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I3 Extractive Industries Technical Assistance Project (EITAP)

Ministry of Mines and Mineral Resources (MMMR)

Financial StatementsI For the year ended 31 December 2016

CONTENTS PAGE(S)

General Information 1

Report of the Project Management 2

Independent Auditors' Report 3-6

Statement of Comprehensive Income 7

3 Statement of Financial Position 8

Statement of Cashflows 9

Receipts and Payments 10

Notes to the Financial Statements 11 - 16

sOpinion on the Special Account Statement 17

FSpecial Account Statement 18

Io h eredd3 eebr21IAESI1

IExtractive Industries Technical Assistance Project (EITAP)

Ministry of Mines and Mineral Resources (MMMR)Financial Statements

For the year ended 31 December 2016

I GENERAL INFORMATION

ADDRESS 5th Floor

Youyi BuildingBrookfieldsFreetown

PROJECT MANAGEMENT Mrs Fatmata S. MustaphaPermanent Secretary MMMR

I Mr Mustapha Sheku GibritProject Co-ordinator

Mr Idrissa BarrieFinancial Specialist

Mr Randy M. KabiaProcurement Specialist

I BANKERSGuaranty Trust Bank (SL) Limited

Wilberforce Street

Freetown

AUDITORS BDORegent House12 Wilberforce StreetFreetown

IIIII

II




REPORT OF THE PROJECT MANAGEMENT

The Project Management has pleasure to report as follows:

Statement of Responsibilities of the Project Management

The Financing Agreement dated 14 December 2009 requires the Project Management to prepare financial

statements for each financial year, which give a true and fair view of the state of affairs of the project

and of the resources and expenditure for that period. In preparing these financial statements, the

Project Management is required to:

* Select suitable accounting policies and then apply them consistently;

* Make judgements and estimates that are reasonable and prudent;

* State whether applicable accounting standards have been followed, subject to any material

departures disclosed and explained in the financial statements;

* Prepare the financial statements on a going concern basis unless it is inappropriate to presume that

the project wilt continue its activities.

The Project Management is also responsible for keeping proper accounting records, which disclose with

reasonable accuracy at any time the financial position of the project and to enable them to ensure

that the financial statements comply with International Financial Reporting Standards. The Project

Management is also responsible for safeguarding the assets of the project and for taking

reasonable steps for the prevention and detection of fraud and other irregularities.

j Financial Statements

The annexed financial statements disclosed the financial activities of the project for the year ended

3 31 December 2016.

(<Mr M apha Sheku Gibril Date

IProject Co-ordinator

III* 2

II

II IBDO

Extractive Industries Technical Assistance Project (EITAP)Ministry of Mines and Mineral Resources (MMMR)

Financial Statements

For the year ended 31 December 2016REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS

Opinion

We have audited the financial statements of the Extractive Industries Technical Assistance Project

IDA H520/H6680, DfID TF 11786, Ministry of Mines and Mineral Resources with the Statement ofComprehensive Income, Statement of Financial Position as at 31 December 2016, Statement ofCashflows for the year then ended, Receipt and Payments and notes to the financial statements,

including a summary of significant accounting policies.

In our opinion, the financial statements present a true and fair view of the state of affairs of theproject as at 31 December 2016 and the results for the period then ended in accordance with theaccounting policies adopted by the project as stated in note 2 of the financial statements and

the requirements of the Project Agreement Document.

I Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Ourresponsibilities under those standards are further described in the Auditors'Responsibilities for the Audit of the Financial Statements section of our report. We areindependent of the Project in accordance with the International Ethics Standards Boardfor Accountants' Code of Ethics for Professional Accountants (IESBA Code), and we havefulfilled our other ethical responsibilities in accordance with the IESBA Code. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

I Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of mostsignificance in our audit of the financial statements of the current period. We havedetermined that there are no such matters to report.

Other Information

Management is responsible for the other information. The other information comprises theinformation included in the Annual Report, but does not include the financial statements

and our auditors' report thereon. Our opinion on the financial statements does not coverthe other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read theother information and, in doing so, consider whether the other information is materiallyinconsistent with the financial statements or our knowledge obtained in the audit orotherwise appears to be materially misstated. If, based on the work we have performed,

we conclude that there is a material misstatement of this other information, we are

required to report that fact. We have nothing to report in this regard.

3

BDO, a Sierra Leone partnership, is a member of BDO international Limited, a UK company limited by guarantee, and forms part of the internationalBDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms


Ministry of Mines and Mineral Resources (MMMR)


IREPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS (Contd)

Responsibilities of Management and Those Charged with Governance for the Financial

Statements

The project's management is responsible for the preparation and presentation of these financialstatements on the basis of accounting policies for the purpose of determining the eligible expenditureand results for the year for use by the World Bank and the Government of Sierra Leone. Thisincludes determining whether the accounting policies described in note 1 form an acceptable basisfor preparing and maintaining internal controls relevant to the preparation and presentation offinancial statements that are free from material misstatement, whether due to fraud or error,selecting and applying appropriate accounting policies and making accounting estimates that are

reasonable in the circumstances.

Auditors' Responsibilities for the Audit of the Financial Statements

Our Objectives are to obtain reasonable assurance about whether the financial statementsas a whole are free from material misstatement, whether due to fraud or error, and toissue an auditors' report that includes our opinion. Reasonable assurance is a high level ofassurance, but is not a guarantee that an audit conducted in accordance with ISAs will

always detect a material misstatement when it exists. Misstatements can arise from fraudor error and are considered material if, individually or in the aggregate, they couldreasonably be expected to influence the economic decisions of users taken on the basis of

these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than forone resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control.

Obtain an understanding of internal controls relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the Project's Internal Control.

I

1 4

IBDO, a Sierra Leone partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the internationalBDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms


Ministry of Mines and Mineral Resources (MMMR)IB D O Financial StatementsFor the year ended 31 December 2016

REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS (Contd)

Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty

exists related to events or conditions that may cast significant doubt on the Project's

ability to continue as a going concern. If we conclude that a material uncertainty exists,

we are required to draw attention in our auditors' report to the related disclosures in the

financial statements or, if such disclosures are inadequate, to modify our opinion. Our

conclusions are based on the audit evidence obtained up to the date of our auditors'

report. However, future events or conditions may cause the Project to cease to continue

as a going concern.

Evaluate the overall presentation, structure and content of the financial statements,

including the disclosures, and whether the financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the

entities or business activities within the Project to express an opinion on the financial

statements. We are responsible for the direction, supervision and performance of the

Project audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit and significant audit findings, including any

significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied

with relevant ethical requirements regarding independence, and to communicate with

them all relationships and other matters that may reasonably be thought to bear on our

independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those

matters that were of most significance in the audit of the financial statements of the

current period and are therefore the key audit matters. We describe these matters in our

auditors' report unless law or regulation precludes public disclosure about the matter or

when, in extremely rare circumstances, we determine that a matter should not be

communicated in our report because the adverse consequences of doing so would

reasonably be expected to outweigh the public interest benefits of such communication.

5

BDO, a Sierra Leone partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the internationalBDO network of Independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms

I


Ministry of Mines and Mineral Resources (MMMR)IIBD O Financial Statements


IREPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS (Contd)

I Report on Other Legal and Regulatory Requirements

There are no other legal and regulatory requirements.

The engagement partner on the audit resulting in this independent auditors' report is Brinsley Johnson.

IFreetown, Sierra Leone

VAI , 2017

IIIIIIIII

5 6

BDO, a Sierra Leone partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the internationalBDO network of independent member firms. BOO is the brand name for the BDO network and for each of the BDO Member Firms




STATEMENT OF COMPREHENSIVE INCOME

2016 2015

Notes US$ US$

Incomeinternational Development Association

Dfid fund

Expenditure

Institutional strengthening 3 1,478,556 992,021

Project Support Team (PST) cost 244,372 250,915

Project audit 5,513 7,600

1,728,441 1,250,536

Depreciation 45,685 35,583

Foreign exchange adjustments (2,822) -

Total expenditure 1,771,304 1,286,119

Net movement in funds (1,771,304) (1,286,119)

The notes on pages 11 to 16 form part of these financial statements.

III

1 7




I STATEMENT OF FINANCIAL POSITION

2016 2015

Notes US$ US$

Non-Current Assets

Property, plant and equipment 4 - 45,686

Long term receivables

Grant funds - IDA H532-SL 12,200 791,868

DFID Grant Funds - TF 11786 202,033 1,021,062

3 Prepayment -5

Current Assets

Cash and cash equivalents 5 2,144 136,262

216,378 1,994,953

3 Represented by

Accumulated fund 6 216,049 1,987,353

Payables and accruals 7 329 7,600

216,378 1,994,953

The financial statements were approved by the Project Management on 0 2017

I4 Project Coordinator

Mr Must ha Sheku Gibril

_ _ _ _ Permanent Secretary MMMR

Mrs Fatmata S. Mustapha


8




ISTATEMENT OF CASHFLOWS

2016 2015Notes US$ US$

Operating ActivitiesNet cashflows from operating activities 8 (134,447) 78,437

Investing Activities

Payments to acquire property, plant and equipment (2,152)

Net cash (outflows)/ inflows (134,447) 76,285

Increase in cash and cash equivalentsBalance at the beginning of the year 136,262 59,977

Net cash (outflows)/ inflows (134,447) 76,285

Balance at the end of the year 1,815 136,262


IIIII

I

£ 9

II




IRECEIPTS AND PAYMENTS

2016 2015Notes US$ US$

RECEIPTSInternational Development Association 9 773,485 754,539

DfID Fund 802,744 573,962Direct payments to suppliers by IDA 34,668 -

Total receipts 1,610,897 1,328,501

PAYMENTSRegulatory framework - -Institutional strengthening 1,478,556 992,021Project management 244,372 250,915


Amount refunded to IDA 16,903 2,154

Petty cash replenishments - -

Total payments 1,745,344 1,252,217

Net receipts (134,447) 76,284

Opening cash balance 136,262 59,977

Closing cash balance 1,815 136,261

Represented by:Special Account Balance - US Dollars 2,144 126,705

Special Account Balance - Leones (329) 9,557

I 1,815 136,262


IIII

I 10

1I




NOTES TO THE FINANCIAL STATEMENTS

3 BACKGROUND INFORMATION ON THE PROJECT

A financing agreement dated 14 December 2009 for the Extractive Industries Technical

Assistance Project was signed between the Government of Sierra Leone (GoSL) and

International Development Association (IDA).

The objective of the Project is to build government's capacity to improve management

and regulation of the mining sector.

International Development Association (IDA) agreed to extend to the Government of

Sierra Leone, on terms and conditions specified in the financing agreement a grant in

an amount equivalent to special drawing rights (SDR) 2,600,000.

The project is made up of the following components overarching and regulatory frameworks

for the mining sector, institutional strengthening and project management. The overarching

and regulatory frameworks for the mining sector is to improve the regulation of the mining

sector. The institutional strengthening is to ensure good sector governance guided by the

principles of transparent, non-discretionary and efficient mining sector administration. The

project management will provide support to MMMR to implement the project activities.

The financing agreement became effective on the 13th February 2010 and the first

withdrawal was made in August 2010.

The project will include a Project Preparation Facility (PPF) re-financing. A letter of agreement

dated 25th April 2007 was signed between the GoSL and IDA. The PPF supported

preparation of safeguard documents, procurement of Information Technology (IT)

and office equipment for the Project Support Team (PST). The PPF letter agreement

became effective on 6th July 2007 and the first withdrawal was made in March 2008.

The overarching and regulatory frameworks for the mining sector

This aspect of the project covers the:

* development of environmental and social regulations related to the environmental/

social impact assessment process as these apply to the mining sectors for both

large-scale and mechanised small-scale mines.

preparation of a mining sector code of practice to include recommendations beyond

regulations for environmental management practices, relationships with communities

standards for environmental management tools, environmental performance indicators

standards for monitoring and inspection of environmental management facilities, etc.

* preparation of trading license regulations for precious minerals and diamonds.

II




NOTES TO THE FINANCIAL STATEMENTS (Contd)

Institutional Strengthening

This institutional strengthening aspect of the project covers:

support to the Ministry of Mines and Mineral Resources (MMMR) and the National Minerals

Agency (NMA):

a) technical assistance to the Geological Survey Department (GSD) of MMMR to evaluate report and

plans and manage geological data;b) geochemical surveys for mapping and resource assessment in selected areas;c) building the Government's capacity to run a modern mining agency by equipping NMA with

vehicles, computers and building refurbishing; andd) provide capacity building towards investment promotion by training officials to prepare for

events focused on mining investment promotion and financing the participation of Government

officials in international events for exploration and mining.

* temporary salary support for MMMR/NMA.

* support for a post-mining rehabilitation programme (through MMMR/GSD).

The activities will include:

a) Geochemical surveying of 3 - pilot areas requiring assessment before further decision to

rehabilitate the land.

b) Associated technical studies of pilot areas.

c) Identification of alternative livelihood options in pilot areas.

* Strengthen the capacity of MMMR to manage donor financed projects and day to dayadministration, including building skills for procurement, financial management, project

I management and monitoring.

Project management

* This component will provide support to MMMR to implement the project activities, inaccordance with the Bank's fiduciary and other guidelines including incremental

operating cost equipment for the Project Support Team (PST), training and audits.

I In order to increase the scope of the project the GoSL has requested for additional financing

from the IDA. A financing agreement dated 17th May 2011 is in the process of being finalised.Under the financing agreement the IDA has pledge grant funds in the amount of SDR 2,600,000as additional financing for the project. In addition to the amount from IDA it is expected thatDfID through a trust fund to be managed by IDA will also provide some additional financing.As part of the restructuring for the additional financing the name of the project is been

changed from Mining Technical Assistance Project (MTAP) to Extractive IndustriesTechnical Assistance Project (EITAP).

II 12

II





2 (a) BASIS OF PRESENTATION

The financial statements on pages 5 to 15 have been prepared in accordance with

International Financial Reporting Standards (IFRS) using the historic cost convention as the basis.

The following accounting bases have been applied consistently in dealing with items which are

considered material in relation to the project's financial statements.

(b) DepreciationDepreciation of fixed assets has been provided on a straight line basis at the following annual rates,

which have been calculated to write off the cost of each asset over its expected useful life:

* Per annum

Vehicles 25%Furniture and fixtures 33.33%Equipment 33.33%

Computer 33.33%

(c) Foreign currenciesForeign currency transactions are accounted for at the rate of exchange prevailing on the

date at which the transaction was recorded. International Development Association transactions

are recorded at the rate ruling on the value date of the transaction.

Assets and liabilities denominated in foreign currencies are translated at the rate ruling at the

reporting date. All foreign exchange differences have been reflected in the Statement of

Comprehensive Income

Exchange rate as at 31 December 2016 was Le6,500.

13 INSTITUTIONAL STRENGTHENING

2016 2015US$ US$

Training/courses/workshop - PDMMR 559,488 325,809Salary support to civil servants 30,710 -

Geochemical mapping 30,000National Minerals Agency (NMA) 487,702 5,085

Capacity building - 25,647

Environmental and social regulationSoil samplesMonitoring and Evaluation -

Geodata 204,659 222,030Training on software for petroleum directorate 195,997 -Technical Assistance to Geological Surveys Department (GSD) - -

Land Rehabilitation - 383,450

1,478,556 992,021

£13

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Extractive Industries Technical Assistance Project (EITAP)

Ministry of Mines and Mineral Resources (MMUR)

Financial Statements



5 CASH AND CASH EQUIVALENTS

2016 2015

US$ US$

Cash at bank 2,144 126,705

Cash in hand 9,557

2,144 136,262

6 ACCUMULATED FUND

Opening balance 1,987,353 3,272,998

Surplus/ (deficit) for the year (1,771,304) (1,286,119)

Prior year adjustment 474

216,049 1,987,353

7 PAYABLES AND ACCRUED CHARGES

Audit fees - 7,600

Overdraft 329 -

329 7,600

8 CASHFLOW FROM OPERATING ACTIVITIES

Deficit for the year (1,771,304) (1,286,119)

Decrease in receivables 1,598,697 1,328,502

Decrease/ (increase) in prepayment 75 (3)

Increase in payables (7,600) -

Depreciation 45,685 35,583

Prior year adjustment - 474

(134,447) 78,437

15

IExtractive Industries Technical Assistance Project (ElTAP)




9 WORLD BANK FUNDS DISBURSED TO EITAP (DfID)

2016 2015US$ US$

Withdrawal application - 099 97,360 -











Withdrawal application - 075 - 59,629



Withdrawal application - 082 - 108,185Withdrawal application - 085 - 72,524




773,485 754,539

10 CAPITAL COMMITMENTS

There were no capital commitments at 31 December 2016 (2015 nil).

11 CONTINGENT LIABILITIES

There were no contingent liabilities at 31 December 2016 (2015 nil).

1 12 EVENTS AFTER THE REPORTING DATE

Events subsequent to the reporting date are reflected only to the extent that they are material.There were no such events as at the date these financial statements were signed.

UU* 16

II

II BDO

Extractive Industries Technical Assistance Project (EITAP)Ministry of Mines and Mineral Resources (MMMR)

Financial StatementsFor the year ended 31 December 2016

REPORT OF THE AUDITORS ON THE SPECIAL ACCOUNT STATEMENT,DESIGNATED ACCOUNT NUMBER 003001117808110209

3 Opinion

We have audited the accompanying Special Account Statement Dollar Account No 2081051/002/0001/000established under the provisions of IDA GRANT No. H520/H6680, DfID TF 11786 for the year ended 31 December 2016

In our opinion, the receipts were properly accounted for and the withdrawals were made for the purposesof the project in accordance with the project agreement.

The accompanying Special Account Statement give fair view of the beginning and closing balances andthe accounting activity for the year ended 31 December 2016 on the basis of cash deposits andwithdrawals.

We conducted our audit in accordance with International Standards on Auditing. Those standards requirethat we comply with ethical requirements and plan and perform the audit to obtain reasonable assurancewhether the financial statements are free of material misstatement and accordingly include such test ofthe accounting records, verification of assets and liabilities, review of systems of internal controlsand other auditing procedures that we considered necessary in the circumstances.

The accompanying special account statement was prepared on the basis of cash deposits andwithdrawals for the purpose of complying with the project agreement.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisI for our audit opinion.

Freetown

2017 Chartered Accountants

17

BDo, a Sierra Leone partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the internationalBDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms

IMinistry of Mines and Mineral Resources (MMMR)

Financial StatementsFor the year ended 31 December 2016

SPECIAL ACCOUNT STATEMENT - DESIGNATED ACCOUNT

IAccount No: 2081051/002/0001/000

I Depository Bank: Guaranty Trust Bank (SL) Limited

Address: Wilberforce StreetFreetown, Sierra Leone

Grant Agreement No: IDA GRANT No. H520/H6680, DfID TF 11786

Currency: United States Dollars (US$) and Leones (Le)

1 2016 2015US$ US$

I Opening balanceUSD Account 126,705 59,474

Leones Account 9,557 503

Add:

International Development Association 791,868 754,539

Dfid fund 819,029 573,962

1,747,159 1,388,478

Less:

Regulatory framework -

Institutional strengthening 1,478,556 992,021

Project Support Team (PST) cost 244,372 250,915


Amount refunded to IDA 16,903 2,154

Balance at 31 December 1,815 136,262

Represented by:Special Account Balance - US Dollars 2,144 126,7053 Special Account Balance - Leones (329) 9,557

1,815 136,262

1 18

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