Iron-ore developer Sundance Resources has signed the Nabeba mining convention with the government of the Republic of Congo.
The signing follows the issue of the mining permit, which was approved in December 2012, and outlines the fiscal and legal terms and conditions that Sundance has to satisfy for the development and management of the 35-million-tonne-a-year Nabeba iron-ore project.
Sundance MD Giulio Casello said on Friday that the signing of the convention was the culmination of the strong support given to the project by the Congo-Brazzaville government, since the company started exploration at Nabeba in 2010.
“In just four years we have achieved extraordinary success in the Republic of Congo, with the Nabeba deposit now boasting a significant high-grade hematite reserve, as well as substantial itabirite resources. This world-class inventory will underpin a successful mining operation for many years, generating substantial economic benefits, including employment opportunities for the Congo people.”
Under the key terms of the convention, Sundance would have a 25-year operating licence, effective from the publication of the mining permit decree, and which was renewable for successive terms of up to 15 years, depending on the remaining reserves.
The company would also be given a five-year corporate tax holiday following the start of production, after which corporate tax would be levelled at a rate of 7.5% for five years, and 15% thereafter.
A mining royalty equal to 3% of the mine gate value of all the extracted ore would also be applied. Furthermore, the state government would take a 10% interest in Sundance subsidiary Congo Iron SA, which would be non-dilutory during the term of the convention.
Furthermore, there would be no fees, levies or taxes charged on the export of iron-ore from the mine, and there would be exemptions from import duties and taxes on plant and equipment imported temporarily for project construction, and limited import duties and taxes on other mining equipment and consumables throughout the production phase.
Congo Iron SA would make yearly contributions to a fund established to promote the economic, social and cultural development of local communities, which would be impacted by the Nabeba mine.
The Nabeba deposit would underpin Stage 1 of the project development, which was a 35-million-tonne–a-year direct shipping ore operation, which would run for a minimum of ten years.
Casello said that the signing of the convention meant that Sundance had taken another significant step towards finalising the preconditions for financing and the start of construction.
By Esmarie Swanepeol