10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004.

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______.

Commission file number 0-27918

Century Aluminum Company

(Exact name of Registrant as specified in its Charter)

Delaware (State of Incorporation)	13-3070826 (IRS Employer Identification No.)
2511 Garden Road Building A, Suite 200 Monterey, California (Address of principal executive offices)	93940 (Zip Code)

Registrant’s telephone number, including area code (831) 642-9300

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]   No [   ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [X]   No [   ]

     The registrant had 31,681,883 shares of common stock outstanding at July 30, 2004.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION
	Item 1. — Financial Statements
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF OPERATIONS
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		Notes to Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
Part II. OTHER INFORMATION
	Item 4. Submission of Matters to a Vote of Stockholders
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
SENIOR FACILITY AGREEMENT
AMENDMENT AGREEMENT
CERTIFICATION
CERTIFICATION
CERTIFICATION

PART I – FINANCIAL INFORMATION

Item 1. — Financial Statements.

CENTURY ALUMINUM COMPANY

CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)

(Unaudited)

	June 30,			December 31,
	2004			2003
ASSETS
Current Assets:
Cash and cash equivalents	$	75,169		$	28,204
Restricted cash		8,500			—
Accounts receivable – net		68,399			51,370
Due from affiliates		12,016			10,957
Inventories		104,321			89,360
Prepaid and other current assets		9,648			4,101
Deferred taxes – current portion		6,133			3,413
Total current assets		284,186			187,405
Property, plant and equipment – net		743,614			494,957
Intangible asset – net		92,972			99,136
Goodwill		107,259			—
Other assets		32,502			28,828
Total	$	1,260,533		$	810,326
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable, trade	$	43,583		$	34,829
Due to affiliates		32,657			27,139
Industrial revenue bonds		7,815			7,815
Accrued and other current liabilities		46,401			30,154
Current portion of long-term debt		13,460			—
Accrued employee benefits costs — current portion		8,296			8,934
Total current liabilities		152,212			108,871
Senior secured notes payable– net		322,561			322,310
Nordural debt		170,472			—
Notes payable — affiliates		—			14,000
Accrued pension benefits costs – less current portion		11,584			10,764
Accrued postretirement benefits costs — less current portion		83,411			78,218
Other liabilities		35,200			33,372
Due to affiliates – less current portion		7,107			—
Deferred taxes		68,310			55,094
Total noncurrent liabilities		698,645			513,758
Contingencies and Commitments (See Note 7)
Shareholders’ equity:
Convertible preferred stock (8.0% cumulative, 0 and 500,000 shares outstanding at June 30, 2004 and December 31, 2003, respectively)		—			25,000
Common stock (one cent par value, 50,000,000 shares authorized; 31,681,883 and 21,130,839 shares outstanding at June 30, 2004 and December 31, 2003, respectively)		317			211
Additional paid-in capital		409,568			173,138
Accumulated other comprehensive loss		(14,556	)		(5,222	)
Retained earnings (deficit)		14,347			(5,430	)
Total shareholders’ equity		409,676			187,697
Total	$	1,260,533		$	810,326

See notes to consolidated financial statements

1

CENTURY ALUMINUM COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
	2004			2003			2004			2003
NET SALES:
Third-party customers	$	225,430		$	163,746		$	417,776		$	317,201
Related parties		38,303			32,421			78,051			57,975
		263,733			196,167			495,827			375,176
Cost of goods sold		218,542			188,391			413,587			359,694
Gross profit		45,191			7,776			82,240			15,482
Selling, general and administrative expenses		3,991			4,086			9,399			8,221
Operating income		41,200			3,690			72,841			7,261
Interest expense – third party		(11,474	)		(10,330	)		(21,849	)		(20,554	)
Interest expense – related party		(51	)		(1,000	)		(380	)		(1,000	)
Interest income		244			45			341			196
Net gain (loss) on forward contracts		(1,177	)		211			(13,997	)		41,904
Other income (expense)		9			(770	)		(605	)		(500	)
Income (loss) before income taxes, minority interest and cumulative effect of change in accounting principle		28,751			(8,154	)		36,351			27,307
Income tax (expense) benefit		(10,463	)		3,147			(13,263	)		(9,827	)
Income (loss) before minority interest and cumulative effect of change in accounting principle		18,288			(5,007	)		23,088			17,480
Minority interest		—			—			—			986
Income (loss) before cumulative effect of change in accounting principle		18,288			(5,007	)		23,088			18,466
Cumulative effect of change in accounting principle, net of tax benefit of $3,430		—			—			—			(5,878	)
Net income (loss)		18,288			(5,007	)		23,088			12,588
Preferred dividends		(269	)		(500	)		(769	)		(1,000	)
Net income (loss) applicable to common shareholders	$	18,019		$	(5,507	)	$	22,319		$	11,588
EARNINGS (LOSS) PER COMMON SHARE:
Basic:
Income (loss) before cumulative effect of change in accounting principle	$	0.61		$	(0.26	)	$	0.88		$	0.83
Cumulative effect of change in accounting principle	$	—		$	—		$	—		$	(0.28	)
Net income (loss)	$	0.61		$	(0.26	)	$	0.88		$	0.55
Diluted:
Income (loss) before cumulative effect of change in accounting principle	$	0.60		$	(0.26	)	$	0.87		$	0.82
Cumulative effect of change in accounting principle	$	—		$	—		$	—		$	(0.26	)
Net income (loss)	$	0.60		$	(0.26	)	$	0.87		$	0.56
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		29,629			21,070			25,412			21,070
Diluted		30,542			21,070			25,588			22,465

See notes to consolidated financial statements

2

CENTURY ALUMINUM COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)
(Unaudited)

	Six months ended
	June 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	23,088		$	12,588
Adjustments to reconcile net income to net cash provided by operating activities:
Unrealized net loss (gain) on forward contracts		6,659			(12,292	)
Depreciation and amortization		23,731			25,787
Deferred income taxes		4,926			6,396
Pension and other postretirement benefits		5,376			5,897
Inventory market adjustment		(2,273	)		(394	)
Loss on disposal of assets		695			836
Minority interest		—			(986	)
Cumulative effect of change in accounting principle		—			9,308
Changes in operating assets and liabilities:
Accounts receivable – net		(8,264	)		(4,178	)
Due from affiliates		(1,059	)		(4,604	)
Inventories		(703	)		5,734
Prepaids and other current assets		(2,724	)		(2,733	)
Accounts payable, trade		(1,294	)		(3,184	)
Due to affiliates		(3,383	)		1,394
Accrued and other current liabilities		9,308			632
Other – net		(2,472	)		9,527
Net cash provided by operating activities		51,611			49,728
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(5,712	)		(10,300	)
Acquisitions, net of cash acquired		(184,869	)		(59,837	)
Net cash used in investing activities		(190,581	)		(70,137	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt		(20,659	)		—
Financing fees		—			(297	)
Dividends		(3,311	)		(11	)
Issuance of common stock		209,905			—
Net cash provided by (used in) financing activities		185,935			(308	)
NET INCREASE (DECREASE) IN CASH		46,965			(20,717	)
CASH, BEGINNING OF PERIOD		28,204			45,092
CASH, END OF PERIOD	$	75,169		$	24,375

See notes to consolidated financial statements

3

CENTURY ALUMINUM COMPANY

Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

1. General

     The accompanying unaudited interim consolidated financial statements of Century Aluminum Company (the “Company” or “Century”) should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2003. In management’s opinion, the unaudited interim consolidated financial statements reflect all adjustments, which are of a normal and recurring nature, that are necessary for a fair presentation of financial results for the interim periods presented. Operating results for the first six months of 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. Certain reclassifications of 2003 information were made to conform to the 2004 presentation.

2. Acquisitions

  Nordural Acquisition

     On April 27, 2004, the Company completed the acquisition of Nordural hf (“Nordural”) from Columbia Ventures Corporation (“CVC”), a privately-owned investment company headquartered in Vancouver, Washington. Nordural hf is an Icelandic company that owns and operates the Nordural facility, a primary aluminum reduction facility located in Grundartangi, Iceland, approximately 25 miles north of Reykjavik, Iceland’s capital. The results of operations of Nordural are included in the Company’s Statement of Operations beginning April 28, 2004.

     The Nordural acquisition is a significant step forward in achieving the Company’s strategic goals of reducing its average cost to produce aluminum and geographically diversifying its asset base. The $107,259 of Goodwill recognized in the acquisition reflects the fact that the Nordural facility, built in 1998, is the Company’s most recently constructed and lowest operating cost facility. The Company is expanding the Nordural facility to increase its annual production capacity to 397 million pounds, or double its current production capacity.

     The Company accounted for the acquisition as a purchase using the accounting standards established in Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations,” and SFAS No. 142, “Goodwill and Other Intangible Assets.”

     The purchase price for Nordural was $195,346, which included a $25,000 payment related to satisfaction of conditions for a planned expansion, and related adjustments totaling $20,346, allocated as follows:

4

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

Allocation of Purchase Price:

Current assets	$	41,322
Property, plant and equipment		261,871
Goodwill		107,259
Current liabilities		(26,144	)
Long-term debt		(177,132	)
Other non-current liabilities		(11,830	)
Total purchase price	$	195,346

     The appraisal upon which portions of the purchase allocation will be based is not yet complete, and additional adjustments to the purchase price allocation may still be required. Century used proceeds from a registered equity offering to finance the acquisition (see Note 18 – Equity Offering).

     The following schedules represent the unaudited pro forma results of operations for the three and six months ended June 30, 2004 and 2003 assuming the acquisitions occurred on January 1, 2003. The unaudited pro forma amounts may not be indicative of the results that actually would have occurred if the transaction described above had been completed and in effect for the periods indicated.

	Three months ended					Six months ended
	June 30,					June 30,
	2004		2003			2004		2003
Net sales	$	272,721	$	220,700		$	534,202	$	424,355
Net income		19,566		(1,247	)		29,996		20,053
Net income available to common shareholders		19,297		(1,747	)		29,227		19,053
Earnings per share:
Basic	$	0.62	$	(0.06	)	$	0.95	$	0.63
Diluted	$	0.61	$	(0.06	)	$	0.94	$	0.64

  The Planned Gramercy Acquisition

     On May 17, 2004, the Company, together with subsidiaries of Noranda, Inc. (“Noranda”), entered into an agreement with Kaiser Aluminum and Chemical Corporation to jointly purchase Kaiser’s Gramercy, Louisiana, alumina refinery and its 49% interest in a Jamaican bauxite mining partnership for a purchase price of $23,000, subject to working capital adjustments. The Company and Noranda will each pay one-half of the purchase price. Kaiser is selling its alumina and bauxite assets as part of its reorganization to emerge from Chapter 11

5

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

bankruptcy. The bankruptcy court approved the sale to Century and Noranda on July 19, 2004. The transaction is expected to close in the third quarter of 2004, subject to the consent of the Government of Jamaica, which owns the remaining 51% interest in the bauxite mining partnership. The bauxite mining partnership supplies all of the bauxite used for the production of alumina at the Gramercy refinery and bauxite to a third party refinery in Texas. At the Gramercy refinery, bauxite is chemically refined and converted into alumina, the principal raw material used in the production of primary aluminum. All of the alumina used at the Hawesville facility is purchased from the Gramercy refinery.

3. Stock-Based Compensation

     The Company has elected not to adopt the recognition provisions for employee stock-based compensation as permitted in SFAS No. 123, “Accounting for Stock-Based Compensation.” As such, the Company accounts for stock based compensation in accordance with Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to Employees.” No compensation cost has been recognized for the stock option portions of the plan because the exercise prices of the stock options granted were equal to the market value of the Company’s stock on the date of grant. Had compensation cost for the Stock Incentive Plan been determined using the fair value method provided under SFAS No. 123, the Company’s net income and earnings per share would have changed to the pro forma amounts indicated below:

		Three months ended						Six months ended
		June 30,						June 30,
		2004			2003			2004			2003
Net income (loss) applicable to common shareholders	As Reported	$	18,019		$	(5,507	)	$	22,319		$	11,588
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects			169			99			1,046			198
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects			(235	)		(53	)		(1,179	)		(547	)
Pro forma net income (loss)		$	17,953		$	(5,461	)	$	22,186		$	11,239
Basic earnings (loss) per share	As reported	$	0.61		$	(0.26	)	$	0.88		$	0.55
	Pro forma	$	0.61		$	(0.26	)	$	0.87		$	0.53
Diluted earnings (loss) per share	As reported	$	0.60		$	(0.26	)	$	0.87		$	0.56
	Pro forma	$	0.60		$	(0.26	)	$	0.87		$	0.54

6

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

4. Inventories

     Inventories consist of the following:

	June 30,		December 31,
	2004		2003
Raw materials	$	48,273		$	35,621
Work-in-process		16,499			15,868
Finished goods		10,886			14,920
Operating and other supplies		28,663			22,951
	$	104,321		$	89,360

     At June 30, 2004 and December 31, 2003, approximately 78% of the domestic inventories were valued at the lower of last-in, first-out (“LIFO”) cost or market. The excess of LIFO cost (or market, if lower) over FIFO cost was approximately $983 and $3,762 at June 30, 2004 and December 31, 2003, respectively. Inventories at Nordural are stated at lower of cost or market. Cost is determined by the first in, first out (“FIFO”) method, except for supplies inventories which are based upon the average cost method.

5. Intangible Asset

     The intangible asset consists of the power contract acquired in connection with the Company’s acquisition of an 80% interest in the Hawesville facility in April 2001. The contract value is being amortized over its term (ten years) using a method that results in annual amortization equal to the percentage of a given year’s expected gross annual benefit to the total as applied to the total recorded value of the power contract. In connection with the Company’s acquisition of the remaining 20% interest in the Hawesville facility from Glencore on April 1, 2003, the 20% portion of the power contract that was indirectly owned by Glencore was revalued in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.” As a result, the gross carrying amount of the contract and the accumulated amortization, both related to the 20% portion of the contract indirectly owned by Glencore, were removed and the fair value of the 20% of the power contract acquired on April 1, 2003 was recorded. As of June 30, 2004, the gross carrying amount of the intangible asset was $153,592 with accumulated amortization of $60,620. For the three month periods ended June 30, 2004 and June 30, 2003, amortization expense for the intangible asset totaled $3,082 and $4,927, respectively. For the six month periods ended June 30, 2004 and June 30, 2003, amortization expense for the intangible asset totaled $6,164 and $9,512, respectively. For the year ending December 31, 2004, the estimated aggregate amortization expense for the intangible asset will be approximately $12,326. The estimated aggregate amortization expense for the intangible asset for the following five years is as follows:

7

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

	For the year ending December 31,
	2005		2006		2007		2008		2009
Estimated Amortization Expense	$	14,162	$	12,695	$	13,617	$	14,669	$	15,717

6. Debt

  Secured First Mortgage Notes

     The Company has outstanding 11¾% senior secured first mortgage notes due 2008 (the “Notes”) with an aggregate principal amount of $325,000. No principal payments are required until maturity. The Company had unamortized bond discounts on the Notes of $2,439 and $2,690 at June 30, 2004 and December 31, 2003, respectively. The indenture governing the Notes contains customary covenants including limitations on the Company’s ability to pay dividends, incur debt, make investments, sell assets or stock of certain subsidiaries, and purchase or redeem capital stock.

     On July 29, 2004, the Company announced that it had commenced a cash tender offer for any and all of its outstanding Notes. The Company is also soliciting consent to proposed amendments to the indenture governing the Notes that would eliminate substantially all of the restrictive covenants and certain default provisions in the indenture. See Note 19 Subsequent Events for additional information about the tender offer.

  Revolving Credit Facility

     Effective April 1, 2001, the Company entered into a $100,000 senior secured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks. The Revolving Credit Facility will mature on April 2, 2006. The Company’s obligations under the Revolving Credit Facility are unconditionally guaranteed by its domestic subsidiaries (other than Century Aluminum of Kentucky, LLC (the “LLC”) and certain subsidiaries formed in connection with the Nordural acquisition) and secured by a first priority security interest in all accounts receivable and inventory belonging to the Company and its subsidiary borrowers. The availability of funds under the Revolving Credit Facility is subject to a $30,000 reserve and limited by a specified borrowing base consisting of certain eligible accounts receivable and inventory. Borrowings under the Revolving Credit Facility are, at the Company’s option, at the LIBOR rate or the Fleet National Bank base rate plus, in each case, an applicable interest margin. The applicable interest margin ranges from 2.25% to 3.0% over the LIBOR rate and 0.75% to 1.5% over the base rate and is determined by certain financial measurements of the Company. There were no outstanding borrowings under the Revolving Credit Facility as of June 30, 2004 and December 31, 2003. Interest periods for LIBOR rate borrowings are one, two, three or six months, at the Company’s option. As of June 30, 2004, the Company had a borrowing base of $75,620 under the Revolving Credit Facility. The Company is subject to customary covenants, including limitations on capital expenditures, additional indebtedness, liens, guarantees, mergers and acquisitions, dividends, distributions, capital redemptions and investments.

8

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

  Industrial Revenue Bonds

     Effective April 1, 2001, in connection with its acquisition of the Hawesville facility, the Company assumed industrial revenue bonds (the “IRBs”) in the aggregate principal amount of $7,815. From April 1, 2001 through April 1, 2003, Glencore assumed 20% of the liability related to the IRBs consistent with its ownership interest in the Hawesville facility during that period. The IRBs mature on April 1, 2028, and bear interest at a variable rate not to exceed 12% per annum determined weekly based on prevailing rates for similar bonds in the bond market, with interest paid quarterly. The IRBs are secured by a Glencore guaranteed letter of credit and the Company provides for the servicing costs for the letter of credit. The Company has agreed to reimburse Glencore for all costs arising from the letter of credit. The Company’s maximum potential amount of future payments under the reimbursement obligations for the Glencore letter of credit securing the IRBs would be $8,150. The interest rate on the IRBs at June 30, 2004 was 1.38%. The IRBs are classified as current liabilities because they are remarketed weekly and could be required to be repaid upon demand if there is a failed remarketing, as provided in the indenture governing the IRBs. The Company’s reimbursement obligations related to the Glencore letter of credit securing the IRBs are guaranteed by each of its material consolidated subsidiaries, except for the LLC (see Note 17 for a discussion of note guarantees), and secured by a first priority interest in the 20% interest in the Hawesville facility.

  Glencore Note Payable

     On April 1, 2003, in connection with its acquisition of the remaining 20% interest in the Hawesville facility, the Company issued a six-year $40,000 promissory note payable to Glencore bearing interest at a rate of 10% per annum (the “Glencore Note”). In April 2004, the Company paid the remaining $14,000 of principal on the Glencore Note, which consisted of a $2,000 required principal payment and an optional $12,000 prepayment of principal.

  Term Loan Facility – Nordural

     As of June 30, 2004, Nordural had approximately $183,932 of debt, principally consisting of debt that was originally incurred in connection with the construction of the Nordural facility in 1998 and an expansion completed in June 2001. On September 2, 2003, Nordural entered into a $185,000 senior term loan facility with a syndicate of banks. A substantial portion of the proceeds from the loan was used to repay indebtedness outstanding under an existing $167,200 senior facility agreement. At June 30, 2004, the balance of the loan facility was $171,384. Amounts borrowed under Nordural’s loan facility generally bear interest at the applicable LIBOR rate plus an initial margin of 1.45% per year, which increases to 1.55% per year in January 2010 and 1.65% in January 2014, plus an applicable percentage to cover certain lender compliance costs.

9

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

     Nordural’s obligations have been secured under the loan facility by a pledge of all of Nordural shares pursuant to a share pledge agreement with the lenders. In addition, all of Nordural’s assets have been pledged as security under the loan facility. Amounts outstanding under the loan facility are payable semiannually in installments through June 30, 2018. The amount of each installment is based on a scheduled rate that fluctuates between 2.74% and 3.88% of outstanding principal semi-annually. Nordural may voluntarily prepay all or part of the loan under the facility without penalty provided it gives five business days’ notice, subject to a minimum payment threshold. The agreement provides for mandatory prepayment upon the receipt of proceeds from certain asset sales, events impairing the value of assets and insurance recoveries. If the price of aluminum falls below designated levels for six months prior to a payment date and certain debt coverage ratios are not met, the loan facility provides for deferral of principal payments. Principal payments are increased if certain debt coverage ratios are exceeded.

     Nordural’s loan facility contains customary covenants, including limitations on additional indebtedness, security interests, investments, asset sales, loans, guarantees, capital expenditures, mergers and acquisitions, amendments to various agreements used in the operation of the Nordural facility, hedging agreements, distributions and share capital redemptions. Nordural is also subject to various financial covenants, including minimum debt service coverage, loan life coverage and net worth covenants. The loan facility contains customary events of default, including nonpayment, misrepresentation, breach of a covenant, insolvency and default of other indebtedness. If an event of default were to occur, the various banks under the loan facility would have the right to cancel all commitments and demand repayment of the loan facility.

      Nordural Refinancing and Expansion Financing

     In connection with an ongoing expansion of the Nordural facility, the Company has agreed to terms on a $310,000 senior term loan facility with Landsbanki Islands hf. and Kaupthing Bank hf. Amounts borrowed will be used to repay debt currently held by Nordural and to finance a portion of the costs associated with the ongoing expansion of the Nordural facility. The Company has entered into numerous agreements in connection with the expansion, including amendments to several long-term contracts with the Government of Iceland and an agreement with Hitaveita Sudurnesja hf and Reykjavik Energy to supply the additional power needed for the expansion capacity. On August 1, 2004, the Company entered into a ten-year alumina tolling agreement with Glencore for Nordural’s expansion capacity. The expansion is projected to be completed by mid-2006, subject to satisfaction of various conditions, including the closing of the new term loan facility.

10

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

7. Contingencies and Commitments

  Environmental Contingencies

     The Company believes its environmental liabilities are not likely to have a material adverse effect on the Company. However, there can be no assurance that future requirements at currently or formerly owned or operated properties will not result in liabilities which may have a material adverse effect on the Company’s financial condition, results of operations or liquidity.

     Century Aluminum of West Virginia, Inc. (“Century of West Virginia”) is performing certain remedial measures at its Ravenswood facility pursuant to a RCRA 3008(h) order issued by the Environmental Protection Agency (“EPA”) in 1994 (the “3008(h) Order”). Century of West Virginia also conducted a RCRA facility investigation (“RFI”) under the 3008(h) Order evaluating other areas at the Ravenswood facility that may have contamination requiring remediation. The RFI was submitted to the EPA in December 1999. Century of West Virginia, in consultation with the EPA, has completed interim remediation measures at two sites identified in the RFI, and the Company expects that neither the EPA, nor the State of West Virginia, will require further remediation under the 3008(h) Order. The Company believes a significant portion of the contamination on the two identified sites is attributable to the operations of Kaiser Aluminum & Chemical Corporation (“Kaiser”), which had previously owned and operated the Ravenswood facility, and will be the financial responsibility of Kaiser.

     Kaiser owned and operated the Ravenswood facility for approximately 30 years before Century of West Virginia acquired it. Many of the conditions that Century of West Virginia is remedying exist because of activities that occurred during Kaiser’s ownership and operation. Under the terms of the purchase agreement for the Ravenswood facility (the “Kaiser Purchase Agreement”), Kaiser retained responsibility to pay the costs of cleanup of those conditions. In addition, Kaiser retained title to certain land within the Ravenswood premises and is responsible for those areas. On February 12, 2002, Kaiser and certain wholly-owned subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code. The Company believes that the bankruptcy will not relieve Kaiser of its responsibilities as to some of the remedial measures performed at the Ravenswood facility. The Company cannot be certain of the ultimate outcome of the bankruptcy and, accordingly, the Company may be unable to hold Kaiser responsible for its share of remedial measures.

     Under the terms of the agreement to sell its fabricating businesses to Pechiney (the “Pechiney Agreement”), the Company and Century of West Virginia provided Pechiney with certain indemnifications. Those include the assignment of certain of Century of West Virginia’s indemnification rights under the Kaiser Purchase Agreement (with respect to the real property transferred to Pechiney) and the Company’s indemnification rights under its stock purchase agreement with Alcoa relating to the Company’s purchase of Century Cast Plate, Inc. The Pechiney Agreement provides further indemnifications, which are limited, in general, to pre-closing conditions that were not disclosed to Pechiney and to off-site migration of hazardous substances from pre-closing acts or omissions of Century of West Virginia. Environmental indemnifications under the Pechiney Agreement expire September 20, 2005

11

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

and are payable only to the extent they exceed $2,000. Payments under this indemnification would be limited to $25,000 for on-site liabilities, but there is no limit on potential future payments for any off-site liabilities. The Company does not believe there are any undisclosed pre-closing conditions or off-site migration of hazardous substances, and it does not believe that it will be required to make any potential future payments under this indemnification.

     On July 6, 2000, while the Hawesville facility was owned by Southwire Company (“Southwire”), the EPA issued a final Record of Decision (“ROD”), under the federal Comprehensive Environmental Response, Compensation and Liability Act, which detailed response actions to be implemented at several locations at the Hawesville site to address actual or threatened releases of hazardous substances. Those actions include:

• removal and off-site disposal at approved landfills of certain soils contaminated by polychlorinated biphenyls (“PCBs”);

• management and containment of soils and sediments with low PCB contamination in certain areas on-site; and

• the continued extraction and treatment of cyanide contaminated ground water using the existing ground water treatment system.

     Under the Company’s agreement with Southwire to purchase the Hawesville facility, Southwire indemnified the Company against all on-site environmental liabilities known to exist prior to the closing of the acquisition, including all remediation, operation and maintenance obligations under the ROD. The total costs for the remedial actions to be undertaken and paid for by Southwire relative to these liabilities are estimated under the ROD to be $12,600 and the forecast of annual operating and maintenance costs is $1,200. Century will operate and maintain the ground water treatment system required under the ROD on behalf of Southwire, and Southwire will reimburse Century for any expense that exceeds $400 annually.

     If on-site environmental liabilities relating to pre-closing activities at the Hawesville facility that were not known to exist as of the date of the closing of the acquisition become known before March 31, 2007, the Company will share the costs of remedial action with Southwire on a sliding scale depending on the year the liability is identified. Any on-site environmental liabilities arising from pre-closing activities which do not become known until on or after March 31, 2007, will be the responsibility of the Company. In addition, the Company will be responsible for any post-closing environmental costs which result from a change in environmental laws after the closing or from its own activities, including a change in the use of the facility. In addition, Southwire indemnified the Company against all risks associated with off-site hazardous material disposals by the Hawesville plant which pre-date the closing of the acquisition.

     The Company acquired the Hawesville facility by purchasing all of the outstanding equity securities of Metalsco Ltd. (“Metalsco”), which was a wholly owned subsidiary of Southwire. Metalsco previously owned certain assets which are unrelated to the Hawesville plant’s

12

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

operations, including the stock of Gaston Copper Recycling Corporation (“Gaston”), a secondary metals recycling facility in South Carolina. Gaston has numerous liabilities related to environmental conditions at its recycling facility. Gaston and all other non-Hawesville assets owned at any time by Metalsco were identified in the Company’s agreement with Southwire as unwanted property and were distributed to Southwire prior to the closing of the Hawesville acquisition. Southwire indemnified the Company for all liabilities related to the unwanted property. Southwire also retained ownership of certain land adjacent to the Hawesville facility containing Hawesville’s former potliner disposal areas, which are the sources of cyanide contamination in the facility’s groundwater. Southwire retained full responsibility for this land, which was never owned by Metalsco and is located on the north boundary of the Hawesville site.

     Southwire has secured its indemnity obligations to the Company for environmental liabilities until April 1, 2008 by posting a letter of credit, currently in the amount of $14,000, issued in the Company’s favor, with an additional $15,000 to be posted if Southwire’s net worth drops below a pre-determined level during that period. The amount of security Southwire provides may increase (but not above $14,500 or $29,500, as applicable) or decrease (but not below $3,000) if certain specified conditions are met. The Company cannot be certain that Southwire will be able to meet its indemnity obligations. In that event, under certain environmental laws which impose liability regardless of fault, the Company may be liable for any outstanding remedial measures required under the ROD and for certain liabilities related to the unwanted properties. If Southwire fails to meet its indemnity obligations or if the Company’s shared or assumed liability is significantly greater than anticipated, the Company’s financial condition, results of operations and liquidity could be materially adversely affected.

     Century is a party to an Administrative Order on Consent with the Environmental Protection Agency (the “Order”) pursuant to which other past and present owners of an alumina refining facility at St. Croix, Virgin Islands have agreed to carry out a Hydrocarbon Recovery Plan to remove and manage hydrocarbons floating on groundwater underlying the facility. Pursuant to the Hydrocarbon Recovery Plan, recovered hydrocarbons and groundwater will be delivered to the adjacent petroleum refinery where they will be received and managed. Lockheed Martin Corporation (“Lockheed”), which sold the facility to one of the Company’s affiliates, Virgin Islands Alumina Corporation (“Vialco”), in 1989, has tendered indemnity and defense of this matter to Vialco pursuant to terms of the Lockheed–Vialco Asset Purchase Agreement. Management does not believe Vialco’s liability under the Order or its indemnity to Lockheed will require material payments. Through June 30, 2004, the Company has expended approximately $440 on the Recovery Plan. Although there is no limit on the obligation to make indemnification payments, the Company expects the future potential payments under this indemnification will be approximately $200 which may be offset in part by sales of recoverable hydrocarbons. The Company, along with others, including former owners of its former St. Croix facility, received notice of a threatened lawsuit alleging natural resource damages involving the subsurface hydrocarbon contamination at the facility. While it is not presently possible to determine the outcome of this matter, the Company’s known liabilities with respect to this and other matters relating to compliance and cleanup,

13

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

based on current information, are not expected to be material and should not materially adversely affect the Company’s operating results. However, if more stringent compliance or cleanup standards under environmental laws or regulations are imposed, previously unknown environmental conditions or damages to natural resources are discovered, or if contributions from other responsible parties with respect to sites for which the Company has cleanup responsibilities are not available, the Company may be subject to additional liability, which may be material.

     Nordural is subject to various Icelandic and other environmental laws and regulations. These laws and regulations are subject to change, which changes could result in increased costs. Operating in a foreign country exposes the Company to political, regulatory, currency and other related risks. The Nordural facility, built in 1998, uses technology currently defined to be “best available technology” under the European Union’s Integrated Pollution Prevention and Control Directive of 1996, or IPPC. The operational restrictions for the Nordural facility, as determined by the Icelandic Minister for the Environment, are set forth in the facility’s operating license. The license currently allows for both the facility’s current and planned expansion capacity.

     It is the Company’s policy to accrue for costs associated with environmental assessments and remedial efforts when it becomes probable that a liability has been incurred and the costs can be reasonably estimated. The aggregate environmental related accrued liabilities were $740 and $694 at June 30, 2004 and December 31, 2003, respectively. All accrued amounts have been recorded without giving effect to any possible future recoveries. With respect to ongoing environmental compliance costs, including maintenance and monitoring, such costs are expensed as incurred.

     Because of the issues and uncertainties described above, and the Company’s inability to predict the requirements of the future environmental laws, there can be no assurance that future capital expenditures and costs for environmental compliance will not have a material adverse effect on the Company’s future financial condition, results of operations, or liquidity. Based upon all available information, management does not believe that the outcome of these environmental matters, or environmental matters concerning Mt. Holly, will have a material adverse effect on the Company’s financial condition, results of operations, or liquidity.

  Legal Contingencies

     Prior to the Kaiser bankruptcy, Century was a named defendant, along with Kaiser and many other companies, in civil actions brought by employees of third party contractors who alleged asbestos-related diseases arising out of exposure at facilities where they worked, including Ravenswood. All of those actions relating to the Ravenswood facility have been dismissed or resolved with respect to the Company and as to Kaiser. Only 14 plaintiffs were able to show they had been on the Ravenswood premises during the period the Company owned the plant, and the parties have agreed to settle all of those claims for non-material amounts. The Company is awaiting receipt of final documentation of those settlements and the entry of dismissal orders. The Company does not expect the Kaiser bankruptcy will have any effect on the settlements reached on those asbestos claims. Since the Kaiser bankruptcy,

14

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

the Company has been named in additional civil actions based on similar allegations with unspecified monetary claims against Century, 75 of which remain outstanding. To the best of the Company’s knowledge, of the remaining civil actions, only two of the claimants were in the Ravenswood facility during the Company’s ownership, and both were employees of Kaiser or Century.

     The Company has pending against it or may be subject to various other lawsuits, claims and proceedings related primarily to employment, commercial, environmental and safety and health matters. Although it is not presently possible to determine the outcome of these matters, management believes their ultimate disposition will not have a material adverse effect on the Company’s financial condition, results of operations, or liquidity.

  Power Commitments

     The Hawesville facility currently purchases all of its power from Kenergy Corporation (“Kenergy”), a local retail electric cooperative, under a power supply contract that expires at the end of 2010. Kenergy acquires the power it provides to the Hawesville facility mostly from a subsidiary of LG&E Energy Corporation (“LG&E”), with delivery guaranteed by LG&E. The Hawesville facility currently purchases all of its power from Kenergy at fixed prices. Approximately 27% of the Hawesville facility’s power requirements are unpriced in calendar years 2006 through 2010.

     The Company purchases all of the electricity requirements for the Ravenswood facility from Ohio Power Company, a unit of American Electric Power Company, under a fixed price power supply agreement that runs through December 31, 2005.

     The Mt. Holly facility purchases all of its power from the South Carolina Public Service Authority (“Santee Cooper”) at rates fixed by published schedules. The Mt. Holly facility’s current power contract expires December 31, 2015. Power delivered through 2010 will be priced as set forth in currently published schedules, subject to adjustments for fuel costs. Rates for the period 2011 through 2015 will be as provided under then-applicable schedules.

     The Nordural facility purchases power from Landsvirkjun, a power company jointly owned by the Republic of Iceland and two Icelandic municipal governments, under a contract due to expire in 2019. The power delivered to the Nordural facility under its current contract is from hydroelectric and geothermal sources, both competitively-priced and renewable sources of power in Iceland, at a rate based on the LME price for primary aluminum. In connection with the planned expansion, Nordural has entered into a power contract with Orkuveita Reykjavikur (“OR”) and Hitaveita Sudurnesja hf (“HS”) for the supply of the additional power required for the expansion capacity. Power under this agreement will be generated from geothermal resources and prices will be LME-based. By the terms of a Second Amendment to the Landsvirkjun/Nordural Power Contract, dated as of April 21, 2004, Landsvirkjun has agreed on best commercial effort basis to provide backup power to Nordural should OR or HS be unable to meet the obligations of their contract to provide power for the Nordural expansion.

     The Company may suffer losses due to a temporary or prolonged interruption of the supply of electrical power to its facilities, which can be caused by unusually high demand, blackouts,

15

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

equipment failure, natural disasters or other catastrophic events. The Company uses large amounts of electricity to produce primary aluminum, and any loss of power which causes an equipment shutdown can result in the hardening or “freezing” of molten aluminum in the pots where it is produced. If this occurs, the Company may experience significant losses if the pots are damaged and require repair or replacement, a process that could limit or shut down production operations for a prolonged period of time. Although the Company maintains property and business interruption insurance to mitigate losses resulting from catastrophic events, the Company may still be required to pay significant amounts under the deductible provisions of those insurance policies. Century’s coverage may not be sufficient to cover all losses, or certain events may not be covered. For example, certain of Century’s insurance policies do not cover any losses the Company may incur if its suppliers are unable to provide the Company with power during periods of unusually high demand. Certain material losses which are not covered by insurance may trigger a default under the Company’s Revolving Credit Facility. No assurance can be given that a material shutdown will not occur in the future or that such a shutdown would not have a material adverse effect on the Company.

  Labor Commitments

     Ravenswood’s hourly employees, which comprised approximately 33% of the Company’s workforce as of June 30, 2004, are represented by the United Steelworker’s of America (the “USWA”) and are currently working under a labor agreement that expires May 31, 2006. Hawesville’s hourly employees, which comprised approximately 38% of the Company’s workforce as of June 30, 2004, are represented by the USWA and are currently working under a five-year labor agreement that expires March 31, 2006.

     There are six national labor unions represented in Nordural’s unionized work force. The current labor contract with these unions, which sets forth the work rules and wages for the covered employees, expires on December 31, 2004. The contract is expected to be renegotiated in the latter half of 2004.

  Other Commitments and Contingencies

     The Company may be required to make post-closing payments to Southwire up to an aggregate maximum of $7,000 if the price of primary aluminum on the London Metal Exchange (“LME”) exceeds specified levels during the seven years following closing of the Hawesville Acquisition in April 2001. No post-closing payments were made to Southwire through June 30, 2004; however, if LME prices remain at or above current levels, Southwire would be entitled to receive the entire $7,000 in 2005.

     Equipment failures at the Ravenswood, Mt. Holly, Hawesville or Nordural facilities could limit or shut down the Company’s production for a significant period of time. In order to minimize the risk of equipment failure, the Company follows a comprehensive maintenance and loss prevention program and periodically reviews its failure exposure.

16

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

8. Forward Delivery Contracts and Financial Instruments

     As a producer of primary aluminum products, the Company is exposed to fluctuating raw material and primary aluminum prices. The Company routinely enters into fixed and market priced contracts for the sale of primary aluminum and the purchase of raw materials in future periods.

  Alumina Tolling

     Nordural is party to a long-term alumina tolling contract with a subsidiary of BHP Billiton (the “Tolling Agreement”) which is due to expire December 31, 2013. Under this contract, which is for virtually all of the Nordural facility’s existing production capacity, Nordural receives an LME-based fee for the conversion of alumina, supplied by BHP Billiton, into primary aluminum. The contract includes customary termination provisions upon a force majeure event or material breach that could result in early termination. On August 1, 2004, the Company entered into a ten year alumina toll conversion agreement with Glencore for Nordural’s expansion capacity. That contract also provides Nordural with an LME-based fee. The contract is effective in July 2006.

     Iceland is a member of the European Free Trade Area, or EFTA. EFTA countries have free trade agreements with the European Union, or EU, which provide for duty-free trade in certain industrial goods, including primary aluminum. As a result of Iceland’s EFTA membership, BHP Billiton is able to sell primary aluminum produced at the Nordural facility to EU markets on a duty-free basis, and those cost savings are reflected in the tolling fee paid to Nordural under the tolling contract.

  Primary Aluminum Sales Agreements

     Century has a contract with Pechiney (the “Pechiney Metal Agreement”) under which Pechiney purchases 23 to 27 million pounds, per month, of molten aluminum produced at the Ravenswood facility through December 31, 2005, at a price determined by reference to the U.S. Midwest Market Price. This contract will be automatically extended through July 31, 2007 provided that the Company’s power contract for the Ravenswood facility is extended or replaced through that date. Pechiney has the right, upon twelve months notice, to reduce its purchase obligations by 50% under this contract. In December 2003, Alcan Inc. (“Alcan”) completed an acquisition of Pechiney.

     The Pechiney rolling mill that purchases primary aluminum from the Company under this contract is located adjacent to the Ravenswood facility, which allows the Company to deliver molten aluminum, thereby reducing its casting and shipping costs. If Alcan materially reduces its purchases or fails to renew the contract when it expires, the Company’s casting, shipping and marketing costs at the Ravenswood facility would increase.

     On April 1, 2000, the Company entered into an agreement with Glencore, expiring December 31, 2009, to sell and deliver monthly, primary aluminum totaling approximately 110 million pounds per year at a fixed price for the years 2002 through 2009 (the “Original

17

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

Sales Contract”). In January 2003, Century and Glencore agreed to terminate and settle the Original Sales Contract for the years 2005 through 2009. At that time, the parties entered into a new contract (the “New Sales Contract”) that requires Century to deliver the same quantity of primary aluminum as did the Original Sales Contract for these years. The New Sales Contract provides for variable pricing determined by reference to the LME for the years 2005 through 2009. For deliveries through 2004, the price of primary aluminum delivered will remain fixed.

     Prior to the January 2003 agreement to terminate and settle the years 2005 though 2009 of the Original Sales Contract, the Company had been classifying and accounting for it as a normal sales contract under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” A contract that is so designated and that meets other conditions established by SFAS No. 133 is exempt from the requirements of SFAS No. 133, although by its terms the contract would otherwise be accounted for as a derivative instrument. Accordingly, prior to January 2003, the Original Sales Contract was recorded on an accrual basis of accounting and changes in the fair value of the Original Sales Contract were not recognized.

     According to SFAS No. 133, it must be probable that at inception and throughout its term, a contract classified as “normal” will not result in a net settlement and will result in physical delivery. In April 2003, the Company and Glencore net settled a significant portion of the Original Sales Contract, and it no longer qualified for the “normal” exception of SFAS No. 133. The Company marked the Original Sales Contract to current fair value in its entirety. Accordingly, in the first quarter of 2003 the Company recorded a derivative asset and a pre-tax gain of $41,700. Of the total recorded gain, $26,100 related to the favorable terms of the Original Sales Contract for the years 2005 through 2009, and $15,600 relates to the favorable terms of the Original Sales Contract for 2003 through 2004.

     The Company determined the fair value by estimating the excess of the contractual cash flows of the Original Sales Contract (using contractual prices and quantities) above the estimated cash flows of a contract based on identical quantities using LME-quoted prevailing forward market prices for aluminum plus an estimated U.S. Midwest premium adjusted for delivery considerations. The Company discounted the excess estimated cash flows to present value using a discount rate of 7%.

     On April 1, 2003, the Company received $35,500 from Glencore, $26,100 of which relates to the settlement of the Original Sales Contract for the years 2005 through 2009, and $9,400 of which represents the fair value of the New Sales Contracts discussed below. In January 2003, the Company began accounting for the unsettled portion of the Original Sales Contract (years 2003 and 2004) as a derivative and recognizing period-to-period changes in fair value in current income. The Company also accounts for the New Sales Contract as a derivative instrument under SFAS No. 133. The Company has not designated the New Sales Contract as “normal” because it replaces and substitutes for a significant portion of the Original Sales Contract which, after January 2003, no longer qualified for this designation. The $9,400 initial fair value of the New Sales Contract is a derivative liability and represents the present value of

18

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

the contract’s favorable term to Glencore in that the New Sales Contract excludes from its variable price an estimated U.S. Midwest premium, adjusted for delivery considerations. Because the New Sales Contract is variably priced, the Company does not expect significant variability in its fair value, other than changes that might result from the absence of the U.S. Midwest premium.

     In connection with the acquisition of the Hawesville facility in April 2001, the Company entered into a 10-year contract with Southwire (the “Southwire Metal Agreement”) to supply 240 million pounds of high-purity molten aluminum annually to Southwire’s wire and cable manufacturing facility located adjacent to the Hawesville facility. Under this contract, Southwire will also purchase 60.0 million pounds of standard grade molten aluminum each year for the first five years of the contract, with an option to purchase an equal amount in each of the remaining five years. Southwire has exercised this option through 2008. Prior to the acquisition of the 20% interest in the Hawesville facility on April 1, 2003, the Company and Glencore were each responsible for providing a pro rata portion of the aluminum supplied to Southwire under this contract. In connection with the Company’s acquisition of the 20% interest in the Hawesville facility, the Company assumed Glencore’s delivery obligations under the Southwire Metal Agreement. The price for the molten aluminum to be delivered to Southwire from the Hawesville facility is variable and will be determined by reference to the U.S. Midwest Market Price. This agreement expires on March 31, 2011, and will automatically renew for additional five-year terms, unless either party provides 12 months notice that it has elected not to renew.

     In connection with the acquisition of the 20% interest in the Hawesville facility, the Company entered into a ten-year contract with Glencore (the “Glencore Metal Agreement”) from 2004 through 2013 under which Glencore will purchase approximately 45 million pounds per year of primary aluminum produced at the Ravenswood and Mt. Holly facilities, at prices based on then-current market prices, adjusted by a negotiated U.S. Midwest premium with a cap and a floor as applied to the current U.S. Midwest premium.

     Apart from the Pechiney Metal Agreement, the Glencore Metal Agreement, Original Sales Contract, New Sales Contract and Southwire Metal Agreement, the Company had forward delivery contracts to sell 203.9 million pounds and 351.8 million pounds of primary aluminum at June 30, 2004 and December 31, 2003, respectively. Of these forward delivery contracts, the Company had fixed price commitments to sell 21.1 million pounds and 70.5 million pounds of primary aluminum at June 30, 2004 and December 31, 2003, respectively. Of these forward delivery contracts, 12.2 million pounds and 53.5 million pounds at June 30, 2004 and December 31, 2003, respectively, were with Glencore.

  Alumina Purchase Agreements

     The Company is party to long-term supply agreements with Glencore for the supply of alumina to the Company’s Ravenswood and Mt. Holly facilities that extend through December 2006 and January 2008 at prices indexed to the price of primary aluminum quoted on the LME.

19

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

     Kaiser filed for bankruptcy under Chapter 11 of the Bankruptcy Code in February 2002. Subsequent to that date, and with bankruptcy court approval, Kaiser agreed to assume the Company’s alumina supply agreement and a new alumina supply agreement for the Company’s Hawesville facility for the years 2006 through 2008. To date, Kaiser has continued to supply alumina to the Company pursuant to the terms of its agreement.

     In July 2004, the Company and Noranda, Inc. were approved as the successful bidders to jointly acquire the Gramercy alumina refinery and related Jamaican bauxite mining assets from Kaiser Aluminum & Chemical Corporation for $23,000, subject to closing adjustments. Century and Noranda will each pay one-half, or $11,500, of the purchase price. Closing is expected to occur in the third quarter of 2004, see Note 2.

     The price the Company expects to pay for alumina used by the Hawesville facility would be based on the cost of alumina production, rather than the LME price for primary aluminum. Those production costs may be materially higher than an LME-based price. If the Company and Noranda had not purchased the Gramercy facility, and Kaiser or a successor failed to supply alumina to the Hawesville facility pursuant to the terms of the agreements, the Company’s costs for alumina could have increased substantially, and the Company may not have been able to fully recover damages resulting from breach of those contracts.

  Anode Purchase Agreement

     Nordural has a contract for the supply of anodes for its existing capacity which expires in 2013. Pricing for the anode contract is variable and is indexed to the raw material market for petroleum coke products.

  Financial Sales and Purchase Agreements

     To mitigate the volatility in its unpriced forward delivery contracts, the Company enters into fixed price financial sales contracts, which settle in cash in the period corresponding to the intended delivery dates of the forward delivery contracts. Certain of these financial sales contracts are accounted for as cash flow hedges depending on the Company’s designation of each contract at its inception. At June 30, 2004 and December 31, 2003, the Company had financial instruments with Glencore for 367.4 million pounds and 102.9 million pounds, respectively, of which 345.4 million pounds and 58.8 million pounds, respectively, were designated as cash flow hedges. These financial instruments are scheduled for settlement at various dates through 2007. The Company had no fixed price financial purchase contracts to purchase aluminum at June 30, 2004 or December 31, 2003. Additionally, to mitigate the volatility of the natural gas markets, the Company enters into fixed price financial purchase contracts, accounted for as cash flow hedges, which settle in cash in the period corresponding to the intended usage of natural gas. At June 30, 2004 and December 31, 2003, the Company had financial instruments for 2.8 million and 2.7 million DTH (one decatherm is equivalent to one million British Thermal Units), respectively. These financial instruments are scheduled for settlement at various dates through 2008. Based on the fair value of the Company’s financial instruments as of June 30, 2004, accumulated other comprehensive loss of $6,472 is expected to be reclassified as a reduction to earnings over the next twelve month period.

20

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

     The forward financial sales and purchase contracts are subject to the risk of non-performance by the counterparties. However, the Company only enters into forward financial contracts with counterparties it determines to be creditworthy. If any counterparty failed to perform according to the terms of the contract, the accounting impact would be limited to the difference between the nominal value of the contract and the market value on the date of settlement.

9. Supplemental Cash Flow Information

     In the six months ended June 30, 2004, the Company had two significant non-cash equity transactions. In April 2004, the Company issued approximately 67,000 shares of common stock to satisfy a performance share liability of $1,630 to certain employees of the Company. Additionally, in May 2004, Glencore exercised its option to convert its shares of cumulative convertible preferred stock. The Company issued 1,395,089 shares of common stock in exchange for Glencore’s $25,000 of preferred stock, see Note 14.

	Six months ended
	June 30,
	2004		2003
Cash paid for:
Interest	$	21,230	$	19,145
Income tax		198		—
Cash received for:
Interest		339		196
Income tax refunds		135		—
Seller financing related to the acquisition of the 20% interest in the Hawesville facility		—		40,000

10. Asset Retirement Obligations

     In June 2001, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” This Statement establishes standards for accounting for legal obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company adopted the Standard during the first quarter of 2003. SFAS 143 requires that the Company record the fair value of a legal liability for an asset retirement obligation (“ARO”) in the period in which it is incurred and capitalize the ARO by increasing the carrying amount of the related asset. The liability is accreted to its present value each period and the capitalized cost is depreciated over the useful life of the related asset. The Company’s asset retirement obligations consist primarily of costs associated with the removal and disposal of spent pot liner from its reduction facilities.

21

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

     With the adoption of SFAS 143 on January 1, 2003, Century recorded an ARO asset of $6,484, net of accumulated amortization of $7,372, a deferred tax asset of $3,430, and an ARO liability of $14,220. The net amount initially recognized as a result of applying the Statement was reported as a cumulative effect of a change in accounting principle. The Company recorded a one-time, non-cash charge of $5,878, for the cumulative effect of a change in accounting principle. For the year ended December 31, 2003, $1,795 of the additional ARO liability incurred was related to the acquisition of the 20% interest in the Hawesville facility in April 2003.

     The reconciliation of the changes in the asset retirement obligations is presented below:

	For the six
	months ended			For the year ended
	June 30, 2004			December 31, 2003
Beginning Balance, ARO Liability.	$	16,495		$	14,220
Additional ARO Liability incurred		684			3,402
ARO Liabilities settled		(1,711	)		(2,423	)
Accretion Expense		1,383			1,296
Ending Balance, ARO Liability	$	16,851		$	16,495

11. New Accounting Standards

     In December 2003, the FASB issued FASB Interpretation (“FIN”) No. 46 (revised December 2003), “Consolidation of Variable Interest Entities.” This Interpretation clarifies the application of Accounting Research Bulletin (“ARB”) No. 51, “Consolidated Financial Statements” and replaces FIN No. 46, “Consolidation of Variable Interest Entities.” The Interpretation explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity to decide whether to consolidate that entity. The effective date of this Interpretation varies depending on several factors, including public status of the entity, small business issuer status, and whether the public entities currently have any interests in special-purpose entities. Century applied this Interpretation in the first quarter of 2004. The application of FIN No. 46 had no impact on the Company’s Consolidated Financial Statements.

12. Comprehensive Income and Accumulated Other Comprehensive Income (Loss)

	Six months ended
	June 30,
	2004			2003
Net income	$	23,088		$	12,588
Other comprehensive income (loss):
Net unrealized gain (loss) on financial instruments, net of tax of $5,848 and ($531), respectively		(10,442	)		869
Net amount reclassified as loss (income), net of tax of ($612) and $2,417, respectively		1,108			(4,286	)
Minimum pension liability adjustment, net of tax of $0 and 1,122		—			(1,995	)
Comprehensive income	$	13,754		$	7,176

22

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

Composition of Accumulated Other Comprehensive Loss:

	June 30,			December 31,
	2004			2003
Net unrealized loss on financial instruments, net of tax of $6,101 and $864	$	(10,925	)	$	(1,591	)
Minimum pension liability adjustment, net of tax of $2,042 and $2,042		(3,631	)		(3,631	)
Total accumulated other comprehensive loss	$	(14,556	)	$	(5,222	)

13. Earnings Per Share

     The following table provides a reconciliation of the computation of the basic and diluted earnings per share for income from continuing operations:

	Three months ended June 30,
	2004							2003
	Income			Shares		Per-Share		Income			Shares		Per-Share
Income (loss) before cumulative effect of change in accounting principle	$	18,288						$	(5,007	)
Less: Preferred stock dividends		(269	)						(500	)
Basic EPS:
Income (loss) applicable to common shareholders		18,019			29,629	$	0.61		(5,507	)		21,070	$	(0.26	)
Effect of Dilutive Securities:
Plus: Incremental Shares from assumed conversion of stock options		—			162				—			—
Plus: Incremental Shares from assumed conversion of preferred stock		269			751				—			—
Diluted EPS:
Income (loss) applicable to common shareholders with assumed conversions	$	18,288			30,542	$	0.60	$	(5,507	)		21,070	$	(0.26	)

23

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

	Six months ended June 30,
	2004							2003
	Income			Shares		Per-Share		Income			Shares		Per-Share
Income before cumulative effect of change in accounting principle	$	23,088						$	18,466
Less: Preferred stock dividends		(769	)						(1,000	)
Basic EPS:
Income applicable to common shareholders		22,319			25,412	$	0.88		17,466			21,070	$	0.83
Effect of Dilutive Securities:
Plus: Incremental shares from assumed conversion of stock options		—			176				—			—
Plus: Incremental shares from assumed conversion of preferred stock		—			—				1,000			1,395
Diluted EPS:
Income applicable to common shareholders with assumed conversions	$	22,319			25,588	$	0.87	$	18,466			22,465	$	0.82

     Options to purchase 597,593 and 712,200 shares of common stock were outstanding during the periods ended June 30, 2004 and 2003, respectively. For the three and six month periods ended June 30, 2004, incremental shares from the assumed conversion of stock options of 161,901 and 175,728 were included in the computation of diluted earnings per share based upon the average market price of the common shares during the period; for the three and six month periods ended June 30, 2003, no incremental shares were included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares during the period.

14. Preferred Stock Dividends and Conversion

     In May 2004, the Company used a portion of the proceeds from a registered equity offering that closed in April 2004 to pay preferred stock dividends of $3,269 or $6.54 per preferred stock share.

     In May 2004, Glencore exercised its option to convert its $25,000 8.0% cumulative convertible preferred stock into shares of the Company’s common stock at a price of $17.92 per common share. The Company issued 1,395,089 shares of its common stock to Glencore in the conversion.

24

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

15. Components of Net Periodic Benefit Cost

	Three months ended June 30,
	Pension Benefits						Other Benefits
	2004			2003			2004			2003
Service Cost	$	775		$	824		$	1,184		$	961
Interest Cost		1,103			927			2,131			1,746
Expected return on plan assets		(1,175	)		(851	)		—			—
Amortization of prior service cost		211			301			(84	)		(86	)
Amortization of net gain (loss)		138			205			795			380
Net Periodic benefit cost	$	1,052		$	1,406		$	4,026		$	3,001

	Six months ended June 30,
	Pension Benefits						Other Benefits
	2004			2003			2004			2003
Service Cost	$	1,678		$	1,682		$	2,302		$	1,878
Interest Cost		2,129			1,894			3,991			3,411
Expected return on plan assets		(2,376	)		(1,739	)		—			—
Amortization of prior service cost		421			615			(168	)		(168	)
Amortization of net gain (loss)		163			419			1,233			743
Net Periodic benefit cost	$	2,015		$	2,871		$	7,358		$	5,864

Employer Contributions

     The Company previously disclosed in its financial statements for the year ended December 31, 2003, that it expects to contribute $3,300 to its pension plans in 2004. As of June 30, 2004, contributions of $1,755 have been made.

16. Restricted Cash

     The Company had $8,500 in restricted cash set aside for Nordural debt service reserves.

25

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

17. Condensed Consolidating Financial Information

     The Company’s 11¾% Senior Secured First Mortgage Notes due 2008 are jointly and severally and fully and unconditionally guaranteed by all of the Company’s material wholly owned direct and indirect domestic subsidiaries other than the LLC and certain subsidiaries formed in connection with the Nordural acquisition (the “Guarantor Subsidiaries”). Nordural hf and the LLC will not guarantee the Notes (collectively, the “Non-Guarantor Subsidiaries”). The Company’s policy for financial reporting purposes is to allocate expenses to subsidiaries. For the three months ended June 30, 2004 and June 30, 2003, the Company allocated total corporate expenses of $1,143 and $359 to its subsidiaries, respectively. For the six months ended June 30, 2004 and June 30, 2003, the Company allocated total corporate expenses of $56 and $2,590 to its subsidiaries, respectively. Additionally, the Company charges interest on certain intercompany balances.

     Because certain Non-Guarantor Subsidiaries are not “minor” as defined in Rule 3-10(f) of Regulation S-X under the Securities Exchange Act of 1934, as amended, the Company is providing the condensed consolidating financial information required under Rule 3-10(f). See Note 6 to the Consolidated Financial Statements for information about the terms of the Notes.

     The following summarized condensed consolidating balance sheets as of June 30, 2004 and December 31, 2003, condensed consolidating statements of operations for the three and six months ended June 30, 2004 and June 30, 2003 and the condensed consolidating statements of cash flows for the six months ended June 30, 2004 and June 30, 2003 present separate results for Century Aluminum Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries.

     This summarized condensed consolidating financial information may not necessarily be indicative of the results of operations or financial position had the Company, the Guarantor Subsidiaries or the Non-Guarantor Subsidiaries operated as independent entities.

26

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET
As of June 30, 2004

	Combined			Combined
	Guarantor			Non-Guarantor			The			Reclassifications
	Subsidiaries			Subsidiaries			Company			and Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	397		$	14,323		$	60,449		$	—		$	75,169
Restricted cash		—			8,500			—			—			8,500
Accounts receivables, net		59,039			9,360			—			—			68,399
Due from affiliates		118,800			16,173			563,306			(686,263	)		12,016
Inventories		68,958			35,363			—			—			104,321
Prepaid and other current assets		1,616			2,547			5,485			—			9,648
Deferred taxes — current portion		6,133			—			—			—			6,133
Total current assets		254,943			86,266			629,240			(686,263	)		284,186
Investment in subsidiaries		72,556			—			258,648			(331,204	)		—
Property, plant and equipment, net		475,625			267,856			133			—			743,614
Intangible asset — net		—			92,972			—			—			92,972
Goodwill		—			107,259			—			—			107,259
Other assets		15,740			—			16,762			—			32,502
Total assets	$	818,864		$	554,353		$	904,783		$	(1,017,467	)	$	1,260,533
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable, trade	$	12,285		$	31,298		$	—		$	—		$	43,583
Due to affiliates		21,871			40			134,643			(123,897	)		32,657
Industrial revenue bonds		7,815			—			—			—			7,815
Accrued and other current liabilities		14,342			9,049			23,010			—			46,401
Current portion of long-term debt		—			13,460			—			—			13,460
Accrued employee benefits costs – current portion		6,461			1,800			—			—			8,296
Total current liabilities		62,809			55,647			157,653			(123,897	)		152,212
Senior secured notes payable – net		—			—			322,561			—			322,561
Nordural long-term debt		—			170,472			—			—			170,472
Accrued pension benefits costs – less current portion		—			—			11,584			—			11,584
Accrued postretirement benefits costs – less current portion		55,830			26,694			887			—			83,411
Other liabilities/intercompany loan		450,477			147,020			—			(562,297	)		35,200
Due to affiliates – less current portion		7,107			—			—			—			7,107
Deferred taxes – less current portion		53,153			12,804			2,422			(69	)		68,310
Total non-current liabilities		566,567			356,990			337,454			(562,366	)		698,645
Shareholders’ Equity:
Convertible preferred stock		—			—			—			—			—
Common stock		59			13			317			(72	)		317
Additional paid-in capital		188,424			199,586			409,568			(388,010	)		409,568
Accumulated other comprehensive income (loss)		(13,917	)		—			(14,556	)		13,917			(14,556	)
Retained earnings (deficit)		14,922			(57,883	)		14,347			42,961			14,347
Total shareholders’ equity		189,488			141,716			409,676			(331,204	)		409,676
Total liabilities and equity	$	818,864		$	554,353		$	904,783		$	(1,017,467	)	$	1,260,533

27

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

CONDENSED CONSOLIDATING BALANCE SHEET
As of December 31, 2003

	Combined									Reclassifications
	Guarantor			Non-Guarantor			The			and
	Subsidiaries			Subsidiary			Company			Eliminations			Consolidated
ASSETS
Current Assets:
Cash and cash equivalents	$	104		$	—		$	28,100		$	—		$	28,204
Accounts receivable – net		51,131			239			—			—			51,370
Due from affiliates		101,489			23,586			455,025			(569,143	)		10,957
Inventories		76,878			12,482			—			—			89,360
Prepaid and other assets		4,263			134			3,117			—			7,514
Total current assets		233,865			36,441			486,242			(569,143	)		187,405
Investment in subsidiaries		78,720			—			178,483			(257,203	)		—
Property, plant and equipment – net		489,502			5,299			156			—			494,957
Intangible asset – net		—			99,136			—			—			99,136
Other assets		14,877			—			13,951			—			28,828
Total	$	816,964		$	140,876		$	678,832		$	(826,346	)	$	810,326
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable, trade	$	13,137		$	21,692		$	—		$	—		$	34,829
Due to affiliates		25,392			525			116,538			(115,316	)		27,139
Industrial revenue bonds		7,815			—			—			—			7,815
Accrued and other current liabilities		8,929			5,740			15,485			—			30,154
Accrued employee benefits costs — current portion		7,306			1,628			—			—			8,934
Total current liabilities		62,579			29,585			132,023			(115,316	)		108,871
Long term debt – net		—			—			322,310			—			322,310
Notes payable – affiliates		—			—			14,000			—			14,000
Accrued pension benefit costs — less current portion		—			—			10,764			—			10,764
Accrued postretirement benefit costs — less current portion		53,234			24,334			650			—			78,218
Other liabilities/intercompany loan		478,892			8,237			—			(453,757	)		33,372
Deferred taxes		43,776			—			11,388			(70	)		55,094
Total noncurrent liabilities		575,902			32,571			359,112			(453,827	)		513,758
Shareholders’ Equity:
Convertible preferred stock		—			—			25,000			—			25,000
Common stock		59			—			211			(59	)		211
Additional paid-in capital		188,424			133,175			173,138			(321,599	)		173,138
Accumulated other comprehensive income (loss)		(4,582	)		—			(5,222	)		4,582			(5,222	)
Retained earnings (deficit)		(5,418	)		(54,455	)		(5,430	)		59,873			(5,430	)
Total shareholders’ equity		178,783			78,720			187,697			(257,203	)		187,697
Total	$	816,964		$	140,876		$	678,832		$	(826,346	)	$	810,326

28

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three Months Ended June 30, 2004

	Combined			Combined					Reclassifications
	Guarantor			Non-Guarantor			The		and
	Subsidiaries			Subsidiaries			Company		Eliminations			Consolidated
Net sales:
Third-party customers	$	203,947		$	21,483		$	—	$	—		$	225,430
Related parties		38,303			—			—		—			38,303
		242,250			21,483			—		—			263,733
Cost of goods sold		200,935			100,096			—		(82,489	)		218,542
Reimbursement from owner		—			(82,529	)		—		82,529			—
Gross profit (loss)		41,315			3,916			—		(40	)		45,191
Selling, general and administrative expenses		3,991			—			—		—			3,991
Operating income (loss)		37,324			3,916			—		(40	)		41,200
Interest expense – third party		(8,578	)		(2,896	)		—		—			(11,474	)
Interest expense – related party		(51	)		—			—		—			(51	)
Interest income		195			22			—		27			244
Net loss on forward contracts		(1,177	)		—			—		—			(1,177	)
Other income (expense), net		(61	)		59			—		11			9
Income (loss) before taxes, minority interest and cumulative effect of change in accounting principle		27,652			1,101			—		(2	)		28,751
Income tax (expense) benefit		(10,190	)		(1,444	)		—		1,171			(10,463	)
Net income (loss) before equity earnings (loss) of subsidiaries		17,462			(343	)		—		1,169			18,288
Equity earnings (loss) of subsidiaries		(1,910	)		—			18,288		(16,378	)		—
Net income (loss)	$	15,552		$	(343	)	$	18,288	$	(15,209	)	$	18,288

29

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Three months Ended June 30, 2003

	Combined			Combined						Reclassifications
	Guarantor			Non-Guarantor			The			and
	Subsidiaries			Subsidiary			Company			Eliminations			Consolidated
Net sales:
Third-party customers	$	163,746		$	—		$	—		$	—		$	163,746
Related parties		32,421			—			—			—			32,421
		196,167			—			—			—			196,167
Cost of goods sold		183,810			87,171			—			(82,590	)		188,391
Reimbursement from owners		—			(82,624	)		—			82,624			—
Gross profit (loss)		12,357			(4,547	)		—			(34	)		7,776
Selling, general and administrative expenses		4,086			—			—			—			4,086
Operating income (loss)		8,271			(4,547	)		—			(34	)		3,690
Interest expense – third party		(10,324	)		(34	)		—			28			(10,330	)
Interest expense – related party		(1,000	)		—			—			—			(1,000	)
Interest income		45			—			—			—			45
Net gain on forward contracts		211			—			—			—			211
Other income (expense), net		(774	)		(2	)		—			6			(770	)
Loss before taxes		(3,571	)		(4,583	)		—			—			(8,154	)
Income tax benefit		1,405			—			—			1,742			3,147
Net income (loss) before equity earnings (loss) of subsidiaries		(2,166	)		(4,583	)		—			1,742			(5,007	)
Equity earnings (loss) of subsidiaries		(2,841	)		—			(5,007	)		7,848			—
Net income (loss)	$	(5,007	)	$	(4,583	)	$	(5,007	)	$	9,590		$	(5,007	)

30

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Six months Ended June 30, 2004

	Combined			Combined					Reclassifications
	Guarantor			Non-Guarantor			The		and
	Subsidiaries			Subsidiaries			Company		Eliminations			Consolidated
Net sales:
Third-party customers	$	396,293		$	21,483		$	—	$	—		$	417,776
Related parties		78,051			—			—		—			78,051
		474,344			21,483			—		—			495,827
Cost of goods sold		392,898			183,780			—		(163,091	)		413,587
Reimbursement from owners		—			(163,165	)		—		163,165			—
Gross profit (loss)		81,446			868			—		(74	)		82,240
Selling, general and administrative expenses		9,399			—			—		—			9,399
Operating income (loss)		72,047			868			—		(74	)		72,841
Interest expense - third party		(18,921	)		(2,928	)		—		—			(21,849	)
Interest expense - related party		(380	)		—			—		—			(380	)
Interest income		267			22			—		52			341
Net loss on forward contracts		(13,997	)		—			—		—			(13,997	)
Other income (expense), net		(682	)		57			—		20			(605	)
Income (loss) before taxes		38,334			(1,981	)		—		(2	)		36,351
Income tax (expense) benefit		(14,161	)		(1,444	)		—		2,342			(13,263	)
Equity earnings (loss) of subsidiaries		(3,821	)		—			23,088		(19,267	)		—
Net income (loss)	$	20,352		$	(3,425	)	$	23,088	$	(16,927	)	$	23,088

31

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the Six months Ended June 30, 2003

	Combined			Combined					Reclassifications
	Guarantor			Non-Guarantor			The		and
	Subsidiaries			Subsidiary			Company		Eliminations			Consolidated
Net sales:
Third-party customers	$	317,201		$	—		$	—	$	—		$	317,201
Related parties		57,975			—			—		—			57,975
		375,176			—			—		—			375,176
Cost of goods sold		350,198			166,972			—		(157,476	)		359,694
Reimbursement from owners		—			(157,537	)		—		157,537			—
Gross profit (loss)		24,978			(9,435	)		—		(61	)		15,482
Selling, general and administrative expenses		8,221			—			—		—			8,221
Operating income (loss)		16,757			(9,435	)		—		(61	)		7,261
Interest expense - third party		(20,548	)		(61	)		—		55			(20,554	)
Interest expense – related party		(1,000	)		—			—		—			(1,000	)
Interest income		196			—			—		—			196
Net gain on forward contracts		41,904			—			—		—			41,904
Other income (expense), net		(490	)		(16	)		—		6			(500	)
Income (loss) before taxes		36,819			(9,512	)		—		—			27,307
Income tax (expense) benefit		(13,067	)		—			—		3,240			(9,827	)
Net income (loss) before minority interest and cumulative effect of change in accounting principle		23,752			(9,512	)		—		3,240			17,480
Minority interest		—			—			—		986			986
Net income (loss) before cumulative effect of change in accounting principle		23,752			(9,512	)		—		4,226			18,466
Cumulative effect of change in accounting principle, net of $3,430 in tax		(5,878	)		—			—		—			(5,878	)
Equity earnings (loss) of subsidiaries		(5,286	)		—			12,588		(7,302	)		—
Net income (loss)	$	12,588		$	(9,512	)	$	12,588	$	(3,076	)	$	12,588

32

CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 2004

	Combined			Combined
	Guarantor			Non-Guarantor			The			Reclassifications
	Subsidiaries			Subsidiaries			Company			and Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	55,058		$	(3,447	)	$	—		$	—	$	51,611
Investing activities:
Purchase of property, plant and equipment, net		(3,618	)		(2,094	)		—			—		(5,712	)
Acquisitions, net of cash acquired		—			—			(184,869	)		—		(184,869	)
Net cash used in investing activities		(3,618	)		(2,094	)		(184,869	)		—		(190,581	)
Financing activities:
Repayment of debt		—			(6,659	)		(14,000	)		—		(20,659	)
Dividends		—			—			(3,311	)		—		(3,311	)
Intercompany transactions		(51,146	)		26,522			24,624			—		—
Issuance of common stock		—			—			209,905			—		209,905
Net cash provided by (used in) financing activities		(51,146	)		19,864			217,218			—		185,935
Net increase in cash		293			14,323			32,349			—		46,965
Cash, beginning of period		104			—			28,100			—		28,204
Cash, end of period	$	397		$	14,323		$	60,449		$	—	$	75,169

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 2003

	Combined			Combined
	Guarantor			Non-Guarantor			The			Reclassifications
	Subsidiaries			Subsidiary			Company			and Eliminations		Consolidated
Net cash provided by operating activities	$	47,283		$	2,445		$	—		$	—	$	49,728
Investing activities:
Purchase of property, plant and equipment, net		(9,748	)		(421	)		(131	)		—		(10,300	)
Acquisition of minority interest					—			(59,837	)				(59,837	)
Net cash used in investing activities		(9,748	)		(421	)		(59,968	)		—		(70,137	)
Financing activities:
Financing Fees		—			—			(297	)		—		(297	)
Dividends		—			—			(11	)		—		(11	)
Intercompany transactions		(38,280	)		(2,005	)		40,285			—		—
Net cash provided by (used in) financing activities		(38,280	)		(2,005	)		39,977			—		(308	)
Net increase (decrease) in cash		(745	)		19			(19,991	)		—		(20,717	)
Cash, beginning of period		745			—			44,347			—		45,092
Cash, end of period	$	—		$	19		$	24,356		$	—	$	24,375

18. Equity Offering

     In April 2004, the Company completed a public equity offering of 9,000,000 shares of its common stock at a price to the public of $24.50 per share. The Company received $209,905 in net proceeds from the offering. The Company used: (1) $195,346 to fund the Nordural acquisition, including $2,652 in transaction fees and expenses; (2) $12,000 to repay the remaining principal outstanding under the Glencore Note; and (3) the remaining proceeds plus available cash to pay dividends of $3,269 on the Company’s cumulative convertible preferred stock.

19. Subsequent Events

  Issuance of Convertible Senior Notes

     On July 30, 2004, the Company placed a private offering of $175,000 aggregate principal amount of 1.75% convertible senior notes due August 1, 2024 (“Convertible Notes”) to certain qualified institutional buyers. In connection with this offering, the Company granted the initial purchasers of the Convertible Notes a 45-day option to purchase up to an additional $25,000 of Convertible Notes, which was exercised. The sale of the Convertible Notes is expected to close on August 9, 2004.

     The Convertible Notes will be convertible at any time at an initial conversion rate of 32.7430 shares of Century common stock per one thousand dollars of principal amount of Convertible Notes, subject to adjustments for certain events. The initial conversion rate is equivalent to

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

a conversion price of approximately $30.5409 per share of Century common stock. Upon conversion of a Convertible Note, the holder of such Convertible Notes will receive cash equal to the principal amount of the Convertible Notes and, at Century’s election, either cash, Century common stock, or a combination thereof, for the Convertible Notes’ conversion value in excess of such principal amount, if any. In addition, the Convertible Notes will be redeemable at Century’s option beginning on August 6, 2009, and the holders may require Century to repurchase all or part of their Convertible Notes for cash on each of August 1, 2011, August 1, 2014 and August 1, 2019. Due to the current convertibility of the Convertible Notes, the Company will classify the Convertible Notes as short-term debt on its balance sheet.

     The Convertible Notes are senior unsecured obligations of Century. Century intends to use the net proceeds from the sale of the Convertible Notes, together with proceeds from a future private placement of senior unsecured notes, to repurchase any or all of its outstanding 11 3/4% senior secured first mortgage notes (“First Mortgage Notes”) pursuant to a previously announced tender offer and consent solicitation and for general corporate purposes, including to fund a portion of the costs of the ongoing expansion of the Company’s Nordural facility and to redeem or repurchase any untendered First Mortgage Notes. The sale of the Convertible Notes was not conditioned upon Century’s completion of the tender offer and consent solicitation.

  Tender Offer for Senior Secured Mortgage Notes

     As discussed in Note 6, the Company announced that it had commenced a cash tender offer for any and all of its outstanding First Mortgage Notes. The Company is also soliciting consents to proposed amendments to the indenture governing the First Mortgage Notes that would eliminate substantially all of the restrictive covenants and certain default provisions in the indenture. The tender offer will expire on August 26, 2004, unless extended or terminated (the “Expiration Date”).

     The tender offer and consent solicitation are being made solely pursuant to an Offer to Purchase and Consent Solicitation Statement, dated July 29, 2004, and related Letter of Transmittal, which include a more comprehensive description of the terms and conditions thereof.

     The principal purpose of the tender offer and consent solicitation is to refinance Century’s outstanding First Mortgage Notes with debt bearing a lower interest rate, thereby reducing the Company’s annual interest expense. The Company intends to fund the tender offer and any expenses incurred in connection therewith with proceeds from a planned private placements of new debt. The tender offer and consent solicitation are being made in conjunction with, and are conditioned upon, the consummation of such private placements. The tender offer is also conditioned upon the receipt of consent from the holders of at least a majority of the outstanding principal amount of such First Mortgage Notes to amend the indenture governing the First Mortgage Notes and certain general conditions.

     Under the terms of the tender offer, the purchase price for each one thousand dollars principal amount of First Mortgage Notes validly tendered and accepted for purchase by Century will be determined on August 12, 2004 based on the present value of the First Mortgage Notes as of the payment date, calculated in accordance with standard market practice, assuming each $1 principal amount of the First Mortgage Notes would be paid at a price of $1.05875 on April 15, 2005, the earliest redemption date of the First Mortgage Notes, discounted at a rate equal to 50 basis points over the yield on the 1.625% U.S.

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CENTURY ALUMINUM COMPANY
Notes to Consolidated Financial Statements
Six Month Periods Ended June 30, 2004 and 2003
(Dollars in Thousands)
(Unaudited)

Treasury Note due April 30, 2005, minus a consent payment of $0.02 per $1 of principal amount of First Mortgage Notes. Holders who tendered their First Mortgage Notes by August 6, 2004, unless extended (the “Consent Date”) were entitled to receive the consent payment. Holders who tender their First Mortgage Notes after the Consent Date will not receive the consent payment. Through August 6, 2004, the Company had received consents from holders of more than 96% of its outstanding First Mortgage Notes. The settlement date is currently expected to be August 27, 2004. Holders who properly tender also will be paid accrued and unpaid interest, up to, but not including, the settlement date.

     Holders who desire to tender their First Mortgage Notes must consent to the proposed amendments and may not deliver a consent without tendering their First Mortgage Notes. Any First Mortgage Notes tendered before the Consent Date may be withdrawn at any time on or prior to the Consent Date, but not thereafter, except as may be required by law. Any Notes tendered after the Consent Date may not be withdrawn, except as may be required by law.

     The securities that may be offered in connection with Century’s refinancing plan described above will be offered pursuant to an exemption from registration under the Securities Act of 1933. Such securities will not be registered under the Securities Act and, accordingly, may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration requirements.

  Private Placement of Senior Unsecured Notes

     On August 3, 2004, the Company announced that it intends to sell, subject to market and other conditions, $250,000 of its senior notes due 2014 (“Senior Notes”) through a private placement exempt from the registration requirements of the Securities Act. The Senior Notes will be senior unsecured obligations of Century.

     The Company intends to use the net proceeds from the sale of the Senior Notes, together with proceeds from a private placement of $175,000 of its Convertible Notes, to purchase up to 100% of its outstanding $325,000 aggregate principal amount First Mortgage Notes that may be tendered pursuant to its tender offer and consent solicitation. The proceeds also will be used for general corporate purposes, including to fund a portion of the costs related to the ongoing expansion of the Company’s Nordural facility and to repurchase or redeem any untendered First Mortgage Notes. The sale of the Senior Notes will be conditioned upon Century’s completion of the tender offer and consent solicitation.

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FORWARD-LOOKING STATEMENTS – CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES REFORM ACT OF 1995.

     This Quarterly Report on Form 10-Q contains forward-looking statements. The Company has based these forward-looking statements on current expectations and projections about future events. Many of these statements may be identified by the use of forward-looking words such as “expects,” “anticipates,” “plans,” “believes,” “projects,” “estimates,” “should,” and “potential” and variations of such words. All of these forward-looking statements are based on estimates and assumptions made by management that, although believed to be reasonable, are inherently uncertain. There can be no assurance that any of such estimates or statements will be realized and actual results may differ materially from those contemplated by such forward looking statements. Factors that may cause such differences include:

• The Company’s high level of indebtedness reduces cash available for other purposes and limits the Company’s ability to incur additional debt and pursue its growth strategy;

• The cyclical nature of the aluminum industry causes variability in the Company’s earnings and cash flows;

• The loss of a major customer would increase the Company’s production costs at those facilities which deliver molten aluminum;

• The Company could suffer losses due to a temporary or prolonged interruption of the supply of electrical power to its facilities, which can be caused by unusually high demand, blackouts, equipment failure, natural disasters or other catastrophic events;

• Due to increasing prices for alumina, the principal raw material used in primary aluminum production, changes to or disruptions in the Company’s current alumina supply arrangements would materially impact its raw material costs;

• By expanding its geographic presence and diversifying its operations through the acquisition of bauxite mining and alumina refining assets, the Company is exposed to new risks that could adversely affect its business;

• Changes in the relative cost of certain raw materials and energy compared to the price of primary aluminum could affect the Company’s margins;

• Most of the Company’s employees are unionized and any labor dispute or failure to successfully renegotiate an existing labor agreement could materially impair the Company’s ability to conduct its production operations at its unionized facilities;

• The Company is subject to a variety of environmental laws that could result in costs or liabilities; and

• The Company may not realize the expected benefits of its growth strategy if the Company is unable to successfully integrate the businesses it acquires.

     Although the Company believes the expectations reflected in its forward-looking statements are reasonable, the Company cannot guarantee its future performance or results of operations and

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the risks described above should be considered when reading any forward-looking statements. All forward-looking statements in this filing are based on information available to the Company on the date of this filing; however, the Company is not obligated to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The Company qualifies all of its forward-looking statements by these cautionary statements.

     Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

     The following discussion reflects Century’s historical results of operations, which do not include results for the Company’s interest in the Nordural facility until it was acquired in April 2004 and the additional 20% interest in the Hawesville facility until it was acquired from Glencore in April 2003.

     Century’s financial highlights include:

	Three months ended					Six months ended
	June 30,					June 30,
	2004		2003			2004		2003
	(In thousands, except per share data)
Net sales
Third-party customers	$	225,430	$	163,746		$	417,776	$	317,201
Related party customers		38,303		32,421			78,051		57,975
Total	$	263,733	$	196,167		$	495,827	$	375,176
Net income (loss)	$	18,288	$	(5,007	)	$	23,088	$	12,588
Net income (loss) applicable to common shareholders	$	18,019	$	(5,507	)	$	22,319	$	11,588
Earnings per common share:
Basic – Income (loss) before cumulative effect of change in accounting principle	$	0.61	$	(0.26	)	$	0.88	$	0.83
Basic — Cumulative effect of change in accounting principle		—		—			—	$	(0.28	)
Basic — Net income (loss)	$	0.61	$	(0.26	)	$	0.88	$	0.55
Diluted – Income (loss) before cumulative effect of change in accounting principle	$	0.60	$	(0.26	)	$	0.87	$	0.82
Diluted — Cumulative effect of change in accounting principle		—		—			—	$	(0.26	)
Diluted — Net income (loss)	$	0.60	$	(0.26	)	$	0.87	$	0.56

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     Net sales. Net sales for the three months ended June 30, 2004 increased $67.6 million or 34% to $263.7 million. Higher price realizations for primary aluminum in the second quarter 2004, due to an improved LME price and Midwest premium for primary aluminum, contributed an additional $42.8 million in sales. Tolling revenues from the 100% interest in the Nordural facility beginning in late April 2004 accounted for $21.5 million of the increase with increased direct shipment volume of 4.8 million pounds contributing the remaining $3.3 million of the increase. Net sales for the six months ended June 30, 2004 increased $120.7 million or 32% to $495.8 million. Higher price realizations for primary aluminum in the current period, due to an improved LME price and Midwest premium for primary aluminum, contributed an additional $68.7 million in sales. Direct shipment volume increased 44.5 million pounds, primarily associated with the additional 20% interest in the Hawesville facility beginning in April 2003, which accounted for $30.5 million of the increase with tolling revenues from the 100% interest in the Nordural facility beginning in late April 2004 contributing the remaining $21.5 million of the increase.

     Gross profit. Gross profit for the three months ended June 30, 2004 increased $37.4 million or 481% to $45.2 million from $7.8 million for the same period in 2003. Improved price realizations net of increased alumina costs improved gross profit by $33.1 million with the 100% interest in the Nordural facility contributing $7.0 million in additional gross profit. Lower depreciation and amortization charges of $1.8 million, primarily related to the intangible asset, (see Item I, Notes to the Consolidated Financial Statements, Note 5 – Intangible Asset), were offset by increased operating costs associated with raw material quality, $2.8 million; adjustments to pension and other post retirement benefit valuations of $0.7 million; volume and mix impact, $0.7 million and the elimination of credits to cost of goods sold for lower-of-cost or market inventory adjustments, $0.3 million.

     For the six month period ended June 30, 2004, gross profit improved $66.8 million to $82.2 million. Improved price realizations net of increased alumina costs improved gross profit by $51.6 million with the 100% interest in the Nordural facility contributing $7.0 million in additional gross profit in the current period. Increased direct shipments of 44.5 million pounds, primarily from the additional 20% interest in the Hawesville facility beginning in April 2003, improved gross profit by $3.4 million. Lower depreciation and amortization charges of $3.2 million, primarily related to the intangible asset, (see Item I, Notes to the Consolidated Financial Statements, Note 5 – Intangible Asset), increased credits to cost of goods sold for lower-of-cost or market of $1.9 million, and other cost improvements of $0.4 million were offset by adjustments to pension and other post retirement benefit valuations of $0.7 million.

     Selling, general and administrative expenses. Selling, general and administrative expenses for the three months ended June 30, 2004 decreased $0.1 million to $4.0 million. The allowance for bad debts was reduced by $0.6 million in the second quarter 2004, reflecting a settlement of a claim. This reduction was offset by increased expenses and incentive compensation accruals in the quarter.

     Selling, general and administrative expenses for the six months ended June 30, 2004 increased $1.2 million from the same period in 2003. The increase was primarily a result of incentive compensation expense accruals in the current period.

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     Net gain/loss on forward contracts. Net loss on forward contracts for the three months ended June 30, 2004 was $1.2 million as compared to a net gain on forward contracts of $0.2 million for the same period in 2003. For the six month period ended June 30, 2004, net loss on forward contracts was $14.0 million as compared to a net gain on forward contracts of $41.9 million for the same period in 2003. The loss and gain reported for the three and six month periods ended June 30, 2004 and June 30, 2003, respectively, primarily relate to the early termination of a fixed price forward sales contract with Glencore (see Item I, Notes to the Consolidated Financial Statements, Note 8 – Forward Delivery Contracts and Financial Instruments).

     Tax provision. Income tax expense for the three months ended June 30, 2004 increased $13.6 million from the same period in 2003 and the income tax expense for the six month period ended June 30, 2004 increased $3.4 million due to the changes in income before income taxes discussed above.

Liquidity and Capital Resources

     The Company’s principal sources of liquidity are cash flow from operations, available borrowings under its revolving credit facility, and a term loan facility in Iceland. The Company’s principal uses of cash are operating costs, payments of interest on the Company’s outstanding debt, the funding of capital expenditures and investments in related businesses, working capital and other general corporate requirements.

     Debt Service

     As of June 30, 2004, the Company had $514.3 million of indebtedness outstanding, including $322.6 million of principal under the Senior Secured First Mortgage Notes, net of unamortized issuance discount, the $171.4 million senior loan facility at Nordural, and $7.8 million in industrial revenue bonds which were assumed in connection with the Hawesville acquisition. On April 23, 2004, Standard & Poor’s Ratings Service revised its outlook on Century Aluminum Company from negative to stable, and affirmed its BB- corporate credit, senior secured bank loan and senior secured notes ratings.

     Notes. Interest payments on the 11¾% Senior Secured First Mortgage Notes (“Notes”) are payable semiannually in arrears beginning on October 15, 2001. Payment obligations under the Notes are unconditionally guaranteed by the Company’s material domestic subsidiaries (other than the LLC and certain subsidiaries formed in connection with the Nordural acquisition) and secured by mortgages and security interests in 80% of the real property, plant and equipment comprising the Hawesville facility and 100% of the same comprising the Ravenswood facility. The Notes will mature in 2008. The indenture governing the Notes contains customary covenants, including limitations on the Company’s ability to pay dividends, incur debt, make investments, sell assets or stock of certain subsidiaries, and purchase or redeem capital stock.

     On July 29, 2004, the Company announced that it has commenced a cash tender offer for any and all of its outstanding Notes. The Company is also soliciting consent to proposed amendments to the indenture governing the Notes that would eliminate substantially all of the restrictive covenants and certain default provisions in the indenture. The tender offer will expire on August 26, 2004, unless extended or terminated (the “Expiration Date”).

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     The tender offer and consent solicitation are being made solely pursuant to an Offer to Purchase and Consent Solicitation Statement, dated July 29, 2004, and related Letter of Transmittal, which include a more comprehensive description of the terms and conditions thereof.

     The principal purpose of the tender offer and consent solicitation is to refinance Century’s outstanding Notes with debt bearing a lower interest rate, thereby reducing the Company’s annual interest expense. The Company intends to fund the tender offer and consent solicitation and any expenses incurred in connection therewith with proceeds from planned private placements of new debt. The tender offer and consent solicitation are being made in conjunction with, and are conditioned upon, the consummation of such private placements. The tender offer is also conditioned upon the receipt of consent from the holders of at least a majority of the outstanding principal amount of such Notes to amend the indenture governing the Notes and certain general conditions.

     Under the terms of the tender offer, the purchase price for each $1,000 principal amount of Notes validly tendered and accepted for purchase by Century will be determined on August 12, 2004 based on the present value of the Notes as of the payment date, calculated in accordance with standard market practice, assuming each $1,000 principal amount of the Notes would be paid at a price of $1,058.75 on April 15, 2005, the earliest redemption date of the Notes, discounted at a rate equal to 50 basis points over the yield on the 1.625% U.S. Treasury Note due April 30, 2005, minus a consent payment of $20.00 per $1,000 of principal amount of Notes. Holders who tender their Notes by August 6, 2004, unless extended (the “Consent Date”) will be entitled to receive the consent payment. Holders who tender their Notes after the Consent Date will not receive the consent payment. The settlement date is currently expected to be August 27, 2004. Holders who properly tender also will be paid accrued and unpaid interest, up to, but not including, the settlement date.

     Holders who desire to tender their Notes must consent to the proposed amendments and may not deliver a consent without tendering their Notes. Any Notes tendered before the Consent Date may be withdrawn at any time on or prior to the Consent Date, but not thereafter, except as may be required by law. Any Notes tendered after the Consent Date may not be withdrawn, except as may be required by law. Through August 6, 2004, the Company had received consents from holders of more than 96% of its outstanding Notes.

     The securities that may be offered in connection with Century’s refinancing plan described above will be offered pursuant to an exemption from registration under the Securities Act of 1933. Such securities will not be registered under the Securities Act and, accordingly, may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration requirements.

     Revolving Credit Facility. Effective April 1, 2001, the Company entered into a $100.0 million senior secured revolving credit facility (the “Revolving Credit Facility”) with a syndicate of banks. The Revolving Credit Facility will mature on April 2, 2006. The Company’s obligations under the Revolving Credit Facility are unconditionally guaranteed by its domestic subsidiaries (other than the LLC and certain subsidiaries formed in connection with the Nordural acquisition) and secured by a first priority security interest in all accounts receivable and inventory belonging to the

41

Company and its subsidiary borrowers. The availability of funds under the revolving credit facility is subject to a $30.0 million reserve and limited by a specified borrowing base consisting of certain eligible accounts receivable and inventory. Borrowings under the revolving credit facility are, at the Company’s option, at the LIBOR rate or the Fleet National Bank base rate plus, in each case, an applicable interest margin. The applicable interest margin ranges from 2.25% to 3.0% over the LIBOR rate and 0.75% to 1.5% over the base rate and is determined by certain financial measurements of the Company. There were no outstanding borrowings under the Revolving Credit Facility as of June 30, 2004 and December 31, 2003. Interest periods for LIBOR rate borrowings are one, two, three or six months, at the Company’s option. The Company measures its borrowing base at month-end. At June 30, 2004, the Company had borrowing availability of $75.6 million under the Revolving Credit Facility. The Company is subject to customary covenants, including limitations on capital expenditures, additional indebtedness, liens, guarantees, mergers and acquisitions, dividends, distributions, capital redemptions and investments.

     Glencore Note Payable. In connection with the acquisition of the remaining 20% interest in the Hawesville facility, the Company entered into a six-year $40.0 million promissory note payable to Glencore. In April 2004, the Company repaid the remaining $14.0 million of outstanding principal under the Glencore Note, which consisted of a $2.0 million required principal payment and an optional $12.0 million prepayment of principal.

     Industrial Revenue Bonds. As part of the purchase price for the Hawesville acquisition, the Company assumed industrial revenue bonds (the “IRBs”) in the aggregate principal amount of $7.8 million which were issued in connection with the financing of certain solid waste disposal facilities constructed at the Hawesville Facility. From April 1, 2001 through April 1, 2003, Glencore assumed 20% of the liability related to the IRBs consistent with its ownership interest in the Hawesville facility during that period. The IRBs mature on April 1, 2028, and bear interest at a variable rate not to exceed 12% per annum determined weekly based upon prevailing rates for similar bonds in the industrial revenue bond market. Interest on the IRBs is paid quarterly. At June 30, 2004, the interest rate on the industrial IRBs was 1.38%. The IRBs are classified as current liabilities because they are remarketed weekly and, under the indenture governing the IRBs, repayment upon demand could be required if there is a failed remarketing.

     The IRBs are secured by a Glencore guaranteed letter of credit. The Company has agreed to reimburse Glencore for all costs arising from the letter of credit and has secured the reimbursement obligation with a first priority security interest in the 20% interest in the Hawesville facility it purchased from Glencore in April 2003. Century’s maximum potential amount of future payments under the reimbursement obligation for the Glencore letter of credit securing the IRBs would be approximately $8.2 million.

     Nordural Debt. As of June 30, 2004, Nordural had approximately $183.9 million of debt, principally consisting of debt that was originally incurred in connection with the construction of the Nordural facility in 1998 and an expansion completed in June 2001. On September 2, 2003, Nordural entered into a $185.0 million senior term loan facility with a syndicate of banks. A substantial portion of the proceeds from the loan was used to repay indebtedness outstanding under an existing $167.2 million senior facility agreement. At June 30, 2004, the balance of the

42

loan facility was $171.4 million. Amounts borrowed under Nordural’s loan facility generally bear interest at the applicable LIBOR rate plus an initial margin of 1.45% per year, which increases to 1.55% per year in January 2010 and 1.65% in January 2014, plus an applicable percentage to cover certain lender compliance costs.

     Nordural’s obligations have been secured under the loan facility by a pledge of all of Nordural shares pursuant to a share pledge agreement with the lenders. In addition, all of Nordural’s assets have been pledged as security under the loan facility. Amounts outstanding under the loan facility are payable semiannually in installments through June 30, 2018. The amount of each installment is based on a scheduled rate that fluctuates between 2.74% and 3.88% of outstanding principal semi-annually. Nordural may voluntarily prepay all or part of the loan under the facility without penalty provided it gives five business days’ notice, subject to a minimum payment threshold. The agreement provides for mandatory prepayment upon the receipt of proceeds from certain asset sales, events impairing the value of assets and insurance recoveries. If the price of aluminum falls below designated levels for six months prior to a payment date and certain debt coverage ratios are not met, the loan facility provides for deferral of principal payments. Principal payments are increased if certain debt coverage ratios are exceeded.

     Nordural’s loan facility contains customary covenants, including limitations on additional indebtedness, security interests, investments, asset sales, loans, guarantees, capital expenditures, mergers and acquisitions, amendments to various agreements used in the operation of the Nordural facility, hedging agreements, distributions and share capital redemptions. Nordural is also subject to various financial covenants, including minimum debt service coverage, loan life coverage and net worth covenants. The loan facility contains customary events of default, including nonpayment, misrepresentation, breach of a covenant, insolvency and default of other indebtedness. If an event of default were to occur, the various banks under the loan facility would have the right to cancel all commitments and demand repayment of the loan facility.

     Nordural Refinancing and Expansion Financing. In connection with an ongoing expansion of the Nordural facility, the Company has agreed to terms on a $310.0 million senior term loan facility with Landsbanki Islands hf. and Kaupthing Bank hf, subject to definitive agreement. Amounts borrowed will be used to repay approximately $170.0 million in debt currently held by Nordural and to finance a portion the costs associated with the ongoing expansion the Nordural facility. Once completed, the expansion will increase the facility’s annual production capacity from 198 million pounds to approximately 397 million pounds. The Company has entered into numerous agreements in connection with the expansion, including amendments to several long-term contracts with the Government of Iceland and an agreement with Hitaveita Sudurnesja hf and Reykjavik Energy to supply the additional power needed for the expansion capacity. On August 1, 2004, the Company entered into a ten-year alumina tolling contract with Glencore for the expansion capacity. The expansion is projected to be completed by mid-2006, subject to satisfaction of various conditions, including the closing of the new term loan facility.

     Subsequent Event – Convertible Notes. On July 29, 2004, the Company announced that it intends to sell, subject to market and other conditions, $175.0 million of its 1.75% convertible senior

43

notes due 2024 (“Convertible Notes”) through a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (“Securities Act”). Century granted to the initial purchasers of the Notes a 30-day option to purchase up to an additional $25.0 million of Convertible Notes, which was exercised.

     The Convertible Notes will be senior unsecured obligations of Century, and will be convertible at a fixed conversion rate into cash or a combination of cash and Century common stock. Upon conversion of a Convertible Note, the holder of such Convertible Notes shall receive cash equal to the principal amount of the Note and, at Century’s election, either cash, Century common stock, or a combination thereof, for the Convertible Note’s conversion value in excess of such principal amount, if any.

     The Convertible Notes will be convertible at any time at an initial conversion rate of 32.7430 shares of Century common stock per one thousand dollars of principal amount of Convertible Notes, subject to adjustments of certain events. The initial conversion rate is equivalent to a conversion price of approximately $30.5409 per share of Century common stock. In general, upon conversion of a Convertible Note, the holder of such Convertible Notes shall receive cash equal to the principal amount of the Convertible Notes and, at Century’s election, either cash, Century common stock, or a combination thereof, for the Convertible Notes’ conversion value in excess of such principal amount, if any, in addition, the Convertible Notes will be redeemable at Century’s option beginning on August 6, 2009, and the holders may require Century to repurchase all or part of their Convertible Notes for cash on each of August 1, 2011, August 1, 2014 and August 1, 2019. Due to the current convertibility of the Convertible Notes, the Company will classify the Convertible Notes as short-term debt on its balance sheet.

     Century intends to use the net proceeds from the sale of the Convertible Notes, together with proceeds from a future private placement of senior unsecured debt, to fund a planned tender offer and consent solicitation for any or all of its outstanding 11¾% senior secured first mortgage notes and for general corporate purposes, which could include acquisitions and a planned expansion of the Company’s Nordural facility. The sale of the Convertible Notes will be not conditioned upon Century’s completion of the tender offer and consent solicitation.

     Subsequent Event – Private Placement of Senior Unsecured Notes. On August 3, 2004, the Company announced that it intends to sell, subject to market and other conditions, $250 million of its senior notes due 2014 (“Senior Notes”) through a private placement exempt from the registration requirements of the Securities Act. The notes will be senior unsecured obligations of Century.

     The Company intends to use the net proceeds from the sale of the Senior Notes, together with proceeds from a private placement of $175 million of Convertible Notes, to purchase up to 100% of its outstanding $325 million aggregate principal amount 11¾% senior secured first mortgage notes that may be tendered pursuant to its tender offer and consent solicitation. The proceeds also will be used for general corporate purposes, including to fund a portion of the costs related to the ongoing expansion of the Company’s Nordural facility and to repurchase or redeem any untendered first mortgage notes. The sale of the Notes will be conditioned upon Century’s completion of the tender offer and consent solicitation.

Convertible Preferred Stock

     In connection with the Hawesville acquisition, the Company issued $25.0 million of Century Aluminum Company convertible preferred stock to Glencore in 2001. In May 2004, Glencore exercised its option to convert the 500,000 shares of convertible preferred stock it held into shares of the Company’s common stock at a price of $17.92 per common share. The Company issued 1,395,089 shares of its common stock to Glencore in the conversion.

     In May 2004, the Company used a portion of the proceeds from a registered equity offering that closed in April 2004 to pay preferred stock dividends of $3.3 million or $6.54 per preferred stock share.

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Working Capital

     Working capital was $132.0 million at June 30, 2004. The Company believes that its working capital will be consistent with past experience and that cash flow from operations and borrowing availability under the Revolving Credit Facility and Nordural term loan facility should be sufficient to meet working capital needs.

Capital Expenditures

     Capital expenditures for the period ended June 30, 2004 were $5.7 million and were principally related to upgrading production equipment, maintaining facilities and complying with environmental requirements. The Revolving Credit Facility limits the Company’s ability to make capital expenditures; however, the Company believes that the amount permitted will be adequate to maintain its properties and business and comply with environmental requirements. The Company anticipates that capital expenditures will be approximately $20.0 million in 2004, exclusive of capital expenditures related to the Nordural acquisition. The Company anticipates that it will spend approximately $70.0 million on the Nordural expansion in 2004.

Acquisitions, Liquidity and Financing

     The Company’s strategic objectives are to grow its aluminum business by pursuing opportunities to acquire primary aluminum reduction facilities which offer favorable investment returns and lower its per unit production costs; diversifying the Company’s geographic presence; and pursuing opportunities in bauxite mining and alumina refining. In connection with possible future acquisitions, the Company may need additional financing, which may be provided in the form of debt or equity. The Company cannot be certain that any such financing will be available. The Company anticipates that operating cash flow, together with borrowings under the Revolving Credit Facility and Nordural term loan facility, will be sufficient to meet its future debt service obligations as they become due, as well as working capital and capital expenditures requirements. The Company’s ability to meet its liquidity needs, including any and all of its debt service obligations, will depend upon its future operating performance, which will be affected by general economic, financial, competitive, regulatory, business and other factors, many of which are beyond the Company’s control. The Company will continue from time to time to explore additional financing methods and other means to lower its cost of capital, including stock issuances or debt financing and the application of the proceeds to the repayment of bank debt or other indebtedness.

The Planned Gramercy Acquisition

     On May 17, 2004, the Company, together with subsidiaries of Noranda, Inc. (“Noranda”), entered into an agreement with Kaiser Aluminum and Chemical Corporation to jointly purchase Kaiser’s Gramercy, Louisana alumina refinery and its 49% interest in a Jamaican bauxite mining partnership for a purchase price of $23.0 million, subject of working capital adjustments. The Company and Noranda will each pay one-half of the purchase price. Kaiser is selling its alumina and bauxite assets as part of its reorganization to emerge from Chapter 11 bankruptcy. The bankruptcy court approved the sale to Century and Noranda on July 19, 2004. The

45

transaction is expected to close in the third quarter of 2004, subject to the consent of the Government of Jamaica, which owns the remaining 51% interest in the bauxite mining partnership. The bauxite mining partnership supplies all of the bauxite used for the production of alumina at the Gramercy refinery and bauxite to a third party refinery in Texas. At the Gramercy refinery, bauxite is chemically refined and converted into alumina, the principal raw material in the production of primary aluminum. All of the alumina used at the Hawesville facility is purchased from the Gramercy refinery. The Gramercy refinery, which began operations in 1959, had extensive portions rebuilt and modernized in 2000, and has an annual production capacity of 1.2 million metric tons of alumina, approximately 80% of which is supplied under long-term contracts to the Hawesville facility and to a primary aluminum production facility separately owned by Noranda.

     The Nordural Acquisition

     On April 27, 2004, the Company completed the acquisition of 100% of the equity shares of Nordural hf, a wholly-owned subsidiary of Columbia Ventures Corporation (“CVC”). Nordural hf is an Icelandic company that owns and operates the Nordural facility, a primary aluminum reduction facility located in Grundartangi, Iceland, approximately 25 miles north of Reykjavik, Iceland’s capital. The Nordural facility, built in 1998, is the Company’s most recently constructed and lowest cost facility. It currently has an annual production capacity of approximately 198 million pounds, which would increase to approximately 397 million pounds upon completion of a planned expansion.

     The purchase price for the shares was $195.4 million, which included a payment of $25 million related to the commencement of the planned expansion and other adjustments totaling $20.3 million. In addition, the Company assumed Nordural’s debt of approximately $190.6 million. Century used the proceeds from a registered equity offering to finance the acquisition (see Item 1, Notes to the Consolidated Financial Statements, Note 18 – Equity Offering).

     The Nordural facility purchases power from Landsvirkjun, a power company jointly owned by the Republic of Iceland and two Icelandic municipal governments, under a contract due to expire in 2019. The power delivered to the Nordural facility under its current contract is from hydroelectric and geothermal sources, both competitively-priced and renewable sources of power in Iceland, at a rate based on the LME price for primary aluminum. In connection with the planned expansion, Nordural has entered into a power contract with Orkuveita Reykjavikur (“OR”) and Hitaveita Sudurnesja hf (“HS”) for the supply of the additional power required for the expansion capacity. Power under this agreement will be generated from geothermal resources and prices will be LME-based. By the terms of a Second Amendment to the Landsvirkjun/Nordural Power Contract, dated as of April 21, 2004, Landsvirkjun has agreed on best commercial effort basis to provide backup power to Nordural should OR or HS be unable to meet the obligations of their contract to provide power for the Nordural expansion.

     Nordural is party to a Toll Conversion Agreement with a subsidiary of BHP Billiton which expires December 31, 2013. Under this agreement, which is for virtually all of the Nordural facility’s existing production capacity, Nordural receives an LME-based fee for the conversion of alumina into primary aluminum. The tolling fee paid to Nordural also allows Nordural to share in the benefit realized by BHP Billiton as a result of its ability to sell primary aluminum

46

produced at Nordural to European Union markets on a duty-free basis. On August 1, 2004, the Company entered into a ten year alumina toll conversion agreement with Glencore for Nordural’s expansion capacity. That contract also provides Nordural with an LME-based fee. The contract is effective in July 2006.

     Expansion of the Nordural Facility. The Company plans to expand the Nordural facility to increase its annual production capacity to 397 million pounds, or double its current production capacity, which the Company estimates will cost approximately $330 million. Nordural’s ability to proceed with the expansion will depend on its ability to obtain financing and certain key contracts. There can be no assurance that the expansion will be timely completed or completed without significant cost overruns.

     Historical

     The Company’s statements of cash flows for the six months ended June 30, 2004 and 2003 are summarized below:

	Six months ended
	June 30,
	2004			2003
	(dollars in thousands)
Net cash provided by operating activities	$	51,611		$	49,728
Net cash used in investing activities		(190,581	)		(70,137	)
Net cash provided by (used) in financing activities		185,935			(308	)
Increase (decrease) in cash	$	46,965		$	(20,717	)

     Net cash from operating activities in the first six months of 2004 was $1.9 million higher than the same period in 2003. Exclusive of the $35.5 million settlement received during the second quarter 2003 from the termination of the Original Sales Contract and entering into the New Sales Contract with Glencore for the years 2005 through 2009, net cash from operating activities increased $37.4 million in the current quarter. This increase was a direct result of improved price realizations and contributions from the April 2004 Nordural acquisition.

     The Company’s net cash used for investing activities during the six month period ended June 30, 2004 increased $120.4 million from the same period in 2003. The net acquisition cost of the Nordural facility in April 2004 was $184.9 million. The net purchase price for the additional 20% interest in the Hawesville facility in April 2003 was $59.8 million.

     Net cash provided by financing activities during the six month period ending June 30, 2004 increased $186.2 million primarily due to net proceeds from the issuance of $209.9 million of common stock and the absence of $0.3 million of financing fees in the current quarter, which was partially offset by the repayment of debt, $20.7 million, primarily related to the Glencore Note, and payment of accrued preferred dividends, $3.3 million, upon conversion to common stock in the current quarter.

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     The Company believes that cash flow from operations, its unused Revolving Credit Facility, and the term loan facility at Nordural will provide sufficient liquidity to meet working capital needs, fund capital improvements, and provide for debt service requirements.

     Contractual Obligations

     As the result of the Nordural acquisition, the Company has had material changes in contractual obligations during the second quarter. The contractual obligations provided below are the direct result of the Nordural acquisition and are in addition to the contractual obligations disclosed previously in the Company’s 2003 Form 10-K.

				Payments Due by Period
	Total		<1 Year			1-3 Years			3-5 Years		> 5 Years
				(dollars in millions)
Long term debt (1)	$	183.9		$	13.5		$	24.2	$	26.8	$	119.4
Capital lease obligations		0.8			0.3			0.4		0.1		—
Operating lease obligations		0.4			0.1			0.1		—		0.2
Purchase obligations (2)		505.6			38.3			76.6		76.6		314.1
Other long-term liabilities (3)		3.8			—			—		—		3.8
Total	$	694.5		$	52.2		$	101.3	$	103.5	$	437.5

     (1) Long-term debt includes principal repayments on the Nordural loan facility, a smelter site lease agreement, a bank loan agreement, and a power contract debt obligation. Long-term debt does not include expected interest payments on Nordural’s long-term debt totaling $75.3 million, of which $6.3 million would be due within a year, $16.5 million due within 1 to 3 years, $17.2 million due within 3 to 5 years, and $35.3 million due 5 years and thereafter. With the exception of the site lease, Nordural’s debt bears interest at a variable rate based on the LIBOR rate plus an applicable margin. The future interest obligations were estimated based upon the current LIBOR rate at 1.5% initially, increasing to 5.0% by 2007 and steady thereafter.

     (2) Purchase obligations include long-term power and anode contracts. The power contracts are priced as a percentage of the LME price of primary aluminum. The Company assumed an LME price of $1,525 per metric ton for purposes of calculating expected future cash flows for this contract. The anode contract is denominated in euros, the Company assumed a $1.20/euro conversion rate to estimate the obligations under this contract.

     (3) Other long-term liabilities are primarily estimated deferred tax payments.

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Environmental Expenditures and Other Contingencies

     The Company has incurred and in the future will continue to incur capital expenditures and operating expenses for matters relating to environmental control, remediation, monitoring and compliance. The aggregate environmental related accrued liabilities were $0.7 million at June 30, 2004 and December 31, 2003. The Company believes that compliance with current environmental laws and regulations is not likely to have a material adverse effect on the Company’s financial condition, results of operations or liquidity; however, environmental laws and regulations may change, and the Company may become subject to more stringent environmental laws and regulations in the future. There can be no assurance that compliance with more stringent environmental laws and regulations that may be enacted in the future, or future remediation costs, would not have a material adverse effect on the Company’s financial condition, results of operations or liquidity.

     The Company has planned environmental capital expenditures of approximately $1.3 million for 2004, $0.4 million for 2005 and $0.2 million for 2006. In addition, the Company expects to incur operating expenses relating to environmental matters of approximately $4.9 million, $5.0 million, and $5.8 million in each of 2004, 2005 and 2006, respectively. As part of the Company’s general capital expenditure plan, it also expects to incur capital expenditures for other capital projects that may, in addition to improving operations, reduce certain environmental impacts.

     The Company is a defendant in several actions relating to various aspects of its business. While it is impossible to predict the ultimate disposition of any litigation, the Company does not believe that any of these lawsuits, either individually or in the aggregate, will have a material adverse effect on the Company’s financial condition, results of operations or liquidity.

     Nordural is subject to various Icelandic environmental laws and regulations. While the Company does not believe that the cost of complying with these laws and regulations will have a material adverse effect on the Company’s financial condition, results of operations or liquidity, these laws and regulations are subject to change, which changes could result in increased costs.

New Accounting Standards

     In December 2003, the FASB issued FASB Interpretation (“FIN”) No. 46 (revised December 2003), “Consolidation of Variable Interest Entities.” This Interpretation clarifies the application of Accounting Research Bulletin (“ARB”) No. 51, “Consolidated Financial Statements” and replaces FIN No. 46, “Consolidation of Variable Interest Entities.” The Interpretation explains how to identify variable interest entities and how an enterprise assesses its interests in a variable interest entity to decide whether to consolidate that entity. The effective date of this Interpretation varies depending on several factors, including public status of the entity, small business issuer status, and whether the public entities currently have any interests in special-purpose entities. Century applied this Interpretation in the first quarter of 2004. The application of FIN No. 46 had no impact on the Company’s Consolidated Financial Statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Prices

     The Company is exposed to the price of primary aluminum. The Company manages its exposure to fluctuations in the price of primary aluminum by selling aluminum at fixed prices for future delivery and through financial instruments as well as by purchasing alumina under supply contracts with prices tied to the same indices as the Company’s aluminum sales contracts (see Item 1, Notes to the Consolidated Financial Statements, Note 8 – Forward Delivery Contracts and Financial Instruments). The Company’s risk management activities do not include trading or speculative transactions.

     Apart from the Pechiney Metal Agreement, the Glencore Metal Agreement, Original Sales Contract, New Sales Contract and Southwire Metal Agreement, the Company had forward delivery contracts to sell 203.9 million pounds and 351.8 million pounds of primary aluminum at June 30, 2004 and December 31, 2003, respectively. Of these forward delivery contracts, the Company had fixed price commitments to sell 21.1 million pounds and 70.5 million pounds of primary aluminum at June 30, 2004 and December 31, 2003, respectively, of which, 12.2 million pounds and 53.5 million pounds at June 30, 2004 and December 31, 2003, respectively, were with Glencore.

     At June 30, 2004 and December 31, 2003, the Company had financial instruments, primarily with Glencore, for 367.4 million pounds and 102.9 million pounds of primary aluminum, respectively, of which 345.4 million pounds and 58.8 million pounds, respectively, were designated cash flow hedges. These financial instruments are scheduled for settlement at various dates in 2004 through 2007. Additionally, to mitigate the volatility of the natural gas markets, the Company enters into fixed price financial purchase contracts for natural gas, accounted for as cash flow hedges, which settle in cash in the period corresponding to the intended usage of natural gas. At June 30, 2004 and December 31, 2003, the Company had financial instruments for 2.8 million and 2.7 million DTH (one decatherm is equivalent to one million British Thermal Units), respectively. These financial instruments are scheduled for settlement at various dates in 2004 through 2008.

     On a hypothetical basis, a $0.01 per pound increase or decrease in the market price of primary aluminum is estimated to have an unfavorable or favorable impact of $2.2 million after tax on accumulated other comprehensive income for the contracts designated cash flow hedges, and $0.1 million on net income, for the contracts designated as derivatives, for the period ended June 30, 2004 as a result of the forward primary aluminum financial sales contracts outstanding at June 30, 2004.

     On a hypothetical basis, a $0.50 per DTH decrease or increase in the market price of natural gas is estimated to have an unfavorable or favorable impact of $0.9 million after tax on accumulated other comprehensive income for the period ended June 30, 2004 as a result of the forward natural gas financial purchase contracts outstanding at June 30, 2004.

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     The Company’s metals and natural gas risk management activities are subject to the control and direction of senior management. The metals related activities are regularly reported to the Board of Directors of Century.

     Nordural. Substantially all of Nordural’s revenues are derived from a Toll Conversion Agreement whereby it converts alumina provided to it into primary aluminum for a fee based on the LME price for primary aluminum. Nordural’s revenues are subject to the risk of decreases in the market price of primary aluminum; however, Nordural is not exposed to increases in the price for alumina, the principal raw material used in the production of primary aluminum. In addition, under its current power contract, Nordural purchases power at a rate which is a percentage of the LME price for primary aluminum, providing Nordural with a natural hedge against downswings in the market for primary aluminum.

     Nordural is exposed to foreign currency risk due to fluctuations in the value of the U.S. dollar as compared to the euro and the Icelandic krona. Under its Toll Conversion Agreement, Nordural receives revenues linked to the LME price for primary aluminum, which is denominated in U.S. dollars. Nordural’s labor costs are denominated in Icelandic kronur and a portion of its anode costs are denominated in euros. As a result, an increase or decrease in the value of those currencies relative to the U.S. dollar would affect Nordural’s operating margins.

     Nordural does not currently have financial instruments to hedge commodity, currency or interest rate risk.

Interest Rates

     Interest Rate Risk. The Company’s primary debt obligations are the outstanding Notes, the Nordural debt, borrowings under its Revolving Credit Facility, if any, and the industrial revenue bonds the Company assumed in connection with the Hawesville acquisition. Because the Notes bear a fixed rate of interest, changes in interest rates do not subject the Company to changes in future interest expense with respect to these borrowings. Borrowings under the Company’s Revolving Credit Facility, if any, are at variable rates at a margin over LIBOR or the Fleet National Bank base rate, as defined in the Revolving Credit Facility. The industrial revenue bonds bear interest at variable rates determined by reference to the interest rate of similar instruments in the industrial revenue bond market. At June 30, 2004, Nordural had approximately $183.9 million of long-term debt consisting primarily of obligations under the Nordural loan facility. Borrowings under Nordural’s loan facility bear interest at a margin over the applicable LIBOR rate, plus an applicable percentage to cover certain lender compliance costs. At June 30, 2004, Nordural had $176.6 million of liabilities which bear interest at a variable rate.

     At June 30, 2004, the Company had $184.4 million of variable rate borrowings. A hypothetical one percentage point increase in the interest rate would increase the Company’s annual interest expense by $1.2 million, assuming no debt reduction.

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     The Company’s primary financial instruments are cash and short-term investments, including cash in bank accounts and other highly rated liquid money market investments and government securities.

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Item 4. Controls and Procedures

a. Evaluation of Disclosure Controls and Procedures

As of June 30, 2004, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Company’s Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective.

b. Changes in Internal Control over Financial Reporting

During the quarter ended June 30, 2004, there has not been any change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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Part II. OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Stockholders

No items during this quarter.

Item 6. Exhibits and Reports on Form 8-K.

     (a) Exhibits –

Exhibit No.	Exhibit Description
10.1	Senior Facility Agreement, dated September 2, 2003, among Nordural hf, Royal Bank of Scotland PLC, BNP Paribas S.A., Fortis Bank (Nederland, N.V.*)
10.2	Amendment Agreement, dated April 27, 2004, among Nordural hf, Century, Nordural Holdings I eHf, Nordural Holdings II eHf, Columbia Ventures Corporation, BNP Paribas S.A., and the Royal Bank of Scotland PLC.
31.1	Certification of Disclosure in Century Aluminum Company’s Quarterly Report by the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (13 U.S.C. 1350).
31.2	Certification of Disclosure in Century Aluminum Company’s Quarterly Report by the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (13 U.S.C. 1350).
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (13 U.S.C. 1350).

*Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 30, 2004. Schedules and exhibits are omitted and will be furnished to the Securities and Exchange Commission upon request.

     (b) Reports on Form 8-K – During the quarter ended June 30, 2004, the Company filed the following thee reports on Form 8-K with the Securities and Exchange Commission:

1.	Form 8-K dated April 7, 2004, announcing pricing of the approximately $230 million public offering of 9,500,000 shares of Century’s common stock.
2.	Form 8-K dated April 26, 2004, attaching the Company’s earnings report for the quarter ended March 31, 2004.

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3. Form 8-K dated April 27, 2004, announcing the completion of the Company’s acquisition of Nordural hf from Columbia Ventures Corporation.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Century Aluminum Company
Date: August 9, 2004	By:	/s/ Craig A. Davis
		Craig A. Davis
		Chairman and Chief Executive Officer

Date: August 9, 2004	By:	/s/ David W. Beckley
		David W. Beckley
		Executive Vice-President/Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Exhibit Description
10.1	Senior Facility Agreement, dated September 2, 2003, among Nordural hf, Royal Bank of Scotland PLC, BNP Paribas S.A., Fortis Bank (Nederland, N.V.*)
10.2	Amendment Agreement, dated April 27, 2004, among Nordural hf, Century, Nordural Holdings I eHf, Nordural Holdings II eHf, Columbia Ventures Corporation, BNP Paribas S.A., and the Royal Bank of Scotland PLC.
31.1	Certification of Disclosure in Century Aluminum Company’s Quarterly Report by the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (13 U.S.C. 1350).
31.2	Certification of Disclosure in Century Aluminum Company’s Quarterly Report by the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (13 U.S.C. 1350).
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (13 U.S.C. 1350).

*Schedules and exhibits are omitted and will be furnished to the Securities and Exchange Commission upon request.

EX-10.1

Exhibit 10.1

$185,000,000

TERM LOAN FACILITY

for

NORDURAL hf

arranged by

THE ROYAL BANK OF SCOTLAND PLC

BNP PARIBAS S.A.

and

FORTIS BANK (NEDERLAND) N.V.

SENIOR FACILITY AGREEMENT

CONTENTS

Clause		Page
1.	Interpretation		1
2.	Facility		27
3.	Purpose		28
4.	Conditions Precedent		28
5.	Drawdown		29
6.	Repayment		29
7.	Prepayment and Cancellation		33
8.	Interest Periods		36
9.	Interest		37
10	Payments		39
11.	Taxes		41
12.	Market Disruption		42
13.	Increased Costs		43
14.	Illegality		44
15.	Representations and Warranties		45
16.	Undertakings		52
17.	Default		69
18.	Forecasts		79
19.	The Agent, the Security Trustee, the Arrangers and the Account Bank		85
20.	Fees		93
21.	Expenses		94
22.	Stamp Duties		95
23.	Indemnities		95
24.	Evidence and Calculations		96

-2-

Clause		Page
25.	Amendments and Waivers		97
26.	Changes to the Parties		98
27.	Advisers		100
28.	Disclosure of Information		101
29.	Set-Off		101
30.	Pro Rata Sharing		101
31.	Severability		102
32.	Counterparts		103
33.	Notices		103
34.	Language		104
35.	Use of websites		105
36.	Jurisdiction		106
37.	Governing Law		107
SCHEDULE 1	Banks and Commitments		108
SCHEDULE 2	Conditions Precedent Documents		109
SCHEDULE 3	Form of Request		120
SCHEDULE 4	Form of Novation Certificate		121
SCHEDULE 5	Reserved Discretions		122
SCHEDULE 6	Construction Contracts		129
SCHEDULE 7	Mandatory Cost Formulae		130
SCHEDULE 8	Insurances		133
SCHEDULE 9	Form of Debt Service Reserve, L/C		157

-3-

THIS AGREEMENT is dated 2 September 2003 and is between:

(1)	NORDURAL hf (Registered No: 570297-2609) as borrower (the “Borrower”);
(2)	THE ROYAL BANK OF SCOTLAND PLC, BNP PARIBAS S.A. and FORTIS BANK (NEDERLAND) N.V. as arrangers (each an “Arranger” and together the “Arrangers”);
(3)	THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the “Banks” );
(4)	BNP PARIBAS S.A. as account bank (in this capacity the “Account Bank” );
(5)	THE ROYAL BANK OF SCOTLAND PLC as agent (in this capacity the “Agent”); and
(6)	BNP PARIBAS S.A. as security trustee (in this capacity the “Security Trustee” ).

IT IS AGREED as follows:

1.	INTERPRETATION
1.1	Definitions
	In this Agreement:
	“Account Agreement” means the account agreement to be entered into on or prior to Financial Close between the Borrower, the Account Bank, the Security Trustee and the Agent.
	“Additional Cost Rate” has the meaning given to it in Schedule 7 (Mandatory Cost Formulae).
	“Additional Shareholder Funding” means the provision of funds to the Borrower by the Shareholder or any Affiliate of the Shareholder in the form of:

(a)	a subscription for share capital; and/or
(b)	the provision of Subordinated Loans, and/or
(c)	any other form of capital contribution,

in each case in accordance with the terms of the Sponsor Funding Agreement and the Intercreditor Agreement.

“Affiliate” means, with respect to any company or a Bank, a Subsidiary or a Holding Company of that company or any other Subsidiary of a Holding Company of that Company.

“Agency” includes, in relation to a state or supranational organisation, any agency, authority, central bank, department, government, legislature, ministry, official or public person (whether autonomous or not) of, or of the government of, that state or supranational organisation.

“Aluminium Hedging Agreement” means any agreement relating to the hedging of the aluminium price entered or to be entered into by the Borrower in accordance with Clause 16.20 (Hedging).

“Aluminium Hedging Counterparty” means any financial institution that is a counterparty to an Aluminium Hedging Agreement entered into by the Borrower.

“Amounts Payable” means, in respect of any Repayment Date, the aggregate of:

(a)	Financing Costs; and
(b)	Financing Principal (within paragraph (b) of the definition thereof); and
(c)	Permitted Payments (including those payable from amounts transferred to the Onshore Proceeds Account),

due on such Repayment Date.

“Anode Supply Agreement” means the anode supply agreement dated 7th May, 1997 between VAW Aluminium AG (now Hydro Aluminium Deutschland GmbH) and the Borrower as amended and restated on 15 June 2000.

“Authorised Investment” has the meaning given to it in the Account Agreement.

“Banks’ Adviser” means the Banks’ Insurance Adviser, the Banks’ Aluminium Market Adviser, the Banks’ Model Adviser or the Banks’ Technical Adviser (as the context requires).

“Banks’ Aluminium Market Adviser’ means Metal Bulletin Research of 16 Lower Marsh, London SE1 7RJ or such other firm of advisers on the aluminium market as may be appointed pursuant to Clause 27 (Advisers),

“Banks’ Insurance Adviser” means Bankrisk Services, a division of Marsh UK Limited of Tower Place, London, EC3R 5BU or such other firm of insurance advisers as may be appointed pursuant to Clause 27 (Advisers).

“Banks’ Model Adviser” means PriceWaterhouseCoopers of One Embankment Place, London WC2N 6NN or such other firm of model audit advisers as may be appointed pursuant to Clause 27 (Advisers).

“Banks’ Technical Adviser” means Hatch Associates Ltd. of Regal House, London Road, Twickenham, Middlesex, TW1 3QQ or such other independent firm of consultant engineers as may be appointed pursuant to Clause 27 (Advisers).

“Base Case Repayment Instalment” means each instalment for repayment of the Loan calculated as the percentage for each Repayment Date of the Loan Outstanding on the expiry of the Commitment Period set out in the table in Clause 6.1, as any such instalment may thereafter be reduced by any prepayments pursuant to Clause 7 (Prepayment and Cancellation) and/or Clause 14 (Illegality).

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“Billiton Pledge” means the pledge agreement dated 28 August 2000 by Billiton Marketing A.G. in favour of the Borrower.

“Building Permit” means each building licence issued by the Joint Building Committee of the Municipalities of Hvalfjardarstrandarhreppur and Skilmannahreppur.

“Business Day” means a day (other than a Saturday or a Sunday) on which banks are open for business in London and New York.

“Calculation Date” means the first Repayment Date and each subsequent Repayment Date in each year until but excluding the Final Repayment Date, provided that any adjustment pursuant to Clause 10.6 shall be ignored for this purpose.

“Calculation Period” means:

(a)	the period of eleven months ending on the first Calculation Date;
(b)	each period of twelve months ending on each subsequent Calculation Date; or
(c)	for the purposes of Clause 6.2.1(b) (Deferrals) and Clause 7.4 (Mandatory Prepayments), each period of six months ending on the subsequent Calculation Date.

“Cash Available for Debt Service” means, for a period, Gross Revenues received or for the purposes of Clause 18 (Forecasts) projected to be received during that period, less the aggregate of the Permitted Payments paid or for the purposes of Clause 18 (Forecasts) projected to be paid during that period provided that, for the purposes of determining the Loan Life Cover Ratio, there shall be excluded from Permitted Payments so deducted Permitted Payments in respect of Financial Indebtedness.

“Cash Collateral” means, in relation to a Debt Service Reserve L/C, cash cover equal to the face amount of that Debt Service Reserve L/C and which is provided on terms acceptable to the Agent (acting reasonably).

“Charge and Assignment” means the English Law charge and assignment to be entered into on or prior to Financial Close between the Borrower and the Security Trustee.

“Commitment” means:

(a)	in relation to a Bank which is a Bank on the date of this Agreement, the amount in Dollars set opposite its name in Schedule 1 and the amount of any other Bank’s Commitment acquired by it under Clause 26 (Changes to the Parties); and
(b)	in relation to a Bank which becomes a Bank after the date of this Agreement, the amount of any other Bank’s Commitment acquired by it under Clause 26 (Changes to the Parties),

to the extent not cancelled, transferred or reduced under this Agreement.

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“Commitment Period” means the period from the date of this Agreement up to and including the date falling one month after the date of this Agreement.

“Compensation” means:

(a)	all consideration received by the Borrower in respect of the partial or total nationalisation, expropriation or compulsory purchase of the Project Facilities or any interest in the Project Facilities;
(b)	any sum payable to or for the account of the Borrower in respect of the release, inhibition, modification, suspension or extinguishment of any rights, easements or covenants enjoyed by or benefiting the Project Facilities, or the imposition of any restrictions affecting the Project Facilities, or the grant of any easement or rights over or affecting the Project Facilities or any part of them; and
(c)	any sum payable to or for the account of the Borrower in respect of the refusal, revocation, suspension or modification of any authorisation or exemption subject to conditions, or any other official order or notice restricting the construction or operation of the Project Facilities;

but excluding Insurance Proceeds and any Revenue Damages.

“Computer Model” means the computer model in the form accepted by the Agent pursuant to Clause 4.1 (Documentary Conditions Precedent) which uses the Forecast Assumptions to produce financial projections and projected cash flows and represented by material contained in or on computer discs, printouts and the analyses comprising the Forecast as it may be revised or replaced from time to time in accordance with this Agreement.

“Confidentiality Agreement” means, at any time, the confidentiality undertaking substantially in the form recommended by the Loan Market Association from time to time, extended to take effect for the benefit of the Borrower as well as the Agent, or in any other form agreed between the Borrower and the Agent.

“Construction Contract” means each agreement entered into by the Borrower in respect of the construction of the Project Expansion as set out in Schedule 6 (Construction Contracts).

“Consultancy Assignment Agreement” means the German law assignment agreement to be entered into on or prior to Financial Close between the Borrower and the Security Trustee relating to the Technology Consultancy Agreement.

“Contract of Affreightment” means the contract of affreightment dated 16th May 2003 between BHP Billiton Marketing A.G. and the Borrower.

“Contractor” means each person party to a Construction Contract (other than the Borrower).

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“Co-operation Agreement” means the co-operation agreement dated 19th January, 2000 between the Borrower and VAW Aluminium-Technologie GmbH (now Hydro Aluminium Technologie GmbH).

“Debt Service Cover Ratio” means, in relation to a Calculation Period, the ratio of A:B where:

A	is the Cash Available for Debt Service for that period; and
B	is the Senior Debt Service Obligations for that period (after deducting any amount of principal repayment falling due in such period that the Borrower is permitted to defer in accordance with the provisions of Clause 6.2 (Deferrals)),

and, as at any Calculation Date, the Debt Service Cover Ratio for the applicable Calculation Period ending on that Calculation Date.

“Debt Service Reserve Account” has the meaning given to it in the Account Agreement.

“Debt Service Reserve L/C” means each letter of credit in place pursuant to Clause 6 of the Account Agreement substantially in the form set out in Schedule 9 (Form of Debt Service Reserve L/C) or such other form as the Agent (acting reasonably) may agree with the Borrower and with an initial duration of at least one year.

“Declaration of Pledge” means the Icelandic law declaration of pledge to be entered into on or prior to Financial Close between the Borrower and the Security Trustee.

“Default” means an Event of Default or an event or circumstance which, with the giving of notice, lapse of time, determination of materiality or fulfilment of any other applicable condition set out in Clause 17 (Events of Default) (or any combination of the foregoing), would constitute an Event of Default provided that any such event which by reason of express provisions in any Finance Document requires the satisfaction of a condition as to materiality before it may become an Event of Default shall not be a Default unless that condition is satisfied.

“Deferral Certificate” has the meaning given to that term in Clause 6.2.3.

“Deferral Conditions” has the meaning given to that term in Clause 6.2 (Deferrals).

“Deferral Instalment” means any Base Case Repayment Instalment or the portion thereof that is not repaid by the Borrower on a Repayment Date as a result of the operation of the provisions of Clause 6.2 (Deferrals), being an amount equal to such Base Case Repayment Instalment less the relevant Deferral Repayment Instalment.

“Deferral Repayment Instalment” means each instalment for repayment of the Loans referred to in Clause 6.2 (Deferrals).

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“Determination Date” means in respect of any Repayment Date or Calculation Date, the date falling on the Business Day after the Ratios have been finally determined in accordance with Clause 18 (Forecasts).

“Direct Agreement” means each of:

(a) the direct agreements in the agreed form between the Borrower, the Security Trustee and (respectively):

(i)	the Ministry of Industry, the Treasury and the Shareholder (relating to the Investment Agreement and the Smelter Site Agreement);
(ii)	Landsvirkjun (relating to the Power Contract);
(iii)	BHP Billiton Marketing A.G. (relating to the Tolling Conversion Agreement); and
(iv)	the Harbour Fund (relating to the Harbour Agreement and the Harbour Usage Agreement);

(b) the letters in the agreed form (if any) from the Security Trustee to the Borrower and each person listed below, and acknowledgements from the Borrower and each person listed below:

(i)	Hydro Aluminium Technologie GmbH (relating to the Technology Consultancy Agreement);
(ii)	Hydro Aluminium Deutschland GmbH (relating to the Anode Supply Agreement); and

(c) the Landsbanki Direct Agreement,

and any other agreement designated as such by the Borrower and the Agent from time to time.

“Discounted Cash Available for Debt Service” means, as at any Calculation Date, the Cash Available for Debt Service projected for the period from the Calculation Date on the basis of the Computer Model to the Final Repayment Date discounted back to that Calculation Date at the applicable Discount Rate.

“Discount Rate” means, as at any Calculation Date with respect to Cash Available for Debt Service for any period, the discount rate calculated as follows:

(a) if an Interest Rate Hedging Agreement has not been entered into in respect of interest payments due for any period in respect of the Outstanding Senior Debt or part of the Outstanding Senior Debt prior to the Final Repayment Date, the interest rate applicable to such unhedged amounts shall be the sum of (i) the relevant fixed swap rate determined in accordance with Clause 18.10 to be the prevailing market rate in respect of such amounts for that period, and (ii) the weighted average of the relevant prevailing Margin applicable to the

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Outstanding Senior Debt for that period (taking into account applicable increases with respect to the Loan contemplated in the definition of “Margin” herein); and

(b)

if an Interest Rate Hedging Agreement has been entered into in respect of interest payments due for any period in respect of the Outstanding Senior Debt or part of the Outstanding Senior Debt, for the period to which such Interest Rate Hedging Agreement applies, the interest rate applicable to such hedged amounts shall be the sum of (i) the fixed rate payable under that Interest Rate Hedging Agreement, and (ii) the weighted average of the relevant prevailing Margin applicable to the Outstanding Senior Debt (taking into account applicable increases with respect to the Loan contemplated in the definition of “Margin” herein), and

the Discount Rate applicable to the Cash Available for Debt Service for each period shall be, if there are no hedged amounts for that period, the interest rate determined in accordance with paragraph (a) above, and if the entire Outstanding Senior Debt is hedged for that period, the interest rate determined in accordance with paragraph (b) above, and if part only of the Outstanding Senior Debt for that period is hedged, the weighted average of the interest rate determined in accordance with paragraph (a) for the unhedged amounts and the interest rate determined in accordance with paragraph (b) for the hedged amounts.

“Distribution” means:

(a)	a dividend or other distribution (in cash or in kind) in respect of the share capital of the Borrower;
(b)	any payment (including, without limitation, principal or interest) in respect of any Shareholder Debt;
(c)	any payment (including without limitation, principal or interest) in respect of any Subordinated Debt; and
(d)	management fees and expenses payable to the Shareholder in excess of $375,000 in any financial year.

“Distributions Account” has the meaning given to it in the Account Agreement.

“Dividend Reserve Account” shall have the meaning given to it in the Account Agreement.

“Documents” means the Finance Documents and the Project Contracts

“Dollars” or “$” means the lawful currency for the time being of the United States of America.

“Drawdown Date” means the date of the advance of the Loan.

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“DSCR Certificate” shall mean the certificate delivered by the Borrower to the Agent as described in Clause 18.9.3.

“Economic Assumptions” means the economic assumptions as set out in part 4 of the Model Assumption Book, in each case as input into the Computer Model.

“Environmental Approval” means any authorisation of any kind required under any Environmental Law applicable to the Project and/or the Borrower.

“Environmental Claim” means any claim by any person as a result of or in connection with any violation of Environmental Law and/or any Environmental Approval and/or any Environmental Contamination which could give rise to any remedy or penalty against (whether interim or final) or liability of the Borrower or any Finance Party.

“Environmental Contamination” means each of the following and their consequences:

(a)	any release, emission, leakage or spillage of any Substances at or from the Site into any part of the environment; or
(b)	any accident, fire, explosion or sudden event at the Site which is directly or indirectly caused by or attributable to any Substances; or
(c)	any other pollution of the environment at or from the Site other than as permitted pursuant to the Environmental Operating Permit (save to the extent that any such pollution permitted pursuant to the Environmental Operating Permit gives rise to an Environmental Claim).

“Environmental Guidelines” means the World Bank and International Finance Corporation (“IFC”) guidelines including, without limitation, the World Bank Pollution Prevention and Abatement Handbook, the World Bank General Environmental Guidelines and the IFC General Health and Safety Guidelines as they apply to the Project from time to time pursuant to the adoption by the Agent of the “Equator Principles” on 4 June 2003.

“Environmental Law” means any applicable Icelandic or European Economic Area law, regulation or directive concerning the protection of human health or the environment or concerning Substances.

“Environmental Operating Permit” means the environmental operating permit issued to the Borrower for the Project by the Government on 26th March, 1997.

“Excess Cash” means, as of a Repayment Date, after first deducting (without double counting) all withdrawals which the Borrower may make pursuant to sub-paragraphs (a) through to (i) (inclusive) of paragraph 2 of Schedule 3 to the Account Agreement on such Repayment Date, an amount equal to the aggregate of the credit balances on each of the Project Accounts (other than, in each case after the Borrower has provided reasonable evidence to the Banks’ Technical Adviser in relation to the proposed use of the relevant amounts) credit balance amounts standing to the credit of the Compensation Account (to the extent that amounts in such account are to be applied by

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the Borrower to the reinstatement or repair of the asset in relation to which the relevant payment arose within the following six month period) and amounts standing to the credit of the Insurance Account (to the extent that amounts in such account are to be applied in respect of the costs of repair, restoration or replacement of the Project Facilities or part thereof in accordance with paragraphs 7.3 to 7.6 of Schedule 8)) which, if the amount so calculated is negative, shall be deemed to be zero.

“Expert” means an expert appointed in accordance with Clause 18.5.3 (Submissions to the Expert).

“Event of Default” means an event specified as such in Clause 17.1 (Events of Default).

“Facility” means the $185,000,000 term loan facility, the terms of which are set out in this Agreement.

“Facility Office” means the office(s) notified by a Bank to the Agent:

(a)	on or before the date it becomes a Bank; or
(b)	by not less than five Business Days’ notice,

as the office(s) through which it will perform all or any of its obligations under this Agreement.

“Fee Letter” means each letter dated on or about the date of this Agreement (or, in respect of arrangement and participation fees, the engagement letter dated 2 May 2003 together with supplemental letter dated 2 May 2003 and amended and restated supplemental letter dated 24 July 2003) between certain Finance Parties and the Borrower setting out the amount of various fees referred to in Clause 20 (Fees).

“Final Repayment Date” means 30 June 2018, as adjusted by deducting six months for each Base Case Repayment Instalment which is prepaid in full and in inverse order of maturity pursuant to Clauses 7.1 (Voluntary Prepayment), Clause 7.3 (Additional Right of Prepayment and Cancellation) or Clause 7.4 (Mandatory Prepayment).

“Finance Document” means:

(a)	this Agreement;
(b)	a Security Document;
(c)	the Intercreditor Agreement;
(d)	the Account Agreement;
(e)	a Hedging Agreement to the extent the Hedging Bank accedes to the Intercreditor Agreement;
(f)	a Direct Agreement;

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(g)	the Sponsor Funding Agreement;
(h)	the Debt Service Reserve L/C; and
(i)	a Novation Certificate,

or any other document designated as such by the Agent and the Borrower.

“Finance Party” means an Arranger, a Bank, a Hedging Bank which accedes to the Intercreditor Agreement, the Account Bank, the Agent or the Security Trustee.

“Financial Close” means the date on which the Agent notifies the Borrower and the Banks that it has received all of the documents and/or evidence set out in Schedule 2 in the agreed form (if any) or otherwise in form and substance satisfactory to the Majority Banks.

“Financial Indebtedness” means any indebtedness (whether present, future, actual or contingent) in respect of:

(a)	moneys borrowed or debit balances at banks and other financial institutions;
(b)	any debenture, bond, note, loan stock or other security;
(c)	any acceptance or documentary credit;
(d)	receivables sold or discounted (otherwise than on a non-recourse basis);
(e)	the acquisition cost of any asset to the extent payable before or after the time of acquisition or possession by the party liable where the advance or deferred payment is arranged primarily as a method of raising finance or financing the acquisition of that asset (excluding for the avoidance of doubt any deferred payment obligations entered into in the ordinary course of trade and which do not involve the deferral of payment of any sum for more than 90 days);
(f)	any lease entered into primarily as a method of raising finance or financing the acquisition of the asset leased;
(g)	any currency swap (other than a foreign exchange agreement for spot delivery entered into in the ordinary course of business) interest swap, cap, commodity swap, collar arrangement, forward currency transactions or any other derivative instrument;
(h)	any transaction which involves or has the commercial effect of the borrowing of base or precious metals or other minerals as part of an arrangement for or in substitution for the raising of finance;
(i)	any amount raised under any other transaction having the commercial effect of a borrowing or raising of money; or

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(j) any guarantee, indemnity, letter of credit or similar assurance in respect of any indebtedness of the type described in paragraphs (a) to (i) above of any person.

“Financing Costs” means:

(a)	interest, fees, commissions and costs payable by the Borrower under the Finance Documents;
(b)	interest payable by the Borrower on the Site Obligations and Harbour Loan under the Smelter Site Agreement and the Replacement Harbour Loan Agreement respectively;
(c)	amounts payable by the Borrower under Clause 11 (Taxes), by virtue of market disruption provisions under Clause 12 (Market Disruption), Clause 13 (Increased Costs), Clause 22 (Stamp Duties) and Clause 23 (Indemnities) of this Agreement;
(d)	amounts payable by the Borrower under any Hedging Agreement;
(e)	any value added or other taxes payable by the Borrower in respect of the above,

less any amount receivable by the Borrower under any Hedging Agreement.

“Financing Principal” means:

(a)	principal amounts outstanding under this Agreement; and
(b)	principal amounts outstanding (including capitalised interest) of the Site Obligations and the Harbour Loan pursuant to the Smelter Site Agreement and the Replacement Harbour Loan Agreement respectively.

“First Amendment to the Investment Agreement” means the first amendment to the Investment Agreement entered into between the Ministry of Industry and Commerce, the Shareholder and the Borrower dated 14 June 2000 amending the Investment Agreement.

“First Amendment to the Power Contract” means the first amendment to the Power Contract entered into between the Borrower and Landsvirkjun on 29th October, 1999 amending the Power Contract.

“First Amendment to the Tolling Conversion Agreement” means the first amendment to the Tolling Conversion Agreement originally entered into between Billiton Marketing B.V. and the Borrower dated 16 June 2000 amending the Tolling Conversion Agreement in respect of which the rights and obligations of Billiton Marketing B.V. were novated to Billiton Marketing A.G. in August 2000.

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“First Forecast” means the base case forecast approved by the Banks’ Model Adviser and agreed by the Borrower and initialled for the purposes of identification by the Agent and the Borrower.

“First Repayment Date” means 30 November 2003 (as adjusted, if appropriate, pursuant to Clause 10.6 (Non-Business Days)).

“Forecast” means the results of running the Computer Model in accordance with the provisions of (and on the basis of the assumptions agreed in) Clause 18 (Forecasts).

“Forecast Assumptions” means each of the Economic Assumptions and the Technical Assumptions.

“General Bond” means the Icelandic law general bond to be entered into on or prior to Financial Close between the Borrower and the Security Trustee.

“Good Industry Practice” means the exercise of that degree of skill, diligence, prudence, foresight and operating practice which would reasonably and ordinarily be expected from a skilled and experienced operator engaged in the same type of undertaking as the Borrower under the same or similar circumstances.

“Government” means the Government of the Republic of Iceland.

“Gross Revenues” means, for any relevant period, all moneys received by the Borrower during that period including, without limitation:

(a)	moneys received pursuant to the Project Contracts;
(b)	any Loss of Revenue Insurance Proceeds;
(c)	any Revenue Damages;
(d)	amounts representing interest on any Project Account and income of any kind in respect of Authorised Investments made out of moneys standing to the credit of any Project Account to the extent that such amounts of interest and/or income are transferred to the Proceeds Account;
(e)	all other amounts (including any such amounts as are of a non-recurring or extraordinary nature) received by the Borrower during the relevant period; and
(f)	moneys received or receivable pursuant to any Aluminium Hedging Agreements (less moneys paid or payable pursuant to the Aluminium Hedging Agreements); and
(g)	amounts representing value added taxes or similar taxes in respect of the foregoing and all refunds of Tax of any kind,

but excluding:

(i) Insurance Proceeds (other than Loss of Revenue Insurance Proceeds);

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(ii)	any amounts receipt of which gives rise to an obligation to prepay the Loan in accordance with Clause 7.4.1(a)(ii) (Mandatory Prepayments);
(iii)	amounts paid to the Borrower under the Finance Documents;
(iv)	amounts paid to the Borrower under the Smelter Site Agreement and/or the Replacement Harbour Loan Agreement in respect of the Site Obligations and/or the Harbour Loan;
(v)	any moneys received in respect of shares in the Borrower and Financial Indebtedness; and
(vi)	Compensation.

“Group Company” means each of the Borrower, the Shareholder and any Shareholder Affiliate which becomes a party to the Sponsor Funding Agreement pursuant to Clause 13 thereof and the Intercreditor Agreement pursuant to Clause 23.11 thereof.

“Grundartangi Aluminium Smelter” or “Smelter” means the aluminium reduction plant and related facilities constructed, owned and operated by the Borrower on the Smelter Site that had an initial annual production capacity of approximately 60,000 tonnes of aluminium and, following the completion of the Project Expansion, has an annual production capacity of approximately 90,000 tonnes of aluminium.

“Harbour Agreement” means the harbour agreement dated 7th August, 1997 between the Harbour Fund and the Borrower.

“Harbour Area” has the meaning given to that term in the Harbour Agreement as in effect on the date of this Agreement.

“Harbour Fund” means the Grundartangi Harbour Fund, an independent public fund jointly owned by the Municipalities of Hvalfjardarstrandarhreppur, Innri-Akraneshreppur, Leirar and Melahreppur, Skilmannahreppur, the Township of Akranes and by all Districts of the Counties of Borgarfjardarsysla and Myrasysla other than those above mentioned.

“Harbour Loans” means the loans in an aggregate amount of $3,000,000 plus capitalised interest (if any) provided under the Replacement Harbour Loans Agreement.

“Harbour Usage Agreement” means the harbour usage agreement dated 12th June, 1997 between the Harbour Fund, Icelandic Alloys Limited and the Borrower.

“Hedging Agreement” means any interest rate or foreign currency hedging agreement entered into by the Borrower pursuant to and in accordance with Clause 16.20 (Hedging).

“Hedging Bank” means any financial institution which is a counterparty to a Hedging Agreement entered into by the Borrower.

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“Holding Company” in relation to a person, means an entity of which that person is a Subsidiary.

“Industrial Licence” means the industrial licence issued or to be issued by Magistrates Court at Borgames pursuant to a power delegated by the Ministry of Industry.

“Information Memorandum” means the Information Memorandum dated 10 June 2003 prepared by the Arrangers in consultation with and as agreed with the Borrower in connection with syndication of the Facility.

“Initial Shareholder Distribution” means the amount of up to $30,000,000 specified by the Borrower in the Request to be transferred to the Distributions Account out of the Loan advanced to the Borrower.

“Insurance Account” has the meaning given to it in the Account Agreement.

“Insurance Proceeds” means all proceeds of insurance payable to or received by the Borrower.

“Insurances” means all contracts and policies of insurance and re-insurance of any kind which are taken out by or on behalf of the Borrower in accordance with Clause 16.33 (Insurance) or (to the extent of its interest) in which the Borrower has an interest.

“Intercreditor Agreement” means the intercreditor agreement to be entered into on or about or prior to Financial Close between the Borrower, the Shareholder, each Bank, each Hedging Bank, the Agent and the Security Trustee.

“Interest Period” means each period determined in accordance with Clause 8 (Interest Periods).

“Interest Rate Hedging Agreement” means any interest rate hedging agreement entered or to be entered into between the Borrower and a Hedging Bank pursuant to Clause 16.20 (Hedging).

“Investment Agreement” means the investment agreement dated 7th August, 1997 between the Ministry of Industry, the Shareholder and the Borrower, as amended by the First Amendment to the Investment Agreement.

“Key Licence” means each of:

(a)	the Environmental Operating Permit;
(b)	the Industrial Licence; and
(c)	the Operating Permit.

“Key Project Contract” means each Project Contract to which a Major Project Party is a party.

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“Landsbanki Direct Agreement” means the letter dated on or about the date hereof from the Security Trustee to Landsbanki Islands hf, the National Debt Management Agency and the Borrower.

“Legal Opinions” means the legal opinions listed in paragraph 13 of Schedule 2.

“LIBOR” means:

(a)	the rate per annum which appears on Telerate Page 3750; or
(b)	if no such rate appears, the arithmetic mean (rounded upward to four decimal places) of the offered quotations which appear on the relevant page (if any) on the Reuters Monitor Money Rates Service (or such other service as may replace the Reuters Monitor Money Rates Service for the purposes of displaying London interbank offered rates of leading banks); or
(c)	if no such rate appears on the Telerate Screen and one only or no such offered quotation appears on the relevant page of the Reuters Screen or there is no relevant page on the Reuters Screen the arithmetic mean (rounded upward to four decimal places) of the rates, as supplied to the Agent at its request, quoted by the Reference Banks to leading banks in the London interbank market,

at or about 11.00 a.m. two Business Days before the first day of the relevant Interest Period for the offering of deposits in Dollars for a period comparable to the relevant Interest Period.

For the purposes of this definition “Telerate Page 3750” means the display designated as “Page 3750” on the Telerate Service (or such other page as may replace Page 3750 for that service) or such other service as may be nominated by the British Bankers’ Association as the information vendor for the purpose of displaying British Bankers’ Association Interest Settlement Rates for deposits in the currency concerned.

“LME Cash Price” means the London Metal Exchange cash sellers quotation in Dollars per tonne for high grade aluminium as published by Metal Bulletin “Aluminium High Grade cash sellers” or, if no such quotation is published, such alternative internationally recognised quotation for high grade aluminium as the Agent may reasonably select.

“Loan” means, subject to Clause 8 (Interest Periods), the principal amount of the borrowing by the Borrower under this Agreement or the principal amount outstanding of that borrowing.

“Loan Assignment” means any assignment of subordinated loans entered into between the Shareholder and the Security Trustee and/or a Shareholder Affiliate and the Security Trustee pursuant to the Sponsor Funding Agreement.

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“Loan Life Cover Ratio” means, at any Calculation Date, the ratio of A:B where:

A

is the aggregate of the Discounted Cash Available for Debt Service (as shown in the then applicable Forecast) and the aggregate of the credit balances on the Debt Service Reserve Account together with the aggregate amount available for drawing under any Debt Service Reserve L/C, the Reserved Cashflow Account (only after deduction of any amounts set out in paragraph 2(a) to (g) of Schedule 3 of the Account Agreement to the extent that such amounts are withdrawn from the account pursuant to Clause 4.2 of the Account Agreement on such date (to the extent such amounts are not treated as Cash Available for Debt Service)) at the Calculation Date; and

B

the aggregate amount of:

(i)	the outstanding amount of the Loan at that time;
(ii)	without double counting:

(1)	the aggregate of principal and capitalised interest outstanding in respect of the Harbour Loans and Site Obligations for the period up to the Final Repayment Date (ignoring for this purpose any adjustments to the Final Repayment Date); or
(2)	if and to the extent that the Harbour Loans and/or Site Obligations have become prematurely due and payable, the aggregate of principal and capitalised interest outstanding in respect of the Harbour Loans and the Site Obligations; and
(3)	the outstanding principal amount of any other Financial Indebtedness incurred by the Borrower (other than Financial Indebtedness owed to the Shareholder or any Affiliate of the Shareholder, any Subordinated Debt, and any amounts owing under any Hedging Agreement or Aluminium Hedging Agreement) at that time.

“Loss of Revenue Insurance Proceeds” means Insurance Proceeds under any business interruption, loss of revenue, delay in start-up, loss of profit or similar Insurances.

“Major Project Parties” means:

(a)	the Shareholder;
(b)	the Ministry of Industry;
(c)	the Treasury;
(d)	Landsvirkjun;
(e)	BHP Billiton Marketing A.G (unless replaced under (i) below);

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(f)	Hydro Aluminium Deutschland GmbH (unless replaced under (i) below);
(g)	Hydro Aluminium Technologie GmbH;
(h)	the Harbour Fund; and
(i)	any replacement or additional tollers, alumina suppliers, aluminium purchasers or anode suppliers that enter into contracts with the Borrower to replace or supplement the Borrower’s existing arrangements under the Tolling Conversion Agreement and the Anode Supply Agreement,

and any other person designated as such by both the Borrower and the Agent.

“Majority Banks” means, at any time, Banks:

(a)	whose participations in the Loans then outstanding aggregate more than 662/3 per cent, of all the Loans then outstanding; or
(b)	if there are no Loans then outstanding, whose Commitments then aggregate more than 662/3 per cent, of the Total Commitments; or
(c)	if there are no Loans then outstanding and the Total Commitments have been reduced to nil, whose Commitments aggregated more than 662/3 per cent. Of the Total Commitments immediately before the reduction.

“Mandatory Cost” means the percentage rate per annum calculated and determined in accordance with and so defined in Schedule 7 (Mandatory Cost Formulae).

“Margin” means, subject to Clause 9.1.2 (Interest Rate):

(a)	at any time from (and including) the date of this Agreement up to (and including) 31 December 2009, 1.45% per annum;
(b)	at any time from (and including) 1 January 2010 up to (and including) 31 December 2013, 1.55% per annum; and
(c)	at any time from (and including) 1 January 2014, 1.65% per annum.

“Material Adverse Effect” means a material adverse effect on:

(a)	the ability of the Borrower to perform or comply with its payment or other material obligations under the Documents;
(b)	(i) the interests of the Finance Parties under the Finance Documents; or

(ii)	the business, operations or financial condition of the Borrower; or
(iii)	the Project,

Provided that a material adverse effect solely on the ability of the Borrower to comply with the covenants set out in Clause 16.35.1 or Clause 16.35.2 shall not be treated as a Material Adverse Effect.

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“Ministry of Industry” means the Ministry of Industry of the Government of the Republic of Iceland.

“Model Assumption Book” means the model assumption book prepared by the Arranger (and agreed by the Borrower) delivered to the Agent prior to Financial Close.

“Net Worth” means at any applicable Calculation Date the aggregate of the amounts paid up or credited as paid up on the issued ordinary share capital of the Borrower and any consolidated revenue reserves and capital reserves and any retained earnings,

  plus (without double counting):

(a)	any amount credited to the share premium account;
(b)	any capital redemption reserve fund;
(c)	any balance standing to the credit of the consolidated profit and loss account of the Borrower; and
(d)	the outstanding amount of any Additional Shareholder Funding,

  but deducting:

(i)	any debit balance on the consolidated profit and loss account of the Borrower;
(ii)	(to the extent included) any amount shown in respect of goodwill (including goodwill arising only on consolidation) or other intangible assets of the Borrower (but only to the extent arising or acquired following the date of this Agreement);
(iii)	(to the extent included) any amount set aside for taxation, deferred taxation or bad debts not already accounted for in the consolidated profit and loss account;
(iv)	(to the extent included) unless agreed by the Majority Banks any amounts arising from an upward revaluation of assets made at any time after 31 December 2002; and
(v)	any amount in respect of any Distribution declared, recommended or made by the Borrower to the extent such Distribution is not provided for in the most recent financial statements,

  and so that no amount shall be included or excluded more than once.

  “Novation Certificate” has the meaning given to it in Clause 26.3 (Procedure for Novations).

  “Onshore Proceeds Accounts” has the meaning given to that term in the Account Agreement.

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“Operating Budget” means a budget itemising the operating expenditures forecast for a financial year of the Borrower in a form which is consistent with the format of the Computer Model.

“Operating Costs” means all costs and expenses incurred by the Borrower in the ordinary course of its business for the purpose of the operation and maintenance of the Project Facilities including but not limited to:

(a)	operating costs and expenses set out in the latest Operating Budget;
(b)	liabilities of the Borrower under the Project Contracts;
(c)	all Insurance premia;
(d)	maintenance expenditure (including, without limitation, expenditure in relation to cell relining);
(e)	capital expenditure on repair and/or replacement of assets up to a maximum aggregate amount of $2,500,000 in any financial year of the Borrower;
(f)	all amounts payable in connection with Aluminium Hedging Agreements (less amounts receivable in connection with Aluminium Hedging Agreements);
(g)	administrative, legal, management, accounting and employee costs (but only to the extent incurred in connection with the operation and maintenance of the Project Facilities);
(h)	all other costs and expenses which the Majority Banks agree may be Operating Costs; and
(i)	any value added tax in respect of any of the above,

  but excluding:

(i)	Project Taxes (except for value added tax provided for in paragraph (i) above);
(ii)	Financing Principal;
(iii)	Financing Costs;
(iv)	any other Permitted Financial Indebtedness (except within paragraphs (f) and (g) or (save as covered by Financing Costs and Financing Principal) within Clauses 16.12.4, 16.12.6, 16.12.7 and 16.12.8 of Clause 16.12 (Borrowings)) and related interest, costs and expenses;
(v)	any Distribution;
(vi)	depreciation, other non-cash charges, reserves, amortisation of intangibles and similar book-keeping entries; and

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(vii) capital expenditure or other non-recurring expenditure funded by Additional Shareholder Funding and/or other Permitted Financial Indebtedness.

“Operating Permit” means the operating permit issued on 22nd May, 1997 to the Borrower on behalf of the Occupational Health and Safety Authority together with confirmation that such operating permit applied to the Project Expansion.

“Outstanding Senior Debt” means, as at any Calculation Date, the aggregate of:

(a)	the principal amount of outstanding scheduled Base Case Repayment Instalments;
(b)	the principal amount of outstanding Deferral Instalments; and
(c)	the principal amount of outstanding scheduled repayments in respect of the Site Obligations and Harbour Loan in accordance with the Smelter Site Agreement and the Replacement Harbour Loan Agreement respectively.

“Party” means a party to this Agreement.

“Permitted Financial Indebtedness” means any Financial Indebtedness which the Borrower is permitted to maintain or incur pursuant to Clause 16.12 (Borrowings).

“Permitted Payments” means at any time and/or for the relevant period and without duplication, each of the following amounts paid or, in the case of a Forecast, projected to be payable by the Borrower during that period:

(a)	Operating Costs;
(b)	Project Taxes;
(c)	amounts referred to under Clause 3.1.l(c) (Purpose); and
(d)	such other costs and liabilities as the Borrower and the Majority Banks agree will be Permitted Payments.

“Permitted Security Interest” means:

(a)	any lien arising by operation of law in the ordinary course of business and securing amounts not more than 30 days overdue (or any longer period where such overdue amounts do not exceed in aggregate $100,000, the payment of such amounts is being contested in good faith by any appropriate proceedings and unless the enforcement of such lien over the relevant asset is likely, in the reasonable opinion of the Majority Banks, to have a Material Adverse Effect);
(b)	any Security Interest arising under the Security Documents;
(c)	any Security Interest created in favour of Billiton Marketing A.G. pursuant to and in accordance with the terms of the Tolling Conversion Agreement (as in force on the date of this Agreement);

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(d)	any Security Interest created under the Smelter Site Agreement, the Harbour Agreement or the Replacement Harbour Loan Agreement (in each case as in force on the date of this Agreement); and
(e)	any Security Interest arising in respect of the Precedent Facility Agreement that will be irrevocably discharged upon the Drawdown Date (or, in respect of any Icelandic general bond, as soon as possible thereafter).

“Power Contract” means the power contract dated 7th August, 1997 between Landsvirkjun and the Borrower, as amended by the First Amendment to the Power Contract.

“Precedent Facility Agreement” means the $167,200,000 senior facility agreement dated 16 June 2000 between Nordural hf as borrower (1), BNP Paribas S.A. and Dresdner Bank AG London Branch as arrangers (2), the financial institutions listed in Schedule 1 thereof as banks (3), BNP Paribas S.A. as account bank (4), BNP Paribas S.A. as agent (5) and BNP Paribas S.A. as security trustee (6).

“Proceeds Account” has the meaning given to it in the Account Agreement.

“Project” means the design, development, financing, construction, testing, commissioning, operation and maintenance of the Grundartangi Aluminium Smelter and the Harbour Area.

“Project Account” has the meaning given to it in the Account Agreement.

“Project Contract” means:

(a)	the Technology Consultancy Agreement;
(b)	the Investment Agreement;
(c)	the Harbour Agreement;
(d)	the Harbour Usage Agreement;
(e)	the Smelter Site Agreement;
(f)	the Power Contract (together with any supplement thereto or replacement thereof);
(g)	the Tolling Conversion Agreement and the First Amendment to the Tolling Conversion Agreement (together with any supplement thereto or replacement thereof);
(h)	the Anode Supply Agreement (together with any supplement thereto or replacement thereof);
(i)	each Aluminium Hedging Agreement;
(j)	the Billiton Pledge; and

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(k) the Replacement Harbour Loan Agreement,

and any other material contract entered into by the Borrower relating to the Project which both the Borrower and Agent designate as a Project Contract.

“Project Expansion” means the completed expansion of the Grundartangi Aluminium Smelter to reach an output level of 89,100 tonnes of aluminium per annum.

“Project Facilities” means:

(a)	the Site; and
(b)	the Project.

“Project Taxes” means all Taxes payable or to be payable by the Borrower.

“Qualifying Issuer” means a bank or financial institution that has a credit rating for its unsecured and unsubordinated long or medium term debt of at least A with Standard & Poor’s.

“Ratio” means the Debt Service Cover Ratio or the Loan Life Cover Ratio.

“Reference Banks” means, subject to Clause 26.4 (Reference Banks), the Agent, BNP Paribas S.A. and Fortis Bank (Nederland) N.V.

“Repayment Date” means the First Repayment Date, the Final Repayment Date and each other date for the payment of a Repayment Instalment specified in Clause 6.1 (Repayment Instalments) (as adjusted if appropriate pursuant to Clause 10.6 (Non-Business Days)).

“Repayment Instalment” means each-Base Case Repayment Instalment, Deferral Repayment Instalment and/or any additional amounts which the Borrower is required to repay pursuant to Clause 6.1 (Repayment Instalments).

“Replacement Harbour Loan Agreement” means the US$3,000,000 loan agreement dated 23^rd June, 1998 between the Borrower as borrower and Landsbanki Islands hf as lender.

“Request” means a request made by the Borrower for the Loan, substantially in the form of Schedule 3 (Form of Request).

“Required DSRA Balance” has the meaning given to that term in the Account Agreement.

“Reserved Cashflow Account” has the meaning given to that term in the Account Agreement.

“Reserved Discretion” means the rights of the Borrower under the Project Contracts listed in Schedule 5 (Reserved Discretions).

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“Revenue Damages” means all damages paid under the Anode Supply Agreement (or any supplement thereto or replacement thereof), the Power Contract (or any supplement thereto or replacement thereof), the Tolling Conversion Agreement (or any supplement thereto or replacement thereof), any liquidated damages paid for delay under any construction contract (including any associated claim under any bond and/or guarantee in respect of such construction contract) and any other damages paid under any Project Contract compensating the Borrower for loss of its revenue or increase in its Operating costs.

“Security Asset” means any asset the subject of any Security Interest under the Security Documents.

“Security Documents” means:

(a)	the Shares Pledge;
(b)	the Charge and Assignment;
(c)	the Assignment Agreement;
(d)	the General Bond;
(e)	the Declaration of Pledge;
(f)	any shares pledge entered into pursuant to Clause 4 of the Sponsor Funding Agreement;
(g)	any Loan Assignment; and
(h)	any security document entered into pursuant to Clause 2.3 Of Schedule 8 (Insurances),

and any other document evidencing or creating any Security Interest over any asset Of a Group Company to secure any obligations of the Group Company to a Finance Party under the Finance Documents.

“Security Interest” means any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having the effect of conferring rights equivalent to security (for the avoidance of doubt, retention of title is not a Security Interest on the Borrower’s assets).

“Senior Debt Service Obligations” means in respect of any period:

(a) the aggregate principal amount of scheduled Base Case Repayment Instalments that have fallen due or will fall due (or which would have fallen due if Clause 6.2 (Deferrals) had not applied) during such period in accordance with the provisions of this Agreement;

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(b)	the aggregate principal amount of Deferred Instalments that have fallen due or will fall due during such period in accordance with the provisions of this Agreement;
(c)	the aggregate principal amount of scheduled repayments that have fallen due or will fall due during such period in respect of the Site Obligations and Harbour Loan in accordance with the Smelter Site Agreement and the Replacement Harbour Loan Agreement respectively; and
(d)	Financing Costs accruing during such period.

“Shareholder” means Columbia Ventures Corporation incorporated in the State of Washington, United States of America.

“Shareholder Debt” has the meaning given to that term in the Intercreditor Agreement.

“Shares Pledge” means the Icelandic law shares pledge to be entered into on or about Financial Close between the Borrower, the Shareholder, any other shareholders and the Security Trustee.

“Site” means the Smelter Site and the Harbour Area.

“Site Obligations” means the sums provided in an aggregate amount of $7,000,000 plus capitalised interest under the Smelter Site Agreement.

“Smelter Site” has the meaning given to that term in the Smelter Site Agreement as in effect on the date of this Agreement.

“Smelter Site Agreement” means the smelter site agreement dated 20th March, 1997 between the Treasury and the Borrower and the first amendment agreement dated 7th August, 1997 between the same parties.

“Sponsor Funding Agreement” means the sponsor funding agreement to be entered into On or prior to Financial Close between the Shareholder, the Borrower and the Security Trustee.

“Subordinated Debt” has the meaning given to that term in the Intercreditor Agreement.

“Subordinated Loan” has the meaning given to that term in the Sponsor Funding Agreement.

“Subsidiary” means an entity from time to time of which a person has direct or indirect control, or owns directly or indirectly more than fifty per cent. (50%) of the share capital or similar right of ownership.

“Substances” means any radioactive emissions and any natural or artificial substance (whether in solid or liquid form or in the form of a gas or vapour and whether alone or in combination with any other substance) capable of causing harm to man or any Other

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living organism or damaging the environment or public health or welfare including but not limited to any controlled, special, hazardous, toxic, radioactive or dangerous waste.

“Taxes” means any present or future income and other tax, levy, impost, duty, charge, fee, deduction or withholding in the nature of tax (including interest thereon and penalties in respect thereof), whatever called, wherever imposed, levied, collected, withheld or assessed and “Tax” shall be construed accordingly.

“Technical Assumptions” means the technical assumptions as set out in part 3 of the Model Assumption Book in each case as identified by line items from the Computer Model.

“Technical Committee” means the Agent, the Arrangers and the Banks’ Technical Adviser.

“Technology Consultancy Agreement” means the technology consultancy agreement dated 24th April, 1997 between VAW Aluminium-Technologie GmbH (now Hydro Aluminium Technologie GmbH) and Columbia Aluminium Corporation together with the side letter relating thereto dated 17th May, 2000.

“Tolling Conversion Agreement” means the tolling conversion agreement dated 23rd September, 1997 between Billiton Marketing B.V. (formerly Billiton Marketing and Trading B.V.) and the Borrower, as amended by the First Amendment to the Tolling Conversion Agreement and in respect of which the rights and obligations of Billiton Marketing B.V. were novated to Billiton Marketing A.G. (“BMT”) in August 2000.

“Total Commitments” means the aggregate for the time being of the Commitments, being $185,000,000 at the date of this Agreement.

“Treasury” means the State Treasury of the Government of the Republic of Iceland.

“Working Capital Balance” means $500,000 or such other amount as may be agreed with the Majority Banks from time to time.

1.2 Construction

1.2.1 In this Agreement, unless the contrary intention appears, a reference to:

(a)	“agreed form” means in the form agreed between the Borrower and the Agent and initialled by them for the purposes of identification;
	an “amendment” includes a supplement, replacement, novation or reenactment and “amend” and “amended” are to be construed accordingly;
	“assets” includes properties, contracts, revenues and rights of every description, present, future and contingent;

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an “authorisation” includes an authorisation, consent, approval, resolution, licence, permit, exemption, filing, registration and notarisation;

“control” means the power to direct the management and policies of an entity, whether through the ownership of voting capital, by contract or otherwise and/or the power to appoint or remove a majority of an entity’s directors;

“(indexed)” after a figure means that the Figure shall be increased from time to time to reflect increases since the date of this Agreement in the Consumer Price Index produced by the Bureau of Labor Statistics in the United States or, if such index is no longer published, the index that replaces it (adjusted to take account of any rebasing);

“international accounting standards” means accounting principles issued by the International Accounting Standards Committee;

a period of one or more “months” is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the relevant later calendar month, except that:

(i)	if there is no numerically corresponding day in the month in which that period ends, that period shall end on the last day in that calendar month; or
(ii)	if an Interest Period commences on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which it is to end;

a “regulation” includes any regulation, rule, Order, official directive, request or guideline (whether or not having the force of law) of any governmental, inter-governmental or supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;

“force majeure”, for the purposes of Clause 17.19 (Project Events), means any event outside the reasonable control of the Borrower;

(b)	a provision of law is a reference to that provision as amended or re-enacted;
(c)	a Clause or a Schedule is a reference to a clause of or a schedule to this Agreement;
(d)	a person includes its successors, assigns, transferees and, in relation to a Major Project Party, a permitted replacement thereof;

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(e)	a Finance Document or (without limitation) any other document is a reference to that Finance Document or other document as amended (in the case of the Project Contracts as permitted pursuant to this Agreement);
(f)	a time of day is a reference to London time (unless Otherwise provided);
(g)	a Ratio is a reference to that Ratio as most recently determined in accordance with the Clause 18 (Forecasting); and
(h)	words importing the singular shall include the plural and vice versa.

1.2.2	Unless the contrary intention appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
1.2.3	The index to and the headings in this Agreement are for convenience only and are to be ignored in construing this Agreement.
1.2.4	(a) Unless expressly provided to the contrary in a Finance Document, a person who is not a party to a Finance Document may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999.

(b) Notwithstanding any term of any Finance Document, the consent of any third party is not required for any variation (including any release or compromise of any liability under) or termination of that Finance Document.

2.	FACILITY
2.1	Facility
	Subject to the terms of this Agreement, the Banks agree to make a Loan during the Commitment Period to the Borrower up to an aggregate principal amount not exceeding the Total Commitments. No Bank is obliged to lend more than its Commitment.
2.2	Nature of a Finance Party’s Rights and Obligations

2.2.1	The obligations of a Finance Party under the Finance Documents are several. Failure of a Finance Party to carry out those obligations does not relieve any other Party of its obligations under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
2.2.2	The rights of a Finance Party under the Finance Documents are divided rights. Subject to Clause 17.24 (No Independent Action) a Finance Party may, except as otherwise stated in the Finance Documents, separately enforce those rights.

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3. PURPOSE

3.1.1 The Borrower shall apply the Loan drawn down under this Agreement only towards:

(a)	repayment of all amounts outstanding under the Precedent Facility Agreement;
(b)	funding directly the Distributions Account in an amount equal to the Initial Shareholder Distribution;
(c)	amounts payable pursuant to Clauses 20 (Fees) and 21 (Expenses);
(d)	stamp duty, notarial fees and registration fees payable (if any) in respect of the Finance Documents; and
(e)	any other purpose approved by the Majority Banks in writing.

3.1.2 Without affecting the obligations of the Borrower in any way, no Finance Party is bound to monitor or verify the application of the Loan.

4.	CONDITIONS PRECEDENT
4.1	Documentary Conditions Precedent
	The Borrower may not deliver the Request until the Agent has notified the Borrower and the Banks that it has received all of the documents and/or evidence set out in Schedule 2 (Condition Precedent Documents) in the agreed form (if any) or otherwise in form and substance satisfactory to the Banks. The Agent undertakes to so notify the Borrower promptly upon satisfaction of this condition precedent.
4.2	Further Conditions Precedent
	The obligation of each Bank to participate in the Loan under Clause 5.3 (Advance of Loan) is subject to the further conditions precedent that:

4.2.1 on both the date of the Request and the Drawdown Date:

(a)	the representations and warranties in Clause 15 (Representations and Warranties) to be repeated on those dates are correct and will be correct immediately after the Loan is made; and
(b)	no Default is outstanding or would result from the Loan;

4.2.2 the amount of the Loan does not exceed the Total Commitments.

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5.	DRAWDOWN
5.1	Commitment Period
	The Borrower may borrow the Loan during the Commitment Period if the Agent receives, not later than 11.00 a.m. (London time) three Business Days before the proposed Drawdown Date, a duly completed Request. The Request is irrevocable.
5.2	Completion of Requests
	A Request will not be regarded as having been duly completed unless:

5.2.1	the Drawdown Date is a Business Day falling on or before the expiry of the Commitment Period;
5.2.2	the amount of the Loan is:

(a)	equal to the amount of the Total Commitments; or
(b)	such other amount as the Agent may agree;

5.2.3	the first Interest Period selected complies with Clause 8 (Interest Periods); and
5.2.4	the payment instructions comply with Clause 10 (Payments).

	The Request must specify one Loan only and the Borrower may not deliver more than one duly completed Request during the Commitment Period.
5.3	Advance of Loan

5.3.1	The Agent shall promptly notify the Account Bank and each Bank of the details of the requested Loan and each Bank of the amount of its participation in the Loan.
5.3.2	Subject to the terms of this Agreement, each Bank shall make its participation in the Loan available to the Agent for the account of the Borrower on the relevant Drawdown Date. The amount of each Bank’s participation in the Loan will be the proportion of the Loan which its Commitment bears to the Total Commitments at close of business on the date of the Request.

6.	REPAYMENT
6.1	Repayment Instalments
	The Borrower shall repay the Loan on each Repayment Date set out in the table below in an amount equal to:

6.1.1 the aggregate of:

(a) the Base Case Repayment Instalment relating to that Repayment Date; and

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(b) the sum of (^A/_B)X C

where:
A	=	the Base Case Repayment Instalment relating to that Repayment Date;
B	=	the aggregate amount of all outstanding Base Case Repayment Instalments (including the Base Case Repayment Instalment relating to that Repayment Date); and
C	=	the aggregate principal amount of all outstanding Deferral Instalments; or

6.1.2 if Clause 6.2 (Deferrals) applies, but not otherwise, in an amount equal to the Deferral Repayment Instalment,

and all other amounts outstanding under this Agreement shall be paid on the Final Repayment Date if not previously due.

This is the table referred to above:

Repayment Date	Base Case Repayment Instalment %
30th November, 2003		3.61
30th June, 2004		3.75
31st December, 2004		3.75
30th June, 2005		3.23
31st December, 2005		3.23
30th June, 2006		2.91
31st December, 2006		2.91
30th June, 2007		3.16
31st December, 2007		3.16
30th June, 2008		3.38
31st December, 2008		3.38
30th June, 2009		3.63
31st December, 2009		3.63

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Repayment Date	Base Case Repayment Instalment %
30th June, 2010		3.88
31st December, 2010		3.88
30th June, 2011		3.70
31st December, 2011		3.70
30th June, 2012		2.74
31st December, 2012		2.74
30th June, 2013		2.94
31st December, 2013		2.94
30th June, 2014		3.08
31st December, 2014		3.08
30th June, 2015		3.24
31st December, 2015		3.24
30th June, 2016		3.39
31st December, 2016		3.39
30th June, 2017		3.49
31st December, 2017		3.48
30th June, 2018		3.36

6.2 Deferrals

6.2.1 Subject to Clauses 6.2.2 to 6.2.5, if on any Repayment Date other than the First Repayment Date or any Repayment Date falling in the 12 month period ending on the Final Repayment Date:

(a) the Borrower cannot pay both the Base Case Repayment Instalment due and the amount determined due by the formula in Clause 6.1. l(b) (or, in each case, which would have been due but for this Clause 6.2 (Deferrals)) in full on that Repayment Date using (other than Amounts Payable and the Working Capital Balance) the proceeds of amounts standing to the credit of the Proceeds Account and after demand has been made of all amounts outstanding under the Debt Service Reserve L/C and application of any amounts standing to the credit of the Debt Service Reserve Account or any other Project Account (other than, the Dividend Reserve Account and, in each case, after the Borrower has

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	provided reasonable evidence to the Banks’ Technical Adviser in relation to the proposed use of the relevant amounts, the Compensation Account (to the extent that amounts in such account are to be applied by the Borrower to the reinstatement or repair of the asset in relation to which the relevant payment arose within the following six month period) and the Insurance Account (to the extent that amounts in such account are to be applied in respect of the costs of repair, restoration or replacement of the Project Facilities or part thereof in accordance with paragraph 7.3 to 7.6 of Schedule 8)) on that Repayment Date; and
(b)	the Debt Service Cover Ratio (as evidenced in the Deferral Certificate) is
	less than 1.1:1; and
(c)	the average LME Cash Price for the six months prior to that Repayment
	Date is less than $1,230 per metric tonne,

	(together, the “Deferral Conditions”), then the Borrower shall only repay the Loan on that Repayment Date (subject to Clause 6.2.4 (Deferrals)) in an amount equal to the balance of amounts (other than Amounts Payable on such date and the Working Capital Balance) standing to the credit of the Proceeds Account, together with all amounts Outstanding under the Debt Service Reserve L/C and application of any amounts standing to the credit of the Debt Service Reserve Account or any other Project Account (other than, the Dividend Reserve Account and, in each case, after the Borrower has provided reasonable evidence to the Banks’ Technical Adviser in relation to the proposed use of the relevant amounts, the Compensation Account (to the extent that amounts in such account are to be applied by the Borrower to the reinstatement or repair of the asset in relation to which the relevant payment arose within the following six month period) and the Insurance Account (to the extent that amounts in such account are to be applied in respect of the costs of repair, restoration or replacement of the Project Facilities or part thereof in accordance with paragraph 7.3 to 7.6 of Schedule 8)) on that Repayment Date (each a “Deferral Repayment Instalment”). Deferral Repayment Instalments shall be applied firstly against relevant Base Case Repayment Instalments and secondly against Deferral Instalments (in the order that they have been outstanding).
6.2.2	Notwithstanding the subsistence of the Deferral Conditions at any time and subject to Clause 6.2.6, no more than 3 Deferral Instalments in respect of the Loan may be outstanding at any time on or prior to 31 December 2010 and no more than 2 Deferral Instalments in respect of the Loan may be outstanding at any time after 1 January 2011.
6.2.3	If the Borrower wishes to rely on the provisions of this Clause 6.2 in order to make a Deferral Repayment Instalment, it shall provide the Agent with a certificate (the “Deferral Certificate”) 5 Business Days preceding the relevant Repayment Date. The Deferral Certificate shall specify the Debt Service

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	Cover Ratio which shall be calculated up to the relevant Calculation Date, using actual financial information to the extent available, otherwise using reasonable estimates, on the basis set out in Clauses 18.9.1 and 18.9.2.
6.2.4	The provisions of this Clause 6.2 (Deferrals) shall only apply if the Deferral Conditions are satisfied and, for the avoidance of doubt, shall only apply to payments of principal under this Agreement and not to any other amounts payable under this Agreement. The provisions of this Clause 6.2 (Deferrals) shall not apply to the Base Case Repayment Instalment payable on the First Repayment Date.
6.2.5	Any amount repaid by the Borrower pursuant to Clause 6.1.1(b) shall be applied against Deferral Instalments in the order that they became outstanding.
6.2.6	If, as at 1 January 2011, 3 Deferral Instalments are outstanding, on each subsequent Repayment Date until such time as only the two most recent Deferral Instalments are outstanding, the Borrower shall apply all Excess Cash as of that Repayment Date towards repayment of the Deferral Instalment that has been outstanding for the longest period of time until such time that only the two most recent Deferral Instalments remain outstanding.

7.	PREPAYMENT AND CANCELLATION
7.1	Voluntary Prepayment
	The Borrower may, by giving not less than five Business Days prior written notice to the Agent, prepay the Loan on the last day of an Interest Period in whole or in part (but, if in part, either (a) in a minimum amount of $3,000,000 and an integral multiple of $500,000) or (b) in the amount of any outstanding Deferral Instalment (or the aggregate of 2 or more outstanding Deferral Instalments). Any such prepayment shall be applied firstly against Deferral Instalments (in the order that they have been outstanding) and second against the Base Case Repayment Instalments, pro-rata or in inverse order of maturity at the Borrower’s option.
7.2	Automatic Cancellation
	The Commitment of each Bank shall be automatically cancelled at the close of business in London on the expiry of the Commitment Period.
7.3	Additional Right of Prepayment and Cancellation
	If:

7.3.1	the Borrower is required to pay to a Bank any additional amounts under Clause 11 (Taxes); or
7.3.2	the Borrower is required to pay to a Bank any amount under Clause 13 (Increased Costs); or

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7.3.3	interest on a Bank’s participation in the Loan is being calculated in accordance with Clause 12.4.3 (Alternative Basis for Outstanding Loans); or
7.3.4	any Lender notifies the Agent of its Additional Cost Rate under paragraph 3 of Schedule 7 (Mandatory Cost Formulae),

then, without prejudice to the obligations of the Borrower under those Clauses, the Borrower may, whilst the circumstances continue or whilst (in the case of Clause 7.3.4 above) that Additional Cost Rate is greater than zero, serve a notice of prepayment and cancellation on that Bank through the Agent. Subject to Clause 7.6 (Limitations on Certain Prepayments), on the date falling five Business Days after the date of service of the notice:

(a)	the Borrower shall prepay that Bank’s participation in the Loan; and
(b)	the Commitment of that Bank shall be cancelled.

Prepayments made pursuant to this Clause 7.3 shall be applied firstly against Deferral Instalments (in the order that they have been outstanding) and secondly against the outstanding Base Case Repayment Instalments pro rata.

7.4 Mandatory Prepayments

7.4.1 (a) The Borrower shall, within 10 Business Days following receipt of any:

(i)	Compensation;
(ii)	damages payments payable pursuant to any Construction Contract and/or any associated claim under any bond and/or guarantee in respect of such Construction Contract (excluding any liquidated damages for delay thereunder),

in an amount in each case in excess of $1,000,000, prepay the Loan in an amount equal to that receipt provided that the provisions of this paragraph shall not apply to amounts within paragraph 7.4.1(a)(ii) above if:

(1)	the Borrower certifies in writing to the Agent prior to the expiry of such 10 Business Day period that amounts are to be applied by it to the reinstatement or repair of the asset in relation to which the relevant payment arose; and
(2)	such amounts are applied or committed in the manner described in the Borrower’s certificate within six months of receipt by it of the relevant amount;

(b) The Borrower shall, following receipt of any Insurance Proceeds apply them in accordance with paragraphs 7.3 to 7.6 of Schedule 8 (Insurances).

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7.4.2 If (i) the Debt Service Cover Ratio as of any Calculation Date exceeds 1.75:1; or (ii) the average LME Cash Price exceeds $1,675 per metric tonne, in each case for the period from the First Repayment Date to the next Calculation Date (both dates inclusive) and thereafter for any period Of six months ending on a subsequent Calculation Date (each such period, a “Relevant Period”) then the Borrower shall prepay within 10 Business Days of the relevant Calculation Date or the Determination Date (as the case may be) an amount which is equal to:

(a)

if (i) only applies (1) Cash Available for Debt Service for the Relevant Period, as utilised in calculating the Debt Service Cover Ratio as at that Calculation Date, exceeds (2) that amount of Cash Available for Debt Service for the Relevant Period, which if it had been used in calculating the Debt Service Cover Ratio for the Relevant Period as at that Calculation Date, would have produced a ratio of 1.75:1; and

(b)

if (ii) only applies (1) Cash Available for Debt Service for the Relevant Period exceeds (2) Cash Available for Debt Service for the Relevant Period if the LME Cash Price of $1,675 per metric tonne applied throughout the Relevant Period,

	provided that if (i) and (ii) above apply the Borrower shall prepay an amount equal to the greater of (a) or (b) above and provided further that the maximum aggregate amount the Borrower shall be obliged to prepay under this Clause 7.4.2 (Mandatory Prepayments) shall not exceed an amount equal to 22 per cent. (22%) of the aggregate principal amount outstanding under this Agreement at the end of the Commitment Period.
7.4.3	If at the end of any two year period ending on a Calculation Date, either of the Debt Service Cover Ratio or Loan Life Cover Ratio or both of the Ratios tested as at that Calculation Date and each of the three previous Calculation Dates during that two year period was less than 1.25:1 on the occasion of each and every such test, then within 10 Business Days of the applicable Determination Date relating to that Calculation Date the Borrower shall apply all amounts standing to the credit of the Reserved Cashflow Account (if any) in prepayment of the Loan.
7.4.4	If, on 30 November 2013, either the Tolling Conversion Agreement or the Anode Supply Agreement has not been extended, supplemented or replaced in each case on terms reasonably satisfactory to the Majority Banks and with a term that ends on or after the Final Repayment Date, the Borrower shall apply all amounts standing to the credit of the Dividend Reserve Account at such date (if any) in prepayment of the Loan.
7.4.5	Any prepayment pursuant to paragraphs 7.4.1 to 7.4.4 above shall be applied against first, Deferral Instalments (in the order that they have been outstanding) and second, the Base Case Repayment Instalments, in the case of

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Clauses 7.4.1 or 7.4.2, in inverse order of maturity and in the case of Clauses 7.4.3 or 7.4.4, pro rata.

7.5 Miscellaneous Provisions

7.5.1	Any notice of prepayment and/or cancellation under this Agreement is irrevocable. The Agent shall notify the Banks promptly of receipt of any such notice.
7.5.2	All prepayments under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to Clause 23.2 (Other Indemnities), without premium or penalty.
7.5.3	No prepayment or cancellation is permitted except in accordance with the express terms of this Agreement.
7.5.4	No amount of the Total Commitments cancelled under this Agreement may subsequently be reinstated.
7.5.5	No amount prepaid under this Agreement may subsequently be re-borrowed.

7.6	Limitations on Certain Prepayments
	The Borrower:

7.6.1	shall only be obliged to prepay outstanding Loans to a particular Bank, and that Bank’s Commitments shall only be cancelled, under Clause 14 (Illegality); and
7.6.2	may only prepay outstanding Loans to, and cancel the Commitments of, a particular Bank under Clause 7.3 (Additional Right of Prepayment and Cancellation),

	to the extent that the Borrower on any Repayment Date has sufficient funds which it is entitled to use for such purpose pursuant to the Account Agreement.
8.	INTEREST PERIODS
8.1	Selection

8.1.1

Subject to Clause 8.1.4 (Selection), the Borrower may select an Interest Period for the Loan in either the Request or, if the Loan has been borrowed, a notice received by the Agent not later than seven Business Days before the commencement of that Interest Period. The first Interest Period for the Loan will commence on the Drawdown Date and subsequent Interest Periods will commence on the expiry of its preceding Interest Period.

8.1.2

Subject to the following provisions of this Clause 8, each Interest Period will be one, three or six months or any other period agreed by the Borrower and the Banks.

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8.1.3	If the Borrower does not select an Interest Period for an outstanding Loan in accordance with paragraph 8.1.1 above, that Interest Period will, subject to the other provisions of this Clause 8, be one month.
8.1.4	The Borrower shall select Interest Periods which are consistent with the Borrower’s interest rate hedging strategy and any Interest Rate Hedging Agreements it has entered into.

8.2	Non-Business Days
	If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
8.3	Coincidence with Repayment Dates
	If an Interest Period would otherwise overrun the Final Repayment Date, it shall be shortened so that it ends on the Final Repayment Date. The Agent may (in consultation with the Borrower) and shall at the Borrower’s request also shorten any Interest Period for the Loan (and/or notionally redesignate the Loan as two Loans) to ensure that the aggregate principal amount with an Interest Period ending on a Repayment Date is not less than the Repayment Instalment due on that Repayment Date.
8.4	Other Adjustments
	The Agent and the Borrower may enter into such other arrangements as they may agree for the adjustment of Interest Periods and the consolidation and/or splitting the Loan.
8.5	Notification
	The Agent shall notify the Borrower and the Banks of the duration of each Interest Period promptly after ascertaining its duration.
8.6	Number of Loans
	There shall at no time be more than two Loans outstanding.
9.	INTEREST
9.1	Interest Rate

9.1.1 Subject to Clause 9.1.2, the rate of interest on the Loan for each of its Interest Periods is the rate per annum determined by the Agent to be the aggregate of the applicable:

(a)	Margin;
(b)	LIBOR; and
(c)	Mandatory Cost.

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9.1.2 Without prejudice to Clause 17.12 (Project Contracts and Direct Agreements), if, any of the following occurs:

(a)	at any time in the period 1 January 2010 up to and including 31 December 2013, the Tolling Conversion Agreement is not in full force and effect or has not been extended, supplemented or replaced on terms reasonably satisfactory to the Majority Banks; or
(b)	at any time in the period 1 January 2010 up to and including 31 December 2013, the Anode Supply Agreement is not in full force and effect or has not been extended, supplemented or replaced on terms reasonably satisfactory to the Majority Banks; or
(c)	at any time on or after 1 August 2008 Hydro Aluminium Deutschland GmbH gives notice of its intention to negotiate an amendment to the basic price and/or negotiate a price adjustment under the Clause 20 of the Anode Supply Agreement and, following the conclusion of the resulting arbitration there is a material adverse change to the terms of the Anode Supply Contract (compared to the terms in existence at the date of this Agreement),

then the Margin shall be 1.65% per annum.

9.2	Due Dates
	Except as otherwise provided in this Agreement, accrued interest on the Loan is payable by the Borrower on the last day of each Interest Period and also, if the Interest Period is longer than six months, on the dates falling at six monthly intervals after the first day of that Interest Period.
9.3	Default Interest

9.3.1 If the Borrower fails to pay any amount payable by it under the Finance Documents on the due date, it shall, forthwith on demand by the Agent, pay interest on the overdue amount from the due date up to the date of actual payment, as well after as before judgement, at a rate (the “default rate”) determined by the Agent to be two per cent, per annum above the higher of:

(a)	the rate on the overdue amount under Clause 9.1 (Interest Rate) immediately before the due date (if of principal); and
(b)	the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for such successive Interest Periods of such duration as the Agent may determine (each a “Designated Interest Period”).

9.3.2 The default rate will be determined by the Agent on each Business Day or the first day of, or two Business Days before the first day of, the relevant Designated Interest Period, as appropriate.

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9.3.3	If the Agent determines that deposits in the currency of the overdue amount are not at the relevant time being made available by the Reference Banks to leading banks in the London interbank market, the default rate will be determined by reference to the cost of funds to the Agent from whatever sources it may select.
9.3.4	Default interest will be compounded at the end of each Designated Interest Period.

9.4	Notification
	The Agent shall promptly notify each relevant Party of the determination of a rate of interest under this Agreement.
10.	PAYMENTS
10.1	Place
	AH payments by the Borrower or a Bank under the Finance Documents shall be made to the Agent to its account at such office or bank as it may notify to the Borrower or Bank for this purpose.
10.2	Funds
	Payments under the Finance Documents to the Agent shall be made for value on the due date at such times and in such funds as the Agent may specify to the Party concerned as being customary at the time for the settlement of transactions in Dollars.
10.3	Distribution

10.3.1 Each payment received by the Agent under the Finance Documents for another Party shall, subject to paragraph 10.3.2 below, be made available by the Agent to that Party by payment (on the date and in the currency and funds of receipt):

(a)	in the case of a Party other than the Borrower to its account with such office or bank in the principal financial centre of the country of the relevant currency as it may notify to the Agent for this purpose by not less than five Business Days’ prior notice; and
(b)	in the case of the Borrower to the Proceeds Account.

10.3.2 Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that Party until it has established that it has actually received that sum. The Agent may, however, assume that the sum has been paid to it in accordance with this Agreement, and, in reliance on that assumption, make available to that Party a corresponding amount. If the sum has not been made available but the Agent has paid a corresponding amount to another Party, that Party shall forthwith on demand by the Agent refund the corresponding amount together with

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interest on that amount from the date of payment to the date of receipt, calculated at a rate determined by the Agent to reflect its cost of funds.

10.4 Currency

10.4.1	Amounts payable in respect of costs, expenses and taxes and the like are payable in the currency in which they are incurred.
10.4.2	Any other amount payable under the Finance Documents is, except as otherwise provided in the Finance Documents, payable in Dollars.

10.5	Set-off and Counterclaim
	All payments made by the Borrower under the Finance Documents shall be made without set-off or counterclaim.
10.6	Non-Business Days

10.6.1	If a payment under the Finance Documents is due on a day which is not a Business Day, the due date for that payment shall instead be the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).
10.6.2	During any extension of the due date for payment of any principal under this Agreement pursuant to Clause 10.6.1 (Non-Business Days) interest is payable on that principal at the rate payable on the original due date.

10.7 Partial Payments

10.7.1 If the Agent receives a payment insufficient to discharge all the amounts then due and payable by the Borrower under the Finance Documents, the Agent shall apply that payment towards the obligations of the Borrower under the Finance Documents in the following order:

(a)	first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent, the Security Trustee and the Account Bank;
(b)	secondly, in or towards payment pro rata of any accrued interest due but unpaid under this Agreement;
(c)	thirdly, in or towards payment pro rata of any other Financing Costs due but unpaid under this Agreement;
(d)	fourthly, in or towards payment of any Deferral Instalment unpaid (such payment to be applied against Deferral Instalments in the order they became outstanding);
(e)	fifthly, in or towards payment pro rata of any other Financing Principal due but unpaid under this Agreement; and

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(f) sixthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

10.7.2	The Agent shall, if so directed by all the Banks, vary the order set out in sub-paragraphs 10.7. l(b) to 10.7.1(f) above.
10.7.3	Paragraphs 10.7.1 and 10.7.2 above shall override any appropriation made by the Borrower.

11.	TAXES
11.1	Gross-up
	All payments by the Borrower under the Finance Documents shall be made without any deduction and free and clear of and without any deduction for or on account of Taxes, except to the extent that the Borrower is required by law to make payment subject to any Taxes. If any Tax or amounts in respect of Tax must be deducted, or any other deductions must be made, from any amounts payable or paid by the Borrower, or paid or payable by the Agent to a Bank, under the Finance Documents, the Borrower shall pay such additional amounts as may be necessary to ensure that the relevant Bank receives a net amount equal to the full amount which it would have received had payment not been made subject to tax or other deduction.
11.2	Tax Receipts
	All Taxes required by law to be deducted by the Borrower from any amounts paid or payable under the Finance Documents shall be paid by the Borrower when due and the Borrower shall, within 15 days of the payment being made, deliver to the Agent for the relevant Bank evidence satisfactory to that Bank (including all relevant tax receipts) that the payment has been duly remitted to the appropriate authority.
11.3	Tax Credits
	If the Borrower pays an additional amount under Clause 11.1 (Gross-up) (a “Tax Payment”) and a Bank effectively obtains a refund of Tax or credit against Tax by reason of that Tax Payment (a “Tax Credit”) and is able to identify the Tax Credit as being attributable to the Tax Payment, then the Bank concerned shall reimburse to the Borrower the amount which that Bank determines to be the proportion of the Tax Credit which will leave it (after that reimbursement) in no better or worse position than it would have been in if the Tax Payment had not been required. Each Bank shall have an absolute discretion as to whether to claim any Tax Credit and, if it does claim, the extent, order and manner in which it does so. No Bank is obliged to disclose any information regarding its tax affairs or computations to the Borrower.

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12.	MARKET DISRUPTION
12.1	Absence of Quotations
	If LIBOR is to be determined by reference to Reference Banks but a Reference Bank does not supply an offered rate by 11.30 a.m. two Business Days before the first day of an Interest Period, the applicable LIBOR shall, subject to Clause 12.2 (Market Disruption), be determined on the basis of the quotations of the remaining Reference Banks.
12.2	Market Disruption
	If:

12.2.1	LIBOR is to be determined by reference to the Reference Banks but no, or only one, Reference Bank supplies a rate by 11.30 a.m. two Business Days before the first day of an Interest Period or the Agent otherwise determines that adequate and fair means do not exist for ascertaining LIBOR; or
12.2.2	the Agent receives notification from Banks whose participations in a Loan exceed 50 per cent, of that Loan that, in their opinion:

(a)	matching deposits may not be available to them in the London interbank market in the ordinary course of business to fund their participations in that Loan for the relevant Interest Period; or
(b)	the cost to them of obtaining matching deposits in the London interbank market would be in excess of LIBOR for the relevant Interest Period,

the Agent shall promptly notify the Borrower and the Banks of the fact and that this Clause 12 is in operation.

12.3	Suspension of Drawdowns
	If a notification under Clause 12.2 (Market Disruption) applies to the Loan which has not been made, that Loan shall not be made. However, within five Business Days of receipt of the notification, the Borrower and the Agent shall enter into negotiations for a period of not more than 30 days with a view to agreeing an alternative basis for determining the rate of interest and/or funding applicable to the Loan. Any alternative basis agreed shall be, with the prior consent of all the Banks, binding on all the Parties.
12.4	Alternative Basis for Outstanding Loans
	If a notification under Clause 12.2 (Market Disruption) applies to a Loan which is outstanding, then:

12.4.1 within five Business Days of receipt of the notification, the Borrower and the Agent shall enter into negotiations for a period of not more than 30 days with a view to agreeing an alternative basis for determining the rate of interest and/or funding applicable to that Loan and/or any other Loans;

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12.4.2	any alternative basis agreed under paragraph 12.4.1 above shall be, with the prior consent of all the Banks, binding on all the Parties;
12.4.3	if no alternative basis is agreed, each Bank shall (through the Agent) certify on or before the last day of the Interest Period to which the notification relates an alternative basis for maintaining its participation in that Loan;
12.4.4	any such alternative basis may include an alternative method of fixing the interest rate, alternative Interest Periods or alternative currencies but it must reflect the cost to the Bank of funding its participation in the Loan from whatever sources it may select plus the Margin; and
12.4.5	each alternative basis so certified shall be binding on the Borrower and the certifying Bank and treated as part of this Agreement.

13.	INCREASED COSTS
13.1	Increased Costs

13.1.1 Subject to Clause 13.2 (Exceptions), the Borrower shall forthwith on demand by a Finance Party pay to that Finance Party the amount of any increased cost incurred by it or any of its Holding Companies as a result of:

(a)	the introduction of, or any change in, or any change in the interpretation or application of, any law or regulation; or
(b)	compliance with any regulation made after the date of this Agreement,

	(including any law or regulation relating to taxation, monetary union, or reserve asset, special deposit, cash ratio, liquidity or capital adequacy requirements or any other form of banking or monetary control).
13.1.2	In this Agreement “increased cost” means:

(a)	an additional cost incurred by a Finance Party or any of its Holding Companies as a result of it having entered into, or performing, maintaining or funding its obligations under, any Finance Document; or
(b)	that portion of an additional cost incurred by a Finance Party or any of its Holding Companies in making, funding or maintaining all or any advances comprised in a class of advances formed by or including that Finance Party’s participations in the Loans made or to be made under this Agreement as is attributable to that Finance Party making, funding or maintaining those participations; or
(c)	a reduction in any amount payable to a Finance Party or any of its Holding Companies or in the effective return to a Finance Party or any of its Holding Companies under this Agreement or (to the extent that it is attributable to this Agreement) on its capital; or

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(d) the amount of any payment made by a Finance Party or any of its Holding Companies, or the amount of any interest or other return foregone by a Finance Party or any of its Holding Companies, calculated by reference to any amount received or receivable by that Finance Party or any of its Holding Companies from any other Party under this Agreement.

13.1.3 Each Finance Party or any of its Holding Companies shall give to the Borrower such reasonable details as to how such increased cost has been suffered as the relevant Finance Party considers appropriate provided that no Finance Party or any of its Holding Companies shall be under any obligation under this paragraph to disclose any information relating to its affairs which it in its sole discretion, determines is confidential, commercially sensitive or the disclosure of which would be contrary to any of its usual policies, and no failure to disclose any such information shall limit the relevant Finance Party’s rights under this Clause 13 (Increased Costs).

13.2	Exceptions
	Clause 13.1 (Increased Costs) does not apply to any increased cost:

13.2.1	compensated for by the operation of Clause 11 (Taxes);
13.2.2	compensated for by payment of the Mandatory Cost; or
13.2.3	attributable to any change in the rate of, or change in the basis of calculating Tax on the overall net income of a Bank (or the overall net income of a division or branch of the Bank) imposed in the jurisdiction in which its principal office or Facility Office is situate.

14.	ILLEGALITY
14.1	Illegality
	If it is or becomes unlawful in any jurisdiction for a Bank to give effect to any of its obligations as contemplated by this Agreement or to fund or maintain its participation in any Loan, then:

14.1.1	that Bank may notify the Borrower through the Agent accordingly; and
14.1.2	subject to Clause 7.6 (Limitations on Certain Prepayments);

(a)	the Borrower shall prepay the participations of that Bank in all the Loans together with all other amounts payable by it to that Bank under this Agreement; and
(b)	the Commitment of that Bank will forthwith be cancelled.

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14.2	Mitigation
	If circumstances arise in respect of a Bank which would, or would upon the giving of notice, result in the operation of Clause 11.1 (Taxes), Clause 13.1 (Increased Costs), Clause 14.1 (Illegality) or paragraph 3 of Schedule 7 (Mandatory Cost Formulae) in relation to that Bank then, without in any way limiting, reducing or otherwise qualifying the Borrower’s obligations under such clause, the relevant Bank shall, in consultation with the Agent and the Borrower, use at all times reasonable endeavours to take such steps as may be reasonably open to it to mitigate or remove those circumstances, including a change in its Facility Office or the transfer of its rights and obligations under the Finance Documents to another bank or financial institution acceptable to the Borrower, unless to do so might (in the reasonable opinion of the Bank) be prejudicial to that Bank or conflicts with its banking policies. Nothing in this provision shall require a Bank to disclose any information as to its banking policies or any other matters which it regards as confidential or commercially sensitive.
15.	REPRESENTATIONS AND WARRANTIES
15.1	Representations and Warranties
	The Borrower makes the representations and warranties set out in this Clause 15 (Representations and Warranties) to each Finance Party.
15.2	Status

15.2.1	It is a limited liability company, duly incorporated and in good standing and validly existing under the laws of the jurisdiction of its incorporation.
15.2.2	It has the power to own its assets and to carry on its business as it is being conducted.

15.3	Powers and Authority
	It has the power to enter into and perform, and has taken or, prior to entering in to the Documents, will have taken all necessary action to authorise the entry into, performance and delivery of, the Documents to which it is or will be a party and the transactions contemplated by those Documents.
15.4	Legal Validity
	Each Document to which it is or will be a party constitutes, or when executed in accordance with its terms will constitute, (subject to express qualifications as to matters of law as provided in the Legal Opinions) its legal, valid, binding and enforceable obligations.
155	Non-Conflict
	The entry into and performance by it of, and the transactions contemplated by, the Documents to which it is or will be a party do not and will not:-

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15.5.1	conflict with any law or regulation or judicial or official order; or
15.5.2	conflict with its constitutional documents; or
15.5.3	conflict with any document which is binding upon it or any of its assets.

15.6 No Default

15.6.1	No Default is outstanding;
15.6.2	no other event or circumstance is outstanding which constitutes a material default under any document which is binding on the Borrower or any asset of the Borrower which is likely to have a Material Adverse Effect; and
15.6.3	it is not, and, so far as it is aware after making all reasonable internal enquiries, no Major Project Party is, in breach of the terms of any Project Contract to an extent which is likely to have a Material Adverse Effect.

15.7 Authorisations

15.7.1	All authorisations required in connection with the entry into, performance, validity and enforceability of the Documents and the transactions contemplated by the Documents (including the carrying out of the Project) have been or will be obtained or effected on or before the date they are required in order to implement the Project, are or will be in full force and effect and no steps have been taken to revoke or cancel any authorisation obtained or effected.
15.7.2	It has not received any notice from any relevant authority that any authorisation not yet required but that will be required for the purposes set out in paragraph (a) above will not be obtained or effected at the time it is required.
15.7.3	As at the date of this Agreement and (subject as updated by the Borrower) as at Financial Close, to the best of its knowledge and belief (after due enquiry) the only material licences and permits required in connection with the entry into, performance, validity and enforceability of the Documents on the part of the Borrowers and the carrying out of the Project are those set out in part c of Schedule 2 and the Industrial Licence and Operating Permit.

15.8	Pari Passu Ranking
	Its obligations under the Finance Documents rank and will rank at least pari passu with all its unsecured obligations other than those obligations which mandatorily have priority by operation of law applicable to companies in Iceland generally.

15.9	Taxes on Payments
	All amounts payable by it under the Finance Documents may be made free and clear of and without deduction for or on account of any tax.

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15.10	Ownership of Assets
	It:

15.10.1	has or will have good title to, or freedom to use (in accordance with any applicable laws, the Smelter Site Agreement and the Harbour Agreement) the Site and any other assets necessary from time to time to implement and operate the Project in accordance with the Project Contracts;
15.10.2	has good and marketable title to all of the assets which are reflected in its latest audited financial statements; and
15.10.3	has or will have acquired and/or has or will have vested in it at or before the time at which they are necessary:

(a)	access to the Site; and
(b)	all easements, wayleaves and other rights required in order to implement and operate the Project in accordance with the Project Contracts,

in each case:

(i)	subject to no Security Interest other than any Permitted Security Interests; and
(ii)	free from any material restrictions and onerous covenants (save as set out in the Smelter Site Agreement and the Harbour Agreement).

15.11	Stamp Duties
	Save as expressly provided in any Legal Opinions, no stamp or registration duty or similar taxes or charges are payable in respect of any Document.
15.12	Immunity

15.12.l The execution by it of each Document to which it is a party constitutes, and its exercise of its rights and performance of its obligations under each Document to which it is a party will constitute, private and commercial acts done and performed for private and commercial purposes; and

15.12.2 It will not be entitled to claim immunity from suit, execution, attachment or other legal process in any proceedings taken in relation to any Document to which it is a party.

15.13 Jurisdiction/Governing Law

15.13.1 Subject as expressly provided in the Legal Opinions, its:

(a) irrevocable submission under Clause 36 (Jurisdiction) to the jurisdiction of the courts of England; and

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(b) agreement that this Agreement is governed by English law; are legal, valid and binding under the laws of Iceland; and

15.13.2 any judgment obtained in England or Germany will be recognised and be enforceable by the courts of Iceland.

15.14 Accounts

Its audited accounts most recently delivered to the Agent:

15.14.1	have been prepared in accordance with international accounting standards consistently applied;
15.14.2	have been audited by PriceWaterhouseCoopers or such other firm of international auditors acceptable to the Majority Banks; and
15.14.3	fairly represent its financial condition as at the date to which they were drawn up,

and there has been no undisclosed material adverse change in its financial condition since the date to which those accounts were drawn up.

15.15 Litigation

No litigation, arbitration or administrative proceedings are current or, to its knowledge, pending or threatened, which is likely to be adversely determined and, if adversely determined, is likely to have a Material Adverse Effect.

15.16 Information

15.16.1	the factual information contained in the Information Memorandum, to the best of the Borrower’s knowledge and belief, was true in all material respects as at its date, or as the case may be, the date on which it was supplied;
15.16.2	all factual information material to the Project supplied to the Arrangers by the Borrower, the Shareholder, its advisers or the Borrower’s Manager, to the best of the Borrower’s knowledge and belief, was true in all material respects as at its date or, as the case may be, the date it was supplied to the Arrangers, save to the extent corrected by the Borrower or its advisers or the Borrower’s Manager prior to the date hereof;
15.16.3	the Information Memorandum, to the best of the Borrower’s knowledge and belief, did not omit as at its date any material factual information which would be likely to render them untrue or misleading in any material respect;
15.16.4	nothing has occurred since the date of the Information Memorandum which renders the factual information contained therein untrue or misleading in any material respect, save to the extent of any factual information fully and fairly

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	disclosed by the Borrower at least five Business Days prior to the date on which this representation and warranty is repeated;
15.16.5	the statements of opinion or belief attributed to the Borrower and/or the Shareholder in the Information Memorandum were, as at its date, made in good faith and were arrived at bona fide by the Borrower and the Shareholder, after careful consideration and enquiry and genuinely reflected its views;
15.16.6	the information supplied by the Borrower to the Agent in accordance with Clause 18 (Forecasting) was true in all material respects as at the date it was supplied and the assumptions made by the Borrower and supplied to the Agent for the purposes of any Forecast and any assumptions contained in the Model Assumption Book represented the genuine views of the Borrower; and
15.16.7	all factual information supplied by the Borrower to a person preparing a report referred to in paragraph 8 of Schedule 2 (Conditions Precedent Documents) was, to the best of the Borrower’s knowledge and belief, true in all material respects at its date or, as the case may be, the date on which it was supplied and the report provided by the Banks’ Technical Adviser did not omit, to the best of the Borrower’s knowledge and belief, as at its date any material factual information which would be likely to render it, as at such date, untrue or misleading in any material respect.

15.17 Project Contracts

15.17.1	The copies of the Project Contracts which it has delivered to the Agent are true and complete copies of those contracts.
15.17.2	There are no other material agreements to which it is a party on the date of this Agreement copies of which have not been delivered to the Agent prior to the date of this Agreement.
15.17.3	There are no other material agreements to which it is a party other than the Finance Documents and Project Contracts listed in the definition thereof.
15.17.4	All of the representations and warranties given by it under the Project Contracts to which it is a party were true and correct in all material respects when made.

15.18 Intellectual Property

It has or will have available to it prior to the date upon which it is required for the Project, all material intellectual property of every description, including but not limited to, licences, copyrights, design registrations and know-how, necessary for the implementation of the Project.

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15.19 Insurances

All Insurances which are currently required to be maintained or effected by it pursuant to the Documents are in full force and effect and no event or circumstance has occurred, nor has there been any omission to disclose a fact, which would entitle any insurer to avoid or otherwise reduce its liability under any policy relating to the Insurances.

15.20 No other business

15.20.1	It has not engaged in any business or activities, either alone or in partnership or joint venture other than those envisaged by the Documents.
15.20.2	It has no Subsidiaries except as permitted by the Majority Banks.

15.21 No Force Majeure

To the best of its knowledge and belief, no event of force majeure as defined in or contemplated by any Project Contract has occurred and is continuing for the purposes of that Project Contract.

15.22 Taxes

The Borrower has filed, or procured the filing of, all tax returns that are required to have been filed by it in any jurisdiction, and has paid or discharged all taxes due and payable from it or against its assets (other than any taxes that it is contesting in good faith and by appropriate proceedings, in respect of which a reasonably adequate reserve has been established) and, to the extent any taxes are not due, has established reserves that are adequate for the payment of those taxes and are required by generally accepted international accounting standards.

15.23 Budgets and Projections

15.23.1 The First Forecast, the most recent Forecast, DSCR Certificate and Operating Budget:

(a)	(other than in relation to any Forecast after the First Forecast) are or will be based on reasonable assumptions as at their respective dates as to all legal and factual matters material to any estimates included in those documents;
(b)	are or will be consistent (if applicable) with the provisions of the Documents, and the Computer Model in all material respects as at their respective dates;
(c)	have been or will be prepared in good faith and with due care as at their respective dates; and
(d)	fairly represent the Borrower’s expectation as to the matters covered in those documents as at their respective dates.

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15.23.2	Each Operating Budget accurately specifies the Borrower’s best estimate of all Operating Costs anticipated to be incurred by it as at its date in the financial year to which that Operating Budget relates.
15.23.3	It is not aware of any undisclosed matter which would, if disclosed, render the Project Budget, the First Forecast, any other Forecast, any Operating Budget or the DSCR Certificate misleading in any material respect.

15.24 Options

No person has any right to call for the issue or transfer of any share capital or loan stock in the Borrower other than under the terms of the Sponsor Funding Agreement as in effect at the date of this Agreement or the Security Documents or on the terms of any agreement relating to a transfer of shares which would not cause an Event of Default under Clause 17.20 (Ownership of the Borrower).

15.25 Environmental Matters

15.25.1	It has or will at all relevant times have obtained all Environmental Approvals required in connection with the Project and has at all times complied in all material respects with the terms of those Environmental Approvals and all other applicable Environmental Laws;
15.25.2	save as otherwise disclosed in writing to the Agent prior to the date of this Agreement, no Substance has, so far as it is aware, been disclosed, used, disposed of, generated, stored, processed, transported, dumped, deposited, buried or emitted at, on, from or under the Site in circumstances where this has resulted, or would be likely to result, in a Material Adverse Effect; and
15.25.3	all information supplied by the Borrower to the Minister of Environment in order to obtain the Environmental Operating Permit was true in all material respects as at its date or, as the case may be, the date on which it was supplied and such information did not omit as of its date or, as the case may be, the date on which it was so supplied, any material information.

15.26 Financial Indebtedness

It has not incurred or permitted to subsist any Financial Indebtedness other than the Permitted Financial Indebtedness.

15.27 Times for making Representations and Warranties

15.27.1 The representations and warranties set out in this Clause 15 (Representations and Warranties):

(a) are made on the date of this Agreement and on Financial Close with reference to the facts and circumstances then existing; and

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15.27.2 (with the exception of Clauses 15.9, 15.11, 15.16.1 to 15.16.5 and 15.16.7 (Information), 15.17 and 15.21) are deemed to be repeated by the Borrower on the date of the Request and on each Drawdown Date with reference (to the extent applicable) to the facts and circumstances then existing.

16.	UNDERTAKINGS
16.1	Duration

The undertakings in this Clause 16 (Undertakings) remain in force from the date of this Agreement for so long as any amount is or may be outstanding under this Agreement or any Commitment is in force.

16.2 Financial Information

The Borrower shall (at its expense) supply to the Agent (together, in relation to paragraphs 16.2.1 and 16.2.3 below only, with sufficient copies for all the Banks) and (in relation to paragraph 16.2.2(c) below) to the Banks’ Technical Adviser:

16.2.1	as soon as the same are available (and in any event within 120 days of the end of each of the applicable financial years) the audited accounts of the Borrower for that financial year accompanied by a comparison to the Operating Budget for that financial year and, if the Operating Budget has not been met, a management commentary thereon;
16.2.2	as soon as the same are available (and in any event within 30 days of the end of each quarter of its financial years):

(a)	its unaudited accounts for that quarter accompanied by a comparison to the Operating Budget for that quarter, and, if the Operating Budget has not been met, a management commentary thereon;
(b)	a cashflow statement for that quarter in a form reasonably acceptable to the Agent and showing performance against budget, Gross Revenues received and Permitted Payments made; and
(c)	such additional information as the Agent and/or the Banks’ Technical Adviser (as applicable) may reasonably require to enable it to calculate or verify (as appropriate) the calculations contemplated by Clause 18 (Forecasts), and the Debt Service Cover Ratio including, without limitation, any other financial and/or cash flow statements in the form agreed between the Agent and the Borrower and which are consistent with the format of the Computer Model;

16.2.3 as soon as the same are publicly available (and in any event within 120 days of them becoming publicly available) the audited accounts of the Shareholder, Billiton Plc, B.H.P. Billiton Marketing A.G., Landsvirkjun and Hydro Aluminium Deutschland GmbH for that financial year; and

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16.2.4 not less than 30 days prior to the beginning of each financial year, an Operating Budget for that financial year.

16.3 Information - Miscellaneous

The Borrower shall (at its expense) supply to the Agent promptly:

16.3.1	upon becoming aware of them, details of any litigation, arbitration or administrative proceedings which are current, threatened or pending which, if adversely determined could have a Material Adverse Effect, and, together, in each case, with its current proposals for conducting the litigation, arbitration or proceedings or otherwise resolving the dispute in question;
16.3.2	such further information in its possession or control regarding its financial condition and operations as the Agent may reasonably request;
16.3.3	details of any event of which it is aware which may constitute a material event of force majeure under any Project Contract;
16.3.4	details of any event of which it is aware which is likely to have a Material Adverse Effect;
16.3.5	details of any claim made under any Insurance in accordance with Schedule 8 (Insurances);
16.3.6	copies of all notices of default, suspension, termination, or material claims or material demands made against it under a Project Contract, otherwise than in the normal course of performance of any Project Contract, or affecting the Project Facilities and details of any action it proposes to take in relation to the same;
16.3.7	upon becoming aware of them, details of any damage to or destruction of the Project Facilities where the cost of repair or re-instatement is likely to exceed $2,000,000;
16.3.8	details of any reduction in production levels of the Smelter which is likely to lead to an Event of Default under Clause 17.19.1 (Project Events);
16.3.9	copies of all material documents despatched by it to its Shareholder in its capacity as such or all of its creditors (or any class of them) at the same time as they are despatched; and
16.3.10	upon receipt by it, copies of all authorisations which are material in the context of the Documents and/or the Project;
16.3.11	details of any intermediate compensation agreed by the Borrower pursuant to Clause 6.2 of the Tolling Conversion Agreement and in the event that such compensation is payable (if requested by the Agent) copies of any audit information in the Borrower’s possession or control;

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16.3.12	on the reasonable request of the Agent, any information held by Borrower’s insurance broker regarding the Insurances to which the Borrower is entitled to have access, including, without limitation, any claims correspondence;
16.3.13	in respect of each of the Construction Contracts details of:

(a)	any material amendments or material variations to the terms of the Construction Contract;
(b)	any assignment, novation or transfer by the Contractor of its rights and/or obligations under the Construction Contract;
(c)	any material claims or any material dispute which arises under the Construction Contract, including information on the steps being taken to resolve the dispute; and

16.3.14 promptly upon receipt by it, any changes or supplements to the terms of the first back to back loan signed by the Treasury in respect of the Site Obligations and any amendments or supplements to the Rent and Payment Schedule in Annex D of the Smelter Site Agreement,

in sufficient copies for all of the Banks, if the Agent so reasonably requests.

16.4 Project Reports

The Borrower shall (at its expense) supply to the Agent in the form agreed between the Agent and the Borrower, within 45 days of the end of each of its financial quarters, a report on the operation of the Project, accompanied by a management commentary on any problems referred to in such reports in each case in scope and form reasonably acceptable to the Agent and in sufficient copies for all of the Banks.

16.5 Access and Consultation

16.5.1

Subject to Clause 16.5.4, the Borrower shall procure that the Agent and the Blanks’ Technical Adviser be allowed access, during normal business hours and upon giving two Business Days’ notice, to inspect the Project Facilities, the technical and statistical data, accounting books, records and other data in the possession or control of the Borrower with respect to the Project Facilities as they may reasonably require for the purposes of performing their respective duties in relation to this Agreement (including, for the avoidance of doubt, any duties of the Banks’ Technical Adviser in connection with Clause 18 (Forecasts)) and to take copies of any documents inspected for such purpose provided that they shall be accompanied at all times by a representative of the Borrower and the Borrower shall make such a representative available;

16.5.2

Subject to Clause 16.5.4, the Borrower shall procure that the Agent and the Banks are together allowed access during normal business hours to the Project Facilities at least once a year, upon the giving of three weeks’ notice by the Agent to the Borrower provided that they shall be accompanied at all times by

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	a representative of the Borrower and the Borrower shall make such a representative available; and
16.5.3	Without prejudice to Clause 17.15 (Equity, Letters of Credit and DSRA), if at any time the provisions of Clause 6.2 (Deferrals) come into effect, and whilst they remain in effect, or the amount available for drawing under the Debt Service Reserve L/C together with the amount standing to the credit of the Debt Service Reserve Account is less than the Required DSRA Balance for any Repayment Date, and whilst there is such a shortfall, the Borrower shall regularly consult with the Agent and provide it with such information as it may reasonably require in relation to the Deferral Conditions and the Borrower’s proposals for returning to payment of Base Case Repayment Instalments or for ensuring that the amount available for drawing under the Debt Service Reserve L/C together with amounts standing to the credit of the Debt Service Reserve Account is equal to or greater than Required DSRA Balance (as the case may be).
16.5.4	The rights of access granted to each Finance Party and the Banks’ Technical Adviser pursuant to Clauses 16.5.1 and 16.5.2 above are subject to:

(a)

that Finance Party or the Banks’ Technical Adviser (as the case may be) entering into a confidentiality agreement with the Borrower substantially in the form agreed by the Borrower and the Agent and initialled by them for the purposes of identification prior to Financial Close (and the Borrower agrees that it shall enter into such confidentiality agreement as soon as possible after receipt thereof, duly executed by the relevant Finance Party or the Banks’ Technical Adviser (as the case may be)); and,

(b)

complying with the Project Facilities’ applicable health and safety standards from time to time whilst they are inspecting the Project Facilities.

16.6 Notification of Default

The Borrower shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon its occurrence.

16.7 Compliance Certificates

The Borrower shall supply to the Agent:

16.7.1	together with the accounts specified in Clause 16.2.1 and 16.2.2 (Financial Information); and
16.7.2	promptly at any other time, if the Agent reasonably so requests,

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a certificate signed by two of its senior officers on its behalf certifying that no Default is outstanding or, if a Default is outstanding, specifying the Default and the steps, if any, being taken to remedy it.

16.8 Authorisations

16.8.1 The Borrower shall promptly:

(a)	obtain, maintain, comply in all material respects with the terms of, and comply to the extent that non-compliance would lead to termination, suspension, loss or revocation of; and
(b)	supply certified copies to the Agent of,

any authorisation required under any law or regulation as and when required to enable it to perform its obligations under, or for the validity or enforceability of, any Document or to implement the Project.

16.8.2 Clause 16.8.1 above shall not apply to any authorisation which a person other than the Borrower is obliged to obtain under any Project Contract.

16.9 Pari Passu Ranking

The Borrower shall procure that its obligations under the Finance Documents do and will rank at least pari passu with all its other present and future unsecured obligations, except for obligations mandatorily preferred by law applying to Icelandic companies generally.

16.10 Negative pledge

16.10.1	The Borrower shall not create or permit to subsist any Security Interest on any of its assets.
16.10.2	Paragraph 16.10.1 does not apply to any Permitted Security Interest.

16.11 Transactions similar to Security

The Borrower shall not:

16.11.1	sell, transfer or otherwise dispose of any of its assets on terms whereby it is or may be leased to or re-acquired or acquired by it or any of its related entities; or
16.11.2	sell, transfer or otherwise dispose of any of its receivables on recourse terms, except for the discounting of bills or notes in the ordinary course of trading,

in circumstances where the transaction is entered into primarily as a method of raising finance or of financing the acquisition of an asset.

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16.12 Borrowings

The Borrower shall not incur or have outstanding any Financial Indebtedness except:

16.12.1	liabilities under the Finance Documents or the Precedent Facility Agreement (up to the time of prepayment under Clause 3.1. l(a));
16.12.2	liabilities under the Sponsor Funding Agreement including, without limitation, any loans made to the Borrower in accordance with the provisions thereof;
16.12.3	the Site Obligations and liabilities in respect thereof;
16.12.4	the Harbour Loans and liabilities in respect thereof;
16.12.5	liabilities under any Hedging Agreements;
16.12.6	any other Financial Indebtedness provided by a person other than the Borrower expressly provided for under any Project Contract on its original terms as at the date of this Agreement;
16.12.7	in respect of leases of equipment and vehicles provided that the aggregate value of such equipment and vehicles at no time exceeds $3,000,000 (indexed) and the aggregate amount payable by way of rental does not exceed $1,000,000 (indexed) per annum; and
16.12.8	any other Financial Indebtedness approved in writing by the Majority Banks.

16.13 Loans and Guarantees etc.

The Borrower shall not make any loans or provide credit or financial accommodation, or give any guarantee of any person’s Financial Indebtedness, except for:

16.13.1	loans, guarantees or credit approved in writing by the Majority Banks;
16.13.2	loans made to an employee of the Borrower or any guarantee of such loans up to an aggregate maximum amount of $750,000;
16.13.3	loans made by the Borrower to the Shareholder in accordance with the Borrower’s constitutional documents and applicable law, which are funded solely from amounts standing to the credit of the Distribution Account;
16.13.4	any deferred payment rights in the ordinary course of trade and which do not involve the deferral of payment of any sum for more than 90 days; and
16.13.5	Authorised Investments.

16.14 Capital Expenditures

Other than with the prior written approval of the Majority Banks, the Borrower shall not incur any capital expenditure, other than:

16.14.1 Operating Costs within paragraphs (d) and (e) of the definition thereof;

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16.14.2

capital expenditure funded from amounts standing to the credit of the Distributions Account, in an amount not exceeding $3,000,000 in any of its financial years provided that if the capital expenditure incurred under this paragraph 16.14.2 in any financial year is less than $3,000,000, an amount equal to the difference between the amount so incurred and $3,000,000 can be carried forward to the immediately following financial year only and may be incurred in that financial year; or

16.14.3

capital expenditure funded by any Additional Shareholder Funding or any other Permitted Financial Indebtedness provided that, in the case of non-essential capital expenditure, no Deferral Instalments are outstanding at the relevant time.

16.15 Disposals

16.15.1	The Borrower shall not either in a single transaction or in a series of transactions, whether related or not and whether voluntarily or involuntarily, sell, transfer, grant or lease or otherwise dispose of all or any part of its assets.
16.15.2	Paragraph 16.15.1 does not apply to:

(a)	disposals made in the ordinary course of trade of the disposing entity on arm’s length terms;
(b)	Permitted Security Interests;
(c)	disposals required by the provisions of the Project Contracts; or
(d)	disposals of obsolete or redundant assets which are no longer required for the efficient operation of its business and are not replaced, on arm’s length terms and in an aggregate amount not exceeding $1,000,000 in any financial year.

16.16 Mergers and acquisitions

The Borrower shall not:

16.16.1	enter into any amalgamation, demerger, merger or reconstruction; or
16.16.2	acquire any assets or business if the assets or business are substantial save where expressly contemplated by the Documents or expressly permitted by this Agreement.

16.17 Set-off Arrangements with Billiton

Other than the Tolling Conversion Agreement, the Borrower shall not enter into or permit to subsist any agreements with BHP Billiton Marketing A.G. which would allow it to exercise any right of set off in respect of amounts owed by it to the Borrower and shall not permit BHP Billiton Marketing A.G. to give any guarantee or

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other assurance against loss in respect of any of the Borrower’s liabilities or obligations.

16.18 Operation and maintenance

The Borrower shall:

16.18.1	diligently operate and maintain the Project Facilities in a safe, efficient and business-like manner, in accordance with Good Industry Practice and in such a manner as to ensure that it does not prejudice its ability to claim against any person (including any Contractor) for breach of any material manufacturer, supplier or other warranties;
16.18.2	not cease to be the operator;
16.18.3	not enter into any agreement with an associated company under which the Borrower will incur Operating Costs except on arm’s length terms;
16.18.4	employ a sufficient number of trained personnel to operate and maintain the Project Facilities in accordance with Good Industry Practice and in order to comply with applicable law and its contractual obligations;
16.18.5	not without the consent of the Majority Banks (after consultation with the Banks’ Technical Adviser) reduce or allow depletion of the stocks of carbon anode blocks at the Smelter Site to a level below that which would be sufficient to enable the Smelter to operate at its full production capacity of 89,100 Tonnes of aluminium per annum for a period of three weeks except that the Borrower may utilise such stocks following a failure by Hydro Aluminium Deutschland GmbH to provide carbon anode blocks in the required quantity.

16.19 Project Contracts

16.19.1	The Borrower shall comply in all material respects with its obligations under the Project Contracts.
16.19.2	Subject to paragraph 16.19.5, the Borrower shall not, without the prior written consent of the Majority Banks (such consent not to be unreasonably withheld), agree to:

(a)	any material amendment or variation to; or
(b)	waive compliance with any material provision of;

any Project Contract (other than the Construction Contracts) and, if such amendment, waiver or variation or any material amendment or variation to the scope of works thereunder is likely to have a Material Adverse Effect, the Construction Contracts.

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16.19.3	Subject to paragraph 16.19.5, the Borrower shall not, without the prior written consent of the Majority Banks, agree to or give notice of the termination, repudiation or abandonment of any Project Contract or any Construction Contract or suspension of all or a material part of the obligations of any other party under any Project Contract or any Construction Contract.
16.19.4	The Borrower shall not, without the prior written consent of the Majority Banks, amend its constitutional documents.
16.19.5	The Borrower shall exercise each Reserved Discretion in accordance with Schedule 5 (Reserved Discretions).
16.19.6	The Borrower shall not enter into any material agreements other than the Documents without the consent of the Majority Banks (such consent not to be unreasonably withheld) except for a labour contract with its employees or any short-term (up to three years) or temporary arrangements reasonably required to carry on its business in the ordinary course and the Borrower shall keep the Agent reasonably informed in respect of discussions it has with counterparties to Project Contracts in respect of any proposed replacement, extension or supplement to such contracts, or with third parties in respect of any proposed replacement or supplement to any Project Contract that has terminated or is due to terminate before the Final Repayment Date. The Borrower shall provide the Banks with a reasonable period of time in which to approve the terms of any new Project Contract and the Agent shall inform the Borrower of the consent (or otherwise) of the Majority Banks as soon as reasonably practicable (taking into account the need for the Banks to engage advisers, consult amongst themselves, and agree and enter into any direct agreements with the relevant counterparties).
16.19.7	Subject to paragraph 16.19.5 above, the Borrower shall maintain and, in good faith and in the best interests of the Borrower, take all reasonable steps to enforce its rights and exercise its discretions under the Project Contracts and the Construction Contracts to comply with applicable laws and its contractual obligations.
16.19.8	In the event that Hydro Aluminium Deutschland GmbH gives notice of its intention:

(a)	to negotiate an amendment or other change to the basic price and/or to make a price adjustment under the Anode Supply Agreement as a result of or in contemplation of the Rheinwerk-Smelter being closed after 1st August, 2008; or
(b)	to terminate the Anode Supply Agreement after 30th June, 2013, to the extent there are outstandings under this Agreement,

the Borrower will promptly after receipt of such notice consult fully with the Banks with regard to any such change, price adjustment and/or as to the

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choice of a new anode supplier and the terms and conditions of any replacement anode supply contract, which shall be reasonably satisfactory to the Majority Banks.

16.20 Hedging

16.20.1	The Borrower shall not enter into an Aluminium Hedging Agreement or a Hedging Agreement (in respect of its interest rate exposure) unless the Agent has approved in writing (such approval not to be unreasonably withheld) the structure of the proposed arrangements together with the identity of the Aluminium Hedging Counterparty or, as the case may be, the Hedging Bank.
16.20.2	The Borrower shall not enter into a Hedging Agreement (in respect of its foreign exchange rate exposure) without the Agent’s prior written consent, other than in respect of Hedging Agreements with a term of less than 12 months, a notional amount of no more than $10 million and based on a margin free forward contract in a form common in the market at the relevant time.
16.20.3	The Borrower shall ensure that each Hedging Bank with respect to an Interest Rate Hedging Agreement or any Hedging Agreement in respect of the Borrower’s foreign exchange rate exposure that requires the Agent’s prior written consent under Clause 16.20.2 accedes to the Intercreditor Agreement and that each Hedging Agreement is based on the prevailing ISDA Master Agreement.

16.21 Compliance with Laws and Payment of Taxes

16.21.1	The Borrower shall comply in all material respects with all laws and regulations applicable to it provided that nothing in this Clause shall prevent the Borrower from contesting in good faith the application to it of such laws and regulations.
16.21.2	The Borrower shall pay all its Taxes when due, except to the extent the Taxes are contested in good faith and by appropriate means, and a reserve reasonably regarded as adequate and generally required by international accounting standards has been set aside for payment of those contested Taxes.

16.22 Environmental Matters

16.22.1 The Borrower shall comply in all material respects with:

(a)	all applicable Environmental Law; and
(b)	the terms and conditions of all Environmental Approvals applicable to it,

and to the extent that non-compliance would lead to loss, termination, revocation or suspension of the Environmental Operating Permit and for this purpose will implement procedures in accordance with Good Industry Practice

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or which are reasonably necessary to monitor compliance and contain liability under Environmental Law.

16.22.2 Promptly upon receipt of the same, the Borrower shall notify the Agent of any claim, notice or other communication served on it in respect of any alleged breach of any Environmental Law which, if substantiated, is likely to have a Material Adverse Effect.

16.23 Scope of business

The Borrower shall not engage in any business or activities, either alone or in partnership or joint venture with any other person, other than those directly associated with the Project and contemplated by the Facilities Description and the Documents.

16.24 Share Capital

Other than the redemption in capital to take effect on or about the Drawdown Date in accordance with the resolution referred to in paragraph 2(k) of Schedule 2 (Conditions Precedent), the Borrower shall not purchase, cancel or redeem any of its share capital or issue any further voting capital, save pursuant to the Sponsor Funding Agreement or any issue of new shares to the Shareholder or, provided there will be no Event of Default under Clause 17.20, an Affiliate of the Shareholder which are subject to the Shares Pledge.

16.25 Investments

The Borrower shall not:

16.25.1	acquire any share or loan capital of any corporate body or other investments except Authorised Investments in accordance with the Account Agreement and/or investments acquired with proceeds standing to the balance of the Distributions Account;
16.25.2	save as agreed with the Agent, and except for Authorised Investments pursuant to the Account Agreement or investments made with proceeds standing to the credit of the Distributions Account, open or maintain any accounts other than the Project Accounts, the Onshore Proceeds Accounts and the Distributions Account and any other account into which proceeds standing to the credit of the Distributions Account are paid; or
16.25.3	have or acquire any Subsidiary whether by formation or otherwise.

16.26 Distributions

The Borrower shall not declare, make or pay any Distribution other than out of amounts standing to the credit of the Distributions Account. Other than the Initial Shareholder Distribution, the Borrower shall not transfer an amount to the Distributions Account save in accordance with the Account Agreement in circumstances where all of the following conditions are satisfied:

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16.26.1	the transfer is made on or up to 30 days after a Repayment Date or (if later) 30 days after the relevant Determination Date after the Borrower has paid the applicable Repayment Instalment due on that Repayment Date;
16.26.2	the Debt Service Cover Ratio exceeded 1.25:1 and the Loan Life Cover Ratio exceeded 1.40:1 (in respect of the Loan Life Cover Ratio, on the assumption that the LME Cash Price is US$1,330 per metric tonne) as at the Calculation Date for that Repayment Date and would continue to be exceeded after the relevant transfer is made and that Ratio recalculated assuming that such transfer to the Distributions Account had already occurred;
16.26.3	no Default has occurred and is continuing and no Default would result from the payment of such amount to the Distributions Account;
16.26.4	to the extent that there is sufficient cash available to pay the same standing to the credit of the Proceeds Account or Holding Account (treating Authorised Investments as cash for this purpose);
16.26.5	the amount standing to the credit of the Debt Service Reserve Account together with any amount available for drawing under the Debt Service Reserve L/C is equal to or greater than the Required DSRA Balance for the applicable Repayment Date;
16.26.6	the Borrower has complied with its obligations under Clause 6.1 (Repayment Instalments), any amount of principal repayment that has been previously deferred pursuant to Clause 6.2 (Deferrals) has been repaid;
16.26.7	in respect of the period after 1 January 2010, both the Tolling Conversion Agreement and the Anode Supply Agreement have been replaced or supplemented by tolling arrangements or, as the case may be, arrangements for anode supply, on terms reasonably satisfactory to the Majority Banks and with a term that ends after the Final Repayment Date; and
16.26.8	if a notice has been delivered under Clause 16.34 (Major Project Parties), a period of one year from the date of such notice has expired or, if earlier, the Borrower has demonstrated to the reasonable satisfaction of the Majority Banks that the Notifiable Event does not have or no longer has a Material Adverse Effect,

provided that:

(a) in addition to the conditions set out above, no transfer to the Distributions Account shall be made or paid if at that time the Environmental Operating Permit does not or will not permit the operation of the Project to continue for the next two years or, if earlier, until the Final Repayment Date on terms satisfactory to the Agent (acting reasonably); and

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(b)

in the case of a transfer where the Repayment Date is the first Repayment Date there is a cash balance of at least US$10 million standing to the credit of the Proceeds Account at the opening of business on the first Repayment Date; and

(c)

if all the conditions in Clauses 16.26.1 to 16.26.8 are satisfied apart from the condition in Clause 16.26.7, the Borrower shall transfer an amount to the Dividend Reserve Account up to an amount it would otherwise have been able to transfer to the Distributions Account (and the balance standing to the credit of the Dividend Reserve Account shall not be taken into consideration for the purposes of determining whether the Borrower has cash available for making any Distribution or in determining whether the condition in Clause 16.26.2 has been satisfied).

16.27 Financial Year-End

The Borrower shall not change its financial year-end from 31st December.

16.28 Assignability

The Borrower shall ensure that its interest under each Project Contract entered into by it, and (to the extent practicable) each material authorisation granted to it, after the date of this Agreement is capable of being charged or assigned by way of security on and subject to the terms of the Security Documents.

16.29 Further Assurance

16.29.1	The Borrower shall, at its own expense, execute and do all such assurances, acts and things as the Agent and/or the Security Trustee may reasonably require for perfecting or protecting the security constituted or evidenced or purported to be constituted or evidenced by any of the Finance Documents or for exercising its rights under any Direct Agreement.
16.29.2	The Borrower shall, on terms no more onerous than any other Security Document, (i) enter into any updates or supplements to any Security Documents governed by Icelandic law; and (ii) enter into any security documents relating to Construction Contracts and/or other Project Contracts entered into by it after Financial Close.
16.29.3	The Borrower, by way of security, irrevocably appoints the Agent, the Security Trustee and any of their delegates or sub-delegates to be its attorney to take any action which the Borrower is obliged to take and fails to do so under this Clause 16.29. The Borrower ratifies and confirms whatever any attorney does or purports to do pursuant to its appointment under this paragraph 16.29.3.

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16.30 Power to Remedy

16.30.1

In case of default by the Borrower in complying with Clauses 16.33 (Insurances), 16.17 (Project Works) and 16.18 (Operation and Maintenance), the Borrower shall permit the Agent or its agents and contractors to enter the Project Facilities and to comply with or object to any notice served on the Borrower in respect of the Project Facilities and to effect such repairs or insurance or generally do such things or pay all such costs, charges and expenses as the Agent may reasonably consider necessary or desirable to prevent or remedy any breach of Clause 16.33 (Insurances) or those Clauses or to comply with or object to any notice.

16.30.2

The Borrower will indemnify and keep the Agent indemnified against all losses, costs, charges and expenses reasonably incurred in connection with the exercise of the powers contained in this Clause 16.30 (Power to Remedy).

16.31 Payments and Account Agreement

The Borrower shall ensure that all payments to it (including, without limitation, the Loan) are made in accordance with the Account Agreement and shall comply with its obligations set out in the Account Agreement.

16.32 Equator Principles

16.32.1	Subject to the provisions of this Clause 16.32 (Equator Principles), the Borrower shall comply with Environmental Guidelines.
16.32.2	Subject to Clause 16.32.3 below, the Banks acknowledge and agree that if the Borrower complies with the terms of the Environmental Operating Permit (in the form applicable at the date of this Agreement or in more stringent terms) then it will be treated as in compliance with its obligations under Clause 16.32.1.
16.32.3	The Borrower acknowledges that if the Environmental Operating Permit is amended and/or replaced so that the terms of the amended Environmental Operating Permit (or the replacement) are less stringent with respect to the protection of the environment than the Environmental Operating Permit in place at the date hereof, the Borrower and the Agent (acting on the advice of the Technical Adviser) shall meet in good faith to devise a proposed course of action so as to ensure that any resulting changes to the operating and reporting procedures of the Borrower will be in compliance with the Environmental Guidelines.

16.33 Insurances

The Borrower shall comply with its obligations set out in Schedule 8 (Insurances).

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16.34 Major Project Parties

16.34.1

The Borrower shall notify the Agent promptly after it becomes aware of the occurrence of any event specified in any of Clauses 17.5.1 and 17.5.3 and Clauses 17.6 (Insolvency) to 17.10 (Analogous Proceedings) (each a “Notifiable Event”) in relation to any of BHP Billiton Marketing A.G., Landsvirkjun and Hydro Aluminium Deutschland GmbH, unless any of the foregoing shall cease to be a Major Project Party, in which case in relation to the replacement thereof for the time being, (each a “Material Company”) provided that in respect of Clauses 17.5.1 and 17.5.3 the aggregate amount of Financial Indebtedness in respect of each such company shall exceed $5,000,000.

16.34.2

After the Borrower has given a notice pursuant to paragraph 16.34.1 above or after the Agent has given a notice of a Notifiable Event in relation to a Material Company to the Borrower, the Borrower shall consult with the Agent regularly as to the consequences for it of any such Notifiable Event, keep the Agent informed as to any steps it proposes to take as a consequence of such Notifiable Event and provide the Agent with such information as it may reasonably request in relation to such Notifiable Event, until the earlier of (i) the later of one year from the date of any such notice or the date on which any Event of Default which exists at the expiry of such period is waived by the Majority Banks or ceases to exist or (ii) the Borrower demonstrates to the reasonable satisfaction of the Majority Banks that the Notifiable Event does not have or no longer has a Material Adverse Effect.

16.35 Financial Covenants

Subject to Clause 16.36, the Borrower shall ensure that as at each applicable Calculation Date:

16.35.1	the Debt Service Cover Ratio is greater than or equal to 1.10:1;
16.35.2	the Loan Life Cover Ratio is greater than or equal to 1.10:1 (on the assumption that the LME Cash Price is US$1,330 per metric tonne);
16.35.3	the ratio of the aggregate of its Outstanding Senior Debt to its Net Worth is less than that in the right hand column below, by reference to the most recent financial statements drawn as at its financial year end delivered by it pursuant to Clause 16.2 (Financial Information).

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As at the Calculation Date
falling on 31 December
for the following years	Permitted Ratio
2003	3.25:1
2004	3.10:1
2005	3.00:1
2006	2.80:1
2007	2.60:1
2008	2.40:1
2009	2.20:1
2010	2.00:1
2011	1.80:1
2012	1.60:1
2013	1.40:1
2014	1.20:1
2015	1.00:1
2016	0.80:1
2017	0.60:1

16.36 Remedy

16.36.1 After becoming aware of the occurrence a breach of any of the covenants in Clause 16.35 (Financial Covenants), the Borrower shall notify the Agent (and provide such details about the breach as the Agent may request) and, within 10 Business Days of becoming so aware:

(a)

the Borrower may seek to remedy such breach by procuring the provision to it of Additional Shareholder Funding (such funding to be provided in the case of a breach of Clause 16.35.1 or 16.35.2 no later than 45 days from the relevant Calculation Date unless the Agent or its advisers have delayed the determination of any of the Ratios (other than where any delay arose as a consequence of an act or omission of the Borrower or its advisers), and in the case of a breach of Clause 16.35.3 no later than 45 days after the delivery of relevant financial statements); and

(b)

following the provision of such Additional Shareholder Funding in accordance with the Sponsor Funding Agreement and the Intercreditor Agreement, the Borrower shall confirm to the Agent by notice in writing signed by the chief financial officer of the Borrower (a “Cure Notice”) that such breach has been remedied (and shall provide such further evidence of or information about such remedy and/or such breach as the Agent may request).

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16.36.2

For so long as the Borrower shall have the rights conferred to it under Clause 16.36.1 above, the relevant breach shall not constitute a Default or a breach of this Agreement.

16.36.3

The amount of any Additional Shareholder Funding provided to the Borrower pursuant to this Clause 16.36 shall (subject to compliance by the Borrower with the other provisions of Clause 16.36.1 above within the stated 10 Business Day period) be included as a positive amount in the recalculation of the Debt Service Cover Ratio and/or the Loan Life Cover Ratio and/or the Borrower’s Net Worth as at the Calculation Date to which such breach related provided that:

(a)	other than as provided in Clause 16.36.5 below, nothing in this Clause 16.36.3 shall in any way relieve the Borrower of its obligations under Clause 16.35 (without prejudice to Clause 16.36.2); and
(b)	the Borrower may deliver no more than two consecutive Cure Notices at any time and no more than three Cure Notices during the lifetime of this Agreement.

16.36.4 If the Borrower anticipates the occurrence of any breach referred to in Clauses 16.35.1 or 16.35.2 above, it may at any time after it anticipates that a breach may occur seek to avoid that breach by obtaining Additional Shareholder Funding under this Clause 16.36.4. In this case:

(a)	the Borrower shall notify the Agent of its intention to seek such Additional Shareholder Funding and shall provide the Agent with such details about the anticipated breach as the Agent may request; and
(b)	the provisions of Clauses 16.36.1 to 16.36.3 above shall apply in respect of the provision of that Additional Shareholder Funding except that:

(i)	such Additional Shareholder Funding must be provided prior to any actual breach of any covenant in Clauses 16.35.1 or 16.35.2 (Financial Covenants); and
(ii)	within 10 Business Days of the provision of such Additional Shareholder Funding, the Borrower shall confirm this to the Agent by notice in writing signed by the chief financial officer of the Borrower, and such notice given under this Clause 16.36.4(b)(ii) will be a Cure Notice for the purpose of this Clause 16.36.4(b)(ii).

16.36.5 Notwithstanding Clause 16.35 and the foregoing provisions of this Clause 16.36, if the conditions set out in paragraphs 6.2.1(b) and 6.2.1(c) of Clause 6.2.1 are satisfied with respect to a Repayment Date, whether or not any principal amount falls to be deferred under Clause 6.2 as a result thereof, the Borrower shall not as at the Calculation Date corresponding to that Repayment

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	Date be treated as in breach of Clause 16.35.1 nor shall any requirement to cure or remedy arise.
16.36.6	Any steps taken by the Borrower to prevent or avoid a breach of any of the covenants in Clause 16.35 other than in accordance with the provisions of this Clause 16.36 shall not be treated as constituting the giving of a Cure Notice.

16.37 Replacement Harbour Loan Agreement

The Borrower shall not make any prepayment under the Replacement Harbour Loan Agreement without the prior written consent of the Agent.

17. DEFAULT

17.1 Events of Default

Each of the events set out in Clauses 17.2 (Non-payment) to 17.22 (Material Adverse Change) of this Clause 17 is an Event of Default (whether or not caused by any reason whatsoever outside the control of die Borrower or any other person).

17.2 Non-Payment

Any Group Company does not pay on the due date any amount payable by it under the Finance Documents except where such non-payment is due solely to technical or administrative reasons and is paid within three Business Days of its due date, in each case at the place at and in the currency in which it is expressed to be payable.

17.3 Breach of other Obligations

17.3.1	The Borrower does not comply with any of Clauses 16.10 (Negative Pledge), 16.11 (Transactions similar to Security), 16.12 (Borrowings), 16.13 (Loans and Guarantees), 16.15 (Disposals), 16.20 (Hedging) or 16.26 (Distributions).
17.3.2	Subject to Clause 16.36 (Remedy), the Borrower is in breach of Clause 16.35 (Financial Covenants) and such breach is not remedied in accordance with Clause 16.36 (Remedy).
17.3.3	A Group Company does not comply with any other provision of a Finance Document (other than those referred to in Clause 17.2 (Non-payment), Clause 17.3.1 or Clause 17.3.2 above) and such non-compliance, if capable of remedy in the reasonable opinion of the Majority Banks, is not remedied within 15 Business Days after its occurrence.

17.4 Misrepresentation

17.4.1 A representation, warranty or statement made or repeated in or in connection with any Finance Document or in any document delivered by or on behalf of a Group Company under or in connection with any Finance Document is

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incorrect in any material respect when made or deemed to be made or repeated.

17.4.2 Any representation and warranty set out in any of Clauses 15.2 (Status), to Clause 15.5 (Non-Conflicts), Clause 15.7 (Authorisations), Clauses 15.10 (Ownership of Assets), Clauses 15.12 (Immunity) to 15.15 (Litigation), Clause 15.18 (Intellectual Property), Clause 15.20 (No Other Business), Clauses 15.22 (Taxes) to 15.25 (Environmental Matters) would have been incorrect in any material respect if it had been repeated on the first day of any Interest Period with reference (if applicable) to the facts and circumstances then existing.

17.5 Cross-Default

17.5.1	Any Financial Indebtedness (other than Financial Indebtedness of the nature referred to in paragraph 16.12.7 of Clause 16.12 (Borrowings) up to a maximum aggregate amount of $100,000) of the Borrower is not paid when due; or
17.5.2	an event of default howsoever described occurs under any document relating to Financial Indebtedness of the Borrower; or
17.5.3	any Financial Indebtedness of the Borrower becomes prematurely due and payable or is placed on demand as a result of an event of default (howsoever described) under the document relating to that Financial Indebtedness; or
17.5.4	any commitment for, or underwriting of, any Financial Indebtedness of the Borrower is cancelled or suspended as a result of an event of default (howsoever described) under the document relating to that Financial Indebtedness; or
17.5.5	any Security Interest securing Financial Indebtedness over any material asset of the Borrower becomes enforceable.

17.6 Insolvency

17.6.1	The Borrower is deemed for the purposes of any law to be, unable to pay its debts as they fall due or to be insolvent, or admits inability to pay its debts as they fall due; or
17.6.2	The Borrower suspends making payments on all or any class of its debts or announces an intention to do so, or a moratorium is declared in respect of any of its indebtedness; or
17.6.3	The Borrower by reason of financial difficulties, begins negotiations with one or more of its creditors with a view to the readjustment or rescheduling of any of its indebtedness.

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17.7 Insolvency proceedings

17.7.1	Any step (including petition, proposal or convening a meeting) is taken with a view to a composition, assignment or arrangement with any creditors of the Borrower; or
17.7.2	a meeting of the Borrower is convened for the purpose of considering any resolution for (or to petition for) its winding-up, liquidation, a moratorium or for its administration or any such resolution is passed; or
17.7.3	any person presents a petition for the winding-up, liquidation, moratorium or for the administration of the Borrower; or
17.7.4	an order is made for the winding-up, liquidation, moratorium or administration of the Borrower; or
17.7.5	any other step (including petition, proposal or convening a meeting) is taken with a view to the rehabilitation, administration, custodianship, liquidation, winding-up, dissolution or a moratorium of the Borrower or any other insolvency proceedings involving the Borrower are commenced,
save for any step or petition referred to in Clause 17,7.3 or 17.7.5 which is frivolous or vexatious and is discharged with 14 days of its presentation and which does not relate to any administration, moratorium or similar proceedings.

17.8 Appointment of Receivers and Managers

17.8.1	Any liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or the like is appointed in respect of the Borrower or any part of its assets; or
17.8.2	the directors of the Borrower request the appointment of a liquidator, trustee in bankruptcy, judicial custodian, compulsory manager, receiver, administrative receiver, administrator or the like; or
17.8.3	any other steps are taken to enforce any Security Interest over any part of the assets of the Borrower.

17.9 Creditors’ Process

Any attachment, sequestration, distress or execution affects any asset of the Borrower, in an amount exceeding $100,000 and is not discharged within 14 days.

17.10 Analogous Proceedings

There occurs in relation to the Borrower any event anywhere which, in the reasonable opinion of the Majority Banks, corresponds with any of those mentioned in Clauses 17.6 (Insolvency) to 17.9 (Creditors’ Process) (inclusive).

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17.11	Cessation of Business
	The Borrower ceases, or threatens to cease, to carry on all or a substantial part of its business.

17.12 Project Contracts and Direct Agreements

17.12.1	Any party to a Key Project Contract or a Direct Agreement (other than a Finance Party) breaches in any material respect any material provision of that Key Project Contract or Direct Agreement and such breach, if capable of remedy, is not remedied within such grace period as may be provided for in the relevant Key Project Contract or Direct Agreement or, in the case of the Power Contract, the period until Landsvirkjun is entitled to suspend power supply to the Borrower.
17.12.2	Any Key Project Contract or Direct Agreement is repudiated (otherwise than by the Borrower with the consent of the Majority Banks or by a Finance Party) or is or becomes void or unenforceable and, in the case of a Key Project Contract, is not replaced on terms and, where applicable, with a substitute party which in each case is reasonably acceptable to the Majority Banks within 45 days of such event.
17.12.3	Any material obligation expressed to be assumed by a party under a Key Project Contract or Direct Agreement is not or ceases to be a valid and binding obligation of, or is repudiated by, that party (otherwise than by the Borrower with the consent of the Majority Banks or by a Finance Party) or is or becomes void or unenforceable and, in the case of a Key Project Contract or any material obligation under it, is not replaced on terms and, where applicable, with a substitute party which is reasonably acceptable to the Majority Banks within 45 days of such event.
17.12.4	Otherwise than by the acts or omissions of the Borrower acting with the consent of the Majority Banks or of a Finance Party:

(a)	any Key Project Contract or any Direct Agreement terminates; or
(b)	(after expiry of any applicable grace period) any Key Project Contract or any Direct Agreement is or becomes capable of being terminated; or
(c)	a party to a Key Project Contract, or a Direct Agreement issues a notice of termination of, or (after the expiry of any applicable grace period) a notice of intention to terminate, any Key Project Contract or any Direct Agreement,

(in each case otherwise than by reason of full performance of the agreement or expiry of its term) and, in the case of a Key Project Contract, such contract is not replaced on terms and, where applicable, with a substitute party which is reasonably acceptable to the Majority Banks within 45 days of such event.

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17.12.5	The Borrower (otherwise than with the consent of the Majority Banks) issues a notice of termination or a notice of intention to terminate any Key Project Contract or Direct Agreement.
17.12.6	As at 31 December 2013, either of the Tolling Conversion Agreement or the Anode Supply Agreement has not been renewed, extended or replaced, in each case (i) as required to ensure that the expiry of the term of each such contract will not occur prior to the Final Repayment Date, and (ii) on terms reasonably satisfactory to the Majority Banks.
17.12.7	Any event in Clause 17.12.1 to 17.12.6 above occurs in relation to a Project Contract (other than a Key Project Contract) and any such event in the reasonable opinion of the Majority Banks is likely to have a Material Adverse Effect and (in the case of Clauses 17.12.2, 17.12.3 and 17.12.4) such Project Contract is not replaced on terms and, where applicable, with a substitute party which is reasonably acceptable to the Majority Banks within 45 days of such event or (in the case of paragraph 17.12.1 above) such non-compliance, if capable of remedy, is not remedied within such grace period as may be provided for in the relevant Project Contract.
17.12.8	Any Key Licence required by the Borrower is amended or modified and is likely to have a Material Adverse Effect.
17.12.9	Any Key Licence required by the Borrower is terminated and not reinstated or, where applicable, replaced within 30 Business Days.

17.13 Illegality

17.13.1	It is or becomes unlawful for any person (other than a Finance Party) to perform any of its material obligations under the Documents.
17.13.2	Any Document or any material provision of any Document is required in any material respect by any law or regulation having the force of law to be waived, amended, modified or abandoned and, in the case of any Project Contract, such event, in the reasonable opinion of the Majority Banks, is likely to have a Material Adverse Effect.
17.13.3	Any material authorisation required in relation to the Project is (i) revoked or (ii) amended in a manner which in the reasonable opinion of the Majority Banks is likely to have a Material Adverse Effect.

17.14 Effectiveness of Security

17.14.1	Any Security Document is not or ceases to be effective (and is not remedied forthwith) or is alleged by a Group Company to be ineffective for any reason.
17.14.2	Any Security Interests created pursuant to any Security Document is subject to any prior or pari passu Security Interests (other than Permitted Security Interests).

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17.15 Equity, Letters of Credit and DSRA

17.15.1	The Borrower registers the issue or transfer of any of its share capital in circumstances where that issue or transfer was made in breach of any provision of the Sponsor Funding Agreement or any Finance Document.
17.15.2	The issuer fails to pay any amount properly claimed pursuant to any Letter of Credit within three Business Days of the time permitted under that Letter of Credit.
17.15.3	At any time the issuer of any Debt Service Reserve L/C required to be in place under the Account Agreement or any other Finance Document ceases to be a Qualifying Issuer (and Cash Collateral has not been provided) and the issuer and such Debt Service Reserve L/C are not replaced with a further Debt Service Reserve L/C and a bank or other financial institution which is a Qualifying Issuer within 20 Business Days of the Agent notifying the Borrower of the occurrence of such event.
17.15.4	Any Debt Service Reserve L/C ceases to be in place and in full force and effect at any time when it is required to be in place pursuant to the Account Agreement or any other Finance Document or, in relation to the Debt Service Reserve L/C, is not renewed or replaced as required by the Account Agreement or any other Finance Document.
17.15.5	At any time prior to 31 December 2010 3 Deferral Instalments are outstanding, or at any time after 31 December 2010 2 Deferral Instalments are outstanding, if, in addition, after 30 days of the third Deferral Instalment becoming outstanding, or after 31 December 2010, the later of 31 December 2010 and the second Deferral Instalment becoming outstanding, and at any time thereafter, whilst there are 3 Deferral Instalments outstanding (prior to 31 December 2010) or 2 Deferral Instalments outstanding (at any time after 31 December 2010) the amount available for drawing under the Debt Service Reserve L/C together with the amount standing to the credit of the Debt Service Reserve Account is less than the Required DSRA Balance for each subsequent Repayment Date following that date.

17.16 Abandonment

The Borrower abandons all or a material part of the Project Facilities or all or a material part of the Project Facilities are damaged or destroyed, unless, in the case of damage or destruction, risk of the occurrence of the event concerned is covered by Insurance and the Borrower is able to utilise the Insurance Proceeds in reinstatement pursuant to Schedule 8 (Insurance).

17.17 Nationalisation

17.17.1 The Government of Iceland or any Agency of that Government takes, or states officially that it proposes to take, any step with a view to the seizure,

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	expropriation, nationalisation or acquisition (whether compulsory or otherwise, in whole or in part, and whether or not for fair compensation) of the Borrower or any of its material assets or of any other party to any Project Contract or any of its material assets.
17.17.2	All or a material part of the Project Facilities is requisitioned.
17.17.3	The Government of Iceland takes any step (save as provided for in the Investment Agreement as in effect on the date of this Agreement) with a view to the regulation, administration or limitation of, or the assertion of any form of administrative control over, rates applied, prices charged or rates of return achievable, by the Borrower in connection with the Project and any such step, in the reasonable opinion of the Majority Banks, is likely to have a Material Adverse Effect.

17.18 Insurance

Any Insurance is not, or ceases to be in full force and effect or (at the time it is required to be effected) is unavailable, or is avoided or any insurer is or will be entitled to avoid or otherwise reduce its liability under any policy relating to an Insurance in breach of Schedule 8.

17.19 Project Events

17.19.1 The average production level of aluminium from the Grundartangi Aluminium Smelter is less than ninety per cent. (90%) of 89,100 tonnes per annum applied pro rata for a period of thirty consecutive days (excluding from the calculation any reduction in production level which is as a consequence of:

(a)	an event of force majeure where any losses and/or liabilities incurred by the Borrower in such circumstances and as a result of such event are covered by Insurances and the Borrower is able to utilise the Insurance Proceeds to fully cover such losses and/or liabilities; or
(b)	unavailability of Secondary Power under (and as defined in) the Power Contract),

unless the Borrower produces a remedial plan within fifteen days of the end of any such period which is in form and substance satisfactory to the Majority Banks (acting reasonably) and such plan is then implemented in accordance with its terms.

17.19.2 (a) The Borrower ceases to have title to or the right to possess and use the Site; and/or

(b) the Borrower ceases to have title to or the right to possess and/or use any buildings or fixtures on the Site or any easements and wayleaves necessary to implement the Project in accordance with the Documents

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and such cessation, in the reasonable opinion of the Majority Banks, is likely to have a Material Adverse Effect.

17.20 Ownership of the Borrower

17.20.1	The Shareholder ceases to hold (legally and beneficially) 100% of the share capital and voting rights of the Borrower, but holds more than 50.1% of the share capital and voting rights provided that it shall not be an event of default if the conditions set out in Clause 17.20.3 are complied with in respect of any transfer.
17.20.2	The Shareholder ceases to hold (legally and beneficially) at least 50.1 % of the share capital and voting rights of the Borrower provided that it shall not be an event of default if the Shareholder holds (legally or beneficially) less than 50.1 % of the share capital and voting rights of the Borrower and:

(a)	any transferee of such share capital and voting rights is approved in writing by the Majority Banks (such approval not to be unreasonably withheld); and
(b)	the conditions set out in Clause 17.20.3 are complied with in respect of any transfer.

17.20.3 The conditions that must be complied with in respect of any transfer permitted under Clauses 17.20.1 and 17.20.2 are as follows:

(a)	any transfer would not breach the Investment Agreement or any applicable law;
(b)	unless the Majority Banks otherwise consent, any such share capital and voting rights are transferred subject to the Shares Pledge or the transferee creates a new Security Interest over such share capital and voting rights in form and substance reasonably satisfactory to the Agent;
(c)	any such transferee agrees to be bound by the Intercreditor Agreement;
(d)	the transferee’s obligations under the Documents to which it is or will become a party or subject to are legal, valid and binding on it, and the Agent has received any relevant legal opinions which are satisfactory to it; and
(e)	following any transfer, the Shareholder maintains control of the Borrower (unless the Majority Banks agree otherwise).

17.21 Environmental Matters

17.21.1 The Borrower (i) fails to comply in any material respect with any Environmental Law or Environmental Approval or to the extent that such non-compliance would lead to loss, termination, revocation or suspension of the

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	Environmental Operating Permit, or (ii) becomes subject to any Environmental Claim which, in the reasonable opinion of the Majority Banks, is likely to have a Material Adverse Effect.
17.21.2	There is a change in applicable Environmental Law which would be likely to result in the imposition of any material liability in relation to the Project on any Finance Party.
17.21.3	There is a change in Environmental Law which will cause the rights of any person in relation to any claim against the Borrower in relation to non- compliance with an Environmental Law or Environmental Licence to rank ahead of the rights of any Finance Party against the Borrower and the Agent gives notice of such event to the Borrower within 90 days of becoming aware of the relevant change in Environmental Law.
17.21.4	The Environmental Operating Permit terminates for any reason or the Government issues a notice of termination of or (after expiry of any applicable grace period) a notice of intention to terminate the Environmental Operating Permit.
17.21.5	The Environmental Operating Permit becomes capable of being terminated by reason of any technical, legal or procedural error or impropriety in connection with the issuance of the Environmental Operating Permit.

17.22 Material Adverse Change

Any other event or series of events occurs after the date hereof (other than a reduction in the price of aluminium where the Borrower continues to have the right to make deferrals under Clause 6.2) which will have a material adverse effect on the ability of the Borrower to comply with its payment obligations under the Finance Documents and which, if capable of remedy, is not remedied within 30 days of the date of any notice given by the Agent to the Borrower requiring it to be remedied.

17.23 Acceleration

17.23.1 On and at any time after the occurrence of an Event of Default which is continuing immediately prior to the exercise of any of the following rights, the Agent may, and shall if so directed by the Majority Banks (or, in the case of (e) below, the Majority Senior Creditors), by notice to the Borrower:

(a)	cancel the Total Commitments; and/or
(b)	demand that all or part of the Loans, together with accrued interest and all other amounts accrued under the Finance Documents be immediately due and payable, whereupon they shall become immediately due and payable; and/or
(c)	demand that all or part of the Loans together with accrued interest and all other amounts accrued under the Finance Documents be payable on

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	demand, whereupon they shall immediately become payable on demand by the Agent acting on the instructions of the Majority Banks; and/or
(d)	require the Borrower to exercise its rights to or exercise the Borrower’s rights to or require the Security Trustee to exercise its rights (if any) to:

(i)	call for immediate subscription of capital under the Sponsor Funding Agreement; and/or
(ii)	request loans under the Sponsor Funding Agreement; and/or
(iii)	call for immediate payment under any Letter of Credit; and/or

(e)	require the Security Trustee to exercise its rights under the Security Documents; and/or
(f)	give any notice regarding the payment of Insurance Proceeds; and/or
(g)	give notice to the Account Bank for the purposes set out in the Account Agreement; and/or

17.23.2

On and at any time after the occurrence of an Event of Default which is continuing immediately prior to the exercise of any of the following rights, the Security Trustee or the Agent or any person appointed by either of them may by notice to the Borrower from the Agent or Security Trustee exercise (in place of the Borrower) all of the Borrower’s rights and discretions and (acting as agent of the Borrower and/or jointly and severally with the Borrower) perform any obligations of the Borrower under any Project Contract for which there is a Direct Agreement.

17.23.3

Nothing in this Clause 17.23 (Acceleration) limits or affects any of the Finance Parties’ rights or remedies under or in respect of any Finance Documents.

17.24 No Independent Action

No Finance Party may, except with the prior consent of the Majority Banks:

17.24.1	enforce any Security Interest created or evidenced by any Security Document or require the Agent to enforce any such Security Interest;
17.24.2	sue for or institute any creditor’s process (including a Mareva injunction, garnishment, execution or levy, whether before or after judgment) in respect of any obligation (whether or not for the payment of money) owing to it under or in respect of any Finance Document;
17.24.3	take any step (including petition, application, notice of meeting or proposal to creditors) for the liquidation, winding-up or administration of, or any insolvency proceeding in relation to, the Borrower, or for a voluntary arrangement or scheme of arrangement in relation to the Borrower; or

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17.24.4 apply for any order for an injunction or specific performance in respect of the Borrower in relation to any of the Finance Documents.

18. FORECASTS

18.1 Time for Delivery of Forecasts

The Borrower shall, as of each Calculation Date, prepare a Forecast (in consultation with the Agent and the Banks’ Technical Adviser) in the manner set out in this Clause 18 (Forecasts).

18.2 Contents of Forecast

18.2.1 Each Forecast will set out:

(a)	details of the Forecast Assumptions on which it is based;
(b)	Discounted Cash Available for Debt Service as at the Calculation Date for that Forecast;
(c)	details of Cash Available for Debt Service for that Forecast;
(d)	the Loan Life Cover Ratio, as at the Calculation Date for that Forecast (on the assumption that the LME Cash Price is US$1,330 per metric tonne).

18.2.2 All projections and calculations to be made under this Clause 18 (Forecasts) shall be expressed and made in Dollars.

18.3 Forecast Assumptions

18.3.1	Each Forecast will be prepared and the Loan Life Cover Ratio calculated using the Computer Model and on the basis of Forecast Assumptions determined in accordance with this Clause 18 (Forecasts).
18.3.2	Where the manner of preparing any Forecast and determining the Loan Life Cover Ratio differs between the program on which the Computer Model operates and the provisions of this Agreement, this Agreement will prevail.

18.4 Procedures for Determining Forecast Assumptions

18.4.1 Not later than 60 Business Days prior to each Calculation Date the Borrower shall notify the Agent of its proposals (failing which the Agent shall make its own proposals) as to:

(a) the additions and amendments (if any) to the Technical Assumptions (the “Existing Technical Assumptions”) that were the basis of the preceding Forecast which it believes are necessary:

(i) to correct any deficiency in the form and structure of the Computer Model; or

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(ii) to take into account any circumstances that are not taken into account in the Existing Technical Assumptions but which it reasonably believes should be taken into account.

18.4.2 Within five Business Days after receipt of the notification referred to in paragraph 18.4.1 above, the Agent shall notify the Banks, the Borrower and the Banks’ Technical Adviser of:

(a)	the Borrower’s proposals or (if applicable) the Agent’s proposals under paragraph 18.4.1 above;
(b)	the additions and amendments (if any) to the Economic Assumptions (the “Existing Economic Assumptions”) that were the basis of the preceding Forecast which it believes are necessary:

(i)	to correct any deficiency in the form and structure of the Computer Model; or
(ii)	to take into account any circumstances that are not taken into account in the Existing Economic Assumptions but which it reasonably believes should be taken into account.

18.4.3

Each of the Banks shall, within 10 Business Days of receipt of the notification referred to in paragraph 18.4.2 above, notify the Agent whether they accept or reject the proposals of the Borrower and/or the Agent with respect to the Forecast Assumptions for that Forecast. If the Majority Banks do not accept any proposed Technical Assumption it shall be referred to the relevant Expert for resolution in accordance with Clause 18.5 (Submissions to the Expert). If the Majority Banks do not accept any proposal with respect to any Economic Assumption, then (subject to paragraph 18.4.4 below) the Banks shall within five Business Days, consult together in good faith with a view to agreeing a mutually acceptable Economic Assumption and the relevant Economic Assumption shall be the Economic Assumption agreed upon by the Majority Banks. In making any determination with respect to the Technical Assumptions pursuant to this Clause, the Banks may consult with the Agent and the Banks’ Technical Adviser.

18.4.4

If the Majority Banks accept the Agent’s proposals with respect to any of the Economic Assumptions or agree any of the Economic Assumptions as contemplated by paragraph 18.4.3 above, the Agent shall promptly notify the Borrower of that fact and, within five Business Days of receipt of such notification, the Borrower shall notify the Agent whether it accepts or rejects the relevant Economic Assumptions. If the Majority Banks do not agree any of the Economic Assumptions as contemplated by paragraph 18.4.3 above or the Borrower does not accept any proposal with respect to the Economic Assumptions made in accordance with this paragraph 18.4.4 then the dispute

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	shall be referred to the Expert for resolution in accordance with Clause 18.5 (Submissions to the Expert).
18.4.5	The assumption with respect to the aluminium price may not be changed and shall not be referred to the Expert for recalculation in accordance with Clause 18.5 (Submissions to the Expert).

18.5 Submissions to the Expert

18.5.1	If the Borrower and/or the Majority Banks reject any proposals of the Majority Banks or the Borrower (as the case may be) with respect to the Forecast Assumptions or any additions or amendments to the Computer Model within any periods provided for in paragraphs 18.5.3 and 18.5.4, the Agent shall refer the disputed matter to an Expert for determination within five Business Days of any such rejection.
18.5.2	The Agent shall instruct the Expert to give his decision within 15 Business Days after the date of receipt of his instructions.
18.5.3	An Expert shall be a person having appropriate expertise with respect to, but no interest in the outcome of, the matter referred to him and shall be appointed by agreement between the Borrower and the Agent (after consultation with the Banks and the Banks’ Technical Adviser). Failing any such agreement within five Business Days of the first nomination of a person to be the Expert by either party, the Expert shall be a person having the characteristics outlined above and nominated on the application of the Agent. The costs of any reference to the Expert shall be borne by the person whom the Expert specifies or otherwise by the Borrower.
18.5.4	The Expert shall be given terms of reference agreed between the Borrower and the Agent properly stating the context in which the relevant referral is being made to him. The Borrower and the Agent may each provide the Expert with whatever supporting evidence they think appropriate.
18.5.5	The Expert shall not be bound to choose either the proposal made by the Borrower or that made by the Agent but shall be free to make his own determination of the point referred to him provided that for any determination to be final and binding as contemplated by this paragraph 18.5.5, the determination of the Expert must be (where applicable) within the range of possible Forecast Assumptions or range of possible revisions to the Computer Model which falls between and includes the relevant Forecast Assumption or revisions to the Computer Model (as the case may be) proposed by the Majority Banks or the Agent and the Borrower. The Expert’s determination, if it complies with the previous sentence, shall (except in the case of manifest error) be final and binding on all the Parties and shall be used in the relevant Forecast or Computer Model. If the Expert’s determination (where applicable) falls outside the range of possible Forecast Assumptions or

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	revisions to the Computer Model referred to in the first sentence of this paragraph, then the Parties shall be bound by the proposed Forecast Assumptions or revisions to the Computer Model (as the case may be) which are closest to the Expert’s determination.
18.5.6	The Expert shall act as an expert in determining the matter referred to him and not as an arbitrator.

18.6 Preparation of Forecast

18.6.1	The Borrower shall prepare the Forecast within 30 days after each Calculation Date, using the Computer Model and on the basis of the Forecast Assumptions as determined in accordance with Clauses 18.4 (Procedures for determining Forecast Assumptions) and 18.5 (Submissions to the Expert).
18.6.2	Within 30 days after each Calculation Date, the Borrower shall give a copy of the Forecast to the Agent, each Bank and the Banks’ Technical Adviser.
18.6.3	The Borrower represents and warrants to each Finance Party that:

(a)	the method of calculating the figures referred to in Clause 18.2.1 (the “Relevant Figures”) contained in the Computer Model is consistent in all material respects with the method for doing so referred to in this Clause 18 (Forecasts); and
(b)	upon delivery of each Forecast, the Relevant Figures specified in it have been calculated in accordance with, and using, the Computer Model.

These representations shall be deemed to be repeated on each Calculation Date.

18.6.4

Notwithstanding paragraph 18.6.3 above, if the Agent (after comparison of the Relevant Figures contained in a Forecast with the figures produced by its own simulation of the Computer Model (using the same Forecasting Assumptions)) considers that the Relevant Figures have not been so calculated, it may notify the Borrower (or the Banks’ Technical Adviser, as the case may be) accordingly within seven Business Days of receipt by it of a Forecast. If any such notification is given, the Borrower and the Agent shall consult together within five Business Days of the notification with a view to establishing and agreeing whether or not the Relevant Figures have been properly calculated as contemplated by paragraph 18.6.3 above.

18.6.5

If the Borrower and the Agent do not agree any such disputed issue within five Business Days after the notification under paragraph 18.6.4 above, then the matter shall be referred to the Expert for resolution and Clauses 18.5.2 to 18.5.6 shall apply. In the event of any such dispute, unless and until resolution of the dispute, the Agent’s simulation of the Computer Model shall prevail over the Computer Model so that all references in this Agreement shall

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be construed as references to that simulation and Forecasts shall be prepared, and the Relevant Figures calculated, using that simulation but not so as to require a prepayment pursuant to Clauses 7.4.2 and 7.4.3 or give rise to any breach or Default pursuant to Clause 16.35.

18.7 Computer Model

18.7.1 By notice to the Borrower, the Agent (after consultation with the Borrower, the Banks and, if appropriate, the Banks’ Technical Adviser) may, at any time and at the expense of the Borrower, make such revisions to the Computer Model as may be reasonably required for the purpose of:

(a)	correcting any error in the form or structure of the Computer Model; or
(b)	incorporating any additional assumptions agreed or determined pursuant to any of Clauses 18.3 (Forecast Assumptions), 18.4 (Procedures for determining Forecast Assumptions) and 18.5 (Submissions to the Expert).

The Agent’s determination of the revisions that are so required shall (in the absence of mathematical or manifest error) be final and conclusive.

18.7.2

If the Computer Model is revised, the Agent shall promptly notify the Borrower and the Banks of the revision and provide the Borrower with a diskette with a copy of the same. Any such notice shall be accompanied by a certificate from the Banks’ Model Adviser that the relevant revisions have been made to the Computer Model.

18.7.3

In the event that the Borrower notifies the Agent that there is a mathematical or manifest error in the revisions made by the Agent to the Computer Model pursuant to this Clause 18.7 (Computer Model) and the Agent and the Borrower are unable to agree on the revisions so required, then either party may refer the same to the Expert for resolution in accordance with Clause 18.5 (Submissions to the Expert).

18.8 Period for which Figures are Valid

The Loan Life Cover Ratio and other dates and figures specified in an applicable Forecast will once finally determined apply on and as from the relevant Calculation Date until next recalculated in accordance with this Clause 18 (Forecasts) in an applicable Forecast.

18.9 Calculation of Debt Service Cover Ratio

The Borrower shall calculate the Debt Service Cover Ratio as of each Calculation Date within 30 days after each Calculation Date on the following basis:

18.9.1 figures shall be taken from the financial information for the relevant period or as at the relevant date provided in accordance with Clause 16.2.1 and 16.2.2

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\

	(Financial Information) and in accordance with the provisions of this Clause 18 (Forecasts);
18.9.2	the calculation shall be made in accordance with:

(a)	such international accounting standards (consistently applied) as were applied in the Computer Model at the date of this Agreement; and
(b)	those principles and practices which are consistent with those applied and reflected in the Computer Model at the date of this Agreement.

18.9.3	The Borrower shall (at its expense) supply to the Agent and the Banks’ Technical Adviser within 30 days of each Calculation Date a certificate (the “DSCR Certificate”) setting out in reasonable detail the Borrower’s determinations of the Debt Service Cover Ratio.
18.9.4	The Agent and/or the Banks’ Technical Adviser may, by notice to the Borrower (with a copy to the Banks’ Technical Adviser or the Agent) (as appropriate) within five Business Days of receipt of any certificate referred to in Clause 18.9.1 above dispute any of the determinations contained in such certificate. If the Agent and/or the Banks’ Technical Adviser does so, the Borrower, the Banks’ Technical Adviser and the Agent shall consult together within five Business Days of such notification with a view to establishing and agreeing the figures in the certificate.
18.9.5	In the absence of any notification pursuant to Clause 18.9.4 within the requisite time period, the Agent and Banks’ Technical Adviser will be deemed to have accepted the certificate and the calculations contained therein and any references to Debt Service Cover Ratio in this Agreement as at the date stated in the Borrower’s certificate shall be construed as references to the amounts set out in that certificate.
18.9.6	If a notification is given under Clause 18.9.4 above and the Borrower, the Agent and the Banks’ Technical Adviser fail to reach agreement within five Business Days after such notification, then the matter shall be referred to the Expert for determination and Clauses 18.5.2 to 18.5.6 shall apply as if references to Forecasts and Computer Model were references to the Debt Service Cover Ratio.
18.9.7	In the event of any such dispute, unless and until resolution of the dispute, the figures as at a specific date for the Debt Service Cover Ratio for the purposes of this Agreement shall be construed as those determined by the Agent (after consultation with the Banks’ Technical Adviser) but not so as to require a prepayment pursuant to Clauses 7.4.2 and 7.4.3, or give rise to a breach or Default pursuant to Clause 16.35.

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18.10 Determination of Discount Rate

The Agent shall determine the applicable Discount Rate at or about 11 am on the day three Business Days prior to each Calculation Date and shall notify the Borrower no later than the following Business Day. For this purpose, the Agent shall seek relevant fixed swap rates from three Banks (as reasonably selected in consultation with the Borrower) and shall use the average rate quoted. For the avoidance of doubt, such rate shall not take into account any credit assessment of the Borrower.

19. THE AGENT, THE SECURITY TRUSTEE, THE ARRANGERS AND THE ACCOUNT BANK

19.1 Appointment and Duties of the Agent

19.1.1	Each Finance Party (other than the Agent or the Security Trustee (as the case may be)) irrevocably appoints the Agent and the Security Trustee to act as its agent under and in connection with the Finance Documents.
19.1.2	Each Party appointing the Agent and the Security Trustee irrevocably authorises each of the Agent and the Security Trustee on its behalf to:

(a)	perform the duties and to exercise the rights, powers and discretions that are specifically delegated to it under or in connection with the Finance Documents, together with any other incidental rights, powers and discretions; and
(b)	execute as agent for that Party each Finance Document to which the Agent and/or the Security Trustee is a party.

19.1.3 The Agent and the Security Trustee have only those duties which are expressly specified in the Finance Documents. Those duties are solely of a mechanical and administrative nature.

19.2 Role of the Arrangers

Except as specifically provided in the Finance Documents, no Arranger has no obligations of any kind to any other Party under or in connection with any Finance Document.

19.3 Relationship

The relationship between each of the Agent and the Security Trustee and the other Finance Parties is that of agent and principal only. Except as contemplated by the Security Documents, nothing in this Agreement constitutes the Agent or the Security Trustee as trustee or fiduciary for any other Party or any other person and neither the Agent nor the Security Trustee need hold in trust any moneys paid to it for a Party or be liable to account for interest on those moneys.

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19.4 Majority Banks’ Instructions

19.4.1	Each of the Agent and the Security Trustee will be fully protected if it acts in accordance with the instructions of the Majority Banks in connection with the exercise of any right, power or discretion or any matter not expressly provided for in the Finance Documents. Any such instructions given by the Majority Banks will be binding on all the Banks. In the absence of such instructions, each of the Agent and the Security Trustee may act as it considers to be in the best interests of all the Banks and shall be deemed to have acted with the approval of all the Banks.
19.4.2	Neither the Agent nor the Security Trustee is authorised to act in the name of a Bank (without first obtaining that Bank’s consent) in any legal proceedings in relation to any Finance Document provided that nothing in this paragraph shall prevent the Security Trustee enforcing any Security Interest under the Security Documents.
19.4.3	Each of the Agent and the Security Trustee may refrain from doing anything which would or might in its reasonable opinion (a) be contrary to the law of any applicable jurisdiction or any applicable official directive or (b) render it liable to any person, and may do anything which in its reasonable opinion (acting on legal advice) is necessary to comply with any such law or directive. If the Agent and/or the Security Trustee is under an obligation to act reasonably no Bank shall be entitled to require it to act otherwise.

19.5 Delegation

Each of the Agent and the Security Trustee may act under the Finance Documents through its personnel and agents.

19.6 Responsibility for Documentation

None of the Agent, the Security Trustee, the Arrangers or the Account Bank is responsible to any other Party for:

19.6.1	the execution, genuineness, validity, enforceability or sufficiency of any Finance Document or any other document;
19.6.2	the collectability of amounts payable under any Finance Document; or
19.6.3	the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document (including the Information Memorandum).

19.7 Default

19.7.1 None of the Agent, the Security Trustee or the Account Bank is obliged to monitor or enquire as to whether or not a Default has occurred. None of the Agent, the Security Trustee or the Account Bank will be deemed to have

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	knowledge of the occurrence of a Default unless it has received actual written notice to that effect from any Party. However, if the Agent, the Security Trustee or the Account Bank receives notice from a Party referring to this Agreement, describing the Default and stating that the event is a Default, it shall promptly notify the Banks (in the case of the Account Bank, through the Agent).
19.7.2	Each of the Agent and the Security Trustee may require the receipt of security satisfactory to it, whether by way of payment in advance or otherwise, against any liability or loss which it will or may incur in taking any proceedings or action arising out of or in connection with any Finance Document before it commences those proceedings or takes that action.

19.8 Exoneration

19.8.1

Without limiting paragraph 19.8.2 below, none of the Agent, the Security Trustee or the Account Bank will be liable to any other Party for any action taken or not taken by it under or in connection with any Document, unless directly caused by its gross negligence or wilful misconduct.

19.8.2

No Party may take any proceedings against any officer, employee or agent of the Agent, Security Trustee and/or Account Bank in respect of any claim it might have against the Agent, the Security Trustee and/or Account Bank or in respect of any act or omission of any kind (including gross negligence or wilful misconduct) by that officer, employee or agent in relation to any Document. Any such officer, employee or agent may rely on this paragraph 19.8.2 and enforce its rights under the Contracts (Rights of Third Parties) Act 1999.

19.9 Reliance

Each of the Agent, the Security Trustee and the Account Bank may:

19.9.1	rely on any notice or document believed by it to be genuine and correct and to have been signed by, or with the authority of, the proper person;
19.9.2	rely on any statement made by a director or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify; and
19.9.3	engage, pay for and rely on legal or other professional advisers selected by it (including those in its employment and those representing a Party other than itself).

19.10 Credit Approval and Appraisal

Without affecting the responsibility of the Borrower for information supplied by it or on its behalf in connection with any Finance Document, each Bank confirms that it:

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19.10.1

has made its own independent investigation and assessment of the structure of the Project, the form and substance of the Documents and the documents listed in Schedule 2, the financial condition and affairs of the Borrower, the parties to the Project Contracts and their respective related entities in connection with its participation in this Agreement and has not relied on any information provided to it by the Agent, the Security Trustee, the Account Bank or the Arrangers in connection with any Finance Document; and

19.10.2

will continue to make its own independent appraisal of the matters referred to in paragraph 19.10.1 above while any amount is or may be outstanding under the Finance Documents or any Commitment is in force.

19.11 Information

19.11.1	Each of the Agent and the Security Trustee shall promptly forward to the person concerned the original or a copy of any document which is delivered to it by a Party for that person.
19.11.2	Each of the Agent and the Security Trustee shall promptly supply a Bank with a copy of each document received by it under Clause 4 (Conditions Precedent) (other than any Fee Letter) upon the request of that Bank and at the reasonable expense of the Borrower.
19.11.3	Except where this Agreement specifically provides otherwise, neither the Agent nor the Security Trustee is obliged to review or check the accuracy or completeness of any document it forwards to another Party.
19.11.4	Except as provided above, neither the Agent nor the Security Trustee has any duty:

(a)	either initially or on a continuing basis to provide any Bank with any credit or other information concerning the Borrower whether coming into its possession before, on or after the date of this Agreement; or
(b)	unless specifically requested to do so by a Bank in accordance with a Finance Document to request any certificates or other documents from the Borrower.

19.12 The Agent, the Security Trustee, the Arrangers and the Account Bank individually

19.12.1	If it is also a Bank, each of the Agent, the Security Trustee, the Arranger and the Account Bank has the same rights and powers under this Agreement as any other Bank and may exercise those rights and powers as though it were not the Agent, the Security Trustee, an Arranger or the Account Bank.
19.12.2	Each of the Agent, the Security Trustee, the Arrangers and the Account Bank may:

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(a)	carry on any business with the Borrower, any party to the Documents or their respective related entities;
(b)	act as agent or trustee for, or in relation to any financing involving, the Borrower, any party to the Documents or their respective related entities; and
(c)	retain any profits or remuneration in connection with its activities under this Agreement or in relation to any of the foregoing.

19.12.3

In acting as the Agent or the Security Trustee, the agency and/or trustee division of the Agent or the Security Trustee (as the case may be) will be treated as a separate entity from its other divisions and departments. Any information acquired by the Agent or the Security Trustee which, in its opinion, is acquired by it otherwise than in its capacity as the Agent or Security Trustee may be treated as confidential by the Agent or the Security Trustee and will not be deemed to be information possessed by the Agent or Security Trustee in its capacity as such.

19.12.4

The Borrower irrevocably authorises each of the Agent, the Security Trustee and the Account Bank to disclose any information which, in its opinion, is received by it in its capacity as the Agent, the Security Trustee or the Account Bank to the other Finance Parties.

19.13 Indemnities

19.13.1	Without limiting the liability of the Borrower under the Finance Documents, each Bank shall forthwith on demand indemnify the Agent for that Bank’s proportion of any liability or loss incurred by the Agent in any way relating to or arising out of its acting as the Agent, except to the extent that the liability or loss arises directly from the Agent’s gross negligence or wilful misconduct.
19.13.2	Without limiting the liability of the Borrower under the Finance Documents, each Bank shall forthwith on demand indemnify the Security Trustee for that Bank’s proportion of any liability or loss incurred by the Security Trustee in any way relating to or arising out of its acting as the Security Trustee, except to the extent that the liability or loss arises directly from the Security Trustee’s gross negligence or wilful misconduct.
19.13.3	A Bank’s proportion of the liability set out in paragraphs 19.13.1 and 19.13.2 above will be the proportion which its participation in the Loans (if any) bears to all the Loans on the date of the demand. If, however, there is no Loan outstanding on the date of demand, then the proportion will be the proportion which its Commitment bears to the Total Commitments at the date of demand or, if the Total Commitments have then been cancelled, bore to the Total Commitments immediately before being cancelled.

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19.13.4 The Borrower shall forthwith on demand reimburse each Bank for any payment made by it under paragraph 19.13.1 and 19.13.2 above.

19.14 Compliance

19.14.1

Each of the Agent, the Security Trustee and the Account Bank may refrain from doing anything which might, in its opinion, constitute a breach of any law or regulation or be otherwise actionable at the suit of any person, and may do anything which, in its opinion, is necessary or desirable to comply with any law or regulation of any jurisdiction.

19.14.2

Without limiting paragraph 19.14.1 above, none of the Agent, the Security Trustee or the Account Bank need disclose any information relating to the Borrower, any Major Project Party, the issuer of any Letter of Credit, any Contractor or any of their respective related entities if the disclosure might, in the opinion of the Agent or the Security Trustee, constitute a breach of any law or regulation or any duty of secrecy or confidentiality or be otherwise actionable at the suit of any person.

19.15 Resignation of the Agent and the Security Trustee

19.15.1	Notwithstanding its irrevocable appointment, the Agent and/or the Security Trustee may resign by giving notice to the Banks and the Borrower, in which case the Agent or the Security Trustee (as the case may be) may forthwith appoint one of its Affiliates as successor Agent or Security Trustee or, failing that, the Majority Banks may after consultation with the Borrower appoint a successor Agent or Security Trustee.
19.15.2	If the appointment of a successor Agent and/or the Security Trustee is to be made by the Majority Banks but they have not, within 30 days after notice of resignation, appointed a successor Agent and/or the Security Trustee which accepts the appointment, the Agent may appoint a successor Agent and/or the Security Trustee may appoint a successor Security Trustee.
19.15.3	The resignation of the Agent or Security Trustee and the appointment of any successor Agent or Security Trustee will both become effective only upon the successor Agent or Security Trustee notifying all the Parties that it accepts its appointment. On giving the notification, the successor will succeed to the position of the Agent or the Security Trustee and the term “Agent” or “Security Trustee” will mean that successor.
19.15.4	The retiring Agent or Security Trustee shall, at its own cost, make available to the successor Agent or Security Trustee such documents and records and provide such assistance as the successor may reasonably request for the purposes of performing its functions as the Agent or Security Trustee under this Agreement.

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19.15.5	Upon its resignation becoming effective, this Clause 19 will continue to benefit the retiring Agent and/or Security Trustee in respect of any action taken or not taken by it under or in connection with the Finance Documents while it was the Agent and/or Security Trustee, and, subject to paragraph 19.15.4 above, it shall have no further obligations under any Finance Document.
19.15.6	The Majority Banks may, by notice to the Agent and/or the Security Trustee, require it to resign in accordance with paragraph 19.15.1 above. In this event, the Agent and/or the Security Trustee shall resign in accordance with paragraph 19.15.1 above but it shall not be entitled to appoint one of its Affiliates as a successor pursuant to paragraph 19.15.1 above.

19.16 Banks

19.16.1	Each of the Agent and the Security Trustee may treat each Bank as a Bank, entitled to payments under this Agreement and as acting through its Facility Office(s) until it has received not less than five Business Days’ prior notice from that Bank to the contrary.
19.16.2	Each of the Agent and the Security Trustee may at any time, and shall if requested to do so by the Majority Banks, convene a meeting of the Banks.
19.16.3	Each Bank shall supply the Agent with any information required by the Agent in order to calculate the Mandatory Cost in accordance with Schedule 7 (Mandatory Cost Formulae).

19.17 Bank Confirmation

Each Bank confirms in writing to the Agent (on the date hereof, or, in the case of a Bank which becomes a party hereto pursuant to a transfer, novation or assignment, on the date on which the relevant transfer, novation or assignment becomes effective) that either:

19.17.1	it is not resident for tax purposes in the United Kingdom and is beneficially entitled to the Loans and the interest thereon; or
19.17.2	it is a bank for the purposes of Section 349 of the Income and Corporation Taxes Act 1988 and is beneficially entitled to the Loans and the interest thereon,

and each Bank in favour of the Agent agrees to notify the Agent if there is any change in its position from that set out above.

19.18 Agent and Security Trustee as Trustee

19.18.1 Each of the Agent and the Security Trustee in its capacity as trustee or otherwise under the Finance Documents:

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(a)	is not liable for any failure, omission or defect in perfecting or registering the security constituted or created by any Finance Document;
(b)	may accept without enquiry such title as any Group Company may have to any asset secured by any Security Document; and
(c)	is not under any obligation to hold any Finance Document or any other document in connection with the Finance Documents or the assets secured by any Finance Document (including title deeds) in its own possession or to take any steps to protect or preserve the same. The Agent may permit a Group Company to retain any Finance Document or other document in its possession.

19.18.2 Save as otherwise provided in the Finance Documents, all moneys which under the trusts contained in the Finance Documents are received by each of the Agent and/or Security Trustee in its capacity as trustee or otherwise may be invested in the name of or under the control of the Agent and/or Security Trustee in any investment authorised by English law for the investment by trustees of trust money or in any other investments which may reasonably be selected by the Agent and/or Security Trustee. Additionally, the same may be placed on deposit in the name of or under the control of the Agent and/or Security Trustee at such bank or institution (including the Agent and/or Security Trustee) and upon such terms as the Agent and/or Security Trustee may reasonably think fit.

19.19 Parallel Debt and Security

19.19.1 For the purpose of ensuring and preserving the validity and continuity of the security rights created under or pursuant to the Finance Documents, the Borrower hereby irrevocably and unconditionally undertakes to pay to the Security Trustee any and all amounts owing by the Borrower to the Finance Parties under the Finance Documents and the Borrower and the Security Trustee acknowledge that for this purpose the Borrower’s obligations to the Finance Parties under the Finance Documents (the “Obligations”) are also obligations and liabilities of the Borrower to the Security Trustee under the Finance Documents which are separate and independent from, and without prejudice to, the identical obligations which the Borrower has to the Finance Parties under the Finance Documents, provided that the amounts due and payable under this Clause 19.19 (the “Parallel Debt”) shall be decreased to the extent that the Borrower has paid any amounts to the Finance Parties or any of them in respect of the Obligations and vice versa and that the Parallel Debt shall not exceed the aggregate of identical obligations which the Borrower has to the Finance Parties under the Finance Documents. Nothing in this Clause 19.19 shall in any way negate or affect the obligations which the Borrower has to the Finance Parties under the Finance Documents in respect of the Obligations. For the purpose of this Clause 19.19 the Security Trustee acts in its own name and on behalf of itself and not as agent or representative

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of any other party hereto and any security rights granted to the Security Trustee to secure the Parallel Debt are granted to the Security Trustee in its capacity as creditor of the Parallel Debt.

19.19.2

Without limiting or affecting the Security Trustee’s rights against the Borrower (whether under this paragraph or under any other provision of the Finance Documents), the Security Trustee agrees with each other Finance Party (on a several and divided basis) that, subject as set out in the next sentence, it will not exercise its rights as a joint creditor with a Finance Party except with the consent of the relevant Finance Party. However, for the avoidance of doubt, nothing in the previous sentence shall in any way limit the Security Trustee’s right to act in the protection or preservation of rights under or to enforce any Finance Document (or to do any act reasonably incidental to any of the foregoing).

20. FEES

20.1 Arrangement Fee

The Borrower shall on the date of this Agreement pay to each Arranger an arrangement fee in the amount agreed in the engagement letter dated 2 May 2003 together with supplemental letter dated 2 May 2003 and the amended and restated supplemental letter dated 24 July 2003. This fee shall be distributed by the Arrangers among the Banks in accordance with the arrangements agreed by each Arranger with the Banks.

20.2 Agent’s and Security Trustee’s Fee

The Borrower shall pay to each of the Agent and the Security Trustee for its own account an agency fee in the amount agreed in and in accordance with each Fee Letter.

20.3 Advisers’ Fees

The Borrower shall pay the reasonable costs and expenses of the Banks’ Advisers and any advisers appointed pursuant to Clause 27 (Advisers) subject to any separate written agreements reached between the Borrower and the Banks’ Advisers prior to the date of this Agreement.

20.4 Participation Fee

The Borrower shall on the date of this Agreement pay to each Arranger a participation fee in the amount and at the times agreed in the engagement letter dated 2 May 2003 together with supplemental letter dated 2 May 2003 and the amended and restated supplemental letter dated 24 July 2003. This fee shall be distributed by the Arrangers among the Banks in accordance with the arrangements agreed by each Arranger with the Banks.

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20.5 Commitment Fee

20.5.1	The Borrower shall pay to the Agent for each Bank a commitment fee in Dollars computed at the rate of 0.50 percent per annum on the undrawn, uncancelled amount of that Bank’s Commitment during the Commitment Period.
20.5.2	Accrued commitment fee is payable quarterly in arrears. Accrued commitment fee shall also be payable to the Agent for the relevant Bank on the cancelled amount of its Commitment at the time the cancellation comes into effect.

20.6 VAT

Any fee referred to in this Clause 20 is exclusive of any value added tax or any other tax which might be chargeable in connection with that fee. If any value added tax or other tax is so chargeable, it shall be paid by the Borrower at the same time as it pays the relevant fee.

21. EXPENSES

21.1 Initial and Special Costs

The Borrower shall forthwith on demand pay the Agent, the Security Trustee each Arranger and the Technical Committee the amount of all reasonable costs and expenses (including legal fees) incurred by them (in accordance with the terms of any written arrangement recorded in respect thereof (if one exists)) in connection with:

21.1.1	the review of the Project Contracts and any other agreements to which any Group Company is or becomes a party;
21.1.2	the negotiation, preparation, printing and execution of:

(a)	this Agreement and any other documents referred to in this Agreement; and
(b)	any other Finance Document (other than a Novation Certificate) executed after the date of this Agreement; and

21.1.3	any amendment, waiver, consent or suspension of rights (or any proposal for any of the foregoing) requested by or on behalf of the Borrower and relating to a Finance Document or a document referred to in any Finance Document;
21.1.4	the original syndication of the facility prior to the date of this Agreement; and
21.1.5	any meetings of the Technical Committee provided for in Clause 16.5 (Access and Consultation).

21.2 Enforcement Costs

The Borrower shall forthwith on demand pay to:

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21.2.1	each Finance Party the amount of all costs and expenses (including legal fees) incurred by it in connection with the enforcement of, or the preservation of any rights under, any Finance Document; and
21.2.2	the Agent and/or Security Trustee the amount of all reasonable costs and expenses (including legal fees) reasonably incurred by it in investigating any Default where the Agent and/or the Security Trustee reasonably believes that such Default has occurred.

22. STAMP DUTIES

The Borrower shall pay, and forthwith on demand indemnify each Finance Party against any liability it incurs in respect of, any stamp, registration and similar tax which is or becomes payable in connection with the entry into, performance or enforcement of any Finance Document (other than a Novation Certificate).

23. INDEMNITIES

23.1 Currency Indemnity

23.1.1 If a Finance Party receives an amount in respect of the Borrower’s liability under the Finance Documents or if that liability is converted into a claim, proof, judgment or order in a currency other than the currency (the “contractual currency”) in which the amount is expressed to be payable under the relevant Finance Document:

(a)	the Borrower shall indemnify that Finance Party as an independent obligation against any loss or liability arising out of or as a result of the conversion;
(b)	if the amount received by that Finance Party, when converted into the contractual currency at a market rate in the usual course of its business is less than the amount owed in the contractual currency, the Borrower shall forthwith on demand pay to that Finance Party an amount in the contractual currency equal to the deficit; and
(c)	the Borrower shall forthwith on demand pay to the Finance Party concerned any exchange costs and taxes payable in connection with any such conversion.

23.1.2 The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency other than that in which it is expressed to be payable.

23.2 Other Indemnities

The Borrower shall forthwith on demand indemnify each Finance Party against any loss or liability which that Finance Party incurs as a consequence of:

23.2.1 the occurrence of any Default;

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23.2.2	the operation of Clause 17.23 (Acceleration) or Clause 30 (Pro Rata Sharing);
23.2.3	any payment of principal or an overdue amount by the Borrower being received from any source otherwise than on the last day of a relevant Interest Period or Designated Interest Period (as defined in Clause 9.3 (Default Interest)) relative to the amount so received;
23.2.4	(other than by reason of negligence or default by a Finance Party) a Loan not being made after the Borrower has delivered a Request or a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment;
23.2.5	any Environmental Claim or any actual or alleged breach of any Environmental Law or Environmental Approval to the extent that the loss or liability incurred by the Finance Party would not have arisen if this Agreement or any of the other Finance Documents had not been executed (other than as a result of its grossly negligent acts or wilful misconduct); or
23.2.6	the entry into or performance by it of any Direct Agreement or any step-in indemnity or similar undertaking or obligations given or assumed by it under or in respect of any Direct Agreement (including, without limitation, any payments made to or on behalf of the Borrower in connection with any Direct Agreement).

The Borrower’s liability in each case includes any loss of margin or other loss or expense on account of funds borrowed, contracted for or utilised to fund any amount payable under any Finance Document, any amount repaid or prepaid or any Loan.

24. EVIDENCE AND CALCULATIONS

24.1 Accounts

Accounts maintained by a Finance Party in connection with this Agreement are prima facie evidence of the matters to which they relate.

24.2 Certificates and Determinations

Any certification or determination by a Finance Parry which is required to be made by it of a rate, amount or calculation under the Finance Documents is, in the absence of manifest error, prima facie evidence of the matters to which it relates.

24.3 Calculations

24.3.1	Interest and the fee payable under Clause 20.5 (Commitment Fee) accrue from day to day and are calculated on the basis of the actual number of days elapsed and a year of 360 days.
24.3.2	Unless a Finance Document otherwise provides, the Agent’s spot rate of exchange for the purchase of one currency in the London foreign exchange market with another at or about 11.00 a.m. on the day of calculation for

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delivery two Business days’ later shall be used to calculate the equivalent of one currency in another.

25.	AMENDMENTS AND WAIVERS
25.1	Procedure

25.1.1	Subject to Clause 25.2 (Exceptions), any term of the Finance Documents may be amended or waived with the agreement of the Borrower and the Majority Banks and, in the case of any Hedging Agreement, with the consent of the relevant Hedging Bank. The Agent may effect, on behalf of the Finance Parties, an amendment or waiver to which the Majority Banks have agreed.
25.1.2	The Agent shall promptly notify the other Parties of any amendment or waiver effected under paragraph 25.1.1 above, and any such amendment or waiver shall be binding on all the Parties.

25.2 Exceptions

25.2.1 An amendment or waiver not agreed by a Bank and which relates to:

(a)	the definition of “Majority Banks” in Clause 1.1 (Definitions);
(b)	an extension of the date for, or a decrease in an amount or a change in the currency of, any payment to that Bank under the Finance Documents (including, without limitation, the Margin and any fee payable under clause 20.5 (Commitment Fee);
(c)	an increase in that Bank’s Commitment;
(d)	a term of a Finance Document which expressly requires the consent Of that Bank;
(e)	any release of any Security Interest under any Security Document except where its consent has been expressly provided in the Finance Documents; or
(f)	Clause 2.2 (Nature of a Finance Party’s Rights and Obligations), Clause 16.23 (Scope of Business), Clause 26.2 (Transfers by Banks), Clause 30 (Pro Rata Sharing) or this Clause 25 (Amendments and Waivers), is not binding on that Bank.

25.2.2 An amendment or waiver which relates to the rights and/or obligations of the Agent or the Security Trustee may not be effected without the agreement of the Agent or the Security Trustee.

25.3 Waivers and Remedies Cumulative

The rights of each Finance Party under the Finance Documents:

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25.3.1	may be exercised as often as necessary;
25.3.2	are cumulative and not exclusive of its rights under the general law; and
25.3.3	may be waived only in writing and specifically.

	Delay in exercising or non-exercise of any such right is not a waiver of that right.
26.	CHANGES TO THE PARTIES

26.1 Transfers by Borrower

The Borrower may not assign, transfer, novate or dispose of any of, or any interest in, its rights and/or obligations under the Finance Documents.

26.2 Transfers by Banks

26.2.1	A Bank (the “Existing Bank”) may, subject to paragraph 26.2.2 below, at any time assign, transfer or novate any part of its Commitment and/or any of its rights and/or obligations under this Agreement to another bank or financial institution (the “New Bank”).
26.2.2	A transfer of part of a Commitment must be in a minimum amount of at least $5,000,000.
26.2.3	A transfer of obligations will be effective only if either:

(a)	the obligations are novated in accordance with Clause 26.3 (Procedure for Novations); or
(b)	the New Bank confirms to the Agent and the Borrower that it undertakes to be bound by the terms of this Agreement as a Bank in form and substance satisfactory to the Agent. On the transfer becoming effective in this manner the Existing Bank shall be relieved of its obligations under this Agreement to the extent that they are transferred to the New Bank.

26.2.4	Nothing in this Agreement restricts the ability of a Bank to sub-contract an obligation if that Bank remains liable under this Agreement for that obligation.
26.2.5	On each occasion an Existing Bank assigns, transfers or novates any of its Commitment and/or any of its rights and/or obligations under this Agreement, the New Bank shall, on the date the assignment, transfer and/or novation takes effect, pay to the Agent for its own account a fee of $1,000.
26.2.6	An Existing Bank is not responsible to a New Bank for:

(a)	the execution, genuineness, validity, enforceability or sufficiency of any Finance Document or any other document;
(b)	the collectability of amounts payable under any Finance Document; or

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(c) the accuracy of any statements (whether written or oral) made in or in connection with any Finance Document.

26.2.7 Each New Bank confirms to the Existing Bank and the other Finance Parties that it:

(a)	has made its own independent investigation and assessment of the financial condition and affairs of each Group Company and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Bank in connection with any Finance Document; and
(b)	will continue to make its own independent appraisal of the creditworthiness of each Group Company and its related entities while any amount is or may be outstanding under this Agreement or any Commitment is in force.

26.2.8 Nothing in any Finance Document obliges an Existing Bank to:

(a)	accept a re-transfer from a New Bank of any of the rights and/or obligations assigned, transferred or novated under this Clause; or
(b)	support any losses incurred by the New Bank by reason of the non- performance by any Group Company of its obligations under the Finance Documents or otherwise.

26.2.9 Any reference in this Agreement to a Bank includes a New Bank but excludes a Bank if no amount is or may be owed to or by it under this Agreement and its Commitment has been cancelled or reduced to nil.

26.3 Procedure for Novations

26.3.1 A novation is effected if:

(a)	the Existing Bank and the New Bank deliver to the Agent a duly completed certificate, substantially in the form of Schedule 4 (a “Novation Certificate”); and
(b)	the Agent executes it.

26.3.2	Each Party (other than the Existing Bank and the New Bank) irrevocably authorises the Agent to execute any duly completed Novation Certificate on its behalf which, subject to the terms of this Agreement, it shall execute save where it would incur any liability as a consequence of so executing.
26.3.3	To the extent that they are expressed to be the subject of the novation in the Novation Certificate:

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(a)	the Existing Bank and the other Parties (the “existing Parties”) will be released from their obligations to each other (the “discharged obligations”);
(b)	the New Bank and the existing Parties will assume obligations towards each other which differ from the discharged obligations only insofar as they are owed to or assumed by the New Bank instead of the Existing Bank;
(c)	the rights of the Existing Bank against the existing Parties and vice versa (the “discharged rights”) will be cancelled; and
(d)	the New Bank and the existing Parties will acquire rights against each other which differ from the discharged rights only insofar as they are exercisable by or against the New Bank instead of the Existing Bank,

all on the date of execution of the Novation Certificate by the Agent or, if later, the date specified in the Novation Certificate.

26.4 Reference Banks

If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank of which it is an Affiliate) ceases to be a Bank, the Agent shall (in consultation with the Borrower) appoint another Bank or an Affiliate of a Bank to replace that Reference Bank.

26.5 Register

The Agent shall keep a register of all the Parties and shall supply any other Party (at that Party’s expense) with a copy of the register on request.

26.6 Additional Payments

If following any assignment, transfer or novation of all or any part of the rights or obligations of a Bank to a New Bank under Clause 26.2 (Transfers by Banks) any additional amount is required to be paid to the New Bank by a Borrower under Clauses 11 (Taxes) or 13 (Increased Costs) as a result of laws or regulations in force at the time of that assignment, transfer or novation, then the New Bank will be entitled to receive any such amount only to the extent that the Existing Bank would have been so entitled had there been no assignment, transfer or novation.

27. ADVISERS

27.1.1	Subject to paragraph 27.1.2 below, the Agent may with the prior approval of the Majority Banks and following consultation with the Borrower, if any of the Banks’ Advisers resign or their appointments otherwise cease or are terminated, appoint a new adviser replacing such Banks’ Adviser.
27.1.2	If the Majority Banks are unable to agree on the appointment of a new Banks’ Adviser within 30 days of notification to them by the Agent of alternative advisers, the Agent may appoint a new Banks’ Adviser as it thinks fit.

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28. DISCLOSURE OF INFORMATION

A Bank may disclose to one of its Affiliates or any person with whom it is proposing to enter, or has entered into, any kind of transfer, participation or other agreement in relation to this Agreement:

28.1.1	a copy of any Document;
28.1.2	the Information Memorandum; and
28.1.3	any information which that Bank has acquired under or in connection with any Document,

only after the person (other than any Affiliate) to whom such disclosure is proposed to be made has executed a Confidentiality Agreement.

29. SET-OFF

A Finance Party may set off any matured obligation owed by the Borrower under the Finance Documents (to the extent beneficially owned by that Finance Party) against any obligation (whether or not matured) owed by that Finance Party to the Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off. If either obligation is unliquidated or unascertained, the Finance Party may set off in an amount estimated by it in good faith to be the amount of that obligation.

30. PRO RATA SHARING

30.1 Redistribution

If any amount owing by the Borrower under the Finance Documents to a Finance Party (the “recovering Finance Party”) is discharged by payment, set-off (other than the transaction fees of the Account Bank) or any other manner other than through the Agent in accordance with Clause 10 (Payments) (a “recovery”), then:

30.1.1	the recovering Finance Party shall, within three Business Days, notify details of the recovery to the Agent;
30.1.2	the Agent shall determine whether the recovery is in excess of the amount which the recovering Finance Party would have received had the recovery been received by the Agent and distributed in accordance with Clause 10 (Payments);
30.1.3	subject to Clause 30.3 (Exceptions), the recovering Finance Party shall within three Business Days of demand by the Agent pay to the Agent an amount (the “redistribution”) equal to the excess;

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30.1.4	the Agent shall treat the redistribution as if it were a payment by the Borrower under Clause 10 (Payments) and shall pay the redistribution to the Finance Parties (other than the recovering Finance Party) in accordance with Clause 10.7 (Partial Payments); and
30.1.5	after payment of the full redistribution, the recovering Finance Party will be subrogated to the portion of the claims paid under paragraph 30.1.4 above and the Borrower will owe the recovering Finance Party a debt which is equal to the redistribution, immediately payable and of the type originally discharged.

30.2 Reversal of Redistribution

If under Clause 30.1 (Redistribution):

30.2.1	a recovering Finance Party must subsequently return a recovery, or an amount measured by reference to a recovery, to the Borrower; and
30.2.2	the recovering Finance Party has paid a redistribution in relation to that recovery,

each Finance Party shall, within three Business Days of demand by the recovering Finance Party through the Agent, reimburse the recovering Finance Party all or the appropriate portion of the redistribution paid to that Finance Party, Thereupon, the subrogation in Clause 30.1.5 (Redistribution) will operate in reverse to the extent of the reimbursement.

30.3 Exceptions

30.3.1	A recovering Finance Party need not pay a redistribution to the extent that it would not, after the payment, have a valid claim against the Borrower in the amount of the redistribution pursuant to Clause 30.1.5 (Redistribution).
30.3.2	A recovering Finance Party is not obliged to share with any other Finance Party any amount which the recovering Finance Party has received or recovered as a result of taking legal proceedings, if the other Finance Party had an opportunity to participate in those legal proceedings but did not do so and did not take separate legal proceedings.

31. SEVERABILITY

If a provision of any Finance Document is or becomes illegal, invalid or unenforceable in any jurisdiction, that shall not affect:

31.1.1	the validity or enforceability in that jurisdiction of any other provision of the Finance Documents; or
31.1.2	the validity or enforceability in other jurisdictions of that or any other provision of the Finance Documents.

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32. COUNTERPARTS

Each Finance Document may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of the Finance Document.

33. NOTICES

33.1 Giving of Notices

All notices or other communications under or in connection with the Finance Documents shall be given in writing and, unless otherwise stated may be made by letter, telex or facsimile. Any such notice will be deemed to be given as follows:

33.1.1	if by letter, when delivered personally or on actual receipt;
33.1.2	if by telex, when despatched, but only if, at the time of transmission, the correct answerback appears at the start and at the end of the sender’s copy of the notice; and
33.1.3	if by facsimile, when received in legible form.

However, a notice given in accordance with the above but received on a non-Business Day or after business hours in the place of receipt will only be deemed to be given on the next Business Day in that place. Without affecting the validity of any notice delivered in accordance with paragraph 33.1.3 above, a copy of each notice delivered by facsimile shall also be sent by letter to the relevant party.

33.2 Addresses for Notices

33.2.1 The address and facsimile number of each Party (other than the Borrower and the Agent) for all notices under or in connection with the Finance Documents are:

(a)	those notified by that Party for this purpose to the Agent on or before the date it becomes a Party; or
(b)	any other notified by that Party for this purpose to the Agent by not less than five Business Days’ notice.

33.2.2 The address and facsimile number of the Borrower are:

Nordural hf

Grundartangi

301 Akranes

Iceland

Attention: Managing Director and Finance Manager

Tel: 00 354 430 1000

Fax: 00 354 430 1001

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with a copy to:

Columbia Ventures Corporation

16703 S.E. McGillivray Boulevard

Suite 210

Vancouver

Washington

98603 USA

Attention: Kenneth Peterson

Tel: 001 360 882 1052

Fax: 001 360 882 2068

or such other as the Borrower may notify to the Agent by not less than five Business Days’ notice.

33.2.3 The address and facsimile number of the Agent are:

The Royal Bank of Scotland plc

5^th Floor, Structured Finance

135 Bishopsgate

London EC2M 3UR

Attention: Graham Boreham

Tel: +44 (0)20 7375 8719

Fax: +44 (0)20 7375 8762

or such other as the Agent may notify to the other Parties by not less than 5 Business Days’ notice.

33.2.4 The address and facsimile number of the Security Trustee are:

BNP Paribas S.A.

37 place du Marché Saint-Honoré

75031 PARIS Cedex 01

France

Attention: Thierry Bonnel

Tel: +33 1 42 98 18 64

Fax: +33 1 42 98 43 17

33.2.5 The Agent shall, promptly upon request from any Party, give to that Party the address or facsimile number of any other Party applicable at the time for the purposes of this Clause.

34. LANGUAGE

34.1.1 Any notice given under or in connection with any Finance Document shall be in English.

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34.1.2 All Other documents (other than financial statements of the companies referred to in Clause 16.2.3) provided under or in connection with any Finance Document shall be:

(a)	in English; or
(b)	if not in English, if requested by the Agent, accompanied by a certified English translation and, in this case, the English translation shall prevail unless the document is a statutory or other official document.

35. USE OF WEBSITES

35.1.1 The Borrower may satisfy its obligation under this Agreement to deliver any information in relation to those Banks (the “Website Banks”) who accept this method of communication by posting this information onto an electronic website designated by the Borrower and the Agent (the “Designated Website”) if:

(a)	the Agent expressly agrees (after consultation with each of the Banks) that it will accept communication of the information by this method;
(b)	both the Borrower and the Agent are aware of the address of and any relevant password specifications for the Designated Website; and
(c)	the information is in a format previously agreed between the Borrower and the Agent.

If any Lender (a “Paper Form Lender”) does not agree to the delivery of information electronically then the Agent shall notify the Borrower accordingly and the Borrower shall supply the information to the Agent (in sufficient copies for each Paper Form Lender) in paper form. In any event the Borrower shall supply the Agent with at least one copy in paper form of any information required to be provided by it.

35.1.2	The Agent shall supply each Website Lender with the address of and any relevant password specifications for the Designated Website following designation of that website by the Borrower and the Agent.
35.1.3	The Borrower shall promptly upon becoming aware of its occurrence notify the Agent if:

(a)	the Designated Website cannot be accessed due to technical failure;
(b)	the password specifications for the Designated Website change;
(c)	any new information which is required to be provided under this Agreement is posted onto the Designated Website;
(d)	any existing information which has been provided under this Agreement and posted onto the Designated Website is amended; or

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(e) the Borrower becomes aware that the Designated Website or any information posted onto the Designated Website is or has been infected by any electronic virus or similar software.

if the Borrower notifies the Agent under Clauses 35.1.3(a) or 35.1.3(e) above, all information to be provided by the Borrower under this Agreement after the date of that notice shall be supplied in paper form unless and until the Agent and each Website Lender is satisfied that the circumstances giving rise to the notification are no longer continuing.

35.1.4 Any Website Lender may request, through the Agent, one paper copy of any information required to be provided under this Agreement which is posted onto the Designated Website. The Borrower shall comply with any such request within ten Business Days.

36. JURISDICTION

36.1 Submission

For the benefit of each Finance Party, the Borrower agrees that the courts of England have jurisdiction to settle any disputes in connection with any Finance Document and accordingly submits to the jurisdiction of the English courts.

36.2 Service of Process

Without prejudice to any other mode of service, the Borrower:

36.2.1	irrevocably appoints DLA (reference Nigel Drew/Matthew Saunders) of 3 Noble Street, London, EC2V 7EE, U.K as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document;
36.2.2	agrees to maintain such an agent for service of process in England for so long as any amount is outstanding under this Agreement or any Commitment is in force.
36.2.3	agrees that failure by a process agent to notify the Borrower of the process will not invalidate the proceedings concerned;
36.2.4	consents to the service of process relating to any such proceedings by prepaid posting of a copy of the process to its address for the time being applying under Clause 33.2 (Addresses for Notices); and
36.2.5	agrees that if the appointment of any person mentioned paragraph 36.2.1 above ceases to be effective, the Borrower shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within 15 days, the Agent is entitled to appoint such person by notice to the Borrower.

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36.3 Forum Convenience and Enforcement Abroad

The Borrower:

36.3.1	waives objection to the English courts on grounds of inconvenient forum or otherwise as regards proceedings in connection with a Finance Document; and
36.3.2	agrees that a judgment or order of an English court in connection with a Finance Document is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction.

36.4 Non-Exclusivity

Nothing in this Clause 36 limits the right of a Finance Party to bring proceedings against the Borrower in connection with any Finance Document:

36.4.1	in any other court of competent jurisdiction; or
36.4.2	concurrently in more than one jurisdiction.

37. GOVERNING LAW

This Agreement is governed by English law.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

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EX-10.2

Exhibit 10.2

EXECUTION COPY

DATED 27 APRIL 2004

NORDURAL HF
as Borrower

CENTURY ALUMINUM COMPANY
as Century

NORDURAL HOLDINGS I eHf

and

NORDURAL HOLDINGS II eHf

as Transferees

COLUMBIA VENTURES CORPORATION

as Transferor

BNP PARIBAS S.A.
as Security Trustee

and

THE ROYAL BANK OF SCOTLAND PLC
as Agent and Senior Agent

AMENDMENT AGREEMENT
RELATING TO A
SENIOR FACILITY AGREEMENT
AND AN INTERCREDITOR AGREEMENT
BOTH DATED 2 SEPTEMBER 2003

THIS AGREEMENT is dated 27 April 2004 and made between:

(1)	NORDURAL hf registered in Iceland, registered no. 570297-2609 (the “Borrower”);
(2)	NORDURAL HOLDINGS I eHf registered in Iceland, registered no. 470404 - 2130 (“Nordural Holdings I”);
(3)	NORDURAL HOLDINGS II eHf registered in Iceland, registered no. 470404 - 2210 (“Nordural Holdings II”) (together with Nordural Holdings I the “Transferees” and each a “Transferee”);
(4)	CENTURY ALUMINUM COMPANY a company incorporated under the laws of the State of Delaware having its principal place of business at 2511 Garden Road, Monterey, California 93940, USA (“Century”);
(5)	COLUMBIA VENTURES CORPORATION a company incorporated under the laws of the State of Washington having its principal place of business at 1220 Main Street, Suite 200, Vancouver, WA, USA (the “Transferor”);
(6)	THE ROYAL BANK OF SCOTLAND plc as agent on behalf of the Finance Parties and as senior agent on behalf of the Senior Creditors (the “Agent”); and
(7)	BNP PARIBAS S.A. a bank incorporated under the laws of France having its place of business in England at 10 Harewood Avenue, London NW1 6AA (together with its successors, transferees and assigns in such capacity and referred to herein as the “Security Trustee”).

IT IS AGREED as follows:
1.	DEFINITIONS AND INTERPRETATION
1.1	Definitions In this Agreement:
	“Effective Date” means, subject to Clause 5.3 (Conditions Precedent), the date on which the Agent confirms to the Banks, the Borrower, the Transferor, the Transferees and Century that it has received each of the documents listed in Schedule 4 (Conditions Precedent) in a form and substance satisfactory to the Agent;
	“Intercreditor Agreement” means the intercreditor agreement dated 2 September 2003 between the Borrower, the Transferor as Shareholder, the Banks and Financial Institutions therein as Senior Creditors and Hedging Banks, the Shareholder Creditors therein, The Royal Bank of Scotland plc as Senior Agent and the Security Trustee;
	“Original Sponsor Funding Agreement” means the sponsor funding agreement dated 2 September 2003 between, inter alia, the Transferor, the Company, the Security Trustee and the Senior Agent;
	“Senior Facility Agreement” means the senior facility agreement dated 2 September 2003 between the Borrower, The Royal Bank of Scotland plc, BNP Paribas S.A. and Fortis Bank (Nederland) N.V. as Arrangers, the Financial Institutions therein, the Agent and BNP Paribas S.A. as Account Bank and Security Trustee;

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	“Shares” means all of the shares in the share capital of the Borrower held by, to the order or on behalf of the Transferor;
	“Stock Purchase Agreement” means the amended and restated stock purchase agreement dated 28 March 2004 between Century, the Borrower and the Transferor pursuant to which the Transferor agrees to sell to Century and/or one of more of its subsidiaries all of the issued and outstanding capital stock of the Borrower; and
	“Transfer” means the transfer by the Transferor of all of the issued and outstanding capital stock of the Borrower to Century and/or one of more of its subsidiaries (which includes the Transferees) pursuant to the Stock Purchase Agreement.
1.2	Incorporation of Defined Terms

(a)	Headings are for convenience of reference only and shall be ignored in the interpretation of this Agreement.
(b)	In this Agreement, unless the context otherwise requires:

(i)	references to Clauses and Schedules are to be construed as references to Clauses of, and Schedules to, this Agreement;
(ii)	words importing the singular shall include the plural and vice versa; and
(iii)	references to persons shall include any firm, body corporate, company, government, state or agency of a state or any association or partnership (whether or not having separate legal personality) of two or more of the foregoing.

(c) Terms defined in and/or whose interpretation is provided for in the Senior Facility Agreement and Intercreditor Agreement (including by reference to any other document) shall have the same meaning when used in this Agreement unless separately defined in or interpreted in this Agreement.

1.3	Senior Facility Agreement Clauses
	The Borrower, the Security Trustee and the Agent acknowledge that the Transferor, Century and each of the Transferees are not parties to the Senior Facility Agreement and agree that the Transferor, Century and each of the Transferees are not subject to or party to Clauses 2.2 (Amendment of the Senior Facility Agreement) and 3 (Representations) of this Agreement.

2. AMENDMENT

2.1 Amendment of the Intercreditor Agreement

(a)	With effect from the date of this Agreement, the Intercreditor Agreement shall be amended as provided in part 1 of Schedule 1 (Amendments to the Intercreditor Agreement) hereto.
(b)	With effect from the Effective Date, the Intercreditor Agreement shall be amended as provided in part 2 of Schedule 1 (Amendments to the Intercreditor Agreement) hereto.

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2.2	Amendment of the Senior Facility Agreement
	With effect from the Effective Date the Senior Facility Agreement shall be amended as provided in Schedule 3 (Amendments to the Senior Facility Agreement) hereto.

3. REPRESENTATIONS

(a)

The representations and warranties set out in Clause 15 (Representations and Warranties) of the Senior Facility Agreement (as amended as set out herein) (with the exception of Clauses 15.9, 15.11, 15.16.1 to 15.16.5 and 15.16.7 (Information), 15.17 and 15.21) are deemed to be repeated by the Borrower on the Effective Date with reference (to the extent applicable) to the facts and circumstances then existing; and

(b)

the Borrower makes the following representations to each Finance Party as at the Effective Date with reference (to the extent applicable) to the facts and circumstances then existing:

(i)

all factual information material to the Project supplied to the Agent and/or the Banks by the Borrower, the Transferor, Century or either of the Transferees or their advisers in relation to the Transfer, to the best of the Borrower’s knowledge and belief, was true in all material respects as at its date or, as the case may be, the date it was supplied to the Agent and/or the Banks, save to the extent corrected by the Borrower or its advisers prior to the Effective Date; and

(ii)

to the best of the Borrower’s knowledge and belief, no event of force majeure as defined in or contemplated by any Project Contract has occurred and is continuing for the purposes of that Project Contract.

4. DEBT SERVICE RESERVE ACCOUNT

Prior to the Effective Date, the Debt Service Reserve L/C shall remain in place until the Agent has received evidence that the Debt Service Reserve Account has been fully funded to the Required DSRA Balance in accordance with the provisions of the Senior Facility Agreement and the Account Agreement from funds standing to the credit of the Distributions Account and/or unconditional payments by Century or either of the Immediate Shareholders and/or as otherwise agreed by the Majority Banks.

5. RELEASE OF THE TRANSFEROR’S OBLIGATIONS

5.1 No further claims

(a)	Each of the Borrower and the Transferor confirms that as of the Effective Date the Borrower will not have, any present or future liability (whether actual or contingent) to the Transferor on any account whatsoever, whether or not matured and whether or not liquidated.
(b)	Each of the Borrower and the Transferor confirms that as of the Effective Date the Transferor will not have, any present or future liability (whether actual or contingent) to the Borrower on any account whatsoever, whether or not matured

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and whether or not liquidated (except as otherwise provided for in the Stock Purchase Agreement).

5.2

Release of the Transferor’s obligations under the Intercreditor Agreement

With effect from the Effective Date, the Transferor shall be released by each of the Finance Parties and the Borrower from further performance of obligations and any liability under the Intercreditor Agreement and/or the Original Sponsor Funding Agreement (such release being without prejudice to any liabilities or obligations for any breach prior to the Effective Date under the Intercreditor Agreement or the Original Sponsor Funding Agreement which have accrued prior to the Effective Date and which have not been discharged in full on or before the Effective Date). For the avoidance of doubt, as from the Effective Date the Original Sponsor Funding Agreement shall terminate and cease to have force and effect and the Transferor shall cease to be a party to or liable under the Intercreditor Agreement except in accordance with this Clause 5.2.

5.3

Conditions Precedent

The conditions precedent listed in paragraphs 1(a) — (f), 2, 3, 4, 5 and 9 of Schedule 4 (Conditions Precedent) hereto may not be waived without the agreement of the Transferor and shall not be treated as satisfied unless the Transferor has confirmed to the Agent in writing that it has received each of the documents and evidence listed in paragraphs 1(a) — (f), 2, 3, 4, 5 and 9 of Schedule 4 (Conditions Precedent) in form and substance satisfactory to the Transferor. The Transferor undertakes to so notify the Agent promptly upon satisfaction of these conditions precedent.

6. CONTINUITY AND FURTHER ASSURANCE

6.1	Continuing obligations
	The provisions of the Senior Facility Agreement and the Intercreditor Agreement shall, save as amended in this Agreement, continue in full force and effect.

6.2	Further assurance
	The Borrower shall, at the request of the Agent and at its own expense, do all such acts and things necessary or desirable to give effect to the amendments effected or to be effected pursuant to this Agreement.

7. FEES, COSTS AND EXPENSES

7.1	Transaction expenses
	The Borrower shall promptly on demand pay the Agent and the Security Trustee the amount of all costs and expenses (including legal fees) reasonably incurred by any of them in connection with the negotiation, preparation, printing and execution of this Agreement and any other documents referred to in this Agreement.

7.2	Enforcement costs
	The Borrower shall, forthwith on demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by that Finance Party in connection with the enforcement of, or the preservation of any rights under this Agreement.

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7.3	Stamp taxes
	The Borrower shall pay and, forthwith on demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of this Agreement.

8. JURISDICTION

8.1	Submission
	For the benefit of each Finance Party, each of the Borrower, the Transferor, the Transferees and Century agrees that the courts of England have jurisdiction to settle any disputes in connection with this Agreement and accordingly submits to the jurisdiction of the English courts.

8.2	Service of Process
	Without prejudice to any other mode of service, each of the Transferees and Century:

(a)	appoints Law Debenture Corporate Services Limited of Fifth Floor, 100 Wood Street, London EC2V 7EX as its agent for service of process in relation to any proceedings before the English courts in connection with this Agreement and any other Document to which Century or either of the Transferees are to be parties;
(b)	subject to paragraph (d) below, agrees to maintain such an agent for service of process in England for so long as any Commitment is in force;
(c)	agrees that failure by a process agent to notify it of the process will not invalidate the proceedings concerned; and
(d)	agrees that if the appointment of any person mentioned paragraph (a) above ceases to be effective, it shall immediately appoint a further person in England to accept service of process on its behalf in England and, failing such appointment within 15 days, the Agent is entitled to appoint such person by notice to it.

8.3	Forum Convenience and Enforcement Abroad
	Each of the Borrower, the Transferor, the Transferees and Century:

(a)	waives objection to the English courts on grounds of inconvenient forum or otherwise as regards proceedings in connection with this Agreement; and
(b)	agrees that a judgment or order of an English court in connection with this Agreement is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction.

8.4	Non-Exclusivity
	Nothing in this Clause 8 limits the right of a Finance Party to bring proceedings against the Borrower, the Transferor, the Transferees or Century in connection with this Agreement:

(a) in any other court of competent jurisdiction; or

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	(b)   concurrently in more than one jurisdiction.
9.	GOVERNING LAW
	This Agreement is governed by English law.
10.	MISCELLANEOUS
10.1	Notices
	Pursuant to Clause 33.2 (Addresses for Notices) of the Senior Facility Agreement the Borrower hereby notifies the Agent that the addressee details for copies of notices to the Borrower shall be as follows:
	Century Aluminum 2511 Garden Road Monterey California 93940 USA Attention:          Gerald Kitchen Tel:                    00 1 831 642 9300 Fax:                   00 1 831 642 9300
10.2	Designation as Finance Document
	The Borrower and the Agent designate this Agreement as a Finance Document by execution of this Agreement for the purposes of the definition of Finance Document in the Senior Facility Agreement.
10.3	Counterparts
	This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

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SCHEDULE 1

Amendments to the Intercreditor Agreement

Part 1

(a) The definition of “Shareholder” shall be deleted and replaced with the following:

““Shareholder” means Columbia Ventures Corporation, incorporated in the State of Washington, United States of America or any other entity that accedes to this Agreement as a “Shareholder” in accordance with Clause 23.12 (Accession of Shareholders) of this Agreement.”

(b) The definition of “Shareholder Creditor” shall be deleted and replaced with the following:

““Shareholder Creditor” means an Affiliate of the Shareholder or any other party which is from time to time a party to any Shareholder Finance Document (other than a Finance Party or the Borrower) or a creditor in respect of all or any part of the Shareholder Debt and any successors thereof and any assigns, transferees or substitutes therefor (whether pursuant to any assignment or other transfer or otherwise) which has acceded to this Agreement in accordance with Clause 23.11 hereof.”

(c) The definition of “Sponsor Funding Agreement” shall be deleted and replaced with the following:

““Sponsor Funding Agreement” means the Sponsor Funding Agreement dated 2 September 2003 between, inter alia, the Shareholder, the Company, the Security Trustee and the Senior Agent or any document designated by the Security Trustee as a replacement thereof.”

(d) Clause 1.3.1 shall be deleted and replaced with the following:

“References to the Company, the Senior Creditors, the Hedging Banks, the Security Trustee, the Senior Agent and, subject to Clause 23.12 (Accession of Shareholders), the Shareholder, or any of them include their or its respective successors and permitted assigns, transferees and substitutes.”

(e) Clause 16.1 shall be deleted and replaced with the following:

“New Transactions

Without prejudice to the Shareholder’s or any Shareholder Creditor’s rights against any Senior Creditor under the Sponsor Funding Agreement, no Junior Creditor shall have any remedy against the Company or any of the Senior Creditors by reason of any transaction entered into between the Senior Creditors (or any of them) or the Senior Agent or the Security Trustee on their behalf and the Company relating to the Senior Debt or otherwise which violates or is a default under any Junior Finance Document. No Junior Creditor may object to any such transaction by reason of any provisions of any Junior Finance Document.”

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(f) A new Clause 23.12 (Accession of Shareholders) shall be added as follows:

“If any holder of shares in the capital of the Borrower transfers its shareholding (or any part thereof) in accordance with Clause 17.20 (Ownership of the Borrower) of the Senior Facility Agreement, then any transferee of such shares, or, if the Agent so requires, any Holding Company of such transferee shall accede to this Agreement as a Shareholder by delivering to the Security Trustee a deed of accession substantially in the form of Schedule 4. To the extent any Holding Company of a transferee accedes to this Agreement as a Shareholder, any transferee shall, at the same time, accede to this Agreement as a Shareholder Creditor by delivering to the Security Trustee a deed of accession substantially in the form of Schedule 4.”

(g) The first paragraph of Schedule 3 (Agent’s Deed of Accession) shall be deleted and replaced with the following:

“THIS DEED dated [          ] is supplemental to an intercreditor agreement (the “Intercreditor Agreement”) dated 2 September 2003 between Nordural hf, the Shareholder, the Senior Creditors, the Hedging Banks, the Subordinated Creditors (all as defined therein), The Royal Bank of Scotland plc as Senior Agent and BNP Paribas S.A. as Security Trustee.”

(h) Schedule 4 (Creditors’ Deed of Accession) shall be replaced with Schedule 2 to this Agreement.

Part 2

(a) The definition of “Guarantees” shall be deleted and replaced with the following:

““Guarantee” means any guarantee, indemnity, letter of credit, bond or other form of credit support giving rise to any right of reimbursement or indemnity from the Company or a right to be subrogated to any claim or rights against the Company issued from time to time by the Shareholder or a Shareholder Affiliate in respect of the Company’s obligations to any person.”

(b) The definition of “Shareholder” shall be deleted and replaced with the following:

““Shareholder” means Century Aluminum Company, incorporated in the State of Delaware, United States of America or any other entity that accedes to this Agreement as a “Shareholder” in accordance with Clause 23.12 (Accession of Shareholders) of this Agreement.”

(c) Clause 25.19 shall be deleted and replaced with the following:

“Other

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Subject to Clause 13 and the other provisions of this Clause 25, the Security Trustee will comply (to the extent that it is able) with notifications communicated to it by the Senior Creditors and the Hedging Banks directing transfer or redemption of shares of the Company that are subject to the Shares Pledge (in accordance with its rights and remedies thereunder, or under otherwise applicable law or agreements) without further consent of the Shareholder or either of the Immediate Shareholders.”

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SCHEDULE 2

CREDITORS’ DEED OF ACCESSION

THIS DEED dated [          ] is supplemental to an intercreditor agreement (the “Intercreditor Agreement”) dated 2 September 2003 between Nordural hf, the Shareholder, the Senior Creditors, the Hedging Banks, the Subordinated Creditors (all as defined therein), The Royal Bank of Scotland plc as Senior Agent and BNP Paribas S.A. as Security Trustee.

Words and expressions defined in the Intercreditor Agreement have the same meaning when used in this Agreement.

[NAME OF NEW SENIOR CREDITOR OR HEDGING BANK OR SUBORDINATED CREDITOR OR SHAREHOLDER OR SHAREHOLDER CREDITOR] of [address] hereby agrees with each other person who is or who becomes a party to the Intercreditor Agreement that with effect on and from the date hereof it will be bound by and benefit from the Intercreditor Agreement as a *[Senior Creditor / Hedging Bank / Subordinated Creditor / Shareholder / Shareholder Creditor] as if it had been party originally to the Intercreditor Agreement in that capacity.

+[The following are the Hedging Agreements to which such Hedging Bank is a party with the Company referred to, and such Hedging Agreements provide for facilities a brief description of which is also set out:

[Describe hedging facilities and identify Hedging Agreements]

The address for notices of [the new Creditor] for the purposes of Clause 26 (Notices) of the Intercreditor Agreement is:

     [          ].

This Deed is governed by English law.

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IN WITNESS of which this deed has been executed as a deed and has been delivered on the date first appearing herein.

(English Companies)
Either:	or:
THE COMMON SEAL	)	Executed as a deed by	)
of	)	[                    ]	)
was affixed to this deed	)	acting by [                    ]	)
in the presence of:	)	and [                    ]	)
Director	Director
Director/Secretary	Director/Secretary

*[          ] Delete as applicable.

+[          ] Include only for new Hedging Banks

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SCHEDULE 3

Amendments to the Senior Facility Agreement

(a) A new definition of “Amendment to the Senior Facility Agreement and Intercreditor Agreement” will be added as follows:

““Amendment to the Senior Facility Agreement and Intercreditor Agreement” means the amendment to the Senior Facility Agreement and Intercreditor Agreement dated 27 April 2004 between, inter alia, the Shareholder, the Immediate Shareholders, CVC, the Borrower, the Security Trustee and the Agent.”

(b) A new definition of “CVC” will be added as follows:

““CVC” means Columbia Ventures Corporation incorporated in the State of Washington, United States of America.”

(c) Paragraph (a)(i) of the definition of “Direct Agreement” shall be deleted and replaced with the following:

“the Ministry of Industry, the Treasury, the Shareholder and the Immediate Shareholders (relating to the Investment Agreement and the Smelter Site Agreement);”

(d) The definition of “Group Company” shall be deleted and replaced with the following:

““Group Company” means each of the Borrower, the Shareholder, the Immediate Shareholders and any Shareholder Affiliate which becomes a party to the Sponsor Funding Agreement pursuant to Clause 13 thereof and the Intercreditor Agreement pursuant to Clause 23.11 or Clause 23.12 thereof.”

(e) A new definition of “Immediate Shareholders” will be added as follows:

““Immediate Shareholders” means Nordural Holdings I eHf (a company registered in Iceland with registered no. 470404 — 2130) and Nordural Holdings II eHf (a company registered in Iceland with registered no. 470404 — 2210) and “Immediate Shareholder” shall mean any one of them.”

(f) The definition of “Intercreditor Agreement” shall be deleted and replaced with the following:

““Intercreditor Agreement” means the intercreditor agreement entered into on 2 September 2003 originally between the Borrower, CVC, each Bank, each Hedging Bank, the Agent and the Security Trustee as amended by the Amendment to the Senior Facility Agreement and Intercreditor Agreement.”

(g) The definition of “Investment Agreement” shall be deleted and replaced with the following:

““Investment Agreement” means the investment agreement dated 7 August 1997 originally between the Ministry of Industry, CVC and the Borrower (as amended by the

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First Amendment to the Investment Agreement and acceded to by the Shareholder and the Immediate Shareholders on 23 April 2004).”

(h) The definition of “Loan Assignment “ shall be deleted and replaced with the following:

““Loan Assignment” means any assignment of subordinated loans entered into between (i) the Shareholder and/or either of the Immediate Shareholders and/or a Shareholder Affiliate as Assignor and (ii) the Security Trustee pursuant to the Sponsor Funding Agreement.”

(i) Paragraph (a) of the definition of “Major Project Parties” shall be deleted and replaced with the following:

“the Shareholder and the Immediate Shareholders;”

(j) The definition of “Shareholder” shall be deleted and replaced with the following:

““Shareholder” means Century Aluminum Company, incorporated in the State of Delaware, United States of America.”

(k) The definition of “Shares Pledge “ shall be deleted and replaced with the following:

““Shares Pledge” means the Icelandic law shares pledge entered into on 2 September 2003 originally between the Borrower, CVC, any other shareholders and the Security Trustee and acceded to by the Immediate Shareholders on 27 April 2004.”

(l) The definition of “Sponsor Funding Agreement” shall be deleted and replaced with the following:

““Sponsor Funding Agreement” means the Sponsor Funding Agreement dated 27 April 2004 between, inter alia, the Shareholder, the Borrower, the Security Trustee and the Agent or any document designated by the Security Trustee as a replacement thereof.”

(m) Clause 16.2.3 shall be deleted and replaced with the following:

“as soon as the same are publicly available (and in any event within 120 days of them becoming publicly available) the audited accounts of the Shareholder, each of the Immediate Shareholders, Billiton Plc, B.H.P. Billiton Marketing A.G., Landsvirkjun and Hydro Aluminium Deutschland GmbH for that financial year; and”

(n) Clause 16.3.9 shall be deleted and replaced with the following:

“copies of all material documents despatched by it to the Shareholder or either of the Immediate Shareholders in their capacity as such or all of its creditors (or any class of them) at the same time as they are despatched; and”

(o) Clause 16.13.3 shall be deleted and Clauses 16.13.4 and 16.13.5 shall be renumbered accordingly.

(p) Clause 16.24 shall be deleted and replaced with the following:

“Share Capital

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Other than the redemption in capital to take effect on or about the Drawdown Date in accordance with the resolution referred to in paragraph 2(k) of Schedule 2 (Conditions Precedent), the Borrower shall not purchase, cancel or redeem any of its share capital or issue any further voting capital, save pursuant to the Sponsor Funding Agreement or any issue of new shares to either of the Immediate Shareholders or, provided there will be no Event of Default under Clause 17.20, an Affiliate of the Shareholder which are subject to the Shares Pledge.”

(q) Clause 17.20 shall be deleted and replaced with the following:

“Ownership of the Borrower

17.20.1

The Shareholder ceases to hold (legally and beneficially) 100% of the share capital and voting rights of the Borrower (either directly or indirectly through an Intermediate Wholly Owned Holding Company or Companies), but holds at least 50.1% of the share capital and voting rights provided that it shall not be an event of default if the conditions set out in Clause 17.20.3 are complied with in respect of any transfer.

17.20.2

The Shareholder ceases to hold (legally and beneficially) at least 50.1% of the share capital and voting rights of the Borrower (either directly or indirectly through an Intermediate Wholly Owned Holding Company or Companies) provided that it shall not be an event of default if the Shareholder holds (legally or beneficially) less than 50.1% of the share capital and voting rights of the Borrower and:

(a)	any transferee of such share capital and voting rights is approved in writing by the Majority Banks (such approval not to be unreasonably withheld); and
(b)	the conditions set out in Clause 17.20.3 are complied with in respect of any transfer.

17.20.3

The conditions that must be complied with in respect of any transfer permitted under Clauses 17.20.1 and 17.20.2 are as follows:

(a)	any transfer would not breach the Investment Agreement or any applicable law;
(b)	in the case of any transfer by the Immediate Shareholders, unless the Majority Banks otherwise consent, any such share capital and voting rights are transferred subject to the Shares Pledge or the transferee creates a new Security Interest over such share capital and voting rights in form and substance reasonably satisfactory to the Agent;
(c)	any such transferee agrees to be bound by the Intercreditor Agreement;

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(d)	the transferee’s obligations under the Documents to which it is or will become a party or subject to are legal, valid and binding on it, and the Agent has received any relevant legal opinions which are satisfactory to it; and
(e)	following any transfer, the Shareholder maintains control of the Borrower (unless the Majority Banks agree otherwise).

For the purposes of this Clause 17.20, “Intermediate Wholly Owned Holding Company” means a company, corporation, association or partnership that is a wholly owned (legally and beneficially) Subsidiary of the Shareholder or which is a wholly owned (legally and beneficially) Subsidiary of an Intermediate Wholly Owned Holding Company (other than the Borrower).”

(r) Paragraph 1.1 of Schedule 8 (Insurances) shall be deleted and replaced with the following:

“Operational Insurances

Appendix 1 specifies the minimum operational insurances which are to be effected by, or procured by, the Borrower for the benefit of the Borrower and others (the “Operational Insurances”) and the Borrower shall procure that all the Operational Insurances shall be purchased and maintained in full force and effect from not later than the date of first drawdown with cover attaching not later than the date the risk commences and until the Agent has acknowledged in writing that all liabilities and obligations of the Borrower or CVC (or anyone who replaces CVC in accordance with Clause 17.20 (Ownership of the Borrower) of this Agreement) to the Finance Parties under the Finance Documents (the “Liabilities”) have been discharged in full and that those insurances are effected against the risks and liabilities and maintained in the amounts specified in Appendix 1 (as varied from time to time by paragraph 2.2 or agreed or determined under paragraph 4).”

(s) Paragraph “Waiver of Subrogation” of Part 1 (Property “All Risks") and Part 2 (Business Interruption Following All Risks) of Appendix 1 (Operational Insurances) of Schedule 8 (Insurances) shall be deleted and replaced with the following:

“Insurers to waive their rights of subrogation against the Insureds and the Shareholder (and all the Shareholder’s Affiliates and Subsidiaries) and their respective officers, directors and employees.

Insurers to waive their rights of subrogation against Hydro Aluminium Technologie GmbH and its personnel.

Insurers to waive their rights of subrogation against the insurers in respect of the Project Expansion.”

(t) Paragraph “Insured” of Part 3 (Third Party Liability/Product Liability) of Appendix 1 (Operational Insurances) of Schedule 8 (Insurances) shall be deleted and replaced with the following:

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“The Borrower, the Shareholder (and all the Shareholder’s Affiliates and Subsidiaries), Billiton Marketing A.G. and the Finance Parties and their respective officers, directors and employees.”

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SCHEDULE 4

Conditions Precedent

1. Originals of each of the following documents duly executed by all parties to such document:

(a)	this Agreement;
(b)	Deeds of Accession pursuant to which each Transferee and Century accedes to the Intercreditor Agreement as Shareholder Creditors and Shareholder respectively;
(c)	an agreement executed by each of the Transferees pursuant to which each of the Transferees accedes to the Shares Pledge and the Transferor is released from its obligations thereunder;
(d)	a replacement Sponsor Funding Agreement between, inter alia, Century, the Transferees, the Borrower and the Agent;
(e)	a written instrument entered into by Century and each of the Transferees by which Century and each of the Transferees consents to the terms and provisions of the Investment Agreement and agrees to be fully bound by the terms and provisions thereof; and
(f)	a replacement Direct Agreement, in form and substance satisfactory to the Security Trustee, between the Borrower, the Security Trustee, the Ministry of Industry, the Treasury, Century and each of the Transferees relating to the Investment Agreement and the Smelter Site Agreement on substantially the same terms as the agreement between the Borrower, the Ministry of Industry, the Treasury, the Security Trustee and the Transferor dated 26 August 2003 (the “Existing Direct Agreement”) and a release of all obligations of the Transferor under the Existing Direct Agreement.

2. A certified copy of the Stock Purchase Agreement duly executed by Century, the Borrower and the Transferor.

3. Evidence that the Debt Service Reserve Account has been fully funded to the Required DSRA Balance in accordance with Clause 4 (Debt Service Reserve Account) and that the Debt Service Reserve L/C has been returned to the issuer by the Security Trustee duly cancelled.

4. Evidence that the transfer to each of the Transferees of their respective holdings in the Shares has been notified by each of the Transferees to the Borrower and evidence that the transfer and the Shares Pledge is registered in the books of the Borrower.

5. Share certificates in respect of 100 per cent. of the issued and registered share capital of the Borrower duly noted as to the Shares Pledge and with the transfer and accession of

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each of the Transferees to the Shares Pledge endorsed thereon (and signed by the Transferor) is in the possession of the Security Trustee.

6. Evidence of registration of UCC3 form with the Secretary of State for Washington.

7. Legal opinion from:

(a)	Icelandic legal counsel to each of the Transferees confirming that each of the Transferees’ obligations under the Documents to which it is or will become a party are legal, valid and binding on it;
(b)	Icelandic legal counsel to the Borrower confirming that the Borrower’s obligations under the Documents to which it is or will become a party are legal, valid and binding on it and that the transfer to each of the Transferees of their respective holdings in the Shares does not and will not lead to any breach or rights of termination or revocation under any of the Project Contracts which are expressed to be governed by Icelandic law or any authorisations or licences relating to the Project or any other agreement or document to which the Borrower is a party;
(c)	Icelandic legal counsel to the Banks confirming that each of the Transferees’ obligations under the Documents which are expressed to be governed by the laws of Iceland to which it is or will become a party are legal, valid and binding on it and confirming the effectiveness of the share security;
(d)	US legal counsel to Century confirming that Century’s obligations under the Documents to which it is or will become a party are legal, valid and binding on it;
(e)	English legal counsel to the Banks confirming that each of the Transferees’, the Borrower’s and Century’s obligations under the Finance Documents which are expressed to be governed by English law to which it is or will become a party are legal, valid and binding; and
(g)	English legal counsel to the Borrower confirming that that the transfer to each of the Transferees of their respective holdings in the Shares does not and will not lead to any breach or rights of termination or revocation under any of the Project Contracts which are expressed to be governed by English law.

8. Confirmation addressed to the Agent from the Transferor that the transfer to each of the Transferees of their respective holdings in the Shares does not and will not lead to any breach under any agreement or document to which the Transferor is a party.

9. Confirmation from the Government of Iceland that the requirements of the Investment Agreement have been met and that the Borrower, owned by the Transferees, shall have the same rights and obligations under the Investment Agreement as it had when owned by the Transferor.

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10. A copy of a resolution of the board of directors of the Transferor authorising the board of directors of the Borrower to enter into all transactions and documents contemplated by the transfer of the Shares to the Transferee.

11. A copy of a resolution of the board of directors of each of the Transferees:

(a)	approving the terms of, and transactions contemplated by, the Documents executed by it;
(b)	approving the transactions contemplated by the Documents to which it is or will be a party;
(c)	agreeing to waive its pre-emptive right to purchase any shares of the Borrower it will have as a shareholder; and
(d)	authorising the grant of an irrevocable power of attorney in favour of the Security Trustee authorising the Security Trustee to transfer all issued shares in the Borrower in connection with enforcement of the Shares Pledge.

12. A copy of a resolution of the board of directors of Century:

(a)	approving the terms of, and transactions contemplated by, the Documents executed by it; and
(b)	approving the transactions contemplated by the Documents to which it is or will be a party.

13. A copy of a resolution of the board of directors of the Borrower consenting to the Shares Pledge by the Transferee.

14. A specimen signature of each person authorised to sign the Documents on behalf of each of the Transferees and Century and to sign and/or dispatch all documents and notices to be signed and/or dispatched by each of the Transferees and Century under or in connection with the Documents.

15. A copy of the certificate of incorporation of Century certified by the Delaware Secretary of State.

16. A copy of the bylaws of Century certified by the company secretary.

17. A copy of the constitutional documents of each of the Transferees certified by their company secretary.

18. A certificate of good standing in relation to Century.

19. A certificate of a director or the company secretary of each of the Transferees confirming that:

(a) the board resolution referred to in paragraph 11 above is current and without amendment;

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(b)	the obligations of such Transferee under the Shares Pledge, Sponsor Funding Agreement and the Intercreditor Agreement will not breach any limit binding on it;
(c)	on the date of the transfer such Transferee is not unable to pay its debts as they fall due and that no actions have been taken by the company to apply for rehabilitation (greiðslustöðvun eða nauðasamninga), in accordance with the Insolvency Act nr. 21/1991;
(d)	the proposed transfer of shares will not breach any contractual or other obligations of such Transferee; and
(e)	each copy document provided pursuant to paragraphs 14 and 17 above is correct, complete and in full force and effect as at the Effective Date.

20. A certificate of a director or the company secretary of Century confirming that:

(a)	the board resolution referred to in paragraph 12 above is current and without amendment;
(b)	the obligations of Century under the Sponsor Funding Agreement and the Intercreditor Agreement will not breach any limit binding on it;
(c)	on the date of the transfer Century is able to pay its debts as they come due in the usual course of business and that the sum of Century’s total liabilities does not exceed the sum of Century’s total assets; and
(d)	each copy document provided pursuant to paragraphs 14, 15 and 16 above is correct, complete and in full force and effect as at the Effective Date.

21. A copy of Century’s most recent audited financial statements and a list of all Century’s material contingent liabilities.

22. Evidence that the process agent appointed under Clause 6.2 (Service of Process) hereto and pursuant to the other Documents to which Century and/or each of the Transferees is a party has accepted its appointment.

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SIGNATURES

(to an Amendment Agreement dated 27 April 2004 to a Senior Facility Agreement
and Intercreditor Agreement dated 2 September 2003)

The Borrower

Nordural hf

By:

The Agent for and on behalf of the Finance Parties and Senior Agent for an on behalf of the Senior Creditors

The Royal Bank of Scotland plc

By:

The Transferees

Nordural Holdings I eHf

By:

Nordural Holdings II eHf

By:

Century

Century Aluminum Company

By:

The Transferor

Columbia Ventures Corporation

By:

The Security Trustee

BNP Paribas S.A.

By:

EX-31.1

Exhibit 31.1

I, Craig A. Davis, Chairman and Chief Executive Officer of Century Aluminum Company (the “registrant”) certify that:

1)	I have reviewed this quarterly report on Form 10-Q of the registrant;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2004

/s/ CRAIG A. DAVIS
Title:	Chairman and Chief      Executive Officer

EX-31.2

Exhibit 31.2

I, David W. Beckley, Executive Vice President and Chief Financial Officer of Century Aluminum Company (the “registrant”), certify that:

1)	I have reviewed this quarterly report on Form 10-Q of the registrant;
2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4)	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 9, 2004

/s/ DAVID W. BECKLEY
Name:	David W. Beckley
Title:	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of
the Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. 1350)

     In connection with the quarterly report on Form 10-Q of Century Aluminum Company (the “Company”) for the quarter ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Craig A. Davis, as Chief Executive Officer of the Company, and David W. Beckley, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:

1.	This Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Craig A. Davis	/s/ David W. Beckley
By: Craig A. Davis	By: David W. Beckley
Title: Chief Executive Officer	Title: Chief Financial Officer
Date: August 9, 2004	Date: August 9, 2004

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.