OCR

TOQUEPALA PROJECT CONSTRUCTION CONTRACT AND REVISIONS The Toquepala project general Construction Agreement between Southern Peru Copper Corporation as Owner and a Joint Venture consisting of Utah Construction Company (Sponsor and 60 participating) and Morrison-Knudsen Company, Inc. (40% participating) as Contractor was signed, effective March 7, 1956. The agreed contract price was reimbursement of actual work cost plus a fixed fee of 1.875% of the estimated work cost, then established at $80,000,000. However, the agreement stipulated that within 12 months from the signing thereof, a review of the estimate was to be made to determine its adequacy and to adjust the estimated cost of work as required, the Contractor's fixed fee to be likewise adjusted at the original rate or percentage. The agreement further stipulated that at such time of estimated work cost review, consideration would be given to a contract modification providing for incentive adjustment to the Contractor's price based on final actual work cost. Revision to the Construction Agreement dated August 29, 1956. more specifically defined between the parties the intent and constitution of the term cost of work. Broadly stated, cost of work was thereafter considered total construction cost of the Toquepala project, less delivered cost of all process or engineered equipment, less any and all costs incurred in direct development of the ore deposit, less all other specific exclusions of the original agreement. In meeting between the parties December 23, 1957, the Construction Agreement was mutually modified to define and establish bases for time completion and actual cost of work incentive adjustments to Contractor's price. From the October, 1957 estimate, this contract modification fixed the estimated cost of work for fee determination at $103,926,975. Due to major changes in scope of work authorized and performed after approval of the October 1957 estimate, this figure was subsequently and finally revised to $104,668,278.