republic islamic of mauritania investing in the mining & oil & gas sectors

REPUBLIC ISLAMIC OF MAURITANIA

INVESTING IN THE MINING & OIL & GAS SECTORS

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I. OVERVIEW

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Mauritania: Overview

Major deposits: Gold, copper and iron ore and reserves of oil and gas, including the Chinguetti Oil field. Oil production started in February 2006 and it has proven reserves of 600 million barrels

Border countries:Algeria and Western Sahara ( to the North), to the East by Mali and to the South by Senegal. The country is bordered completely by the Atlantic Ocean.

Land Mass : 1.0307.000 km2 Capital : Nouakchott Population: 3.359.185 people (2012).The Demographical

growth rate is 2.3% Official Language: Arabic, but French is used as the

language of business Religion : Mauritania is an socially democratic Islamic

Republic. Currency: Ouguiya (UM). Exchange rate (October 2013)

392,83 UM = 1 Euro & 299,24 UM =1 USD$. Ministry of Petroleum, Energy and Mining

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Mauritania: Overview

GDP Per Person (2012 Esti.): US$ 1 310

Inflation rate: 4% in 2011

Contribution of the Extractive Industries to GDP 25% (2011)

Foreign Direct Investments are growing

Estimated GDP Growth : 2010-2013 : 6 %

Projection of FDI in $ million (IMF)

GDP Growth % (IMF)

Ministry of Petroleum, Energy and Mining

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II.Political Context

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The Government has been democratically elected Multiplicity of media and civil society Adherence to the EITI member countries ( 2005), country

conforming to the principles of EITI ( 2012) Stability of institutions and security

Political Context

The Government has made the strategic decision to modernize Mauritania with the following objectives:

Promoting good governance

Enhancing the government performance

Increasing the efficiency of public policies

Establishing the foundations of a modern State

Ministry of Petroleum, Energy and Mines

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III. Organisation of the Ministry of Petroleum, Energy & Mines

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The central administration of the Ministry of Petroleum, Energy & Mines includes :

The Minister’s Cabinet, the General Secretariat and the Central Directions.

I –The Minister’s Cabinet:: 2 Heads of Mission, 5 Technical Advisors, Internal Inspector and a Personal Secretariat.

The following organisations & companies report to the technical and administrative supervision of the Ministry of Petroleum, Energy & Mines: National Mauritanian Hydrocarbons Company (SMH) , The National Agency of Renewable Energy (ANADER) , Mauritanian Gaz Company (SOMAGAZ) Mauritanian Electricity Company (SOMELEC), Mauritanian Company of Refining Industries (SOMIR), Mauritanian Office of Geological Research (OMRG), National Industrial and Mining Company (SNIM), The Committee of the Mauritanian Mining School (CEM) .

The Ministry monitors the good running of the: Agency for Rural Electrification (ADER), National Hydrocarbons Commission (CNHY), The Company for the Management of Petroleum Installations (GIP), Mauritanian Company for the Storage of Petroleum Products (MEPP), Project to Support Petroleum Management (PAGEP), Project for the Institutional Reinforcement of the Mining Sector (PRISM),

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IV. The reforms

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Mining Sector

Mining Code 2008/2009 updated 2012 with the following objectives :

Provide competitive advantages to the investors in the mining sector

Establishing the norm « first come first served »

The Mining Code is completed by a new Standard Mining Convention (2012) which guarantees the stability of the fiscal system throughout the exploration period

Exploration Phase :

License awarded (by Cabinet) of surface of 1.000 km² to a company incorporated in Mauritania with sufficient technical and financial capacities.

Guaranty for good execution of the work program and prior payment of fees and rights ($6.000);

Payment of progressive surface fee year by year from $6,5/km² (first year) to $80/km² (9thyear)

The Mining Code


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Mining SectorMining Code (Continued)

Exploitation Phase:

License awarded to a company incorporated in Mauritania for a period of thirty years and renewable many times for ten years.

State participation in the capital with a 10% free equity and an option for acquiring a maximum of 10% cash participation in the exploitation company.


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Mining Sector


ApplicationApplication

Exploitation

Permit

Exploitation

Permit

3 years

3 years

3 years

EXPLORATION PHASE

EXPLOITATION PHASE

Installation Phase 2 years

30 years

Max 9 years

Production PhaseReturn of Permit

Return of Permit

Assessment

Assessment

Assessment


Award

Permit

Award

PermitFiscal Regime :

Deduction regime according to practice in the mining industry

Competitive rates

Exemption during the first 3 years of production

Tax exemption on dividends that are reinvested

A simplified tax system for subcontractors working with

mining operators

1/4

1/4

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Petroleum Sector

New legal framework in 2010 updated in 2011

New Standard Exploration Production Agreement 2011

Period of exploration: 10 years maximum divided in 3 phases

Period of operation : 25/30 years, renewable 10 years

Recovery cost with a rate to be negotiated

The applied taxation concerns the Industrial and Commercial Profits

No taxes Import/Export for oil operations

A simplified tax system adopted for the foreign service providers working with the oil operators

10% of State participation free equity starting from exploration managed by SMH (NOC). Option for acquiring a maximum of 10% cash participation.

Ministry of Petroleeum, Energy and Mining

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Oil Sector



EXPLORATION PHASEMax 10 years

End Contract

End Contract

Assessment

Assessment

Assessment

Award

Contract

Award

ContractExploitatio

n Authorizati

on

Exploitation

Authorization

EXPLOITATION PHASE25/ 30 years

Fiel Development

Fiel Operation

1/4

1/4

Estimated recoverable reservesProgram and implementation scheduleEstimated investment Funding arrangementsEnviromental Impact AssessmentRehabilitation program

Sharing Production based on the R factor

Sub phase 1

Sub phase 3

Sub phase 2

NEGOCIATION

Standard Production Exploration ContractGeological StudiesGeophysical StudiesDrilling

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Petroleum Sector

Legal framework adopted in 2002

activities of import, export, refining, storage, racking, transportation, distribution and marketing of refined hydrocarbons

Activities subject to license

Revision to enhance the framework and to enable a PPP to rehabilitate, develop and manage storage capacities

Downstream: Hydrocarbons Code


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Oil and Gas Blocks in Mauritania ( October 2012)


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V. Development of Key Infrastructure

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Improvement of the Factors of Production Costs A major investment program in the infrastructure sector has been

developed by the Government, with the aim of significantly improving the conditions of development in the Private sector :

Establishment of a Free Zone in Nouadhibou (starting 2012)

Iron Ore Port in Nouadhibou, extension of the Commercial Port of Nouadhibou and the Extension of Port of Nouakchott (2013)

New International Airport (2014)

Water supply: Aftout Saheli Project 200 000 m3 per d ay (2010)

Energy : launch of Gas Power Plant project and extension of the electricity network, Renewable Energy (15 MW Solar and 30 to 40 MW wind projects)

Roads : opening up of the valley and the northern area with the construction of secondary roads,

Education : Akjoujt Mining School, Mining Technology Training Center Akjoujt, University Campus ,

Telecommunications : optical submarine cable ACE (2012)


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VI.Investments

.

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VII. Important Assets

Mining : more than 300 Exploration Licenses and 12 Exploitation Licenses

Iron Ore : Snim/GuelbII, Xstrata/Askaf, Bumi/Tamagot, Gold : Expansion of Tasiast Gold Mine Granite : Joint Venture with SNIM Quartz : 2 exploitation permits Phosphate : Bofal Indo Mining Company Oil & Gas : 1 PSC Exploitation Phase Petronas Tullow Oil : 1 Onshore bloc et 1 Offshore (deepwater) Total E&P: 1 Onshore bloc et 1 Offshore (deepwater) Kosmos Energy: 3 Offshore Blocs (deepwater) Chariot Oil & Gas: 1 Offshore Bloc

An effective Mobilization of Private Operators


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VIII. SNIM & TASIAST

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SNIM

SNIM: Exploits essentially two types of iron ore in the region of Tiris Zemmour in the North of Mauritania: the hematite mineral and the magnetite mineral.

Hematite: The major deposits of hematite actually in production are T014 ((Kédia) and M’Haoudatt . They provide 60% of SNIM’s total production.

Magnetite: The Guelb El Rhein, the only deposit of magnetite in exploitation at this time, contains several hundred million tonnes of proven reserves. The Guelbs Factory where these minerals are treated, has an annual capacity of 4.5 million tonnes. All mining operations are carried out by SNIM themselves, research, pit optimisation, earth moving, ship-loading, rolling, training, explosives, rail transport, maintenance etc.

The Guelb II project includes essentially the construction and equipment of a second iron ore magnetite enriching factory. It mobilises an investment of nearly 750 million USD and covers: the extension of the existing mine, the construction of an mineral enrichment factory with an annual capacity of 4MT, the extension of the Central Electric, the extension and modernisation of installations and existing annexes, putting into exploitation a water capturing field and a network of water conveyance

The New Vision of SNIM is to guarantee its integration into the Top 5 worldwide exporters of Iron Ore from now until 2025 with an annual production of 40 million tonnes and a cost of production that does not exceed $40/T


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SNIM

The PDM is an ambitious program of which the cost is about 1 billion USD. This program will focus on.

The modernisation of SNIM’s existing infrastructure The increase by a significant amount of the production capacity of the

Company. The 8 components of the PDM are: Guelbs II Factory, New Mineral Port (NPM), Modernisation and Rail

Maintenance (MMV), Modernisation of the Communication System (MSC), Modifying the Handling of TO14 (MMT), Modernisation of the Zouerate Electrical Network (MRE), the extension of staff accommodation and Rehabilitation of hotels, new professional training centre of Zouerate (NCFPZ)

SNIM is also involved in developing iron ore resources with partners including the following projects:

Project El Aouj ( Xstrata), Project Tazadit 1 ( MinMetals), Project Leagarib

In October 2013, announced the results of their exploration at Tizerghaf, situated 40 km north of Zouerate, they evaluated probable resources of 830 million tonnes ( inferred) of magnetite iron ore

Ministry of Petroleum , Energy and Mining

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IX. Tasiast

Kinross-Tasiast finalised a framework study for the expansion of the Tasiast mine, based on the period of 16 years. For the first 8 years of effective exploitation, the average annual production should reach 1.5 milion ounces of gold, with an average sales prices from $480 - $520, with a quality estimated at about 2g/t and average rate of recovery at 93%This is an open cast mine, producing 8000 tonnes per day with the current factory and with an output of 60,000 tonnes per day envisaged after the expansion project.As of June 2011, the proven and probable mineral reserves of the Tasiast mine are estimated at 7.6 million ounces. The measured mineral resources et indices were 9.1 million ounces, and the mineral resources presumed at 4.6 millions ounces. The Tasiast Mine will exploit a deposit of 30 tonnes of gold. Tasiast is the first gold producing mine in the Republic Islamic of Mauritania

Kinross acquired with a 100% stake, the gold of mine of Tasiast on 17 September 2010, after having acquired Red Back Mining Inc. The mining has a very high potential, with a vast gold system, which is largely unexplored.

Ministry of Petroleum, Energy and Mines

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X. Current Status and Perspectives for the Development of the Mining Sector

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Geological Coverage : Total coverage of Mauritania: 1/500.000Coverage of 52% of the Territory to 1/200.000- Format : SHP,PDF

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►D-Reguibat: Archean and Birimian formations: with mineralisations of uranium, iron, gold and copper...) ►C-Mauritanides: metamorphic, volcanic & sedimentary formations with copper, gold, iron, beryl, manganese and nickel mineralisation….)►B-Coastal: formations Paleozoico-Cenozoic formations with mineralisations of Ilménite, monazite, zircon, phosphates, salt …)►A-Taoudeni: deposits of Proterozoic superior to Paleozoic, with mineralisations of copper, gold, zinc, uranium…etc

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Potentialities: Coastal Basin

1. Titanium/Zirconium: Jreida,Tanit,Lemsid, Cap Timiris

2. Peat: 23 known occurrences in the Coastal Basin with more than 3 million m3 reserves of peat discovered over an area of 5000km2

3. Gypsum: One of the largest deposits of gypsum in the world, situated at Sebkha N'Drhamcha between 50 and 100 km to the North/North-East of Nouakchott, 9 billion metric tonnes

4. Phosphates: Resources identified of more than 130 Mt with content 20% P2O5, in the Bofal-Loubeira Zone, easily exploitable, close to main roads and with access to the Ocean.

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Potentialities: Mauritanides

1. Copper: Guelb Mogrein Deposit (IOCG), known since Neolithic times, mined by First Quantum/MCM, production (2011) 35,281 tonnes of copper & 62,938 troy ounces of gold, reserves 32.06 million tonnes 1.09% copper and 0.79 g/t gold.

2. Iron Ore: Large region favourably for both hematite, magnetite and the mineralisation of Geothite at Kaouate, Tamagot, Legleitate and Idjibiten

3. Gold: several deposits at Fra Agharghar (Vararate), Kadiar, Mbout and Bouzraibia. The majority of prospective sites are “Greenfield”

4. Barite: Barite discovered in several places in the Mauritanides notably at Bouzraibia

5. REE (Terres Rares): exist in the region of Bounaga

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Potentialities: Taoudeni Basin

1. Copper: Sedimentary Copper in the Neo-proterozoic-Cambrian, continental sediments of Taoudeni Basin, notably found in the Char and Teniagouri groups

2. Or: Aluvial Deposit, “red bed” type

3. Uranium: non compliant uranium, sandstone type, red-bed type, and associated with phosphates

4. Lead,Zinc

Potentialities: Tindouf BasinIron Ore: Phanerozoic oolitic

type

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Potentialities: Reguibat Ridge1. Gold: Orogenic and hydro-thermal, deposits of

gold and paleoplacers2. Uranium: Large deposits

a) Bir en Nar 1.33Mt @ 704ppm U3O8 containing 2.06Mlbs U3O8 b) A238 45.2 Mt @ 235 ppm U3O8

containing 23.4 Mlbs U3O8c) Aura Calcrete 68.7 Mt @ 300 ppm

U3O8 containing t 50.2 Mlbs U3O81. Diamants: Discovery of a kimberlitic dyke at

Maqteir (2000), more40 kimberlites discovered in the country( 2005-11)

2. Ornamental Stones: Amsaga, Tijirit and Tasiast Terrains Zednes regions

3. Nickel, Lithium and Beryl: Occurrences of nickel present in the Paléoprotérozoic, Beryl is found in Iguilid Lithium found in several places principally at the Chambi belt green stone, Zone Nich Sebkhet, the Tijirit belt as well as the North East part of the Amsaga Complex.

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Thank you very much for listening!!

Please come and meet us in the Islamic Republic of Mauritania!


Route de la plage rond-point Sabah, Nouakchott Mauritanie, BP : 4921

Tél. 00(222) 45259515 Fax : 00 (222) 45255250 www.mauripem.com Ministry of Petroleum, Energy and Mining

Honour– Fraternity - Justice

republic islamic of mauritania investing in the mining & oil & gas sectors

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