CONTRACT FOR CONSTRUCTION
BETWEEN
MINERA SAN XAVIER, S.A. de C.V.
AND
MEXTICA de MEXICO S. de R.L., de C.V.
DATED AS OF MARCH 3, 2004
TABLE OF CONTENTS
PAGE
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RECITALS........................................................................................ 1
ARTICLE I DEFINITIONS........................................................................... 2
ARTICLE II PERFORMANCE OF THE WORK.............................................................. 7
ARTICLE III OWNER'S RESPONSIBILITIES............................................................ 12
ARTICLE IV REPRESENTATIVES...................................................................... 13
ARTICLE V PROJECT SCHEDULE AND WORK COMPLETION.................................................. 14
ARTICLE VI COMPENSATION OF CONTRACTOR........................................................... 16
ARTICLE VII ADDITIONS, DELETIONS, AND CHANGES TO WORK........................................... 18
ARTICLE VIII LIABILITY AND INDEMNIFICATION...................................................... 21
ARTICLE IX INSURANCE AND BONDS.................................................................. 22
ARTICLE X TERMINATION OF CONTRACT AND OWNER'S RIGHT TO PERFORM CONTRACTOR'S OBLIGATIONS......... 23
ARTICLE XI ASSIGNMENT OF SUBCONTRACTORS......................................................... 25
ARTICLE XII CONFIDENTIAL INFORMATION............................................................ 26
ARTICLE XIII SUSPENSION OF THE WORK............................................................. 27
ARTICLE XIV TITLE TO THE WORK................................................................... 28
ARTICLE XV PATENTS AND COPYRIGHTS............................................................... 28
ARTICLE XVI ARBITRATION......................................................................... 29
ARTICLE XVII MISCELLANEOUS PROVISIONS........................................................... 29
EXHIBITS
Exhibit A Scope of Work
Exhibit B Division of Responsibilities (DOR)
Exhibit C Drawings and Specifications List
Exhibit D Performance Test
Exhibit E-l Mextica Labor Rates
Exhibit E-2 Lyntek Rate Sheet
Exhibit E-3 Construction Equipment Rates
Exhibit F Schedule
Exhibit G MSX Permit Conditions
Exhibit H MSX Parent Guarantee
Exhibit I Mextica Parent Guarantee
DESIGN/BUILD/INSTALL CONTRACT FOR
This agreement ("Contract") is entered into and effective as of the
10th day of December, 2003, by and between Minera San Xavier, S.A. de C.V., a
Mexican Corporation ("Owner"), and Mextica de Mexico S. de R.L., de C.V. a duly
organized and legally existing company under the laws of the United Mexican
States ("Contractor").
Recitals
Owner is constructing an open pit gold mine with related materials
handling and ore processing facilities at its Minera San Xavier project near San
Luis Potosi, Mexico ("Project"). Owner desires to have Contractor design,
procure or supply all equipment and material for, and install or construct
certain facilities or structures, more particularly described as the gold and
silver heap leach facility ("Facility"), in connection with the Project.
Contractor desires to undertake such design, procurement, supply
installation and construction so as to provide Owner with such Facility.
Agreement
In consideration of the mutual covenants and promises set forth herein,
the parties agree as follows:
ARTICLE I
DEFINITIONS
When used in this Contract, the following terms shall have the meanings
set forth in this Article:
1.1. "Affiliate" means any person, partnership, joint venture,
corporation or other form of enterprise which directly or indirectly controls,
is controlled by, or is under common control with a Owner or with the
Contractor, as applicable.
1.2. "Applicable Laws" shall mean all applicable federal, provincial,
state and local laws, ordinances, regulations and decrees including, without
limitation, environmental protection laws.
1.3. "Change Order" means a written order executed by Owner's
Representative defining and authorizing a change in the scope of the
Contractor's Work.
1.4. "Completion Date" means the date set forth in Section 5.1 by which
the Work shall be completed as adjusted from time to time in accordance with the
Contract.
1.5. "Construction Contract" means any agreement between Owner and any
Construction Contractor in relation to carrying out construction and
design/build activities forming part of the Project.
1.6. "Construction Contractors" mean those persons or entities,
(including Contractor) Owner proposes to contract with or has contracted with in
relation to the carrying out of construction and design/build activities forming
part of the Project.
1.7. "Construction Team" shall mean, collectively, Owner, and the
Engineer.
1.8. "Contract" means the Contract, all exhibits or addenda hereto, and
all drawings, specifications, and other documents incorporated by reference
herein, as the same may be amended in writing from time to time.
1.9. "Contract Price" means the aggregate amount invoiced by Contractor
for the Work performed, as described in Article VI.
1.10. "Contractor's Representative" means the person designated in
Section 4.3 hereof to receive notices on behalf of Contractor.
1.11. "Defective Work" means Work that is unsatisfactory, faulty or
deficient, or does not conform to this Contract, or does not meet the
requirements of any inspection, reference standard, test or approval referred to
in this Contract, or has been damaged prior to Owner becoming responsible for
protection thereof.
1.12. "Engineer" means any entity or individual other than Contractor
or its Subcontractors with which Owner has contracted on behalf of the Owner to
provide procurement, design, and other engineering or architectural services in
connection with the Project.
1.13. "Facility" means the gold and silver heap leach facility which is
the object of this Contract and intended to be the product of the Work, as
finally constructed.
1.14. "Liens" mean mechanic's and materialmen's liens and any other
liens, charges, security interests or other encumbrances which may cloud or
affect the Owner's title to the Work, the Facility, or the Project.
1.15. "Limited Notice to Proceed" means the agreement between the Owner
and Contractor, effective December 10, 2003, directing the Contractor to begin
the Work on a limited basis.
1.16. "Milestone Dates" are certain key events in the orderly
development of the Project as identified in Section 5.1.
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1.17. "Owner's Representative" shall mean the representative designated
from time to time by Owner as described in Article IV.
1.18. "Performance Test" means the mechanical performance test as
described in Exhibit D.
1.19. "Project" means Owner's development and construction of an open
pit gold mine, including related process facilities to extract gold and other
saleable minerals, with supporting ancillary facilities and infrastructure,
including design, procurement of equipment, construction, assembly, testing and
commissioning of the mine and related facilities.
1.20. "Project Schedule" means the schedule for completing the various
phases and facilities of the Project prepared by the Contractor and approved by
Owner, as it may from time to time be revised and updated.
1.21. "Project Work" means construction work performed by Construction
Contractors in furtherance of the Project.
1.22. "Representative" shall refer to the Contractor's Representative,
or to Owner's Representative, whichever may be applicable, as described in
Article IV.
1.23. "Scope of Work" means the description of expressly-described Work
set forth in Exhibit "A" hereto.
1.24. "Site" means the location of the Owner' planned mining, milling,
and related operations near San Luis Potosi, Mexico, as more particularly
described in the Specifications.
1.25. "Specifications" shall mean the physical, technical, and
performance requirements of the Owner, and the physical conditions and
constraints at the Site relevant or pertaining to the Facility to which
Contractor shall be subject and which Contractor shall fulfill in performance of
the Work.
1.26. "Subcontractor" shall mean any authorized party, not an employee
of Contractor, engaged by Contractor pursuant to Section 11.3 to perform or
assist in performing any portion of the Contractor's Work. Vendors or suppliers
of standard equipment and off-the-shelf items shall not be considered as
Subcontractors, and Contractor purchasing from such vendors and suppliers shall
be governed by Section 2.11.
1.27. "Substantially Complete" means that the Work has been completed,
in Owner's reasonable opinion, to the extent that the Facility is ready for use
or is being used for its intended purpose and the portion of the Work still not
completed will in no way delay work of other Construction Contractors.
1.28. "Work" means all duties of the Contractor expressly set forth in
this Contract including but not limited to the work set forth in the Scope of
Work, and any services reasonably inferred in
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order to carry out the Work expressly set forth herein, excluding (a) work to be
performed by the Engineer , and (b) construction, design/build or other Project
Work to be performed by Construction Contractors other than either Contractor or
its Subcontractors.
ARTICLE II
PERFORMANCE OF THE WORK
2.1. Contractor hereby agrees to perform the Work so as to produce a
functionally complete and operating Facility in accordance with the terms and
conditions contained in this Contract.
2.2. Contractual Relationship and Acknowledgements.
2.2.1. In all things undertaken by the parties under this
Contract, it is specifically understood and agreed that neither Contractor nor
any Subcontractor nor any of their employees, agents, or consultants shall be
considered or treated as an agent, employee, or servant of the Owner for any
purpose whatsoever, including worker's compensation. Contractor shall be, and
remain at all times during the term of this Contract, an independent contractor
and shall not, except as specifically authorized by this Contract or by Owner in
writing, make or purport to make commitments or representations of any kind on
behalf of the Owner. Contractor shall not have the authority to bind the Owner
to any contractual obligation or to any expenditure for any services, equipment
or other matter or thing, except as provide herein, without prior approval of
Owner in writing and shall, prior to the performance of any services or action
which will result or is likely to result in a claim for compensation against the
Owner by a third party, advise Owner of the possibility of the claim and all
details relating thereto and obtain Owner's direction in respect thereof.
2.2.2. Contractor shall be responsible for determining whether
or not it has sufficient information from Owner to perform the Work prior to
commencing the Work. Contractor shall notify Owner of any additional
information, data, or test results it considers it needs from Owner before
undertaking any portion of the Work to which such information applies.
2.2.3. Any work that may reasonably be inferred from the Scope
of Work as being required to produce the result specified in this Contract shall
be supplied or performed whether or not it is specifically called out herein.
2.2.4. Owner reserves the right to perform other work and to
let other contracts in connection with the Project Work. The Contractor shall
afford Owner and other Construction Contractors, reasonable opportunity for the
introduction and storage of their materials and the execution of their work, and
shall properly coordinate and connect its work with theirs. If any part of the
Work depends for proper execution or results upon the work of Owner, or of
another Construction Contractor, the Contractor shall visually inspect such work
and promptly report to Owner any observed defects in such work that render it
unsuitable for such proper execution and result. The Contractor's failure to so
inspect and report defects, that were reasonably detectable by prior to its
commencement of the affected portion of the Work shall constitute an acceptance
of
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Owner's and other Construction Contractor's work as fit and proper for the
execution of the Work. To ensure the proper execution of subsequent Work, the
Contractor shall examine work already in place and shall at once report to Owner
any discrepancy between the executed work and the drawings and specifications.
2.3. Representations and Warranties.
Contractor represents that:
2.3.1. Contractor is fully experienced and properly qualified,
equipped, organized, financed and licensed as necessary to perform the Work and
complete the Facility in accordance with (i) the terms and conditions of this
Contract, (ii) all Applicable Laws, (iii) all permits or approvals necessary to
construct the Facility, and (iv) all industry design and construction standards
and specifications applicable to facilities and operations of a nature and
extent comparable to the Facility, including but not limited to those laws and
standards set forth in the Scope of Work;
2.3.2. The Work shall be performed in a first class,
workmanlike manner in accordance with: the terms of this Contract; all
Applicable Laws relating to construction of the Facility; and all permits and
approvals required for construction of the Facility, including those obtained
for the Project in general which may pertain to or affect the Facility;
2.3.3. With respect to engineering design included in the
Work, the Work shall be in accordance with the highest quality design and
engineering practices and standards of professional engineers performing similar
services;
2.3.4. With respect to the construction services and other
Work (other than engineering design), the Work shall be in accordance with the
highest quality standards for qualified and experienced persons engaged in
providing such services in similar locations;
2.3.5. Material and equipment specified and used by Contractor
for the Work shall be in accordance with the specifications in Exhibit C_______
and, unless otherwise specified, shall be of first quality new materials and
workmanship, and shall be free from defects in workmanship or materials.
2.3.6. The Facility shall be fit for the purposes intended by
Owner, as specified by this Contract;
2.3.7. With respect to equipment or machinery purchased and
installed by Contractor, such equipment or machinery shall be installed in
accordance with the manufacturer's or supplier's instructions and
specifications.
2.4. Contractor acknowledges that the Owner has in good faith
endeavored to supply all information and data in its possession to Contractor to
aid Contractor in formulating the Work, has made all records and data in its
possession which was deemed relevant by the Owner or requested by Contractor
available to Contractor, and has allowed Contractor full access to the Site in
order for
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Contractor to familiarize itself with local conditions. Contractor acknowledges
that the Owner has made no representation as to plans, data, specifications or
conditions at the Site, except that it has in good faith attempted to disclose
to Contractor information actually known to it. Contractor acknowledges that it
has fully reviewed and understands all information supplied to it by the Owner,
that it has requested and received any additional information which it deems
necessary in order to commence the Work, that it has fully viewed the Site, and
that it has made an independent evaluation of such data and information and
based upon such independent evaluation, has determined to its own satisfaction
the scope of the Work, requirements to complete the Work, and Contractor's
qualifications to carry out the Work as warranted herein.
2.5. Covenants.
With the respect to its performance of the Work, Contractor covenants
and agrees as follows:
2.5.1. The Work shall be carried out by Contractor utilizing
Contractor's best care, skill and diligence, which shall in any event be as good
as the standards set forth in Sections 2.3.2, 2.3.3, 2.3.4, and 2.3.5.
2.5.2. The Work shall be carried out with a view to completing
the Project in the most expeditious and economical manner consistent with the
requirements and conditions set forth herein and the interests of the Owner.
2.5.3. The Contractor shall carry out its activities and
functions in a manner which allows completion of those activities and functions
consistent with the Project Schedule. Contractor shall cooperate with
Construction Manager in matters pertaining to the Project Schedule.
2.5.4. The Work shall be coordinated with activities being
carried out or planned by the Construction Team and other Construction
Contractors.
2.5.5. Contractor and its Subcontractors, their employees,
agents and invitees, shall strictly observe and comply with any and all
Applicable Laws bearing on the Work and the conduct of the Work. If Contractor
performs any work contrary to such Applicable Laws, it shall assume full
responsibility therefor and shall indemnify and save harmless the Owner from and
against any liabilities, expenses, fines, penalties or losses resulting
therefrom.
2.5.6. Contractor and its Subcontractors, their employees,
agents and invitees shall strictly observe and comply with any and all rules,
regulations and accident prevention programs promulgated by Owner for the safe,
orderly and efficient conduct of the Work at the Site including, but not limited
to the contractor safety, environmental and conduct requirements applicable to
the Work set forth in Exhibit G, MSX Permit Conditions attached hereto and
incorporated by this reference. Reference to "Contractor" in such requirements
shall mean Contractor and its Subcontractors and their employees, agents, and
invitees, and reference to "Company" shall mean Owner.
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2.6. Contractor represents and covenants that it has not and will not
accept commissions or allowances from, and that it will disclose, prior to their
involvement, any financial interest in persons (other than Owner) involved in or
seeking to become involved in the Project.
2.7. In performing the Work Contractor shall utilize key personnel
identified to and approved by Owner unless such personnel prove to be
unsatisfactory to Contractor or Owner. Contractor will promptly remove from the
Site and the Work any employee or agent who Owner reasonably deems
unsatisfactory. Contractor shall not remove any key personnel without the
written consent of Owner.
2.8. Contractor shall advise Owner of any errors or omissions in the
work of any Engineer any other Construction Contractor, or others it discovers
in the course of performing the Work and of any matters or things it discovers
that are likely to affect adversely the Facility, Project Budget, or Project
Schedule, or the Project.
2.9. No inspection, review, approval or advice undertaken by Engineer
or other Construction Contractors pursuant to any Construction Contract or
engineering contract by or on behalf of the Owner shall define or limit
Contractor's obligations under this Contract.
2.10. In the event the Work called for in this Contract necessitates
the sealing of drawings or other documents by a duly licensed engineer or other
professional, then Contractor and/or a sufficient number of individual engineers
or other professionals employed by Contractor on the Work shall be licensed as
necessary to seal drawings and documents.
2.11. All purchasing of equipment and/or materials to be imported into
Mexico, pursuant to the Scope of Work, shall be accomplished by purchase order
on Owner's forms. The purchase orders must specify that the invoices be
presented to the Contractor for payment on behalf of the Owner. The Contractor
will loan funds to the Owner for payments made under said purchase orders for
imported materials and equipment. The Owner will repay the Contractor the loaned
monies plus a fee of 10% within 15 days of presentation of the invoice to Owner
for the loan amount and the 10% fee. (IVA will be due on the 10% fee but not on
the loan repayment).
All purchasing of equipment and/or materials from Mexican suppliers
shall be accomplished by purchase order on Contractor's forms, and Contractor
shall obtain reimbursement for such materials and equipment pursuant to Article
VI, below. Specification of equipment and materials and selection of the vendor,
regardless of country origin, shall be in accordance with the Scope of
Work.2.12. During the execution of the Work the Contractor shall take all
necessary precautions to protect all workmanship, materials and equipment
furnished under this Contract (including workmanship, materials and equipment
furnished by Owner) from loss or damage, and shall protect the Project and
Facility from loss or damage of any sort which might result, either directly or
indirectly, from the Contractor's operations under this Contract. The means
which the Contractor provides for protecting the Owner' property shall be
subject to Owner's approval, but Owner's approval shall not relieve the
Contractor of any responsibility therefor.
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2.13. The Contractor shall not block any roads on the Site nor obstruct
access to any of Owner's equipment or the equipment of other Construction
Contractors without first obtaining Owner's approval.
2.14. Contractor shall at all times keep the Site free from
accumulation of waste materials and rubbish due to the Work. Promptly after
completing the Work, the Contractor shall remove all construction equipment from
the Site, remove all rubbish and waste material of any kind resulting from the
Work, dispose of said rubbish in a manner satisfactory to Owner, and place the
ground around the Facility in a condition satisfactory to Owner; and, if any
similar work is needed because of repairs, alterations, changes or corrections
which the Contractor subsequently makes on the Work or any portion thereof, the
Contractor shall perform same.
2.15. The Contractor's buildings and other forms of protection for
tools and materials at the Site will be permitted only at such places as Owner
shall designate.
2.16. The Contractor shall keep itself and Owner fully advised as to
all pertinent local and regional labor agreement practices, including any local
labor union contract negotiations occurring during the term of this Contract.
Contractor shall use its best efforts to resolve any labor disputes affecting
Contractor's performance hereunder, with due consideration for Owner's interest
hereunder and will consult with Owner in connection with any such labor dispute.
2.17. Owner reserves the right to use all of Site for its own purposes
in any manner it deems fit and proper, provided its use thereof does not
interfere unduly with the performance of the Work.
2.18. Contractor's Representative shall attend such scheduling
meetings, review meetings or other meetings as Owner reasonably requests.
2.19. If required by Owner, Contractor shall promptly, as directed,
either correct all Defective Work, whether or not fabricated, installed or
completed, or, if the Work has been rejected by Owner, remove it from the Site
and replace it with non defective Work. Contractor shall perform all costs of
removal, correction and reinstallation at the rates shown in Exhibit E, without
Contractor's Overhead and Fee.
2.20. If within twelve months after the Substantial Completion Date any
Work is found to be defective, Contractor shall promptly, in accordance with
Owner's written instructions, correct such Defective Work, The corrected or
replaced Work shall be subject to this Section for twelve months from the date
the correction or replacement is completed, but not to exceed (18) eighteen from
the Substantial Completion Date. Contractor shall perform all costs of removal,
correction and reinstallation of Defective Work at the rates shown in Exhibit E,
with out Contractor's Overhead and Fee.
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ARTICLE III
OWNER'S RESPONSIBILITIES
3.1. Owner shall:
3.1.1. Endeavor to provide Contractor with information
regarding its requirements in connection with the Facility and the Project and
shall supply Contractor with information in Owner's possession or coming into
its possession related to the Facility or Project, in each case to the extent
such information is relevant to Contractor's performance of the Work.
3.1.2. Furnish for the site of the Facility all necessary
surveys describing the physical characteristics, soil reports and subsurface
investigations, legal limitations, utility locations, and a legal description.
3.1.3. Furnish the site for erection and installation of the
Facility including work and storage areas reasonably needed by Contractor for
the erection of the Facility at the Site.
3.1.4. Secure and pay for necessary approvals, easements,
assessments and charges required for the construction, use or occupancy of
permanent structures or for permanent changes in existing facilities.
3.1.5. Furnish such legal services as may be necessary for
providing the items set forth in Section 3.1.4 and such auditing services as it
may require.
3.1.6. Provide any reviews, approvals, or directions required
in order for Contractor to perform the Work, provided that nothing contained
herein requires Owner to approve any matter or thing inconsistent with or
contrary to the Project or Work being completed as contemplated by this
Contract, the Project Budget and the Project Schedule, or the rights or
obligations of the Owner pursuant to any contract with a third party.
3.18 . Indemnify, defend, and hold harmless Contractor from
any liability, damages, penalties, or costs of any kind arising from hazardous
materials on site or brought to site by persons other than Contractor or its
Subcontractors.
3.2. Nothing in this Article shall affect Owner's right to add to,
delete from, or change the Work, or shall affect Owner's right on behalf of the
Owner to terminate the Contract, suspend the Work, or terminate or suspend the
Project.
3.3. No review or approval by Owner of any matter requested by
Contractor shall affect or limit the Contractor's responsibilities for
performance of the Work.
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3.4. Owner's security measures for the Project and the Site shall not
be deemed an undertaking by Owner to protect Contractor's Work, equipment,
tools, materials and the like. Contractor shall be solely responsible for
protecting such Work, equipment, tools, materials and the like.
ARTICLE IV
REPRESENTATIVES
4.1. Owner and Contractor shall each designate a Representative
authorized to act on its behalf, shall delineate the scope of each such
Representative's authority to act on its behalf, and shall have the right to
change the Representative or the scope of the Representative's authority upon
prior written notice to the other party. Each party's Representative shall have
the right to delegate duties and powers to another particular individual for
specified periods or in connection with specified portions of the Work by giving
the Representative of the other party written notice of the decision to do so.
4.2. Owner's Representative with general authority concerning the
Facility, and his address for notice, initially shall be:
Fred Lightner, Vice President Operations
Metallica Resources, Inc
3979 E. Arapahoe Road, Suite 100
Littleton, CO 80122
4.3. Contractor's Representative with general authority to represent
Contractor in dealing with Owner initially shall be:
John Eastwood, Senior Operations Manager
Mextica de Mexico
Calle 3 #1009
Colonia Xicohtencatl
90070 Tlaxcala, Tlaxcala
Mextica de Mexico Job Site
Camino Cerro de San Pedro KM.3.8 #200
Colonia La Zapatillo
San Luis Potosi, San Luis Potosi, Mexico
C.P. 78440
4.4
ARTICLE V
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PROJECT SCHEDULE AND WORK COMPLETION
5.1. Owner contemplates that various phases of the Project will be
undertaken in general accordance with the schedule as shown in Exhibit F.
Contractor shall be entitled to a bonus for early attainment of the milestones
and at the rates (USD) shown below. The bonus for each milestone shall be
separate and independent. The aggregate amount of the bonuses shall not exceed
two hundred and twenty five thousand dollars ($ 225,000).
5.1.1 Ready to Spray Solution on Cell #1: Date - September 16,
2002; Rate - $10,000 per day
5.1.2 Haul Road Ready to turnover to Washington Group: Date -
June 9, 2004; Rate - $5,000 per day
5.2. Time is of the essence under this Contract for the milestones
listed below and Contractor shall, as to those matters within Contractor's
control and for which Contractor is responsible, plan and perform the Work with
due regard for meeting the Completion Date in Section 5.1 as it may be revised
from time to time in the Project Schedule. Owner's sole remedy for schedule
delay shall be termination, per Section 10.2.and liquidated damages. Liquidated
damages shall not exceed an aggregated limit of fifty thousand dollars ($50,000)
and shall be for exceeding the aforementioned guaranteed milestone dates, at the
rates shown below.
Ready to spray cell#1: Rate - $5,000/day
Notwithstanding the above, to the extent the amount the Budget,
pursuant to Section 6.10, exceeds the final Project Price, such amount shall be
an off-set liquidated damages owed the Owner.
5.3. Contractor shall supply to the Owner a detailed schedule for
performance of the Work promptly after this Contract becomes effective.
Contractor shall commence the Work promptly after receipt from Owner of a
written "Notice to Proceed." Contractor shall promptly report to the Owner
likely or known delays or variances which may affect the Completion Date or
Project Schedule.
5.4. Neither party shall be liable to the other for failure to perform
its obligations hereunder if and to the extent such failure to perform results
from reasonably unforeseen causes beyond its reasonable control, all of which
causes herein are called "force majeure," including but not limited to, labor
disputes (however arising and whether or not employee demands are reasonable or
within the power of the party to grant); civil disturbances; fires; explosion;
floods; unusual climatic conditions; acts of God; acts of a public enemy;
inability to obtain or delay in obtaining required licenses, permits, or other
authorizations; or laws, regulations, or orders of any governmental authority
having jurisdiction. Financial difficulty shall not be considered a cause beyond
a party's control. The party asserting force majeure shall use all reasonable
efforts to remove or overcome the cause of the delay or inability to perform.
The party unable to perform as a result of force majeure shall promptly notify
the other at the beginning and ending of each such period.
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5.5. When Contractor considers the Facility and Work to be
Substantially Complete and ready for performance testing, Contractor shall
notify Owner in writing of this fact. Within a reasonable time thereafter, Owner
will make an inspection of the Work to determine the status of completion. If
Owner does not consider the Work Substantially Complete, Owner will notify
Contractor in writing giving the reasons therefore. If the Work appears
Substantially Complete to Owner, Owner will so advise Contractor of this fact,
and the parties shall schedule the performance test of the Facility set forth in
Exhibit D hereto ("Performance Test"). If the Performance Test is successful as
set forth in Exhibit D, the Owner shall acknowledge, in writing, that
Substantial Completion has occurred. If Owner considers the Work not to be
Substantially Complete after such inspection, Contractor will promptly remedy
the matters upon which such determination is based and shall again advise Owner
that the Work is Substantially Complete.
5.6. Use by Owner of any finished part of the Work, which has
specifically been identified in this Contract or which Owner and Contractor
agree constitutes a separately functioning and useful part of the Facility that
can be used by Owner without significant interference with Contractor's
performance of the remainder of the Work, may be made prior to all the Work
being Substantially Complete, subject to the following:
5.6.1. Owner at any time may request Contractor in writing to
permit Owner to use any such part of the Work which Owner believes to be ready
for its intended use and Substantially Complete. If Contractor agrees,
Contractor and Owner shall make an inspection of that part of the Work to
determine its status of completion. If, after such inspection, Owner does not
consider that part of the Work to be Substantially Complete, Owner will notify
Contractor in writing giving the reasons therefore and, unless Owner otherwise
requests, Contractor shall take all steps necessary to Substantially Complete
such part of the Work in response to Owner's objections. If Owner considers that
part of the Work to be Substantially Complete, the performance testing
provisions of Section 5.5 will apply with respect to that part of the Work.
5.6.2. No occupancy or separate operation of part of the Work
by Owner will be made prior to compliance with appropriate provisions concerning
property insurance.
5.6.3 Owner shall have care, custody, control and risk of loss
for such part of the Work upon use by Owner and the warranty period, as noted in
Section 2.20, shall commence for such part of the Work upon use by Owner.
5.7. Upon completion of the Performance Test, Owner will make a final
inspection with Contractor and will notify Contractor in writing of all
particulars in which this inspection reveals that the Work is incomplete or
defective. Contractor shall immediately take such measures as are necessary to
remedy such deficiencies and place the Facility in full compliance with this
Contract.
5.8. After Contractor has completed all corrections to the satisfaction
of Owner and has delivered all lien waivers or releases, consents of sureties,
maintenance and operating instructions, schedules, guarantees, bonds,
certificates of inspection, marked up documents, and other documents -- all as
required by this Contract -- and after Owner has given written notice that the
Work is
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acceptable (subject to Contractor's continuing obligations and warranties),
Contractor shall submit an invoice for final payment following the procedure as
provided in Section 6.2 and the procedure in Section 6.6. If any Subcontractor
or supplier of materials, equipment and the like fails to furnish a release or
receipt in full, Contractor may furnish a bond or other collateral satisfactory
to Owner to indemnify the Owner against any Lien.
ARTICLE VI
COMPENSATION OF CONTRACTOR
6.1. Owner shall compensate Contractor for the Work performed on a cost
basis. Subcontractor and vendor costs shall be invoiced at actual cost and work
performed by Contractor shall be invoiced at the rates shown in Exhibit_E. The
rates shown in Exhibit E shall not change during the term of this Contract.
Overhead ("Overhead") shall be a fixed percentage of seven (7.00%) and shall be
applied to all costs. Profit ("Fee") shall be a fixed percentage of three (3%),
and shall be applied to all costs and Overhead. All costs paid by Contractor in
US dollars shall be invoiced to Owner in US dollars and all costs paid in
Mexican pesos shall be invoiced to Owner in Mexican pesos.
6.2. The Contractor shall invoice the Owner each month, no sooner than
the 15th of the month, the estimated cost of work to be completed during the
next month. This invoice ("Application for Payment") shall include the estimated
cost for work to be completed, and amounts for Overhead and Fee based on the
above percentages applied to the estimated costs, with adjustments for over or
under payment in the prior month. The first Application for Payment shall
include any necessary adjustments for over or under payments made under the
Limited Notice to Proceed. The Application for Payment shall show the amounts to
be paid in US dollars and the amounts to be paid in Mexican pesos. If payment is
requested on the basis of materials and equipment not incorporated in the Work
but delivered and suitably stored at the site or at another location agreed to
in writing, the Application for Payment shall also be accompanied by a bill of
sale, invoice or other documentation warranting, if applicable, that the Owner
has received the materials and equipment free and clear of all Liens and
evidence that the materials and equipment are covered by appropriate property
insurance and other arrangements to protect the Owner's interest therein, all of
which will be satisfactory to Owner.
6.3. Contractor warrants and guarantees that title to all Work,
materials and equipment covered by any Application for Payment, whether
incorporated in the Project or not, shall pass to Owner no later than the time
of full payment free and clear of all Liens.
6.4. Owner will, within seven days after receipt of each Application
for Payment, either indicate in writing a recommendation of payment or a
statement of reasons for refusing to recommend payment. Owner and Contractor
shall endeavor to resolve informally any matter leading to a negative
recommendation as to the Application for Payment.
6.5. Subject to the following sentence, payment by the Owner to the
Contractor of the amount claimed in the Application for Payment shall be made
within fifteen (15) days after receipt of the
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Application for Payment. If Owner disputes or questions any charge appearing in
the Request for Payment, Owner will notify Contractor's Representative of the
nature of such question or dispute, and Owner may withhold from payment an
amount sufficient to cover the item questioned or disputed and shall have no
obligation to pay such questioned or disputed amount until the matter is
resolved to Owner's reasonable satisfaction.
6.6. The final Application for Payment shall be submitted after
Contractor believes the Work is complete. Within seven days after the final
Application for Payment is received pursuant to Section 5.8, Owner will either
indicate in writing a recommendation of final payment or a statement of reasons
as to why the Owner considers the Work not to have been completed satisfactorily
or the Contractor's other obligations under this Contract not to have been
fulfilled. Within fifteen days after the final Application for Payment, Owner
shall determine if it is satisfied that the Work has been completed, that there
are no outstanding claims made against the Owner for which Contractor is liable,
and that Contractor's other obligations under this Contract have been fulfilled.
Owner shall give written notice of its decision to Contractor, and if the final
Application for Payment is accepted, final payment will be due and payable by
Owner to Contractor. If Owner has any objection to the sufficiency of completion
of the Work, Owner shall instead give notice of such objections to Contractor
and Contractor shall promptly remedy the same and advise Owner when such matters
have been completed and the Work is considered by the Contractor to be complete,
and the foregoing review and payment process shall again apply.
6.7. The making and acceptance of the final payment will constitute a
waiver of all claims by Contractor against the Owner other than those previously
made in writing and still unsettled. Final payment shall not constitute a waiver
by the Owner of any rights in respect of Contractor's continuing warranty
obligations under this Contract.
6.8. All Applications for Payment shall be supported by time sheets,
receipts, ledgers and the like sufficient to support the matters charged to the
Work. To the extent relevant for calculation or verification of Contractor's
entitlement to any interim or final payment hereunder, Owner shall have the
right to audit, for a period of one year following Acceptance of Facilities,
Contractor's books and records relevant to the Work in order to verify that
charges are proper. Owner shall also have the right to require evidence that
Contractor has paid for labor, material, equipment, supplies, Subcontractors and
other matters related to the Work. Notwithstanding the above, Owner shall not
have a right to audit the Contractor built-up rates shown in Exhibit E.
6.9. Contractor shall not allow any Liens to attach to the Work or to
the Project, arising from the Work, and Contractor shall act promptly to remove
at its cost any such Liens if they do arise. Owner shall have the right at any
time, including the time of final payment, to retain from payments otherwise due
Contractor amounts sufficient to protect the Owner from such Liens.
6.10. The Project Price is estimated to be $ (12-24-03 Budget),
composed of:
Site Work/Leach Pads: $6,663,537
Well Water System: $ 298,479
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Transmission Line: $ 580,262
Buildings: $ 721,047
Process Systems and Piping: $ 2,191,742
Plant Equipment: $ 1,906,126
Electrical: $ 1,265,731
Engineering: $ 554,500
Indirects and Misc: $ 1,405,092
Contingency $ 331,725
Overhead $ 1,160,800
Fee $ 500,000
Total 12-24-03 Budget $18,579,040
6.11. Contractor's books, records, and reports shall be established and
maintained so as to present cost breakdowns and other matters in a format
compatible with Owner requirements.
6.12 Owner shall provide a guarantee of payment to Contractor in a form
satisfactory to Contractor.
ARTICLE VII
ADDITIONS, DELETIONS, AND CHANGES TO WORK
7.1. Owner is entitled to add to any portions of Work specifically
described in this Contract so long as the added services are within the general
description of the Work contained in this Contract. The Work added by Owner,
together with any work reasonably inferred from portions of Work so added which
is required to produce the intended result, shall be performed by Contractor and
shall be compensated for as set out in Article Six above.
7.2. Owner is entitled to delete from the Work any work or services
described in this Contract or previously added to the Work.
7.3. All additions or deletions to the Work shall be in writing. If
Owner requests additional services which Contractor considers not to be within
the Work described in Exhibit A, Scope of Work, or if Owner makes any deletion
from the Work, then Contractor shall prepare a request for a Change Order
covering the revised Work and documenting any change in the Budget, Fee Cap or
Milestone Dates resulting from the change in Work.. Work outside the Scope of
Work shall not be performed by Contractor without execution by Contractor and
Owner of such a written Change Order.
7.4. Changes in the Work shall be preceded by a "Project Change Notice"
issued by Owner. Upon the issuing of a "Project Change Notice" the Contractor
shall present to Owner:
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7.4.2. The Contractor's estimate of the effect of the change
in the Work on the Milestone Dates;
7.4.3. The following:
A. An estimate of the cost effect of such change in
the Work, and the Budget, including specific identification of the cost of the
labor, (including identification of hours and trades involved) and materials
involved, and
B. The identity of any Subcontractor who will be
involved in performing such change in the Work and details of any quotations
which the Contractor may have obtained in relation to such work, and
C. If the change in the Work involves equipment,
details as to the type of equipment, hours and cost (whether rented or owned);
and
7.4.4. Such other information as may be requested by Owner.
Without limiting the generality of the foregoing the information listed above
shall be submitted in the form requested by Owner.
7.5. The Contractor shall have ten (10) working days from the receipt
of a "Project Change Notice" to prepare and present the information referred to
in Section 7.4.
7.6. Notwithstanding Section 7.4, in the event a change in the Work is
required immediately, Owner may direct the Contractor to carry out the same. In
such event the procedures set out in Section 7.4 shall be complied with as soon
after such direction as is reasonably possible..
7.7. Following receipt of the information referred to in Section 7.4,
Owner shall have the right to:
7.7.1. require the Contractor to proceed with the change, or
7.7.2. withdraw the proposed change in the Work.
If Owner elects to proceed in accordance with Sections 7.7.1, Owner will execute
a written "Change Order" directed to the Contractor.
7.8. If Owner makes a change in the Work, the Milestone Dates, Fee Cap
and the Budget shall be adjusted as agreed to by the Owner and the Contractor,
or failing agreement within thirty (30)
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days of such change in the Work being ordered, as may be determined in
accordance with Article XVI hereunder.
7.9. Failure by the parties to agree on the Budget, Fee Cap or the time
adjustments resulting from a change in the Work shall not constitute a valid
reason for the Contractor's failure to effect such change in the Work.
7.10. Any dispute as to the right to change or amount of change of the
Budget or Completion Date shall be resolved in accordance with Article XVI
hereunder.
7.11. In the event of any change, after the date of this Contract, of
any Applicable Laws, permit conditions, industry construction or design factors
or other factors, that will in Contractor's reasonable opinion materially affect
the cost, progress, or performance of the Work, Contractor shall immediately
advise Owner thereof. Provided that the changed condition was not one which was
or reasonably should have been foreseen by Contractor as of the date of this
Contract, Contractor shall be entitled to request a Change Order to meet such
changed condition, and the applicable provisions of this Article VII shall be
invoked with respect to such requested change. Discovery of conditions different
from those anticipated by Contractor but which were in existence as of the date
of this Contract does not constitute a change in conditions to which this
Section is applicable.
ARTICLE VIII
LIABILITY AND INDEMNIFICATION
8.1. The Contractor shall indemnify and save harmless the Owner and its
directors, officers, employees and agents from and against all liabilities,
demands, claims and causes of action of any nature arising from damage to third
party property or injury to persons, and to the extent of Contractor's
proportionate share of fault. The Owner shall indemnify and save harmless the
Contractor and its directors, officers, employees and agents from and against
all liabilities, demands, claims and causes of action of any nature arising from
damage to third party property or injury to persons, and to the extent of
Owner's proportionate share of fault.
8.2. The Owner shall not be liable or responsible in any way for any
property damage of any nature whatsoever that may be suffered or sustained by
the Contractor in the performance of its obligations under this Contact.
8.3. Owner shall have the right to withhold payments otherwise due
Contractor sufficient to reasonably protect the Owner from losses or claims made
against it, or which Owner has a reasonable expectation will be made against it,
for which Contractor is liable pursuant to this Article and to set off any
amounts paid to satisfy, compromise or settle any such claim or loss against
amounts otherwise due Contractor.
8.4. Acceptance of the Work by the Owner shall not relieve Contractor
of its warranty, indemnification, or other obligations hereunder.
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8.5. If the Facility fails to meet the Performance Test described in
Exhibit "D," the provisions of paragraph 3 of Exhibit "D" shall apply to define
Contractor's liability and Owner's rights.
8.6. With respect to Defective Work other than that described in
Section 8.6, Owner may direct Contractor to correct the deficiencies, correct
the deficiencies itself or engage another party to correct such deficiencies.
8.7 Contractor's total collective liability to Owner for any and all
damages of any kind (including, but in no way limited to liquidated damages but
excluding indemnity liabilities) arising out of or related, in whole or in part,
to the Project, the Contract and/or any work performed by Contractor under the
Contract is limited to 5% of the Contract Price. This limitation shall apply
regardless of the theory of recovery and regardless of whether liability arises
in tort or contract, at law or equity.. HOWEVER, THIS AMENDMENT SHALL IN NO WAY
LIMIT ANY RIGHT TO INSURANCE PROCEEDS OWNER MAY HAVE AS A RESULT OF ITS STATUS
AS "ADDITIONAL INSURED" ON ANY POLICY OF INSURANCE SUPPLIED BY CONTRACTOR
PURSUANT TO THE CONTRACT.
8.8 Neither party shall be liable to the other for special, incidental
or consequential damages arising out of or related, in whole or in part, to the
Project, the Contract and/or any work performed by Contractor under the
Contract. Neither earned Fee or Overhead are considered consequential. This
exclusion shall apply regardless of whether the liability arises in tort or
contract, at law or equity.
ARTICLE IX
INSURANCE AND BONDS
9.1. Prior to commencing work, the Contractor shall obtain and maintain
continuously during the term of this Contract the following insurance:
9.1.1. The Mexican equivalent of Workers' Compensation
Insurance in full and complete compliance with all applicable laws and
regulations of the jurisdiction(s) in which work under this Contract is being
performed. The Contractor will provide the Owner with a copy of a certificate or
other suitable evidence of compliance prior to the start of work.
9.1.2. Employer's Liability Insurance with limits of not less
than One Million dollars ($1,000,000) for accidental injury or death of any of
the Contractor's employees engaged in the work.
9.1.3. Motor Vehicle Liability insurance with limits of not
less than One Million dollars ($1,000,000)inclusive limit for each accident and
covering any motor vehicle, used or
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operated by Contractor in conjunction with the Work regardless whether such
motor vehicle is owned, non-owned, rented and/or leased.
9.1.4. Comprehensive general liability insurance with a
combined limit for bodily injury and/or property damage of not less than Ten
Million Dollars ($10,000,000) per occurrence and including coverage for Products
Liability, Owners and Contractors Protective, Broad Form Property Damage,
twenty-four (24) months Completed Operations and Blanket Contractual Liability
specifically recognizing the liability assumed under the indemnification clauses
of this Contract.
9.1.5. Contractor's equipment insurance against "All Risks" of
physical damage to Contractor's owned or leased equipment and tools used in
connection with the Work in an amount equal to its full replacement cost or
value, or, an amount that will provide sufficient funds to expedite replacement
of key equipment and tools, in the event of loss, to minimize undue delay in the
work schedule.
9.1.6. Professional liability ("errors and omissions")
insurance, either directly or by Contractor's engineering subcontractor, either
purchased specifically for the Work under this Contract or covered under
Contractor's existing Practice Policy, but in any event with minimum limits of
One Million Dollars ($1,000,000) each claim/One Million Dollars ($1,000,000)
annual aggregate available with respect to Contractor's Work under this
Contract.
9.2. With respect to the coverages in 9.1 and 9.4, excepting only
9.1.1. and 9.1.6, Contractor's insurance shall include Owner as an additional
named insured and a Waiver of Subrogation in favor of the Owner. The
Contractor's insurer will provide the Owner with at least thirty (30) days prior
written notice of cancellation or material change of the insurance and provide a
certificate of insurance, verifying that the coverage is in effect, prior to the
start of work.
9.3. The certification of Comprehensive Liability Insurance shall not
contain exclusions for damage to underground property, collapse of structures,
or damage resulting from explosion or blasting.
9.4 Builders All Risk insurance in an amount equal to the Budget on
non-admitted paper.
9.5 Said insurance coverage shall be written by companies satisfactory
to Owner. Certificates of insurance coverage evidencing such insurance shall be
provided to Owner. Contractor shall require and be responsible for similar
coverage being in force for any of its Subcontractors.
9.64. Contractor shall maintain at the Owner' expense, charged as a
disbursement, such other and additional types and amounts of insurance as Owner
may request in writing.
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ARTICLE X
TERMINATION OF CONTRACT AND OWNER'S
RIGHT TO PERFORM CONTRACTOR'S OBLIGATIONS
10.1. Without limitation, the following events shall constitute events
of default under this Contract:
10.1.1. if Contractor is adjudged a bankrupt or insolvent,
10.1.2. if Contractor makes a general assignment for the
benefit of creditors,
10.1.3. if a trustee or receiver is appointed for Contractor
or for any of Contractor's property,
10.1.4. if Contractor files a petition to take advantage of
any debtor's act, or to reorganize under bankruptcy or similar laws,
10.1.5. if Contractor fails to assign sufficient skilled
personnel or suitable materials or equipment for performance of the Work,
10.1.6. if Contractor fails to make prompt payments for labor,
materials or equipment unless such payments are withheld due to a failure by the
supplier to properly perform the labor or supply acceptable materials or
equipment,
10.1.7. if Contractor violates, contravenes, or disregards
Applicable Laws of any public body having jurisdiction, or disregards safety or
environmental protection rules, security, regulations and accident prevention
programs of Owner at the Project,
10.1.8. if Contractor disregards the authority of Owner's
Representative,
10.1.9. if Contractor acts in excess of the authority granted
it by this Contract or otherwise by Owner,
10.1.10. if Contractor fails to prosecute the Work with
reasonable diligence, or
10.1.11. if Contractor otherwise violates any provisions of
this Contract.
10.2. Subject to the conditions contained in this Section, Owner shall
have the right to terminate this Contract for Contractor's default under Section
10.1, and upon such termination assume the duties and responsibilities of the
Contractor. If Owner asserts a default, Owner shall give Contractor written
notice thereof. If Contractor fails to cure or commence and thereafter
diligently complete cure of any material default within 30 days after such
notice is given, then Owner may give written notice of termination which shall
be effective when given. Repeated defaults of a similar nature shall themselves
constitute a material uncured default for which Owner may give notice of
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termination without further rights to cure. If this Contract is terminated due
to Contractor's default, Contractor shall submit a final Application for
Payment, pursuant to Section 6.6 and the Owner shall have the right to set off
against the final payment any amounts owed Owner or in dispute.
10.3. Upon seven (7) days' written notice to Contractor Owner may,
without cause, elect to terminate this Contract in its sole discretion and for
any reason whatsoever or for no reason. In such case, Contractor shall be paid
for all Work executed, plus reasonable Termination Expenses. "Termination
Expenses" shall be limited to relocation costs, equipment ordered or delivered
which cannot be returned or delivery of which cannot be cancelled without
Contractor incurring liability therefor, non-refundable lease obligations which
Contractor has incurred with the approval of Owner, and other similar out of
pocket and unavoidable expenses for services or equipment or materials which
were incurred or acquired for the Work and which are not usable on other
projects of Contractor or are not returnable, recoverable or refundable,
provided that "Termination Expenses" shall specifically exclude any loss of
anticipated profits relating to Work not performed prior to the time of
termination. After notice of termination is given and before the effective date
of termination, Contractor shall:
10.3.1. Surrender to Owner full and exclusive possession of
all plans, specifications, drawings, designs, schedules, lists, instructions,
and other information in Contractor's possession or control which are necessary
in order to complete or related to the Work, to the extent available to the
Contractor.
10.3.2. As directed by Owner's Representative on an individual
basis, terminate, cancel, settle, adjust, assign, or transfer to Owner all
orders, subcontracts, and other commitments related to the Work which were
placed, made or entered into by Contractor before notice of termination was
given.
10.3.3. Take all other steps and perform all other services
which Owner's Representative reasonably requires in connection with termination
of all or any portion of this Contract.
In no event shall the provisions of this Contract be applied or construed so as
to require or permit duplication of all or any portion of any individual payment
made to Contractor by Owner, or to require or permit payment to Contractor by
Owner for portions of the Work not actually performed by Contractor before the
effective date of termination. In any and all orders, subcontracts, and other
commitments which Contractor may place, make or enter into in connection with
the Work, Contractor shall include appropriate provisions to ensure similar
termination rights to Owner in the event this Contract is subsequently
terminated as provided herein.
10.4. Notwithstanding termination of the Work under the provisions of
this Article X, there shall survive and remain in effect all of Contractor's
continuing obligations, warranties and indemnities with respect to portions of
the Work previously undertaken and/or completed hereunder.
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ARTICLE XI
ASSIGNMENT AND SUBCONTRACTORS
11.1. Neither party shall assign its interest in this Contract without
the written consent of the other, which consent shall not be unreasonably
withheld.
11.2. Subcontractors
11.3.1. Contractor shall not subcontract any portion of the
Work without the prior written approval of Owner, which approval shall not
unreasonably be withheld. No such approval shall relieve Contractor from any of
its obligations pursuant to this Contract and Contractor shall continue to be
primarily responsible to Owner for all portions of the Work whether or not
subcontracted by it.
11.3.2. Contractor shall bind in a manner acceptable to Owner
its Subcontractors, if any, to all of the provisions of this Contract to the
extent they are applicable under the circumstances to the Work to be performed
by the Subcontractor.
ARTICLE XII
CONFIDENTIAL INFORMATION
12.1. Contractor and its agents and employees shall treat as
confidential all information relating to the ore body, ore reserves, metallurgy,
geology, processes, products, compositions, machinery, apparatus, trade secrets
or computer based information of the Owner or relating to the Work, the Project,
the Owner's operation at the Project or the general business affairs of the
Owner which Contractor may observe or which may be disclosed to it by the Owner
as a result of its services hereunder. Contractor shall not divulge said
information to others, for any reason or at any time, except with the prior
written consent of Owner's Representative, which consent may be withheld for any
reason or for no reason. Contractor shall not in any way or at any time use said
information except as required for the proper performance of the Work.
Contractor agrees to restrict access to all information disclosed by the Owner
or developed by Contractor hereunder within Contractor's organization to only
such limited group of authorized employees who (i) require such information in
connection with Contractor's activities as contemplated by this Contract and
(ii) have agreed in writing with Contractor for the express benefit of the Owner
to maintain the confidential nature of such information on the terms and
conditions set forth herein. Excluded from the provisions of this Article shall
be such portions of the information as:
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12.1.1. were known to Contractor without restriction of
confidentiality prior to their disclosure by the Owner, as demonstrated by
competent documentary evidence in Contractor's possession;
12.1.2. properly become available to Contractor, under
conditions which do not restrict further disclosure, from a third party source
who shall not have obtained such information either directly or indirectly from
the Owner or its Affiliates; or
12.1.3. are at the time of disclosure in the public domain or,
after disclosure, come into public domain without fault on the part of
Contractor or its employees.
12.2. No information relating to the Owner, the Work or the Project
shall be released by Contractor for publication, advertising or any other
purpose without the prior written approval of Owner. Contractor shall obtain
Owner's prior approval in writing before making or releasing to the public any
speech, photograph, press release, article for publication, or other information
for publication concerning the Work or the Project. Such approval may be
withheld by Owner for any reason or for no reason. In general, such information
includes, but is not limited to:
12.2.1. Speeches prepared for, and to be delivered by,
Contractor's personnel concerning the Owner's operations, developments, plans,
business functions, or other information related to the Work.
12.2.2. Photographs of the Owner's equipment, facilities,
operations, functions, and personnel originating within or outside Contractor's
organization and intended for publication in internal or external publications,
or for use outside Contractor's organization, but under its control.
12.2.3. Articles and editorial copy for internal or external
publications concerning Owner's operations, developments, plans, business
functions, etc., prepared either by Contractor's personnel or by persons outside
Contractor's organization, but within its control.
ARTICLE XIII
SUSPENSION OF THE WORK
13.1. Immediately upon Contractor's receipt of a written request by
Owner's Representative to suspend all or any portion of the Work, Contractor
shall suspend the Work to the extent requested to do so by Owner's
Representative. Owner may suspend the Work or any portion thereof for any reason
it desires or for no reason and in its sole discretion without liability to
Contractor other than as set forth in this Contract.
13.2. Upon receipt of such notice of suspension, Contractor shall use
best efforts to reduce and if possible eliminate any costs and expenses which
Owner would be obligated to pay Contractor pursuant to this Contract. If
suspension causes Contractor to incur costs which it would not have incurred but
for the suspension, Contractor shall request a Change Order to cover such costs.
Owner
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shall be obligated to compensate Contractor only for those reasonable and
unavoidable expenditures related to the Work which Contractor continues to incur
while such suspension is in effect.
13.3. If such suspension should exceed 120 days, Contractor may request
reassignment of its personnel and/or at its option terminate this Contract by
giving Owner at least fifteen (15) days' written notice before the effective
date of termination.
13.4 Contractor shall have the right to suspend the work if owner fails
to pay amounts properly due Contractor.
ARTICLE XIV
TITLE TO THE WORK
14.1. All plans and specifications, drawings, reports, or other written
or electronically stored data supplied to Contractor by the Owner, its agents,
or any other consultants, or any such plans, specifications and other data
prepared by Contractor or any Subcontractor specifically to carry out any part
of the Work or otherwise relating to the Facility and not describing or related
to processes proprietary with Contractor or any of its Subcontractors or
suppliers shall remain or become the property of the Owner. Contractor shall not
use them or permit them to be used for other work and shall return them along
with all copies to Owner upon completion of the Work, or earlier, if requested
by Owner, provided that Contractor may retain a single copy for its own record.
ARTICLE XV
PATENTS AND COPYRIGHTS
15.1. Contractor agrees not to include in its designs, plans, or
specifications furnished as part of the Work any methods, processes, equipment,
inventions, or documents which are covered or claimed by any patent or pending
patent application or any copyright or which, to its knowledge, constitute
confidential information or trade secrets of a third party, and Contractor
further agrees to indemnify, defend and save the Owner and its Affiliates
(including officers, directors, employees and agents of Owner and its
Affiliates) harmless from and against all claims, royalties, damages,
liabilities, costs and expenses of whatever kind or nature (including, but not
limited to, attorneys' fees) in any manner resulting from, or claimed to result
from, any such inclusion.
15.2. The provisions of Section 15.1 shall not apply to designs, plans
or specifications furnished by the Owner or purchased from the owner or a
licensee of the method, process, equipment, invention, or document or to any
method, process, equipment or invention designated by Owner for inclusion in the
Work.
15.3. Contractor shall communicate to Owner at once, and require
Contractor's employees assigned to this Project to communicate to Owner all
inventions and improvements which any of Contractor's employees, either alone or
in conjunction with any of Owner's employees, may conceive,
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make or discover during the course of or as a result of work on this Project
under this Contract that relates to the processes, products, compositions,
machinery or plants of the Owner, or relating in any way to any of the
operations in which the Owner or any of its Affiliates have been or are engaged
at the time, and such inventions and improvements shall become the sole,
exclusive property of the Owner without any obligation on its part to make any
payment therefor in addition to any sums which Owner may be obligated to pay to
Contractor as compensation for services rendered by Contractor under this
Contract. Contractor shall require its employees to execute patent applications
and assignments thereof to the Owner or its nominees, and powers of attorney
relating thereto for any country Owner may designate, and shall take all other
actions as Owner may request to maintain and protect such inventions and
improvements. Owner shall pay all costs or charges incurred in protecting such
inventions and improvements if Owner desires to protect them. Before assigning
any of Contractor's employees to work under any contract with the Owner
concerning this Project, Contractor shall obtain from them agreements
satisfactory to Owner effectuating the purposes of this paragraph.
ARTICLE XVI
ARBITRATION
16.1. All claims, disputes and other matters in question between the
parties to this Contract arising out of or relating to this Contract or the
breach thereof, shall be decided in accordance with rules of the American
Arbitration Association then in effect unless the parties mutually agree
otherwise. All proceedings of Arbitration shall be conducted in the English
Language. No arbitration arising out of or relating to this Contract shall
include, by consolidation, joinder or in any other manner, any additional person
not a party to this Contract except by written consent containing a specific
reference to this Contract and signed by the Contractor, Owner, and any other
person sought to be joined. Any consent to arbitration involving an additional
person or persons shall not constitute consent to arbitration of any dispute not
described therein or with any person not named or described therein. This
agreement to arbitrate and any agreement to arbitrate with an additional person
or persons duly consented to by the parties to this Agreement shall be
specifically enforceable under the prevailing arbitration law.
16.2. Notice of demand for arbitration shall be filed in writing with
the other party to this Agreement and with the American Arbitration Association.
The demand shall be made within a reasonable time after the claim, dispute or
other matter in question has arisen. In no event shall the demand for
arbitration be made after the date when institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by the applicable statute of limitations, or by any express limitation in
this Contract.
16.3. The award rendered by the arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable law in any court
having jurisdiction thereof.
ARTICLE XVII
-28-
MISCELLANEOUS PROVISIONS
17.1. Any failure by the Owner at any time, or from time to time, to
enforce any of the terms and conditions of this Contract shall not constitute a
waiver of such terms and conditions, and shall not affect or impair such terms
or conditions in any way, or the right of the Owner at any time to avail itself
of such remedies as it may have for any breach of such terms and conditions.
17.2. This Contract represents the entire agreement between the Owner
and the Contractor and supersedes all prior negotiations, representations or
agreements. This Contract shall not be superseded by any provisions of the
documents for construction and may be amended only by written instrument signed
by both Owner on behalf of the Owner and Contractor.
17.3. This Contract shall be governed by the laws of the jurisdiction
in which the Site is located. By agreement of the parties, the language of this
Contract is English. In the event of any ambiguity, inconsistency or conflict
between this English version and any translation thereof, the English version
shall control.
17.4. Words importing the singular shall include the plural and vice
versa, words importing the masculine gender shall include the feminine and
neuter gender and vice versa and words importing individuals shall include firms
and corporations and vice versa.
17.5. The captions and headings appearing in this Contract are inserted
merely to facilitate reference and shall have no bearing on the interpretation
of the provisions hereof.
17.6. In the event any of the terms or conditions of this Contract or
the application of any such terms and conditions to any party or circumstance
shall be held invalid by any court or other regulatory authority having
jurisdiction the remainder of this Contract or the application of the terms or
conditions contained herein to parties or circumstances other than those as to
which it is held invalid shall not be affected thereby.
17.7. The duties and obligations imposed by this Contract and the
rights and remedies available hereunder shall be in lieu of any rights and
remedies available at law or equity.
17.8. This Contract may be executed in counterparts each of which shall
be deemed to be an original and all of which shall be construed together as one
original instrument.
17.9. Termination of this Contract shall not affect the validity of any
provisions of this Contract which are, expressly or by implication, to survive
or to take effect on or after, such termination.
17.10. In the event of any conflict between the text of Articles I
through XVII, inclusive, of this Contract and any addendum, exhibit, schedule,
or attachment hereto, the text of the Contract shall control over the
conflicting addendum, exhibit, schedule, or attachment.
-29-
17.11. Owner represents that it has full authority to enter into this
Contract. All benefits, rights and remedies inuring hereunder shall directly
inure to the benefit of all Owner, and the respective successors and assigns of
Owner.
AGREEMENT EXECUTED THE 3rd DAY of MARCH, 2004.
MINERA SAN XAVIER, S.A. de C.V.
By: /s/ FRED H. LIGHTNER
DIRECTOR GENERAL(Title)
MEXTICA de MEXICO S. de R.L., de C.V.
By: /s/ JOHN M ROOS
PRESIDENT(Title)
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EXHIBIT A
MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
The Contractor has estimated this Scope of Work in accordance with the general
direction given by MSX via drawings formulated for the Project by Lyntek Inc.
along with the Division of Responsibility (DOR) mutually agreed during the
course of the estimate and site visit information. The following information
details the Contractor's basis for the Contract .
GENERAL
1. Import Duties will be paid by MSX.
2. MexTICa has not included for encountering any ACM (Asbestos
Containing Material).
3. Design is based on project being situated in a Seismic Zone 2A.
4. The drawings submitted with the proposal for the sitework do reflect
the most current design from AB Engineering .
5. Connection fees to the CFE grid will be paid by MSX.
PROCESS DESCRIPTION
The Contract Scope of Work for the Cerro San Pedro project includes all items
defined by the drawings and specifications, which are detailed in Exhibit C. The
project includes the leach pad, ponds, process building, office, laboratory,
guard shacks, power line, and water supply system. Process plant facilities have
been located based upon topographic constraints of the site. The leach pad is
located in a broad, flat valley area along and to the south of the paved road
leading to the Cerro de San Pedro Village (elevation: 1,947 m), approximately
2km from the pit exit ramp. The solution recovery plant is situated in close
proximity to the leach pad (elevation: 1,943 m).
LEACH PAD & PONDS
The leach pad is designed to drain to a single exit point at the southwest end
of the pad. The internal perimeter of the leach pad will contain a system of
v-notch ditches which serve the dual purpose of providing leak detection and
maintaining an open solution flow path for storm water runoff and for pregnant
solutions exiting the heap. Solution will be collected and transported to the
pregnant solution pond system via a lined open channel. The INAH restricted area
has been avoided in the final design and shall not be disturbed.
Prior to the onset of leach pad construction, MSX will remove all existing
structures and protected flora and fauna. The Contractor will then clear and
stockpile the surface
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CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
vegetation and topsoil in a clearly labeled storage area. Surface rock rubble
and organic soil cover will also be stripped prior to construction of the leach
pad with any salvageable topsoil being stockpiled for later use during
reclamation and closure. In areas where there is no rock, the stripped subgrade
surface will be scarified and recompacted in preparation for placement of site
grading fill and/or low-permeability clayey bedding fill beneath the geomembrane
liner. The leach pad has been designed for a total area of 325,000 square meters
for Phase 1. Phase 2 construction is not part of this contract.
The leach pad liner system consists of a 1.5mm (60 mil) low -density
polyethylene (LDPE) geo-membrane overlying a minimum of 0.3 m of
low-permeability fine-grained bedding fill which will be compacted to a
permeability of 1 x 10(-6) cm/sec. The bedding fill material will either be
purchased from stockpiled material about 3 km west of the pad from a private
vendor or be sourced from a borrow pit to be located just northwest of the pad
itself. The 0.5 m protective free-draining layer on the pad will consist of
nominal minus 19 mm size crushed rock or limestone ore from the mine, delivered
by WGI . The leach pad is divided into a total of six northeast-southwest
oriented cells, each cell measuring about 75 - 125 m wide and 600 - 900 m long.
Each cell is separated by a one-meter high berm. There are three cells in Phase
I and three cells in the Phase II pad expansion.
The solution ponds store the operational, draindown, and design storm flows. The
86,400 cubic meter (m(3)) storm water pond is designed to contain water produced
from a 100 year, 24-hour storm event (79 mm), with 75 percent runoff from
covered areas and 100 percent runoff from the final maximum lined areas, plus
direct precipitation on the pond. The pregnant solution pond will store 48,000
cubic meters (m(3)), which represents 24 hours of operating volume plus 24 hours
of drain down. The Merrill-Crowe plant will discharge into an 88 cubic meter
(m(3)) (23,250 gal) tank, from which barren solution will be pumped directly
back to the heap. An overflow from the barren tank will be directed to the
pregnant solution pond if there is an excess of process solution. The pregnant
solution pond will be double lined with a 1.5 mm (60 mil) LDPE lower liner and a
2mm (80 mil) HDPE upper liner. A geo-synthetic net to promote flow of any
potential leakage from the primary liner to a collection/ pump back sump will
separate the pregnant pond liner. The storm water pond will have the same double
liner. The design of the ponds is base upon the capacity of the heap leach pads.
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CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
An open ditch diversion system diverts the natural runoff from uphill catchment
areas around the phased heap leach pad into the downhill natural drainages.
Diversion ditches will be sized and constructed to divert the 24-hour design
storm runoff. Two monitoring wells will be installed down gradient of the leach
pad and solution ponds. Location of these wells will follow a geotechnical
investigation to assure the best locations and the optimum number of wells
required for adequate monitoring. The internal perimeter of the leach pad will
contain small double-lined v-notch ditches which serve the dual purpose of
providing leak detection and maintaining an open solution flow path for storm
water runoff and for pregnant solutions exiting the heap. Solution passing
through the primary liner in these ditches, if any, will be collected in a
geogrid and drained by gravity to the pregnant solution pond. The leak detection
will be positive by 12 mm plastic pipe that will visually show any leaks.
Contractor will construct the heap leach pad. The mine contractor will deliver
the ore to the pad. The ore will be direct dumping from 100-tonne haul trucks in
10 m lifts at a nominal rate of 1,450 tonnes per hour. Depending on the length
of the ore haul, two or three trucks will generally be used for leach pad
loading. A D-10 bulldozer equipped with a ripper will level and rip the heap
surface as necessary to minimize compaction. Heap leach cells will typically be
loaded from the southwest to the northeast, or from the downhill side to the
uphill side. Panels of ore approximately 100 m by 100 m will be ripped and
placed under leach on a weekly basis. As the ore haul retreats along the haul
road, segments of the haul road will also be ripped and placed under leach.
Prior to placing a new lift of ore over an existing lift, the heap is
cross-ripped using a D-10 dozer equipped with a deep penetration (3-4 m) Kelly
ripper provided by owner or mine contractor.
The ore is truck-dumped on the leach pad in nominal 10-meter lifts at the
natural angle-of-repose with 5-meter setback benches for an overall two
horizontal to one vertical (2H:1V) slope. The design maximum heap height is 80
meters. Computer slope stability analyses performed on the heap by others at the
most critical down gradient pad section resulted in static and pseudostatic
factors of safety that meet or exceed the minimum recommended standards for such
a structure.
Each phase of the leach pad is divided into cells for solution recovery, three
cells in Phase I, an additional three cells in Phase II. Each cell is divided by
a berm 1.0 m high to collect and direct leach solution percolating through the
leach pad. The solution is directed within each cell through a network of 100 mm
and 200 mm perforated collection pipes to a single central collection pipe
located in the solution trench. Each of the central perforated collection pipes
is routed to the leach pad solution discharge
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CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK and DESIGN CRITERIA
trench at a common exit point at the low end of the heap. Solutions from each
individual cell are sampled periodically during operation at the trench and will
be followed daily. These values will determine when the barren solution will be
disconnected and the piping removed and replaced on a new cell.
The storm water pond will be double lined as described above over a 0.3 m
compacted low permeability soil. The pond will have a PVC pipe that will be
below the liner and the low permeability soil. This will allow for the testing
of any solution that will be in the sump.
Solution is recovered from the pregnant solution pond via a submersible turbine
pump rated at 900 m(3)/hr that feeds directly into the clarifier filters at the
Merrill-Crowe plant. Solution recovered from the storm water pond will be pumped
directly to the clarifier filters or back to the pregnant pond via a similar 900
m(3)/hr submersible turbine pump, which also serves as a backup for the pregnant
solution pump.
Barren solution is pumped at a nominal rate of 1000 m(3)/hr (4,400 gpm) from the
barren solution tank through solution distribution piping and irrigation type
drip emitters for application onto the surface of the ore. In order to minimize
the potential for generation of scale and resultant potential plugging of
emitters, an anti-scalant chemical will be added to the barren tank and the
pregnant solution pump intake caisson. Fresh make-up water will either be
added to barren tank or the storm water pond to allow precipitation of scale.
The two horizontal barren solution pumps are set in parallel. Solution
application under leach will average 90 days at an application rate of 9 liters
per square meter per hour (0.0040 gpm per sq ft).
MERRILL-CROWE RECOVERY PLANT
The precious metals are recovered from the pregnant heap leach solution in a
typical Merrill-Crowe zinc precipitation plant. Pregnant solution is pumped from
the pregnant solution pond at a nominal rate of 251 liters per second (4,000
gpm), to three pressure leaf clarification filters, each with a 185 m(2) (2000
ft(2)) surface area. Clarified solution is transferred to a 3.4 m diameter by
4.78 m high de-aeration tower equipped with one vacuum pump for removal of
oxygen from the solution. The de-aeration has 75 mm packing, demister pad, and a
solution distributions system. The level in the de-aeration will be controlled
by a level controller sending a signal to a flow valve located upstream of the
clarifier filter feed header. The discharge of the de-aeration will be equipped
with both dissolved oxygenmeter and a turbidity meter. Zinc dust is slurried in
a zinc mix cone with Diatomaceous earth (DE) for body feed. The zinc will flow
into the pregnant
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MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
leach solution and the precious metals are precipitated from the pregnant leach
solution. The precipitate filter feed pumps will transfer the solution
containing the precipitated precious metals to plate and frame filters for
precious metals recovery from solution. Diatomaceous earth may be mixed in an
agitated pre-coat mix tank and an agitated body feed mix tank, and pumped to the
precipitate filters to facilitate precipitate recovery. Each filter has a total
filtration area of 185 m(2) (2000 ft(2)) surface area. Sumps and pumps are
installed in the Merrill-Crowe area for clean-up purposes. The clarifier
backwash will be discharged into a trench and flow by gravity to a collection
basin outside of the building. The solution will be decanted over a small
concrete wall and flow by gravity to the storm water pond.
The majority of the piping in the process plant will be carbon steel and the
pipe outside will be HDPE.
REFINING PROCESS
The precipitation filter feed pumps to a pressure of 6.9 bars or 100 psig fills
the filters pressure. Once gold and silver are filtered from the solution, the
barren solution from the precipitate filters flows to the barren solution tank.
When a filter is filled it is taken off line and the standby unit is placed on
line so that two filters are on line at all times. The filter cake is dried by
blowing air through the precipitate filter cake until the cake reaches
approximately 10% moisture. Approximately 425 kg per day of precipitate is
generated. The cake will be manually removed from the filter press either 2 or 3
times per week. The cake will be removed from the filter plates and placed into
cart. The carts will be loaded into a mercury retort furnace for mercury
removal.
There will be two Mercury Retorts. Each retort has a capacity of 1.13 m(3) (40
ft(3)) approximately 3,600 kg (8000 pounds) of Filter Cake. After placing the
precipitate filter cake into the chamber the retorts will be heated over a
12-hour period to drive off the excess moisture and mercury. A PLC will control
the heating elements to control the temperature. The retorts will require 150 KW
to complete the heating. The temperature will be increased over time and held at
485 degrees C(900 degrees F) for a period of 3 hours. During this time a vacuum
will be maintained on the retort chamber. The off gas will be condensed and the
water and mercury will be collected in a chamber. The mercury will be loaded in
flasks and stored for sale. The off gas will be further scrubbed with caustic
solution before discharge into the atmosphere. The retort chamber will be cooled
by the introduction of air into the system. The carts with the filter cake will
be removed and either put into the vault or unloaded into the furnace.
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EXHIBIT A
MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK and DESIGN CRITERIA
From the retort, the precipitate is loaded into a 0.2 m(3) (7 ft(3)) electric
induction melt furnace. Flux consisting of fluorspar, borax, and sodium nitrate
is charged into a hopper and then transferred to a mixer via a screw conveyor.
Silica is usually made from the DE in the filter cake. Additional silica may be
added in the flux mixer. The precipitate is blended with the flux in a mixing
system. A screw feeder will feed the mixture to the melting furnace on a batch
basis. When the furnace is full, the molten metal is poured into 31 kg (1000 oz)
side pour cascade type mold units, in series. Dore bullion is cleaned with an
air scabbler then weighed, sampled, and stored in a vault awaiting shipment.
Once gold and silver are filtered from the solution, the barren solution from
the precipitate filters flows to the barren solution tank.
Slag, generated from the furnace during melting, is processed through a circuit
consisting of a jaw crusher, ball mill, and slag filter press to remove prills
for re-melting in the furnace. Filter Press tails are sent to the heap leach pad
via carts that will be releached.
Sumps and pumps are installed in the refinery area for clean-up purposes. A bag
house is used to clean up the off gas from the furnace. The furnace will have a
2 m x 2 m hood over the unit to collect the off gasses. The off gasses will be
sent to a bag house with a capacity of 285 cubic meters per minute.
SECURITY
The refinery area is a high security, limited-access area. The door to the
viewing area and refinery will have a card scan and a magnetic lock that monitor
all people into the refinery area. A system of 6 closed circuit television
cameras, with redundant video recording, monitors the entire refinery area
including the entrances (inside and outside). There is a camera located in the
vault. A system of 4 closed circuit television cameras will be located in the
precipitation area. All refinery and precipitation access doors are linked to an
alarm system, which records every access door movement. Motion detectors are
also linked to the cameras and then to the alarm system. The closed circuit
video system will record all events. If an alarm is not attended by the security
people, a third party will be notified by telephone automatically.
REAGENTS
Sodium cyanide mix and storage facilities will be included in the system. Bulk
sodium cyanide is transported as solid briquettes. The product is dissolved on
site in a sodium cyanide mixing and storage tank 12 m(3) (3200 gallon). Caustic
is added before the cyanide to achieve a pH of 10. The tank will be equipped
with a "flow bin" loading arrangement. The mix tank will transfer the 5%
solution to storage in one 94 m(3) (24,800 gallon) storage tank. Cyanide will be
injected into the barren solution pump discharge
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EXHIBIT A
MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
to maintain sodium cyanide concentration of approximately 0.5 grams per liter.
The cyanide injection will be by flow meter and tested and adjusted by the
operator.
Sodium hydroxide mix and storage facilities will be included in the system. Bulk
sodium hydroxide is transported as solid prills in bags. The tank is equipped
with a bag breaker. The product is dissolved on site in a caustic mixing and
storage tank sized at 9.7 m(3) (2600 gallon). The caustic is added to the
cyanide tank.
Pebble lime will be added directly to the ore trucks from a 300 tonne silo
equipped with a vibrating bottom and discharge conveyor capable of delivering
the lime to a weigh bin located on a truck loadout structure adjacent to the
lime silo. The weigh bin will have a pneumatic valve that can transfer 300 kg of
lime to each truck in a few seconds. The trucks will drive under the weigh bin
and the valve will open automatically. Lime deliveries will be via bulk trucks
from a nearby source. Pebble lime is pneumatically delivered to the top of the
silo. Pebble lime addition to ore will be optimized at approximately 3 kg per
ore tonne to maintain heap feed solution pH in the range 10.5 to 11.0.
Anti-scalant is added to the inlet of the pregnant feed pumps, the barren
solution tank, and storm water pond via chemical metering pumps, which can
maintain an appropriate dosage rate (estimated between 3 to 8 mg/liter of
solution). Plastic tanks and pumps for the addition of anti-scalant will be
supplied by the vendor.
High purity zinc powder will be received in 36-kg cans, which are manually added
to the zinc feeder system at the Merrill Crowe plant. The cans will be open
manually and, for each can of zinc, 2 bags of DE will be added as body feed to
the precipitation filters.
Diatomaceous earth (DE) is received in 23-kg bags loaded on pallets. The pallets
are located by forklift on the platform and the DE is then added to both the
body feed and precoat tanks. The precoat application will be done with 3 bags of
DE to each filter. The precoat solution is recirculated on the filter with a
precoat pump that is 45 kW. The body feed DE is manually added to the mixer and
feed tanks in the Merrill-Crowe plant and the body feed is pumped into the
pregnant feed solution before the clarification filters.
ASSAY/METALLURGICAL LABORATORY
The metallurgical and assay laboratory is located adjacent to the process
building. The laboratory facility has been designed to perform the following
works:
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MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK and DESIGN CRITERIA
- Preparation mine grade control samples by drying;
- Crushing and pulverizing samples;
- Analysis of hot cyanide shake leach;
- Gold and silver fire assay for ore control, plant operation and Dore
analysis;
- Atomic absorption analysis for gold and silver in solution;
- Fire assay and gravity finish final dore and concentrates
- Atomic absorption analysis of final dore and concentrates;
- Leaching (CN soluble) analyses;
- Metallurgical test work required for process optimization;
- Water analysis
- Screen analysis
- Column testing
- Bottle rolls or leach work
The responsibility for the laboratory furniture and laboratory equipment is
detailed in Exhibit B Division of Responsibility. The assay lab is sized to
perform sample preparation and fire assay gold analyses on a nominal 200 samples
from the mine in a 24 to 36-hour turnaround time.
POWER LINE AND ELECTRICAL
A 115 KV transmission line will carry power from the substation San Luis II to
the Zapatilla water well substation. The line will be sized by CFE. A step-down
transformer sized for 3 MW located adjacent to the Zapatilla water well
substation will transform the line voltage down to 13.8 KV. The 13.8 KV line
will feed the water well, the plant, the Lime Bin facility, and the truck shop
(approx. 3900 meters beyond the plant). There is a 750 kW (minimum) emergency
generator sized to run the barren and pregnant precipitation pumps and other
critical items in the plant.
WATER WELL
The submersible well water pump will pump 60 l/s to the plant. The water well
has an existing 350 mm casing. The static water level is approximately 150
meters below the
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CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
surface. The dynamic water level is projected to be 156 meters below the
surface. The majority of water consumption at Cerro San Pedro will occur as a
result of heap leach operations and dust control in the mine. New water will be
added to the solution inventory as the heap leach pad grows due to the residual
soak moisture in the ore, evaporation losses, and other water uses in the plant
and mine facility. The moisture is estimated at 5% by weight of the ore tonnage
applied to the leach pad. To account for other water uses (road watering,
construction water, domestic water uses, etc.) the water consumption estimates
for Cerro San Pedro are conservatively based upon a 12% by weight of ore tonnage
factor. The water from the well is pumped directly to the main plant water
storage tank (2850 m distant). Transfer pumps located at the plant will pump
water from the plant water tank to the truck shop water tank (3900 m distant).
Both the plant water tank and the truck shop tank have a capacity of 750 m(3). A
volume of 332 m(3) of the plant water tank volume is reserved for fire
protection. The plant is fed by gravity throughout from the water storage tank.
Underground fire protection pipelines will be installed to the plant area
facilities to cover the office, laboratory, and process building.
TECHNICAL CLARIFICATIONS
The following are technical clarifications regarding the Scope of Work.
CIVIL
1. Due to unknown conditions at the site, Contractor has based pricing on
the assumption that the soil is not contaminated and can be excavated
with a backhoe or loader in a continuous activity at standard
productivity rates.
2. Contractor has made no allowance for removal or relocation of existing
above or underground utilities with the exception of the microwave
tower and the Questa de Campa water line.
3. Contractor has assumed all soil or rock is rippable.
4. There will be no concrete or asphalt paving.
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SCOPE OF WORK AND DESIGN CRITERIA
5. The sitework scope of work is based upon the AB Engineering leach pad
design and utilizing WGI for rough grading and drilling and blasting
work.
CONCRETE
1. Concrete work is based upon ACI guidelines.
2. Drilled concrete piers, H-Piling, or any other type of supplemental
support under the foundations will not be required.
3. A soil bearing capacity of 2,500 PSF at the plant area is the basis for
foundations.
4. The foundation concrete scope of work is based on the following general
descriptions of the various elements.
a) Lime Bin Foundation; 9 m square mat x .46 m thick w/ 20 ea rock
anchors tying mat to existing rock & 4 piers w/ anchors. Load-Out
slab along side of lime bin foundation 4 m x 9 m x .46 m thick
with column piers.
b) Pump Pad @ pregnant pond assumed 10' Sq w/ thickened edge, 6"
thick slab & 18" x 6" thickened edge.
c) Cyanide Tote Storage 6" thick slab w/ curb between Retort Room &
Deaeration Tower & sloping to 30" deep Sump.
d) Guard shacks (2): support pads and door pads as necessary for
office trailer installations.
e) Main Office building; 50' x 100' x 6" slab inside masonry walls on
305 mm thick spread footer for an 8" CMU block bldg.
f) Assay Lab Building; same as office bldg.
g) Process Plant Building & Perimeter Structures; (plan as shown on
Lyntek Dwg 03023-G-01 rev-D) settling pond, sodium cyanide storage
& trenches would be lower than process bldg and would have a 6"
base slab with 6" raised sections under tanks and 8" high
containment walls.
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CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
The process building foundation would consist of a 381 mm thick
spread footer 355 mm below grade, (masonry wall shall be built
directly on this footer), then 8" slabs butt to the masonry walls.
h) Water Storage Tanks; 2 @ 12.4 m square, 300 mm thick.
i) Door Pads; 4" pads at mandoors, 6" apron slabs at roll-up doors.
j) Creek Drainage Tunnel; Includes 5.86 m round Multiplate CMP set
with the invert at the level of the CSP creek bed under the WGI
haul road with Rip Rap slope stabilization around each end. The
pipe is enveloped in engineered fill 3m thick at each side and 1m
above.
k) Road Tunnel; Includes cast-in place (CIP) concrete footings and
walls at each side with pre-cast twin tee or box beam roof members
spanning over the existing Cerro San Pedro road. The clear opening
of the tunnel is 7.3 m wide x 4.57 m high. Tapered CIP wing walls
and head walls will be constructed at each end.
BUILDINGS AND ARCHITECTURAL
1. Buildings shall be constructed using masonry block walls, 8" exterior and
4"interior, with rebar reinforcing and grout filled cavities as required
for structural integrity. Roofing shall consist of 24 gauge ribbed metal
panels on steel purlins on trusses bearing on the exterior masonry wall
system. The roof system will incorporate 2" of fiberglass blanket
insulation for sound and condensation control. The roof will be designed
with a 1:12 slope.
2. Doors and frames shall be 16 gauge hollow metal with industrial grade
hardware as required.
3. Louvers and ventilators shall be industrial grade.
4. Steel shall be coated with red oxide prime paint. Masonry shall be painted
at building exterior and in office areas. The Retort room shall receive an
epoxy coating on floor, walls and ceiling. Doors and window frames shall
be painted.
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EXHIBIT A
MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
5. Ceilings shall be 2 x 4 suspended grid acoustical type at 8' above floor
except in designated areas that do not have a suspended grid ceiling.
MECHANICAL
1. MexTICa will install the plant equipment indicated in the Equipment List
in accordance with manufacturers' recommendations and typical Nevada, USA
mining practice. Manufacturers' representatives will be contracted for
startup assistance for the 3 or 4 critical pieces of equipment (including
Furnace, Retort, and Clarification Filters).
2. Plant Equipment will be installed directly on floor slabs set 2" above
slab level on cement grout, fastened with drill-in Hilti type anchors
bolts. Tanks will be set up on 6" housekeeping pads unless they have
integral support legs.
ELECTRICAL
The following generally defines the scope of electrical work in each area of the
project.
1. Electrical Power Distribution
a. Well Area - Electrical power shall be supplied to the well site via
a 115 kV overhead distribution line with a transformer.
b. Truck Shop & Lime Bin Area - Electrical power shall be provided from
a branch off the 13.8 kV overhead distribution line with a
transformer. Power to the Lime Bin control board will be fed via
underground. Lighting and local control for the lime bin is included
in the scope of work.
c. Plant Area - Electrical power shall be provided from the plant
substation to the Plant Area via a 13.8 kV overhead distribution
line and transformer.
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EXHIBIT A
MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
2. Secondary Power and Controls
The One-Line Diagram (Drawing no. 03023-E-03 Rev. C) and Equipment List
form the basis for the electrical scope work. Instrumentation is per the
P&ID's listed in Exhibit C. The following paragraphs define our approach
to various systems in each area.
a. Well Area - Secondary feed from the 13.8kV/480V Transformer will
consist of ductbank or buried conduit, above grade conduit, power
cables, terminations, and motor connection to the 350 hp well pump
and seal water pump. Required instrumentation shall be provided and
installed with direct buried cabling running in the water line
piping trench.
b. Process Plant Area-
1. Cabling for power and instrumentation shall be
galvanized armored cable in cable tray. Cable tray shall
be galvanized vented; 36" for power circuits and 24"
tray for control and instrumentation cabling. EMT
conduit system is utilized for non-process distribution.
Cabling between buildings shall be run in underground
conduit. Electrical Equipment & Gear is provided as
indicated on Lyntek drawings 03023-E-03, 04, 08, and 09
(single line drawings).
2. Lighting & Outlets; Interior lighting consists of 2x4
Troffers in office locations, Low Bay lighting in
process areas, with exit and emergency lighting.
Switches, receptacles and data ports are included in
office areas. Power for electric roll up doors and HVAC
components included. Welding receptacles are provided in
the process area. Lightning Protection, without UL
Label, is provided for in the scope of work.
c. Lab Building -
All branch circuit wiring for equipment power and HVAC systems,
including switches, receptacles, and data ports, shall be run in an
EMT conduit system. Interior lighting shall be provided utilizing
2x4 troffers in all public locations and industrial surface mount
florescent strips in mechanical rooms. Exit and emergency interior
lighting and two 250 Watt HPS Wall Packs on exterior wall facing
plant are provided. Local fire alarm and lightning protection
systems are included.
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EXHIBIT A
MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
d. Office Building
All branch circuit wiring for equipment power and HVAC systems,
including switches, receptacles, data ports, shall be run in an EMT
conduit system. Interior lighting shall be provided utilizing 2x4
florescent troffers in office locations, recessed cans in rest rooms
with brackets above vanities, recessed cans & architectural pendants
with dimming switches in large conference room, and exit & emergency
lighting. Two 250 Watt HPS Wall Packs on exterior wall facing plant
are provided.
Fire alarm and Lightning protection systems are included.
3. Yard Lighting
a. Plant Area - 250Watt HPS Wall Packs with glare shades shall be
mounted on the exterior of Plant area Buildings. Three 1000W HPS
pole type roadway fixtures on 50' concrete poles shall be used
around the perimeter of the ponds. One at each end and one between
the storm and pregnant solution pond.
b. Leach Pad Area - 8 ea 1000W HPS pole type roadway fixtures on 50'
concrete poles shall be placed around the base of the leach pad
along the collection trench with 24"(phi) x 5' Deep concrete bases.
Power shall be run via direct burial cable along the trenches.
4. Alarms & Monitoring - Reference: Environmental Impact Statement (MIA)
issue #91 & #93. "Monotox" cyanic acid detectors are provided for
Clarifying and Preciptate areas. Low pH sound alarm system is provided for
in sodium cyanide mixing and storage tank.
5. Control Systems - The plant is designed around a non-automated philosophy.
As such, only local control stations are provided for equipment.
6. Security & CCTV - Fixed cameras, with motion sensors are provided and
located in room corners of refining, precipitate, and vault. These cameras
communicate to system hardware including monitor and VCR in security room.
Monitoring of these critical process rooms can also be viewed at manager's
office and plant guard shack. Position monitoring for all doors of these
rooms is provided. A Card Reader system shall be installed to facilitate
screening of entrants to Secure areas of the plant and monitored in the
security room. The gate area of the
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EXHIBIT A
MINERA SAN XAVIER.
CERRO SAN PEDRO PROJECT
CIUDAD DE SAN LUIS POTOSI
SAN LUIS POTOSI, MEXICO
SCOPE OF WORK AND DESIGN CRITERIA
refinery storage area shall be monitored by CCTV.
7. Communications - Relocation of the existing microwave tower and cabling
and reinstallation, in the area above the new water tank, is included.
Backbone cabling from tower to plant shall be surface run. Tele/data
systems for Process Building, Lab, and Office, include cabling,
terminations, and installation of owner provided hardware and system
components have been included.
8. Grounding - A ground loop of #4/0 copper shall be installed around process
building with cad weld tails and mechanical connections to building steel,
pipe rack & equipment. Grounding for pond pumps shall be installed.
9. Ductbank - Underground conduit shall be installed to provide raceway to
connect Guard Shack, Office, Lab Bldg and Process Building.
PIPE
1. Materials of construction for above ground pipe are as indicated on P &
ID's. Utility and Service piping systems are generally HDPE or PVC and
field routed.
2. Valving and instrumentation are consistent with a "manually operated"
plant philosophy with materials and components normally used in this type
of mining process application and suitable for an installation with a life
expectancy of 8 years.
3. Excavated existing site material will be acceptable for trench backfill
without screening or sorting. Pipe bedding material has been included.
4. All carbon steel piping 2" and smaller shall be A106B schedule 80 with
socket weld fittings. 2.5" and larger piping shall be A53B ERW schedule 40
with butt-welded fittings. Flange ratings, where required shall be 150#.
All above ground carbon steel will have coat of primer paint only.
5. Leach collection/drain piping shall be ADS type pipe, 4" and 8",
perforated with filter fabric. The 12" and 24" diameter collection header
shall be non-perforated. The Scope of work includes only the leach
collection pipe for Phase 1.