Memorandum of Understanding Information and Communications
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Memorandum of Understanding Information and Communications Exchange or due diligence (the Agreement) Between The Diaguita Indigenous Communities (CID) and the Diaguita Indigenous Associations (AID) that execute this instrument with Compañía Minera Nevada SpA (CMN) In relation to the Pascua-Lama Mining Project ONE. Declarations and Background Information CMN is the holder of the bi-national mining project known as “Pascua Lama”, that, in its Chilean portion, is located in the Andes Mountain Range, Third Region of Atacama, borough of Alto del Carmen, Huasco Province, in the high part of the basin of the Huasco valley, at an altitude ranging from 3,700 to 5,100 meters above sea level and approximately 110 km Southwest of the city of Vallenar. The CID and AID, both belonging to the Diaguita indigenous peoples of the Huasco Valley, identified above and signing this instrument below, in turn declare that they develop their activities and ways of life in the Huasco valley from ancestral times. As a result of the initiation of the construction phase of the Project, the CID and AID appeared before Chilean courts of law in order to safeguard the interests and rights that they considered affected, which process concluded in the suspension of the Project in 2013. As ordered by the judicial and administrative authorities, CMN suspended its operations and decided to engage in a good faith dialogue with the communities and persons that make up the Diaguita people within the area of influence of the Pascua Lama Project, thereby building a mutually beneficial relationship. Over the last few months, CMN has held conversations and informal meetings with the CID and AID, with a view to explore a potential understanding that could allow for, on the one hand, sustainable development of the Project, and on the other hand, that could satisfy the interests and rights of the CID and AID, pursuant to the principles and declarations contained in the voluntary commitment promised by CMN to the CID and AID on April 2 of this year (a copy of which is attached hereto as Exhibit One). In light of the above, the parties hereby constitute a Technical Commission (the Commission) for the purposes of exchanging information through a process of communication or due diligence (the Agreement) which shall attempt to establish the technical and scientific foundations for a potential Dialogue Table between CMN and CID and AID, for the potential execution of an Understanding of Dialogue and Cooperation (the Understanding) For these purposes, the parties have taken into account universal human rights and the rights of indigenous peoples recognized in the treaties and laws in force in Chile, including ILO Convention 169. The CID and AID declare that they have had, during the entire engagement process described above, proper legal counsel from attorneys appointed by them with broad powers to assume the obligations and commitments established hereunder. Other CID and AID of the Huasco Valley that have been duly incorporated as of April 30, 2014 may also participate in the process established hereunder via a written request from their representative bodies, submitted before the Commission. TWO. Due Diligence Process - The purpose of the due diligence process is to perform a common and preliminary diagnosis of the scope and influence of CMN’s Pascua Lama Project within the ancestral territory of the CID, as well as the rights and expectations of development and benefits sought by the CID in connection with said project. - For these purposes, the Commission will first address the following matters: definition of the framework and terms of reference needed for the baselines for water, use of soils, territory and the tangible and intangible patrimony of the CID and its members, for their better protection and regularization. - The commission will especially evaluate the process necessary for the regularization of the CID’s territory and its water, so that they are all registered in property, whether as a community or co-ownership. - CMN shall provide to the CID, through its representatives in the Commission, the necessary information (RCA, EIA, DIA, sector-specific permits, operational plans) as may be required by the CID, so that they may evaluate and determine the territorial issues that may exist and, if applicable, have an influence in the project and the potential administrative and legislative measures that may apply, as well as in the exploration or exploitation processes carried out by CMN that are associated with or have a demonstrated influence in territory of the communities that comprise the CID. - The Commission may exceptionally agree to recommend to CMN the adoption of certain follow-up, monitoring, mitigation and compensation measures as per the issues that are technically validated and detected. - CMN shall provide all of the information at its disposal, as requested by the CID or voluntarily in good faith, as soon as possible once the information is available, employing socially and culturally adequate and effective procedures. Express note is made of the fact that CMN is not bound to deliver under this Agreement any information that is not of a public nature or that has not been delivered by BGC to its shareholders or the market. - The Commission shall be comprised by three representatives from CMN and three representatives of the CID and AID; the regular members of each party are listed in Exhibit Two. Each party shall be entitled to appoint alternate representatives. The appointment, revocation and replacement of each party's regular and alternate representatives in the Commission shall be carried out via a written notice delivered to the other party and to the arbitrator, and any such appointments or revocations shall be effective as from the following meeting of the Commission. At least one of CMN's representatives shall be empowered to make binding decisions in the company's name or to directly access whoever is entitled to make such decisions. The CID's and AID's representatives shall be appointed and eventually revoked or replaced via their respective assemblies, and a copy of the respective minutes shall be made available for the Commission. The appointment as representative before the Commission shall be deemed to have been made jointly in respect of both the CID and AID. - The Commission shall hold its meetings with the attendance of at least one member appointed by each of the parties. Likewise, and provided that their attendance has been notified at least one day in advance and that no objections have been made in such regard, any observers and guests that each party decides can also attend the meetings. - The Commission shall have decision powers regarding the subject matters set out in this Agreement. In the event an agreement cannot be reached, the parties shall mutually grant each other a prudent analysis deadline prior to submitting the evidence and background information once again for the Commission's decision. If the discrepancies continue to exist within the Commission, any of the parties shall be entitled to terminate this Agreement. - Furthermore, the Commission shall also be integrated by attorney-at-law Alonso Barros, who shall act as arbitrator, as per the concurrent intention of the undersigned. - The Commission shall hold its meetings at the location and on the dates defined by its members' mutual agreement, always procuring that the chosen location and dates are adequate for the CID's and AID's representatives. The Commission shall hold its meetings at least twice per month, with its members being authorized to attend the same via teleconference, videoconference or through any other communications means acceptable for the parties. The respective meetings schedule shall be agreed by the Commission during its first session. - The Commission may be convened to hold extraordinary meetings upon the request of - at least - one member appointed by each party. - The arbitrator shall record the information and communication process in a written file - that shall be backed up both materially and digitally - that registers each and every one of the acts carried out during each one of the stages of the process, such as: process documentation, audiovisual records of the held meetings, minutes of the held meetings, attendance records, and any documents and expert reports, whether submitted by the CID, AID, CMN or public organizations, indicating their reception date. Said registry file shall be available for its review by any of the parties, at all times, except for any information that the Commission exceptionally classifies as confidential in nature. Upon termination of this Agreement, for whichever grounds, the arbitrator shall deliver a complete copy of the registry file to each party. - Prior to the execution of any prospective Understanding of Dialogue or other similar document, or if the aforementioned term of 6 months has elapsed and it has not been dissolved, the Commission shall draft a report that contains the results of the information collection and communication process. A copy of said report shall be delivered to each one of the parties and to the arbitrator. - Under no circumstance whatsoever shall this Agreement be construed to be a waiver by CMN of any of the rights it holds under applicable law, nor a waiver by the CID and AID of any of their internationally recognized rights (Indigenous People Act, ILO Convention 169, other treaties that may be enforceable in Chile), nor a waiver to exercise any administrative and judicial actions before the relevant authorities. - The due diligence process is not per se a dialogue between CMN and the CID and AID, but, rather, its purpose and basis is that the parties may freely and in good faith access the available information and weigh the technical possibilities in the future assessment and observation of CMN's project, which the CID and AID believe directly affect them.