EXHIBIT 10.2
PRELIMINARY JOINT VENTURE AGREEMENT
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THE PARTIES:
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(1) (YUNNAN PROVINCE NUCLEAR INDUSTRY
BRIGADE 209) (the "Chinese Party"); and
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(2) GRAVITY SPIN HOLDINGS, INC. to be
renamed as MAGNUS INTERNATIONAL RESOURCES
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INC.
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PRELIMINARY STATEMENTS
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A. The Chinese Party and the Foreign Party signed a Letter of Intent on
January 15, 2004
pursuant to which they
agreed to establish a
cooperative
joint
venture company (the "JV Company") to conduct copper and gold
exploration
and mining
activities
within an indicated
two hundred (200)
square kilometer
area (the "JV Area") of Qilian County, Qinghai Province,
-------
People's
Republic of China (as shown on Appendix I).
B. The Chinese Party holds gold
and copper exploration permits for the JV Area
(copies
of which are attached hereto as Appendix II). Based on the
agreements
arrived at through discussions between the Parties, the Chinese
Party shall
transfer the exploration permits and all related data and
information (the
"Exploration Permits") to the JV Company.
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C. Based on the [Preliminary
Mine Purchase Agreement] entered into between the
Chinese Party
and(1) the Qilian County, Qinghai Province Zhamashi Copper
Mill(2),
the Chinese Party
agrees to acquire the assets (see Appendix III)
and Mining
Permits (See Appendix IV) owned by the mine (collectively, the
"Mining
Assets"). Thereafter,
the Chinese Party
agrees to sell the Mining
Assets to the JV
Company in accordance
with the [Mine Purchase Agreement]
which will soon
be entered into by the JV Company and the Chinese Party.
D. Based on friendly
discussions,
the Parties have
agreed on the basic terms
of their
cooperation,
and to confirm
such agreements by signing this
Agreement.
THEREFORE, the Parties hereby agree to the
following terms.
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1. JV Company and JV Term
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The Parties
shall establish the JV
Company as a legal person Sino-foreign
cooperative
joint venture company under the laws of the PRC.
The term of
Company shall be
provisionally set as 30 years. The JV Company's activities
will be divided
into two phases. The
first phase of five years will be the
exploration
phase. The second phase of 25 years will be the
development
phase.
If the JV Company
acquires mining rights to develop a commercial
mine, such
initial term may be extended, based on actual operational
needs,
so that the
cooperation between the Parties may continue through the end of
the commercial
life of the mine.
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2. Business Scope
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2.1 The JV Company's core objective shall be to engage in commercially
profitable exploration and mining within the JV Area. The JV
Company's
business scope shall
include the
exploration,
mining, processing,
refining and
selling of
copper, gold and other related metal and
mineral products.
2.2 In addition to the permits that
the Chinese Party must transfer to the
JV Company in
accordance with
Article 7.2, the JV Company may also
acquire or apply for additional exploration and mining permits
around
the perimeter area of the JV Area.
3. Management of the JV
Company
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3.1 The JV Company shall be managed by a board of directors. The board
shall be composed of five directors. The Foreign Party shall
appoint
three of the directors
including the Chairman
of the Board, and
the
Chinese Party shall appoint two directors (including the
Vice-Chairman
of the Board).
3.2 Except as required by laws and regulations, resolutions of the JV
Board may be passed with the approval of a majority of the
directors.
JV Board meetings may be held in person or by telephone
conference.
3.3 The Foreign Party shall have the
right to appoint the General Manager
of the JV Company. The
Chinese Party shall
have the right to appoint
the Deputy General
Manager(s) of the JV Company. The General Manager
shall manage the day-to-day operations of the JV Company in
accordance
with policies and budgets established by the JV Board, and
shall have
the power to select and hire other management personnel to assist
him.
4. Appraisal of Permits
Transferred by the Chinese Party and Information
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The Parties
agree that prior to the conclusion of definitive JV
documents,
the permits to
be transferred by the
Chinese Party shall be appraised by a
legally
qualified appraisal
firm in the appropriate industry selected and
appointed
by the Foreign Party ("Appraised Value of the Exploration
Permits"),
however the ultimate appraised value thereof shall not
influence
the distribution
of rights and interests within the JV Company.
5. Definitive JV Documents
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If the Appraised
Value of the
Exploration Permits
and the appraised value
of the Mining
Assts are satisfactory
to both Parties, the Parties shall
agree on and
sign a definitive
joint venture contract and articles of
association
(the "JV Documents") as soon as possible
before June 30, 2004
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or such later
date as the Parties may agree upon. The JV Documents shall
reflect the
terms and conditions
of this Agreement and other customary
provisions.
2
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6. Mine Purchase Agreement
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The Parties
shall enter into a
[Definitive Mine
Assets Agreement] at
the
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same time as the
Parties sign the JV Documents. The Definitive Mine Assets
Agreement
shall reflect the terms of the Preliminary Mine Purchase
Agreement and
other customary provisions.
7. Total Investment and
Registered Capital
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7.1 The total investment for the JV Company's
Phase I activities shall be
Five Million Ten Thousand United States Dollars (US$5,010,000) and
the
Registered Capital
shall be Five Million
Ten Thousand United
States
Dollars (US$5,010,000)
7.2 As its capital contribution, the Chinese Party shall,
in accordance
with the JV terms, make its contribution to the registered
capital by
transferring the
Exploration
Permits to the JV Company at the
Appraised Value of the
Exploration Permits.
The Chinese Party
shall
hold ten percent (10%)
of the rights and interests in the JV Company.
As its contribution to the registered capital the Foreign Party
shall
remit Five Million Ten Thousand United States Dollars (US$5,010,000)
in cash and
shall hold ninety percent (90%) of the rights and
interests in the JV Company.
7.3 Any increase in the registered
capital or total
investment of the
JV
Company shall be contributed one hundred percent (100%) by the
Foreign
Party, and the Chinese
Party shall not be required to contribute
fur
