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LARF ENG FINAL.Cdr Land Acquision and Reselement Framework (LARF) Timok Project Table of Contents 1 Introducon 5 1.1 Summary project descripon 5 1.2 Project owner 5 1.3 Project locaon and key components 5 1.4 Principles for land acquision 9 1.5 Raonale for reselement framework 9 2 Legal and instuonal framework 11 2.1 Key relevant laws of the Republic of Serbia 11 3 Overview of socio-economic condions in the Project area 12 3.1 Municipality of Bor 12 3.2 Communies in the area of influence of the Project 12 3.3 Key demographic trends 13 3.4 Livelihoods 13 3.5 Access to public services 13 3.6 Survey and data collecon strategy for the LARF and RAPs 13 4 Overview of Project potenal land impacts 14 4.1 Project footprint and land requirements 14 4.2 Esmated land impacts 14 4.3 Analysis of alternaves 17 4.4 Project development schedule 17 4.5 Land acquision and LARF schedule 17 5 Compensaon strategy 18 5.1 Land acquision process 18 5.2 Eligibility 18 5.3 Compensaon opons and raonale for cash compensaon 19 5.4 Replacement value (definions for each type of affected asset) 19 5.5 Entlements (entlement matrix) 20 5.6 Valuaon of losses 23 6 Compensaon process 24 6.1 Preparaon of survey instruments 24 6.2 Willing buyer – willing seller process (voluntary) 24 7 Engagement and grievance management 28 7.1 Engagement strategy 28 7.2 Engagement plan 28 7.3 Grievance management 30 8 Assistance to vulnerable people 32 8.1 Definions 32 8.2 Idenficaon process 32 8.3 Conceptual assistance measures 32 9 Livelihood restoraon 33 9.1 Overview of potenal livelihood impacts 33 9.2 Opportunies 33 9.3 Livelihood restoraon conceptual measures 34 9.4 Livelihood restoraon monitoring 34 10 Monitoring and evaluaon 35 10.1 Internal monitoring of LARF commitments 35 10.2 Periodic external LARF commitment audit(s) 35 11 Organizaon 37 11.1 Resources & Organizaon 38 11.2 Outsourced tasks 38 11.3 Informaon management 38 Appendix 1: References 39 Acronyms ESIA Environmental and Social Impact Assessment GLAC Guide to Land Acquision HRIA Human Rights Impact Assessment IFC PS5 Internaonal Financial Corporaon´s Performance Standards 5: Land Acquision and Involuntary Reselement LARF Land Acquision and Reselement Framework SEP Stakeholder Engagement Plan TSF Tailing Storage Facility Figures and Tables List of Figures Figure 1: Čukaru Peki Locaon 6 Figure 2: General Arrangement of the Mine Site 8 Figure 3: Proposed organizaon chart for implementaon of land access acvies 37 List of Tables Table 1: Inial Inventory of Structures 14 Table 2: Provisional Land Ownership and Land Use Recapitulave Data 15 Table 3: Provisional Land Use Recapitulave Data 16 Table 4: Proposed Entlement Matrix 20 Page 5 1. INTRODUCTION This report provides an overview of expected acvies required for the preparaon and implementa- on of the Land Acquision and Reselement Framework (LARF) for the Timok Project (the Project) which is being developed by Rakita. It includes key decisions that were made during the scoping and planning process, as well as the recommendaons for future LARF acvies including surveys, monitoring and evaluaon. Per Internaonal Finance Corporaon (IFC) requirements, this report has been built to address Rakita's requirement to align to the Land Framework described in IFC Performance Standard 5 (PS5). This LARF was prepared by Rakita and a team of land acquision and reselement consultants, follow- ing work done in Serbia between October 2016 and May 2017. A Stakeholder Engagement Plan (SEP) for the Project was completed in January, 2017, and publicly disclosed in Serbia (in Serbian and English) in February, 2017. Inial disclosure and informaon meengs on the LARF are scheduled for May, 2017, and onwards. This report deals with the land access, acquision, compensaon and reselement associated with the mining and processing of the Project's Čukaru Peki copper-gold deposit. 1.1 Summary project descripon The main focus of acvity for Rakita is developing the Project, which is situated within the Brestovac- Metovnica Exploraon license. The Čukaru Peki mineral deposit has been subdivided into two zones, the 'Upper Zone' and 'Lower Zone'. Rakita is currently undertaking a pre-feasibility study on the Upper Zone, with the objecve of evaluang this high-grade deposit for mining and processing of copper and gold ore. In parallel, explo- raon of the lower grade, but higher tonnage, Lower Zone mineralized zone is connuing. 1.2 Project owner Rakita is a Serbian company, currently carrying out exploraon acvies in the Timok district of Eastern Serbia, near the town of Bor, and holds the exploraon license for the Project. Rakita is owned and operated through a joint venture between Nevsun Resources Ltd. (Nevsun) and Freeport-McMoran Exploraon Corporaon (Freeport). Nevsun is a mid-er Canadian mining company. Freeport is the world's largest publicly traded copper producer, the world's largest producer of molybdenum, and a significant gold producer. Nevsun holds a 100% interest in the Upper Zone, and is the operator. Following compleon of a feasibil- ity study on the Upper Zone, Nevsun will hold a 46% interest in the Lower Zone and Freeport will hold a 54% interest in the Lower Zone. 1.3 Project locaon and key components The Project is located approximately 6 km south of the town of Bor, which is a regional administrave and mining center approximately 245 km southeast of Belgrade, Serbia. The Project site is favorably located for mining infrastructure (road, rail, power, water) and close to a recently upgraded copper smelter complex in Bor. Page 6 Bor 6km Brestovac Slana Čukaru Peki Road Bor-Zaječar Figure 1: Čukaru Peki Locaon Aerial Imagery Source: Google Page 7 1.3.1 Project components The current studies are indicang the potenal for an underground mine on the Upper Zone to a depth of 450 m to 850 m below ground surface. Access to the Upper Zone will be through an inclined tunnel or 'decline', which will inially serve as an exploraon decline for the purpose of confirming the viability of the Upper Zone. The decline would most likely be comprised of two parallel tunnels. The first tunnel would ulmately be used for access, and the second one for venlaon. Each tunnel is currently designed to be approximately 5 m wide and 5 m high, but this remains a work in progress. Operaonal support facilies would be located adjacent to the portals of the decline tunnels at the surface. These facilies are expected to include typical mine site infrastructure and offices, including a mobile equipment workshop, fuel storage, temporary power generaon, shotcrete batch plant, mine dry, administrave offices, temporary waste rock storage, and water management infrastructure. A processing plant would be developed to convert the mined ore into a copper concentrate with gold credits, which would be available for sale at internaonal rates. A tailings storage facility (TSF) would be located in the vicinity of the processing plant, designed and built to comply with Serbian law and inter- naonal best pracce. At the end of the operang phase of the Upper Zone Mine, the Project site will be reclaimed. A depres- sion will remain in the ground surface above the mine, and some ground subsidence is expected within a circular zone around this depression. 1.3.2 Expected development schedule Rakita is conducng exploraon acvies under the Decision of the Sector for Geology and Mining of the Ministry of Mining and Energy No. 310-02-0221/2012-14. Although some limited exploraon work had been carried out in the area in the past, no mineralized deposit had been idenfied unl the Rakita team made the discovery of the Čukaru Peki deposit in July 2012. Following the intended development of an Exploraon decline for the Upper Zone deposit, planned for late 2017, construcon of the proposed mining and mineral processing facilies for the Upper Zone is scheduled to commence in year 2019, subject to a posive Feasibility Study, perming and approvals from applicable authories. This ancipated construcon of processing facilies for the Upper Zone deposit is expected to be complete no later than 2021, with underground mining operaons starng in later that year. The mining and mineral processing operaons are expected to run approximately 12 to 15 years, but the exact meframe for these acvies will be further clarified in the pre-Feasibility and Feasibility studies for the Upper Zone. Construcon and operaons are expected to take place on a 24- hour/day, seven-day/week, and 365-day/year work schedule. The Lower Zone mineralized zone will connue to be evaluated, however Lower Zone mine develop- ment has yet to be confirmed with considerable drilling and technical/economic studies sll required, and if feasible, inial development is not likely for at least 15-20 years, subject to the connued success of the Lower Zone exploraon program. The project area has been broken down into six zones covering areas of ancipated land acquision acvies to allow for mining facilies and infrastructure: The map provided in Figure 1 presents the latest proposed General Arrangement of the Mine Site. Page 8 The map provided in Figure 2 presents the latest proposed General Arrangement of the Mine Site. Figure 2: General Arrangement of the Mine Site Page 9 1.4 Principles for land acquision The proposed key principles guiding land acquision for the Project are as follows: Ÿ Minimizing land acquision requirements to avoid unnecessary economic and physical displace- ment of the local populaon is the cornerstone of the process aer undertaking an alternaves analysis; Ÿ Land acquision will be conducted based on willing buyer/willing seller
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