WEST AFRICA EXPLORATION POTENTIAL ALFRED BAKU EVP and Head of West - - PowerPoint PPT Presentation

WEST AFRICA EXPLORATION POTENTIAL

ALFRED BAKU – EVP and Head of West Africa, Gold Fields

October 2015

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Key Themes

Geographical Spread and Footprint West Africa’s Gold Mining Portfolio Exploration Spend Doing Business in West Africa Type and Quality of Deposits Tax Rates of African Mining Countries How Africa Compares SWOT Analysis

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West Africa – Spread and Footprint

SENEGAL M A L I NIGERIA GUINEA COTE D’IVOIRE GHANA BURKINA NIGER SIERRA LEONE GUINEA-B BENIN TOGO

15 countries under the Economic Community of West African States Same currency (FCFA) in 8 states through West Africa Economic and Monetary Union (WAEMU)

SENEGAL M A L I NIGERIA GUINEA COTE D’IVOIRE GHANA BURKINA NIGER SIERRA LEONE GUINEA-B BENIN TOGO

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Doing Business in West Africa

Regional Regulatory framework

• ECOWAS guidelines serves as guidelines for drafting or

updating all regulation pertinent to doing Business in WA.

• 8 West Africa countries have subscribed to the Organisation

for the Harmonisation of Legal Business in Africa (OHADA). Investment Regime

• The Mining Codes of most countries make provisions for the

granting of stability agreements, after completing PFS.

• Fiscal and custom regimes are included in the stability

agreement and are binding for the duration of the agreement. Fiscal Incentives

• Write-off of exploration and development costs
• Corporate tax: 17.5-35%
• Royalty: 3-5%;
• Tax holiday for certain jurisdiction

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West Africa – Type and Quality of Deposits

High grade & large deposits Cluster of high grade modest size deposits – Vein like

Mali Cote D’Ivoire Liberia Guinea Senegal Niger Ghana Sierra Leone Burkina Faso

Kenieba Ashanti & C. Ghana King George District Syama

Large deposits, but low grade (Heap Leach?)

SE Burkina Hounde Belt Hire Belt Siguiri basin Sebba belt Asankrangwa

Fekola Natougou Tengrela Yanfolila

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New Liberty – 2.4mOz

West Africa - Producing Gold Assets

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Kalsaka-1.0mOz Morila-6.2mOz Yatela-3.2mOz Samira-1mOz Sadiola-13.3mOz Gounkoto-6mOz Loulo-6.3mOz Tabakoto-4.8mOz Ity-1.3mOz Agbaou-2.1mOz Chirano-2.1mO Ahafo-23mOz Obuasi (60mOz) Tarkwa-14.6mOz Damang-8.4mOz Lefa-8.2mOz Kiniero-1.2mOz Siguiri-5.2mOz Youga-2.5mOz Bissia-5.1mOz Akyem-7.7mOz Sabodala-5.6mOz Tongo-6.5mOz Bonikro-4.3mOz Ayanfuri (8.1mOz) Essakan-9mOz Mana-6.3mOz Inata-6.3mOz

As at the end of 2014:

• 44 mines in 8 countries produced 7.2mOz
• 81.4Moz at 2.34g/t reserves and 255Moz Resources at 2.87 g/t.

Senegal Mali Sierra Leone Liberia Burkina Faso Ghana Cote D’Ivoire Guinea

17 New mines from 2007 to date

Nzema-3.2mOz

9 world class operations >200Koz pa

Bissia-5.1mOz Akyem-7.7mOz Sabodala-5.6mOz Tongo-6.5mOz Bonikro-4.3mOz Ayanfuri (8.1mOz) Essakan-9mOz Inata-6.3mOz New Liberty- 2.4mOz

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West Africa – Exploration Spend

Greenfields, Late Stage and Mine Site Gold Exploration Spent (2009-2013).

• US$4.4B spent on gold

exploration in USA Africa - Gold Exploration spent USA – Gold Exploration spent

• Similar amount spent by all
• f Africa over same period.
• West Africa accounting

for 62% of Africa’s exploration spend

Source: SNL Metals 2015

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Low maturity exploration terrain that underwent 2 cycles of modern exploration

Essakan Inata Youga Loulo Sadiola Mana Bonikro Ahafo Tarkwa Tongon Kalana Bissa

Archean terrain poorly explored and represents a new search space

West Africa - Upside

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Tax Rates of African Mining Countries

Fiscal Payment Burkina Faso Tanzania Cote d’Ivoire DRC Senegal South Africa Mauritania Liberia Zambia * Sierra Leone Mali Niger Ghana Guinea Corporate Tax Rate (%) 20% 30% 25% 30% 25% 34% 25% 30% 30% 30% 30% 30% 35% 35% Royalty Rate (%) 5% 4% 3% 2.50% 3% 1.50% 5% 3% 9% 5% 6% 5.50% 5% 5%

• Govt. free carried (%)

10%

• 10%

5% 10%

• 10%

10% 0% 10% 10% 10% 10% 15% Effective Tax Rate (%) 34% 35% 36% 36% 36% 36% 38% 40% 41% 42% 43% 43% 47% 49%

Source: Ghana Chamber of Mines

* Zambia recently announced changes to its mining tax regime, effective 1 July 2015:

• Flat 9% royalty rate
• CIT for mining operations 30%

From Jan 2015, Zambia introduced a mineral royalty tax of 20% for open cast mining and 6% for underground mining and the rate for CIT was reduced to zero. Following public outcry, this has now been reversed

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Corporate Income Tax Rates – How Africa Compares

With an average of 29%, Africa has the highest Corporate Income Tax (CIT ) regime compared to all the other regions.

Top Rate of Corporate Income Tax Germany 15% Canada 16% Chile 19% Kazakhstan 20% Russian Federation 20% Burkina Faso 20% Ukraine 21% Brazil 25% Cote D'Ivoire 25% Ghana - Up to 2012 25% China 25% Indonesia 25% UK 26% South Africa 28% Mali 30% Australia 30% Mexico 30% Peru 30% Philippines 30% Tanzania 30% Zambia * 30% Congo - Rep 34% Argentina 35% Ghana - post 2012 35% USA 35% India 42% Average 27% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Germany Canada Chile Kazakhstan Russian Federation Burkina Faso Ukraine Cote D'Ivoire Ghana - Up to 2012 China Indonesia Brazil UK South Africa Mali Australia Mexico Peru Philippines Tanzania Zambia * Congo - Rep Argentina Ghana - post 2012 USA India

Source: PwC, Ghana Chamber of Mines

11 Mineral Royalty Rates (Gold) Comment Brazil 1.0%

Levied on revenue less i)taxes levied

• n revenue, ii)insurance and iii)freight

costs

India 2.0% Australia 2.5% Argentina 3.0% Ghana - Up to 2012 3.0% Indonesia 3.8% China 4.0% Tanzania 4.0% Congo - Rep 5.0% Ghana - post 2012 5.0% Kazakhstan 5.0% Philippines 5.0% South Africa 5.0% USA 5.0% Russian Federation 6.0% Lower CIT rate of up to 20% Zambia 9.0% Flat rate Peru Max13.1%

Sliding Scale based on operating profit. Lowest rate is 1%

Chile 14.0% lower CIT rate of up to 19% Canada 16.0% lower CIT rate of up to 16% Germany N/A Mexico N/A UK N/A Ukraine Tonnage 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

Africa has an average royalty rate of 5.6%, against Asia’s average royalty rate of 4.3%. Chile and Canada, who have significantly higher royalty rates (14% and 16% respectively), also have significantly lower CIT rates (19% and 16% respectively)

Royalty Rates – How Africa Compares

Source: PwC

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STRENGTH OPPORTUNITY WEAKNESS THREAT

Integrated business environment Attractive regulatory framework Negotiable stability agreement Open pittable gold deposits Free digging from 0-60 m vertical depth Restricted to French speaking countries Integrated regulatory framework under implementation Unlikely to enjoy new favorable terms Attract potential artisanal miners Strong bureaucracy from past history Simple metallurgical feature Limited Infrastructures: power, road etc. Last frontier and search space, worldwide Large scale deposits yet to be discovered Low cost discovery rate Mining agreement at exploration stage Administrative bureaucracy Community, social and environmental issues In-country limited mining skills force Strong state controls on exchange Tap into regional set-up & expertise

West Africa - SWOT

THANK YOU