Section 4: TERMS OF LICENCES

(a) TERM The term of each Prospecting Licence shall be two (2) years from the date of issue. (b) RIGHTS AND OBLIGATIONS (1) Each Prospecting Licence shall confer on the Company 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 and associated minerals as it may reasonably think necessary to test the adequacy and operating effectiveness of the machinery and equipment which the Company proposes to use in its commercial operations under an Additional Mining Lease and to retain or dispose of any minerals so raised or obtained, subject to the same conditions as are prescribed in Section 47(3) of the Minerals Act with respect to minerals raised or obtained to test the mineral bearing qualities of the land. (2) Subject as hereinafter mentioned, the Company shall be under no obligations during the period of a Prospecting Licence to survey, demarcate, beacon or clear the boundaries of the Prospecting Areas included therein. (3) If the Company and/or owner of any adjacent prospecting licence, mining right or lease shall require that any common boundary be cleared, surveyed, beaconed and demarcated, the Company shall procure that this be done and the Company and each adjacent owner shall share the cost thereof. (c) PROSPECTING AREA EXPENDITURES The Company shall throughout the period of each Prospecting Licence undertake an expenditure in the aggregate each year of not less than US$2,500 (two thousand five hundred United States Dollars) per square mile or part thereof on exploring, prospecting and developing the Prospecting Area included in that Prospecting Licence. The Company shall submit a detailed work and expenditure programme for that Prospecting Area for the approval of the Director of Mines. Compliance with this No. 4 Sierra Rutile Agreement (Ratification) Act 2002 13 paragraph shall constitute full compliance with the requirements of Section 47(1)(a) of the Minerals Act relating to *bona fide* prospecting operations. The Company shall submit to the Director of Mines at the end of each prospecting year detailed returns of expenditure incurred in respect of the requirements of this paragraph. (d) INDEMNIFICATION Subject to Clause 10(b) of this Agreement, the Government shall indemnify the Company against all claims of any owners or occupiers (including the Chiefdom Councillors) in respect of a Prospecting Area other than claims for compensation made in accordance with the provisions of Section 26 of the Minerals Act. (e) RENT The rent payable by the Company under each Prospecting Licence shall be at the rate of US$20 (twenty United States Dollars) a year for each square mile or part thereof contained in a Prospecting Area payable to the Government annually in advance. (f) SURRENDER (1) The Company may surrender a Prospecting Licence in its entirety or relinquish any area included therein at any time during the term of a Prospecting Licence by written notice to the Director of Mines to that effect. The expenditure obligations of the Company under Clause 4(c) hereof relating to any surrendered area shall continue to apply until the end of the year in which such surrender of the Prospecting Licence shall take place. (2) Upon the surrender or other termination of a Prospecting Licence granted hereunder, or of any portion thereof, the Company 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 its 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 within the period stated herein, or such longer period as the Director of Mines may specify, shall at the termination of such period become the property of the Government. (g) ADDITIONAL AREAS In the event that the Company delineates a deposit within a Prospecting Area which indicates that the limits of each deposit extend beyond the Prospecting Area, the Company may with the consent of the Director of Mines, which consent shall not 14 No. 4 Sierra Rutile Agreement (Ratification) Act 2002 be unreasonably withheld, incorporate in the Prospecting Area such additional land as it may select, which land will be contiguous to the Prospecting Area by filing with the Director of Mines a plan of the additional area selected, and such descriptive data as he may reasonably require to identify the same provided that such area is not then the subject of any prospecting Licence or mining lease granted by the Government.