MICHIQUILLAY COPPER DEPOSITS TRANSFER CONTRACT … · 3, 2017 and it contemplates the Michiquillay...

Important notice: This is an unofficial translation. In the case of divergence between the English and Spanish text, the version in Spanish shall prevail

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MICHIQUILLAY COPPER DEPOSITS

TRANSFER CONTRACT PROJECT

To the Notary: Kindly enter into your Register of Public Deeds, one evidencing the Transferring of a Mine Concession and other assets making up the Michiquillay Copper Deposit Project (hereinafter the “CONTRACT”) hereby entered into by and between:

- Activos Mineros S.A.C., with Taxpayer Identification Number 20103030791, registered under Electronic Record 11924481 in the Registry of Legal Entities of Lima Registry Office, located at Av. Prolongación Pedro Miotta No. 421, San Juan de Miraflores, Province and Department of Lima, Peru, represented by its General Manager [●], identified by National Identity Number [●], according to powers duly registered under Entry [●] in the Registry File [●] of the Register of Legal Persons of Lima Registry Office (hereinafter "ACTIVOS MINEROS "); and,

- [●], with Taxpayer Identification Number [●], registered under Electronic Record [●] in the Registry of Legal Entities of [●], located at [●], duly represented by [●], identified by [●] according to powers of attorney filed with Entry [●] under Registry File [●] of the Registry of Legal Persons of [●] (hereinafter the "ACQUIRING PARTY").

With intervention of:

- Private Investment Promotion Agency – PROINVERSION, with Taxpayer Identification Number 20380799643 and domiciled at Av. Paseo de la Republica No. 3361, 9° Piso - San Isidro, Lima, which is duly represented by its Executive Director, Mr. [●] identified by National Identity Number [●] designated through Resolution [●] dated [●] (hereinafter "PROINVERSION").

- [●],a company duly incorporated in [●], domiciled for this purpose at [●], duly

represented by [●], identified by [●] according to powers of attorney filed with Entry [●] in Record [●] of the Registry of Legal Entities of [●] (hereinafter "[●]"), in its capacity as Successful Bidder / related company of the ACQUIRING PARTY that fulfilled the prequalification requirements.

For the purposes of this CONTRACT, MINING ASSETS and the ACQUIRING PARTY shall be referred to individually and indistinctly as "PARTY" and jointly as "PARTIES". This CONTRACT is entered into under the terms and conditions set forth in the following clauses: FIRST CLAUSE: BACKGROUND 1.1. Through Supreme Resolution 102-92-PCM dated February 21, 1992, the agreement

was ratified and the Mining Company Centro del Perú SA, hereinafter "CENTROMIN", was included in the private investment promotion process referred to in Legislative Decree 674.

1.2. Through Supreme Resolution 016-96-PCM dated January 18, 1996, the agreement reached by the Commission for the Private Investment Promotion - COPRI was ratified, pursuant to which the new Plan for Private Investment Promotion in CENTROMIN was approved. Likewise, the agreement approving the extension of such Promotion Plan was ratified by means of Supreme Resolution 246-2001-EF dated May 15, 2001.

1.3. Also, the agreement defining the method to carry out the private investment promotion process in Michiquillay Mining Unit owned by Minero Perú SA and subsequently acquired by CENTROMIN was ratified through Supreme Resolution 415-94-PCM dated September 28, 1996.


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1.4. CENTROMIN transferred to ACTIVOS MINEROS, formerly Empresa Regional Minera

Grau Bayóvar S.A., the mining concession title as well as the ownership of the assets referred to in the Third Clause hereof, through a Public Deed on the transferring of mining rights dated 15 December 2006 and a Public Deed on the transferring of surface and ancillary land dated December 14, 2006.

1.5. It is important to note that the COPRI Agreement (now PROINVERSIÓN) was ratified through Supreme Resolution 406-93-PCM dated September 8, 1993, which included ACTIVOS MINEROS in the investment promotion process, referred to in Legislative Decree No. 674. The COPRI-FOPRI merger is approved by means of Supreme Decree 027-2007-EM and PROINVERSION is formed.

1.6. Under the PRI-88-2006 International Public Bid, on June 5, 2007 Anglo American Michiquillay S.A. and ACTIVOS MINEROS, with intervention of the successful bidder, Anglo American Services UK (Limited) and PROINVERSION, signed Transfer Contract of mining concessions and other assets comprising the Michiquillay Project (hereinafter, the "PREVIOUS TRANSFER CONTRACT"). The successful bidder exercised the power to terminate the PREVIOUS TRANSFER CONTRACT. In this regard, the mining concession title and ownership of other assets that make up the Michiquillay Project were restored to ACTIVOS MINEROS on June 24, 2015.

1.7. PROINVERSION Board of Directors’ resolution adopted in the meeting held on June 9, 2010, approving ACTIVOS MINEROS’ Plan for the Private Investment Promotion was ratified through Supreme Resolution 092-2010-EF dated August 27, 2010.

1.8. The Ministry Resolution 165-2017-MEM/DM, which approved the "Multiannual Report on Investments in Public-Private Mining Partnerships for 2017" was published on May 3, 2017 and it contemplates the Michiquillay Copper Deposit Project.

1.9. On May 15, 2017, PROINVERSION Board of Directors agreed to incorporate the "Michiquillay Copper Deposits" Project into the private investment promotion process, as established in Legislative Decree 1224, its regulatory and amending standards, applying, as applicable, Legislative Decree 674 and its Regulations.

1.10. On May 23, 2017, PROINVERSION Committee on Infrastructure Projects and Public Social, Mining, Sanitation, Irrigation Services and Agricultural Affairs - PRO DESARROLLO approved the amendment to ACTIVOS MINEROS’ Plan for Private Investment Promotion incorporating Michiquillay Copper Deposit Project.

1.11. In the meeting dated August 28, 2017, PROINVERSION Board of Directors resolved to approve the Specifications (hereinafter the "SPECIFICATIONS") of the International Public Bid (hereinafter the "PUBLIC BID") to promote the private investment in Michiquillay Copper Deposit Project (hereinafter the "PROJECT").

1.12. In the context of the PUBLIC BID, [●] was selected as successful bidder on [●]; in this regard, by means of resolution [●] adopted by PROINVERSION Board of Directors in the meeting dated [●], PROINVERSION participation, acting as intervener in the signing of this CONTRACT, was approved and ACTIVOS MINEROS was instructed to sign it.

1.13. The CONTRACT is signed with the ACQUIRING PARTY, and the Successful Bidder/ related company of the ACQUIRING PARTY that fulfilled the prequalification requirements intervened being jointly and severally liable, along with the ACQUIRING PARTY, for the obligations assumed by the latter under this CONTRACT.


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SECOND CLAUSE: CONTRACT’S PURPOSE

2.1. Based on the background described in the First Clause, under the CONTRACT, ACTIVOS MINEROS transfers to the ACQUIRING PARTY the ownership of concessions and other assets referred to in 3.1 below (hereinafter, the "ASSETS").

2.2. This transfer includes all the integral and ancillary parts of the ASSETS and everything

that, in fact or by law, corresponds to ACTIVOS MINEROS with respect to the ASSETS.

THIRD CLAUSE: ASSETS 3.1. The ASSETS comprising the PROJECT and which is transferred to the ACQUIRING

PARTY are the following: a. The ownership of the eighteen (18) Mining Concessions located in the District of La

Encañada, province and department of Cajamarca, described below (hereinafter the "CONCESSIONS").

CONCESIONES HECTARE MINING REGISTER

1 CANDELARIA 96.0294 03546051Z08

2 EL NIÑO 80.0707 03000256X01

3 ENCAÑADA 1 180.0463 03546051Z18

4 ENCAÑADA 2 350.0930 03546051Z17

5 ENCAÑADA 3 760.1794 03546051Z16

6 ENCAÑADA 4 350.0958 03546051Z15

7 ENCAÑADA 5 33.0091 03546051Z14

8 ENCAÑADA 6 100.0278 03546051Z13

9 ENCAÑADA 7 117.3910 03546051Z12

10 ENCAÑADA 8 10.0024 03546051Z11

11 ENCAÑADA 9 160.0487 03546051Z01

12 ENCAÑADA 10 144.0463 03546051Z10

13 ENCAÑADA 11 360.0627 03546051Z09

14 ENCAÑADA 12 250.0556 03546051Z07

15 ENCAÑADA 13 500.1411 03546051Z06

16 ENCAÑADA 14 10.0024 03546051Z05

17 ENCAÑADA 20 450.0964 03546051Z03

18 MAVILA 100.0276 03546051Z02

b. The surface properties for a total of 4.8642 hectares, located in the district of La Encañada, province and department of Cajamarca, registered in the Cajamarca Registry Office (SUNARP), detailed below:

SURFACE PROPERTIES HECTARE REAL PROPERTY

1 PREDIO RUSTICO - CAMPO DE FULBITO 0.1875 2290161

2 CIENAGA I - DEPOSITO 0.3050 2260103

3 CIENAGA II - DEPOSITO 0.3477 2260102

4 CIENAGA III - DEPOSITO 1.0000 2260100

5 CIENAGA IV - DEPOSITO 1.7180 2260101

6 CIENAGA V - DEPOSITO 0.1290 2260105

7 CIENAGA VI - DEPOSITO 0.0270 2260104 c. The existing PROJECT information, which is listed in the data room referred to in

4.44 of the SPECIFICATIONS (the "Data Room") and which has been subject to review by the ACQUIRING PARTY.


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d. The core samples of drilling carried out in the CONCESSIONS.

3.2. THE ACQUIRING PARTY is obliged to pay as consideration for the transfer of the

ASSETS the amounts indicated in the Fourth Clause hereof.

3.3. The PARTIES recognize the need to jointly transfer the ASSETS, considering that, for adequate exploration, development and/or exploitation of the CONCESSIONS, in accordance with current legislation, all of them are required.

3.4. Notwithstanding the statements and warranties granted by ACTIVOS MINEROS herein with respect to the ASSETS, which will be valid and enforceable against ACTIVOS MINEROS, the ASSETS listed in section b., subparagraph 3.1, are transferred in the situation "where they are and in the form they are ", therefore, ACTIVOS MINEROS takes no responsibility for the condition or for any use thereof.

3.5. The PARTIES expressly state that only for the purposes of the provisions under Resolution 052-2004-SUNARP/SN and Sunarp Court Resolution 037-2011-SUNARP-TR-T and in order to register the title and ownership of ASSETS indicated in a. and b. of subparagraph 3.1 above, these ASSETS are valued as indicated in Exhibit 1. Such valuation does not affect the consideration agreed in the fourth clause hereof.

3.6. The ASSETS indicated in c. and d. of subparagraph 3.1 above will be delivered within a period not exceeding forty-five (45) calendar days from the signing of the CONTRACT and the PARTIES will sign the relevant delivery certificate; with the ACQUIRING PARTY assuming the costs of transfer and disposition of such Assets.

FOURTH CLAUSE: CONSIDERATION 4.1. TRANSFER PRICE:

4.1.1. In consideration for the transfer of the ASSETS indicated in subparagraph 3.1 of the

Third Clause, the ACQUIRING PARTY agrees to pay ACTIVOS MINEROS the price offered in its economic proposal submitted during the PUBLIC BID that amounts to USD __________ (________ with ___ / 100 U.S. Dollars) plus the applicable statutory taxes (hereinafter the "TRANSFER PRICE"), as follows: a. USD _________ (_________ with ___ / 100 U.S. Dollars (INITIAL PAYMENT),

plus the statutory taxes applicable to the CONTRACT signing. The difference between the TRANSFER PRICE and the INITIAL PAYMENT is called the TRANSFER PRICE BALANCE.

b. 20% of the TRANSFER PRICE BALANCE, amounting to USD ________ (_________ with ___ / 100 U.S. Dollars), plus applicable taxes, fifteen (15) days after expiration of the first CONTRACT year.

c. 20% of the TRANSFER PRICE BALANCE, amounting to USD _______ (______

with ___ / 100 U.S. Dollars), plus applicable taxes, fifteen (15) days after expiration of the second CONTRACT year.

d. 20% of the TRANSFER PRICE BALANCE, amounting to USD _______ (______ with ___ / 100 U.S. Dollars), plus applicable taxes, fifteen (15) days after expiration of the third CONTRACT year.

e. 20% of the TRANSFER PRICE BALANCE, amounting to USD _______ (______ with ___ / 100 U.S. Dollars), plus applicable taxes, fifteen (15) days after expiration of the fourth CONTRACT year.


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f. 20% of the TRANSFER PRICE BALANCE, amounting to USD _______ (______ with ___ / 100 U.S. Dollars), plus applicable taxes, fifteen (15) days after expiration of the fifth CONTRACT year.

4.2. CONTRACT ROYALTY

4.2.1. The ACQUIRING PARTY is obliged to pay semiannually to ACTIVOS MINEROS a flat

percentage offered in its economic proposal submitted during the PUBLIC BID amounting to [●]% of the Annual Net Revenues from the sale of mineral resources extracted from the CONCESSIONS and marketed under any form (hereinafter THE CONTRACT ROYALTY).

4.2.2. The value of the sale of the aforementioned mineral resources extracted from the

CONCESSIONS by the ACQUIRING PARTY shall be the appropriate to any production process or processes carried out by the ACQUIRING PARTY. To that end, the production process or processes through which CONCESSIONS resources will be exploited may not be of a lower degree of mineral processing than that used to produce copper concentrates, copper cathodes by leaching, gold bullion by cyanidation or other mining products of similar processing degree.

4.2.3. For the purposes of this Clause, Annual Net Revenues shall mean the revenues on the sales of minerals from CONCESSIONS subject to this CONTRACT less deductions for smelting and refining expenses, any taxes originated in the country attributable to the operation or to local or export sales in force on that date or that may be created and are actually applied as well as any discounts by usually deductible laws and by losses due to the impurity content, transportation costs of the products from the mine to the port of embarkation and from the Peruvian port of embarkation to the place of destination and brokerage expenses and sales commissions, expenses of warehouse insurance in the port of destination for export cases, as well as the expenses incurred in obtaining samples.

4.2.4. The ACQUIRING PARTY shall pay the CONTRACT ROYALTY from the beginning of commercialization of minerals extracted from the CONCESSIONS and as long as there are revenues from commercial operations carried out as a result of the CONCESSIONS exploitation. Commercialization will begin on the date of the first invoicing for the first transfer of minerals extracted from the CONCESSIONS. In this regard, commercialization includes any act such as sale, barter or any other mechanism used by the ACQUIRING PARTY for the transfer of minerals extracted from the CONCESSIONS.

4.2.5. The CONTRACT ROYALTY will be settled, accrued and paid on a regular basis, in semiannual periods within fifteen (15) days following expiration of the relevant semester.

4.2.6. The semiannual payments shall be consistent with the semiannual periods of the calendar year; to that end, if necessary, the first period may last less than six months, so that the second period coincides with the calendar semester and the remaining semesters are sequentially accrued in that way.

4.2.7. From the moment in which the CONTRACT ROYALTY payment obligation begins, the ACQUIRING PARTY shall deliver to ACTIVOS MINEROS, within fifteen (15) days following expiration of each semester, a copy of the sales and income ledger (TRANSFER DECLARATION), duly endorsed by an authorized representative, including sales carried out during the semester, as well as a copy of any other document that allows to reasonably verify the transfers carried out; including copies of the relevant customs declarations, bills of lading, sworn statement of the monthly income tax, etc.


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4.2.8. In April of each year, the ACQUIRING PARTY shall deliver to ACTIVOS MINEROS a copy of its audited financial statements and a copy of the Income Tax Return for the previous year.

4.2.9. Likewise, ACTIVOS MINEROS may request the ACQUIRING PARTY any additional information the ACQUIRING PARTY may reasonably have and that is strictly necessary for the supervision. The ACQUIRING PARTY is obliged to submit the information required for this purpose.

4.2.10. The documents provided by the ACQUIRING PARTY will be used by ACTIVOS MINEROS exclusively for the purpose of evaluating the correct application of the CONTRACT ROYALTY. ACTIVOS MINEROS will be entitled to appoint auditors, at its own cost, to review the financial information.

4.2.11. The provision by the ACQUIRING PARTY to ACTIVOS MINEROS of false information, due to fraud or negligence, as per subparagraph 4.2 of the Fourth Clause, negatively affecting the amount to be paid as CONTRACT ROYALTY, will be penalized with a fine, in favor of ACTIVOS MINEROS, equal to five (5) times the value of the unpaid difference as a result of the application of such false information; without detriment to the personal and criminal liabilities arising therefrom.

4.2.12. In the event the ACQUIRING PARTY intentionally provides false information, it may be grounds to terminate the CONTRACT.

4.3. In the event of any failure to make the payments indicated in subparagraphs 4.1 and 4.2 within the established deadlines, the ACQUIRING PARTY will automatically fall in default without the need for any requirement by ACTIVOS MINEROS. From that moment, interest will accrue with the maximum active 180-day Libor rate + 6% established in the REUTER screen at 11:00 hours on the last day of the deadline.

4.4. The payments referred to in subparagraphs 4.1 and 4.2 shall be made in all cases in U.S. Dollars, through a bank deposit in ACTIVOS MINEROS account.

4.5. ACTIVOS MINEROS shall provide payment vouchers that comply with the statutory formalities.

4.6. Notwithstanding the CONTRACT ROYALTY payment established in this Clause, the ACQUIRING PARTY is obliged to make the payment established by Law N° 28258, Mining Royalty Law as amended.

FIFTH CLAUSE: ACQUIRING PARTY’S OBLIGATIONS DURING THE PRE-OPERATION PERIOD During the period of twelve (12) years counted as from the CONTRACT signing (the "PRE-OPERATION PERIOD"), which may be extended in accordance with the Eighth Clause, the ACQUIRING PARTY undertakes to: 5.1 Execute, as established in the following Sixth Clause, creditable investments in the

PROJECT (the "MINIMUM INVESTMENT COMMITMENT" or "MIC"), in carrying out exploration activities, experimental tests, studies, any research, development and construction required before starting the PROJECT operation.

5.2 Obtain from PROINVERSION approval of the STUDY (as defined in subparagraph 7.1 of the Seventh Clause), to be prepared at the cost and risk of the ACQUIRING PARTY and in accordance with the provisions of Seventh Clause.

5.3 Obtain the necessary authorizations to start the PROJECT operation, in accordance with the provisions of the General Mining Law and other applicable regulations.

SIXTH CLAUSE: MINIMUM INVESTMENT COMMITMENT


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6.1 For the purposes of executing the MINIMUM INVESTMENT COMMITMENT, creditable

investments shall mean those made by the ACQUIRING PARTY in acquisitions or services, effectively disbursed, paid to the supplier, constructor and/or executor and registered in its accounting books, in the following items :

a. PROJECT prospecting and exploration.

b. Technical, social, environmental and/or financial studies, including metallurgical

tests for the PROJECT. c. Construction of works and acquisition of machinery and equipment for mining

exploration and development, as well as for construction of mining and civil infrastructure works such as roads, bridges, docks, storage facilities and others, related to the PROJECT.

d. Construction of a plant or similar facilities for mineral treatment. e. Remediation of environmental damage caused by exploration and exploitation

activities, as well as environmental guarantees and other costs related to environment conservation, within the CONTRACT scope.

f. Insurance, freight, customs duties and all taxes paid by the ACQUIRING PARTY in

compliance with its investment commitment that are not recoverable as tax credit, related to the PROJECT.

g. Financial costs, including but not limited to commissions derived from the issuance of letters of guarantee, provided that they are related to the PROJECT development.

h. Social investment, within the PROJECT’S AREA OF DIRECT INFLUENCE, in

education, health, road infrastructure, sanitation, housing, rural electrification, irrigation and agricultural, cultural projects, sports and general sustainable development projects, provided that it has been carried out in coordination with the relevant authorities and it is for effective functional purposes. Likewise, the commitments under the Nineteenth Clause are included, where applicable. On the date of the CONTRACT signing, the PROJECT’S DIRECT AREA OF INFLUENCE is considered to be the Rural Communities of Michiquillay and La Encañada.

i. Payments for land (acquisition, lease, use, beneficial ownership, surface area),

rights of access, easements, mining use, validity rights, as well as any other payment related to obtaining a right of similar nature for the PROJECT execution.

6.2 It is hereby put on record that the list under subparagraph 6.1 is merely for illustration

purposes but not limited thereto. In this regard, other investments will be considered a part of the creditable investments to execute the MINIMUM INVESTMENT COMMITMENT, as long as they qualify as such in accordance with generally accepted accounting principles, and as long as they are related and carried out in order to develop the PROJECT.

6.3 In no case shall the amounts paid as part of the TRANSFER PRICE be considered a creditable investment.

6.4 In order to prove the amount invested, the ACQUIRING PARTY shall submit on an annually basis a sworn statement on the investments made, which shall be endorsed by an internationally recognized firm of independent auditors registered in the Registry of Audit Companies and Financial Auditors (RESAF) of the General Comptroller’s Office or the entity that replaces it.


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For these purposes, ACTIVOS MINEROS shall provide the PURCHASER with a list of at least ten (10) companies registered in the RESAF, of which the ACQUIRING PARTY shall propose a minimum of three (3) firms, of which ACTIVOS MINEROS shall designate one.

6.5 The ACQUIRING PARTY’s proposal on the auditing firms shall be submitted to ACTIVOS MINEROS within sixty (60) days prior to expiration of the annual period to be audited. Otherwise, at the end of this period, ACTIVOS MINEROS will designate the auditing firm, without taking into account the proposals submitted by the ACQUIRING PARTY.

6.6 If ACTIVOS MINEROS does not designate the auditing firm within thirty (30) days of receiving the ACQUIRING PARTY’S proposal, the ACQUIRING PARTY may designate it from the list proposed to ACTIVOS MINEROS, the firm that will perform the audit.

6.7 The sworn statement, duly endorsed by the auditors, shall be submitted to ACTIVOS MINEROS within one hundred and twenty (120) days of the end of each annual period of the MINIMUM INVESTMENT COMMITMENT.

6.8 The auditors’ fees shall be assumed by ACTIVOS MINEROS.

6.9 For the purposes of MIC execution, the ACQUIRING PARTY shall disburse and execute the following: 6.9.1 The first five (05) years, following the signing of this CONTRACT, a minimum

lump sum of US$20.000.000 (twenty million and 00/100 American dollars). During that period, the annual minimum investment shall be US$1.500.000 (one million five hundred thousand and 00/100 American dollars).

6.9.2 From year six (06) of the PRE-OPERATIONAL PERIOD until the year the STUDY is approved, a minimum annual investment of US$12.500.000 (twelve million five hundred thousand and 00/100 American dollars).

6.9.3 From the year following the STUDY approval until the end of the PRE-

OPERATIONAL PERIOD, the minimum annual investment will be of US$30.000.000 (thirty million and 00/100 American dollars), as set out in Section 7.3 of Clause Seven.

In the event that, during two (02) consecutive years, the minimum annual investment indicated in the preceding paragraphs is not executed, the difference shall be completed over the next two (02) years within the PRE-OPERATION PERIOD. Any amount executed in excess of the minimum lump sum established in subparagraph 6.9.1 or the annual minimum amounts established in subparagraphs 6.9.2 and 6.9.3 may be used by the ACQUIRING PARTY to prove compliance with the minimum investment established in the following years within the PRE-OPERATION PERIOD.

6.10 In case of extending the PRE-OPERATIONAL PERIOD in accordance with Clause Eight, the ACQUIRING PARTY shall keep making an investment -as part of the Minimum Investment Commitment- of US$30.000.000 (thirty million and 00/100 American dollars) by each year such period is extended.

SEVENTH CLAUSE: BANKABLE FEASIBILITY STUDY 7.1 The bankable feasibility study (the STUDY) shall be prepared in accordance with

international standards normally accepted by the mining industry, such as NI Standard 43-111 or the like, to accredit the PROJECT technical and financial viability as well as with those standards adopted by financial institutions, investors and regulatory authorities. Likewise, it shall include the topics included in but not limited to Annex 2.


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7.2 The STUDY will determine the total investment required for the PROJECT development (TOTAL PROJECT INVESTMENT) and an annual investment schedule. This STUDY shall meet at least one of the following conditions: a. Construction of a plant or similar facilities for mineral treatment, with a treatment

capacity not less than ____________ (___) daily tons of mineral; or.

b. A minimum total investment for PROJECT development equal to USD [TO BE DEFINED] ([TO BE DEFINED] with 00/100 U.S. Dollars).

7.3 In any case, after the STUDY is approved, the minimum annual investment until the end

of the PRE-OPERATION PERIOD will equal to US$30.000.000 (thirty million and 00/100 American dollars).

7.4 The STUDY shall be prepared by one or more international well-known engineering companies to be selected by the ACQUIRING PARTY. Likewise, it shall be accompanied by one or more financial letters of intent issued by one or more well-known national or international institutions that provide credit or investment funds, stating their interest in providing the necessary financing for the PROJECT execution. In the event the ACQUIRING PARTY, directly or through a related company as defined in subparagraph 20.4 of the Twentieth Clause, considers it has enough capital to self-finance the PROJECT development, it shall submit a Board of Director’s resolution or similar corporate act, including such decision, accompanied by its latest annual report and the past quarterly audited financial statements, which have been submitted to the relevant authority, and a report issued by an internationally well-known independent auditing firm registered in the Register of Audit Companies and Financial Auditors (RESAF) of the General Comptroller’s Office or an entity that replaces it, stating the ACQUIRING PARTY meets such self-financing conditions.

7.5 The ACQUIRING PARTY shall submit the STUDY during the PRE-OPERATION PERIOD. The STUDY submission does not exempt the ACQUIRING PARTY from compliance with the TRANSFER PRICE payment obligation.

7.6 PROINVERSION, in coordination with ACTIVOS MINEROS, will evaluate the STUDY and the documents submitted by the ACQUIRING PARTY within a period not exceeding ninety (90) calendar days of receipt, communicating its decision of having approved or not such documents. In case the STUDY is not approved, all relevant objections should be indicated. In case no decision is made by PROINVERSIÓN once such period has elapsed, the STUDY will be deemed to have been approved.

7.7 The STUDY will be approved, after the relevant evaluation, if: a. It meets the international standards referred to in subparagraph 7.1 of the Seventh

Clause;

b. It includes the topics contained in Annex 2; c. It meets any of the two conditions indicated in subparagraph 7.2; and, d. It is accompanied by one or more financial letters of intent from internationally well-

known companies that provide credit or investment funds or the Board of Director’s resolution or similar corporate act, stating the ACQUIRING PARTY’S decision to self-finance the PROJECT development, as established in subparagraph 7.4.

7.8 Once the STUDY has been approved, the ACQUIRING PARTY will be considered

suitable to begin the PROJECT construction.

7.9 After the STUDY has been approved, it may be subject to improvements and modifications, before implementing the PROJECT, provided that compliance with the


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conditions established in this clause is not affected. Such improvements and modifications will be previously communicated to PROINVERSIÓN.

7.10 If PROINVERSION does not approve the STUDY, the ACQUIRING PARTY will have no more than ninety (90) additional calendar days from the notice of such disapproval, with the relevant objections, to restate it and resolve the objections communicated by PROINVERSION. PROINVERSION, in coordination with ACTIVOS MINEROS, will evaluate the restated STUDY within a period no greater than thirty (30) calendar days from the date of receipt thereof. In case no decision is made by PROINVERSION once the term has elapsed, the STUDY shall be deemed to have been approved.

EIGHTH CLAUSE: PRE-OPERATION PERIOD EXTENSION The ACQUIRING PARTY may extend the PRE-OPERATION PERIOD indicated in the Fifth Clause up to for three (03) additional years. For this purpose, it shall submit to ACTIVOS MINEROS a written statement with a copy to PROINVERSION on the need to extend the term of the PRE-OPERATION PERIOD thirty (30) days in advance of expiration of the relevant annual term. Such extension will automatically apply, without detriment to the review PROINVERSION may make of the submitted supporting documents. NINTH CLAUSE: ACQUIRING PARTY’S TERMINATION POWER 9.1 During the PRE-OPERATION PERIOD, the ACQUIRING PARTY shall be entitled to

terminate the CONTRACT, without expression of cause, being exempted from the obligation to continue with the PROJECT implementation.

9.2 The exercise by the ACQUIRING PARTY of the power indicated in subparagraph 9.1, in accordance with conditions established in this clause, releases it from the date of termination, to continue executing the obligations arising from the CONTRACT. 9.3 Notwithstanding the foregoing and even when the ACQUIRING PARTY has

exercised the power indicated in subparagraph 9.1, the ACQUIRING PARTY shall keep all responsibility for the activities carried out during the CONTRACT term until the date of termination, especially but not limited to topics related to environment, occupational health and safety at work and occupational safety and health and mining hygiene, administrative matters, civil liability and contractual, and other topics, according to the current legal regulations.

9.4 For the ACQUIRING PARTY to exercise the power indicated in subparagraph 9.1 of the

Ninth Clause, it shall notify ACTIVOS MINEROS, through a notary certified notice, with a copy notice to PROINVERSION. Such notice shall be sent not less than thirty (30) calendar days before the effective date of termination, and only if compliance with the conditions indicated in subparagraph 9.5 of the Ninth Clause is verified. This notice shall be accompanied by the proof of payment to ACTIVOS MINEROS of all amounts indicated in subparagraph 4.1 of the Fourth Clause; otherwise the notice shall be deemed to be not submitted.

9.5 The ACQUIRING PARTY’s power to terminate the CONTRACT, during the first five (05) years of the PRE-OPERATION PERIOD, is conditional upon compliance with the following conditions: a. The ACQUIRING PARTY pays the TRANSFER PRICE BALANCE, referred to in

subparagraph 4.1.1. of the Fourth Clause. b. The ACQUIRING PARTY pays to ACTIVOS MINEROS the amount not invested

with respect to the USD US$20.000.000 (twenty million and 00/100 American dollars) of the MIC related to the five (5) year period, which runs from the date of CONTRACT signing, referred to in subparagraph 6.9.1 of the Sixth Clause.


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c. The ACQUIRING PARTY complies with providing ACTIVOS MINEROS with the assets referred to in subparagraph 9.8 of the Ninth Clause.

d. The ACQUIRING PARTY pays or provides the bank letter of guarantee for the

amount determined in the environmental audit, referred to in subparagraph 15.9 of the Fifteen Clause.

9.6 As a result of the CONTRACT termination by the ACQUIRING PARTY, as per the

power indicated in subparagraph 9.1: (i) ACTIVOS MINEROS will immediately hold back the ownership of the ASSETS,

without the need of any additional act, and the ACQUIRING PARTY shall return them in the condition they were provided, except for the natural wear and tear, due to the time and use for exploration activities;

(ii) The ACQUIRING PARTY shall return the assets indicated in subparagraph 9.8 of the Ninth Clause to ACTIVOS MINEROS; and,

(iii) All amounts invested, paid or spent by the ACQUIRING PARTY in executing the

CONTRACT shall be in favor of those who have received them, and the ACQUIRING PARTY shall not have the right to file any claim in connection therewith, to any third party, PROINVERSION, or ACTIVOS MINEROS.

9.7 The ACQUIRING PARTY, within a period not exceeding ninety (90) days from the

termination date, shall remove all equipment, machinery, materials and other mobile or removable items used in the works performed, except for those which ACTIVOS MINEROS and/or the relevant authorities authorize and/or require to be maintained or installed to remedy any environmental impacts caused and to comply with its environmental obligations in accordance with current legal regulations.

9.8 Likewise, the ACQUIRING PARTY will provide ACTIVOS MINEROS, before the date of termination, free of charge for PROINVERSION or ACTIVOS MINEROS, with the ASSETS received as well as with the following assets with respect to the PROJECT: a. All the studies and results of explorations that it would have been carried out during

the PRE-OPERATION PERIOD, including but not limited to all analytical, non-analytical, interpretative, geological, geophysical, geometallurgical and metallurgical reports, as well as feasibility or pre-feasibility studies;

b. Fixed facilities installed in CONCESSION areas that cannot be removed without destroying or affecting the safety of mining CONCESSIONS, their integral and ancillary parts;

c. All drill core samples, sample rejections, petrographic sections and laboratory analysis certificates;

d. Topographic and cadastral drawings, photos of the areas and the like; e. Any other technical, factual document(s), record(s) or study/studies derived from

the PROJECT held by the ACQUIRING PARTY.

9.9 Once the CONTRACT has been completed and after the provisions of this clause have been complied with, PROINVERSION will proceed to return the guarantee indicated in the Twelfth Clause.

9.10 The ACQUIRING PARTY’s power to terminate the CONTRACT, as of the sixth year of the PRE-OPERATION PERIOD, is conditional upon compliance with the conditions indicated in the above subparagraphs, and the ACQUIRING PARTY shall pay the penalty referred to in subparagraph 11.5 of the Eleventh Clause.


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TENTH CLAUSE: NON-IMPUTABLE FACTS 10.1 If an act of God or force majeure occurs as per provisions of Article 1315 of the Code of

Civil Procedures or the like, in case of any change or supplement to the associated regulations, or any facts not directly attributable to the ACQUIRING PARTY’s negligence, pursuant to Article 1317 ° of the Code of Civil Procedures, all CONTRACT obligations directly affected by that event will be suspended if applicable.

10.2 An act of God, force majeure or facts not directly attributable to the ACQUIRING PARTY’s negligence, among others, shall mean the duly proven impossibility of carrying out the exploration work, experimental tests, research and construction and, in general, the PROJECT implementation in case of social unrest, local or regional opposition movements or the filing of judicial or administrative actions that stop or impede the execution thereof; likewise, such concepts include the denial of authorizations, permits, licenses, easements, rights of way, surface rights and any other rights that may be necessary to carry out exploration, development, construction and exploitation activities; unless any of the circumstances mentioned above derive from causes attributable to the ACQUIRING PARTY.

10.3 The suspension will be maintained while the aforementioned facts prevent the ACQUIRING PARTY from fulfilling the obligations that would have been affected by the facts indicated in this subparagraph.

10.4 In all cases, the ACQUIRING PARTY shall make reasonable efforts to carry out its obligations as soon as possible. Likewise, the ACQUIRING PARTY shall, at all times, continue carrying out the contractual obligations not affected by such reason, provided that the main purpose for which the CONTRACT was signed, in accordance with the Second Clause, may continue to be executed and it shall keep the guarantees indicated in the following Twelfth or Sixteenth Clause in force, as applicable.

10.5 Once the act of God, the force majeure or any of the events not directly attributable to the ACQUIRING PARTY’s negligence have occurred, if they affect the fulfillment of the obligations established in the CONTRACT, the ACQUIRING PARTY shall notify in writing the occurrence of such event or events to PROINVERSION with a copy to ACTIVOS MINEROS, within fifteen (15) calendar days following such occurrence. In that notice, the ACQUIRING PARTY shall specify the causal relationship between the event and the impossibility of fulfilling its obligations, as well as the aspects that would be affected.

10.6 PROINVERSION will answer in writing, accepting or not the reasons that support the cause, within thirty (30) days after receiving the aforementioned notice, without it being unjustifiably denied. Upon expiration of such period without any decision made by PROINVERSION, the reasons stated will be accepted.

10.7 In the event of any discrepancy with respect to the existence of an act of God, force majeure or facts not directly attributable to the ACQUIRING PARTY’s negligence, or regarding the causal relationship between the event and the impossibility of fulfilling the obligations, such discrepancy will be submitted to the dispute resolution mechanism provided in the Twenty-Fourth Clause.

10.8 The ACQUIRING PARTY shall immediately proceed to restart compliance with the contract obligations and conditions affected, after such cause or causes as well as those effects that prevent such compliance have disappeared, for which it shall give notice to PROINVERSION with a copy to ACTIVOS MINEROS, within fifteen (15) days following the disappearance of the cause and such effects. The PARTIES may collaborate with each other to overcome the existing circumstances.

10.9 The time of suspension, during which the effects of the act of God, force majeure or facts not directly attributable to the ACQUIRING PARTY’s negligence affect the fulfillment of the obligations, will be added to the term foreseen to comply with the


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affected obligations. In this case, within fifteen (15) days after receiving the request made by the ACQUIRING PARTY through a notary certified document, PROINVERSION shall issue a written decision on the term extension by means of a notary certified letter sent to the ACQUIRING PARTY. In the event the ACQUIRING PARTY is affected by an act of God, force majeure or facts not directly attributable to its negligence, preventing it him from completing its obligation after twelve (12) consecutive months counted from the moment any of these events occurred, the PARTIES, by mutual agreement, may decide to extend the suspension period up to an additional maximum term of twelve (12) months, signing the relevant Addendum. Upon expiration of such additional period, the CONTRACT will be terminated.

10.10 In case the CONTRACT is terminated for the reason expressed in this clause, the ACQUIRING PARTY will not make any of the payments referred to in subparagraph 9.5 a. and 9.5 b. of the Ninth Clause.

10.11 With respect to any of the obligations assumed by the ACQUIRING PARTY under the CONTRACT, the ACQUIRING PARTY’s bankruptcy, insolvency or illiquidity, any exchange rate variation, price variations of any product for any reason, increased interest rate, general variation of financial or market conditions in the territory of the Republic of Peru, free availability of amounts deposited or credited in bank accounts or other circumstances according to the Peruvian legislation are not considered to be a reason for an act of God or force majeure or a fact not attributable directly to the ACQUIRING PARTY’s negligence.

ELEVENTH CLAUSE: ACQUIRING PARTY’S NON-COMPLIANCE DURING THE PRE-OPERATION PERIOD 11.1 ACTIVOS MINEROS may terminate this CONTRACT and PROINVERSION may

execute the PERFORMANCE BOND in case the ACQUIRING PARTY: 11.1.1 Has not complied with paying any of the TRANSFER PRICE installments set

forth in subparagraph 4.1 of the Fourth Clause.

11.1.2 Has not complied with any of the disbursement obligations under the MINIMUM INVESTMENT COMMITMENT established in subparagraph 6.9 of the Sixth Clause, including, but not limited to, the obligations of disbursing the minimum amounts established in subparagraph 6.9.1, 6.9.2 and 6.9.3 of the Sixth Clause.

11.1.3 Has not renewed the PERFORMANCE BOND when expired, in accordance

with the provisions of this CONTRACT. 11.1.4 Has not completed all the works necessary to start the PROJECT operation

within the PRE-OPERATION PERIOD, including the extensions indicated in the Eighth Clause, if applicable, and has not exercised the power referred to in subparagraph 9.1 of the Ninth Clause.

11.2 Likewise, if the ACQUIRING PARTY does not comply with paying any of the amounts

set forth in the Fourth Clause within the period established therein, ACTIVOS MINEROS will require the payment of such sum to the ACQUIRING PARTY, who shall comply with that payment within two (2) business days of receipt of the request. Otherwise, the PERFORMANCE BOND will be immediately executed and ACTIVOS MINEROS will terminate this CONTRACT.

11.3 In case the ACQUIRING PARTY has not fulfilled the conditions set forth in subparagraph 9.5 of the Ninth Clause until expiration of the term indicated in subparagraph 9.4 of the Ninth Clause, the PERFORMANCE BOND will be immediately executed and ACTIVOS MINEROS will resolve this CONTRACT.


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11.4 In the event the CONTRACT is terminated in accordance with the provisions of this clause: (i) the same effects set forth in subparagraph 9.6 of the Ninth Clause shall apply; (ii) the ACQUIRING PARTY shall deliver to ACTIVOS MINEROS the ASSETS and other property indicated in subparagraph 9.8 of the Ninth Clause; and, (iii) the provisions of subparagraph 15.9 under the Fifteen Clause shall apply.

11.5 In addition, and only when the termination takes place after the first five (05) years of this CONTRACT, the ACQUIRING PARTY shall pay to ACTIVOS MINEROS a penalty equivalent to the balance of the MINIMUM INVESTMENT COMMITMENT pending implementation for the duration of the PRE-OPERATIONAL PERIOD, applying as minimum annual investment the amount of US$12.500.000 (twelve million five hundred and 00/100 American dollars) per year in case the STUDY has not been approved or US$30.000.000 (thirty million and 00/100 American dollars) per year following the STUDY’s approval, for the remaining years of the PRE-OPERATIONAL PERIOD.

11.6 For greater clarity, in case of CONTRACT termination for any reason and at any time, except as provided in the Tenth Clause, the ACQUIRING PARTY shall comply with all provisions set forth in subparagraph 9.5 of the Ninth Clause.

TWELTH CLAUSE: PERFORMANCE BOND 12.1 The ACQUIRING PARTY, on the date of the CONTRACT signing, will deliver to

PROINVERSION a bond (hereinafter, the "PERFORMANCE BOND") in favor of PROINVERSIÓN with the characteristics indicated in the Fourteenth Clause, to guarantee compliance with all the obligations established herein, including but not limited to payment of the TRANSFER PRICE and execution of the MINIMUM INVESTMENT COMMITMENT. The bond will be issued for an amount equal to [*]% of the MINIMUM INVESTMENT COMMITMENT. 12.1.1 Such PERFORMANCE BOND may be annually replaced in a diminished

manner in the investment executed and credited as indicated in the Sixth Clause. However, in no case may the bond amount be less than USD ________ (_________ with ___ / 100 U. S. Dollars).

12.1.2 In case the PERFORMANCE BOND is executed by PROINVERSION as indicated in the Eleventh Clause, and the CONTRACT is not terminated, the ACQUIRING PARTY shall reinstate this PERFORMANCE BOND, under the same terms as set forth in this clause within the five (05) days following the bond execution.

THIRTEENTH CLAUSE: CONTRACT SUPERVISION For the purposes of the CONTRACT, ACTIVOS MINEROS or the entity designated by PROINVERSION, hereinafter referred to as the SUPERVISOR, assumes the supervision tasks regarding the commitments assumed by the ACQUIRING PARTY. This designation shall be communicated to the ACQUIRING PARTY. FOURTEENTH CLAUSE: GUARANTEES 14.1 The guarantees referred to in the Twelfth Clause shall be irrevocable, unconditional,

joint and several, automatic letters of guarantee issued in favor of PROINVERSION without benefit of excussion and annually renewable for the term indicated in such clauses.

14.2 The guarantees delivered by the ACQUIRING PARTY may be replaced at any time by other guarantees issued by one of the bank entities indicated in Annex 2 to the SPECIFICATIONS, and the terms and conditions set forth in the preceding paragraph shall be complied with.


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14.3 The guarantees referred to in the Twelfth Clause and Sixteenth Clause may be executed by PROINVERSION in the cases of non-compliance foreseen in this CONTRACT, applying the provisions of subparagraph 27.3 of the Twenty-Fourth Clause.

14.4 The guarantees will be executed within the deadlines and in accordance with the procedures established in the clauses hereof. In cases in which a specific procedure has not been foreseen, in order to execute the guarantees, PROINVERSION will require the ACQUIRING PARTY to fulfill the obligation, clearly specifying the noncompliance nature and amount and establishing a period of remedy no greater than ninety (90) days or less than fifteen (15) days, depending on the nature of the noncompliance. Upon expiration of that period without the ACQUIRING PARTY having remedied the non-compliance, the guarantee will be executed.

CLAUSE FIFTEENTH ENVIRONMENTAL COMMITMENTS AND OBLIGATIONS OF THE ACQUIRING PARTY 15.1 The ACQUIRING PARTY declares that it is familiar with the existing legislation on

environmental control and protection applicable to the mining industry and that it is aware that -according to the legal regulations- for carrying out exploration, development, exploitation and beneficiation activities it shall obtain the corresponding approvals, authorizations, permits and licenses from the competent authorities, committing itself to get them in order to develop its activities.

15.2 Upon execution of this CONTRACT, the ACQUIRING PARTY is bound by the environmental obligations it assumes in its capacity as owner of the CONCESSIONS and ASSETS, according to the current legal regulations. It also assumes to:

a. Mitigate and control site clearings, effluents, tailings, waste, emissions and other impacts generated by the exploration, development, exploitation and beneficiation activities developed by the ACQUIRING PARTY regarding the CONCESSIONS and ASSETS, in accordance with the current legislation.

b. Remediate the environmental impacts generated by the mining activities carried out by the ACQUIRING PARTY regarding the CONCESSIONS and ASSETS, in accordance with the applicable legislation.

c. Claims by third parties concerning environmental damages attributable to the mining activities carried out by the ACQUIRING PARTY regarding the CONCESSIONS and ASSETS, in accordance with the current legislation, for up to 02 (two) years after the execution of such activities in the event this CONTRACT is terminated.

15.3 This obligation will remain even after the ACQUIRING PARTY meets the MINIMUM

INVESTMENT COMMITMENT. In the case of an assignment of rights or assignment of contractual position, the ACQUIRING PARTY will take the corresponding measures to make sure this obligation is fulfilled.

15.4 Non-compliance with the environmental obligations of the ACQUIRING PARTY in its capacity as owner of the CONCESSION and ASSETS shall be subject to the provisions established in the applicable legal regulations.

15.5 Within one hundred and eighty (180) days after the execution of this CONTRACT, one environmental audit firm from the list of environmental audit firms registered in the Ministry of Energy and Mines (hereinafter, “ENVIRONMENTAL AUDITORS”) shall carry out a survey to determine the environmental situation in the area where the CONCESSIONS and ASSETS are located on the date the CONTRACT is signed. If the audit determines the existence of environmental damages -and the ACQUIRING PARTY has not provided for the remediation of these damages in the exploration, development, exploitation and beneficiation activities of the CONCESSIONS or during


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the project development- ACTIVOS MINEROS, its successor or substitute shall assume the remediation of these damages within a reasonable time frame according to their nature and pursuant to the applicable legal regulations.

15.6 The ENVIRONMENTAL AUDITORS will be selected by ACTIVOS MINEROS from at least three (03) of the firms proposed by the ACQUIRING PARTY from the list provided by ACTIVOS MINEROS, within ninety (90) days following the signing of the CONTRACT. If the ACQUIRING PARTY does not submit its proposal within that period of time, ACTIVOS MINEROS will appoint the auditors. If ACTIVOS MINEROS fails to appoint the audit firm within fifteen (15) days after receiving the ACQUIRING PARTY’s proposal, the ACQUIRING PARTY may choose the firm that will be in charge of the audit from the list proposed to ACTIVOS MINEROS.

15.7 ACTIVOS MINEROS will deliver a copy of the environmental audit to the ACQUIRING PARTY. The fees for the ENVIRONMENTAL AUDITORS shall be borne by ACTIVOS MINEROS.

15.8 Within one hundred and eighty (180) days following the termination of the CONTRACT, an ENVIRONMENTAL AUDIT firm shall survey the environmental impact of the exploration, development, construction and exploitation activities related to the project and carried out by the ACQUIRING PARTY.

15.9 The survey shall compare the environmental conditions in the area of the CONCESSIONS and ASSETS determined in the audit referred to in Section 15.6 of this Clause, with the environmental situation at the time of this audit. In the case environmental damages that were not present in the initial environmental audit are found, the cost to remediate the damages attributable to the ACQUIRING PARTY shall be determined. In this case, the ACQUIRING PARTY shall either: i) pay to ACTIVOS MINEROS the amount determined by the environmental audit in US dollars to use it to remediate the corresponding environmental damages; or ii) carry out the environmental remediation of the damages determined by the environmental audit according to the current legal regulations, and shall deliver ACTIVOS MINEROS a letter bank deposit for the amount determined by the environmental audit, with the characteristics indicated in Section 14.1 of Clause Fourteen, according to the format provided, which shall remain valid until the environmental remediation is completed, after which it shall be returned.

15.10 The payment mentioned in Section i) of section 15.9 of this Clause or the delivery of the letter bank deposit indicated in Section ii) of section 15.9 of this Clause shall be made within fifteen (15) days following the notification sent by ACTIVOS MINEROS. In case of non-compliance, the PERFORMANCE BOND will be implemented or corresponding legal actions will be taken, as appropriate.

15.11 The ENVIRONMENTAL AUDITORS will also be selected by ACTIVOS MINEROS from a minimum of three (03) firms proposed by the ACQUIRING PARTY from the list provided in writing by ACTIVOS MINEROS, upon termination of the CONTRACT. If the ACQUIRING PARTY fails to submit its proposal within five (5) business days following the date on which ACTIVOS MINEROS provided the list, ACTIVOS MINEROS will appoint, from the list provided, the ENVIRONMENTAL AUDIT firm. If ACTIVOS MINEROS fails to appoint the ENVIRONMENTAL AUDIT firm within fifteen (15) days after receiving the ACQUIRING PARTY’s proposal, the ACQUIRING PARTY may appoint the firm that will be in charge of the audit from the list proposed to ACTIVOS MINEROS

15.12 ACTIVOS MINEROS will deliver a copy of the environmental audit to the ACQUIRING PARTY. The fees for the ENVIRONMENTAL AUDITORS shall be borne by ACTIVOS MINEROS.

15.13 In case the ACQUIRING PARTY decides to make use of the resolution of termination indicated in Ninth Clause, the environmental audit referred to in Section 18.9 of this


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Clause will be carried out not later than one hundred and eighty (180) days after receiving the notarized communication indicated in Section 9.4 of NINTH CLAUSE: .

SIXTEENTH CLAUSE: REPRESENTATIONS AND OBLIGATIONS OF ACTIVOS MINEROS 16.1 ACTIVOS MINEROS represents and guarantees that on the date the CONTRACT is

signed:

a. It is a state-owned company duly registered and existing under the Peruvian legislation and it is duly authorized and empowered to assume the obligations agreed on the CONTRACT.

b. It is the sole owner of the CONCESSIONS, which have been duly registered, and are valid and free of liens and encumbrances.

c. It is the owner of the ASSETS, which are free of encumbrances or limitations of any kind limiting or affecting the ASSETS or their free availability. Consequently, ACTIVOS MINEROS ensures the validity of the asset titles against any pretension of third parties associated with situations before the execution of the CONTRACT or situations that have not been disclosed in the above mentioned Data Room.

d. It has carried out the arrangements and coordination with PROINVERSIÓN for -as provided in Article 2° of Executive Order N° 25570, amended by Article 6° of Law N° 26438- the issuance of Supreme Decree N° ______, which grants the ACQUIRING PARTY the guarantee of the Peruvian Government to support the obligations, declarations and guarantees of ACTIVOS MINEROS, its successors or assignees, as set out in the CONTRACT. To this end, the Peruvian Government and the ACQUIRING PARTY signed the corresponding Guarantee Contract on the date this CONTRACT was executed.

e. The signing of the CONTRACT and execution of the actions adopted therein are within its authority and are in compliance with the laws and other applicable provisions under the Peruvian legislation. ACTIVOS MINEROS or PROINVERSIÓN are not required to perform additional actions or procedures to authorize the CONTRACT or meet the obligations assumed therein. The CONTRACT has been duly and validly signed by ACTIVOS MINEROS and it constitutes a valid and binding obligation of this company.

f. On the date of execution of this CONTRACT, there are no other requirements imposed by the Peruvian legal system or any other country authority, or by any agreement or contract entered into by the State with third parties, or that may be applicable as a result of the identity or specific nature of ACTIVOS MINEROS, other than the consents foreseen in the CONTRACT, which might limit or prevent its execution.

g. The CONTRACT was executed in accordance with the legal framework in force. Therefore, it does not violate, comes into conflict or breaches such provisions. Neither the signing of the CONTRACT by ACTIVOS MINEROS nor the compliance with the obligations foreseen constitute a violation of any of the provisions contained in the Peruvian legislation, the articles of incorporation or the standards applicable to ACTIVOS MINEROS or of any decision, order, mandate or legal requirement given by a competent authority applicable to ACTIVOS MINEROS or the Peruvian government.

h. It is the sole owner of the information contained in the Data Room concerning the PROJECT and there are no copyrights in favor of third parties over such information.

i. There are no current actions, lawsuits, arbitrations or other legal proceedings nor judicial rulings or decisions of any kind -including administrative decisions not


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implemented against ACTIVOS MINEROS, PROINVERSIÓN or the Peruvian government- intended to forbid or somehow hamper or limit the execution of this CONTRACT or compliance with the commitments or obligations foreseen in this CONTRACT, except as reported in the Data Room during the Public Bid.

j. The CONCESSIONS affected by this transfer do not have legal grounds that could affect their validity.

k. The payment of the operational rights of the CONCESSIONS covered by this CONTRACT has been made until 2017.

l. It will be responsible for the remediation of the environmental impacts generated by the exploration and exploitation activities in the CONCESSIONS and ASSETS attributable to ACTIVOS MINEROS and its predecessors, as well as for the environmental liabilities existing on the date of signing the CONTRACT and claims made by third parties regarding such liabilities. Likewise, as set out in Section 1.6 of Clause One, it assumes the remediation of the liabilities and environmental damages resulting from the PREVIOUS TRANSFER CONTRACT.

Without prejudice to this statement, the ACQUIRING PARTY may, after coordination with ACTIVOS MINEROS, assume the remediation of some of the environmental liabilities described herein. To that end, the environmental survey indicated in Section 15.5 of Fifteenth Clause must be updated.

m. Provided the ACQUIRING PARTY meets the requirements set out in the current

legal regulations, it may execute with the Peruvian Government a Guarantee Contract and/or Legal Stability Agreement.

16.2 ACTIVOS MINEROS makes a commitment with the ACQUIRING PARTY to do the

following:

a. Sign the Public Deed and other documents necessary to transfer the ASSETS and carry out the corresponding registration in the Public Records.

b. Exercise its best effort to help the ACQUIRING PARTY to obtain from the competent authorities the permits, licenses, rights of use, authorizations or other approvals required to comply with their obligations under this CONTRACT.

c. Exercise its best effort to help the ACQUIRING PARTY to obtain the intervention of the competent authorities, including the intervention of law enforcement agencies, if necessary, in case social unrest and local or regional opposition mobilizations take place.

d. Comply with the remediation obligations within its competence, according to the applicable legal regulations.

CLAUSE SEVENTEENTH: DECLARATIONS OF THE ACQUIRING PARTY 17.1 The ACQUIRING PARTY declares and guarantees that, on the date the CONTRACT is

signed:

a. It is a company duly incorporated and existing under the current legal framework. Likewise, it is duly authorized and capable of assuming the obligations resulting from the execution of the CONTRACT in all the jurisdictions in which such authorization is required due to the nature of its activities or due to the ownership, leasing or operation of its ASSETS.

b. It has fulfilled all the requirements necessary to formalize the CONTRACT and comply with the commitments foreseen herein.


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c. The execution of and compliance with the corresponding CONTRACT are considered within its scope of authority and have been duly authorized by the respective directories or similar entities.

d. They have fully complied with the acts and/or procedures required in the BIDDING TERMS AND CONDITIONS for its participation and direct or indirect execution of the CONTRACT, according to the conditions set out in such TERMS AND CONDITIONS.

e. It expressly, unconditionally and irrevocably waives its right to claim or exercise any privilege or diplomatic immunity, as well as to file any claim through diplomatic channels. It also waives any right to compensation or similar concerning any claim that could be presented by or against the Peruvian government, ACTIVOS MINEROS, PROINVERSIÓN, under the Peruvian legislation or any other legislation with regard to any of the obligations that correspond or might correspond under the CONTRACT.

f. The company has no legal impediment to executing contracts with the Peruvian government according to the current legal framework. In that regard, the ACQUIRING PARTY declares that it has no impediment to executing agreements, as set out in Article 1366° of the Civil Code and that it has not been imposed administrative sanctions that temporarily or permanently disqualified it from the exercise of its rights to enter into agreements with the State.

g. There are no current actions, judicial rulings, arbitrations or other legal proceedings or rulings or resolutions not implemented against the ACQUIRING PARTY intended to forbid or somehow hamper or limit the compliance with the commitments or obligations foreseen in this CONTRACT.

h. There are no judicial or arbitral proceedings pending in which it has been sued by ACTIVOS MINEROS or the Peruvian government, neither has it been notified through a regular channel about the start of a judicial or arbitral proceeding in which it is being sued by ACTIVOS MINEROS or the Peruvian government.

i. It has achieved the condition of ACQUIRING PARTY, directly or indirectly, as a

result of the BIDDING procedure, as set out in this CONTRACT. The bidding procedure has considered and assessed its compliance with the prequalification requirements maintained to this date, as set out in the CONTRACT and the TERMS AND CONDITIONS.

j. The obligations assumed under the CONTRACT are not subject to the provision or conduct of ACTIVOS MINEROS or PROINVERSIÓN, beyond what has been expressly provided for in the CONTRACT.

k. It has carried out preliminary studies about the geological characteristics of the CONCESSIONS, and in that regard, it assumes the risk of the investments it makes with respect to the existing resources and reserves, without prejudice to exercise the authority set out in section 9.1 of ninth clause: .

l. It is aware of the environmental situation of the area of CONCESSIONS and ASSETS, based on the information made available in the Data Room and the conclusions reached in the audit referred to in Section 15.6 of Fifteenth Clause .

17.2 If it is determined that these statements do not reflect the truth on the date the CONTRACT is signed, the guarantees indicated in Clause Twelve may be enforced, as appropriate, and the CONTRACT may be terminated.

EIGHTEENTH CLAUSE: ADDITIONAL OBLIGATIONS OF THE ACQUIRING PARTY 18.1 The ACQUIRING PARTY commits itself to:


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18.1.1 Maintain directly or indirectly the prequalification requirements, in accordance with the

conditions set out in the TERMS AND CONDITIONS. 18.1.2 Maintain the ownership of the CONCESSIONS, unless previously authorized by

PROINVERSIÓN to do otherwise. This authorization cannot be unreasonably denied. In that regard, the ACQUIRING PARTY -without the previous written consent of PROINVERSION- cannot:

a) Transfer the ownership of the CONCESSIONS, portions, aliquots or undivided

shares. b) Divide or fraction the CONCESSIONS. c) Waive the CONCESSIONS. Without prejudice to the previous paragraph, in case the ACQUIRING PARTY had to transfer, assign or charge under any modality its rights on any of the CONCESSIONS in favor of a top-level international entity of the financial system or insurer in order to ensure and/or facilitate the funding of the PROJECT; PROINVERSIÓN must approve such transfer, encumbrance or assignment within thirty (30) days after the request is made; otherwise, it will be considered to have been approved. To this end, the documentation submitted to PROINVERSIÓN must record: i) the obligation of the future ACQUIRING PARTY, beneficiary or assignee -under an

eventual activation of the guarantees- to assume all the obligations of the ACQUIRING PARTY under the CONTRACT;

ii) the obligation of the future ACQUIRING PARTY, beneficiary or assignee -under an

eventual activation of the guarantees- to comply with the prequalification requirements set out in the TERMS AND CONDITIONS;

iii) provide PROINVERSIÓN all the documents and information reasonably necessary

to certify the future ACQUIRING PARTY, beneficiary or assignee meets the above-mentioned conditions; and,

iv) the financial entity or insurance company accepts the above mentioned conditions.

18.1.3 Deliver to ACTIVOS MINEROS a legalized copy of the payment slip corresponding to the operational rights or the document supporting such payment, not later than ten (10) business days before the expiration date, in accordance with the current legal framework. The ACQUIRING PARTY will assume the payment of the operational rights corresponding to 2018 onwards.

In the event the ACQUIRING PARTY fails to present the legalized copy of the payment slip or document supporting the payment, as set out in the previous paragraph, ACTIVOS MINEROS may pay the corresponding operational rights to avoid the cancellation of the CONCESSIONS. In that case, the ACQUIRING PARTY must reimburse to ACTIVOS MINEROS the payment made -plus the corresponding interests- within fifteen (15) business days after having been notified of the payment; otherwise, the guarantees referred to in Clause Twelve will be activated, as appropriate, and the CONTRACT terminated.

18.2 In case of non-compliance with the obligations set out in Sections 18.1 and 20.1, the guarantees indicated in Twelfth Clause will be activated, as appropriate, and the CONTRACT terminated.

18.3 The obligations indicated in sections 18.1 of this Clause and 20.1 of Clause Twenty,

shall remain until termination of this CONTRACT on any grounds.


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NINETEENTH CLAUSE: COMMITMENTS OF THE ACQUIRING PARTY 19.1 The ACQUIRING PARTY declares and accepts to be subject to strict compliance with the

Peruvian legislation, submitting to the sanctions imposed by them in case of default. It also declares to be familiar with the current legislation about the commitment prior to the activity, the sector-specific regulations on socio-environmental protection and participatory monitoring, and the guidelines of multilateral agencies on social aspects applicable to the mining activities and it commits itself to comply with them and apply them. Also, it expresses its commitment to:

a. Implement a social responsibility and social investment plan that allows the

promotion of an ongoing dialogue with the settlers of the DIRECT AREA OF INFLUENCE, aimed at facilitating a dynamic, correct and harmonious relationship between the ACQUIRING PARTY and the communities located in the DIRECT AREA OF INFLUENCE of the PROJECT, starting with a diagnosis of the social and economic situation of the DIRECT AREA OF INFLUENCE.

b. Carry out production activities in the context of a policy that seeks excellence in compliance with current national and international social and environmental standards, favoring the preservation of the environment, flora, fauna and the proper management of local water resources, prioritizing the use of green technologies and adjusting to the standards approved by the national regulations. To that end, it must comply with the provisions of the current environmental regulations; obtain the permits, licenses and authorizations required for the development of its activities; and take as reference the Code of Conduct of the Mining, Petroleum and Energy Society of Peru.

c. Treat with respect the population, institutions, authorities, culture, human rights and local costumes, keeping a healthy relationship with the population of the DIRECT AREA OF INFLUENCE of the mining operation and its surroundings. Likewise, implement proper enforcement of a code of conduct in accordance with the national and international regulations in force.

d. Maintain a timely, transparent and opening dialogue with the community, regional and local authorities of the population from the DIRECT AREA OF INFLUENCE of the mining operation and its representative agencies, providing them information about the activities that it will carry out within the framework of its social responsibility plan and mining activities, as appropriate, establishing suitable communication channels to facilitate access to the information and dialogue.

e. Promote the generation of development opportunities beyond the mining activity with the population of the DIRECT AREA OF INFLUENCE.

f. Prioritize the use of water for human consumption, as provided in the framework

of the Environmental Impact Assessment (EIA) and other water surveys prepared by the ACQUIRING PARTY and subject to the availability of that resource.

g. Incorporate to its corporate social responsibility strategy the intervention with programs to support vulnerable populations (early childhood and the elderly), prepared according to the current government policy.

h. Promote, integrate and harmonize mining development with other local economic

activities -such as agricultural and livestock activities or others - fostering social and rural development.


Page 22 of 32

i. Promote, preferably, the use of local workforce, providing the training opportunities required. To that end, it will develop work training programs to enable the qualification of people from the communities located in the DIRECT AREA OF INFLUENCE of the PROJECT, in such a way they can be assessed for potential participation in the works required during the project execution. When the technical qualifications and experience are the same, priority will be given to the people living in the communities located in the DIRECT AREA OF INFLUENCE of the PROJECT.

j. Preferably, acquire local goods and services for the development of the mining activities and provide services to the personnel in reasonable conditions of quality, opportunity and price, creating suitable cooperation mechanisms. Local goods and services refer to the services provided by companies and people domiciled in Peru. Nevertheless, priority will be given to the companies or people domiciled in the DIRECT AREA OF INFLUENCE of the PROJECT that provide the same goods or services under the same conditions, in terms of quality and price, as the companies located outside the area of influence.

k. Promote and support the development of community projects in charge of female entrepreneurs to boost the creation of development opportunities for the mothers and women of the area.

l. Promote and support projects that involve the improvement of the education and health conditions of the DIRECT AREA OF INFLUENCE of the PROJECT in coordination and with the support of the government entities required for their implementation.

m. Based on the needs of the PROJECT set out in the STUDY, the relocation or

resettlement of the population located in the DIRECT AREA OF INFLUENCE of the PROJECT could be implemented, if necessary, following the international standards and guidelines established to that effect.

n. Promote with the population located in the DIRECT AREA OF INFLUENCE of the PROJECT the shared care of the environment, aimed at an honest and responsible coexistence with the environment.

19.2 The non-compliance with the commitments set out in this Clause is subject to the provisions of current legal standards.

TWENTIETH CLAUSE : ASSIGNMENT OF CONTRACTUAL POSITION 20.1 The ACQUIRING PARTY may not assign its contractual position or transfer its rights or

obligations arising from the CONTRACT to third parties without the previous written consent of PROINVERSIÓN or its authorized representative.

20.2 In the event PROINVERSIÓN authorizes the transfer to third parties, the corresponding CONTRACT shall expressly record that the third party assumes all the obligations assumed by the ACQUIRING PARTY under the CONTRACT.

20.3 The request of the ACQUIRING PARTY for total transfer of its rights and/or obligations under the CONTRACT or for the assignment of its contractual position cannot be unreasonably denied, as long as the assignment is made to:

a. A related company (the “Assignee”). This company does not necessarily have to

comply with the prequalification requirements set out in the TERMS AND CONDITIONS as long as a related company belonging to the economic group of the ACQUIRING PARTY meets such requirements and submits to PROINVERSIÓN, for qualification, all sworn statements and completed forms included in Annexes 3


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through 6 of the TERMS AND CONDITIONS. In this case, the ACQUIRING PARTY will be released from all the obligations and liabilities derived from the CONTRACT, and the assignee will assume full responsibility for them; or,

b. A non-related company that complies with the prequalification requirements set out in the TERMS AND CONDITIONS that submits to PROINVERSIÓN, for qualification, all the sworn statements and completed forms included in Annexes 3 through 6 of the TERMS AND CONDITIONS. In this case, the ACQUIRING PARTY will be released from all the obligations and liabilities derived from the CONTRACT, and the assignee will assume full responsibility for them.

20.4 A related company is any company that belongs to an economic group, according to the

definition set out in the TERMS AND CONDITIONS. The business links shall be verified by PROINVERSIÓN, at its sole discretion, by virtue of the documentation submitted by the ACQUIRING PARTY, and it must be confirmed by the official use of the corporate name in the business name of the assignee.

20.5 Effective control shall be understood according to the definition set out in the TERMS AND CONDITIONS.

20.6 It is expressly stated that, by signing the CONTRACT, the ACQUIRING PARTY gives its

conformity for ACTIVOS MINEROS to exercise the right to transfer, at any given time, any of the rights owned by the ACQUIRING PARTY, including its contractual position, to another entity, institution or agency that belongs to the Peruvian government.

20.7 The assignment of the contractual position will only be in effect upon receipt of notarized notification sent by PROINVERSIÓN to the ACQUIRING PARTY.

TWENTY-FIRST CLAUSE: TERMINATION OF THE CONTRACT 21.1 The CONTRACT will be terminated in the cases expressly foreseen in sections 4.2.12,

9.1, 11.1, 17.2, 18.2 and Clause Twenty-Nine.

The termination of the CONTRACT for the reasons foreseen in section 9.1 will be carried out according to the terms stipulated in ninth clause: . The termination of the CONTRACT by the grounds foreseen in Twenty-Ninth Clause will be according to the provisions of said clause.

21.2 ACTIVOS MINEROS may declare the CONTRACT void under the procedure of Article 1430° of the Civil Code, once any of the reasons foreseen in sections 4.2.12, 11.1, 17.2, or 18.2 takes place. To that end, sending a communication to ACTIVOS MINEROS indicating the contract has been terminated for the corresponding reasons will be enough. At that time, PROINVERSION will be able to enforce the corresponding guarantees.

21.3 The termination of the contract does not result in the refund of any of the payments,

contributions or investments made by the ACQUIRING PARTY under the CONTRACT. Upon termination, the ACQUIRING PARTY must proceed as set out in section 9.6 of ninth clause: and section 15.8 of Fifteenth Clause.

21.4 The termination of the CONTRACT does not exempt the ACQUIRING PARTY from its

environmental responsibility or any other responsibility generated by its activities during the duration of the CONTRACT, neither does it exempt it from any other obligations it may be responsible for according to the applicable legal regulations, which must be assumed according to such regulations.

21.5 In case of delay in compliance with any of the obligations of the ACQUIRING PARTY

assumed under this CONTRACT, the ACQUIRING PARTY will automatically incur in default, without need to meet any additional requirements, generating default interests at the highest rates allowed for entities outside the national financial system.


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TWENTY-SECOND CLAUSE : DOMICILE 22.1 For the purposes of CONTRACT execution, the PARTIES establish as their domiciles in

Peru the domiciles indicated in the introduction of the CONTRACT. 22.2 The communications, requirements and notifications sent by one party to the other will

be in effect from the moment they are known by the recipient. For the purposes of the CONTRACT, it will be understood that the communications, requirements and notifications are known by the recipient at the time they are received in its domicile.

22.3 The change of domicile of any of the PARTIES cannot oppose to the other if it has not

been informed by notarized letter at least five (05) calendar days before the date the domicile is changed. The changes of domicile will only be possible when the new domicile is located in the city of Lima, Peru.

TWENTY-THIRD CLAUSE : APPLICABLE LAW The CONTRACT will be governed and executed according to the laws of the Republic of Peru. TWENTY-FOURTH CLAUSE : DISPUTE SETTLEMENT 24.1 The PARTIES state their will to settle through direct negotiation all disputes or

uncertainties subject to arbitration with legal relevance that may arise from the interpretation, execution, compliance and any aspect regarding the existence, validity, efficiency or termination of the CONTRACT, within six months from the date one PARTY informs the other, in writing, about the existence of a dispute or uncertainty with legal relevance.

24.1.1 During the stage of direct negotiation before the beginning of a national arbitration, the

PARTIES may agree on the intervention of a neutral third party, called amiable compositeur, or a dispute resolution board. The amiable compositeur will be appointed directly by the PARTIES or delegated by the center or institution that administers alternative dispute resolution mechanisms, submitting to the provisions set out in Articles 69 to 78 of Supreme Decree N° 410-2015-EF. The amiable compositeur will propose a formula to solve the dispute, which -if partially or totally accepted by the PARTIES- will have the legal effects of a transaction and, as a result, will be considered res judicata and be fully enforceable.

24.1.2 Likewise, at the request of any of the PARTIES, the disputes may be submitted to a dispute resolution board, which will issue a binding and enforceable decision, unless otherwise agreed by the PARTIES, without prejudice to the ability to resort to arbitration. In case arbitration is requested, the decision reached by the dispute resolution board is considered as a precedent.

24.1.2.1 The dispute resolution board is comprised of one (01) or three (03) experts, who will be

appointed directly by the PARTIES or assigned by a Center or Institution that administers alternative dispute resolution mechanisms.

24.1.2.2 Without prejudice to the above, the dispute resolution board may be formed since the

beginning of the contractual execution in order to additionally perform the roles of answering questions and giving recommendations with respect to the issues and/or subjects requested by the PARTIES.

The provisions given with regard to the dispute resolution board will not be applicable when the dispute is referred to the international dispute resolution mechanism referred to in Law N° 28933, where the direct negotiation will be assumed by the Special Commission of the State Coordination and Response System for International Investment Disputes.


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24.2 If the PARTIES -within the time frame established for direct negotiation- fail to settle the

dispute or uncertainty that has arisen, the dispute or uncertainty must be defined as technical or non-technical, as the case may be.

24.2.1 If the PARTIES -within the time frame established for direct negotiation- fail to reach an

agreement in deciding whether the dispute or uncertainty that has arisen is a Technical or Non-Technical Controversy, or if the dispute has components of both a Technical and Non-Technical Controversy, such dispute or uncertainty must be considered a Non-Technical Controversy and be settled according to the corresponding procedure provided for in Section 24.2.2 of Twenty-Fourth Clause .

24.2.1 All Technical Controversies that cannot be directly solved by the PARTIES within the

time frame established for direct negotiation must be subject to arbitration in equity, pursuant to Section 3 of Article 57 of Legislative Decree N° 1071, through which the arbitrators will solve the dispute to the best of their knowledge and belief. The arbitrators may be national or foreign experts; however, in all cases they must have extensive experience in the area of the Technical Controversy and must have no conflict of interest with the PARTIES at the time and after they are appointed as arbitrators.

24.2.1.1 The Arbitration Board may request the PARTIES to provide the information it deems

necessary to solve the Technical Controversy, and -as a result- it may submit to the PARTIES a conciliation proposal, which may be accepted by them or not. The Arbitration Board may act upon the evidence and request the PARTIES or third parties the evidence it deems necessary to settle their claims.

24.2.1.2 The Arbitration Board shall prepare a preliminary decision that shall be notified to the

parties within thirty (30) days following to its installation, and the parties will have five (5) days to prepare and deliver to the Board their comments on said preliminary decision. The Arbitration Board must issue its final decision on the Technical Controversy within ten (10) days following the reception of comments of the PARTIES, after issuing its preliminary decision or upon expiration of the term to submit said comments, whichever occurs first. The procedure for the resolution of a Technical Controversy must be carried out in the city of Lima, Peru. Exceptionally, and due to the nature of a concrete case, the Arbitration Board will be transferred to another location only with the purpose to act upon the evidence, such as to carry out an expert appraisal, ocular inspection or any other evidence necessary to be tested in another location, not later than ten (10) days.

24.2.1.3 The members of the Arbitration Board must keep absolute reserve and maintain

confidentiality on the information made available to them due to their participation in the settlement of a Technical Controversy.

24.2.1.4 The controversy shall be settled through national arbitration, which will be administered

by the Arbitration Center of the Chamber of Commerce of Lima for all aspects not envisaged in this contract.

24.2.2 Non-Technical controversies shall be settled through arbitration of law, in accordance

with Sections 1 and 2 of Article 57 of Legislative Decree N°1071. In this procedure, the arbitrators shall settle the dispute according to the applicable Peruvian legislation. The arbitration of law may be local or international, according to the following:

24.2.2.1 When Non-Technical Controversies involve more than thirty million USD (US$ 30’000,000.00) or its equivalent in national currency, the controversies must be settled by international arbitration of law, through a procedure managed according to the Conciliation and Arbitration Rules of the International Center for Settlement of Investment Disputes (CIADI in Spanish), established in the Convention on the Settlement of Investment Disputes between States and Nationals of other States, approved by Peru through Legislative Resolution Nº 26210, to whose standards the PARTIES adhere.


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24.2.2.1.1 In order to process the procedures of the international arbitration of law, according to

the arbitration rules of CIADI, the Grantor -in representation of the State of the Republic of Peru- declares that the Concession Owner will be considered as “National of Another Contracting State” for being submitted to foreign control, as set out in subparagraph b) of Section 2 of Article 25° of the Convention on the Settlement of Investment Disputes between States and Nationals of other States, and the CONCESSIONAIRE accepts to be considered as such.

24.2.2.1.2 The arbitration shall be held in the city of Washington D.C., United States of America,

and will be conducted in Spanish. The arbitration award shall be made in accordance with the provisions of the arbitration regulations of the corresponding arbitration management institutions.

24.2.2.1.3 If for any reason CIADI refuses to register the arbitration promoted under this clause,

the PARTIES accept in advance to submit the controversy in the same terms indicated to the Arbitration Rules of UNCITRAL (United Nations Commission on International Trade Law).

24.2.2.1.4 Alternatively, the PARTIES may agree to submit the dispute to a different jurisdiction,

if so required. Such agreement must be recorded in writing.

24.2.2.2 Non-Technical Controversies involving the amount of thirty million USD (US$ 30’000,000.00) or less than that, or its equivalent in national currency, and controversies of law that do not have a quantifiable monetary value, will be settled by arbitration of law, and will be administered by the Center of Arbitration of the Chamber of Commerce of Lima, the Center for Dispute Analysis and Settlement – PUCP, the Arbitration Center of the Bar Association of Lima or the American Chamber of Commerce in Peru - AMCHAM. In the absence of agreement regarding the arbitration administration, the decision will be made by the PARTY that requested the arbitration.

24.2.2.2.1 The arbitration will be held in the city of Lima, Peru, and conducted in Spanish. The

corresponding arbitration award must be issued within one hundred and eighty (180) calendar day following the date on which the Arbitration Board was installed. Exceptionally, the award may be issued outside that period if the Board believes it is essential to act upon the evidence carrying out expert appraisals or ocular inspections outside the city where the arbitration procedure is being held, within a period of time previously agreed by the PARTIES.

24.2.3 Both for the Arbitration in Equity and the Arbitration of Law referred to in this Clause,

whether in their International or national modality, the following general provisions will be equally applied:

24.2.3.1 The Arbitration Board will be comprised of three (3) members. Each PARTY shall

appoint an arbitrator and the third arbitrator shall be appointed by agreement of the two (02) arbitrators appointed by the PARTIES; the third arbitrator shall act as President of the Arbitration Board.

24.2.3.2 If the two arbitrators do not agree on the appointment of the third arbitrator within thirty

(30) days following the date on which the second arbitrator is designated, the third arbitrator will be appointed by the arbitration center selected. On the other hand, in the case of international arbitration of law, the PARTIES may agree on the time frame they see fit, so that in case no agreement is reached regarding the appointment of the third arbitrator, the decision will be made by CIADI.

24.2.3.3 If one of the parties fails to appoint an arbitrator within sixty (60) days following the

reception of the corresponding request to do so, it will be considered that it has waived its right and the arbitrator shall be appointed by the national arbitration center at the request of the other party. On the other hand, in international arbitration of law, the


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PARTIES may agree on the time frame they see fit, so that in case one of the PARTIES fails to appoint an arbitrator, such arbitrator may be appointed by the corresponding center at the request of the other PARTY.

24.2.3.4 The arbitrators may, at their discretion, fill any gaps in the legislation or the Contract,

through the application of general principles of law or agreements, conventions and/or treaties to which the Republic of Peru is a signatory.

24.2.3.5 As set out in Section 81.2 of Article 81 of the Regulations of Legislative Decree N° 1224, the arbitrators shall allow the participation of the Regulator in the case of arbitration procedures dealing with decisions and issues related to the jurisdiction of such Regulator, except when they are dealing with controversies where the dispute settlement mechanisms and procedures referred to in Law Nº 28933 may be applied. This law establishes the State Coordination and Response System for International Investment Disputes, or those envisaged in international treaties by which the Peruvian government is bound.

24.2.3.6 The parties agree that the award issued by the Arbitration Board will be final and indisputable. In this regard, the PARTIES must consider it as a final ruling, with status as res judicata. Consequently, the PARTIES declare that the award will be binding, final and immediately enforceable, except in the cases strictly foreseen in Articles 62 and 63 of Legislative Decree N° 1071 and Articles 51 and 52 of the CIADI Convention or relevant standards, as the case may be.

24.2.3.7 During the development of the arbitration, the PARTIES shall continue with the execution of their contractual obligations, to the extent possible, including those that are subject to arbitration. If the subject of the arbitration is related to the compliance with the obligations guaranteed according to Clause 12, if applicable, the respective deadline shall be suspended and such guarantee may not be enforced by the reason that originated the arbitration, and must remain in effect throughout the arbitration procedure.

24.2.3.8 All expenses incurred in the resolution of a Technical or Non-Technical Controversy,

will be covered by the losing PARTY. The same rule applies in case the defendant or counterclaim defendant accepts or recognizes the claim of the plaintiff or counterclaimant. The expenses will also be covered by the plaintiff or counterclaimant who withdraws the claim. If the procedure ends without a pronouncement on the substance of the claims for cause of transaction or conciliation, the referred expenses shall be covered equally by the plaintiff and defendant. Also, in case the award partially favors the positions of the PARTIES, the Arbitration Board shall decide how said expenses will be distributed.

From the provisions of this clause are excluded costs and expenses, such as consultancy fees, internal costs or others, which will be charged individually to one PARTY.

24.2.3.9 The fees for the arbitrators will be paid by the PARTIES equally. 24.3 For the purposes of this Clause, the term PARTIES also includes PROINVERSIÓN,

with respect to the responsibilities assumed in this CONTRACT. TWENTY-FIFTH CLAUSE : EXPENSES AND TAXES 25.1 The expenses incurred in recording the minute as a public deed and its registration in

the Public Records shall be borne by the ACQUIRING PARTY, including one authenticated copy for ACTIVOS MINEROS and one for PROINVERSIÓN.

25.2 The ACQUIRING PARTY assumes the obligation to cover with its own resources the

value of any taxes which may be due by the execution of the CONTRACT.


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TWENTY-SIXTH CLAUSE: CONTRACT INTERPRETATION 26.1 The CONTRACT has been drafted in Spanish. Therefore, its interpretation shall be on

the basis of the Spanish version and pursuant to the laws of Peru. 26.2 The CONTRACT interpretation and what is not expressly regulated by it, will be

additionally governed by the following instruments, in the order indicated below, the same that will be inserted in the Public Deed generated by this minute.

a) The economic proposal of the ACQUIRING PARTY. b) The TERMS AND CONDITIONS integrated with the resolution of queries and their

amendments.

26.3 The titles of the clauses used are for illustrative and referential purposes. They shall not affect the interpretation of the CONTRACT.

26.4 All references to a clause, section or subparagraph refer to the corresponding clause,

section or subparagraph of the CONTRACT. References to a clause include all sections and subparagraphs in that clause and the references to a section include all its paragraphs and subparagraphs.

26.5 All references made to a day or days will be understood as calendar days, unless

otherwise indicated in the CONTRACT. 26.6 The amendments and clarifications to this CONTRACT, including those that might be

proposed by the ACQUIRING PARTY by the suggestion of financial institutions, shall only be agreed in writing and signed by representatives duly authorized by the PARTIES; they shall also comply with the corresponding requirements of the applicable legislation.

26.7 Unless a maximum period of time for exercising a right is specifically indicated, after

which such right will be considered to be lost, a delay in the execution of a right from one of the PARTIES does not mean it waives its right to exercise such right neither does it represent an impediment for the future exercise of that right.

TWENTY-SEVENTH CLAUSE: JOINT AND SEVERAL GUARANTEE OF THE ACQUIRING PARTY _____________, the Awardee/company related to the ACQUIRING PARTY that certified the prequalification requirements, will be jointly liable with the ACQUIRING PARTY for the obligations assumed by latter under this CONTRACT. Twenty-Fourth Clause will apply for resolution of conflicts among them arising from this CONTRACT. TWENTY-EIGHTH CLAUSE: MICHIQUILLAY SOCIAL FUND The parties declare that fifty percent (50%) of the payments corresponding to the TRANSFER PRICE will be transferred by PROINVERSIÓN in favor of the social fund called “Asociación Fondo Social Michiquillay” set up by means of a public deed dated 27 January 2009, as set out in Legislative Decree N° 996, which approves the regime applicable to the use of resources from private investment promotion processes in the execution of social programs and the regulations approved by Supreme Decree N° 082-2008-EF, as well as its modifying standards. Such fund will be channeled exclusively for the execution of sustainable development projects in the DIRECT AREA OF INFLUENCE of the PROJECT, which will be prioritized and implemented by the Michiquillay Social Fund.


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TWENTY-NINTH CLAUSE : ANTICORRUPTION CLAUSE 29.1 The ACQUIRING PARTY declares that neither it nor its shareholders, partners or

associated companies, or any of the corresponding directors, officers, employees or advisors, representatives or agents have paid, offered or tried to pay or offer nor will they try to pay or offer a payment or illegal commission to any of the authorities associated with the bid award, transfer or contract execution.

29.2. It is hereby expressly stated that in case it is determined that one of the natural or legal

persons mentioned in the paragraph above has been sentenced by agreed final judgment or has accepted and/or recognized the commission of any of the offences specified under Section IV of Chapter II of Title XVIII of the Criminal Code, or equivalent offences if committed in other countries, before a competent national or foreign authority, with regard to the execution of the CONTRACT or the bid award, the CONTRACT will be terminated without further formality and the ACQUIRING PARTY will pay a penalty equivalent to […], without prejudice to the execution of the outstanding guarantees by PROINVERSIÓN on the date of termination.

29.3 The termination of the CONTRACT on these grounds does not give rise to a right to

compensation in favor of the ACQUIRING PARTY for damages. 29.4 For determining the economic link referred to in Section 29.1, the provisions of Resolution

of SMV Nº 019-2015-SMV/01 shall be applied. Mr. Notary, kindly add any other provision under law and ensuring that the corresponding reports are submitted to the Public Records. Lima, _________

ACTIVOS MINEROS S.A.C.

THE ACQUIRING PARTY

PROINVERSIÓN THE AWARDEE and/or RELATED COMPANY THAT

CERTIFIED THE PREQUALIFICATION

REQUIREMENTS


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ANNEX 1

VALUATION OF CONCESSIONS AND SURFACE PROPERTIES The PARTIES expressly declare that only for the purposes of the provisions of Resolution N° 052-2004-SUNARP/SN and SUNARP Tribunal Resolution N° 037-2011-SUNARP-TR-T and for recording the ownership of the ASSETS indicated in Section 3.1, they have been valued for reference purposes, as indicated in Annex 1, in US$ 3,00 (three and 00/100 American dollars) per hectare, equivalent to the amount that each Mining Concession is obliged to pay as operational rights, as set out in Article 39 of the Single Revised Text of the General Mining Law. Such valuation does not affect the amount agreed in the Fourth Clause. CONCESSIONS:

CONCESSION HA. MINING REGISTRY AMOUNT (US$

1. Candelaria 96.0294 03546051Z08 288.0882

2. El Niño 80.0707 03000256X01 240.2121

3. Encañada 1 180.0463 03546051Z18 540.1389

4. Encañada 2 350.0930 03546051Z17 1050.279

5. Encañada 3 760.1794 03546051Z16 2280.5382

6. Encañada 4 350.0958 03546051Z15 1050.2874

7. Encañada 5 33.0091 03546051Z14 99.0273

8. Encañada 6 100.0278 03546051Z13 300.0834

9. Encañada 7 117.3910 03546051Z12 352.1730

10. Encañada 8 10.0024 03546051Z11 30.0072

11. Encañada 9 160.0487 03546051Z01 480.1461

12. Encañada 10 144.0463 03546051Z10 432.1389

13. Encañada 11 360.0627 03546051Z09 1080.1881

14. Encañada 12 250.0556 03546051Z07 750.1668

15. Encañada 13 500.1411 03546051Z06 1500.4233

16. Encañada 14 10.0024 03546051Z05 30.0072

17. Encañada 20 450.0964 03546051Z03 1350.2892

18. Mavila 100.0276 03546051Z02 300.0828

TOTAL: 4,051.4257 12154.2771

SURFACE PROPERTIES The surface properties indicated in subparagraph b. of section 3.1 are valued in US$ 4256.19 (four thousand two hundred and fifty-six and 19/100 American dollars), according to the information included in the last entry of the Registration Entry of each property. In this regard, surface properties are valued in:

PROPERTY HA. REGISTRATION ENTRY-PI

CAJAMARCA

AMOUNT (US$)

ENTRY IN THE PROPERTY REGISTRY

Football field 0.1875 02290161 1006.25 C0003

Wetland I 0.3050 02260103 304.24 C0003

Wetland II 0.3477 02260102 266.88 C0003

Wetland III 1.0000 02260100 23.63 C0003

Wetland IV 1.7180 02260101 112.88 C0003

Wetland V 0.1290 02260105 1503.25 C0003


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PROPERTY HA. REGISTRATION ENTRY-PI

CAJAMARCA

AMOUNT (US$)

ENTRY IN THE PROPERTY REGISTRY

Wetland VI 0.0270 02260104 875.00 C0003

Yanaquero 1.1500 02290225 164.06 C0003

TOTAL AREA: 4.8642 4256.19

The PARTIES expressly state that the valuations indicated in this Annex do not affect or modify in any way: (i) the compensation for transferring the assets owned by ACTIVOS MINEROS in favor of the ACQUIRING PARTY, as set out in the Fourth Clause of the CONTRACT, (ii) or any other provisions set out in the CONTRACT, limiting to detail, for the purposes of the provisions of Resolution N° 052-2004- SUNARP/SN and SUNARP Tribunal Resolution N° 037-2011-SUNARP-TR-T, the value of each mining concession and surface property, which were requested to be registered in the Registry of Mining Rights and transferred from ACTIVOS MINEROS to the ACQUIRING PARTY under the CONTRACT.


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ANNEX 2

CONTENT OF THE BANKABLE FEASIBILITY STUDY

The content of the Bankable Feasibility Study referred to in Section 7.1 of the CONTRACT, is the following:

I. Introduction

II. Executive summary

III. Mining and surface properties

IV. Geological resources

V. Water resources

VI. Mining

VII. Metallurgy

VIII. Ancillary and process facilities

IX. Tailings disposal

X. Power

XI. Access roads

XII. External facilities

XIII. Assessment and Environmental Management Plan

XIV. Technical comments

XV. Capital costs

XVI. Operating costs

XVII. Implementation plan

XVIII. Marketing

XIX. Financial assessment

All economic calculations presented as part of the STUDY shall be submitted in a digital file and in Excel format.

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