Reconciliation report of payments made by the extractive companies to the Malagasy State and of revenues collected by the Malagasy State Fiscal Year 2012

January 2015

Conducted on behalf of the EITI by : Reconciliation reportEITI Fiscal Year 2012

Executive summary Presentation of the assignment

Context and purpose of the report This document, entitled « EITI Madagascar Report – Year 2012 », is the fourth official reconciliation report of Madagascar, commissioned by the National Committee of EITI. Its first aim is the reconciliation of cash flows between the State and the main extractive industries (mining and upstream oil companies) in Madagascar for the 2012 fiscal year. The report also reflects the requirements of the EITI standards, including: ► the governance arrangements, tax and regulatory framework applying to extractives industries ; ► an overview of the extractive sector in Madagascar ; ► the contribution of the extractive sector in 2012 in relation to the economy and an overview of the extractive sector's tax contribution to the economy to the total of the tax revenues of the country ; ► the production per product and per company including : 1/ the total production volume and 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 common practices ruling the financial relationship between the governement and the State-owned companies ; ► the situation regarding the procedures for granting licences in 2012 ; ► 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 the system of which is the participatory budget.

The exchange rate used for the report is the average exchage rate of the Central Bank of Madagascar for 2012 which is 1 USD equals to MGA 2,194.97.

Scope and approach The 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 standard ISRS 4410 related to « Compilation Engagements ».

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

Materiality-defined scope

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The results of the materiality process, duly validated by the National Committee, have enable study to define the scope presented in the table below : Scope of the Characteristics report Group A 47 Filling of the reconciliation canvas required for the companies and for the State Group B Number of 13 Disaggregated statement by company provided by the State entities per Group C group 66 Aggregate statement provided by the State Total 126 Materiality threshold of Group A (USD) 54,876.12 Coverage rate reached by Group A 97.01%

126 entities, including companies and natural persons, were identified as having made a total of significant payments to the main public authorities. These entities whose payments exceed USD 5,000 are included in the scope of « EITI Madagascar Report – Year 2012 ».

They were classified into 3 groups: • The group A consists of 47 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 group enabled us to achieve a coverage rate of 97.01% with companies having made payments exceeding the materiality threshold of USD 54,876.12 ; • The group B ompte 13 entités, pour lesquelles seul l’Etat est tenu de fournir une déclaration désagrégée par société ; • The group C includes 66 entities, for which only the State is required to provide an aggregate statement.

Update of the Materiality rate During the reconciliation engagement, we performed updates that enabled us to redefine the scope of the materiality process.

The materiality threshold goes from USD 54,876.12 to USD 55,417.43 and the coverage rate updated to 99.03% instead of 97.01%.

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Background information

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

The major commercial-scale projects currently ongoing or planned in the mining sector are outlined below :

Company name Ongoing or planned projects QMM Ongoing operation: ilmenite, zirsill. Region Anosy Ongoing operation: nickel, cobalt. Mine in Moramanga, processing plant in Projet Ambatovy Toamasina. Kraoma Ongoing operation : chrome Wisco Research : Iron of Soalala Madagascar Consolidated Pre-feasibility stage: Coal of Sakoa Mining and PAM Sakoa Operating permit since 2011, currently performing the Environmental Impact Toliara Sands Assessment : Ilmenite of Ranobe Currently performing the Environmental Impact Assessment : ilmenite on the Mainland East Coast of Madagascar Aziana Owns mining licences for the bauxite of Manantenina Exploitation of pozzuolana, clay and cipolin in Antsirabe and Tamatave for the Holcim production and sales of cement

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

Gold illegal exploitation and export is a striking aspect of the small mines. As a matter of fact, no gold export was officially recorded in Madagascar until the first semester of 2012. Approximately 150 kilograms of gold were legally exported ; this has doubled the royalties and taxes collected by the Mining Authority as for April 2012. However, a decision of the Council of Ministers prohibited the gold exploitation after this once off experience. Inspite of the prohibition of the exploitation of this precious metal, the United Nations estimated the value of the export from Madagascar at USD 18 millions in 2012; this is equivalent to 600 kg of gold and could be representative of MGA 790 millions of royalties.

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

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

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Gouvernance of the extractive sector The 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 decentralized territorial units.

In the upstream oil sector, we have the following entities: ► the Ministry of hydrocarbons ; ► the OMNIS, as a technical body, in charge of the regulation in one hand ; and in 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 theMining Code of 1999, modified in 2005 and updated in 2006 and 2007. It monitors the mining companies, except those governed by the following 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, and the Large Scale Mining Investment Law (Loi sur les Grands Investissements Miniers, LGIM) for the companies the investment of which exceeds 50 billions MGA. Currently, Ambatovy is the only project under the LGIM. Moreover, many sectoral laws are applicable to the mining sector ; ► the upstream oil sector is ruled by a decree of 1997, and oil contracts signed between the OMNIS and the companies. It is currently being reviewed.

Tax The main specific tax regulation provided by the specific legislations, promoting the investment in the mining sector are : ► in the frame of the Framework Agreement : o decrease of the Income Tax and the Investment Income Tax (Impôt sur le revenu des Capitaux 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. ► in the frame of the LGIM : o decrease of the taxable base to the Tax on Transfers ; o the right for the refun 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 production phase. During the exploration phase, le tax regime is that of the common law, provided by the General Tax Code (Code Général des Impôts, CGI). The key measures provided by the Oil Code are:

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► the Direct Tax on Hydrocarbons (Impôt Direct sur les Hydrocarbures) is set at the same rate as of the Income Tax (Impôt sur le Revenu, IR) of the common law, that exempts teh oil companies from the 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.

Projects of reform of the Mining and Oil Codes were announced in 2014 by the Government. Des projets de réforme des Codes Minier et Pétrolier ont été annoncés en 2014 par le gouvernement.

Situational analysis of the licensing procedures In the mining sector, the various types of licenses are delivered by the Registry Office (Bureau du Cadastre Minier de Madagascar, BCMM). The licencing needs, among other things, a technical advice, the publishing of a decision and the verification of the administrative fees. The delivery of new licences has been suspended since April 6th, 2011 and this suspension still remains to this day. In the oil sector, the "mining rights for hydrocarbons" are granted following a tender process managed by the OMNIS.

Licenses records For the mining sector, a record is available at the Bureau du Cadastre Minier de Madagascar (BCMM). This record is available on request and gives information on the mining squares, the request date and the licensing date, etc. Regarding the oil sector, such record is non existent. However, the website of OMNINS provides, a map that has been reproduced in this report, showing the available blocks and the ones on which contracts were signed with OMNIS. The names of the parties of these contracts are available.

Information on the beneficial ownership No record of the beneficial owners2 is available in the public domain in Madagascar. For the companies in the group A, it has been recommended without compulsion to disclose the name of the beneficial owners. 22 companies of the 47 accepted to do so in the frame of the 2012 EITI report.

Disclosure of the oil contracts The oil contract does not provide for procedures of conclusion and the publishing of the oil contracts. The CCP (Contrat de Partage de Production which is a Product Sharing Agreement) has a confidentiality clause. The main information available are the presidential decree for the approval of the oil contract and the onshore and offshore standard contracts. An overview of the standard contracts 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.

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

Moreover, it should be noter that following an increas of the share capital of QMM SA en 2012, the OMNIS, representing the State with a 20% share accepted that this company, member of the Group Rio Tinto, pays on behalf of OMNIS for an amount of 33,2 millions USD. Rio Tinto will get additional dividend until full repayment of the debt.

Contribution the extrative sector to the economy The impact of the extractive sector in the GNP is assessed by INSTAT and the General Economy Directorate at 0.7% in 2012. This figure is to be analysed carefully, given the fact that INSTAT relied on the production structure of 1984, due to lack of recent investigation.

Regarding foreign direct investments, the extractive sector prevails, as this sector represents approximtely 42% of foreign investments received by Madagascar in 2012. During the construction phases of the projects QMM and Ambatovy, this proportion could represent more than the double of that which of 2012 (86% in 2008).

As for tax revenues, the chart below shows that the extractive sector represents 7% of the total revenue of the General Tax Directorate (Direction Générale de Impôts, DGI) in 2012.

Contribution of the extractive sector to the tax revenues in 2012

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

93%

7%

Regarding employment, for lack of more accurate information, the schedule below shows that the companies of the group A, employing more than 4000 persons, represent 0,9% of the workers affiliated to the Caisse Nationale de Prévoyance Sociale (CNaPS).

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Description 2012 Number of workers from the group A 4,752 Number of workers affiliated at the CNaPS 527,862 Percentage of the workers from Group A compared to the total of workers affiliated to 0.9% the CNAPS

As for the exported quantity, the schedule below shows the exported quantity reported by the companies. In 2012, the ilmenite is the first exported mining product.

FROM COMPANIES PRODUCED EXPORTED Region of VALUE OF EXPORTED COMPANIES PRODUCTS QUANTITY (in QUANTITY (in origin PRODUCTS (in MGA) tonnes) tonnes)

GALLOIS Graphite Atsinanana 3,628.90 3,459.50 8,725,622,181.00 Etablissement Poozzole Vakinankaratra 54,979.00 N/A N/A HOLCIM. Cipolin Vakinankaratra 164,183.00 N/A N/A Clay Vakinankaratra 24,085.00 N/A N/A Betsiboka Sample of Sofia- MADAGASCAR 0.25 raw Rocks Alaotra CHROMIUM Mangoro N/A N/A COMPANY LTD Sample of S.A.R.L.U. Vatovavy altered 0.15 Fitovinany Rocks MADAGASCAR Betsiboka MINING Alaotra Rocks 0.42 N/A N/A RESOURCES LTD Mangoro S.A.R.L. Bongolava Dolomite 2,540.00 N/A N/A Amoron'i PROCHIMAD Calcite 175.00 N/A N/A Mania Kaolin 230.00 N/A N/A Ammonium Alaotra 15,822.00 - N/A PROJET Sulfate Mangoro AMBATOVY Cobalt Atsinanana 493.00 378.00 20,048,112,763.16 Nickel 5,695.00 4,471.00 162,036,083,652.55 RED GRANITI Atsimo MADAGASCAR Labradorites 1,563.35 2,564.50 N/D Andrefana S.A.R.L. Concentrate 40,512.00 43,000.00 16,020,407,123.65 KRAOMA S.A. Betsiboka Bedrock 51,551.00 67,000.00 23,732,565,900.94 MAINLAND MINING LTD Ilmenite Analanjirofo 38,500.00 38,500.00 8,372,501,424.00 S.A.R.L.U QIT Ilmenite Anosy 582,179.00 582,179.00 175,694,618,815.38 MADAGASCAR Zircon Anosy 31,242.00 31,242.00 82,022,568,675.65 MINERALS S.A. Concentrate 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 have the same understanding in the reading, a negative discrepancy means that the State has reported more revenues than those paid by the companies. In the opposite, a positive discrepancy is when the companies reported payments are greater than those reported by the State.

The total amount of the financial flows in the report, represented by the total flow reported by the State, all groups included, amounts to MGA 307.29 billions which is USD 140.50 millions. This amount represents the total amount received by the Malagasy State from extrative companies in 2012.

The table below shows that the percentage of the residual discrepancy for the group A is equivalent to 0,36% of the total flow received by the State :

Amount of total Total amount paid by Total amount received Total residual residual Currency the companies by the administrations discrepancy discrepancy (in thousands) (in thousands) (in thousands) (in %) MGA 304,322,320.21 305,424,639.27 -1,102,319.06 -0.36% USD 138,645.32 139,147.52 -502.20

a) Main flows

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

► non-refunded VAT3amounting to MGA 151.76 billions equivalent to USD 69.12 millions, 98% of which is from the Ambatovy Projet; ► Wage Income Tax (IRSA, Impôt sur les Revenus Salariaux) amounting to MGA 40.80 billions equivalent to USD 18.6 millions mainly from the Ambatovy Project for 83% and QMM for 10% ; ► Unrecovered VAT amounting to MGA 19.90 billions, equivalent to USD 9.1 millions from the Ambatovy Project for 61% and from TULLOW Madagascar for 26% ; ► Mining administration fees (FAM) amounting to MGA 16.47 billions equivalent to USD 7.50 millions mainly from : PAM Madagascar, Madagascar Chromium Company, Mainland et Goldsand ; ► Net VAT (due) amounting to MGA 11.37 billions equivalent to USD 5.18 millions corresponding to payments made from Ambatovy Project and HOLCIM.

The other payments comprise flows that are 3% of the global amount of the payment flows received by the State.

Note on the non-refunded VAT In a letter dated January 22nd, 2015 to the Minister attached to the Presidency in charge of the Strategic Resources, the Minister of Finances and Budget has precised the status of many requests for VAT refund that were submitted by the extractive companies at the end of the fiscal year 2012. The letter reflects

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

EY | 8 Reconciliation reportEITI Fiscal Year 2012 the refunds approved by the Tax Directorate (Direction Générale des Impôts, DGI) mainly during the first quarter of 2014, for a total amount of MGA 127.73 billions, equivalent to USD 58.19 millions.

b) Ecart résiduel Following our reconciliation work, the residual discrepancy is negative and amounts to MGA 1.11 billions equivalent to USD 0.50 millions for the fiscal year 2012. This discrepancy represents 0.36% of thetotal revenue received by the State the per-company breakdown of which is provided below :

Residual Residual Reported by Reported by discrepancie discrepan Residual the Company the State s cies discrepa Companies (in nciesin (in millions (in millions (in millions millions % MGA) MGA) MGA) USD) 001. PROJET AMBATOVY 214,180.19 214,551.22 -371.03 -0.17 33.66% 002. HOLCIM 22,019.96 21,361.75 658.21 0.30 -59.71% 003. QIT MADAGASCAR MINERALS S.A. 23,319.49 22,876.56 442.94 0.20 -40.18% 004. GROUPE PAM 4,611.71 5,207.63 -595.92 -0.27 54.06% 005. MADAGASCAR OIL 5,063.23 5,021.30 41.93 0.02 -3.80% 006. MAINLAND MINING LTD S.A.R.L.U 4,322.31 4,222.43 99.88 0.05 -9.06% 007. KRAOMA S.A. 6,615.55 6,738.09 -122.54 -0.06 11.12% 008. GOLD SAND S.A.R.L. 1,570.73 1,520.13 50.60 0.02 -4.59% 009. NOVA RESOURCES S.A.R.L.U 512.26 504.95 7.30 0.00 -0.66% 010. MADAGASCAR CHROMIUM COMPANY LTD 1,406.40 1,354.94 51.47 0.02 -4.67% S.A.R.L.U 011. GALLOIS Etablissement 1,512.13 1,302.82 209.31 0.10 -18.99% 012. EXXON MOBIL 1,994.59 1,994.90 -0.31 -0.00 0.03% 013. MADAGASCAR INTERNATIONAL TAK MINING 880.32 859.48 20.84 0.01 -1.89% S.A.R.L. 014. TULLOW MADAGASCAR 5,782.97 5,784.32 -1.35 -0.00 0.12% 015. MADAGASCAR MINING RESOURCES LTD 836.18 825.48 10.70 0.00 -0.97% S.A.R.L. 016. NIKO RESSOURCES [ENERMAD] 901.08 901.08 - - 0.00% 017. OPHIR ENERGY - 761.29 -761.29 -0.35 69.06% 018. MADA-AUST S.A.R.L. 752.29 771.88 -19.59 -0.01 1.78% 019. TANTALUM RARE EARTH (MALAGASY) 804.55 568.87 235.67 0.11 -21.38% S.A.R.L.U 020. CALIBRA RESOURCES & ENGINEERS 368.54 684.62 -316.08 -0.14 28.67% MADAGASCAR S.A.R.L.U 021. TOTAL EXPLORATION 916.49 918.05 -1.56 -0.00 0.14% 022. STERLING ENERGY LTD 421.01 419.78 1.23 0.00 -0.11% 023. PETRA OF MADAGASCAR S.A.R.L. - 121.64 -121.64 -0.06 11.03% 024. MINVEST MADAGASCAR S.A.U. 6.63 6.63 - - 0.00% 025. URAMAD S.A 354.37 354.37 -0.00 -0.00 0.00% 026. MINERAL PRODUCTS INTERNATIONAL 348.39 348.26 0.13 0.00 -0.01% GROUP S.A.R.L. 027. LABRADOR MADAGASCAR 363.87 358.70 5.17 0.00 -0.47% 028. AMICOH RESOURCES 334.58 334.58 - - 0.00% 029. ROC OIL/SAPETRO 430.73 430.73 0.00 0.00 0.00% 030. ACCRINGTON MINERALS S.A. 0.10 328.63 -328.53 -0.15 29.80% 031. MADAGASCAR CONSOLIDATED MINING S.A. 394.85 404.44 -9.60 -0.00 0.87% 032. TANETY LAVA S.A.R.L. 558.29 484.83 73.46 0.03 -6.66% 033. ACCESS MADAGASCAR S.A.R.L. 410.83 338.98 71.85 0.03 -6.52% 034. TOLIARA SANDS S.A.R.L. 371.66 328.04 43.62 0.02 -3.96% 035. CLASSIC REAL STONES S.A.R.L. 81.79 202.85 -121.06 -0.06 10.98% 036. PETROMAD - 197.55 -197.55 -0.09 17.92% 037. EAX /CANDAX 393.69 393.69 - - 0.00% 038. MADAGASCAR MINING INVESTMENTS 196.45 196.45 0.01 0.00 0.00% S.A.R.L.U. 039. UNIVERSAL EXPLORATION MADAGASCAR 210.17 203.47 6.70 0.00 -0.61% S.A.R.L. 040. PROCHIMAD 137.36 137.27 0.09 0.00 -0.01% 041. FARASANDS S.A.R.L. 183.92 184.65 -0.73 -0.00 0.07%

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Residual Residual Reported by Reported by discrepancie discrepan Residual the Company the State s cies discrepa Companies (in nciesin (in millions (in millions (in millions millions % MGA) MGA) MGA) USD) 042. INTERNATIONAL MINING CORPORATION 170.67 170.67 - - 0.00% LTD S.A.R.L. 043. MADAGASCAR RESSOURCES S.A.R.L. 165.14 164.82 0.32 0.00 -0.03% 044. VELONAODY Fabien 137.55 160.13 -22.58 -0.01 2.05% 045. MADAGASCAR WISCO GUANGXIN KAM WAH 244.31 244.31 - - 0.00% RESSOURCES S.A.U. 046. ENERGIZER RESSOURCES (Minerals) 0.20 142.58 -142.39 -0.06 12.92% S.A.R.L. 047. RASAMIZAFINDROSOA Dauphin 34.80 34.80 - - 0.00% 100.00 304,322.32 305,424.64 -1,102.32 -0.50 %

The canvas of OPHIR ENERGY, PETRA OF MADAGASCAR S.A.R.L, ACCRINGTON MINERALS S.A., PETROMAD et ENERGIZER RESSOURCES (Minerals) S.A.R.L were not filled out and/or signed within the time limit. The data from the State amounting to MGA 1 551.69 millions equivalent to USD 0.71 millions are considered as residual discrepancies on the companies' side.

The residual discrepancy by payment type is mainly explained by the following reasons: ► the customs duties and the Taxes on Petroleum Products (Taxes sur les produits pétroliers, TPP) show a positive discrepancy of MGA 381.12 millions equivalent to USD 0.173 millions in favour of the companies. These discrepancies were mainly noted for : QMM, PAM Madagascar, HOLCIM and the Ambatovy Project. ► the net VAT (due VAT) has generated a positive discrepancy for a total of MGA 326.42 millions equivalent to USD 0.15 millions comprising a positive discrepancy of MGA 537.14 millions for HOLCIM and a negative discrepancy of MGA 209.46 millions for OPHIR Energy. ► The administration fees paid to OMNIS generated a negative discrepancy of MGA 582.84 millions equivalent to USD 0.27 millions mainly for OPHIR ENERGY and PETROMAD. They have not provided the canvas during the reconciliation; ► the social contributions paid to the CNaPS correspond to a negative discrepancy of MGA 746.83 millions equivalent to USD 0.34 millions which could not be reconciled with the data from PAM SAKOA ; ► the Mining Administration Fees (Frais d’Administration Minière, FAM) show a negative discrepancy in favour of the State for MGA 837.46 millions equivalent to USD 0.38 millions explained by : o the payments traced at the BCMM, mainly by the companies that did not provide the canvas; o the fact that the data at the BCMM is not up to date regarding the new owner of the mining license in the case of transfer between companies, the payments are recorded in the name of the former owner for the license that was transferred.

c) Breakdown of flows per public entity The breakdown of flows per public entity is presented in the table below and shows that the DGI has received the most significant flows from the extractive companies for 2012, which is 80% of them.

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Payment flows received by the Public Entities Entity name (in thousands MGA) (in thousands USD) (In %) Direction Générale des Impôts (DGI) 244,352,002.67 111,323.62 80% BCMM 17,027,948.78 7,757.71 6% OMNIS 7,839,628.52 3,571.63 3% Customs 7,720,497.55 3,517.36 3% CNAPS 5,617,876.49 2,559.43 2% Other entities 22,866,685.26 10,417.77 7% Total 305,424,639.27 139,147.52 100%

Entities from Group B

Total amount Total amount received by the received by the Entity type State State in thousands MGA in thousands USD Mining entity 1,060,798.75 483.29 Legal persons 1,033,193.95 470.71 Natural persons 27,604.80 12.58 Total 1,060,798.75 483.29

As presented in the table below, the amount of the flows reported unilaterally and disaggregated by the State amounts to MGA 1.07 billions, equivalent to USD 0.48 millions for the group B.

Entities from Group C

Total amount Total amount received by the received by the Entity type State State in thousands MGA in thousands USD Mining entity 1,897,594.95 864.52 Legal persons 1,512,389.81 689.03 Natural persons 385,205.14 175.49 Oil company 18,591.30 8.47 Total 1,916,186.25 872.99

As presented in the table below, the amount of the flows reported unilaterally and aggregated by the State amounts to MGA 1.92 billions, equivalent to USD 0.87 millions for the group C.

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Other results

Donations4

15 companies from the Group A made donations during 2012. The total amount of these donations is MGA 1.42 billions equivalent to USD 0.65 millions, 47% of which is cash and 53% in kind. These voluntary contributions 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.

Amount of voluntary contributions Total Mining companies Cash donations (in Donations in kind (in (in MGA) (in USD) MGA) MGA) QIT MADAGASCAR MINERALS S.A. 291,473,156.73 176,591,264.75 468,064,421.48 213,244.11 MADAGASCAR OIL 31,236,000.00 270,187,179.13 301,423,179.13 137,324.51 PROJET AMBATOVY - 241,154,259.22 241,154,259.22 109,866.77 KRAOMA S.A. 144,747,000.00 - 144,747,000.00 65,944.86 MADAGASCAR CONSOLIDATED 89,159,390.00 15,810,000.00 104,969,390.00 47,822.70 MINING S.A. TOTAL EXPLORATION 80,684,383.18 - 80,684,383.18 36,758.76 HOLCIM - 39,711,414.20 39,711,414.20 18,092.01 TOLIARA SANDS S.A.R.L. 8,268,117.20 12,093,650.00 20,361,767.20 9,276.56 MAINLAND MINING LTD S.A.R.L.U 11,330,000.00 - 11,330,000.00 5,161.80 MADA-AUST S.A.R.L. 6,235,710.00 - 6,235,710.00 2,840.91 MADAGASCAR WISCO GUANGXIN 1,000,000.00 643,000.00 1,643,000.00 748.53 KAM WAH RESSOURCES S.A.U. SAPETRO 320,000.00 - 320,000.00 145.79 MADAGASCAR CHROMIUM - 264,000.00 264,000.00 120.27 COMPANY LTD S.A.R.L.U TANTALUM RARE EARTH 120,000.00 - 120,000.00 54.67 (MALAGASY) S.A.R.L.U PROCHIMAD 31,000.00 - 31,000.00 14.12 Total 664,604,757.11 756,454,767.30 1,421,059,524.41 647,416.37

Social expenditures5

5 companies from the Group A made social expenditures payments during fiscal year 2012. These social expenditures amount to MGA 4.49 billions equivalent to USD 2.05 millions, 80% of which is in cash and 20% is in kind. The social expenditures mainly comprise integrated development projects (Projets de Développement Intégrés, PDI) of QMM, the rehabilitation of the National Road RN5 by Mainland et various construction works.

4Definition 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 these infrastructures, 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 infrastructures constructions, free of charge, are considered as donations.» 5« Significant social expenditures from companies are ones that are made compulsory by the law or by a contract signed with the government. »

EY | 12 Reconciliation reportEITI Fiscal Year 2012

Amount of voluntary contributions Total Social expenditures in Mining companies Social expenditures cash (in MGA) (in USD) in kind (in MGA) (in MGA) QIT MADAGASCAR MINERALS 3,390,923,060.49 - 3,390,923,060.49 1,544,860.78 MAINLAND MINING LTD 1,816,000.00 739,772,217.00 741,588,217.00 337,858.02 EAX 158,782,336.82 - 158,782,336.82 72,339.18 PROJET AMBATOVY - 160,313,112.85 160,313,112.85 73,036.58 SAPETRO 30,299,825.00 7,554,212.00 37,854,037.00 17,245.81 Total 3,581,821,222.31 907,639,541.85 4,489,460,764.16 2,045,340.37

Decentralised authorities

Flows received by the decentralised authorities (Regions and Municipalities) are mainly the Mining rebates and the Mining Administration Fees (FAM). • Mining Rebates: GALLOIS, HOLCIM, MAINLAND MINING and QMM paid a total of MGA 3.52 billions for the rebates related to 2012. The benéficiairies are repectively the regions Vakinankaratra, Anosy, Toamasina and Analanjirofo, as well as the municipalities located in these regions. • Mining Administration Fees: the mining companies in the group A paid to the municipalities and the regions a total amount of MGA 15.38 billions.

Moreover, the schedules showing the repayment and non-repayment of the FAM by the BCMM to the municipalities and the regions for all the mining operators in 2012 are presented in the tables below.

Administration Fees of 2012 for the group A relevant to the fiscal year repaid by the BCMM to the municipalities and the regions Amounts received Amounts received by the Total amount received by the regions Companies municipalities (In thousands (In thousands MGA) (In thousands MGA) (In thousands MGA) USD) ACCESS MADAGASCAR 7,459.28 4,351.25 11,810.53 5.38 ACCRINGTON MINERALS 39,423.74 22,997.18 62,420.93 28.44 AMBATOVY MINERALS 12,944.99 7,551.25 20,496.24 9.34 CALIBRA RESOURCES & ENGINEERS 31,307.95 18,262.97 49,570.92 22.58 MADAGASCAR CLASSIC REAL STONES 6,739.58 3,931.42 10,671.01 4.86 DYNATEC MADAGASCAR 22,964.58 13,396.01 36,360.59 16.57 ENERGIZER RESSOURCES (Minerals) 10,955.14 6,390.50 17,345.63 7.90 GALLOIS Etablissement 11,243.10 6,558.48 17,801.58 8.11 GOLD SAND 113,038.72 65,939.25 178,977.97 81.54 GRANITEX 2,048.41 1,194.91 3,243.32 1.48 INTERNATIONAL MINING 13,270.75 7,741.27 21,012.02 9.57 CORPORATION LTD KRAOMA 27,049.68 15,778.98 42,828.66 19.51 LABRADOR MADAGASCAR 3,270.72 1,907.92 5,178.64 2.36 MADA-AUST 69,545.11 40,567.98 110,113.09 50.17 MADAGASCAR CHROMIUM COMPANY 119,600.35 69,766.87 189,367.22 86.27 LTD MADAGASCAR CONSOLIDATED MINING 28,480.55 16,613.65 45,094.20 20.54 MADAGASCAR INTERNATIONAL TAK 80,570.23 46,999.30 127,569.53 58.12 MINING

EY | 13 Reconciliation reportEITI Fiscal Year 2012

Amounts received Amounts received by the Total amount received by the regions Companies municipalities (In thousands (In thousands MGA) (In thousands MGA) (In thousands MGA) USD) MADAGASCAR MINING INVESTMENTS 15,020.46 8,761.94 23,782.40 10.83 MADAGASCAR MINING RESOURCES LTD 64,357.52 37,541.89 101,899.41 46.42 MADAGASCAR RESSOURCES 19,618.56 11,444.16 31,062.72 14.15 MAINLAND MINING LTD 164,813.80 96,141.38 260,955.18 118.89 MINERAL PRODUCTS INTERNATIONAL 31,615.16 18,442.18 50,057.34 22.81 GROUP MINVEST MADAGASCAR 37,961.71 22,144.33 60,106.04 27.38 NOVA RESOURCES 122,319.42 71,353.00 193,672.42 88.23 PAM Atomique 77,442.96 45,175.06 122,618.02 55.86 PAM Madagascar 332,989.86 194,244.09 527,233.95 240.20 PAM SAKOA COAL 8,828.93 5,150.21 13,979.14 6.37 PETRA OF MADAGASCAR 20,818.94 12,144.38 32,963.33 15.02 PROCHIMAD MINES & CARRIERES 449.69 262.32 712.01 0.32 "P.M.C" PROCHIMAD 1,328.41 774.91 2,103.32 0.96 RED GRANITI MADAGASCAR -245.76 -143.36 -389.12 -0.18 TANETY LAVA 12,002.98 7,001.74 19,004.71 8.66 TANTALUM RARE EARTH (MALAGASY) 14,489.12 8,451.99 22,941.11 10.45 TOLIARA SANDS 7,018.85 4,094.33 11,113.18 5.06 UNIVERSAL EXPLORATION 14,768.57 8,615.00 23,383.57 10.65 MADAGASCAR URAMAD 34,305.70 20,011.66 54,317.36 24.75 VELONAODY Fabien 15,968.71 9,315.08 25,283.79 11.52 TOTAL 1,595,786.50 930,875.46 2,526,661.95 1,151.11

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

Statement of the Administration fees of 2012 the repayment of which by the BCMM to the municipalities is pending

Total FAM Total FAM Total FAM not Total FAM not not paid to not paid to paid to the paid to the Region / municipality the Region / municipality the municipalities municipalities municipalities municipalities in MGA in USD in MGA in USD EN MER 14,326,444.44 6,526.94 BONGOLAVA 786,864.00 358.49 ALAOTRA MANGORO 11,669,808.00 5,316.61 DIANA 4,557,948.00 2,076.54 AMORON'I MANIA 18,097,056.00 8,244.79 IHOROMBE 4,979,088.00 2,268.41 ANALAMANGA 20,448.00 9.32 ITASY 1,852,416.00 843.94 ANALANJIROFO 14,508,924.00 6,610.08 MELAKY 29,574,546.55 13,473.78 ANDROY 4,675,039.38 2,129.89 MENABE 50,935,606.91 23,205.61 ANOSY 38,111,814.76 17,363.25 SAVA 67,786,944.00 30,882.86 ATSINANANA 43,846,308.00 19,975.81 SOFIA 15,006,276.00 6,836.67 BETSIBOKA 26,446,728.00 12,048.79 VAKINANKARATRA 26,855,208.00 12,234.89 BOENI 22,123,392.00 10,079.13 VATOVAVY FITOVINANY 5,252,052.00 2,392.77 BOENY 5,758,668.00 2,623.57 TOTAL 407,171,580.04 185,502.12

The Minings Administration fees yet to be repaid are mainly for the share of the municipalities that do not have a dedicated bank account the details of which are given to the BCMM and are pending.

EY | 14 Reconciliation reportEITI Fiscal Year 2012

Participatory budget

In compliance with the provisions mentionned in the sections 3.7 and 3.8 of the EITI standards 2013, the use of the mining revenues in the municipalities and the regions, having applied the participatory budget, has been highlighted in the frame of the reconciliation.

The participatory budget is a process and an instrument giving the population the possibility to determine the use of the public resources (part or overall investement budget for the local community).

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

Mining Resources Uses Municipality / Région company in MGA in USD in MGA in USD Municipality of Ambohibary – AMBATOVY 11,000,000.00 5,011.46 11,000,000.00 5,011,46 Moramanga HOLCIM Municipality of Ibity 62,525,896.00 28,485.99 Nonfourni Non fourni HOLCIM Tritriva 23,180,072.00 10,560.54 Non fourni Non fourni HOLCIM Andranomanelatra 13,101,534.38 5,968.89 Non fourni Non fourni Rural municipality of QMM 949,314,068.00 432,495.24 949,314,068.00 432,495,24 Ampasy Nahampoana Municipality QMM 581,285,055.00 264,825.97 430,745,739.30 196,242,20 ofMandromodromotra Municipality of KRAOMA 16,796,044.80 7,652.06 16,558,841.56 7,543,99 Antsiafabositra KRAOMA Municipality of Antanimbary 6,252,686.40 2,848.64 5,449,080.40 2,482,53 Municipality of Maevatanana KRAOMA 13,742,176.80 6,260.76 13,792,500.00 6,283,68 II Total 1,677,197,533,38 764,109.55 1,426,860,229.26 650,059.10

Recommendations

Follow-up of previous recommendations

RECEPIENT RECOMMENDATIONS - Reinforce the sensitization of the mining and oil companies, and of the public Administration, to make sure of the integration of the EITI process EITI and to ease data collection. - Exclude dissolved companies from the reconciliation of the year. - Implement a system that will enable to distinguish the revenues by Companies and sector for the same company, at the Tax Administration and the Public company. administrations in - Design a procedure for the follow-up of the regimes applicable to the general mining companies. - Make the datas in the canvas reliable:following the guide for the filling, Mining and upstream support from a competent person during the preparation workshop, oil companies making available all supporting document and presence of a dedicated contact person during the reviews within the companies, etc.

EY | 15 Reconciliation reportEITI Fiscal Year 2012

RECEPIENT RECOMMENDATIONS - Certify the canvas by an independant auditor. - Implement within the Treasurya system for identifying the paying Treasury, Ministry of companies when redistributing the payments to the decentralised Decentralisation, authorities. Regions and - Provide the decentralized authorities with a system that will enable them Municipalities to follow-up on the revenues. Customs - Update the database of the information on the companies and the Directorateand SRI6 mapping of the old and new NIFs7. - Within BCMM, inform the decentralised authorities on the details of the BCMM8, Ministry of repaid FAM9and link the payment to the real owners after the disposal or Decentralisation, the transfer of the mining titles. Regions and - Within the decentralized authorities, perform a follow-up of the Municipalities payments from the mining companies in the sector and create a bank account. - Provide exhaustive information related to the payments of taxes, duties Tax administration and taxes by the companies such as : paying company, period, principal tax amount, fines and penalties, etc. - Centralise the database for the delivery of visa and resident card at the EDBM10 and the EDBM or the Ministry of the Interior with all the information about the Ministry of the inquirer or the company for which they work so as to ease the tracking Interior of these information.

New recommendations following the reconciliation

RECEPIENT RECOMMENDATIONS

The Administration - Implement a centralised and updated database of all the existing and its divisions companies and an archiving electronic system of the data. Trésor, Ministry of - Provide in each BTR11all information related to the receipt of payments. the Decentralisation, Regions and Municipalities - Set up a database that will enable to provide the coordinates of the Customs Directorate Customs broker and the final beneficiary. INSTAT, Ministry of - Perform an annual study of the actual contribution of the mining and Economy, Ministry in upstream oil sectors after an update of the structure. charge of the extractive sector

6SRI : Service de Renseignements des Immatriculations (Registration Information Service) 7 NIF : Numéro d’Identification Fiscale (Tax Identification Number) 8 BCMM : Bureau des Cadastres Miniers de Madagascar (Mining Registry Office) 9 FAM : Frais d’Administration Minière (Mining Administration Fees) 10 EDBM : Economic Development Board of Madagascar 11 BTR : Bons de Transfert de Recettes (Revenues Transfer Coupons)

EY | 16 Reconciliation reportEITI Fiscal Year 2012

EY | 17 Reconciliation reportEITI Fiscal Year 2012

Sommaire

Presentation of the assignment ...... 1 Context and purpose of the report...... 1 Scope and approach ...... 1 Materiality-defined scope ...... 1 Update of the Materiality rate ...... 2 Background information ...... 3 Overview of the extractive sector ...... 3 Gouvernance of the extractive sector ...... 4 Legal and tax framework ...... 4 Situational analysis of the licensing procedures ...... 5 Licenses records ...... 5 Information on the beneficial ownership ...... 5 Disclosure of the oil contracts ...... 5 Financial relationships between the government and the State-owned companies ...... 6 Contribution the extrative sector to the economy ...... 6 Main outcome of the reconciliation ...... 8 Analysis of the results ...... 8 Entities from Group A ...... 8 Entities from Group B ...... 11 Entities from Group C ...... 11 Other results ...... 12 Donations ...... 12 Social expenditures ...... 12 Decentralised authorities ...... 13 Participatory budget ...... 15 Recommendations ...... 15 1 Presentation of the assignment ...... 26 1.1 Context and purpose of the report ...... 26 1.1.1 EITI worldwide and in Madagascar ...... 26 1.1.2 Purpose of the EITI report ...... 28 1.2 Context of work ...... 29 1.2.1 Scope ...... 29 1.2.2 Reconciler’s procedures ...... 29 1.2.3 Methodological approach ...... 31 1.2.4 Limitations of the works ...... 32 1.2.5 Coverage ...... 32 1.2.6 Fiscal year ...... 32 1.2.7 Type of flow ...... 33 1.2.8 Entity type ...... 33

EY | 18 Reconciliation reportEITI Fiscal Year 2012

1.2.9 Thresholds ...... 33 1.2.10 Update of the coverage rate ...... 34 1.2.11 Discrepancies and adjustments ...... 35 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 exctractive sector ...... 39 2.1.1 The mining sector ...... 39 2.1.2 Upstream oil sector ...... 40 2.2 Overview of the small mines and informal mining activities ...... 42 2.2.1 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 Gold’s case ...... 43 2.3 Significant events of 2012 ...... 46 2.4 Governance of the sector: key actors ...... 46 2.4.1 The mining sector ...... 46 2.4.2 The upstream oil sector ...... 46 2.5 Legal framework ...... 47 2.5.1 The minig sector ...... 47 2.5.2 The upstream oil sector ...... 47 2.6 Tax framework ...... 48 2.6.1 Comparative table ...... 48 2.6.2 Specificities for State taxes and local taxes ...... 49 2.7 Royalties and rebates ...... 50 2.8 Administration and training fees ...... 50 2.9 Current state of the licensing procedures ...... 52 2.9.1 Mining sector ...... 52 2.9.2 Secteur pétrolier amont...... 54 2.10 Registry of licences and permits ...... 55 2.10.1 Reiterating the standard ...... 55 2.10.2 Situation in Madagascar ...... 55 2.11 Information on the beneficial ownership of the extractive companies ...... 55 2.11.1 Reiterating the standard ...... 55 2.11.2 Situation in Madagascar ...... 55 2.12 Disclosure of oil contracts ...... 59 2.12.1 Reiterating the standard ...... 59 2.12.2 Situation in Madagascar ...... 59 2.13 Financial relationships between the government and State-owned companies .60 2.13.1 Reiterating the standard ...... 60 2.13.2 Situation in Madagascar ...... 60 2.14 Contribution of the extractive sector to the economy ...... 61 2.14.1 Contribution to the GDP ...... 61

EY | 19 Reconciliation reportEITI Fiscal Year 2012

2.14.2 Contribution to foreign direct investments ...... 62 2.14.3 Contribution of the total tax revenues ...... 62 2.14.4 Contribution in terms of employment ...... 64 2.15 Exported quantities ...... 64 3 Results of the reconciliation ...... 66 3.1 Total flows and total residual discrepancy ...... 66 3.2 Entities in the Group A ...... 66 3.2.1 Schedule of the payment flows per company, with amounts paid, amounts received and discrepancies ...... 66 3.2.2 Comments ...... 89 3.3 Entités du Groupe B ...... 95 3.3.1 Tableau des flux de paiements par société, au niveau des entités publiques en milliers MGA 95 3.3.2 Commentaires ...... 96 3.4 Entités du Groupe C ...... 97 3.4.1 Tableau des flux de paiements par société, au niveau des entités publiques en milliers MGA 97 3.4.2 Commentaires ...... 98 4 Autres résultats ...... 99 4.1 Résultats relatifs aux dons ...... 99 4.1.1 QIT MADAGASCAR MINERALS S.A...... 99 4.1.2 MADAGASCAR OIL ...... 100 4.1.3 PROJET AMBATOVY ...... 102 4.1.4 KRAOMA ...... 103 4.1.5 MADAGASCAR CONSOLIDATED MINING S.A...... 103 4.1.6 TOTAL EXPLORATION ...... 103 4.1.7 HOLCIM...... 104 4.1.8 TOLIARA SANDS S.A.R.L...... 104 4.1.9 MAINLAND ...... 104 4.1.10 MADA-AUST SARL ...... 105 4.1.11 MADAGASCAR WISCO GUANGXIN KAM WAH RESSOURCES S.A.U...... 105 4.1.12 SAPETRO...... 105 4.1.13 MADAGASCAR CHROMIUM COMPANY ...... 105 4.1.14 TANTALUM RARE EARTH ...... 106 4.1.15 PROCHIMAD ...... 107 4.2 Résultats relatifs aux dépenses sociales ...... 107 4.2.1 QMM ...... 107 4.2.2 MAINLAND MINING LTD S.A.R.L.U ...... 108 4.2.3 EAX ...... 108 4.2.4 PROJET AMBATOVY ...... 108 4.2.5 SAPETRO ...... 110 4.3 Résultats au niveau des collectivités décentralisées ...... 111 4.3.1 Ristournes minières ...... 111

EY | 20 Reconciliation reportEITI Fiscal Year 2012

4.3.2 Frais d’administration minière ...... 112 4.3.3 Impôts fonciers sur les propriétés bâties (IFPB) ...... 116 4.3.4 Property tax on land (IFT) ...... 116 4.3.5 Utilisation des fonds reçus par les collectivités appliquant le budget participatif ...... 117 5 Observations et recommandations ...... 122 5.1 Suivi des recommandations antérieures ...... 122 5.1.1 Recommandations pour l’EITI ...... 122 5.1.2 Recommandations générales (sociétés et administrations) ...... 123 5.1.3 Recommandations pour les sociétés minières et pétrolières amont concernées par la réconciliation ...... 124 5.1.4 Recommandations pour les administrations et ses démembrements ...... 126 5.1.5 Recommandations pour la Direction des Douanes et du Service de Renseignement des Immatriculations (SRI) ...... 128 5.1.6 Recommandations pour le BCMM, Ministère de la Décentralisation, Régions et Communes 129 5.1.7 Recommandations pour l’Administration fiscale ...... 130 5.1.8 Recommandations pour l’EDBM et le Ministère de l’Intérieur ...... 131 5.2 Recommandations générales suite à la réconciliation ...... 131 5.2.1 Recommandations pour l’administration et ses démembrements ...... 131 5.2.2 Pour le Trésor, le Ministère de la Décentralisation, les Régions et les Communes ..... 132 5.2.3 Pour la Direction des douanes ...... 132 5.2.4 Pour l’INSTAT, le Ministère en charge de l’Economie, le Ministère en charge du secteur extractif ...... 133 6 Annexes ...... 134

EY | 21 Reconciliation reportEITI Fiscal Year 2012

EY | 22 Reconciliation report EITI Fiscal Year 2012

Listof abbreviations

ACRONYM MEANING Public entities: ANDEA Autorité Nationale de l’Eau et de l’Assainissement ADEMA Aéroport de Madagascar BCMM Bureau du Cadastre Minier de Madagascar Cnaps Caisse Nationale pour la Prévoyance Sociale DGE Direction des Grandes Entreprises DGI Direction Générale des Impôts DIR Direction Interrégionale des Mines DRI Direction Régionale des Impôts EDBM Economic Development Board of Madagascar EITI Extractive Industries Transparency Initiative ENEMPSI Enquête Nationale sur l’Emploi et le Secteur Informel ITIE Initiative de la Transparence des Industries Extractives OMERT Office Malagasy d'Etudes et de Régulation des Télécommunications OMNIS Office des Mines Nationales et des Industries Stratégiques ONE Office National pour l’Environnement OSIE Organisation Sanitaire Inter-Entreprises SONAPAR Société Nationale de Participation SPAT Société du port à gestion autonome de Toamasina SRE Service Régional des Entreprises SMMC Société de Manutention de Marchandises Conventionnelles Mining companies : AMSA Ambatovy Minerals Société Anonyme COMINA Compagnie Minière d’Andriamena DMSA Dynatec Madagascar Société Anonyme KRAOMA Kraomita Malagasy MOIL Madagascar Oil MCM Madagascar Consolidated Mining QMM Qit Madagascar Minerals WISCO WUHAN Iron and Steel Co Guanxin PAM Pan African Mining Oil companies : EMEPML ExxonMobil Exploration and Production Madagascar Limited EMEPMML ExxonMobil Exploration and Production Madagascar Majunga Limited EMEPNML ExxonMobil Exploration and Production Northern Madagascar Limited SAPETRO South Atlantic Petroleum BP SAS EAX East African Exploration Madagascar Taxe : AERP Autorisation Exclusive de Réservation de Périmètre DA Droit d'accise DD Droit de douanes FAM Frais d'administration minière HTVA Hors TVA IBS Impôts sur les bénéfices des sociétés IFPB Impôts fonciers sur la propriété bâtie

EY | 23 Reconciliation report EITI Fiscal Year 2012

ACRONYM MEANING IFT Impôts fonciers sur les terrains IR Impôts sur les revenus IRCM Impôts sur les revenus des capitaux mobiliers IRSA Impôts sur les revenus salariaux et assimilés IPVI Impôts sur les plus-values immobilières REU Redevance sur les eaux usées TAFB Taxe annexe à l'IFPB TFT Taxe forfaitaire sur le transfert TP Taxe professionnelle TPF Taxe de publicité foncière TVA Taxe sur la valeur ajoutée TVST Taxe sur les véhicules de tourisme des entreprises ENR Entreprises non résidentes Texts and Laws: LGIM Loi sur les Grands Investissements Miniers Others: AC Avis de crédit AD Avis de débit AMIT Association Médicale Inter-Entreprises de Tananarive BRGM Bureau de Recherches Géologiques et Minières CAD Commissionnaire agrée en douane CNUCED Conférence des Nations Unies pour le Commerce et le Développement Corp. Corporation CPP Contrat de Partage de production CTD Collectivités territoriales décentralisées DAU Déclaration administrative unique EY Ernst & Young ISRS International Standards on Related Services Kg Kilogramme Km Kilomètre Ltd Limited MECIE Mise en Compatibilité des Investissements avec l’Environnement MGA Malagasy Ariary NIF Numéro d'identité fiscale OMSI Organisation Médico-Sociale Inter-professionnelle OV Ordre de Virement PDI Projet de Développement Intégré PV Procès-Verbal S.A Société Anonyme SARLU Société A Responsabilité Limitée Unipersonnelle SMIMO Service Médical Inter-Entreprises Moramanga SE Secrétaire Exécutif USD Dollar des Etats-Unis d'Amérique

EY | 24 Reconciliation report EITI Fiscal Year 2012

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1 Presentation of the assignment

1.1 Context and purposeof the report

1.1.1 EITIworldwideand in Madagascar

1.1.1.1 EITIworldwide

EITI, or Extractive Industries TransparencyInitiative,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 the extractive industry to publish the payments they made to the State, and for the governments to disclose their revenues. It aims to reinforce the governance by improving the transparency and the responsibility in the extractive sector. It is financed by a multi-donor fund in place since 2004, to which many governments (British, German, Dutch, Norwegian, and French) contribute and it is managed by the World Bank. The diversity of this coalition is represented in the Board of Directors. The latter is assisted by a General Secretary who materialises his political decisions and coordinates the international efforts aiming to implement EITI. For a country to take part in the EITI, two steps are required : first, acquiring the status of candidate country, and the recognition to compliance to EITI standards. These steps are both under membership conditions and principles that are to be respected by each country wishing to take part in the initiative. The integration within EITI generally brings many advantages to the member country : governance capacity development, improvement of the international credibility and the investment climate, the evidence of the will to fight againts corruption and the commitment to good governance.

EITI International has adopted and published a new standard, edition 2013, at the International EITI Conference held in Sydney in May 2013. Applying this norm in its entirety is compulsory starting from 2014.

1.1.1.2 EITI in Madagascar

Madagascar expressed the desire to take part in the EITI process by meeting the membership conditions and principles. For this purpose, Madagascar was accepted as an EITI candidate country in 2008. A first communication and dissemination of information on the payments was made. A Multiparty National Group was established, consisting of members from all extractive regions (Regional Committees), and the Central Region.The group and the board are tripartite, with representatives of the civil society, the Administration and the extractive companies. The National Committee represents the Board of Directors of the Multiparty National Group.

In October 2011, the Board of Directors suspended Madagascar from his status of candidate country, due to a lack of international recognition of the government. The suspension prevailed until the national situation is resolved. However, the Council trusts the Multiparty Group to go on implementing 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 flows between the State and the key taxpayers in the extractive industry for the fiscal year 2012. The new report, prepared by Ernst & Young in 2012, was presented to the Board of Directors, who after seeing 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.

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The Board of Directors of EITI decided, on June 6th 2014, to lift the suspension of Madagascar and to reestablish his status of Candidate country. The Council noted the commitment of the new Malagasy government to implement the EITI standard. They were glad that the required structures for an efficient implementation of the EITI, was in place and could be sustained. The reintegration of Madagascar as a Candidate country is under some conditions. In compliance with the EITI standard, Madagascar must publish each year EITI reports compliant to the requirements of EITI so as to keep its status of Candidate country.

The National Committee has decided to order 2 reports for the reconciliation of 2014 for the fiscal year 2012 and 2013, prepared by Ernst & Young. For the current report, the new requirements EITI 201312 in force the recapitulation of which is presented below, are applicable:

N° Requirements Application 1 EITI requires an efficient follow-up by the multiparty group (National Committee EITI) Compulsory

EITI requires a regular and punctual publishing of the data: the EITI reports must include 2 Compulsory the data that are not of the two previous fiscal years.

EITI requires that the EITI reports also include contextual information about the extractive industries : - 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 3 - 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 EITI requires the publishing of a reconciliation report including entirely and exhaustively all the significant payments received by the State from the extractive sector : - complete definition of the taxes, and other revenues that should be included in the report Compulsory définition 4 - providing infrastructures or a barter trade arrangement (if applicable) Compulsory - the social expenditures (according to the social commitment required from the company) Compulsory - transfer of funds between State-owned company and other State departments Compulsory - subnational payments and transfers Compulsory EITI requires a methodology and a process of reliable statement and verification, in line 5 Compulsory with the international standards when the independent reconciler prepares the report. EITI requires that the EITI reports be reader friendly and promoted and contribute to public 6 Compulsory discussion. EITI requires of the Multiparty Groupe (National Committee) to adopt measures in order to 7 act in line with the lessons learnt and assess the results and the impact of the Compulsory implementation of EITI.

12Source : 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 the financial flows between the State and the main extractive industries (mining and upstream oil companies) in Madagascar for the fiscal year 2012.

Specific services required from the Reconciler as per the terms of reference

► Verify if the assumptions of the materiality process of 2011 are compatibel to the realities of 2012 ; ► Collect information from the selected companies from the process as well as from the related administration offices and compile them; ► Perform the reconciliation of the figures reported by the extractive industries and those from the State ; ► Analyse the differences ; ► Compare the information related to the transactions in the Regions and the Municipalities beneficiaries and those reported by the taxpaying companies, and explain the differences ; ► Provide in the report the current state of the licensing procedures of 2012 ; ► Give the current state of the mining and upstream oilcontracts and/or licences available in the public field, in Madagascar ; ► Assess the contrubition of the extractive sector in 2012 compared to the overall economy for the same period by referring to the GDP. This comparison will also be tax-wise. ► Give an overview of the contribution of the extractive sector to the overall tax revenues of the country ; ► Disclose the exported production per product and for each company during 2012 and also per region if applicable; ► Provide specific information about the State-owned companies or those where the State owns shares, as well as information related to the ownership of the extractive companies ; ► Provide a summary of the donations to public entities from the mining and oil companies ; ► Organise workshops for consulting the National Committee ; ► Publish and disseminate the report and the information; ► Prepare the extracts of the reports for local, regional, national and international publishing; ► 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

1.2.1.1.1 Standards related to the Reconciler’s work

We conducted our works based on International Standard on Related Services: ISRS 4400 related to the « Engagements to perform agreed-upon procedures regarding financial information » and the standard ISRS 4410 related to « Compilation Engagements ».In accordance with these standards, our intervention does not constitute an audit, or a limited review of revenues from the mining and upstream oil sectors. Auditing and certifying the transmitted data do not fall within the scope of our work.Likewise, our intervention was not designed to detect errors, fraud or irregularities. As the auditor provides only a report on the findings based on the agreed upon procedures, he does not express any level of insurance. The receipeients of the report will themselves assess the procedures and the findings of the auditor, and draw their own conclusions from the auditor’s work.

1.2.1.1.2 Standards related to the extractive companies’canvas

Collecting a certification of the auditors of the companies involved in the reconciliation is included in the scope of our work.This document should enable to complete the work on the basis of reliable data.However, without the certification of canvas, reliability procedures were undertaken by the Reconciler, including the control of supporting documents. Regarding the reconciliation for the fiscal year 2012, 20 companies out of 47 receiving the reconciliation have provided the certification from their auditors and 17 are not audited. Further details 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 as provided by the current legislation in Madagascar.

1.2.1.1.3 Standards related to the administration’s canvas

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

1.2.2 Reconciler’s procedures

It is the Reconciler’s responsibility to: ► Collect and compile the data receivedfrom mining and upstream oil companies, and administrations from the canvas and/or statements that were given to him ; ► Check the consistency of the financial flowscompleted by these entities with the adopted repository form, “the canvas” of reporting ; ► Check the reliability of data contained in these canvas 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 discrepancies and if applicable, make appropriate recommendations based on weaknesses noted and in reference 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 and its annexes.To overcome the lack of certification of accounts of some companies and the administration, work has been carried out to improve the reliability of the data collected: • An understanding of the system of financial flows:for each financial flows (taxes, duties, fees,…) listed on the canvas, we reconstructed the flow of funds paid by the company, through the receiving entities (primary bank, treasury…) to the final beneficiary for the monitoring of traceability of the revenues collected by the State. A diagram showing the most significant financial flows is provided in the annexes ; • A verification of supporting documents : concerning the numerical data on the canvas and its annexes, 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 supporting documents return, receipt of payment or voucher, bank debit notice, etc.) for the significant payment flows of each reconciled company following the verification threshold predefined at the point 1.2.9.1 ; • An analysis of the recording procedures of financial flows in the canvas and its annexes: we reviewed the correct classification of financial flows by their nature while ensuring the objective of comparability and consolidation of the data from all concerned entities (company, State and its divisions). An arithmetic verification of the total amount put in the canvas compared to the details in the canvas was made as well as a control of the consistency of the information recorded in the annexes with the supporting documents ; • Payments confirmation from entities receiving the funds: payments made to public entities such as Large Companies Directorate, Customs, Directorate of Mines, Regions and some municipalities, etc. are directly paid to the Treasury’s account that is their manager. Each entity has proof of payment from the extractive companies (transfer order, copies of checks, etc.) but only the Treasury can attest to the effectiveness of the payment. We have collected the references of the Revenues Transfer Voucher (Bordereau de Transfert des Recettes, BTR) and the credit notice from each entity and then returned them to the Treasury for payment confirmation. The funds of entities such as the BCMM, OMNIS, ANDEA, ONE, and OMERT are held at primary banks. • Data reconciliation and analysis of the discrepancies: the data collected from the extractive companies and the State have been reconciled and showed discrepancies. Each stakeholder has been asked to explain these discrepancies. Corrections to these discrepancies were made, justified by supporting documents and accepted by both parties.The remaining discrepancies are related to information that was not tracked by the other stakeholder, or of which we did not get any explanation.

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

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

1.2.3 Methodological approach In accordance with the terms of reference, the methodological approach for the reconciliation engagement is presented in the diagram below:

Phase 1:Preliminary analysis 1.1 Preliminary review of the contextual information collection strategy 1.2 Determination of the payment field and elaboration of the reconciliation canvas 1.3 Materiality process: determination of the companies selected for the reconciliation 1.4 Analysis on the credibility of the data 1.5 Validation of the National Committee

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

Phase 2:Collection of the data to be reconciled 2.1 Kickoff meeting woth the stakeholders for launching the engagement 2.2 Data collection from the extractive companies 2.3 Data collection from the State

Phase 3:Initial reconciliation 3.1 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 report 4.1 Collection of the explanations of the lack of information 4.2 Evaluation and follow-up of previous recommendations 4.3 Situation of the licensing process 4.4 Preparation of the draft report 4.5 Presentation of the draft report to the National Committee

Deliverable: Draft report

Phase 5: Final Report 5.1 Organisation of a consulatation workshop 5.2 Publishing of the report and information dissemination 5.3 Elaboration of excerpts of the report for local, regional, and national publishing 5.4 Approval and translation of the report and excerpts from the report

Deliverables: Final report and excerpts from the report

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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 consiste of a prior exhaustive inventory of the extractive companies having paid above 5,000 USD to the BCMM and the OMNIS durinf the fiscal year 2012. From a list of extractive companies in the scope of reconciliation, the data collection has been performed per entity according to the Tax Indentification Number (NIF) and the Statistical Number (STAT) of each entity. Note that the NIF and the STAT enable the public entities such as the General Directorate ofTaxes and the Customs to 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 blockages we met, which were: • The Tax Identification Numbers (NIF) of 9 natural persons and 3 legal persons were not found neither with the Tax Administration nor with other data sources from the State (Researche and Investigation Service of the Tax General Directorate, Customs Directorate…) during the materiality process ; • The data loss related to the revenues collected by the Interregion Directorate of Mines in Toamasina from January to March 2012.Thus, the payments made by the companies during this period are not available and became a discrepancy during the reconciliation ; • The unavailability of some data whether from the companies or from the State (supporting documents of returns, of payments,…) ; • The absence of a digitalised database, for some Directorates and divisions of the State, hinders them from ensuring that the completeness of the data received on the payments made by extractive industries; • the existence of defaulting companies, that did not receive the reconciliation, which has resulted to unreconciled discrepancies ; • the reshuffle of the staff within the Administration following the change of the governement has resulted to blockages and delays in the data collection.

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

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

1.2.5 Coverage

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

1.2.6 Fiscal year

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The fiscal year concerned by the reconciliation is 2012. Thus, it is about the payments made by the extractive industries to the State related to the fiscal year 2012, 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 over the fiscal years to which they are related to; · payments made outsited the the date of the reconciliation engagement but related to the fiscal year 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 are classified in five categories, as cited below: ► State taxes ► Segment revenues ► Other payments ► Withholding taxes ► volontary contributions in kind and in cash

The details per flow type are presented in the annexes.

1.2.8 Entity type

In accordance with the Terms of reference, the entities concerned by the EITI report are the extractive industries in the mining and upstream oil sector. However, the significant payment flows recorded in the name of the individuals, but the mining licenses of whom are actually the property of companies included in the reconciliation and the payment of which are the responsibility of the companies are taken into account. At the same time, the natural persons source of the significant payment flow are included in the coverage 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 reporting canvas on the basis of, at least, the following audit thresholds: ► Materiality threshold set at 1% of the total value of the annual amounts paid for each mining or upstream oil company; ► Tolerable error threshold of 50% of the Materiality threshold; ► Nominal error threshold of 5% of the Materiality threshold; ► The materiality is a limit beyond which potential errors, inaccuracies or omissions are considered problematic. It is the amount from which an informed reader's judgement on the statements of revenue could be changed. The tolerable error threshold is the maximum error in the selected population that the auditor can tolerate while concluding that the sampling results have achieved the aim of the audit. Therefore, the amounts of taxes, duties, fees and royalties exceeding 50% of the materiality threshold were subject to verification with data and supporting documents (payment declarations and receipts) up to at least 50% of the supporting documents.

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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 the extent of the EITI report of 2012 to 47 companies including two natural persons having made significant payments. In conclusion, considering 45 companies and two natural persons from the group A, the coverage rate of the EITI report of 2012 reaches 97.01% of the revenues of the State for 2012 and the materiality threshold is 54,876.12.

As a reminder, the companies included in the scope of the reconciliation are classified into 3 categories, 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 were subject to the reconciliation, and the data have been collected from the companies and compared with the data from the administration via the canvas. • Group B: the companies of which the cumulated payments to the administration is between 97% and 98% of the significant flows received by the State. Each of the companies included in this group did not have to fill out the reconciliation canvas, but was subject to a one-sided disaggregated statement by the administrations that received the payments from them. • Group C: the companies of which the accumulated payments to the administrations is between 98% and 100% of the significant flows received by the State. The companies included in this group did not have to fill out the reconciliation canvas, but were subject to a one-sided agregated statement by the State.

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

Hereafter the table approved by the National Committee:

Characteristics Coverage rate to 97% Fiscal Year 2012 Group A 47 Number Group B 13 of entities Group C 66 per group Total 126 Materiality threshold (USD) 54,876.12 Coverage rate 97.01%

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

1.2.10 Update of the coverage rate

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

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However, 2 companies did not reach this materiality threshold after the reconciliation works and the data analysis. Indeed, some of the flows initially reported by the State were not related to them or were not related to the fiscal year 2012. It was the case of MINVEST MADAGASCAR S.A.Uand of the natural person RASAMIZAFINDROSOA Dauphinwhose payment flows were below the materiality threshold of USD 54,876.12 which amounted respectively toMGA 6,630,740 (equivalent to USD 3,020.87) and MGA 34,787,840 (equivalent to USD 15,848.90).However, we have respected the classification ot the companies as per the materiality process and the two companies were kept in the group A.

42 companies out of the 47 included in the scope of the materiality filled out their EITI statement canvas.5 companies did not receive the reconciliation or did not fill out and/or signed the canvas within the time limit: 017. OPHIR ENERGY 023. PETRA OF MADAGASCAR S.A.R.L. 030. ACCRINGTON MINERALS S.A. 036. PETROMAD 046. ENERGIZER RESSOURCES (Minerals) S.A.R.L.ENERGIZER

The materiality threshold goes from USD 54,876.12 to USD 55,417.43 and the coverage rate updated to 99.03% instead of 97.01% as per the table below.

Characteristics Scope of the report Updated materiality Fiscal Year 2012 Initial materiality threshold threshold Group A 47 47 Number of entities per Group B 13 13 group Group C 66 66 Total 126 126 Materiality threshold (USD) 54,876.12 55,417.43 Taux de couverture atteint 97.01% 99.03%

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 supporting documents 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 low and/or the reconciliable data were not available to this day. These are the statements without counterpart of the health organisations (OSIE, OSTIE, AMIT, FUNHECE, OMSI, OMIT, SMIMO), car tax, technical visits, non-refunded VAT, etc. Note that we have checked, in accordance with the predefined 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 the State and the ones of the companies for the amounts of the resolved discrepancies and adjustments of the statements 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 discrepancie which are: ► Explained discrepancy, but the other party cannot bring corrections to this day (case des FAM on the sold licenses recorded at BCMM to the name of the seller) ;

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► 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 for 2012 where 1 USD is equivalent to MGA 2,194.97.

1.2.13 Companies included in the reconciliation

The outcome of the materiality process was the identification of 126 entities included in the 2012 EITI report. These are the entities the significant payments of which exceeded or equaled USD 5,000and are classified in groups according to their size as presented below:

1.2.13.1 Entities in the Group A

The 47 entities in this group were subject to the reconciliation and data were collected from them, which were compared to the data from the administrations using the canvas. The list is presented below:

Companies in the Group A Companies in the Group A 001. PROJET AMBATOVY 025. URAMAD S.A 002. HOLCIM 026. MINERAL PRODUCTS INTERNATIONAL GROUP 003. QIT MADAGASCAR MINERALS S.A. S.A.R.L. 004. GROUPE PAM 027. LABRADOR MADAGASCAR - 005. MADAGASCAR OIL 028. AMICOH RESOURCES 006. MAINLAND MINING LTD S.A.R.L.U 029. SAPETRO 007. KRAOMA S.A. 030. ACCRINGTON MINERALS S.A. 008. GOLD SAND S.A.R.L. 031. MADAGASCAR CONSOLIDATED MINING S.A. 009. NOVA RESOURCES S.A.R.L.U 032. TANETY LAVA S.A.R.L. 010. MADAGASCAR CHROMIUM COMPANY LTD 033. ACCESS MADAGASCAR S.A.R.L. S.A.R.L.U 034. TOLIARA SANDS S.A.R.L. 011. GALLOIS Etablissement 035. CLASSIC REAL STONES S.A.R.L. 012. EXXON MOBIL 036. PETROMAD 013. MADAGASCAR INTERNATIONAL TAK MINING 037. EAX S.A.R.L. 038. MADAGASCAR MINING INVESTMENTS S.A.R.L.U. 014. TULLOW MCAR 039. UNIVERSAL EXPLORATION MADAGASCAR 015. MADAGASCAR MINING RESOURCES LTD S.A.R.L. S.A.R.L. 016. NIKO RESSOURCES [ENERMAD] 040. PROCHIMAD 017. OPHIR ENERGY 041. FARASANDS S.A.R.L. 018. MADA-AUST S.A.R.L. 042. INTERNATIONAL MINING CORPORATION LTD 019. TANTALUM RARE EARTH (MALAGASY) S.A.R.L.U S.A.R.L. 020. CALIBRA RESOURCES & ENGINEERS 043. MADAGASCAR RESSOURCES S.A.R.L. MADAGASCAR 044. VELONAODY Fabien S.A.R.L.U 045. MADAGASCAR WISCO GUANGXIN KAM WAH 021. TOTAL EXPLORATION RESSOURCES S.A.U. 022. STERLING ENERGY LTD 046. ENERGIZER RESSOURCES (Minerals) S.A.R.L. 023. PETRA OF MADAGASCAR S.A.R.L. 047. RASAMIZAFINDROSOA Dauphin 024. MINVEST MADAGASCAR S.A.U.

Note:

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► On the side of the companies, 5 have not filled out the canvas on time and did not take part in the report, namely:OPHIR ENERGY, PETRA OF MADAGASCAR, ACCRINGTON MINERALS, ENERGIZER RESSOURCES et PETROMAD.However, they were kept in the scope of the report. Consequently, the data from the State related to these companies show a discrepancy.

► On the side of the administrations : · We did not obtain the information related to the Port fees, 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 administration.

The data which we did not get from the administration were included in the report as a unilateral statement of the extractive entities and generated discrepancies.

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

1.2.13.2 Entities in the Group B The entities included in this group do not have to fill out the reconciliation canvas, but are subject to a disagregated unilateral statement from the administration to whom they paid taxes. 13 entities are in the group B. They are presented in the following table:

Companies in the Group B Companies in the Group B 048. AVANA RESOURCES S.A.R.L.U. 055. INDUSTRIE MINIERE SINO-AFRIQUE S.A.R.L. 049. INTERNATIONAL MINING RESEARCH GROUP 056. MAZOTO MINERALS S.A.R.L. S.A.R.L.U 057. INTERNATIONAL MINING DEVELOPMENT LTD 050. RECHERCHES MINIERES DE MADAGASCAR S.A.R.L. S.A.R.L. 058. RAMAROSON Anjoanina Harivahy 051. HOLA FIRM S.A.R.L. 059. VATOSOA MINING S.A. 052. IRON ORE CORPORATION OF MADAGASCAR S.A.R.L. 060. CAPRICORN ENTERPRISES MADAGASCAR (C.E.M) S.A.R.L. 053. NAN TIN POLYCHROME S.A. 054. COAL MINING MADAGASCAR S.A.R.L.

1.2.13.3 Entities in the Group C The entities in this group do not have to fill out the reconciliation canvas, but are subject to an aggregated unilateral statement from the State. 66 entities are in the group C. They are presented in the following table :

Companies in the Group C Companies in the Group C 061. MADAGASCAR EXPLORER S.A.R.L. 069. SIAM S.A.R.L. 062. ZIRCON MINING CORPORATION-ZMC S.A.R.L. 070. COPAX RESOURCES S.A.R.L. 063. RAHERIMANDIMBY Rija Tantely Andriantiana 071. ANDRIANANTOANDRO Faly 064. MADA GONDWANA S.A.R.L. 072. TANETY ZINA S.A.R.L. 065. VARUN INTERNATIONAL S.A.R.L. 073. BLUE CRYSTAL S.A.R.L. 066. LE QUARTZ - 074. MINERAL RESOURCES of MADAGASCAR S.A.R.L. 067. OSHO MADAGASCAR S.A.R.L. 075. OSHO Ventures Madagascar S.A.R.L. 068. CHRYSOCOLLE - 076. VS-GEMS S.A.R.L.

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Companies in the Group C Companies in the Group C 077. SP GROUP S.A.R.L. 122. ALPHA Madagascar S.A.R.L. 078. RANDRIANTAVY TOJOHERY Romaric 123. MINERAL DEVELOPMENT MADAGASCAR 079. SUCCESSION RASAMOEL Jean Baptiste - 124. TAFITA MINING S.A.R.L. 080. SOMIDA S.A. 125. MADAGASCAR INVESTIMENT COMPANY S.A.R.L. 081. MILLENIUM STAR S.A.R.L. 126. RAMANANTSOA Jean Christian 082. ZOLOST MINERALS S.A.R.L. 083. SOCIETE MALGACHE DU GRAPHITE S.A. 084. BRIGHT STAR EXPLORATION S.A 085. SHANDI S.A.R.L. 086. SINBAD RESOURCES S.A.R.L. 087. RED ISLAND RESOURCES S.A.R.L.U. 088. MADAGASCAR ENERGY CORPORATION S.A.R.L. 089. BEBY RASOLOMALALA 090. GENYUS S.A.R.L.U. 091. DARAINA EXPLORATION SARLU 092. ETABLISSEMENT RENE IZOUARD 093. LEMURIA S.A.R.L. 094. SMGI - SOCIETE MINIERE DE LA GRANDE ILE 095. M.B GOLD COMPANY S.A.R.L.U. 096. ORIENTAL MINING S.A.R.L.U 097. LILIANE Marie 098. RABETRENA Roland 099. BLUE SUN MINING COMPANY S.A 100. SOGEMINE S.A.R.L. 101. ANDRIANJAFY RENGER Thierry DINO 102. SOCIETE LATVIA MADAGASCAR S.A.R.L. 103. GROUPE KALETA - 104. LA TERRASSE S.A.R.L. 105. FINEBRIDGE (AFRICA) MINING LTD S.A.R.L. 106. RABEZORO Anjarisitraka 107. WORLD GEMS COMPANY S.A.R.L. 108. RATSIMBAZAFY Jean Kinne 109. MADCORE MADAGASCAR S.A.R.L.U. 110. GRANITEX S.A.R.L. 111. RAKOTOMAROLAHY Jean Pierre 112. VARUN PETROLEUM 113. MANAMPISOA RALANDIRANTO Marie Bernadette 114. RAZANAKONDEVO Benjamin 115. PARADISE GEMS S.A.R.L. 116. ARSENE LOUYS & Cie Sa 117. RAKOTONDRAINIBE Andrianjaka Christian 118. UNIVERSAL GEMS S.A.R.L. 119. MEDARD Sarah 120. RAHANTAMANANA Leontine Eléonore 121. RANAIVOARIMANANA Ionjaniaina

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2 Background information

2.1 Overview on the formal exctractive 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), le manganese, le vanadium, le titanium, le 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, minéraux radioactifs comme le mercure, 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 fro the companies in the Group A. The current main industrial ongoing or forecasted indusctrial scale projects include: • QMM, who operates ilmenite and zirsill in the region of Fort-Dauphin. The site is composed by the mine, the mill, the separation plant and the power generation plant. Afterwards, the project was completed by a port, Ehoala ; • The project Ambatovy, operating nicked and cobalt, composed by the mine in Moramanga, the pipeline crossing many locations and reaching Tamatave, where the processing plant is. The products are exported from the port of Tamatave; • KRAOMA, a State-owned company operating chromium ; • Wisco, having its interest in the iron of Soalala ; • Madagascar Consolidated Mining and PAM Sakoa, having their interest in the Coal of Sakoa and are currently in the pre-feasibility study phase; • Toliara Sands, the Exploration Permit of which has been changed into an Operating License in 2011, is currently in the stage of the Environmental Impact Study for the operation of ilmenite of Ranobe; • Mainland, who is interested in the Ilmenite on the East coast of Madagascar and who is currently in the environmental impact assessment phase; • Aziana, who holds licences related to the bauxite of Manantenina, near Fort-Dauphin • Holcim, who exploits pozzolana, clan and cipolin while producing cement for the local market. This company, present for more than 50 years now, operates in Antsirabe and Tamatave.

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2.1.2 The upstream oil sector

Madagascar has 988 000 km2 of onshore and offshore sedimentary basin fit for hydrocarbon explorationand spread mainly on the north-east and west coasts. Today, 445 000 km2 were subject to research reviews, which is 45% of coverage rate.

Sixteen international oil companies signed 23 contracts with OMNIS for hydrocarbonsexploration and operation, regarding 17 onshore blocks and 6 offshore ones. The number of available blocks is 229, 225 of which are offshore and4 are onshore. A promotional campaign and international calls for tender will be made soon regarding these blocks.

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

Block name Related company Antsiranana (onshore) Afren / Oyster Ambilobe (offshore) Sterling Energy / Pura Vida Antsohihy (onshore) Madagascar Northern Petroleum Company Ampasindava (offshore) ExxonMobil Madagascar / Sterling Energy Majunga profond (offshore) ExxonMobil Madagascar / British Gas / Petro Vietnam / Seoul Korea Cap Saint-André (offshore) ExxonMobil Madagascar Bekodoka (onshore) Madagascar Petroleum Energy Bemolanga (onshore) Total Exploration / Madagascar Oil Tambohorano (onshore) Varun Energy Melaky (onshore) Essar Energy Holding Limited Tsimiroro (onshore) Madagascar Oil Manambolo (onshore) Madagascar Oil Grand Prix (offshore) OMV Exploration & Production / Niko Oil / Enermad Belo profond (offshore) South Atlantic Petroleum / Marex Morondava (onshore) Madagascar Oil Manandaza (onshore) Madagascar Oil Manja (onshore) Amicoh Corporation Mandabe (onshore) Tullow Oil Morombe (onshore) Essar Exploration & Production Limited Berenty (onshore) Tullow Oil Toliary (onshore) Madagascar Southern Petroleum Company Sakaraha (onshore) Madagascar International Exploration Bezaha (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 the small-scale or artisanal mining as being: « Traditional methods using mainly manual and applied human or animal effort for the extraction of the mineral from the soil or subsoil. » The small-scale operators are defined as « underground and open pit mines […] using craft techniques without processing the minerals at the extraction site ». Thus, gold-washers are included in this category.

Small-scale mining is often done by small-scale operators without mining title; this is the informal characteristic of 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 estimated that 500,000 people work in the artisanal mining sector in the late 90s, which makes it one of the most significant employers before the textile sector, but after the agricultural one.Moreover, the suspension of the issue of new licences in 2009 has pushed many operators to go informal. Indeed, the number 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 INSTAT13has enabled to have quantitative and qualitative useful indicators to analyse the employment market and the informal sector in Madagascar. The presented results are related to the activities conditionsof the Individual Production Units (IPU)14,the characteristics of the labour force and employment in the IPU, the production, the insertion and the competition of the IPU, the relationship between the informal sector and the State and at last the issues and perspectives of the informal sector, in particular for the branch of the mining extractive industry.

In 2012, in Madagascar, the Individual Production Unites « IPU » (not including agriculture, farmin, hunting and 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 paid leaves nor social security for the workers.

INSTAT’s study has shown that: • The branch of the mining extractive industry represents 8% of all these IPU: 13.3% are seen in the urban area, and 86.7% in the rural area.

13Enquête Nationale sur l’Emploi et le Secteur Informel – Enempsi 2012, Novembre 2013, vol 1 14 The Individual Production Units (Unités de Production Individuelles, « UPI ») are considered as « informal » as: they do not have a 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 of the revenue (54%) for the small-scale operators, in front of 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, the IPU that existed long ago are characterised by a particular or traditional know-how (transformation, design activities). Conversely, the « young »IPUs are ones the activity of which does not necessarily require much funding. • 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 the job creation remains limited (3.9% in the mining extraction IPUs). • Men are more than 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 study.

2.2.3 Gold’s case

There is not yet gold industrial exploitation in Madagascar. According to the information from the General Directorate of Mining Resources, the first official exportation of god was authorised in the first quarter of 2012. Approximately 150 kilograms of precious metal have been declared for export, this made a high value of the export in one hand, and mechanically in the royalties and taxes in the other hand, as shown in the graphs below. However, the Council of Ministers suspended the export of gold in April 2012.

Value of mineral export in 2012 and 2013 (in USD) 7,000,000.00 6,000,000.00 5,000,000.00 4,000,000.00 3,000,000.00 2,000,000.00 1,000,000.00 - 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 2 2 2 3 3 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ------l l t t r r r r c c y v y v n b n g p n b n g p u u c c a a p p e e a a e e o e e o a a u u u u J J O O F A F A J S D J S D J J M M N N A A M M

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Royalties and taxes in 2012 and 2013 (in millions Ariary) 200.00

150.00

100.00

50.00

- 2 2 3 3 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 3 3 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 ------l l t t r r r r c c v v n y g n y g b n p b n p u u c c a a p p e e a o a o a e e a e e u u u u J J O O F A F A J J S D S D M J M J N N A A M M

Despite the export ban, tonnes of gold are extracted from the Malagasy soil and illegally exported.The local media regularly issues the seizures of these precious metals at airports crossing borders. However, it is difficult to obtain data on these phenomenons from the Malagasy authority.

At international level, estimations could be made from the comparison of the trade balances per country and per product.The statistics of the UNCTAD (United Nations Conference on Trade and Development) estimate the value of import of Malagasy gold to the United Arab Emirates respectively to9.8 millions (approximately 327 kg) and 16.3 millions USD (approximately 543 kg) in 2012 and 2013. The same source has provided an estimation of the value of gold exported from Madagascar as exceeding 18 millions USD (approximately 600 kg) in 2012, with a peak of 56.5 millions USD (approximately 1.8 tonne) in 2011based upon these information. Thus, it is possible to estimate that the State and for the local communities have lost an income of 360,000 USD, equivalent to more than790 millions MGA in 2012, which corresponds to non-received royalties.

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Export of gold from Madagascar to the rest of the world from 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 Madagascar from 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 Significant events of 2012

The following are the significatnt events for the extractive sector in 2012: ► First quarter 2012 : application of the legal provisions in force authorising the export of gold ; export of 150 kilograms of gold. ► April 2012: export ban for gold by the Council of Ministers. ► June 2012 : The french Bureau for Geological and Mining Researches presented a geological and metallogenic summary of Madagascar at a scale 1/1,000,000, which is three paper maps complemented by a general notice (a geological map, a map dedicated to metallic substances and another to industrial minerals), also provided as digital databases in a GIS (Geographical information system). ► September 2012: Ambatovy received the first operating license, enabling them to send the first expedition of nickel to the international market.

2.4 Governance of the sector: key actors

2.4.1 The mining sector

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 strategical Resources in 2014): in charge of the design, the execution and the follow-up of the government policy with regards to the mining. ► The BCMM : this industrial and commercial public bureau aims to manage the mining licences and authorisations, from their request to their expiry date ; ► The Gold Agency (Agence de l’Or) ; ► The Mine Police is mainly in charge of the tracking, on one hand, the circulation, the illegal custody and commercialisation of mining products, and on the other hand of all mining violation as provided in the Mining Code. ► The Decentralised Terrotorial Units, beneficiaries of the rebates and the place of interaction of the communities.

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

2.4.2 The upstream oil sector

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

► The Ministry in charge of Hydrocarbons (Ministry of Hydrocarbons in 2012 and 2013, included in the Ministry of Strategic Resources in 2014) : it is in charge of the desing, the execution and the follow-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.

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

2.5 Legal framework

2.5.1 The minig sector

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

► The law n°2005-021 of 17 October 2005 ; ► The decree n°2006-910 of 19 December 2006 setting the implementing arrangements; ► The interministerial decree n°21985-2007 of 2O December 2007 setting the recovery arrangements for the mining royalties and rebates. This legal set is the common law of the mining sector in Madagascar. The Mining Code does not provide for the participation of the State in the mining companies.

Above the common law, Madagascar also has two specific legislations:

► The Framework agreement, signed between the Malagasy State and the Group Rio Tinto. Promulgated in the Official Journal, it governs specifically the ilmenite exploitation project of QMM S.A in the Anosy region. It also provides for the participation of the State in the project via the OMNIS, who has 20% of the share capital; ► The Large-Scale Mining Investment Law : it is in one hand the law 2001-31 of 8 October 2002, said LGIM, modified bu the law n°2005-021 of 02 August 2005 and in the other hand by the decree n°2003-784 of 08 January 2003 setting the terms of application. This law applies to any company meeting the stipulated application eligibility conditions, namely the amount of investment amounting to MGA 50 milliards. This law does not provide for the participation of the State in 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 the decree MECIE (Mise en Compatibilité des Investissements avec l’Environnement) are also applicable to the mining sector.

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

2.5.2 The upstream oil sector

The upstream oil sector is governed by two main sectoral laws, which are the Lawn°96-018 of 04 September 1996 establishing the Oil Code inone hand, and the decree n°97-740 related to the mining exploration and operation titles, and the transport of hydrocarbons in the other hand.

Based on the principle that « hydrocarbons deposits are not likely to be subject to private appropriation », companies wishing yo operate in the upstream oil sectorare to sign a contract with OMNIS. It can be a Petroleum Sharing Contract (PSC) or a joint-venture contract. The related mining title is delivered following a decree of the President of the Republic. These contracts form an integral part of the tax

EY | 47 Reconciliation report EITI Fiscal Year 2012 regime applicable to the sector.OMNIS helps his contracting partner in their relationship with the authorities and the local administrations, and provides the available data and information related to the framework of the contract. Moreover many non-sectoral laws such as the Environment Charter, the various Finance Acts and the decree MECIE (Mise en Compatibilité des Investissements avec l’Environnement) are also applicable to the sector.

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

2.6 Tax framework

2.6.1 Comparative table

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

QMM COMMON LAW (CGI, MINING AMBATOVY TAXES/DUTIES (FRAMEWORK CODE, OIL CODE) (LGIM) AGREEMENT) Finance Acts 2012 and 2013 10% : 6th to the 10th year 25% : AMSA and 2012 : 21% of actual exploitation subcontractors INCOME TAX (IR) 2013 : 20% 15% : until the expiry of the 10% : DMSA and Oil Sector : 0% (included in IDH) privileged tax regime subcontractors DIRECT TAX ON HYDROCARBONS (IDH, oil 2012 : 21% N/A N/A sector only, production 2013 : 20% phase) TAX ON INTERNATIONAL Works : 3,50% FINANCIAL TRANSFERS Mining sector : 10% Services : 15,75% 4,5% (TFT) /NON-RESIDENTS Oil Sector : 0% (included in IDH) INCOME TAX (IRNR) COMBINED TAX N/A N/A 5% For national expatriates : 2012 : Rate in line with the Rate in line with the - Up to Ar 250,000 = 0 common law, without common law, without - Part exceeding Ar 250 000 = WAGES INCOME TAX (IRSA) exceeding 35% for exceeding 35% for 21% expatriates expatriates 2013 : - Up to Ar 250,000 = 0 - Part exceeding Ar 250 000 = 21% 2012 : 21% TAXES ON INCOME FROM 10% 10% 2013 : 20% MOVABLE CAPITAL (IRCM) Oil sector : 0% (included in IDH) TAXES ON REAL ESTATE Rate in line with the Rate in line with the 2012 : 21% GAINS (IPVI) common law common law 2013 : 20% VALUE ADDED TAX (TVA) 0% 20% 20% TRANSFER AND Emphyteutic leases : Duty for company creation Fixed duties : REGISTRATION FEES reduced rate of 50% of continuance; capital 2 000 Ar

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QMM COMMON LAW (CGI, MINING AMBATOVY TAXES/DUTIES (FRAMEWORK CODE, OIL CODE) (LGIM) AGREEMENT) Finance Acts 2012 and 2013 duty : de 0% to 2% not Share capital subscription exceeding 10 millions MGA Proportional duties : duty of QMM : 1% 2% : commercial lease Any other documents 1% : protected tenancy Other documents : 0% related to the above : 0% 0,5% :Documents for company creation of continuance PROPERTY TAXES ON Non-Submitted 1% 1% LANDS (IFT) 1%. PROPERTY TAX ON BUILT 3% Not exceeding 200 5 to 10% PROPERTY (IFPB) millions MGA per year 1% TAFPB 2% Not exceeding 200 Repealed millions MGA per year TAXES ON INSCURANCE 4% 4 % 4% CONTRACTS (risks) 1) Mining sector : Royalties : 0,60% Rebates : 1,40%

2) For crude oil : - Between 8 % and 20% In line with the mining In line with the mining ROYALTIES AND REBATES according to the daily sector common law sector common law production in barrels

3) For the natural gas - Between 5% and 10% according to the daily production in cube meters Set by the BCMM (mining sector) ADMINISTRATION FEES Set by the BCMM Set by the BCMM and OMNIS (oil sector)

2.6.2 Specificities for State taxes and local taxes

The main specificities allowed by the specific regulations in the framework of the investments incentives in 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; ► 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.

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

2.7 Royalties and rebates

2.7.1.1 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 mining sector. The allocation of the rebates between the decentralised authorities was subject to the following precisions as per the Interministerial decree No. 8887/2014 of 21th February2014: ► 60% for the exctracting 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 communities are to be shared equally between other categories. In practice, this measure applies to the Autonomous Provinces, which to this day are not yet implemented.

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

2.8 Administration and training fees

In the mining sector, the administration fees are those received by the State intended to be as a contribution of the private operators in the development of the mining sector in Madagascar. The Mining Administration Fees (FAM) by square are levied by the BCMM as refunding of the services and management costs for the the rights associated to the mining licences. They are annually paid by any owner of a mining square and a mining licence holder. The amount is set by annual decree for each licence category.

In the same way, in the oil sector, the Administration and Training Fees are paid on a regular basis as a legal requirement by the mining title holder. The fees are levied by OMNIS as a refund for the services and 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 for the mining sector and the allocation of the revenues.

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2.9 Current state of the licensing procedures

2.9.1 Mining sector

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

Mining titles Squares15 Validity Purpose AERP : Exclusive 3 months Ground reconnaissance 38 400 which is Authorization for Perimeter to confirm geological 15 000 Km2 Not renewable Reservation and ore-deposits models 8 years Renewable Research Prospection PRE : Permits Restricted to once or several 256 which is100 Km2 Exploitation Small-scale Miners times for four (4) years 5 years 25 600 which is 10 PR : Research Permit Renewable twice for Research Prospection 000 Km2 three (3) years each 2560 which is 40 years renewable once (1) or several Research Prospection PE : Exploitation Permit 1 000 Km2 times for twenty Exploitation (20) years

The procedures for granting minint titles, unchanged compared to 2011, are presented in the graph in the next page, made on the basis of information from the Ministry of Mines.

During the related period, the extractive sector was subject to a freeze for the licensing, pursuant to the note of Council No. 34/2011-PM/SGG/SC, signed by the General Secretary of the Government.This freeze let to prohibition of the granting of new permits from the date of the release of the note, the 06th April 2011. Moreover, the letter No. 682/MMH signed by the Minister of Mines and Hydrocarbons on the 31st May 2011 has suspended the Permits for small scale operators (PRE). The suspension period covered by this letter started on 8th September 2009 and to is yet to be lifted to this day.

15Geometrical setting on the surface of the earth, representing the basic unit of space in which the rights are conferred by the permits. Each side of the square is six hundred and twenty five meters (625 m).

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Mining licensing procedures Step 3 : Processing of files Study of files Signature of the techcnical advice, elaboration and signature of the draft decree in Malagasy and French (if approved), elaboration of the refusal document (if not approved), signature of the decree/decision by competent authorities, verification of the consistency between the decree and the "Traitement Alpha" (TAN), validation and signature of the title Etape 4 : Delivery of mining titles Verification of the payment of Step 1 : Submission of the administration fees : 3/4 and the request 1/4 Reception of the Recording registry of delivered request, admissibility licences check, delivery of the Delivery of the original title and payment order, of the the decree receipts of payment, Etape 2 : Confirmation coding and processing Filing the copies of the titles of the requests, update Reception of additional of the mining map documents for the file, the receipt of the remittance of the file and receipt for the related fees, verification of the completeness of the file and the required number of copies, update of the mining map if the folder is complete, delivery of the refusal letter and additional documents required if uncomplete file

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2.9.2 Upstream oil sector

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

Procedure for the signature of an oil contract

1 2 3 •Promotional campaign •Issuance of a notice of an •Submission of offers by International Tender interested oil companies

4 5 6 •Study of the offer by the •Negotiations •Conclusion and signature OMNIS of the contract between the OMNIS and the company winning of the offer

7 8 9 •Request for approval of •Request of allocation of •Approval of the contract the oil contrat by the the hydrocarbon mining by the President of the OMNIS to the President title by the OMNIS to the Republic and enactment of the Republic President of the Republic of the Presidential Decree approving the oil contract

10 •Attribution of the mining title and and enactment of the Presidential Decree granting the hydrocarbon mining title

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2.10 Registryof licences and permits

2.10.1 Reiterating the standard

As provided by the EITI requirement No. 3.9, Madagascar has the responsibility to hold a public registry or cadaster systemwith updated and complete information, related to the licence holders, the coordinates of the related area, the date of the request and that of the licencing, as well as the duration and for the exploitation licences, the produced raw materials.

2.10.2 Situation in Madagascar

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

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

2.11 Information on the beneficial ownership of the extractive companies

2.11.1 Reiterating the standard

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

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

2.11.2 Situation in Madagascar

Owners register does not publicly exist in Madagascar. Inded, the Trade Register within the Trade Court records only the name of the direct shareholders for the Limited Companies.

The information on the beneficial ownership given by the companies in the group A that accepted their disclosure are presented in the table in the next pages. It is to be noted that filling out of the information on the owners as a last resort was not compulsory in the canvas of the companies, but it was only encouraged. The information presented in the table below are strictly based upon the statements of the companies and were not investigated.

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Information on the beneficial ownership of the extractive companies In the scope of EITI report 2014 (Source:canvas filled out by the companies)

Is any of the Shareholder at last shareholder companies Direct shareholders with the Companies resort (natural or legal listed ? Which one ? percentage of the shares person) Provide the name of the stock exchange. ExxonMobil 100% ExxonMobil Madagascar 100% ExxonMobil NO Exploration and Ventures BV Madagascar Ventures BV Production Madagascar Limited MAINLAND MINING Hong Kong Sino Africa Hong Kong Sino Africa N/D Resources Investment Ltd - Resources Investment 100% Ltd - 100% Holcim (Madagascar) Holcim Outre-mer (99,64%) Holcim Ltd (Legal N/D S.A. Holcim Réunion (0,35 %) personne) Divers minoritaires (0,01%) TOLIARA SANDS MADAGASCAR MINERAL WORLD TITANIUM YES (ASX:WTR) SARL FIELDS LIMITED - 100% RESOURCES TANTALUM RARE N/D Tantalum Holding N/D EARTH MALAGASY Mauritius STERLING ENERGY N/A N/A N/A (UK) Succursale AMBATOVY MADAGASCAR MINERAL MADAGASCAR MINERAL SHERRITT MINERALS S.A. INVESTMENTS Ltd(MMI): 40% INVESTMENTS INTERNATIONAL (AMSA) SUMMIT AMBATOVY MINERALS Ltd(MMI)/SHERRITT CORPORATION: INVESTMENT B.V. (SAMRI) : INTERNATIONAL TORONTO STOCK 27.5% CORPORATION EXCHANGE KOREA RESSOURCES SUMMIT AMBATOVY CORPORATION(KORES): 27.5% MINERALS INVESTMENT SUMITOMO SNC - LAVALIN MADAGASCAR B.V.(SAMRI)/SUMITOMO CORPORATION: TOKYO VENTURE INC. : 5% CORPORATION STOCK EXCHANGE KOREA RESSOURCES CORPORATION SNC - LAVALIN INC.: SNC - LAVALIN TORONTO STOCK MADAGASCAR VENTURE EXCHANGE INC. /SNC - LAVALIN INC CALIBRA RESOURCE SOCIETE HENGSHENG MINING SOCIETE HENGSHENG YES. HENGSHENG AND ENGINEERS GROUP Ltd (HMG) MINING GROUP Ltd MINING GROUP Ltd MADAGASCAR. (HMG) (HMG).BVI ETABLISSEMENTS N/A N/A N/A GALLOIS S. A. PAM MADAGASCAR PAN AFRICAN MINING CORP: PAN AFRICAN MINING NON SA 99.952 % CORP PAM SAKOA COAL SA PAN AFRICAN MINING CORP: PAN AFRICAN MINING NON 99.7 % CORP MADAGASCAR YOXFORD HOLDINGS LTD: 80% YOSFORD HOLDINGS NON CONSOLIDATED NASSCO: 20% LTD MINING S.A.

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Is any of the Shareholder at last shareholder companies Direct shareholders with the Companies resort (natural or legal listed ? Which one ? percentage of the shares person) Provide the name of the stock exchange. MADAGASCAR OIL SA Benchmark Advantage Fund N/A Madagascar Oil Limited, Ltd: 39.02%, société mère de Outrider Management LLC: Madagascar Oil SA est 22.84%, inscrite à la Bourse de SEP African Ventures Limited Londres, AIM London (formerly Persistency Capital Stock Exchange LLC): 20.10%, The John Paul DEJORIA Family Trust: 5.78%, RAB Capital: 1.79% M'PUMALANGA TAHL (Mauritius) Mining Groupe TATA AFRICA N/D MINING RESOURCES Projects Limited 100% HOLDINGS PTY LIMITED S.A.U TATA INTERNATIONAL QIT MADAGASCAR RIOTINTO 80% et RIO TINTO RIO TINTO (London MINERALS SA ETAT MALAGASY 20% Stock Exchange ou LES) (représenté par Omnis) SOUTH ATLANTIC MARTIN TRASCHEL 100% MARTIN TRASCHEL NON PETROLEUM BP SAS 100% TANETY LAVA SARL Blue Sky Corporation, Maurice: AZIANA LIMITED, AZIANA LIMITED, 99 % Australie Australia Stock Exchange (ASX) TOTAL E&P TOTAL SA 100% TOTAL SA TOTAL SA - Paris et MADAGASCAR New-York EAST AFRICAN East African Exploration : 90% AFREN, PLC, détient AFREN est cotée au EXPLORATION Compagnie pétrolière Anglaise 100% London Stock Exchange MADAGASCAR LTD OYSTER Energy : 10% (LSE) PROCHIMAD MINES UPB INTERNATINAL: 33.90% ANDRIANTSITOHAINA NON ET CARRIERES SEPCM: 15% Charles: 50% PROCHIMAD: 0.90% ANDRIANTSITOHAINA Naina: 0.10% Jean Michel GIRAUD: 0,10% CLASSIC REAL Auzonz Mining Private Limited: Auzonz Mining Private N/D STONES 90% Limited: 90% Jamnadas Divias Kumar: 5% Jamnadas Divias Kumar: Shantilac Elesh : 5% 5% Shantilac Elesh : 5% UNIVERSAL IPR Universal limited: 100% Indian Pacific Resources N/A EXPLORATION Ltd MADAGASCAR SARL ACCESS CLEROUX Denise, DESLANDES CLEROUX Denise, N/A MADAGASCAR Jean Pierre DESLANDES Jean Pierre MADAGASCAR MALAGASY SANDS NR.2 ltd : WORLD TITANIUM NON RESSOURCES SARL 100% RESOURCES RED GRANITI RED GRANITI France : 99% RED GRANITI France : NON MADAGASCAR SARL 99%

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2.12 Disclosure of oil contracts

2.12.1 Reiterating the standard

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

2.12.2 Situation in Madagascar

2.12.2.1 Disclosure policy

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

The production sharing contract, governing the relationships between the State and the companies, include 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 disclose any information related to Oil Operations to any person, organisation, affiliated company, employees, consultants, subcontractors, bank or financial institution without prior signing a confidentiality agreement allowing 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, following an agreement with oil companies. ► The current confidentiality of the oil contracts should be part of the subjects in the framework of the reformed Oil Code.

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

A brief summary of the contracts are 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 floors and territorial seas, in the exclusive economic zone and on the continental shelf, are owned by the malagasy State ;

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► No legal entity cannot carry on activities in the national mining industry, unless an association wth OMNIS as custodian of a mining title is signed ; ► No activity related to the exploration, the production, the transformation and the transportation of Hydrocarbons in the national can be undertaken unless by an oil contract with OMNIS.

It defines the terms and conditions according which the Operator will undertake the Oil Operations. Any right and obligation related to the contract and any forecasted oil activity or conducted on the Contract will also be undertaken in accordance with 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 : the accounting and financial procedures - Annexe C : Association contracts for the contractors - Annexe D : Bank guarantee - Annexe E : Quarantee from the mother company for each Contractor - Annexe F : Information and reports

2.13 Financial relationships between the government and State-owned companies

2.13.1 Reiterating the standard

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

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

2.13.2 Situation in Madagascar

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Until September 2014, the regime of the State-owned companies was set by an old law, the Law n°67- 007 du 28 juin 1967 related to the participation of the State and other public entities in the public limited companies and on semi-public companies. The State as a shareholder must always be represented in the Board of Directors.

From September 2014, a law currently in the process of promulgated states the separation between the State as a « public power » and the State « shareholder », so as to avoid the interference of the State in the management of the companies. The undertaken measures aim to give more weight to the Pubic Treasury in comparison to other representatives of the State in the Boards of Directors, and including the territorial communities.

In the framework of EITI, Kraomita Malagasy (Kraoma) SA, where the State owns 97% of shares, was the only State-owned company identified as meeting the definition adopted by the National Committee.Oil companies in which the State is a shareholder by means of OMNIS, are not considered as State-owned Companies because the share of the State, set at 20%, does not reach the majority in the share capital.

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

Moreover, even though QMM SA does not meet the definition of a State-owned company as per EITI’s criterion, it is important to note that the State, via the OMNIS, owns 20% of the share capital. QMM SA increased its capital of an amount of 166 millions USD, which was a significant event for 2012. In order to keep its proportion in the share capital, as provided by the Framework Agreement, OMNIS should have participated 33.2 millions USD. As they lack funds and thus cannot do so, the State has accepted that the controlling shareholder, Rio Tinto, advances the funds for OMNIS. According to the information received from QMM SA, when the company starts to distribute dividends, the controlling shareholder Rio Tinto will receive an additional dividend until full payment the debt owed by the State.

2.14 Contribution of the extractive sector to the economy

2.14.1 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 covered by the EITI Report. The table below presents the data about the contribution of the extractive sector to the GDP of Madagascar, collected from the INSTAT and the General Directorate of Econony, the GDP defined as an economic indicator of the produced wealth per year in the country, calculated from the added value of each sector.

(Source: INSTAT, General Directorate of Economy) (In billions MGA) CURRENT PRICES Amount 2012 Added Value of the 40.44 extractive industry

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Secondary 3,193.55 GDP 19,900.00 CONSTANT PRICES (1984) Amount 2012 Added Value Extractive 6.89 industry Secondary 74.93 GDP 548.18 WEIGHT OF THE EXTRACTIVE BRANCH IN Part 2012 THE GDP Weight in the GDP (in %) 0.7

The table indicated a 0.7% contribution of the extractive sector to the GDP in 2012. However, this information present a limited interest when they partially and unfaithfully reflect the new productive or intermediate consumption or prices structuresthat evolved since the last 20 years.Indeed, the database of INSTAT comprises a series of yearly adjustments to the exctractive branch structure in 1984. For example, the oil sub-branch was not yet integrated in the database of 1984. However, these data are the only official ones as there were no recent and reliable studies on the contribution of the extractive sector to the GDP during the period concerned by the report.

2.14.2 Contribution to foreign direct investments

In the absence of a reliable estimation of the contribution of the extractive sector to the economy, the economic contribution can also be measured by the flows of foreign direct investments (FDI). The table below 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 2008 to 2010 is noted since the beginning of the exploitation phase for QMM and the Ambatovy Project. (In billions MGA) Description 2007 2008 2009 2010 2011 2012 FDI amounts in the 886.20 1,637.50 2,069.80 1,360.00 1,000.60 750.50 extractive activities FDI total amount 1,456.90 1,914.80 2,532.50 1,689.10 1,639.90 1,783.40 Weight of the extractive sector FDI in the total 61% 86% 82% 81% 61% 42% FDI Source: Study on the Foreign Direct Investments in Madagascar, Central Bank of Madagascar, January 2014

2.14.3 Contribution of the total tax revenues

The table and the chart below present the contribution of the extractive companies to the total tax revenues in Madagascar: (in thousands MGA) Description 2012 Amount of tax revenues received by the DGI from the companies of the 92,770,615.23 Groups A, B and C Total amount of tax revenues of the DGI 1,214,396,969.17

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Contribution of the extractive sector to the tax revenues in 2012

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

93%

7%

Thus, the tax revenue of the extractive sector in 2012 represent 7% of the total revenues received by the General Tax Directorate (DGI).

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2.14.4 Contribution in terms of employment

For the years under review in the framework of EITI, there is no official statistics or reliable study results on the contribution of the overall formal extractive sector in terms of direct of indirect employment. The data from the statements made by the companies in Group A give an overwiew of the number of their direct employees. Linked with the number of workers affiliated to CNAPS, they can be used to estimate the weight of the formal extractive sector, inspite of some flaws that could skew the results, namely for the companies that are not CNAPS-affiliated, though registered to the tax office.Indeed, the companies and the employees must be affiliated at the CNAPS. Thus, 0.9% of the CNAPS-affiliated employees work for a company of the Group A in 2012. The weakness of these figures should nevertheless be put into perspective as the great industrial mining projects can generate leverage effects, namely the indirect jobs via subcontractors.

Description 2012 Numbers of workers of the Group A 4,752 Numbers of CNAPS-affiliated workers 527,862 Percentage of workers of the Group A compared 0.9% to the total number of CNAPS-affiliared workers

2.15 Exported quantities

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

The exporting extractive companies have disclosed the volume of total production and the value of the production of raw material as well as the total volume of export and the value of these exports per raw material for the fiscal year 2012.

The table below, prepared on the basis of statements from exporting companies, present the quantity of exported products per company in 2012 (in tonnes).

SOURCE COMPANY NATURE OF PRODUCED EXPORTED VALUE OF Region of COMPANIES THE QUANTITY QUANTITY EXPORTEDPRODUCTS origin PRODUCTS (in tonnes) (in tonnes) (in MGA)

GALLOIS Graphite Atsinanana 3,628.90 3,459.50 8,725,622,181.00 Etablissement Poozzole Vakinankaratra 54,979.00 N/A N/A HOLCIM. Cipolin Vakinankaratra 164,183.00 N/A N/A Clay Vakinankaratra 24,085.00 N/A N/A Betsiboka MADAGASCAR Sample of Sofia- 0.25 CHROMIUM Raw rocks Alaotra N/A N/A COMPANY LTD Mangoro S.A.R.L.U. Sample of Vatovavy 0.15 altered rocks Fitovinany Rocks Betsiboka 0.42 N/A N/A

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SOURCE COMPANY NATURE OF PRODUCED EXPORTED VALUE OF Region of COMPANIES THE QUANTITY QUANTITY EXPORTEDPRODUCTS origin PRODUCTS (in tonnes) (in tonnes) (in MGA)

MADAGASCAR Alaotra MINING Mangoro RESOURCES LTD Bongolava S.A.R.L. Dolomite 2,540.00 N/A N/A Amoron'i PROCHIMAD Calcite 175.00 N/A N/A Mania Kaolin 230.00 N/A N/A Ammonium Alaotra 15,822.00 - N/A DYNATEC Sulfate Mangoro MADAGASCAR Cobalt Atsinanana 493.00 378.00 20,048,112,763.16 Nickel 5,695.00 4,471.00 162,036,083,652.55 RED GRANITI Atsimo MADAGASCAR Labradorites 1,563.35 2,564.50 N/D Andrefana S.A.R.L. Concentrated 40,512.00 43,000.00 16,020,407,123.65 KRAOMA S.A. Betsiboka Rocky 51,551.00 67,000.00 23,732,565,900.94 MAINLAND MINING Ilmenite Analanjirofo 38,500.00 38,500.00 8,372,501,424.00 LTD S.A.R.L.U Ilmenite Anosy 582,179.00 582,179.00 175,694,618,815.38 QIT MADAGASCAR Zircon MINERALS S.A. Anosy 31,242.00 31,242.00 82,022,568,675.65 Concentrate

EY | 65 Reconciliation report EITI Fiscal Year 2012 3 Results of the reconciliation

3.1 Total flows and total residual discrepancy

The EITI report – Fiscal Year 2012 covers a total amount of MGA 308.4 billions equivalent to USD 140.50 millions. The details of the flows received by the State, per entities group are presented in the following table:

Amount of flows Amount of flows Entities group Number of entities received by the State received by the State (in thousands MGA) (in thousands USD) A 47 305,424,639.27 139,147.52 B 13 1,060,798.75 483.29 C 66 1,916,186.24 872.99 Total 126 308,401,624.26 140,503.80

The table below shows that the percentage of the residual discrepancy for the group A is 0.36% of the total flows received by the State:

Amount of the Total amount paid by Total amount received Total residual total residual Currency the companies by the administrations discrepancy discrepancy (in thousands) (in thousands) (in thousands) (in %) MGA 304,322,320.21 305,424,639.27 -1,102,319.06 -0.36% USD 138,645.32 139,147.52 -502.20

Explanations are provided in the following pages.

3.2 Entities in the Group A16

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

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

16Companies of which the cumulated payment to the administrations, reach 97% of the significant flows received by the State. The companies included in this group will be subject to reconciliation through the data collection from the companies, and the confrontation of these with the data collected from the administrations via a canvas.

EY | 66 Reconciliation report EITI Fiscal Year 2012 (en millions de MGA) 003. QIT MADAGASCAR 001. PROJET AMBATOVY 002. HOLCIM 004. GROUPE PAM 005. MADAGASCAR OIL MINERALS S.A. Type of payment Paid by Received Paid by Received Paid by Received Paid by Received Paid by Received Discrepa Discrepa Discrepa Discrepa Discrepa the by the the by the the by the the by the the by the ncy ncy ncy ncy ncy entity State entity State entity State entity State entity State A - State Taxes 170 981.40 171 341.44 (360.03) 19 456.04 18 798.84 657.20 7 700.11 7 535.07 165.04 351.77 203.25 148.53 1 776.02 1 734.09 41.93 Export fees ------Import fees 246.51 246.51 - 51.00 51.00 ------Lease registration 65.62 54.80 10.81 - - - 4.50 4.50 - 6.36 6.36 - 7.56 7.56 - fees Custom duties and taxes on oil products 101.25 187.92 (86.67) 3,015.05 2,949.20 65.85 4,379.73 4,168.00 211.73 149.19 - 149.19 155.53 143.18 12.35 (TPP) Income taxes (IR) 0.10 0.10 - 2,498.91 2,498.91 - - - - 0.30 0.20 0.10 0.32 0.32 - Non-resident IR or 1,568.91 1,569.86 (0.95) 1,101.76 1,101.86 (0.10) 3,313.86 3,360.55 (46.69) ------TFT Unrecovered VAT 12,053.84 12,053.84 (0.00) 26.62 26.62 - - - - 195.93 195.93 - 1,284.45 1,284.45 0.00 Non-refunded VAT 149,130.2 149,130.2 ------State taxes 7,814.95 8,098.19 (283.23) 12,762.69 12,171.24 591.45 2.02 2.02 (0.00) - 0.76 (0.76) 328.16 298.59 29.58 remainders B - Local taxes 11.06 11.06 - 134.00 133.85 0.15 3,577.32 3,373.00 204.33 ------Property tax on built - - - 9.03 8.88 0.15 ------property (IFPB) Property tax on land 11.00 11.00 ------(IFT) Mining rebates - - - 78.62 78.62 - 3,573.91 3,369.58 204.33 ------Taxiing charges - - - 46.35 46.35 ------Local taxes 0.06 0.06 - - - - 3.41 3.41 ------remainders C - Segmented fees, 3,167.38 3,178.37 (10.98) 1,581.42 1,580.24 1.18 3,260.18 3,172.03 88.15 3,986.33 3,986.33 - 2,168.48 2,168.48 - duties and royalties Mining administration 381.87 381.87 - 29.73 28.55 1.18 260.64 260.64 - 3,986.33 3,986.33 - - - - fees Administration fees ------1,618.79 1,618.79 - paid to OMNIS Training fees paid to ------548.74 548.74 - OMNIS Port 2,149.94 2,149.94 - 739.21 739.21 ------Segmented 635.58 646.56 (10.98) 812.48 812.48 - 2,999.54 2,911.39 88.15 - - - 0.95 0.95 - remainders D - Other payments 973.32 973.33 (0.01) 5.15 5.26 (0.11) 23.63 23.63 - 16.98 2.58 14.40 35.05 35.05 - Other common payments (nature and 11.30 11.30 - - - - 2.61 2.61 ------amount provided in annexes) (Note b) Other segmented payments (nature and 8.80 8.80 - - - - 0.02 0.02 ------amount provided in annexes) (Note b) Alien’s identity card 682.14 682.14 - 4.13 4.13 - - - - 1.73 1.73 - 3.30 3.30 - Visa fee 270.22 270.22 - 0.02 0.02 - 7.86 7.86 - 0.30 0.30 - 1.63 1.63 - Permits release fees ------Processing fees ------(BCMM) Penalties 0.86 0.88 (0.01) 1.00 1.11 (0.11) 13.13 13.13 - 14.96 0.56 14.40 30.12 30.12 -

EY | 67 Reconciliation report EITI Fiscal Year 2012 (en millions de MGA) 003. QIT MADAGASCAR 001. PROJET AMBATOVY 002. HOLCIM 004. GROUPE PAM 005. MADAGASCAR OIL MINERALS S.A. Type of payment Paid by Received Paid by Received Paid by Received Paid by Received Paid by Received Discrepa Discrepa Discrepa Discrepa Discrepa the by the the by the the by the the by the the by the ncy ncy ncy ncy ncy entity State entity State entity State entity State entity State Other payments ------remainders E - Withheld at source 38,645.56 38,645.56 - 803.63 803.84 (0.21) 4,899.28 4,913.86 (14.58) 256.62 1,015.47 (758.85) 782.26 782.26 0.00 CNAPS 2,912.50 2,912.50 - 217.34 217.34 - 819.87 834.44 (14.58) 77.13 841.88 (764.75) 108.49 108.49 0.00 Taxes on wage income 33,955.48 33,955.48 - 559.24 559.45 (0.21) 4,038.95 4,038.95 - 143.06 137.16 5.90 523.95 523.95 - and similar (IRSA) Withheld at source 1,777.58 1,777.58 - 27.05 27.05 - 40.46 40.46 - 36.42 36.42 - 149.81 149.81 - remainders F –Donations 241.15 241.15 - 39.71 39.71 - 468.06 468.06 - - - - 301.42 301.42 - In kind (Expert evaluation or 241.15 241.15 - 39.71 39.71 - 176.59 176.59 - - - - 270.19 270.19 - supporting documents) En numéraire ------291.47 291.47 - - - - 31.24 31.24 - G - Government’s share of production ------(Oil companies) H - Various premiums ------I - Social expenditures required by law or by 160.31 160.31 - - - - 3,390.92 3,390.92 ------an agreement with the government Social expendituresin kind (Expert evaluation or 160.31 160.31 ------supporting documents) Dépenses sociales en ------3,390.92 3,390.92 ------numéraire J - Transportation ------expenses GRAND TOTAL 214,180.19 214,551.22 (371.03) 22,019.96 21,361.75 658.21 23,319.49 22,876.56 442.94 4,611.71 5,207.63 (595.92) 5,063.23 5,021.30 41.93

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(en millions de MGA) 010. MADAGASCAR 006. MAINLAND MINING LTD 009. NOVA RESOURCES 007. KRAOMA S.A. 008. GOLD SAND S.A.R.L. CHROMIUM COMPANY LTD S.A.R.L.U S.A.R.L.U S.A.R.L.U Type of payment Receive Receive Receive Receive Receive Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State 3,652.9 3,766.4 A - State Taxes 742.22 724.59 17.63 -113.46 0.74 0.74 - 33.12 33.14 (0.02) 2.98 0.10 2.87 4 0 Export fees 17.63 - 17.63 83.42 83.42 ------Import fees ------Lease registration fees 0.80 0.80 ------0.51 0.51 - 0.60 - 0.60 Custom duties and taxes on oil products - - - 135.31 133.45 1.86 ------(TPP) Income taxes (IR) 70.61 70.61 (0.00) 646.03 646.03 - 0.64 0.64 - 26.53 26.53 - 0.10 0.10 - Non-resident IR or TFT ------Unrecovered VAT 643.81 643.81 ------2,514.3 2,629.9 Non-refunded VAT - - - -115.59 ------7 6 State taxes remainders 9.37 9.37 - 273.81 273.54 0.27 0.10 0.10 - 6.08 6.10 (0.02) 2.28 0.00 2.28 B - Local taxes 277.29 246.04 31.25 12.81 19.16 -6.35 0.38 0.38 ------Property tax on built - - - 10.77 10.77 -0.00 ------property (IFPB) Property tax on land - - - 0.01 0.01 ------(IFT) Mining rebates 246.04 246.04 ------Taxiing charges 31.25 - 31.25 - 6.35 -6.35 ------Local taxes remainders - - - 2.02 2.02 - 0.38 0.38 ------C - Segmented fees, 1,879.7 1,830.1 1,594.0 1,596.7 1,567.8 1,517.2 1,351.2 1,351.2 49.65 -2.72 50.60 458.51 453.60 4.91 - duties and royalties 7 2 2 4 4 4 2 2 Mining administration 1,721.1 1,721.1 1,567.8 1,517.2 1,351.1 1,351.1 - 395.38 395.38 0.00 50.60 458.51 453.60 4.91 - fees 7 7 4 4 7 7 Administration fees ------paid to OMNIS Training fees paid to ------OMNIS Port - - - 837.34 837.34 ------Segmented remainders 158.60 108.94 49.65 361.29 364.01 -2.72 ------0.05 0.05 - D - Other payments 636.61 635.27 1.34 22.49 22.49 - - - - 19.94 17.53 2.41 51.95 3.35 48.60 Other common payments (nature and 21.64 20.00 1.64 ------0.92 0.92 - amount provided in annexes) (Note b) Other segmented payments (nature and 9.64 9.94 (0.30) ------17.49 17.53 (0.04) 50.95 - 50.95 amount provided in annexes) (Note b) Alien’s identity card ------Visa fee 35.06 35.06 ------

EY | 69 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 010. MADAGASCAR 006. MAINLAND MINING LTD 009. NOVA RESOURCES 007. KRAOMA S.A. 008. GOLD SAND S.A.R.L. CHROMIUM COMPANY LTD S.A.R.L.U S.A.R.L.U S.A.R.L.U Type of payment Receive Receive Receive Receive Receive Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State Permits release fees 486.45 486.46 (0.01) ------Processing fees (BCMM) 35.97 35.97 ------Penalties 47.84 47.84 - 22.49 22.49 - - - - 2.45 - 2.45 - 2.35 (2.35) Other payments ------0.08 0.08 - remainders 1,188.5 1,188.5 E - Withheld at source 33.49 33.49 - - 1.77 1.77 - 0.68 0.68 - - - - 6 6 CNAPS 21.66 21.66 - 366.90 366.90 - 1.77 1.77 ------Taxes on wage income 11.83 11.83 - 752.32 752.32 - - - - 0.68 0.68 - - - - and similar (IRSA) Withheld at source - - - 69.34 69.34 ------remainders F - Donations 11.33 11.33 - 144.75 144.75 ------0.26 0.26 - In kind (Expert evaluation or ------0.26 0.26 - supporting documents) En numéraire 11.33 11.33 - 144.75 144.75 ------G - Government’s share of production (Oil ------companies) H - Various premiums ------I - Social expenditures required by law or by 741.59 741.59 ------an agreement with the government Social expenditures in kind (Expert evaluation 1.82 1.82 ------or supporting documents) Cash social 739.77 739.77 ------expenditures J - Transportation ------expenses 4,322.3 4,222.4 6,615.5 6,738.0 1,570.7 1,520.1 1,406.4 1,354.9 GRAND TOTAL 99.88 -122.54 50.60 512.26 504.95 7.30 51.47 1 3 5 9 3 3 0 4

EY | 70 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 013. MADAGASCAR 015. MADAGASCAR MINING 011. GALLOIS Etablissement 012. EXXON MOBIL INTERNATIONAL TAK 014. TULLOW MADAGASCAR RESOURCES LTD S.A.R.L. MINING S.A.R.L. Type of payment Receive Receive Receive Receive Receive Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State 5,108.6 5,110.0 A - State Taxes 957.84 809.72 148.12 165.80 165.82 (0.01) 0.23 0.10 0.13 (1.35) 0.20 0.10 0.10 8 3 Export fees 1.81 - 1.81 ------Import fees 0.28 - 0.28 ------Lease registration fees 0.59 0.59 - 5.30 5.30 ------Custom duties and taxes on oil products 88.22 72.58 15.64 ------0.43 (0.43) - - - (TPP) Income taxes (IR) 363.22 363.22 - 0.30 0.30 - 0.10 0.10 - 0.32 0.32 - 0.10 0.10 - Non-resident IR or TFT 202.51 202.51 ------5,108.3 5,108.3 Unrecovered VAT 7.77 7.77 - 160.20 160.20 ------6 6 Non-refunded VAT 97.00 - 97.00 ------State taxes remainders 196.45 163.05 33.40 0.00 0.01 (0.01) 0.13 0.00 0.13 - 0.92 (0.92) 0.10 0.00 0.10 B - Local taxes 22.62 13.99 8.63 ------Property tax on built ------property (IFPB) Property tax on land ------(IFT) Mining rebates 19.36 13.99 5.37 ------Taxiing charges 3.26 - 3.26 ------Local taxes remainders ------C - Segmented fees, 1,771.1 1,771.1 269.44 251.30 18.14 - 879.57 858.86 20.71 658.41 658.41 - 819.66 825.05 (5.39) duties and royalties 5 5 Mining administration 245.30 245.30 - - - - 858.82 858.82 - - - - 819.52 824.91 (5.39) fees Administration fees 1,205.9 1,205.9 ------438.99 438.99 - - - - paid to OMNIS 5 5 Training fees paid to - - - 565.21 565.21 - - - - 219.41 219.41 - - - - OMNIS Port ------Segmented remainders 24.14 6.00 18.14 - - - 20.76 0.05 20.71 - - - 0.14 0.14 - D - Other payments 6.15 5.89 0.26 - 0.30 (0.30) 0.51 0.51 - - - - 16.33 0.33 16.00 Other common payments (nature and 0.26 - 0.26 - - - 0.51 0.51 - - - - 0.33 0.33 - amount provided in annexes) (Note b) Other segmented payments (nature and ------16.00 - 16.00 amount provided in annexes) (Note b)

EY | 71 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 013. MADAGASCAR 015. MADAGASCAR MINING 011. GALLOIS Etablissement 012. EXXON MOBIL INTERNATIONAL TAK 014. TULLOW MADAGASCAR RESOURCES LTD S.A.R.L. MINING S.A.R.L. Type of payment Receive Receive Receive Receive Receive Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State Alien’s identity card ------Visa fee ------Permits release fees ------Processing fees (BCMM) ------Penalties 5.89 5.89 - - 0.30 (0.30) ------Other payments ------remainders E - Withheld at source 256.08 221.92 34.15 57.63 57.63 - - - - 15.87 15.87 - - - - CNAPS 136.87 109.95 26.91 5.33 5.33 - - - - 2.46 2.46 - - - - Taxes on wage income 111.97 111.97 - 39.96 39.96 - - - - 12.37 12.37 - - - - and similar (IRSA) Withheld at source 7.24 - 7.24 12.34 12.34 - - - - 1.04 1.04 - - - - remainders F - Donations ------In kind (Expert evaluation or ------supporting documents) En numéraire ------G - Government’s share of production (Oil ------companies) H - Various premiums ------I - Social expenditures required by law or by ------an agreement with the government Social expenditures in kind (Expert evaluation ------or supporting documents) Cash social ------expenditures J - Transportation ------expenses 1,512.1 1,302.8 1,994.5 1,994.9 5,782.9 5,784.3 GRAND TOTAL 209.31 (0.31) 880.32 859.48 20.84 (1.35) 836.18 825.48 10.70 3 2 9 0 7 2

EY | 72 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 020. CALIBRA RESOURCES & 016. NIKO RESSOURCES 019. TANTALUM RARE EARTH 017. OPHIR ENERGY 018. MADA-AUST S.A.R.L. ENGINEERS MADAGASCAR [ENERMAD] (MALAGASY) S.A.R.L.U S.A.R.L.U Type of Paid Paid Paid Paid payment Receive Paid Receive by Receive Receive Receive by Discrepa Discrepanc by Discrepanc by Discrepanc d by the Discrepancy by the d by the the d by the d by the d by the the ncy y the y the y State entity State entit State State State entity entity entity y A - State 566,4 1,82 1,82 - - 209,78 (209,78) 22,43 22,60 (0,17) 485,19 81,25 0,32 0,32 (0,00) Taxes 5 Export fees ------Import fees ------Lease registration 1.77 1.77 ------fees Custom duties and taxes on oil ------21.87 - 21.87 - - - products (TPP) Income taxes 0.05 0.05 - - 0.32 (0.32) 3.20 3.38 (0.18) 0.10 0.10 - 0.32 0.32 - (IR) Non-resident 135.4 ------135.47 - - - - IR or TFT 7 Unrecovered 270.9 ------270.94 - - - - VAT 4 Non-refunded ------VAT State taxes 138.0 - - - - 209.46 (209.46) 19.22 19.22 0.00 78.69 59.38 - 0.00 (0.00) remainders 7 B - Local ------8.93 (8.93) 0.02 0.02 - - - - taxes Property tax on built ------property (IFPB) Property tax ------on land (IFT) Mining ------8.93 (8.93) ------rebates Taxiing ------charges Local taxes ------0.02 0.02 - - - - remainders C - Segmented 763.7 592.5 291.5 763.78 - - 383.94 (383.94) 597.42 (4.84) 2.62 0.42 2.20 607.63 (316.08) fees, duties 8 8 5 and royalties

EY | 73 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 020. CALIBRA RESOURCES & 016. NIKO RESSOURCES 019. TANTALUM RARE EARTH 017. OPHIR ENERGY 018. MADA-AUST S.A.R.L. ENGINEERS MADAGASCAR [ENERMAD] (MALAGASY) S.A.R.L.U S.A.R.L.U Type of Paid Paid Paid Paid payment Receive Paid Receive by Receive Receive Receive by Discrepa Discrepanc by Discrepanc by Discrepanc d by the Discrepancy by the d by the the d by the d by the d by the the ncy y the y the y State entity State entit State State State entity entity entity y Mining 591.2 291.5 administratio ------589.89 1.37 2.20 - 2.20 607.63 (316.08) 6 5 n fees Administratio 374.6 n fees paid to 374.63 - - 383.94 (383.94) ------3 OMNIS Training fees 389.1 389.15 ------paid to OMNIS 5 Port ------Segmented ------1.31 7.53 (6.21) 0.42 0.42 - - - - remainders D - Other 147.6 - - - - 167.56 (167.56) - - - 0.71 146.94 58.42 58.42 - payments 5 Other common payments (nature and ------amount provided in annexes) (Note b) Other segmented payments (nature and ------amount provided in annexes) (Note b) Alien’s ------identity card Visa fee ------Permits ------release fees Processing ------fees (BCMM) 147.6 Penalties - - - - 167.56 (167.56) - - - 0.71 146.94 58.42 58.42 - 5 Other payments ------remainders

EY | 74 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 020. CALIBRA RESOURCES & 016. NIKO RESSOURCES 019. TANTALUM RARE EARTH 017. OPHIR ENERGY 018. MADA-AUST S.A.R.L. ENGINEERS MADAGASCAR [ENERMAD] (MALAGASY) S.A.R.L.U S.A.R.L.U Type of Paid Paid Paid Paid payment Receive Paid Receive by Receive Receive Receive by Discrepa Discrepanc by Discrepanc by Discrepanc d by the Discrepancy by the d by the the d by the d by the d by the the ncy y the y the y State entity State entit State State State entity entity entity y E - Withheld 135.4 131.0 135.47 - - - - 136.69 (5.64) 87.70 82.42 5.28 18.24 18.24 - at source 7 5 CNAPS 3.92 3.92 - - - - 22.33 22.33 - 18.01 12.73 5.28 3.93 3.93 - Taxes on wage income 102.8 102.84 - - - - 88.62 94.26 (5.64) 69.69 69.69 - 13.13 13.13 - and similar 4 (IRSA) Withheld at source 28.71 28.71 - - - - 20.10 20.10 - - - - 1.18 1.18 - remainders F - Donations ------6.24 6.24 - 0.12 0.12 - - - - In kind (Expert evaluation or ------supporting documents) En numéraire ------6.24 6.24 - 0.12 0.12 - - - - G - Government’ s share of ------production (Oil companies) H - Various ------premiums I - Social expenditures required by law or by an ------agreement with the government Social expenditures in kind (Expert ------evaluation or supporting documents) Cash social ------expenditures

EY | 75 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 020. CALIBRA RESOURCES & 016. NIKO RESSOURCES 019. TANTALUM RARE EARTH 017. OPHIR ENERGY 018. MADA-AUST S.A.R.L. ENGINEERS MADAGASCAR [ENERMAD] (MALAGASY) S.A.R.L.U S.A.R.L.U Type of Paid Paid Paid Paid payment Receive Paid Receive by Receive Receive Receive by Discrepa Discrepanc by Discrepanc by Discrepanc d by the Discrepancy by the d by the the d by the d by the d by the the ncy y the y the y State entity State entit State State State entity entity entity y J - Transportatio ------n expenses GRAND 901.0 752.2 804.5 368.5 901.08 - - 761.29 (761.29) 771.88 (19.59) 568.87 235.67 684.62 (316.08) TOTAL 8 9 5 4

EY | 76 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 023. PETRA OF 024. MINVEST 021. TOTAL EXPLORATION 022. STERLING ENERGY LTD 025. URAMAD S.A MADAGASCAR S.A.R.L. MADAGASCAR S.A.U. Receive Receive Receive Receive Type of payment Paid by Paid by Paid by Paid by Receive Paid by d by Discrep d by Discrep d by Discrep Discrep d by Discrep the the the the d by the the the ancy the ancy the ancy ancy the ancy entity entity entity entity State entity State State State State A - State Taxes 176.23 176.23 - 1.33 0.10 1.23 - - - 0.18 0.18 - 1.16 1.17 (0.00) Export fees ------Import fees ------Lease registration fees 20.15 20.15 - 1.23 - 1.23 ------Custom duties and taxes on oil products ------(TPP) Income taxes (IR) ------0.03 0.03 - 1.16 1.16 - Non-resident IR or TFT ------Unrecovered VAT 155.98 155.98 ------Non-refunded VAT ------State taxes remainders 0.10 0.10 - 0.10 0.10 - - - - 0.15 0.15 - - 0.00 (0.00) B - Local taxes ------0.02 0.02 - - - - Property tax on built ------property (IFPB) Property tax on land ------(IFT) Mining rebates ------Taxiing charges ------Local taxes remainders ------0.02 0.02 - - - - C - Segmented fees, 641.17 642.73 (1.56) 419.68 419.68 - - 121.64 (121.64) 6.13 6.13 0.00 353.20 353.20 - duties and royalties Mining administration ------121.64 (121.64) 6.13 6.13 0.00 353.20 353.20 - fees Administration fees 547.39 548.74 (1.35) 309.93 309.93 ------paid to OMNIS Training fees paid to 82.11 82.31 (0.20) 109.75 109.75 ------OMNIS Port ------Segmented remainders 11.67 11.67 ------D - Other payments 0.10 0.10 ------0.30 0.30 - - - - Other common payments (nature and ------amount provided in annexes) (Note b) Other segmented payments (nature and ------amount provided in annexes) (Note b) Alien’s identity card ------Visa fee ------Permits release fees ------Processing fees (BCMM) ------Penalties 0.10 0.10 ------0.30 0.30 - - - -

EY | 77 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 023. PETRA OF 024. MINVEST 021. TOTAL EXPLORATION 022. STERLING ENERGY LTD 025. URAMAD S.A MADAGASCAR S.A.R.L. MADAGASCAR S.A.U. Receive Receive Receive Receive Type of payment Paid by Paid by Paid by Paid by Receive Paid by d by Discrep d by Discrep d by Discrep Discrep d by Discrep the the the the d by the the the ancy the ancy the ancy ancy the ancy entity entity entity entity State entity State State State State Other payments ------remainders E - Withheld at source 18.31 18.31 ------CNAPS 1.78 1.78 ------Taxes on wage income 16.00 16.00 ------and similar (IRSA) Withheld at source 0.53 0.53 ------remainders F - Donations 80.68 80.68 ------In kind (Expert evaluation or ------supporting documents) En numéraire 80.68 80.68 ------G - Government’s share of production (Oil ------companies) H - Various premiums ------I - Social expenditures required by law or by ------an agreement with the government Social expenditures in kind (Expert evaluation ------or supporting documents) Cash social ------expenditures J - Transportation ------expenses GRAND TOTAL 916.49 918.05 (1.56) 421.01 419.78 1.23 - 121.64 (121.64) 6.63 6.63 0.00 354.37 354.37 (0.00)

EY | 78 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 026. MINERAL PRODUCTS 027. LABRADOR 030. ACCRINGTON INTERNATIONAL GROUP 028. AMICOH RESOURCES 029. ROC OIL/SAPETRO MADAGASCAR MINERALS S.A. S.A.R.L. Type of payment Receive Receive Receive Receive Receive Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State A - State Taxes 0.20 0.10 0.10 308.44 307.17 1.28 0.32 0.32 - - - - 0.10 0.10 - Export fees ------Import fees ------Lease registration fees - - - 0.19 0.20 (0.00) ------Custom duties and taxes on oil products ------(TPP) Income taxes (IR) 0.10 0.10 - 114.16 114.16 - 0.32 0.32 - - - - 0.10 0.10 - Non-resident IR or TFT ------Unrecovered VAT ------Non-refunded VAT ------State taxes remainders 0.10 0.00 0.10 194.09 192.81 1.28 ------B - Local taxes - - - 7.00 3.60 3.41 ------Property tax on built ------property (IFPB) Property tax on land ------(IFT) Mining rebates - - - 7.00 3.60 3.41 ------Taxiing charges ------Local taxes remainders ------C - Segmented fees, 348.04 348.04 - 30.26 29.77 0.49 331.04 331.04 - 392.56 392.56 0.00 - 328.53 (328.53) duties and royalties Mining administration 348.04 348.04 - 27.26 27.26 ------328.53 (328.53) fees Administration fees ------220.69 220.69 - 219.43 219.43 0.00 - - - paid to OMNIS Training fees paid to ------110.35 110.35 - 109.71 109.71 0.00 - - - OMNIS Port ------Segmented remainders - - - 3.00 2.51 0.49 - - - 63.41 63.41 - - - - D - Other payments 0.15 0.12 0.04 ------Other common payments (nature and 0.12 0.12 ------amount provided in annexes) (Note b) Other segmented payments (nature and 0.04 - 0.04 ------amount provided in annexes) (Note b) Alien’s identity card ------Visa fee ------Permits release fees ------

EY | 79 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 026. MINERAL PRODUCTS 027. LABRADOR 030. ACCRINGTON INTERNATIONAL GROUP 028. AMICOH RESOURCES 029. ROC OIL/SAPETRO MADAGASCAR MINERALS S.A. S.A.R.L. Type of payment Receive Receive Receive Receive Receive Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State Processing fees (BCMM) ------Penalties ------Other payments ------remainders E - Withheld at source - - - 18.16 18.16 - 3.22 3.22 ------CNAPS - - - 9.96 9.96 ------Taxes on wage income - - - 5.78 5.78 - 3.22 3.22 ------and similar (IRSA) Withheld at source - - - 2.42 2.42 ------remainders F - Donations ------0.32 0.32 - - - - In kind (Expert evaluation or ------supporting documents) En numéraire ------0.32 0.32 - - - - G - Government’s share of production (Oil ------companies) H - Various premiums ------I - Social expenditures required by law or by ------37.85 37.85 - - - - an agreement with the government Social expenditures in kind (Expert evaluation ------30.30 30.30 - - - - or supporting documents) Cash social ------7.55 7.55 - - - - expenditures J - Transportation ------expenses GRAND TOTAL 348.39 348.26 0.13 363.87 358.70 5.17 334.58 334.58 - 430.73 430.73 0.00 0.10 328.63 (328.53)

EY | 80 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 031. MADAGASCAR 033. ACCESS MADAGASCAR 034. TOLIARA SANDS 035. CLASSIC REAL STONES 032. TANETY LAVA S.A.R.L. CONSOLIDATED MINING S.A. S.A.R.L. S.A.R.L. S.A.R.L. Receive Receive Receive Receive Receive Type of payment Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State A - State Taxes 16.95 26.41 (9.45) 174.09 95.11 78.98 0.06 0.14 (0.09) 111.33 68.02 43.30 5.32 8.39 (3.07) Export fees ------Import fees ------Lease registration fees 1.14 1.17 (0.03) - - - 0.01 - 0.01 0.68 0.68 - - - - Custom duties and taxes on oil products - - - 37.50 25.31 12.19 - - - 16.91 17.12 -0.21 0.59 1.00 (0.41) (TPP) Income taxes (IR) 0.10 10.71 (10.61) 0.32 0.32 - - 0.10 (0.10) 0.43 0.43 - 1.30 1.80 (0.50) Non-resident IR or TFT 1.19 - 1.19 ------17.18 17.18 - - - - Unrecovered VAT 1.72 1.72 ------Non-refunded VAT ------43.17 - 43.17 - - - State taxes remainders 12.81 12.81 (0.00) 136.27 69.48 66.79 0.05 0.04 0.01 32.96 32.61 0.35 3.43 5.59 (2.16) B - Local taxes ------Property tax on built ------property (IFPB) Property tax on land ------(IFT) Mining rebates ------Taxiing charges ------Local taxes remainders ------C - Segmented fees, 242.90 243.01 (0.12) 179.39 191.53 (12.14) 405.63 296.66 108.97 56.70 56.70 - 28.54 137.42 (108.88) duties and royalties Mining administration 242.90 243.01 (0.12) 179.34 191.53 (12.19) 405.63 296.66 108.97 56.04 56.04 - 28.54 137.42 (108.88) fees Administration fees ------paid to OMNIS Training fees paid to ------OMNIS Port ------Segmented remainders - - - 0.05 - 0.05 - - - 0.66 0.66 - - - - D - Other payments 6.49 6.51 (0.03) 11.72 5.10 6.62 0.46 37.49 (37.03) 2.01 2.01 - 23.49 32.60 (9.11) Other common payments (nature and 0.55 0.55 ------amount provided in annexes) (Note b) Other segmented payments (nature and ------7.57 (7.57) - - - - 5.85 (5.85) amount provided in annexes) (Note b) Alien’s identity card ------1.71 1.71 - - - - Visa fee - - - 6.62 - 6.62 - - - 0.30 0.30 - - - - Permits release fees ------

EY | 81 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 031. MADAGASCAR 033. ACCESS MADAGASCAR 034. TOLIARA SANDS 035. CLASSIC REAL STONES 032. TANETY LAVA S.A.R.L. CONSOLIDATED MINING S.A. S.A.R.L. S.A.R.L. S.A.R.L. Receive Receive Receive Receive Receive Type of payment Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State Processing fees (BCMM) 5.65 5.65 - - - - - 29.51 (29.51) ------Penalties 0.29 0.32 (0.03) 5.10 5.10 (0.00) 0.46 0.41 0.04 - - - 23.49 26.75 (3.26) Other payments ------remainders E - Withheld at source 23.54 23.54 - 193.09 193.09 - 4.69 4.69 - 181.26 180.95 0.31 24.44 24.44 - CNAPS 6.45 6.45 - 59.85 59.85 - 2.73 2.73 - 23.80 23.49 0.31 11.51 11.51 - Taxes on wage income 12.44 12.44 - 116.32 116.32 - 0.33 0.33 - 128.92 128.92 - 12.93 12.93 - and similar (IRSA) Withheld at source 4.66 4.66 - 16.92 16.92 - 1.62 1.62 - 28.53 28.53 - - - - remainders F - Donations 104.97 104.97 ------20.36 20.36 - - - - In kind (Expert evaluation or 15.81 15.81 ------12.09 12.09 - - - - supporting documents) En numéraire 89.16 89.16 ------8.27 8.27 - - - - G - Government’s share of production (Oil ------companies) H - Various premiums ------I - Social expenditures required by law or by ------an agreement with the government Social expenditures in kind (Expert evaluation ------or supporting documents) Cash social ------expenditures J - Transportation ------expenses GRAND TOTAL 394.85 404.44 (9.60) 558.29 484.83 73.46 410.83 338.98 71.85 371.66 328.04 43.62 81.79 202.85 (121.06)

EY | 82 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 039. UNIVERSAL 038. MADAGASCAR MINING 036. PETROMAD 037. EAX /CANDAX EXPLORATION MADAGASCAR 040. PROCHIMAD INVESTMENTS S.A.R.L.U. S.A.R.L. Type of payment Paid by Receive Paid by Receive Paid by Receive Paid by Receive Paid by Receive Discrep Discrep Discrep Discrep Discrep the d by the the d by the the d by the the d by the the d by the ancy ancy ancy ancy ancy entity State entity State entity State entity State entity State A - State Taxes - - - 0.10 0.10 - 0.16 0.16 - 0.15 0.15 - 69.16 69.16 - Export fees ------Import fees ------Lease registration fees ------Custom duties and taxes on oil products ------(TPP) Income taxes (IR) - - - 0.10 0.10 - 0.16 0.16 - 0.15 0.15 - 5.09 5.09 - Non-resident IR or TFT ------Unrecovered VAT ------Non-refunded VAT ------State taxes remainders ------64.06 64.06 - B - Local taxes ------2.74 2.74 - Property tax on built ------1.85 1.85 - property (IFPB) Property tax on land ------(IFT) Mining rebates ------0.89 0.89 - Taxiing charges ------Local taxes remainders ------C - Segmented fees, - 197.55 (197.55) 205.09 205.09 - 196.19 196.19 0.01 137.72 137.72 - 31.06 31.06 - duties and royalties Mining administration ------196.19 196.19 0.01 137.41 137.41 - 29.98 29.98 - fees Administration fees - 197.55 (197.55) 131.58 131.58 ------paid to OMNIS Training fees paid to - - - 54.76 54.76 ------OMNIS Port ------Segmented remainders - - - 18.75 18.75 - - - - 0.32 0.32 - 1.08 1.08 - D - Other payments - - - 0.21 0.21 - 0.10 0.10 - 6.80 0.10 6.70 0.09 - 0.09 Other common payments (nature and ------amount provided in annexes) (Note b) Other segmented payments (nature and ------amount provided in annexes) (Note b) Alien’s identity card ------Visa fee ------Permits release fees ------Processing fees (BCMM) ------Penalties - - - 0.21 0.21 - 0.10 0.10 - 6.80 0.10 6.70 0.09 - 0.09

EY | 83 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 039. UNIVERSAL 038. MADAGASCAR MINING 036. PETROMAD 037. EAX /CANDAX EXPLORATION MADAGASCAR 040. PROCHIMAD INVESTMENTS S.A.R.L.U. S.A.R.L. Type of payment Paid by Receive Paid by Receive Paid by Receive Paid by Receive Paid by Receive Discrep Discrep Discrep Discrep Discrep the d by the the d by the the d by the the d by the the d by the ancy ancy ancy ancy ancy entity State entity State entity State entity State entity State Other payments ------remainders E - Withheld at source - - - 29.50 29.50 - - - - 65.50 65.50 - 34.29 34.29 - CNAPS - - - 1.34 1.34 - - - - 11.39 11.39 - 23.73 23.73 - Taxes on wage income - - - 28.16 28.16 - - - - 54.11 54.11 - 4.14 4.14 - and similar (IRSA) Withheld at source ------6.42 6.42 - remainders F - Donations ------0.03 0.03 - In kind (Expert evaluation or ------supporting documents) En numéraire ------0.03 0.03 - G - Government’s share of production (Oil ------companies) H - Various premiums ------I - Social expenditures required by law or by - - - 158.78 158.78 ------an agreement with the government Social expenditures in kind (Expert evaluation ------or supporting documents) Cash social - - - 158.78 158.78 ------expenditures J - Transportation ------expenses GRAND TOTAL - 197.55 (197.55) 393.69 393.69 - 196.45 196.45 0.01 210.17 203.47 6.70 137.36 137.27 0.09

EY | 84 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 042. INTERNATIONAL 045. MADAGASCAR WISCO 043. MADAGASCAR 041. FARASANDS S.A.R.L. MINING CORPORATION LTD 044. VELONAODY Fabien GUANGXIN KAM WAH RESSOURCES S.A.R.L. S.A.R.L. RESSOURCES S.A.U. Type of payment Receive Receive Receive Receive Receive Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State A - State Taxes - 0.29 (0.29) 0.33 0.33 - 1.61 1.29 0.32 - - - 0.10 0.10 - Export fees ------Import fees ------Lease registration fees ------Custom duties and taxes on oil products ------(TPP) Income taxes (IR) - 0.10 (0.10) 0.10 0.10 - 0.32 - 0.32 - - - 0.10 0.10 - Non-resident IR or TFT ------Unrecovered VAT ------Non-refunded VAT ------State taxes remainders - 0.19 (0.19) 0.23 0.23 - 1.29 1.29 ------B - Local taxes ------Property tax on built ------property (IFPB) Property tax on land ------(IFT) Mining rebates ------Taxiing charges ------Local taxes remainders ------C - Segmented fees, 122.62 122.62 - 133.65 133.65 - 163.54 163.54 - 137.55 160.13 (22.58) 231.04 231.04 - duties and royalties Mining administration 122.62 122.62 - 133.59 133.59 - 163.49 163.49 - 137.55 160.13 (22.58) 70.55 70.55 - fees Administration fees ------paid to OMNIS Training fees paid to ------OMNIS Port ------Segmented remainders - - - 0.05 0.05 - 0.05 0.05 - - - - 160.50 160.50 - D - Other payments 61.31 61.74 (0.43) 36.69 36.69 ------9.86 9.86 - Other common payments (nature and - - - 0.13 0.13 ------amount provided in annexes) (Note b) Other segmented payments (nature and - - - 3.16 3.16 ------amount provided in annexes) (Note b) Alien’s identity card ------Visa fee ------9.19 9.19 - Permits release fees ------

EY | 85 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 042. INTERNATIONAL 045. MADAGASCAR WISCO 043. MADAGASCAR 041. FARASANDS S.A.R.L. MINING CORPORATION LTD 044. VELONAODY Fabien GUANGXIN KAM WAH RESSOURCES S.A.R.L. S.A.R.L. RESSOURCES S.A.U. Type of payment Receive Receive Receive Receive Receive Paid by Paid by Paid by Paid by Paid by d by Discrep d by Discrep d by Discrep d by Discrep d by Discrep the the the the the the ancy the ancy the ancy the ancy the ancy entity entity entity entity entity State State State State State Processing fees (BCMM) ------Penalties 61.31 61.74 (0.43) 33.40 33.40 ------0.67 0.67 - Other payments ------remainders E - Withheld at source ------1.66 1.66 - CNAPS ------Taxes on wage income ------1.66 1.66 - and similar (IRSA) Withheld at source ------remainders F - Donations ------1.64 1.64 - In kind (Expert evaluation or ------0.64 0.64 - supporting documents) En numéraire ------1.00 1.00 - G - Government’s share of production (Oil ------companies) H - Various premiums ------I - Social expenditures required by law or by ------an agreement with the government Social expenditures in kind (Expert evaluation ------or supporting documents) Cash social ------expenditures J - Transportation ------expenses GRAND TOTAL 183.92 184.65 (0.73) 170.67 170.67 - 165.14 164.82 0.32 137.55 160.13 (22.58) 244.31 244.31 -

EY | 86 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 046. ENERGIZER RESSOURCES (Minerals) 047. RASAMIZAFINDROSOA Dauphin S.A.R.L. Total Paid by Total Received Total residual Type of payment Paid by the Received by Paid by the Received by the entity by the State discrepancies Discrepancy Discrepancy entity the State entity the State A - State Taxes - 51.09 (51.09) - - - 212,388.43 211,749.26 639.18 Export fees ------102.86 83.42 19.44 Import fees ------297.79 297.51 0.28 Lease registration fees ------117.00 104.39 12.61 Custom duties and taxes on oil products - 21.85 (21.85) - - - 8,101.15 7,720.03 381.12 (TPP) Income taxes (IR) ------3,735.31 3,746.70 -11.39 Non-resident IR or TFT ------6,340.88 6,387.43 -46.55 Unrecovered VAT ------19,909.63 19,909.63 0.00 Non-refunded VAT ------151,784.75 151,760.17 24.57 State taxes remainders - 29.24 (29.24) - - - 21,999.07 21,739.98 259.10 B - Local taxes ------4,045.26 3,812.78 232.48 Property tax on built ------21.65 21.51 0.15 property (IFPB) Property tax on land ------11.01 11.01 - (IFT) Mining rebates ------3,925.82 3,728.00 197.82 Taxiing charges ------80.87 46.35 34.51 Local taxes remainders ------5.91 5.91 - C - Segmented fees, - 91.29 (91.29) 33.14 33.14 - 31,890.76 33,154.00 -1,263.24 duties and royalties Mining administration - 91.29 (91.29) 33.14 33.14 - 15,632.90 16,470.37 -837.46 fees Administration fees ------5,067.39 5,650.23 -582.84 paid to OMNIS Training fees paid to ------2,189.19 2,189.40 -0.20 OMNIS Port ------3,726.49 3,726.49 - Segmented remainders ------5,274.79 5,117.51 157.27 D - Other payments - - - 1.66 1.66 - 2,175.60 2,146.80 28.80 Other common payments (nature and ------38.38 36.47 1.91 amount provided in annexes) (Note b) Other segmented payments (nature and ------106.09 52.87 53.22 amount provided in annexes) (Note b) Alien’s identity card ------693.00 693.00 - Visa fee ------331.21 324.59 6.62 Permits release fees ------486.45 486.46 (0.01) Processing fees (BCMM) ------41.62 71.13 (29.51) Penalties - - - 1.66 1.66 - 478.77 482.22 (3.44) Other payments ------0.08 0.08 - remainders

EY | 87 Reconciliation report EITI Fiscal Year 2012

(en millions de MGA) 046. ENERGIZER RESSOURCES (Minerals) 047. RASAMIZAFINDROSOA Dauphin S.A.R.L. Total Paid by Total Received Total residual Type of payment Paid by the Received by Paid by the Received by the entity by the State discrepancies Discrepancy Discrepancy entity the State entity the State E - Withheld at source 0.20 0.20 - - - - 47,911.75 48,651.28 (739.54) CNAPS ------4,871.05 5,617.88 (746.83) Taxes on wage income 0.20 0.20 - - - - 40,808.31 40,808.26 0.05 and similar (IRSA) Withheld at source ------2,232.38 2,225.15 7.24 remainders F - Donations ------1,421.06 1,421.06 - In kind (Expert evaluation or ------756.45 756.45 - supporting documents) En numéraire ------664.60 664.60 - G - Government’s share of production (Oil ------companies) H - Various premiums ------I - Social expenditures required by law or by ------4,489.46 4,489.46 - an agreement with the government Social expenditures in kind (Expert evaluation ------192.43 192.43 - or supporting documents) Cash social ------4,297.03 4,297.03 - expenditures J - Transportation ------expenses GRAND TOTAL 0.20 142.58 (142.39) 34.80 34.80 - 304,322.32 305,424.64 -1,102.32

EY | 88 EITI Reconciliation Report Fiscal Year 2012

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 public entities for the fiscal year 2012:

Payment flows received in 2012 per type of payment

TVA non remboursée 21% Impôts sur les revenus 4% 50% salariaux et assimilés (IRSA) 5% TVA non récupérée 7% Frais d’administration minière 13% TVA nette (TVA à payer)

Autres paiements

The total flows received by the State from the extractive industries for the fiscal year 2012 amounts to MGA 305.42 billions which is USD 139.15 millions.

As shown in the above chart, the most significant flows are essentially the non-refunded VAT which represents 50%, the Taxes on wage income and similar (IRSA) which represents 13%, the Unrecovered VAT which represents 7%, the Mining administration fees representing 5%, the net VAT which is 4%, and other payments which are 21% of the payment flows received by the State.

► The VAT17non-refunded by the State to the extractive companies, for the fiscal year 2012 amounts to MGA 151.76 billions which is USD 69.12 millions. 98% of these flows were generated by the Ambatovy project. ► The IRSA paid to the State by the extractive companies for the fiscal year 2012 amounts to MGA 40.80 billions which is USD 18.6 millions.83% of these flows were from the Ambatovy project and 10% from QMM. ► The VAT unrecovered by the companies from the tax administrations amounts to MGA 19.90 billions, which is USD 9.1 millions.The Ambatovy project generated 61% of these flows, and TULLOW Madagascar generated 26%. ► The Mining Administration Fees (FAM) amounts to MGA 16.47 billions which is USD 7.50 millions.The extractive companies that contributed most to this flow are PAM Madagascar, Madagascar Chromium Company, Mainland and Goldsand. ► The net VAT (Due VAT) represents MGA 11.37 billions which is USD 5.18 millions.These flows were mainly generated by the Ambatovy Project and Holcim.

17The non-refunded VAT corresponds to VAT paid to suppliers, the refund of which has been claimed from the State in accordance with the law for the concerned companies, but the refund was not paid to the companies within the time limit as prescribed by the law.

EY | 89 EITI Reconciliation Report Fiscal Year 2012

The other payments are the flows that individually taken are less than 3% of the payment flows received by the State.

Note on the non-refunded VAT In a letter dated January 22nd 2015, addressed to the Minister attached to the Presidency in charge of the Strategic Resources, the Minister of Finances and Budget has precised the status of many requests of VAT refund submitted by the extractive companies for the fiscal year 2012.The letter reports on the refunds approved by the Tax General Directorate, especially during the last quarter of 2014, for a total amount of MGA 127.73 billions, which is USD 58.19 millions.

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 the main public entities or the administrations and their branches. The details per type of payment per public entity are presented in the annexes.

Payment flow per public entity

Direction Général des 3% 2% 2% 7% Impôts (DGI) 6% BCMM

Douane

OMNIS 80% CNAPS

Autres entités

As seen in the above chart, the main payment flows were paid to the Tax General Directorate representing 80% for MGA 244.35 billions which is USD 111.32 millions. The flows paid to the DGI are mostly the State Taxes (non-refunded TVA, unrecovered VAT, TFT, IR etc.) and the payment of taxes withheld 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 without counterpart on the State’s side where the unilateral statements of the extractive industries were

EY | 90 EITI Reconciliation Report Fiscal Year 2012 taken into account. As a result, to cancel the discrepancy, an adjustment of the corresponding amount has been made to the information from the State. We have classified as statements without counterpart, the payment flows to the entities the flow of which were: ► 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 were not collected (car tax…).

Statement without counterpart from the State

TVA non récupérée 6% 14%

Dépenses sociales en 12% numéraire 68% Organisation sanitaire d'entreprise Autres paiements

The total of the statements without counterpart of the State for the fiscal year 2012 is MGA 28.48 billions which is USD 12.97 millions.

As illustrated above, the statements without counterpart are essentially the unrecovered VAT representing 68% of the flows, the cash social expenditures that represent 12% of the flows and other payments representing 14% 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 than the payments made by the companies. Conversely, a discrepancy is positive when the companies have reported payments superior to the revenues received by the State.

Following our reconciliation, the total amount of the residual discrepancy amount to MGA 1.11 billions which is USD 0.50 millions for the fiscal year 2012, representing 0.36% of the total revenues received by the State.

EY | 91 EITI Reconciliation Report Fiscal Year 2012

The table below presents the details of the discrepancies: (in millions MGA) Amount paid Residual Amounts Residual by the discrepan Residual received by discrepan extractive cies discrepanci Type of tax the State cies companies (source: es (source: companie State) (1) (2) (1)-(2) s) Custom duties and taxes on oil 8,101.15 7,720.03 381.12 -851.15 1,232.27 products (TPP) Net VAT (due VAT) 11,696.96 11,370.54 326.42 -210.82 537.24 Mining rebates 3,925.82 3,728.00 197.82 203.34 -5.53 Mining royalties 1,685.17 1,584.03 101.13 87.03 14.11 Administration fees paid to OMNIS 5,067.39 5,650.23 -582.84 -582.84 0.00 CNAPS 4,871.05 5,617.88 -746.83 -752.41 5.59 Mining Administration Fees 15,632.90 16,470.37 -837.46 -557.87 -279.60 Other non significant payments 253,341.89 253,283.56 58.33 -591.99 650.32 - 304,322.32 305,424.64 -3,256.72 2,154.40 TOTAL 1,102.32

(in millions USD) Amount paid Residual Amounts Residual Residual by the discrepan received by discrepan discrepanci Type of tax extractive cies the State cies es(source: companies (source: État) (1) (2) (1)-(2) sociétés) Custom duties and taxes on oil 3.69 3.52 0.17 -0.39 0.56 products (TPP) TVA nette (TVA à payer) 5.33 5.18 0.15 -0.10 0.24 Mining rebates 1.79 1.70 0.09 0.09 -0.00 Mining royalties 0.77 0.72 0.05 0.04 0.01 Administration fees paid to OMNIS 2.31 2.57 -0.27 -0.27 - CNAPS 2.22 2.56 -0.34 -0.34 0.00 Mining Administration fees 7.12 7.50 -0.38 -0.25 -0.13 Other non significant payments 115.42 115.39 0.03 -0.27 0.30 TOTAL 138.65 139.15 -0.50 -1.48 0.98

The explanation and breakdown of the significant discrepancies are provided below:

3.2.2.4.1 Custom duties and taxes on oil products (TPP)

Les Custom duties and taxes on oil products (TPP) have shown a negative discrepancy of MGA 381.12 millions which is USD 0.17 millions for the benefit of the companies. The discrepancy is mainly composed of negative discrepancies from the companies amounting to MGA 851.15 millions and positive discrepancies from the State for MGA 1,232.27 millions. It is worth noting that the negative discrepancies are related to the flows that were traced with the Customs, but not tracedwith the companies and the positive discrepancies are those traced with the companies but not found with the Customs.

This discrepancy is mainly composed of the discrepancies traced during the reconciliations of the information from the customs and the following companies: QMM, PAM Madagascar, HOLCIM and the Ambatovy project, the details of which are presented in the following table:

EY | 92 EITI Reconciliation Report Fiscal Year 2012

(in MGA) Elements traced at the Elements traced with customs, but not with the companies, but not Residual discrepancy Company the company with the customs (2 – 1) (1) (2) QMM -651,958,161.00 863,693,054.00 211,734,893.00 PAM Madagascar - 113,434,560.00 113,434,560.00 HOLCIM -71,138,701.00 136,986,749.00 65,848,048.00 DYNATEC Madagascar -116,792,196.00 36,679,554.00 -80,112,642.00 Other companies 11,265,054.00 81,479,613.49 70,214,559.49 TOTAL -851,154,112.00 1,232,273,530.49 381,119,418.49

3.2.2.4.2 Net VAT (due VAT) The net VAT paid to the General Tax Directorate has generated a positif discrepancy of MGA 326.42 millions which is 0.15 millionswhich is mainly composed with a positive discrepancy from HOLCIM for MGA 537.14 millions and a negative discrepancy of MGA 209.46 millions which is the result of the the absence of the information from OPHIR Energy.

3.2.2.4.3 Mining rebates The mining rebates paid to the Mines Directorate have generated a total positive discrepancy of MGA 197.82 millions which is USD 0.09 millions mainly composed with a positive discrepancy of MGA 204.32 millions which are not traced at QMM and negative discrepancies with MADA AUST and KRAOMA.

3.2.2.4.4 Redevance minière The mining royalties paid to the Mines Directorate have generated a total positive discrepancy of MGA 101.13 millions which is USD 0.05 millions, discrepancies that are mainly with the QMM and Mainland.

3.2.2.4.5 Administration fees paid to OMNIS The administration fees paid to the OMNIS have generated a negative discrepancy of MGA 582.84 millions which is USD 0.27 millions.This discrepancy is mainly related to the administration fees recorded at the OMNIS on behalf of OPHIR ENERGYand PETROMAD that did not provide the canvas during the reconciliation.

3.2.2.4.6 CNAPS CNAPS has generated a total negative discrepancy of 746.83 millions which is USD 0.34 millions corresponding mainly to the contributions paid and were not reconciled with the data of the group PAM, especially those of PAM SAKOA.

3.2.2.4.7 Mining Administration fees (FAM) The mining administration fees paid to the BCMM have shown a total negative discrepancy of MGA 837.46 millions equivalent to USD 0.38 millions to the benefit of the State.

This discrepancy is mainly composed in one hand by mining administration fees traced with the BCMM and is also related to the companies that did not provide filled out and/or signed canvas which arePETRA OF MADAGASCAR (MGA – 121.64 millions), ACCRINGTON MINERALS (MGA – 328.53 millions) andENERGIZER RESSOURCES (Minerals) S.A.R.L (MGA – 91.29 millions). In the other hand, a negative discrepancy has been noted regarding the payments of mining administration fees related to licences that were disposed at the time of the reconciliation, but within the BCMM, they are still recorded to the name of the seller. This was the case of CALIBRA RESSOURCES MINERALS (CREM) that sold their licences to SINBAD. Mining administration fees are recorded with the BCMM at the name of CREM, for an amount of MGA 316.08 millions which is USD 0.14 millions.

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3.3 Entities from the Group B18

3.3.1 Schedule of the payment flows per company, within the public entities in thousands MGA (In thousands MGA) PAYMENT FLOW MINES NAME OF THE COMPANY BCMM OMNIS DIRECTOR DGI CUSTOMS ONE MICTSL/ CNAPS MININ TOTAL OMERT ANDEA ATE SMMC TER Legal persons – Mining companies 877,397.80 - 4,290.00 46,818.07 104,688.08 ------1,033,193.95 048. AVANA RESOURCES S.A.R.L.U. 92,461.20 - - 2.00 ------92,463.20 049. INTERNATIONAL MINING RESEARCH 15,680.00 - - 102.00 ------15,782.00 GROUP S.A.R.L.U 050. RECHERCHES MINIERES DE 107,878.40 - 4,290.00 1,330.05 ------113,498.45 MADAGASCAR S.A.R.L. 051. HOLA FIRM S.A.R.L. 35,270.60 - - 1,144.00 62,803.21 ------99,217.81 052. IRON ORE CORPORATION OF 100,378.40 ------100,378.40 MADAGASCAR S.A.R.L. 053. NAN TIN POLYCHROME S.A. 64,811.30 - - 15,713.84 14,582.81 ------95,107.95 054. COAL MINING MADAGASCAR S.A.R.L. 40,480.00 - - 16,045.30 27,302.06 ------83,827.36 055. INDUSTRIE MINIERE SINO-AFRIQUE 116,302.70 - - 922.41 ------117,225.11 S.A.R.L. 056. MAZOTO MINERALS S.A.R.L. 84,956.00 - - 202.00 ------85,158.00 057. INTERNATIONAL MINING 80,088.00 - - 102.00 ------80,190.00 DEVELOPMENT LTD S.A.R.L. 059. VATOSOA MINING S.A. 60,046.40 - - 10,934.47 ------70,980.87 060. CAPRICORN ENTERPRISES 79,044.80 - - 320.00 ------79,364.80 MADAGASCAR (C.E.M) S.A.R.L. Personnes physiques - Sociétés Minières 27,604.80 ------27,604.80 058. RAMAROSON Anjoanina Harivahy 27,604.80 ------27,604.80 Total payment flows 905,002.60 - 4,290.00 46,818.07 104,688.08 ------1,060,798.75

18 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.

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3.3.2 Comments

The payment flows from the extractive companies of the group B for the fiscal year 2012 that amount to MGA 1.06 millions which is USD 0.48 millionscomposed by 97% of legal persons with a flow of MGA 1.03 billions and 3% of natural persons with a flow of MGA 0.027 millions.

As noted in the chart below, the main flows for the extractive companies of the group B are the mining administration fees paid to the BCMM that amounts to MGA 905.02 millions which is USD 0.41 millions.

(in thousands MGA)

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3.4 Entities of the Group C19

3.4.1 Schedule of the payment flows per company, at the public entities inthousands MGA (en milliers de MGA) FLUX DE PAIEMENT Category MINES BCMM OMNIS DGI CUSTOMS ONE OMERT ANDEA CNAPS TOTAL DIRECTORATE MICTSL/SMMC MININTER Mining companies 1,634,855.22 - 64,946.10 131,647.47 55,354.12 10,792.04 - - - - - 1,897,594.95 Legal persons 1,282,799.82 - 42,097.30 127,904.28 48,796.37 10,792.04 - - - - - 1,512,389.81 Natural persons 352,055.40 - 22,848.80 3,743.19 6,557.75 ------385,205.14 Oil companies - 18,271.30 - 320.00 ------18,591.30 Legal persons - 18,271.30 - 320.00 ------18,591.30 Total 1,634,855.22 18,271.30 64,946.10 131,967.47 55,354.12 10,792.04 - - - - - 1,916,186.25

19Companies, 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 the obligation to fill out the reconciliation canvas, but will be subject to an agregated unilateral statement filled out by the State.

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3.4.2 Comments

The total payment flows of the extractive companies of the group C amount to MGA 1.92 billions which is USD 0.87 millions. This amount is mainly related to the mining administration fees paid to the BCMM that amounts to MGA 1.63 billions which is USD 0.74 millions.

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4 Other results

4.1 Donations-related results

In accordance with the Terms of reference for the reconciliation of 2014, the multiparty Groupe defines donation as:« any cash and in-kind transfers from themining and oil companies. It is to be noted that 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 these infrastructures, 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 infrastructures constructions, free of charge, are considered as donations. »

Donations from exctractive companies can be cash or in kind.

For 2012, the total of the donations amounts to MGA 1,421.06 millions which is USD 647,416.38, MGA 664 millions of which is cash and MGA 756.45 millions in kind.

Les tableaux ci-dessous montrent le détail des dons octroyés par société pour l’exercice 2012.

4.1.1 QIT MADAGASCAR MINERALS S.A. Amounts Description Beneficiary Amounts MGA USD Cash donations Support to sport association Sport club, Army 108,090,402.06 49,244.59 Various donations Chamber of Commerce, Community 44,451,915.00 20,251.72 Support to community Community, miscellaneous, army 36,421,333.48 16,593.09 association Miscellaneous for training Miscellaneous, Community 34,336,055.14 15,643.06 Miscellaneous Miscellaneous, army, Anosy region 23,981,767.03 10,925.78 Scolarship and educational Miscellaneous, Anosyregion, Municipality 16,566,294.00 7,547.39 assistance Support to music association Miscellaneous 11,874,693.12 5,409.96 Purchase of zebus Miscellaneous 10,500,000.00 4,783.66 KADAHA Project KADAHA Tour 4,651,696.90 2,119.25 Miscellaneous, army, Anosy region, Machinery and equipment 599,000.00 272.90 Municipality SUBTOTAL 291,473,156.73 132,791.41 Donations in kind Miscellaneous, army, Anosy region, Machinery and equipment 45,259,502.50 20,619.65 Municipality Scolarship and educational Community 33,924,800.00 15,455.70 assistance KADAHA Project KADAHA Tour 23,255,788.00 10,595.04 Miscellaneous Miscellaneous 18,729,000.00 8,532.69 Goodies Miscellaneous 16,410,568.00 7,476.44 IT equipments Miscellaneous, Community 9,984,500.00 4,548.81 Purchase of zebus Miscellaneous 9,450,000.00 4,305.30 Foodstuffs Miscellaneous, Community 6,245,200.00 2,845.23 Support to music association Miscellaneous 4,000,000.00 1,822.35

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Amounts Description Beneficiary Amounts MGA USD Chamber of Commerce, Army, Miscellaneous donations 4,000,000.00 1,822.35 Community Support to sport association Sport club, Army 2,750,000.00 1,252.86 Study for bus stop shelters Divers 2,581,906.25 1,176.28 SUBTOTAL 176,591,264.75 80,452.70 TOTAL 468,064,421.48 213,244.11

4.1.2 MADAGASCAR OIL Amounts Description Beneficiary Amounts MGA USD Donationsin cash Financial Contribution to police Telovavy 10,000,000.00 4,555.87 barracks of Ankondromena Financial contribution and transport of children during Ankondromena 9,740,000.00 4,437.42 CEPE exams District of Miandrivazo, Miandrivazo 9,246,000.00 4,212.36 donations for sinister victims Contribution to the COJM Melaky Melaky 2,000,000.00 911.18 day and COJM Melaky games OPCI fair OPCI Miandrivazo 200,000.00 91.12 Travel costs for the FRAM Ankisatra 50,000.00 22.78 teacher in Ankisatra SUB TOTAL 31,236,000.00 14,230.73 Donations in kind Construction of Ankisatra ECSON 115,503,962.10 52,622.11 Public Primary School Bush proof –water research Bush proof 64,128,891.74 29,216.30 and study folakara & ankisatra Transport of materials (school Etienne Rakotonoely 29,400,000.00 13,394.26 kits, bush proof) Pharmacie of Pharmacie d'Ankazomanga 23,387,200.00 10,654.91 Ankazomanga,medicines Purchase of toys, Maintenance Ankisatra 11,648,295.89 5,306.81 (School and hospital) Pharmadiff Pharmadiff 10,342,724.40 4,712.01 Donations of medicines PHAGDIS Salama Maintirano 5,999,335.00 2,733.22 Pharmacie Principale, Pharmacie Principale 3,989,400.00 1,817.52 medicines SNGF –training of the peasants SNGF 2,587,750.00 1,178.95 Folakara Miscellaneous purchases Commune Ankondromena 2,257,380.00 1,028.44 MEXI Trading, medical Maexi Trading 748,740.00 341.12 equipments SOAM - oxygene for medicinal SOAM 147,900.00 67.38 use Training of the peasants ABC Construction 45,600.00 20.77 Folakara SUBTOTAL 270,187,179.13 123,093.80 TOTAL 301,423,179.13 137,324.53

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4.1.3 PROJET AMBATOVY 4.1.3.1 DYNATEC MADAGASCAR S.A Description Beneficiaries Amounts MGA Amounts USD

Donations in kind SHEET MUNICIPALITYOF BRICKAVILLE 64,286,800.00 29,288.24 METAL/PLANK/FALAFA NERVURE ALUZINC UNIVERSITYOF TOAMASINA 22,267,620.00 10,144.84 GENERAL DIRECTORATE OF THE LAND SERVICE 4 LAPTOPS 20,675,200.00 9,419.35 OF TANA FULL DESKTOP GENERAL DIRECTORATE OF THE LAND SERVICE 20,187,150.00 9,197.00 COMPUTERS OF TANA 19CANS 25KG VALNYL INT UNIVERSITYOF TOAMASINA 15,522,538.00 7,071.87

GANT GARDIEN DE BUT FOKONTANY CITE CANADA TOAMASINA 10,184,800.00 4,640.06

CONSTRUCTION FOKONTANY TANANDAVA TOAMASINA 6,768,000.00 3,083.41 MATERIALSFOR BRIDGES

300 STYLO BLEUS Service de Santé de District 5,910,000.00 2,692.52

DESKTOP COMPUTER/ DIRECTION GENERALE CCIT 5,645,000.00 2,571.79 INVERTER FULL SET OF DESKTOP DISTRICT TAMATAVE II 4,996,000.00 2,276.11 COMPUTER SPRAY 16L FOKONTANY MORARANO GARA 4,817,420.00 2,194.75

JERSEYS FOKONTANY TANANDAVA TOAMASINA 4,508,000.00 2,053.79 3049KGS WHITE RICE Sinistrés communes Maroseranana, Fetraomby, 4,204,200.00 1,915.38 MAKALIOKA Anjamany INSECTICIDE-TREATED District Health Service 3,520,000.00 1,603.67 NETS RECTANGLE TABLE AGRICULTURE TRAINING IN BRICKAVILLE 2,718,748.00 1,238.63 COMPLETE SET OF MILITARY REGION 3 TAMATAVE 2,498,000.00 1,138.06 DESKTOP COMPUTER REFEREE’S JERSEY SUBURB MUNICIPALITY OF TAMATAVE 2,472,600.00 1,126.48

CONFERENCE CHAIRS REGION ATSINANANA 2,385,000.00 1,086.58

PROPELLER PAPS VOHITRAMBATO 2,364,500.00 1,077.24

6 WATER-BASED PAINT NATIONAL GENDARMERIE CIRCONSCRIPTION 1,839,583.37 838.09

SUBMERSIBLE PUMP 5" AGRICULTURAL TRAINING CENTER BRICKAVILLE 1,446,899.85 659.19

COMPUTER DESK RURAL MUNICIPALITY MORARANO GARA 1,406,000.00 640.56 DOORS 1/2 OF GLASS AND LYCEE TECHNIQUE PROFESSIONNELLE 1,260,000.00 574.04 WOODEN MORAMANGA MICROPROCESSEUR INTEL SUBURB MUNICIPALITY OF AMBOHIBARY 942,000.00 429.16 CELERON1.8 OFFICE CUPBOARD/ DESK/ MUNICIPALITY OF MORARANO GARA 840,000.00 382.69 CHAIR 14M3 FINE SAND TECHNICAL AND VOCATIONAL HIGH SCHOOL 523,600.00 238.55

SAFETY ROPE FOKONTANY CITE CANADA TOAMASINA 445,600.00 203.01

SOCCER BALL/JERSEYS FRAM EPP CITE CANADA 271,000.00 123.46 TOTAL 214,906,259.22 97,908.52

4.1.3.2 AMBATOVY MINERALS S.A Description Beneficiaries Amounts MGA Amounts USD Donations in kind Local Association locale Surveillance Training fees 18,848,000.00 8,586.91 PPL Emergency support Municipality of Ambalarondra 4,670,500.00 2,127.82 AMBLARNGRA

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Emergency support Brickaville COMMUNE BRICKAVILLE 2,729,500.00 1,243.52 TOTAL 26,248,000.00 11,958.25

4.1.4 KRAOMA Description Beneficiaries Amounts MGA Amounts USD Cash donations Donations for the renovation of the City Urbane Municipality of 120,000,000.00 54,670.45 Hall of Tamatave Toamasina Participation to the Project Betsiaka Treasury of DIANA 10,000,000.00 4,555.87 Contribution to the social component of DIANA Region 10,000,000.00 4,555.87 the DIANA region Various donations Miscellaneous 1,825,000.00 831.45 Cash donations for the Fokontany Fokontany Ampefiloha 1,305,000.00 594.54 Indemnity given to the Chancellor Chancellor 1,000,000.00 455.59 Donations given to the social Employés 317,000.00 144.42 component in the company Participation to the 'organisation of the celebration of the 50th anniversary of OECFM 160,000.00 72.89 l'OECFM Participation to the social component of the association NY HAVANA MIRAY NY HAVANA MIRAY HINA 140,000.00 63.78 HINA TOTAL 144,747,000.00 65,944.86

4.1.5 MADAGASCAR CONSOLIDATED MINING S.A. Description Beneficiaries Amounts MGA Amounts USD Cash donations Donations for the rehabilitation of the high Association FIHAMI - 52,040,300.00 23,708.89 school Laurent Botokeky Tuléar Tuléar Donations for the Association FIHAMI - rehabilitation of the EPP 35,619,090.00 16,227.60 Tuléar Saint Augustin Donations to the South South West region -Tuléar 1,500,000.00 683.38 West region SUBTOTAL 89,159,390.00 40,619.87 Donations in kind Donations of rice for the PM’s palace - victims of the cyclone 6,525,000.00 2,972.71 MAHAZOARIVO Giovanna Donations of rice to the Palais du PM - victims of the cyclone 6,525,000.00 2,972.71 MAHAZOARIVO Giovanna Donations in kind for the South West region : rice, South West region -Tuléar 2,760,000.00 1,257.42 soap, cooking, sugar SUBTOTAL 15,810,000.00 7,202.83 TOTAL 104,969,390.00 47,822.70

4.1.6 TOTAL EXPLORATION Description Beneficiaries Amounts MGA Amounts USD Cash donations

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Control and surveillance of the Rural municipality of construction works for the 22,054,467.08 10,047.73 Morafenobe Tranompokonolona Construction works for the Commune rurale de 58,629,916.10 26,711.03 Tranompokonolona Morafenobe TOTAL 80,684,383.18 36,758.76

4.1.7 HOLCIM Description Beneficiaries Amounts MGA Amounts USD Donations in kind Cement donation to the Association Miarintsoa (UNICEF’s Partner) for the Unicef 27,192,675.10 12,388.63 program Wash in urban area in the municipality of Antsirabe Donations of cement for the construction of an environmental Wildlife Conservation Society 6,760,992.00 3,080.22 campus for the MamaBaie à Landscape in Maroanstetra Donation of cement Alliance française 2,340,920.00 1,066.49 Donation of cement Ecole des Maçons 1,696,939.50 773.10 Donation of cement Commune Andranomanelatra 655,053.00 298.43 Donation of cement Commune Tritriva 555,206.60 252.94 Donation of cement Happy life 509,628.00 232.18 TOTAL 39,711,414.20 18,092.01

4.1.8 TOLIARA SANDS S.A.R.L. Description Beneficiaries Amounts MGA Amounts USD Dons en numéraire Payment of the expenses of the ADFA 8,268,117.20 3,766.85 Association ADFA SUBTOTAL 8,268,117.20 3,766.85 Donations in kind Forage Pump Vernier Municipality of Tsifanoka 5,856,000.00 2,667.92 Forage Pump Vernier Municipality of Ranobe 3,859,000.00 1,758.11 Forage Pump Vernier Municipality of Tsianishia 2,378,650.00 1,083.68 SUBTOTAL 12,093,650.00 5,509.71 TOTAL 20,361,767.20 9,276.56

4.1.9 MAINLAND Description Beneficiaries Amounts MGA Amounts USD Cash donations Schooling aid Region Antsinanana 6,000,000.00 2,733.52 Support for the construction of the Manankatafana Soanierana 2,000,000.00 911.17 market BAZAR Ivongo Contribution to the Regional fair Region Vatovavy Fitovinany 1,000,000.00 455.59 Régionale Ankarena Schooling aid Region Analanjirofo 400,000.00 182.23 Financial support to the feast of the Fokontany Anjahambe 360,000.00 164.01 fokontany Region Vatovavy Support to the region Fitovinany/District of 300,000.00 136.68 Manakara

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Description Beneficiaries Amounts MGA Amounts USD Region Vatovavy Delivering the donations to the victims 200,000.00 91.12 Fitovinany/District Manakara Environment and Forests Regional Directorate de Contribution to the JME 2012 200,000.00 91.12 l'environnement et des Forêts de Vatovavy Fitovinany Financial support to the region Region Vatovavy 200,000.00 91.12 Vatovavy Fitovinany Fitovinany/District Manakara Participation to the festival Sakilio Région Vatovavy Fitovinany 200,000.00 91.12 Contribution to the JME 2012 Region Tamatave 150,000.00 68.34 Support to the graduation of the Military Academy/ 10th 100,000.00 45.56 Malagasy Military Academy special platoon Customs Office of the port of Support to the regional team 100,000.00 45.56 Toamasina Aide social pour les jeunes de Région Tamatave 100,000.00 45.56 Toamasina à partir de FIFAFIFI Participation au FIZOMA Région Vatovavy Fitovinany 20,000.00 9.11 TOTAL 11,330,000.00 5,161.80

4.1.10 MADA-AUST SARL

Description Beneficiaries Amounts MGA Amounts USD Cash donations Support to the doctors in the South West ADFA 4,299,710.00 1,958.89 region Support to the development of the South REGION SUD 1,936,000.00 882.02 region TOTAL 6,235,710.00 2,840.91

4.1.11 MADAGASCAR WISCO GUANGXIN KAM WAH RESSOURCES S.A.U. Description Beneficiaries Amounts MGA Amounts USD Cash donations Donation for the end of the Region Boeny 1,000,000.00 455.59 year- region Boeny SUBTOTAL 1,000,000.00 455.59 Donations in kind Donations of basic commodities Fokontany Antanetibe 643,000.00 292.94 to the Fokontany Antanetibe SUBTOTAL 643,000.00 292.94 TOTAL 1,643,000.00 748.53

4.1.12 SAPETRO Description Beneficiaries Amounts MGA Amounts USD Cash donations Association of the women from the OMNIS 320,000.00 145.79 'OMNIS TOTAL 320,000.00 145.79

4.1.13 MADAGASCAR CHROMIUM COMPANY Description Beneficiaries Amounts MGA Amounts USD Donations in kind

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DONATION: 40 jerseys -site rural municipality Betrandraka 240,000.00 109.34 DONATION: 3 balls -site rural municipality Betrandraka 24,000.00 10.93 TOTAL 264,000.00 120.27

4.1.14 TANTALUM RARE EARTH Description Beneficiaries Amounts MGA Amounts USD Cash donations JAONTSOTSOLAHY Service projects Miscellaneous Associations 80,000.00 36.45 Service projects Miscellaneous Associations 20,000.00 9.11 Service projects for the elderly Miscellaneous Associations 20,000.00 9.11 TOTAL 120,000.00 54.67

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4.1.15 PROCHIMAD Description Beneficiaries Amounts MGA Amounts USD Cash donations Donations Municipality of Ambohimanjaka 31,000.00 14.12 TOTAL 31,000.00 14.12

4.2 Results related to the social expenditures

In accordance with the new EITI standard, version of July 11th 2013, :« material social expenditures by companies are mandated by law or the contract with the government that governs the extractive investment, the EITI Report must disclose and, where possible, reconcile these transactions and where reconciliation is not feasible, the EITI Report should include unilateralcompany and/or government disclosures of these transactions.» For the fiscal year 2012, the total social expenditures disclosed by the extractive companies amount to MGA 4,489 billions which is equivalent to USD 2,045,340.38, and MGA 3,581 millions of which is cash and MGA 907 millions in kind. The tables below disclose the details of the social expenditures made by the companies for the fiscal year 2012.

4.2.1 QMM References of the law or the contract Description Beneficiaries Amounts MGA Amounts USD with the gouvernment Cash social expenditures PDI20 Mandena Community Not provided 1,048,531,011.60 477,697.19 Transfer Clairefontaine Community Not provided 811,132,287.55 369,541.40 FAFAFI Project (PDI) Community Not provided 452,859,463.20 206,316.93 ASOS Project (PDI) Community Not provided 226,252,200.00 103,077.58 MANOA Project (PDI) Community Not provided 202,194,200.00 92,117.07 APICULTURE Project (PDI) Community Not provided 182,561,430.90 83,172.63 Construction Community Not provided 177,441,817.53 80,840.20 AGRIVET Project (PDI) Community Not provided 121,707,620.60 55,448.42 Miscellaneous, Miscellaneous Not provided 77,815,488.61 35,451.73 Community Lost acces compensation Community Not provided 25,727,170.00 11,720.97 HIMO Project (PDI) Community Not provided 20,392,006.50 9,290.33 Training Community Not provided 15,142,500.00 6,898.73 Tourism Community Not provided 10,568,864.00 4,815.04 Study contract Miscellaneous Not provided 10,557,000.00 4,809.63 Scholarship and schooling aid Community Not provided 5,040,000.00 2,296.16 Ministry of strategic Geology Symposium Participation Not provided 3,000,000.00 1,366.76 resources TOTAL 3,390,923,060.49 1,544,860.78

20 Projet de Développement Intégré (Integrated Development Project)

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4.2.2 MAINLAND MINING LTD S.A.R.L.U References of the law Amounts Description Beneficiaries or the contract with Amounts MGA USD the gouvernment Cash social expenditures Assessment of social Fenerive Est- Soanierana N°10/12/MINDEC/S actions made by 1,816,000.00 827.35 Ivongo - G/DGRD/DADGL Mainland Mining SUBTOTAL 1,816,000.00 827.35 Social expenditures in kind Maintenance of RN5 Atsinanana Region 739,772,217.00 337,030.67 (national road) SUBTOTAL 739,772,217.00 337,030.67 TOTAL 741,588,217.00 337,858.02 4.2.3 EAX References of the law or the Description Beneficiaries contract with Amounts MGA Amounts USD the gouvernment Cash social expenditures Urban municipality of Office Construction for the 107PROJECTS2 Ambilobe - District 99,945,905.91 45,534.06 Fokontany Antafiakasaka 6581RQ Ambilobe Fokontany West SIRAMA – Rural Construction of 3 classrooms 107PROJECTS2 municipality of 29,864,759.45 13,606.00 with 2 boxes restrooms 7248RQ Antsohimbondrona - District Ambilobe Fokontany Anjavibe - Construction of 3 classrooms 107PROJECTS2 Rural municipality - 28,971,671.46 13,199.12 with 2 boxes restrooms 7245RQ District Ambilobe 158,782,336.8 TOTAL 72,339.18 2

4.2.4 AMBATOVY PROJECT 4.2.4.1 DYNATEC MADAGASCAR S.A

References of the law or the Description Beneficiaries Amounts MGA Amounts USD contract with the gouvernment Social expenditures in kind School supplies CP1 CP2 Vohitrambato Not provided 82,989,800.00 37,809.08 Fokontany Berano Medicines Municipality of Not provided 10,349,220.00 4714.97 Ambohibary People living along the Not provided Pamphlets 10,223,000.00 4657.47 pipeline route Bags of white rice PAPS Tanandava Not provided 9,625,000.00 4,385.03 Writing copybook Not provided 1200 bottles of sur'eau Black sheath de 15cm PAPS Vohitrambato 7,129,275.33 3248 Lime 4kg 60 semi-metal chairs

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References of the law or the Description Beneficiaries Amounts MGA Amounts USD contract with the gouvernment POPULATION of Not provided Manure 5,680,000.00 2,587.73 Vohitrambato/Marovato People living along the Not provided PP non-woven metallic pipeline route between 5,260,000.00 2,396.39 bag/draft costs Moramanga and Toamasina Fokontany Not provided Cement bags Manda 4,004,780.00 1,824.53 Tanandava/Toamasina School fees of the Not provided Enfants PAPS boursiers Ambatovy scholarship 3,860,300.00 1,758.70 camp holders Students in the School supplies secondary school in Not provided 3,646,333.33 1661.22 Vohitrambato 432 round timbers/72 PAPS glissés Tailings Not provided 3,618,000.00 1,648.31 falafa wall (purchase of materials) Payment of the expenses incurred during exchange Ambatovy Not provided 2,398,000.00 1,092.50 visit Soamahatsinjo tailings, Kininina square timbers Not provided 2,003,950.00 912.97 School Basket of basic Population Not provided 1,777,000.00 809.58 commodities inVohitrambato Protective metal grill cover Technical-vocational High Not provided 1,589,499.99 724.16 LTP MRG school Illustration on the SRA Not provided District of Brickaville 750,000.00 341.69 youth - 24 ans PAPS children Not provided 10 board folders scholarship holders from 712,000.00 324.38 the camp PAPS children Not provided Plastic board folders scholarship holders from 518,000.00 235.99 the camp Nitrile gloves District Health Service Not provided 398,250.00 181.44 PGEDS - Child protection Not provided Black permament marker 385,000.00 175.4 program Basic health center Not provided Lohmann ster compress 360,204.20 164.11 Vohitrambato 8 plastic brooms CAP EPP Vohitrambato Not provided 327,400.00 149.16 Wheel barrow Community Not provided 280,000.00 127.56 TOTAL 157,885,012.85 71,930.37

4.2.4.2 AMBATOVY MINERALS S.A

References of the law or the Amounts Description Beneficiaries Amounts USD contract with the MGA gouvernment Social expenditures in kind Municipality of Drinking water supply Not provided 2 428 100,00 1 106,21 Seranantsara TOTAL 2 428 100,00 1 106,21

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4.2.5 SAPETRO References of the law or the Description Beneficiaries Amounts MGA Amounts USD contract with the gouvernment Cash social expenditures Well installation budget 30% FANOITRA NGO Not provided 5,329,200.00 2,427.91 Adult literacy - 30% social budget FANOITRA NGO Not provided 5,154,625.00 2,348.38 VONY Not provided School kits distribution 4,396,000.00 2,002.76 ASSOCIATION Setup monitoring mission vony FANOITRA NGO Not provided 4,108,000.00 1,871.55 Budget installation alphabétisation FANOITRA NGO Not provided 4,081,000.00 1,859.25 Remaining adult literacy FANOITRA NGO Not provided 3,081,000.00 1,403.66 First installment for well FANOITRA NGO Not provided 2,180,000.00 993.18 VONY Not provided Children education debit note 1,970,000.00 897.51 ASSOCIATION SUBTOTAL 30,299,825.00 13,804.21 Social Expenditures in kind MITIA LE Not provided Account school kits 2,925,000.00 1,332.59 MARQUEUR MITIA LE Not provided School kits : rest of 50% account 2,292,500.00 1,044.43 MARQUEUR School kits BADRI Not provided 2,205,000.00 1,004.57 Moving school kits to maintirano TRANSMELAKY Not provided 131,712.00 60.01 SUBTOTAL 7,554,212.00 3,441.60 TOTAL 37,854,037.00 17,245.81

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4.3 Results with the decentralised authorities

The decentralised authorities, such as the regions and the municipalities, receive mining rebates and administration fees, property taxes on built property and Property taxes on lands. These are the main payment flows received by these authorities in 2012.

4.3.1 Mining rebates

Mining rebates are local taxes due on the value of mining products at their first sale. They are paid by the mining companies during the exploitation phase.

Mining rebates are calculated by using a percentage of the quantities exported by the mining companies.

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 from the 4 companies who are in their exploitation phase during the fiscal year 2012: HOLCIM, QMM, MAINLAND and ETS GALLOIS.

The following tables display the reconciliation of the rebates paid by the mining companies and the amounts received by the municipalities and the regions, in MGA and in USD. (In MGA) Amounts received by Mining Amounts paid by Municipality/Region the Discrepancies Company the company municipalities/regions Municipality of Ampasimadinika Tamatave ETS GALLOIS 4,491,078.90 4,491,078.90 0,00 Region of Tamatave ETS GALLOIS 4,197,270.00 4,197,270.00 0,00 Municipality of Sahamatevina Tamatave ETS GALLOIS 3,819,515.70 3,819,515.70 0,00 Province of Tamatave ETS GALLOIS 1,399,090.00 1,399,090.00 0,00 Municipality of Anjahamana Tamatave ETS GALLOIS 83,945.40 83,945.40 0,00 Municipality of Ibity HOLCIM 31,720,156.00 30,805,740.00 914 416,00 Region of Vakinankaratra HOLCIM 23,584,669.20 23,584,669.20 0,00 Municipality of Tritriva HOLCIM 10,621,994.00 10,621,994.00 0,00 Municipality of Andranomanelatra HOLCIM 4,827,188.00 0.00 4 827 188,00 Municipality of Soanierana-Ivongo MAINLAND 95,035,867.92 89,874,403.92 5 161 464,00 Region of Analanjirofo MAINLAND 73,811,998.68 70,725,703.84 3 086 294,84 Municipality of Ampasina Maningory MAINLAND 38,142,111.84 35,989,237.20 2 152 874,64 Municipality of Ampasimbe Manatsatrana MAINLAND 14,446,017.60 14,446,017.60 0,00 Region of Anosy QMM 1,072,172,418.64 934,314,068.00 137 858 350,64 Municipality of Ampasy Nahampoana QMM 1,072,172,418.64 934,314,068.00 137 858 350,64 Municipality of Mandromodromotra QMM 536,086,209.32 468,804,956.00 67 281 253,32 Municipality of Fort Dauphin QMM 536,086,209.32 422,295,949.00 113 790 260,32 Total 3,522,698,159.17 3,049,767,706.76 472,930,452.41

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(In USD) Amounts received by Amounts paid Municipality/Region Mining company the Discrepancies by the company municipalities/regions Municipality of Ampasimadinika Tamatave ETS GALLOIS 2,046.08 2,046.08 0,00 Region of Tamatave ETS GALLOIS 1,912.22 1,912.22 0,00 Municipality of Sahamatevina Tamatave ETS GALLOIS 1,740.12 1,740.12 0,00 Province of Tamatave ETS GALLOIS 637.41 637.41 0,00 Municipality of Anjahamana Tamatave ETS GALLOIS 38.24 38.24 0,00 Municipality of Ibity HOLCIM 14,451.29 14,034.70 416,60 Region of Vakinankaratra HOLCIM 10,744.87 10,744.87 0,00 Municipality of Tritriva HOLCIM 4,839.24 4,839.24 0,00 Municipality of Andranomanelatra HOLCIM 2,199.20 0.00 2 199,20 Municipality of Soanierana-Ivongo MAINLAND 43,297.11 40,945.62 2 351,50 Region of Analanjirofo MAINLAND 33,627.79 32,221.72 1 406,08 Municipality of Ampasina Maningory MAINLAND 17,377.05 16,396.23 980,82 Municipality of Ampasimbe Manatsatrana MAINLAND 6,581.42 6,581.42 0,00 Region of Anosy QMM 488,467.91 425,661.43 62 806,49 Municipality of Ampasy Nahampoana QMM 488,467.91 425,661.43 62 806,49 Municipality of Mandromodromotra QMM 244,233.96 213,581.49 30 652,47 Municipality of Fort Dauphin QMM 244,233.96 192,392.58 51 841,37 Total 1 604 895,81 1,389,434.80 215,461.01

The main discrepancies are related to the following locations:

a) Andranomanelatra, beneficiary of the payments made by HOLCIM, that were not received by the municipality in 2012 but received in 2013;

b) Region of Anosy, municipality of Ampasy Nahampoana, municipality of Mandromodromotra and municipality of Fort Dauphin, beneficiaries of the rebates payments made by QMM part of which was not reconciled with the authorities, due to unsufficient supporting documentation and payments that were not traced with the municipalities.

Discrepancies were noted at each stage of the reconciliation of the rebates from QMM, details are provided below:

A B C D E Treasury of QMM Mines Minicipalities Autonomous Province Taolagnaro 3,573,908,062.14 3,369,862,653.08 3,114,380,224.00 2,759,729,041.00 311,438,028.00 A-B A-C C-D-E Discrepancies 204,045,409.06 459,527,838.14 43,213,155.00

c) Municipality of Ampasimbe Manantsatrana, Municilality of Ampasina Maningory and the Region of Analanjirofo, beneficiaries of the rebates paid by MAINLAND of which part of the amounts paid could not be reconciled with the authorities due to unsufficient supporting documentation.

4.3.2 Mining administration fees

The mining administration fees presented hereafter are related to the shares intended to the municipalities and the regions related to the administration fees paid by the companies selected in the Group A.

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4.3.2.1 Administration fees paid by the BCMM to the decentralised authorities as for the fiscal year 2012 for the mining companies from the group A (MGA and USD) : Amounts Amounts received by the received by the Total amounts received Companies municipalities regions (In thousands (In thousands (In thousands (In thousands MGA) MGA) MGA) USD) ACCESS MADAGASCAR S.A.R.L. 7,459.28 4,351.25 11,810.53 5.38 ACCRINGTON MINERALS S.A. 39,423.74 22,997.18 62,420.93 28.44 AMBATOVY MINERALS S.A. 12,944.99 7,551.25 20,496.24 9.34 CALIBRA RESOURCES & ENGINEERS 31,307.95 18,262.97 49,570.92 22.58 MADAGASCAR S.A.R.L.U CLASSIC REAL STONES S.A.R.L. 6,739.58 3,931.42 10,671.01 4.86 DYNATEC MADAGASCAR S.A 22,964.58 13,396.01 36,360.59 16.57 ENERGIZER RESSOURCES (Minerals) S.A.R.L. 10,955.14 6,390.50 17,345.63 7.90 GALLOIS Etablissement 11,243.10 6,558.48 17,801.58 8.11 GOLD SAND S.A.R.L. 113,038.72 65,939.25 178,977.97 81.54 GRANITEX S.A.R.L. 2,048.41 1,194.91 3,243.32 1.48 INTERNATIONAL MINING CORPORATION LTD 13,270.75 7,741.27 21,012.02 9.57 S.A.R.L. KRAOMA S.A. 27,049.68 15,778.98 42,828.66 19.51 LABRADOR MADAGASCAR - 3,270.72 1,907.92 5,178.64 2.36 MADA-AUST S.A.R.L. 69,545.11 40,567.98 110,113.09 50.17 MADAGASCAR CHROMIUM COMPANY LTD 119,600.35 69,766.87 189,367.22 86.27 S.A.R.L.U MADAGASCAR CONSOLIDATED MINING S.A. 28,480.55 16,613.65 45,094.20 20.54 MADAGASCAR INTERNATIONAL TAK MINING 80,570.23 46,999.30 127,569.53 58.12 S.A.R.L. MADAGASCAR MINING INVESTMENTS 15,020.46 8,761.94 23,782.40 10.83 S.A.R.L.U. MADAGASCAR MINING RESOURCES LTD 64,357.52 37,541.89 101,899.41 46.42 S.A.R.L. MADAGASCAR RESSOURCES S.A.R.L. 19,618.56 11,444.16 31,062.72 14.15 MAINLAND MINING LTD S.A.R.L.U 164,813.80 96,141.38 260,955.18 118.89 MINERAL PRODUCTS INTERNATIONAL 31,615.16 18,442.18 50,057.34 22.81 GROUP S.A.R.L. MINVEST MADAGASCAR S.A.U. 37,961.71 22,144.33 60,106.04 27.38 NOVA RESOURCES S.A.R.L.U 122,319.42 71,353.00 193,672.42 88.23 PAM Atomique S.A 77,442.96 45,175.06 122,618.02 55.86 PAM Madagascar S.A 332,989.86 194,244.09 527,233.95 240.20 PAM SAKOA COAL S.A. 8,828.93 5,150.21 13,979.14 6.37 PETRA OF MADAGASCAR S.A.R.L. 20,818.94 12,144.38 32,963.33 15.02 PROCHIMAD MINES & CARRIERES SA 449.69 262.32 712.01 0.32 PROCHIMAD S.A. 1,328.41 774.91 2,103.32 0.96 RED GRANITI MADAGASCAR S.A.R.L. -245.76 -143.36 -389.12 -0.18 TANETY LAVA S.A.R.L. 12,002.98 7,001.74 19,004.71 8.66 TANTALUM RARE EARTH (MALAGASY) 14,489.12 8,451.99 22,941.11 10.45 S.A.R.L.U TOLIARA SANDS S.A.R.L. 7,018.85 4,094.33 11,113.18 5.06 UNIVERSAL EXPLORATION MADAGASCAR 14,768.57 8,615.00 23,383.57 10.65 S.A.R.L. URAMAD S.A 34,305.70 20,011.66 54,317.36 24.75 VELONAODY Fabien 15,968.71 9,315.08 25,283.79 11.52 TOTAL 1,595,786.50 930,875.46 2,526,661.95 1,151.11

4.3.2.2 Administration fees of which the payments to the municipalities are still pending

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The table below presents the mining administration fees paid by the permit holders companies from the group A, but not paid in accordance with the allocation defined by the law.

Amount of which the payment is still pending Company (In thousands MGA) (In thousands USD) ACCESS MADAGASCAR S.A.R.L. 20,171.63 9.19 AMBATOVY MINERALS S.A. 9,495.39 4.33 CALIBRA RESOURCES & ENGINEERS MADAGASCAR S.A.R.L.U 3,678.48 1.68 CLASSIC REAL STONES S.A.R.L. 2,400.00 1.09 DYNATEC MADAGASCAR S.A 419.10 0.19 GALLOIS Etablissement 18,193.38 8.29 GOLD SAND S.A.R.L. 5,273.03 2.40 GRANITEX S.A.R.L. 221.03 0.10 HOLCIM Industrie S.A. 1,962.43 0.89 INTERNATIONAL MINING CORPORATION LTD S.A.R.L. 2,760.48 1.26 KRAOMA S.A. 19,627.63 8.94 MADA-AUST S.A.R.L. 1,242.22 0.57 MADAGASCAR CHROMIUM COMPANY LTD S.A.R.L.U 10,111.54 4.61 MADAGASCAR CONSOLIDATED MINING S.A. 163.58 0.07 MADAGASCAR INTERNATIONAL TAK MINING S.A.R.L. 1,876.10 0.85 MADAGASCAR MINING INVESTMENTS S.A.R.L.U. 8,521.81 3.88 MADAGASCAR MINING RESOURCES LTD S.A.R.L. 14,316.16 6.52 MADAGASCAR WISCO GUANGXIN KAM WAH RESSOURCES S.A.U. 8,465.47 3.86 MAINLAND MINING LTD S.A.R.L.U 32,012.10 14.58 MINERAL PRODUCTS INTERNATIONAL GROUP S.A.R.L. 1,796.87 0.82 MINVEST MADAGASCAR S.A.U. 4,979.09 2.27 NOVA RESOURCES S.A.R.L.U 30,156.08 13.74 PAM Atomique S.A 65,116.66 29.67 PAM Madagascar S.A 118,580.89 54.02 PETRA OF MADAGASCAR S.A.R.L. 10,146.82 4.62 PROCHIMAD MINES & CARRIERES "P.M.C" SA 3,147.62 1.43 PROCHIMAD S.A. 429.16 0.20 RED GRANITI MADAGASCAR S.A.R.L. -2,780.16 -1.27 TANETY LAVA S.A.R.L. 3,864.67 1.76 TANTALUM RARE EARTH (MALAGASY) S.A.R.L.U 1,205.72 0.55 UNIVERSAL EXPLORATION MADAGASCAR S.A.R.L. 1,426.25 0.65 URAMAD S.A 7,653.59 3.49 VELONAODY Fabien 536.76 0.24 TOTAL 407,171.58 185.50

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 Commitee are kept in a suspense account within the BCMM as these structures are not actually set up. Moreover, the shares of the FAM of 2012 that is intended to the Gold Agency are managed by BCMM on behalf of the Gold Agency and the shares of the Mine and Environment Police are managed by the Ministry of Mines on their behalf. We have not received a certified statement from the BCMM confirming that these funds are available in their bank account.

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The allocation per entity is detailed in the table below: Mines Mines and Autonomous National Gold Paying company Environment Total province 5% Commitee Agency 2% Police 8% 5% (In (In (In (In (In (In thousands thousands thousands thousands thousands thousands MGA) MGA) MGA) MGA) MGA) de USD) ACCESS MADAGASCAR 8,404.85 13,447.75 8,404.85 3,361.94 33,619.38 15.32 S.A.R.L. AMBATOVY MINERALS S.A. 3,956.41 6,330.26 3,956.41 1,582.57 15,825.65 7.21 CALIBRA RESOURCES & ENGINEERS MADAGASCAR 1,532.70 2,452.32 1,532.70 613.08 6,130.80 2.79 S.A.R.L.U CLASSIC REAL STONES 1,000.00 1,600.00 1,000.00 400.00 4,000.00 1.82 S.A.R.L. DYNATEC MADAGASCAR S.A 174.63 279.40 174.63 69.85 698.50 0.32 GALLOIS Etablissement 7,580.58 12,128.92 7,580.58 3,032.23 30,322.30 13.81 GOLD SAND S.A.R.L. 2,197.10 3,515.35 2,197.10 878.84 8,788.38 4.00 GRANITEX S.A.R.L. 92.10 147.35 92.10 36.84 368.38 0.17 HOLCIM Industrie S.A. 817.68 1,308.29 817.68 327.07 3,270.72 1.49 INTERNATIONAL MINING 1,150.20 1,840.32 1,150.20 460.08 4,600.80 2.10 CORPORATION LTD S.A.R.L. KRAOMA S.A. 8,178.18 13,085.09 8,178.18 3,271.27 32,712.72 14.90 MADA-AUST S.A.R.L. 517.59 828.14 517.59 207.04 2,070.36 0.94 MADAGASCAR CHROMIUM 4,213.14 6,741.02 4,213.14 1,685.26 16,852.56 7.68 COMPANY LTD S.A.R.L.U MADAGASCAR CONSOLIDATED 68.16 109.06 68.16 27.26 272.64 0.12 MINING S.A. MADAGASCAR INTERNATIONAL TAK MINING 781.71 1,250.74 781.71 312.68 3,126.84 1.42 S.A.R.L. MADAGASCAR MINING 3,550.76 5,681.21 3,550.76 1,420.30 14,203.02 6.47 INVESTMENTS S.A.R.L.U. MADAGASCAR MINING 5,965.07 9,544.10 5,965.07 2,386.03 23,860.26 10.87 RESOURCES LTD S.A.R.L. MADAGASCAR WISCO GUANGXIN KAM WAH 3,527.28 5,643.65 3,527.28 1,410.91 14,109.12 6.43 RESSOURCES S.A.U. MAINLAND MINING LTD 13,338.38 21,341.40 13,338.38 5,335.35 53,353.50 24.31 S.A.R.L.U MINERAL PRODUCTS INTERNATIONAL GROUP 748.70 1,197.91 748.70 299.48 2,994.78 1.36 S.A.R.L. MINVEST MADAGASCAR S.A.U. 2,074.62 3,319.39 2,074.62 829.85 8,298.48 3.78 NOVA RESOURCES S.A.R.L.U 12,565.04 20,104.06 12,565.04 5,026.01 50,260.14 22.90 PAM Atomique S.A 27,131.94 43,411.10 27,131.94 10,852.78 108,527.76 49.44 PAM Madagascar S.A 49,408.71 79,053.93 49,408.71 19,763.48 197,634.82 90.04 PETRA OF MADAGASCAR 4,227.84 6,764.54 4,227.84 1,691.14 16,911.36 7.70 S.A.R.L. PROCHIMAD MINES & 1,311.51 2,098.42 1,311.51 524.60 5,246.04 2.39 CARRIERES "P.M.C" SA PROCHIMAD S.A. 178.82 286.10 178.82 71.53 715.26 0.33 RED GRANITI MADAGASCAR -1,158.40 -1,853.44 -1,158.40 -463.36 -4,633.60 -2.11 S.A.R.L. TANETY LAVA S.A.R.L. 1,610.28 2,576.45 1,610.28 644.11 6,441.12 2.93 TANTALUM RARE EARTH 502.39 803.82 502.39 200.95 2,009.54 0.92 (MALAGASY) S.A.R.L.U UNIVERSAL EXPLORATION 594.27 950.83 594.27 237.71 2,377.08 1.08 MADAGASCAR S.A.R.L.

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Mines Mines and Autonomous National Gold Paying company Environment Total province 5% Commitee Agency 2% Police 8% 5% (In (In (In (In (In (In thousands thousands thousands thousands thousands thousands MGA) MGA) MGA) MGA) MGA) de USD) URAMAD S.A 3,189.00 5,102.40 3,189.00 1,275.60 12,755.99 5.81 VELONAODY Fabien 223.65 357.84 223.65 89.46 894.60 0.41 TOTAL 169,654.83 271,447.72 169,654.83 67,861.93 678,619.30 309.17

4.3.3 Property taxes on built property (IFPB)

Property taxes on built property that were paid by HOLCIM et KRAOMA, and were reconciled are detailed as follows: (In MGA) Amounts received by Amounts paid by Municipality/Region Company the Discrepancies the company municipalities/regions Rural Municipality of Ibity HOLCIM 9,034,567.00 8,881,308.00 153,259.00 Municipality of Brieville KRAOMA S.A. 8,149,500.00 8,153,500.00 -4,000.00 TOTAL 17,184,067.00 17,034,808.00 149,259.00

(In USD) Amounts received by Amounts paid by Municipality/Region Company the Discrepancies the company municipalities/regions Rural Municipality of Ibity HOLCIM 4,116.03 4,046.21 69.82 Municipality of Brieville KRAOMA S.A. 3,712.81 3,714.63 -1.82 TOTAL 7,828.84 7,760.84 68.00

We have noted non-significant discrepancies during the reconciliation.

4.3.4 Property tax on lands (IFT)

The property taxes on lands that were paid by AMBATOVY MINERALS S.A. are presented below: (In MGA) Amounts received by Amounts paid by the Municipality/Region the Discrepancies company municipalities/regions Rural municipality of Ambohibary 11,000,000.00 11,000,000.00 0.00 TOTAL 11,000,000.00 11,000,000.00 0.00

(In USD) Amounts received by Amounts paid by the Municipality/Region the Discrepancies company municipalities/regions Rural Municipality of Ambohibary 5,011.46 5,011.46 0.00 TOTAL 5,011.46 5,011.46 0.00

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The property taxes on lands that were paid by QMM and KRAOMA are detailed as follows: Amounts paid by Amounts paid by Municipality/Region Company the company (in the company (in MGA) USD) Domaines Taolagnaro QIT MADAGASCAR MINERALS SA 2,201,000.00 1,002.75 Municipality of Ampanefy KRAOMA S.A. 14,800.00 6.74 TOTAL 2,215,800.00 1,009.49

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

In accordance with the provisions in the sections 3.7 and 3.8 of the EITI standard of 2013, the use of these revenues within the municipalities and regions practicing the participatory budget was highlighted in the reconciliation.

The participatory budget is a process as well as an instrument with which the population can determine how the public resources will be used, mainly a part of or the overall investment budget of the local community.

Thus, the reconciliation report displays the sharing of the revenues put in the State budget and from the extractive industries, as well as the information regarding the use of these funds to the benefiting entities.

During the fiscal year 2012, the participatory budget has been collected for the regions and the municipalities that benefit from the payment flows of the following main mining companies that are currently in their exploitation phase: AMBATOVY MINERALS, HOLCIM, QMM and KRAOMA.

4.3.5.1 Participatory budget: Municipality of Ambohibary – District of Moramanga (AMBATOVY MINERALS S.A.) Resources Uses Caption Amount Caption Amount Property Tax on Land (IFT) 2008- 11,000,000.00 Overheads (staff costs, supplies) 7,700,000.00 2009 of AMBATOVY paid in 2012 Purchase of cement for the construction of the stadium wall 3,300,000.00 Ambohibary TOTAL 11,000,000.00 TOTAL 11,000,000.00

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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: Ibity Year: 2012 - 2013 (In MGA) Resources Use Caption Amount Caption Amount 31,720,156.0 Mining rebates 2013 Municipality staff costs 0 Housing of gendarmes, Landline, 30,805,740.0 Mining rebates 2012 “quartier mobile”, salaries of 0 gendarmes 62,525,896.0 TOTAL TOTAL Not provided 0

Authority: Tritriva Year: 2012 - 2013 (In MGA) Resources Use Caption Amount Caption Amount 12,558,078.0 Mining rebates 2013 Municipality’s account 0 10,621,994.0 Municipality’s staff costs, share of Mining rebates 2012 0 schools, inter-fokontany roads 23,180,072.0 TOTAL TOTAL Not provided 0

Authority: Andranomanelatra Year: 2012 - 2013 (In MGA) Resources Use Caption Amount Caption Amount 10,613,799.0 Mining rebates 2013 Budget for overheads 0 Municipality’s staff costs, electricity, Mining Administration Fees 2,487,735.38 high school’s teacher salary 13,101,534.3 TOTAL TOTAL Not provided 8

The related authorities mentioned that the use of the payment flows from HOLCIM, however, they did not provide accurate amounts.

4.3.5.3 Participatory budget: Rural municipality of Ampasy Nahampoana (QMM) (in MGA) Resources Use Caption Amount Caption Amount INVESTMENT Miscellaneous constructions (sports field, meeting room, Rebates 2012 934 314 068,00 466,045,079.00 housing for 28 families, warehouse, stables, nurseries)

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(in MGA) Resources Use Caption Amount Caption Amount Road rehabilitation,sundry arrangements, bridge 112,412,031.00 construction, Staff costs, external service provides, miscellaneous 105,561,135.00 indemnities Contributions de the expenditures on education, health, sports, 83,362,290.00 fokontany Purchase of a municipality bus, 75,158,117.00 maintenance and fuel Holdback on various 38,266,632.00 infrastructures Miscellaneous festivals, 18,691,984.00 inaugurations, receptions Participation on equipments and 12,452,300.00 materials for a church Roadway (street sweeping) 3,150,000.00 SUBTOTAL 934,314,068.00 SUBTOTAL 934,314,068.00 FONCTIONNEMENT Office supplies, mailing, printing, Passes 15,000,000.00, 4,427,964.00 copies, bookbinding Travel expenses 4,055,763.00 Participation to a world day 2,410,000.00 Transfer charges (vehicles) 1,399,000.00 Addition costs to the fence 935,785.00 rehabilitation, road maintenance Tools and equipments 662,000.00 Water and electricity consumption, 556,988.00 insurance Furniture maintenance, CSB II, 552,500.00 Town hall, Schools SUBTOTAL 15,000,000.00 SUBTOTAL 15,000,000.00 TOTAL 949,314,068.00 TOTAL 949,314,068.00

4.3.5.4 Participatory budget: Municipality of Mandromodromotra (QMM)

Resources Use Caption Amount Caption Amount Road construction and Mining rebates QMM 468,804,956.00 248,173,184.70 arrangement Staff costs, sundry indemnities, Report 2011 89,661,599.00 79,236,932.00 health Meals (meeting, new year, Operating grants 12,000,000.00 41,119,380.00 independance day) Miscellaneous supports (schooling, Test fees 9,168,000.00 17,444,145.00 social, sports) Tools and equipment, office Civil status and health grant 800,000.00 16,960,410.00 supplies Action support 500,000.00 Overheads, electricity 15,471,304.00

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Miscellaneous administrative taxes Fuel, vehicle maintenance (Civil status, technical 350,500.00 9,174,000.00 (motorbike) specifications) Participation OPCI (municipal 2,578,383.60 association) Bank charges, petty cash 588,000.00 TOTAL 581,285,055.00 TOTAL 430,745,739.30

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4.3.5.5 Participatory budget: Municipality of Antsiafabositra, Antanimbary, Maevatanana II (KRAOMA) Authority: Municipality of Antsiafabositra Year: 2012 (In MGA) Resources Use Caption Amount Caption Amount Repairs for the room of the town Mining administration fees 16,796,044.80 11,063,487.00 hall 4 months wages for the staff 5,495,354.56 TOTAL 16,796,044.80 TOTAL 16,558,841.56

Municipality of Authority: Antanimbary Year: 2012 (In MGA) Resources Use Caption Amount Caption Amount Mining administration fees 2,675,112.00 Salary and indemnités de fonction 2,780,000.00 Rehabilitation (2 buildings in the Mining administration fees 2,040,000.00 municipality and the Secondary 2,195,000.00 School) Other overheads for the rural Mining administration fees 803,606.40 municipality (Office supplies, fuel, 474,080.40 etc….) Mining administration fees 733,968.00 TOTAL 6,252,686.40 TOTAL 5,449,080.40

Authority: Municipality of Maevatanana II Year: 2012 (In MGA) Resources Use Caption Amount Caption Amount Mining administration fees 13,742,176.80, Unpaid wages 13,792,500.00 TOTAL 13,742,176.80, TOTAL 13,792,500.00

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5 Observations et recommendations

The follow-up on the previous recommendations as well as the new recommendations from the reconciliation of 2012 are presented below.

5.1 Follow-up of previous recommendations

5.1.1 Recommendations for EITI

Section Observations Recommendations Follow-up Willingness of the Mining companies often We believe that mutual Recommendation extractive companies to find it difficult to make dialogues, respect and maintained. be part of theavailable any part of trust between the Tax reconciliation information and data Administration and the We sensed the lack of related to paid taxes. extractive companies are trust during our crucial for transparency. interventions while Their behaviour, Thus we recommend that collecting the although voluntary to the these principles are information and while EITI process, can be observed over time by performing the described as the extractive companies verification of the contradictory. Indeed a and the public supporting persistent distrust, administrations as of documentations within justified or not, for the now to ensure the extractive Tax Administration or its integration of the EITI companies. third parties is usually process. constated. Mining companies fear that their information generates harmful problems or polemics that may affect their brand, reputation or interests, or that it will be used for purposes other than transparency. Improvement the scope A company included in We recommend to the Recommendation of the reconciliation the scope of EITI to exclude from the maintained. reconciliation has been reconciliation companies OPHIR MADAGASCAR subject of a takeover by already dissolved at the was dissolved in 2013. another company at a time of reconciliation. We could not obtain date subsequent to the information related to period of reconciliation. this company. Thus we encountered difficulties in obtaining a canvas completed and signed by an appropriate official. The former employees of the sold company, the only people with a good knowledge of its payments and activities, are no longer available, while those of the

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Section Observations Recommendations Follow-up acquiring company are hesitant about signing a document that they cannot certify the accuracy, due to lack of complete and accurate information.

5.1.2 General recommendations (companies and administrations)

Section Observations Recommendations Follow-up Distinction of revenues Some companies We recommend, for the Recommendation by sector for companies included in the scope of companies and the State, maintained. with several activities reconciliation carry to implement a system of several activities, registration that allow to includind those related to distinguish well the extractive activities. revenues from each sector of activity of a They have a NIF company. registered at the tax authorities. Declarations and payments related to these companies, all activities combined, are linked to that number.

Therefore, for some taxes and duties declarations, it was impossible to distinct payments related to mining activities with other activities not included in the reconciliation (as for the IRSA). Indeed, the tax administration data does not distinguish payments by activity. Implementation of Mining companies We recommend, for the Recommendation means of monitoring voluntary in the EITI State and companies, to maintained. customs and tax process benefit from implement procedures specific tax and customs that will ensure the rules. However,

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Section Observations Recommendations Follow-up systems specific to the payments of custom application of rules mining industry duties and Import VAT applicable to mining not conform to their companies. specific rules were still found. These mistakes might be due to a lack of knowledge of the specific rules applicable to their projects. Payments of these companies are based on freight bills that do not specify the nature of the cleared goods. In addition, some statements were not available during the audit of reconciliation to judge on whether or not applying the exemption.

5.1.3 Recommendations for the mining and upstream oil companies concerned by the reconciliation

Section Observations Recommendations Follow up Reliability and A filling guide was We recommend each Recommendations availability of data for provided to the concerned company to : maintained. the reconciliation companies with the canvas. A workshop for - Look at the filling The companies selected the preparation of the guide prior to the in the scope of the establishment of the mission took place. The reconciliation for 2012 canvas calendar was have submitted the communicated and the - Be represented by an canvas on time. We have dates of intervention adequate and noted an improvement in ware agreed in advance competent individual the filling out of the with the companies to fill the canvas at canvas and the officials. the workshop for the availability of the contact preparation of the However, we noticed that persons. mission of sometimes the data filles reconciliation was not exhaustive and The companies who were most of the canvas was - To improve their new in the process were changed following the internal organization late in submitted the constatation of mistakes for the availability on information. or omissions by the time of data and supporting Reconciler. documents Also, we had to face the unavailability of several interlocutors and delays, many times, of the date of intervention on field of the Reconciler for some companies. Certification of the The prior reliability of the We recommend each Recommendation canvas by an canvas by an company to certify the maintained. independent auditor canvas and its annexes

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Section Observations Recommendations Follow up independent auditor is as well as the financial We did not obtain canvas not yet effective. statements during the from independent Indeed, a reconciliation intervention of its auditors. made by an independent independent auditors. auditor on amounts However, for the reported and/or paid by It should be noted that companies listed in the the entity and/or the the financial statements annexes, we have administration with those and the canvas of the received the cerfication accounted, should be a report are independent from the auditors. prerequisite for documents; one refers to reconciliation; and if the financial situation, applicable, the and the other on tax Reconciler could directly situation. collect and establish exhaustively the amount of taxes, duties and charges reported and paid.

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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 up Access to information Meetings for information We recommend the Recommandation and awareness of the and awareness of each involvement of the maintained. executive staff department Directorates of the representative of the Administration in We recommend to EITI ro Administration were educating their staff at raise the awareness organized by the EITI to all levels. regarding the bring all stakeholders to reconciliation the same level of assignment for the key information and to contacts persons within ensure proper conduct of the administration. the work during the collection. However, we noted that the awareness of the Administration to join the EITI process has not reached the executive staff of some departments of the Administration, despite the appointment of dedicated interlocutors to facilitate the collection. Thus, some members of the executive staff are suspicious or even hostile to the auditors and required the dispatch of a formal letter to their respective directors, so that they can give their consent to the disclosure of information, despite the note from the Ministry of Finance. This situation created an issue to collect the data on time.

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5.1.4.2 For the Treasury, the Ministry of Decentralization, the regions and municipalities

Section Observations Recommendations Follow up Traceability of cash The disparity in Recommendation inflows from mining distribution methods of maintained. We recommend setting revenues as provided by the cash inflows of minig up a system that the regulations in force royalties, rebates and improves the traceability mining administration of cash inflows fees to the various distributed to the entities concerned beneficiaries of the compared to that revenues under the provided by the Mining regulations in force. For Code and its each final beneficiary, implementing sub-accounts specifically regulations do not dedicated to each type of provide traceability and income, including a consistency in the definition of the management of mining procedures for the revenues received by transmission of mining and decentralized corresponding administrations supporting documents, (municipalities, regions), could be implemented for especially with the many example. beneficiaries of the revenues. Reliability of data issued Data received from the We recommend : Recommendations by decentralized Administration have ► To the maintained. communities been amended several Treasury : times. This could be - To accompany each partially due to a lack of payment with a familiarity of the used detailed statement software for registration tracing the origin and of revenues and the nature of the nonexistence of an revenues; adequate system of - To inform the revenues registration and archival officials of the of supporting municipality and documents. region on the different Indeed, we found that typers of income to some members of the receive from extractive administrative and industries with their financial staff of frequency and municipalities and payment circuit; regions have not mastered the notion of ► To the Ministry liquidity and the reading of Decentralization: of a bank statement. - To organize training on Thus, they rarely track cach accounting for the collection of the revenues officials revenues that they of the State for a receive, which prevent better monitoring of them from knowing the the cash flows; origin and nature of their revenues. ► To the region and municipalities:

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Section Observations Recommendations Follow up These situations delayed - To set up a system of the collection of data and data recording and information. archival of reliable supporting document Reconciliation of Rebates are collectively We recommend the Recommandation companies data with paid by non-state decentralized authorities maintained. those of non-state entities, such as the to get a workable state entities management company of for the audit and the Port of Toamasina monitoring of their MICTSL, to the revenues. concerned decentralized communities. The document sent to them does not enable the conduct of an audit of payments made by company. It is therefore tedious to perform a reconciliation with the mining and oil companies’ data.

5.1.5 Recommndations for the Department of Customs and Intelligence Service of Registrations (SRI)

Section Observations Recommendations Follow up Update of the database Data collection will be We recommend : Recommendations on the companies conducted by entity, and ► To the SRI : maintained. for that the Tax - To keep up to date the Identification Number information in their (NIF) of each mining and possession; oil entity is necessary. - To reset the However, information at correlation table with the SRI has not been the Customs that updated, making it would link the new NIF difficult to collect data of each company with from the Administration. the old ones. At the Customs, the NIF of extractive industries ► To the Customs: recorded in its database - To educate importers is not consistent with to inform their current those at the SRI. This NIF in their could be linked to declaration; different changes of NIF - To update and clean up of the companies in its database. recent years or an imputation error. In fact a single company can be found in the SIGTAS database with a similar name but a different NIF.

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Section Observations Recommendations Follow up Therefore, we proceeded to identify the companies through the imports list.

5.1.6 Recommendations for the BCMM, Ministry of Decentralization, regions and municipalities

Section Observations Recommendations Follow up Traceability of Mining Administration We recommend : Recommendations distribution of the FAM Fees paid by the► To the BCMM : maintained. by company at the companies are registered - To notify the municipalities and in the BCMM system. The beneficiary entities in regions distribution to the advance by letter various beneficiaries, remittances in their including regions and favor with relevant municipalities, details, such as the depending on the period covered by the definition of operating FAM, date of dispatch, perimeter, is amount transferred, automatically calculated company or person by internal software at a who paid the FAM given date. - To approach The parts of the municipalities/regions beneficiary whose parts are held in municipalities/regions a suspense account for are directly sent to their lack of bank account respective accounts, information. without prior notice from the BCMM. ► To In addition, the parts of municipalities/regi municipalities/regions on: that do not have a bank - To file with the BCMM account deposited with the account number of the BCMM are the automatically kept in a municipality/region suspense account, while duly approved by the the municipality or Ministry of region is not alerted Decentralization, about the situation. - Ensure at the BCMM These situations create the effective payments at the subdivisions of the of FAM by the State a failure in the operators within its monitoring, scope so that they can management and claim their rightful traceability of their funds part. if they do not track the bank cashing. Actual ownership and Some sold and We recommend the Recommendation payment of mining transferred permits are BCMM to distinguish maintained. administration fees still registered in the payment flows by actual name of the sellers in the owner during the work of BCMM database. reconciliation. Treatment at its level is

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Section Observations Recommendations Follow up in progress. This situation created difficulties for the materiality assessment as well as for the work of reconciliation. Indeed, gaps identified in the mining administration fees mainly result from the fact that payments made by the actual owners of the mining permits are registered in the name of the former owners.

5.1.7 Recommendations for the Tax Administration

Section Observations Recommendations Follow up Attachment of It was particularly We recommend the tax Recommendation registration fees paid to difficult to reconcile centres to directly attach maintained. reporting companies registration fees (DE) of all taxes and duties 2011 of some companies cashed by the tax with the tax administration to administration data. individuals or legal Indeed, for some tax entities that actually centres, the DE were not made the payment. This registered in the name of could enable an the paying company but exhaustive statement of linked to the NIF of the their tax situation. main receptor of the administration that cashed them. Reliability of data at the Tax administration data We recommend each Recommendations Tax Administration has been amended entity of the tax maintained. several times. Indeed, administration : the periods to which the ► To properly payments are attached inform the period of are not always properly attachment of each or sufficiently payment in the recording knowledgeable in the software. used software. This observation was ► To fill in the particularly noted for same information nonrecurrent taxes such system all data related as fines and penalties, to a company. the flat rate taxe on Transfer (TFT) or the nonresident income tax (IRNR) at the DGE and some taxes at the SRE and tax centres.

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Section Observations Recommendations Follow up Moreover, VAT refunds are manually processed and are not reported in the DGE computer software. These facts delayed the information collection.

5.1.8 Recommendations for the EDBM and the Department of Home Affairs

Section Observations Recommendations Follow up Establishment of a Data on fees issuing visa We recommend : Recommendations monitoring tool for visa and resident cards could maintained. fees and resident cards not be indentified by ► Centralizing company at the EDBM data on the fees for and the Ministry of the issuing of visa and Interior. Indeed, their resident cards either at database does not sort the EDBM or at the by company. Data is Ministry of the Interior, recorded by visa category and registration ► Recording all number. However, the information (name, manual records with the address, date of company names are payment, amount paid, available, but it would duration, Employer require taking the Company…) regarding information one by one. the expatriate and the Nevertheless, we were employer company in able to verify the the database, payment vouchers of fees for issuing visa and ► A software resident cards from the setting to analyze the reconciled companies. issuance of visa and resident cards by company.

5.2 General recommendations following the reconciliation

5.2.1 Recommendations for the administration and its subdivisions

Section Observations Recommendations Reliability of the information for Obtaining the information related We recommend to each the reconciliation to the payments made by the Directorate: extractive industries to the ► To acquire an adequate Interregional Directorate of Mines software in order to record of Antananarivo have been data ; difficult. The data collection was delayed ► To set up a database of because there is no digitalized relevant information such as database but manual registers the Company name, the type

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Section Observations Recommendations were used, making it impossible to of flow (rebates, taxes,…), the ensure the completeness of the period, the payment payments made by the extractive reference ; industries. At the same time, payments made ► To regulary update the by extractive companies were not information in their hands; taken into account due to the fact that datas related to the revenues ► To implement an archiving collected by the Interregional system ; Mines Directorate of Toamasina from January to March 2012 were lost, and there is not any appropriate archiving system. Follow up of information related to We have requested the information We recommend to each non refunded VAT related to the non refunded VAT for Directorate: the mining and oil companies from ► To set up a database of the the Large Enterprise Department information related to the (DGE). VAT that is yet to be refunded The DGE has redirected our request per company; to the Ministry of Finance. However, we had difficulties ► To ensure that the obtaining the information. Some information is the regularly information could not be traced followed upon and updated. through time.

5.2.2 For the Treasury, the Ministry of decentralisation, the regions and the Municipalities

Section Observations Recommendations Traceability of the payments Cashing confirmations were made We recommend to each SRE and received from the extractive with the General Revenues of tax centre : industries Antananarivo (RGA) via Revenue Transfers Vouched (BTR). These ► To mention in each BTR with BTRs are provided by the Regional accuracy all the information business tax departments (SRE) such as the name of the and tax centres. taxpayer, the nature of the However, we noted that the names tax, the amount, the related of tehe corporate taxpayers, the fiscal year and the payment amount, and the nature of the date. taxes paid are not mentionned in the BTRs. The total amount of taxes received each month is mentionned. Thus, i twas impossible for us to trace the amounts paid by the mining and oil companies to the SREs and tax centres in the BTRs claimed by the RGA.

5.2.3 For the Customs Directorate

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Section Observations Recommendations Monitoring of the customs duty, The tax identification numbers We recommend to the Customs taxes on oil products and VAT on (NIF) of the extractive companies Directorate Nous recommandons imort paid by the extractive were used to collect the to include the references of the companies information from the customs representative as well ads the final directorate. beneficiary in the database (NIF of The recording of the information in the company). the system SYDONIA is based upon references of the declarant mentionned in the single administrative document (DAU). This situation has caused difficulties during our reconciliation work. Some companies use subcontractors for dealing with their export and import transactions. Thus, the transactions are recorded by the customs Directorate under the names of the subcontractors and not under the name of the final beneficiary. Because of this, the completeness of the payments made by extractive industries cannot be ensured.

5.2.4 For the INSTAT, the Ministry of Economy, the ministry in charge of the extractive sector

Section Observations Recommendations Analysis of the economic There is not yet reliable information We recommend to the Ministry in contribution of the extractive related on the contribution of the charge of the extractive sector, to sector mining sector. These statistics the Ministry of Economy and to the would be important decision INSTAT : making tools, particularly to help debate on the reforms on the ► To perform an annual study on legislation of the extractive sector. the actual contribution of the mining and upstreal oil secotrs after updating the structure.

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6 Annexes

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