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Reconciliation report ofpayments made by theextractive companies to theMalagasy State and ofrevenues collected by theMalagasy StateFiscal Year 2013

January 2015

Conducted on behalf ofEITI Madagascar by :

Reconciliation report EITIFiscal Year 2013

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Executive summaryPresentation of the assignment

Context and purpose of the reportThis document, entitled « EITI Madagascar Report – Year 2013 », is the fifth official reconciliationreport of Madagascar, commissioned by the National Committee of EITI. Its first aim is thereconciliation of cash flows between the State and the main extractive industries (mining andupstream oil companies) in Madagascar for the 2013 fiscal year. The report also reflects therequirements of the EITI standards, including:

► the governance arrangements, tax and regulatory framework applying to extractivesindustries ;

► an overview of the extractive sector in Madagascar ;► the contribution of the extractive sector in 2013 in relation to the economy and an

overview of the extractive sector's tax contribution to the economy to the total of thetax revenues of the country ;

► the production per product and per company including : 1/ the total production volumeand its value 2/ the total volume exported and the value of the export by raw material ;

► the specific information on the companies of the EAE (Entreprises Appartenant à l'Etat)which are State-owned companies, in particular : an explanatory of the rules and commonpractices ruling the financial relationships between the governement and the State-owned companies ;

► the situation regarding the procedures for granting licences in 2013 ;► information on the actual property of the extractive companies► information on the oil contracts ;► the summary of the donations from extractive companies to the collectivity ;► information related to the decentralised authorities (regions and municipalities) ;► the use of the funds received from the extractive companies by the municipalities subject

to a participatory budget practice.

The exchange rate used for the report is the average exchange rate of the Central Bank of Madagascarfor 2013 in which 1 USD equals MGA 2,206.91.

Scope and approachThe mission of the Reconciler is governed by the International Stantard ISRS 4400 related to the «Engagements to perform agreed-upon procedures regarding financial information » and the ISRS4410 standard related to « Compilation Engagements ».

In accordance with the Terms of Reference, the approach consists of the following steps :Phase 1 : Preliminary analysisPhase 2 : Collection of the data to be reconciledPhase 3 : Initial reconciliationPhase 4 : Investigating discrepancies and drafting the reportPhase 5 : Final report


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Materiality-defined scopeThe results of the materiality process, duly validated by the National Committee, have led to thedefinition of the scope presented in the table below :

CharacteristicsScope of the

report

Number ofentities per

group

Group AFilling of the reconciliation canvas required for the companies and for the State

34

Group BDisaggregated statement by company provided by the State

5

Group CAggregate statement provided by the State

63

Total 102Materiality threshold of Group A (USD) 79,226.53

Coverage rate reached by Group A 97.53%

102 entities, including companies and natural persons, were identified as having made a total ofsignificant payments to the main public authorities. These entities whose payments exceed USD5,000 are included in the scope of « EITI Madagascar Report – Year 2013».

They were classified into 3 groups:► Group A consists of 34 entities, including two natural persons connected to companies in

the same group. Filling the reconciliation canvas is required of the companies of this group,as well as of the authorities receiving payments from them. The work performed on this groupenabled us to achieve a coverage rate of 97.53% with companies having made paymentsexceeding the materiality threshold of USD 79,226.53 ;

► Group B comprises 5 entities, for which the State alone is asked to provide a disaggregatedstatement per company ;

► Group C includes 63 entities, for which only the State is required to provide an aggregatestatement.

Update of the Materiality rateDuring the reconciliation assignment, we performed updates that enabled us to redefine the scope ofthe materiality process.

The revised materiality threshold is USD 79,331.12 as opposed to the USD 79,226.53 definedinitially. The scope became 99.12% instead of 97.53%.

Background information

Overview of the extractive sectorMadagascar has a great potential in terms of minerals.

The major commercial-scale projects currently underway or planned in the mining sector are outlinedbelow :


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Companyname

Ongoing or planned projects

QMM Ongoing operation: ilmenite, zirsill. Region Anosy

Projet AmbatovyOngoing operation: nickel, cobalt. Mine in Moramanga, processing plant inToamasina.

Kraoma Ongoing operation : chromeWisco Research : Iron of SoalalaMadagascar ConsolidatedMining et PAM Sakoa

Pre-feasibility stage: Coal of Sakoa

Toliara SandsOperating permit since 2011, currently performing the Environmental ImpactAssessment : Ilmenite of Ranobe

MainlandCurrently performing the Environmental Impact Assessment : ilmenite on theEast Coast of Madagascar

Aziana Owns mining licences for the bauxite of Manantenina

HolcimExploitation of pozzuolana, clay and cipolin in Antsirabe and Tamatave for theproduction and sales of cement

Moreover, the malagasy mining sector is also characterized by small mines, which are mostlyinformal. According to the data of 1990, this sector employed more than 500,000 workers, which isequivalent to the formal working population registered at the CNaPS in 2012, of all sectors. Accordingto the ENEMPSI study, performed in 2012 by INSTAT1, 8% of the 2.2 million of Individual ProductionUnits – of which 99% are informal – pertain to the branch of the mining extractive industry.

The illegal exploitation and exportation of gold are striking aspects of the small mines. As a matter offact, not a single case of gold exportation was officially recorded in Madagascar until the firstsemester of 2012. Approximately 150 kilograms of gold were legally exported ; this has doubled theroyalties and taxes collected by the Mining Authority during the month of April 2012. However, adecision of the Council of Ministers prohibited the exploitation of gold after this once off experience.Inspite of the prohibition of the exploitation of this precious metal, the United Nations estimated thevalue of the export from Madagascar at USD 18 million in 2012; this is equivalent to 600 kg of goldand could be representative of MGA 790 million of royalties.

Concerning oil, 16 international petroleum companies signed 25 contracts with OMNIS forhydrocarbon exploration and exploitation. Madagascar Oil SA has officially announced that theproject Tsimiroro – block 3104 is a «commercial discovery». In October 2014, the company hassubmitted its Development Plan to the Steering Committee for approval.

Governance of the extractive sectorThe key actors in the mining governance are:► the Ministry of Mines ;► the Mining Cadastre Office (Bureau du Cadastre Minier de Madagascar, BCMM) ;► the Gold Agency (Agence de l’Or) ;► the Mine Police ;► the decentralised territorial units.

In the upstream oil sector, we have the following entities:► the Ministry of hydrocarbons ;

1Enquête Nationale sur l’Emploi et le Secteur Informel – Enempsi 2012 , November 2013 , vol. 1


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► the OMNIS, as a technical body, in charge of the regulation on one hand ; and on the other hand,as a national company in charge of the contracts with the oil companies.

Legal and tax framework

Legal :► the common law of the mining sector is governed by the Mining Code of 1999, modified in 2005

and updated in 2006 and 2007. It monitors the mining companies, except those governed by thefollowing two specific legislations : the Framework Agreement, signed by the Malagasy State,represented by OMNIS, and Qit-Fer and Titane Inc, monitoring the ilmenite project of QMM, andthe Large Scale Mining Investment Law (Loi sur les Grands Investissements Miniers, LGIM) forcompanies whose investments exceed 50 billion MGA. Currently, Ambatovy is the only projectunder the LGIM. Moreover, many sectoral laws are applicable to the mining sector ;

► the upstream oil sector is ruled by a decree of 1997, as well as by oil contracts signed betweenthe OMNIS and the companies. It is currently being reviewed.

TaxThe particular, main tax regulations provided by the specific legislations designed to promoteinvestments in the mining sector are :► as part of the Framework Agreement :

o decrease of the Income Tax and the Investment Income Tax (Impôt sur le revenu desCapitaux Mobiliers, IRCM) ;

o decrease of the taxable base to the Tax on Transfers ;o 0% VAT ;o exemption of registration fees ;o low unique rate for the Tax on Insurance Contracts ;o decrease of the rate of the Building Property Tax (Impôt Foncier sur la Propriété

Bâtie, IFPB) ;o stability of the tax framework.

► as part of the LGIM :o decrease of the taxable base to the Tax on Transfers ;o the right for the refund of the VAT credit ;o decrease of the rates and an upper limit amount for the registration fees ;o decrease of the rates and an upper limit of the amount of IFPB ;o stability of the tax framework.

In the oil sector, a taxation that exempts from three other taxes is applied during the productionphase. During the exploration phase, the tax regime is that of the common law, provided by theGeneral Tax Code (Code Général des Impôts, CGI). The key measures provided by the Oil Code are:► the Direct Tax on Hydrocarbons (Impôt Direct sur les Hydrocarbures) set at the same rate as that

of the Income Tax (Impôt sur le Revenu, IR) of the common law, which exempts oil companies fromthe payment of the IR and the IRCM ;

► the exemption from the tax on dividends (Impôt sur les dividendes) ;► the taxes of common law for all the other taxes such as VAT (TVA), Wage Income Tax (IRSA) etc.The Oil Code does not provide for the stability of the tax framework.

Plans to reform the Mining and Oil Codes were announced in 2014 by the Government.

Situational analysis of the licensing procedures


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In the mining sector, the various types of licenses are delivered by the Registry Office (Bureau duCadastre Minier de Madagascar, BCMM). The issuance of licences rests, among other things, upontechnical advice, the publishing of a decision and the verification of administrative fees. The deliveryof new licences has been suspended since April 6th, 2011 and this suspension still remains to thisday.In the oil sector, the "mining rights for hydrocarbons" are granted following a tender processmanaged by the OMNIS.

Licenses recordsFor the mining sector, records are available at the Bureau du Cadastre Minier de Madagascar (BCMM).These records are available on request and provide information as to the mining squares, the requestdate, the licensing date, etc.Regarding the oil sector, such records are non-existent. However, the website of OMNINS provides —as shown by a map that has been reproduced in this report — an overview of available blocks and theones on which contracts were signed with OMNIS. The names of the parties of these contracts areavailable.

Information on the beneficial ownershipNo records of the beneficial owners2 are available in the public domain in Madagascar. For thecompanies in group A, it has been recommended but not mandatory to disclose the names of thebeneficial owners. 22 companies out of the 47 accepted to do so in the frame of the 2012 EITI report.

Disclosure of the oil contractsThe oil contract does not provide for procedures of conclusion and the publication of oil contracts.The CCP (Contrat de Partage de Production which is a Product Sharing Agreement) has aconfidentiality clause. The main information available are the presidential decree for the approval ofoil contracts and standard contracts.An overview of standard contracts, whether onshore or offshore, is available on the website of OMNIS,via the following link:http://www.omnis.mg/en/download-contracts-models.

2 Persons controling the company as a last resort.

http://www.omnis.mg/en/download-contracts-models


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Financial relationships between the government and State-ownedcompaniesOnly KRAOMA was identified as a State-owned company, meaning that the State owns the majorityof the share capital (97% of the shares). KRAOMA is a public limited company ruled by the Law oncommercial companies. In the frame of EITI, the companies have the same obligations as othercompanies in the extractive sector.

Contribution of the extractive sector to the economyThe impact of the extractive sector in the GNP is assessed by INSTAT and the General EconomyDirectorate at 2,12% in 2013. This figure is to be analysed carefully, given the fact that INSTAT reliedon the production structure of 1984, due to the absence of any recent investigation.

We noted a significant growth from 2012 to 2013 regarding the weight of the mining sector in theGDP (0.7% in 2012 to 2.12% in 2013) whereas this part is practically constant during the last tenyears (0.1% per year of contribution with a slight improvement in 2010 and 0.2% in 2011). This wasthe result of the cumulation of the launch of operation of two big companies, QMM (earlier) andAmbatovy during this period.

Regarding foreign direct investments, the extractive sector prevails, as this sector alone representsapproximately 42% of foreign investments received by Madagascar in the first trimester of 2013.During the construction phases of the QMM and Ambatovy, this proportion could represent more thanthe double of that which was observed in 2013 (86% in 2008).

Regarding tax revenues, the chart below shows that the extractive sector represents 14% of the totalrevenue of the Tax General Directorate in 2013, which appear to be double of last year’s figures. Thisis explained by the rise of Ambatovy.

14%

86%

Contribution of the extractive sector to the taxrevenues in 2013

Montant des recettes fiscales reçues par la DGI en provenance desentreprises des Groupes A, B et C

Montant des recettes fiscales totales de la DGI


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Regarding employment, for lack of more accurate information, the schedule below shows that thecompanies of group A, employing 4,600 persons in 2013, represent 0.8% of the workers affiliated tothe Caisse Nationale de Prévoyance Sociale (CNaPS) as opposed to 0.9% in 2012.

Description 2013Number of workers from Group A 4,600Number of workers affiliated at the CNaPS allsectors combined 576,048

Percentage of the workers from Group A compared tothe total of workers affiliated to the CNAPS 0.8%

As for the exported quantity, the schedule below shows the exported quantity reported by thecompanies. In 2013, the ilmenite was the first exported mining product (in value).

COMPANIES Region of origin PRODUCTS

FROM COMPANIESPRODUCEDQUANTITY

EXPORTEDQUANTITY VALUE OF EXPORTED

PRODUCTS

(in tonnes) (in tonnes) (in MGA)

GALLOIS Etablissement Atsinanana Graphite 3,832.95 4,192.85 10,382,662,339.00

HOLCIM

Vakinankaratra Poozzole 65,000.00 N/A N/A

Vakinankaratra Cipolin 164,718.00 N/A N/A

Vakinankaratra Argile 29,751.00 N/A N/A

MADAGASCAR MININGRESOURCES LTD S.A.R.L.

Betsiboka

Roches 1.50 N/A N/ASofia-

Alaotra Mangoro

Vatovavyfitovinany Sols 2.20 N/A N/A

PROCHIMAD Amoron'i Mania

Dolomie 3,730.00 N/A N/A

Calcite 200.00 N/A N/A

Kaolin 200.00 N/A N/A

PROJET AMBATOVY

Alaotra Mangoro SulphateAmmonium 65,410.00 68,570.00 29,295,987,646.85

Atsinanana Cobalt 2,083.00 2,067.00 121,458,684,432.28

Nickel 2,514.00 25,507.56 803,024,114,385.96

RED GRANITIMADAGASCAR S.A.R.L.

AtsimoAndrefana Labradorites 3,591.45 2,989.92 N/D

KRAOMA S.A. BetsibokaRocheux 59,085.00 61,000.00

45,013,034,580.00Concentré 58,100.00 49,000.00

QIT MADAGASCARMINERALS S.A.

Anosy ZirconConcentrate 31,345.00 31,345.00 43,682,262,165.09

Anosy Ilménite 530,421.00 530,421.00 167,523,336,557.73

GRANITEX S.A.R.L. Manjakandriana Granite 3,240.00 3,078.00 270,613,069.73

N/D : Not available (not provided)N/A : Not applicable to the company


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Main outcome of the reconciliation

Analysis of the results

Entities from Group A

To guarantee the understanding of the terms employed in this document, one should note that anegative discrepancy means that the State has reported more revenues than those paid by thecompanies. On the opposite, a positive discrepancy is when companies reported payments greaterthan those reported by the State.

The total amount of the financial flows in the report, represented by the total flow reported by theState, all groups included, amounts to MGA 427,68 billion, or USD 193.80 million. This amountrepresents the total amount received by the Malagasy State from extrative companies in 2013.

The table below shows that the percentage of the residual discrepancy for group A is equivalent to2.42% of the total flow received by the State :

CurrencyTotal amount paid by

the companies

Total amountreceived by theadministrations

Amount of totalresidual discrepancy

Total residualdiscrepancy

(in thousands) (in thousands) (in thousands) (in %)

MGA 434,175,403.01 423,926,956.46 10,248,446.552.42%

USD 196,734.53 192,090.73 4,643.80

a) Main flows

The flows totaling the amount received by the Administrations are mainly :

► The non-refunded VAT3 amounting to MGA 129.40 billion equivalent to USD 58.63 million,99% of which are related to the Ambatovy project;

► The unrecovered VAT4 of which the total amount is MGA 136.93 billion, equivalent to USD62.05 million or the 86% discrepancy of TULLOW Madagascar, 8% of Ambatovy Project and6% of Madagascar Oil;

► Tax on Wages income and similar (IRSA) for a total amount of MGA 42.66 billion equivalentto USD 19.33 million mainly generated by the Ambatovy project for 82% and QMM for 10% ;

► Mining Administration Fees (FAM) for a total amount of MGA 14.74 billion equivalent to USD6.68 million comprising the discrepancies from the following companies: PAM Madagascar,Madagascar Chromium Company, Mainland and Goldsand ;

► Administration fees paid to OMNIS amounting to MGA 14.43 billion equivalent to USD 6.54million mainly generated by : OPHIR ENERGY, Madagascar Oil et EXXON Mobil ;

3 The non-refunded VAT corresponds to the VAT paid to suppliers, the refund of which is claimed from the State in compliancewith the law for the companies to which it applies, but the refund of which has not yet been received by the companies withinthe time limit set by the law.

4TVA n’ayant pas fait l’objet de demande de remboursement ou de déduction mais qui fait l'objet d’un paiement. TVA inclusedans le canevas car est considérée comme un paiement indirect effectué pour le compte de l’Etat. En effet, l’Etat encaisse cetteTVA à travers la déclaration de la TVA collectée effectuée par les fournisseurs de la société.


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► Non-resident IR or TFT amounting to MGA 13.39 billion equivalent to USD 6.07 million thatwere noted for the Ambatovy Project, QMM and Holcim.

The other payments comprise flows that each represent less than 3% of the global amount of thepayment flows received by the State.

Note on the non-refunded VATIn a letter dating back to January 22nd 2015 and addressed to the Minister attached to thePresidency in charge of the Strategic Resources, the Minister of Finances and Budget has precisedthe status of many requests for VAT refund that were submitted by the extractive companies at theend of the fiscal year 2013. The letter reflects the refunds approved by the Tax Directorate (DirectionGénérale des Impôts, DGI) mainly during the first quarter of 2014, for a total amount of MGA 90.47billion, equivalent to USD 40.99 million.

b) Residual discrepancyFollowing our reconciliation work, the final residual discrepancy for group A is negative and amountsto MGA 10.25 billion equivalent to USD 4.64 million for the fiscal year 2013. This discrepancyrepresents 2.42% of the total revenue received by the State of which the per-company breakdown isprovided below :

Companies

Reported bythe Company

Reported bythe State

Residualdiscrepanc

ies

Residualdiscrepa

ncies Residualdiscrepancie

s in % (in millionMGA)

(in millionMGA)

(in millionMGA)

(inmillionUSD)

001. PROJET AMBATOVY 225,804.03, 202,332.82 23,471.21 10.64, 229.02%002. HOLCIM 20,475.06 22,962.49 -2,487.42 -1.13 -24.27%003. MADAGASCAR OIL 14,092.24 14,045.84 46.40 0.02 0.45%

004. OPHIR ENERGY - 10,687.00 -10,687.00 -4.84 -104.28%

005. QIT MADAGASCAR MINERALS S.A. 19,699.60 18,369.56 1,330.04 0.60 12.98%006. GOLD SAND S.A.R.L. 1,471.37 2,233.88 -762.51 -0.35 -7.44%007. EXXON MOBIL 2,321.71 2,321.61 0.10 0.00 0.00%008. KRAOMA S.A. 8,863.90 8,863.06 0.84 0.00 0.01%009. MAINLAND MINING LTD S.A.R.L.U 5,476.01 5,476.01 - - 0.00%010. GALLOIS Etablissement 1,707.92 1,577.97 129.94 0.06 1.27%011. NIKO RESSOURCES [ENERMAD] 1,074.03 1,074.03 - - 0.00%012. GROUPE PAM 3,300.59 3,981.75 -681.16 -0.31 -6.65%013. MADA-AUST S.A.R.L. 831.25 828.10 3.16 0.00 0.03%014. MADAGASCAR MINING RESOURCES LTDS.A.R.L. 805.01 805.42 -0.42 -0.00 0.00%

015. MADAGASCAR INTERNATIONAL TAK MININGS.A.R.L. 779.28 781.84 -2.56 -0.00 -0.02%

016. CALIBRA RESOURCES & ENGINEERSMADAGASCAR S.A.R.L.U 311.85 312.06 -0.21 -0.00 0.00%

017. NOVA RESOURCES S.A.R.L.U 868.97 634.79 234.18 0.11 2.29%018. MADAGASCAR CHROMIUM COMPANY LTDS.A.R.L.U 1,520.38 1,635.65 -115.27 -0.05 -1.12%

019. UNIVERSAL EXPLORATION MADAGASCARS.A.R.L. 646.18 567.25 78.92 0.04 0.77%

020. URAMAD S.A 504.86 504.87 -0.00 -0.00 0.00%021. STERLING ENERGY LTD 422.94 422.06 0.88 0.00 0.01%022. TULLOW MADAGASCAR 118,403.24 118,404.10 -0.86 -0.00 -0.01%023. TOLIARA SANDS S.A.R.L. 538.25 511.36 26.89 0.01 0.26%024. TANTALUM RARE EARTH (MALAGASY)S.A.R.L.U 506.96 474.73 32.23 0.01 0.31%

025. ROC OIL/SAPETRO 682.97 682.97 - - 0.00%026. MADAGASCAR CONSOLIDATED MINING S.A. 447.79 448.06 -0.27 -0.00 0.00%027. LABRADOR MADAGASCAR 402.59 391.29 11.30 0.01 0.11%


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Companies

Reported bythe Company

Reported bythe State

Residualdiscrepanc

ies

Residualdiscrepa

ncies Residualdiscrepancie

s in % (in millionMGA)

(in millionMGA)

(in millionMGA)

(inmillionUSD)

028. MINERAL PRODUCTS INTERNATIONAL GROUPS.A.R.L. 367.37 356.30 11.06 0.01 0.11%

029. AMICOH RESOURCES 558.29 484.83 73.46 0.03 0.72%030. RED GRANITI MADAGASCAR S.A.R.L. - 287.25 -287.25 -0.13 -2.80%031. TANETY LAVA S.A.R.L. 422.89 424.46 -1.57 -0.00 -0.02%032. GRANITEX S.A.R.L. 40.94 216.73 -175.79 -0.08 -1.72%033. EAX /CANDAX 651.94 651.74 0.20 0.00 0.00%034. MADAGASCAR RESSOURCES S.A.R.L. 175.00 175.08 -0.08 -0.00 0.00%TOTAL 434,175.40 423,926.96 10,248.45 4.64 100.00%

OPHIR ENERGY and RED GRANITI did not fill out and/or sign their canvas within the agreed timeframe. The information from the State shows figures amounting to MGA 10,974.25 million equivalenttoUSD 4.97 million which will be considered as residual discrepancies on the companies’ side.

The residual discrepancy by payment type is mainly explained by the following reasons:

► The non-refunded VAT generated a positive total of MGA 22.62 billion equivalent to USD10.25 million which is 99% of the information from the Ambatovy project that were not foundwithin the tax Administration;

► the customs duties and the Taxes on Petroleum Products (Taxes sur les produits pétroliers,TPP) show a positive discrepancy of MGA 1,575.88 million equivalent to USD 0.71 million infavour of the companies. These discrepancies resulted from : Projet Ambatovy, HOLCIM,QMM and the group PAM ;

► the non-resident IR or TFT showed a positive discrepancy of MGA 892.85 million equivalentto USD 0.40 million in favour of the companies, the main discrepancy of which comes fromQMM for MGA 797.41 million which is 89% of the total discrepancy;

► the net VAT generated a total negative discrepancy of 226.94 million equivalent to USD0.102 million which is 78% for OPHIR ENERGY;

► the contributions paid to the CNAPS correspond to a negative discrepancy of MGA 780.75million equivalent to USD 0.35 million that could not be reconciled with the information ofPAM SAKOA ;

► the Mining Administration Fees (Frais d’Administration Minière, FAM) show a negativediscrepancy in favour of the State for MGA 939.16 million equivalent to USD 0.43 millionexplained by :

o the payments traced at the BCMM, mainly by the companies that did not provide thecanvas;

o the fact that the data at the BCMM is not up to date regarding the new owner of themining license in the case of transfer between companies, the payments are recordedin the name of the former owner for the license that was transferred.

► The VAT on import and VAT on oil products (TVP) have generated a total negativediscrepancy of MGA 2,138.94 million equivalent to USD 0.97 million mainly for HOLCIM witha negative discrepancy of MGA 1,590.96 million equivalent to USD 0.721 million ;

► The administration fees paid to OMNIS generated a total negative discrepancy ofMGA 10,316.81 million equivalent to USD 4.67 million mainly for OPHIR ENERGY, who didnot provide a filled out canvas during the reconciliation;

c) Breakdown of flows per public entity


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The breakdown of flows per public entity is presented in the table below and shows that the DGI hasreceived the most significant flows from the extractive companies for 2013, which is 80% of them.

Name of the entityPayment flows received by the public entities

(in thousandsMGA)

(in thousandsUSD) (in %)

Direction Général des Impôts(DGI) 339,946,616.48 154,037.37 80%

BCMM 14,745,906.17 6,681.70 3%

OMNIS 16,512,212.18 7,482.05 4%

Douane 7,899,380.04 3,579.38 2%

CNAPS 6,762,767.65 3,064.36 2%

Other entities 38,060,073.94 17,245.87 9%

Total 423,926,956.46 192,090.73 100%

Entities from Group B

Name of the entity

Total amountreceived by the

State


Statein thousands MGA in thousands USD

Mining entity 734,327.68 332.74Legal persons 734,327.68 332.74

Oil company - -Total 734,327.68 332.74

As presented in the table above, the total sum of the flows reported in a unilateral disaggregatedmanner by the State amounts to MGA 0.73 billion equivalent to USD 0.33 million for group B.

Entities from Group C

Type of entityTotal amount

received by the State


Statein thousands MGA in thousands USD

Mining entity 3,017,479.02 1,367.29Legal persons 2,668,599.36 1,209.20Individuals 348,879.66 158.09

Oil company - -Total 3,017,479.02 1,367.29

As presented in the table above, the total sum of the flows reported in a unilateral and aggregatedmanner by the State amounts to MGA 3.02 billion, equivalent to USD 1.37 million million for group C.


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Other results

Donations 5

11 companies from Group A made donations during 2013. The total amount of these donations isMGA 2.40 billion equivalent to USD 1.09 million, 69% of which is cash and 31% in kind. These voluntarycontributions were mainly made for building local public infastructures in favour of the community,such as: Primary Public Schools (Ecole Primaire Publique, EPP), Secondary Schools, market places,roads, well drilling, etc. and also donations in form of education and sport support.

CompaniesAmount of voluntary contributions TotalCash donations

(in MGA)Donations in kind

(in MGA) (in MGA) (in USD)

QMM 1,553,826,600.62 87,830,630.40 1,641,657,231.02 743,871.40PROJET AMBATOVY - 402,327,868.73 402,327,868.73 182,303.71MADAGASCAR OIL 27,595,000.00 129,386,984.25 156,981,984.25 71,132.03TOLIARA SANDS 9,157,563.32 42,305,932.66 51,463,495.98 23,319.25HOLCIM - 47,125,468.23 47,125,468.23 21,353.60MADAGASCAR CONSOLIDATED MINING 15,982,940.00 20,138,800.00 36,121,740.00 16,367.56TANTALUM RARE EARTH (MALAGASY) 30,000,000.00 - 30,000,000.00 13,593.67KRAOMA - 15,892,640.00 15,892,640.00 7,201.31MAINLAND MINING LTD 12,525,000.00 294,060.00 12,819,060.00 5,808.60MADA-AUST 8,407,130.00 - 8,407,130.00 3,809.46SAPETRO 900,000.00 - 900,000.00 407.81Total 1,658,394,233.94 745,302,384.27 2,403,696,618.21 1,089,168.40

Social expenditures6

5 companies from Group A made social expenditure payments during fiscal year 2013. These socialexpenditures amount to MGA 9.83 billion equivalent to USD 4.46 million, 65% of which is in cash and35% is in kind.The social expenditures mainly comprise integrated development projects (Projets de DéveloppementIntégrés, PDI) of QMM, the rehabilitation of the National Road RN5 by Mainland et variousconstruction works.

Mining companiesAmount of voluntary contributions Total

Cash social expenditures(in MGA)

Social expendituresin kind (in MGA) (in MGA) (in USD)

MAINLAND MINING 3,497,496,936.57 - 3,497,496,936.57 1,584,793.64PROJET AMBATOVY - 3,448,411,669.06 3,448,411,669.06 1,562,552.02QMM 2,303,361,661.13 - 2,303,361,661.13 1,043,704.39EAX 399,103,553.93 - 399,103,553.93 180,842.70SAPETRO 185,518,779.32 - 185,518,779.32 84,062.68

Total 6,385,480,930.95 3,448,411,669.06 9,833,892,600.01 4,455,955.43

5 Definition of a donation according to the EITI standards: «Any cash or in-kind transfer from the mining and oil companies.The following shall not be considered as donations :- Sponsorings that are within the communication activities ;- Environmental and social requirements defined in the clear specifications by a government entity ;- Port, road, railway… infrastructures for the mining or oil operation. Even though the local population benefit from theseinfrastructures, they shall not in any case be considered as donations.By contrast, routing infrastructures made by mining companies for strictly public usage as well as social infrastructuresconstructions, free of charge, are considered as donations.»6« Significant social expenditures from companies are ones that are made compulsory by the law or by a contract signed withthe government. »


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Decentralised authorities

Flows received by the decentralised authorities (Regions and Municipalities) are mainly the Miningrebates and the Mining Administration Fees (FAM).

• Mining Rebates : HOLCIM, QMM, KRAOMA and ETS GALLOIS paid a total of MGA 2.90 billionequivalent to USD 1.31 million for the rebates related to 2013. The beneficiairies arerespectively the regions Vakinankaratra, Anosy, Betsiboka and Analanjirofo, as well as themunicipalities located in these regions.

• Mining Administration Fees : the mining companies in group A paid the respectivemunicipalities and regions a total amount of MGA 1.86 billion equivalent to USD 0.84 million.

Moreover, the schedules showing the repayment and non-repayment of the FAM by the BCMM to themunicipalities and the regions for all the mining operators in 2013 are presented in the tables below.

Administration fees for group A relevant to the fiscal year repaid by the BCMM to themunicipalities and the regions for the year 2013

Companies

Amounts receivedby the

municipalities

Amounts receivedby the regions

Total amount received

(In thousandsMGA)

(In thousandsMGA)

(In thousandsMGA)

(Inthousands

USD)PROJET AMBATOVY 38,105.45 22,228.18 60,333.63 27.34CALIBRA RESOURCES & ENGINEERSMADAGASCAR S.A.R.L.U 32,999.28 19,249.58 52,248.86 23.68

GALLOIS Etablissement 17,059.68 9,951.48 27,011.16 12.24GOLD SAND S.A.R.L. 168,315.16 98,183.84 266,499.00 120.76KRAOMA S.A. 35,608.70 20,771.74 56,380.45 25.55LABRADOR MADAGASCAR - 3,446.40 2,010.40 5,456.80 2.47MADA-AUST S.A.R.L. 81,451.36 47,513.29 128,964.65 58.44MADAGASCAR CHROMIUM COMPANY LTDS.A.R.L.U 146,373.77 85,384.70 231,758.47 105.01

MADAGASCAR CONSOLIDATED MINING S.A. 38,545.52 22,484.89 61,030.41 27.65MADAGASCAR INTERNATIONAL TAK MININGS.A.R.L. 86,283.43 50,332.00 136,615.43 61.90

MADAGASCAR MINING RESOURCES LTDS.A.R.L. 80,434.01 46,919.84 127,353.85 57.71

MADAGASCAR RESSOURCES S.A.R.L. 20,678.40 12,062.40 32,740.80 14.84MAINLAND MINING LTD S.A.R.L.U 164,284.61 95,832.69 260,117.30 117.86MINERAL PRODUCTS INTERNATIONAL GROUPS.A.R.L. 38,211.70 22,290.16 60,501.85 27.41

NOVA RESOURCES S.A.R.L.U 63,766.98 37,197.41 100,964.39 45.75GROUPE PAM 22,060.80 12,868.80 34,929.60 15.83QIT MADAGASCAR MINERALS S.A. 20,175.05 11,768.78 31,943.83 14.47RED GRANITI MADAGASCAR S.A.R.L. 3,963.26 2,311.90 6,275.17 2.84TANETY LAVA S.A.R.L. 22,716.07 13,251.04 35,967.11 16.30TANTALUM RARE EARTH (MALAGASY)S.A.R.L.U 15,271.86 8,908.59 24,180.45 10.96

TOLIARA SANDS S.A.R.L. 7,819.20 4,561.20 12,380.40 5.61UNIVERSAL EXPLORATION MADAGASCARS.A.R.L. 20,743.02 12,100.10 32,843.12 14.88

URAMAD S.A 48,183.67 28,107.14 76,290.82 34.57TOTAL 1,176,497.38 686,290.14 1,862,787.52 844.07

(*)The nominative list of the beneficiary municipalities is presented in the Annexes.


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Statement of the administration fees subject to BCMM’s pending repayment tothe municipalities for the year 2013

Region/municipalityFAM not paid to the municipalities

in MGA in USD

En Mer 35,349,673.89 16,017.72ALAOTRA MANGORO 15,025,800.00 6,808.52AMORON'I MANIA 5,353,248.00 2,425.68ANALAMANGA 32,328.00 14.65ANALANJIROFO 6,022,848.00 2,729.09ANDROY 3,096,687.56 1,403.18ANOSY 48,039,543.11 21,767.79ATSINANANA 32,459,844.00 14,708.28BETSIBOKA 32,328.00 14.65BOENI 11,226,984.00 5,087.20BONGOLAVA 140,088.00 63.48DIANA 753,900.00 341.61IHOROMBE 4,913,856.00 2,226.58ITASY 1,082,988.00 490.73MELAKY 6,203,458.55 2,810.93MENABE 4,813,210.91 2,180.97SAVA 2,197,164.00 995.58SOFIA 19,844,004.00 8,991.76VAKINANKARATRA 14,049,300.00 6,366.05TOTAL 210,637,254.01 95,444.42

The Minings Administration fees yet to be repaid are mainly for the share of the municipalities thatdo not have a bank account dedicated to the municipality registered with BCMM, and for which thedetails are still pending.

Participatory budgetIn compliance with the provisions mentioned in sections 3.7 and 3.8 of the EITI standards 2013, theuse of mining revenues in municipalities and regions applying the participatory budget has beenhighlighted in the frame of the reconciliation.

The participatory budget is a process and an instrument giving the population the possibility todetermine the use of public resources (as a part of or as the overall investement budget for the localcommunity).

The table below presents the total resources and the use for each local community, the details ofwhich are categorised as investment and operating resources, but also in investment and operatinguse. The amounts which are not provided are the uses non-reported by the municipalities.


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Miningcompany

Municipality / RégionResources Uses

in MGA in USD in MGA in USD

AMBATOVYMunicipality ofAmbohibary -MORAMANGA

11,000,000.00 4,984.34 11,000,004.00 4 984,35

HOLCIM Municipality of Ibity 62,525,896.00 28,331.87 Not provided Notprovided

HOLCIM Municipality of Tritriva 23,180,072.00 10,503.41 Not provided Notprovided

HOLCIMMunicipality of

Andranomanelatra13,101,534.38 5,936.60

Not provided Notprovided

KRAOMAMunicipality ofAntsiafabositra

27,836,406.13 12,613.29 27,325,521.56 12 381,80

KRAOMAMunicipality ofMaevatanana II

12,845,346.00 5,820.51 12,800,000.00 5 799,96

KRAOMAMunicipality ofAntanimbary

10,728,575.73 4,861.36 10,728,575.73 4 861,36

QMMMunicipality of AmpasyNahampoana

937,525,556.00 424,813.68 937,525,556.00 424 813,68

QMMMunicipality ofMandromodromotra

627,877,907.10 284,505.44 627,337,149.65 284 260,41

Total 1,726,621,293,34 782,370.51 1,626,716,806.94 737,101.56


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Recommendations

Follow-up of previous recommendations

RECEPIENT RECOMMENDATIONS

EITI

- Reinforce the sensitization of the mining and oil companies, and of thepublic Administration, to guarantee the integration of the EITI processand to ease data collection.

- Exclude companies that have undergone dissolution during thereconciliation period.

Companies andPublicadministrations ingeneral

- Implement a system at the Tax Administration and company levels thatwill enable to distinguish the revenues by sector of the same company

- Design a procedure for the follow-up of the regimes applicable to miningcompanies.

Mining and upstreamoil companies

- Strengthen the reliability of the data in the canvas: tracking of the fillingguide, support from a competent person during the preparationworkshop, availability of all supporting document, presence of adedicated contact person during the reviews within the companies, etc.

- Certify the canvas by an independent auditor.

Treasury, Ministry ofDecentralisation,Regions andMunicipalities

- Implement within the Treasury a system for identifying the payingcompanies when redistributing the payments to the decentralisedauthorities.

- Provide the decentralised authorities with a system that will enable themto follow-up on the revenues.

CustomsDirectorateand SRI 7

- Update the database of the information on the companies and themapping of the old and new NIFs8.

BCMM9, Ministry ofDecentralisation,Regions andMunicipalities

- Within BCMM, inform the decentralised authorities on the details of therepaid FAM10and link payments to real owners after the disposal or thetransfer of the mining titles.

- Within the decentralised authorities, perform a follow-up of thepayments from the mining companies in the sector and create a bankaccount.

Tax administration- Provide exhaustive information related to the payments of taxes, duties

and other fees by the companies such as : paying company, period,principal tax amount, fines and penalties, etc.

EDBM11 and theMinistry of theInterior

- Centralise the database for the delivery of visa and resident card at theEDBM or the Ministry of the Interior with all the information about theinquirer or the employer to facilitate the tracking of information.

7SRI : Service de Renseignements des Immatriculations (Registration Information Service)8 NIF : Numéro d’Identification Fiscale (Tax Identification Number)9 BCMM : Bureau des Cadastres Miniers de Madagascar (Mining Registry Office)10 FAM : Frais d’Administration Minière (Mining Administration Fees)11 EDBM : Economic Development Board of Madagascar


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New recommendations following the reconciliation

RECIPIENT RECOMMENDATIONS

The Administrationand its divisions

- Implement a centralised and updated database of all the existingcompanies and an electronically-accessible archive of the data.

Treasury, Ministry ofthe Decentralisation,Regions andMunicipalities

- Provide in each BTR12all information related to the receipt of payments.

Customs Directorate- Set up a database that will provide the coordinates of the Customs

broker and of the final beneficiary.INSTAT, Ministry ofEconomy, Ministry incharge of theextractive sector

- Perform an annual study of the actual contribution of the mining andupstream oil sectors after an update of the structure.

12 BTR : Bons de Transfert de Recettes (Revenues Transfer Coupons)


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Summary

Presentation of the assignment ................................................................................................. 1

Context and purpose of the report.............................................................................. 1Scope and approach ................................................................................................... 1Materiality-defined scope ........................................................................................... 2Update of the Materiality rate .................................................................................... 2

Background information ............................................................................................................ 2

Overview of the extractive sector .............................................................................. 2Governance of the extractive sector........................................................................... 3Legal and tax framework ............................................................................................ 4Situational analysis of the licensing procedures .......................................................... 4Licenses records ........................................................................................................ 5Information on the beneficial ownership ..................................................................... 5Disclosure of the oil contracts .................................................................................... 5Financial relationships between the government and State-owned companies ............. 6Contribution of the extractive sector to the economy ................................................. 6

Main outcome of the reconciliation ............................................................................................. 8

Analysis of the results ............................................................................................... 8Entities from Group A ........................................................................................................ 8

Entities from Group B ...................................................................................................... 11

Entities from Group C ...................................................................................................... 11

Other results .......................................................................................................................... 12

Donations ................................................................................................................12Social expenditures ..................................................................................................12Participatory budget ................................................................................................14Recommendations ...................................................................................................16

1 Presentation of the assignment ..................................................................................... 27

1.1 Context and purpose of the report .................................................................271.1.1 EITI worldwide and in Madagascar ......................................................................... 27

1.1.2 Purpose of the EITI report ..................................................................................... 29

1.2 Context of work .............................................................................................301.2.1 Scope ................................................................................................................. 30

a) Standards related to the Reconciler’s work ................................................................ 30

b) Standards related to the extractive companies’ canvas ............................................... 30

c) Standards related to the administration’s canvas ....................................................... 30

1.2.2 Reconciler’s procedures ....................................................................................... 30

1.2.3 Methodological approach ...................................................................................... 32

1.2.4 Limitations of the works ....................................................................................... 33

1.2.5 Coverage ............................................................................................................ 33

1.2.6 Fiscal year ........................................................................................................... 34

1.2.7 Type of flow ........................................................................................................ 34


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1.2.8 Entity type .......................................................................................................... 34

1.2.9 Thresholds .......................................................................................................... 34

1.2.10 Update of the coverage rate .............................................................................. 35

1.2.11 Discrepancies and adjustments .......................................................................... 36

1.2.12 Exchange rate .................................................................................................. 36

1.2.13 Companies included in the reconciliation ............................................................ 36

2 Background information ............................................................................................... 39

2.1 Overview on the formal extractive sector .......................................................392.1.1 The mining sector ................................................................................................ 39

2.1.2 The upstream oil sector ........................................................................................ 40

2.2 Overview of the small mines and informal mining activities .............................422.2.1 Definition and weight of the small-scale mining ....................................................... 42

2.2.2 Results of the studies on the informal extractive sector ........................................... 42

2.2.3 The case of gold ................................................................................................... 43

2.3 Governance of the sector: key actors .............................................................452.3.1 The mining sector ................................................................................................ 45


2.4 Legal framework ............................................................................................452.4.1 The mining sector ................................................................................................ 45


2.5 Tax framework ...............................................................................................472.5.1 Comparative table ................................................................................................ 47

2.5.2 Specificities for State taxes and local taxes ............................................................ 48

2.6 Royalties and rebates ....................................................................................492.7 Administration and training fees ....................................................................502.8 Current state of the licensing procedures .......................................................52

2.8.1 Mining sector ....................................................................................................... 52

2.8.2 Upstream oil sector .............................................................................................. 54

2.9 Registry of licences and permits ....................................................................552.9.1 Reiterating the standard ....................................................................................... 55

2.9.2 Situation in Madagascar ....................................................................................... 55

2.10 Information on the beneficial ownership of the extractive companies ..............552.10.1 Reiterating the standard ................................................................................... 55

2.10.2 Situation in Madagascar .................................................................................... 55

2.11 Disclosure of oil contracts ..............................................................................592.11.1 Reiterating the standard ................................................................................... 59


2.12 Financial relationships between the government and State-owned companies .602.12.1 Reiterating the standard ................................................................................... 61


2.13 Contribution of the extractive sector to the economy .....................................612.13.1 Contribution to the GDP .................................................................................... 61


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2.13.2 Contribution to foreign direct investments .......................................................... 62

2.13.3 Contribution of the total tax revenues ................................................................ 63

2.13.4 Contribution in terms of employment ................................................................. 64

2.14 Exported quantities .......................................................................................643 Results of the reconciliation .......................................................................................... 66

3.1 Total flows and total residual discrepancy ......................................................663.2 Entities in Group A .........................................................................................66

3.2.1 Schedule of the payment flows per company, with amounts paid, amounts received anddiscrepancies .................................................................................................................. 66

3.2.2 Comments ........................................................................................................... 84

3.3 Entities from Group B ....................................................................................903.3.1 Schedule of the payment flows per company, within the public entities in thousands MGA

90

3.3.2 Comments ........................................................................................................... 91

3.4 Entities of Group C .........................................................................................923.4.1 Schedule of the payment flows per company, at the public entities in thousands MGA 92

3.4.2 Comments ........................................................................................................... 93

4 Other results ............................................................................................................... 94

4.1 Donations-related results ...............................................................................944.1.1 QIT MADAGASCAR MINERALS S.A. ........................................................................ 94

4.1.2 AMBATOVY PROJECT .......................................................................................... 94

4.1.3 MADAGASCAR OIL ............................................................................................... 96

4.1.4 TOLIARA SANDS .................................................................................................. 97

4.1.5 HOLCIM............................................................................................................... 97

4.1.6 MADAGASCAR CONSOLIDATED MINING ................................................................. 97

4.1.7 TANTALUM RARE EARTH (MALAGASY) ................................................................. 98

4.1.8 KRAOMA ............................................................................................................. 98

4.1.9 MAINLAND MINING LTD ........................................................................................ 99

4.1.10 MADA-AUST..................................................................................................... 99

4.1.11 SAPETRO......................................................................................................... 99

4.2 Results related to the social expenditures ....................................................1004.2.1 MAINLAND MINING............................................................................................. 100

4.2.2 AMBATOVY PROJECT ........................................................................................ 100

4.2.3 QIT MADAGASCAR MINERALS S.A. ...................................................................... 101

4.2.4 EAX .................................................................................................................. 103

4.2.5 SAPETRO .......................................................................................................... 103

4.3 Results with the decentralised authorities ....................................................1044.3.1 Mining rebates ................................................................................................... 104

4.3.2 Mining Administration fees ................................................................................. 106

4.3.3 Property taxes on built property (IFPB) ................................................................ 108

4.3.4 Property tax on land (IFT) ................................................................................... 109

4.3.5 Use of the funds received by the authorities that apply the participatory bydget...... 109


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5 Observations et recommendations .............................................................................. 113

5.1 Follow-up of previous recommendations .......................................................1135.1.1 Recommendations for EITI .................................................................................. 113

5.1.2 General recommendations (companies and administrations) .................................. 114

5.1.3 Recommendations for the mining and upstream oil companies concerned by thereconciliation ................................................................................................................ 115

5.1.4 Recommendations for the administrations and its subdivisions .............................. 117

5.1.5 Recommendations for the Department of Customs and Intelligence Service ofRegistrations (SRI) ........................................................................................................ 119

5.1.6 Recommendations for the BCMM, Ministry of Decentralisation, regions and municipalities120

5.1.7 Recommendations for the Tax Administration ...................................................... 121

5.1.8 Recommendations for the EDBM and the Ministry of the Interior ............................ 122

5.2 General recommendations following the reconciliation..................................1225.2.1 Recommendations for the administration and its subdivisions ................................ 122

5.2.2 For the Treasury, the Ministry of Decentralisation, the Regions and the Municipalities123

5.2.3 For the customs directorate ................................................................................ 124

5.2.4 For the INSTAT, the Ministry of Economy, the Ministry in charge of the extractive sector124

6 Annexes .................................................................................................................... 125


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EITI Reconciliation reportFiscal Year 2013

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List of abbreviationsACRONYM MEANING

Public entities:ANDEA Autorité Nationale de l’Eau et de l’AssainissementADEMA Aéroport de MadagascarBCMM Bureau du Cadastre Minier de MadagascarCnaps Caisse Nationale pour la Prévoyance SocialeDGE Direction des Grandes EntreprisesDGI Direction Générale des ImpôtsDIR Direction Interrégionale des MinesDRI Direction Régionale des ImpôtsEDBM Economic Development Board of MadagascarEITI Extractive Industries Transparency InitiativeENEMPSI Enquête Nationale sur l’Emploi et le Secteur InformelITIE Initiative de la Transparence des Industries ExtractivesOMERT Office Malagasy d'Etudes et de Régulation des TélécommunicationsOMNIS Office des Mines Nationales et des Industries StratégiquesONE Office National pour l’EnvironnementOSIE Organisation Sanitaire Inter-EntrepriseSONAPAR Société Nationale de ParticipationSPAT Société du port à gestion autonome de ToamasinaSRE Service Régional des EntreprisesSMMC Société de Manutention de Marchandises Conventionnelles

Mining companies :AMSA Ambatovy Minerals Société AnonymeCOMINA Compagnie Minière d’AndriamenaDMSA Dynatec Madagascar Société AnonymeKRAOMA Kraomita MalagasyMOIL Madagascar OilMCM Madagascar Consolidated MiningQMM Qit Madagascar MineralsWISCO WUHAN Iron and Steel Co GuanxinPAM Pan African Mining

Oil companies :EMEPML ExxonMobil Exploration and Production Madagascar LimitedEMEPMML ExxonMobil Exploration and Production Madagascar Majunga LimitedEMEPNML ExxonMobil Exploration and Production Northern Madagascar LimitedSAPETRO South Atlantic Petroleum BP SASEAX East African Exploration Madagascar

Taxes :AERP Autorisation Exclusive de Réservation de PérimètreDA Droit d'acciseDD Droit de douanesFAM Frais d'administration minièreHTVA Hors TVAIBS Impôts sur les bénéfices des sociétésIFPB Impôts fonciers sur la propriété bâtie


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ACRONYM MEANINGIFT Impôts fonciers sur les terrainsIR Impôts sur les revenusIRCM Impôts sur les revenus des capitaux mobiliersIRSA Impôts sur les revenus salariaux et assimilésIPVI Impôts sur les plus-values immobilièresREU Redevance sur les eaux uséesTAFB Taxe annexe à l'IFPBTFT Taxe forfaitaire sur le transfertTP Taxe professionnelleTPF Taxe de publicité foncièreTVA Taxe sur la valeur ajoutéeTVST Taxe sur les véhicules de tourisme des entreprisesENR Entreprises non résidentes

Texts and Laws:LGIM Loi sur les Grands Investissements Miniers

Others:AC Avis de créditAD Avis de débitAMIT Association Médicale Inter-Entreprises de TananariveCAD Commissionnaire agrée en douaneCNUCED Conférence des Nations Unies pour le Commerce et le Développement

Corp. CorporationCPP Contrat de Partage de productionCTD Collectivités territoriales décentraliséesDAU Déclaration administrative uniqueISRS International Standards on Related ServicesKm KilomètreLtd LimitedMECIE Mise en Compatibilité des Investissements avec l’EnvironnementMGA Malagasy AriaryNIF Numéro d'identité fiscaleOMSI Organisation Médico-Sociale Inter-professionnelleOV Ordre de VirementPDI Projet de Développement IntégréPV Procès-VerbalS.A Société AnonymeSARLU Société A Responsabilité Limitée UnipersonnelleSMIMO Service Médical Inter-Entreprises MoramangaSE Secrétaire ExécutifUSD Dollar des Etats-Unis d'Amérique


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1 Presentation of the assignment

1.1 Context and purpose of the report

1.1.1 EITI worldwide and in Madagascar

1.1.1.1 EITI worldwide

EITI, or Extractive Industries Transparency Initiative, has been officially founded in London in 2003.This initiative was the result of a coalition of governments, companies, civil society organisations,investors and international organizations. It establishes a standard enabling the companies of theextractive industry to publish the payments they made to the State, and for the governments todisclose their revenues. It aims to reinforce the governance by improving transparency andaccountability in the extractive sector. It is financed by a multi-donor fund in place since 2004, towhich many governments (British, German, Dutch, Norwegian, and French) contribute and it ismanaged by the World Bank.The diversity of this coalition is represented in the Board of Directors. The latter is assisted by aGeneral Secretary who materialises his political decisions and coordinates the international effortsaiming to implement EITI.For a country to take part in the EITI, two steps are required : first, acquiring the status of candidatecountry, followed by the recognition of compliance to EITI standards. These steps are both undermembership conditions and principles that are to be respected by each country wishing to take partin the initiative.The integration within EITI generally brings many advantages to the member country : governancecapacity development, improvement of the international credibility and the investment climate,demonstrated willingness to fight against corruption, and a lasting commitment to good governance.

EITI International has adopted and published a new standard, edition 2013, at the International EITIConference held in Sydney in May 2013. Applying this norm in its entirety is compulsory starting from2014.

1.1.1.2 EITI in Madagascar

Madagascar expressed the desire to take part in the EITI process by meeting the membershipconditions and principles. For this purpose, Madagascar was accepted as an EITI candidate country in2008. A first communication and dissemination of information on the payments was made. AMultiparty National Group was established, consisting of members from all extractive regions(Regional Committees), and the Central Region.The group and the board are tripartite, withrepresentatives of the civil society, the Administration and the extractive companies. The NationalCommittee represents the Board of Directors of the Multiparty National Group.

In October 2011, the Board of Directors suspended Madagascar from its status of candidate country,due to a lack of international recognition of the government. The suspension prevailed until thenational situation was to be resolved. However, the Council trusted the Multiparty Group to go onimplementing EITI and produce a reconciliation report according to the new standards. To this end,the National Committee of EITI Madagascar ordered a reconciliation report of the financial flowsbetween the State and the key taxpayers in the extractive industry for the fiscal year 2012. The newreport, prepared by Ernst & Young in 2012, was presented to the Board of Directors, who after seeing


EY | 28

all these efforts, decided to extend the suspension of Madagascar instead of excluding the country.This extension enabled Madagascar to be among the countries implementing the EITI.

The Board of Directors of EITI decided, on June 6th 2014, to lift the suspension of Madagascar and toreestablish its status of Candidate country. The Council noted the commitment of the new Malagasygovernment to implement the EITI standard. They were glad that the required structures for anefficient implementation of the EITI was in place and could be sustained. The reintegration ofMadagascar as a Candidate country was granted under certain conditions. In compliance with the EITIstandard, Madagascar must publish each year EITI reports compliant to the requirements of EITI soas to keep its status of Candidate country.

The National Committee has decided to order 2 reports for the reconciliation of 2014 for the fiscalyear 2012 and 2013, prepared by Ernst & Young.For the current report, the new requirements outlined by EITI 201313, of which a summarised table ispresented below, are applicable:

N° Requirements Application1 EITI requires an efficient follow-up by the multiparty group (National Committee EITI) Compulsory

2EITI requires a regular and timely publication of the data: the EITI reports must include thedata that are not of the two previous fiscal years.

Compulsory

3

EITI requires that the EITI reports also include contextual information about the extractiveindustries :- summary of the legal and tax regime Compulsory- an overview of the extractive industry in the country Compulsory- the contribution of the extractive industries in the economy Compulsory- the information on production in quantity and in value Compulsory- the form of participation of the State in the extractive industries Compulsory- the allocation of the revenue from the extractive industries Compulsory- the management of the revenue from the extractive sector Compulsory- the licences and permits registry Compulsory- the licensing procedure for the mining licences Compulsory- the beneficial owners of the extractive companies Suggested- the oil contracts Suggested

4

EITI requires the publication of a reconciliation report that outlines, in an entire andexhaustive manner, all the significant payments received by the State from the extractivesector :- complete definition of the taxes, and other revenues that should be included in the reportdefinition

Compulsory

- attributions of infrastructures or barter trade arrangements (if applicable) Compulsory- social expenditures (according to the social commitment required from the company) Compulsory- transfer of funds between State-owned companies and other State departments Compulsory- subnational payments and transfers Compulsory

5EITI requires a methodology and a process of reliable statement and verification, in linewith the international standards, when the independent reconciler prepares the report.

Compulsory

6EITI requires that the EITI reports be reader-friendly, promoted, and useful to publicdiscussion.

Compulsory

7EITI requires of the Multiparty Groupe (National Committee) to adopt measures in order toact in line with the lessons learnt and assess the results and the impact of theimplementation of EITI.

Compulsory

13Source : eiti-madagascar.org


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1.1.2 Purpose of the EITI report

The Terms of Reference describe the purpose of the assignment as performing reconciliation of thefinancial flows between the State and the main extractive industries (mining and upstream oilcompanies) in Madagascar for the fiscal year 2013.In compliance with the terms of reference, the services requested from the Reconciler include specificservices, which are :

Specific services required from the Reconcileras per the terms of reference

► Verify if the assumptions of the materiality process of 2011 arecompatible with the realities of 2013 ;

► Collect and compile information from the selected companies and fromthe related administration offices;

► Perform the reconciliation of the figures reported by the extractiveindustries and by the State;

► Analyse the differences;► Compare the information related to the transactions in the Regions and

the Municipalities beneficiaries and those reported by the taxpayingcompanies, and explain the differences ;

► Provide in the report the current state of the licensing procedures of2013;

► Give the current state of the mining and upstream oil contracts and/orlicences available in the public field, in Madagascar ;

► Assess the contribution of the extractive sector in 2012 compared to theoverall economy for the same period by referring to the GDP. Thiscomparison will also be tax-wise;

► Give an overview of the contribution of the extractive sector to the overalltax revenues of the country;

► Disclose the exported production per product and for each companyduring 2012 and also per region if applicable;

► Provide specific information about the State-owned companies or thosewhere the State owns shares, as well as information related to theownership of the extractive companies;

► Provide a summary of the donations to public entities from the miningand oil companies;

► Organise consulting workshops of the National Committee ;► Publish and disseminate the report and the information;► Prepare extracts of the reports for local, regional, national and

international publishing purposes;► Translate the EITI report into English.


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1.2 Context of work

1.2.1 Scope

1.2.1.1 Verification standards

a) Standards related to the Reconciler’s workWe conducted our works based on the International Standard on Related Services: ISRS 4400 relatedto the « Engagements to perform agreed-upon procedures regarding financial information » and thestandard ISRS 4410 related to « Compilation Engagements ».In accordance with these standards, ourintervention does not constitute an audit, nor a limited review of revenues from the mining andupstream oil sectors. Auditing and certifying the transmitted data do not fall within the scope of ourwork. Likewise, our intervention was not designed to detect errors, fraud or irregularities. As theauditor provides only a report on the findings based on the agreed-upon procedures, he does notexpress any level of insurance. The recipients of the report will themselves assess the procedures andthe findings of the auditor, and draw their own conclusions from the auditor’s work.

b) Standards related to the extractive companies’ canvasCollecting a certification of the auditors of the companies involved in the reconciliation is included inthe scope of our work. This document should enable to complete the work on the basis of reliabledata. However, without the certification of canvas, reliability procedures were undertaken by theReconciler, including the control of supporting documents.Regarding the reconciliation for the fiscal year 2013, 15 companies out of 34 receiving thereconciliation have provided the certification from their auditors and 13 were not audited. Furtherdetails are provided in the annexes.The companies are bound to submit their Financial Statements to the Tax Administration. However,the auditor’s certification on the accounts is not compulsory for certain types of companies asprovided by the current legislation in Madagascar.

c) Standards related to the administration’s canvas

Regarding the certification of public accounts, a study by Ernst & Young in 2012 showed that aprocess for independent certification of the administration's canvas according to internationalstandards was yet to be designed. Reliability procedures were undertaken by the Reconciler, includingthe control of supporting documents.

1.2.2 Reconciler’s procedures

It is the Reconciler’s responsibility to:► collect and compile the data received from mining and upstream oil companies and from

administrations, based on the canvas and/or statements given to him;► Check the consistency of the financial flows completed by these entities with the adopted

repository form, “the canvas” of reporting;► Check the reliability of data contained in these canvases and/or statements with the analysis of

the procedures of their registration and the supporting documents (returns, payment vouchers,etc) ;

► Perform a reconciliation of the compiled data ;


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► Perform an analysis of information discrepancies, provide an explanation on the discrepanciesand if applicable, make appropriate recommendations based on weaknesses noted and inreference to good practices in other countries to address them.

It should be noted that our data collection works are not limited to the receipt of the canvas andits annexes.To overcome the lack of certification of accounts of some companies and theadministration, work has been carried out to improve the reliability of the data collected:

• An understanding of the system of financial flows: for each financial flow (taxes, duties, fees,…)listed on the canvas, we reconstructed the flow of funds paid by the company, through thereceiving entities (primary bank, treasury…) to the final beneficiary for the monitoring oftraceability of the revenues collected by the State. A diagram showing the most significantfinancial flows is provided in the annexes ;

• A verification of supporting documents : concerning the numerical data on the canvas and itsannexes, we have tested their reliability (accuracy of amounts, correct allocation period, non-existence of duplicates or omission, etc.) by reviewing a sample or all of the supportingdocuments (return, receipt of payment or voucher, bank debit notice, etc.) for the significantpayment flows of each reconciled company following the verification threshold predefined at thepoint 1.2.9.1 ;

• An analysis of the recording procedures of financial flows in the canvas and its annexes: wereviewed the correct classification of financial flows by their nature while ensuring the objectiveof comparability and consolidation of the data from all concerned entities (company, State andits divisions). An arithmetic verification of the total amount put in the canvas compared to thedetails in the canvas was made as well as a control of the consistency of the information recordedin the annexes with the supporting documents ;

• Payments confirmation from entities receiving the funds: payments made to public entitiessuch as Large Companies Directorate, Customs, Directorate of Mines, Regions and somemunicipalities, etc. are directly paid to the Treasury’s account, that is their manager. Each entityhas proof of payment from the extractive companies (transfer order, copies of checks, etc.) butonly the Treasury can attest to the effectiveness of the payment. We have collected thereferences of the Revenues Transfer Voucher (Bordereau de Transfert des Recettes, BTR) andthe credit notice from each entity and then returned them to the Treasury for paymentconfirmation. The funds of entities such as the BCMM, OMNIS, ANDEA, ONE, and OMERT are heldat primary banks.

• Data reconciliation and analysis of the discrepancies: the data collected from the extractivecompanies and the State have been reconciled and showed discrepancies. Each stakeholder hasbeen asked to explain these discrepancies. Corrections to these discrepancies were made,justified by supporting documents and accepted by both parties. The remaining discrepanciesare related to information that was not tracked by the other stakeholder, or of which we did notget any explanation.

In particular, it is asked of the auditor to take into account, in addition to financial flows, all donationsand social expenditures from extractive companies for the State and its subdivisions on one hand,and to highlight financial information concerning the regions and municipalities on the other hand.We must submit, in a consolidated then disaggregated form by company, for each type of consideredEITI income, the reported income flows paid by mining companies, as well as the reported incomeflows received by the State.


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Details of the methodological approach used to execute the engagement are presented in thefollowing section « Methodological approach» of the Reconciler.

1.2.3 Methodological approach

In accordance with the terms of reference, the methodological approach for the reconciliationengagement is presented in the diagram below:

Phase 1: Preliminary analysis1.1 Preliminary review of the contextual information collection strategy

1.2 Determination of the payment field and elaboration of the reconciliation canvas1.3 Materiality process: determination of the companies selected for the reconciliation

1.4 Analysis of the credibility of the data1.5 Validation of the National Committee

Deliverables: Reporting canvas (tax and non-tax part) / Initial report

Phase 2: Collection of the data to be reconciled2.1 Kickoff meeting with the stakeholders for launching the engagement

2.2 Data collection from the extractive companies2.3 Data collection from the State

Phase 3: Initial reconciliation3.1 Reconciliation of the data received

3.2 Collection and analysis of the data regarding the contextual information

Deliverable: Report for the initial reconciliation

Phase 4: Investigating discrepancies and drafting the report4.1 Collection of the explanations of the lack of information4.2 Evaluation and follow-up of previous recommendations

4.3 Situation of the licensing process4.4 Preparation of the draft report

4.5 Presentation of the draft report to the National Committee

Deliverable: Draft report

Phase 5: Final report5.1 Organisation of a consultation workshop

5.2 Publication of the report and information dissemination5.3 Elaboration of excerpts of the report for local, regional, and national publishing purposes

5.4 Approval and translation of the report and excerpts from the report

Deliverables: Final report and excerpts from the report

Comments regarding the methodological approach:► Details of the above methodological approach are presented in the annexes.► Regarding the materiality process:

In accordance with the Terms of reference, the definition of the scope of reconciliation consistsof a prior exhaustive inventory of the extractive companies having paid above 5,000 USD to theBCMM and the OMNIS during the fiscal year 2012. From a list of extractive companies in the


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scope of reconciliation, the data collection has been performed per entity according to the TaxIndentification Number (NIF) and the Statistical Number (STAT) of each entity. Note that the NIFand the STAT enable the public entities such as the General Directorate of Taxes and the Customsto identify a tax payer at their level and also the related payments.

1.2.4 Limitations of the works

Our data collection was limited due to barriers we faced, which were :

• The Tax Identification Numbers (NIF) of 9 natural persons and 3 legal persons were not foundwithin the Tax Administration nor with other data sources from the State (Research andInvestigation Service of the Tax General Directorate, Customs Directorate…) during themateriality process;

• The unavailability of some data, whether at the company or State level (supporting documentsof returns, of payments,…);

• The absence of a digitalised database, for some Directorates and divisions of the State,hinders them from ensuring the completeness of the data received on the payments made byextractive industries;

• the existence of defaulting companies, that did not receive the reconciliation, which led tounreconciled discrepancies;

• the reshuffle of the staff within the Administration following the change of the governementhas resulted to blockages and delays in the data collection.

Moreover, our intervention consists only of the collection, the reconciliation of the data and analysisof the discrepancies. We are not supposed to express our opinion on the quality of the informationand of estimations, or perform investigations in case of fraud suspicion.

However, inspite of these limitations, we estimate having performed satisfactory and correctreconciliation of the data.

1.2.5 Coverage

In accordance with the Terms of reference, the reconciliation will cover the significant payments flowfrom the extractive industries in the mining and upstream oil sectors.


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1.2.6 Fiscal year

The fiscal year concerned by the reconciliation is 2013. Thus, it concerns the payments made by theextractive industries to the State related to the fiscal year 2013, regardless of when they were paid.We note the following exceptions:

· for the payment of penalties and tax ajustments, the date of payment will be considered overthe fiscal years to which they are related to;

· payments made outside of the date of the reconciliation engagement but related to the fiscalyear 2013 are not taken into account in this report.

1.2.7 Type of flow

The flows considered by the National Committee that fall within the scope of the reconciliation areclassified in five categories, as cited below:

► State taxes► Segment revenues► Other payments► Withholding taxes► voluntary contributions in kind and in cash

The details per flow type are presented in the annexes.

1.2.8 Entity typeIn accordance with the Terms of reference, the entities concerned by the EITI report are the extractiveindustries in the mining and upstream oil sector.However, the significant payment flows recorded in the name of the individuals, but whose mininglicenses are actually the property of companies included in the reconciliation and whose paymentsare exercised by the companies are taken into account.At the same time, natural persons responsible for significant payment flows are included in thecoverage threshold for the reconciliation.

1.2.9 Thresholds

1.2.9.1 Verification threshold of the financial flows

We have performed the verification of the reliability of the data and information in the reportingcanvas on the basis of, at least, the following audit thresholds:

► A materiality threshold set at 1% of the total value of the annual amounts paid for eachmining or upstream oil company. A materiality threshold is a limit beyond which potential errors,misstatement or omissions are considered as problematic. It is the amount above which thejudgement of an informed reader could be altered regarding the statements of the revenues.► A tolerable error of 50% of the materiality threshold. The tolerable error threshold is themaximum error in a selected population that the auditor is willing to accept when concluding thatthe sampling results reached the audit objective. Thus, the amount of taxes, fees, and chargesexceeding 50% of the materiality threshold were subject to a verification of the supportingdocuments for the selected samples (returns and payment receipts) up to 50% of the supportingdocuments.► A nominal error threshold of 5% of the materiality threshold.


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1.2.9.2 Materiality threshold and coverage rate validated by the National Committee

On the basis of the materiality process performed by EY, the National Committee decided to keep theextent of the EITI report of 2013 to 34 companies including two natural persons having madesignificant payments.In conclusion, considering the 34 companies and two natural persons from group A, the coveragerate of the EITI report of 2013 reaches 97.53% of the revenues of the State for 2013 and themateriality threshold is USD 79,226.53.

As a reminder, the companies included in the scope of the reconciliation are classified into 3categories, which are:

• Group A: the companies of which the accumulated payments to the administrations reach 97%of the significant flows received by the State. The companies included in this group weresubject to the reconciliation, by comparing, via a canvas, the data collected from thecompanies with the data given by the administration.

• Group B: the companies of which the accumulated payments to the administration arebetween 97% and 98% of the significant flows received by the State. Each of the companiesincluded in this group did not have to fill out the reconciliation canvas, but was subject to aone-sided disaggregated statement by the administrations that received the payments fromthem.

• Group C: the companies of which the accumulated payments to the administrations arebetween 98% and 100% of the significant flows received by the State. The companies includedin this group did not have to fill out the reconciliation canvas, but were subject to a one-sidedaggregated statement by the State.

Regarding this matter, EITI rules provide that, in case the Multiparty Groupe agrees to define specificmateriality thresholds, it has to specify the options that were considered and the justification of theestablishement of the threshold at a certain level.

Hereafter the table approved by the National Committee:

Characteristics Coverage rate to 97.5%Fiscal Year 2013

Numberof entitiesper group

Group A 34Group B 5Group C 63

Total 102Materiality threshold (USD) 79,226.53

Coverage rate 97.53%

The chart of methodology that led to the assumptions validated by the National Committee ispresented in the annexes.

1.2.10 Update of the coverage rateWhile collecting the data from the companies, we noted that the data from the adminsitration duringthe materiality process should be completed by non-recurring and specific payments such as : the Taxon International Financial Transfer (Taxe Forfaitaire sur les Transferts, TFT), fines and penalties, non-refunded VAT, documents registration fees, etc.


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32 companies out of the 34 included in the scope of the materiality filled out their EITI statementcanvas. The two companies that did not receive the reconciliation or did not fill out and/or signed thecanvas within the time limit:

017. OPHIR ENERGY030. RED GRANITI MADAGASCAR S.A.R.L.

The materiality threshold has been reviewed and set at USD 79,331.12, as opposed the initial figureof USD 79,226.53. The coverage rate was brought to 99.12% instead of 97.53% as per the tablebelow.

Characteristics Scope of the report

Fiscal Year 2013 Initial materialitythreshold

Updated materialitythreshold

Number Group A 34 34of entities Group B 5 5per group Group C 63 63

Total 102 102Materiality threshold (USD) 79,226.53 79,331.12

Coverage rate 97.53% 99.12%

1.2.11 Discrepancies and adjustments

In general, the following types of discrepancies are met during the reconciliation:► Resolved discrepancies related to the reconciled discrepancies and the supportingdocuments of which were submitted to us after the signature of the canvas;► The adjustments made on the taxes that were not reconciled because the value was lowand/or the reconciliable data were not available to this day. These are the statements withoutcounterpart of the health organisations (OSIE, OSTIE, AMIT, FUNHECE, OMSI, OMIT, SMIMO), cartax, technical visits, non-refunded VAT, etc. Note that we have checked, in accordance with thepredefined audit threshold, the reliability of the data and related documents with the companies;► Residual discrepancies or remaining discrepancies after the correction of the canvas of theState and the ones of the companies for the amounts of the resolved discrepancies andadjustments of the statements without counterpart.

The comments on the discrepancies are related to the residual discrepancies in this document.It is necessary to note that there are three kinds of residual discrepancies which are:► Explained discrepancy, but the other party cannot bring corrections to this day (case of the FAM

on the sold licenses recorded at BCMM to the name of the seller) ;► Discrepancy not acknowledged by the other party ;► Discrepancy unexplained at the moment of the report.These different types of discrepancies are commented in the report when appropriate.

1.2.12 Exchange rate

The exchange rate used for the report is the average rate from the Central Bank of Madagascar for2013 where 1 USD is equivalent to MGA 2,206.91.

1.2.13 Companies included in the reconciliation


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The outcome of the materiality process identified the 102 entities to be included in the 2013 EITIreport. These are the entities whose payments are significant, exceeding or equal to USD 5,000 andare classified in groups according to their size as presented below:

1.2.13.1 Entities in Group A

The 34 entities in this group were subject to the reconciliation whereby data was collected from suchentities and subsequently compared to the data collected from the administrations via a canvas. Thelist is presented below:

Sociétés

001. PROJET AMBATOVY002. HOLCIM003. MADAGASCAR OIL004. OPHIR ENERGY005. QIT MADAGASCAR MINERALS S.A.006. GOLD SAND S.A.R.L.007. EXXON MOBIL008. KRAOMA S.A.009. MAINLAND MINING LTD S.A.R.L.U010. GALLOIS Etablissement011. NIKO RESSOURCES [ENERMAD]012. GROUPE PAM013. MADA-AUST S.A.R.L.014. MADAGASCAR MINING RESOURCES LTD S.A.R.L.015. MADAGASCAR INTERNATIONAL TAK MINING S.A.R.L.016. CALIBRA RESOURCES & ENGINEERS MADAGASCAR S.A.R.L.U017. NOVA RESOURCES S.A.R.L.U

Sociétés

018. MADAGASCAR CHROMIUM COMPANY LTD S.A.R.L.U019. UNIVERSAL EXPLORATION MADAGASCAR S.A.R.L.020. URAMAD S.A021. STERLING ENERGY LTD022. TULLOW MCAR023. TOLIARA SANDS S.A.R.L.024. TANTALUM RARE EARTH (MALAGASY) S.A.R.L.U025. SAPETRO026. MADAGASCAR CONSOLIDATED MINING S.A.027. LABRADOR MADAGASCAR -028. MINERAL PRODUCTS INTERNATIONAL GROUP S.A.R.L.029. AMICOH RESOURCES030. RED GRANITI MADAGASCAR S.A.R.L.031. TANETY LAVA S.A.R.L.032. GRANITEX S.A.R.L.033. EAX /CANDAX034. MADAGASCAR RESSOURCES S.A.R.L.

Note:As for the companies, 2 of them have not filled out the canvas on time and thus, did not take part inthe report, namely: OPHIR ENERGY and RED GRANITI MADAGASCAR S.A.R.L.However, they werekept in the scope of the report. Consequently, the data from the State related to these companiesshows a discrepancy.

As for the administrations :► We did not obtain the information related to the Port fees, the municipal and regional royalties

and the maritime and inland waterways royalties from MICTSL ;► At the date of this report, the exhaustive information on the non-refunded VAT for some

companies were yet to be obtained from the Tax.

Data which we did not get from the administration were included in the report as a unilateralstatement of the extractive entities and generated discrepancies.

The summary table for the canvas and the certificate from the auditor of the companies in group Aand the administration is presented in the Annexes.

1.2.13.2 Entities in Group B

The entities included in this group do not have to fill out the reconciliation canvas, but are subject toa disaggregated unilateral statement from the administration to whom they paid taxes. 5 entities arein group B. They are presented in the following table:


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Companies

035. MADAGASCAR WISCO GUANGXIN KAM WAH RESSOURCES S.A.U.036. CLASSIC REAL STONES S.A.R.L.037. FARASANDS S.A.R.L.038. INTERNATIONAL MINING CORPORATION LTD S.A.R.L.039. RECHERCHES MINIERES DE MADAGASCAR S.A.R.L.

1.2.13.3 Entities in Group C

The entities in this group do not have to fill out the reconciliation canvas, but are subject to anaggregated unilateral statement from the State. 63 entities are in group C. They are presented in thefollowing table :

Companies

040. INDUSTRIE MINIERE SINO-AFRIQUE S.A.R.L.041. ACCRINGTON MINERALS S.A.042. MINVEST MADAGASCAR S.A.U.043. PROCHIMAD044. BLUE GOLD RESOURCES "MADAGASCAR" S.A045. RAHERIMANDIMBY Rija Tantely Andriantiana046. IRON ORE CORPORATION OF MADAGASCARS.A.R.L.047. COPAX RESOURCES S.A.R.L.048. AVANA RESOURCES S.A.R.L.U.049. MAZOTO MINERALS S.A.R.L.050. CAPRICORN ENTERPRISES MADAGASCAR (C.E.M)S.A.R.L.051. TANETY ZINA S.A.R.L.052. MADA GONDWANA S.A.R.L.053. SIAM S.A.R.L.054. LE QUARTZ -055. VATOSOA MINING S.A.056. SINBAD RESOURCES S.A.R.L.057. SAKAMENA GOLD S.A.U.058. BLUE SUN MINING COMPANY S.A059. ORIENTAL MINING S.A.R.L.U060. NAN TIN POLYCHROME S.A.061. RASAMIZAFINDROSOA Dauphin062. SP GROUP S.A.R.L.063. MINERAL RESOURCES of MADAGASCAR S.A.R.L.064. SOCIETE MALGACHE DU GRAPHITE S.A.065. SHANDI S.A.R.L.066. SOMIDA S.A.067. MILLENIUM STAR S.A.R.L.068. BRIGHT STAR EXPLORATION S.A069. ETABLISSEMENT RENE IZOUARD070. RABETRENA Roland071. FINEBRIDGE (AFRICA) MINING LTD S.A.R.L.072. LEMURIA S.A.R.L.073. SOCIETE LATVIA MADAGASCAR S.A.R.L.074. COAL MINING MADAGASCAR S.A.R.L.075. MADCORE MADAGASCAR S.A.R.L.U.076. WORLD GEMS COMPANY S.A.R.L.077. HOLA FIRM S.A.R.L.078. LA TERRASSE S.A.R.L.079. SUCCESSION RASAMOEL Jean Baptiste -

Companies

080. ACCESS MADAGASCAR S.A.R.L.080. MANAMPISOA RALANDIRANTO Marie Bernadette082. CONCORDANT RESOURCE SURVEYCORPORATION S.A.R.L.U.083. UNIVERSAL GEMS S.A.R.L.084. SOGEMINE S.A.R.L.085. RANDRIANASOLO Clarisse Marie Emilie086. ARSENE LOUYS & Cie Sa087. SMGI - SOCIETE MINIERE DE LA GRANDE ILE088. BEBY RASOLOMALALA089. MADAGASCAR INVESTIMENT COMPANY S.A.R.L.090. INTERNATIONAL MINING DEVELOPMENT LTDS.A.R.L.091. MIRANA Lynda Eliane / Gros Center092. ANDRIAKOTO Norolala Jenny093. RATSIMBAZAFY Jean Kinne094. CHAUMAD S.A.R.L.095. MINERAL DEVELOPMENT MADAGASCAR096. RAZANAKONDEVO Benjamin097. TAFITA MINING S.A.R.L.098. RANAIVOARIMANANA Ionjaniaina099. RABEZORO Anjarisitraka100. RAKOTOMAROLAHY Jean Pierre101. MADAGASCAR ENERGY CORPORATION S.A.R.L.102. GEMS INDUSTRY CORPORATION -


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2 Background information

2.1 Overview on the formal extractive sector

2.1.1 The mining sector

2.1.1.1 Potentials in Madagascar

Madagascar has great potentials in terms of minerals. We can find the following :• Non-metal minerals : these are those used for construction purposes and for public works, such as

sands, clay, marble (Ambatofinandrahana), etc. ;• Industrial use minerals : these are the minerals such as iron (Soalala, Bekisopa, Fasintsara), cobalt,

nickel (Ambatovy, Valozoro), chromium (Ranomena, Andriamena, Mahakiry), manganese,vanadium, titanium, zirconium, ilmenite (Fort-Dauphin, Ranobe), etc. ;

• Base metals : copper, lead, coal, lignite, bauxite (Manantenina, Analavory, Marangaka), aluminium,tin, etc. ;

• Precious metals : mainly gold (Andavakoera), silver or platinum ;• Precious and semi-precious stones : beryl, sapphire, emerald, ruby, rose quartz, topaz, tourmaline,

amethyst, aquamarine, etc. ;• Strategic minerals : radioactive minerals such as mercury, lithium, magnesium, radium and rare

earths ;• Mineral waters : minerals from drinking water.

2.1.1.2 Main ongoing or planned projects

Identification forms are presented in annexes for the companies in Group A. The current main industrialongoing or forecasted indusctrial scale projects include:• QMM, which operates ilmenite and zirsill in the region of Fort-Dauphin. The site is composed of the

mine, the mill, the separation plant and the power generation plant. Later on, the project wascompleted by a port, Ehoala ;

• The project Ambatovy, operating nickel and cobalt, and composed by the mine in Moramanga, fromthe pipeline crossing many locations and reaching Tamatave, where the processing plant is. Theproducts are exported from the port of Tamatave;

• KRAOMA, a State-owned company operating chromium ;• Wisco, and its interests tied to the iron of Soalala ;• Madagascar Consolidated Mining and PAM Sakoa, whose interest in the Coal of Sakoa prompted a

pre-feasibility study phase currently underway;• Toliara Sands, whose Exploration Permit has been changed into an Operating License in 2011, and

who is currently in the stage of the Environmental Impact Study for the operation of ilmenite inRanobe;

• Mainland, who is interested in the ilmenite on the east coast of Madagascar and who is currently inthe environmental impact assessment phase;

• Aziana, who holds licences related to the bauxite of Manantenina, near Fort-Dauphin


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• Holcim, who exploits pozzolana, clan and cipolin while producing cement for the local market. Thiscompany, present for more than 50 years now, operates in Antsirabe and Tamatave.

2.1.2 The upstream oil sectorMadagascar has 988 000 km2 of onshore and offshore sedimentary basin fit for hydrocarbon explorationwhich are mainly spread on the northeast and western coasts.Today, 445 000 km2 were subject to research reviews, which is equivalent to a 45% coverage rate.

Sixteen international oil companies signed 23 contracts with OMNIS for hydrocarbons exploration andoperation, regarding 17 onshore blocks and 6 offshore ones. The number of available blocks is 229, 225of which are offshore and 4 are onshore. A promotional campaign and international calls for tender willbe made soon regarding these blocks.

The various ongoing projects in Madagascar are presented in the table below and in the map in thefollowing page:

Block name Related companyAntsiranana (onshore) Afren / OysterAmbilobe (offshore) Sterling Energy / Pura VidaAntsohihy (onshore) Madagascar Northern Petroleum CompanyAmpasindava (offshore) ExxonMobil Madagascar / Sterling EnergyMajunga profond (offshore) ExxonMobil Madagascar / British Gas / Petro Vietnam / Seoul KoreaCap Saint-André (offshore) ExxonMobil MadagascarBekodoka (onshore) Madagascar Petroleum EnergyBemolanga (onshore) Total Exploration / Madagascar Oil SATambohorano (onshore) Varun EnergyMelaky (onshore) Essar Energy Holding LimitedTsimiroro (onshore) Madagascar Oil SAManambolo (onshore) Madagascar Oil SAGranx Prix (offshore) OMV Exploration & Production / Niko Oil / EnermadBelo profond (offshore) South Atlantic Petroleum / MarexMorondava (onshore) Madagascar Oil SAManandaza (onshore) Madagascar Oil SAManja (onshore) Amicoh CorporationMandabe (onshore) Tullow OilMorombe (onshore) Essar Exploration & Production LimitedBerenty (onshore) Tullow OilToliary (onshore) Madagascar Southern Petroleum CompanySakaraha (onshore) Madagascar International ExplorationBezaha (onshore) Petromad


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2.2 Overview of the small mines and informal mining activities

2.2.1 Definition and weight of the small-scale mining

The mining code of 2005 defines small-scale or artisanal mining as being: « Traditional methods usingmainly manual tools and applied human or animal effort for the extraction of minerals from the soil orsubsoil. » Small-scale operators are defined as « those working in underground and open pit mines […]using craft techniques without processing the minerals at the extraction site ». Thus, gold-washers areincluded in this category.

Small-scale mining is often done by small-scale operators that do not hold mining titles, thus adding aninformal characteristic to this kind of operation. These are mainly related to gold and precious or semi-precious stones (ruby, emerald, sapphire, amethyst, topaz, tourmaline, etc.).

2.2.2 Results of the studies on the informal extractive sector

2.2.2.1 Information from the World Bank

In its Compendium of policy notes for Madagascar (published in May 2014), the World Bank estimatedthat 500,000 people worked in the artisanal mining sector in the late 90s, which makes it one of themost significant employers before the textile sector, but behind the agricultural one. Moreover, thesuspension of the issue of new licences in 2009 has pushed many operators to go informal. Indeed, thenumber of PRE has gone from 1,500 in 2008 to less than 500 in 2012.

2.2.2.2 ENEMPSI information for 2012

The National Employment and Informal Sector Survey (ENEMPSI) performed in 2012 by INSTAT14hasdefined quantitative and qualitative indicators that now enable an analysis of the employment marketand informal sector in Madagascar. The presented results are related to the conditions of activitiesrelated to Individual Production Units (IPU)15, the characteristics of the labour force and employment inthe IPU, the production, the insertion and the competition of the IPU, the relationship between theinformal sector and the State and lastly the issues and perspectives of the informal sector, in particularfor the branch of the mining extractive industry.

In 2012, in Madagascar, the Individual Production Units « IPU » (excluding agriculture, farmin, huntingand fishing) are estimated to 2,268,900 units. Most of these Individual Production Units « IPU » (99.9%)are classified as informal production units. Thus, in the IPU, there are neither written contracts, nor paidleaves nor social security for the workers.

INSTAT’s study has shown that:• The mining extractive industry branch represents 8% of all these IPU: 13.3% are observed in the urban

area, and 86.7% in the rural area.

14Enquête Nationale sur l’Emploi et le Secteur Informel – Enempsi 2012, Novembre 2013, vol 1 15 The Individual Production Units (Unités de Production Individuelles, « UPI ») are considered as « informal » as: they do not havea Statistical Identification Number, or they do not have an accounting system with an administrative value.


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• The main reason motivating the creation of IPU in the mining extractive sector is the increase ofrevenue (54%) for small-scale operators, who face the impossibility of finding a formal job or the «family tradition ».

• IPUs last in average 8.7 years; at the date of our study, they have existed for 6.8 years in average.Indeed, IPUs that existed long ago are characterised by a particular or traditional know-how(transformation, design activities). Conversely, the « young » IPUs are ones whose activities do notnecessarily require extensive capital.

• 70.7% of the share capital of the branch of the mining extraction is funded by savings.• The share of employees is low in the IPU, as job creation remains limited (3.9% in the mining extraction

of IPUs).• Men workers outweigh women in the informal extractive branch.• 44% of those who are active in this branch are aged under 26.• Those who are active in this branch have had in average 3.1 years of study.

2.2.3 The case of gold

Even though the exportation of gold is prohibited, tons of it are extracted from Malagasy soil and illegallyexported. The local media regularly reports seizures of precious metals at airports and border crossings.However, it is difficult to get information on these events from the Malagasy authorities.

At the international level, estimations can be made by comparing the trade balances per country and perproduct. According to the UNCTAD (United Nations Conference on Trade and Development), whose datais presented below, it is estimated that the value of import of Malagasy gold to the United Arab Emiratesis, respectively, 9.8 million (approximately 327 kg) and 16.3 million USD (approximately 543 kg) in 2012and 2013. Based upond this partial data, that only regards the United Arab Emirates, it is possible toestimate that the State and the local communities have lost an income of 326,000 USD, equivalent tomore than 720 million MGA in 2013 that corresponds to non-received royalties.

The same source has provided an estimation of the value of gold exported from Madagascar as exceeding18 million USD (approximately 600 kg) in 2012, with a peak of 56.5 million USD (approximately 1.8 ton)in 2011 based upon this information. Thus, it is possible to estimate that the State and the localcommunities have lost an income of 360,000 USD, equivalent to more than 790 million MGA in 2012,which corresponds to non-received royalties.


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Export of gold from Madagascar to the rest of the worldfrom 2005 to 2013, in thousands USD

(Source : unctadstat.unctad.org)Note: “(5)” in front of figures in the table means that it is an estimation

Gold importation made by the United Arab Emirates from Madagascarfrom 2005 to 2013, in thousands USD

(Source : unctadstat.unctad.org)Note: “(5)” in front of figures in the table means that it is an estimation


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2.3 Governance of the sector: key actors


Here are the main key actors in the mining governance:

► The Ministry in charge of Mines (Ministry of Mines in 2012 and 2013, within the Ministry of StrategicResources in 2014): in charge of the design, the execution and the follow-up of the governmentpolicy with regards to mining.

► The BCMM : this industrial and commercial public bureau aims to manage the mining licences andauthorisations, from their request to their expiry date ;

► The Gold Agency (Agence de l’Or) ;► The Mine Police is mainly in charge of tracking, on one hand, of the circulation, illegal custody and

commercialisation of mining products, and on the other hand, of all mining violations as provided inthe Mining Code.

► The Decentralised Territorial Units, beneficiaries of the rebates and the place of interaction of thecommunities.

Moreover, we note that many mining operators gathered within the Chamber of Mines of Madagascar,which is recognized as an association, with goals « to encourage, to promote and protect the mininginvestments in Madagascar while developping good business professional ethics in the mining sector.»

2.3.2 The upstream oil sector

The main key actors in the governance of upstream oil are:

► The Ministry in charge of Hydrocarbons (Ministry of Hydrocarbons in 2012 and 2013, included inthe Ministry of Strategic Resources in 2014) : it is in charge of the design, the execution and thefollow-up of the government’s policy in terms of hydrocarbons ;

► The OMNIS, as a technical body, in charge of the regulation ;► The OMNIS, as a national society, in charge of the contracts with the international oil companies.

The companies in the sector are gathered in the Association Professionnelle des Pétroliers Amont deMadagascar (APPAM) which is the Professional Association of Upstream Oil Operators of Madagascar.

2.4 Legal framework


In Madagascar, the mining sector is mainly governed by the law n°99-022 of August 19th 1999establishing the Mining Code. Later, this law has been completed by:

► The law n°2005-021 of October 17th 2005 ;► The decree n°2006-910 of December 19th 2006 setting the implementing arrangements;


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► The interministerial decree n°21985-2007 of December 20th 2007 setting the recovery arrangementsfor the mining royalties and rebates.

This legal setting forms the common law of the mining sector in Madagascar. The Mining Code does notprovide for the participation of the State in the mining companies.

In addition to the common law, Madagascar also has two specific legislations:► The Framework agreement, signed between the Malagasy State and the Rio Tinto Group. Promulgated

in the Official Journal, it specifically governs the ilmenite exploitation project of QMM S.A in the Anosyregion. It also provides for the participation of the State in the project via the OMNIS, who has 20% ofthe share capital;

► The Large-Scale Mining Investment Law : it regards, on one hand, the law 2001-31 of October 8th

2002, otherwise known as LGIM, modified by the law n°2005-021 of August 2nd 2005, and on theother hand, by the decree n°2003-784 of January 8th 2003 setting the terms of application. This lawapplies to any company meeting the stipulated application eligibility conditions, namely the amount ofinvestment amounting to MGA 50 billion. This law does not provide for the participation of the Statein the mining companies. To this day, only Ambatovy project is governed by this law.

Moreover many non-sectoral laws such as the Environment Charter, the various Finance Acts and theMECIE decree (Mise en Compatibilité des Investissements avec l’Environnement) are also applicable tothe mining sector.

It is planned that the Mining Code will be subject to a reform in 2014-2015. The government announcedone of the key measures, which is the creation of a national mining company.

2.4.2 The upstream oil sector

The upstream oil sector is governed by two main sectoral laws, which are the Law n°96-018 ofSeptember 4th 1996 establishing the Oil Code in one hand, and the decree n°97-740 related to themining exploration and operation titles, and the transport of hydrocarbons, on the other hand.

Based on the principle that « hydrocarbons deposits are not likely to be subject to private appropriation »,companies wishing to operate in the upstream oil sector are to sign a contract with OMNIS. It can be aPetroleum Sharing Contract (PSC) or a joint-venture contract. The related mining title is deliveredfollowing a decree of the President of the Republic. These contracts form an integral part of the taxregime applicable to the sector. OMNIS thus helps its contracting partner in the latter’s relationship withauthorities and local administrations, and provides the available data and information related to theframework of the contract.Moreover many non-sectoral laws such as the Environment Charter, the various Finance Acts and thedecree MECIE (Mise en Compatibilité des Investissements avec l’Environnement) are also applicable tothe sector.

It is worth noting that the revision of the Oil Code is currently under study. Specifically, it is workingtowards: updating the Oil Code to the standards of neighbouring countries, such as East Africa; makingit more attractive for investors; adapting it to the situation of the upstream oil sector in Madagascar – theshift towards exploitation is planned at short and medium term for Madagascar Oil; and allowing a clearand fair redistribution of resource royalties.


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2.5 Tax framework

2.5.1 Comparative table

The Tax framework of the mining sector is presented in the Mining Code, or the Oil Code and the GeneralTax Code for the common law. The special regimes of the mining sector (Framework Agreement andLGIM) have their own tax framework, which can refer to the General Tax Code. Below is a presentationof the flows:

TAXES/DUTIESQMM

(FRAMEWORKAGREEMENT)

AMBATOVY(LGIM)

COMMON LAW (CGI, MININGCODE, OIL CODE)

Finance Acts 2012 and2013

INCOME TAX (IR)

10% : 6th to the 10thyear of actualexploitation15% : until the expiry ofthe privileged tax regime

25% : AMSA andsubcontractors10% : DMSA andsubcontractors

2012 : 21%2013 : 20%Oil Sector : 0% (included inIDH)

DIRECT TAX ONHYDROCARBONS (IDH, oilsector only, productionphase)

N/A N/A2012 : 21%2013 : 20%

TAX ON INTERNATIONALFINANCIAL TRANSFERS(TFT) /NON-RESIDENTSINCOME TAX (IRNR)

Works : 3,50%Services : 15,75% 4,5%

Mining sector : 10%Oil Sector : 0% (included inIDH)

COMBINED TAX N/A N/A 5%

WAGES INCOME TAX(IRSA)

Rate in line with thecommon law, withoutexceeding 35% forexpatriates

Rate in line with thecommon law, withoutexceeding 35% forexpatriates

For national expatriates :2012 :- Up to Ar 250,000 = 0- Part exceeding Ar 250 000= 21%2013 :- Up to Ar 250,000 = 0- Part exceeding Ar 250 000= 20%

TAXES ON INCOME FROMMOVABLE CAPITAL(IRCM)

10% 10%2012 : 21%2013 : 20%Oil sector : 0% (included inIDH)

TAXES ON REAL ESTATEGAINS (IPVI)

Rate in line with thecommon law

Rate in line with thecommon law

2012 : 21%2013 : 20%

VALUE ADDED TAX (TVA) 0% 20% 20%

TRANSFER ANDREGISTRATION FEES

Emphyteutic leases :reduced rate of 50%

Share capitalsubscription duty ofQMM : 1%

Other documents : 0%

Duty for companycreation ofcontinuance; capitalduty : de 0% to 2% notexceeding 10 millionMGA

Fixed duties :2 000 Ar

Proportional duties :2% : commercial lease1% : protected tenancy0,5% :Documents forcompany creation ofcontinuance


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TAXES/DUTIESQMM

(FRAMEWORKAGREEMENT)

AMBATOVY(LGIM)

COMMON LAW (CGI, MININGCODE, OIL CODE)

Finance Acts 2012 and2013

Any other documentsrelated to the above :0%

PROPERTY TAXES ONLANDS (IFT)

Not-Submitted 1% 1%

PROPERTY TAX ONBUILT PROPERTY (IFPB)

3% 1%.Not exceeding 200million MGA per year

5 à 10%

TAFPB 2%1%Not exceeding 200million MGA per year

Repealed

TAXES ON INSCURANCECONTRACTS (risks)

4% 4 % 4%

ROYALTIES ANDREBATES

In line with the miningsector common law

In line with the miningsector common law

1) Mining sector :Royalties : 0,60%Rebates : 1,40%

2) For crude oil :- Between 8 % and 20%according to the dailyproduction in barrels

3) For the natural gas- Between 5% and 10%according to the dailyproduction in cube meters

ADMINISTRATION FEES Set by the BCMM Set by the BCMMSet by the BCMM (miningsector) and OMNIS (oilsector)

2.5.2 Specificities for State taxes and local taxes

The main specificities allowed by the specific regulations in the framework of the investments incentivesin the mining sector are:► Within the Framework Agreement:

► Lowered rate of the Income Tax and the taxes on income from movable capital (IRCM);► Decrease of the taxable base for the Tax on International Financial Transfers;► 0% VAT;► Exemption for the registration fees ;► Unique rate for the Tax on Insurance Contracts ;► Decrease of the rate for the Property Tax on built property ;► Stability of the tax framework.

► In the framework of the LGIM :► Decrease of the taxable base for the Tax on International Financial Transfers ;► The right to be refunded with the VAT credit;


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► Lowering of the rate and an upper limit for the registration fees;► Lowering the rate and an upper limit for the Property Tax on built property► Stability of the tax framework.

In the oil sector, a unique tax exempting from three other taxes is applied during the production phase.During the exploration phase, the tax regime is that of the common law, provided by the General TaxCode.

2.6 Royalties and rebates

2.6.1.1 In the mining sector

The Mining Code provides that the rates for royalties and rebates are respectively set to 0.6% and 1.4%of the value of the products at their initial sale. They also apply to the special legal regime of the miningsector. The allocation of the rebates between the decentralised authorities was subject to the followingprecisions as per the Interministerial decree No. 8887/2014 of February 21th 2014:► 60% for the extracting communities;► 25% for the communities in the location of the transformation and processing entities, in proportion

of the transformation or processing level made in these disctricts;► 15% for the communities other than those previously mentioned and in which other components of

the mining project are located.The Decree also states that the share of rebates intended for the non-existent categories of communitiesare to be shared equally between other categories. In practice, this measure applies to AutonomousProvinces, which to this day are not yet implemented.

2.6.1.2 In the oil sector

The Oil Code provides that the royalties shall be between 8% and 20% for crude oil, and between 5% and20% for natural gas.


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2.7 Administration and training fees

In the mining sector, the administration fees are those received by the State and intended to act as acontribution of private operators towards the development of the mining sector in Madagascar. TheMining Administration Fees (FAM) by square are levied by the BCMM as a refund of the services andmanagement costs for the rights associated to the mining licences. They are annually paid by any ownerof a mining square and a mining licence holder. The amount is set by annual decree for each licencecategory.

In the same way, in the oil sector, the Administration and Training Fees are paid on a regular basis as alegal requirement by the mining title holder. The fees are levied by OMNIS as a refund for the servicesand management costs associated to the oil contracts.

The chart in the next page shows the various administrations to which taxes, duties and fees are paid forthe mining sector and the allocation of the revenues.


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2.8 Current state of the licensing procedures

2.8.1 Mining sector

The different types of mining titles are presented in the following table:

Mining titles Squares 16 Validity PurposeAERP : ExclusiveAuthorization for PerimeterReservation

38 400 which is15 000 Km2

3 months Ground reconnaissanceto confirm geologicaland ore-deposits modelsNot renewable

PRE : Permits Restricted toSmall-scale Miners

256 which is 100 Km2

8 years renewableonce or severaltimes for four (4)years

Research ProspectionExploitation

PR : Research Permit25 600 which is 10000 Km2

5 yearsResearch ProspectionRenewable twice for

three (3) years each

PE : Exploitation Permit

2560 which is 40 years renewableonce (1) or severaltimes for twenty(20) years

Research ProspectionExploitation1 000 Km2

The procedures for granting mining titles, which remain unchanged compared to 2011, are presented inthe graph in the next page, made on the basis of the information given by the Ministry of Mines.

During the related period, the extractive sector was subject to a licensing freeze, pursuant to the note ofCouncil No. 34/2011-PM/SGG/SC, signed by the General Secretary of the Government. This freeze ledto the prohibition of granting of new permits from the date of the release of the note, April 6th 2011.Moreover, the letter No. 682/MMH signed by the Minister of Mines and Hydrocarbons on May 31st 2011has suspended Permits for small scale operators (PRE). The suspension period covered by this letterstarted on September 8th 2009 and to is yet to be lifted to this day.

16Geometrical setting on the surface of the earth, representing the basic unit of space in which the rights are conferred by thepermits. Each side of the square is six hundred and twenty five meters (625 m).


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Step 1 : Submission ofthe requestReception of therequest, admissibilitycheck, delivery of thepayment order, of thereceipts of payment,coding and processingof the requests, updateof the mining map

Etape 2 : ConfirmationReception of additionaldocuments for the file, thereceipt of the remittance of thefile and receipt for the relatedfees, verification of thecompleteness of the file and therequired number of copies,update of the mining map if thefolder is complete, delivery ofthe refusal letter and additionaldocuments required ifuncomplete file

Step 3 : Processing of filesStudy of filesSignature of the techcnical advice,elaboration and signature of the draftdecree in Malagasy and French (ifapproved), elaboration of the refusaldocument (if not approved), signatureof the decree/decision by competentauthorities, verification of theconsistency between the decree andthe "Traitement Alpha" (TAN),validation and signature of the title Etape 4 : Delivery of mining titles

Verification of the payment ofthe administration fees : 3/4 and1/4Recording registry of deliveredlicencesDelivery of the original title andthe decreeFiling the copies of the titles

Mining licensing procedures


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2.8.2 Upstream oil sector

There is no change in the procedure of the signature of an oil contract as compared to 2011; it ispresented in the following chart:

Procedure for the signature of an oil contract

1•Promotional campaign

2•Issuance of a notice of anInternational Tender

3•Submission of offers byinterested oil companies

4•Study of the offer by theOMNIS

5•Negotiations

6•Conclusion and signatureof the contract betweenthe OMNIS and thecompany winning of theoffer

7•Request for approval ofthe oil contrat by theOMNIS to the Presidentof the Republic

8•Request of allocation ofthe hydrocarbon miningtitle by the OMNIS to thePresident of the Republic

9•Approval of the contractby the President of theRepublic and enactmentof the PresidentialDecree approving the oilcontract

10•Attribution of the miningtitle and enactment ofthe Presidential Decreegranting thehydrocarbon mining title


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2.9 Registry of licences and permits

2.9.1 Reiterating the standard

As provided by the EITI requirement No. 3.9, Madagascar has the responsibility to hold a public registryor cadaster system with updated and complete information, related to the licence holders, thecoordinates of the related area, the date of the request and issuance of the licence, as well as its duration,and in the case of exploitation licences, the produced raw materials.

2.9.2 Situation in Madagascar

Regarding the mining sector, a registry is available with the Mining Cadastre Office (BCMM). Available ondemand, the coordinates of the mining squares, the request and delivery date, etc., can be consulted.The addresses and details of the permit holders are not disclosed for the sake of the confidentiality ofpersonal information principle, and are often not up to date. Moreover, in some cases, delays have beennoted in the update of the registry in case of disposal of the licences.

Regarding the oil sector, such registry is non-existent. However, the website of OMNIS, via a map that isreproduced in this report, discloses the available blocks and the blocks on which contracts are signed withOMNIS. The names of the signing parties of the contracts are also available.

2.10 Information on the beneficial ownership of the extractivecompanies


The EITI requirement EITI No. 3.11 provides for the implementation of a publicly available register of thebeneficial owners of the corporate entities that bid for, operate or invest in extractive assets, includingthe identities of their beneficial owner(s) and the level of ownership. A beneficial owner in respect to acompany is defined as the natural person(s) who directly or indirectly ultimately owns or controls thecorporate entity holding the licence in Madagascar.

The same requirement recommends that where such registers do not exist or are incomplete, it isrequested from companies participating in the EITI process to provide this information for inclusion in theEITI Report.


A register of owners does not publicly exist in Madagascar. Inded, the Trade Register within the TradeCourt records only the name of the direct shareholders of the Limited Companies.

The information on the beneficial ownership given by the companies in group A that accepted theirdisclosure are presented in the table in the next pages. It is to be noted that filling out the information onthe owners as a last resort was not compulsory in the canvas of the companies, but it was only


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encouraged. The information presented in the table below is strictly based upon the statements of thecompanies and was not investigated.


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Information on the beneficial ownership of the extractive companiesin the scope of the EITI report 2014

(Source: canvas filled out by the companies)

CompaniesDirect shareholders with the

percentage of the shares

Shareholder at lastresort (natural or legal

person)

Are any of theshareholder companieslisted ? Which ones ?

Provide the name of thestock exchange.

ExxonMobilExploration andProductionMadagascar Limited

100% ExxonMobil MadagascarVentures BV

100% ExxonMobilMadagascar Ventures BV

NO

MAINLAND MINING Hong Kong Sino AfricaResources Investment Ltd -100%

Hong Kong Sino AfricaResources InvestmentLtd - 100%

N/D

Holcim (Madagascar)S.A.

Holcim Outre-mer (99,64%)Holcim Réunion (0,35 %)Divers minoritaires (0,01%)

Holcim Ltd (Legalperson)

N/D

TOLIARA SANDSSARL

MADAGASCAR MINERALFIELDS LIMITED - 100%

WORLD TITANIUMRESOURCES

YES (ASX:WTR)

TANTALUM RAREEARTH MALAGASY

N/D Tantalum HoldingMauritius

N/D

STERLING ENERGY(UK) Succursale

N/A N/A N/A

AMBATOVYMINERALS S.A.(AMSA)

MADAGASCAR MINERALINVESTMENTS Ltd(MMI): 40%SUMMIT AMBATOVY MINERALSINVESTMENT B.V. (SAMRI) :27.5%KOREA RESSOURCESCORPORATION(KORES): 27.5%SNC - LAVALIN MADAGASCARVENTURE INC. : 5%

MADAGASCAR MINERALINVESTMENTSLtd(MMI)/SHERRITTINTERNATIONALCORPORATIONSUMMIT AMBATOVYMINERALS INVESTMENTB.V.(SAMRI)/SUMITOMOCORPORATIONKOREA RESSOURCESCORPORATIONSNC - LAVALINMADAGASCAR VENTUREINC. /SNC - LAVALIN INC

SHERRITTINTERNATIONALCORPORATION:

TORONTO STOCKEXCHANGE

SUMITOMOCORPORATION: TOKYO

STOCK EXCHANGE

SNC - LAVALIN INC.:TORONTO STOCK

EXCHANGE

CALIBRA RESOURCEAND ENGINEERSMADAGASCAR.

SOCIETE HENGSHENG MININGGROUP Ltd (HMG)

SOCIETE HENGSHENGMINING GROUP Ltd(HMG)

YES. HENGSHENGMINING GROUP Ltd

(HMG).BVIETABLISSEMENTSGALLOIS S. A.

N/A N/A N/A

PAM MADAGASCARSA

PAN AFRICAN MINING CORP:99.952 %

PAN AFRICAN MININGCORP

NO

PAM SAKOA COAL SA PAN AFRICAN MINING CORP:99.7 %

PAN AFRICAN MININGCORP

NO


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person)



MADAGASCARCONSOLIDATEDMINING S.A.

YOXFORD HOLDINGS LTD: 80%NASSCO: 20%

YOSFORD HOLDINGSLTD

NO

MADAGASCAR OIL SA Benchmark Advantage FundLtd: 39.02%,Outrider Management LLC:22.84%,SEP African Ventures Limited(formerly Persistency CapitalLLC): 20.10%,The John Paul DEJORIA FamilyTrust: 5.78%,RAB Capital: 1.79%

N/A Madagascar Oil Limited,the mother company of

Madagascar Oil SA islisted on the AIM London

Stock Exchange

M'PUMALANGAMINING RESOURCESS.A.U

TAHL (Mauritius) MiningProjects Limited 100%

Groupe TATA AFRICAHOLDINGS PTY LIMITEDTATA INTERNATIONAL

N/D

QIT MADAGASCARMINERALS SA

RIOTINTO 80% etETAT MALAGASY 20%(représenté par Omnis)

RIO TINTO RIO TINTO (LondonStock Exchange ou LES)

SOUTH ATLANTICPETROLEUM BP SAS

MARTIN TRASCHEL 100% MARTIN TRASCHEL100%

NO

TANETY LAVA SARL Blue Sky Corporation, Maurice:99 %

AZIANA LIMITED,Australie

AZIANA LIMITED,Australia StockExchange (ASX)

TOTAL E&PMADAGASCAR

TOTAL SA 100% TOTAL SA TOTAL SA - Paris etNew-York

EAST AFRICANEXPLORATIONMADAGASCAR LTD

East African Exploration : 90%Compagnie pétrolière AnglaiseOYSTER Energy : 10%

AFREN, PLC, détient100%

AFREN is listed on theLondon Stock Exchange

(LSE)PROCHIMAD MINESET CARRIERES

UPB INTERNATINAL: 33.90%SEPCM: 15%PROCHIMAD: 0.90%

ANDRIANTSITOHAINACharles: 50%ANDRIANTSITOHAINANaina: 0.10%Jean Michel GIRAUD:0,10%

NO

CLASSIC REALSTONES

Auzonz Mining Private Limited:90%Jamnadas Divias Kumar: 5%Shantilac Elesh : 5%

Auzonz Mining PrivateLimited: 90%Jamnadas Divias Kumar:5%Shantilac Elesh : 5%

N/D

UNIVERSALEXPLORATIONMADAGASCAR SARL

IPR Universal limited: 100% Indian Pacific ResourcesLtd

N/A

ACCESSMADAGASCAR

CLEROUX Denise, DESLANDESJean Pierre

CLEROUX Denise,DESLANDES Jean Pierre

N/A


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person)



MADAGASCARRESSOURCES SARL

MALAGASY SANDS NR.2 ltd :100%

WORLD TITANIUMRESOURCES

NO

RED GRANITIMADAGASCAR SARL

RED GRANITI France : 99% RED GRANITI France :99%

NO

2.11 Disclosure of oil contracts


According to EITI standards No. 3.10, the report has to document the policy of the government in termsof disclosure of the contracts and permits setting the prospection or exploitation conditions of oil, gasand minerals. The relevant legal provisions, the actual disclosure practice and the planned reforms or inprogress are to be included in the report with an overview of the contracts.


2.11.2.1 Disclosure policy

Regarding the government’s policy in terms of contracts and licences disclosure, it appears that the OilCode does not provide for specific dispositions on the conditions of the conclusion or the disclosure of oilcontracts. Only the presidential decree approving the oil contract and the standard contract are available.

The production sharing contract, governing the relationships between the State and the companies,includes a confidentiality clause representing the government policy in terms of contracts disclosure.Thus, the article 36.5 of the onshore standard contract provides that « None of the parties shall discloseany information related to Oil Operations to any person, organisation, affiliated company, employees,consultants, subcontractors, bank or financial institution without prior signing a confidentiality agreementallowing to keep the strictly confidential information, unless required by the law.»

In practice, OMNIS confirmed that:► The disclosure, at present, is not possible unless legal requirement is obtained, following an

agreement with oil companies.► The current confidentiality of oil contracts should be one of the subjects addressed in the Oil Code

reform.


EY | 60

2.11.2.2 Overview of oil contracts

An overview of the standard contracts, onshore and offshore, is available on the website of OMNIS, atthe following address: http://www.omnis.mg/en/download-contracts-models

A brief summary of the contracts is presented below:

Key elements of an oil contract

The production sharing contract is established for the following reasons:

► The oil resources in the soil and subsoil of the malagasy territory, on the seafloors and in territorial seas, in the exclusive economic zone and on thecontinental shelf, are owned by the malagasy State ;

► No legal entity can carry activities in the national mining industry, unless anassociation wth OMNIS as custodian of a mining title is signed ;

► No activity related to the exploration, the production, the transformation and thetransportation of Hydrocarbons in the national mining industry can beundertaken unless authorized by an oil contract with OMNIS.

It defines the terms and conditions according to which the Operator will undertake theOil Operations. Any right and obligation related to the contract and any forecasted orcurrent oil activity conducted within the Contract will also be undertaken in accordancewith any possible amendment done to the Contract and to the malagasy law.

The production sharing contract is composed of 46 articles and 6 annexes.

It is established according to the main clauses as follows :- Obligation of exploration minimum works (article 8)- Program of the exploration works and budgets (article 10)- Assistance of OMNIS (article 17)- Recovery of oil costs (article 23)- Oil profit sharing (article 24)- Customs provisions (article 28)- Tax provisions (article 29)- Production bonus (article 31)

The production sharing contract comprises the following annexes :- Annexe A : Map of the Contractual Scope- Annexe B : Accounting and financial procedures- Annexe C : Association contracts for the contractors- Annexe D : Bank guarantee- Annexe E : Guarantee from the mother company for each Contractor- Annexe F : Information and reports

2.12 Financial relationships between the government and State-ownedcompanies

http://www.omnis.mg/en/download-contracts-models


EY | 61


According to the EITI standard No. 3.6, the report must include the prevailing rules and practicesregarding the financial relationships between the government and state-owned enterprises (SOEs), e.g.the rules and practices governing transfers of funds between State-owned companies and the state,retained earnings, reinvestment and third-party financing.

Moreover, disclosures from State-owned companies on their quasi-fiscal expenditures such as paymentsfor social services, public infrastructure, fuel subsidies and national debt servicing on fuels are alsorequired in the report.


Until September 2014, the regime of State-owned companies was set by an old law, the Law n°67-007of June 28th 1967 related to the participation of the State and other public entities in public limitedcompanies and in semi-public companies. The State as a shareholder must always be represented in theBoard of Directors.From September 2014 on, a law currently in the process of promulgation states the separation betweenthe State as a « public power » and the State as a « shareholder », so as to avoid the interference of theState in the management of the companies. The undertaken measures aim to give more weight to thePubic Treasury in comparison to other representatives of the State in the Boards of Directors, and tofurther the inclusion of territorial communities.

Within the context of the EITI report, Kraomita Malagasy (Kraoma) SA, in which the State owns 97% ofshares, was identified as the only State-owned company meeting the definition adopted by the NationalCommittee. Oil companies in which the State is a shareholder by means of OMNIS are not considered asState-owned Companies because the share of the State, set at 20%, does not reach the majority in theshare capital.

Regardless of the public participation in its capital, KRAOMA is a public limited company under the law oncommercial companies. It is worth noting that KRAOMA, having participated in the EITI process since thefirst report, has the same obligation as the other extractive companies under the framework of EITI.KRAOMA did not pay any dividend to the State for 2012.

2.13 Contribution of the extractive sector to the economy

2.13.1 Contribution to the GDP

As per the requirement No. 3.4 of the EITI standards, the report must disclose, when available,information about the contribution of the extractive industries to the economy for the fiscal year coveredby the EITI Report. The table below presents the data about the contribution of the extractive sector tothe GDP of Madagascar, collected from the INSTAT and the General Directorate of Economy, the GDPdefined as an economic indicator of the produced wealth per year in the country, calculated from theadded value of each sector.


EY | 62

(Source: INSTAT, General Directorate of Economy)(In billion MGA)

CURRENT PRICES 2012 2013Added Value of the extractive industry 40.44 62.09GDP 19900 21552CONSTANT PRICES (1984) 2012 2013Added Value of the extractive industry 6.89 22.00GDP 548.18 556.68WEIGHT OF THE EXTRACTIVE BRANCH IN THE GDP 2012 2013Weight in the GDP (in %) 0.7 2.12

The table indicated a 2.12% contribution of the extractive sector to the GDP in 2013. This information,however, has limited significance as it partially and unfaithfully reflects the new productive orintermediate consumption or price structures that have since evolved over the past 20 years. Indeed, theINSTAT database comprises a series of yearly adjustments to the extractive branch structure in 1984.For example, the oil sub-branch was not yet integrated in the database of 1984. However, this data is theonly official one as there were no recent and reliable studies on the contribution of the extractive sectorto the GDP during the period concerned by the report.

From 2012 to 2013, we note a significant raise of the weight of the mining sector in the GDP (0.7% in2012 to 2.12 % in 2013). This was quite constant for the last ten years (0.1% of contribution per yearwith a slight improvement in 2012 and 0.2% in 2011). This results from the cumulative effect of thelaunch of the operations of QMM (earlier) and Ambatovy during this period.

2012 and 2013 are major inflexion periods in the economy, and reflect the first structural adjustmentsin the real economy. The mining branch ceases to be an auxiliary sector and becomes a growing pillar inthe real domestic economy. This weight is significant during this period as most of the companies are stillin the prospection phase and do not yet generate gross operating profit. This qualitative weight changeof the extractive branch in 2012-2013 shows how important the new extracting companies – which justentered in the production phase – are for the economy.

2.13.2 Contribution to foreign direct investments

Due to a lack of reliable estimation of the contribution of the extractive sector to the economy, theeconomic contribution can also be measured by the flows of foreign direct investments (FDI). The tablebelow shows that in 2012, the extractive sector represented more than 40% of the received FDI flows,according to a study of the Central Bank of Madagascar. A decrease in FDI compared with those datingfrom 2008 to 2010 is noted since the beginning of the exploitation phase for QMM and the AmbatovyProject.

(In billion MGA)

Description 2007 2008 2009 2010 2011 2012 First semester2013


EY | 63

FDI amountsin theextractiveactivities

886.20 1,637.50 2,069.80 1,360.00 1,000.60 750.50 312.00

FDI totalamount 1,456.90 1,914.80 2,532.50 1,689.10 1,639.90 1,783.40 718.20

Weight oftheextractivesector FDI inthe total FDI

61% 86% 82% 81% 61% 42% 43%

Source: Study on the Foreign Direct Investments in Madagascar, Central Bank of Madagascar, January 2014

2.13.3 Contribution of the total tax revenues

The table and the chart below present the contribution of the extractive companies to the total taxrevenues in Madagascar:

(in thousands MGA)

Description 2012 2013 Variation

Amount of tax revenues received by the DGI fromthe companies of Groups A, B and C

92,770,615.23 210,994,011.99 127%

Total amount of tax revenues of the DGI 1,214,396,969.17 1,276,735,530.00 5%

14%

86%

Contribution of the extractivesector to the tax revenues in 2013Montant des recettes fiscales reçues par la DGI en provenance desentreprises des Groupes A, B et C

Montant des recettes fiscales totales de la DGI


EY | 64

Thus, the tax revenue of the extractive sector in 2013 represent 14% of the total revenues received bythe General Tax Directorate (DGI). This percentage is double of the percentage of 2012. In value, theamount of taxes paid by the companies of group A increased to 127% compared to 2012.

2.13.4 Contribution in terms of employment

For the years under review within the EITI framework, there is no official statistics or reliable study resultson the contribution of the overall formal extractive sector in terms of direct or indirect employment.The data from the statements made by the companies in Group A gives an overview of the number oftheir direct employees. Linked with the number of workers affiliated to CNAPS, they can be used toestimate the weight of the formal extractive sector, inspite of some flaws that could skew the results,namely the companies that are not CNAPS-affiliated, though registered to the tax office. Indeed, thecompanies and the employees must be affiliated at the CNAPS.Thus, 0.8% of the CNAPS-affiliated employees work for a company of Group A in 2013. The weakness ofthese figures should nevertheless be put into perspective as the great industrial mining projects cangenerate leverage effects, namely the indirect jobs via subcontractors.

Description 2013Number of workers in Group A 4,600Number of CNAPS-affiliated workers 576,048Percentage of workers of Group A compared tothe total number of CNAPS-affiliated workers

0.8%

2.14 Exported quantities

As required by the new EITI standard n°3, the contextual information, including the information aboutthe production of exporting companies, form an integral part of the reconciliation report.

The exporting extractive companies have disclosed the total volume production, the value of theproduction of raw material, as well as the total volume of export and the value of these exports per rawmaterial for the fiscal year 2013.

The table below, prepared on the basis of statements from exporting companies, present the quantity ofexported products per company in 2013 (in tonnes).

COMPANIES Region oforigin

NATURE OFTHE

PRODUCTS

SOURCE COMPANYPRODUCEDQUANTITY

EXPORTEDQUANTITY

VALUE OFEXPORTEDPRODUCTS

(in tonnes) (in tonnes) (in MGA)GALLOISEtablissement Atsinanana Graphite 3,832.95 4,192.85 10,382,662,339.00

HOLCIMVakinankaratra Poozzole 65,000.00 N/A N/AVakinankaratra Cipolin 164,718.00 N/A N/AVakinankaratra Clay 29,751.00 N/A N/A

MADAGASCARMINING

Betsiboka Rocks 1.50 N/A N/A

Sofia-


EY | 65

RESOURCES LTDS.A.R.L.

AlaotraMangoroVatovavyfitovinany Soil 2.20 N/A N/A

PROCHIMAD Amoron'i ManiaDolomite 3,730.00 N/A N/ACalcite 200.00 N/A N/AKaolin 200.00 N/A N/A

PROJETAMBATOVY

AlaotraMangoro

SulphateAmmonium 65,410.00 68,570.00 29,295,987,646.85

Atsinanana Cobalt 2,083.00 2,067.00 121,458,684,432.28Nickel 2,514.00 25,507.56 803,024,114,385.96

RED GRANITIMADAGASCARS.A.R.L.

AtsimoAndrefana Labradorites 3,591.45 2,989.92 N/D

KRAOMA S.A. BetsibokaRocheux 59,085.00 61,000.00

45,013,034,580.00Concentrate 58,100.00 49,000.00

QITMADAGASCARMINERALS S.A.

Anosy ZirconConcentrate 31,345.00 31,345.00 43,682,262,165.09

Anosy Ilmenite 530,421.00 530,421.00 167,523,336,557.73GRANITEXS.A.R.L. Manjakandriana Granit 3,240.00 3,078.00 270,613,069.73


EY | 66

3 Results of the reconciliation

3.1 Total flows and total residual discrepancy

The EITI report – Fiscal Year 2013 covers a total amount of MGA 427.68 billion equivalent to USD 193.80million. The details of the flows received by the State, per entities group are presented in the followingtable:

Entities group Number of entitiesAmount of flows

received by the StateAmount of flows

received by the State(in thousands USD) (in thousands USD)

A 34 423,926,956.46 192,090.73B 5 734,327.68 332.74C 63 3,017,479.03 1,367.29

Total 102 427,678,763.17 193,790.76

The table below shows that the percentage of the residual discrepancy for group A is 2.42% of the totalflows received by the State:

CurrencyTotal amount paid by the

companies

Total amountreceived by theadministrations

Amount of thetotal residualdiscrepancy

Total residualdiscrepancy

(in thousands) (in thousands) (in thousands) (in %)MGA 434,175,403.01 423,926,956.46 10,248,446.55 2.42%USD 196,734.53 192,090.73 4,643.80

3.2 Entities in Group A17

3.2.1 Schedule of the payment flows per company, with amounts paid, amountsreceived and discrepancies

Reading principle:The tables below mention remainders that were not intended to be in the canvas. These categories werecreated to save some space through the aggregation of certain kinds of payments. Aggregated paymentsunder this header are detailed in Annexes as well as the USD version of the tables.

17Companies of which the cumulated payment to the administrations, reach 97% of the significant flows received by the State. Thecompanies included in this group will be subject to reconciliation through the data collection from the companies, and theconfrontation of these with the data collected from the administrations via a canvas.


EY | 67

(in millions MGA)001. PROJET AMBATOVY 002. HOLCIM 003. MADAGASCAR OIL 004. OPHIR ENERGY 005. QIT MADAGASCAR MINERALS S.A.

Type of payment Paid by theentity

Received bythe State

Residualdiscrepanci

es

Paid by theentity

Receivedby theState

Residualdiscrepan

cies

Paid bythe entity

Receivedby theState

Residual

discrepanci

es

Paid bythe

entity

Receivedby theState

Residualdiscrepanci

es

Paid by theentity


Residualdiscrepanci

es

Export fees - - - - - - - - - - - - - - -Import fees 440.15 440.15 - 16.39 16.39 - - - - - - - - - -Lease registration fees 19.33 11.00 8.33 - - - 15.90 15.90 - - - - 2.06 2.06 -Custom duties and taxes onoil products (TPP) 3,170.38 1,555.13 1,615.25 3,074.37 3,813.62 -739.25 42.18 25.51 16.67 - - - 2,342.30 1,768.50 573.80

Income taxes (IR) - - - 1,852.18 2,010.36 -158.18 0.27 0.27 - - 0.32 -0.32 - - -Non-resident IR or TFT 9,137.88 9,137.69 0.19 1,435.44 1,335.57 99.87 - - - - - - 3,475.35 2,677.94 797.41State taxes remainders 62.13 540.59 -478.46 10,985.52 12,640.36 -1,654.85 86.01 56.27 29.73 - 178.04 -178.04 7.14 7.14 -Unrecovered VAT 11,191.33 11,191.33 - 22.48 22.48 - 7,730.37 7,730.37 - - - - - - -Non-refunded VAT 146,548.25 124,006.74 22,541.50 - - - - - - - - - - - -

A - State taxes 170,569.44 146,882.62 23,686.81 17,386.38 19,838.78 -2,452.40 7,874.73 7,828.32 46.40 - 178.36 -178.36 5,826.84 4,455.63 1,371.21

Property tax on builtproperty (IFPB) - - - 9.03 9.03 - - - - - - - - - -

Property tax on land (IFT) 20.03 20.03 - 10.67 10.67 - - - - - - - - - -Local taxes remainders - - - 3.49 3.49 - - - - - - - - - -Mining rebates - - - 83.61 83.61 - - - - - - - 2,925.80 2,925.80 -0.00Taxing charges - - - 58.80 58.80 - - - - - - - - - -

B - Local taxes 20.03 20.03 - 165.61 165.61 - - - - - - - 2,925.80 2,925.80 -0.00

Mining Administration fees 433.20 433.20 - 36.84 35.01 1.83 - - - - - - 355.39 355.39 -Administration fees paid toOMNIS - - - - - - 1,627.60 1,627.60 - - 10,316.87 -10,316.87 - - -

Training fees paid to OMNIS - - - - - - 551.73 551.73 - - - - - - -Port 3,530.65 3,744.25 -213.60 971.99 971.99 - - - - - - - - - -Royalties on wastewaters(REU) - - - - - - - - - - - - - - -

Segmented remainders 746.58 745.91 0.67 840.07 840.07 - 28.80 28.80 - - - - 1,411.48 1,453.48 -41.99C - Segmented fees, dutiesand royalties 4,710.43 4,923.36 -212.93 1,848.90 1,847.07 1.83 2,208.12 2,208.12 - - 10,316.87 -10,316.87 1,766.87 1,808.87 -41.99

Other common payments(nature and amountprovided in annexes) (Noteb)

16.85 16.85 - - - - - - - - - - 2.65 2.65 -

Other segmented payments(nature and amountprovided in annexes)(Note b)

14.80 14.80 - - - - - - - - - - - - -

Alien’s identity card 558.22 558.22 - 3.57 3.57 - - - - - - - - - -Visa application 224.34 224.34 - 0.88 0.88 - 0.78 0.78 - - - - 6.45 6.45 -Permits release fees - - - - - - - - - - - - - - -Processing fees (BCMM) - - - - - - - - - - - - - - -Penalties 4,192.91 4,195.58 -2.67 95.41 131.11 -35.70 2,864.58 2,864.58 - - 191.76 -191.76 0.20 0.20 -Other payments remainders - - - - - - - - - - - - - - -


EY | 68

(in millions MGA)001. PROJET AMBATOVY 002. HOLCIM 003. MADAGASCAR OIL 004. OPHIR ENERGY 005. QIT MADAGASCAR MINERALS S.A.

Type of payment Paid by theentity


Residualdiscrepanci

es

Paid by theentity

Receivedby theState

Residualdiscrepan

cies

Paid bythe entity

Receivedby theState

Residual

discrepanci

es

Paid bythe

entity

Receivedby theState

Residualdiscrepanci

es

Paid by theentity


Residualdiscrepanci

es

D - Other payments 5,007.12 5,009.79 -2.67 99.86 135.56 -35.70 2,865.36 2,865.36 - - 191.76 -191.76 9.31 9.31 -CNAPS 3,737.88 3,737.88 - 226.40 226.40 - 141.88 141.88 - - - - 873.38 872.56 0.82Taxes on wage income andsimilar (IRSA) 34,846.11 34,846.11 - 646.15 647.30 -1.15 644.05 644.05 - - - - 4,320.45 4,320.45 -

Withheld at sourceremainders 3,062.29 3,062.29 - 54.65 54.65 - 201.12 201.12 - - - - 31.92 31.92 -

E - Withheld at source 41,646.28 41,646.28 - 927.19 928.34 -1.15 987.05 987.05 - - - - 5,225.76 5,224.93 0.82

In kind (Expert evaluation orsupporting documents) 402.33 402.33 - 47.13 47.13 - 129.39 129.39 - - - - 87.83 87.83 -

Cash - - - - - - 27.60 27.60 - - - - 1,553.83 1,553.83 -

F - Donations 402.33 402.33 - 47.13 47.13 - 156.98 156.98 - - - - 1,641.66 1,641.66 -

Revenues on the State-owned companies’s share ofproduction

- - - - - - - - - - - - - - -

Revenues on thegovernment’s share ofproduction

- - - - - - - - - - - - - - -

G - Government’s share ofproduction (Oil companies) - - - - - - - - - - - - - - -

Discovery premiums paid tothe State - - - - - - - - - - - - - - -

Production premiums paid tothe State - - - - - - - - - - - - - - -

Signature premiums paid tothe State - - - - - - - - - - - - - - -

H - Various premiums - - - - - - - - - - - - - - -

Social expenses in kind(Expert evaluation orsupporting documents)

3,448.41 3,448.41 - - - - - - - - - - - - -

Cash social expenses - - - - - - - - - - - - 2,303.36 2,303.36 -I - Social expenses requiredby law or by an agreementwith the government

3,448.41 3,448.41 - - - - - - - - - - 2,303.36 2,303.36 -

Minerals transport fees paidto the State or an entity ofthe State

- - - - - - - - - - - - - - -

J - Transport fees - - - - - - - - - - - - - - -TOTAL GENERAL 225,804.03 202,332.82 23,471.21 20,475.06 22,962.49 -2,487.42 14,092.24 14,045.84 46.40 - 10,687.00 -10,687.00 19,699.60 18,369.56 1,330.04


EY | 69

(in millions MGA)

006. GOLD SAND S.A.R.L. 007. EXXON MOBIL 008. KRAOMA S.A. 009. MAINLAND MINING LTDS.A.R.L.U 010. GALLOIS Etablissement

Type of payment Paid bythe entity

Receivedby theState

Residualdiscrepancies

Paid bythe entity

Receivedby theState


Paid bythe entity

Receivedby theState


Paid bythe entity

Receivedby theState


Paid bythe entity

Receivedby theState


Export fees - - - - - - 89.74 89.74 - - - - 2.36 - 2.36Import fees - - - - - - - - - - - - 0.31 - 0.31Lease registration fees - - - - - - - - - - - - 0.49 0.49 -Custom duties and taxes onoil products (TPP) - - - - - - 119.78 119.78 - - - - 152.72 148.87 3.85

Income taxes (IR) 0.64 0.64 - 0.30 0.30 - 33.14 33.14 - 35.41 35.41 - 287.89 287.89 -Non-resident IR or TFT - - - - - - - - - - - - 232.06 236.30 -4.24State taxes remainders 0.05 0.05 - 11.84 11.86 -0.02 344.11 344.11 - 0.00 0.00 - 320.05 308.27 11.78Unrecovered VAT - - - 277.85 277.85 - - - - 183.27 183.27 - 16.35 16.35 -Non-refunded VAT - - - - - - 5,392.34 5,392.34 - - - - 81.15 - 81.15

A - State taxes 0.69 0.69 - 289.99 290.01 -0.02 5,979.12 5,979.12 - 218.68 218.68 - 1,093.38 998.17 95.21

Property tax on builtproperty (IFPB) - - - - - - 10.85 10.85 - - - - - - -

Property tax on land (IFT) - - - - - - 0.01 0.01 - - - - - - -Local taxes remainders 0.66 0.66 - - - - 2.76 2.76 - - - - - - -Mining rebates - - - - - - 166.96 166.96 - - - - 13.21 11.32 1.90Taxing charges - - - - - - - - - - - - 4.21 4.21 -

B - Local taxes 0.66 0.66 - - - - 180.59 180.59 - - - - 17.42 15.53 1.90

Mining Administration fees 1,469.55 2,232.06 -762.51 - - - 408.59 410.00 -1.41 1,640.63 1,640.63 - 258.48 258.48 -Administration fees paid toOMNIS - - - 1,192.71 1,192.64 0.07 - - - - - - - - -

Training fees paid to OMNIS - - - 559.00 558.94 0.06 - - - - - - - - -Port - - - - - - 630.64 630.64 - - - - - - -Royalties on wastewaters(REU) - - - - - - - - - - - - - - -

Segmented remainders - - - - - - 442.02 442.02 - - - - 33.82 33.00 0.82C - Segmented fees, dutiesand royalties 1,469.55 2,232.06 -762.51 1,751.71 1,751.59 0.12 1,481.24 1,482.65 -1.41 1,640.63 1,640.63 - 292.30 291.48 0.82

Other common payments(nature and amount providedin annexes) (Note b)

- - - - - - - - - 0.57 0.57 - 0.61 0.61 -

Other segmented payments(nature and amount providedin annexes)(Note b)

- - - - - - - - - 1.69 1.69 - - - -

Alien’s identity card - - - 0.65 0.65 - - - - - - - - - -Visa application - - - 0.15 0.15 - 0.86 0.86 - 27.22 27.22 - - - -Permits release fees - - - - - - - - - - - - - - -Processing fees (BCMM) - - - - - - 2.25 - 2.25 - - - - - -Penalties - - - 12.19 12.19 - 0.04 0.04 - 13.47 13.47 - 2.01 0.51 1.50Other payments remainders - - - - - - - - - - - - - - -

D - Other payments - - - 12.99 12.99 - 3.15 0.90 2.25 42.95 42.95 - 2.63 1.13 1.50

CNAPS 0.46 0.46 - 5.58 5.58 - 447.37 447.37 - 30.68 30.68 - 165.82 135.30 30.51


EY | 70

(in millions MGA)

006. GOLD SAND S.A.R.L. 007. EXXON MOBIL 008. KRAOMA S.A. 009. MAINLAND MINING LTDS.A.R.L.U 010. GALLOIS Etablissement

Type of payment Paid bythe entity

Receivedby theState


Paid bythe entity

Receivedby theState


Paid bythe entity

Receivedby theState


Paid bythe entity

Receivedby theState


Paid bythe entity

Receivedby theState


Taxes on wage income andsimilar (IRSA) - - - 251.59 251.59 - 688.55 688.55 - 23.56 23.56 - 127.08 127.08 -

Withheld at sourceremainders - - - 9.84 9.84 - 67.99 67.99 - 9.20 9.20 - 9.28 9.28 -

E - Withheld at source 0.46 0.46 - 267.02 267.02 - 1,203.90 1,203.90 - 63.44 63.44 - 302.18 271.67 30.51

In kind (Expert evaluation orsupporting documents) - - - - - - - - - 0.29 0.29 - - - -

Cash - - - - - - 15.89 15.89 - 12.53 12.53 - - - -

F - Donations - - - - - - 15.89 15.89 - 12.82 12.82 - - - -

Revenues on the State-owned companies’s share ofproduction

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -


Discovery premiums paid tothe State - - - - - - - - - - - - - - -





- - - - - - - - - - - - - - -

Cash social expenses - - - - - - - - - 3,497.50 3,497.50 - - - -I - Social expenses requiredby law or by an agreementwith the government

- - - - - - - - - 3,497.50 3,497.50 - - - -

Minerals transport fees paidto the State or an entity ofthe State

- - - - - - - - - - - - - - -

J - Transport fees - - - - - - - - - - - - - - -GRAND TOTAL 1,471.37 2,233.88 -762.51 2,321.71 2,321.61 0.10 8,863.90 8,863.06 0.84 5,476.01 5,476.01 - 1,707.92 1,577.97 129.94


EY | 71

(in millions MGA)

011. NIKO RESSOURCES [ENERMAD] 012. GROUPE PAM 013. MADA-AUST S.A.R.L. 014. MADAGASCAR MININGRESOURCES LTD S.A.R.L.

015. MADAGASCARINTERNATIONAL TAK MINING

S.A.R.L.

Type of paymentPaid by

theentity

Receivedby theState


Paid bythe

entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees 1.90 1.90 - - - - - - - - - - - - -Custom duties and taxeson oil products (TPP) - - - 401.90 259.69 142.21 - - - - - - - - -

Income taxes (IR) 0.10 0.10 - 0.30 0.20 0.10 10.15 6.99 3.16 0.10 0.10 - 0.10 0.10 -Non-resident IR or TFT - - - - - - - - - - - - - - -State taxes remainders - - - 14.50 14.53 -0.02 1.03 1.03 -0.00 0.01 - 0.01 0.01 0.01 -Unrecovered VAT - - - 138.21 138.21 - - - - - - - - - -Non-refunded VAT - - - - - - - - - - - - - - -

A - State taxes 2.00 2.00 - 554.91 412.62 142.28 11.18 8.02 3.16 0.11 0.10 0.01 0.11 0.11 -

Property tax on builtproperty (IFPB) - - - - - - - - - - - - - - -

Property tax on land (IFT) - - - - - - - - - - - - - - -Local taxes remainders - - - - - - - - - - - - - - -Mining rebates - - - - - - - - - - - - - - -Taxing charges - - - - - - - - - - - - - - -

B - Local taxes - - - - - - - - - - - - - - -

Mining Administrationfees - - - 2,303.85 2,303.85 - 692.54 692.54 - 775.20 774.53 0.67 772.42 772.42 -

Administration fees paidto OMNIS 383.81 383.81 - - - - - - - - - - - - -

Training fees paid toOMNIS 388.60 388.60 - - - - - - - - - - - - -

Port - - - - - - - - - - - - - - -Royalties on wastewaters(REU) - - - - - - - - - - - - - - -

Segmented remainders 155.39 155.39 - 22.00 22.00 - 0.46 0.46 - 0.33 0.33 - - - -C - Segmented fees,duties and royalties 927.81 927.81 - 2,325.85 2,325.85 - 693.00 693.00 - 775.53 774.86 0.67 772.42 772.42 -

Other common payments(nature and amountprovided in annexes)(Note b)

- - - - - - - - - 0.80 0.80 - 0.32 0.32 -

Other segmentedpayments (nature andamount provided inannexes)(Note b)

- - - - - - - - - 28.56 29.67 -1.11 6.42 8.98 -2.56

Alien’s identity card - - - 2.83 2.83 - - - - - - - - - -Visa application - - - 0.35 0.35 - - - - - - - - - -Permits release fees - - - - - - - - - - - - - - -Processing fees (BCMM) - - - - - - - - - - - - - - -


EY | 72

(in millions MGA)



S.A.R.L.


theentity

Receivedby theState


Paid bythe

entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Penalties 0.10 0.10 - 184.98 184.95 0.04 - - - - - - - - -Other paymentsremainders - - - - - - - - - - - - - - -

D - Other payments 0.10 0.10 - 188.16 188.12 0.04 - - - 29.36 30.47 -1.11 6.74 9.30 -2.56

CNAPS 4.36 4.36 - 70.04 893.53 -823.49 24.78 24.78 - - - - - - -Taxes on wage incomeand similar (IRSA) 108.67 108.67 - 142.57 142.57 - 85.26 85.26 - - - - - - -

Withheld at sourceremainders 31.10 31.10 - 19.07 19.07 - 8.63 8.63 - - - - - - -

E - Withheld at source 144.13 144.13 - 231.68 1,055.16 -823.49 118.67 118.67 - - - - - - -

In kind (Expert evaluationor supporting documents) - - - - - - - - - - - - - - -

Cash - - - - - - 8.41 8.41 - - - - - - -

F - Donations - - - - - - 8.41 8.41 - - - - - - -

Revenues on the State-owned companies’s shareof production

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -

G - Government’s shareof production (Oilcompanies)

- - - - - - - - - - - - - - -

Discovery premiums paidto the State - - - - - - - - - - - - - - -

Production premiums paidto the State - - - - - - - - - - - - - - -

Signature premiums paidto the State - - - - - - - - - - - - - - -



- - - - - - - - - - - - - - -

Cash social expenses - - - - - - - - - - - - - - -I - Social expensesrequired by law or by anagreement with thegovernment

- - - - - - - - - - - - - - -

Minerals transport feespaid to the State or anentity of the State

- - - - - - - - - - - - - - -


EY | 73

(in millions MGA)



S.A.R.L.


theentity

Receivedby theState


Paid bythe

entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


J - Transport fees - - - - - - - - - - - - - - -TOTAL GENERAL 1,074.03 1,074.03 - 3,300.59 3,981.75 -681.16 831.25 828.10 3.16 805.01 805.42 -0.42 779.28 781.84 -2.56


EY | 74

(in millions MGA)016. CALIBRA RESOURCES &

ENGINEERS MADAGASCAR S.A.R.L.U 017. NOVA RESOURCES S.A.R.L.U 018. MADAGASCAR CHROMIUMCOMPANY LTD S.A.R.L.U

019. UNIVERSAL EXPLORATIONMADAGASCAR S.A.R.L. 020. URAMAD S.A

Type ofpayment

Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paid bythe

entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Leaseregistration fees - - - 55.45 1.74 53.71 - - - - - - - - -

Custom dutiesand taxes on oilproducts (TPP)

- - - - - - - - - 112.02 95.64 16.38 - - -

Income taxes (IR) 0.32 0.43 -0.11 13.26 13.26 - 0.10 0.10 - 0.10 0.10 - 0.32 0.32 -Non-resident IRor TFT - - - - - - - - - - - - - - -

State taxesremainders 4.23 4.23 - 167.20 - 167.20 0.01 - 0.01 275.19 212.65 62.54 - 0.00 -0.00

Unrecovered VAT - - - - - - - - - - - - - - -Non-refundedVAT - - - - - - - - - - - - - - -

A - State taxes 4.55 4.66 -0.11 235.91 15.01 220.91 0.11 0.10 0.01 387.31 308.39 78.92 0.32 0.32 -0.00

Property tax onbuilt property(IFPB)

- - - - - - - - - - - - - - -

Property tax onland (IFT) - - - - - - - - - - - - - - -

Local taxesremainders - - - - - - - - - - - - - - -

Mining rebates - - - - - - - - - - - - - - -Taxing charges - - - - - - - - - - - - - - -

B - Local taxes - - - - - - - - - - - - - - -

MiningAdministrationfees

307.30 307.30 - 624.79 619.62 5.17 1,500.46 1,632.70 -132.24 192.00 192.00 - 504.54 504.54 -

Administrationfees paid toOMNIS

- - - - - - - - - - - - - - -

Training fees paidto OMNIS - - - - - - - - - - - - - - -

Port - - - - - - - - - - - - - - -Royalties onwastewaters(REU)

- - - - - - - - - - - - - - -

Segmentedremainders - - - - - - - - - - - - - - -

C - Segmentedfees, duties androyalties

307.30 307.30 - 624.79 619.62 5.17 1,500.46 1,632.70 -132.24 192.00 192.00 - 504.54 504.54 -


EY | 75




Type ofpayment

Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paid bythe

entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Other commonpayments (natureand amountprovided inannexes) (Note b)

- - - - - - 0.49 0.49 - - - - - - -

Other segmentedpayments (natureand amountprovided inannexes)(Note b)

- - - 5.35 - 5.35 12.25 - 12.25 - - - - - -

Alien’s identitycard - - - - - - - - - - - - - - -

Visa application - - - - - - - - - - - - - - -Permits releasefees - - - - - - - - - - - - - - -

Processing fees(BCMM) - - - - - - - - - - - - - - -

Penalties - 0.10 -0.10 2.69 0.10 2.59 7.06 2.35 4.71 0.30 0.30 - - - -Other paymentsremainders - - - - - - - - - - - - - - -

D - Otherpayments - 0.10 -0.10 8.04 0.10 7.94 19.80 2.84 16.96 0.30 0.30 - - - -

CNAPS - - - 0.16 - 0.16 - - - 13.79 13.79 - - - -Taxes on wageincome andsimilar (IRSA)

- - - - - - - - - 52.77 52.77 - - - -

Withheld atsourceremainders

- - - 0.06 0.06 - - - - - - - - - -

E - Withheld atsource - - - 0.23 0.06 0.16 - - - 66.56 66.56 - - - -

In kind (Expertevaluation orsupportingdocuments)

- - - - - - - - - - - - - - -

Cash - - - - - - - - - - - - - - -

F - Donations - - - - - - - - - - - - - - -

Revenues on theState-ownedcompanies’sshare ofproduction

- - - - - - - - - - - - - - -

Revenues on thegovernment’sshare ofproduction

- - - - - - - - - - - - - - -


EY | 76




Type ofpayment

Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paid bythe

entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


G -Government’sshare ofproduction (Oilcompanies)

- - - - - - - - - - - - - - -

Discoverypremiums paid tothe State

- - - - - - - - - - - - - - -

Productionpremiums paid tothe State

- - - - - - - - - - - - - - -

Signaturepremiums paid tothe State

- - - - - - - - - - - - - - -

H - Variouspremiums - - - - - - - - - - - - - - -

Social expensesin kind (Expertevaluation orsupportingdocuments)

- - - - - - - - - - - - - - -

Cash socialexpenses - - - - - - - - - - - - - - -

I - Socialexpensesrequired by lawor by anagreement withthe government

- - - - - - - - - - - - - - -

Mineralstransport feespaid to the Stateor an entity ofthe State

- - - - - - - - - - - - - - -

J - Transportfees - - - - - - - - - - - - - - -

TOTALGENERAL 311.85 312.06 -0.21 868.97 634.79 234.18 1 520.38 1 635.65 -115.27 646.18 567.25 78.92 504.86 504.87 -0.00


EY | 77

(in millions MGA)

021. STERLING ENERGY LTD 022. TULLOW MADAGASCAR 023. TOLIARA SANDS S.A.R.L. 024. TANTALUM RARE EARTH(MALAGASY) S.A.R.L.U 025. ROC OIL/SAPETRO

Type of paymentPaid

by theentity

Receivedby theState


Paid bythe entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees 0.88 - 0.88 - - - 4.77 - 4.77 - - - - - -Custom duties andtaxes on oil products(TPP)

- - - - 0.41 -0.41 13.02 4.21 8.81 3.71 3.71 - - - -

Income taxes (IR) - - - 0.32 0.32 - 0.43 0.82 -0.39 7.82 7.82 - - - -Non-resident IR or TFT - - - - - - - - - - - - - - -State taxes remainders 0.10 0.10 - - 0.49 -0.49 88.15 74.02 14.14 8.52 12.59 -4.07 - - -Unrecovered VAT - - - 117,355.73 117,355.73 - - - - 15.44 15.44 - - - -Non-refunded VAT - - - - - - - - - - - - - - -

A - State taxes 0.98 0.10 0.88 117,356.05 117,356.94 -0.89 106.37 79.05 27.32 35.49 39.56 -4.07 - - -

Property tax on builtproperty (IFPB) - - - - - - - - - - - - - - -

Property tax on land(IFT) - - - - - - - - - - - - - - -

Local taxes remainders - - - - - - - - - - - - - - -Mining rebates - - - - - - - - - - - - - - -Taxing charges - - - - - - - - - - - - - - -

B - Local taxes - - - - - - - - - - - - - - -

Mining Administrationfees - - - - - - 65.16 65.16 - 137.86 137.86 - - - -

Administration feespaid to OMNIS 311.62 311.62 - 257.47 257.47 - - - - - - - 220.69 220.69 -

Training fees paid toOMNIS 110.35 110.35 - 128.62 128.62 - - - - - - - 275.86 275.86 -

Port - - - - - - - - - - - - - - -Royalties onwastewaters (REU) - - - - - - - - - - - - - - -

Segmented remainders - - - - - - 0.99 0.99 - - - - - - -C - Segmented fees,duties and royalties 421.96 421.96 - 386.09 386.09 - 66.15 66.15 - 137.86 137.86 - 496.55 496.55 -

Other commonpayments (nature andamount provided inannexes) (Note b)

- - - - - - - - - - - - - - -

Other segmentedpayments (nature andamount provided inannexes)(Note b)

- - - - - - - - - - - - - - -

Alien’s identity card - - - - - - - - - - - - - - -Visa application - - - - - - - - - - - - - - -Permits release fees - - - - - - - - - - - - - - -


EY | 78

(in millions MGA)


Type of paymentPaid

by theentity

Receivedby theState


Paid bythe entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Processing fees(BCMM) - - - - - - - - - - - - - - -

Penalties - - - 652.20 652.20 - - 0.43 -0.43 88.94 88.42 0.52 - - -Other paymentsremainders - - - - - - - - - - - - - - -

D - Other payments - - - 652.20 652.20 - - 0.43 -0.43 88.94 88.42 0.52 - - -

CNAPS - - - 2.62 2.60 0.03 30.52 30.52 - 80.16 44.38 35.78 - - -Taxes on wage incomeand similar (IRSA) - - - 4.81 4.81 - 260.80 260.80 - 134.51 134.51 - - - -

Withheld at sourceremainders - - - 1.46 1.46 - 22.94 22.94 - - - - - - -

E - Withheld at source - - - 8.90 8.87 0.03 314.26 314.26 - 214.67 178.89 35.78 - - -

In kind (Expertevaluation orsupporting documents)

- - - - - - 42.31 42.31 - - - - - - -

Cash - - - - - - 9.16 9.16 - 30.00 30.00 - 0.90 0.90 -

F - Donations - - - - - - 51.46 51.46 - 30.00 30.00 - 0.90 0.90 -

Revenues on the State-owned companies’sshare of production

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -

G - Government’sshare of production(Oil companies)

- - - - - - - - - - - - - - -

Discovery premiumspaid to the State - - - - - - - - - - - - - - -

Production premiumspaid to the State - - - - - - - - - - - - - - -

Signature premiumspaid to the State - - - - - - - - - - - - - - -



- - - - - - - - - - - - 185.52 185.52 -

Cash social expenses - - - - - - - - - - - - - - -I - Social expensesrequired by law or byan agreement with thegovernment

- - - - - - - - - - - - 185.52 185.52 -


EY | 79

(in millions MGA)


Type of paymentPaid

by theentity

Receivedby theState


Paid bythe entity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Minerals transport feespaid to the State or anentity of the State

- - - - - - - - - - - - - - -

J - Transport fees - - - - - - - - - - - - - - -TOTAL GENERAL 422.94 422.06 0.88 118,403.24 118,404.10 -0.86 538.25 511.36 26.89 506.96 474.73 32.23 682.97 682.97 -


EY | 80

(in millions MGA)026. MADAGASCAR CONSOLIDATED

MINING S.A. 027. LABRADOR MADAGASCAR 028. MINERAL PRODUCTSINTERNATIONAL GROUP S.A.R.L. 029. AMICOH RESOURCES 030. RED GRANITI MADAGASCAR

S.A.R.L.

Type of paymentPaid

by theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidbythe

entity

Receivedby theState


Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees 0.46 0.46 - - - - - - - - - - - - -Custom duties and taxes on oilproducts (TPP) - - - - - - - - - 37.50 25.31 12.19 - 45.01 -45.01

Income taxes (IR) 2.72 2.72 - 130.60 130.60 - 0.10 0.10 - 0.32 0.32 - - 21.52 -21.52Non-resident IR or TFT - - - - - - - - - - - - - 0.39 -0.39State taxes remainders 26.48 26.49 -0.01 211.43 210.53 0.90 0.01 - 0.01 136.27 69.48 66.79 - 136.19 -136.19Unrecovered VAT 3.15 3.15 - - - - - - - - - - - - -Non-refunded VAT - - - - - - - - - - - - - - -

A - State taxes 32.82 32.83 -0.01 342.03 341.13 0.90 0.11 0.10 0.01 174.09 95.11 78.98 - 203.12 -203.12

Property tax on built property(IFPB) - - - - - - - - - - - - - - -

Property tax on land (IFT) - - - - - - - - - - - - - - -Local taxes remainders - - - - - - - - - - - - - - -Mining rebates - - - 8.84 1.56 7.28 - - - - - - - - -Taxing charges - - - - - - - - - - - - - - -

B - Local taxes - - - 8.84 1.56 7.28 - - - - - - - - -

Mining Administration fees 332.02 332.02 - 28.72 28.72 - 356.04 356.04 - 179.34 191.53 -12.19 - - -Administration fees paid toOMNIS - - - - - - - - - - - - - - -

Training fees paid to OMNIS - - - - - - - - - - - - - - -Port - - - - - - - - - - - - - - -Royalties on wastewaters(REU) - - - - - - - - - - - - - - -

Segmented remainders - - - 3.79 0.67 3.12 - - - 0.05 - 0.05 - 0.70 -0.70C - Segmented fees, dutiesand royalties 332.02 332.02 - 32.51 29.39 3.12 356.04 356.04 - 179.39 191.53 -12.14 - 0.70 -0.70

Other common payments(nature and amount providedin annexes) (Note b)

0.53 0.53 - - - - 0.17 0.17 - - - - - - -

Other segmented payments(nature and amount providedin annexes)(Note b)

- - - - - - 11.05 - 11.05 - - - - 0.00 -0.00

Alien’s identity card - - - - - - - - - - - - - - -Droit de visa - - - - - - - - - 6.62 - 6.62 - - -Permits release fees - - - - - - - - - - - - - - -Processing fees (BCMM) 7.72 7.98 -0.26 - - - - - - - - - - - -Penalties 0.47 0.47 - - - - - - - 5.10 5.10 -0.00 - 0.42 -0.42Other payments remainders - - - - - - - - - - - - - - -

D - Other payments 8.73 8.99 -0.26 - - - 11.21 0.17 11.05 11.72 5.10 6.62 - 0.43 -0.43


EY | 81

(in millions MGA)026. MADAGASCAR CONSOLIDATED

MINING S.A. 027. LABRADOR MADAGASCAR 028. MINERAL PRODUCTSINTERNATIONAL GROUP S.A.R.L. 029. AMICOH RESOURCES 030. RED GRANITI MADAGASCAR

S.A.R.L.

Type of paymentPaid

by theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidby theentity

Receivedby theState


Paidbythe

entity

Receivedby theState


CNAPS 10.84 10.84 -0.00 10.32 10.32 - - - - 59.85 59.85 - - 24.56 -24.56Taxes on wage income andsimilar (IRSA) 22.18 22.18 - 6.50 6.50 - - - - 116.32 116.32 - - 58.44 -58.44

Withheld at source remainders 5.08 5.08 - 2.40 2.40 - - - - 16.92 16.92 - - - -

E - Withheld at source 38.10 38.10 -0.00 19.21 19.21 - - - - 193.09 193.09 - - 83.00 -83.00

In kind (Expert evaluation orsupporting documents) 20.14 20.14 - - - - - - - - - - - - -

Cash 15.98 15.98 - - - - - - - - - - - - -

F - Donations 36.12 36.12 - - - - - - - - - - - - -

Revenues on the State-ownedcompanies’s share ofproduction

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -


Discovery premiums paidtothe State - - - - - - - - - - - - - - -




Social expenses in kind (Expertevaluation or supportingdocuments)

- - - - - - - - - - - - - - -

Cash social expenses - - - - - - - - - - - - - - -I - Social expenses requiredby law or by an agreementwith the government

- - - - - - - - - - - - - - -

Minerals transport fees paid tothe State or an entity of theState

- - - - - - - - - - - - - - -

J - Transport fees - - - - - - - - - - - - - - -TOTAL GENERAL 447.79 448.06 -0.27 402.59 391.29 11.30 367.37 356.30 11.06 558.29 484.83 73.46 - 287.25 -287.25


EY | 82

(in millions MGA)

031. TANETY LAVA S.A.R.L. 032. GRANITEX S.A.R.L. 033. EAX /CANDAX 034. MADAGASCARRESSOURCES S.A.R.L.

Total Paidby the entity

TotalReceived by

the State

TotalResidual

discrepanciesType of payment

Paid bythe

entity

Received by the

State

Residualdiscrepan

cies

Paid bythe

entity

Received by the

State

Residual

discrepancies

Paid bythe

entity

Receivedby theState

Residualdiscrepa

ncies

Paid bythe

entity

Received bythe

State

Residualdiscrepa

ncies

Export fees - - - 6.18 2.14 4.04 - - - - - - 98.29 91.89 6.40Import fees - - - - - - - - - - - - 456.85 456.54 0.31Lease registration fees - - - - - - - - - - - - 101.23 33.55 67.68Custom duties and taxes on oilproducts (TPP) 4.50 4.50 - - 28.61 -28.61 - - - - - - 9,474.37 7,898.50 1,575.88

Income taxes (IR) 0.32 0.32 - 1.05 1.05 - 0.10 - 0.10 0.32 0.31 0.01 2,378.78 2,555.94 -177.16Non-resident IR or TFT - - - - - - - - - - - - 14,280.74 13,387.89 892.85State taxes remainders 46.22 20.75 25.46 - 142.23 -142.23 - - - 2.36 2.36 - 12,798.57 15,014.37 -2,215.80Unrecovered VAT - - - - - - - - - - - - 136,934.19 136,934.19 -Non-refunded VAT - - - - - - - - - - - - 152,021.74 129,399.09 22,622.65

A - State taxes 51.03 25.57 25.46 7.23 174.03 -166.80 0.10 - 0.10 2.68 2.67 0.01 328,544.75 305,771.95 22,772.81

Property tax on built property(IFPB) - - - - - - - - - - - - 19.89 19.89 -

Property tax on land (IFT) - - - - - - - - - - - - 30.72 30.72 -Local taxes remainders - - - - - - - - - - - - 6.91 6.91 -Mining rebates - - - 3.24 3.24 - - - - - - - 3,201.67 3,192.49 9.18Taxing charges - - - 3.00 3.00 - - - - - - - 66.01 66.01 -

B - Local taxes - - - 6.24 6.24 - - - - - - - 3,325.20 3,316.02 9.18

Mining Administration fees 227.01 260.04 -33.03 22.08 27.54 -5.45 - - - 172.32 172.32 - 13,796.34 14,735.50 -939.16Administration fees paid to OMNIS - - - - - - 132.34 132.34 - - - - 4,126.24 14,443.05 -10,316.81Training fees paid to OMNIS - - - - - - 55.06 55.06 - - - - 2,069.22 2,069.16 0.06Port - - - - - - - - - - - - 5,133.27 5,346.88 -213.60Royalties on wastewaters (REU) - - - - - - - - - - - - - - -Segmented remainders 0.10 - 0.10 4.29 4.32 -0.03 16.48 16.48 - - 0.09 -0.09 3,706.65 3,744.69 -38.05C - Segmented fees, duties androyalties 227.11 260.04 -32.93 26.37 31.86 -5.49 203.88 203.88 - 172.32 172.41 -0.09 28,831.72 40,339.29 -11,507.57

Other common payments (natureand amount provided in annexes)(Note b)

- - - - - - - - - - - - 23.00 23.00 -

Other segmented payments(nature and amount provided inannexes)(Note b)

- - - - 1.08 -1.08 - - - - - - 80.12 56.22 23.91

Alien’s identity card - - - - - - - - - - - - 565.27 565.27 -Visa application - - - - - - - - - - - - 267.65 261.03 6.62Permits release fees - - - - - - - - - - - - - - -Processing fees (BCMM) - - - - 2.42 -2.42 - - - - - - 9.97 10.40 -0.43Penalties 0.40 0.34 0.05 1.10 1.10 - 0.10 - 0.10 - - - 8,124.24 8,345.83 -221.59Other payments remainders - - - - - - - - - - - - - - -

D - Other payments 0.40 0.34 0.05 1.10 4.61 -3.50 0.10 - 0.10 - - - 9,070.26 9,261.75 -191.49

CNAPS 42.38 42.38 - - - - 2.76 2.76 - - - - 5,982.02 6,762.77 -780.75


EY | 83

(in millions MGA)

031. TANETY LAVA S.A.R.L. 032. GRANITEX S.A.R.L. 033. EAX /CANDAX 034. MADAGASCARRESSOURCES S.A.R.L.

Total Paidby the entity

TotalReceived by

the State

TotalResidual

discrepanciesType of payment

Paid bythe

entity

Received by the

State

Residualdiscrepan

cies

Paid bythe

entity

Received by the

State

Residual

discrepancies

Paid bythe

entity

Receivedby theState

Residualdiscrepa

ncies

Paid bythe

entity

Received bythe

State

Residualdiscrepa

ncies

Taxes on wage income and similar(IRSA) 80.53 74.68 5.85 - - - 46.00 46.00 - - - - 42,608.47 42,662.20 -53.74

Withheld at source remainders 21.44 21.44 - - - - - - - - - - 3,575.39 3,575.39 -

E - Withheld at source 144.35 138.50 5.85 - - - 48.76 48.76 - - - - 52,165.88 53,000.37 -834.48

In kind (Expert evaluation orsupporting documents) - - - - - - - - - - - - 729.41 729.41 -

Cash - - - - - - - - - - - - 1,674.29 1,674.29 -

F - Donations - - - - - - - - - - - - 2,403.70 2,403.70 -

Revenues on the State-ownedcompanies’s share of production - - - - - - - - - - - - - - -

Revenues on the government’sshare of production - - - - - - - - - - - - - - -


Discovery premiums paid to theState - - - - - - - - - - - - - - -

Production premiums paid to theState - - - - - - - - - - - - - - -

Signature premiums paid to theState - - - - - - - - - - - - - - -


Social expenses in kind (Expertevaluation or supportingdocuments)

- - - - - - - - - - - - 3,633.93 3,633.93 -

Cash social expenses - - - - - - 399.10 399.10 - - - - 6,199.96 6,199.96 -I - Social expenses required bylaw or by an agreement with thegovernment

- - - - - - 399.10 399.10 - - - - 9,833.89 9,833.89 -

Minerals transport fees paid to theState or an entity of the State - - - - - - - - - - - - - - -

J - Transport fees - - - - - - - - - - - - - - -TOTAL GENERAL 422.89 424.46 -1.57 40.94 216.73 -175.79 651.94 651.74 0.20 175.00 175.08 -0.08 434,175.40 423,926.96 10,248.45


EY | 84

3.2.2 Comments

3.2.2.1 Regarding the significant flows per type of payment

The following charts present the total payment flows from the extractive companies to the publicentities for the fiscal year 2013 :

The total flows received by the State from the extractive industries for the fiscal year 2013 amountsto MGA 423.93 billion which is USD 192.10 million.

As shown in the above chart, the most significant flows are essentially the non-refunded VAT whichrepresents 31%, the unrecovered VAT which represents 32%, the Taxes on wage income and similar(IRSA) which represents 10%, the Mining administration fees representing 4%, the net VAT which is4%, and other payments which are 17% of the payment flows received by the State.

► The Non-refunded VAT18 by the State to the extractive companies, for the fiscal year 2013amounts to MGA 129.40 billion which is USD 58.63 million. 96% of these flows were generatedby the Ambatovy project.

► The Unrecovered VAT by the companies from the tax administrations amounts to MGA136.93 billion, which is USD 62.05 million. TULLOW Madagascar generated 86% of theseflows, the Ambatovy project 8% and Madagascar Oil 6%.

► L’IRSA paid to the State by the extractive companies for the fiscal year 2013 amounts to MGA42.66 billion which is USD 19.33 million. 82% of these flows were from the Ambatovy projectand 10% from QMM.

► The Mining Administration fees (FAM) amounts to MGA 14.74 billion which is USD 6.68million. The extractive companies that contributed most to this flow are PAM Madagascar,Goldsand, Madagascar Chromium Company, and Mainland.

18 VAT for which a request of reimbursement was presented to the State but the request was rejected.

31%

10%

32%

4%3%

3%

17%

Payment flows received in 2013 pertype of payment

TVA non remboursée

Impôts sur les revenussalariaux et assimilés (IRSA)

TVA non récupérée

Frais d’administrationminière

Frais d’administration payé àl'OMNIS

IR non résident ou TFT

Autres paiements


EY | 85

► The Mining Administration Fees (FAM) amounts to MGA 14.44 billion which is USD 6.54million mostly from OPHIR ENERGY for 71%, Madagascar Oil for 11% and the group EXXONMobil for 8%.

► The Non-resident IR or TFT paid by the extractive industries is MGA 13.39 billion equivalentto USD 6.07 million, mainly from Ambatovy project for 68%, QMM for 20% and HOLCIM for10%.

The Other payments include the flows that individually represent less than 3% of the total flowsreceived by the State.

Note on the non-refunded VATIn a letter dated January 22nd 2015, addressed to the Minister attached to the Presidency in chargeof the Strategic Resources, the Minister of Finances and Budget has precised the status of manyrequests of VAT refund submitted by the extractive companies for the fiscal year 2013. The letterreports on the refunds approved by the Tax General Directorate, especially during the last quarter of2014, for a total amount of MGA 90.47 billion, which is USD 40.99 million.

3.2.2.2 The significant flows per public entity

The following charts present the total of the payment flows paid by the extractive companies for themain public entities or the administrations and their branches.The details per type of payment per public entity are presented in the annexes.

As seen in the above chart, the main payment flows were paid to the Tax General Directoraterepresenting 80% for MGA 339.95 billion which is USD 154.04 million. The flows paid to the DGI aremostly the State Taxes (non-refunded TVA, unrecovered VAT, TFT, IR etc.) and the payment of taxeswithheld at source (IRSA).

3.2.2.3 Regarding the statements without counterpart by the State

During our reconciliation works, some payment flows were considered as being statements withoutcounterpart on the State’s side where the unilateral statements of the extractive industries were

80%

3%

2%4%

2%9%

Payment flow per public entity

Direction Général desImpôts (DGI)

BCMM

Douane

OMNIS

CNAPS

Autres entités


EY | 86

taken into account. As a result, to cancel the discrepancy, an adjustment of the corresponding amounthas been made to the information from the State.We have classified as statements without counterpart, the payment flows to the entities of which theconcerned flows are:

► Very different and/or collected by various companies (health contribution, …);► Non-traceable per company within the administration (Alien’s identity card…);► Traceable only within the companies by their nature (unrecovered VAT, social expenditures,

donations…);► Small and uncollected (car tax…).

The total of the statements without counterpart of the State for the fiscal year 2013 is MGA 146.53billion which is USD 66.40 million.

As illustrated above, the statements without counterpart are mostly the unrecovered VATrepresenting 88% of the flows mainly from TULLOW Madagascar for 86%, the cash social expendituresthat represent 4%, other health organizations representing 2% and of the flows and other paymentsrepresenting 6% of the statements without counterpart at the State.

3.2.2.4 Regarding the residual discrepancy

It is to be noted that a negative discrepancy means that the State has reported more revenues thanthe payments made by the companies. Conversely, a discrepancy is positive when the companies havereported payments superior to the revenues received by the State.

Following our reconciliation, the total amount of the residual discrepancy amount to MGA 10.25billion which is USD 4.64 million for the fiscal year 2013, representing 2.42% of the total revenuesreceived by the State.

The table below presents the details of the discrepancies:(in million MGA)

Type of tax

Amount paid bythe extractive

companies

Amountsreceived bythe State

Residualdiscrepanc

ies

Residualdiscrepancie

s (source:companies)

Residualdiscrepanc

ies(1) (2) (1)-(2)

88%

4%2% 6%

Statement without counterpartfrom the State

TVA non récupérée

Dépenses sociales ennuméraire

Organisation sanitaired'entreprise

Autres paiements


EY | 87

(source:State)

Non-refunded VAT 152,021.74 129,399.09 22,622.65 0.00 22,622.65Custom duties and taxes on oil products (TPP) 9,474.37 7,898.50 1,575.88 -574.69 2,150.57Non-resident IR or TFT 14,280.74 13,387.89 892.85 -326.92 1,219.78Net VAT (due VAT) 0.00 0.00 0.00 0.00 0.00CNAPS 5,982.02 6,762.77 -780.75 -847.23 66.48Mining Administration fees 13,796.34 14,735.50 -939.16 -31.59 -907.57

Administration fees paid to OMNIS 4,126.24 14,443.05 -10,316.81 -10,316.87 0.07

Other non significant payments 234,493.94 237,300.16 -2,806.22 -3,980.28 1,174.07TOTAL 434,175.40 423,926.96 10,248.45 -16,077.59 26,326.04

(in million USD)

Type of tax

Amount paid bythe extractive

companies

Amountsreceived bythe State

Residualdiscrepanc

ies

Residualdiscrepancie

s (source:companies)

Residualdiscrepanc

ies(source:State)(1) (2) (1)-(2)

Non-refunded VAT 68.88 58.63 10.25 0.00 10.25Custom duties and taxes on oil products (TPP) 4.29 3.58 0.71 -0.26 0.97Non-resident IR or TFT 6.47 6.07 0.40 -0.15 0.55Net VAT (due VAT) 0.00 0.00 0.00 0.00 0.00CNAPS 2.71 3.06 -0.35 -0.38 0.03Mining Administration fees 6.25 6.68 -0.43 -0.01 -0.41Administration fees paid to OMNIS 1.87 6.54 -4.67 -4.67 0.00Other non significant payments 106.25 107.53 -1.27 -1.80 0.53TOTAL 196.73 192.09 4.64 -7.29 11.93

OPHIR ENERGY and RED GRANITI MADAGASCAR S.A.R.L. did not fill out their canvas within the timelimit. Thus, the information from the State will be considered as residual discrepancies on thecompany’s side. The total information from the State regarding these companies amount to MGA10,974.25 million equivalent to USD 4.97 million.

The explanation and breakdown of the significant discrepancies are provided below:

► Non-refunded VATThe Non-refunded VAT generated a total positive discrepancy of MGA 22.62 billion equivalent to USD10.25 million. The related information, mainly those of the Ambatovy project for 99%, was not tracedwith the Tax Administration.

► Custom duties and taxes on oil products (TPP)Custom duties and taxes on oil products (TPP) have shown a positive discrepancy ofMGA 1,575.88 million which is USD 0.71 million for the benefit of the companies. The discrepancy ismainly composed of negative discrepancies from the companies amounting to MGA 574.69 millionand positive discrepancies from the State for MGA 2,150.57 million.It is worth noting that the negative discrepancies are related to the flows that were traced with theCustoms, but not identified with the companies and the positive discrepancies are those traced withthe companies but not found with the Customs.

COMPANYStatement by the

StateStatement by the

State(in million MGA) (in million USD)

017.OPHIRENERGY 10,687.00 4.84030.REDGRANITIMADAGASCARS.A.R.L. 287.25 0.13TOTAL 10,974.25 4.97


EY | 88

This discrepancy is mainly composed of the discrepancies traced during the reconciliations of theinformation from the customs and the following companies: Ambatovy project, HOLCIM, QMM, GroupPAM, the details of which are presented in the following table:

(in MGA)

Company

Elements traced at thecustoms, but not with

the company

Elements traced withthe companies, but not

with the customs

Residualdiscrepancy

(1) (2) (2 – 1)PROJET AMBATOVY (252,174,645.00) 1,867,425,457.14 1,615,250,812.14HOLCIM (905,524,801.00) 166,276,946.00 (739,247,855.00)QIT MADAGASCAR MINERALS S.A. 658,860,223.00 (85,063,896.00) 573,796,327.00GROUP PAM - 142,208,662.00 142,208,662.00Other companies (75,852,563.00) 59,720,020.56 (16,132,542.44)TOTAL (574,691,786.00) 2,150,567,189.70 1,575,875,403.70

► Non-resident IR or TFTThe Non-resident IR or TFT showed a positive discrepancy of MGA 892.85 million equivalent to USD0.40 million in favour of the companies, of which most of the discrepancy is from QMM for MGA797.41 million which is 89% of the total discrepancy.

► Due VAT (net TVA)The net VAT generated a total negative discrepancy of MGA 226.94 million equivalent to USD 0.10million mainly from OPHIR ENERGY for 78%. They have not provided the canvas during thereconciliation.

► CNAPSCNAPS has generated a total negative discrepancy of 780.75 million which is USD 0.35 millioncorresponding mainly to the contributions paid and were not reconciled with the data of the groupPAM, especially those of PAM SAKOA.

► Mining Administration fees (FAM)The mining administration fees paid to the BCMM have shown a total negative discrepancy of MGA939.16 million equivalent to USD 0.43 million to the benefit of the State.

This discrepancy is mainly composed, on one hand, by mining administration fees traced with theBCMM and is also related to the companies that did not provide filled out and/or signed canvas whichare OPHIR ENERGY and RED GRANITI MADAGASCAR S.A.R.L.On the other hand, a negative discrepancy has been noted regarding the payments of miningadministration fees related to licences that were disposed at the time of the reconciliation, but withinthe BCMM, they are still recorded to the name of the seller. The details are provided below:

- Licence purchased by BAO MA SARL for MGA 762.50 million but still recorded underGOLDSAND SARL ;

- Licence purchased by SINBAD for MGA 333.15 million but still recorded under CALIBRARESOURCES MINERALS ;

- Licence purchased by a natural person named Zisy Davida Michel for MGA 132 million butstill recorded under MADAGASCAR CHROMIUM COMPANY.

► VAT on import and VAT on oil products (TVP)The VAT on import and VAT on oil products (TVP) generated a total negative discrepancy ofMGA 2,138.94 million equivalent to USD 0.97 million mostly for HOLCIM with a negative discrepancyof MGA 1,590.96 million equivalent to USD 0.721 million which is 84%.


EY | 89

► Administration fees paid to OMNISThe administration fees paid to OMNIS generated a total negative discrepancy of MGA 10,316.81million equivalent to USD 4.67 million. This discrepancy is mainly for the administration fees recordedat the OMNIS for OPHIR ENERGY, who did not provide the canvas during the reconciliation.


EY | 90

3.3 Entities from Group B 19

3.3.1 Schedule of the payment flows per company, within the public entities in thousands MGA(in thousands MGA)

NAME OF THE COMPANY

PAYMENT FLOW

BCMM OMNISMINES

DIRECTORATE

DGI CUSTOMS ONE OMERT MICTSL/

SMMC ANDEA CNAPS MININTER TOTAL

Legal persons – Miningcompanies 590,831.86 - - 114,155.03 311.36 4,590.80 - - - 24,438.63 - 734,327.68

MADAGASCAR WISCOGUANGXIN KAM WAHRESSOURCES S.A.U.

74,409.60 - - 97,190.40 - - - - - 200.00 - 171,800.00

CLASSIC REAL STONESS.A.R.L. 193,959.70 - - 15,118.64 311.36 4,590.80 - - - 24,238.63 - 238,219.13

FARASANDS S.A.R.L. 142,164.00 - - 1,300.00 - - - - - - - 143,464.00INTERNATIONAL MININGCORPORATION LTD S.A.R.L. 141,668.16 - - 100.00 - - - - - - - 141,768.16

RECHERCHES MINIERES DEMADAGASCAR S.A.R.L. 38,630.40 - - 446.00 - - - - - - - 39,076.40

Total payment flows 590,831.86 - - 114,155.03 311.36 4,590.80 - - - 24,438.63 - 734,327.68

19 The companies whose cumulated payment were between 97% and 98% of the significant flows perceived by the State. Each of these companies in this group won’t have to fill out a reconciliation

canvas, but will be subject to a disaggregated unilateral statement from the administrations that received the payments.


EY | 91

3.3.2 Comments

The payment flows from the extractive companies of group B amount to MGA 743.32 millionequivalent to USD 0.33 million.This amount is mainly related to the Mining administration fees paid to BCMM totaling MGA 590.83million equivalent to USD 0.26 million.

As noted in the chart below, the main flows for the extractive companies of group B are the miningadministration fees paid to the BCMM amounting to MGA 734.33 million which is USD 0.33 million.

(in thousands MGA)


EY | 92

3.4 Entities of Group C20

3.4.1 Schedule of the payment flows per company, at the public entities in thousands MGA(In thousands MGA)

Category

PAYMENT FLOWS

BCMM OMNISMINES

DIRECTORATE

DGI CUSTOMS ONE OMERT MICTSL/SMMC

ANDEA

CNAPS MININTER

TOTAL

Mining companies 2,576,598.49 - 26,513.76 332,328.40 22,639.06 7,287.42 - - - 52,111.89 - 3,017,479.02

Legal persons 2,237,092.33 - 26,513.76 327,309.80 22,639.06 2,932.52 - - - 52,111.89 - 2,668,599.36

Natural persons 339,506.16 - - 5,018.60 - 4,354.90 - - - - - 348,879.66

Total payment flows 2,576,598.49 - 26,513.76 332,328.40 22,639.06 7,287.42 - - - 52,111.89 - 3,017,479.02

20Companies, whose cumulated payment to the administration are between 98% and 100% of the significant flows received by the State. The companies included in this group don’t have theobligation to fill out the reconciliation canvas, but will be subject to an agregated unilateral statement filled out by the State.


EY | 93

3.4.2 Comments

The total payment flows of the extractive companies from group C amount to MGA 3.02 billion whichis USD 1.37 million.

This amount is mainly related to the mining administration fees paid to the BCMM amounting to MGA2.58 billion which is USD 1.17 million.

-

500,000.00

1,000,000.00

1,500,000.00

2,000,000.00

2,500,000.00

3,000,000.00

Flux de paiement Groupe C


EY | 94

4 Other results

4.1 Donations-related results

In accordance with the Terms of reference for the reconciliation of 2014, the multiparty Groupedefines donation as:« any cash and in-kind transfers from mining and oil companies.It is to be noted that the following shall not be considered as donations:- Sponsorships that are within communication activities;- Environmental and social requirements defined by the clear specifications of a governmental entity;- Ports, roads, railways and other infrastructures used for mining or oil operations. Even though thelocal population benefits from these infrastructures, they shall not in any case be considered asdonations. By contrast, routing infrastructures made by mining companies for strictly public usage aswell as social infrastructures constructions, free of charge, are considered as donations. »

Donations from exctractive companies can be cash or in kind.

For 2013, the total of the donations amounts to MGA 2.40 billion which is USD 1.09 million, MGA1,658.40 million of which is cash and MGA 745.30 million in kind.

The tables below present the details of the donations for the fiscal year 2013.

4.1.1 QIT MADAGASCAR MINERALS S.A.Description Beneficiary Amounts MGA Amounts USDCash donationsTransfer Clairefontaine Community 880,385,680.14 398,922.33Prestation ASOS DRSP Community 183,043,800.00 82,941.22Compensation for fishers at Libanona Community 100,000,000.00 45,312.22SODEXO Community 90,392,356.19 40,958.79Support to a sport association Community 72,592,194.49 32,893.14Construction Community 68,085,482.46 30,851.05Trainings Community 49,031,175.00 22,217.12

Support to community association Community 32,486,302.52 14,720.27Scholarship and schooling aid Community 25,146,000.00 11,394.21Policemen wages Community 17,171,770.00 7,780.91Commemoration of the abolition of slavery Community 9,213,715.92 4,174.94

Support to a musical association Community 8,984,730.74 4,071.18Miscellaneous donations Community 7,210,126.16 3,267.07

Reforestation Community 3,982,000.00 1,804.33Various donations to the community Community 2,760,155.00 1,250.69Tourism Community 1,700,000.00 770.31Tools and equipements Community 1,641,112.00 743.62

SUBTOTAL 1,553,826,600.62 704,073.39Donations in kindTools and equipements Community 46,237,090.40 20,951.05Goodies Community 14,543,220.00 6,589.86Various sports materials Community 10,437,000.00 4,729.24IT equipment Community 5,920,000.00 2,682.48

Purchase of zebus Community 4,900,000.00 2,220.30Foodstuffs Community 2,912,000.00 1,319.49Miscellaneous Community 2,881,320.00 1,305.59

SUBTOTAL 87,830,630.40 39,798.01TOTAL 1,641,657,231.02 743,871.40

4.1.2 AMBATOVY PROJECT


EY | 95

4.1.2.1 DYNATECMADAGASCAR S.ADescription Beneficiary Amounts MGA Amounts USDDonations in kindReading materials and supplies CISCO Brickaville 102,290,187.50 46,349.97Dump truck rental Urban Municipality of Toamasina 44,797,917.00 20,298.93

3 months waste removal Urban Municipality ofMoramanga 41,737,500.00 18,912.19

Pencils CISCO Toamasina II 36,693,700.00 16,626.73Scanner CANON DR 6030C, TOTALStation TOPCON

General Directorate, LandService of Antananarivo 35,573,560.00 16,119.17

Rehabilitation and construction,school garden, Community nutritionproject

District of Moramanga 29,342,650.00 13,295.81

BackpacksPrimary Public School ofMoramanga, Brickaville,Toamasina

19,461,775.00 8,818.56

20 bags of ciments SPA 40MG cpr/20,Médicaments Tanandava Population 11,882,459.00 5,384.21

Director’s chair, Printer HP Laser1415FNW

Employment office ofMoramanga 11,780,500.00 5,338.01

07 sets of desktop computers Vocational highschool ofToamasina 8,529,500.00 3,864.91

2000l of fuel/100 jerry cans of 20l Rural Municipality of Ambatovola 8,440,000.00 3,824.35

Polycrystalline modules 110wc CSBII Rurale Municipality ofAmbinaninony 7,196,000.00 3,260.67

25% Downpayment- fuel andlubricants

Suburb Municipality ofToamasina 4,768,000.00 2,160.48

02 nylon meshes of 9,50mx4m, galvapole Fokontany Anivorano Est 3,808,920.00 1725.91

03 plastic trash cans, 50 plastic chairs Urban Municipality of Brickaville 3,031,666.50 1373.72Sports equipment, 04 sets of jerseys Fokontany Dépôt 2,165,800.00 981.37

6 bags of rice /10l of oil 2nd regiment of militaryengineering 1,698,400.00 769.58

Waterspout galva, TOP_30NP University of Toamasina 1,660,680.00 752.49Office desk Fokontany Beforona 1,557,000.00 705.511 table and 4 office chairs Fokontany Fanovana 1,557,000.00 705.51

04 gorges of pinewood 4m Vocational highschool ofMoramanga 1,420,000.00 643.43

Assembling of furniture Ambatovy furnitures assemblingCFA Brickaville 1,303,000.00 590.42

Event of the Gendarmerie School Sign for the event 1,000,000.00 453.12Tensiometer Vaseq Laubry Population of Moramanga 891,800.00 404.09Tensiometer Vaquez laubry classi Population TAILINGS 445,900.00 202.0525l Iceboxes Fokontany of Tanandava 150,333.00 68.12Purchase of supplies for the healthcontest of 2012 Vohitrambato PAPS Vohitrambo 126,000.00 57.09

TOTAL 383,310,248.00 173,686.40


EY | 96

4.1.2.2 AMBATOVY MINERALSDescription Beneficiaries Amounts MGA Amounts USDDonations in kindEmergency aid AMBLARNGRA Commune Ambalarondra 4 670 500,00 2 116,31Emergency aid Brickaville Municipality of Brickaville 2 729 500,00 1 236,80

Soccer, basket ball, trophy District of Brickaville/HIV AIDS awarenessraising 2 251 800,00 1 020,34

25 bags of ciment CSB2 Ranomafana Est 2 248 310,00 1 018,76Rehabilitation Municipality of Ranomafana 2 100 000,00 951,5606 pannes of 5m CSB2 Ranomafana Est 1 805 244,06 818,00Rehabilitation of the trainstation office Municipality of Rurale Morarano Gare 1 460 000,00 661,56

Emergency aid MAROFODY Municipality of Marofody 819 200,00 371,20Emergency aid RanomafanaEst Municipality of Ranomafana 496 400,00 224,93

12 metal sheets 2m50 0,25 NGO Fandrosoana Municipality ofambatovola 436 666,67 197,86

TOTAL 19 017620,73 8 617,31

4.1.3 MADAGASCAR OILDescription Beneficiaries Amounts MGA Amounts USDCash donationsFinancial contribution FRAM FRAM teacher Ankisatra 15,960,000.00 7,231.83BNGRC contribution to the MenabeRegion BNGRC 6,615,000.00 2,997.40

Financial contribution paramed Ankisatra Paramed Ankisatra 2,160,000.00 978.74Financial contribution paramed Ankisatra Paramed Ankisatra 2,160,000.00 978.74Showcase Miandrivazo PCN°654 Miandrivazo 700,000.00 317.19SUBTOTAL 27,595,000.00 12,503.91Donations in kindWateraid – 1st part of the drinking waterBeravina Municipality of Beravina 50,400,000.00 22,837.36

Adminstrative map of Madagascar, schoolmaterials, candies and biscuits

Municipality ofBetsipolotra 16,023,060.00 7,260.40

Purchases for the celebration of theIndependence day 26th June 2013

Municipality ofAnkondromena 9,132,543.25 4,138.16

Pharmacie principale, CEPE candidatestravel, glasses, cataract surgery, schoolkit transportation

Municipality ofAnkondromena 8,027,000.00 3,637.21

ADAMM - Municipality of Belinta, buildingrehabilitation Municipality of Belinta 8,002,748.00 3,626.22

ADAMM – Rural Municipality ofManandaza – well

Municipality ofManandaza 7,604,811.00 3,445.91

India fountain installation in Folakara,Transportation, Toys Fokontany Folakara 7,556,915.00 3,424.21

Contribution to the municipality ofMasoarivo and CEG

Municipality ofMasoarivo 4,242,249.00 1,922.26

ADAMM - Municipality of Analaiva – publicmarket place Municipality of Analaiva 4,003,011.00 1,813.85

ADAMM - Municipality of Andimaky publicmarket

Municipality ofAndimaky 4,002,885.00 1,813.80

ADAMM - Municipality of Begidro – schoolrehabilitation Municipality of Begidro 4,000,000.00 1,812.49

ADAMM - Municipality of Bemahatazana –Gendarmerie office

Municipality ofBemahatazana 3,801,782.00 1,722.67

School supplies, candies Municipality of Andramy 2,203,600.00 998.50School supplies, candies Municipality of Soaloka 386,380.00 175.08


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Description Beneficiaries Amounts MGA Amounts USDSUBTOTAL 129,386,984.25 58,628.12TOTAL 156,981,984.25 71,132.03

4.1.4 TOLIARA SANDSDescription Beneficiaries Amounts MGA Amounts USDCash donationsSupport for the Association ADFA ADFA 9,157,563.32 4,149.50SUBTOTAL 9,157,563.32 4,149.50Donations in kindDonations for the victims of the cycloneHaruna COMMUNITY 35,805,932.66 16,224.46

NGO BEL AVENIR ONG BEL AVENIR 5,750,000.00 2,605.45NGO HONKO donation ONG HONKO 750,000.00 339.84SUBTOTAL 42,305,932.66 19,169.76TOTAL 51,463,495.98 23,319.25

4.1.5 HOLCIMDescription Beneficiaries Amounts MGA Amounts USDDonations in kindCement for the construction of a publicbuilding to the environmental Campus ofMasoala Park in Maroantsetra

Wildlife ConservationSociety 28,887,119.93 13,089.40

Volunteering day of the employees ofHOLCIM for the sanitation andrehabilitation in the court yard of theEPP Isotry Ambodifiakarana

ENDA-OI 7,708,723.20 3,492.99

Cement for the construction works of 3classrooms CEG CARION 3,191,448.29 1,446.12

Cement for the construction works ofhouses for the village of the 17thgraduates

ASA 2,596,980.00 1,176.75

Cement for the construction of a bridgeAnkorona above Sisaony River AVOTR'ANDRAMASINA 1,575,282.65 713.80

Cement EGEXTRA 1,269,385.98 575.19Cement for the sanitation works and therehabilitation of the court yard of the EPPIsotry Ambodifiakarana

CUA 1,163,455.00 527.19

Cement for the construction works for aclinic within a school of 500 students andfor the rehabilitation and upgradingworks on a thatched cottage

MADA FON'NY ANKIZY 485,737.56 220.10

Cement Macons School 247,335.61 112.07TOTAL 47,125,468.23 21,353.60

4.1.6 MADAGASCAR CONSOLIDATED MININGDescription Beneficiaries Amounts MGA Amounts USDCash donations

Donations for the victims of thecyclone Haruna

Cellule de Prévention et de Gestiondes Urgences (CPGU) PrimeMinister’s office – Mahazoarivo

11,000,000.00 4,984.34

Donations for the rehabilitation ofthe EPP Saint Augustin Association FIHAMI 4,982,940.00 2,257.88

SUBTOTAL 15,982,940.00 7,242.23Donations in kindDonation of a water supply systemto the village de Sakamasay

Village of Sakamasay - District ofBetioky Sud 18,612,100.00 8,433.56

Donations of furnitures to FFM(Filan-kevitry ny FampihavananaMalagasy)

FFM office in Ampefiloha 1,526,700.00 691.78


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SUBTOTAL 20,138,800.00 9,125.34TOTAL 36,121,740.00 16,367.56

4.1.7 TANTALUM RARE EARTH (MALAGASY)Description Beneficiaries Amounts MGA Amounts USDCash donationsDonation for the reconstruction ofFJKM ANTSIRABE FJKM ANTSIRABE 17,000,000.00 7,703.08

Donation to FJKM FIFALIANA FJKM FIFALIANA 13,000,000.00 5,890.59TOTAL 30,000,000.00 13,593.67

4.1.8 KRAOMADescription Beneficiaries Amounts MGA Amounts

USDCash donationsParticipation to the social component or the ProjectBetsiaka in the DIANA Region TREASURY DIANA 13,750,000.00 6,230.43

Donations to the social component in the company Employees 987,640.00 447.52Prizes for the best students EPP Ampefiloha 314,000.00 142.28Participation to the fundraising of the Association VATO Association VATO 200,000.00 90.62Donation to the Chancellor RALITERA Chancellor 200,000.00 90.62Participation to the oral health promotion Ministry of Health 130,000.00 58.91

Cash donations Ministry of CivilService 90,000.00 40.78

Participation to the social component in the Fokontany FokontanyAmpefiloha 90,000.00 40.78

Donation to the patients at the hospital HJRA 85,000.00 38.52Participation to the social component of the associationNY HAVANA MIRAY HINA

NY HAVANA MIRAYHINA 26,000.00 11.78

Cash donation for support Orchidée Blanche 20,000.00 9.06TOTAL 15,892,640.00 7,201.31


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4.1.9 MAINLAND MINING LTDDescription Beneficiaries Amounts MGA Amounts USDCash donationsFinancial support to the inauguralactivities Région Antsinanana 10,000,000.00 4,531.22

Participation to a feast in AmbodisainaMunicipality ofAmboditandroho/FokontanyAmbodisaina

1,400,000.00 634.37

For the ANAED ANAED 500,000.00 226.56

Support for the victims (sinistered)FokontanyMahasoa/Municipality ofFénérive Est

200,000.00 90.62

Participation to the travel for the women Rurale Municipality ofAmpasimbe Manantsatrana 150,000.00 67.97

For the customs Rurale Municipality ofAmpasimbe Manantsatrana 130,000.00 58.91

Women of Anjahambe Rurale Municipality ofAmpasimbe Manantsatrana 80,000.00 36.25

Participation to the Independance daycelebration Manakara 50,000.00 22.66

For the JORO Rurale Municipality ofAmpasimbe Manantsatrana 10,000.00 4.53

Condolences Fénérive Est 5,000.00 2.27SUBTOTAL 12,525,000.00 5,675.36Donations in kindBetsa 60 litres, star Juice 3 packs, candies10 bags

Rurale Municipality ofAmpasimbe Manantsatrana 199,000.00 90.17

5 bouttles of oil, 5 bags of candies, 5 bagsof 5kg Rice, 20 packs of biscuits

Municipality ofAntehiroka/FokontanyAntanetibe

95,060.00 43.07

SUBTOTAL 294,060.00 133.25TOTAL 12,819,060.00 5,808.60

4.1.10 MADA-AUSTDescription Beneficiaries Amounts MGA Amounts USDCash donationsSupport to the doctors in the South East Region ADFA 6,727,130.00 3,048.21Development support for the South region REGION,SUD 1,680,000.00 761.25TOTAL , 8,407,130.00 3,809.46

4.1.11 SAPETRODescription Beneficiaries Amounts MGA Amounts USDCash donations

Participation to the World Water Day Direction Régionale eau et forêt(Regional Directorate) 500,000.00 226.56

Per diems (fuel) Menabe Region 400,000.00 181.25TOTAL 900,000.00 407.81


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4.2 Results related to the social expenditures

In accordance with the new EITI standard, version of July 11th 2013, :« material social expendituresby companies are mandated by law or the contract with the government that governs the extractiveinvestment, the EITI Report must disclose and, where possible, reconcile these transactions and wherereconciliation is not feasible, the EITI Report should include the unilateral disclosures of thesetransactions by the concerned companies and/or government.»For the fiscal year 2013, the total social expenditures disclosed by the extractive companies amountto MGA 4,489 billion which is equivalent to USD 4.46 million, of which MGA 6.39 million is cash andMGA 3.45 billion in kind.The tables below disclose the details of the social expenditures made by the companies for the fiscalyear 2013.

4.2.1 MAINLAND MINING

Description BeneficiariesReferences of the

law or the contractwith the

gouvernment

Amounts MGA Amounts USD

Cash social expendituresRehabilitation RN5 SMATP Not provided 2,439,896,936.57 1,105,571.56Rehabilitation RN5 BMCE Not provided 906,400,000.00 410,710.00Rehabilitation RN5 MTPM Not provided 151,200,000.00 68,512.08TOTAL 3,497,496,936.57 1,584,793.64

4.2.2 AMBATOVY PROJECT

4.2.2.1 DYNATEC MADAGASCAR

Description BeneficiariesReferences ofthe law or the

contract with thegouvernment


Social expenditures in kindConstruction bazar be Population Toamasina Not provided 3,192,800,621.48 1,446,728.97Construction gouvernementpoultry projects and ZEREN NH3project

Population along thePipeline

Not provided89,773,108.11 40,678.19

Clothes, supplies, materials,divers PAPS Vohitrambato Not provided 66,700,750.74 30,223.59

10 teachers’ desks, 10 tables,Toboggan EPP Vohitrambato Not provided 38,747,000.00 17,557.13

Tongue blade, Ibex caps b/24, 10tests malaria, 100 sarcleuses ariz, 60 acidesbenzoïque/salicylique

PAPS Ambohibary

Not provided

16,606,927.00 7,524.97

1250 t-shirtsAmbatovy Employeesand CommunitiesTMM_BRK_MGA

Not provided8,475,000.00 3,840.21

02 pendrives 4gb, full set ofdesktop computeur – DELL

Population of MarovatoVohitrambato

Not provided 2,281,600.00 1,033.84

100 plastic 20 l jerry cans PAPS TAILINGSFokontany Tanandava

Not provided 2,270,000.00 1,028.59

40 raincoats- polo shirts Relocation Comitee(VHT and MVT)

Not provided 2,180,160.00 987.88

540 bags of powder soap kiln Centre de santéVohitrambato

Not provided 1,503,720.00 681.37

TOTAL 3,421,338,887.33 1,550,284.74

4.2.2.2 AMBATOVY MINERALS


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Description Beneficiaries

References of thelaw or the

contract with thegouvernment


Social expenditures in kindFOKONTANY Seranatsara FKT Seranatsara Not provided 11,086,827.00 5,023.69

PAPS Mangetana,Municipality of Anivorano

PAPS Mangetana,Municipality ofAnivorano

Not provided4,658,750.00 2,110.98

Municipality ofSeranantsara, District ofBrickaville


Not provided4,279,000.00 1,938.91

District of Brickaville/HIVAIDS awareness-raising

District ofBrickaville/VIH SIDA'sawareness-raising

Not provided3,295,100.00 1,493.08

District of Brickaville/HIVAIDS awareness-raising

District ofBrickaville/HIV AIDSawareness-raising

Not provided1,557,200.00 705.60


Municipality ofSeranantsara, Districtde Brickaville

Not provided878,750.15 398.18

FKT Seranatsara FKT Seranatsara Not provided 685,499.92 310.62

PAPS Mangetana,Municipality of Anivorano

PAPS Mangetana,Municipality ofAnivorano

Not provided504,166.67 228.45

Municipality of Ampasimbe Municipality ofAmpasimbe

Not provided127,488.00 57.77

TOTAL 27,072,781.73 12,267.28

4.2.3 QIT MADAGASCAR MINERALS S.A.

Description BeneficiariesReferences of the lawor the contract withthe gouvernment


Cash social expendituresMiscellaneous Community 600,782,967.21 272,228.12Construction Community 507,562,943.66 229,988.06

Project FAFAFI (PDI) Community Memorandum ofUnderstanding 312,134,200.00 141,434.95

PRESTATION MANOA Community Memorandum ofUnderstanding 274,382,800.00 124,328.95

Project WATER AID Community Memorandum ofUnderstanding 164,929,945.00 74,733.43

Project ASOS (PDI) Community Memorandum ofUnderstanding 87,389,500.00 39,598.13

Project APEA (PDI) Community Memorandum ofUnderstanding 80,000,000.00 36,249.78

Project HIMO Community Memorandum ofUnderstanding 64,792,715.00 29,359.02

AGRIVET Community 60,853,810.30 27,574.21

Project COGEMA Community Memorandum ofUnderstanding 42,000,000.00 19,031.13

PRESTATION CARA Community Memorandum ofUnderstanding 38,757,190.90 17,561.75

Project FIMPIAP Community Memorandum ofUnderstanding 19,026,273.00 8,621.23

PRESTATION MBG Community Memorandum ofUnderstanding 17,359,400.00 7,865.93

Project KADAHA Community Memorandum ofUnderstanding 13,033,020.00 5,905.55

Project ECG Community Memorandum ofUnderstanding 6,848,891.00 3,103.38

Miscellaneous for training Community 6,591,000.00 2,986.53


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Wages of the guard Community 5,048,505.06 2,287.59Purchase of zebus Community 1,220,000.00 552.81Support to the communityassociation

Community 417,500.00 189.18

Foodstuff Community 231,000.00 104.67TOTAL 2,303,361,661.13 1,043,704.39


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4.2.4 EAX

Description Beneficiaries

References of thelaw or the contract

with thegouvernment

Amounts MGA AmountsUSD

Cash social expensesConstruction ofadministration offices

Municipality of AMBILOBE.District of AMBILOBE

107PROJECTS26581PO 101,547,120.15 46,013.26

School ConstructionMunicipality ofAMBODIBONARA. District ofAMBILOBE

107PROJECTS33181PO 81,668,641.80 37,005.88

Construction of aPrimary School

Municipality of BERAMANJA.District of AMBILOBE

107PROJECTS43881PO 38,555,973.45 17,470.57

School ConstructionMunicipality ofd’AMPONDRALAVA.District d'AMBILOBE

107PROJECTS43882PO 37,961,671.20 17,201.28

Construction ofadministration offices

Municipality ofBEMANEVIKY. District ofAMBANJA

107PROJECTS45577PO 33,017,391.60 14,960.91

School with restroomsConstruction

Municipality of ANJIABE.District of AMBILOBE

107PROJECTS44070PO 31,124,049.20 14,103.00


Municipality ofANTSOHIMBONDRONA.District of AMBILOBE

107PROJECTS27248PO 29,973,589.59 13,581.70


Municipality of MANTALY.District d'AMBILOBE

107PROJECTS27245PO 28,983,143.94 13,132.91

Construction ofadministration offices

Fokontany ofMANONGALAZADIEGO SUAREZ.ANTSIRANANA

107PROJECTS44550PO 16,271,973.00 7,373.19

TOTAL 399,103,553.93 180,842.70

4.2.5 SAPETRO

Description BeneficiariesReferences of the

law or thecontract with the

gouvernment


Cash social expensesBush proof MELAKY REGION Not provided 111,579,162.69 50,559.00Bush proof MELAKY REGION Not provided 52,314,801.55 23,705.00Association Vony MELAKY REGION Not provided 6,195,000.00 2,807.09: 50% downpayment AEPLambokely

MELAKY REGION Not provided 5,257,713.00 2,382.39

NGO FANOITRA: balance for theconstruction of AEP Lambokely

MELAKY REGION Not provided 4,043,830.00 1,832.35

Assignment for the monitoringand follow-up of the drilling in theMelaky resion

MELAKY REGION Not provided1,880,750.00 852.21

Librairie Saint Paul MELAKY REGION Not provided 1,400,000.00 634.37NGO FANOITRA : settlement MELAKY REGION Not provided 1,118,413.00 506.78Association Vony MELAKY REGION Not provided 1,105,059.08 500.73NGO FANOITRA : Well testing MELAKY REGION Not provided 568,050.00 257.40Institut Pasteur MELAKY REGION Not provided 56,000.00 25.37TOTAL 185,518,779.32 84,062.68


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4.3 Results with the decentralised authorities

The decentralised authorities, such as regions and municipalities, receive mining rebates andadministration fees, property taxes on built property and property taxes on lands. These are the mainpayment flows received by these authorities in 2013.

4.3.1 Mining rebates

Mining rebates are local taxes due on the value of mining products at their first sale. They are paid bythe mining companies during the exploitation phase.

Mining rebates are calculated by using a percentage of the quantities exported by the miningcompanies.

Hereafter the distribution rate for the received mining rebates:► 60 % for the municipality► 30% for the region► 10 % for the autonomous province (currently in a suspense account within the Treasury)

We have obtained the information from the Mines Directorate regarding the rebates collected fromthe 4 companies who are in their exploitation phase during the fiscal year 2013: HOLCIM, QMM,MAINLAND and ETS GALLOIS.

The following tables display the reconciliation of the rebates paid by the mining companies and theamounts received by the municipalities and the regions, in MGA and in USD.

(in MGA)

Municipality/Region Miningcompany

Amounts paid bythe company

Amounts received bythe

municipalities/regionsDiscrepancies

Municipality of Ampasimadinika Tamatave ETS GALLOIS 1,556,747.28 1,556,747.28 -Région Tamatave ETS GALLOIS 1,454,904.00 1,454,904.00 -Municipality of Sahamatevina Tamatave ETS GALLOIS 1,323,962.64 1,323,962.64 -Province Tamatave ETS GALLOIS 484,968.00 484,968.00 -Municipality of Anjahamana Tamatave ETS GALLOIS 29,098.08 29,098.08 -Municipality of Ibity HOLCIM 31,823,518.00 31,720,156.00 103,362.00Région Vakinankaratra HOLCIM 25,084,104.00 - 25,084,104.00Municipality of Tritriva HOLCIM 12,558,078.00 12,558,078.00 -Municipality of Rurale d’Andranomanelatra HOLCIM 5,786,611.00 10,613,799.00 (4,827,188.00)Municipality of Brieville KRAOMA 76,776,030.00 - 76,776,030.00Région Betsiboka KRAOMA 50,088,746.00 - 50,088,746.00Municipality of Andriamena KRAOMA 23,401,462.00 - 23,401,462.00Province Autonome Mahajanga KRAOMA 16,696,248.80 - 16,696,248.80Région Anosy QMM 885,257,742.79 990,881,852.00 (105,624,109.21)Municipality of Ampasy Nahampoana QMM 885,257,742.79 918,225,555.00 (32,967,812.21)Municipality of Mandromodromotra QMM 442,628,871.40 460,392,679.68 (17,763,808.28)Municipality of Fort Dauphin QMM 442,628,871.40 502,848,636.00 (60,219,764.60)

Total 2 902 837706,18 2,932,090,435.68 (29,252,729.50)


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(in USD)

Municipality/Region Miningcompany

Amounts paid bythe company



Municipality of Ampasimadinika Tamatave ETS GALLOIS 705.40 705.40 -Région Tamatave ETS GALLOIS 659.25 659.25 -Municipality of Sahamatevina Tamatave ETS GALLOIS 599.92 599.92 -Province Tamatave ETS GALLOIS 219.75 219.75 -Municipality of Anjahamana Tamatave ETS GALLOIS 13.18 13.18 -Municipality of Ibity HOLCIM 14,419.94 14,373.11 46.84Région Vakinankaratra HOLCIM 11,366.17 - 11,366.17Municipality of Tritriva HOLCIM 5,690.34 5,690.34 -Municipality of Rurale d’Andranomanelatra HOLCIM 2,622.04 4,809.35 (2,187.31)Municipality of Brieville KRAOMA 34,788.93 - 34,788.93Région Betsiboka KRAOMA 22,696.32 - 22,696.32Municipality of Andriamena KRAOMA 10,603.72 - 10,603.72Province Autonome Mahajanga KRAOMA 7,565.44 - 7,565.44Région Anosy QMM 401,129.97 448,990.60 (47,860.63)Municipality of Ampasy Nahampoana QMM 401,129.97 416,068.42 (14,938.45)Municipality of Mandromodromotra QMM 200,564.99 208,614.16 (8,049.18)Municipality of Fort Dauphin QMM 200,564.99 227,851.90 (27,286.91)Total 1,315,340.32 1,328,595.38 (13,255.06)

The main discrepancies are related to the following locations:

a) Municipality of Andranomanelatra beneficiary of the payments made by HOLCIMMADAGASCAR SA. The amount of MGA 4,827,188.00 is a rebate paid by HOLCIM in 2012but was received by the authority only in 2013 ;

b) Région Vakinankaratra beneficiary of the payments made by HOLCIM. We could not trace thedetails of the payments received by the region;

c) Region of Anosy, municipality of Ampasy Nahampoana, municipality of Mandromodromotraand municipality of Fort Dauphin, beneficiaries of the rebates payments made by QMM partof which was not reconciled with the authorities, due to unsufficient supportingdocumentation and payments that were not traced with the municipalities;

Discrepancies were noted at each stage of the reconciliation of the rebates from QMM, detailsare provided below:

A B C D E

QMM Mines Treasury ofTaolagnaro Minicipalities Autonomous

Province2,950,859,142.65 2,925,802,266.02 3,114,380,224.00 2,872,348,722.68 326,230,761.00

A-B A-C C-D-EDiscrepancies 25,056,876.63 -163,521,081.35 -84,199,259.68

d) The Autonomous Province of Mahajanga, Region Betsiboka, Municipality of BrievilleMunicipality of Andriamena beneficiary of the paiement of KRAOMA. The discrepancies weremainly due to the fact that the authorities beneficiaries of the mining rebates confirmed thatthey did not receive the mining rebates in 2013.


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4.3.2 Mining Administration fees

The Mining Administration fees presented hereafter regard the shares due to the municipalities andthe regions related to the administration fees paid by the mining companies from group A.

4.3.2.1 Administration fees paid by the BCMM to the decentralised authorities as for the fiscalyear 2013 for the mining companies from group A (MGA and USD):

Companies

Amounts received bythe municipalities

Amountsreceived by the

regionsTotal amounts received

(In thousands MGA) (In thousandsMGA)

(In thousandsMGA)

(Inthousands

MGA)PROJET AMBATOVY 38,105.45 22,228.18 60,333.63 27.34CALIBRA RESOURCES & ENGINEERSMADAGASCAR S.A.R.L.U 32,999.28 19,249.58 52,248.86 23.68

GALLOIS Etablissement 17,059.68 9,951.48 27,011.16 12.24GOLD SAND S.A.R.L. 168,315.16 98,183.84 266,499.00 120.76KRAOMA S.A. 35,608.70 20,771.74 56,380.45 25.55LABRADOR MADAGASCAR - 3,446.40 2,010.40 5,456.80 2.47MADA-AUST S.A.R.L. 81,451.36 47,513.29 128,964.65 58.44MADAGASCAR CHROMIUM COMPANY LTDS.A.R.L.U 146,373.77 85,384.70 231,758.47 105.01

MADAGASCAR CONSOLIDATED MINING S.A. 38,545.52 22,484.89 61,030.41 27.65MADAGASCAR INTERNATIONAL TAK MININGS.A.R.L. 86,283.43 50,332.00 136,615.43 61.90

MADAGASCAR MINING RESOURCES LTDS.A.R.L. 80,434.01 46,919.84 127,353.85 57.71

MADAGASCAR RESSOURCES S.A.R.L. 20,678.40 12,062.40 32,740.80 14.84MAINLAND MINING LTD S.A.R.L.U 164,284.61 95,832.69 260,117.30 117.86MINERAL PRODUCTS INTERNATIONAL GROUPS.A.R.L. 38,211.70 22,290.16 60,501.85 27.41

NOVA RESOURCES S.A.R.L.U 63,766.98 37,197.41 100,964.39 45.75GROUPE PAM 22,060.80 12,868.80 34,929.60 15.83QIT MADAGASCAR MINERALS S.A. 20,175.05 11,768.78 31,943.83 14.47RED GRANITI MADAGASCAR S.A.R.L. 3,963.26 2,311.90 6,275.17 2.84TANETY LAVA S.A.R.L. 22,716.07 13,251.04 35,967.11 16.30TANTALUM RARE EARTH (MALAGASY)S.A.R.L.U 15,271.86 8,908.59 24,180.45 10.96

TOLIARA SANDS S.A.R.L. 7,819.20 4,561.20 12,380.40 5.61UNIVERSAL EXPLORATION MADAGASCARS.A.R.L. 20,743.02 12,100.10 32,843.12 14.88

URAMAD S.A 48,183.67 28,107.14 76,290.82 34.57TOTAL 1,176,497.38 686,290.14 1,862,787.52 844.07


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4.3.2.2 Administration fees of which the payments to the municipalities are still pending

The table below presents the mining administration fees paid by the permit holders companies fromgroup A, but not paid in accordance with the allocation defined by the law.

CompanyAmount of which the payment is still pending(In thousands MGA) (In thousands USD)

ACCESS MADAGASCAR S.A.R.L. 1,293.12 0.59AMBATOVY MINERALS S.A. 10,007.89 4.53CALIBRA RESOURCES & ENGINEERS MADAGASCAR S.A.R.L.U 3,877.20 1.76CLASSIC REAL STONES S.A.R.L. 2,040.66 0.92DYNATEC MADAGASCAR S.A 441.73 0.20FARASANDS S.A.R.L. 9,710.25 4.40GALLOIS Etablissement 13,957.92 6.32GOLD SAND S.A.R.L. 7,031.34 3.19HOLCIM Industrie S.A. 2,067.84 0.94INTERNATIONAL MINING CORPORATION LTD S.A.R.L. 2,564.69 1.16MADA-AUST S.A.R.L. 1,653.35 0.75MADAGASCAR CHROMIUM COMPANY LTD S.A.R.L.U 14,623.03 6.63MADAGASCAR CONSOLIDATED MINING S.A. 172.42 0.08MADAGASCAR INTERNATIONAL TAK MINING S.A.R.L. 1,993.56 0.90MADAGASCAR MINING RESOURCES LTD S.A.R.L. 8,168.21 3.70MADAGASCAR WISCO GUANGXIN KAM WAH RESSOURCES S.A.U. 5,305.73 2.40MAINLAND MINING LTD S.A.R.L.U 32,058.05 14.53MINERAL PRODUCTS INTERNATIONAL GROUP S.A.R.L. 2,478.48 1.12MINVEST MADAGASCAR S.A.U. 4,913.86 2.23NOVA RESOURCES S.A.R.L.U 10,587.42 4.80PROCHIMAD MINES & CARRIERES "P.M.C" SA 3,317.16 1.50PROCHIMAD S.A. 452.34 0.20QIT MADAGASCAR MINERALS S.A. 53,748.79 24.35RED GRANITI MADAGASCAR S.A.R.L. 689.28 0.31TANETY LAVA S.A.R.L. 3,459.10 1.57TANTALUM RARE EARTH (MALAGASY) S.A.R.L.U 1,270.86 0.58UNIVERSAL EXPLORATION MADAGASCAR S.A.R.L. 2,003.22 0.91URAMAD S.A 10,749.77 4.87TOTAL 210,637.25 95.44

4.3.2.3 FAM kept in a suspense account within the BCMM for the other beneficiaries

The shares intended for the following beneficiaries are kept in the bank account of BCMM:► Autonomous Province,► Gold Agency,► Mine and Environment Police,► Mines National Committee.

The shares that are yet to be paid to the Autonomous Provinces and the Mines National Commiteeare kept in a suspense account within the BCMM as these structures are not actually set up. Moreover,the shares of the FAM of 2013 that is intended to the Gold Agency are managed by BCMM on behalfof the Gold Agency and the shares of the Mine and Environment Police are managed by the Ministryof Mines on their behalf.We have not received a certified statement from the BCMM confirming that these funds are availablein their bank account.

The allocation per entity is detailed in the table below:


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Paying company

Autonomousprovince 5%

Mines andEnvironment

Police 8%

MinesNational

Commitee5%

GoldAgency 2% Total

(Inthousands

MGA)

(In thousandsMGA)

(Inthousands

MGA)

(Inthousands

MGA)

(Inthousands

MGA)

(Inthousands

USD)PROJET AMBATOVY 4,354.01 6,966.42 4,354.01 1,741.60 17,416.04 7.89CALIBRA RESOURCES & ENGINEERSMADAGASCAR S.A.R.L.U 1,615.50 2,584.80 1,615.50 646.20 6,462.00 2.93

GALLOIS Etablissement 5,815.80 9,305.28 5,815.80 2,326.32 23,263.20 10.54GOLD SAND S.A.R.L. 2,929.73 4,687.56 2,929.73 1,171.89 11,718.90 5.31HOLCIM Industrie S.A. 861.60 1,378.56 861.60 344.64 3,446.40 1.56MADA-AUST S.A.R.L. 688.90 1,102.23 688.90 275.56 2,755.58 1.25MADAGASCAR CHROMIUMCOMPANY LTD S.A.R.L.U 6,092.93 9,748.69 6,092.93 2,437.17 24,371.72 11.04

MADAGASCAR CONSOLIDATEDMINING S.A. 71.84 114.94 71.84 28.74 287.36 0.13

MADAGASCAR INTERNATIONAL TAKMINING S.A.R.L. 830.65 1,329.04 830.65 332.26 3,322.60 1.51

MADAGASCAR MINING RESOURCESLTD S.A.R.L. 3,403.42 5,445.47 3,403.42 1,361.37 13,613.68 6.17

MAINLAND MINING LTD S.A.R.L.U 13,357.52 21,372.03 13,357.52 5,343.01 53,430.08 24.21MINERAL PRODUCTSINTERNATIONAL GROUP S.A.R.L. 1,032.70 1,652.32 1,032.70 413.08 4,130.80 1.87

NOVA RESOURCES S.A.R.L.U 4,411.43 7,058.28 4,411.43 1,764.57 17,645.70 8.00QIT MADAGASCAR MINERALS S.A. 22,395.33 35,832.53 22,395.33 8,958.13 89,581.32 40.59RED GRANITI MADAGASCAR S.A.R.L. 287.20 459.52 287.20 114.88 1,148.80 0.52TANETY LAVA S.A.R.L. 1,441.29 2,306.06 1,441.29 576.52 5,765.16 2.61TANTALUM RARE EARTH(MALAGASY) S.A.R.L.U 529.53 847.24 529.53 211.81 2,118.10 0.96

UNIVERSAL EXPLORATIONMADAGASCAR S.A.R.L. 834.68 1,335.48 834.68 333.87 3,338.70 1.51

URAMAD S.A 4,479.07 7,166.51 4,479.07 1,791.63 17,916.28 8.12TOTAL 75,433.10 120,692.97 75,433.10 30,173.24 301,732.42 136.72

4.3.3 Property taxes on built property (IFPB)

Property taxes on built property that were paid by HOLCIM et KRAOMA, and were reconciled aredetailed as follows:

Municipality/Region CompanyAmounts paid by

the companyAmounts paid by

the company(In MGA) (In USD)

Commune Rurale Ampanefy KRAOMA 80,000.00 36,25Urban Municipality of d'Antananarivo KRAOMA 2,620,162.00 1 187,25Municipality of Brieville KRAOMA 8,153,500.00 3 694,53

TOTAL 10 853 662,00 4,918.03

We have noted non-significant discrepancies during the reconciliation.(In MGA)

Municipality/Region Company Amounts paidby the company



Municipality of Brieville KRAOMA 8,153,500.00 8,149,500.00 4,000.00TOTAL 8,153,500.00 8,149,500.00 4,000.00

(In USD)

Municipality/Region Company Amounts paidby the company



Municipality of Brieville KRAOMA 3,694.53 3,692.72 1.81TOTAL 3,694.53 3,692.72 1.81


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4.3.4 Property tax on land (IFT)

The property taxes on lands that were paid by HOLCIM, following our reconciliation works arepresented below:

(In MGA)

Municipality/Region Amounts paid bythe company

Amounts received by themunicipalities/regions Discrepancies

Rural Municipality of Ibity 10,672,719.00 10,672,719.00 0.00TOTAL 10,672,719.00 10,672,719.00 0.00

(In USD)

Municipality/Region Amounts paid bythe company

Amounts received by themunicipalities/regions Discrepancies

Rural Municipality of Ibity 4,836.05 4,836.05 0.00TOTAL 4,836.05 4,836.05 0.00

The property taxes on lands that were paid by DYNATEC MADAGASCAR and KRAOMA are presentedas follows:

Municipality/Region CompanyAmounts paid bythe company (in

MGA)

Amounts paid bythe company (in

USD)

Municipality of Ampanefy KRAOMA S.A. 14,800.00 6.71Municipality of Fanandrana DYNATEC MADAGASCAR S.A 4,516,914.00 2,046.71Municipality of Fanandrana DYNATEC MADAGASCAR S.A 4,516,914.00 2,046.71TOTAL 9,048,628.00 4,100.13

4.3.5 Use of the funds received by the authorities that apply the participatorybydget

In accordance with the provisions in the sections 3.7 and 3.8 of the EITI standard of 2013, the use ofthese revenues within the municipalities and regions practicing the participatory budget washighlighted in the reconciliation.

The participatory budget is a process as well as an instrument with which the population candetermine how the public resources will be used, mainly as a part of or as the overall investmentbudget of the local community.

Thus, the reconciliation report displays the sharing of the revenues put in the State budget and fromthe extractive industries, as well as the information regarding the use of these funds to the benefitingentities.

During the fiscal year 2013, the participatory budget has been collected for the regions and themunicipalities that benefit from the payment flows of the following main mining companies that arecurrently in their exploitation phase: AMBATOVY MINERALS, HOLCIM, QMM and KRAOMA.


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4.3.5.1 Participatory budget : Municipality of Ambohibary – District of Moramanga (AMSA)(In MGA)

Resources UseCaption Amount Caption Amount

Property tax on land (IFT) 2010-2011 for AMBATOVY paid in2013

11,000,000.00 Operating expenses (wages, supplies) 6,221,988.00

Litigation costs for a land in theMunicpality of Ambohibary 1,900,000.00

CNAPS contribution for the 4thquarter 1,317,216.00

Wages of piece-worker for theconstruction of the stadium wall 843,800.00

Purchase of rubble for theconstruction of the AmbohibaryStadium

717,000.00

TOTAL 11,000,000.00 TOTAL 11,000,004.00

4.3.5.2 Participatory budget: Ibity Tritriva Andranomanelatra (HOLCIM)

The municipalities could not provide the details regarding the uses for the two fiscal years.

Authority: IbityYear: 2012 - 2013 (In MGA)


Mining rebates 2012 30,805,740.00 Wages of the municipality personnel

Mining rebates 2013 31,720,156.00

City of constables, « poste fixe, quartiermobile » wages of constables

TOTAL 62,525,896.00 TOTAL 0.00

Authority: TritrivaYear: 2012 - 2013 (In MGA)


Mining rebates 2012 10,621,994.00 Municipality’s account

Mining rebates 2013 12,558,078.00

Wages, school rehabilitation, “piste inter-fokontany”

TOTAL 23,180,072.00 TOTAL 0.00

Authority: AndranomanelatraYear: 2012 - 2013 (In MGA)


Mining rebates 2013 10,613,799.00 Operating budget

Mining administration fees 2,487,735.38 Wages, Electricity, Wages of high schoolteachers

TOTAL 13,101,534.38 TOTAL 0.00

The authorities have only mentioned the use of the payment flows but did not provide accurateamounts regarding the payment flows from HOLCIM.


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4.3.5.3 Participatory budget : Municipality of Antsiafabositra Antanimbary Maevatanana II(KRAOMA)

Authority: Municipality of AntsiafabositraYear: 2013 (In MGA)


Mining Administration fees 27,836,406.13Construction of 2 classroms forthe CEG Ampotaka

12,053,499.00

4 months salary for the personnel 9,162,022.56Purchase of 163 metal sheets forthe construction of the Townhallbuilding

4,890,000.00

Contributions for theconstruction of the Ward office

1,220,000.00

TOTAL 27,836,406.13 TOTAL 27,325,521.56

Authority: Municipality of Maevatanana IIYear: 2013 (In MGA)


Mining Administration fees 12,845,346.00 Unpaid wages 12,800,000.00TOTAL 12,845,346.00 TOTAL 12,800,000.00

Authority: Municipality of AntanimbaryYear: 2013 (In MGA)


Mining Administration fees 10,728,575.73 Wages and duty allowance 4,700,000.00Contribution for the constructionof the slaughterhouse

4,000,000.00

Rehabilitation and extension ofthe Townhall building

1,603,000.00

Other operating expenses of theRural Municipality (Officesupplies, fuel, etc.)

425,575.73

TOTAL 10,728,575.73 TOTAL 10,728,575.73


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4.3.5.4 Participatory budget: Rural Municipality of Ampasy Nahampoana (QMM)(In MGA)


Free-pass 9,300,000.00Sundry maintenance (Townhallbuilding, EPP, nursery)

5,803,430.00

Generator maintenance and fuel 1,316,400.00Tools and equipment 833,700.00Road maintenance 645,000.00Water (Municipality and hospital) 481,194.00Airtime 220,276.00

SUBTOTAL 9,300,000.00 SUBTOTAL 9,300,000.00

Rebates 918,225,556.00Sundry constructions (feed mill,high school, stables)

370,761,893.00

Additional asphalting, roadrehabilitaion, improvement,water system

276,363,674.00

Purchase of ferlilizer, feed 148,279,925.00Personnel wage, consultant 96,320,064.00Sundry acquisitions (motorbikes,oil press, husker)

26,500,000.00

SUBTOTAL 918,225,556.00 SUBTOTAL 918,225,556.00

Donations for construction - land 10,000,000.00Gear rental for the earthwork ofa footbal field

10,000,000.00

SUBTOTAL 10,000,000.00 SUBTOTAL 10,000,000.00TOTAL 937,525,556.00 TOTAL 937,525,556.00

4.3.5.5 Participatory budget: Municipality of Mandromodromotra (QMM)(in MGA)


Mining rebates QMM460,392,679.6

8 Road construction and improvement

353,413,692.55

Operating grant 12,000,000.00 Wages, sundry indemnities, health173,418,455.0

0

Test fees (AIRTEL) 4,320,000.00Reception (meeting, independence day,new year)

33,285,330.00

Various administrative taxes(civil status, état civil, termsof service)

646,653.20 Sundry supports (schooling, social,sports)

30,808,563.00

Fuel, vehicle maintenance (motorbike) 17,778,000.00Balance 2012 broughtforward

150,518,574.22

Tools and supplies, office furniture 11,326,420.00

Operating expenses, electricity 5,052,000.00Bank charges, petty cash 1,954,689.10

Participation OPCI (municipalityassociation)

300,000.00

TOTAL627,877,907.1

0 TOTAL

627,337,149.65


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5 Observations et recommendations

The follow-up on the previous recommendations as well as the new recommendations following thereconciliation of 2013 are presented hereafter.

5.1 Follow-up of previous recommendations

5.1.1 Recommendations for EITISection Observations Recommendations Follow-up

Willingness of theextractive companies tobe part of thereconciliation

Mining companies oftenfind it difficult to makeavailable any part ofinformation and datarelated to paid taxes.

Their behaviour,although voluntary to theEITI process, can bedescribed ascontradictory. Indeed apersistent distrust,justified or not, for theTax Administration or itsthird parties is usuallyconstated. Miningcompanies fear that theirinformation generatesharmful problems orpolemics that may affecttheir brand, reputationor interests, or that it willbe used for purposesother than transparency.

We believe that mutualdialogues, respect andtrust between the TaxAdministration and theextractive companies arecrucial for transparency.Thus we recommend thatthese principles beobserved over time bythe extractive companiesand the publicadministrations as ofnow to ensureintegration of the EITIprocess.

Recommendationmaintained.

We sensed the lack oftrust during ourinterventions whilecollecting theinformation and whileperforming theverification of thesupportingdocumentations withinthe extractivecompanies.

Improvement of thescope of reconciliation

A company included inthe scope ofreconciliation has beensubject of a takeover byanother company at adate subsequent to theperiod of reconciliation.Thus we encountereddifficulties in obtaining acanvas completed andsigned by an appropriateofficial. The formeremployees of the soldcompany, the onlypeople with a goodknowledge of itspayments and activities,are no longer available,while those of theacquiring company are

We recommend the EITIto exclude from thereconciliation companiesthat are alreadydissolved at the time ofreconciliation.

Recommendationmaintained.OPHIR MADAGASCARwas dissolved in 2013.We could not obtaininformation related tothis company.


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Section Observations Recommendations Follow-uphesitant about signing adocument that theycannot certify in terms ofaccuracy, due to lack ofcomplete and accurateinformation.

5.1.2 General recommendations (companies and administrations)

Section Observations Recommendations Follow-upDistinction of revenuesby sector for companieswith several activities

Some companiesincluded in the scope ofreconciliation carryseveral activities,including those related toextractive activities.

They have a NIFregistered at the taxauthorities. Declarationsand payments related tothese companies, allactivities combined, arelinked to that number.

Therefore, for sometaxes and dutiesdeclarations, it wasimpossible to distinctpayments related tomining activities fromother activities notincluded in thereconciliation (as for theIRSA). Indeed, the taxadministration data doesnot distinguish paymentsby activity.

We recommend, for thecompanies and the State,to implement a system ofregistration thatdistinguishes therevenues from eachsector of activity of acompany.


Implementation ofmeans of monitoringcustoms and taxsystems specific to themining industry

Mining companies withvoluntary participation inthe EITI process benefitfrom specific tax andcustoms rules. However,payments of customduties and import VATthat do not conform totheir specific rules werestill found.These mistakes might bedue to a lack ofknowledge of the specificrules applicable to theirprojects.Payments of thesecompanies are based on

We recommend, for theState and companies, toimplement proceduresthat will ensure theapplication of rulesspecific to miningcompanies.



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Section Observations Recommendations Follow-upfreight bills that do notspecify the nature of thecleared goods. Inaddition, somestatements were notavailable during the auditof reconciliation whichwould normallydetermine whether theexoneration can beapplied.

5.1.3 Recommendations for the mining and upstream oil companiesconcerned by the reconciliation

Section Observations Recommendations Follow upReliability andavailability of data forthe reconciliation

A filling guide wasprovided to thecompanies with thecanvas. A workshop forthe preparation of themission took place. Thecalendar wascommunicated and thedates of interventionwere agreed in advancewith company officials.However, we noticed thatsometimes the data filledwas not exhaustive andmost of the canvas waschanged following theconstatation of mistakesor omissions by theReconciler.Also, we had to face theunavailability of severalinterlocutors and delays,many times, of the dateof interventions on fieldof the Reconciler forsome companies.

We recommend eachconcerned company to :

- Look at the fillingguide prior to theestablishment of thecanvas

- Be represented by anadequate andcompetent individualto fill the canvas atthe workshop for thepreparation of themission ofreconciliation

- To improve itsinternal organizationfor the availability ontime of data andsupportingdocuments

Recommendationsmaintained.

The companies selectedin the scope of thereconciliation for 2013have submitted thecanvas on time. We havenoted an improvement inthe filling out of thecanvas and theavailability of the contactpersons.

The newly selectedcompanies seem to belagging behind intransmittinginformation.

Certification of thecanvas by anindependent auditor

The prior reliability of thecanvas by anindependent auditor isnot yet effective.

Indeed, a reconciliationmade by an independentauditor on amountsreported and/or paid bythe entity and/or the

We recommend eachcompany to certify thecanvas and its annexesas well as the financialstatements during theintervention of itsindependent auditors.

It should be noted thatthe financial statements


We did not obtaincanvases fromindependent auditors.

However, for thecompanies listed in theannexes, we have


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Section Observations Recommendations Follow upadministration withthose accounted, shouldbe a prerequisite forreconciliation; and ifapplicable, theReconciler could directlycollect and exhaustivelyestablish the amount oftaxes, duties and chargesreported and paid.

and the canvas of thereport are independentdocuments; one refers tothe financial situation,and the other on taxsituation.

received the cerficationfrom the auditors.


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5.1.4 Recommendations for the administrations and its subdivisions

5.1.4.1 For each Directorate of the Administration

Section Observations Recommendations Follow upAccess to informationand awareness of theexecutive staff

Meetings for informationand awareness of eachdepartmentrepresentative of theAdministration wereorganized by the EITI tobring all stakeholders tothe same level ofinformation and toensure proper conduct ofthe work during thecollection.However, we noted thatthe awareness of theAdministration to join theEITI process has notreached the executivestaff of somedepartments of theAdministration, despitethe appointment ofdedicated interlocutorsto facilitate thecollection.Thus, some members ofthe executive staff aresuspicious or evenhostile to the auditorsand required the dispatchof a formal letter to theirrespective directors, sothat they can give theirconsent to the disclosureof information, despitethe note from theMinistry of Finance.This situation created anissue to collect the dataon time.

We recommend theinvolvement of theDirectorates of theAdministration ineducating their staff atall levels.

Recommandationmaintained.

We recommend to EITI roraise the awarenessregarding thereconciliationassignment for the keycontact persons withinthe administration.


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5.1.4.2 For the Treasury, the Ministry of Decentralisation, the regions and municipalities

Section Observations Recommendations Follow upTraceability of cashinflows from miningrevenues as provided bythe regulations in force

The disparity indistribution methods ofthe cash inflows ofmining royalties, rebatesand miningadministration fees tothe various entitiesconcerned compared tothat provided by theMining Code and itsimplementingregulations do notprovide traceability andconsistency in themanagement of miningrevenues received bymining and decentralisedadministrations(municipalities, regions),especially with the manybeneficiaries of therevenues.

We recommend settingup a system thatimproves the traceabilityof cash inflowsdistributed to thebeneficiaries of therevenues under theregulations in force. Foreach final beneficiary,sub-accounts specificallydedicated to each type ofincome, including adefinition of theprocedures for thetransmission ofcorrespondingsupporting documents,could be implemented forexample.


Reliability of data issuedby decentralisedcommunities

Data received from theAdministration has beenamended several times.This could be partiallydue to a lack offamiliarity of the usedsoftware for registrationof revenues and thenonexistence of anadequate system ofregistration and archivalof supportingdocuments.Indeed, we found thatsome members of theadministrative andfinancial staff ofmunicipalities andregions have notmastered the notion ofliquidity and the readingof a bank statement.Thus, they rarely trackthe collection ofrevenues that theyreceive, which preventthem from knowing theorigin and nature of theirrevenues.

We recommend :► To theTreasury :

- To accompany eachpayment with adetailed statementtracing the origin andnature of therevenues;

- To inform the revenueofficials of themunicipality andregion on the differenttypes of income to bereceived fromextractive industrieswith their frequencyand payment circuit;

► To the Ministryof Decentralisation:

- To organize training oncash accounting forthe revenue officials ofthe State for a bettermonitoring of the cashflows;



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Section Observations Recommendations Follow upThese situations delayedthe collection of data andinformation.

► To the regionand municipalities:

- To set up a system ofdata recording andarchival of reliablesupporting document

Reconciliation ofcompanies’ data withthat of non-stateentities’

Rebates are collectivelypaid by non-stateentities, such as themanagement company ofthe Port of ToamasinaMICTSL, to theconcerned decentralisedcommunities.The document sent tothem does not enable theconduct of an audit ofpayments made bycompany.It is therefore tedious toperform a reconciliationwith the mining and oilcompanies’ data.

We recommend thedecentralised authoritiesto get a workable statefor the audit andmonitoring of theirrevenues.

Recommandationmaintained.

5.1.5 Recommendations for the Department of Customs and IntelligenceService of Registrations (SRI)

Section Observations Recommendations Follow upUpdate of the databaseon the companies

Data collection will beconducted by entity, andfor that the TaxIdentification Number(NIF) of each mining andoil entity is necessary.However, information atthe SRI has not beenupdated, making itdifficult to collect datafrom the Administration.At the Customs, the NIFof extractive industriesrecorded in its databaseis not consistent with theone found at the SRI. Thiscould be linked todifferent changes of NIFof the companies inrecent years or animputation error. In facta single company can befound in the SIGTAS

We recommend :► To the SRI :

- To keep up-to-date theinformation in theirpossession;

- To reset thecorrelation table withthe Customs thatwould link the new NIFof each company withthe old ones.

► To the Customs:- To educate importers

to inform their currentNIF in theirdeclaration;

- To update and clean upits database.



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Section Observations Recommendations Follow updatabase with a similarname but a different NIF.Therefore, we proceededto identify the companiesthrough the imports list.

5.1.6 Recommendations for the BCMM, Ministry of Decentralisation, regionsand municipalities

Section Observations Recommendations Follow upTraceability of the FAMdistribution by companyat the municipalities andregions

Mining AdministrationFees paid by thecompanies are registeredin the BCMM system. Thedistribution to thevarious beneficiaries,including regions andmunicipalities,depending on thedefinition of operatingperimeter, isautomatically calculatedby internal software at agiven date.The parts of thebeneficiarymunicipalities/regionsare directly sent to theirrespective accounts,without prior notice fromthe BCMM.In addition, the parts ofmunicipalities/regionsthat do not have a bankaccount deposited withthe BCMM areautomatically kept in asuspense account, whilethe municipality orregion is not alertedabout the situation.These situations createat the subdivisions of theState a failure in themonitoring,management andtraceability of their fundsif they do not track thebank cashing.

We recommend :► To the BCMM :

- To notify thebeneficiary entities inadvance by letterremittances in theirfavor with relevantdetails, such as theperiod covered by theFAM, date of dispatch,amount transferred,company or personwho paid the FAM

- To approachmunicipalities/regionswhose parts are held ina suspense account forlack of bank accountinformation.

► Tomunicipalities/region:

- To file with the BCMMthe account number ofthemunicipality/regionduly approved by theMinistry ofDecentralisation,

- Ensure at the BCMMthe effective paymentsof FAM by theoperators within itsscope so that they canclaim their rightfulpart.


Actual ownership andpayment of miningadministration fees

Various sold andtransferred permits arestill registered in thename of the sellers in the

We recommend theBCMM to distinguishpayment flows by actual



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Section Observations Recommendations Follow upBCMM database.Treatment at its level isin progress. Thissituation createddifficulties for themateriality assessmentas well as for the work ofreconciliation.Indeed, gaps identified inthe miningadministration feesmainly result from thefact that payments madeby the actual owners ofthe mining permits areregistered in the name ofthe former owners.

owner during the work ofreconciliation.

5.1.7 Recommendations for the Tax Administration

Section Observations Recommendations Follow upAttachment ofregistration fees paid toreporting companies

It was particularlydifficult to reconcileregistration fees (DE) of2011 of some companieswith the taxadministration data.Indeed, for some taxcentres, the DE were notregistered in the name ofthe paying company butlinked to the NIF of themain receptor of theadministration thatcashed them.

We recommend the taxcentres to directly attachall taxes and dutiescashed by the taxadministration toindividuals or legalentities that actuallymade the payment. Thiscould enable anexhaustive statement oftheir tax situation.


Reliability of data at theTax Administration

Tax administration datahas been amendedseveral times. Indeed,the periods to which thepayments are attachedare not always properlyor sufficientlyknowledgeable in theused software. Thisobservation wasparticularly noted fornonrecurrent taxes suchas fines and penalties,the flat rate tax onTransfer (TFT) or thenonresident income tax(IRNR) at the DGE and

We recommend eachentity of the taxadministration :► To properlyinform the period ofattachment of eachpayment in therecording software.

► To fill in thesame informationsystem all data relatedto a company.



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Section Observations Recommendations Follow upsome taxes at the SREand tax centres.Moreover, VAT refundsare manually processedand are not reported inthe DGE computersoftware.These facts delayed theinformation collection.

5.1.8 Recommendations for the EDBM and the Ministry of the Interior

Section Observations Recommendations Follow upEstablishment of amonitoring tool for visafees and resident cards

Data on fees issuing visaand resident cards couldnot be identified bycompany at the EDBMand the Ministry of theInterior. Indeed, theirdatabase does not sortby company. Data isrecorded by visacategory and registrationnumber. However,manual records with thecompany names areavailable, but it wouldrequire taking theinformation one by one.Nevertheless, we wereable to verify thepayment vouchers offees for issuing visa andresident cards from thereconciled companies.

We recommend :

► Centralizingdata on the fees for theissuance of visas andresident cards either atthe EDBM or at theMinistry of the Interior,

► Recording allthe information (name,address, date ofpayment, amount paid,duration, EmployerCompany…) regardingthe expatriate and theemployer company inthe database,

► A softwaresetting to analyze theissuance of visa andresident cards bycompany.


5.2 General recommendations following the reconciliation

5.2.1 Recommendations for the administration and its subdivisions

Section Observations Recommendations

Reliability of the information forthe reconciliation

Obtaining the information relatedto the payments made by theextractive industries to theInterregional Directorate of Minesof Antananarivo has been difficult.The data collection was delayedbecause there is no digitalized

We recommend each Directorate:► To acquire an adequate

software in order to recorddata ;

► To set up a database ofrelevant information such as


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database but manual registerswere used, making it impossible toensure the completeness of thepayments made by the extractiveindustries.At the same time, payments madeby extractive companies were nottaken into account due to the factthat data related to the revenuescollected by the InterregionalMines Directorate of Toamasinafrom January to March 2012 waslost, and there is not anyappropriate archiving system.

the Company name, the typeof flow (rebates, taxes,…), theperiod, the paymentreference ;

► To regularly update theinformation in their hands;

► To implement an archivingsystem ;

Follow up of information related tonon refunded VAT

We have requested the informationrelated to the non refunded VAT forthe mining and oil companies fromthe Large Enterprise Department(DGE).The DGE has redirected our requestto the Ministry of Finance.However, we had difficultiesobtaining the information. Someinformation could not be tracedback.

We recommend each Directorate:► To set up a database of the

information related to theVAT that is yet to be refundedper company;

► To ensure that information isregularly followed upon andupdated.

5.2.2 For the Treasury, the Ministry of Decentralisation, the Regions and theMunicipalities


Traceability of the paymentsreceived from the extractiveindustries

Cashing confirmations were madewith the General Revenues ofAntananarivo (RGA) via RevenueTransfers Vouchers (BTR). TheseBTRs are provided by the Regionalbusiness tax departments (SRE)and tax centres.However, we noted that the namesof the corporate taxpayers, theamount, and the nature of thetaxes paid are not mentioned in theBTRs. The total amount of taxesreceived each month is mentioned.Thus, it was impossible for us totrace the amounts paid by themining and oil companies to theSREs and tax centres in the BTRsclaimed by the RGA.

We recommend each SRE and taxcentre :

► To mention in each BTR withaccuracy all the informationsuch as the name of thetaxpayer, the nature of thetax, the amount, the relatedfiscal year and the paymentdate.


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5.2.3 For the customs directorate


Monitoring of the customs duty,taxes on oil products and VAT onimport paid by the extractivecompanies

The tax identification numbers(NIF) of the extractive companieswere used to collect theinformation from the customsdirectorate.The recording of the information inthe system SYDONIA is based uponreferences of the declarantmentioned in the singleadministrative document (DAU).This situation has causeddifficulties during ourreconciliation work.Some companies usesubcontractors for dealing withtheir export and importtransactions. Thus, thetransactions are recorded by thecustoms Directorate under thenames of the subcontractors andnot under the name of the finalbeneficiary. Because of this, thecompleteness of the paymentsmade by extractive industriescannot be ensured.

We recommend the CustomsDirectorate to include thereferences of the representative aswell as the final beneficiary in thedatabase (NIF of the company).

5.2.4 For the INSTAT, the Ministry of Economy, the Ministry in charge of theextractive sector


Analysis of the economiccontribution of the extractivesector

There is not yet reliable informationrelated to the contribution of themining sector. These statisticswould be important decision-making tools, particularly to helpdebate on the reforms on thelegislation of the extractive sector.

We recommend the Ministry incharge of the extractive sector, theMinistry of Economy and theINSTAT :

► To perform an annual study onthe actual contribution of themining and upstream oilsectors after updating thestructure.


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6 Annexes

Date post:	19-May-2018
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