Schedule 2

2017 variation agreement

Current

[s. 3]

[Heading inserted: No. 13 of 2017 s. 7.]

2017

THE HONOURABLE MARK McGOWAN

THE STATE OF WESTERN AUSTRALIA

and

CHANNAR MINING PTY. LIMITED

ACN 009 127 039

SINOSTEEL CHANNAR PTY LTD

ACN 009 277 249

and

HAMERSLEY IRON PTY. LIMITED

ACN 004 558 276

IRON ORE (CHANNAR JOINT VENTURE) AGREEMENT 1987

RATIFIED VARIATION AGREEMENT

[Solicitor's details]

THIS AGREEMENT is made this 29^th day of September 2017

BETWEEN

THE HONOURABLE MARK McGOWAN, BA LLB MLA, Premier of the State of Western Australia, acting for and on behalf of the said State and its instrumentalities from time to time (hereinafter called the "State") of the first part,

AND

CHANNAR MINING PTY. LIMITED ACN 009 127 039 of Level 22, Central Park, 152‑158 St Georges Terrace, Perth, Western Australia and SINOSTEEL CHANNAR PTY LTD ACN 009 277 249 of Level 41, 108 St Georges Terrace, Perth, Western Australia (hereinafter called the "Joint Venturers" in which term shall be included their successors and permitted assigns) of the second part,

AND

HAMERSLEY IRON PTY. LIMITED ACN 004 558 276 of Level 22, Central Park, 152‑158 St Georges Terrace, Perth, Western Australia (hereinafter called "Hamersley") of the third part.

RECITALS:

A. The State, the Joint Venturers and Hamersley are parties to the agreement dated 27 October 1987, which is referred to in this Agreement as the "Principal Agreement".

B. The parties wish to vary the provisions of the Principal Agreement on the terms and conditions set out in this Agreement.

THE PARTIES AGREE AS FOLLOWS:

1. Ratification and operation

(1)

This Agreement, other than this clause, does not come into operation except in accordance with subclause (2).

(2)

This Agreement, other than this clause, comes into operation on the day on which it is ratified by an Act of the Parliament of Western Australia ("Operative Date") unless, before that day, it terminates under subclauses (4) or (5).

(3)

The State must introduce in the Parliament of Western Australia before 31 October 2017 or a later date agreed by the parties to this Agreement a Bill to ratify this Agreement and must endeavour to secure its passage as an Act.

(4)

If by 31 December 2017 this Agreement has not been ratified by an Act of the Parliament of Western Australia then, unless the parties to this Agreement otherwise agree, this Agreement terminates on that day and no party hereto will have any claim against any other party hereto with respect to any matter or thing arising out of, done, performed, or omitted to be done or performed under this Agreement.

(5)

The parties agree that if the Principal Agreement is otherwise determined in accordance with its provisions on a day prior to the Operative Date, then this Agreement shall also terminate on and from that day and no party hereto will have any claim against any other party hereto with respect to any matter or thing arising out of, done, performed, or omitted to be done or performed under this Agreement.

2. Variations of the Principal Agreement

The Principal Agreement is hereby varied as follows:

(1)

in clause 1 by:

(a)

deleting the definitions of "direct shipping ore", "fine ore", "fines" and "f.o.b. revenue"; and

(b)

inserting in the appropriate alphabetical positions the following new definitions:

"Hamersley Range 1963 Agreement" means the agreement approved by and scheduled to the Iron Ore (Hamersley Range) Agreement Act 1963, as from time to time added to, varied or amended;

"Variation Agreement" means the variation agreement made on or about 3 October 2017 between the Honourable Mark McGowan, Premier of the State of Western Australia acting for and on behalf of the said State and its instrumentalities from time to time, the Joint Venturers and Hamersley;

"Variation Date" means the date on which clause 2 of the Variation Agreement comes into operation;

(2)

in clause 15 by:

(a)

in subclause (5) inserting after the words "consent of" the following:

"the Minister for Minerals and Energy, acting with the concurrence of the Minister, and"; and

(b)

in paragraph (a) of subclause (7) deleting the words "agreement (as amended from time to time) ratified by the Iron Ore (Hamersley Range) Agreement Act 1963" and substituting:

"Hamersley Range 1963 Agreement";

(3)

in clause 22 by:

(a)

inserting after the words "Clause 23" the following:

"or pursuant to the proviso to paragraph (a) of subclause (7) of Clause 15"; and

(b)

inserting after the last sentence of Clause 22 the following additional sentence:

"The parties acknowledge that rental paid by the Joint Venturers pursuant to this Clause in respect of any period or part thereof prior to the Variation Date in relation to iron ore upon which royalty was payable pursuant to the proviso to paragraph (a) of subclause (7) of Clause 15 shall be treated for all purposes as rental paid in respect of iron ore upon which royalty was payable pursuant to Clause 23.";

(4)

in clause 23 by:

(a)

deleting subclause (1) and substituting the following:

"The Joint Venturers shall during the continuance of this Agreement pay to the State royalty in accordance with the Hamersley Range 1963 Agreement on all iron ore from the mining lease (other than iron ore shipped solely for testing purposes and iron ore on which royalty is paid by Hamersley pursuant to the proviso to paragraph (a) of subclause (7) of Clause 15) as if such iron ore were produced under a mineral lease granted pursuant to the abovementioned agreement."; and

(b)

deleting subclauses (2), (3) and (4);

(5)

by inserting after clause 23 a new Clause as follows:

"Blending

23A. The Joint Venturers may blend iron ore mined from the mining lease with iron ore mined pursuant to the Hamersley Range 1963 Agreement."

(6)

in clause 31 by:

(a)

deleting "(except as to any part upon which a permanent residence shall be erected or which is occupied in connection with that residence and except as to any part upon which there stands any improvements that are used in connection with a commercial undertaking not directly related to the mining of iron ore)" and substituting:

"(except as to any part of land upon which is situated a specified improvement as referred to below)"; and

(b)

inserting after the last sentence of clause 31 the following additional sentence:

"For the purpose of this Clause the following improvements are specified improvements:

(a)

accommodation, recreation or administration facilities and associated buildings; or

(b)

maintenance workshops existing within 100 metres of facilities of the type listed in paragraph (a) above.";

(7)

in clause 41 by inserting after the words "pursuant to any Act" the following:

"(including under the Environmental Protection Act 1986)";

(8)

by deleting clause 50 and substituting the following new clause:

"Term of Agreement and completion of productive mining

50.

(1)

Subject to the provisions of Clause 39, this Agreement shall expire on 22 February 2028.

(2)

The Joint Venturers may, provided they are not in default of their obligations under this Agreement, give notice to the Minister not later than 22 February 2027 of their desire to have the provisions of this Agreement extended for such period not exceeding 5 years as may be nominated in such notice.

(3)

The Minister may, if satisfied that the Joint Venturers require the Agreement to be extended for the additional period nominated in a notice given under subclause (2) to:

(a)

complete any productive mining activities then the subject of approved proposals; or

(b)

decommission a mine or mines (including ceasing production and removing infrastructure, plant, equipment and services comprising and associated with the mine or mines) and rehabilitate the minesite or minesites,

extend the term of this Agreement for such additional period.

(4)

For the purposes of this clause "productive mining activities" means activities for the mining and recovery of iron ore.";

(9)

by inserting after clause 50 the following new clause:

"50A. Mining lease and lease I163654 are deemed amended upon endorsement in registers

(1)

The respective terms of the mining lease and lease I163654 (originally special lease 3116/11553) shall be deemed to be extended upon and from the respective date of endorsement referred to in subclause (2) so as to in each case expire on 22 February 2028 or such later date agreed by the Minister pursuant to Clause 50(3) as being the date of expiry of this Agreement, subject to the sooner determination of their respective terms in accordance with their provisions or upon the cessation or determination of the Agreement.

(2)

As soon as practicable after the Variation Date the State shall cause a notation or other endorsement to be made in the register maintained under:

(a)

section 103F of the Mining Act that the mining lease is extended from the date of such endorsement and by such endorsement pursuant to this Clause and as contemplated by this Clause; and

(b)

section 48 of the Transfer of Land Act 1893 that lease I163654 is extended from the date of such endorsement and by such endorsement pursuant to this Clause and as contemplated by this Clause.

For the avoidance of doubt, the Director General of Mines and the Registrar of Titles are authorised to make the abovementioned endorsements in the respective registers that they administer without any further formalities, approvals or other preconditions."; and

(10)

in clause 51 by adding the following after "State of Western Australia":

"and the parties to this Agreement submit to the jurisdiction of the courts of Western Australia in relation to any action or proceeding to settle any dispute or question arising out of or in connection with this Agreement".

EXECUTED AS A DEED.

SIGNED by THE HONOURABLE MARK McGOWAN, in the presence of:

[Signature]
.......................................................
Signature of witness

TRENA McDONALD
...........................................................
Name of witness (block letters)

)

[Signature]
.....................................................
Signature of THE HONOURABLE MARK McGOWAN

EXECUTED by CHANNAR MINING PTY. LIMITED ACN 009 127 039 in accordance with section 127(1) of the Corporations Act 2001 (Cth) by authority of its directors:

[Signature]
..........................................................
Signature of director

PAUL SHANNON
..........................................................
Name of director (block letters)

)
)
)
)
)
)

[Signature]
.................................................
Signature of director/~~company~~ ~~secretary~~*
*delete whichever is not applicable

MICHAEL GOLLSCHEWSKI
......................................................
Name of director/~~company secretary~~* (block letters)
*delete whichever is not applicable

EXECUTED by SINOSTEEL CHANNAR PTY LTD ACN 009 277 249 in accordance with section 127(1) of the Corporations Act 2001 (Cth) by authority of its directors:

[Signature]
..........................................................
Signature of director

SUN XIAOXUAN
..........................................................
Name of director (block letters)

)
)
)
)
)
)

[Signature]
.......................................................
Signature of ~~director~~/company secretary*
*delete whichever is not applicable

IAN HOLDING
.......................................................
Name of ~~director~~/company secretary* (block letters)
*delete whichever is not applicable

EXECUTED by HAMERSLEY IRON PTY. LIMITED ACN 004 558 276 in accordance with section 127(1) of the Corporations Act 2001 (Cth) by authority of its directors:

[Signature]
......................................................
Signature of director

PAUL SHANNON
......................................................
Name of director (block letters)

)
)
)
)
)
)

[Signature]
...................................................
Signature of director/~~company secretary~~*
*delete whichever is not applicable

MICHAEL GOLLSCHEWSKI
...................................................
Name of director/~~company secretary~~* (block letters)
*delete whichever is not applicable

[Schedule 2 inserted: No. 13 of 2017 s. 7.]

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