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IRON ORE (FMG CHICHESTER PTY LTD) AGREEMENT BILL 2006

                     Western Australia


Iron Ore (FMG Chichester Pty Ltd) Agreement
                Bill 2006

                       CONTENTS


   1.   Short title                          2
   2.   Commencement                         2
   3.   Terms used in this Act               2
   4.   Ratification and authorisation       2
   5.   State empowered under clause 22      2
   6.   Effect on other laws                 2
        Schedule 1 -- Iron Ore (FMG
            Chichester Pty Ltd) Agreement




                         127--1              page i
                           Western Australia


                     LEGISLATIVE ASSEMBLY



Iron Ore (FMG Chichester Pty Ltd) Agreement
                Bill 2006


                               A Bill for


An Act to ratify, and authorise the implementation of, an agreement
between the State and FMG Chichester Pty Ltd and Fortescue
Metals Group Ltd relating to the development of a project for the
mining of iron ore in the Pilbara region of the State.



The Parliament of Western Australia enacts as follows:




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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006



     s. 1




     1.         Short title
                This is the Iron Ore (FMG Chichester Pty Ltd) Agreement
                Act 2006.

     2.         Commencement
 5              This Act comes into operation on the day on which it receives the
                Royal Assent.

     3.         Terms used in this Act
                In this Act --
                "scheduled agreement" means the agreement of which a copy
10                   is set out in Schedule 1;
                "the Agreement" means the scheduled agreement or, if it is
                     varied in accordance with its terms, that agreement as
                     varied from time to time.

     4.         Ratification and authorisation
15        (1)   The scheduled agreement is ratified.
          (2)   The implementation of the Agreement is authorised.

     5.         State empowered under clause 22
                The State has power in accordance with clause 22 of the
                Agreement.

20   6.         Effect on other laws
          (1)   The Agreement operates and takes effect despite any enactment
                or other law.
          (2)   If a provision of the scheduled agreement expressly or by
                implication purports to modify or exclude the application or
25              operation of an enactment for a purpose or in relation to a
                person or thing, the application or operation of the enactment is
                modified or excluded for that purpose, or in relation to that


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                     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006



                                                                         s. 6



          person or thing, to the extent or for the period mentioned in the
          provision or necessary for the provision to have effect.
    (3)   To avoid doubt, it is declared that the provisions of the Public
          Works Act 1902 section 96 do not apply to any railway
5         constructed pursuant to the Agreement.
    (4)   This section does not limit or otherwise affect the application of
          the Government Agreements Act 1979.




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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




          Schedule 1 -- Iron Ore (FMG Chichester Pty Ltd)
                            Agreement
                                                                  [s. 3]

 5                                     2005



                    THE STATE OF WESTERN AUSTRALIA
10

                                        and


15                       FMG CHICHESTER PTY LTD
                              ACN 109 264 262


                                        and
20

                      FORTESCUE METALS GROUP LTD
                             ACN 002 594 872

25



              IRON ORE (FMG CHICHESTER PTY LTD) AGREEMENT

30




35
                                [Solicitor's details]




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                           Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
                       Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




     THIS AGREEMENT is made this 1st day of December 2005


     BETWEEN
 5

     THE HONOURABLE GEOFFREY IAN GALLOP, B.Ec., MA., MPhil.,
     DPhil., M.L.A., Premier of the State of Western Australia, acting for and on
     behalf of the said State and its instrumentalities from time to time (hereinafter
10   called "the State") of the first part,

     FMG CHICHESTER PTY LTD ACN 109 264 262 of Ground Floor,
     46-50 Kings Park Road, West Perth, Western Australia (hereinafter called "the
     Company" in which term shall be included its successors and permitted assigns)
15   of the second part, and

     FORTESCUE METALS GROUP LTD ACN 002 594 872 of Level 1, 46-50
     Kings Park Road, West Perth, Western Australia (hereinafter called "the
     Guarantor") of the third part.
20

     WHEREAS:


25   A.      The Company wishes to develop within the Defined Area in the vicinity
             of the Chichester Ranges in the Pilbara region of Western Australia a
             project for the mining of iron ore for sale either within Australia or by
             export to overseas purchasers.

30   B.      At the date of this Agreement the Company holds, in respect of the
             Defined Area, the exploration licences referred to in part A of schedule 1
             and has applied under the Mining Act to have granted to it the exploration
             licences referred to in part B of schedule 1. The Company has also
             applied under the Mining Act to have granted to it the mining leases, as
35           referred to in schedule 2, in respect of part of the land the subject of those
             exploration licences held by it.

     C.      The Guarantor and The Pilbara Infrastructure Pty Ltd ACN 103 096 340
             are proceeding with detailed feasibility studies for the construction and
40           operation of a multi-user railway from in the vicinity of the Chichester
             Ranges to multi-user port facilities within the Port of Port Hedland or to a

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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




              location near the boundary of that port for delivery to such port facilities
              by multi-user conveyor, and of such multi-user port facilities, for the
              shipping and export of iron ore products, freight goods and other
              products. The State has agreed to assist the development of those
 5            multi-user facilities upon and subject to the terms of the Railway and Port
              Agreement.

     D.       The Guarantor and the Company intend the railway and port facilities,
              upon being constructed, to be used for the transportation, shipping and
10            export of iron ore produced as part of the Company's proposed project.

     E.       The State, for the purposes of promoting the development of the iron ore
              industry and the creation of employment opportunity generally in
              Western Australia, has agreed to assist the Company in the establishment
15            of its proposed project and has agreed to provide a framework for
              managing future changes to the project, upon and subject to the terms of
              this Agreement.

     F.       This Agreement is the Mining Agreement as defined in clause 1 of the
20            Railway and Port Agreement.


     NOW THIS AGREEMENT WITNESSES:

25   Definitions

     1.        In this Agreement subject to the context:

               "Access Act" means the Railways (Access) Act 1998;
30
               "Access Code" means the Railways (Access) Code 2000;

               "Access Minister" means the Minister in the Government of the State
                   for the time being responsible for the administration of the
35                 Access Act;

               "accommodation area" means an area or areas on, or subject to
                   clause 6 in the vicinity of, the Mining Leases for accommodation
                   and ancillary facilities for the mine workforce;
40



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                   Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
               Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




     "advise", "apply", "approve", "approval", "consent", "certify",
         "direct", "notify", "request", or "require", means advise,
         apply, approve, approval, consent, certify, direct, notify, request
         or require in writing as the case may be and any inflexion or
 5       derivation of any of those words has a corresponding meaning;

     "Agreement Mining Tenements" means:

         (a)     the exploration licences listed in part A of schedule 1;
10
         (b)     any exploration licences granted to the Company pursuant
                 to the applications for exploration licences listed in part B
                 of schedule 1;

15       (c)     any mining leases granted to the Company pursuant to its
                 applications for mining leases referred to in schedule 2;

         (d)     any other mining leases or general purpose leases granted
                 to the Company wholly by way of conversion of all or part
20               of an exploration or exploration licences which at the time
                 of conversion is an Agreement Mining Tenement or are
                 Agreement Mining Tenements;

         (e)     any other mining tenements granted to the Company in
25               accordance with approved proposals; and

         (f)     any other mining tenements approved by the Minister as
                 Agreement Mining Tenements pursuant to clause 12(10),

30       and includes any renewals or extensions thereof as the case may
         be;

     "approved proposal" means a proposal approved or deemed to be
         approved under this Agreement;
35
     "beneficiated ore" means iron ore which has been concentrated or
         upgraded, otherwise than by washing, drying, crushing or
         screening or a combination thereof, by the Company in a plant
         constructed pursuant to an approved proposal or such other plant
40       as is approved by the Minister after consultation with the


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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                  Minister for Mines and "beneficiation" and "beneficiate" have
                  corresponding meanings;

              "commencement date" means the date on which the Bill referred to
 5                in clause 3 comes into operation as an Act;

              "Commonwealth" means the Commonwealth of Australia and
                 includes the Government for the time being thereof;

10            "Company's workforce" means the persons (and the dependants of
                 those persons) connected directly with the Company's activities
                 under this Agreement, whether or not such persons are employed
                 by the Company and includes the persons (and the dependants of
                 those persons) involved in the construction phases of the Project;
15
              "Defined Area" means the area of land shown hatched on the plan
                  annexed to this Agreement and marked with the letter "A";

              "Department" means the instrumentality of the State from time to
20               time assisting the Minister for Mines in the administration of the
                  Mining Act;

              "EP Act" means the Environmental Protection Act 1986;

25            "Government agreement" has the meaning given to it in the
                 Government Agreements Act 1979;

              "iron ore" includes beneficiated ore;

30            "iron ore products" includes iron ore of all grades and all products
                  from the processing of iron ore;

              "LAA" means the Land Administration Act 1997;

35            "laws relating to native title" means laws applicable from time to
                  time in Western Australia in respect of native title and includes
                  the Native Title Act 1993 (Commonwealth);

              "local government" means a local government established under the
40                Local Government Act 1995;


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                 Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
             Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




     "metallised agglomerates" means the product of a pyrometallurgical
        iron ore reduction process which has a composition of not less
        than 85% total iron excluding carbon;

 5   "mine workforce" means such of the Company's workforce
         (excluding dependants) engaged for the Company's activities on
         the area of the Mining Leases, the accommodation area, and other
         areas provided for the facilities of the Company in the vicinity of
         the Mining Leases but does not include persons visiting any of
10       those areas in connection with the Company's activities on a
         short term basis only or employed for a specific task of limited
         duration;

     "Mining Act" means the Mining Act 1978;
15
     "Mining Amendment Act" means the Mining Amendment Act 2004;

     "Mining Leases" means mining leases granted to the Company
        wholly by way of conversion of all or part of an exploration
20      licence or exploration licences which at the time of conversion is
        an Agreement Mining Tenement or are Agreement Mining
        Tenements and mining leases approved by the Minister as
        Agreement Mining Tenements pursuant to clause 12(10) and
        includes any renewal thereof and according to the requirements
25      of the context shall describe the area of land demised as well as
        the instruments by which such land is demised;

     "mining tenement" has the meaning given to it in section 8 of the
         Mining Act;
30
     "Minister" means the Minister in the Government of the State for the
        time being responsible for the administration of the Act to ratify
        this Agreement and pending the passing of that Act means the
        Minister for the time being designated in a notice from the State
35      to the Company and includes the successors in office of the
        Minister;

     "Minister for Mines" means the Minister in the Government of the
        State for the time being responsible for the administration of the
40      Mining Act;


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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




               "month" means calendar month;

               "native title" and "native title rights and interests" have the
                   meaning given in the Native Title Act 1993 (Commonwealth);
 5
               "notice" means notice in writing;

               "private roads" means the roads referred to in clause 15(1) and any
                   other roads constructed by the Company in accordance with an
10                 approved proposal or agreed by the State and the Company to be
                   a private road for the purposes of this Agreement;

               "Project" means the establishment and operation under this
                   Agreement and in accordance with approved proposals of a
15                 project for the production of iron ore from the Mining Leases for
                   transportation from the Mining Leases;

               "public road" means a road as defined by the Road Traffic Act 1974;

20             "Rail Safety Act" means the Rail Safety Act 1998;

               "Railway" has the meaning given to it in clause 1 of the Railway and
                   Port Agreement;

25             "Railway and Port Agreement" means the agreement ratified by the
                   Railway and Port (The Pilbara Infrastructure Pty Ltd) Agreement
                   Act 2004;

               "said State" means the State of Western Australia;
30
               "The JORC Code" means the Australasian Code for Reporting of
                   Mineral Resources and Ore Reserves prepared by the Joint Ore
                   Reserves Committee of The Australasian Institute of Mining and
                   Metallurgy, Australian Institute of Geoscientists and Minerals
35                 Council of Australia in December 2004 or any future superseding
                   code issued by the same or any future equivalent organisation or
                   organisations;




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                           Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
                       Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




             "this Agreement" "hereof " and "hereunder" refer to this
                  Agreement whether in its original form or as from time to time
                  added to, varied or amended; and

 5           "washing" means a process of separation by water using only size as
                 a criterion.


     Interpretation
10
     2.     (1)       In this Agreement:

                      (a)    monetary references are references to Australian
                             currency unless otherwise specifically expressed;
15
                      (b)    power given under any clause other than clause 29 to
                             extend any period or date shall be without prejudice to
                             the power of the Minister under clause 29;

20                    (c)    clause headings do not affect interpretation or
                             construction;

                      (d)    words in the singular shall include the plural and words
                             in the plural shall include the singular according to the
25                           requirements of the context;

                      (e)    one gender includes the other genders;

                      (f)    a covenant or agreement by more than one person
30                           binds, and is enforceable against, those persons jointly
                             and each of them severally;

                      (g)    reference to an Act includes the amendments to that Act
                             for the time being in force and also any Act passed in
35                           substitution therefor or in lieu thereof and the
                             regulations for the time being in force thereunder;

                      (h)    reference to the Access Code includes the amendments
                             to that code for the time being in force and also any
40                           code established or made in substitution therefor or in
                             lieu thereof;

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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                   (i)     reference in this Agreement to any other document
                           includes that document as from time to time added to,
                           varied or amended and notwithstanding any change in
                           the identity of the parties to it;
 5
                   (j)     reference to a clause, schedule or annexure is a
                           reference to a clause, schedule or annexure to this
                           Agreement, and a reference to a subclause or paragraph
                           is a reference to the subclause of the clause or
10                         paragraph of the clause or subclause as the case may be
                           in, or in relation to, which the reference is made;

                   (k)     "including" means "including, but not limited to"; and

15                 (l)     reference to a "person" includes a body corporate.

            (2)    Nothing in this Agreement, including the approval of proposals,
                   shall be construed to exempt the State or the Company from
                   compliance with, or to require the State or the Company to do
20                 anything contrary to, any laws relating to native title or any
                   lawful obligation or requirement imposed on the State or the
                   Company, as the case may be, pursuant to any laws relating to
                   native title.

25          (3)    Nothing in this Agreement, including the approval of proposals,
                   shall be construed to exempt the Company from compliance
                   with any requirement in connection with the protection of the
                   environment, including the clearing of native vegetation (as
                   defined in section 3 of the EP Act), arising out of or incidental
30                 to its activities under this Agreement that may be made by or
                   under the EP Act.


     Ratification and operation
35
     3.     (1)    The State shall introduce and sponsor a Bill in the State
                   Parliament of Western Australia to ratify this Agreement and
                   endeavour to secure its passage as an Act prior to 30 June 2006
                   or such later date as may be agreed between the parties hereto.
40



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                         Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
                     Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




            (2)    (a)     This clause and clauses 1, 2, 4 and 6 (2) shall come into
                           operation on the date of this Agreement.

                   (b)     Clause 12(3) shall not come into operation until both
 5                         the Bill referred to in subclause (1) has been passed by
                           the Parliament of Western Australia and comes into
                           operation as an Act and Parts 6 and 10 of the Mining
                           Amendment Act come into operation.

10                 (c)     The other provisions of this Agreement shall not come
                           into operation until the Bill referred to in subclause (1)
                           has been passed by the Parliament of Western Australia
                           and comes into operation as an Act.

15          (3)    If by 31 December 2006 the said Bill has not commenced to
                   operate as an Act then unless the parties hereto otherwise agree
                   this Agreement shall then cease and determine and no party
                   hereto shall have any claim against any other party hereto with
                   respect to any matter or thing arising out of, done, performed,
20                 or omitted to be done or performed under this Agreement.

            (4)    Subject to subclauses 2(b) and (5), on the said Bill commencing
                   to operate as an Act all the provisions of this Agreement shall
                   operate and take effect despite any enactment or other law.
25
            (5)    On the later of:

                   (a)     the date on which the said Bill commences to operate as
                           an Act; and
30
                   (b)     the date on which Parts 6 and 10 of the Mining
                           Amendment Act come into operation,

                   the provisions of clause 12(3) shall operate and take effect
35                 despite any enactment or other law.


     Initial obligations of the Company

40   4.     (1)    The Company shall continue its field and office engineering,
                   environmental, heritage, market and finance studies and other

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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                   matters necessary for the purposes of this clause and to enable it
                   to finalise and to submit to the Minister the detailed proposals
                   referred to in clause 8. This shall include progressively
                   exploring and carrying out geological investigations to delineate
 5                 both the Indicated Mineral Resource and the Measured Mineral
                   Resource (each as defined in The JORC Code) of iron ore
                   within those parts of the exploration licences referred to in part
                   A of schedule 1 which are the subject of the applications for
                   mining leases set out in schedule 2.
10
            (2)    The Company shall keep the State fully informed in writing at
                   quarterly intervals from the date of this Agreement as to the
                   progress and results of its operations under subclause (1) and
                   shall supply to the Minister such information in relation thereto
15                 as the Minister may request from time to time.

            (3)    The Company shall co-operate with the State and consult with
                   the representatives or officers of the State regarding matters
                   referred to in subclauses (1) and (2) and any other relevant
20                 studies in relation to those subclauses that the Minister may
                   wish the Company to undertake.

            (4)    Notwithstanding the dedication of Agreement Mining
                   Tenements to the Project as referred to in clause 6(2), as part of
25                 undertaking its obligations under subclause (1) the Company
                   may mine iron ore on not more than 2 Mining Leases for the
                   purposes of taking bulk samples and for testing mining
                   equipment intended to be used in the Project provided that:

30                 (a)     such mining and associated mining operations shall be
                           subject to the Mining Act, the EP Act and the other
                           laws of the State; and

                   (b)     the amount of earth, soil, rock, stone, fluid or mineral
35                         bearing substances that is excavated, extracted or
                           removed from:

                           (i)     those Mining Leases; and




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                         Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
                     Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




                           (ii)     exploration licences which are Agreement
                                    Mining Tenements and in respect of which the
                                    Minister for Mines has, pursuant to
                                    section 66(c) of the Mining Act, approved a
 5                                  limit greater than the prescribed limit as
                                    referred to in that section,

                           as part of that bulk sampling and testing does not
                           exceed 1,000,000 tonnes in aggregate.
10

     Aboriginal Heritage Act 1972

     5.     For the purposes of this Agreement the Aboriginal Heritage Act 1972
15          applies as if it were modified by:

            (a)    the insertion before the full stop at the end of section 18(1) of
                   the words:

20                 "and the expression "the Company" means the persons from
                   time to time comprising "the Company" in their capacity as
                   such under the agreement made on 1 December 2005 between
                   The Honourable Geoffrey Ian Gallop, Premier of the State of
                   Western Australia acting for and on behalf of the said State and
25                 its instrumentalities from time to time, FMG Chichester Pty Ltd
                   ACN 109 264 262 and Fortescue Metals Group Ltd
                   ACN 002 594 872, in relation to the use or proposed use
                   pursuant to that agreement of land within the Defined Area (as
                   defined in that agreement) after and in accordance with
30                 approved proposals under that agreement and in relation to the
                   use of that land before any such approval of proposals where
                   the Company has the requisite authority to enter upon and so
                   use the land";

35          (b)    the insertion in sections 18(2), 18(4), 18(5) and 18(7) of the
                   words "or the Company as the case may be" after the words
                   "owner of any land";

            (c)    the insertion in section 18(3) of the words "or the Company as
40                 the case may be" after the words "the owner";


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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




            (d)    the insertion of the following sentence at the end of
                   section 18(3):

                   "In relation to a notice from the Company pursuant to
 5                 subsection (2) the conditions that the Minister may specify can
                   as appropriate include, among other conditions, a condition
                   restricting the Company's use of the relevant land to after the
                   approval or deemed approval as the case may be under the
                   abovementioned agreement of all of the Company's submitted
10                 proposals thereunder for the Project (as defined in the
                   abovementioned agreement), or in the case of additional
                   proposals submitted or to be submitted by the Company to after
                   the approval or deemed approval under that agreement of such
                   additional proposals, and to the extent so approved."; and
15
            (e)    the insertion in sections 18(2) and 18(5) of the words "or it as
                   the case may be" after the word "he".

            The Company acknowledges that nothing in this clause 5 nor the
20          granting of any consents under section 18 of the Aboriginal Heritage
            Act 1972 will constitute or is to be construed as constituting the
            approval of any proposals submitted or to be submitted by the Company
            under this Agreement or as the grant or promise of land tenure for the
            purposes of this Agreement.
25

     Land to be the subject of this Agreement

     6.     (1)    The land to be granted pursuant to this Agreement, whether
30                 under the LAA, the Mining Act or otherwise, will be drawn
                   from within:

                   (a)     the Defined Area; and

35                 (b)     such other area of land in the vicinity of the Defined
                           Area as the Minister, before the Company submits
                           proposals in respect thereof, approves as land the
                           Company may as part of the particular proposals and in
                           accordance with but subject to this Agreement request
40                         the grant to it of leases, licences or other tenures over as


     page 16
                       Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
                   Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




                         referred to in clause 18 to support the undertaking of
                         the Project.

           (2)   Subject to clause 4(4), the Company dedicates to the Project:
 5
                 (a)     all Agreement Mining Tenements held by it at the date
                         of this Agreement; and

                 (b)     all future Agreement Mining Tenements,
10
                 and agrees that while this Agreement continues they shall
                 remain so dedicated for their respective terms including as
                 renewed or extended from time to time.

15
     Community development plan

     7.    (1)   In this clause, the term "community and social benefits"
                 includes:
20
                 (a)     training and guaranteed employment for indigenous and
                         non-indigenous persons living in the Pilbara region of
                         the said State;

25               (b)     regional development and local procurement of goods
                         and services;

                 (c)     contribution to community services and facilities; and

30               (d)     a regionally based workforce.

           (2)   The Company acknowledges the need for community and social
                 benefits flowing from this Agreement.

35         (3)   The Company agrees that, prior to the time at which it submits
                 any proposals pursuant to clause 8 and, if required by the
                 Minister, prior to the time at which it submits any additional
                 proposals pursuant to clauses 10 or 11, it shall:

40               (a)     consult with the relevant local government or local
                         governments with respect to the need for community

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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                           and social benefits in relation to the developments
                           proposed;

                   (b)     following such consultation, prepare a plan which
 5                         describes the Company's proposed strategies for
                           achieving community and social benefits in connection
                           with the developments proposed, and such plan shall
                           include a process for regular consultation by the
                           Company with the relevant local government or local
10                         governments in respect of the strategies; and

                   (c)     submit to the Minister the plan prepared pursuant to
                           subclause (3)(b) and confer with the Minister in respect
                           of the plan.
15
            (4)    The Minister shall within one month after receipt of a plan
                   submitted under subclause (3)(c), either notify the Company
                   that the Minister approves the plan as submitted or notify the
                   Company of any changes that the Minister requires be made to
20                 the plan. If the Company is unwilling to accept the changes
                   which the Minister requires it shall notify the Minister to that
                   effect and either party may refer to arbitration hereunder the
                   question of the reasonableness of the changes required by the
                   Minister.
25
            (5)    The effect of an award made on an arbitration pursuant to
                   subclause (4) shall be that the plan submitted by the Company
                   pursuant to subclause (3)(c) shall, with such changes required
                   by the Minister under subclause (4) as the arbitrator determines
30                 to be reasonable (with or without modification by the
                   arbitrator), be deemed to be the plan approved by the Minister
                   under this clause.

            (6)    During the continuance of this Agreement, the Company shall
35                 implement the plan approved or deemed to be approved by the
                   Minister under this clause.

            (7)    The Company shall report to the Minister about the results of its
                   periodic ongoing consultation with the relevant local
40                 government or local governments in accordance with the plan
                   approved or deemed to be approved by the Minister under this

     page 18
                       Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
                   Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




                  clause and as soon as practicable after each such consultation
                  takes place.

           (8)    At the request of either of them made at any time and from time
 5                to time, the Minister and the Company shall confer as to any
                  amendments desired to any plan approved or deemed to be
                  approved by the Minister under this clause and may agree to
                  amendment of the plan or adoption of a new plan. Any such
                  amended plan or new plan will be deemed to be the plan
10                approved by the Minister under this clause.


     Company to submit proposals

15   8.    (1)    The Company shall, subject to the EP Act, the provisions of this
                  Agreement and approval of a plan as referred to in clause 7,
                  submit to the Minister by 31 December 2006 to the fullest
                  extent reasonably practicable its detailed proposals (including
                  plans where practicable and specifications where reasonably
20                required by the Minister and any other details normally required
                  by a local government in whose area any works are to be
                  situated) with respect to the production of iron ore from the
                  Mining Leases then held by the Company and, if the Company
                  so wishes, also from any mining leases which the Company has
25                then applied for under the Mining Act and which if granted
                  would be Agreement Mining Tenements (such Mining Leases
                  and proposed mining leases in this subclause together being
                  called "the relevant mining leases") in an amount not less than,
                  in aggregate, 10,000,000 tonnes per annum and not greater than
30                the production limit specified in clause 11(1) or such higher
                  number of tonnes per annum as may be approved in principle
                  by the Minister pursuant to clause 11(2), for transportation from
                  the relevant mining leases and which proposals shall include the
                  location, area, lay-out, design, quantities, materials and time
35                program for the commencement and completion of construction
                  or the provision (as the case may be) of each of the following
                  matters, namely:

                  (a)     the mining and recovery of iron ore including mining,
40                        crushing, screening, handling, transport and storage of
                          iron ore and plant facilities;

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     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                   (b)    any beneficiation or further processing of iron ore
                          proposed to be carried out;

                   (c)    transportation of iron ore from the relevant mining
 5                        leases by road or by rail spur line or conveyor
                          connecting to the Railway or to any other railway of a
                          third party at a location within the Defined Area;

                   (d)    roads within the relevant mining leases and roads
10                        serving the relevant mining leases;

                   (e)    temporary accommodation and ancillary facilities for
                          the mine workforce on, or subject to clause 6 in the
                          vicinity of, the relevant mining leases and housing or
15                        other appropriate accommodation and facilities
                          elsewhere for the Company's workforce;

                   (f)    water supply and disposal;

20                 (g)    energy supplies;

                   (h)    a mine aerodrome on, or subject to clause 6 in the
                          vicinity of, the relevant mining leases;

25                 (i)    any other works, services or facilities desired by the
                          Company;

                   (j)    residue disposal;

30                 (k)    subject to clause 6, any ancillary leases (not being
                          general purpose leases for land within the Defined Area
                          or mining leases), licences (not being exploration
                          licences or retention licences) or other tenures of land in
                          favour of the Company required from the State to
35                        support the undertaking of the Project; and

                   (l)    use of local labour, professional services,
                          manufacturers, suppliers, contractors and materials and
                          measures to be taken with respect to the engagement
40                        and training of employees by the Company, its agents
                          and contractors.

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     (2)   Proposals submitted pursuant to subclause (1) must not:

           (a)     include a request for the grant of a lease, licence or
                   other tenure of land which the Company has already
 5                 applied for under the Mining Act, the LAA or
                   otherwise;

           (b)     in relation to all Agreement Mining Tenements the
                   subject of the proposals, be inconsistent with the
10                 conditions endorsed by the Minister for Mines on the
                   grants of those mining tenements; and

           (c)     if they relate to a mining lease or mining leases which
                   the Company has applied for under the Mining Act and
15                 which if granted would be an Agreement Mining
                   Tenement or Agreement Mining Tenements as the case
                   may be, be inconsistent with the documentation that
                   accompanied that application or those applications
                   under the Mining Act.
20
     (3)   Each of the proposals submitted pursuant to subclause (1) may
           with the approval of the Minister or must if so required by the
           Minister be submitted separately and in any order as to the
           matter or matters mentioned in one or more of paragraphs (a) to
25         (l) of subclause (1). Until all of its proposals under this clause
           have been approved the Company may withdraw and may
           resubmit any proposal but the withdrawal of any proposal shall
           not affect the obligations of the Company to submit a proposal
           under this clause in respect of the subject matter of the
30         withdrawn proposal.

     (4)   Each of the proposals submitted pursuant to subclause (1) may
           with the consent of the Minister and the consents of any other
           parties concerned, instead of providing for the construction of
35         new facilities or equipment or the provision of new services of
           the kind therein mentioned, provide for the use by the Company
           of any existing facilities equipment or services of such kind
           belonging to the Company or upon terms and conditions agreed
           between the Company and the other parties concerned of any
40         other existing facilities equipment or services of such kind.


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            (5)    The Company shall, whenever any of the following matters
                   referred to in this subclause are proposed by the Company
                   (whether before or during the submission of proposals under
                   this clause), submit to the Minister details of any services
 5                 (including any elements of the Project investigations, design
                   and management) and any works, materials, plant, equipment
                   and supplies that it proposes to consider obtaining from or
                   having carried out or permitting to be obtained or carried out
                   outside Australia, together with its reasons therefor and shall, if
10                 required by the Minister consult with the Minister with respect
                   thereto.

            (6)    At the time when the Company submits the last of the said
                   proposals pursuant to this clause, it shall furnish to the
15                 Minister's reasonable satisfaction evidence of:

                   (a)     marketing arrangements demonstrating the Company's
                           ability to sell iron ore produced in accordance with the
                           said proposals;
20
                   (b)     the financial capacity of the Company to undertake the
                           operations to which the said proposals refer;

                   (c)     all accreditations under the Rail Safety Act which are
25                         required to be held by the Company or any other person
                           for the construction of any rail spur proposed as
                           referred to in subclause (1)(c); and

                   (d)     the readiness of the Company to embark upon and
30                         proceed to carry out the operations referred to in the
                           said proposals.


     Consideration of proposals
35
     9.     (1)    In respect of each proposal pursuant to clause 8(1) the Minister
                   shall subject to the EP Act:

                   (a)     approve of the proposal without qualification or
40                         reservation; or


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            Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




           (b)     defer consideration of or decision upon the same until
                   such time as the Company submits a further proposal or
                   proposals in respect of some other of the matters
                   mentioned in clause 8(1) not covered by the said
 5                 proposal or until such time as clause 8(6) has been
                   complied with by the Company; or

           (c)     require as a condition precedent to the giving of his
                   approval to the said proposal that the Company make
10                 such alteration thereto (including where the proposal
                   relates to an Agreement Mining Tenement or
                   Agreement Mining Tenements granted after the
                   submission of the proposal, to accord with the
                   conditions endorsed by the Minister for Mines on the
15                 grant of that mining tenement or grants of those mining
                   tenements) or comply with such conditions in respect
                   thereto as he thinks reasonable, and in such a case the
                   Minister shall disclose his reasons for such conditions,

20         PROVIDED ALWAYS that where implementation of any
           proposals hereunder have been approved pursuant to the EP Act
           subject to conditions or procedures, any approval or decision of
           the Minister under this clause shall if the case so requires
           incorporate a requirement that the Company make such
25         alterations to the proposals as may be necessary to make them
           accord with those conditions or procedures.

     (2)   The Minister shall within 2 months after the later of:

30         (a)     receipt of proposals pursuant to clause 8(1);

           (b)     where the proposals are to be assessed under Part IV of
                   the EP Act, service on the Minister of an authority
                   under section 45(7) of the EP Act;
35
           (c)     where a proposal will or may require the State to do any
                   act which affects any native title rights and interests,
                   completion of all processes required by laws relating to
                   native title to be undertaken by the State before that act
40                 may be done by the State; and


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     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                   (d)     where the proposals relate to a mining tenement or
                           mining tenements which the Company has applied for
                           under the Mining Act and which if granted would be an
                           Agreement Mining Tenement or Agreement Mining
 5                         Tenements, the grant of that application or of all of
                           those applications as the case may be,

                   give notice to the Company of his decision in respect to the
                   proposals.
10
            (3)    If the decision of the Minister is as mentioned in either of
                   paragraphs (b) or (c) of subclause (1) the Minister shall afford
                   the Company full opportunity to consult with him and should it
                   so desire to submit new or revised proposals either generally or
15                 in respect to some particular matter.

            (4)    If the decision of the Minister is as mentioned in either of
                   paragraphs (b) or (c) of subclause (1) and the Company
                   considers that the decision is unreasonable the Company within
20                 2 months after receipt of the notice mentioned in subclause (2)
                   may elect to refer to arbitration in the manner hereinafter
                   provided the question of the reasonableness of the decision
                   provided that any requirement of the Minister pursuant to the
                   proviso to subclause (1) shall not be referable to arbitration
25                 hereunder.

            (5)    An award made on an arbitration pursuant to subclause (4) shall
                   have force and effect as follows:

30                 (a)     if by the award the dispute is decided against the
                           Company then unless the Company within 3 months
                           after delivery of the award gives notice to the Minister
                           of its acceptance of the award this Agreement shall on
                           the expiration of that period of 3 months cease and
35                         determine; or

                   (b)     if by the award the dispute is decided in favour of the
                           Company the decision shall take effect as a notice by
                           the Minister that he is so satisfied with and approves the
40                         matter or matters the subject of the arbitration.


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                         Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
                     Iron Ore (FMG Chichester Pty Ltd) Agreement  Schedule 1




            (6)    Notwithstanding any provision of this Agreement (other than
                   clause 29) or that the plan required to be approved pursuant to
                   clause 7 has not been approved, or that under this clause any
                   proposals of the Company are approved by the Minister or
 5                 determined by arbitration award, unless each and every
                   proposal and matter required pursuant to clause 8 is so
                   approved or determined by 31 December 2007 then the Minister
                   may give to the Company 12 months notice of intention to
                   determine this Agreement and unless before the expiration of
10                 the said 12 months period all the detailed proposals and matters
                   are so approved or determined this Agreement shall cease and
                   determine subject however to the provisions of clause 31.

            (7)    Subject to and in accordance with the EP Act and any approvals
15                 and licences required under that Act the Company shall
                   implement the approved proposals in accordance with the terms
                   thereof.

            (8)    Notwithstanding clause 27, the Minister may during the
20                 implementation of approved proposals approve variations to
                   those proposals.

            (9)    The Minister may extend the periods set forth in clause 8(1) and
                   subclause (6) of this clause (in addition to any extension
25                 granted under clauses 28 and 29) upon request of either the
                   Company or the State for such reasonable period or periods as
                   the Minister considers appropriate to enable either of them to
                   comply with laws relating to native title.

30
     Expansion of the Project

     10.    (1)    Subject to clause 11, if the Company at any time during the
                   continuance of this Agreement desires to significantly modify,
35                 expand or otherwise vary its activities that are the subject of this
                   Agreement and that may be carried on by it pursuant to this
                   Agreement beyond those activities specified in any approved
                   proposals it shall give notice of such desire to the Minister and
                   within 2 months thereafter shall submit to the Minister detailed
40                 proposals in respect of all matters covered by such notice and


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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                   such of the other matters mentioned in clause 8(1) as the
                   Minister may require.

            (2)    The provisions of clauses 8 and 9 (other than subclauses (5)(a)
 5                 and 6) shall mutatis mutandis apply to detailed proposals
                   submitted pursuant to this clause with the proviso that the
                   Company may withdraw such proposals at any time before
                   approval thereof or, where any decision of the Minister in
                   respect thereof is referred to arbitration, within 3 months after
10                 the award by notice to the Minister that it shall not be
                   proceeding with the same. Subject to and in accordance with
                   the EP Act and any approvals or licences required under that
                   Act, the Company shall implement approved proposals pursuant
                   to this clause in accordance with the terms thereof.
15

     Limits on mining

     11.    (1)    The Company shall not produce, in aggregate, more than
20                 45,000,000 tonnes of iron ore per annum from the Mining
                   Leases without the prior in-principle approval of the Minister
                   under, and approval of detailed proposals in regard thereto in
                   accordance with, this clause.

25          (2)    (a)     If the Company desires to increase the annual tonnage
                           beyond that specified in subclause (1) it shall, subject to
                           sub-clause (3), give notice thereof to the Minister and
                           furnish to the Minister with that notice an outline of its
                           proposals in respect thereto (including the matters
30                         mentioned in clause 8(1) or as the Minister otherwise
                           requires).

                   (b)     The Minister shall within one month of receipt of a
                           notice under paragraph (a) of this subclause advise the
35                         Company whether or not he approves in principle the
                           proposed increase. An in-principle approval by the
                           Minister under this subclause may be given subject to
                           conditions including a condition requiring variations of
                           or additions to this Agreement provided that any such
40                         condition shall not without the consent of the Company
                           require variations of:

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                  (i)     the term of any Agreement Mining Tenement;
                          or

                  (ii)    the rentals payable under any Agreement
 5                        Mining Tenement; or

                  (iii)   the rates or method of calculating royalty; or

                  (iv)    the provisions of clause 20.
10
                  The Minister shall afford the Company full opportunity
                  to consult with him in respect of the decision of the
                  Minister under this subclause.

15   (3)   The Company may not give a notice under subclause (2)(a) in
           regard to the production, in aggregate, of more than 45,000,000
           tonnes of iron ore per annum from the Mining Leases unless the
           Minister:

20         (a)    acting in accordance with clause 20(4) has approved or
                  is deemed to have approved proposals submitted under
                  clause 20(2) for the establishment within the said State
                  of plant for the production of metallised agglomerates
                  or under clause 20(6) for an alternative project in lieu of
25                the Company's obligations under clause 20 in respect of
                  the establishment of such plant; or

           (b)    agrees for the purpose of this subclause (3) to receive a
                  notice under subclause (2)(a). If at the time the
30                Minister is considering whether or not to so agree for
                  the purpose of this subclause the Company has pursuant
                  to clause 20(3) applied for or been granted a
                  postponement of its obligations to submit proposals
                  under clause 20(2) or such an application made by it is
35                subject to clause 20(3)(d), the Minister shall in
                  considering whether or not to so agree for the purpose
                  of this subclause take into account the estimated
                  quantity of iron ore then still available to be produced
                  from the Mining Leases.
40



                                                                    page 27
     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




            (4)    (a)    If the Minister approves in principle a proposed
                          increase the Company:

                          (i)     if it has not already submitted pursuant to
 5                                clause 8 all of its proposals for its initial mining
                                  project, shall submit to the Minister pursuant to
                                  clause 8 detailed proposals in respect of the
                                  proposed increase as part of the Company's
                                  proposals for its initial mining project and in
10                                accordance with any condition of the Minister's
                                  in-principle approval which may include the
                                  amendment of the plan approved under clause 7
                                  as a prerequisite to the submission by the
                                  Company of proposals under clause 8; or
15
                          (ii)    if it has already submitted pursuant to clause 8
                                  all of its proposals for its initial mining project,
                                  may after compliance with clause 7 (if required
                                  by the Minister) and within 18 months or such
20                                longer period as the Minister may from time to
                                  time allow of the Minister's in-principle
                                  approval, submit to the Minister detailed
                                  proposals in respect of the proposed increase in
                                  accordance with any conditions of that
25                                in-principle approval otherwise that in-principle
                                  approval shall lapse.

                   (b)    The provisions of clauses 8 and 9 shall mutatis
                          mutandis apply to detailed proposals regarding a
30                        proposed increase referred to in paragraph (a)(i) of this
                          subclause. The provisions of clause 10(2) shall apply to
                          detailed proposals submitted pursuant to
                          paragraph (a)(ii) of this subclause.

35          (5)    Any proposal to increase the annual tonnage to be produced
                   from the Mining Leases shall specify the proposed increase and
                   on and after approval or determination of any such proposal in
                   accordance with subclause (4)(b):

40                 (a)    a reference to the amount referred to in subclause (1)
                          shall be deemed to be a reference to the increased

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                         tonnage and the provisions of this clause shall apply
                         mutatis mutandis to the increased tonnage and also to
                         any subsequent desires of the Company for an increase
                         in the tonnage; and
 5
                 (b)     a reference to the amount referred to in subclause (3)
                         shall be deemed to be a reference to the increased
                         tonnage if that increased tonnage is higher than
                         45,000,000 tonnes of iron ore per annum.
10

     Agreement Mining Tenements

     12.   (1)   The Company shall be responsible for obtaining the grant to it
15               under the Mining Act of mining leases and general purpose
                 leases, by way of conversion of all or part of exploration
                 licences now or hereafter held by it and which are Agreement
                 Mining Tenements, required for the purposes of the Project and
                 the grant of such leases and any other mining leases will not be
20               sought or granted pursuant to this Agreement.

           (2)   For the purposes of this Agreement and without limiting the
                 operation of other subclauses, the application of the Mining Act
                 and regulations made thereunder are specifically modified
25               during the continuance of this Agreement as follows:

                 (a)     in relation to an application that the Company may after
                         the commencement date make under the Mining Act:

30                       (i)     to convert all or part of an exploration licence
                                 referred to in part A of schedule 1 or granted to
                                 the Company pursuant to an application
                                 referred to in part B of schedule 1 to a mining
                                 lease or general purpose lease; or
35
                         (ii)    otherwise for the grant to it of a mining
                                 tenement solely over land within the Defined
                                 Area where the grant is provided for in
                                 approved proposals,
40



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     Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                           the provisions of the Mining Act which, but for this
                           paragraph, entitle or would entitle a person to object
                           with or without the leave of the warden to the grant of
                           such a mining tenement to the Company, shall not
 5                         apply to the extent only that those provisions entitle or
                           would entitle a person to so object;

                   (b)     by inserting in section 65(1a) the words "or otherwise
                           by the terms of the licence" after the words
10                         "section 111";

                   (c)     the Company shall not be entitled to apply for and be
                           granted any retention licences in respect of the whole or
                           any part of the land the subject of a Mining Lease or an
15                         exploration licence which is an Agreement Mining
                           Tenement; and

                   (d)     in respect of any exploration licence that is an
                           Agreement Mining Tenement by inserting in
20                         regulation 23AB the following new ground for
                           extension of the term of such exploration licence:

                           "the holder of the exploration licence is a person
                           authorised by the Minister under section 111 or
25                         otherwise by the terms of the licence to explore for iron
                           on that land".

            (3)    For the purposes of this Agreement and without limiting the
                   operation of other subclauses, the application of the Mining Act
30                 and regulations made thereunder are also specifically modified
                   during the continuance of this Agreement as follows:

                   (a)     in respect of the applications for mining leases referred
                           to in schedule 2 and any other applications by Company
35                         for mining leases under the Mining Act which if
                           granted would be Agreement Mining Tenements, by
                           deleting section 120AA;

                   (b)     section 6(1a), including as applying pursuant to
40                         section 90(1), shall not apply to the extent it may
                           prevent the Minister from referring for assessment

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                Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
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                  under Part IV of the EP Act, a proposal or proposals
                  submitted pursuant to clauses 8, 10 or 11 as the case
                  may be;

 5         (c)    in section 6(1d), including as applying pursuant to
                  section 90(1), by deleting the full stop at the end of
                  paragraph (b) and substituting "; or" and inserting the
                  following new paragraph:

10                "(c)    a proposal or proposals submitted pursuant to a
                          Government agreement as defined in the
                          Government Agreements Act 1979 for approval
                          under that agreement";

15         (d)    a "relevant mining proposal" as defined in
                  section 82(1a) shall include an approved proposal;

           (e)    in section 82A(2), including as applying pursuant to
                  section 90(4), by deleting the full stop at the end of
20                paragraph (b) and substituting a comma and inserting as
                  a qualification to paragraphs (a) and (b) the words
                  "unless such mining operations are dealt with in a
                  proposal or proposals approved or deemed to be
                  approved pursuant to a Government agreement as
25                defined in the Government Agreements Act 1979."; and

           (f)    by deleting section 118A.

     (4)   For the purposes of this Agreement and without limiting the
30         operation of other subclauses, during the continuance of this
           Agreement and notwithstanding any provisions of the Mining
           Act and regulations made thereunder to the contrary:

           (a)    any assignment, mortgaging, charging, subletting,
35                parting with possession or disposal of an Agreement
                  Mining Tenement shall be subject to clause 26;

           (b)    subject to compliance with its obligations hereunder,
                  the Company shall not be required to comply with the
40                expenditure obligations imposed by or under the
                  Mining Act in regard to Agreement Mining Tenements;

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     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                   (c)    in considering an application by the Company for the
                          extension of the term of an Agreement Mining
                          Tenement or for an exemption from the requirement of
                          section 65 of the Mining Act in respect of an
 5                        exploration licence which is an Agreement Mining
                          Tenement, the Minister for Mines shall consult with the
                          Minister and if applicable have regard to the
                          Company's compliance with clause 12(11) in respect of
                          that Agreement Mining Tenement and the results of the
10                        geological investigations carried out on it; and

                   (d)    an Agreement Mining Tenement shall not be forfeited
                          (except if it is an exploration licence, in regard to
                          failure to surrender land the subject of the licence in
15                        accordance with the Mining Act) or determined
                          otherwise than in accordance with this Agreement.

            (5)    Except as required by section 65 of the Mining Act the
                   Company shall not surrender all or any part of an Agreement
20                 Mining Tenement without the prior consent of the Minister.

            (6)    The Company shall lodge with the Department at Perth:

                   (a)    in respect of each Agreement Mining Tenement such
25                        periodical reports and returns as may be prescribed
                          from time to time in respect of such type of mining
                          tenement under or pursuant to the Mining Act or the
                          regulations made thereunder;

30                 (b)    if requested by the Department but not more frequently
                          than annually, a report on identified mineral resources
                          and/or iron ore reserves within the Agreement Mining
                          Tenements (prepared in accordance with The JORC
                          Code) together with a list of any geological,
35                        geochemical, geophysical, geotechnical and
                          metallurgical activities carried out during the year and,
                          if requested by the Department, the Company will
                          provide details and results of any of those activities in a
                          mineral exploration report, or other technical report, in
40                        accordance with the statutory guidelines on reporting as
                          specified in the Mining Act; and

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            (c)     reports on drilling operations and drill holes where the
                    main purposes of the drilling was to discover or define
                    future mineral resources and ore reserves within the
                    Agreement Mining Tenements and, if requested by the
 5                  Department, reports on drilling done within blocks of
                    proven ore for the purpose of mine planning.

     (7)    The Company shall at all times permit the State and third
            parties with the consent of the State (with or without stock,
10          vehicles and rolling stock) to have access to and to pass over
            Agreement Mining Tenements and any other lease, licence of
            other title granted pursuant to or under this Agreement (by
            separate route, road or railway) so long as that access and
            passage does not in the Minister's opinion unduly prejudice or
15          interfere with the activities of the Company under this
            Agreement.

     (8)    Notwithstanding the Mining Act, the Company may with the
            prior consent of the Minister and from time to time (with
20          abatement of future rent in respect to the area surrendered but
            without any abatement of rent already paid or any rent which
            has become due and has been paid in advance) surrender to the
            State all or any portion or portions of the Mining Leases.

25   (9)    The Company in accordance with approved proposals may for
            the construction of works (and the maintenance thereof) within
            the Mining Leases for the purposes of this Agreement and
            without payment of royalty, obtain stone sand clay an gravel
            from the Mining Leases.
30
     (10)   The Minister, after consulting the Minister for Mines, may
            approve any mining tenement held by the Company the land the
            subject of which is wholly or partly within the Defined Area or
            in the vicinity of the Defined Area, and which is not then an
35          Agreement Mining Tenement, as an Agreement Mining
            Tenement for the purposes of this Agreement and subject to
            such of the existing conditions of that mining tenement as the
            Minister for Mines determines but otherwise as from the date of
            the Minister's approval subject to the provisions of this
40          Agreement.


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            (11)   The Company shall to the extent permitted by the Mining Act
                   progressively explore and carry out geological investigations to
                   delineate the Inferred Mineral Resource (as defined in The
                   JORC Code) of iron ore within the Mining Leases and
 5                 exploration licences which are Agreement Mining Tenements.


     Royalties

10   13.    Except as otherwise provided in clause 12(9) the Company shall pay to
            the State royalties on all minerals obtained from Agreement Mining
            Tenements as may from time to time be prescribed under or pursuant to
            the Mining Act or the regulations made thereunder.

15
     Transportation by rail

     14.    (1)    Subject to and in accordance with approved proposals, the Rail
                   Safety Act and the State having assured to the Company all
20                 necessary rights in or over Crown lands (as defined in the LAA)
                   available for the purpose the Company shall in a proper and
                   workmanlike manner and in accordance with recognised
                   standards for railways of a similar nature operating under
                   similar conditions construct along the route specified in the
25                 approved proposals the rail spur line or lines specified in the
                   approved proposals and shall also construct inter alia any
                   necessary loops, sidings, crossings, points, bridges signalling
                   switches and other works and appurtenances and provide for
                   crossing places and (where required by the Minister) grade
30                 separation or other protective devices including flashing lights
                   and boom gates (all of which together with the specified rail
                   spur line or lines being hereinafter referred to as "the said
                   railway spur line") at places where the said rail spur line crosses
                   or intersects with major roads or existing railways and unless
35                 the Minister otherwise allows shall operate the said railway spur
                   line with sufficient and adequate locomotives freight cars and
                   other railway stock and equipment for the purposes of the
                   Company's activities under this Agreement.




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     (2)   The Company shall during the continuance of this Agreement:

           (a)     keep the said railway spur line constructed under this
                   Agreement in operation;
 5
           (b)     ensure that the said railway spur line is operated in a
                   safe and proper manner in compliance with all
                   applicable laws from time to time; and

10         (c)     without limiting subclause 2(b), ensure that the
                   obligations imposed under the Rail Safety Act on an
                   owner and an operator (as those terms are therein
                   defined) are complied with in connection with the said
                   railway spur line,
15
           and nothing in this Agreement shall be construed to exempt the
           Company or any other person from compliance with the Rail
           Safety Act, or limit their application to the Company's
           operations generally.
20
     (3)   The Company shall provide crossings for livestock and also for
           any roads, other railways, conveyors, pipelines and other
           utilities which now exist and where in the Minister's opinion it
           can do so without unduly prejudicing or interfering with its
25         activities hereunder the Company shall allow such crossings for
           roads, railways, conveyors, pipelines and other utilities which
           may be constructed for future needs and which may be required
           to cross the said railway spur line.

30   (4)   Where in the Minister's opinion the Company can do so
           without materially prejudicing or interfering with its operations
           hereunder and subject to the payment to it of the charges
           prescribed by and for the time being payable under any by-laws
           made by the Company in respect of the transporting of
35         passengers and the carriage of freight (including the iron ore
           and iron ore products of third parties) over the said railway spur
           line and subject to the due compliance with the other
           requirements and conditions prescribed by such by-laws (or
           should there be no such by-laws for the time being in force then
40         subject to the payment of such charges and the due compliance
           with such requirements and conditions as in either case shall be

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     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                   reasonable having regard to the cost to the Company of the
                   construction and operation of the said railway spur line) the
                   Company shall if and when reasonably required so to do
                   transport passengers and carry the freight of the State and third
 5                 parties (including the iron ore and iron ore products of third
                   parties) over the said railway spur line but in relation to its use
                   of the said railway spur line the Company shall not be deemed
                   to be a common carrier at law or otherwise.

10          (5)    (a)     The Company shall, during the continuance of this
                           Agreement and until the Access Act and the Access
                           Code are applied to and in respect of the said railway
                           spur line and associated access roads of the Company,
                           notify the Minister of all written requests made by third
15                         parties to the Company for access to the said railway
                           spur line and associated access roads of the Company
                           and as soon as practicable after such requests are made.

                   (b)     The Minister shall provide to the Access Minister a
20                         copy of each notification from the Company as soon as
                           practicable after such notification is received for
                           consideration by the Access Minister as to whether or
                           not in the Access Minister's discretion the Access Act
                           and the Access Code should be applied to and in respect
25                         of the said railway spur line and associated access roads
                           of the Company.

                   (c)     The Company acknowledges that the Access Act and
                           the Access Code may during the continuance of this
30                         Agreement be applied to and in respect of the said
                           railway spur line and associated access roads of the
                           Company (but not to the Company's rolling stock,
                           rolling stock maintenance facilities, office buildings,
                           housing, freight centres, terminal yards and depots and
35                         any other facilities which are not railway infrastructure
                           (as that term is defined in the Access Act)). The
                           Company:

                           (i)      acknowledges that the State shall from time to
40                                  time be entitled to make such legislative


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                                   changes as are necessary to achieve that
                                   application; and

                           (ii)    in the event the Access Minister decides in
 5                                 exercise of the Access Minister's discretion as
                                   referred to in paragraph (b) that such
                                   application should occur, shall do all such
                                   things as the Minister reasonably requests for
                                   the purposes of the Access Act and the Access
10                                 Code applying and continuing to apply to and
                                   in respect of the said railway spur line and
                                   associated access roads of the Company which
                                   are not inconsistent with this Agreement.

15          (6)    Throughout the continuance of this Agreement the Company
                   shall all times keep and maintain the said railway spur line in
                   good repair and working order and condition (which obligation
                   includes, where necessary, replacing or renewing all parts
                   which are worn out or in need of replacement or renewal due to
20                 their age or condition).

            (7)    The Company shall not at any time without the prior consent of
                   the Minister dismantle, sell or otherwise dispose of any part or
                   parts of the said railway spur line constructed under this
25                 Agreement or permit this to occur, other then for the purpose of
                   maintenance, repair, upgrade or renewal.


     Private and public roads
30
     15.    (1)    The Company shall:

                   (a)     be responsible for the cost of the construction and
                           maintenance of all private roads which shall be used in
35                         its activities hereunder;

                   (b)     at its own cost erect signposts and take other steps that
                           may be reasonable in the circumstances to prevent any
                           persons and vehicles (other than those engaged upon
40                         the Company's activities and its invitees and licensees)
                           from using the private roads; and

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                   (c)     at any place where any private roads are constructed by
                           the Company so as to cross any public roads or private
                           railways provide at its cost such reasonable protection
                           and signposting as may be required by the
 5                         Commissioner of Main Roads or the owner of the
                           private railway as the case may be.

            (2)    The State shall maintain or cause to be maintained those public
                   roads under the control of the Commissioner of Main Roads or
10                 a local government which may be used by the Company for the
                   purposes of this Agreement to a standard similar to comparable
                   (in the Minister's opinion) public roads maintained by the
                   Commissioner of Main Roads or a local government as the case
                   may be.
15
            (3)    In the event that for or in connection with the Company's
                   activities hereunder the Company or any person engaged by the
                   Company uses or wishes to use a public road (whether referred
                   to in subclause (2) or otherwise) which is inadequate for the
20                 purpose, or any use by the Company or any person engaged by
                   the Company of any public road results in excessive damage to
                   or deterioration thereof (other than fair wear and tear) the
                   Company shall pay to the State or the local government as the
                   case may require the whole or an equitable part of the total cost
25                 of any upgrading required or of making good the damage or
                   deterioration as may be reasonably required by the
                   Commissioner of Main Roads having regard to the use of such
                   public road by others.

30          (4)    Where a road constructed by the Company for its own use is
                   subsequently required for public use, the State may, after
                   consultation with the Company and so long as resumption
                   thereof shall not in the Minister's opinion unduly prejudice or
                   interfere with the activities of the Company under this
35                 Agreement, resume and dedicate such road as a public road.
                   Upon any such resumption the State shall pay to the Company
                   such amount as is reasonable for such resumption.




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     Electricity

     16.     The Company may in accordance with its approved proposals hereunder
             and subject to the provisions of the Electricity Act 1945 and any other
 5           relevant Act:

             (a)    install and operate without cost to the State at an appropriate
                    location or locations on the Mining Leases equipment of
                    sufficient capacity to generate electricity for its activities on the
10                  Mining Leases and other areas provided for the facilities of the
                    Company in the vicinity of the Mining Leases; and

             (b)    transmit power within and between the Mining Leases and other
                    areas provided for the facilities of the Company in the vicinity
15                  of the Mining Leases and for other elements of the Company's
                    operations hereunder as the Minister may approve for the
                    purposes of this clause.


20   Water

     17.     (1)    (a)     To the fullest extent reasonably practicable the
                            Company shall use water obtained from dewatering on
                            Mining Leases for its purposes under this Agreement.
25
                    (b)     Nothing in this Agreement shall be construed so as to
                            exempt the Company from any liability to the State or
                            to third parties arising out of or caused by the extraction
                            of water from the Agreement Mining Tenements by
30                          dewatering or any discharge or escape from the
                            Agreement Mining Tenements of water obtained by
                            dewatering.

             (2)    Except as otherwise specifically provided for under this clause
35                  the water requirements for the Project shall be obtained in
                    accordance with laws applicable from time to time in Western
                    Australia in respect of rights in water and the supply and
                    discharge of water and the supply of water services.

40           (3)    The Company shall to the extent that it is practical and
                    economical design, construct and operate all plant and

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     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                        equipment used in its activities under this Agreement so as to
                        minimise water consumption and shall at all times use its best
                        endeavours to minimise the consumption of water in its
                        activities under this Agreement and ensure the most efficient
 5                      use of the available water resources.


     Ancillary titles

10   18.     On application made by the Company not later than 3 months after
             proposals submitted pursuant to clause 8(1) have been approved or
             determined or not later than 3 months after proposals submitted pursuant
             to clause 10 or 11 have been approved or determined (as applicable), the
             State shall in accordance with the Company's approved proposals grant
15           to the Company, or arrange to have the appropriate authority or other
             interested instrumentality of the State grant to the Company, for such
             periods and on such terms and conditions including rentals and renewal
             rights as shall be reasonable having regard to the requirements of the
             Company and as are consistent with the terms of this Agreement and
20           approved proposals, leases and where applicable licences, easements and
             rights of way for all or any of the purposes of the Company's activities
             hereunder including any of the following namely - accommodation area,
             mine aerodrome, rail spur line, conveyor, private roads, water pipelines,
             pumping installations and reservoirs, power transmission lines, radio and
25           communication sites and plant site areas.


     Use of local labour professional services and materials

30   19.     (1)        Except as otherwise agreed by the Minister the Company shall,
                        for the purposes of this Agreement:

                        (a)     except in those cases where the Company can
                                demonstrate it is not reasonable and economically
35                              practicable so to do, use labour available within the said
                                State (using all reasonable endeavours to ensure that as
                                many as possible of the workforce be recruited from the
                                Pilbara region) or if such labour is not available then,
                                except as aforesaid, use labour otherwise available
40                              within Australia;


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           (b)     as far as it is reasonable and economically practicable
                   so to do, use the services of engineers, surveyors,
                   architects and other professional consultants experts
                   and specialists, project managers, manufacturers,
 5                 suppliers and contractors resident and available within
                   the said State, or if such services are not available
                   within the said State, then, as far as practicable as
                   aforesaid, use the services of such persons otherwise
                   available within Australia;
10
           (c)     during design and when preparing specifications,
                   calling for tenders and letting contracts for works,
                   materials, plant, equipment and supplies (which shall at
                   all times, except where it is impracticable so to do, use
15                 or be based upon Australian Standards and Codes)
                   ensure that suitably qualified Western Australian and
                   Australian suppliers, manufacturers and contractors are
                   given fair and reasonable opportunity to tender or
                   quote;
20
           (d)     give proper consideration and, where possible,
                   preference to Western Australian suppliers,
                   manufacturers and contractors when letting contracts or
                   placing orders for works, materials, plant, equipment
25                 and supplies where price, quality, delivery and service
                   are equal to or better than that obtainable elsewhere or,
                   subject to the foregoing, give that consideration and,
                   where possible, preference to other Australian
                   suppliers, manufacturers and contracts; and
30
           (e)     if, notwithstanding the foregoing provisions of this
                   subclause, a contract is to be let or an order is to be
                   placed with other than a Western Australian or
                   Australian supplier, manufacturer or contractor, give
35                 proper consideration and, where possible, preference to
                   tenders, arrangements or proposals that include
                   Australian participation where price, delivery and
                   service are otherwise equal or better.

40   (2)   Except as otherwise agreed by the Minister, the Company shall,
           in every contract entered into with a third party for the supply

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     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                   of services, labour, works, materials, plant, equipment or
                   supplies for the purposes of this Agreement require as a
                   condition thereof that such third party shall undertake the same
                   obligations as are referred to in subclause (1) and shall report to
 5                 the Company concerning such third party's implementation of
                   that condition.

            (3)    The Company shall:

10                 (a)     in respect of developments the subject or to be the
                           subject (as the case may be) of proposals submitted
                           pursuant to clause 8, submit a report to the Minister at
                           quarterly intervals from the commencement date to the
                           date of the first submission of proposals pursuant to
15                         clause 8 and thereafter at monthly intervals until the
                           date on which iron ore from the Mining Leases (other
                           than iron ore transported solely for testing purposes and
                           iron ore produced as part of the testing of mining
                           equipment referred to in clause 4(4)) is first transported
20                         from the Mining Leases and thereafter as requested by
                           the Minister from time to time; and

                   (b)     in respect of developments the subject or to be the
                           subject (as the case may be) of proposals submitted
25                         pursuant to clauses 10 or 11, submit a report to the
                           Minister at quarterly intervals from the date on which it
                           gives notice under clauses 10 or 11, to the date of the
                           first submission of proposals in connection with that
                           notice pursuant to clause 10 or 11 as the case may be
30                         and thereafter at monthly intervals until commissioning
                           of the developments the subject of the proposals
                           approved in accordance with to clause 10 or 11 as the
                           case may be and thereafter as requested by the Minister
                           from time to time,
35
                   concerning its implementation of the provisions of this clause,
                   together with a copy of any report received by the Company
                   pursuant to subclause (2) during that month or longer period as
                   the case may be provided that the Minister may agree that any
40                 such reports need not be provided in respect of contracts of such
                   kind or value as the Minister may from time to time determine.

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            (4)    The Company shall keep the Minister informed on a regular
                   basis as determined by the Minister from time to time or
                   otherwise as reasonably required by the Minister during the
                   currency of this Agreement of any services (including any
 5                 elements of the project investigations, design and management)
                   and any works, materials, plant, equipment and supplies that it
                   may be proposing to obtain from or have carried out or permit
                   to be obtained from or carried out outside Australia, together
                   with its reasons therefor and shall, as and when required by the
10                 Minister, consult with the Minister with respect thereto.


     Further processing

15   20.    (1)    During the term of this Agreement, the Company shall
                   undertake ongoing investigations into the technical and
                   economic feasibility of establishing within the said State plant
                   for the production of metallised agglomerates and shall on or
                   before the earlier of:
20
                   (a)     the date 7 years after the date on which iron ore
                           produced as part of the Project (other than iron ore
                           transported solely for testing purposes and in respect of
                           which no purchase price or other consideration is
25                         payable or due) is first transported from the Mining
                           Leases; and

                   (b)     the date on which the 100 millionth tonne of the
                           aggregate of such iron ore and iron ore produced from
30                         Mining Leases as part of the testing of mining
                           equipment as referred to in clause 4(4) is transported
                           from the Mining Leases,

                   submit to the Minister detailed reports of such investigations
35                 carried out up to the date of the report and its program, budget
                   and timetable for the preparation of the proposals referred to in
                   subclause (2).




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     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




            (2)    The Company shall:

                   (a)    on or before the earlier of:

 5                        (i)     the date 10 years after the date on which iron
                                  ore produced as part of the Project (other than
                                  iron ore transported solely for testing purposes
                                  and in respect of which no purchase price or
                                  other consideration is payable or due) is first
10                                transported from the Mining Leases; and

                          (ii)    the date on which the 150 millionth tonne of the
                                  aggregate of such iron ore and iron ore
                                  produced from Mining Leases as part of the
15                                testing of mining equipment as referred to in
                                  clause 4(4) is transported from the Mining
                                  Leases (which date is hereinafter called "the
                                  m.a. date"); or

20                 (b)    if proposals under this subclause are postponed for a
                          3 year period pursuant to subclause (3), on or before the
                          third or subsequent third anniversary as the case may
                          require of the m.a. date,

25                 submit to the Minister detailed proposals for the establishment
                   within the said State of plant for the production of metallised
                   agglomerates containing provisions that such plant will within
                   3 years of the date on which the proposals are submitted have
                   the capacity to produce not less than 2 million tonnes of
30                 metallised agglomerates per annum and will within 8 years of
                   the date on which the proposals are submitted have the capacity
                   to produce not less than 3 million tonnes of metallised
                   agglomerates per annum.

35          (3)    (a)    If the Company believes that the submission of
                          proposals pursuant to subclause (2) on the m.a. date or a
                          third anniversary of the m.a. date where a 3 year
                          postponement has been allowed pursuant to this
                          subclause should be postponed because the
40                        establishment of the said plant is not then economically
                          feasible, the Company may apply to the Minister not

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           more than 6 months nor less than 3 months before the
           date for submission of those proposals for
           postponement for a period of 3 years of the date for
           submission of proposals under subclause (2) and shall
 5         provide to the Minister with such application all
           relevant information and supporting data available to
           the Company relating to such application.

     (b)   The Company shall supply to the Minister such other
10         information and data as the Minister may reasonably
           require in relation to its application.

     (c)   If the Minister is satisfied that there are reasonable
           grounds for the postponement applied for the
15         requirement on the Company to submit proposals under
           this subclause shall be postponed for a period of
           3 years.

     (d)   If the Minister notifies the Company that he does not
20         agree with its submission then at the request of the
           Company made within 2 months after receipt by the
           Company of the notification from the Minister, the
           Minister will appoint a tribunal (hereinafter called "the
           Tribunal") consisting of one person if the Company and
25         the State agree on that person or, failing such agreement
           consisting of 3 persons (one of whom shall be a Judge
           of the Supreme Court of Western Australia or failing
           him or her a Commissioner appointed pursuant to
           section 49 of the Supreme Court Act 1935 or a State
30         Counsel and the others of whom shall have appropriate
           technical or economic qualifications) to decide in
           accordance with clause 34 whether or not the
           metallising operation is economically feasible and the
           Tribunal in reaching its decision shall take into account
35         (inter alia) the Company's submission, the amount of
           capital required for the metallising operation, the
           availability of that capital at that time on reasonable
           terms and conditions, the likelihood of the Company
           being able to sell metallised agglomerates at sufficient
40         prices and in sufficient quantities and for a sufficient
           period to justify the metallising operation having regard

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                           to the amount and rate of return on total funds that
                           would be involved in or in connection with the
                           production and sale of metallised agglomerates and the
                           weighted average cost of capital to the Company.
 5
            (4)    The Minister shall within 2 months of receipt of proposals
                   under subclause (2) give to the Company notice of his approval
                   of those proposals (which approval shall not be unreasonably
                   withheld) or of any objections raised or alterations desired
10                 thereto, and in the latter case shall afford the Company an
                   opportunity to consult with and to submit new proposals to the
                   Minister. If within 2 months of receipt by the Company of such
                   notice agreement is not reached as to the proposals, the
                   Company may within a further period of 2 months elect by
15                 notice to the State to refer to arbitration as provided in clause 34
                   any dispute as to the reasonableness of the Minister's decision.
                   If by the award on arbitration the question is decided in favour
                   of the Company the Minister shall be deemed to have approved
                   the proposals of the Company.
20
            (5)    The Company shall (except to the extent otherwise agreed with
                   the Minister) before the end of the respective times specified in
                   subclause (2) complete the construction of plant in accordance
                   with the Company's proposals as finally approved or
25                 determined under this clause and shall thereafter continue to
                   produce metallised agglomerates from such plant at not less
                   than the rates provided for in subclause (2) for so long as the
                   Company continues to transport iron ore from the Mining
                   Leases.
30
            (6)    (a)     The Company may at any time before the time for
                           submission of proposals pursuant to subclause (2) apply
                           to the Minister for approval that an alternative project
                           be accepted by the State in lieu of all or some part of
35                         the Company's obligations in respect of the
                           establishment of plant for the production of metallised
                           agglomerates pursuant to this clause.

                   (b)     Where the Minister approves an application under
40                         paragraph (a) of this subclause the Company shall
                           implement the alternative project in accordance with

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                 that approval and upon completion thereof, or earlier
                 with the agreement of the Minister, the provisions of
                 subclause (2) or that part of those provisions which
                 pursuant to the said approval are to be satisfied by the
 5               alternative project shall cease to apply PROVIDED
                 FURTHER that the provisions of subclause (2) shall
                 cease to apply upon completion of an alternative project
                 which represents, or alternative projects which together
                 represent, economic development in the said State
10               (either alone or in the aggregate with other alternative
                 projects) of value approximately equivalent to a plant
                 for the production of 2 million tonnes of metallised
                 agglomerates per annum.

15   (7)   (a)   In subclauses (1) and (2) references to "Mining Leases"
                 include, for the avoidance of doubt, all of the mining
                 leases granted to the Company by way of conversion of
                 all or part of exploration licences which at the time of
                 conversion are Agreement Mining Tenements and all of
20               the mining leases (if any) approved by the Minister as
                 Agreement Mining Tenements pursuant to
                 clause 12(10) considered together, and whether or not
                 such mining leases are still in force at the relevant dates
                 referred to in those subclauses.
25
           (b)   Iron ore produced from Mining Leases as part of the
                 Company undertaking the testing of mining equipment
                 as referred to in clause 4(4) shall be included in the
                 amounts referred to in subclauses (1) and (2).
30
           (c)   Iron ore produced from mining leases approved by the
                 Minister as Agreement Mining Tenements pursuant to
                 clause 12(10) but before the date of the Minister's
                 approval, shall not be included in the amounts referred
35               to in subclauses (1) and (2).

           (d)   For the purposes of subclause (6) "alternative project"
                 means a project under which the Company or a related
                 body corporate (within the meaning of the Corporations
40               Act 2001 (Commonwealth)) of the Company or another
                 party first approved of by the Minister undertakes to

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                            establish and operate plant in the said State which
                            processes and adds to the value of minerals mined in
                            the said State.

 5
     No discriminatory charges

     21.    Except as provided in this Agreement the State shall not impose, nor
            shall it permit or authorise any of its agencies or instrumentalities or
10          any local or other authority of the State to impose discriminatory taxes,
            rates or charges of any nature whatsoever on or in respect of the titles,
            property or other assets, products, materials or services used or
            produced by or through the activities of the Company in the conduct of
            its business hereunder nor will the State take or permit to be taken by
15          any such State authority any other discriminatory action which would
            deprive the Company of full enjoyment of the rights granted and
            intended to be granted under this Agreement. In the application of this
            clause the conferral of rights upon parties to Government agreements
            (or the Railway and Port Agreement if it is not a Government
20          agreement) shall be disregarded.


     Taking of land for the purposes of this Agreement

25   22.    (1)     The State is hereby empowered, as and for a public work under
                    Parts 9 and 10 of the LAA and the Public Works Act 1902, to
                    take for the purposes of this Agreement any land which in the
                    opinion of the Company is necessary for the Project and which
                    the Minister determines is appropriate to be taken for the
30                  Project (except any land the taking of which would be contrary
                    to the provisions of a Government agreement entered into
                    before the submission of the proposals relating to the proposed
                    taking or to the provisions of the Railway and Port Agreement
                    if it is not a Government agreement) and notwithstanding any
35                  other provisions of those Acts may lease or license that land to
                    the Company.




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            (2)    In applying Parts 9 and 10 of the LAA and the Public Works
                   Act 1902 for the purposes of this clause -

                   (a)     "land" in those Acts includes a legal or equitable estate
 5                         or interest in land;

                   (b)     sections 170, 171, 172, 173, 174, 175 and 184 of the
                           LAA do not apply; and

10                 (c)     the LAA applies as if it were modified in section 177(2)
                           by inserting:

                           (i)      after "railway" the following -

15                                  "or land is being taken pursuant to a
                                    Government agreement as defined in section 2
                                    of the Government Agreements Act 1979"; and

                           (ii)     after "that Act" the following -
20
                                    "or that Agreement as the case may be".

            (3)    The Company shall pay to the State on demand the costs of or
                   incidental to any land taken at the request of and on behalf of
25                 the Company including but not limited to any compensation
                   payable to any holder of native title or of native title rights and
                   interests in the land.


30   No taking of land

     23.    Subject to the performance by the Company of its obligations under this
            Agreement the State shall not during the term of this Agreement
            without the consent of the Company resume nor suffer nor permit to be
35          resumed by any State instrumentality or by any local or other authority
            of the State any of the works, installations, plant, equipment or other
            property for the time being belonging to the Company and the subject
            of or used for the purpose of this Agreement or any of the works on any
            Agreement Mining Tenement or other lease, licence or other title
40          granted to the Company under or pursuant to this Agreement and
            without such consent (which shall not be unreasonably withheld) the

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              State shall not create or grant or permit or suffer to be created or granted
              by any instrumentality or authority of the State as aforesaid any road,
              right-of-way, water right or easement of any nature or kind whatsoever
              over or in respect of any such lands which may in the Minister's
 5            opinion unduly prejudice or interfere with the Company's activities
              under this Agreement.

     Commonwealth licences and consents

10   24.      (1)     The Company shall from time to time make application to the
                      Commonwealth or to the Commonwealth constituted agency,
                      authority or instrumentality concerned for the grant to it of any
                      licence or consent under the laws of the Commonwealth
                      necessary to enable or permit the Company to enter into this
15                    Agreement and to perform any of its obligations hereunder.

              (2)     On request by the Company the State shall make
                      representations to the Commonwealth or to the Commonwealth
                      constituted agency, authority or instrumentality concerned for
20                    the grant to the Company of any licence or consent mentioned
                      in subclause (1).


     Zoning
25
     25.      The State shall ensure after consultation with the relevant local
              government that any Agreement Mining Tenement or any other lease,
              licence or other title granted to the Company under or pursuant to this
              Agreement shall be and remain zoned for use or otherwise protected
30            during the currency of this Agreement so that the activities of the
              Company hereunder may be undertaken and carried out thereon without
              any interference or interruption by the State or by any State agency or
              instrumentality or by any local or other authority of the State on the
              ground that such activities are contrary to any zoning by-law, regulation
35            or order.


     Assignment

40   26.      (1)     Subject to the provisions of this clause the Company may at any
                      time assign, mortgage, charge, sublet or dispose of to any

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           person with the consent of the Minister the whole or any part of
           the rights of the Company hereunder (including its rights to or
           as the holder of any Agreement Mining Tenement or any other
           lease, licence, easement or other title granted under or pursuant
 5         to this Agreement) and of the obligations of the Company
           hereunder subject however in the case of an assignment,
           subletting or disposition, to the assignee, sublessee or disponee
           (as the case may be) executing in favour of the State (unless the
           Minister otherwise determines) a deed of covenant in a form to
10         be approved by the Minister to comply with, observe and
           perform the provisions hereof on the part of the Company to be
           complied with, observed or performed in regard to the matter or
           matters the subject of such assignment, subletting or
           disposition.
15
     (2)   Notwithstanding anything contained in or anything done under
           or pursuant to subclause (1) the Company shall at all times
           during the currency of this Agreement be and remain liable for
           the due and punctual performance and observance of all the
20         covenants and agreements on its part contained in this
           Agreement and in the Agreement Mining Tenements and in all
           other leases, licences, easements or other titles the subject of an
           assignment, mortgage, subletting or disposition under
           subclause (1) provided that the Minister may agree to release
25         the Company from such liability where the Minister considers
           such release will not be contrary to the interests of the State.

     (3)   Notwithstanding the provisions of the Mining Act, the LAA and
           the Transfer of Land Act 1893, insofar as the same or any of
30         them may apply:

           (a)     no assignment, mortgage, charge, sublease or
                   disposition made or given pursuant to this clause of or
                   over an Agreement Mining Tenement or other lease,
35                 licence, easement or other title granted under or
                   pursuant to this Agreement by the Company or any
                   assignee, sublessee or disponee who has executed and is
                   for the time being bound by deed of covenant made
                   pursuant to this clause; and
40



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     Schedule 1     Iron Ore (FMG Chichester Pty Ltd) Agreement




                     (b)     no transfer, assignment, mortgage or sublease made or
                             given in exercise of any power contained in any such
                             mortgage or charge,

 5                   shall require any approval or consent other than such consent as
                     may be necessary under this clause and no equitable mortgage
                     or charge shall be rendered ineffectual by the absence of any
                     approval or consent (otherwise than as required by this clause)
                     or because the same is not registered under the provisions of the
10                   Mining Act, the LAA or the Transfer of Land Act 1893 as the
                     case may be.


     Variation
15
     27.    (1)      The parties to this Agreement may from time to time by
                     agreement in writing add to, substitute for, cancel or vary all or
                     any of the provisions of this Agreement or of any Agreement
                     Mining Tenement or any other lease, licence, easement or other
20                   title granted under or pursuant to this Agreement for the
                     purpose of more efficiently or satisfactorily implementing or
                     facilitating any of the objects of this Agreement.

            (2)      The Minister shall cause any agreement made pursuant to
25                   subclause (1) in respect of any addition, substitution,
                     cancellation or variation of the provisions of this Agreement to
                     be laid on the Table of each House of Parliament within 12
                     sitting days next following its execution.

30          (3)      Either House may, within 12 sitting days of that House after the
                     agreement has been laid before it, pass a resolution disallowing
                     the agreement, but if after the last day on which the agreement
                     might have been disallowed neither House has passed such a
                     resolution the agreement shall have effect from and after that
35                   last day.


     Force majeure

40   28.    This Agreement shall be deemed to be made subject to any delays in the
            performance of the obligations under this Agreement and to the

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            temporary suspension of continuing obligations under this Agreement
            that may be caused by or arise from circumstances beyond the power
            and control of the party responsible for the performance of those
            obligations including without limiting the generality of the foregoing
 5          delays or any such temporary suspension as aforesaid caused by or
            arising from act of God, force majeure, earthquakes, floods, storms,
            tempest, washaways, fire (unless caused by the actual fault or privity of
            the party responsible for such performance), act of war, act of public
            enemies, riots, civil commotions, strikes, lockouts, stoppages, restraint
10          of labour or other similar acts (whether partial or general), acts or
            omissions of the Commonwealth, shortages of labour or essential
            materials, reasonable failure to secure contractors, delays of contractors,
            inability to sell iron ore or metallised agglomerates profitably, factors
            due to overall world economic conditions, factors due to action taken by
15          or on behalf of any government or governmental authority (other than
            the State or any authority of the State) or factors that could not
            reasonably have been foreseen provided that that the party whose
            performance of obligations is affected by any of the said causes shall
            promptly give notice to the other party of the event or events and shall
20          use its best endeavours to minimise the effects of such causes as soon as
            possible after the occurrence.


     Power to extend periods
25
     29.    Notwithstanding any provision of this Agreement the Minister may at
            the request of the Company from time to time extend or further extend
            any period or vary or further vary any date referred to in this Agreement
            or in any approved proposal for such period or to such later date as the
30          Minister thinks fit whether or not the period to be extended has expired
            or the date to be varied has passed.


     Determination of this Agreement
35
     30.    (1)     If:

                    (a)     (i)      the Company makes default which the State
                                     considers material in the due performance or
40                                   observance of any of the covenants or
                                     obligations of the Company in this Agreement

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                                   or in any Agreement Mining Tenement or any
                                   other lease, licence, easement or other title
                                   granted under or pursuant to this Agreement on
                                   its part to be performed or observed; or
 5
                           (ii)    the Company abandons or repudiates this
                                   Agreement or its activities under this
                                   Agreement,

10                         and such matter is not remedied within a period of
                           180 days after notice is given by the State as provided
                           in subclause (2) or, if the matter is referred to
                           arbitration, then within the period mentioned in
                           subclause (3); or
15
                   (b)     the Company goes into liquidation (other than a
                           voluntary liquidation for the purpose of reconstruction)
                           and unless within 3 months from the date of such
                           liquidation the interest of the Company is assigned to an
20                         assignee approved by the Minister under clause 26,

                   the State may by notice to the Company determine this
                   Agreement.

25          (2)    The notice to be given by the State in terms of paragraph (a) of
                   subclause (1) shall specify the nature of the default,
                   abandonment or repudiation so entitling the State to exercise
                   such right of determination and where appropriate and known to
                   the State the party or parties responsible therefor and shall be
30                 given to the Company and all such assignees, mortgagees,
                   chargees and disponees for the time being of the Company's
                   said rights to or in favour of whom or by whom an assignment,
                   mortgage, charge or disposition has been effected in terms of
                   clause 26 whose name and address for service of notice has
35                 previously been notified to the State by the Company or any
                   such assignee, mortgagee, chargee or disponee.

            (3)    (a)     If the Company contests the alleged default
                           abandonment or repudiation referred to in paragraph (a)
40                         of subclause (1) the Company shall within 60 days after


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                             notice given by the State as provided in subclause (2)
                             refer the matter in dispute to arbitration.

                  (b)        If the question is decided against the Company, the
 5                           Company shall comply with the arbitration award
                             within a reasonable time to be fixed by that award
                             provided that if the arbitrator finds that there was a
                             bona fide dispute and that the Company was not
                             dilatory in pursuing the arbitration, the time for
10                           compliance with the arbitration award shall not be less
                             than 90 days from the date of such award.

            (4)     If the default referred to in paragraph (a) of subclause (1) shall
                    not have been remedied within a period of 180 days after
15                  receipt of the notice referred to in that subclause or within the
                    time fixed by the arbitration award as aforesaid the State instead
                    of determining this Agreement as aforesaid because of such
                    default may itself remedy such default or cause the same to be
                    remedied (for which purpose the State by agents, workmen or
20                  otherwise shall have full power to enter upon lands occupied by
                    the Company and to make use of all plant, machinery,
                    equipment and installations thereon) and the actual costs and
                    expenses incurred by the State in remedying or causing to be
                    remedied such default shall be a debt payable by the Company
25                  to the State on demand.

            (5)     The parties may at any time by mutual agreement determine
                    this Agreement, provided that no matter in connection with a
                    failure by the parties to agree under this subclause (5) shall be
30                  referable to arbitration hereunder.


     Effect of cessation or determination of this Agreement

35   31.    (1)     On the cessation or determination of this Agreement:

                    (a)      (i)     except as otherwise agreed by the Minister the
                                     rights of the Company to, in or under this
                                     Agreement and the rights of the Company or
40                                   any mortgagee or chargee to, in or under
                                     Agreement Mining Tenements (other than any

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                                   exploration licences then held by the Company
                                   which are Agreement Mining Tenements) and
                                   any other lease, licence, easement or other title
                                   or right granted hereunder or pursuant hereto
 5                                 shall thereupon cease and determine but without
                                   prejudice to the liability of any of the parties
                                   hereto in respect of any antecedent breach or
                                   default under this Agreement or in respect of
                                   any guarantee or indemnity given under this
10                                 Agreement;

                           (ii)    the Company shall forthwith pay to the State all
                                   moneys which may then have become payable
                                   or accrued due;
15
                           (iii)   save as aforesaid and as otherwise provided in
                                   this Agreement neither the State nor the
                                   Company shall have any claim against the other
                                   of them with respect to any matter or thing in or
20                                 arising out of this Agreement; and

                   (b)     The benefit of the rights and privileges conferred by
                           this Agreement, and any modification by this
                           Agreement of any Act or law shall cease to apply, but
25                         otherwise any Agreement Mining Tenements that the
                           Company may pursuant to paragraph (a) continue to
                           hold after the cessation or determination of this
                           Agreement shall continue in force under and subject to
                           the Mining Act for the balance of their respective terms
30                         and any renewals thereof or extensions thereto that may
                           be granted pursuant to the Mining Act.

            (2)    Except as otherwise determined by the Minister and subject to
                   the provisions of subclause (3), upon the cessation or
35                 determination of this Agreement all buildings, erections and
                   other improvements erected on any land then occupied by the
                   Company under the Agreement Mining Tenements (other than
                   any Agreement Mining Tenements that the Company may
                   pursuant to subclause (1) continue to hold after the cessation or
40                 determination of this Agreement) or any other lease, licence,
                   easement or other title granted under or pursuant to this

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                   Agreement shall become and remain the absolute property of
                   the State without the payment of any compensation or
                   consideration to the Company or any other party and freed and
                   discharged from all mortgages and other encumbrances and the
 5                 Company shall do and execute all such deeds, documents and
                   other acts, matters and things (including surrenders) as the State
                   may reasonably require to give effect to the provisions of this
                   subclause.

10         (3)     (a)      In the event of the Company immediately prior to the
                            cessation or determination of this Agreement or within
                            3 months therefrom desiring to remove any of its fixed
                            or movable plant and equipment or any part thereof
                            from any part of the land occupied by it at the date of
15                          such cessation or determination (other than any
                            Agreement Mining Tenements that the Company may
                            pursuant to subclause (1) continue to hold after such
                            cessation or determination) it shall give to the State
                            notice of such desire and thereby shall grant to the State
20                          the right or option exercisable within 3 months
                            thereafter to purchase in situ such fixed or moveable
                            plant and equipment at a fair valuation to be agreed
                            between the State and the Company or failing
                            agreement determined by arbitration under this
25                          Agreement.

                   (b)      If the State does not exercise the right or option referred
                            to in paragraph (a) the Company may on the expiry of
                            the 3 month period referred to, or sooner with the
30                          consent of the Minister, remove the fixed or movable
                            plant and equipment to which the right or option refers.


     Indemnity
35
     32.   The Company shall indemnify and keep indemnified the State and its
           servants, agents and contractors in respect of all actions, suits, claims,
           demands or costs of third parties arising out of or in connection with
           any work carried out by or on behalf of the Company pursuant to this
40         Agreement or relating to its activities hereunder or arising out of or in
           connection with the construction maintenance or use by the Company

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            or its servants, agents, contractors or assignees of the Company's works
            or services the subject of this Agreement or the plant, apparatus or
            equipment installed in connection therewith provided that subject to the
            provisions of any other relevant Act such indemnity shall not apply to
 5          the extent the State or its servants, agents, or contractors are negligent in
            carrying out work for the Company pursuant to this Agreement.


     Subcontracting
10
     33.    Without affecting the liabilities of the parties under this Agreement each
            of the State and the Company will have the right from time to time to
            entrust to third parties the carrying out of any portions of the activities
            which it is authorised or obliged to carry out hereunder.
15

     Arbitration

     34.    (1)     Any dispute or difference between the State and the Company
20                  arising out of or in connection with this Agreement, the
                    construction of this Agreement or as to the rights, duties or
                    liabilities of either of them under this Agreement or as to any
                    matter to be agreed upon between them under this Agreement
                    shall in default of agreement between them and in the absence
25                  of any provision in this Agreement to the contrary be referred to
                    and settled by arbitration under the provisions of the
                    Commercial Arbitration Act 1985 and notwithstanding
                    section 20(1) of that Act each party may be represented before
                    the arbitrator by a duly qualified legal practitioner or other
30                  representative.

            (2)     Except where otherwise provided in this Agreement, the
                    provisions of this clause shall not apply to any case where the
                    State, the Minister or any other Minister in the Government of
35                  the said State is by this Agreement given either expressly or
                    impliedly a discretionary power.

            (3)     The arbitrator of any submission to arbitration under this
                    Agreement is hereby empowered upon the application of either
40                  of the parties to the arbitration to grant in the name of the
                    Minister any interim extension of any period or variation of any

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                       date referred to herein which having regard to the circumstances
                       may reasonably be required in order to preserve the rights of
                       that party or of the parties to the arbitration and an award may
                       in the name of the Minister grant any further extension or
 5                     variation for that purpose.


     Consultation

10   35.       The Company shall during the currency of this Agreement consult with
               and keep the State fully informed on a confidential basis concerning any
               action that the Company proposes to take with any third party
               (including the Commonwealth or any Commonwealth constituted
               agency authority instrumentality or other body) which might
15             significantly affect the overall interest of the State under this
               Agreement.


     Notices
20
     36.       Any notice, consent or other writing authorised or required by this
               Agreement to be given or sent by the State to the Company or to the
               Guarantor will be deemed to have been duly given or sent if signed by
               the Minister or by any senior officer of the Public Service of the State
25             acting by the direction of the Minister and forwarded by prepaid post or
               handed to the Company or to the Guarantor as the case may be at its
               address hereinbefore set forth or other address in the said State
               nominated by the Company, or by the Guarantor as the case may be, to
               the Minister and by the Company or by the Guarantor to the State if
30             signed on its behalf by any person or persons authorised by the
               Company or by its solicitors, or by the Guarantor or by its solicitors as
               the case may be, as notified to the State from time to time, and
               forwarded by prepaid post or handed to the Minister and except in the
               case of personal service any such notice, consent or writing shall be
35             deemed to have been duly given or sent on the day on which it would be
               delivered in the ordinary course of post.




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     Guarantee of Company's performance

     37.    Notwithstanding any addition to or deletion or variation of the
            provisions of this Agreement or any time or other indulgence granted by
 5          the State or by the Minister to the Company whether or not notice
            thereof is given to the Guarantor by the State, the Guarantor hereby
            guarantees to the State the due performance by the Company of all of
            the Company's obligations to be performed hereunder. The Minister
            may agree to release the Guarantor from this guarantee where the
10          Minister is reasonably satisfied that the Company has the financial
            capacity to perform its obligations under this Agreement. Except as
            provided in a release given under this clause, the guarantee given under
            this clause 37 shall continue notwithstanding the cessation or
            determination of this Agreement.
15

     Stamp Duty

     38.    (1)    The State shall exempt the following instruments from any
20                 stamp duty which, but for the operation of this clause, would or
                   might be assessed as chargeable on them:

                   (a)      this Agreement;

25                 (b)      any instrument executed by the State pursuant to this
                            Agreement granting to or in favour of the Company any
                            licence, lease, easement or other title; and

                   (c)      any assignment, sublease or disposition (other than by
30                          way of mortgage or charge) made by the Company
                            arising from a request for the Minister's consent
                            submitted to the Minister and consented to by the
                            Minister under clause 26 (1),

35                 provided that this clause shall not apply to any instrument or
                   other document executed or made more than 2 years after the
                   commencement date.

            (2)    If prior to the commencement date stamp duty has been
40                 assessed and paid on any instrument or other document or
                   transaction referred to in subclause (1) the State shall on

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                      demand after the commencement date refund any stamp duty
                      paid on any such instrument or other document or transaction to
                      the person who paid the same.

 5
     Term of this Agreement

     39.    Subject to the provisions of clauses 9(6), 30 and 31 this Agreement
            shall expire on the date occurring 50 years after the commencement
10          date.


     Applicable law

15   40.    This Agreement is to be interpreted according to the law for the time
            being in force in the State of Western Australia.




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                                     SCHEDULE 1

                                        PART A

 5                           EXPLORATION LICENCES

     White Knight

     Exploration licences 45/2497, 45/2499, 45/2593, 45/2651 and 47/1434

     Cloud Break

     Exploration licences 45/2498, 45/2652 and 46/590

10   Christmas Creek

     Exploration licences 46/566, 46/610 - 46/612

     Mt Lewin

     Exploration licences 46/567 and 46/600

     Clayton's Hammer

15   Exploration licences 46/518, 46/568 and 46/601

     Mt Nicholas

     Exploration licences 46/467, 46/595, and 46/623

     Springo Bore

     Exploration licences 46/519

20   Tongololo

     Exploration licences 46/413, 46/516 and 46/569




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                                        PART B

                    EXPLORATION LICENCE APPLICATIONS


 5   Christmas Creek

     Application for exploration licence 46/664

     Tongololo

     Applications for exploration licences 46/666 and 46/675

10




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                                     SCHEDULE 2

                          MINING LEASE APPLICATIONS

 5

     Christmas Creek

     Applications for mining leases 46/320 - 46/355 and 46/412 - 46/424

     Cloud Break

     Applications for mining leases 45/1102 - 45/1107, 45/1082 - 45/1085, 45/1124 -
10   45/1128, 45/1138- 45/1140, 45/1143, 46/356, 46/357, 46/407 - 46/411 and
     46/449 - 46/455

     White Knight

     Applications for mining leases 45/1086 - 45/1094 and 45/1147 - 45/1150
     Mt Lewin/Clayton's Hammer
15   Applications for mining leases 46/292, 46/293 and 46/314 - 46/319

     Sandy Creek

     Applications for mining leases 46/401 - 46/406




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     IN WITNESS WHEREOF this Agreement has been executed by or on behalf
     of the parties hereto the day and year first hereinbefore mentioned.

     SIGNED by the HONOURABLE GEOFFREY IAN                      )    [Signature]
     GALLOP in the presence of:                                 )
                                                                )

 5
     Witness: [Signature]
     Name: NEIL ROBERTS


10
     THE COMMON SEAL of FMG CHICHESTER PTY                  )        [C.S]
     LTD ACN 109 264 262 was hereunto affixed in            )
     accordance with its constitution in the presence of:   )


     Director: [Signature]
     Name: WILLIAM GRAEME ROWLEY
15

     Director/Secretary: [Signature]
     Name:               ROD CAMPBELL

20

     THE COMMON SEAL of FORTESCUE METALS                    )        [C.S.]
     GROUP LTD ACN 002 594 872 was hereunto affixed in      )
     accordance with its constitution in the presence of:   )


     Director: [Signature]
25   Name: WILLIAM GRAEME ROWLEY


     Director/Secretary: [Signature]
     Name:               ROD CAMPBELL
30




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Iron Ore (FMG Chichester Pty Ltd) Agreement Bill 2006
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