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Model Mining Services Contract: Version 2 Coal and Iron Clauses

AMPLA Model Mining Services Contract Version 2, Coal & Iron Clauses, 3 December 2006


EXPLANATORY NOTE
These Coal and Iron Clauses have been prepared on the initiative of the Board of AMPLA Ltd for
use with the AMPLA Model Mining Services Contract. They have been prepared by a
representative Reference Group selected from knowledgeable AMPLA members in private
practice, mining companies and contractor organisations.
The Coal and Iron Clauses go beyond the basic framework of the Model Contract. They cover
specific situations which can arise in Coal Mining Contracts or Iron Ore Mining Contracts. There
are both new Optional Clauses and Alternative Clauses. Each of the Coal and Iron Clauses can be
inserted in the Model Contract at the places indicated.
As with the Model Mining Services Contract, the Coal and Iron clauses endeavour to strike a fair
balance on contentious matters between a Principal and a Contractor in a consistent manner.

COPYRIGHT
The AMPLA Model Mining Services Contract and the Coal and Iron Clauses are the property of
AMPLA Ltd which owns the copyright. AMPLA financial members are granted a royalty free
licence to use them for commercial purposes. Non-members may use the Model Mining Services
Contract and the Coal and Iron Clauses, without being in breach of copyright, only if the
applicable licence fee has been paid to AMPLA Ltd.

DISCLAIMER
AMPLA makes no warranty or guarantee or promise, express or implied, that the Model Mining
Services Contract and the Coal and Iron Clauses are accurate, complete, up to date, or fit for any
use or purpose whatsoever. They are made available on the AMPLA website for the information
and use of AMPLA members only and on the condition that AMPLA Ltd is not engaged in
rendering professional advice. Readers of the Model Contract and the Coal and Iron Clauses
should exercise their own skill and judgment in adopting or adapting any part of the Model or the
Coal and Iron Clauses for their own use.
AMPLA accepts no responsibility for any loss, cost or expense arising from use of the Model
Mining Services Contract and the Coal and Iron Clauses and shall not be liable in any manner
whatsoever for any direct, special, incidental, consequential, indirect or punitive losses or
damages arising out of the use of the Model Contract and the Coal and Iron Clauses, or any errors
or omissions in its content or in their use.

IMPROVEMENTS
If you have any questions or suggestions for improvement concerning this document, please
contact the AMPLA office at federal@ampla.org or see www.ampla.org.


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TABLE OF CONTENTS
1 Definitions - Coal Mining definitions (new definitions, clause 1.1) __________ 1
2 Contractors primary service obligations - statutory appointment (new clause
3.6) ______________________________________________________________ 3
3 Product Coal Specifications (new definitions and new clause 3.10) _________ 4
4 Variation in Quality and Quantity of ROM Coal (new definitions and new
clause 8.4) ________________________________________________________ 6
5 Payment for Lost Stockpile Coal (new clause 10.7) [Example only] _________ 8
6 Term, suspension and termination - by Principal for convenience of Washed
Coal Operation (New clause 18.3 (b) to (e)) ____________________________ 10
7 Coal Measurement - short form (Alternative Schedule 10) ______________ 13
8 Coal measurement - long form (Alternative Schedule 10) ________________ 15
9 Schedule 10 - Method of Measurement - Weightometer Management Plan
(new definitions and Schedule 10, paragraph 5) ________________________ 18
10 Schedule 11 - Mining Planning and Production Requirements - Coal
Performance Criteria (Alternative Schedule 11, paragraph 5) ____________ 19
11 Coal Mining Sections (new Schedule 11, paragraph 6) __________________ 21
12 Coal Mining Services Fee (Alternative Schedule 14) ____________________ 22
13 Coal Rise and Fall Adjustment (Alternative Schedule 17)________________ 23
14 Iron ore clause - Schedule 9 - Iron Ore Specifications [Example only] ______ 25




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1 Definitions - Coal Mining definitions (new definitions, clause 1.1)
These definitions are to be inserted or amended in the Model Mining Services
Contract where indicated in a particular Coal clause.
Delete Ore wherever appearing, and insert ROM Coal.
Include the following definitions in clause 1.1 as follows:
Coal means Crushed Coal and Washed Coal, but does not include ROM Coal.
Export Coal means Coal which the Principal intends to export from Australia.
Coal Handling Plant or CHP means that part of the Processing Plant so marked on the
plan annexed to Schedule 1, which converts ROM Coal to Crushed Coal.
Alternative definition:
Coal Preparation Plant or CPP is all buildings and infrastructure established for the
processing of ROM Coal including the ROM Coal pad and associated crushing
systems, CPP, conveyors, stockpiles, train loading system, offices, workshops and
adjacent fines recovery area bounded by the CPP declared plant boundary.
Alternative definition:
Coal Preparation Plant or CPP means that part of the Processing Plant so marked on
the plan annexed to Schedule 1, which converts Crushed Coal to Washed Coal.
Crushed Coal means coking coal and steaming coal, which has been beneficiated
through the Coal Handling Plant and has been crushed and screened only, regardless of
its metallurgical properties.
Delivery Point means the [I NSERT] load-out bin in accordance with this agreement.
Alternative definition:
Delivery Point means the stockpile at the [rail loading facility at or adjacent to the
Site] [port] in accordance with this agreement.
Domestic Coal means Coal other than Export Coal.
Product Coal means coking coal and steaming coal which has been mined and
processed and for Domestic Coal, loaded onto rail wagons or delivered to the Delivery
Point in accordance with this agreement and for Export Coal, as delivered onto
stockpile at port in accordance with this agreement.
Product Coking Coal and Product Steaming Coal mean respectively coking coal and
steaming coal mined and processed and loaded onto rail wagons or delivered to the
Delivery Point.
Product Coal Specifications means the Coal specifications described in Schedule 9, as
may be varied by the Principal from time to time.
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ROM Coal means run of mine raw coal (i.e. not crushed, screened or processed)
mined, hauled and dumped into the Processing Plant.
Washed Coal means Crushed Coal which has been beneficiated through the Coal
Preparation Plant.
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2 Contractors primary service obligations - statutory
appointment (new clause 3.6)
Example for new South Wales modify for other States: Insert a new Clause 3.6 as
follows:
3.6 Appointment under the Coal Mines Regulation Act 1982 (NSW)
(a) The Principal and the Contractor acknowledge that, when providing the
Mining Services and performing its other obligations under this agreement,
the Contractor will assume responsibility as an owner for the purposes of
the Coal Mines Regulation Act 1982 (NSW) (and not as an owner for the
purposes of the Mining Act 1992 (NSW)).
(b) The Contractor must:
(i) appoint a Mine manager who must:
(A) be approved by the Principals Representative; and
(B) be able to comply with its obligations under the Coal Mines
Regulation Act 1982 (NSW);
(ii) ensure that the Mine manager approved by the Principals
Representative is not replaced without the prior written approval of
the Principals Representative; and
(iii) ensure that the Mine manager performs and discharges all obligations
of the Mine manager under Law including the Coal Mines Regulation
Act 1982 (NSW).


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3 Product Coal Specifications (new definitions and new clause 3.10)
[See also Downstream facilities Rail Loading and Despatch - new Clause
3.9 in Section 6 of the Optional Clauses]
Insert new definitions in Clause 1.1 of Coal Preparation Plant, Coal
Handling Plant, Export Coal, Product Coal and Product Coal
Specifications see new definitions in Section 1.

Insert a new Clause 3.6 as follows:
3.6 Meeting Product Coal Specifications
(a) The Principal acknowledges that, due to:
(i) the inherent qualities of coal available for extraction at the Mine;
(ii) the lack of storage capacity available in the Coal Preparation Plant or
the Coal Handling Plant within the rail loop at the Mine;
(iii) the need to maximise recovery and utilisation of quality coal; and
(iv) the fact that the Contractor's Schedule of Rates has been based on bulk
mining methods which includes the sequencing of works, time in pit,
utilisation of equipment and utilisation of personnel, all to be within the
Contractor's absolute discretion,
it may not always be possible for the Contractor to meet the Product Coal
Specifications on train at the Delivery Point as required under this agreement.
(b) The Principals objectives are to:
(i) optimise its economic return from Product Coal; and
(ii) with respect to Export Coal, minimise the amount of blending carried
out at the port.
(c) The Contractors objectives are to:
(i) use bulk mining methods in providing the Mining Services;
(ii) minimise the cost of mining and hauling Waste and coal, coal
processing and loading coal; and
(iii) maximise the recovery of coal having regard to the Product Coal
Specifications.
(d) The Contractor shall use its best endeavours, having regard to the above
acknowledgements and objectives and the Contractor's knowledge of and
experience with the Mine (including the resource and the Processing Plant)
obtained from providing the Mining Services and the Contractor's other
obligations under this agreement, to provide Product Coal which:
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(i) in the case of coal other than Export Coal when loaded onto rail or
delivered to the [describe] load-out; or
(ii) in the case of Export Coal loaded onto rail; or
(iii) in the case of Export Coal, by blending in a single stockpile at the port,
conforms to the Product Coal Specifications. The obligation of the Contractor
under this subclause does not extend to varying its mining operation if to do so
would lead to an increase in costs or a decrease in profit to the Contractor
without a Variation, provided that the Contractor conducts its mining operation
in accordance with Good Industry Practice and otherwise in accordance with
this agreement.
(e) If the Contractor is unable to provide Product Coal which conforms to the
Product Coal Specifications, the Contractor must, as soon as practicable after it
becomes aware of the relevant fact, give the Principal a notice in writing
stating:
(i) the way in which it is unable or likely to be unable to provide Product
Coal which conforms to the Product Coal Specifications;
(ii) the reason for being unable or likely to be unable to provide such
Product Coal; and
(iii) the steps it can take to minimise any loss to the Principal if directed so
to do so by the Principal.
If the Contractor does not provide the Principal with a notice contemplated in
this subclause, the Contractor is deemed not to have used best endeavours for
the purposes of paragraph (d).


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4 Variation in Quality and Quantity of ROM Coal (new definitions
and new clause 8.4)
Delete Ore and insert Coal, wherever appearing.

Insert new definitions in Clause 1.1 of Coal and ROM Coal see new
definitions in Section 1.

[See also Schedule 2 Description of Mining Services - Mining Plan
(Contractor) - new definition in Section 30 of the Optional Clauses]

Insert a new Clause 8.4 as follows:
8.4 Variation in Quality and Quantity of ROM Coal
(a) The parties acknowledge and agree that all Production Schedules and Mining
Plans (Contractor) shall schedule and specify the basic coal quality
parameters of:
(i) ash (adb basis);
(ii) sulphur (adb basis);
(iii) calorific value (GAR basis); and
(iv) inherent moisture (GAR basis).
(b) The parties agree to develop and implement Coal quality control systems and
procedures to ensure that all Coal mined and delivered to the [Coal Handling
Plant][Coal Preparation Plant] complies with the requirements of the
Production Schedule and the Mining Plan (Contractor).
(c) The Principal or the Contractor may at any time and from time to time during
the Term have independent tests conducted on the mining area or any part
thereof. The effects of the ash content of the mining area or any part thereof
on the performance of the Mining Services by the Contractor in relation to
quality of ROM Coal shall be dealt with by the parties as follows:
(i) the Contractor must use its best endeavours in accordance with Good
Industry Practice to minimize any coal losses and dilution of coal
reserves in the mining area in which it is performing the Mining
Services from time to time;
(ii) the Principal shall consult with and monitor the Contractors
performance of the Mining Services with respect to coal dilution and
variation in ash content in the coal reserves in the mining area in
which the Contractor is performing the Mining Services from time to
time by coal sampling and testing;
(iii) upon identification of any significant hot spots or areas of coal
seams in the mining areas in which the Contractor is performing the
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Mining Services from time to time where there is greater than
[I NSERT]% variation adb in ash content, the Principal and the
Contractor shall jointly determine and agree the action required to
deal with such variations (if possible) such that the ash content of the
ROM Coal that is to be delivered to the [Coal Handling Plant][Coal
Preparation Plant] is consistent with the relevant Mining Plan
(Contractor); and
(iv) subject thereto, the Contractor is not required to perform any
additional work or provide additional Mining Services without a
Variation accepted by the Contractor.
(d) Should the Contractor fail to produce the required quality and/or quantity of
ROM Coal as specified in the Production Schedule (and this was shown as
not being a result of variances in coal quality) the Principal shall be entitled to
require the Contractor to explain the reasons for the failure and provide a plan
detailing steps to be taken to bring the quality and/or quantity back in line
with the relevant Mining Plan (Contractor) described in Schedule 11.
[See also Coal Clause 3.6(d) above].
(e) The obligation of the Contractor under this clause does not extend to varying
its mining operation if to do so would lead to an increase in costs or a
decrease in profit to the Contractor without a Variation, provided that the
Contractor conducts its mining operation in accordance with Good Industry
Practice and otherwise in accordance with this agreement.
(f) If the Contractor fails to take corrective measures within 6 months of being
required to do so by the Principal, a Termination Event is deemed to occur
and continue until the breach is remedied or this agreement is terminated,
whichever is the sooner.

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5 Payment for Lost Stockpile Coal (new clause 10.7) [Example only]
[Example only Clause assumes Principal insures Coal Stockpiles]
Insert a new Clause 10.7 as follows:
10.7 Stockpile Losses
(a) If any Coal mined by the Contractor is lost or damaged while in stockpile
(Lost Stockpile Coal) and the loss or damage:
(i) is not due to a breach of this agreement by the Contractor or due to a
negligent or wrongful act or omission of the Contractor; and
(ii) is beyond the reasonable control of the Contractor,
the Principal must, subject to this clause 10.7, pay the Contractor for
production of the Lost Stockpile Coal at the applicable rates in the Schedule
of Rates for items relating to Coal production to the extent that the work has
been performed in respect of that Lost Stockpile Coal (C).
(b) Where the Principal receives either no proceeds from insurance from its insurer
in respect of Lost Stockpile Coal, or those proceeds are less than or equal to
M, then the Contractor agrees to pay a rebate to the Principal equal to C, and
the Principal may set the rebate off against its obligation to pay the Contractor
under paragraph (a),
where
M = the sale price at the relevant time for the Lost Stockpile Coal
(or equivalent) less:
(i) if the Lost Stockpile Coal, instead of being lost or
damaged, had been loaded onto rail wagons or delivered
to the Delivery Point, then the amount the Principal has
paid or would have paid for production of that Coal
under this agreement; plus
(ii) any other costs of sale and loading, including
commissions and transport costs.
(c) Where the Principal receives proceeds of insurance from its insurer in respect of
Lost Stockpile Coal (the total net proceeds of that insurance being I) and
where I exceeds M then the Contractor agrees to pay a rebate to the Principal
equal to R,
where
R = C + M - I.
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The Principal may set the rebate off against its obligation to pay the
Contractor under paragraph (a).
(d) The Principal and the Contractor agree that:
(i) the maximum payment to the Contractor under this clause 10.7 must
not exceed C; and
(ii) the maximum rebate payable by the Contractor under this clause 10.7
must not exceed C.
NOTE: The payment provisions in this clause are not intended to deal with coal
stockpile losses that arise prior to the Delivery Point.


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6 Term, suspension and termination - by Principal for
convenience of Washed Coal Operation (New definitions and new clause
18.3 (b) to (e))
Delete Ore and insert Coal, wherever appearing.

Insert new definitions in Clause 1.1 of Coal, Coal Preparation Plant,
Crushed Coal, ROM Coal and Washed Coal see new definitions in
Section 1.
Insert new definitions in Clause 1.1 of Economic and Washed Coal as
follows:
Economic means economically viable on a cash break-even basis with a margin of
[I NSERT] % on the Principals cash costs.
Washed Coal Operation means that part of the delivery of Mining Services which
produces Washed Coal and the ROM Coal feed for that coal.
Amend Clause 18.3 to read Clause 18.3 (a) and insert the following:

(b) If in the opinion of the Principal the Washed Coal Operation is no longer
Economic, the Principal may, by the giving of not less than 6 months notice
to the Contractor, direct the Contractor to cease the production of Washed
Coal.
(c) Upon receipt of a notice to cease the production of Washed Coal, the
Contractor must, upon expiration of the notice:
(i) cease the Washed Coal Operation;
(ii) demobilise (as that term is defined in clause 35.1) its staff, employees
and equipment utilised in the Washed Coal Operation; and
(iii) decommission and secure and make safe the Coal Preparation Plant
(if directed by the Principal),
and the Principal shall thereupon pay the Contractor, as relates to the Washed
Coal Operation to the date of notice to cease the production of Washed Coal:
(iv) the amount due to the Contractor shown in any unpaid Payment
Certificates related to the Washed Coal Operation;
(v) for Mining Services provided prior to the date of termination, the
amount which would have been payable if the notice to cease the
production of Washed Coal had not been given and the Contractor
had been entitled to make and had made a Monthly Claim on the date
of expiration of the notice;
(vi) the cost of materials reasonably ordered by the Contractor for the
Washed Coal Operation, which the Contractor is liable to accept, but
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only if the materials become the property of the Principal upon
payment and only to the extent that this has not been recovered in
payments made by the Principal;
(vii) costs of cancellation of subcontracts and agreements for the supply of
materials or labour to the extent that they relate to or were entered
into for performance of the Washed Coal Operation and have not
been novated to the Principal or its nominee, or not been included in
any payment by the Principal;
(viii) the reasonable cost of decommissioning and securing and making safe
the Coal Preparation Plant (if directed by the Principal) and removal
of Contractor's Plant and Equipment (to the extent that this has not
been recovered in payments made by the Principal);
(ix) the reasonable additional costs of termination of the Contractor's
employees incurred by the Contractor as a result of the early
termination of the Washed Coal Operation;
(x) costs (excluding costs of Contractor's Plant and Equipment)
reasonably incurred by the Contractor with the knowledge and prior
written approval of the Principal in the expectation of completing the
Washed Coal Operation, and not included in any payment by the
Principal; and
(xi) the Contractor's profit margin agreeed by the Principal and the
Contractor (if any) on each of the above items.
The costs referred to in (vi) to (xi) (inclusive) above must not include any
amounts for:
(A) costs paid to related corporations which exceed reasonable market
rates; or
(B) amounts incurred as a result of a breach of contract or negligent or
other wrongful act or omission of the Contractor or its employees or
subcontractors.
The Contractor must take all reasonable measures to minimise the amounts
referred to in (vi) to (xi) (inclusive) above.
(d) The Contractor is not entitled to any other payments in connection with the
ceasing of the Washed Coal Operation.
(e) If after termination of the Washed Coal Operation under this clause, the
Principal proposes to recommence operating the Coal Preparation Plant then
if this agreement is still on foot, the Principal must give the Contractor a
written notice of that proposal, upon which the Contractor may within 60
days either:
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(i) advise the Principal that the Contractor is no longer interested in
operating the Coal Preparation Plant in which case the Principal is
entitled to operate the Coal Preparation Plant itself or contract for
others to do so; or
(ii) advise the Principal that it is prepared to recommence operating the
Coal Preparation Plant in which case those provisions of the
Contract dealing with operating the Coal Preparation Plant will be
restored to full operation.

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7 Coal Measurement - short form (Alternative Schedule 10)
Delete Ore and insert Coal, wherever appearing.

Insert a new definition in Clause 1.1 of Coal Preparation Plant see new
definitions in Section 1.

Schedule 10 - Method of Measurement for Coal [Example only]
1. The total tonnage of Coal mined and hauled by the Contractor in any given period
must be measured from readings taken from the Coal Preparation Plant
weightometer at the commencement and at end of that given period after:
(a) deducting the tonnage of any Coal passing over the Coal Preparation Plant
weightometer which has been transported to the ROM stockpile by any third
party;

(b) adding the tonnage of any Coal transported by the Contractor to locations
other than the ROM stockpile; and

(c) adding the tonnage of Coal transported by the Contractor in stockpile on the
ROM stockpile at the end of the given period less the tonnage of Coal
transported by the Contractor in stockpile on the ROM at the start of the
given period.

2. The total tonnage of Coal mined and hauled by the Contractor to the ROM stockpile
each month must be estimated by multiplying the number of loads of Coal mined
each month and transported by the Contractor on each route by an agreed estimated
average tonnes per load. The parties may use a weighbridge to determine the
estimated average tonnes of Coal per load.
3. The parties must use the following method to calculate the quantity of Coal hauled:
(a) during each shift, the Principals Representative may direct the Contractor to
cause each piece of equipment being used to haul Coal to cross the
weighbridge on at least 2 occasions for weighing its net payload of Coal;
and
(b) each month, the quantity of Coal hauled will be calculated by multiplying
the average net payload of Coal for each item of equipment as measured on
the weighbridge by the number of loads hauled by that item of equipment
totalled for all items of equipment used by the Contractor for that month.
4. On each occasion that the Coal Preparation Plant ROM stockpile is empty, the
Principal and the Contractor must make a reconciliation between the cumulative
tonnes of Coal hauled by the Contractor for the relevant period as measured by the
Coal Preparation Plant weightometer and the total estimated tonnes of Coal hauled
by the Contractor.
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5. At times agreed between the parties or, failing agreement, at times determined by
the Principals Representative, the Contractor must cause the following to occur:
(a) the ROM dump hopper will be run empty and the ROM feeder will be
stopped and a reading will be taken of the ROM weightometer;
(b) after first being weighed on the weighbridge, the Contractors trucks will
then dump directly into the ROM hopper until it is full. No other Coal will
be used to fill that hopper;
(c) after the ROM/dump hopper is full, the ROM feeder will be started and Coal
will be transferred across the weightometer into the Coal Preparation Plant.
No further Coal will be dumped into the hopper during this process;
(d) once empty, a recording of the cumulative tonnes indicated on the Coal
Preparation Plant weightometer will be taken. The ROM/dump hopper will
then by available for normal activities; and
(e) after taking into account the weighted tare mass of the trucks, if there is a
discrepancy between the tonnage of Coal dumped in the hopper as measured
by the weighbridge compared to that measured by the Coal Preparation
Plant weightometer of more than [2]%, the Principals Representative shall
arrange for the re-calibration of both the Coal Preparation Plant
weightometer and the weighbridge.
6. If the Coal Preparation Plant weightometer is found to have a greater than [1.0]%
variance from the nominal value, the Principal shall make an adjustment to the
preceding periods quantities of Coal hauled by the Contractor to the ROM
stockpile by an amount equal to that of the variance from the nominal value, to
bring the tonnage for which payment is made to the Contractor to the actual tonnage
following calibration of the Coal Preparation Plant weightometer.
7. During the Term, the Principals Representative must periodically have the Coal
Preparation Plant weightometer calibrated by a suitably qualified NATA (National
Association of Testing Authorities) technician and, if requested by the Contractor,
provide a copy of the calibration test results to the Contractor.

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8 Coal measurement - long form (Alternative Schedule 10)
Delete Ore and insert Coal, wherever appearing.

Insert new definitions in Clause 1.1 of Coal Preparation Plant see new
definitions in Section 1.

Schedule 10 - Method of Measurement [Example only]
1. Measurement for Payment Purposes
(a) For the purpose of payment, the tonnage of ROM Coal mined and hauled by
the Contractor to the CPP will be measured by the ROM Crusher
weightometer. Measurement shall be carried out by determining all tonnes
recorded by the ROM Crusher weightometer in the relevant month adjusted
by the stockpile variations measured between month surveys at the ROM
stockpile. For the purpose of this calculation, Coal held in stockpile shall be
deemed to have a density of [1.00] tonnes per 1 cubic metre.
(b) The tonnage of Coal mined and hauled by the Contractor from each mining
block to the ROM stockpile each month will be estimated by multiplying the
number of loads of each Coal type mined and transported on each route by an
agreed estimated average tonnes per load (for each truck type used). The truck
weighbridge or other weighing devices, agreed by both parties, may be used
to determine the estimated average tonnes per load.
(c) The parties must adopt the following principles in determining the method of
measurement for calculating ROM Coal Loss and Dilution:
(i) The survey volumes determined in any month are overlayed in the
geological model. The survey surfaces will be input into the
geological model, which will then generate the Coal tonnage for the
period in which the ROM Coal Loss and Dilution is being measured.
(ii) If the tonnes indicated by survey and measured by the ROM feed
Weightometer for the same period are less than the tonnes calculated
by the geological model, adjusted in accordance with paragraph (iii)
below (ROM reserves), then the value of the ROM Coal Loss and
Dilution is an amount owing by the Contractor to the Principal.
(iii) The in situ reserves generated by the geological model will be
adjusted using the Coal Properties (as defined as the parameters
detailed in the Schedule of ROM Products and Coal Properties) to
establish ROM reserves.
(iv) Using the Coal Properties, ROM reserves will be allocated a base
ROM ash as shown in the Schedule of ROM Products and Coal
Properties. The Principals Representative will carry out daily
sampling of the CPP feed ROM Coal to determine the actual feed
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ROM ash. If the feed ROM ash is greater than the base ROM ash,
then the dilution value will be an amount owing by the Contractor to
the Principal.
(v) The Principal and the Contractor must, on or before 3 months before
the commencement of a Year (other than the first Year) agree on the
Coal Properties for the geological model to apply for that Year.
2. Measurement for Reporting Purposes
(a) The Contractor shall determine by survey each month end the number of
hectares in respect of which clear and grub removal has been completed.
(b) The Contractor shall, by agreement with the Principal, determine by survey
each month end the quantity of bcm of Waste removed.
(c) The Contractor must carry out a survey of the Waste as follows:
(i) before extraction of the Waste, a survey must be carried out of the
area to be stripped;
(ii) after extraction of the Waste to the roof of the underlying Coal seam,
a further survey must be carried out of the seam roof.
(d) The Contractor shall keep a separate measurement in respect of the drilling
and blasting of Waste material.
(e) The results of all Contractors surveys under this clause are subject to the
approval of and may be disputed by the Principal which may raise this as an
Issue to be resolved by expert determination in accordance with clause 17.3.
3. Waste
During reporting periods, Waste volumes will be calculated by multiplying the
number of loads of Waste transported by an agreed volume per load (truck factor,
expressed in bcm/load for each type of truck used). This truck factor will be
reconciled and adjusted on a monthly basis. Surveyed Waste volumes will be
reported in three components:
3.1 Prime Waste
Prime Waste will be measured by the differential expanding face method, that is
the difference in volume between the advancing face in a period as compared to that
in the previous period, measured as follows:
P = S C OW
P is Prime Waste;
S is difference in survey volumes;
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C is Coal volume;
OW is old workings void spaces; and

Where all measurements are in bcm.
(a) Coal volume will be the tonnage removed from the Coal mining area divided
by the Density defined in the Coal Properties.
(b) Old workings void spaces will be calculated as follows:
(i) First workings:
Lengths of roadways within the mining block will be measured from
the Record Tracing (as defined in the Coal Mines Regulation Act
1982 (Cth)) [amend for State Law as applicable]. Width of roadways
will be an assumed 5.5 metres unless indicated otherwise on the
Record Tracing. Working height will be the height shown on the
Record Tracing or an agreed height as indicated by historical data.

(ii) Second workings and goaf:
For all areas of second workings and goaf, an air space volume of
20% of the total worked volume will be assumed.
3.2 Rehandle Waste
Rehandle Waste is the volume of material that is placed and moved again to allow
access to prime Waste and Coal as part of a logical mining sequence. Rehandle Waste
will be quantified and reported as an indicator of the success of a mining method.
3.3 Blasted ground
Blasted ground will be surveyed and reported each month and used to track monthly
inventory of blasted material.
4. Weightometers
The Project Review Group must, within 1 month of the Commencement Date,
develop and agree on the Weightometer Management Plan, which Plan must include:
(a) cross referencing of the weightometers for checking purposes, including an
audit process;
(b) an ongoing maintenance and inspection regime for the weightometers,
including a regular inspection and report on the conditions of the
weightometers by an independent authority;
(c) the calibration frequency and correction factors; and
(d) any other items agreed by the Project Review Group (including the
installation of additional weightometers).
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AMPLA Model Mining Services Contract Version 2, Coal & Iron Clauses, 3 December 2006 18
9 Schedule 10 - Method of Measurement - Weightometer
Management Plan (new definitions and Schedule 10, paragraph 5)
Insert new definitions in clause 1.1 as follows:
Weightometer is any device for calculating the weight of ROM Coal carried on a
conveyor on the Site (and includes the truck weighbridge or other weightometers and
conveyors as recommended by the Project Review Group).
Weightometer Management Plan is the Weightometer Management Plan set out in
Schedule 10 as agreed by the Project Review Group
Insert new paragraph 5 in Schedule 10 as follows:
Schedule 10 - Method of Measurement (Example only)
5 Weightometer Management Plan
(a) The Principal and the Contractor shall develop a Weightometer Management
Plan. This plan shall be for all Weightometers used in conjunction with the
Mining Services and will incorporate the following principles:
(i) The CPP Weightometer shall be calibrated on a monthly basis by a
suitably qualified National Association of Testing Authorities
(NATA) technician and a copy of the calibration test results will be
provided to the Principal and the Contractor. The timing of the
calibration test will be coordinated by the Principal.
(ii) If the Weightometer is found to have an error in precision of greater
than +/-[1.0]% from the Standard Precision outlined in Table 1 - Table
of Weightometer Details, the Principal shall make an adjustment to
the Coal tonnes delivered over the Weightometer since the last
Weightometer calibration by an amount equal to half of the variance
between the recorded tonnage and that calculated by applying the
Standard Precision.
Table 1
Table of Weightometer Details
Raw Coal Product Refuse
Make Ramsay Ramsay Ramsay
Model 10 14B 10 14B 10 -20B
Standard Precision +/-1/2% +/-1/2% +/-2%

(iii) Other principles that will be defined in the Weightometer
Management Plan include (but will not be limited to) the procedure if
the weightometer system fails, weightometer reconciliation, and the
like.
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10 Schedule 11 - Mine Planning and Production Requirements - Coal
Performance Criteria (Alternative Schedule 11, paragraph 5)
5 Performance Criteria [Example only]
5.1 Monthly tonnage
(a) Subject to paragraph (b), in any 3 successive months, the Contractor must
deliver more than [90]% but less than [110]% of the aggregate Monthly
Tonnage for those months (as contemplated by the Production Schedule).
(b) Over any six month period, the Contractor must deliver more than [95]%, but
less than [105]% of the aggregate Monthly Tonnage for those months (as
contemplated by the Production Schedule).
5.2 Raw Ash content
(a) The Contractor must ensure that the raw ash content of coal delivered to the
CPP is less than that shown for ROM Ash in the Coal Properties.
(b) If the actual ROM Ash (based on a monthly weighted average by ROM
product) of coal mined from any seams (other than those parts that contain old
workings) and delivered to the CPP varies by more than [2]% above the ROM
Ash as defined in the Coal Properties, liquidated damages will be payable by
the Contractor to the Principal at the rate of $[0.75] per 1% of ash for each
tonne of the ROM product(s) delivered during the month which contributed to
the weighted average for that ROM product.
(c) If the actual ROM Ash (based on a monthly weighted average) of coal
delivered to the CPP and mined from those parts that contain old workings,
varies by more than 5% above the ROM Ash as defined in the Coal
Properties, liquidated damages will be payable by the Contractor to the
Principal at the rate of $[0.75] per 1% of ash above 5%, for each tonne of coal
contributing to the weighted average.
5.3 Foreign matter in coal
(a) The Contractor must ensure that raw coal delivered to the CPP is free of
foreign matter such as timber, steel, plastic and rubber in all seams other than
in the [AB seam].
(b) In the [AB seam], the Contractor must ensure that large items of foreign
matter such as pipes, rails, conveyor structure and large timber props are
removed from the raw coal delivered.
(c) If the Principal determines that coal mined by the Contractor does not comply
with the requirements of this clause, the Principal may reject such material at
the ROM pad and require the Contractor to transport it to an area away from
the ROM pad and re-sort the material so that the coal does comply with the
requirements of this clause (all at the Contractors cost).
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5.4 Spontaneous combustion
Mining through areas of old workings creates conditions that encourage
spontaneous combustion. The Contractor must control the old workings voids to
ensure the air is not circulating. Carbonaceous material that is placed in the spoil
dumps must be covered by inert Waste and kept away from dump edges.
Uncontrolled spontaneous combustion could lead to coal loss, loss of coal quality
and environmental problems. The Contractor is required to develop a Spontaneous
Combustion Management Plan that will detail actions and timeframes for these
actions. If the Contractor fails to meet these timeframes the Principal may have
works undertaken by others at the Contractors cost.


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11 Coal Mining Sections (new Schedule 11, paragraph 6)
Schedule 11 - Mine Planning and Production Requirements
(Example only)
6 Coal Mining Sections [Example only]
(a) The Principal will direct the Contractor as to how each block of coal is to be
segregated into seam horizons:
(i) the removal may be in 3 discrete horizons for each seam up to 5
metres thick;
(ii) seams over 5 metres in thickness may be mined in 5 discrete horizons;
(iii) if the discrete horizon comprises of coal then it shall not be less than
200mm in thickness;
(iv) if the discrete horizon comprises parting material then it shall not be
less than 100mm in thickness; and
(v) unless otherwise agreed, the rates in the Schedule of Rates allow for
removal of one parting band per seam.
(b) The normal and an alternate working sequence is shown on Plan No. [X].
Other working sequences may be requested by the Principal provided they
comply with the above guidelines.
(c) The Contractor must provide the Principals Representative with the
proposed method of mining each block of coal which include procedures
that:
(i) ensure designated horizon control;
(ii) ensure that dilution and mining losses are kept to acceptable levels as
provided for in the Schedule 10 - Method of Measurement; and
(iii) manage pit water so as to minimise the effect of water on coal quality
and handling.
(d) The Contractor must cause the coal mined from discrete horizons of each
seam to be dumped or stockpiled as directed by the Principals
Representative.
(e) The Contractor must truck coal to the receival points (each receival point will
have a stockpile area) designated by the Principals Representative.
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12 Coal Mining Services Fee (Alternative Schedule 14)
The Coal Mining Services Fee is calculated according to the following formula:

SF = CC + RA+ SR + DW + Interim CC + PMG Resolutions + P + OH

Where:
SF is the Coal Mining Services Fee for the relevant month;
CC means the amount payable to the Contractor for ROM Coal mined and delivered to
the Delivery Point in the relevant month calculated by multiplying the quantity of ROM
Coal delivered to the Delivery Point in the month by the respective rates, based on the
relevant Design Pit ROM Strip Ratio, in the Schedule of Rates, less the amount of any
Interim CC payable or paid to the Contractor in the month or paid to the Contractor in
any previous month in respect of any of that quantity of ROM Coal;
RA means for the last month of each Year and the last month of the Term the amount
calculated by multiplying the difference between the quantity of ROM Coal delivered
to the Delivery Point in the relevant Year based on the relevant Design Pit ROM Strip
Ratio and the actual Pit ROM Strip Ratio for the relevant period, by the respective rates
in the Schedule of Rates;
SR means the amount payable for all variations to the Mining Services in the relevant
month calculated by multiplying the quantity of item(s) of work carried out in respect
of each such variation by or on behalf of the Contractor in the month by the applicable
rate in the Schedule of Rates;
DW means the amount payable for all dayworks carried out in the relevant month
calculated by multiplying the number of hours of dayworks approved by the Principal
and performed by or on behalf of the Contractor in the month by the respective rates in
the Schedule of Rates;
Interim CC means any interim payment payable under clause [xxx] for non-delivery of
Coal to the Delivery Point due to the act, omission or default of the Principal in the
relevant month;
PMG Resolutions means any amounts that may become due from one party to the
other as determined by resolution of the Project Management Group;
P means the amount payable for escalation the Coal Mining Services Fee for the
relevant month (if any); and
OH means the fixed on-site overheads amount for the relevant month as set out in the
Schedule of Rates.
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13 Coal Rise and Fall Adjustment (Alternative Schedule 17)
At the end of each half Year the Contractor shall submit an escalation claim based on
Rise and Fall for the half Year and the claim shall be determined in accordance with
the following formula:
P = A [a + (b x L1) + (c x M1) + (d x F1) + (e x E1) + (f x C1)] A
L M F E C

Where:
P is the value of the escalation claim during the period;
A is the value of that part of the Coal Services Fees and variations paid or payable
under Clause 8.2 in respect of the previous 6 months;
L is the notional gang hourly rate based on the initial labour agreement negotiated for
thisagreement as agreed by the partyies representatives on Site or, failing agreement
as determined by the Project Management Group;
L1 is the same as for L, but on the last day of the first quarter of the period to which
the escalation claim refers;
M is the price of the basket of parts for the Contractors Supplied Plant and
Equipment used by the Contractor in the calculation of its tendered costs as at the last
day of the month preceding the execution of this Agreement, as agreed by the partys
representatives on Site or, failing agreement as determined by the Project
Management Group;
M1 is the same as for M, but on the last day of the first quarter of the period to which
the escalation claim refers;
F is the Base Index Diesel Fuel Price of $[*]/litre ex [reference delivery point];
F1 is the Net Delivered Diesel Fuel Price in cents per litre on the last day of the first
quarter of the relevant period to which the escalation claim refers;
E is the Base Index price / tonne of [ * ] delivered to the Port of $[*];
E1 is the cost of [ * ] delivered to the Port on the last day of the first quarter of the
period to which the escalation claim refers;
C is the exchange rate of the [currency] in relation to the dollar at the date of this
Agreement. The applicable exchange rate will be the buying rate (ie the rate at which
the bank buys dollars in exchange for [currency]) determined from [*] Bank as
published in the [ * ] on the Commencment Date;
C1 is as for C, but on the last day of the first quarter of the period in which the
escalation claim occurs; and
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and the cost components used are :
a = Fixed Component (not subject to Rise and Fall) = [*]
b = Labour Component = [*]
c = Materials Component = [*]
d = Fuel Component = [*]
e = Explosives Component = [*]
f = [currency] Component = [*]
(b) The parties will also review annually on each anniversary of the Commencment Date
the adequacy of the Rise and Fall formula, in particular the appropriateness of the
proportions, indices and structure of the formula.



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14 Iron ore clause - Schedule 9 - Iron Ore Specifications
[Example only]
Lumpy Ore Specifications are:
(a) chemical (on a dry basis)
Element Specification Min/Max
Iron Fe 63% Minimum
Silica SiO
2
4.2% Maximum
Alumina Al
2
O
3
1.9% Maximum
Phosphorous P 0.07% Maximum
Sulphur S 0.04% Maximum
Copper Cu 0.03% Maximum
Other metals (set forth in Japanese Industrial
Standard M8202-83, other than those mentioned
above and excluding Ca, Mg & Mn)
0.15% Maximum
(b) moisture
free moisture loss at 105C 4% Maximum
(c) physical specifications (on a wet basis)
> 31.5mm 12.5% Maximum
< 6.3mm 10.5% Maximum
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Fine Ore Specifications are:
(a) chemical (on a dry basis)
Element Specification Min/Max
Iron Fe 60% Minimum
Silica SiO
2
4.8% Maximum
Alumina Al
2
O
3
2.9% Maximum
Phosphorous P 0.08% Maximum
Sulphur S 0.05% Maximum
Copper Cu 0.04% Maximum
Other metals (set forth in Japanese Industrial
Standard M8202-83, other than those mentioned
above and excluding Ca, Mg & Mn)
0.15% Maximum

(b) moisture
free moisture loss at 105C 6% maximum
(c) physical specifications (on a wet basis)
> 6.3mm 12.5% Maximum