Avocet Mining PLC Prospectus December 2011

c105718pu030 Proof 5: 7.12.11_13:38 B/L Revision:
a mining concession. Under the new mining code of 2011, the same fiscal regime applies to holders of
exploitation permit or mining concessions.
Legislation relating to mining activities
The mining industry is regulated at the national level by the Ministry of Mines. CPDM implements
the government mining policy to promote investments. The principal legislation concerning the mining
sector is governed by the Mining Code. Guinea was a member of the 15-state ECOWAS, founded on
28 May 1975. Guinea was however excluded from this collaboration in 2008 after a coup d’état and
has yet to become a member again.
The 1986 Mining Code was revised in 1995 of which a new edition including a translation into
English was issued in October 1997. The code established the CPDM which receives international
financial support, including substantial sums from the World Bank to harmonise the code with other
national legislation, undertake new surveys and create a national database of geological information.
The Guinea parliament adopted a new mining code in September 2011 which gives it a 15 per cent
free carry in mining projects, along with the option to purchase an additional 20 per cent at value to
obtain an interest amounting to 35 per cent. In November 2011, the Minister of Mines held a press
conference and stated that the new mining code adopted in September 2011 is under review by the
Guinea government following feedback from its mining partners, and is to be resubmitted to the
National Transitional Council. The government review is expected to contain proposals for a number
of amendments to be made to the tax regime under the new mining code, including amendments to
mining royalties, and rights of entry or port taxation.
Mining licences are targeted to be processed within three months under the current regime.
The Guinean Mining Code identifies five different mining permits.
* Reconnaissance authorisation – Allows prospecting of mineralised sites not under any
exploration or exploitation permit with a maximum duration of six months.
* Exploration permit – Grants exclusive right to explore for all the substances specified in the
permit over a maximum area of 50 square kilometres. It lasts for up to three years and may be
renewed twice, for two years each time.
* Exploitation permit – Exclusive right and free disposal of all the mineral substances specified in
the permit completed by a mining agreement, covers the area comprising of the ore deposit and
the surface installations as defined by the feasibility study, with a duration of fifteen years,
renewable for five year periods.
* Mining concession – Reserved for large ore deposits which involve important investments and
scopes of infrastructure as defined by the feasibility study; the grant of the mining concession is
completed by a mining convention. The duration is 25 years, renewable for ten year periods.
* Artisanal mining – Allowed only to Guinean nationals on consigned areas. Reconnaissance
authorisations for artisanal prospection can also be delivered to Guinean nationals.
Duties, royalties and taxes
Gold sale: Five per cent royalty based on London fixing.
Profits are subject to corporation tax at a rate of 35 per cent. Repatriated dividends are subject to a
ten per cent withholding tax.
Holders of exploitation permits at the exploitation phase are subject to VAT (18 per cent),
withholding tax on services rendered by foreign contractors (10 per cent), taxes on salaries (10 per
cent), and tax on securities income (6 per cent).
Environmental legislation
Ordonnance nº045/PRG/87, as amended by ordonnance 022/PRG/89 of 10 March 1989 being the code
for the protection and enhancement of the environment.
The application for an exploitation permit must include an EIS, an enhancement and mitigation plan,
and an environmental monitoring and management programme. The consent from the people
concerned must be obtained to carry out mining activities within 100 metres of dwellings, wells,
religious buildings, burial or sacred ground. The owner or user of a tract of land must also be
compensated for resettlement or for the use of land, wood and water by the mining operator. Access
roads, power lines and other infrastructures built for the purpose of mining can be used by the public
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