THE UNITED REPUBLIC OF TANZANIA MINISTRY OF ENERGY AND MINERALS

TANZANIA MINERALS AUDIT AGENCY

VISION To be a centre of excellence in monitoring and auditing

of mining operations.

MISSION To conduct financial and environmental audits

as well as auditing of quality and quantity of minerals produced and exported by miners in order to maximize benefits to the Government

from the mining industry for sustainable development of the Country.

Auditing of quality and quantity of

produced and exported

minerals by mining entities

CORE FUNCTIONS

Auditing of capital

investment and operating

expenditure of the mining

entities for the purpose of tax assessments

Auditing of environmental

budget and expenditure of

the mining entities for the

purpose of assessment of compliance to

the mine closure plan.

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Tanzania Minerals Audit Agency (TMAA) marked five years of its establishment by recording good performances as highlighted in this Annual Report. This has been made possible through the keen leadership of TMAA’s Ministerial Advisory Board combined with diverse skills, experience, commitment, hard work and dedication of staff.

In the Annual Report for year 2013 we promised to continue improving our audits with the aim of ensuring maximization of Government revenue from the mineral sector. Following completion of year 2014, it is my sincere pleasure to report the following key outcomes:

i. A total of TZS 101.3 billion was collected as royalty from the large scale mines, while total royalty payable decreased by 5.6% to TZS 107.38 billion compared to TZS 113.78 billion realized in year 2013. The decrease was mainly attributed by lower gold prices and closure of one major gold mine.

ii. A total of TZS 428.24 billion was collected by the Government as taxes and levies from the large scale mines, up by 29.5% compared to TZS 330.76 collected in year 2013.

iii. A total of TZS 4.1 billion was collected as royalty from licensed miners dealing in building materials and industrial minerals as a result of TMAA's strategic audits, up by 141% compared to TZS 1.7 billion realized in year 2013.

iv. A total of TZS 2.3 billion was collected as royalty from mineral licensees with elution plants operating in Geita, Mwanza and Mbeya regions as a result of TMAA's strategic audits, up by 135% compared to TZS 981 million realized in year 2013.

v. Continued improvements in compliance to environmental management best practices by large, medium and some small scale mines as a result of TMAA environmental audits.

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vi. Enhanced curtailing of illegal trading and smuggling of minerals whereby 27 incidents were reported for minerals worth TZS 832 million.

In each quarter of year 2014, the Agency recorded good performance results. This was greatly contributed by embracing the ethics and values of the Agency. On the other hand, support from the Ministry of Energy and Minerals was also vital to the Agency’s performance.

With deep gratitude and appreciation, I would like to thank all TMAA staff for teamwork and cooperation in implementing the Agency’s Action Plan that ensured that our goals and targets are significantly met. I am convinced that, the aim of the Government to maximize its revenues from the mineral sector is progressively being realized.

TMAA shall aggressively continue to monitor and audit large, medium and small scale mining operations in year 2015 so as to ensure that mineral rights holders make the required payments to the Government and conduct their activities in a sound environmental manner. I am optimistic that there will be more successes in year 2015 compared to those achieved in year 2014 as we continue working hard to build excellence across the organization.

I trust you will find our 2014 Annual Report informative, and I encourage you to send us your feedback.

Mining for Sustainable National Development.

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Table of Contents

GLOSSARY OF TERMS ...................................................................................... VI

2014 PERFORMANCE HIGHLIGHTS .................................................................... 1

1.0 WORK PLANNED FOR YEAR 2014 ................................................................ 7

2.0 AUDIT RESULTS AND PERFORMANCE FOR YEAR 2014 .................................. 9

2.1 AUDITING OF MINERALS PRODUCED AND EXPORTED ........................... 9

2.1.1 Minerals Produced by Major Gold Mines in Year 2014 .......................... 10

2.1.2 Minerals Exported by Major Gold Mines in Year 2014 ........................... 11

2.1.3 Auditing of Diamonds Production and Exports ..................................... 12

2.1.4 Auditing of Tanzanite Production and Exports ...................................... 13

2.1.5 Auditing of Coal Production and Sales ................................................. 14

2.1.6 Auditing of Building Materials and Industrial Minerals........................... 14

2.1.7 Auditing of Gold Produced and Sold by Vat Leaching and Elution Plant Operators ........................................................................................... 16

2.1.8 Mineral Royalty Payments for Year 2014 .............................................. 16

2.1.9 Combating Minerals Smuggling and Illegal Trading .............................. 17

2.2 FINANCIAL AUDIT AND TAX REVIEW .................................................. 18

2.2.1 Financial Audit and Tax Review Results for Year 2014 ........................... 18

2.2.2 Achievements Resulting from TMAA's Financial Audits ......................... 19

2.3 ENVIRONMENTAL MONITORING AND AUDITING ................................ 20

3.0 HISTORICAL DATA ................................................................................... 27

4.0 UPDATE ON PROSPECTIVE PROJECTS ........................................................ 42

4.1 Mkuju River Project .......................................................................... 42

4.2 Kabanga Nickel Project ..................................................................... 43

4.3 Mchuchuma-Liganga Project ............................................................. 44

4.4 Nyanzaga Gold Project ..................................................................... 44

5.0 CHALLENGES FACED IN YEAR 2014 .......................................................... 45

6.0 PLANNED ACTIVITIES FOR YEAR 2015 ........................................................ 46

7.0 CONCLUSION .......................................................................................... 49

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Table 1: Key Achievements in Year 2014 ................................................................ 3

Table 2: Work Planned for Year 2014 .................................................................... 7

Table 3: Minerals Produced by Major Gold Mines in Year 2014 ............................. 10

Table 4: Quantity and Value of Minerals Exported by Major Gold Mines, 2014 ..... 11

Table 5: Diamonds Production and Export, 2014 .................................................. 13

Table 6: Tanzanite Production and Exports by TTM, 2014 ..................................... 13

Table 7: Coal Production and Sales at Ngaka Coal Mine, 2014 .............................. 14

Table 8: Building Materials and Industrial Minerals Production in Year 2014 ......... 15

Table 9: Gold Produced at Vat Leaching/ Elution Plants in Mwanza, Geita and Mbeya regions ..................................................................................... 16

Table 10: Unresolved Queries Communicated to TRA (2014) ................................ 18

Table 11: Summary of Environmental Measures Taken by Large and Medium Scale Mines.......................................................................................... 20

Table 12: Common Shortfalls on Environmental Management Noted at Large and Medium Scale Mining Operations ................................................... 23

Table 13: Common Shortfalls on Environmental Management Noted at Small Scale Mining, Vat leaching and Elution Plant Sites .................................. 25

Table 14: Profiles of Seven Large Scale Gold Mines .............................................. 27

Table 15: Tax & Royalty Payments by 9 Major Mines, 1999 – 2014 (TZS Billion) ....... 27

Table 16: Historical Minerals Sales by Major Mines (1999 - 2014) .......................... 28

Table 17: Historical Tax Payments by Major Mines (2006 - 2014, Amounts in TZS Bil.) ............................................................................................... 35

Table 18: Procurement of Goods and Services by Large Scale Mines (2001 – 2014) ...................................................................................... 37

Table 19: Tanzania Mineral Reserves for Selected Minerals and Projects (December 2014) ................................................................................. 38

Table 20: Status of Employment in the Major Mines – Number of Locals versus Expatriates ........................................................................................... 41

Table 21: Planned Activities for Year 2015 ........................................................... 46

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Figure 1: Gold Production, 2014 - Contribution by Mine............................ 11

Figure 2: Total Gold Export Quantity, 2014 - Contribution by Mine ............ 12

Figure 3: Historical Gold Exports by Major Mines (2000- 2014) .................. 29

Figure 4: Total Gold Exports by Large Scale Gold Mines (2001 - 2014) ........ 30

Figure 5: Historical Minerals Export Value by Major Mines (2000 - 2014) .... 31

Figure 6: Total Gold Export Value by Large Scale Gold Mines (2001 - 2014) 32

Figure 7: Historical Royalty Payments by Major Mines (2001 - 2014) ........... 33

Figure 8: Total Royalty Payments by Large Scale Gold Mines (2000 - 2014) . 34

Figure 9: Africa's Top Four Gold Producing Countries (2008 – 2014) .......... 34

Figure 10: Gold Price Trends (2001 - 2014) ................................................. 36

Figure 11: Silver Price Trends (2000 - 2014) ................................................. 36

Figure 12: Copper Price Trends (2001 - 2014) ............................................. 36

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ABG African Barrick Gold MT Metric Ton

ARD Acid Rock Drainage MW Megawatt

ARMZ AtomRedMetZoloto N/A Not Applicable

BFS Bag Filter System NCM Ngaka Coal Mine

BGM Bulyanhulu Gold Mine NDC National Development Corporation

Bil. Billion NEMC National Environment Management Council

BZGM Buzwagi Gold Mine NLGM New Luika Gold Mine

Cap. Chapter NMGM North Mara Gold Mine

Crt Carat PAYE Pay As You Earn

CT Corporate Tax REE Rare Earth Elements

EIA Environmental Impact Assessment

SDL Skills Development Levy

EMP Environmental Management Plan

SHCL Sichuan Hongda Company Limited

EPP Environmental Protection Plan STAMICO State Mining Corporation

FEED Front End Engineering Design TAA Tanzania Airports Authority

g Gram TGM Tulawaka Gold Mine

GGM Geita Gold Mine TMAA Tanzania Minerals Audit Agency

GGML Geita Gold Mine Limited toz Troy Ounce

GPM Golden Pride Mine TRA Tanzania Revenue Authority

ISO International Organization of Standardization

troy oz Troy Ounce

ISR Insitu Recovery TSF Tailings Storage Facility

JNIA Julius Nyerere International Airport

TTM TanzaniteOne Tanzanite Mine

kg Kilogram TZS Tanzanian Shilling

KIA Kilimanjaro International Airport UNESCO UN Educational, Scientific and Cultural Organization

lb Pound USD United States Dollar

LME London Metal Exchange VAT Value Added Tax

MA Mwanza Airport WDL Williamson Diamonds Limited

mg Milligram WHT Withholding Tax

Mil. Million

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This annual report presents data on minerals production and exports collected by the Agency from its physical audits. The report also presents data on royalties and taxes as collected by the Agency from reliable sources. Historical data are also presented and analyzed as collected from different sources as outlined in the report.

The information contained in this report has not been subjected to independent verification. No promise, guarantee, representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, reliability, completeness or correctness of the information or opinions contained herein. Neither TMAA, nor its advisors, nor any of its directors, officers or employees or any representatives of such persons, shall have any responsibility or liability whatsoever (in negligence or otherwise) for any loss arising from any use of the information or any other information or material discussed.

This report also contains confidential information, by accepting such information, the recipient agrees to keep permanently confidential all information contained herein, and that such information will only be used for the purpose that has been disclosed to TMAA, and will not divulge any such information to any other party without express consent of TMAA. Any reproduction of such information, in whole or in part, is prohibited without the permission of TMAA.

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This report covers results of auditing activities performed by the Tanzania Minerals Audit Agency (TMAA) in the year 2014. It also addresses status of implementation of the audit program and highlights key findings and achievements.

Auditing of quantity and quality of minerals from the major mines was comprehensively undertaken by TMAA in year 2014. Gold output (from gold bars and Copper Concentrate products) by the major gold mines in year 2014 was 1.27 million troy ounces, up 1.6% compared to 1.25 million produced in year 2013. Geita Gold Mine (GGM) was the leading gold producer in year 2014 with 37.5% of total production.

Total mineral exports in year 2014 from gold bars and Copper Concentrate produced by the seven major gold mines (Biharamulo, Bulyanhulu, Buzwagi, Geita, Golden Pride, New Luika and North Mara) were: 1.27 million troy ounces of gold; 13.8 million pounds of copper; and 0.47 million troy ounces of silver with total worth of USD 1.66 billion, down 7.3% compared to USD 1.79 billion realized in year 2013. The decrease was mainly caused by lower metal prices notably gold during the reporting period.

Mineral royalty paid to the Government by the seven major gold mines during the year under review was USD 62.4 million. This represents a decrease of 11.2% compared to USD 70.3 million realized in year 2013. However, the Government is expecting to collect USD 66.1 million in total as royalty for the year 2014 once final royalty is paid.

Tanzanite output at TanzaniteOne Tanzanite Mine (TTM) was 3.8 million carats (Grade A – I) in year 2014. The mine sold Tanzanite worth USD 9.66 million, with total royalty paid amounting to USD 268,906.

Diamonds output at Williamson Diamonds Limited (WDL) during year 2014 was 203,786 carats, which is up by 28.5% as compared to 158,562

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carats produced in year 2013. The mine exported 226,351 carats of diamonds worth USD 73.6 million in year 2014, compared to 144,354 carats worth USD 39.56 million sold in year 2013. Total provisional royalty paid for the exported diamonds was USD 3.4 million.

During year 2014, auditing of revenue generated, capital investment and operating expenditure was conducted on 6 large scale mining entities, 21 medium scale mining entities and 2 mineral dealers. The audits revealed a number of significant queries which would lead to recovery of unpaid revenue on the side of the Government once they are acted upon by the relevant Government bodies.

Furthermore, environmental auditing conducted during year 2014 involved large, medium and small scale mining areas. Major mines audited include 6 gold mines, one Tanzanite mine and two diamond mines. Additionally, the Agency audited 27 medium scale mines, 35 small scale mines and 63 vat leaching and elusion processing plants. The audits have attributed to improvements on environmental management practices in the respective mines.

On another note, Golden Pride Mine owned by Resolute Mining Tanzania Limited was officially closed after it performed last gold shipment on 12th February, 2014 hence ending its production and export activities. The mine, which was the first major gold mining project developed in Tanzania, was commissioned in year 1998 at a capital cost amounting to USD 48 million. During its mine life of 17 years, the mine produced and sold 2.2 million troy ounces of gold and 207,803 troy ounces of silver, all worth USD 1.5 billion. The mine has so far paid royalty amounting to USD 47.3 million and other Government taxes and levies amounting to TZS 181.4 billion.

Table 1 highlights key achievements attained in year 2014 as a result of TMAA audits and administrative initiatives taken by the Agency to improve its performance.

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Function Achievements

To audit revenue generated, capital investment and operating expenditure of the large and medium scale mines for the purpose of gathering taxable information and providing the same to TRA and other relevant authorities.

1. Audit of financial records and tax review conducted by TMAA in collaboration with the Tanzania Revenue Authority (TRA) has helped to accelerate and/or increase payments of corporate tax by Geita Gold Mine Limited (GGML) -operating Geita Gold Mine (GGM) and owned by AngloGold Ashanti Limited. GGML paid corporate tax amounting to TZS 97.7 billion for year 2014. Cumulatively, the company has paid corporate tax amounting to TZS 424.1 billion since it started paying corporate tax in year 2009.

2. Audit of financial records and tax review conducted by TMAA in year 2014 resulted into collection of unpaid Government revenues as itemized below:

i. Withholding tax amounting to TZS 905.5 million which was not paid from payments made to mining technical services providers.

ii. Royalty amounting to TZS 761.3 million and empowerment fund amounting to TZS 336.7 million.

iii. Skills Development Levy (SDL) amounting to TZS 150.9 million.

iv. Service Levy amounting to TZS 2.77 billion.

3. Regular financial audits conducted by TMAA have enhanced financial record keeping and compliance by major mining companies.

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Function Achievements

The audited companies in year 2014 were: Shanta Mining Company Limited (New Luika Gold Mine), Geita Gold Mining Ltd, TanzaniteOne Mining Ltd, Bulyanhulu Gold Mine Ltd, North Mara Gold Mine Ltd, Resolute Tanzania Limited, Tancoal Energy Ltd, TOL Gases Ltd, Minjingu Mines and Fertilizers Ltd, Kioo Limited, Maseyu Quarries Ltd, Gulf Concrete & Cement Products Ltd, Shriram Construction Ltd, Ashraf Company Ltd, Highland Estates Ltd, KASSCO Mining Ltd, Rhino Plant & Equipment Ltd, Nyanza Road Works Ltd, Off Route Technologies Ltd, Marc Contractors Limited, Al Hushoom Investment Limited, Tanzania Sands & Stones Quarries Limited, China Henan International Cooperation Group Co. Ltd, Sino Hydro Corporation, Chongqing Foreign Trade & Economic Cooperation Company Ltd, China Civil Engineering Construction Corporation, China Communication Construction Company, Charming Gems Ltd and Ruvu Gemstones Ltd.

To monitor and audit quantity and quality of minerals produced and exported by large, medium and small-scale miners.

1. The Agency increased its auditing activities in medium and small scale mining in various parts of the country from a total of 4 zones in year 2013 to 9 zones in year 2014.

2. Minerals produced and exported by all major gold, diamond and Tanzanite mines were successfully audited and analyzed. This ensured availability of accurate and reliable data on minerals produced and exported by the respective miners and contributed to promote voluntary compliance by the mining companies. The audit facilitated collection of royalty to the tune of USD 62.35 million from nine major mines during the year under review.

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Function Achievements

3. Services at the Agency’s laboratory continued to be improved with availability of modern equipments through assistance from the Sustainable Management of Mineral Resources Project under the Ministry of Energy and Minerals. Furthermore, TMAA continued to implement the quality system under ISO/IEC 17025 for the purpose of attaining international recognition.

4. TMAA in collaboration with the Zonal Mines Offices – Central, Eastern, Lake Nyasa, Lake Victoria (East), Lake Victoria (West), Northern, Southern, South Western and Western zones has facilitated collection of royalty amounting to TZS 4.12 billion in year 2014 as a result of monitoring and auditing of production and sales of building materials and industrial minerals in Arusha, Coast, Dar es Salaam, Dodoma, Geita, Iringa, Katavi, Kigoma, Kilimanjaro, Lindi, Manyara, Mbeya, Morogoro, Mtwara, Mwanza, Rukwa, Ruvuma, Simiyu, Singida and Tanga regions. This is equivalent to 141 % increase as compared to TZS 1.7 billion realized in year 2013.

5. Auditing of gold production from vat leaching sites and elution plants in Geita, Mwanza and Mbeya regions has enabled the Government to collect royalty amounting to TZS 2.3 billion from 1,007 kilograms of gold produced by the operators. This is equivalent to 135% increase as compared to TZS 981 million realized in year 2013.

6. TMAA in collaboration with the Minerals Department has continued to publish local indicative minerals prices on monthly basis through local newspapers and its website (www.tmaa.go.tz) for the purpose of assessment

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Function Achievements

and valuation of minerals; helping local miners to bargain reasonable and fair prices for their minerals; and increasing Government revenues through enhanced minerals price knowledge.

7. TMAA in collaboration with the Tanzania Airports Authority (TAA), Police and TRA managed to apprehend minerals worth TZS 832 million which were in the process of being smuggled out of the country in 27 incidents. The offenders have been dealt with in accordance with the Mining Act of 2010.

To monitor and audit environmental management, environmental budget and expenditure for progressive rehabilitation and mine closure.

1. The Agency continued to work more closely with the Minerals Department to require major mines to post rehabilitation bond. The current mine closure liabilities for 8 major mines are estimated at USD 247.5 million following assessment and field verification during year 2014. The liability covers decommissioning and rehabilitation of major mine sites during closure.

2. During year 2014, there was significant improvement in environmental management in the large and medium scale mining operations. Efforts were made to assist small scale miners to comply with the environmental management requirements by conducting capacity building trainings in Mbeya, Geita and Mara regions.

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Table 2 summarizes operational activities which were set for implementation in year 2014.

Table 2: Work Planned for Year 2014

Function Work Planned

To monitor and audit quantity and quality of minerals produced and exported by large, medium and small-scale miners.

1. Stationing full time Auditors at all major mines to witness and record daily production, weighing, packaging, sealing and export of minerals.

2. Taking mineral samples where necessary and performing logistics for shipments of collected samples from the mine sites to the Agency laboratory in Dar es Salaam for assaying.

3. Determining quality, quantity and provisional value of minerals produced using the Agency's laboratory results and market prices.

4. Conducting strategic audit on medium and small scale mines to gather information on minerals production and sales.

5. Conducting royalty reconciliation by comparing mines’ assay results against those of TMAA.

6. Strengthening efforts to counteract minerals smuggling and royalty evasion practices at key exit points and strategic mining sites.

To audit revenue generated, capital and operating expenditure of the large and medium scale mines for the purpose of gathering taxable information and providing the same to TRA and other

1. Verifying the authenticity of revenue declared plus capital and operating expenditure incurred by the mining companies in the course of mineral production and other supportive operations.

2. Examining tax accounting of mining companies in order to determine whether accounting methods used were appropriate and in compliance with statutory provisions.

3. Performing revenue forecasting based on available historical, current and future economic variables relating to large and medium scale mining projects.

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Function Work Planned

relevant authorities for consideration and action.

4. Reviewing annual costs incurred by the mining companies and performing cost–benefit analysis of the activities undertaken by the mines in particular year of expenditure.

To monitor and audit environmental management, environmental budget and expenditure for progressive rehabilitation and mine closure.

1. Reviewing Environmental Management Plans (EMPs), rehabilitation programs and environmental reports from mining companies.

2. Conducting physical inspection at mine sites to verify implementation of environmental management plans.

3. Assessing adequacy of funds allocated for environmental management activities.

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During the reporting period, TMAA audited production and sales of minerals in seven major gold mines, one diamond mine, one Tanzanite mine and two coal mines. TMAA also conducted strategic audit on vat leaching sites, building materials and industrial minerals.

The auditing of minerals produced and exported by major gold mines conducted by TMAA in year 2014 was aimed at ascertaining the quality and quantity of gold, silver and copper production and exports by each mine. This audit is vital in providing the Government with a precise account of exportable gold-containing products, for the purpose of confirming the amount of revenue generated from the exported mineral products and royalty due.

Auditors stationed by the Agency witnessed each and every smelting session performed in their respective gold rooms including the pouring, marking, weighing and sampling of ingots. The auditors also witnessed the weighing and loading of Copper Concentrate in containers for export and took samples of the product. A total of 1,030 samples from gold bars and 2,194 samples from Copper Concentrate were collected from major gold mines and transported by secure means to the TMAA laboratory in Dar es Salaam. These samples were analyzed to determine the amount of fine gold, silver and copper contained.

Minerals production and exports of diamonds at WDL and Tanzanite at TTM were also witnessed by auditors who are stationed at these mines. The auditors recorded and reported on a daily basis minerals production and exports activities undertaken by the mines. Furthermore, TMAA monitored coal production and sales at Ngaka Coal Project in Mbinga District.

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TMAA also conducted strategic audit on production and sales of building materials and industrial minerals in Arusha, Coast, Dar es Salaam, Dodoma, Geita, Iringa, Katavi, Kigoma, Kilimanjaro, Lindi, Manyara, Mbeya, Morogoro, Mtwara, Mwanza, Rukwa, Ruvuma, Simiyu, Singida and Tanga regions; and gold from operators who use vat leaching technology in Mwanza, Geita and Mbeya regions for the purpose of facilitating royalty collection.

2.1.1 Minerals Produced by Major Gold Mines in Year 2014

Table 3 summarizes the quantity of gold bars and Copper Concentrate produced by major gold mines in year 2014 as audited by TMAA. GGM was the leading gold producer in year 2014 with 37.5% of total production (Figure 1). Table 3: Minerals Produced by Major Gold Mines in Year 2014

Year 2014

Year 2013

Number of gold bars produced 2,221 2,139 Weight of gold bars produced (kg) 42,486 39,775 Number of containers loaded with Copper Concentrate

2,531 1,907

Net wet weight of Copper Concentrate produced (ton)

50,521 38,942

Gold quantity (toz) 1,273,094 1,253,785 Silver quantity (toz) 443,176 376,824 Copper quantity (lb) 12,824,121 12,865,738

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2.1.2 Minerals Exported by Major Gold Mines in Year 2014

Table 4 summarizes the quantity and value of minerals exported by major gold mines in year 2014 as audited by TMAA. The prices applied in the computation of values for gold, silver and copper exports are as quoted from the London Metal Exchange (LME). Gold export contribution by each major gold mine is shown in Figure 2.

Table 4: Quantity and Value of Minerals Exported by Major Gold Mines, 2014

Year 2014

Year 2013*

Gold quantity (toz) 1,274,289 1,244,743

Silver quantity (toz) 469,027 376,818

Copper quantity (lb) 13,775,018 12,702,975

Total Value (USD) 1,661,230,406 1,780,495,461 * Updated figures

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Basic Facts from Tables 3 and 4

Gold production increased by 1.6% to 1.27 million troy ounces, compared to 1.25 million troy ounces produced in the previous year.

Total value of mineral exports by the seven major gold mines decreased by 6.7% from USD 1.78 billion in year 2013 to USD 1.66 billion in year 2014, largely due to lower gold prices in the world market during the year, closure of Golden Pride Mine and suspension of operations at Tulawaka Gold Mine.

2.1.3 Auditing of Diamonds Production and Exports

Diamonds mining operations at the Williamson Diamonds Mine (WDL) are composed of the following distinct activities: mining of ore at the pit, re-

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treatment of tailings to recover missed diamonds and gravel mining. The open pit mining is the largest of the operations. Current ore grade is about 6 carats per hundred tons (or 12 mg/t). Table 5 summarizes the quantity of diamonds produced and exported by WDL in year 2014 as audited by TMAA.

Table 5: Diamonds Production and Export, 2014

Year 2014

Year 2013*

Quantity produced (carat) 203,786 158,562

Quantity exported (carat) 226,351 144,354

Average Price (USD/carat) 325.24 274.06

Export Value (USD) 73,617,469 39,561,323

Royalty Paid (USD) 3,438,841 1,905,304 * Updated figures

2.1.4 Auditing of Tanzanite Production and Exports

TMAA continued to monitor Tanzanite production and exports activities undertaken by TanzaniteOne Tanzanite Mine (TTM). Table 6 summarizes the quantity of Tanzanite produced and exported by TTM in year 2014 as audited by TMAA. Table 6: Tanzanite Production and Exports by TTM, 2014

Year 2014

Year 2013*

Quantity Produced – Grade A – I (crt) 3,798,403 3,235,331

Quantity Sold – rough (g) 5,306,101 3,115,077

Quantity Sold – cut (crt) 76,245 52,809

Export Value (USD) 9,658,706 7,379,669

Royalty Paid (USD) 362,311 229,545 * Updated figures

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2.1.5 Auditing of Coal Production and Sales

TMAA continued to monitor and audit coal production and sales activities at Ngaka Coal Mine (NCM). During year 2014, the mine produced 249,495 metric tons and sold 259,050 metric tons of coal worth USD 12.2 million. Total royalty paid to the Government was USD 362,311, up by 57.7% compared to USD 229,761 realized in year 2013 (Table 7).

Table 7: Coal Production and Sales at Ngaka Coal Mine, 2014

Year 2014

Year 2013

Quantity produced (ton) 249,495 128,920

Quantity sold (ton) 259,050 134,063

Sales Value (USD) 12,196,765 7,445,895

Royalty Paid (USD) 362,311 229,761

Furthermore, in August 2014 the Agency started to monitor production and sales at Matuli Coal Mine owned by Off Route Technologies (Tanzania) Limited and located in Kyela District. During the period under review, the mine produced 4,961.16 tons of coal worth TZS 905,793,431. Total royalty paid was TZS 20,929,098.

2.1.6 Auditing of Building Materials and Industrial Minerals

TMAA in collaboration with the Zonal Mines Offices continued to monitor and audit production and sales of building materials and industrial minerals in the Central, Eastern, Lake Victoria (West) and Southern zones by using “Sales Vouchers”. During year 2014, TMAA expanded this audit in five (5) more zones namely: Lake Nyasa; Lake Victoria (East); Northern; South Western; and Western zones. The audit aimed at ensuring that the Government collects maximum royalty from mineral activities.

During the reporting period, a total of 10.49 million tons of building materials and industrial minerals worth TZS 135.67 billion were produced and sold by miners in the audited areas. Payable royalty is TZS 4.12 billion, which is 141% higher compared to TZS 1.71 billion realized in year 2013.

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Table 8 summarizes minerals produced, sold and royalty payable in each zone as audited by TMAA.

Table 8: Building Materials and Industrial Minerals Production in Year 2014

Zone Year 2014

Year 2013

Quantity produced & sold (mil. ton)

Eastern 5.88 4.53

Lake Victoria - East 0.01 -

Lake Victoria - West 0.83 0.72

Central 0.72 0.18

Northern 2.73 -

South Western 0.10 -

Western 0.05 -

Southern 0.11 0.04

Lake Nyasa 0.06 -

Total 10.49 5.47

Sales Value (TZS mil.)

Eastern 77,993.95 39,849.79

Lake Victoria - East 127.43 -

Lake Victoria - West 12,290.59 10,403.02

Central 8,647.12 2,216.59

Northern 21,780.49 -

South Western 6,779.95 -

Western 3,030.86 -

Southern 3,878.94 4,040.70

Lake Nyasa 1,141.04 -

Total 135,670.37 56,510.10

Royalty Payable (TZS mil.)

Eastern 2,343.77 1,195.50

Lake Victoria - East 3.82 -

Lake Victoria - West 367.21 311.95

Central 275.26 78.36

Northern 666.43 -

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Zone Year 2014

Year 2013

South Western 216.40 -

Western 92.13 -

Southern 117.25 121.22

Lake Nyasa 33.15 -

Total 4,115.41 1,707.04

2.1.7 Auditing of Gold Produced and Sold by Vat Leaching and Elution Plant Operators

TMAA continued to monitor and audit gold producers who use vat leaching technology to recover gold from tailings in Mwanza, Geita and Mbeya regions. During the year 2014, a total of 38 elution plants were audited from which 1,006.83 kilograms of gold worth TZS 50.8 billion were produced. Total paid royalty amounted to TZS 2.3 billion, up by 134.6% as compared to TZS 981.08 million realized in year 2013 (Table 9).

Table 9: Gold Produced at Vat Leaching/ Elution Plants in Mwanza, Geita and Mbeya regions

Year 2014

Year 2013

Number of elution plants audited 38 32 Weight of gold bars produced (kg) 1,006.83 410.07 Value (TZS mil.) 50,836.77 24,680.03 Royalty paid (TZS mil.) 2,301.16 981.08

2.1.8 Mineral Royalty Payments for Year 2014

Total calculated provisional royalty for year 2014 from the major gold mines decreased by 6.1% to USD 66.44 million, compared to USD 70.76 million realized in year 2013. Actual provisional royalty paid during the period amounted to USD 60.00 million.

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2.1.9 Combating Minerals Smuggling and Illegal Trading

TMAA continued to counteract minerals smuggling and minerals royalty evasion by stationing auditors at three major airports in the country in order to inspect and verify minerals transported to and out of the country via Julius Nyerere International Airport (JNIA), Kilimanjaro International Airport (KIA) and Mwanza Airport (MA). This exercise is conducted in collaboration with relevant Government bodies, mainly the Minerals Department, Tanzania Airports Authority, Tanzania Police Force, Tanzania Revenue Authority and Immigration Department. Furthermore, TMAA started auditing activities at Arusha and Songwe airports located in Arusha and Mbeya regions respectively.

During year 2014, minerals worth TZS 832 million were seized in 27 minerals smuggling attempts at JNIA, KIA and MA. The events were reported to other Government bodies for legal actions. Since July 2012 to December 2014, minerals worth TZS 15.92 billion were seized in sixty six (66) different minerals smuggling incidents at the three airports.

18

TMAA continued to audit revenue generated, capital and operating expenditure of the large and medium scale mines for the purpose of gathering taxable information and providing the same to TRA and other relevant authorities for consideration and action.

2.2.1 Financial Audit and Tax Review Results for Year 2014

Audit of revenue generated, capital and operating expenditure during the year 2014 was conducted on six large scale mining entities, twenty one medium scale mining entities and two mineral dealers.

A number of queries were raised during the audit and communicated to the respective auditees for responses. The received responses were reviewed and clearance meetings held to discuss the same. Unresolved queries emanated from the discussions were forwarded to TRA for consideration and action. In general, queries which were common from one entity to another are as summarized in Table 10.

Table 10: Unresolved Queries Communicated to TRA (2014)

Item Total Amount (USD)

1. Disallowable items claimed as allowable expenses

45,059,929

2. Payments of technical services, management fees, non-technical services and loan interest for which tax was not withheld

10,307,886

3. Unqualified capital expenditure deductions 24,607,526

4. Payments which were not subjected to Pay As You Earn (PAYE) and SDL

1,642,692

19

2.2.2 Achievements Resulting from TMAA's Financial Audits

Key achievements for the year 2014 which resulted from TMAA's financial audits and tax reviews conducted on mining entities in collaboration with the Minerals Department and TRA are as follows:

i. GGML paid a total of TZS 97.7 billion in the year 2014 as corporate tax. Cumulatively, the company has paid corporate tax amounting to TZS 424.1 billion since it started paying corporate tax in year 2009.

ii. Withholding tax amounting to TZS 905.5 million which was not paid from payments made to mining technical services providers.

iii. Skills Development Levy amounting to TZS 150.9 million which was not paid to the Government.

iv. Royalty amounting to TZS 761.3 million and empowerment fund amounting to TZS 336.7 million which were not paid to the Government by the respective mines.

v. Service Levy amounting to TZS 2.77 billion which was not paid to the Local Government Councils hosting the mining entities.

vi. Regular financial audits conducted by TMAA have enhanced financial record keeping by major mining companies as well as self-compliance in tax payment.

20

Environmental monitoring and auditing activities in mining areas were conducted to ensure sound environmental management during life of mines and after closure. Audits were conducted by checking compliance with legal requirements on environmental management; assessing implementation of commitments made in the Environmental Management Plans (EMPs) and Environmental Protection Plans (EPPs). The audit also aimed at ascertaining whether the mines have set aside sufficient funds for progressive rehabilitation and mine closure.

During year 2014, the Agency audited environmental matters on major mines comprising six gold mines, one Tanzanite mine and two diamond mines. Additionally, twenty seven medium scale mines, thirty five small scale mines and sixty three vat leaching and elution plant sites were audited.

Noted shortfalls with recommended remedial actions were communicated to auditees for corrective actions. Table 11 highlights rectification of the noted shortfalls by large and medium scale mines in line with TMAA's environmental audit recommendations.

Table 11: Summary of Environmental Measures Taken by Large and Medium Scale Mines

Mine Environmental Measures Taken

Golden Pride Mine

Rehabilitation of major facilities was successfully completed in line with approved mine closure plan. Some infrastructures were left and handed over to Madini Resources Institute for learning purposes.

Bulyanhulu Gold Mine

Incineration of obsolete paints and chemicals after consultation with the Government Chemist Laboratory Agency.

21

Mine Environmental Measures Taken

Establishment of bioremediation facility for treatment of soil contaminated with hydrocarbons.

Construction and commissioning of new fuel dispensing area.

De-silting of surface run-off collection trench.

Engagement of contractor for removal of accumulated recyclable materials.

Geita Gold Mine

Upgrading of surface run-off and catchment pond to contain sediments from the Old Tailings Storage Facility (TSF).

Construction of containment facility to improve hydrocarbons and chemical spills management.

North Mara Gold Mine

Construction and commissioning of bioremediation facility.

Installation of new incinerator at the gold plant for combustion of hazardous wastes.

Upgrading of drainage channels, oil-water separator and containment bunds.

Installation of four piezometers along the perimeter of the TSF embankment.

Removal of chemicals (ammonium nitrate) stored on unprotected ground.

Rehabilitating Nyabigena East Pit by backfilling with waste rocks and overburden materials.

Buzwagi Gold Mine

Construction and commissioning of new detoxification tanks to lower cyanide levels on tailings.

Removal of redundant elemental sulphur and sodium meta-bisulphate by certified contractor.

Construction of containment bund for storage of waste oil containers.

Construction of new bioremediation facility for treatment of soil contaminated with hydrocarbons.

22

Mine Environmental Measures Taken

Williamson Diamonds Mine

Rehabilitation of about 13.126 hectares of disturbed area for alluvial mining.

Updating Environmental Management Plan (EMP) and submitting the same to the National Environment Management Council (NEMC).

Submission of Mine Closure Plan to the Ministry of Energy and Minerals for review and approval.

TanzaniteOne Mine

Rehabilitation of Naisinyai Waste Rock Dump by constructing windrow, Acid Rock Drainage (ARD) collection ditch and ARD collection pond downstream of the dump.

Engagement of a contractor for removal of recyclable materials such as scrap metals, wood, used tyres etc.

New Luika Gold Mine

Acquired sewage effluents discharge permit from Lake Rukwa Water Basin Office upon which effluents are analyzed before discharge.

Redesigning of tailings discharging spigots at the TSF to ensure proper discharge of tailings.

Construction of secondary containment bund at the waste oil storage area.

Designation of specific waste rock dumping areas (Northern Airstrip and Luika Waste Rock Dump).

Mbeya Cement Quarry

Installation of Bag Filter System (BFS) for excessive dust emissions control from the plant stack.

Installation of rubber curtains to control dust emissions from the pozzolana drier.

Progressive rehabilitation of disturbed land at pozollana mining area by backfilling with overburden and laying topsoil.

23

Some of the environmental measures taken by gold processing plants, medium and small scale mining operations owners as a result of TMAA's audits include:

Pavement of sluicing and amalgamation ponds for gold processing using mercury;

Backfilling of old mining pits that are not to be used in future;

Construction of drainage channels sediment traps to intercept sediment loads carried with surface runoff at vat leaching plants;

Improvement in solid waste management;

Construction of secondary containment bunds for storage of hydrocarbons;

Preparation of Environmental Protection Plans (EPPs) or Environmental Management Plans (EMPs); and

Construction of drainage channels and catchment pond for collecting spills.

Table 12 highlights common shortfalls on environmental management noted at large and medium scale mining operations while Table 13 presents shortfalls noted at small scale mining, vat leaching and elution plant sites. Table 12: Common Shortfalls on Environmental Management Noted at

Large and Medium Scale Mining Operations

1. Improper storage of chemicals.

24

2. Environment pollution by acid rock drainage.

3. Improper disposal of slimes from processing plant.

4. Poor waste rock dumping strategy and lack of progressive rehabilitation.

5. Inadequate management of materials contaminated with hydrocarbons.

25

Table 13: Common Shortfalls on Environmental Management Noted at Small Scale Mining, Vat leaching and Elution Plant Sites

1. Inadequate management of chemicals.

2. Inadequate management of waste rocks and tailings .

3. Improper handling of hydrocarbons.

4. Air emissions.

26

5. Absence of secondary containment bund for machines, fuel storage and waste oil storage areas.

6. Poor solid waste management.

7. Absence of either EPP for holders of Primary Mining Licences and or EMP for holders of Processing Licences.

27

Table 14: Profiles of Seven Large Scale Gold Mines Mine Project

Start Project End

Remaining Life of Mine (from 2014)

Main Product

Output from Inception to

2014 (Mil. toz.)

Total Royalty

Paid (TZS Bil.)

*Total Taxes Paid

(TZS Bil.)

BGM 2001 2035 21 Gold 3.49 140.74 326.64

BZGM 2009 2020 6 Gold 0.89 78.14 71.38

GGM 2000 2026 12 Gold 6.26 253.30 770.51

GPM 1999 2014 closed Gold 2.20 62.48 181.40

NLGM 2012 2023 9 Gold 0.15 13.55 19.58

NMGM 2002 2022 8 Gold 2.83 126.97 146.62

TGM 2005 2013 closed Gold 0.94 34.67 174.30 TOTAL 16.76 709.85 1,690.43

* Total Taxes Paid include: Corporate Tax, PAYE, SDL, WHT, VAT, Stamp Duty, Import Duty, Excise Duty and Service Levy.

Table 15: Tax & Royalty Payments by 9 Major Mines, 1999 – 2014 (TZS Billion)

Year Corporate Tax

PAYE SDL WHT *Other Taxes

Total Taxes

Paid

Total Royalty

Paid

Grand Total

2001 0 7.23 1.13 4.86 0.35 13.57 6.56 20.13 2002 0 10.68 1.69 5.40 1.64 19.41 10.22 29.63 2003 0 12.79 1.66 5.45 2.19 22.09 14.97 37.05 2004 0 8.33 2.44 5.32 4.86 20.95 18.87 39.82 2005 2.31 13.05 8.87 7.50 5.43 37.16 21.34 58.50 2006 1.75 11.78 2.49 3.35 2.84 22.21 29.30 51.51 2007 1.44 22.28 3.76 3.26 3.44 34.18 30.00 64.19 2008 0.88 44.01 7.55 5.61 9.23 67.27 32.69 99.95 2009 3.21 52.64 9.78 7.87 8.67 82.16 43.34 125.50 2010 21.38 49.92 11.32 13.14 4.87 100.63 70.37 171.00 2011 60.35 90.30 19.50 12.26 26.26 208.68 97.03 305.71 2012 376.67 87.45 19.32 67.64 46.81 597.88 115.17 713.05 2013 42.67 89.28 19.67 40.37 23.03 215.03 112.42 327.44 2014 97.74 85.91 15.24 94.78 17.65 311.32 102.88 414.20 Total 608.40 585.65 124.42 276.81 157.27 1,752.53 705.16 2,457.69

28

Note: Figures contained in the table above contain adjustments made by respective mining companies.

* Other Taxes include: VAT, Stamp Duty, Import Duty, Excise Duty and Service Levy.

Table 16: Historical Minerals Sales by Major Mines (1999 - 2014)

Year Gold (Mil. toz)

Silver (Mil. toz)

Copper (Mil. lb)

Cut Tanzanite

(crt)

Rough Tanzanite

(Mil. g)

Diamonds (Mil. crt)

1999 0.13 0.01 0.00 n/a n/a 0.23 2000 0.42 0.04 0.00 n/a n/a 0.32 2001 0.94 0.24 5.73 n/a n/a 0.21 2002 1.14 0.34 8.74 n/a n/a 0.18 2003 1.32 0.34 7.47 n/a n/a 0.21 2004 1.42 0.41 9.41 n/a n/a 0.27 2005 1.40 0.37 7.45 n/a n/a 0.20 2006 1.25 0.44 7.05 n/a n/a 0.19 2007 1.16 0.52 6.55 n/a n/a 0.22 2008 1.03 0.32 5.59 n/a n/a 0.13 2009 1.10 0.35 6.46 n/a n/a 0.14 2010 1.24 0.37 13.04 n/a n/a 0.11 2011 1.32 0.37 14.58 n/a n/a 0.03 2012 1.27 0.34 11.82 n/a n/a 0.12 2013 1.24 0.38 12.70 n/a n/a 0.14 2014 1.27 0.47 13.78 76,245 5.31 0.23 Total 17.65 5.31 130.37 76,245 5.31 2.93

29

Figure 3: Historical Gold Exports by Major Gold Mines (2000- 2014)

800 ....--.. 0 0 700 0 N 0 600 +-' -~ 500 +-' +-' c: nJ 400 :::J

0 300 +-'

:I...

0 c.. 200 ><

UJ

"'C 100 -0 \.!1 0 +---~----~--~----~--~----~--~----~--~----~--~----~--~ ~~ ~

0 0 0 N

or--o 0 N

BGM

N 0 0 N

M 0 0 N

-.-BZGM

o:::t 0 0 N

1.1'\ 0 0 N

-..GGM

\.0 0 0 N

I' 0 0 N

-.-GPM

00 0 0 N

0'1 0 0 N

NLGM

0 or--o N

or-­or--0 N

N or--o N

- NMGM

M or--o N

o:::t or--o N

TGM

30

Figure 4: Total Gold Exports by Large Scale Gold Mines (2001 - 2014)

- 1.5 1.42 1.40 - 1.32 1.32 ~ 1.27 1.27 1.25 1.24 1.24 N 1.3 0 1.1 4 1.16 +-' 1.10 ._. ~ 1.1 1.03 +-'

0.94 +-' c ro 0.9 ::::J a t 0.7 0 Cl. X

L.LJ 0.5 "'0 ...... N ('(') ~ Lt'\ \0 r-..... CX) 0\ 0 ...... N ('(') q-0 0 0 0 0 0 0 0 0 0 ...... ...... ...... ...... ...... ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0

N N N N N N N N N N N N N N

Year

31

Figure 5: Historical Minerals Export Value by Major Mines (2000 - 2014)

1,000

900

..-. 800 -~ 0 700 V1 ::::> ...._... (J) 600 ::::J

~ t

500

0 Cl.. 400 ><

L1.J V')

m !....... 300 (J)

c ~ 200

100

0 0 -0 0 0 0 N N

BGM BZGM ....-GGM -11-GPM -e-NLGM

00 0 0 N

-e-NMGM

0 - ('Y') - - -0 0 0 N N N

-+-TGM -+-WDL TTM

32

Figure 6: Total Gold Export Value by Large Scale Gold Mines (2001 - 2014)

- 2.5 - 2.17 (J)a:l 2.17 :::Jo

2.0 ~~ - 1.78 t .. 1.58 1.65 0 "-Q.g_ 1.5 ><o. 1.11 UJo ~u 0.83_ 0.92 ~~ 1.0 Q.-78 -(J) "- 0.60 0.64 C(J) 0.49 ·- > 0.36 ~~ 0.5 0.26 _V) ro .. +-' '1:)

~0 0.0 l9 - N ~ Ll"' N ~ 'f"'"" M \0 "' 00 0\ 0 'f"'"" M

0 0 0 0 0 0 0 0 0 'f"'"" 'f"'"" 'f"'"" 'f"'"" 'f"'""

0 0 0 0 0 0 0 0 0 0 0 0 0 0 N N N N N N N N N N N N N N

Year

33

Figure 7:

Historical Royalty Paym

ents by Majo

r Mines (2001 - 2

014)

• co C\

2001

s: 2002

co 2003 N C\ s:

2004

+ C\ C\ 2005 s:

+ 2006 C\ ~ s:

2007

+ z 2008 ~ s:

+ 2009

z s: 2010 C\ s:

i 2011

C\ s: 2012

I 2013 ~

0 r-

2014

Royalty Payments (USD Mil.) ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ w w w w

0 ~ ~ ~ ~ 0 ~ ~ ~ ~ 0 ~ ~ ~ ~ 0 ~ ~ ~

34

Figure 8: Total Royalty Payments by Large Scale Gold Mines (2000 - 2014)

Figure 9: Africa's Top Four Gold Producing Countries (2008 – 2014)

Sources: www.mining.com; www.mineweb.com; www.miningweekly.com

35

Table 17: Historical Tax Payments by Major Mines (2006 - 2014, Amounts in TZS Bil.)

Mine Type 2006 2007 2008 2009 2010 2011 2012 2013 2014

BGM CT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other 8.64 11.75 21.65 29.36 22.72 42.78 46.00 45.38 49.60

BZGM CT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other 0.00 0.00 0.00 0.00 0.00 0.00 33.07 21.70 16.61

GGM CT 0.00 0.00 0.00 3.20 0.00 19.02 277.16 26.97 97.74 Other 5.32 9.64 18.20 14.73 19.07 16.19 78.50 46.38 106.59

GPM CT 0.00 0.00 0.00 0.00 21.38 41.33 22.15 15.53 0.00 Other 1.51 3.27 5.21 4.96 11.54 10.80 21.27 8.62 0.00

NLGM CT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other 0.00 0.00 0.00 0.00 0.00 0.00 0.00 6.91 12.67

NMGM CT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Other 0.50 0.74 6.14 10.84 9.98 29.93 26.51 28.40 21.79

TGM CT 0.00 0.00 0.00 0.00 0.00 0.00 77.36 0.00 0.00 Other 2.24 3.88 9.55 12.74 11.33 35.15 10.16 8.39 0.00

WDL CT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.18 0.00 Other 1.46 1.65 3.82 4.93 2.54 11.04 3.88 5.05 6.30

TTM CT 1.75 1.44 0.88 0.01 0.00 0.00 0.00 0.00 0.00 Other 0.78 1.82 1.81 1.39 2.06 2.44 1.82 1.53 0.02

Sub Total CT 1.75 1.44 0.88 3.21 21.38 60.35 376.67 42.67 97.74 Other 20.45 32.74 66.39 78.95 79.25 148.33 221.22 172.35 213.59

TOTAL 22.21 34.18 67.27 82.16 100.63 208.68 597.88 215.03 311.32

Note: CT = Corporate Tax. Other taxes include: PAYE, SDL, WHT, VAT, Stamp Duty, Import Duty, Excise Duty, Income Tax and Service Levy.

36

Figure 10: Gold Price Trends (2001 - 2014)

Source: LME - Gold London PM Fix Figure 11: Silver Price Trends (2000 - 2014)

Source: LME - Silver London PM Fix Figure 12: Copper Price Trends (2001 - 2014)

Source: LME – Copper, Cash Seller

37

Table 18: Procurement of Goods and Services by Large Scale Mines (2001 – 2014)

Year Foreign (USD Mil.)

Local (USD Mil.)

Total (USD Mil.)

2001 75.47 109.51 184.98

2002 111.9 125.45 237.35

2003 215.73 186.15 401.88

2004 102.73 130.48 233.21

2005 336.08 237.97 574.05

2006 217.24 349.6 566.84

2007 467.88 547.82 1,015.70

2008 649.78 554.93 1,204.71

2009 619.9 551.77 1,171.67

2010 546.17 337.92 884.09

2011 991.29 379.57 1,370.86

2012 829.35 520.67 1,350.02

2013 568.61 825.62 1,398.23

2014 815.50 536.56 1,352.06

TOTAL 6,547.63 5,394.02 11,945.65

38

Table 19: Tanzania Mineral Reserves for Selected Minerals and Projects (December 2014)

S/N Mine/ Project Owner Type of Minerals

Location Category Mineral Resources/ Ore Reserves

Publication Date

1 Mchuchuma Coal Mine

NDC & Sichuan Hongda Group

Coal Ludewa Proven 159 mil. tons 19/01/2009

2 Ngaka Coal Project/ Mbalawala Basin

Intra Energy Corporation (70%) & NDC (30%)

Coal Ruvuma Measured & Indicated

167 mil. tons 01/12/2012

3 Rukwa Coal Mine Project

Kibo Mining Plc Coal Rukwa, South of Lake Rukwa

Mineable 60 mil. tons 10/09/2014

4 Williamson Diamond Mine

Petra Diamonds (75%) & Tanzania Govt. (25%)

Diamonds Kishapu Indicated & Inferred

33.1 mil. carats 03/10/2014

5 Buckreef Gold Project

Tanzania Royalty (55%) & STAMICO (45%)

Gold Geita Measured & Indicated

1.3 mil troy ounces 05/06/2012

6 Bulyanhulu Gold Mine

Acacia Mining plc Gold Kahama Proven & Probable

9.4 mil. troy ounces

03/10/2014

7 Buzwagi Gold Mine

Acacia Mining Gold Kahama Proven & Probable

1.1 mil. troy ounces

03/10/2014

8 Geita Gold Mine Ashanti Gold Gold Geita Indicated 7.47 mil. troy ounces

31/12/2013

9 Handeni Gold Canaco Resources Gold Handeni Indicated 0.72 mil. ounces 29/02/2012

39

S/N Mine/ Project Owner Type of Minerals

Location Category Mineral Resources/ Ore Reserves

Publication Date

Project/ Magambazi

Inc.

10 Imweru Gold Project

Kibo Mining Plc, Ireland

Gold Singida Indicated 0.1 mil troy ounces 14/10/2014

11 New Luika Gold Mine

Shanta Gold Limited Gold Chunya Indicated

0.69 mil. troy ounces

16/01/2014

12 North Mara Gold Mine

Acacia Mining Gold Tarime Proven & Probable

2.2 mil. troy ounces

03/10/2014

13 Nyanzaga Gold Project

Acacia Mining Gold Sengerema Indicated 4.1 mil. troy ounces

03/10/2014

14 Singida Gold Mining Project

Shanta Gold Limited Gold Singida, Ikungi

Measured & Indicated

0.55 mil. troy ounces

29/01/2014

15 STAMICO Biharamulo Mine

STAMICO Gold Biharamulo Proved 0.1 mil ounces 19/06/2014

16 Liganga Iron Ore Project

NDC & Sichuan Hongda Group

Iron Ore, Titanium, Vanadium

Ludewa Proven Iron Ore -219 mil. tons, Titanium - 175k tons, Vanadium - 5k tons

19/09/2013

17 Kabanga Nickel Project

Barrick Gold Corp. (50%) & Xstrata Plc (50%)

Nickel Ngara Measured & Indicated

0.98 mil. tons 02/08/2013

18 Ntaka Hill Nickel Sulphide Project

IMX Resources Nickel Nachingwea Measured & Indicated

0.12 mil tons 03/10/2014

40

S/N Mine/ Project Owner Type of Minerals

Location Category Mineral Resources/ Ore Reserves

Publication Date

19 Dutwa Nickel Project

African Eagle Resources Plc. (90%)

Nickel, Cobalt Mwanza Indicated Ni - 0.43 mil. tons Co - 9,240 tons

01/03/2011

20 Panda Hill Niobium Project

Cradle Resources Limited

Niobium Mbeya, 35km from Mbeya Town

Indicated & Inferred

0.423 mil. tons 12/08/2014

21 Wigu Hill REE Project

Montero Mining and Exploration Company (81%)

REE Morogoro, 68km South of Morogoro

Inferred 3.3 mil. tons @ 3 - 5% LREO5

30/07/2013

22 Ngualla Rare Earth Project

Peak Resources Limited

REE (Cerium, Lantahm, Neodymium, Other)

Measured & Indicated

1.28 mil. tons REO 06/03/2013

23 TanzaniteOne Mine

STAMICO (50%) & Richland Resources Ltd (50%)

Tanzanite Simanjiro Measured 109 mil. carats 23/07/2014

24 Manyoni Uranium Project

Uranex Uranium Bahi/ Manyoni

Estimate 29 mil. tons @ 100pm cut-off

01/06/2013

25 Mkuju River Project

Mantra Resources Ltd Uranium Namtumbo Measured & Indicated

124.6 mil. pounds 30/06/2013

Source: Mining companies’ publications

41

Table 20: Status of Employment in the Major Mines – Number of Locals versus Expatriates

Mine Type 2007 2008 2009 2010 2011 2012 2013 2014

BGM Local 1,787 1,687 2,012 2,266 2,430 2,535 2,290 2,028 Expat 180 140 185 181 195 181 167 138 Total 1,967 1,827 2,197 2,447 2,625 2,716 2,457 2,166

BZGM Local 0 569 671 746 875 1,064 787 934 Expat 0 58 49 105 132 104 49 19 Total 0 627 720 851 1,007 1,168 836 953

GGM Local 2,338 1,964 1,814 1,792 1,601 1,610 1,560 1,518 Expat 114 129 121 86 82 77 78 67 Total 2,452 2,093 1,935 1,878 1,683 1,687 1,638 1,585

GPM Local 302 225 238 266 297 304 333 0 Expat 15 34 27 34 37 42 23 0 Total 317 259 265 300 334 346 356 0

NLGM Local 0 0 0 0 0 0 270 313 Expat 0 0 0 0 0 0 30 29 Total 0 0 0 0 0 0 300 342

NMGM Local 928 978 621 703 876 971 926 976 Expat 83 129 127 138 157 148 92 68 Total 1,011 1,107 748 841 1,033 1,119 1,018 1,044

TTM Local 644 714 613 648 643 630 645 574 Expat 25 26 29 33 32 37 25 16 Total 669 740 642 681 675 667 670 590

WDL Local 717 677 610 584 558 534 551 558 Expat 11 10 4 8 8 10 10 11 Total 728 687 614 592 566 544 561 569

TOTAL Local 6,716 6,814 6,579 7,005 7,280 7,648 7,362 6,901 Expat 428 526 542 585 643 599 474 348 Total 7,144 7,340 7,121 7,590 7,923 8,247 7,836 7,249

Source: Respective mining companies

42

Mkuju River Project is located in Namtumbo District, Ruvuma Region, about 470 kilometres southwest of Dar es Salaam. The project is owned by Mantra Tanzania Limited and operated by Uranium One Inc of Canada on behalf of JSC Atomredmetzoloto (ARMZ) of Russia who are the owners of both.

Current activities at the Mkuju River Project are focused on Front End Engineering Design (FEED) and testing for Insitu Recovery (ISR) through leaching for some part of the ore body which is amenable to this method.

Mantra obtained the EIA Certificate for the Project in October 2012 following an approval by UNESCO's World Heritage Committee for the minor boundary modification of the world heritage part of the Selous Game Reserve. The Special Mining Licence for the Project was granted in April 2013 and Mining Development Agreement is in final stages of engagement with the Ministry of Energy and Minerals. After the above is finalized, consent to operate in a game reserve will be requested from the Ministry of Natural Resources and Tourism which will be a final permitting stage for the Project.

Mineral resource estimate for the project, as of November, 2011 specified Measured & Indicated resources of 93.3 million pounds of U3O8 (about 35,900 tonnes of uranium oxide), Inferred resources of 26.1 million pounds (about 10,000 tonnes of uranium oxide), and the overall mineral resource of 119.4 million pounds.

(Source: Mantra)

43

Kabanga Nickel Project is an active mine exploration project located 130 kilometres southwest of Lake Victoria in the Ngara District of the Kagera Region. Falconbridge acquired a 50% indirect interest in the Kabanga Nickel project from Barrick Gold Corporation in 2005, which retains the remainder. Falconbridge was acquired by Xstrata in 2006 and Xstrata Nickel is now the operator of the joint venture.

Kabanga's 58 million tonnes nickel resource is regarded as one of the best undeveloped greenfield nickel sulphide deposits in the world. Due to the depth of the resource, Kabanga will be developed as an underground mine. The mine will use conventional underground mining and processing technology, exporting a nickel concentrate to international markets. The expected mine life of Kabanga, with current resources, is approximately 30 years.

Since 2005, there has been continued progress made in the development of the Kabanga Nickel Project with a significant investment to date of over USD 205 million in drilling and evaluation studies. A total of 410 kilometers of diamond drilling has been completed that has expanded the size of the mineral resource. Kabanga has a total estimated Measured and Indicated Resource of 37.2 million tonnes grading 2.63% nickel and an inferred resource of 21 million tonnes grading 2.6% nickel. Contingent upon the results of the feasibility study and Government infrastructure improvement projects, it is expected that the operation may be capable of producing more than 40,000 tonnes per year of nickel-in-concentrate at full production.

(Source: http://www.xstratanickel.com/EN/Operations)

44

Mchuchuma-Liganga twin Project is located in Ludewa District, Njombe Region, about 850 kilometres southwest of Dar es Salaam.

A strategic partner Sichuan Hongda Co. Ltd (SHCL) has been identified to partner with National Development Corporation (NDC) to implement the project. SHCL intends to invest USD 1.3 billion on the project to establish 3.0 million tonnes per annum coal mine and thermal power station of 600MW. The generated power will be absorbed by the Liganga Iron Ore-Titanium-Vanadium Project and the rest will be connected to the National grid at Mufindi or Iringa through proposed Mchuchuma-Mufindi/Iringa power Transmission Line.

SHCL also intends to invest USD 1.7 billion at Liganga for establishing a 3.0 million tonnes per annum iron ore mine and iron and steel complex to produce 1.0 million tonnes per annum of iron and steel products following successful bankable feasibility study.

Mchuchuma Katewaka has a reserve of 536 million tonnes of coal with proven reserve of 159 million tonnes as per study conducted in 1997.

The Liganga project life is expected to be 70 years through which a total of 219 million tonnes of iron ore, 175,400 tonnes of titanium and 5,000 tonnes of vanadium will be mined.

The Mchuchuma and Liganga projects are expected to be completed by 2017 and 2018 respectively.

Source: (http://www.ndc.go.tz)

Nyanzaga Project is located in Sengerema District, Mwanza Region, approximately 60 kilometres southwest of Mwanza city. The project is comprised of the Tusker and Kilimani resource areas, which form a single open-pit, and numerous regional exploration prospects.

45

Nyanzaga Gold Project is 100% owned by Acacia Mining Plc (formerly ABG) since May 2010. The company has undertaken an extensive step-out and infill drilling programme at both the Tusker and Kilimani deposits with the aim of extending mineralisation on the northern, western and southern domains of the project.

An updated resource for the project is estimated at 3.75 million troy ounces of gold (Indicated, April 2012).

(Source: http://www.africanbarrickgold.com/exploration-development)

Apart from various achievements recorded in year 2014, the Agency faced some challenges which affected its overall performance. The following are key challenges which either affected planned activities or expected results:

1. Inadequate human and financial resources to monitor and audit medium and small scale mining operations in the country with potential for Government revenue generation.

2. Poor record-keeping by some medium and small scale miners which hinders audit effectiveness.

3. Little awareness by medium and small scale miners on the legal/regulatory requirements.

4. Delays by some Government bodies in taking action(s) on audit recommendations.

46

Table 21 summarizes auditing activities planned to be undertaken by TMAA in year 2015.

Table 21: Planned Activities for Year 2015

Function Planned Activities Auditing of quality and quantity of produced and exported minerals for the purpose of determining values and royalty due.

To witness and record production of all minerals at Geita Gold Mine (Geita), Bulyanhulu Gold Mine (Kahama), North Mara Gold Mine (Tarime), Biharamulo (Biharamulo), Buzwagi Gold Mine (Kahama), Williamson Diamonds Mine (Kishapu), TanzaniteOne Tanzanite Mine (Simanjiro), Ngaka Coal Project (Mbinga) and New Luika Gold Mine (Chunya).

To undertake strategic auditing of minerals produced by medium and small scale miners, and mineral processors.

To collect samples of gold bearing materials produced by major gold mines and ship the same to the TMAA Laboratory in Dar es Salaam for analysis.

To witness boxing, sealing and shipment for export of all minerals produced by major mines.

To analyze mineral samples collected from the major gold mines so as to be able to accurately determine the quantity of gold, silver and copper contained.

To return the analyzed mineral samples to the respective mines.

To dispose laboratory wastes in a sound environmental manner.

To store the collected data on production and exports of minerals in the TMAA database to ensure its correctness, security and easy access.

To analyze the collected data to determine values and payable royalties of the minerals produced and exported.

To collect, analyze and disseminate minerals production and exports data for projecting Government revenue, planning purposes and decision making in the administration of the mining industry.

47

Function Planned Activities To counteract minerals smuggling and minerals royalty

evasion in collaboration with relevant Government authorities.

Auditing of revenue generated, capital and operating expenditure of the large and medium mining companies, and mineral dealers for the purpose of tax assessments.

To verify correctness of declared value of minerals sold by large and medium scale mines, and mineral dealers.

To review financial statements, accounts, vouchers and other supporting records of large and medium scale mining companies, and mineral dealers for the purpose of verifying revenue generated, capital investments and operating costs incurred by the entities in the course of minerals production and/or sales.

To review tax accounting of large and medium scale mines, and mineral dealers based on revenues and allowable expenses for the purpose of giving assurance to the Government on correctness of taxable income or declared losses.

To review financial projections and budgets on revenues, capital and operating expenditure of the major mining companies for the purpose of forecasting potential Government revenues from major mines in form of taxes and royalties.

Monitoring and auditing of environmental management, environmental budget and expenditure for the purpose of assessment of compliance to environmental laws and regulations.

To monitor and audit environmental management activities in large, medium and small scale mining operations so as to ensure compliance with the Environmental Management Act, Cap.191 and the Mining Act, Cap.123.

To review budgets and actual expenditure incurred on environmental conservation at different phases of mining operations for large and medium scale mining operations as per approved environmental audit schedule.

To verify on site the significant environmental expenditure incurred by large and medium scale mines.

To review provisions for environmental rehabilitation and mine closure activities for large and medium scale mines.

To determine the extent to which the mines’ rehabilitation programs have been implemented.

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Function Planned Activities To monitor and audit environmental management

practices of small scale mining operations, so as to ensure compliance as per the Environmental Management Act, Cap.191 and the Mining Act, Cap.123.

49

The mineral sector remains critical to the Tanzanian development, and has been an important contributor to the national economy for some years now. Tanzania Minerals Audit Agency (TMAA) successfully played its roles during year 2014 to ensure that the Government effectively maximizes its take from the sector and hence sector’s overall contribution to the national economy. Consequently, the Agency ensured that economic benefits from the sector do not compromise environmental sustainability.

Total Government revenue from the sector increased as compared to the previous year. Moreover, significant improvements on environmental management were also observed at the mining and mineral processing sites as a result of TMAA audits.

TMAA is fully committed to increasing its efficiency and effectiveness in carrying out its duties in the coming year for the purpose of realizing more successes in the overall performance. In order to realize this, the Agency will continue to build capacities in all relevant areas to ensure more effective monitoring and auditing of mining operations for the purpose of maximizing Government take and ensuring sound environmental management in mining areas.

Lastly but not the least in importance, TMAA will continue to collaborate with other relevant Government bodies to ensure that benefits from the mineral sector are proportionately shared between the Government and mining entities in a win-win situation.

Mining for Sustainable National Development

Ke : CEO

HPMU

HIAU

HlU

DBS

DMVLS

DEMA

DMPEM

DFAA

DICT

MFA

MHRA

TMAA ORGANIZATION STRUCTURE

Ag. HPMU

ChM>f Executive Officer MPRD

Head, Procurement Management Unrt MMV

Head, Internal Audrt Unit MlS

Head, legal Unit MEMA·lMSM

Director, Bu~ness Support MEMA·SSM

Director, Minerals Valuation and laboratOIY Services MMPEM-lSM

Direclor, En~ronmenlal Monrtoring and Auditing MMPEM·MSSM

Direclor, Minerals Production and Exports Monitoring MFAA-LMSM

Director, Financial Auditing and Analysis MFAA-SSM

Direclor, Information and Communication Technology MTAA

Manager, Fnanoe and Accounls MDMA

Manager, Human Resource and Admilistration MICT

CEO

HIAU

Manager, Planning and Research Dewlopment

Manager, Minerals Valuation

Manager, laboratory Services

Ag. HLU

Manager, En~ronmenlal Monitoring and Auditing of large and '-"'dium Scale Mines

Manager, En~ronmenlal Monitoring and Auditing of Small Scale Mines

Manager, Minerals Production and Export Monitoring of large Scale Mines

Manager, Minerals Production and Export Monitoring of '-"'dium and Small Scale Mines

Manager, Financial Auditing and Analysis for large and '-"'dium Scale Mning

Manager, Financial Auditing and Analysis for Small Scale Mining

Manager, Tax Audit and Anal~s

Manager, Dala Management and Analy~s

Manager, lnfonnation and Communication Technology

Contact details:

Tanzania Minerals Audit Agency Plot 1129 Chole Road - Masaki, Kinondoni

P. 0. Box 23400, DARES SALAAM, Tanzania Tel: +255 22 260 1819, +255 22 260 2109

Fax: +255 22 2601326 Email: info@tmaa.go.tz

Website: www.tmaa.go.tz

Mwanza Sub-office: PPF Tower, Kenyatta Road P. 0. Box 362, MWANZA Tel: +255 28 250 3051 Fax: +255 28 250 6052 Email: info@tmaa.go.tz

Mbeya Sub-office:

Arusha Sub-office: NSSF Mafao House, Old Moshi Road

P. 0. Box 774, ARUSHA Tel: +255 27 252 0157

Fax: +255 27 252 0157 Email: info@tmaa.go.tz

IFAD Building, Tunduma Road, Mwanjelwa P. 0. Box 644, MBEYA Tel: +255 25 250 2921 Fax: +255 25 250 2921 Email: info@tmaa.go.tz