In this agreement unless the context otherwise requires the terms following shall have the meanings respectively assigned to them:—

The Company will proceed immediately with the investigation and economic appraisal of the power potential of the water resources of Lakes Manapouri and TeAnau and of the Waiau and Mararoa Rivers from their respective sources to a point in the vicinity of the confluence of those two rivers.

The Company shall be entitled to make such investigations enquiries and tests (including the carrying out of drilling operations and the taking of samples) as it may deem necessary for the purpose of assessing the power potential of the said water resources and the economic appraisal of any scheme to use such power potential for the Company’s purposes.

The Crown will not grant to any other person firm or company the same or any similar rights to those set out in Clause 3 hereof unless and until the Company has notified the Minister that it has completed its preliminary investigations and does not intend to proceed any further in connection therewith or until the Company ceases to have any further rights under this agreement whichever is the earlier.

If the Company has before 31st March 1961 incurred expenditure to an amount of not less than £25,000 on or in connection with the aforesaid investigation and economic appraisal and if the Company on or before 30th June 1961 notifies the Minister that it intends to proceed with further investigations it shall have the rights and obligations hereinafter set out provided that this agreement shall not after 31st December 1962 have any further force or effect if by then the Company has not spent a total of £100,000 on or in connection with the aforesaid investigation and economic appraisal. All expenditure incurred by the Company in this respect subsequent to 1st August 1959 shall be taken into account for the purposes of this clause.

The Company shall have the following exclusive rights, namely:—

The lands rights and easements necessary to enable the Company to construct maintain and operate the Works and the Facilities (including all land which as a result thereof will or may be inundated) shall as necessary be acquired by the Crown and shall be either leased or licensed to the Company for the term of this agreement and the Company shall pay in respect of each such lease or licence a lump sum or an annual amount as the Company may elect. The amount of any such lump sum shall be equal to the cost incurred by the Crown in acquiring the land right or easement concerned plus the amount which at the date hereof has been paid by or charged to Land Settlement Account in respect of the area of Crown Land which will or may be inundated as aforesaid (estimated to be 8,500 acres) and the amount of any such annual rental shall be such as will over the period of the lease or licence fairly reimburse the Crown in respect of the said cost and amount together with reasonable interest thereon.

The Crown will take all such action as may be necessary to validate this agreement and the Company’s operations hereunder and to protect the Company and its works from interference or damage caused by drilling mining or bush felling operations or otherwise by the Crown or third parties.

The Company shall have freedom of choice in the design and construction of the Works and Facilities but in relation thereto shall adopt sound engineering practices. Subject to Clause 15 the Company shall in stages suitable for its purposes develop the continuous power potential of the aforesaid water resources but shall in no way prejudice the full economic development of such resources. The amount of such continuous power potential shall be such amount as is agreed upon by the Minister and the Company within four years from die date hereof or failing agreement such amount as is determined by arbitration as hereinafter provided.

The Company shall at all times and at its own expense keep, the Works in good safe working order and condition and shall at all times observe all relevant laws, bylaws and regulations.

The Company shall at all times take all necessary measures to control the release of water downstream from any dam constructed by it so that the flow at the point of release will not be greater at any time than the maximum flow at that point under natural conditions, and shall before taking any action which would result in a substantially increased flow in the river below its dams notify the public including farmers downstream by advertisement to be broadcast from any radio station then operating in Invercargill. The amount of maximum flow under natural conditions at the point of release as aforesaid shall be such amount as is agreed upon by the Minister and the Company within four years from the date hereof or failing agreement such amount as is determined by arbitration as hereinafter provided.

The Company shall pay to the Crown in respect of power generated by it from the resources aforesaid in each year a licence fee calculated at the rate of two shillings (New Zealand currency) per kilowatt year and such fee shall be payable at the expiration of three months from the end of each year in respect of power generated during that year. Unless otherwise agreed, such rate shall be adjusted up or down, as the case may be, at intervals of five years from the beginning of the year in which the Company first becomes liable to pay the licence fee, proportionately to the variation of the average in New Zealand currency equivalent of the prices for Canadian primary aluminium of 99½% purity f.o.b. Toronto published in the London Metal Bulletin nearest the dates of 31st March, 30th June, 30th September, 31st December immediately preceding the due date of the adjustment from the price of £180 (New Zealand currency) per long ton. For the purposes of this clause “year” means the Company’s financial year.

The Company shall not sell or otherwise dispose of any power produced from the said water resources except: —

This agreement will not after 30th June 1971 have any further force or effect if by then the Company has not constructed works having a designed installed capacity of at least 100 megawatts of power.

If after the giving of notice in writing with regard thereto from the Minister to the Company and the expiration of a reasonable time (not being less than two months) to be stated in such notice the licence fee referred to in Clause 12 hereof shall be in arrear or unpaid or any non-performance or non-observance by the Company of any of the agreements on the part of the Company herein expressed or implied other than those in respect of which notice may or can be given by the Minister pursuant to Clause 15 hereof shall continue or in the event of the Company going into liquidation or being wound up or compounding with, or assigning its assets or a substantial part thereof for the benefit of its creditors or any number of them then and in any such case the Crown may forthwith without suit and without notice or further notice as the case may be cancel this agreement and thereupon all the rights and interests of the Company under this agreement shall absolutely cease and determine but no such cesser or determination shall release or discharge the Company from liability for any such licence fee due or accruing due at the time of such cancellation or from liability for any prior non-performance or non-observance as aforesaid.

For the purpose of production in any undertaking for which the power produced pursuant to this agreement may be used by them, the Company and any subsidiary company and any associated company shall have the right to import free of sales tax and free of all duties including primage duty (save that where such freedom from all duties would conflict with New Zealand’s international obligations existing at the date of this agreement the minimum duties consistent with those obligations shall apply if and so far as those obligations shall exist under any existing or substituted arrangement) alumina, cryolite, fluorspar, aluminium fluoride, petroleum coke, pitch, sodium carbonate and such other materials of whatsoever kind (including electrode materials) as may be agreed. It is further agreed that such licences as may from time to time be required for the importation of the foregoing materials will be freely granted. The Company and any subsidiary company and any associated company shall also have the right to export free of all duties and sales tax the following products manufactured by them or any of them, viz: aluminium, aluminium alloys, and other products of aluminium, and such other products as may be agreed. It is further agreed that subject to any requirements of defence or national security such licences as may from time to time be required for the export of any of the foregoing products will be freely, granted.

The dates of 31st March 1961 and 31st December 1962 mentioned in Clause 5 hereof and the dates of 30th June 1971 and 30th June 1991 mentioned in Clause 15 hereof may be extended by the Minister for any reason deemed by him to be sufficient but shall be extended by him at the request of the Company for such a period or until such time or times as is reasonably required to compensate the Company for the delay caused by the relevant factor if the Company’s operations have been prevented or hindered by:—

Any dispute as to the granting of any such extension of time shall be determined by arbitration as hereinafter provided.

The Company will assume full responsibility in respect of any valid claims arising out of its tortious acts or out of its breach of contract or its breach of quasi contract in connection with its operations in the construction maintenance and operation of the Works and Facilities by whomsoever such claims may be brought or made and shall indemnify the Crown in respect thereof.

Subject to Clause 5 hereof the provisions of this agreement shall continue in operation for a period of 99 years from the time the Company notifies the Minister pursuant to that clause that it intends to proceed with further investigations and such period may be extended or renewed from time to time by the Crown on such terms and conditions as the Crown may from time to time deem expedient.

On the expiration or sooner determination of this agreement all rights of the Company thereunder shall cease and the Works and Facilities shall thereafter belong to the Crown. Provided always that the Company shall have the right within six months of such expiration or sooner determination to take down and carry away any parts of the Works and Facilities which during the term of this Agreement have been renewed within a period of 40 years preceding such expiration or determination and which can be carried away except to the extent (if any) to which the Crown has undertaken to pay to the Company ffie residual value thereof as agreed between the parties or failing agreement as determined by arbitration such value to be fixed after taking into account the appropriate reduction in respect of the costs of removal.

The intentions of the parties in relation to the preservation of the scenic qualities of the aforesaid lakes and rivers are as set out in the letter from Mr M. Mawby, Vice-Chairman of the Company, to the Right Hon. W. Nash, Prime Minister, dated 8th September 1959 and the letter from the Right Hon. the Prime Minister to Mr M. Mawby dated 7th October 1959 relevant extracts of which are set out in the Schedule hereto. To ensure the carrying out of such intentions the Minister shall by not later than 31st March 1961 cause a survey of the aforesaid lakes and rivers to be made and shall by that date advise the Company of his requirements in relation to those parts of the areas to be inundated in which it is desirable to arrange for the felling and removal of timber before or during inundation.

Except in respect of the matters as to which the parties are left to their legal remedies under Clause 15 all differences and disputes between the parties touching or concerning the rights duties or obligations of the respective parties or any act or thing done suffered or omitted in pursuance of this agreement or of or touching the construction thereof shall be referred to arbitration in accordance with the provisions of the Arbitration Act 1908 or any amendment thereto or re-enactment thereof for the time being in force.

The Company shall be free at any time to discontinue its investigations enquiries and tests without further liability to the Crown in respect thereof but in the event of its doing so or in the event of this agreement ceasing to operate or being cancelled the Company will furnish to the Minister full details of the work done and of the results obtained in relation to the said water and the power potential thereof including its plans and all available information in respect of the undeveloped water resources.

This agreement may be varied pursuant to agreement between the Minister and the Company with the approval by the Governor-General in Council by Order in Council and no provision of the agreement shall be varied nor shall the powers and rights of the Company hereunder be derogated from except in such manner.

Any notice consent requirement or writing authorised or required by this agreement to be given or sent shall be deemed to have been duly given or sent by the Crown or the Minister (as the case may be) if signed by the Minister and forwarded by prepaid post to the Company at its registered office and by the Company if signed on behalf of the Company by the managing director, a director, general manager, secretary, or attorney of the Company and forwarded by prepaid post to the Minister at his office at Wellington and any such notice consent requirement or writing shall be deemed to have been duly given or sent on the day on which it would be delivered in the ordinary course of post.

The rights of the Company hereunder shall not be transferable except with the written consent of the Minister.

This agreement shall be governed by New Zealand law.

In witness whereof this Agreement has been executed the day and year first hereinbefore written.