Avocet Mining PLC Prospectus December 2011

c105718pu070 Proof 5: 7.12.11_13:45 B/L Revision:
The PT AMS SPA was subsequently amended by deeds of variation dated 7 June 2011, 24 June 2011
and 6 September 2011 and by a variation and waiver letter dated 6 September 2011, in each case
between the Company and J&Partners. On 6 September 2011 the Company and J&Partners signed a
restated PT AMS SPA (the ‘‘Restated PT AMS SPA’’) which replaced in its entirety the PT AMS
SPA, without prejudice, however, to any intervening amendments.
Pursuant to the Restated PT AMS SPA, completion of the transaction has been split into completionde
facto, whereupon economic ownership of PT AMS is transferred to J&Partners, and completion-de
jure, whereupon legal ownership of the Company’s shares in PT AMS is transferred to J&Partners.
Completion-de facto took place on 6 September 2011.
The consideration paid by J&Partners on completion-de facto in accordance with the Restated PT
AMS SPA was US$10,222,079, inclusive of estimated cash of US$222,079. The parties agreed to
deduct from the consideration the sum of US$679,098 to cover Avocet Mining’s agreed 50 per cent
share of costs incurred by PT AMS to employees under local change of control regulations in
connection with the transaction. The other half of the costs was agreed to be borne by J&Partners.
The consideration is subject to actual net cash and working capital adjustments. These adjustments
have yet to be agreed or determined.
Under the Restated PT AMS SPA, the Company provided customary warranties, including in relation
to the title to PT AMS’ shares and exploration rights, the ownership of assets, material contracts,
compliance with laws, litigation, related party transaction, accuracy of PT AMS’ accounts, postaccounts
date events, taxation and employment. Warranties regarding the title to PT AMS’ shares,
the Company’s interests under the PT AMS Loan Agreement, the Company’s mining rights, the
accuracy of PT AMS’ accounts and off balance sheet transactions were provided on an indemnity
basis. Additional indemnities were given in relation to: (i) tax liabilities in respect of the period up to
completion-de facto; (ii) absence of the licence to perform mining service business in Indonesia
(capped at US$250,000); and (iii) losses suffered by PT AMS as a result of breach or termination of
certain mining services agreements.
The warranties and indemnities provided by the Company under the Restated PT AMS SPA are
subject to a US$1,000,000 de minimis provision (including claims under all of the other Sale and
Purchase Agreements), with the Company being liable for the whole amount of a claim in the event
it exceeds the required minimum and is proven to be valid. The maximum aggregate liability of the
Company is equal to the total consideration paid for PT AMS by J&Partners (as subject to actual
net cash and working capital adjustments), further limited by the overall limitations contained in the
Interconditionality Agreement. Claims relating to tax warranties and indemnities must be notified
within two years and other claims within one year from the date of completion de facto, with legal
proceedings in respect of any such claims being required to be issued within a further six months’
period.
(iv) Sale and Purchase Agreement relating to Avocet Mining (Malaysia) OHQ Sdn Bhd
On 23 December 2010 the Company entered into a sale and purchase agreement with J&Partners (the
‘‘AMMO SPA’’) to sell the entire issued share capital of AMMO.
The AMMO SPA was subsequently amended by deeds of variation dated 7 June 2011, 24 June 2011
and 6 September 2011 and by a variation and waiver letter dated 6 September 2011, in each case
between the Company and J&Partners. Completion of the sale of AMMO took place on 6 September
2011.
The consideration paid by J&Partners on completion of the AMMO SPA was US$1,078,000, inclusive
of estimated cash of US$78,000. The consideration is subject to actual net cash and working capital
adjustments. These adjustments have yet to be agreed or determined.
Under the AMMO SPA, the Company provided customary warranties, including in relation to the
title to AMMO’s shares, the ownership of assets, material contracts, compliance with laws, litigation,
related party transactions, accuracy of AMMO’s accounts, post-accounts date events, taxation and
employment. Warranties relating to the title to AMMO’s shares, the accuracy of AMMO’s accounts
and off balance sheet transactions were provided on an indemnity basis. Additional indemnity was
given in relation to tax liabilities in respect of the period up to completion of the transaction.
The warranties and indemnities provided by the Company under the AMMO SPA are subject to a
US$1,000,000 de minimis provision (including claims under all of the other Sale and Purchase
Agreements), with the Company being liable for the whole amount of a claim in the event it exceeds
the required minimum and is proven to be valid. The maximum aggregate liability of the Company is
211