| |
| a) |
In terms of an agreement dated March 6, 1997 among Zambia Consolidated Copper Mines Limited (now ZCCM-IH), Avmin Limited, a subsidiary of ARM, Konnoco Zambia Limited (Konnoco) and the Government of Zambia, Konnoco acquired the Konkola North Copper Project in consideration of an initial payment on signing of US$500,000, additional payments which have been made, totalling US$500,000 upon the commencement of a feasibility study and the commitment to pay a further US$7,500,000 upon the taking of a development decision after the completion of a final feasibility study. Konnoco undertook to spend certain amounts to complete a pre-feasibility study, which the Company has done, and produce a feasibility study within a further 24 to 48 months. In terms of an amending agreement dated September 19, 2005, the parties agreed to extend the date on which Konnoco was required to produce a final feasibility study until the earlier of the date that is 24 months following the closing of the Offering and November 30, 2007.
Should a feasibility study be completed and a mine development decision be taken by Konnoco, then TEAL will be obligated to subscribe for that number of new Konnoco shares so as to equity finance one third of the total financing requirements for mine development and, as well, settle all inter-Company loans between Konnoco and TEAL. Thereafter, ZCCM-IH has the right to a 15% or 20% equity interest in Konnoco, of which 5% shall be a free-carried interest. ZCCM-IH’s residual 10% or 15% respectively,“paying” equity interest will obligate ZCCM-IH to fund its share of equity to develop a mine, although ZCCM-IH may elect to be debt funded by TEAL at an interest rate of LIBOR plus 4.5% (should ZCCM-IH elect to have a 15% interest) or a fixed rate of 20% (should ZCCM-IH elect to have a 20% interest).
|
| b) |
In terms of an agreement made May 6, 2003 between TEAL Mining (DRC) s.p.r.l (TEAL Mining), a wholly-owned subsidiary of the Company, and Gécamines, Gécamines agreed to contribute all of the mining rights to the area located within the Kasonta-Lupoto Polygon (an area now known as Permits d’Exploitation No. 2590) to Kalumines, a corporation owned 60% by TEAL Mining and 40% by Gécamines. On August 18, 2005, Gécamines and TEAL Mining agreed that TEAL Mining would submit a feasibility study before May 2007, which is a condition to TEAL Mining’s right to maintain its interest in Kalumines. Thereafter, TEAL Mining must arrange all financing for the development of a mine should a development decision be taken. Royalty payments of between 3% and 4.5% of gross sales must be made upon the commencement of production. TEAL Mining has the right to appoint a majority of members to the board of Kalumines and to any management committee established.
|
| c) |
The Company is committed to future minimum annual rent payments
under operating lease agreements over the next five years as follows:
| |
2007 |
|
2006 |
| |
$ 000 |
|
$ 000 |
| 2008 |
131 |
|
181 |
| 2009 |
107 |
|
172 |
| 2010 |
117 |
|
107 |
| 2011 |
50 |
|
117 |
| 2012 |
– |
|
50 |
| |
405 |
|
627 |
|
d)
|
Commitments in respect of capital expenditure
|
| |
| |
2007 |
|
2006 |
| |
$ 000 |
|
$ 000 |
| |
|
|
|
| Approved by the directors |
|
|
|
| – contracted for |
1,660 |
|
– |
| – not contracted for |
2,000 |
|
1,350 |
| |
3,660 |
|
1,350 |
|
|