Arabian American Development Co. Contracts
Sample Business Contracts
Saudi Arabia-Al Masane Mining Lease Agreement - Saudi Arabia and Arabian Shield Development Co.
Lease Forms
- Start a state-specific lease for the rental of commercial property. Specify the term and rent due, as well as whether the landlord or tenant is responsible for property taxes, insurance, and maintenance and repairs.
- When a tenant vacates commercial property before the lease term has expired, it may be able to rent the premises to a third party. The tenant would be the sublessor and the third party would be the sublessee. Besides preparing a sublease, both parties will want to review the provisions for assignment or subletting in the original lease agreement between the landlord and the sublessor.
- Tenants of residential property should prepare a sublease agreement if they are seeking to sublease a room or the entire apartment or house to a third party. All parties should review the original lease agreement to see if there are any restrictions on subletting or assigning the premises.
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- When renting an office space, tenants should understand the amount of the rent and duration of the lease. Other important terms include whether the space can be subleased, which parties are responsible for maintenance, and whether any furniture and furnishings will be provided.
Mining Lease Agreement
Preamble:
This lease is granted in accordance with the provisions of the Mining Code of
the Kingdom of Saudi Arabia issued under Royal Decree No. M/21 dated 20.05.1392
A.H., its Executive Regulations, directives and any amendments thereto.
Article 1
The above preamble is considered as an integral part of the Lease.
Article 2
1. "Code" designates the Mining Code of the Kingdom of Saudi Arabia issued
under Royal Decree No. M/21 dated 20.05.1392 A.H.
2. (Lessee) designates Arabian Shield Development Company (formed in accordance
with U.S. laws, with headquarters in Dallas, Texas, or any natural person or
entity to which the rights granted by this lease can be transferred to it in
accordance with Article (49) of the Code.
3. (Minerals) designates any natural ones which the lessee has the right to
exploit.
4. (Lease Area) designates the area of the lease located in the area of Al
Masane mine in the Southern part of the Kingdom of Saudi Arabia, with an area
of 44 square kilometers as shown in the map accompanying this lease agreement
(Appendix I), and which is considered as an integral part of this agreement.
5. (Products) designates the ore which can be treated in any way.
6. (Year and month) designates the Hejira year and its [illegible].
7. (Ministry) designates the Ministry of Petroleum and Mineral Resources of
Saudi Arabia.
Article 3
The Lease includes zinc, lead, gold and associated minerals found in the ore,
excluding radioactive minerals and the minerals excluded by Article (2) of the
Code.
Article 4
The Lease confers upon Lessee the exclusive right to produce and exploit the
minerals specified in Article (3) within the Lease area by way of drilling,
mining, concentration, smelting, and refining; to carry away, transport,
export, and sell them in their original or refined form: and to
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construct, operate, and maintain all mines, buildings, railroads, highways,
pipelines, refineries and treatment plants, communication systems, power
plants, and other facilities necessary or convenient for the purpose of the
Lease. The enjoyment of all these rights is subject to conformance with the
provisions of the Mining Code and other laws in force.
Article 5
The lease is for an initial period of 30 years starting with the date of the
Royal Decree, by which the mining lease is issued. The Lessee shall have the
right to extend the period of the lease after the expiration of the initial
period for a period or periods which do not exceed another 20 years, taking
into regard the current codes then, and provided that the lessee has fulfilled
all his obligations with respect to the lease, the Code and its regulations and
any changes made thereto.
Article 6
Lessee shall pay to the Ministry a surface rental for the duration of the lease
at the rate of 10,000 Saudi Riyals per year per square kilometer or part
thereof. Payment will be made in advance each year starting from the issuance
of the Royal Decree.
Article 7
Lessee shall undertake the implementation of the work plan of Appendix 2
attached to this agreement, and shall present the Ministry reports as follows:
1. Report every six months in the construction stage and until the beginning of
commercial production outlining progress of work and expenditures.
2. Yearly reports during commercial production, including all statistics
associated with production, and any anticipated changes in the planned
production schedule or in exploration. Such reports should be presented within
a month after it is due. The lessee shall also provide the ministry with any
other information requested. The Ministry shall take all measures to insure that
all such reports and information shall not be given to third parties to protect
the commercial interests of the lessee.
Article 8
The lessee undertakes to carry out all operations under the lease in accordance
with modern techniques, economically appropriate and recognized by the mining
industry, and shall avoid to the extent practical, waste or loss of natural
resources. Moreover, production of minerals shall not mean extracting the most
valuable only at the expense of the other minerals in the ore.
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The lessee shall take all necessary precautions and measures throughout all
operations related to the lease, to safeguard and protect the environment from
any hazardous waste and any other environmental damage, in accordance with the
rules and regulations of environmental protection then in force in the Kingdom
of Saudi Arabia. When the surface of the land is damaged, it should be restored
to its original contours to the extent possible and reasonable.
Article 9
The lessee undertakes to execute all his obligations prescribed in the lease
with diligence and accuracy, under the general supervision of the Ministry and
in accordance with the programs of construction and operation agreed upon with
the Ministry. Lessee also undertakes to produce the minerals specified in the
lease and to maintain production at the highest level that the ore reserves and
market can support. Lessee also undertakes to observe the safety requirements
and prevent waste.
Article 10
Lessee undertakes to give priority in employment to qualified Saudi citizens.
Lessee also undertakes to have the percentage of Saudi citizens and their wage
scales in accordance of what the Minister of Labor and Social Welfare
decides in agreement with the Minister of Petroleum and Mineral Resources.
Lessee shall prepare and implement a special program for the training of Saudi
employees in different kinds of work in the project including administrative
and technical work.
Article 11
Lessee undertakes to provide the necessary security for all his installations
in the lease area in accordance with accepted procedures followed in this
respect.
Article 12
The Lessee undertakes in to bear the costs of all the infrastructure
necessary for the mine, such as electricity, roads, water, dams and any
other services required for this work, and undertakes to use his best efforts
to develop the lease area.
Article 13
The Ministry reserves the right to enter the lease area to make sure that the
Lessee is fulfilling his obligations in the right manner agreed upon, by
sending its representatives to the lease area to look at the commercial
operations performed. The Lessee shall cooperate with the ministry and its
representatives in this matter and give them all help needed.
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The Ministry has the right to perform work it deems necessary provided in the
area that such work does not hinder the work of the lessee.
Article 14
Without prejudice to the rules and regulations for the use of explosives
within the Kingdom of Saudi Arabia, the Ministry will assist the Lessee to
obtain the necessary permits to use such explosives as may be necessary to
carry out the program of work specified in the lease. The Lessee undertakes to
comply with the applicable laws of the Kingdom of Saudi Arabia regulating the
use of explosives.
Article 15
Lessee shall have all the rights vested in him by virtue of the Code in respect
of export and sale of the production, provided that the State shall at all
items retain priority if it so wishes to purchase from the Lessee the whole
production of gold or any part thereof. The State also reserves the right to
purchase a maximum of ten percent (10%) of his annual production of other
minerals, on the same terms and conditions then available to other similar
buyers, and at current prices then prevailing in the free market. For purpose
of reserving the state's right of priority, the Lessee shall notify the
Ministry in writing at sufficient notice of the amount of production he wishes
to sell every year, so as to enable the state to declare its willingness to
purchase any such amount by written notice to the Lessee three (3) months
before the beginning of the Lessee's financial year.
Article 16
The Lessee has the right to select his suppliers and contractors, on condition
that the Lessee undertakes to give preference to local suppliers and
contractors who can provide goods and services of similar quality upon
acceptable terms.
Article 17
The Lessee undertakes to appoint a chartered accountant, to be chosen by the
Lessee from members of the profession authorized to practice in the Kingdom.
He also undertakes to establish a financial department in the Kingdom for the
purposes of maintaining all necessary financial statements, records and
accounting in accordance with practices used in commercial mining operations.
Lessee shall provide the Ministry with the reports of the chartered accountants
and other reports asked for by the Ministry.
Article 18
The Lessee undertakes to repay the loan which had been granted to it by the
Ministry of Finance and National Economy on 26/2/1399, amounting to $11 million
in accordance
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with agreement with the Ministry of Finance and National Economy.
Article 19
Without prejudice to the exemption from income tax set forth in Article (46) of
the Code, Lessee shall pay income tax in accordance with the income tax laws
then in force in the Kingdom of Saudi Arabia.
Article 20
When the profitability of the project is established, the Lessee shall undertake
the formation of a Saudi Public Stock Company with the Petroleum and Mineral
Organization (PETROMIN), where the Lessee shall subscribe to 50% of the shares,
and PETROMIN to no more than 25%. The remainder of the shares shall be put out
for public subscription. The title of the lease shall then be transferred to the
public stock company. The Ministry shall follow the implementation of the above.
Article 21
Lessee shall be exempt from import and export duties for all equipment imported
for the implementation of the Lease, and unless resold in the Kingdom of Saudi
Arabia, lessee may re-export such equipment. If sold within the Kingdom, customs
duties payable thereof shall be calculated on the value of the equipment at the
time, and according to its condition.
Article 22
Any disputes between the Lessee and the Ministry, which cannot be settled
amicably, shall be settled in accordance with Saudi Codes.
Article 23
No provisions of the lease may be construed in such a manner that it confers
upon the Lessee the ownership of any part of the land within the Lease area, or
grants the Lessee any other rights except those explicitly defined in the Lease
and Code.
Minister of Petroleum and Mineral Resources
Hisham Muhialdin Nazer.
The Lessee agrees to all provisions of the lease above, and shall abide by them,
and abide by all provisions of the Mining Code, and any amendments thereof.
Arabian Shield Development Company,
By: Hatem El-Khalidi