Section 3: TERMS OF LICENCE

(a) The term of the licence is for five (5) years. (b) The Licence shall confer on the Companies, in addition to the rights granted by the Minerals Act the right to raise or obtain in the course of prospecting such quantities of titanium-bearing minerals as they may reasonably deem necessary to test the adequacy and operating effectiveness of the machinery and equipment which the Companies propose to use in their commercial operations under the mining leases granted herein or to be granted hereunder, and to retain or dispose of any minerals so raised or obtained, subject to the same conditions as are prescribed in section 17 of the Minerals Act with respect to Minerals raised or obtained to test the mineral bearing qualities of the Land. (c) Subject as hereinafter mentioned, the Companies shall be under no obligation during the period of the Licence to survey, demarcate, beacon or clear the boundaries of the Prospecting Areas. (d) If the Companies and/or the owner of any adjacent prospecting licence, mining right or lease shall require that any common boundary be cleared, surveyed, beaconed and demarcated, the Companies shall procure that this be done and the Companies and each adjacent owner shall share the cost thereof in accordance with the provisions of the General Minerals Rules. (e) The Companies shall throughout the period of the Licence spend a total sum of not less than Le500,000 (Five hundred thousand leones) on exploring, prospecting and developing the Prospecting Areas, including the procurement of equipment necessary therefor provided, however, that if during such period the approximate area included in the Prospecting Areas becomes less than 3,000 square miles as a result of changes made therein by the Companies pursuant to Paragraph (h) of this Clause 3, there shall be a proportional reduction in such minimum total sum. Compliance with this Paragraph (e) shall constitute full compliance with the requirements of Section 18 of the Minerals Act relating to bona fide prospecting operations. All amounts spent by the Companies in conducting prospecting operations under Special Exclusive Prospecting Licence No. 2070 shall be credited against the minimum amount required to be spent by the Companies under this Paragraph (e). The Companies shall submit to the Director of Mines at the end of each prospecting year detailed returns of expenditure incurred in respect of this Paragraph (e). No. 21 Bayer Preussag Agreement 1973 (Ratification) 1974 A 145 (f) The Government, from the date of this Agreement, shall during the term of the Licence indemnify the Companies against all claims of any owners or occupiers (including chiefdom councillors) in respect of the Prospecting Areas other than claims for compensation made in accordance with the provisions of Section 20 of the Minerals Act but subject to Clause 9 (b) of this Agreement. (g) The rent payable by the Companies in respect of the Prospecting Areas shall be stated in the licences. (h) The Companies may surrender the Licence in its entirety or relinquish any part or parts of the prospecting Areas at any time during the term of the licence by written notice to the Director of Mines to that effect. (i) Upon the surrender or other termination of the Licence granted herein, or of any portion thereof the Companies shall be granted a period of not less than one year, or such longer period as the Director of Mines may specify, immediately following such expiration or termination in which to remove all or any of their buildings, structures, plants, machinery or effects from the Prospecting Areas so surrendered or terminated. Any such buildings, structures, plants, machinery or effects which are not removed in accordance with the provisions of this paragraph (i) within the period stated herein, or such longer periods as the Director of Mines may specify shall at the termination of such period become the property of the Government.