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Production Payment Agreement
"I need a Production Payment Agreement for a copper mining operation in British Columbia, where the payment holder will receive 5% of net production, with operations expected to commence in March 2025 and Indigenous consultation requirements need to be heavily emphasized."
1. Parties: Identification of the resource owner/operator and the production payment recipient
2. Background: Context of the agreement, including description of the resource property and basis for the production payment arrangement
3. Definitions: Key terms used throughout the agreement, including technical resource terms, calculation methods, and payment-related definitions
4. Grant of Production Payment: Core terms establishing the production payment right and its characteristics
5. Calculation and Payment Terms: Detailed methodology for calculating payments, timing, and payment mechanics
6. Operating Standards: Requirements for resource extraction and production operations
7. Representations and Warranties: Standard and specific warranties regarding resource ownership, operations, and compliance
8. Covenants: Ongoing obligations of the parties, including maintenance of permits and operational commitments
9. Records and Reporting: Requirements for maintaining production records and providing regular reports
10. Term and Termination: Duration of the agreement and circumstances for early termination
11. Assignment and Transfer: Rights and restrictions regarding transfer of interests under the agreement
12. Dispute Resolution: Procedures for resolving disputes between parties
13. General Provisions: Standard legal provisions including notices, governing law, and interpretation
1. Indigenous Rights and Consultation: Required when production occurs on or affects traditional Indigenous lands
2. Environmental Compliance: Detailed section needed when production involves significant environmental impacts
3. Security Arrangements: Include when additional security for payment obligations is required
4. Foreign Investment Provisions: Required when involving non-Canadian parties
5. Minimum Production Requirements: Optional section specifying minimum production levels to maintain the agreement
6. Marketing Rights: Include when the payment recipient has rights regarding product marketing
7. Force Majeure: Detailed provisions for suspension of obligations due to extraordinary events
8. Hedging Restrictions: Include when there are limitations on hedging activities
1. Schedule A - Property Description: Detailed legal description of the resource property
2. Schedule B - Calculation Methodology: Detailed formulas and examples for payment calculations
3. Schedule C - Operating Standards: Specific requirements for production operations
4. Schedule D - Reporting Requirements: Forms and templates for required reporting
5. Schedule E - Permitted Encumbrances: List of approved liens or encumbrances on the property
6. Appendix 1 - Form of Assignment: Standard form for transferring interests
7. Appendix 2 - Environmental Management Plan: Required environmental procedures and protocols
8. Appendix 3 - Indigenous Consultation Protocol: Procedures for ongoing Indigenous consultation
9. Appendix 4 - Security Documentation: Forms of security agreements if applicable
Authors
Oil and Gas
Mining
Natural Resources
Energy
Minerals and Metals
Commodities Trading
Investment Banking
Private Equity
Resource Development
Legal
Operations
Finance
Environmental Affairs
Indigenous Relations
Treasury
Risk Management
Regulatory Compliance
Commercial
Business Development
Project Management
Technical Services
Natural Resources Attorney
Mining Engineer
Production Manager
Environmental Compliance Officer
Chief Financial Officer
Resource Development Director
Indigenous Relations Manager
Operations Manager
Commercial Director
Risk Manager
Treasury Manager
Project Finance Manager
Regulatory Compliance Officer
General Counsel
Business Development Director
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