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26.1 Closure Plan and Closure Obligations

(a) The Company shall prepare and deliver a closure plan to the State pursuant to Section 2.4(e) of this Agreement (“Closure Plan”). The Closure Plan shall address the anticipated environmental, social and economic state of the Project Area during the next five-year period of Mining Operations, and shall be prepared in Consultation with communities in the Project Area. It shall be consistent with any Community Development Agreements, and prepared consistent with guidance provided by the Planning for Integrated Mine Closure Toolkit and related guidance published by the International Council on Mining and Metals. The Closure Plan shall be updated through the same process by which it was prepared each time that there is a substantial change in Project operations. In the event that no such updated Closure Plan has been submitted for five (5) years, the Company shall deliver an updated Closure Plan on the sixth anniversary of the last such submission.
(b) The Company shall, after Consultation with communities in the areas affected by Mining Operations, deliver to the State a proposed final Closure Plan not later than twelve months before the planned end of the Commercial Production. After review and comment by of the State (with or without modification), the Company shall deliver the final Closure Plan to the State by the planned end of Commercial Production. The final Closure Plan may be amended by agreement between the Parties, during the performance of closure activities, at the request of the Company or the State, subject to any approval required by Applicable Law.
(c) After cessation of Commercial Production, the Company shall continue to perform the required environmental management of the Project Area as set forth in the Environmental Management Plan and the final Closure Plan.
(d) After cessation of Commercial Production, the Company shall provide to the State every 180 Days (or such alternative period as may be agreed by the Parties from time to time) a report explaining progress in the implementation of the final Closure Plan.
(e) Upon completion of the final Closure Plan, the State shall inspect the Mining Area and provide the Company with Notice as to whether the Company has completed closure in accordance with the final Closure Plan.

26.2 Guarantees for Closure Expenses

The Company shall within ninety (90) Days of the Effective Date, provide a mine closure guarantee to the State. The purpose of this mine closure guarantee is to ensure the completion of the Company’s Closure Plan.

(a) The mine closure guarantee shall be in an amount calculated to be necessary to implement the Closure Plan should the Company fail to implement the Closure Plan during the five-year period covered by the then current Closure Plan. The amount of the guarantee shall be updated any time the Closure Plan is updated, or with the five-year update of the Closure Plan under Section 26.1, so that it continues to be sufficient to ensure that all steps in the Closure Plan can be completed in a satisfactory manner should the Company fail to implement the Closure Plan.
(b) The mine closure guarantee shall consist of financial assurance in the form required by Applicable Law.
(c) During the life of the Project, if there is any substantive change in the Mining Operation, or there is any other event that means that the amount of the mine closure guarantee is no longer an accurate estimate of the amount necessary to implement the Closure Plan should the Company fail to implement it, the amount of the guarantee shall be recalculated, and increased or decreased accordingly, and any additional payment or repayment shall be promptly made.
(d) The State shall return to the Company the full sum of the Company’s mine closure guarantee within [X] Days following verification by the State that the Company has fulfilled all the obligations of the final Closure Plan. The State is permitted to inspect the Mining Area prior to approval to confirm the obligations in the Closure Plan have been fulfilled. Upon return of the Company’s guarantee, the State must itemize the sum of any amount withheld from the returned guarantee due to any alleged lack of compliance with the Closure Plan.
(e) The State may use any mine guarantee monies and any investment returns on such mine closure guarantee monies only for the purposes of implementing the Closure Plan should the Company fail to implement it, and for no other purpose.

26.3 Post-Closure Monitoring

The Company shall in Consultation with local community leaders, develop and implement a post-closure monitoring committee, with the mandate to supervise the monitoring of geophysical stability, water quality, and rehabilitation of contaminated sites and restoration of land for post-closure use. The post-closure monitoring shall take place for a period after the cessation of Commercial Production, the length of which shall be agreed in the Closure Plan.

Example 1
Clause 9.5
Environmental Reserve Fund

(a) Within fifteen (15) Days after the end of each Quarter after the Operational Period commences, [Mine] shall deposit into the Environmental Reserve Fund an amount equal to five percent (5%) of the amount obtained by subtracting (i) all monies expended during such Quarter by [Mine] for concurrent or progressive rehabilitation of the Sites and the cost of any bond, surety or other financial assurance required by Law from (ii) all operating costs paid or incurred by [Mine] during such Quarter in the operation of the Project and the Electrical Generation System, until the amount in the Environmental Reserve Fund has reached the estimated costs of closure of the Mine, including post-closure requirements, as estimated in the Closure Plan. If the calculation described in the preceding sentence produces a negative number (i.e., a credit to [Mine]), the amount [Mine] shall be required to deposit in the Environmental Reserve Fund in subsequent Quarters shall be reduced by the amount of such credit. If [Mine] is required by Law to post any bond, surety or other financial assurance with respect to the costs of closure of the Mine, the amount of the Environmental Reserve Fund shall be reduced by the face amount of such bond or financial assurance. All Quarterly payments made by [Mine] to the Environmental Reserve Fund and any costs incurred for any bond, surety or other financial assurance required by Law shall be deductible for income tax purposes in the Year in which the payments are made. The [Government] shall have the right, within one hundred eighty (180) Days of the end of each Calendar Year, to audit the expenditures made by [Mine] for concurrent or progressive remediation of the Sites during such Year.
(b) If the estimated costs of closure and post-closure change materially as a result of changes to the Closure Plan or changes in the condition of the Sites or concurrent or progressive rehabilitation, [Mine] shall amend the estimate for closure contained in the Closure Plan, consistent with Section 11.5. The Environmental Reserve Fund shall be adjusted in accordance with the changed estimate, through payment of any excess to [Mine] or further deposits by [Mine] in accordance with Section 9.5(a). [Mine] shall not be required to make a deposit greater than deposits required under Section 9.5(a) in any given Year, except as may be required pursuant to Section 9.5(e).
(c) Once the Environmental Reserve Fund has reached the level necessary to fund the estimated costs of closure of the Mine, then: (i) any future payments to the Environmental Reserve Fund will be based on substantial changes to the Closure Plan or other circumstances as agreed by the Parties; and (ii) the excess amount at the end of each Year, as agreed by the Parties, shall be paid in accordance with Section 9.5(d) after the end of that Year to [Mine] from the Environmental Reserve Fund, and the amount withdrawn shall be subject to income taxation and included in the calculation of the NPI Tax.
(d) Funds in the Environmental Reserve Fund shall be disbursed for closure and post-closure costs in a manner consistent with the Environmental Management Plan, Section 9.5(c) and Section 9.5(e). All disbursements from the Environmental Reserve Fund shall be subject to approval by the [Government], which approval shall not unreasonably be withheld, conditioned or delayed. If the [Government] has neither approved nor objected to any proposed disbursement in accordance with this Section 9.5(d) within thirty (30) Days after Notice given by [Mine] of such proposed disbursement, the [Government] shall be deemed to have approved such disbursement.
(e) Immediately prior to the combination of the Governmental Remediation Fund and the Environmental Reserve Fund pursuant to Section 11.11, an actuarial determination shall be made as to the amount required in the Environmental Reserve Fund pursuant to the mechanism established in Sections 9.5(a) through 9.5(c), and in the event there are funds in the Environmental Reserve Fund over and above those required pursuant to such determination, such excess funds shall be paid to [Mine] and shall be subject to income taxation and included in the calculation of the NPI Tax. Conversely, if the funds in the Environmental Reserve Fund are not sufficient to complete the remaining activities in the Post Closure Period as set out in the Closure Plan, then [Mine] shall be required to fund the shortfall.

Example 2
11.5 The Environmental Management Plan.
The Environmental Management Plan shall be prepared by Company during the Initial Period and shall include plans for environmental management, remediation, control and closure of all areas and aspects of the Project that are included in the Feasibility Study consistent with this Article 11. Company will use commercially reasonable efforts to coordinate the Environmental Management Plan with the Environmental Management Plan of THE STATE as then in effect. Company shall include in the Environmental Management Plan, a Closure Plan for Mine closure that will describe all activities that will occur during the Closure Period and the Post-Closure Period to meet the objectives of the Environmental Laws and the Environmental and Social Policies and Guidelines during all potential closure events. The Closure Plan shall also include a description of the actions to be taken during any periods of temporary closure or cessation of operations and for the closure activities to be performed should closure be required prior to the completion of the planned mine life. The Closure Plan will include a schedule and an estimate of the funds required to conduct closure and remediation of all site facilities and site disturbances during the Closure Period and the Post-Closure Period. Closure cost estimates shall include an allowance for Third Party closure and management of the Mine.

[…]

11.11 Combination of Funds. Upon either (i) the termination of this Agreement or (ii) at [Mine]’s option following the completion of the Closure Period, the Governmental Remediation Fund and the Environmental Reserve Fund shall be combined into one fund (the “Post-Closure Fund”) to create a source of funding for the performance of any and all foreseen Post-Closure activities. The Post-Closure Fund shall be transferred to the [Government] who shall continue to perform the required post-closure activities. Alternatively, a Third Party manager shall be retained who will directly, or through qualified Third Parties, continue to perform the post-closure activities. Upon completion of the Closure Period in accordance with Section 11.9 and the combination of funds under this Section 11.11, the [Government], [Mine] and the CENTRAL BANK shall release [Mine] from any and all obligations arising under this Agreement with respect to Environmental Conditions at the [Mine], however caused or created.
11.12 Deposit of Additional Monies in the Post-Closure Fund. In the event Environmental Conditions newly identified prior to completion of the Closure Period result in the need for additional monies to be deposited in the Post-Closure Fund, [Mine] and/or the [Government], depending upon the Party responsible for the increased liability, shall promptly deposit such monies in the Post-Closure Fund.
11.13 Assumption by [Mine] of Responsibilities for Remediation of Historic Environmental Matters.

(a) Notwithstanding any assignment of responsibility for Historic Environmental Matters pursuant to this Article 11, [Mine] shall have the right, but not the obligation, from time to time during the Term of this Agreement, by Notice to the Government Parties (each a “Liability Assumption Offer”) to offer to assume all of the obligations and rights of the Government Parties arising under Section 7.2 of this Agreement for the remediation of Historic Environmental Matters in return for the payment by the [Government] of the consideration (which may involve the forgiveness of some or all of the payments due to the [Government] pursuant to Article 8 and on the terms and conditions specified in the Liability Assumption Offer. The Government Parties may accept a Liability Assumption Offer within sixty (60) Days after the receipt of such offer by Notice to [Mine]. If the Government Parties do not accept a Liability Assumption Offer within such sixty (60)-Day period, the Liability Assumption Offer shall expire and be of no further force or effect. If the Government Parties timely accept a Liability Assumption Offer, the Parties shall promptly thereafter amend this Agreement in accordance with terms of the Liability Assumption Offer.
(b) If the Government Parties accept a Liability Assumption Offer, the Government Parties will continue to remain liable for any claim, demand, cause of action, or asserted right arising out of or relating in any way to the operation of the [Mine] or any activities at the [Mine] prior to the Project Notice Date, (other than operations or activities conducted by or on behalf of [Mine] or its Affiliates), and for all Third Party Liability.

Example 3
The Company shall rehabilitate the environment damaged by Core Operations in accordance with [HOST COUNTRY] and international standards and codes in effect when the mine is closed in whole or in part.

REFER TO MMDA DISCLAIMERS AND MMDA USER’S GUIDE
PRIOR TO ANY USE OF THIS DOCUMENT.

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