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MINING LEASE

Lease Agreement

MINING LEASE | Document Parties: GOLDEN STAR RESOURCES LTD | FIRST CANADIAN GOLDFIELDS LIMITED You are currently viewing:
This Lease Agreement involves

GOLDEN STAR RESOURCES LTD | FIRST CANADIAN GOLDFIELDS LIMITED

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Title: MINING LEASE
Date: 2/25/2009
Industry: Gold and Silver     Sector: Basic Materials

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Exhibit 10.20

THIS MINING LEASE is made the 11th day of January 2008 between THE GOVERNMENT OF THE REPUBLIC OF GHANA (hereinafter called “the Government”) acting by ESTHER OBENG DAPPAH the Minister of Lands, Forestry and Mines (hereinafter called the Minister”) of the one part and FIRST CANADIAN GOLDFIELDS LIMITED having its registered address at P.O. BOX 16075, K.I.A., ACCRA (hereinafter called “the Company”) of the second part:

WHEREAS:

The Government is desirous of developing its mineral resources in such manner as will ensure that the maximum possible benefits accrue to the nation from the exploitation of minerals and has agreed to grant the Company a Mining Lease on the terms and conditions hereinafter following:

NOW THIS AGREEMENT WITNESSETH THAT:

 

1.

GRANT OF MINING RIGHTS:

(a) The Government hereby grants to the Company mining rights to ALL that piece of land described in the schedule hereto and more particularly delineated on the Plan attached and shown edged red (hereinafter called “the Lease Area”) together with mines, beds, seams, veins, channels and strata of gold lying and being within and under the surface for a term of four (4) years from the date of this Agreement. Such term shall be renewable from time to time in accordance with the Minerals and Mining Act, 2006, (Act 703);

(b) The Government hereby grants to the Company the exclusive rights to work, develop and produce gold in the Lease Area for the said term of four (4) years (including, the processing, storing and transportation of ore and materials together with the rights and powers reasonably incidental thereto) subject to the provisions of this Agreement;

(c) The Company shall not, however, conduct any operations in a sacred area and shall not, without the prior consent in writing of the Minister conduct any operations:

(i) within 50 yards of any building, installation, reservoir of dam, public road, railway or area appropriated for railway;

(ii) in an area occupied by a market, burial ground cemetery or Government office, or situated within a town or village or set apart for, used, appropriated or dedicated to a public purpose.

(d) The Company shall commence commercial production of gold within two (2) years from the date of this Mining Lease.

(e) The Company shall conduct its operations in a manner consistent with good commercial mining practices so as not to interfere unreasonably with vegetation in the Lease Area or with the customary rights and privileges of persons to farm, hunt and snare game, gather firewood for domestic purposes or to collect snails.


(f) The public shall be permitted at their sole risk to use without charge, any road constructed by the Company in the Lease Area, in a manner consistent with good mining practices, safety and security, provided that such use does not unreasonably interfere with the operations of the Company hereunder and provided also that such permission shall not extend to areas enclosed for mining operations.

(g) Nothing contained in this Agreement shall be deemed to confer any rights on the Company conflicting with provisions contained in the Minerals and Mining Act, 2006, (Act 703) or to permit the Company to dispense with the necessity of applying for and obtaining any permit or authorization which the Company may be required by law or regulation to obtain in respect of any work or activity proposed to be carried out hereunder.

 

2.

GRANT OF RIGHTS TO THIRD PARTIES IN THE MINING AREA:

(a) Subject to satisfactory arrangements between the Government and the Company, the Government shall grant the first option to the Company to work minerals other than gold and silver discovered in the Lease Area.

(b) Failing such satisfactory arrangements between the Government and the Company, the Government reserves the right to grant licences to third parties to prospect for or to enter into agreements for the production of minerals other than gold and silver in the Lease Area, provided that any such activity shall not unreasonably interfere with the rights granted to the Company hereunder.

 

3.

POWER OF GOVERNMENT TO EXCLUDE PARTS OF THE MINING AREA:

(a) The Government may by reasonable notice in writing to the Company exclude from the Lease Area, at any time and from time to time, any part which may be required for any stated public purpose whatsoever, provided that:

(i) The parts so excluded shall not have a surface area in the aggregate greater than ten percent of the Lease Area.

(ii) Any parts of the Lease Area so excluded shall continue to form part of the Lease Area subject to this Agreement.

(iii) except that no mining operations shall be conducted on the parts so excluded.

(iv) No part of the Lease Area shall be so excluded in respect of which the Company shall have given prior notice specifying that such part is required for mining operations hereunder or on which active operations have commenced or are in progress (such as digging, construction, installation or other works related to gold and silver mining) but, in lieu thereof, a part equal in area to any such part shall be excluded for such public purposes; and

(v) The Government shall not take to itself or grant to third parties the right to mine gold and silver from any part so excluded.

 

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(b) The company shall be relieved of all liabilities or obligations hereunder in respect of any part excluded under this paragraph except liabilities or obligations accrued prior to such exclusion.

 

4.

WORK OBLIGATION:

The Company shall continuously operate in the Lease Area in accordance with good mining practices until such time as the reserves or deposits may be exhausted or the mine can no longer be economically worked or until this Agreement expires, whichever shall be sooner.

 

5.

CONDUCT OF OPERATIONS:

(a) The Company shall conduct all of its operations hereunder with due diligence, efficiency, safety and economy, in accordance with good mining practices and in a proper and workmanlike manner, observing sound technical and engineering principles using appropriate modern and effective equipment, machinery, materials and methods, and pay particular regard to conservation of resources, reclamation of land and environmental protection generally.

(b) The Company shall mine and extract ore in accordance with paragraph 5(a) herein utilizing methods, which include dredging, quarrying, pitting, trenching, stoping and shaft sinking in the Lease Area.

(c) The company shall maintain all equipment in good and safe condition, normal wear and tear excluded, and shall keep all excavated areas, shafts, pits, and trenches in good and safe condition and take all practical steps:

(i) to prevent damage to adjoining farms and villages;

(ii) to avoid damage to trees, crops, buildings structures and other property in the Lease Area; to the extent, however, that any such damage is necessary or unavoidable, the Company shall pay fair and reasonable compensation.

(d) The Company shall fence off effectually from the adjoining lands, all pits, shafts and other works made or used under the powers hereof.

(e) The company shall as far as is necessary or practicable provide and maintain in good repair and condition roads, gates, stiles and fences for the convenient occupation of the surface of the Lease Area.

(f) The Company shall provide and maintain proper and sufficient drains, culverts, arches and passageways for carrying off any waters which shall arise or be produced or interrupted by any of the works hereby authorized so that the drainage of the Lease Area may not be prevented or prejudiced.

 

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6.

NOTIFICATION OF DISCOVERY OF OTHER MINERALS:

(a) The Company shall report forthwith to the Minister, the Chief Executive of the Minerals Commission, the Head, Inspectorate Division of the Minerals Commission and the Director of Ghana Geological Survey, the discovery in the Lease Area of any other mineral deposits apart from gold and silver and the Company shall be given the first option to prospect further and to work the said minerals, subject to satisfactory arrangements between the Government and the Company.

(b) Failing any such satisfactory arrangements the Company shall not produce any minerals from the Lease Area other than gold and silver except where they are unavoidably linked with the production of gold and silver.

 

7.

SAMPLES:

(a) The Company shall not during the currency of this agreement remove, dispose of or destroy, except in analyses, any cores or samples obtained from the Lease Area without the prior consent in writing of the Head of the Inspectorate Division of the Minerals Commission.

(b) The Company shall provide the Director of Ghana Geological Survey with such samples from the Lease Area as he may from time to time reasonably request, and shall keep such samples as he may be directed to do so by the Head of the Inspectorate Division of the Minerals Commission.

 

8.

HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION:

(a) The Company shall comply with all such reasonable instructions as may from time to time be given by the Inspectorate Division of the Minerals Commission for securing the health and safety of persons engaged in or connected with the operations hereunder.

The Company shall adopt all necessary and practical precautionary measures to prevent undue pollution of rivers and other potable water and to ensure that such pollution does not cause harm or destruction to human or animal life or fresh water fish or vegetation.

 

9.

POWER OF HEAD OF THE INSPECTORATE DIVISION OF THE MINERALS COMMISSION TO EXECUTE CERTAIN WORKS:

If the Company shall at any time fail to comply with any provisions of this Agreement or applicable law and such failure is likely, in the opinion of the Head of the Inspectorate Division of the Minerals Commission, to:

 

 

(i)

endanger the health or safety of persons, or

 

 

(ii)

endanger the environment, or

 

 

(iii)

cause harm or destruction to potable water; or

 

4


 

(iv)

result in damage to mining equipment or other structures or installation;

the Head of the Inspectorate Division of the Minerals Commission, shall after giving the Company reasonable notice, execute any works which in his opinion are necessary and practicable in the circumstances and the costs and expenses of such works shall be borne by the Company.

 

10.

LIABILITY FOR DAMAGE OR INJURY AND INDEMNITY:

(a) Nothing in this Agreement shall exempt the Company from liability for any damage, loss or injury caused to any person, property or interest as a result of the exercise by the Company of any rights or powers granted to it under this Agreement.

(b) The Company shall at all times indemnify the Government and its officers and agents against all claims and liabilities in respect of any loss suffered by or damage done to third parties arising out of the exercise by the Company of any rights or powers granted to it under this Agreement provided that the Company shall not so indemnify the Government, its officers and agents where the claim or liability arises out of the wrongful or negligent acts of the Government, its officers and agents.

 

11.

EMPLOYMENT AND TRAINING:

(a) Citizens of Ghana shall be given preference for employment by the Company in all phases of its operations hereunder to the maximum possible extent, consistent with safety, efficiency and economy.

(b) Except with respect to unskilled personnel, the Company may employ non-Ghanaian personnel in the conduct of its operations provided that the number of such non-Ghanaian personnel employed shall not exceed the quota permitted by the Government.

(c) The Company shall provide appropriate programmes of instruction and theoretical and practical training to ensure the advancement, development, improved skills and qualification of Ghanaian employees in all categories of employment.

 

12.

PREFERENCE FOR GHANAIAN GOODS AND SERVICES:

In the conduct of its operations and in the purchase, construction and installation of facilities, the Company shall give preference to:

(a) materials and products made in Ghana, if such materials and products are comparable or better in price, quality and delivery dates than materials and products from foreign sources;

(b) service agencies located in Ghana owned by Ghanaian citizens or companies organized pursuant to Ghanaian law, including but not limited to, insurance agencies, bidding contractors, import brokers, dealers and agents if such agencies give or provide equal or better price and quality of service than competing foreign firms and can render services at such times as the Company may require.

 

5


13.

AFFILIATED COMPANY TRANSACTIONS:

(a) Any services including services in respect of the purchase and acquisition of materials outside Ghana provided by an affiliated company shall be obtained only at a price, which is fair and reasonable. The Company shall, at the request of the Minister, provide such justification of costs as may be required, duly supported by an Auditor’s certificate if necessary.

(b) Any other transactions between the Company and an affiliated company shall be on the basis of competitive international prices and upon such terms and conditions as would be fair and reasonable had such transactions taken place between unrelated parties.

(c) The Company shall notify the Minister of any and all transactions between the Company and an affiliated company and shall supply such details relating to such transactions as the Minister may by notice reasonably require.

 

14.

TECHNICAL RECORDS:

(a) The Company shall maintain at its registered or mine offices complete records of pits and trenches (location, depths of overburden and gravel and assay value) in the Lease Area in such form as may from time to time be approved by the Head of the Inspectorate Division of the Minerals Commission, Chief Executive of the Minerals Commission and the Director of Ghana Geological Survey.

(b) The Company shall maintain at the said offices copies of all reports including interpretations dealing with gold and silver prospects in the Lease Area in the course of its operations hereunder and copies of all tests and analyses, geological and geophysical maps, diagrams or charts relevant to its operations hereunder. These reports and records may be examined by persons in the service or acting on behalf of the Government and authorized in writing by the Minister.

(C) The Company shall maintain at the said offices correct and intelligible plans and sections of all mines which plans and sections shall show the operations and workings which have been carried on as well as dykes, veins, faults and other disturbances which have been encountered in such workings and operations. All such plans and sections shall be made, amended and completed from actual surveys conducted for that purpose.

(c) Upon expiration or termination of this Agreement or the surrender of any part of the Lease Area, such records and data as are required to be maintained pursuant to this paragraph which relate to the Lease Area, or such part of the Lease Area as may have been surrendered shall be delivered to the Head of the Inspectorate Division of the Minerals Commission, Chief Executive of the Minerals Commission and the Director of Ghana Geological Survey and shall become the property of the Government without charge.

 

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15.

PRODUCTION RECORDS:

The Company shall maintain at its registered or mine offices complete and accurate technical records of its operations and production in the Lease Area in such form as may from time to time be approved by the Head of the Inspectorate Division of the Minerals Commission.

 

16.

FINANCIAL RECORDS:

(a) The Company shall maintain at its registered or mine offices, detailed and complete accounts and systematic financial records of its operations as may be required by law. The books of account shall show all revenues received by the Company from all sources including its operations hereunder, as well as all its expenditure. The Company shall provide for a clear basis for understanding and relating the financial records and accounts to its operations.

(b) The Company’s books of account shall be kept on the basis of generally accepted accounting principles.

(c) The Company shall keep separately records and financial statements in terms of Ghana currency an also in terms of U.S. Dollars or other international currency and may record in foreign currency such claims and liabilities as arise in such foreign currency.

(d) The Company’s books of account shall be audited within six (6) months after the close of each Financial Year by a qualified Accountant and member of the Ghana Institute of Chartered Accountants. Such auditing shall not in any way imply acceptance of its results by the Government or preclude the Government from auditing such books of account. The Company shall deliver to the Minister without charge, copies of all or any part of such financial records as he may from time to time reasonably request.

 

17.

REPORTS:

(a) The Company shall furnish a report each quarter, to the Minister, the Head of the Inspectorate Division of the Minerals Commission, the Chief Executive of the Minerals Commission and the Director of Ghana Geological Survey, in such forms as may from time to time be approved by the Minister, regarding the quantities of gold and silver won in that quarter, quantities sold, the revenue received and royalties payable for that quarter and such other information as may be required. Such reports shall be submitted not later than thirty (30) days after the end of each quarter.

(b) The Company shall furnish a report each half-year to the Minister, the Chief Inspector of Mines of the Inspectorate Division, Minerals Commission, the Chief Executive of the Minerals Commission and the Director of Ghana Geological Survey in such form as may from time to time be approved by the Minister summarising the results of its operations in the Lease Area during the half-year and records to be kept by the Company pursuant to paragraphs 14, 15 and 16 hereof. Each such report shall include a description of any geological or geophysical work carried out by the Company in that half-year and a plan upon a scale approved by the Head of the Inspectorate Division of the Minerals Commission showing dredging areas and mine workings. Such reports shall be submitted not later than forty (40) days after the half-year to which they relate.

 

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(c) The Company shall furnish a report each Financial Year in such form as may from time to time be approved by the Minister to the Head of the Inspectorate Division of the Minerals Commission, the Chief Executive of the Minerals Commission and the Director of Ghana Geological Survey Department summarising the results of its operations in the Lease Area during that Financial Year and the records required to be kept by the Company pursuant to paragraphs 14, 15, and 16 hereof. Each such report shall include a description of the proposed operations for the following year with an estimate of the production and revenue to be obtained therefrom. Such reports shall be submitted not later than sixty (60) days after the end of each Financial Year.

(d) The Company shall furnish the Minister, the Head of the Inspectorate Division of the Minerals Commission, the Chief Executive of the Minerals Commission and the Director of Ghana Geological Survey not later than three (3) months after the expiration or termination of this Agreement, with a report giving an account of the geology of the Lease Area including the stratigraphic and structural conditions, together with a geological map on a scale prescribed in the Mining Regulations.

(e) The Company shall furnish the Minister and the Chief Executive of the Minerals Commission, with a report of the particulars of any proposed alteration to its regulations. The Company shall also furnish the Minister and the Chief Executive of the Minerals Commission with a report on the particulars of any fresh issues of shares of its capital stock or borrowings in excess of an amount equivalent to the Stated Capital of the Company. All such reports shall be in such form as the Minister may require and shall be submitted not less than twenty-one (21) days (or such lesser period as the Minister may agree) in advance of any proposed alteration, fresh issue or borrowing, as the case may be.

(f)


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