Sale, Evaluation and Investment, and Co-operation

The sale of mineral prospecting/exploitation rights refers to the legitimate actions by the mineral prospecting/exploitation rights holder in selling the mineral prospecting/exploitation rights to another party for exploration or exploitation of the mineral resources.

The evaluation and investment of mineral prospecting/exploitation rights refers to the legitimate actions by the mineral prospecting/exploitation rights holder to evaluate mineral prospecting/exploitation rights and make an injection of funds to the enterprise as an investment, and implement related rights and obligations subject to the investment amount.

Co-operative exploration/exploitation refers to the actions by the  mineral  prospecting/exploitation  rights  holder  in introducing other funds, technologies, management expertise and so forth for joint exploration/mining of mineral resources through signing a co-operation contract stipulating rights and obligations.

i) Transfer Contracts

The parties to the mineral prospecting/exploitation rights transfer shall sign a contract for the transfer according to the relevant laws.  The contract may be a contract for transfer by sale, equity joint venture or for transfer by co-operation.

The transfer contract will take effect as of the date of transfer approval.

ii) Matters Needing Attention

If the mineral prospecting/exploitation rights holder is reformed into a listed shareholding company, the mineral prospecting/exploitation  rights  may  be  evaluated  and counted as capital funds for the listed company or assigned to the listed company and disclosed to the public. Nevertheless, a  trustee  must  be  hired  to  conduct  an  mineral prospecting/exploitation rights evaluation and the report on such evaluation will be submitted to the geology and mineral resource authorities of the State Council for acknowledgement porior to handling the transfer of rights examination, approval formalities and revision of registration formalities.  If the mining  shareholding  company is  listed overseas,  such evaluation of mineral prospecting/exploitation rights may be implemented by an overseas organization according to the regulations of the country where the company is listed, however the evaluation report needs to be filed with the geology and mineral resource authorities of the State Council.

The transfer by sale of mineral prospecting/exploitation rights or their transfer via the establishment of an equity or cooperative joint venture  legal  person  entity,  for the exploitation of mineral resources, requires an application for a transfer of those rights and a changing of registration formalities.

After the equity or cooperative joint venture contract is signed such a contract shall be filed with the registration authority, if no equity or cooperative joint venture legal person entity is to be established for the exploration/exploitation of the mineral resources.

After the mineral exploitation rights holder has obtained a mining license, the new enterprise jointly established by the mining license holder and other equity joint venture or cooperative joint venture partners may be exempted from the restriction which requires the exploitation and production of a mining enterprise to have been in operation for at least one year since startup.

Before applications for partial sale of mineral prospecting/exploitation rights are made, an application for approval concerning partial mineral prospecting/exploitation rights needs to be made to the registration management authority, and the relevant registration formalities for a change to mineral prospecting/exploitation rights has to be completed.

Mineral exploitation are not allowed be partially assigned in principle.

Mortgaging of Mineral Prospecting/Exploitation Rights

The Mortgaging of mineral prospecting/exploitation rights refers to the action by the mineral prospecting/exploitation rights holder (the mortgagor) of mortgaging the mineral prospecting/exploitation  rights  to  the  mortgagee,  on condition that such right is not transferred.

The mineral prospecting/exploitation rights holder as the mortager, is the debtor, while the mortagee is the creditor.

The  mineral  prospecting/exploitation  rights  which  are provided as the guarantee are the mortgaged goods.

Matters for attention for mineral prospecting/exploitation rights mortgaging:

The mortgagor shall hire an entrusted evaluation organization to evaluate the mortgaged goods if the creditor requires the mortgagor to provide the value of the mortgaged goods.

The mineral prospecting/exploitation rights holder shall go through the filing formalities with the original license issuer by  providing  the  mortgage  contract  and  mineral prospecting/exploitation rights license for establishing the mortgage of mineral prospecting/exploitation rights.  The mineral prospecting/exploitation rights holder shall notify the original license issuer in writing within 20 days of the termination of the mineral prospecting/exploitation rights mortgage relationship.

If the debtor does not perform the liabilities, the creditor shall have the right to apply for the realization of the mortgage and receive indemnification from the income earned from the disposal of mineral prospecting/exploitation rights according to the law.  The new applicant for the mineral prospecting/exploitation rights shall comply with the qualifications as regulated by the state.  The parties involved shall handle the mineral prospecting/exploitation rights transfer and revision registration formalities according to the law.

The debtor is liable for any consequences as a result of the revoke of the mining license of the mineral exploitation rights holder.