CONSTRUCTION AGREEMENT

(1)  

GNiFi, a groupement d’intérêt économique having its registered office at 37, avenue Henri Lafleur, BP K3, 98849 Nouméa Cedex, and enrolled at the Register of Commerce and Companies of Nouméa under number 204 C 749002, and represented by Khalid Ammari, duly authorised for the purposes of this Agreement (hereinafter referred to as the “Owner”); and

(2)  

GORO NICKEL S.A., a company incorporated under the laws of France, having its registered office at 38, rue du Colisée, 75008 Paris, France, and enrolled at the Register of Commerce and Companies of Paris under number 313 954 570, acting herein through and on behalf of its branch (succursale) whose registered office is at 7 bis, rue Suffren, BP218, 98845, Nouméa Cedex, New Caledonia, and represented by Yves Roussel, duly authorised for the purposes of this Agreement (hereinafter referred to as the “Project Manager”),

(A)  

The Owner has been organised for the purpose of constructing, financing and leasing the Assets which constitute a portion of the Plant. The Project shall be developed and operated by the Project Manager. The transactions contemplated by this Agreement and the other Transaction Documents are based on the special tax support available for Dom-Tom investments.

(B)  

In accordance with the Girardin Law, the Request for DGI Final Approval was filed with the DGI. A preliminary approval of the Transaction was granted by the DGI by a letter dated May 4, 2001 and the DGI Final Approval is to be issued. The retrocession rate as calculated in appendix 8 of the Lease at the date of this Agreement is higher than 80%.

(C)  

In order to finance the construction of the Assets, the Owner shall:

(i)  

receive the Tax Advances from the Tax Investors pursuant to the Tax Loan Agreement; and

(ii)  

enter into the Loan Agreement.

(D)  

The involvement of the Owner being only financial, the Project Manager as project manager under this Agreement and as Lessee has selected the site, procured the preliminary technical studies, drawn up certain plans and various descriptions and estimates for the construction of the Assets and has decided on the design and characteristics thereof.

(E)  

The Substantial Completion Date and the delivery of the Assets to the Lessee is expected to occur on or prior to December 31, 2008 (as such date may be extended to a date no later than December 31, 2009 (subject to the satisfaction of the conditions in Clause 11.1(b))). Substantial Completion shall be evidenced by the signature by the Project Manager and the Lessee, on its behalf and on behalf of the Owner, of the Definitive Acceptance Certificate in accordance with the terms of this Agreement.

0  

DEFINITIONS

0.1  

For the purpose of this Agreement, capitalised terms and expressions (whether in singular or in plural form) shall have the respective meanings given to them in this Agreement (including Appendix 1) or if not defined in this Agreement shall have the meaning given to them in the Lease.

0.2  

In this Agreement:

(a)  

headings of Clauses and Appendices are for ease of reference only and are not intended to influence the interpretation of this Agreement; and

(b)  

references to any agreement or any other document shall be construed as a reference to that agreement as it may from time to time be amended, varied, supplemented, restated or novated (but excluding any amendment, variation, supplement, restatement, variation or novation contrary to any Transaction Document).

1  

PURPOSE

1.1  

The Owner and the Project Manager hereby agree that the Project Manager will, on the Owner’s behalf, carry out the Works by way of any contracts including (without limitation) contracting agreements, sub-contracting agreements, purchase agreements and the Services Agreement pursuant to the terms and conditions of this Agreement, as well as to carry out or cause to be carried out any related legal, administrative or financial transactions related to the Works.

Unless otherwise specified in this Agreement, this Agreement is governed by Articles 1831-1 to 1831-5 of the French Civil Code enforced in New Caledonia pursuant to order n°98-728 dated August 20, 1998.

1.2  

The authorisations granted, the contracts executed and the Works undertaken or initiated by or on behalf of the Project Manager prior to the date hereof in connection with the Works (the “Preliminary Works”) are hereby ratified and the Preliminary Works shall be subject to the terms of this Agreement as if they had been undertaken after the date of this Agreement.

1.3  

This Agreement is entered into in the common interest of the Parties. However, the Owner undertakes not to interfere, directly or indirectly, with the duties conferred on the Project Manager.

1.4  

The Project Manager represents:

(i)  

that it has selected the site, procured preliminary technical studies, plans, descriptions and estimates for the construction of the Assets and has decided on their design and specifications;

(ii)  

that it has not been provided with any information or study in respect of the Land or the Assets by the Owner and that the specification of the Assets and of the Works was drawn up by the Project Manager or its agents, contractors or subcontractors;

(iii)  

that, considering the expected modifications of the works authorised by the Building Permit, it applied on or about 2 December, 2004 for a new building permit in respect of the Plant; and

(iv)  

that it will obtain a new Operating Permit in respect of the Plant at least 3 months before the Substantial Completion Date.

2  

SPECIFICATION OF THE ASSETS

(a)  

The Works shall be completed and the Assets shall be delivered and commissioned in accordance with this Agreement, the Administrative Authorisations, the Request for DGI Final Approval (which the Project Manager is fully aware of), the DGI Final Approval (which the Project Manager is fully aware of) and good engineering practices (“les règles de l’art”).

(b)  

In the case of any contradiction between the terms of this Agreement and the DGI Final Approval, the DGI Final Approval shall prevail.

(c)  

For the avoidance of doubt, any reference in this Agreement to commissioning the Assets is a reference only to those commissioning works (in accordance with the commissioning and testing procedures developed by the Project Manager) required to achieve Substantial Completion.

3  

CHANGES TO THE ASSETS

3.1  

Conditions for changes to the Assets

(a)  

It is hereby agreed that the Project Manager may, at its sole expense and risk, vary the technical characteristics of the Assets or any component or aspect thereof, provided that any such Variation or any other variation:

(i)  

will not increase the Construction Costs (unless, for the avoidance of doubt, the costs of such Variation or variation are permitted under Clause 16.2);

(ii)  

will not extend the time limits set out in Clause 11;

(iii)  

will automatically be deemed to be approved by the Project Manager, as Lessee under the Lease;

(iv)  

will not affect the DGI Final Approval; and

(v)  

with respect to a Variation only, has been previously notified to the Owner for information purposes only in accordance with Clause 3.2(b).

(b)  

Notwithstanding the foregoing, in no event shall any Variation or variation adversely affect the ability of the Lessee to operate the Assets in accordance with the Authorised Activities.

3.2  

Authorisation of Variations

(a)  

In the event of any Variation, the Project Manager shall obtain, on its own behalf and in its name, all required building permits and other administrative authorisations and

shall be liable for all claims filed and for all expenses incurred in connection with obtaining such permits and authorisations.

(b)  

The Project Manager shall inform the Owner of any Variation, no later than 15 Business Days prior to the date planned for the filing of the Administrative Authorisations required for such Variation.