San Cristóbal
Management Agreement
Initially, our primary focus will be managing the San Cristóbal mine under the Management Agreement with Sumitomo. Under the San Cristóbal Management Agreement, we will manage $500 million/year budget with accountability for all aspects of operations management including:
- Mining, milling, site support services, power contracts, transportation,
port, logistics and product delivery
- Capital program, MSC accounting controls and business systems
- Staffing, recruiting and training
- Health, safety and environmental responsibility
- Commercial management of major operating contracts
- Corporate social responsibility management
Certain services, such as lobbying, governmental relations and tax planning, are not included in the services to be provided under the Management Agreement. We will be paid an annual fee of approximately $6 million, and be eligible to receive an annual incentive fee of $1.5 million based on achievement of certain negotiated performance targets.
The Management Agreement will have an initial term of 12 months and thereafter may be terminated by us with 12 months prior notice or by Sumitomo with 6 months prior notice. If terminated by Sumitomo, we will be entitled to a $1.0 million termination fee. We will not be required to pay a termination fee.
