Coal Production and Sales at Ngaka Coal Mine, 2013

Message from the Acting Chief Executive Officer This Annual Report highlights key outcomes recorded in year 2013. Tanzania Minerals Audit Agency (TMAA) marked four years of its establishment by recording good performances as highlighted in this Annual Report. This has been made possible through the keen leadership of TMAA’s Ministerial Advisory Board combined with the diverse knowledge, expertise, hard work and dedication of the 93 staff currently employed at TMAA. In our 2012 Annual Report we promised to forge ahead with our efforts aimed at ensuring maximization of Government revenue from the mineral sector. Following completion of year 2013, it is my pleasure to report the following key outcomes: - A total of TZS 310.66 billion was collected by the Government as royalty and taxes from the large scale mines. - A total of TZS 2.7 billion was collected as royalty from some medium and small scale mining operations as a result of TMAA's strategic audits. - Continued improvements in compliance to environmental management best practices by large and medium scale mines as a result of TMAA environmental audits. - Enhanced curtailing of illegal trading and smuggling of minerals whereby 32 incidents were reported for minerals worth TZS 2 billion. In each quarter of 2013, the Agency had good performance results. This was greatly contributed by embracing TMAA’s core values, which are Integrity, Excellence, Teamwork and Customer-Focused. We are very pleased with the support that we received from the Minister for Energy and Minerals (Hon. Prof. Sospeter M. Muhongo), Deputy Minister for Energy and Minerals (Hon. Stephen J. Masele), Permanent Secretary (Mr. Eliakim C. Maswi) and Former Acting Commissioner for Minerals (Eng. Ally Samaje). I wish to thank all TMAA staff who are responsible for implementing the Agency’s Action Plan and normally work hard to ensure that our goals and targets are met. I am convinced that, the aim of the Government to maximize its revenues from the mineral sector is progressively being realized. ii

We are building TMAA on a solid foundation and in that regard we acknowledge our former CEO, Eng. Paul M. Masanja, now Commissioner for Minerals, for his outstanding contribution to TMAA’s success. TMAA shall aggressively continue to monitor and audit large, medium and small scale mining operations in year 2014 so as to ensure that owners make the required payments to the Government and conduct their activities in a sound environmental manner. I am optimistic that 2014 will end with more successes in comparison to those scored in 2013. I trust you will find our 2013 Annual Report informative, and I encourage you to send us your feedback. Mining for National Development.

Eng. Dominic K. Rwekaza Ag. CHIEF EXECUTIVE OFFICER

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Table of Contents GLOSSARY OF TERMS ...... VII 2013 PERFORMANCE HIGHLIGHTS ...... 1 1.0 MANAGEMENT OVERVIEW ...... 6 2.0 TARGETS FOR 2013 ...... 7 3.0 AUDIT RESULTS AND PERFORMANCE FOR 2013 ...... 9 3.1 AUDITING OF MINERALS PRODUCED AND EXPORTED ...... 9 3.1.1 Minerals Produced by Major Gold Mines in 2013 ...... 9 3.1.2 Minerals Exported by Major Gold Mines in 2013 ...... 11 3.1.3 Tulawaka Mine Closure ...... 13 3.1.4 Auditing of Diamonds Production and Exports ...... 13 3.1.5 Auditing of Tanzanite Production and Exports ...... 14 3.1.6 Auditing of Coal Production at Ngaka Coal Mine ...... 15 3.1.7 Auditing of Building Materials and Industrial Minerals ...... 15 3.1.8 Auditing of Gold Produced and Sold by Vat Leaching Operators ...... 16 3.1.9 Mineral Royalty Payments for 2013 ...... 16 3.1.10 Combating Minerals Smuggling and Illegal Trading ...... 16 3.2 FINANCIAL AUDIT AND TAX REVIEW ...... 18 3.2.1 Financial Audit and Tax Review Results for 2013 ...... 18 3.2.2 Achievements Resulting from TMAA's Financial Audits ...... 18 3.2.3 Government Revenue Projection ...... 19 3.3 ENVIRONMENTAL MONITORING AND AUDITING ...... 22 4.0 HISTORICAL DATA ...... 27 5.0 UPDATE ON PROSPECTIVE PROJECTS...... 36 5.1 Mkuju River Project ...... 36 5.2 Kabanga Nickel Project ...... 37 5.3 Mchuchuma-Liganga Project ...... 38 5.4 Nyanzaga Gold Project ...... 39 6.0 CHALLENGES FACED IN 2013 ...... 40 7.0 PLANNED ACTIVITIES FOR 2014 ...... 41 8.0 CONCLUSION ...... 43

List of Tables Table 1: Key Achievements in 2013 ...... 3

Table 2: Targets for 2013 ...... 7

Table 3: Minerals Produced by Major Gold Mines in 2013 ...... 10

Table 4: Quantity and Value of Minerals Exported by Major Gold Mines, 2013 ...... 11

Table 5: Minerals Production, Export and Royalty Payments (2013) ...... 12

Table 6: Diamonds Production and Export, 2013 ...... 14

Table 7: Tanzanite Production and Exports by TTM, 2013 ...... 14

Table 8: Coal Production and Sales at Ngaka Coal Mine, 2013 ...... 15

Table 9: Building Materials and Industrial Minerals Production in the Eastern, Southern, Lake Victoria and Central Zones, 2013 ...... 16

Table 10: Unresolved Queries Communicated to TRA ...... 18

Table 11: Projected Mine Output, Revenue and Government Take (Undiscounted) from 8 Large Scale Mines, 2014 - 2023 ...... 21

Table 12: Summary of Environmental Measures Taken by Large and Medium Scale Mines .... 22

Table 13: Major Shortfalls on Environmental Management Noted at Large and Medium Scale Mining Operations ...... 25

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

Table 15: Tax & Royalty Payments by 9 Major Mines, 1999 – 2013 (TZS Billion) ...... 27

Table 16: Historical Minerals Sales by Major Mines (1999 - 2013) ...... 28

Table 17: Minerals Produced by Medium and Small Scale Miners (2008 - 2013) ...... 29

Table 18: Procurement of Goods and Services by Large Scale Mines (2001 – 2013) ...... 32

Table 19: Tanzania Mineral Reserves for Selected Minerals and Projects (December 2013) .... 33

Table 20: Status of Employment in the Major Gold Mines – Number of Locals versus Expatriates ...... 35

Table 21: Targets for 2014 ...... 41

List of Figures Figure 1: Gold Production, 2013 - Contribution by Mine ...... 10

Figure 2: Total Gold Export Quantity, 2013 - Contribution by Mine ...... 12

Figure 3: Africa's Top Four Gold Producing Countries (2008 – 2013) ...... 28

Figure 4: Gold Exports by Large Scale Gold Mines (2000 - 2013) ...... 30

Figure 5: Gold Exports Value by Large Scale Gold Mines (2000 - 2013) ...... 30

Figure 6: Royalty Payments by Large Scale Gold Mines (2000 - 2013) ...... 31

Figure 7: Gold Price Trends (2000 - 2013) ...... 31

Figure 8: Silver Price Trends (2000 - 2013) ...... 31

Figure 9: Copper Price Trends (2001 - 2013) ...... 31

GLOSSARY OF TERMS

ABG African Barrick Gold NBS National Bureau of Statistics ARD Acid Rock Drainage NCM Ngaka Coal Mine ARMZ AtomRedMetZoloto NDC National Development Corporation BGM Bulyanhulu Gold Mine NEMC National Environment Management Council BGML Bulyanhulu Gold Mine Limited NLGM New Luika Gold Mine Bil. Billion NMGM North Mara Gold Mine BoT Bank of Tanzania NMGML North Mara Gold Mine Limited BZGM Buzwagi Gold Mine PAYE Pay As You Earn BZGML Buzwagi Gold Mine Limited PML Pangea Minerals Limited Cap. Chapter RTL Resolute Tanzania Limited Crt Carat SDL Skills Development Levy EIA Environmental Impact Assessment SHCL Sichuan Hongda Company Limited EMP Environmental Management Plan STAMICO State Mining Corporation FEED Front End Engineering Design TAA Tanzania Airports Authority g Gram TEITI Tanzania Extractive Industries Transparency Initiative GGM Geita Gold Mine TGM Tulawaka Gold Mine GGML Geita Gold Mine Limited TMAA Tanzania Minerals Audit Agency GPM Golden Pride Mine TOML TanzaniteOne Mining Limited ISO International Organization of Standardization toz Troy Ounce JNIA Julius Nyerere International Airport TPDC Tanzania Petroleum Development Corporation kg Kilogram TRA Tanzania Revenue Authority KIA Kilimanjaro International Airport troy oz Troy Ounce lb Pound TSF Tailings Storage Facility LME London Metal Exchange TTM TanzaniteOne Tanzanite Mine MA Mwanza Airport TZS Tanzanian Shilling MAB Ministerial Advisory Board UNESCO UN Educational, Scientific and Cultural Organization MEM Ministry of Energy and Minerals USD United States Dollar mg Milligram VAT Value Added Tax Mil. Million WDL Williamson Diamonds Limited MoF Ministry of Finance WDM Williamson Diamonds Mine MRP Mkuju River Project WHT Withholding Tax MT Metric Ton WRD Waste Rock Dump N/A Not Applicable

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Disclaimer This annual report presents data on minerals production and exports collected by the Agency from its physical audits. The report also presents data on royalties and taxes as collected by the Agency from reliable sources. Historical data are also presented and analyzed as collected from different sources as outlined in the report. The information contained in this report has not been subjected to independent verification. No promise, guarantee, representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, reliability, completeness or correctness of the information or opinions contained herein. Neither TMAA, nor its advisors, nor any of its directors, officers or employees or any representatives of such persons, shall have any responsibility or liability whatsoever (in negligence or otherwise) for any loss arising from any use of the information or any other information or material discussed. This report also contains confidential information, by accepting such information, the recipient agrees to keep permanently confidential all information contained herein, and that such information will only be used for the purpose that has been disclosed to TMAA, and will not divulge any such information to any other party without express consent of TMAA. Any reproduction of such information, in whole or in part, is prohibited without the permission of TMAA.

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2013 PERFORMANCE HIGHLIGHTS

This report covers results of auditing activities performed by Tanzania Minerals Audit Agency (TMAA) in the year 2013. It also addresses status of implementation of the audit program and highlights key findings and achievements.

The task of auditing quantity and quality of mineral products from the major mines was comprehensively undertaken by TMAA in 2013. Gold output (from gold bars and Copper Concentrate products) by the major gold mines in 2013 was the same as the previous year at 1.25 million troy ounces. Geita Gold Mine (GGM) was the leading gold producer in 2013 with 37% of total production.

Total mineral exports in 2013 from gold bars and Copper Concentrate produced by the seven major gold mines (Bulyanhulu, Buzwagi, Geita, Golden Pride, New Luika, North Mara and Tulawaka) were: 1.24 million troy ounces of gold worth USD 1.74 billion; 12.70 million pounds of copper worth USD 40.95 million; and 0.38 million troy ounces of silver worth USD 8.93 million, making total worth of USD 1.79 billion, down 17.7% compared to USD 2.17 billion realized in 2012.

Mineral royalty paid to the Government by the seven major gold mines during the year under review was USD 70.76 million. This represents a decrease of 4.47% compared to USD 74.07 million realized in 2012. However, the Government is expecting to collect USD 71.41 million in total as royalty for the year 2013 once final royalty is paid.

Tanzanite output at TanzaniteOne Tanzanite Mine (TTM) was 3.24 million grams in 2013. The mine sold Tanzanite worth USD 10.97 million, with total royalty paid amounting to USD 229,545.

Diamonds output at Williamson Diamonds Limited (WDL) during the year 2013 was 158,562 carats, up 17.35% as compared to 135,122 carats produced in 2012. The mine exported 144,354 carats of diamonds worth USD 39.56 million in 2013, compared to 116,658 carats worth USD 29.85

1 million sold in 2012. Total provisional royalty paid for the exported diamonds was USD 1.91 million.

During the year 2013, auditing of revenue generated, capital investment and operating expenditure was conducted on 7 major mining companies, 15 medium scale mining companies, and 7 mineral dealers. The audits revealed a number of significant queries which would lead to recovery of lost revenue on the side of the Government once they are acted upon by the relevant Government bodies.

Furthermore, environmental auditing conducted during 2013 involved large, medium and small scale mining areas. Major mines audited included 6 gold mines, 1 Tanzanite mine and 1 diamond mine. Additionally, the Agency audited 27 medium scale mines, 76 small scale mines and 51 gold processing sites. The conducted environmental audits have attributed towards improving environmental management practices in the respective mines.

On another note, Tulawaka Gold Mine, a 70/30 joint venture between Pangea Minerals Ltd., a wholly-owned subsidiary of African Barrick Gold, and MDN Inc. ceased its operations on 30th July, 2013. During its mine life of 9 years, the mine produced and sold 933,015 troy ounces of gold and 104,502 troy ounces of silver worth USD 830.31 million. The mine has so far paid royalty amounting to USD 25.37 million and other Government taxes and levies amounting to TZS 174.3 billion.

Table 1 highlights key achievements attained in year 2013 as a result of TMAA audits and administrative initiatives taken by the Agency to improve its performance.

Table 1: Key Achievements in 2013 Function Achievements To audit 1. Audit of financial records and tax review conducted by revenue TMAA in collaboration with TRA has helped to generated, accelerate and/or increase payments of corporate tax by capital GGML (operating GGM and owned by AngloGold investment and Ashanti Limited) and RTL (operating GPM and owned by operating Resolute Mining Limited) and alternative minimum tax expenditure of by WDL. the large and The three companies paid a total of TZS 24.68 billion medium scale as corporate tax in 2013 as follows: mines for the purpose of  GGML paid corporate tax amounting to TZS 8.97 gathering billion. Cumulatively, the company has paid taxable corporate tax amounting to TZS 308.34 billion. information  RTL paid corporate tax amounting to TZS 15.53 and providing billion. Cumulatively, the company has paid the same to corporate tax amounting to TZS 100.39 billion. TRA and other  relevant WDL paid alternative minimum tax amounting to TZS 178.9 million. authorities. 2. Audit of financial records and tax review conducted by TMAA in 2013 has resulted into collection of Government revenues as itemized below. The audited companies were BGML, NMGL, PML(BZGM and TGM), WDL, TOML , Willy Enterprises Limited-Quarry Operation, Tanga Cement Company Limited Quarry Operations, ARM (T) Limited, Neelkanth Lime Limited, Sea Salt Limited, Nyanza Mines (T) Limited, H.J. Stanley & Sons Limited, Simba Lime Factory, Even Enterprises Limited, Tembo Tiles Limited, Hari Singh & Sons Limited, Kerai Construction Limited, Shilloh Minerals Limited, Terro Construction Limited, Tansino Quarries Limited, Britons International Limited, Colour Clarity Limited, Jacaranda Holdings Limited, KGK Crafts Limited, Sky Gems Limited and Swala Gem Traders.  Withholding tax amounting to TZS 2.77 billion which was not paid from payments made to mineral rights holders, technical services and other imported 3

Function Achievements services.  Royalty amounting to TZS 147.4 million and empowerment fund amounting to USD 200,000.  PAYE and SDL amounting to TZS 85.7 million.  Service Levy amounting to TZS 141.9 million. 3. Regular financial audits conducted by TMAA have enhanced financial record keeping and compliance by major mining companies. To monitor and 1. TMAA has continued to increase its scope of audit by audit quantity auditing all large scale mines, a number of medium and and quality of small scale mines. The Agency also audited a number of minerals vat leaching plants. produced and 2. TMAA successfully audited and analyzed minerals exported by produced and exported by BGM, BZGM, GGM, GPM, large, medium NLGM, NMGM, TGM, WDL and TTM. This ensured and small-scale availability of accurate and reliable data on minerals miners. produced and exported by the respective miners and contributed to promote voluntary compliance by the mining companies. The audit facilitated collection of royalty to the tune of USD 72.86 million from the above listed mines during the year under review. 3. TMAA has commercialized its laboratory services in order to assist individuals dealing with exploration, mining and mineral trading activities. Also, it is in the process of accrediting its laboratory under ISO 17025 for the purpose of attaining international recognition. 4. TMAA in collaboration with the Zonal Mines Offices – Eastern, Southern, Lake Victoria and Central zones has facilitated collection of royalty amounting to TZS 1.7 billion in 2013 as a result of monitoring and auditing of production and sales of building materials and industrial minerals in Dar es Salaam, Coast, Ruvuma, Lindi, Mwanza, Dodoma and Singida regions. This is equivalent to 45.5% increase as compared to TZ 931.08 million realized in 2012.

Function Achievements 5. Auditing of gold production from vat leaching sites and elution plants in Geita and Mwanza regions has enabled the Government to collect royalty amounting to TZS 981 million from 410 kilograms of gold produced by the operators. This is equivalent to 326% increase as compared to TZS 230 million realized in 2012. 6. TMAA in collaboration with the Minerals Department has been publishing local indicative minerals prices on monthly basis through local newspapers and its website (www.tmaa.go.tz) for the purpose of assessment and valuation of minerals; helping local miners to bargain reasonable and fair prices for their minerals; and increasing Government revenues through enhanced minerals price knowledge. 7. TMAA in collaboration with TAA, Police and TRA has managed to apprehend minerals worth TZS 2 billion which were in the process of being smuggled out of the country in 32 incidents. The offenders have been dealt with in accordance with the Mining Act of 2010. To monitor and 1. TMAA conducted environmental audits on 8 large scale audit mines, 27 medium scale mines, 76 small scale mines environmental and 51 gold processing sites. The audits have triggered management, improvements in compliance to environmental environmental management best practices by the auditees. Major budget and environmental restorations made on major, medium expenditure and small scale mining operations are presented in for progressive Section 3.3 of this report. rehabilitation 2. TMAA assessed environmental rehabilitation liabilities and mine for the 8 large scale gold mines in 2013. By the end of closure. 2013, it is estimated that a total of USD 235.25 million will be required to rehabilitate the large scale mine sites after closure. 3. 11 large scale mines were fined a total of TZS 455 million by NEMC for non-compliance with environmental management requirements, as a result of TMAA audit findings.

1.0 MANAGEMENT OVERVIEW

During year 2013, TMAA's Ministerial

Advisory Board (MAB) held two ordinary TMAA Ministerial Advisory meetings on 15th May and 3rd December, Board Members 2013. A total of 10 recommendations with a focus on improving performance of the mineral sector were forwarded to the Minister of Energy and Minerals for

consideration and action. Dr. Yamungu Kayandabila - Chairman MAB also conducted study visit at Mkuju River Project (MRP) which aimed at giving opportunity to Board Members to familiarize with current activities relating to

exploration and mine development. MRP is the first uranium project in Tanzania Mr. Gray Dr. Consolath Mwakalukwa Ishebabi located in Namtumbo District within the Selous Game Reserve in Southern Tanzania. The visit took place on 8th May, 2013.

In order to address key findings and Mr. Rogers Mr. Thomas Sezinga Nchimani challenges observed at MRP, it was recommended that TMAA should team-up with other stakeholders to raise public awareness on uranium mining to

counteract negative publicity considering Eng. James Eng. Benjamin the expected socio-economic benefits of Ngeleja Mchwampaka the project.

2.0 TARGETS FOR 2013

Table 2 summarizes operational activities which were set for implementation in the year 2013.

Table 2: Targets for 2013 Function Targets To monitor and . Stationing full time Auditors at all major mines audit quantity and to witness and record daily production, quality of minerals weighing, packaging, sealing and export of produced and minerals. exported by large, . Taking mineral samples where necessary and medium and small- performing logistics for shipments of collected scale miners. samples from the mine sites to the Agency laboratory in Dar es Salaam for assaying. . Determining quality, quantity and provisional value of minerals produced using the Agency's laboratory results and market prices. . Conducting strategic audit on medium and small scale mines to gather information on minerals production and sales. . Conducting royalty reconciliation by comparing mines’ assay results against those of TMAA. . Strengthening efforts to counteract minerals smuggling and royalty evasion practices at key exit points and strategic mining sites. To audit revenue . Verifying the authenticity of revenue declared, generated, capital capital and operating expenditure incurred by the and operating mining companies in the course of mineral expenditure of the production and other supportive operations. large and medium . Examining tax accounting of mining companies in scale mines for the order to determine whether accounting methods purpose of used were appropriate and in compliance with gathering taxable statutory provisions. information and . Performing revenue forecasting based on available providing the same historical, current and future economic variables to TRA and other relating to large and medium scale mining projects. relevant authorities . Reviewing annual costs incurred by the mining 7

Function Targets for consideration companies and performing cost–benefit analysis of and action. the activities undertaken by the mines in particular year of expenditure. To monitor and . Reviewing Environmental Management Plans audit environmental (EMPs), rehabilitation programs and environmental management, reports from mining companies. environmental . Conducting physical inspection at mine sites to budget and verify implementation of environmental expenditure for management plans. progressive . Assessing adequacy of funds allocated for rehabilitation and environmental management activities. mine closure.

3.0 AUDIT RESULTS AND PERFORMANCE FOR 2013

3.1 AUDITING OF MINERALS PRODUCED AND EXPORTED

The auditing of minerals produced and exported by major gold mines conducted by TMAA in 2013 was aimed at ascertaining the quality and quantity of gold, silver and copper production and exports by each mine. This audit is vital in providing the Government with a precise account of exportable gold-containing products, for the purpose of confirming the amount of revenue generated from the exported mineral products and royalty due.

TMAA auditors witnessed each and every smelting session performed in their respective gold rooms including the pouring, marking, weighing and sampling of ingots. The auditors also witnessed the weighing and loading of the Copper Concentrate in containers for export and took samples of the product. All samples were transported by secure means to the TMAA laboratory in Dar es Salaam where they were analyzed to determine the amount of fine gold, silver and copper contained.

TMAA witnessed production and exports of diamonds at WDL and Tanzanite at TTM, where auditors are stationed at each mine to witness, record and report on a daily basis minerals production and exports activities undertaken by the mines. Furthermore, TMAA monitored coal production and sales at Ngaka Coal Project in Mbinga District.

TMAA also conducted strategic auditing of production and sales of building materials and industrial minerals in Dar es Salaam, Coast, Ruvuma, Lindi, Mwanza, Dodoma and Singida regions; and gold from operators who use vat leaching technology in Mwanza and Geita regions for the purpose of facilitating royalty collection.

3.1.1 Minerals Produced by Major Gold Mines in 2013 Table 3 summarizes the quantity of gold bars and Copper Concentrate produced by major gold mines in 2013 as audited by TMAA. A total of 929 9 samples from gold bars and 1,849 samples from Copper Concentrate were collected from major gold mines for laboratory analysis. GGM was the leading gold producer in 2013 with 37% of total production (Figure 1).

Table 3: Minerals Produced by Major Gold Mines in 2013 Year Year 2013 2012* Number of gold bars produced 2,139 2,099 Weight of gold bars produced (kg) 39,775 38,962 Number of containers loaded with Copper 1,907 1,971 Concentrate Net wet weight of Copper Concentrate produced 38,942 40,247 (ton) Gold quantity (toz) 1,253,785 1,246,821 Silver quantity (toz) 376,824 395,757 Copper quantity (lb) 12,680,362 12,865,738 * Updated figures Figure 1: Gold Production, 2013 - Contribution by Mine

3.1.2 Minerals Exported by Major Gold Mines in 2013 Table 4 summarizes the quantity and value of minerals exported by major gold mines in 2013 as audited by TMAA. The prices applied in the computation of values for gold, silver and copper exports are as quoted from the London Metal Exchange (LME). Gold export contribution by each major gold mine is shown in Figure 2.

Table 4: Quantity and Value of Minerals Exported by Major Gold Mines, 2013 Year Year 2013 2012* Gold quantity (toz) 1,244,743 1,266,354 Silver quantity (toz) 376,818 341,266 Copper quantity (lb) 12,702,975 11,823,431 Gold gross value (USD) 1,735,459,511 2,109,286,360 Silver gross value (USD) 8,934,870 10,501,201 Copper gross value (USD) 40,947,740 42,216,141 Total Value (USD) 1,785,342,121 2,162,003,702 * Updated figures Basic Facts from Tables 3 and 4

 Gold production was the same as the previous year at 1.25 million troy ounces.

 Total value of mineral exports by the seven major gold mines decreased by 17.7% from USD 2.16 billion in 2012 to USD 1.79 billion in 2013, largely due to lower gold prices in the world market during the year.

Figure 2: Total Gold Export Quantity, 2013 - Contribution by Mine

Table 5: Minerals Production, Export and Royalty Payments (2013) Mine Production Export Total Export Total Royalty (Main Product) Quantity Quantity Value Paid (USD Mil.) (USD Mil.) BGM 2013 193,626 toz 195,312 toz 290.11 11.49 (Gold) 2012 205,513 toz 223,272 toz 413.14 14.08 Change -5.78% -12.52% -29.78% -18.39% BZGM 2013 188,650 toz 186,782 toz 292.21 11.57 (Gold) 2012 156,011 toz 149,530 toz 249.48 5.29 Change 20.92% 24.91% 17.13% 118.71% GGM 2013 463,211 toz 455,529 toz 628.94 24.98 (Gold) 2012 534,435 toz 540,780 toz 899.02 32.8 Change -13.33% -15.76% -30.04% -23.84% GPM 2013 74,794 toz 74,827 toz 105.99 4.24 (Gold) 2012 120,151 toz 120,022 toz 200.5 7.48 Change -37.75% -37.66% -47.14% -43.32% NLGM 2013 63,702 toz 62,410 toz 86.4 3.47 (Gold) 2012 4,607 toz 4,250 toz 7.26 0.26 Change 1282.72% 1368.47% 1090.08% 1234.62% NMGM 2013 261,265 toz 261,339 toz 368.19 14.5 (Gold) 2012 182,876 toz 182,634 toz 305.45 11.49 Change 42.86% 43.09% 20.54% 26.20% TGM 2013 8,536 toz 8,536 toz 13.5 0.52

Mine Production Export Total Export Total Royalty (Main Product) Quantity Quantity Value Paid (USD Mil.) (USD Mil.) (Gold) 2012 43,229 toz 45,868 toz 76.33 2.67 Change -80.25% -81.39% -82.31% -80.52% TTM 2013 3,125,683 crt 41,609,149 crt 10.97 0.23 (Tanzanite) 2012 2,465,162 crt 2,465,162 crt 16.10 0.37 Change 26.79% n/a -31.86% -37.84% WDL 2013 158,562 crt 144,354 crt 39.56 1.91 (Diamond) 2012 149,003 crt 116,658 crt 29.85 1.47 Change 6.42% 23.74% 32.53% 29.93%

3.1.3 Tulawaka Mine Closure Tulawaka Gold Mine, a 70/30 joint venture between Pangea Minerals Ltd., a wholly-owned subsidiary of African Barrick Gold, and MDN Inc. ceased its operations on 30th July, 2013. The mine, commissioned in 2004 at a capital cost amounting to USD 48 million, had its first gold pour on 15th March, 2005. During its mine life of 9 years, the mine produced and sold 933,015 troy ounces of gold worth USD 828.60 million, and 104,502 troy ounces of silver worth USD 1.71 million. The mine has so far paid royalty amounting to USD 25.37 million, and other payments such as Corporate Tax, Pay As You Earn, Withholding Tax, Service Levy, Road Toll, Skills Development Levy, amounting to TZS 174.3 billion. The mine had 486 local employees by the end of 2012. In addition, the mine spent USD 6.05 million on Community Development Projects between 2005 and 2013. The mine has accumulated mine closure liabilities amounting to USD 23 million as of June, 2013. The Government is undertaking technical evaluation for possible handing over of the mine to STAMICO.

3.1.4 Auditing of Diamonds Production and Exports Diamonds mining operations at the Williamson Diamonds Mine are composed of the following distinct activities: mining of ore at the pit, re- treatment of tailings to recover missed diamonds and gravel mining. The open pit mining is the largest of the operations. Current ore grade is about 6 carats per hundred tons (or 12 mg/t). Table 6 summarizes the 13 quantity of diamonds produced and exported by WDL in 2013 as audited by TMAA.

Table 6: Diamonds Production and Export, 2013 Year Year 2013 2012* Quantity produced (carat) 158,562 149,003 Quantity exported (carat) 144,354 116,658 Average Price (USD/carat) 274.06 255.85 Export Value (USD) 39,561,323 29,847,382 Royalty Paid (USD) 1,905,304 1,467,898 * Updated figures 3.1.5 Auditing of Tanzanite Production and Exports TMAA Auditor stationed at TTM is responsible for witnessing, recording and reporting on a daily basis Tanzanite production and exports activities undertaken by the mine. Table 7 summarizes the quantity of Tanzanite produced and exported by TTM in 2013 as audited by TMAA.

Table 7: Tanzanite Production and Exports by TTM, 2013 Year Year 2013 2012* Quantity Produced (crt) 3,235,331 2,465,162 Quantity Sold – rough (g) 27,522,880 (n/a) Quantity Sold – cut (crt) 71,970 2,465,162 Export Value (USD) 10,966,017 16,100,000 Royalty Paid (USD) 229,545 371,296 * Updated figures

3.1.6 Auditing of Coal Production at Ngaka Coal Mine TMAA continued to monitor and audit coal production and sales activities at Ngaka Coal Mine (NCM). During the year 2013, the mine produced 128,920 metric tons and sold 134,063 metric tons of coal worth USD 7.45 million. Total royalty paid to the Government was TZS 367.62 million, up 43.3% compared to TZS 256.46 million realized in 2012 (Table 8).

Table 8: Coal Production and Sales at Ngaka Coal Mine, 2013 Year Year 2013 2012 Quantity produced (ton) 128,920 75,752 Quantity sold (ton) 134,063 80,019 Sales Value (USD) 7,445,895 5,830,578 Royalty Paid (TZS) 367,616,952 256,463,960

3.1.7 Auditing of Building Materials and Industrial Minerals TMAA in collaboration with the Zonal Mines Offices continued to monitor and audit production and sales of building materials and industrial minerals in the Eastern, Southern and Western zones by using “Sales Vouchers”. Also, during the year TMAA commenced the same exercise in Lake Victoria and Central zones in March and October, 2013 respectively. The audit aimed at ensuring that the Government collects maximum royalty from these activities. During the reporting period, a total of 5.47 million tons of building materials and industrial minerals worth TZS 56.52 billion were produced and sold by miners in audited areas, with payable royalty of TZS 1.71 billion. The payable royalty is 83.39% higher compared to TZS 931.08 million realized in 2012. Table 9 summarizes minerals produced, sold and royalty payable in each zone as audited by TMAA.

Table 9: Building Materials and Industrial Minerals Production in the Eastern, Southern, Lake Victoria and Central Zones, 2013 Zone Type of Minerals Quantity Value Payable (MT) (TZS Bil.) Royalty (TZS Mil.) Eastern Building Materials 4,529,914 39.9 1,196 Southern Gypsum 38,863 3.9 118.1 Copper Ore 208 0.1 3.12 Lake Victoria Building Materials 720,108 10.4 311.9 Central Building Materials 185,682 2.22 78.4 Total 56.52 1,707.52

3.1.8 Auditing of Gold Produced and Sold by Vat Leaching Operators TMAA continued to monitor and audit gold producers who use vat leaching technology to recover gold from tailings in Mwanza and Geita regions. During the year 2013, a total of 20 elution plants were audited from which 410 kilograms of gold worth TZS 24.7 billion were recovered. Total payable royalty amounted to TZS 981 million, up 326.5% as compared to TZS 230 million realized in 2012.

3.1.9 Mineral Royalty Payments for 2013 Total calculated provisional royalty for 2013 from the major gold mines decreased by 5.03% to USD 71.41 million, compared to USD 75.19 million realized in 2012. Actual royalty paid during the period amounted to USD 70.76 million.

3.1.10 Combating Minerals Smuggling and Illegal Trading TMAA is mandated to counteract minerals smuggling and minerals royalty evasion in collaboration with relevant Government authorities, mainly the Minerals Department, Tanzania Airports Authority, Tanzania Police Force, Tanzania Revenue Authority and Immigration Department. 16

In July 2012, TMAA established Minerals Auditing Desks at three major airports in the country in order to inspect and verify minerals transported to and out of the country via Julius Nyerere International Airport (JNIA), Kilimanjaro International Airport (KIA) and Mwanza Airport (MA).

During year 2013, minerals worth TZS 2 billion were seized in thirty two (32) different minerals smuggling attempts at JNIA, KIA and MA. The events were reported to other Government bodies for legal actions. Since July 2012 to December 2013, minerals worth TZS 15.03 billion were seized in thirty seven (37) different minerals smuggling incidents in the three airports. TMAA will continue to strengthen monitoring and combating of minerals smuggling and illegal trading by increasing number of checkpoints at the above named three airports, and other exit points depending on availability of funds.

3.2 FINANCIAL AUDIT AND TAX REVIEW

One of the essential functions of TMAA is to audit revenue generated, capital and operating expenditures of the large and medium scale mines for the purpose of gathering taxable information and providing the same to TRA and other relevant authorities.

3.2.1 Financial Audit and Tax Review Results for 2013 Audit of revenue generated, capital and operating expenditure during the year 2013 was conducted on 7 large scale mining entities, 15 medium scale mining entities and 7 mineral dealers.

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

Table 10: Unresolved Queries Communicated to TRA Item Total Amount (USD) 1. Disallowable items claimed as allowable expenses 163,544,707 2. Payments of technical services, management fees and royalty for former mineral rights for which tax was not 90,450,167 withheld 3. Unqualified capital expenditure deductions 57,457,020 4. Understatement of Earnings Before Interest and Tax 49,718,035 5. Under- declaration of asset disposal proceeds 2,100,000 6. Payments which were not subjected to PAYE and SDL 3,688,176

3.2.2 Achievements Resulting from TMAA's Financial Audits Key achievements for the year 2013 which resulted from TMAA's financial audits and tax reviews conducted on mining entities in collaboration with TRA are as follows:

 RTL paid a total of TZS 15.53 billion in the year 2013 as corporate tax. Cumulatively, the company has paid corporate tax amounting to TZS 100.39 billion.

 GGML paid a total of TZS 8.97 billion in the year 2013 as corporate tax. Cumulatively, the company has paid corporate tax amounting to TZS 308.34 billion.

 WDL paid alternative minimum tax amounting to TZS 178.9 million.

 Withholding tax amounting to TZS 2.77 billion which was not paid from payments made to mineral rights holders and mining technical services.

 Payroll taxes (PAYE and SDL) amounting to TZS 85.7 million which were not paid to the Government.

 Royalty amounting to TZS 147.4 million and empowerment fund amounting to USD 200,000 which were not paid to the Government by the respective mines.

 Service Levy amounting to TZS 141.9 million which was not paid to the Local Government Councils hosting the mining entities.

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

3.2.3 Government Revenue Projection Revenue forecasting is pertinent aspect of public finance and economic planning. Given the significance of mining sector to the national economy, mining revenue forecasting is one of the functions of TMAA. Under this function, TMAA analyses production plans and financial budgets and perform revenue forecasts on major operating mines. This enables TMAA to share policy recommendations on industry outlook with other Government organs.

The Government is currently receiving technical assistance from the Norwegian Government in revenue forecasting and management of revenue flows from the extractive industries (mining, oil and gas). Representatives from ten Government institutions (MoF, MEM, TRA, BoT, TPDC, NBS, NDC, Planning Commission, TEITI and TMAA) have been undergoing a 3-year capacity building program since January, 2012.

TMAA has successfully applied acquired knowledge in modeling to forecast Government revenue from the eight (8) active large scale mines which are: Bulyanhulu Gold Mine (BGM), Buzwagi Gold Mine (BZGM), Geita Gold Mine (GGM), Golden Pride Mine (GPM), North Mara Gold Mine (NMGM), Tulawaka Gold Mine (TGM), TanzaniteOne Tanzanite Mine (TTM) and Williamson Diamonds Mine (WDM).

The forecasts cover the following Government revenue streams: mineral royalty, local government service levy, corporate tax, withholding tax on dividends and interest, and withholding tax on technical service fees. In other words, this exercise has excluded revenue forecasts relating to payroll taxes, mineral rights rents, import and excise duties, stamp duty, fuel levies and VAT.

Revenue Forecasting Results

Table 11 presents revenue forecasting results for the period of 2014 - 2023.

Table 11: Projected Mine Output, Revenue and Government Take (Undiscounted) from 8 Large Scale Mines, 2014 - 2023

Name of Mine Production Revenue Royalty Other Gross Withholding Corporate Tax Total Govt. (Main Product) (USD Mil.) Payments Revenue Taxes Tax (USD Mil.) Take (USD Mil.) (USD Mil.) (USD Mil) (USD Mil.) Mkuju River 24,155 MT 3,073.80 153.69 9.22 83.99 403.34 650.24 (Uranium) Geita 4.75 mil. toz 4,267.97 170.72 20.19 5.16 33.01 229.08 (Gold) Bulyanhulu 2.8 mil. toz 2,785.62 111.42 8.36 0.00 0.00 119.78 (Gold) North Mara 3.0 mil. toz 2,696.18 107.85 15.34 0.00 0.00 123.19 (Gold) Golden Pride 7,255 toz 6.51 0.26 0.02 0.00 0.00 0.28 (Gold) Buzwagi 1.7 mil. toz 2,143.60 85.74 6.43 43.54 444.74 580.46 (Gold) Kabanga 190,498 MT 4,686.66 187.47 14.06 83.19 468.87 753.59 (Nickel) TOTAL 19,660.33 817.15 73.62 215.89 1,349.96 2,456.62 Revenue Stream Contribution to Total 33.3% 3.0% 8.8% 55.0% 100% Government Take

3.3 ENVIRONMENTAL MONITORING AND AUDITING

TMAA continued with environmental monitoring and auditing activities in mining areas aiming at ensuring sound environmental management during life of mines and after closure. Environmental monitoring and audits were conducted by checking compliance with legal requirements on environmental management; assessing implementation of commitments made in the Environmental Management Plans (EMPs); and ascertaining whether the mines set out adequate environmental budgets for progressive rehabilitation and mine closure.

In 2013, the Agency audited environmental matters on large scale mines comprising 6 gold mines, 1 Tanzanite mine and 1 diamond mine. Additionally, the Agency audited 27 medium scale mines, 76 small scale mines and 51 vat leaching and elution plant sites.

Audit reports with recommended remedial actions were communicated to auditees for corrective actions. All major mines and some of medium and small scale mining operations owners provided action plans to rectify noted shortfalls. Table 12 highlights environment restorations made by large and medium scale mines in line with TMAA's environmental audit recommendations.

Table 12: Summary of Environmental Measures Taken by Large and Medium Scale Mines Mine Environmental Measures Taken Bulyanhulu  Cleaning of the tailings spills along the pipe line. Gold Mine  Paving of the drainage channel for waste water from the plant. Golden Pride  Progressive rehabilitation on Waste Rock Dump (WRD) Mine and Tailings Storage Facility (TSF 1). Geita Gold  Construction of the sediment traps downstream Mine Nyamlilima WRD.  Improvement on dust monitoring procedure and commissioning of new dust monitoring stations.

Mine Environmental Measures Taken North Mara  Installation of new sewage treatment plant. Gold Mine  Hydro-geological study to assess water quality from seepage around the TSF and develop modelled estimates of seepage plumes under various scenarios. The study will help to design and construct seepage collection system. Williamson  Designation and commissioning of specific area to dump Diamonds overburden materials that were previously randomly Mine dumped.  Updating and submission of EMP to NEMC for approval.  Preparation and submission of the mine closure plan. TanzaniteOne  Construction of a windrow downstream old slimes dump Mine located at Naisinyai Village to contain acid rock drainage (ARD) from the dump toes. Great work is in progress to control ARD formation on the dump.  Commencement of water and air quality monitoring as per EMP commitments. Tancoal  Construction of surface runoff interception trenches at Energy Mbalawala Coal Stockpiling area to prevent spread of coal sediments into the environment.  Construction of paved facility with containment bund wall to store waste oil containers to contain possible hydrocarbons spillages.  Stockpiling of topsoil for environmental rehabilitation during operation and closure of the mine. New Luika  Construction and commissioning of cyanide destruct plant Gold Mine to reduce concentration of cyanide in the tailings discharged into the TSF.  Implementation of waste sorting procedures and proper operation of the land fill.  Installation of dust suppression system at the aggregates crusher.  Construction and commissioning of sewage treatment plant.  Implementation of air quality monitoring at various stations.

Mine Environmental Measures Taken Tanga Cement  Monitoring quality of water discharged from the lime Quarry quarry and improved management of solid wastes.  Preparing quarry closure plan as required by law. CGI  Rehabilitation of areas affected by crusher dust heaps. Contractors  Improved waste management practices. Ltd Quarry Arthi River  Employment of an environmental management expert. Minerals  Construction of a bund wall around the furnace and oil storage tanks.

Some of the environmental measures taken by small scale mining operations owners as a result of TMAA's audits include:  Refilling of mining pits that were previously abandoned;  Pavement of sluicing and amalgamation ponds for gold processing using mercury;  Construction of drainage channels sediment traps to intercept sediment loads carried with surface runoff at vat leaching plants;  Improvement in solid waste management;  Preparation of environmental protection plans; and  Construction of drainage channels and catchment pond for collecting spills from Asphalt plant.

Table 13 highlights major shortfalls on environmental management noted at large and medium scale mining operations.

Table 13: Major Shortfalls on Environmental Management Noted at Large and Medium Scale Mining Operations 1. Disposal of tailings with elevated levels of weak acid dissociable cyanide.

2. Improper storage of chemicals.

3. Environmental pollution by acid rock drainage from slimes and waste rock dumps.

4. Discharge of untreated sewage into the environment.

Major environmental management shortfalls noted at small scale mining, vat leaching and elution plant sites include:

 Inadequate management of chemicals;

 Improper handling of hydrocarbons;

 Air emissions;

 Poor management of solid waste;

 Exceedence in discharge of effluents; and

 Absence of Environmental Protection Plans.

4.0 HISTORICAL DATA

Table 14: Profiles of Seven Large Scale Gold Mines Mine Project Project Remaining Main Output from Total *Total Start End Life of Product Inception to Royalty Taxes Paid Mine (from 2013 Paid (TZS Bil.) 2013) (mil. toz.) (TZS Bil.) BGM 2001 2035 22 Gold 3.49 124.30 277.03 BZGM 2009 2020 7 Gold 0.89 59.87 54.77 GGM 2000 2026 13 Gold 6.26 215.98 548.19 GPM 1999 2014 1 Gold 2.19 61.87 181.40 NLGM 2012 2023 10 Gold 0.07 5.99 17.57 NMGM 2002 2022 9 Gold 2.56 103.48 124.83 TGM 2005 2013 0 Gold 0.94 34.60 174.30 TOTAL 16.40 606.09 1,378.09 * Total Taxes Paid include: Corporate Tax, PAYE, SDL, WHT, VAT, Stamp Duty, Import Duty, Excise Duty, and Service Levy (2012 & 2013)

Table 15: Tax & Royalty Payments by 9 Major Mines, 1999 – 2013 (TZS Billion) Year Corporate PAYE SDL WHT *Other Total Total Grand Tax Taxes Taxes Royalty Total Paid Paid 2000 0 3.88 0.86 4.71 0.39 9.85 4.45 14.30 2001 0 7.23 1.13 4.86 0.35 13.57 7.65 21.22 2002 0 10.68 1.69 5.40 1.64 19.41 11.41 30.82 2003 0 12.79 1.66 5.45 2.19 22.09 16.44 38.53 2004 0 8.33 2.44 5.32 4.86 20.95 20.59 41.54 2005 2.31 13.05 8.87 7.50 5.44 37.16 22.34 59.50 2006 1.75 11.78 2.49 3.35 2.84 22.21 30.38 52.59 2007 1.44 22.28 3.76 3.26 3.44 34.18 31.40 65.58 2008 0.88 44.01 7.55 5.61 9.23 67.27 33.72 100.99 2009 3.21 52.64 9.78 7.87 8.67 82.16 44.42 126.58 2010 21.38 49.92 11.32 13.14 4.87 101.16 71.55 172.71 2011 137.16 90.30 19.5 12.26 26.26 287.93 98.13 386.06 2012 299.85 87.45 19.32 67.64 46.81 528.35 117.66 646.01 2013 24.67 87.32 19.25 36.63 22.25 197.44 116.64 314.08 Total 492.65 501.66 109.62 183.00 139.24 1,443.73 626.78 2,070.51 * Other Taxes include: VAT, Stamp Duty, Import Duty, Excise Duty and Service Levy (2012&2013)

Table 16: Historical Minerals Sales by Major Mines (1999 - 2013) Year Gold Silver Copper Tanzanite Tanzanite Diamonds (Mil. toz) (Mil. toz) (Mil. lb) (Mil. crt) (Mil. g) (Mil. crt) 1999 0.13 0.01 0.00 0.00 n/a 0.23 2000 0.42 0.04 0.00 0.00 n/a 0.32 2001 0.94 0.24 5.73 0.00 n/a 0.21 2002 1.14 0.34 8.74 0.00 n/a 0.18 2003 1.32 0.34 7.47 0.00 n/a 0.21 2004 1.42 0.41 9.41 0.80 n/a 0.27 2005 1.40 0.37 7.45 1.24 n/a 0.20 2006 1.25 0.44 7.05 1.19 n/a 0.19 2007 1.16 0.52 6.55 1.70 n/a 0.22 2008 1.03 0.32 5.59 2.20 n/a 0.13 2009 1.10 0.35 6.46 1.91 n/a 0.14 2010 1.24 0.37 13.04 2.20 n/a 0.11 2011 1.32 0.37 14.58 1.57 n/a 0.03 2012 1.27 0.34 11.82 2.11 n/a 0.12 2013 1.24 0.38 12.70 0.07 27.52 0.14 Total 16.40 4.85 116.60 14.99 n/a 2.69

Figure 3: Africa's Top Four Gold Producing Countries (2008 – 2013)

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

Table 17 summarises historical minerals production statistics for selected minerals produced by medium and small scale miners for the year 2008 through 2013 as reported by Zonal and Resident Mines Offices.

Table 17: Minerals Produced by Medium and Small Scale Miners (2008 - 2013)

Type of Unit 2008 2009 2010 2011 2012 2013 TOTAL Minerals

Weight (kg) 566.48 483.87 216.39 891.54 367.48 1,143.26 3,669.02

Value (TZS Bil.) 15.71 15.98 8.88 5.68 19.52 66.76 132.53 Gold

Royalty (TZS Mil.) 471.54 479.37 283.63 199.63 689.74 2,193.25 4,317.16

Weight (kg) 229.13 385.38 1,559.70 344.67 218.77 18,318.62 21,056.27 gh

Value (TZS Bil.) 1.00 11.91 23.89 13.63 14.41 20.86 85.70 Rou

Tanzanite Royalty (TZS Mil.) 49.85 585.36 1,186.48 708.53 732.36 1,024.89 4,287.47

Weight (kg) 9.39 12.42 15.22 12.57 27.85 37.71 115.16

Cut Cut Value (TZS Bil.) 1.31 1.79 6.60 7.74 7.20 22.09 46.73

Tanzanite Royalty (TZS Mil.) - - 11.47 80.83 205.18 281.53 579.01

Weight (crt '000) 84.81 32.66 12.71 9.05 9.09 45.70 194.02 Value (TZS Bil.) 4.27 5.67 5.19 3.78 4.03 13.74 36.68

Diamond Royalty (TZS Mil.) 213.51 255.30 259.51 189.57 201.40 722.08 1,841.37

Weight (ton '000) 2.86 5.40 6.57 5.70 3.06 3.16 26.75 Value (TZS Bil.) 0.84 1.31 1.95 1.68 0.86 1.51 8.15

CopperOre Royalty (TZS Mil.) 25.18 39.15 58.63 70.83 32.58 64.23 290.60

Weight (ton) 12.00 0.11 212.20 - - - 224.31 Value (TZS Mil.) 0.07 - 62.41 - - - 62.48

Iron Ore Iron Royalty (TZS Mil.) 0.00 - 1.87 - - - 1.87

Weight (ton) - 1.00 4,279 22,046 20 169.79 26,516

Tin Value (TZS Bil.) - 0.01 0.05 0.71 0.10 0.71 1.58

Royalty (TZS Mil.) - 0.18 1.59 21.19 3.06 27.11 53.13

Weight (ton '000) - - - 37.70 59.03 33.94 130.67

Value (TZS Bil.) - - - 2.22 5.45 4.89 12.56 Bauxite Royalty (TZS Mil.) - - - 65.58 176.64 154.72 396.94

Weight (ton Mil.) 1.21 1.17 7.68 14.93 1.11 0.01 26.11

Value (TZS Bil.) 9.54 9.43 8.75 12.49 11.52 7.36 59.09 Minerals Industrial Royalty (TZS Mil.) 277.27 274.37 310.19 390.40 428.98 175.55 1,856.76 TOTAL VALUE (TZS Bil.) 32.67 46.10 55.37 47.93 63.09 137.92 383.08 TOTAL ROYALTY (TZS Bil.) 1.04 1.63 2.11 1.73 2.47 4.64 13.62 Source: Zonal and Resident Mines Offices

Figure 4: Gold Exports by Large Scale Gold Mines (2000 - 2013)

Figure 5: Gold Exports Value by Large Scale Gold Mines (2000 - 2013)

Figure 6: Royalty Payments by Large Scale Gold Mines (2000 - 2013)

Figure 7: Gold Price Trends (2000 - 2013)

Source: LME - Gold London PM Fix Figure 8: Silver Price Trends (2000 - 2013)

Source: LME - Silver London PM Fix Figure 9: Copper Price Trends (2001 - 2013) 31

Source: LME – Copper, Cash Seller

Table 18: Procurement of Goods and Services by Large Scale Mines (2001 – 2013)

Year Foreign Local Total (USD Mil.) (USD Mil.) (USD Mil.) 2001 75.47 109.51 184.98 2002 111.9 125.45 237.35 2003 215.73 186.15 401.88 2004 102.73 130.48 233.21 2005 336.08 237.97 574.05 2006 217.24 349.6 566.84 2007 467.88 547.82 1,015.70 2008 649.78 554.93 1,204.71 2009 619.9 551.77 1,171.67 2010 546.17 337.92 884.09 2011 991.29 379.57 1,370.86 2012 829.35 520.67 1,350.02 2013 568.61 825.62 1,398.23 TOTAL 5,372.14 4,857.46 10,589.60

Table 19: Tanzania Mineral Reserves for Selected Minerals and Projects (December 2013) Name of Mine/ Owner Location Minerals Reserve Remarks Project Quantity Bulyanhulu African Kahama Gold 10.6 million Proven & Gold Mine Barrick Gold troy ounces Probable Buzwagi Gold African Kahama Gold 2.7 million troy Proven & Mine Barrick Gold ounces Probable Geita Gold Ashanti Gold Geita Gold 5.4 million troy Proven & Mine ounces Probable North Mara African Tarime Gold 3.0 million troy Proven & Gold Mine Barrick Gold ounces Probable Nyanzaga Gold African Sengerema Gold 3.8 million troy Indicated Project Barrick Gold ounces TanzaniteOne Richland Simanjiro Tanzanite 30.6 million Indicated Mine Resources carats Limited (50%) Tsavorite 1.4 million Indicated & STAMICO (50%) Williamson Petra Kishapu Diamonds 4.93 million Indicated Diamond Mine Diamonds carats (75%) & Tanzania Govt. (25%) Kabanga Nickel Barrick Gold Ngara Nickel 241.2 million Indicated Project Corp. (50%) & pounds Xstrata Plc Cobalt 30.56 million Indicated (50%) pounds Mkuju River ARMZ Namtumbo Uranium 99.3 million Measured & Project Uranium pounds Indicated Holding Co. Mkuju Uranium Uranex Namtumbo Uranium 2.52 million Indicated Project pounds Manyoni Uranex Manyoni Uranium 2.43 million Indicated Uranium pounds Project Kiwira Coal STAMICO Ileje/Kyela Coal 35.4 million Estimate Mine tons Ngaka Coal Intra Energy Ruvuma Coal 412 million Proven Project Corporation tons Ltd. (70%) & NDC (30%) Mchuchuma NDC Ludewa Coal 159 million Proven Coal Mine tons

Name of Mine/ Owner Location Minerals Reserve Remarks Project Quantity Liganga Iron NDC Ludewa Iron Ore 45 million tons Proven Ore-Titanium- Titanium n/a Vanadium Vanadium n/a Project Ngualla Rare Peak Mbeya Rare Earth 0.82 million Proved Earth Project Resources Oxides tons Limited Source: Mining companies’ publications

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

Year Type BGM BZGM GGM GPM NLGM NMGM TTM WDL Grand Total 2007 Expat. 180 - 114 15 - 83 25 11 460 Locals 1,787 - 2,338 302 - 928 644 717 6,999 Total 1,967 - 2,452 317 - 1,011 669 728 7,459 2008 Expat. 140 58 129 34 - 129 26 10 567 Locals 1,687 569 1,964 225 - 978 714 677 7,139 Total 1,827 627 2,093 259 - 1,107 740 687 7,706 2009 Expat. 185 49 121 27 - 127 29 4 583 Locals 2,012 671 1,814 238 - 621 613 610 6,917 Total 2,197 720 1,935 265 - 748 642 614 7,500 2010 Expat. 181 105 86 34 - 138 33 8 650 Local 2,266 746 1,792 266 - 703 648 584 7,361 Total 2,447 851 1,878 300 - 841 681 592 8,011 2011 Expat. 195 132 82 37 - 157 32 8 718 Local 2,430 875 1,601 297 - 876 643 558 7,753 Total 2,625 1,007 1,683 334 - 1,033 675 566 8,471 2012 Expat. 181 104 77 42 - 148 37 10 669 Local 2,535 1,064 1,610 304 - 971 630 534 8,134 Total 2,716 1,168 1,687 346 - 1,119 667 544 8,803 2013 Expat. 167 49 1,560 23 30 926 25 10 482 Local 2,290 787 78 333 270 92 645 551 7,542 Total 2,457 836 1,638 356 300 1,018 670 561 8,024 Source: Mining companies’ financials

5.0 UPDATE ON PROSPECTIVE PROJECTS

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

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

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

Mineral resource estimate for the project, as of November, 2011 specified

Measured & Indicated resources of 93.3 million pounds of U3O8 (about 35,900 tonnes of uranium oxide), Inferred resources of 26.1 million pounds (about 10,000 tonnes of uranium oxide), and the overall mineral resource of 119.4 million pounds.

(Source: Mantra)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

6.0 CHALLENGES FACED IN 2013

The Agency's achievements in 2013 have not been without challenges. The following are key challenges which hampered implementation of planned activities:

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

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

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

4. Delays by some Government bodies in implementing audit recommendations by TMAA aimed at maximizing Government revenue from the mining industry and ensuring sound environmental management.

7.0 PLANNED ACTIVITIES FOR 2014

Table 21 summarizes auditing activities planned to be undertaken by TMAA in 2014.

Table 21: Targets for 2014 Function Targets Auditing of . To witness and record production of all minerals at Geita quality and Gold Mine (Geita), Bulyanhulu Gold Mine (Kahama), North quantity of Mara Gold Mine (Tarime), Golden Pride Mine (Nzega), produced and Buzwagi Gold Mine (Kahama), Williamson Diamonds Mine exported (Kishapu), TanzaniteOne Tanzanite Mine (Simanjiro), minerals for the Ngaka Coal Project (Mbinga) and New Luika Gold Mine purpose of (Chunya). determining . To undertake strategic auditing of minerals produced by values and medium and small scale miners, and mineral processors. royalty due. . To collect samples of gold bearing materials produced by major gold mines and ship the same to the TMAA Laboratory in Dar es Salaam for analysis. . To witness boxing, sealing and shipment for export of all minerals produced by major mines. . To analyze mineral samples collected from the major gold mines so as to be able to accurately determine the quantity of gold, silver and copper contained. . To return the analyzed mineral samples to the respective mines. . To dispose laboratory wastes in a sound environmental manner. . To store the collected data on production and exports of minerals in the TMAA database to ensure its correctness, security and easy access. . To analyze the collected data to determine values and payable royalties of the minerals produced and exported. . To collect, analyze and disseminate minerals production and exports data for projecting Government revenue, planning purposes and decision making in the administration of the mining industry. . To counteract minerals smuggling and minerals royalty evasion in collaboration with relevant Government

Function Targets authorities. Auditing of . To verify correctness of declared value of minerals sold by revenue large and medium scale mines, and mineral dealers. generated, . To review financial statements, accounts, vouchers and capital and other supporting records of large and medium scale operating mining companies, and mineral dealers for the purpose of expenditure of verifying revenue generated, capital investments and the large and operating costs incurred by the entities in the course of medium mining minerals production and/or sales. companies, and . To review tax accounting of large and medium scale mineral dealers mines, and mineral dealers based on revenues and for the purpose allowable expenses for the purpose of giving assurance to of tax the Government on correctness of taxable income or assessments. declared losses. . To review financial projections and budgets on revenues, capital and operating expenditure of the major mining companies for the purpose of forecasting potential Government revenues from major mines in form of taxes and royalties. Monitoring and . To monitor and audit environmental management auditing of activities in large, medium and small scale mining environmental operations so as to ensure compliance with the management, Environmental Management Act, Cap.191 and the Mining environmental Act, Cap.123. budget and . To review budgets and actual expenditure incurred on expenditure for environmental conservation at different phases of mining the purpose of operations for large and medium scale mining operations assessment of as per approved environmental audit schedule. compliance to . To verify on site the significant environmental environmental expenditure incurred by large and medium scale mines. laws and . To review provisions for environmental rehabilitation and regulations. mine closure activities for large and medium scale mines. . To determine the extent to which the mines’ rehabilitation programs have been implemented. . To monitor and audit environmental management practices of small scale mining operations, so as to ensure compliance as per the Environmental Management Act, Cap.191 and the Mining Act, Cap.123.

8.0 CONCLUSION

The mineral sector remains critical to Tanzanian development, and has been an important contributor to the national economy despite fall in metal prices like gold experienced during the year 2013. Statistics show that the sector's contribution to the economy was 3.5% in 2012. This level of economic contribution necessitates comprehensive monitoring and auditing of mining activities.

TMAA being a key stakeholder in the mineral sector played its role of ensuring that the Government maximizes benefits from the sector. As pointed out in this report, significant revenue including royalty and taxes, has been collected by the Government as a result of TMAA's audits.

TMAA is fully committed to strive for exemplary performance in the coming year in order to ensure that the Government maximizes revenue collection from the mineral sector. To realize this, TMAA will strengthen auditing activities, always aiming at increasing efficiency and effectiveness.

The Agency will continue to build capacities in all relevant areas to ensure more effective monitoring and auditing of mining operations for the purpose of maximizing Government take and ensuring sound environmental management in mining areas.

We, all at TMAA, are looking forward to continuing collaboration with other relevant Government bodies to ensure a win-win situation between the Government and mining entities. Mining for National Development