Title of presentation

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1 Title of presentation Benjamin Obidegwu, Partner Hermon (Barristers & Solicitors), Lagos, Nigeria ipad West Africa 2008, Abuja, NIGERIA

2 Mining Rights, Acquisitions and Investment Opportunities in Mining in Nigeria. The Law supporting the acquisition of Mining Rights in Nigeria is the Nigeria Mineral and Mining Act (NMMA) Section 5 of the act established the Mining Cadastre Office as an autonomous body to administer Mining Rights on a 1 st come 1 st serve basis

3 Functions of the Mining Cadastre Office Has exclusive responsibility for the administration of Mineral Title and maintenance of Cadastral register. Consider applications for Mineral Titles and Permits, issue, suspend and may, upon the written advice of the Minister, revoke any Mineral Title

4 Functions of the Mining Cadastre Office cont d Receive and dispose of applications for the transfer, renewal, modification, relinquishment of Mineral Titles or extension of areas; Maintain a chronological record of all applications for Mineral Title in: a Priority Book which is to be specifically used to ascertain the priority and registration of applications for exclusive rights on vacant areas:

5 Functions of the Mining Cadastre Office cont d a General Registry book which is to be used for all other types of applications where registration of the priority is not required. undertakes such other activities necessary for the carrying out of duties and responsibilities under the law.

6 TYPES OF MINERALS TITLES S.46 NMMA 2007 provides for: Reconnaissance Permit; Exploration Licence; Small-Scale Mining Lease; Mining Lease; Quarry Lease; and Water Use Permit.

7 PROCEDURE FOR OBTAINING RECONAISEEANCE PERMIT Procedure is similar with the procedure for obtaining exploration licence and same will be discussed in the next slide

8 PROCEDURE FOR OBTAINING EXPLORATION LICENCE Obtaining, completion and submission of application form in triplicate. Form A-2 Submission of the coordinate of the area of application not exceeding 200sqkm Submission of certified true copy of certificate of incorporation of applicant

9 PROCEDURE FOR OBTAINING EXPL0RATION LICENCE cont d Indication of the type of mineral to be explored Submission of work programme Evidence of payment of the statutory fee N5,000 (approx $50 US.

10 PROCEDURE FOR OBTAINING EXPLORATION LICENCE cont d Assignment of Identification code Registration with time of submission Signing of document by applicant and cadastre officer and copy is given to the applicant for record purposes Application is granted 30 days after submission of documents if all the documents are in order

11 PROCEDURE FOR OBTAINING SMALL SCALE MINING LEASE Completion and submission of application form in triplicate. Form A- 3 Submission of the coordinate of the area of application not exceeding 3sqkm Submission of prefeasibility study which shall include a general description of the proposed mining scheme

12 PROCEDURE FOR OBTAINING SMALL SCALE MINING LEASE Submission of certified true copy of certificate of incorporation of applicant Assignment of Identification code and Registration with time of submission Signing of document by applicant and cadastre officer and copy is given to the applicant for record purposes Application is granted 45 days after submission of documents if all the documents are in order

13 ANNUAL SERVICE FEE FOR MINERAL RIGHTS IN NIGERIA EPL Annual Service Fee = N500 per CU/year (CU =20.25Ha) SSML Annual service Fee = N10,000 per CU/year ML Annual Service Fee = N20, 000 per CU/Year QLS Annual Service Fee = N15,000 per CU/Year Water Use Permit Annual Service Fee = N5,000 per CU/year

14 CANCELLATION OF LICENCES License and right are automatically cancelled when holders refused to pay their fee obligations by due dates, after a holder has been served with notice of impending cancellation. Once cancelled, a holder cannot re apply for, transfer, amend etc any license or right for 5 years.

15 INVESTMENT OPPORTUNITIES Proven solid minerals available in Nigeria in commercial quantity include: ❿ a) Tantalite ❿ c) Mica ❿ e) Coal ❿ g) Talc ❿ h) Gypsum ❿ j) Gold ❿ l) Silver b) Kaolin d) Baryte f) Rutile g) Bismuth i) Feldspar k) Clays m) Limestone

16 Proven solid minerals available cont d ❿ n) Columbite ❿ p) Diatomite ❿ r) Fluorite ❿ t) Lead ❿ v) Bentonite ❿ x) Lithum ❿ z) Kyanite ❿ bb) Mangenese ❿ dd) Marble o) Cassiterite q) Silica Sand s) Bitumen u) Zinc w) Iron Ore y) Magnesite aa) Gemstones cc) Copper ee) Phosphate

17 AVAILABLE INVESTMENT OPPORTUNITIES Local sales and export of crude and processed solid minerals. Importation and local marketing of modern mining equipment technologies and spares Modern mineral testing and quality control equipment technologies and reagents

18 AVAILABLE INVESTMENT OPPORTUNITIES Mining equipment technologies leasing services, technical consultancy Underground mining technologies services, provision and maintenance of automated systems for mining and construction, engineering and high speed underground exactions and development.

19 INCENTIVES FOR INVESTORS ❿ S OF NMMA -Attractive tax policy. Deduction of 95% of qualifying capital expenditure in the year of investment in: a) all certified exploration and development expenditure (including feasibility study and sample assay costs in the year incurred)

20 INCENTIVES FOR INVESTORS all infrastructure costs for mining purpose in the year incurred; 100% of the amount set aside in any particular year for environmental protection and rehabilitation costs.

21 INCENTIVES FOR INVESTORS Unclaimed capital cost can be increased by 5% annually until fully recovered; Tax relief period is for three years but may be extended by Minister for another two years Corporate Income Tax (20%-30%) All holders of a mining lease shall be liable to the payment of a corporate income tax on the net profits or taxable income earned from the mining activities.

22 INCENTIVES FOR INVESTORS Exemption from Custom Duties on all equipment and capital items agreed to be required for the mining operations; Artisan miners are exempted from corporate income Tax but must pay the local taxes in the area of activities. Full currency conversion and full Repatriation or remittances of Profits and dividends to allow investor service its (external) loans on the mining activities.

23 INCENTIVES FOR INVESTORS Royalty payment is affordable and is dependent on the type of mineral being mined. Gold N1090 per ounce Copper N900 per metric ton Granite N50 per metric ton Limestone N40 per metric ton Possible capitalization of expenditure on exploration and surveys; Provision of 100% ownership of mining concerns.

24 END OF SLIDE THANK YOU FOR YOUR ATTENTION