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CONTRACT SPECIFICS

Date: 21 July 2016


Sellers ref: X551.071.E751.01
ITEM

TERM

DETAILS

Buyer

INSERT NAME

General
1.

Add 1:
Add 2:
Add 3:
Contact No.: +
Email:
2.

Seller

LC MINING PROJECTS LIMITED


Supplying Iron Mine in Australia

in

association

with

The

Room 1501 Grand Millennium Plaza,


181 Queens Road, Central, Hong Kong
Tel:
Email:
3.

Recitals

(a)

The Seller has the right to dispose of Product.

(b)

This Agreement sets out the terms on which the Seller agrees
to sell and the Buyer agrees to purchase Product.

4.

Product

Iron Ore Lump

5.

Product origin

Australia

6.

Delivery Terms

CFR FO Discharge Port (Incoterms 2010)

7.

Loading Port

Port Hedland, Western Australia

8.

Discharge Port

9.

Quantity

(a)

CFR FO Qingdao, People's Republic of China;

(b)

One or more alternative ports at the Buyers request where


the Buyer accepts the freight differential quoted by the
Seller.

Lump: 115,000 WMT +/- 10% at the Sellers option

10. Loading Port Laycan

1 - 10 August 2016

11. Latest Shipment


Date

20 August 2016

QP (Quotation Period) month


Pricing - Lump
12. Total Price

USD53.80/DMT CFR FO QINGDAO, CHINA BASIS 58 PCT FE

13. Base Price

USD46.81/DMT CFR FO QINGDAO, CHINA BASIS 58 PCT FE


FRANCTION PRORATA. LETTER OF CREDIT TO AUSTRALIAN
MINE.

14. Deposit +
Commissions

DEPOSIT PAID BY SELLER (LCMP) = USD5.175/DMT X 110 745


DMT = USD573 105.38 FOB PORT HEDLAND, WESTERN
AUSTRALIA. TT (TELEGRAPHIC TRANSFER) TO LCMP ON FOB.
FIXED INCLUSIVE COMMISSION TO SELLER (LCMP) OF
USD0.815/DMT X 110 745 DMT CFR FO QINGDAO, CHINA. TT
(TELEGRAPHIC TRANSFER) TO LCMP ON CFR. COMMISSION IS
NOT PART OF PRICE ADJUSTMENTS CALCULATIONS.
FIXED INCLUSIVE COMMISSION TO BUYER REPRESENTATIVE OF
USD1.00/DMT CFR FO QINGDAO, CHINA. TT (TELEGRAPHIC
TRANSFER) TO SELLER (LCMP) ON CFR. PAYABLE AS PER FEE
PROTECTION AGREEMENT. COMMISSION IS NOT PART OF PRICE
ADJUSTMENTS CALCULATIONS.

Quality - Lump
15. Agreed
Specifications

19. Price Adjustments

Chemical
(Dry Basis)

composition

Percentage by weight (Dry Basis)

Iron (Fe)

58.0% minimum

Silica (SiO2)

6.50% maximum

Alumina (Al2O3)

2.00% maximum

Sulphur (S)

0.02% maximum

Phosphorus (P)

0.06% maximum

Loss on ignition

8.00% indicative

Moisture

Percentage
wet state)

Free moisture loss


(at 105 degrees C)

3.70% indicative

Physical specification

Percentage
Basis)

Size >40.0mm square

2% maximum

Size < 6.3 mm square

7% maximum

by

by

weight

(natural

weight

(Natural

Adjustment for iron specification


If the shipment of Product under this Agreement does not conform
with the Base Iron Content, the Buyer must accept delivery but an
2

adjustment will be made to the Base Price as follows:


Iron content (%)

Adjustment (fractions pro-rata)

Greater than 58.0%

The Base Price shall be increased by the


Base Price divided by 58.0, for each 1% of
Fe above 58.0% (fractions pro-rata)

Less than 58%, but


equal to or greater
than 57%

The Base Price shall be decreased by the


Base Price divided by 58.0, for each 1% of
Fe below 58% (fractions pro-rata)

Less than 57%, but


equal to or greater
than 56%

The Base Price shall be decreased by:


(a)

the Base Price divided by 58.0 for


each 1% of Fe below 58% but
greater than or equal to 57%; plus

(b)

the Base Price divided by 58.0 and


multiplied by two, for each 1% of Fe
below 57%,

(fractions pro-rata)
Less than 56%

The Base Price shall be decreased by:


()

the Base Price divided by 58.0 for


each 1% of Fe below 58.0% but
greater than or equal to 57%; plus

()

the Base Price divided by


58.0 and multiplied by two, for each
1% of Fe below 57% but greater
than or equal to 56%,

()

the Base Price divided by 58.0 and


multiplied by three, for each 1% Fe
below 56%.

(fractions pro-rata).
Adjustment for chemical specifications
If the shipment of Product under this Agreement contains elements
exceeding the Agreed Specifications, the Buyer must accept delivery
but an adjustment will be made to the Base Price as follows:
Element

Adjustment (fractions pro-rata) (US$


per DMT)

Alumina

US$0.05 per 1.00% of excess Alumina


content greater than 2.0%.

Silica

US$0.05 per 1.00% of excess Silica in


excess of 6.5%

Phosphorus

US$0.05 per 0.01% of excess Phosphorus


content greater than 0.06%.

Sulphur

US$0.05 per 0.01% of excess Sulphur


content greater than 0.02%.

Adjustment for physical specifications


If greater than 2% of any shipment of Product does not pass
through a 40.0 mm square aperture screen, the Buyer must accept
delivery but will be entitled to a decrease to the Base Price at a rate
of US$0.10 per DMT divided by 100 for each additional 1%
(fractions pro rata) of the shipment which does not pass through
such screen.
If greater than 7% of any shipment of Product pass through a 6.3
mm square aperture screen, the Buyer must accept delivery but will
be entitled to a decrease to the Base Price at a rate of US$0.10 per
DMT divided by 100 for each additional 1% (fractions pro rata) of
the shipment which pass through such screen.

General Conditions

CONTENTS
CLAUSE
2.

PAGE

INTERPRETATION
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9

Definitions
1
Rules for interpreting this Agreement 3
Non Business Days
4
The rule about "contra proferentem"
4
Requirement on a person not a party to this Agreement
Multiple Parties 4
Consequential loss excluded
4
Relationship of the Parties
4
Inconsistency with Contract Specifics 4

3.

SALE AND PURCHASE OF PRODUCT

4.

SHIPMENT
4.1
4.2
4.3

5.

6.

7.

9.

10.

Weighing at Loading Port


Weighing at Discharge Port
Weight difference
10

9
9

10

Sampling and analysis at the Loading Port


Sampling and analysis at the Discharge Port
Analysis difference
11
11

12

Irrevocable Letter of Credit


12
Specific requirements for Letter of Credit
Amendments to Letter of Credit12

PAYMENT
10.1
10.2
10.3
10.4

10
10

Buyer must accept shipment


11
Limitation of liability for non-conformance to Agreed Specifications

LETTER OF CREDIT
9.1
9.2
9.3

NON CONFORMANCE TO SPECIFICATIONS


8.1
8.2

Buyer to provide safe berth


6
Import licences 7
Notice of Readiness
7
Buyer to discharge vessels
7
Stevedore Damage
7
Agency, Port charges, dues and taxes 8
Discharge rates and calculation of laytime
Counting of Laytime
8
Demurrage and despatch rates 9

SAMPLING AND ANALYSIS


7.1
7.2
7.3

8.

Seller to arrange for shipment of Product


Vessel nomination
4
Advice of shipment
6

WEIGHING
6.1
6.2
6.3

UNLOADING AT DISCHARGE PORT


5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9

13

Provisional payment
13
Payment Adjustment
13
Final Payment 13
No-set off, counterclaim or deduction

14

12

11

11.

DOCUMENTS
11.1
11.2

12.

14

Seller to provide documents


Buyer to provide documents

TITLE AND RISK


12.1
12.2

Risk
Title

15
15

13.

INSURANCE

15

14.

FORCE MAJEURE
14.1
14.2
14.3
14.4
14.5
14.6
14.7

15.

Meaning of Force Majeure


15
Excluded events and circumstances
16
Relief 16
Third party customer sales
16
Labour disputes17
Resumption
17
Termination for extended Force Majeure

Good faith discussions 17


Referral of Dispute to determination

Referral to Independent Expert 17


Appointment of Independent Expert
Conduct of Independent Expert 18

17.

ARBITRATION

18

18.

DEFAULT

19

18.1
18.2

20
20

20

Undertaking
20
Permitted disclosures

20

21

Acknowledgement regarding GST


GST pass on
21
Later adjustment to price or GST
Tax invoices/adjustment notes 21
Change in the GST Law 22
ABN withholding
22
Reimbursements and indemnities

NOTICES AND COMMUNICATIONS


22.1
22.2
22.3
22.4
22.5
22.6

23.

Termination events
Effect of termination

TAXES AND GST


21.1
21.2
21.3
21.4
21.5
21.6
21.7

22.

17

Default Events 19
Consequence of Default Event 19

CONFIDENTIALITY
20.1
20.2

21.

17

TERMINATION 20
19.1
19.2

20.

15

INDEPENDENT EXPERT 17
16.1
16.2
16.3

19.

15

DISPUTE RESOLUTION 17
15.1
15.2

16.

14
14

21
21

22

22

Form all communications


22
Form communications sent by email 22
Delivery
23
When effective 23
When taken to be received
23
Receipt outside business hours 23

GENERAL

23

17

23.1
23.2
23.3
23.4
23.5
23.6
23.7
23.8
23.9

Governing law 23
Entire agreement
Vienna Convention
Assignment
24
Amendments 24
Waiver of rights24
Costs and stamp duty
Severability
25
Counterparts 25

24
24

24

Schedule
1

PRO-FORMA IRREVOCABLE LETTER OF CREDIT 26

2.

INTERPRETATION

1.2

Definitions
Agreed Specifications means the "Agreed Specifications" set out in the
Contract Specifics.
Agreement means this agreement and includes the Contract Specifics, General
Terms and all schedules and annexures.
Base Iron Content means the minimum iron content for Product as specified in
the Agreed Specifications.
Business Day means a day which is not a Saturday, Sunday or a gazetted public
holiday in Western Australia, Singapore, Hong Kong and the Peoples Republic of
China.
Buyer has the meaning given in the Contract Specifics.
Buyer's Sampler has the meaning given in clause 6.2(a).
Buyer's Statement of Final Account has the meaning given in clause 4.2(a)
(iv).
Buy Documents has the meaning given in clause 4.2(a).
Certificate of Origin means a certificate describing the Product and tonnes
loaded by the Seller in accordance with the rules of the country of origin.
CFR has the same meaning as defined in the Incoterms 2010.
CIQ means State Administration for Entry-Exit Inspection and Quarantine for the
People's Republic of China.
Confidential Information means the terms and conditions of this Agreement
and all information flowing to any Party, or owned by or in respect of any Party,
in connection with this Agreement.
Contract Specifics means the schedule of agreement information with that
name forming part of this Agreement.
Corporations Act means the Corporations Act 2001 (Cth).
Discharge Port has the meaning given in the Contract Specifics.
Dry Basis means iron ore dried at 105 degrees celsius.
Dry Metric Tonne (and DMT) means a Metric Tonne of iron ore on a Dry Basis.
Final Invoice has the meaning given in clause 3.3(b)(i).
Force Majeure has the meaning given in clause 11.1.
General Terms means the provisions forming part of the "General Terms" of this
Agreement.

21 July 2016

Government Agency means:


(a)

a government or government department or other body;

(b)

a governmental, semi-governmental or judicial person; or

(c)

a person (whether autonomous or not)


administration of a law.

who

is charged with the

GST Law has the same meaning as "GST Law" in the A New Tax System (Goods
and Services Tax) Act 1999.
Incoterms 2010 means the International Rules for the Interpretation of Trade
Terms of the International Chamber of Commerce 2010 Edition.
LC Issuing Bank has the meaning given in clause 8.1(a).
Letter of Credit means the irrevocable letter of credit referred to in clause
8.1(a).
Loading Port has the meaning given in the Contract Specifics.
Metric Tonne means 1,000 kilograms.
Notice of Readiness means a notice of readiness to unload a vessel at the
Discharge Port.
Party means the Seller or the Buyer and Parties means both of them.
Price Adjustments has the meaning given in the Contract Specifics.
Product has the meaning given in the Contract Specifics.
Provisional Invoice has the meaning given in clause 8.4(a).
Provisional Price means the "Provisional Price" as calculated in accordance with
the Contract Specifics.
Quarter means a period of three consecutive calendar months commencing on 1
January, 1 April, 1 July or 1 October.
Related Corporation has the same meaning given to the term "related body
corporate" in the Corporations Act.
Sale Documents has the meaning given in clause 4.1.
Seller has the meaning given in the Contract Specifics.
Stevedore Damage has the meaning given in clause 4.5
US Dollars or US$ means the lawful currency of the United States of America.
Vessel Nomination Notice has the meaning given in clause 3.2(b).
Vessel Rejection Notice has the meaning given in clause 3.2(c).

21 July 2016

Wet Basis means iron ore in its natural wet state.


Wet Metric Tonne (and WMT) means a Metric Tonne of iron ore in its natural
wet state.
1.3

Rules for interpreting this Agreement


Headings are for convenience only, and do not affect interpretation.
The
following rules also apply in interpreting this Agreement, except where the
context makes it clear that a rule is not intended to apply.
(a)

A reference to:
(i)

a legislative provision or legislation (including subordinate


legislation) is to that provision or legislation as amended, reenacted
or replaced, and includes any subordinate legislation issued under it;

(ii)

a document (including this Agreement) or agreement, or a provision


of a document (including this Agreement) or agreement, is to that
document, agreement or provision as amended, supplemented,
replaced or novated;

(iii)

a party to this Agreement or to any other document or agreement


includes a successor in title, permitted substitute or a permitted
assign of that party;

(iv)

a person includes any type of entity or body of persons, whether or


not it is incorporated or has a separate legal identity, and any
executor, administrator or successor in law of the person; and

(v)

anything (including a right, obligation or concept) includes each part


of it.

(b)

A singular word includes the plural, and vice versa.

(c)

A word which suggests one gender includes the other genders.

(d)

If a word or phrase is defined, any other grammatical form of that word or


phrase has a corresponding meaning.

(e)

If an example is given of anything (including a right, obligation or concept),


such as by saying it includes something else, the example does not limit the
scope of that thing.

(f)

All measurements of physical quantities will be in legal units using the


metric system.

(g)

References to clauses and paragraphs are to clauses and paragraphs of this


Agreement.

(h)

A reference to information is to information of any kind in any form or


medium, whether formal or informal, written or unwritten, for example,
computer software or programs, concepts, data, drawings, ideas,
knowledge, procedures, source codes or object codes, technology or trade
secrets.

21 July 2016

1.4

(i)

The word agreement includes an undertaking or


arrangement or understanding, whether or not in writing.

other

binding

(j)

The expression this Agreement includes the agreement, arrangement,


understanding or transaction recorded in this Agreement.

(k)

A reference to dollars or $ is to an amount in US Dollars.

(l)

Terms defined in the GST Law have the same meaning in this document
unless otherwise defined in this document.

(m)

If a person is a member of a GST group, references to GST for which the


person is liable and to input tax credits to which the person is entitled
include GST for which the representative member of the GST group is liable
must pay and input tax credits to which the representative member is
entitled.

Non Business Days


If the day on or by which a person must do something under this Agreement is
not a Business Day:

1.5

(a)

if the act involves a payment that is due on demand, the person must do it
on or by the next Business Day; and

(b)

in any other case, the person must do it on or by the previous Business


Day.

The rule about "contra proferentem"


This document is not to be interpreted against the interests of a Party merely
because that Party proposed this Agreement or some provision of it or because
that Party relies on a provision of this Agreement to protect itself.

1.6

Requirement on a person not a party to this Agreement


If a provision of this Agreement requires a person that is not a party to this
Agreement to do, or not to do, a thing, each Party must use its reasonable
efforts to ensure that the person does, or does not, do that thing.

1.7

Multiple Parties
If a Party to this Agreement is made up of more than one person, or a term is
used in this Agreement to refer to more than one Party:
(a)

an obligation of those persons is joint and several;

(b)

a right of those persons is held by each of them severally; and

any other reference to that Party or term is a reference to each of those persons
separately, so that (for example) a representation, warranty or undertaking is
given by each of them separately.
1.8

Consequential loss excluded

21 July 2016

1.9

(a)

No Party in any capacity under this Agreement will be liable to any other
Party for any consequential losses or damages of any nature in relation to
this Agreement however caused and whether or not foreseeable at the date
of this Agreement.

(b)

Clause 1.8(a) does not limit the Seller's right to recover the price of any
Product where the Buyer has failed to pay for, or to take delivery of,
Product in accordance with the terms of this Agreement.

Relationship of the Parties


Nothing in this Agreement constitutes or implies a joint venture, agency,
partnership or other fiduciary relationship between the Parties.

1.10

Inconsistency with Contract Specifics


The Contract Specifics will prevail to the extent of any inconsistency between the
terms of the Contract Specifics and these General Conditions.

2.

SALE AND PURCHASE OF PRODUCT


The Seller agrees to sell and the Buyer agrees to purchase the Quantity of
Product on a CFR Discharge Port basis trimmed in a vessel supplied by the Seller,
subject to the terms and conditions set out in this Agreement.

3.

SHIPMENT

3.1

Seller to arrange for shipment of Product


(a)

Subject to clause 3.1(c), the Seller agrees to provide or arrange for


shipment of Product sold and delivered under this Agreement from the
Loading Port to the Discharge Port.

(b)

The Parties acknowledge and agree that:

(c)

(i)

the dates specified as the Loading Port Laycan sets out (as at
date of this Agreement) the indicative dates during which
Quantity of Product will be loaded at the Loading Port for
purpose of procuring the shipment of such Quantity of Product to
Discharge Port by the Latest Shipment Date; and

the
the
the
the

(ii)

the Seller may, at any time, amend the Loading Port Laycan as it
sees fit, by providing written notice to the Buyer and any such
amendment will be effective as of the date of the written notice.

The Seller's obligation to:


(i)

load (or to procure the loading of) any vessel for any shipment of
Product; or

deliver any shipment of Product, under this Agreement is subject to:


(ii)

21 July 2016

receipt from the Buyer of a complying Letter of Credit in respect of


that shipment; and

(iii)

the maintenance of that Letter of Credit until the delivery of that


shipment is complete in all respects (including to account for
subsequent adjustments),

in accordance with clause 8.

3.2

Vessel nomination
(a)

Unless otherwise agreed by the Parties, shipments of Product will be made


or arranged by the Seller in ore-carriers, bulk carriers, or combination
carriers:
(i)

suitable for grab discharge at one or two safe berths and one safe
port at the Discharge Port; and

(ii)

[not more than 25 years old,]

as nominated by the Seller and notified to the Buyer in accordance with this clause
3.2.

(b)

(c)

3.3

No later than 5 days prior to the commencement of Loading Port Laycan,


the Seller must submit to the Buyer a notice (Vessel Nomination Notice)
specifying:
(i)

the name of the performing vessel for the shipment of Product;

(ii)

such vessel's type, approximate dead weight tonnes, overall length


and beam; and

(iii)

the applicable demurrage rate.

If the Buyer has genuine concerns about the use of nominated vessel to
transport the shipment of Product (such concerns must be on grounds
related solely to the seaworthiness of the vessel or the inability of the
nominated vessel to arrive and berth safely at the Discharge Port), the
Buyer may issue a notice (Vessel Rejection Notice) stating those genuine
concerns and requesting the Seller to nominate another vessel, provided
that the Buyer gives the Seller such notice within 36 hours of the Vessel
Nomination Notice. If the Seller agrees that the genuine concerns stated in
the Vessel Rejection Notice are valid, the Seller must nominate and submit
another Vessel Nomination Notice under clause 3.2(b) as soon as
reasonably practicable.

Advice of shipment
(a)

21 July 2016

The Seller must, as soon as reasonably practicable and in any event within
5 Business Days following departure from the Loading Port of a vessel
carrying Product under this Agreement, notify the Buyer of:
(i)

the loading and departure dates;

(ii)

bill of lading number;

(b)

(iii)

weight and chemical composition, size, distribution and free moisture


content of the cargo determined in accordance with clauses 5.1 and
6.1;

(iv)

the approximate value of Product loaded; and

(v)

the vessel's estimated date of arrival at the Discharge Port.

The Seller must ensure the Buyer is further notified at approximately


seventy-two (72), forty eight (48), and twenty four (24) hours prior to the
estimated time of arrival of the vessel at the Discharge Port.

4.

UNLOADING AT DISCHARGE PORT

4.1

Buyer to provide safe berth


(a)

4.2

The Buyer must:


(i)

provide safe mooring facilities and berths at the Discharge Port (such
berths to be nominated by the Buyer no later than 7 days prior to
the vessel reaching Chinese waters) at which a vessel provided
under and in accordance with clause 2 may safely reach and leave
and at which such a vessel can lie safely afloat for the purpose of
unloading Product;

(ii)

ensure that such berths are free and accessible at all times by the
vessel for delivery of Product; and

(iii)

make all arrangements to immediately receive Product from the


vessel upon its arrival alongside the nominated berth.

(b)

The Buyer agrees to indemnify the Seller against any liability, costs,
expense, damage or injury arising from the Buyer's failure to provide such
safe facilities and berths in accordance with this clause 4.1.

(c)

If there is any danger that a vessel may be unable to approach or lie safely
afloat at any of the Buyer's nominated discharging berths:
(i)

the Buyer must arrange for the vessel to be discharged at an


alternative discharging berth or anchorage where the vessel can
discharge always safely afloat; and

(ii)

any additional discharging costs (including those associated with


lighterage and shifting) arising from the vessel being discharged at
such alternative discharging berth or anchorage shall be for the
Buyer's account; and

(iii)

shifting time shall count as laytime.

Import licences
The Buyer must obtain, at its own risk and expense, any import licences or other
official authorisation with respect to the import of Product under this Agreement
notwithstanding that such licence requirement may arise from a change in
legislation after the date of this Agreement.

21 July 2016

4.3

Notice of Readiness
(a)

After a vessel has arrived at or off the Discharge Port, the Seller must
(subject to clause 3.1(c)) procure that the master of the vessel (or the
vessel's agent) tenders a Notice of Readiness to the Buyer (or its
nominated agent).

(b)

Notice of Readiness may be tendered:

(c)

4.4

whether or not the vessel is in berth or port;

(ii)

whether customs cleared or not;

(iii)

whether vessel is in free pratique or not; and

(iv)

at any time day or night, Saturdays, Sundays and public holidays


included (SHINC).

In the event that free pratique and/or customs clearance is not granted, or
the vessel is not ready in all respects to discharge, the previously tendered
Notice of Readiness will be deemed null and void and a new Notice of
Readiness will be tendered when the vessel has complied with the
aforementioned conditions.

Buyer to discharge vessels


(a)

(b)
4.5

(i)

The Buyer must cause all Product sold and delivered under this Agreement
to be discharged and taken free from the vessel's holds:
(i)

at the Buyer's risk and expense; and

(ii)

at the rate referred to in clause 4.7.

The Buyer must appoint and pay for stevedores at the Discharge Port.

Stevedore Damage
At the discharge port, any damage to any part of the vessel caused by stevedores
during the discharge operation should be settled between the ship owner and the
responsible party. The buyer shall give customary assistance to the seller.

4.6

Agency, Port charges, dues and taxes


(a)

Vessels are to be consigned to an agent nominated by the Buyer and


approved by the Seller (such approval not to be unreasonably withheld)
(Port Agent).

(b)

The Seller is accountable for:

(c)

21 July 2016

(i)

all port charges associated with bringing the vessel alongside the
discharge berth; and

(ii)

any taxes, dues or other charges levied against the vessel.

The Buyer must pay all taxes that are imposed under non-Australian law on
Product sold under this Agreement.

4.7

4.8

(d)

The Buyer must procure that the Port Agent provide the Seller with as soon
as reasonably practicable following completion of discharge of the vessel,
an invoice setting out in reasonable detail any outstanding amount payable
on account of the actual amount incurred in respect of the fees and
expenses contemplated in clause 4.6(b) (including all supporting
documentation in respect of such fees and expenses).

(e)

The Seller must pay any amount due as set out in the final invoice issued in
accordance with clause 4.6(d) within 5 Business Days of receipt, provided
such invoices are sufficiently detailed for the purpose of clause 4.6(d) and
are otherwise to the Seller's reasonable satisfaction.

Discharge rates and calculation of laytime


(a)

The discharge rate will be 30,000 WMT per weather working day of twenty
four (24) consecutive hours, Saturdays, Sundays and holidays included
(Discharge Rate).

(b)

Allowed laytime for each Discharge Port shall be calculated by dividing the
quantity stated on the relevant bill of lading by the Discharge Rate.

Counting of Laytime
(a)

Unless otherwise agreed by the Parties, laytime for discharging will


commence counting:
(i)

twelve (12) hours after a valid Notice of Readiness has been given;
or

(ii)

when discharging commences,

whichever occurs first.


(b)

Laytime will cease on completion of discharge, withdrawal of discharging


equipment and, if applicable, completion of the Buyer's draft survey.

(c)

Laytime will include:

(d)

(i)

time used in shifting the vessel directly between berths at the


Buyers request; and

(ii)

where a vessel is already on demurrage, time in respect of any Force


Majeure or bad weather.

The following shall not count as laytime:


(i)

in a case where the Buyer orders the vessel to discharge at two


ports, the time from completion of discharge at the first port until:
(A)

arrival of the vessel at the second port (whether in berth or


not); or

(B)

when discharging resumes,

whichever occurs first;


21 July 2016

(e)

4.9

(ii)

time lost during discharging due to the vessel's inability to discharge


at the Discharge Rate or due to any other defect and/or default in
the vessel, deficiency and/or default of the vessel's personnel,
including inability of the vessel to ballast or deballast at a rate
commensurate with the Discharge Rate.

(iii)

time used for joint inspection of the vessel's holds;

(iv)

time used by the vessel in proceeding from waiting place or


anchorage to discharging berth or discharging anchorage.

Upon completion of discharge, the Seller will arrange for the master of the
vessel to sign on behalf of the Seller and a person designated by the Buyer
shall sign on behalf of the Buyer, a statement of facts which shall be the
basis of calculating laytime for discharging between the Parties.

Demurrage and despatch rates


(a)

The Buyer will pay the Seller demurrage on excess laytime used (if any) at
the market rate specified in the vessel nomination, per 24 hour day (pro
rated for part day).

(b)

The Seller will pay to the Buyer despatch on any laytime saved (if any) at
half the demurrage rate.

5.

WEIGHING

5.1

Weighing at Loading Port


(a)

5.2

At the Loading Port, the Seller must, at the Seller's expense:


(i)

determine the weight of the shipment of Product by draft survey;


and

(ii)

issue a weight certificate (Seller's Certificate of Weight)


indicating the aggregate weight of the shipment on a Wet Basis; and

(iii)

determine the weight of the shipment on a Dry Basis by deducting


from the weight (on a Wet Basis), moisture loss at 105 degrees
celsius (as determined pursuant to clause 6.1).

(b)

The weight of the shipment on a Dry Basis (as determined in accordance


with clause 5.1(a)(iii)) will form the basis of the Seller's Provisional Invoice.

(c)

The Buyer may, at the Buyer's expense, have its representatives present at
the time of the weight determination under this clause 5.1.

Weighing at Discharge Port


(a)

The Buyer may, at the Buyer's expense, arrange for CIQ (or an alternative
third party as agreed by the Parties) to:
(i)

21 July 2016

determine the weight of the shipment at the Discharge Port by draft


survey;

(ii)

5.3

issue a weight certificate indicating the aggregate weight of the


shipment on a Wet Basis (Buyer's Certificate of Weight).

(b)

Subject to clause 5.3, the weight determined pursuant to clause 5.2(a) will
be final as to the weight (on a Wet Basis) of the shipment.

(c)

The final weight on a Dry Basis will be determined by deducting the free
moisture loss at 105 degrees celsius from the weight of such shipment on a
Wet Basis (as determined pursuant to clause 6.2).

(d)

The Seller may, at the Seller's expense, have its representatives present at
the time of the weight determination under this clause 5.2.

(e)

If the Buyer does not have the shipment weighed in accordance with this
clause 5.2 at the Discharge Port or if the Buyer's Certificate of Weight is not
provided to the Seller within the timeframe set out in clause 4.2(a), then
the Seller's Certificate of Weight will be regarded as final (and clause 5.3
will not apply) and the weight on a Wet Basis as specified in the Seller's
Certificate of Weight shall be used for determination of the Seller's Final
Invoice.

Weight difference
(a)

If after determining the weight of a shipment in accordance with clauses


5.1 and 5.2 there are any differences of weight outturns over 0.5% on a
Wet Basis then the Buyer and the Seller must consult in good faith to settle
the difference.

(b)

If the difference cannot be reconciled by way of consultation within 2


Business Days, then the relevant weight will be determined by averaging
the weight determined at the Discharge Port and at the Loading Port. The
weight so determined will be deemed the weight of the shipment.

6.

SAMPLING AND ANALYSIS

6.1

Sampling and analysis at the Loading Port


(a)

(b)

6.2

At the Loading Port, the Seller must, at the Sellers expense:


(i)

take a representative sample of each shipment of Product and


analyse for chemical composition, size distribution and for free
moisture content; and

(ii)

provide a certificate (Sellers Certificate of Quality) showing


details of the analysis which will be the basis for the Seller's
Provisional Invoice.

The Buyer may, at the Buyer's expense, have its representatives present at
the time of such sampling and analysis.

Sampling and analysis at the Discharge Port


(a)

21 July 2016

At the Discharge Port, the Buyer at the Buyer's expense, may arrange for
CIQ (or an alternative third party as agreed by the Parties) (Buyer's

Sampler) to take a representative sample of each shipment of Product


upon each vessel's arrival at the Discharge Port.
(b)

6.3

The Buyer must procure that the Buyer's Sampler:


(i)

divide the sample into three parts one for the Buyer, one for the
Seller and one for the Buyer's Sampler;

(ii)

analyse the Buyer's sample for chemical and physical composition


and free moisture content; and

(iii)

provide the Buyer with a certificate showing the percentage of


chemical contents, the percentage of free moisture loss at 105
degrees centigrade and the relevant screen analysis (Buyer's
Certificate of Quality).

(c)

The Buyer's Sampler's analysis, as shown on the Buyer's Certificate of


Quality, will be final except as otherwise provided for in clause 6.3.

(d)

The Seller may, at the Seller's expense, have its representatives present at
the time the Buyer's Sampler conducts the sampling and analysis
contemplated under this clause 6.2.

(e)

If no analysis is undertaken by the Buyer's Sampler at the Discharge Port,


or if the Buyer's Certificate of Analysis is not provided to the Seller within
the timeframe set out in clause 4.2(a), the Seller's Certificate of Analysis
will be conclusive as to the specifications of the Product sold and delivered
under this Agreement and will form the basis for the Final Invoice.

Analysis difference
(a)

Should there be a difference of 0.5% or more in the chemical specifications


and free moisture content analysis (and 0.05% or more for Phosphorous or
Sulphur content) between Discharge Port and Load Port, then the Seller
may take the average between the Discharge Port and Load Port to
prepare the Final Invoice.

(b)

Whereby the difference in chemical specification between Discharge Port


and Load Port exceeds 1%, the Seller must consult in good faith with the
Buyer to reconcile the difference.

(c)

If, after consultation, the difference cannot be reconciled, then at the


request of Seller, the Buyer must cause the Buyer's Sampler to submit the
Buyer Sampler's sample for analysis by the Independent Expert in
accordance with clause 13.

(d)

Subject to clause 6.3(e), the Independent Expert's analysis for the relevant
elements at issue shall be final and binding on the Parties.

(e)

If for any reason, the Buyer's Sampler is unable to provide the sample
referred to in clause 6.3(a) for the Independent Expert's analysis pursuant
to clause 6.3(a), the specifications stipulated in the Seller's Certificate of
Quality shall be final and binding on the Parties.

21 July 2016

(f)

The costs of the Independent Expert for the purpose of this clause 6.3 shall
be for the account of the Party whose own analysis differs farther from the
Independent Expert's analysis and if the result of such analysis is the mean
of the analysis of Buyer and the analysis of Seller, then, such cost shall be
equally borne by both Parties.

7.

NON CONFORMANCE TO SPECIFICATIONS

7.1

Buyer must accept shipment


If any shipment of Product does not meet the Agreed Specifications, the Buyer
must accept delivery of such shipment but the Base Price payable for that
shipment will be adjusted in accordance with the Price Adjustments set out in the
Contract Specifics.

2.1

Limitation of liability for non-conformance to Agreed Specifications


The Seller's liability for failure to deliver Product conforming to the Agreed
Specifications is limited to the applicable remedies set out in clause 7.1, and
those remedies are, to the maximum extent permitted by law, the sole and
exclusive remedy for the Buyer for such non-conformance.

8.

LETTER OF CREDIT

8.1

Irrevocable Letter of Credit


(a)

8.2

The Buyer must, no later than 3pm Johannesburg, South African time on
the 27 July 2016, open with a prime commercial bank acceptable to the
Seller (LC Issuing Bank), an irrevocable letter of credit in favour of the
Seller (as first beneficiary):
(i)

for an amount of US Dollars sufficient to cover 100% of the value of


the shipment (as calculated in accordance with clause 8.1(b)), plus a
provision of +10% tolerance; and

(ii)

on other terms acceptable to the Seller that comply with the


requirements in clause 9.2.

(b)

For the purpose of clause 8.1(a), the value of the shipment will be
calculated by multiplying the Quantity of Product (in DMT) with the Base
Price as per item 13 in the Contract Specifics.

(c)

The Buyer must pay all Letter of Credit opening charges and reimbursing
bank charges and the Seller must pay all banking charges arising outside of
the LC Issuing Bank.

(d)

The Buyer must provide the Seller with a copy of each Letter of Credit by
email or facsimile within 1 Business Day after its date of issue by the LC
Issuing Bank.

Specific requirements for Letter of Credit


The Letter of Credit must:

21 July 2016

8.3

(a)

remain open for a minimum of 100 days after the vessel is due to sail from
the Loading Port;

(b)

be freely negotiable (for example, by inclusion of an UCP clause stating that


it is "available with any bank"); and

(c)

be denominated in US Dollars.

Amendments to Letter of Credit


The Buyer agrees that it will amend the Letter of Credit to:
(a)

increase its amount;

(b)

extend the period of its validity; and/or

(c)

make any other appropriate modifications as is necessary to provide for


security and payment in full of any amount which may become due to the
Seller in respect of any shipment under this Agreement,

in the event that the opening value of the Letter of Credit (excluding the +10%
tolerance) becomes inadequate to cover such amounts at any relevant point in
time for any reason, including due to fluctuations in the Index Price.
3.

PAYMENT

3.1

Provisional payment
(a)

(b)

3.2

Within 14 Business days after completion of loading of Product at the


Loading Port, the Seller must:
(i)

present the Sale Documents to the LC Issuing Bank for negotiation;


and

(ii)

contemporaneously send copies of each Sale Document to the Buyer


by facsimile and email.

Upon presentation of the Sale Documents to the LC Issuing Bank, payment


of 100% of the Base Price will be made on behalf of the Buyer by the
Seller making a drawing on the Letter of Credit, which shall be payable by
electronic funds transfer by the LC Issuing Bank to the Seller's nominated
bank account .

Payment Adjustment
If at the end of each calendar month, there is a 5% or more price variation from
Provisional price, both parties agree to arrange for a second Provisional payment
to adjust for this difference. In this case, the Buyer or the Seller will prepare a
2nd Provisional invoice for the difference between the Provisional Payment and
100% value of such shipment, based on the elapsed months average price, which
will be paid by respective party within 7 business days of the date of the invoice
by telegraphic transfer.

3.3

Final Payment

21 July 2016

(a)

Upon completion of discharge of each shipment at the Discharge Port, the


Buyer must prepare and send to the Seller the Buy Documents (including
the Buyer's Statement of Final Account).

(b)

Subject to clauses 3.3(e) and 3.3(f), upon receipt of the Buy Documents,
the Seller must as soon as reasonably practicable prepare and issue to the
Buyer:
(i)

the final invoice applicable for that shipment, which shall be for an
amount of the final Base Price payable by the Buyer for that
shipment in excess of any provisional amount paid by the Buyer
pursuant to clause 3.1, such final Base Price to be calculated on the
basis of:
(A)

the Buyer's Certificate of Quality and Buyer's Certificate of


Weight; and

(B)

if applicable, clauses 5.3 and/or 6.3,

(Final Invoice); and


(ii)

8.4

an additional invoice for any demurrage payable by the Buyer in


respect of that shipment under clause 4.9.

(c)

The Seller may make a drawing on the Letter of Credit for the amount set
out in the Final Invoice.

(d)

If despatch is payable by the Seller under clause 4.9:


(i)

the Buyer must send a debit note to the Seller for the amount of
despatch payable (as calculated in accordance with clause 4.9); and

(ii)

the Seller must, within 14 Business Days of receipt of the debit note
referred to in 3.3(d)(i), pay the amount set out in such debit note by
way of electronic funds transfer to the Buyer's nominated account.

(e)

If any of the Buy Documents is not received by the Seller within 60 days
after completion of discharge, the Seller shall be entitled to issue the Final
Invoice based on the Sale Documents for that shipment and no subsequent
adjustment, which shall be final notwithstanding that the Buy Documents
may subsequently be received by the Seller after such time.

(f)

If the provisional amount paid by the Buyer pursuant to clause 3.1 is


greater than the final Base Price, the Seller must remit to the Buyer an
amount equal to such excess by way of electronic funds transfer to the
Buyer's nominated account within 30 days after the date of receipt of a
debit note from the Buyer evidencing such overpayment.

No-set off, counterclaim or deduction


Payment for Product shall be effected as specified in this Agreement, free of any
set-off, counterclaim or deduction.

21 July 2016

4.

DOCUMENTS

4.1

Seller to provide documents


The Seller must present the following documents to the LC Issuing Bank for
negotiation in respect of the shipment of Product under this Agreement:
(a)

a provisional invoice setting out the Provisional Price payable for the
shipment of Product (Provisional Invoice);

(b)

3/3 of the original set of Clean on Board Third Party Bills of Lading; and

(c)

the Seller's Certificate of Weight and the Seller's Certificate of Quality


applicable to the relevant shipment,

(the Sale Documents).

4.2

Buyer to provide documents


(a)

The Buyer must, as soon as reasonably practicable (but in any event no


later than 60 days) after the discharge of the shipment at the Discharge
Port, prepare and send to the Seller (as applicable):
(i)

the Buyer's Certificate of Weight;

(ii)

the Buyer's Certificate of Quality;

(iii)

the Buyers draft survey report;

(iv)

a statement showing the final Base Price payable by the Buyer for
the relevant shipment under this Agreement (including any
applicable Price Adjustments) (Buyer's Statement of Final
Account), calculated on the basis of:
(A)

the Buyer's Certificate of Quality and Buyer's Certificate of


Weight; and

(B)

if applicable, clauses 5.3 and/or 6.3,

(the Buy Documents).

(d)

The Buyer must, on request from the Seller, send the Seller by email a copy
of the Buy Documents.

9.

TITLE AND RISK

9.1

Risk
(a)

The risk in Product passes to the Buyer when Product crosses the ship's rail
at the Loading Port.

(b)

In the event of partial or total loss of any Product after it crosses the ship's
rail at the Loading Port, the Seller will remain entitled to 100% of the
amount set out in the Provisional Invoice by drawing under the Letter of
Credit for payment of such amount.

21 July 2016

9.2

Title
Title passes from the Seller to the Buyer upon payment being effected in
accordance with clause 3.1 of this Agreement.

10.

INSURANCE
(a)

Insurance must be effected by the Buyer from the time Product has crossed
the ship's rail at the Loading Port.

(b)

Over aged premium (as quoted by Lloyds of London) shall be borne by the
Seller if the vessel is over 25 years old.

11.

FORCE MAJEURE

11.1

Meaning of Force Majeure


In this Agreement, Force Majeure means any cause which is beyond the
reasonable control of any Party claiming Force Majeure (Affected Party),
including:
(a)

an act of God;

(b)

strike, lockout or other types of labour dispute;

(c)

act of the public enemy;

(d)

war (whether declared or undeclared);

(e)

blockade;

(f)

revolution, riot, insurrection or civil commotion;

(g)

fire, earthquake, lightning, storm, cyclone or flood;

(h)

explosion;

(i)

epidemic;

(j)

restraint by or of any Government Agency;

(k)

act of terrorism;

(l)

embargoes;

(a)

unavailability of equipment or transport; and

(b)

blockages or obstructions of the navigational channel, approach or loading


berth at the Loading Port;

(c)

any shutdown of, or interruption to, the Seller's mines or the Loading Port;

(d)

a delay in access to, failure or breakdown of, or accident at the Loading


Port; or

21 July 2016

(e)

11.2

any similar or other force majeure event affecting the nominated


performing vessel or any of the Sellers' suppliers of goods and services.

Excluded events and circumstances


Notwithstanding clause 11.1, the following events and circumstances do not
constitute Force Majeure:

11.3

(a)

lack of funds or financial hardship;

(b)

fluctuation in the market price of iron ore;

(c)

loss of customers or loss of market share; and

(d)

any event or circumstance affecting any of the Buyer's activities or facilities


which are within the Buyer's reasonable control.

Relief
If, as a direct result of Force Majeure, an Affected Party becomes unable, wholly
or in part, to perform any of its obligations under this Agreement:

11.4

11.5

(a)

that Affected Party is to give the other Party prompt notice of the Force
Majeure with reasonably full particulars and, insofar as is known to it, the
probable extent to which it will be unable to perform, or be delayed in
performing any obligation;

(b)

that obligation, other than an obligation to pay money, is suspended but


only so far as and for so long as it is affected by the Force Majeure; and

(c)

subject to clause 11.4, that Affected Party must use all reasonable
endeavours to promptly overcome or remove the effect of the Force
Majeure to the extent it is possible to do so.

Third party customer sales


(a)

The Parties acknowledge that the Seller may enter into, or may have
entered into, contracts with other customers for the sale and delivery of
Product.

(b)

If the Seller is the Affected Party and, due to Force Majeure, is prevented or
hindered from supplying Product to the Buyer and its other customers
during the period of Force Majeure, the Seller may, subject to the terms of
this clause 11, allocate its supplies of Product available for delivery between
all of its customers (including the Buyer) as it thinks fit and at its sole
discretion, including (without limitation) by reducing the supply of Product
to the Buyer whilst supplying Product to other customers at the same
delivery location or otherwise.

(c)

The Seller shall be relieved from supplying to the Buyer any difference
between the quantity of Product contracted to be delivered to the Buyer
under this Agreement and any quantity of Product allocated to the Buyer
pursuant to this clause 11.4.

Labour disputes

21 July 2016

Clause 11.3(c) does not require an Affected Party to:

11.6

(a)

settle any strike, or other labour dispute on terms contrary to its wishes; or

(b)

contest the validity or enforceability of any law, regulation or legally


enforceable order by way of legal proceedings.

Resumption
The obligation of the Affected Party to perform its obligations resumes as soon as
it is no longer affected by the Force Majeure.

11.7

Termination for extended Force Majeure


(a)

If delivery of Product is prevented or deferred for more than 3 months as a


result of Force Majeure, any Party may terminate this Agreement by giving
20 Business Days' notice to the other Party.

(b)

Termination pursuant to clause 11.7(a) will be without prejudice to the


rights of either Party which have accrued prior to the date of such
termination.

12.

DISPUTE RESOLUTION

12.1

Good faith discussions


Subject to clause 7.3(b), the Parties agree that they will first seek to resolve any
dispute or difference under or in connection with this Agreement (Dispute) by
discussions between senior representatives of the Parties.

12.2

Referral of Dispute to determination


(a)

If the Parties are unable to resolve the Dispute within 30 days of


discussions in accordance with clause 12.1:
(i)

in the case where the Dispute relates to the Buyer's Statement of


Final Account, any Sale Document, or any other matter that the
Parties agree should be subject to determination by an Independent
Expert, any Party may refer the matter for resolution by an
Independent Expert appointed under clause 13; and

(ii)

in all other cases, the Dispute must be referred to arbitration in


accordance with clause Error: Reference source not found

13.

INDEPENDENT EXPERT

13.1

Referral to Independent Expert


This clause 13 will apply to the appointment and conduct of an Independent
Expert appointed under this Agreement.

13.2

Appointment of Independent Expert

21 July 2016

13.3

14.

(a)

The Independent Expert will be appointed by agreement between the


Parties where this Agreement expressly provides for the referral of a matter
to an Independent Expert.

(b)

If the Parties cannot agree on the person to be appointed as an


Independent Expert, the appointment will be made in accordance with the
Institute of Arbitrators & Mediators Australia Expert Determination Rules in
force as at the date of the appointment.

(c)

The Independent Expert will:


(i)

have appropriate qualifications, including experience in the subject


matter of the dispute or difference; and

(ii)

not have any interest which conflicts or may conflict with his or her
appointment as an Independent Expert in relation to the Dispute.

Conduct of Independent Expert


(a)

Subject to this clause 13.3, the Independent Expert and the relevant
Parties are to conduct the process in accordance with the Institute of
Arbitrators & Mediators Australia Expert Determination Rules as at the date
of the appointment of the Independent Expert, including Schedules A and B
to those rules.

(b)

The Independent Expert will accept oral and written submissions from the
Parties to the dispute or difference and make a written determination in
relation to the matters in dispute within 30 days of his or her appointment
unless the Independent Expert certifies that the matter is complex in which
case the period will be extended to no more than 60 days.

(c)

The Independent Expert will keep all information received in connection


with his or her appointment and the conduct of the process under this
Agreement confidential.

(d)

In the absence of manifest error, the decision of the Independent Expert


made under this clause will be final and binding on the Parties to the
dispute and all other Parties to this Agreement. Any dispute as to whether
the decision of the Independent Expert is or is not final and binding
(whether because of alleged manifest error or otherwise) shall be referred
to arbitration in accordance with clause 14.

(e)

Unless otherwise provided in this Agreement, the costs of the Independent


Expert will be borne by the Parties to the Dispute in such proportions as
determined by the Independent Expert.

ARBITRATION
(a)

21 July 2016

Any Dispute required to be referred to arbitration pursuant to clause


12.2(a)(ii) or 13.3(d), will be referred to and settled by arbitration under
the Arbitration Rules of the Singapore International Arbitration Centre for
the time being in force (Arbitration Rules), which rules are deemed to be
incorporated by reference in this clause.

(b)

Where there is any conflict between the Arbitration Rules and this clause
14, the latter prevails.

(c)

The arbitration shall be administered by the Singapore International


Arbitration Centre in accordance with the Arbitration Rules.

(d)

The appointing authority shall be the President or Vice-President of the


SIAC Court of Arbitration.

(e)

The seat of the arbitration shall be Perth, Western Australia or Singapore.

(f)

The arbitration hearing will be conducted in Singapore unless the arbitral


tribunal otherwise directs.

(g)

Any arbitral award is final and binding on the Parties and may be enforced
by the courts of any relevant country.

(h)

The Parties must carry out any arbitral award without delay. The arbitral
tribunal must state the reasons upon which the award is based.

(i)

The costs of arbitration must be borne by the unsuccessful Party, however


the arbitral tribunal may apportion costs amongst the Parties under the
Arbitration Rules.

(j)

Neither the commencement nor conduct of arbitration will interrupt the


Parties' performance of their respective obligations under this Agreement
nor affect any of the time limits fixed in this Agreement. This is not the case
if such performance is materially affected by the submission of the matter
in dispute to arbitration or by the result of the arbitration. The arbitral
tribunal constituted to settle the matter in dispute is empowered to
determine whether performance is materially affected.

15.

DEFAULT

15.1

Default Events
For the purpose of this clause 14.1(j), a "Default Event" occurs in respect of a
Party (a Defaulting Party) when that Party:
(a)

fails to comply with any material obligation under this Agreement (which
shall include any payment obligation or any obligation under clause 8 of this
Agreement) and such failure remains unremedied for 3 (three) Business
Days after written notice by the other Party;

(b)

makes an assignment or arrangement for the benefit of creditors, other


than as permitted under clause 20.4;

(c)

[is the subject of a petition or proceedings which has been filed or


commenced under any bankruptcy or similar law for creditor protection,
which is not withdrawn or dismissed within 30 days of filing;]

(d)

[otherwise becomes bankrupt or insolvent (however evidenced) or commits


any act of bankruptcy or insolvency; or]

21 July 2016

(e)

15.2

becomes subject to a dissolution or winding-up order or to appointment of


an administrator, examiner, receiver, custodian, liquidator, trustee or other
similar official.

Consequence of Default Event


Where a Default Event has occurred in respect of a Defaulting Party, the other
Party (the Non-Defaulting Party) may elect to:

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terminate this Agreement upon written notice to the Defaulting Party;
(a)

suspend performance of the Non-Defaulting Party's obligations under this


Agreement until the Default Event is remedied or the Agreement is
terminated; and/or

(b)

withhold and/or offset any payments due to the Defaulting Party until such
Default Event is remedied; and/or

(c)

where a Default Event relates to a breach of a payment obligation by the


Buyer:
(i)

repossess any Product which has been delivered but has not been
paid for and/or

(ii)

withhold delivery of Product,

without prejudice to any other rights or remedies available to the Seller (as the
Non-Defaulting Party) under this Agreement or at law.

16.

TERMINATION

16.1

Termination events
(a)

21 July 2016

This Agreement shall immediately terminate upon the earliest to occur of:
(i)

the Parties unanimously agreeing to terminate this Agreement;

(ii)

termination of this Agreement by the Non-Defaulting Party pursuant


to
clause
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(iii)

termination of this Agreement by any Party pursuant to clauses 11.7


or 18.5(b).

(b)

16.2

Each Party agrees that:


(i)

this clause 16 represents the sole and exclusive bases on which this
Agreement may be terminated; and

(ii)

no Party is entitled to terminate this Agreement on any other basis,


whether by way of rights at common law or in equity or otherwise.

Effect of termination
(a)

Termination of this Agreement will be without prejudice to any rights,


obligations or liabilities which have accrued up to the date of termination.

(b)

Clauses 2, 17, 18, 19 and 20 will survive termination of this Agreement.

17.

CONFIDENTIALITY

17.1

Undertaking
Each Party undertakes that it must not, and will procure that its Related
Corporations do not:

17.2

(a)

disclose Confidential Information, including any Confidential Information of


the other Party, to any person, except in accordance with clause 17.2; and

(b)

use Confidential Information except to the extent necessary to exercise its


rights and perform its obligations under this Agreement.

Permitted disclosures
A Party is permitted to disclose Confidential Information:
(a)

with the prior written consent of the other Party;

(b)

to that Party's Related Corporations or to that Party's banks, accountants,


auditors, legal or other professional advisers, to the extent that:

(c)

(i)

such disclosure is necessary to enable that Party to perform its


obligations or to exercise its rights under this Agreement; and

(ii)

each person to whom Confidential Information is disclosed under this


clause 17.2(b) undertakes to keep the Confidential Information
confidential and not to use it for any purpose other than as
permitted under clause 17.2(b)(i); and

to the extent required by law or by order of any court or tribunal of


competent jurisdiction or by any Government Agency, stock exchange or
other regulatory body.

18.

TAXES AND GST

18.1

Acknowledgement regarding GST


The Parties acknowledge that the supply of Product under this Agreement is
intended to be a GST-free export.

21 July 2016

18.2

GST pass on
If GST is or will be payable on a supply made under or in connection with this
Agreement, to the extent that the consideration otherwise provided for that
supply under this document is not stated to include an amount in respect of GST
on the supply:

18.3

(a)

the consideration otherwise provided for that supply under this document is
increased by the amount of that GST; and

(b)

the recipient must make payment of the increase as and when the
consideration otherwise provided for, or relevant part of it, must be paid or
provided or, if the consideration has already been paid or provided, within 7
days of receiving a written demand from the supplier.

Later adjustment to price or GST


If there is an adjustment event in relation to a supply which results in the
amount of GST on a supply being different from the amount in respect of GST
already recovered by the supplier, as appropriate, the supplier within 14 days of
becoming aware of the adjustment event:

18.4

(a)

may recover from the recipient the amount by which the amount of GST on
the supply exceeds the amount already recovered by giving 7 days written
notice; or

(b)

must refund to the recipient the amount by which the amount already
recovered exceeds the amount of GST on the supply to the extent that the
supplier is entitled to a refund or credit from the Commissioner of Taxation;
and

(c)

must issue an adjustment note or tax invoice reflecting the adjustment


event in relation to the supply to the recipient within 28 days of the
adjustment event except where the recipient is required to issue an
adjustment note or tax invoice in relation to the supply.

Tax invoices/adjustment notes


The right of the supplier to recover any amount in respect of GST under this
document on a supply is subject to the issuing of the relevant tax invoice or
adjustment note to the recipient within the time period within which the recipient
is otherwise entitled to the relevant input tax credit except where the recipient is
required to issue the tax invoice or adjustment note.

18.5

Change in the GST Law


(a)

If the GST Law changes (including without limitation as a result of a change


in the GST rate) after the date of this document, any consideration that
expressly includes GST must be adjusted to reflect the change in the GST
Law.

(b)

The Parties acknowledge that they expect supplies made under this
Agreement will be exempt from GST where the conditions in subdivision
38E of the GST Law are met. If the exemption available under subdivision

21 July 2016

38E of the GST Law is not applicable due to a change in GST Law, either
Party may terminate this Agreement by giving 30 days notice to the other
Party, along with documentation supporting the claim that GST will be
payable. On termination of this Agreement, the Parties will be discharged
from any further obligations or liabilities under this Agreement without
prejudice to any rights, obligations or liabilities which accrued up to the
date of termination.
18.6

ABN withholding
All payments made under this document are subject to any withholding required
by law.

18.7

Reimbursements and indemnities


(a)

Costs actually or estimated to be incurred or revenue actually or estimated


to be earned or lost by a party that is required to be reimbursed or
indemnified by another party or used as the basis for calculation of
consideration for a supply under this document must exclude the amount of
GST referrable to the cost to the extent to which an entitlement arises or
would arise to Claim an input tax credit and in relation to revenue must
exclude any amount in respect of GST referable to the revenue.

(b)

The parties each indemnify the other against all GST, and losses, liabilities
and expenses (including legal liabilities on a full indemnity basis) that the
other incurs (directly or indirectly) as a result of a breach of a warranty or
other provision in this document relating to GST.

19.

NOTICES AND COMMUNICATIONS

19.1

Form all communications


Unless expressly stated otherwise in this Agreement, all notices, certificates,
consents, approvals, waivers and other communications in connection with this
Agreement must be:

19.2

(a)

in writing;

(b)

in English or accompanied by a certified translation into English;

(c)

signed by the sender (if an individual) or an authorised representative of


the sender, with the senders seal applied (if applicable); and

(d)

marked for the attention of the person identified for the relevant Party in
the Contract Specifics or, if the recipient has notified otherwise, then
marked for attention in the way last notified.

Form communications sent by email


(a)

Communications sent by email need not be marked for attention in the way
stated in clause 19.1(d), however, the email:
(i)

21 July 2016

must state the first and last name of the sender; and

(ii)

(b)
19.3

must state that the email constitutes a notice for the purpose of this
Agreement.

Communications sent by email are taken to be signed by the named sender.

Delivery
Communications must be:
(a)

left at the address set out or referred to in the Contract Specifics;

(b)

sent by prepaid ordinary post (airmail if appropriate) to the address set out
or referred to in the Contract Specifics;

(c)

sent by fax to the fax number set out or referred to in the Contract
Specifics;

(d)

sent by email to the address set out or referred to in the Contract Specifics;
or

(e)

given in any other way permitted by law,

provided that if the intended recipient has notified a changed address, fax
number or email address, then communications must be to that address, fax
number or email address.
19.4

When effective
Communications take effect from the time they are received or taken to be
received under clause 19.5 (whichever happens first) unless a later time is
specified.

19.5

When taken to be received


Communications are taken to be received:
(a)

if sent by post, three days after posting (or seven days after posting if sent
from one country to another); or

(b)

if sent by fax, at the time shown in the transmission report as the time that
the whole fax was sent; or

(c)

if sent by email:
(i)

when the sender receives an automated message confirming


delivery; or

(ii)

four hours after the time sent (as recorded on the device from which
the sender sent the email) unless the sender receives an automated
message that the email has not been delivered,

whichever happens first.

19.6

Receipt outside business hours

21 July 2016

(a)

Despite clauses 19.4 and 19.5, if communications are received or taken to


be received under clause 19.5 after 5.00pm in the place of receipt or on a
non-Business Day, they are taken to be received at 9.00am on the next
Business Day and take effect from that time unless a later time is specified.

20.

GENERAL

20.1

Governing law

20.2

(a)

This Agreement and any transactions contemplated by it will be governed


by the laws of Western Australia, Australia.

(b)

Subject to clause 14, the Parties irrevocably and unconditionally:


(i)

submit to the non-exclusive jurisdiction of the courts of Western


Australia; and

(ii)

agree that they may not object to any suit, action or proceeding
commenced under or in connection with this Agreement on the basis
that the courts of Western Australia are not an appropriate forum.

Entire agreement
This Agreement contains the entire agreement between the Parties about its
subject matter and supersedes all agreements, undertakings, negotiations and
discussions, whether oral or written, of the Parties

20.3

Vienna Convention
The Parties hereby exclude any application of the United Nations Convention on
Contracts for the International Sale of Goods adopted at Vienna, Austria, on 10
April 1980 as given effect by the Sale of Goods (Vienna Convention) Act 1986
(WA) to the sale and purchase of Product under this Agreement.

20.4

Assignment
Without the prior written consent of the other Party, which shall not be
unreasonably withheld, neither Party may assign or create a trust or otherwise
transfer its rights or obligations under this Agreement in full or in part, except
that the Buyer and its assigns may without such consent assign all or a portion of
their rights to receive and obtain payment under this Agreement in connection
with bank funding arrangements.

20.5

Amendments
No variation, modification or amendment of all or any part of this Agreement will
be effective unless in writing and signed by or on behalf of each Party.

20.6

Waiver of rights
A right may only be waived in writing, signed by the Party giving the waiver, and:
(a)

21 July 2016

no other conduct of a Party (including a failure to exercise, or delay in


exercising, the right) operates as a waiver of the right or otherwise
prevents the exercise of the right;

20.7

(b)

a waiver of a right on one or more occasions does not operate as a waiver


of that right or as an estoppel precluding enforcement of that right if it
arises again; and

(c)

the exercise of a right does not prevent any further exercise of that right or
of any other right.

Costs and stamp duty


Each Party must bear its own costs arising out of the negotiation, preparation
and execution of this Agreement. All stamp duty (including fines, penalties and
interest) payable on or in connection with this Agreement and any instrument
executed under or any transaction evidenced by this Agreement will be paid by
the Buyer.

20.8

20.9

Severability
(a)

If any of the provisions of this Agreement is or becomes invalid, illegal or


unenforceable, in whole or in part, under the law of any jurisdiction, the
validity, legality or enforceability of such provision or part under the law of
any other jurisdiction and the validity, legality and enforceability of the
remaining provisions of this Agreement will not in any way be affected or
impaired.

(b)

If any provision of this Agreement, or its application to any person or entity


or any circumstance, is invalid or unenforceable, the Parties will make such
suitable and equitable provision as is necessary in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision.

Counterparts
This Agreement may be executed in any number of counterparts and by the
Parties on separate counterparts, each of which will be an original but all of
which together will constitute one and the same instrument. This Agreement will
not take effect until each Party has executed at least one counterpart.

21 July 2016

SCHEDULE 1
PRO-FORMA IRREVOCABLE LETTER OF CREDIT
Advising Bank

?????? Australia Bank


??????, Western Australia
Australia
(Trade and International Payments)
SWIFT ID: ????????P

Form
Documentary
Credit

of

IRREVOCABLE

Date and Place of


Expiry

100 days after date of shipment

Beneficiary

???????? Limited
?????? Square, Level ??
??? ?????? Street
????? WA 6000

Currency
Amount

Code,

Available
By..

With

USD xxx ( +/-10% tolerance)

ANY BANK IN AUSTRALIA BY NEGOTIATION

Drafts at

AT SIGHT

Partial Shipments

NOT ALLOWED

Transhipment

NOT ALLOWED

Port of Loading

Port Hedland, Western Australia

For Transportation
To

MAIN PORT (S), CHINA

Latest
Date
Shipment

of

20 August 2016

Description
Goods

of

NAME OF COMMODITY: IRON ORE LUMP


QUANTITY LUMP: 115,000 WMT (- 10 PCT) AT BENEFICIARYS OPTION
COUNTRY OF ORIGIN: AUSTRALIA
PACKING: IN BULK

21 July 2016

Base Price

AS PER ITEM 13 OF THE CONTRACT SPECIFICS

Documents
Required

LIST OF DOCUMENTS TO BE PRESENTED FOR PROVISIONAL INVOICE


PAYMENT:

Additional
Conditions

1.

PROVISIONAL INVOICE COVERING 100 PCT OF CFR FO MAIN


PORT, CHINA VALUE.

2.

FULL SET OF 'CLEAN ON BOARD' OCEAN BILLS OF LADING MADE


OUT TO ORDER, BLANK ENDORSED, MARKED 'FREIGHT PAYABLE AS
PER CHARTER PARTY' AND NOTIFYING APPLICANT.

3.

CERTIFICATE OF QUALITY in one original and three copies.

4.

CERTIFICATE OF ORIGIN issued by beneficiary.

5.

CERTIFICATE OF WEIGHT in one original and three copies.

1.

THIRD PARTY DOCUMENTS EXCEPT DRAFT,


INVOICE AND CERTIFICATES ISSUED BY THE BENEFICIARY ARE
ACCEPTABLE

2.

A TOLERANCE OF +/- 10 PCT ON L/C AMOUNT AND QUANTITY IS


ALLOWED.

3.

CIQ SHOWING CARGO QUANTITY


TOLERANCE ACCEPTABLE.

4.

INSURANCE TO BE COVERED BY ULTIMATE BUYER.

5.

CHARTER PARTY BILLS OF LADING IS ACCEPTABLE, WHICH MUST


BE SIGNED BY MASTER OR SHIP OWNER OR A NAME AGENT OF
MASTER
OR SHIP OWNER.

6.

MINOR SPELLING OR TYPING ERRORS ON DOCUMENTS WILL NOT


BE TREATED AS DISCREPANCIES. (SUBJECT TO ISSUING BANKS
STANDDARD WORDING)

7.

DOCUMENTS DATED PRIOR TO LETTER OF CREDT DATES ARE


ACCEPTABLE.

8.

LC VALUE UNDERDRAWN IS ACCEPTABLE.

9.

CIQ DOCUMENTS SHALL BE ACCEPTED AS PRESENTED.

IN

WMT

IN

EXCESS

OF

10. FINAL INVOICE TAKING THE MEAN RESULT OF LOADING PORT AND
DISCHARGE PORT IN THE WET WEIGHT AND/OR FE CONTENT
AND/OR MOISTURE CONTENT AND/OR SIO2 CONTENT AND/OR
Al2O3 CONTENT FOR CALCULATION IN THE FINAL CARGO VALUE IS
ACCEPTABLE, PROVIDED THE DIFFERENCE OF THOSE RESULTS IS
OVER 0.5 PCT.
11. FINAL INVOICE TAKING THE MEAN RESULT OF LOADING PORT AND
DISCHARGE PORT IN THE P CONTENT AND/OR THE S CONTENT FOR
CALCULATION IN THE FINAL CARGO VALUE IS ACCEPTABLE,

21 July 2016

PROVIDED THE DIFFERENCE OF THOSE RESULTS IS OVER 0.05 PCT.


12. CHEMICAL SPECIFICATION
WEIGHT) as per contract.

(ON

DRY

BASIS,

PECENTAGE

BY

13. PHYSICAL SPECIFICATION (ON NATURAL BASIS) as per contract.


14. ADJUSTMENTS
15. FOR IRON SPECIFICATION as per contract.
16. FOR CHEMICAL SPECIFICATIONS as per contract.
17. FOR PHYSICAL SPECIFICATIONS as per contract.
LIST OF DOCUMENTS TO BE PRESENTED FOR FINAL PAYMENT
WITHIN 60 DAYS FROM DATE OF COMPLETION OF DISCHARGING
BUT WITHIN L/C VALIDITY:
18. FINAL INVOICE IN ONE ORIGINAL AND THREE COPIES BASED ON
INSPECTION CERTIFICATES ISSUED BY CIQ OR BENEFICIARY.
19. INSPECTION CERTIFICATE OF QUALITY ISSUED BY CIQ AT
DISCHARGING PORT OR BENEFICIARY AT LOAD PORT IN ONE
PHOTOCOPY.
20. INSPECTION CERTIFICATE OF WEIGHT ISSUED BY CIQ AT
DISCHARGING PORT OR BENEFICIARY AT LOAD PORT IN ONE
PHOTOCOPY.
IN CASE CERTIFICATE OF WEIGHT OR CERTIFICATE OF QUALITY ISSUED BY
CIQ IS NOT PROVIDED TO THE BENEFICIARY WITHIN 60 DAYS FROM
COMPLETION OF DISCHARGING, THE BENEFICIARY HAS THE RIGHT TO
NEGOTIATE THE FINAL INVOICE BASED ON LOAD PORT WEIGHT AND
ANALYSIS RESULTS WHICH SHALL BE FINAL. IN SUCH A CASE, A
DECLARATION ISSUED BY THE BENEFICIARY OF NON-RECEIPT OF CIQ
INSPECTION CERTIFICATES SHALL ACCOMPANY OTHER DOCUMENTS.
Period For
Presentation

PROVISIONAL INVOICE TO BE PRESENTED WITHIN 14 DAYS AFTER THE


BILL OF LADING DATE.

Confirmation
Instructions

AUTHORISE ADVISING BANK TO ADD CONFIRMATION ON THE LC, CHARGES


ARE FOR THE ACCOUNT OF THE BENEFICIARY.

Charges

ALL BANKING CHARGES OUTSIDE THE ISSUING BANK ARE FOR THE
BENEFICIARY'S ACCOUNT.

Notes for issuing


bank

THIS CREDIT IS SUBJECT TO UNIFORM CUSTOMS AND PRACTICE FOR


DOCUMENTARY CREDITS, 2007 REVISION, AND INTERNATIONAL CHAMBER
OF COMMERCE PUBLICATION NO. 600. LC MUST NOT HAVE ANY CLAUSE
EXCLUDING THE VALIDITY OF CLAUSE 35, UCP 600.

21 July 2016

EXECUTED as an agreement.
Executed by LC Mining Projects Limited

Signature of authorised officer

Signature of authorised officer

Leon Gerhardus le Roux

Irene Holtzhausen

Name of authorised officer (block letters)

Name of authorised officer (block letters)

Executed by LS METAL
STEEL GROUP (BUYER)

AND

LEADER

Signature of authorised officer

Signature of authorised officer

Name of authorised officer (block letters)

Name of authorised officer (block letters)

21 July 2016