ANNUAL REPORT 2017

His Majesty The King Mohammed VI, May God Assist Him SUMMARY

MESSAGE FROM THE GENERAL DIRECTOR 4

CONJUNCTURE 6 International conjuncture 6 National conjuncture 10

MAJOR FACTS 12 Hydrocarbons 12 Mining 12 Human resources 13 Information system 13

PROMOTION AND COOPERATION 14

HYDROCARBON EXPLORATION 16 Licensing 16 ONHYM’s own activities 17 Partners’ activities 20

HYDROCARBON COOPERATION AND PARTNERSHIP 23

HYDROCARBON DEVELOPMENT AND PRODUCTION 26 Reservoirs studies 26 Development studies 26 Reservoirs production 26 Hydrocarbons delivery 27 Maghreb Europe Gas Pipeline « GME » 27

2 MINING EXPLORATION 28 ONHYM’s own activities 28 Partners’ activities 35

MINING LABORATORIES 38 Certification 38 Mineralogy 38 Mineralurgy 38 Mineral chemistry 38 Mining drilling 39

MINING COOPERATION AND PARTNERSHIP 40

HUMAN RESSOURCES 41

ANNUAL REPORT ONHYM 2017 3 MESSAGE FROM THE GENERAL DIRECTOR

Despite a slight recovery in the global growth, the trend in 2017 remains marked by a slight increase in investments, still impacted by the 2014 oil prices drop.

In this context, which is unfavorable to the development of any risky and capital-intensive activity, ONHYM is continuing its mission as a catalyst to attract new companies and multiply investments with the aim to evaluate the potential of the sedimentary basins of Morocco. In accordance with the business model, investments, predominantly from ONHYM’s partners, led to the discovery of gas concentrations in the Gharb and the Tendrara Regions following the drilling of six wells, three of which were positive.

Similarly, mining exploration continued, focusing on the most promising areas of our mining domain, and highlighted new prospects. In order to maximize chances of discovering new deposits in the mature exploration modeling context of Morocco, “integrated project” strategies are being systematized. Thus, beyond major strategic campaigns of geophysics, geochemistry or hyperspectral, an integrated project was finalized in the Oriental Region, a second one was launched in the Southern Moroccan Provinces and a third one is planned in the Anti-Atlas Area .

With regard to the South-South partnership, and in line with its strategy of opening up to Africa, ONHYM signed new agreements in 2017 with several African organizations. It also keep strengthening partnerships as part of its policy of promoting the country’s oil and mining wealth. In this context, ONHYM is involved in two major projects which are the rehabilitation and the safeguard of the Pangalanes Canal in Madagascar and the Nigeria- Morocco Gas Pipeline Project.

On the environmental side, the ONHYM’s policy makes ONHYM’s staff developing a true environmental culture.

In conclusion, operating in a risky, capital-intensive and highly competitive market, ONHYM constantly strives to develop the excellence in exploration in the service of the development of our country under the enlightened leadership of His Majesty King Mohammed VI, May God Assist Him.

Amina BENKHADRA

4 « … discovery of gas concentrations in the Gharb and Tendrara Regions… »

ANNUAL REPORT ONHYM 2017 5 CONJUNCTURE

International conjuncture

The global economy strengthened in 2017. Global growth increased from 3.2% in 2016 to 3.6% in 2017 and should reach 3.7% in 2018. It has accelerated this year in emerging and developing countries, driven by the improvement of external factors, namely a favorable global financial environment and a recovery in advanced economies. Growth in China and in other Asian emerging countries remains strong. And the situation of several commodity- exporting countries in Latin America, in CIS and in sub-Saharan African regions, which remains difficult, appears to improve slightly. In advanced economies, the significant acceleration of growth in 2017 is general, with stronger activity in the United States, in Canada, in the euro zone and in Japan.

The Brent was US$ 54.7 / barrel in 2017, + 21% compared to 2016.

The IAE (International Energy Agency(1)) expects an increase in world oil demand by 1.3 million barrels per day (bpd) in 2018 compared to 1.5 million bpd in 2017. Conversely, oil production outside OPEC (Organization of Petroleum Exporting Countries) is expected to increase by 1.6 million bpd in 2018, compared to just 0.6 million bpd in 2017. This increase will be mainly driven by the increase of the US extraction, which is expected to grow by 1.1 million barrels a day.

Furthermore, investments in oil and gas exploration and production increased by 4% in 2017(2). The increase was mainly in North America, driven by independent US companies. Outside North America the evolution was stable due to the offset of the national companies investments rise by the continued decline of the investment by majors and independents focusing on restoring their margins.

The global E&P spending will rise again in 2018. Estimated at 8%, this increase will be driven again by North American companies (growth rate of 30%) as well as by small and midsize companies (growth rate of 25%).

(2) (1) IEA Monthly report on petroleum As a reminder, E&P investments reached $389 billion in 2017 , compared to $374 billion markets - December 14th 2017 (2) Source: IFP Énergies nouvelles in 2016.

6 Economic growth by region - Years 2016 - 2018

2016 2017 4,9% 4,6% 2018 4,3%

3,6% 3,7% 3,2%

2,3% 2,2% 2,1% 1,8% 1,9% 1,5%

World United States Euro Zone Emerging and developing countries

Brent price $US/bl 1999 - 2017

120 111,5 111 108,6 98,2 98,5 100

79,4 80 72,6

65,9 +21% 62 60 54,4 53,9 54,7 45,1 40 38,2 28,5 28,9 24,4 25 20 17,9

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017 2012

Global E&P investments (billions US$)

800

700 683

600 518 500 397-413 389 400 374

300

200

100

0 2014 2015 2016 2017(e) 2018(p)

Middle east Latin America Europe Africa CIS United States & Canada Asia-Pacific Assessment 2018 Source : IFPBN

ANNUAL REPORT ONHYM 2017 7 In mineral exploration, global investments reached US$ 7.95 billion in 2017, +14% compared to 2016. Most of the global exploration budget in 2017 were spent on gold (9%), followed by copper (20.7%).

Annual nonferrous exploration budgets, 1996 - 2017

24 4

21 Annual indexed metals price (1996=1)

18 3

15 US$ billion 7.95 12 2

9

6 1

3 Global nonferrous exploration budget (US$ B) 0 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017 2012

Global nonferrous exploration budget Annual indexed metals price

Nonferrous exploration budgets by commodity, 2017(1) Total budget : US$ 7,95 billion

Base Metals Zinc $2,383.3M $489.4M Copper 6.2% $1,649.0M 30.0% 20.7% Nickel $244.9M Uranium 3.1% Gold $255.7M $4,050.0M 3.2% 50.9%

Diamonds $207.6M 2.6% PGM $56.1M 0.7%

Other $997.6M 12.6%

(1) Source : S&P Global Market Intelligence (Data as of September 27, 2017)

8 Thanks to stronger prices since the beginning of 2016, the overall gold exploration budget increased by 22% in 2017 compared to the previous year. Zinc prices have also rebounded significantly since the beginning of 2016, mainly due to favorable fundamentals, which encouraged producers and junior explorers to increase the total zinc exploration budget by 29% in 2017.

Despite respective increases of 8% and 3%, copper and nickel remained unattractive to junior explorers in 2017, producing companies being solely responsible for these metals’ budgets increase.

According to SNL estimates, the share of the global budget dedicated to operating sites (37%) exceeded in 2017 the shares allocated to projects in the advanced exploration phases (36%) and to projects at the preliminary stages of exploration (27%). This trend reflects the persistence of the risk climate and the investor’s focus on short-term projects.

Global exploration budget by project type

Preliminary exploration 27%

Mine site 37%

Advanced exploration 36%

Metal prices 2013 - 2017

2013 2014 2015 2016 2017 Lead ($/t) 2,140 2,094 1,784 1,872 2,317 (+24%) Tin ($/t) 22,289 21,868 16,070 17,994 20,105 (+12%) Copper ($/t) 7,321 6,858 5,494 4,863 6,166 (+27%) Zinc ($/t) 1,908 2,164 1,928 2,095 2,896 (+38%) Gold ($/Oz) 1,410 1,266 1,159.8 1,249.8 1,258 (+0.7%) Silver ($/Oz) 23.8 19.1 15.7 17.1 17.05 (-0.3%) Platinum ($/Oz) 1,486 1,384 1,052.5 988.4 949 (-4%) Palladium ($/Oz) 725 803 690.5 613 870 (+42%)

Encouraging signs of global economy improvement led to a stronger demand for metals in 2017. The upward trend in base metal prices recorded in 2017 should thus continue during the first quarter of 2018.

ANNUAL REPORT ONHYM 2017 9 National conjuncture

In 2017, the national economy grew by 4%, against +1.2% a year earlier, driven by a 15% increase in the agricultural sector added value. Non-agricultural added value increased by 2.8%, driven by tertiary and mining activities.

The secondary sector registered a growth of 2.9% in 2017 instead of 1.2% recorded in 2016, supported mainly by mining activities, which rose 17.8% after 2.2% a year earlier. The recovery of foreign demand on raw ores and the expansion of sales to local chemical industries, with stronger demand from East and South America, have benefited from the improvement of the mining business climate in late 2017.

With a contribution of nearly 1.2 point to overall GDP growth, the tertiary sector continued to support economic activity, thanks in particular to the good orientation of trade, air transportation and tourism activities, whose added value increased by 7.9% in annual variation.

The extractive sector closes the year 2017 in strong consolidation, driven by the good momentum of the phosphate business, which continues to benefit from robust foreign demand. In fact, phosphate rock production rose sharply by 22% (in volume) at the end of 2017 after +2.5% at the end of 2016, registering its best performance since 2011.

The net energy bill was 69.4 billion dirhams instead of 54.5 billion dirhams recorded in 2016, with an increase of 30%.

The petroleum bill reached 47.9 billion dirhams in 2017, instead of 40.48 billion DH in 2016.

10 « In 2017, the national economy grew by 4%… »

ANNUAL REPORT ONHYM 2017 11 MAJOR FACTS

Hydrocarbons

• Investment of 1.242 billon MAD by the partners and 39.44 million by ONHYM; • Drilling of 6 exploration wells among which 3 highlighted gas discoveries; • Follow up of 20 projects in partnership, 7 special projects, 1 GIS oil project; • Finalization of the project for the delimitation of the Extension of the Moroccan Atlantic Continental Shelf; • Signature of five petroleum agreements, with the companies Chariot Oil & Gas, on the Kenitra Offshore zone, Sound Energy, on the Anoual zone, SDX Energy, on the Rharb Occidental and Sebou Central, and ENI on Tarfaya Offshore Shallow besides two reconnaissance contracts with ENI and Sound Energy, respectively on the El Jadida Offshore and Matarka.

Mining

• Realization of research over 43 projects located in the most promising areas of the country. ONHYM’s own work concerned 31 projects, including 12 for precious metals, 8 for base metals and uranium, 3 for industrial rocks and minerals, 7 for mining reconnaissance and 1 special project (geothermal energy). Partnership work has involved 12 projects, including 4 for precious metals, 6 for base metals and 2 for industrial rocks and minerals; • Signing of 1 lease contract, 2 deeds of assignment, 1 protocol of agreement and 1 amendment.

12 Human resources

The year 2017 was marked by the continuation of the new Office Staff Status implementation, which came into effect on December 1, 2015, the updating of the succession plan and the elaboration of the HR balance sheet. Following massive retirements and in order to support ONHYM in the renewal of its resources, while preserving and developing strategic skills, targeted recruitment based on a jobs and skills forecast management and on a succession plan have been adopted. Regarding the human capital development, ONHYM is pursuing a sustained training program, implemented in accordance with an engineering training process.

Information system

The year 2017 was marked by the completion of structuring projects of the 2014-2016 IS program, and by the launching of priority projects figuring in the 2017-2021 IS Master Plan: • The Transcription Center upgrade project; • The establishment of a seismic treatment center project; • The establishment of ONHYM Extranet. As part of the continuous improvement of the IS security, the new versions of the IS Security Policy (ISSP) and the IT charter have been implemented since January 2017.

ANNUAL REPORT ONHYM 2017 13 PROMOTION AND COOPERATION

A proactive promotion strategy

As part of its policy of promoting mining and hydrocarbon assets, ONHYM aims to involve national and foreign private operators more closely in research and development of mining and oil projects, thus enhancing the potential and opportunities of investment. The mining promotional activities focused primarily on participation in international exhibitions such as the PDAC conference in Canada, Indaba in South Africa and China Mining in China. During those events, stands are then set up for promoting ONHYM’s mining projects among the players in the international mining industry. ONHYM also participated in the Arab Mining Congress held in London, UK, in collaboration with the Ministry of Energy, Mines and Sustainable Development. As part of African cooperation, ONHYM participated in the Mines Symposium in Guinea and SAMAO in Burkina Faso.

As part of its activities promoting Moroccan sedimentary basins to the international oil industry, ONHYM has participated in several international conferences: • Annual NAPE Summit 2017 (February 15-17th 2017 in Houston); • APPEX / AAPG Prospect and Proprety Expo 2017 (February 28th - March 02th 2017 in London); • International Exhibition of Energy and Oil in Africa (May 10-11th 2017 in Dakar); • 79th EAGE Conference & Exhibition 2017 (June 12-15th 2017 in Paris); • Africa Assembly 2017 (June 12-14th 2017 in Paris); • 22nd World Petroleum Congress (July 09-13th 2017 in Istanbul); • 7th Tunisia Oil & Gas Summit 2017 (September 28-30th 2017 in Tunisia); • Africa Oil Week (October 23-27th 2017 in South Africa).

ONHYM also organized data rooms and technical presentations for ExxonMobil, TOTAL, Kosmos, Anadarko Sound Energy, Europa Energy and Redmed Finance.

14 South-South cooperation

Under the enlightened Leadership of His Majesty The King Mohammed VI, may God Assist Him, and President Buhari, Morocco and Nigeria signed a cooperation agreement in May 2017 for the strategic Nigeria-Morocco Gas Pipeline. The feasibility study for this project has started.

In 2017, as part of visits to Africa by His Majesty The King Mohammed VI, may God Assist Him, new cooperation agreements were signed in the hydrocarbons and mines sectors, particularly with Ghana (Minerals Commission), South Sudan (DGS) and Zambia (MMMD). In this context, ONHYM received several high-level delegations.

As part of the Pangalanes canal rehabilitation project (Madagascar), a multi-sectoral working committee led by Marchica Med S.A was set up. ONHYM participated by performing the diagnostic of the mining sector and the presentation of recommendations for the area development around the canal.

The year 2017 was also marked by the continuation of training sessions for executives and engineers. At the end of the year, the total number of Persons/Days training carried out within the framework of African cooperation amounts to 1 582 persons/days (p/d), 657 p/d of which in 2017.

ANNUAL REPORT ONHYM 2017 15 HYDROCARBON EXPLORATION

Licensing At the end of 2017, hydrocarbon exploration licensing was carried out on a total of 170,002.72 sq. km, by 21 companies in partnership with ONHYM:

Area Designation ONHYM Partnership (sq. km) Onshore exploration permits 22 29,744.78 Offshore exploration permits 77 122,882.17 Onshore reconnaissance licenses 2 10,198.90 Offshore reconnaissance licenses 1 7,108.30 Exploitation concessions 1 38.71 Exploitation concessions 8 29.86 Oil shale 2 MoU - Total 170,002.72

16 ONHYM’s own activities Recognition of regional geology and hydrocarbon potential of Lemsid coastal area in the southern provinces

These activities concerned the quality control, the load and the interpretation of 456 km of 2D seismic acquired in 2016. Based on this interpretation, it was decided to integrate the seismic available between Tarfaya and Boujdour to better appreciate the identified play concepts and their extension throughout the whole area. The mapping at the Jurassic and Triassic levels allowed the identification of 4 types of plays related to boundary progradations of the Jurassic carbonate platform, triassic rocked blocks and anticlinal structures affecting the Paleozoic series.

Control of the plays concepts in the Mesorif structural domain

Following previous geological synthesis and assessment studies in the Mesorif domain, ONHYM reprocessed 500 km of old 2D seismic and acquired a new 2D seismic program of 850 km which is being processed. The reprocessing of the 500 km of 2D seismic has relatively enhanced the imaging of the identified structures that are the target of the new seismic acquisition.

ANNUAL REPORT ONHYM 2017 17 Control of the play concepts in the Tangier-Tarfaya offshore segment

This project focuses on reinterpreting available 2D / 3D seismic data and integrating the results of previous studies mainly on the open acreages in order to enhance the already identified plays concepts and map new ones in the different segments of this Moroccan Atlantic margin. The areas concerned by the project are the Loukos, Lixus and Gharb offshore North blocks, Rabat Ultra Deep, Tarhazoute, Mir Left and Ifni Deep.

Control of the play concepts in the Tarfaya-Lagouira offshore segment

Like the previous project, this one deals with the interpretation of the 2D and 3D seismic data available in the area in order to control the prospects and leads defined by the previous studies and to identify new exploration concepts to promote to the international oil industry. Distributary channels of silico-clastic reservoir sediments extending over an area of 2,000 sq. km and prograding structures of the Lower Cretaceous delta have been identified in the shallow Boujdour zone. They are a strong evidence of the presence of detrital inputs in the basin. 10 stratigraphic leads, associated with these channels and structures, have been mapped.

Regional synthesis of unconventional hydrocarbons potential: Shale gas

Work on this project focused on gathering data on potential gas shale areas and preparing a bibliographic synthesis. Work also continued with the analysis and assembly of potential source rock richness maps in the different sedimentary basins, as well as with the interpretation of geochemical and mineralogical analyzes of field samples and the creation on ArcGis of a database maps of rich potential Paleozoic levels.

Regional synthesis of unconventional hydrocarbons potential: Oil Shale

The study within this project concerned the collect of geological, geochemical and core drills data. A geological reconnaissance fieldtrip was performed in the areas of Timahdit and in the Middle Atlas where three cross sections were logged and Cretaceous samples taken for complementary bio stratigraphic and geochemical studies. A second fieldtrip was carried out on the Tangier oil shale deposit where three cross sections were recorded.

Delimitation of the Extension of the Moroccan Atlantic Continental Shelf

Meetings of the Work Group were held in 2017 to discuss the progress of Moroccan submission report and the project roadmap. The documents relevant to the final submission were delivered by MZSL to ONHYM and presented to the National Commission and to government’s members.

18 ONHYM’s own activities: 2017 achievement

2 3 3

4 6 3

3

1

5

ONHYM 2017 Achievement Acquisition of 850 km of 2D seismic Reprocessing of 500 km of 2D seismic Interpretation of 9 506 km of 2D seismic and 9,028 km² of 3D seismic

Objectives: Paleozoic, Jurassic, Objectives: Triassic, Jurassic and Objectives: Unconventional Cretaceous & Tertiary - Lemsid Cretaceous - Mésorif Basin hydrocarbons: Shale gas and Oil shales Processing and interpretation of Reprocessing of 500 km of 2D seismic. Fieldwork and laboratory analysis, 456 km of 2D seismic. Acquisition of 850km of new Interpretation of 150 km of 2D seismic, Regional study synthesis. 2D seismic. Preparation of 15 stratigraphic logs, an G&G studies. ArcGis database and richness maps of potential Paleozoic intervals.

Objectives: Studies and promotion Objectives: Studies and promotion Objectives: Delimitation of the Tangier - Tarfaya Offshore Tarfaya - Lagwira Offshore Atlantic continental shelf Interpretation of 4 800 km of 2D Interpretation of 4.100 km of 2D Reception of final submission report, seismic and 7,764 km² of 3D. seismic. meetings and project progress Preparation of promotion materiel and Preparation of promotion materiel and workshops. Monitoring and follow up prospects portfolio. prospects portfolio. of the submission file.

ANNUAL REPORT ONHYM 2017 19 Partners’ activities Offshore Zones

Permit/ Area Partner (s) Reconnaissance Achievements license

• Processing and interpretation of 1,218.5 sq. km Gharb Offshore Repsol Exploration permit of 3D seismic. Continued evaluation of the South area.

Mohammedia • Acquisition of 2,246.025 km of 2D Chariot Oil & Gas Exploration permit Offshore and 317 sq. km of 3D seismic.

Kenitra Offshore Chariot Oil & Gas Exploration permit • Acquisition of 707 sq. km of 3D seismic.

• Continued geological studies and evaluation Rabat Deep ENI / Woodside / Exploration permit of the area. Selection of the prospect Offshore Chariot Oil & Gas presenting the least geological risk for drilling.

• Processing and interpretation of 3D seismic data acquired in 2016 with review of the Cap Cantin Deep Chevron / Qatar Triassic syn-rift plays integrating onshore wells Exploration permit Offshore Petroleum to establish a depositional model and reservoir distribution. Detailed analysis of the prospects and leads portfolio ongoing.

• Processing and interpretation of 3D seismic data acquired in 2016 with review of the Cap Walidia Chevron /Qatar Exploration permit Triassic syn-rift plays and modeling study and Deep Offshore Petroleum reservoir distribution. Detailed analysis of the prospects and leads portfolio ongoing.

Essaouira • Acquisition of 3 097.03 sq. km of 3D seismic. Kosmos Exploration permit Offshore Processing underway.

Cap Rhir Deep Chevron / Qatar • Quality control of the 2D and 3D seismic Exploration permit Offshore Petroleum acquisition deliverable.

• Acquisition of 999.1 sq. km of 3D seismic. Foum Ognit New Age Exploration permit • Continued regional evaluation and Offshore geochemical modeling.

Boujdour Kosmos / • Acquisition of 1,745 sq. km of 3D seismic out Exploration permit Maritime Capricorne of total program of 9 700 sq. km.

El Jadida Reconnaissance • Evaluation study of the petroleum potential ENI Offshore contract and reprocessing of seismic data.

20

Onshore Zones

Permit/ Area Partner (s) Reconnaissance Achievements license

Lalla Mimouna • Preparation under way for a drilling campaign.

• Drilling of KSR-14 to 1,830 m, KSR-15 to Central Sebou 1,774 m, KSR-16 to 1,896 m and where gas SDX Energy Exploration permit was discovered.

Occidental • Drilling of ELQ-1 to 1,481 m. Gharb

• Drilling of TE–8 to 3,120 m. Acquisition of 11,168.60 km of aero-gradiometric data Tendrara Lakbir and beginning of acquisition of a 2D seismic Exploration permit program. To 31/12/2017, the total acquired was 598 km. Sound Energy • Acquisition of 11,080.80 km of aero-gradiometric Anoual data.

Reconnaissance • Acquisition of 4,568.42 km of aero-gradiometric Matarka contract data.

Sidi Mokhtar North, South Sound Energy Exploration permit • Reentry of Koba-1 and Kamar-1 wells for test. & West

• Drilling of Tamanar-2 well with acquisition of 5 cores between 420 and 720 m. Haha Onshore PEL / FORPETRO Exploration permit • Suspension of drilling at 4,306 m in the salty formations.

• Interpretation of existing seismic data and feasibility studies for the acquisition of Reconnaissance gravimetric and magnetic data and a 2D Issouka Shell contract seismic program. • Decision to convert the reconnaissance license to exploration permit.

ANNUAL REPORT ONHYM 2017 21 Partners exploration activities in 2017

20°0'0"W 15°0'0"W 10°0'0"W 5°0'0"W

ONHYM and Partners achievement in 2017

Tanger Acquisition of 26,817.82 km of aero-gradiometric # N 0" 0' ° N 35 Acquisition of 2.844 km of 2D seismic 0" 0' ° 35

Oujda and 6,865.13 km² 3D seismic # Drilling of 6 wells among which three Fes # Rabat # are positive (Gharb) Casablanca #

Figuig #

Er-rachidia #

t i c O c e a n Marrakech #

Ouarzazate #

"N Agadir '0 # "N 30 °0 '0

l a n 30 °0

t

A

ALGERIA

Lâayoune # N 0" N 0' ° 0" 25 0' ° 25

ANIA

IT

LI Dakhla #

MAUR MA

Lagouira #

15°0'0"W 10°0'0"W 5°0'0"W

Offshore areas Zones Onshore

Repsol (Gharb offshore sud): Chevron / Qatar Petroleum (Cap SDX Energy (Lalla Mimouna): Continued processing and Cantin and Cap Walidia): Processing Preparing for drilling. interpretation of 1,218.5 km² and interpretation of 4,322 km² of SDX Energy (Sebou central & Gharb of 3D seismic. 3D seismic. Occidental): Drilled KSR-14, KSR-15, Chariot (Kénitra offshore): Kosmos (Essaouira offshore): KSR-16 and ELQ-1 wells. Acquisition of 707 km² of 3D seismic. Acquisition of 3,097 km² of 3D seismic. Sound Energy (Matarka): Acquisition ENI / Woodside / Chariot oil (Rabat New Age (Foum Ognit offshore): of 4,568.42 km of aero-gradiometric Deep offshore): Geological valuation Acquisition of 999 km² of 3D seismic. data. and selection of the prospect to be Sound Energy (Tendrara): Drilled TE-8 drilled. Kosmos / Capricorn (Boujdour Maritime): Acquisition of 1,745 km². to a total depth of 3,120 m. Acquisition Chariot (Mohammedia offshore): of 11,168.60 km of aero-gradiometric Acquisition of 2,246 km of 2D seismic data and 598 km of 2D seismic. and 317km² of 3D seismic. Sound Energy (Anoual): Acquisition ENI (El Jadida offshore): of 11,080.80 km of aero-gradiometric Evaluation of the petroleum potential data. and reprocessing of seismic data. PEL / Forpetro (Haha onshore): Drilled Tamanar-2 well.

22 HYDROCARBON COOPERATION AND PARTNERSHIP

The year of 2017 was marked by the signature of: 1 2 3 5 13

Addendum to a new Applications New amendments reconnaissance reconnaissance for exceptional petroleum to petroleum license licenses extension Agreements Agreements

As of December 31, 2017, licensing concerning hydrocarbon exploration was carried out on a total area of 170,002.72 sq. km.

Petroleum Agreements

Area Partner(s) Achievements Kenitra Chariot Oil & Gas • 3D seismic acquisition. Offshore Investments (Morocco) Limited Anoual Sound Energy Morocco • 2D seismic acquisition. East Limited/Sound Energy • 3D seismic acquisition. Meridja Limited Occidental SDX Energy Morocco (UK) • 3D seismic acquisition. Gharb Limited • Drilling of 4 exploration wells. Central Sebou • Drilling of exploration wells. Tarfaya ENI Maroc B.V • 3D seismic reprocessing. Offshore • 3D seismic acquisition (optional). Shallow

ANNUAL REPORT ONHYM 2017 23 Reconnaissance Licenses

Area Partner(s) Achievements El Jadida Offshore ENI Maroc B.V • 2D seismic reprocessing. Matarka Sound Energy Morocco • G&G works. East Limited/Sound Energy Meridja Limited

Amendments to petroleum agreements

Area Partner(s) Purpose Moulay Gulfsands Petroleum • 12 months extension of the Initial Bouchta Morocco Limited Period. PEL • 4 months extension of the Initial Period. • Transfer of 50,67% of PEL’s Haha Onshore PEL / Beiging Forpetro percentage interest to Forpetro. Sino-Rig Co., Ltd. • 12 months extension of the Initial Period. New Age Morocco Limited • Transfer of 100% of Glencore’s / Glencore Exploration & percentage interest to New Age. Foum Ognit Production (Morocco) Limited Offshore New Age Morocco Limited • 12 months extension of the Initial Period. Lalla Mimouna Sdx Energy Morocco • 16 months extension of the Initial Period. (Jersey) Limited Tendrara Lakbir Sound Energy Morocco • Transfer of 100% of OGIF’s East Limited / Sound percentage interest to Sound Energy Meridja Limited / Energy. OGIF / Sound Energy SARL Sidi Moussa Genel Energy Limited / San • Work program modification. Offshore Leon Offshore Morocco • Gathering the First and Second B.V / Serica Sidi Moussa B.V additional Periods. Boujdour Teredo Morocco Limited • Transfer of 100% of Glencore’s Offshore / Glencore Exploration percentage interest to Teredo. Shallow & Production (Morocco) • Work program modification. Limited

Cap Cantin Chevron Morocco • Work program modification. Deep Offshore Exploration Limited / Qatar Petroleum International Upstream Cap Rhir Deep Chevron Morocco • Work program modification. Offshore Exploration Limited / Qatar Petroleum International Upstream Gharb Offshore Repsol Exploracion Gharb • 6 months extension of the Initial South S.A Period.

24 Addendum to a reconnaissance license

Area Partner(s) Purpose Doukkala Abda Olympus Energy • 12 months extension. International Inc.

Exceptional extensions

Area Partner(s) Purpose Lalla Mimouna SDX Energy Morocco • 8 months exceptional extension due (Jersey) Limited to force majeure. Sidi Moussa Genel Energy Limited / San • 30 months exceptional extension Offshore Leon Offshore Morocco due to force majeure. B.V / Serica Sidi Moussa B.V Gaddari Sud Sdx Energy Morocco • 3 years exceptional extension of (Jersey) Limited the exploitation concession.

ANNUAL REPORT ONHYM 2017 25 HYDROCARBON DEVELOPMENT AND PRODUCTION

Reservoirs studies

• Performance monitoring of producing wells in the Gharb and Essaouira Basins; • Reserves reevaluation of producing fields and establishment of the short and mid-term production forecast for producing wells in Gharb region; • Reserve estimation of the last discoveries made by ONHYM’s partner SDX ENERGY: KSR-14, KSR-15 and KSR-16; • Analysis of well tests data from TE-6 and TE-7 wells drilled in Tendrara Lakbir permit with ONHYM’s partner Sound Energy Morocco. • Monitoring of KOBA-1 well tests operations performed by ONHYM’s partner “Sound Energy Morocco”.

Development studies

• Engineering studies for the PSA plant connection to the Gharb gas pipeline network; • Realization of the geotechnical study needed for crossing the railway in order to connect the PSA plant to the Gharb gas pipeline network; • Monitoring and carrying out the connection works of the PSA plant to the Gharb gas pipeline network, in partnership with SDX Energy; • Supplying of the metering skid to be installed in the PSA plant, in partnership with SDX Energy; • Technical and economic studies for the development of Tenderara field; • Establishing of Meskala’s possible development scenarios with assessment of their economic viability.

Reservoirs production

Within the framework of the maintenance of the gas production infrastructure in the Gharb and Essaouira basins, ONHYM has initiated three projects for preserving the natural gas transportation network: • Upgrading the cathodic protection of the Gharb and Essaouira gas pipeline network; • Inspection of the 8’’ pipeline connecting the Meskala production plant to OCP in Youssoufia; • Upgrading the 4’’ pipeline.

26 Hydrocarbons delivery

In 2017, natural gas delivery slightly increased by 0.9% due mainly to OCP consumption increase.

Years 2016 2017 Natural Gas in million NM3 43,62 44 Condensate in Tons 4,849.7 4,350

The overall turnover generated by hydrocarbons sale (natural gas and condensate) for 2017 has increased by 10% compared to 2016, which increased from 100,7 to 110,67 million MAD HT.

The gas sale has generated, at the end of December 2017, a turnover of 103,75 million MAD HT, which represents an increase of about 5,3% compared to the turnover realized in 2016, which was 98,45 million MAD HT. This increase is mainly due to the rise of the fuel n° 2 price on which the natural gas sold to OCP and CMCP is indexed. It is also due to the increase of the natural gas sales to Super Cérame thanks to the signing of a new gas sale contract.

Oil shale

Follow-up of the activity of the partners Zonatec, GOS and General Strade, including the project for the production of oil and electricity, and the establishment of cement production facilities in Tarfaya from clinker imported or purchased at Morocco mixed with limestone extracted locally.

Maghreb Europe Gas Pipeline « GME »

Concerning the royalty management received by the Moroccan Government for the transit of natural gas through our country for European customers « Sagane and Transgas » benefit, ONHYM’s teams continued to ensure quotidian monitoring of daily, weekly and monthly consumption of Spanish and Portuguese customers as well as ONEE power plants natural gas royalty consumption.

As a result, the natural gas volume transited through the GME in 2017 is 7,93 billion NM3, which represents a significant decrease of 12% compared to the volume transited in 2016 valued to 9,01 billion NM3, due to the gas consumption decrease of the European clients (Sagane and Transgas).

Designations 2016 2017 Gap Quantities of natural gas transported for 9,01 7,93 - 12% Sagane and Transgas, in billion NM3 Total amount of the royalty, in million NM3 644,6 566,7 - 12% Quantities of gas consumed by ONEE 465,1 423,9 - 8,8% power plants ”Tahaddart & ABM”, in million NM3

ANNUAL REPORT ONHYM 2017 27 MINING EXPLORATION

Mining exploration in 2017 involved 43 projects of whom 31 were ONHYM’s own and 12 were in partnership.

The 31 ONHYM’s own works were divided in 12 for precious metals, 8 for base metals and uranium, 3 for industrial rocks and minerals, 7 for mining reconnaissance and 1 for geothermal energy.

The 12 work in partnership were divided in 4 projects for precious metals, 6 projects for base metals and 2 for industrial rocks and minerals.

ONHYM’s own activities Precious metals

• Chenna (Au, Cu) The work carried out in 2017 consisted in geological mapping, sampling and alteration studies. The grades reached 9 ppm Au and 10% Cu in the central part and 571 ppb Au and 8,738 ppm Cu in the northern part. A field magnetism geophysical survey was carried out to cover the mineralized structures for which data interpretation is in progress.

• Tlayha (U) The results of the chemical assays of the drill holes performed in 2016 (935.5 m) on the multi-kilometer structure of Tlayha allowed a preliminary resource assessment that

yielded 10.7 million tons at an average grade of 292 ppm U3O8, with a cutoff grade of nd 100 ppm U3O8. The 2 drilling campaign is in progress.

• Lafhouda East (Ta, Nb et U) The survey campaign started in late 2016 continued during 2017 with the completion of 6 drill holes (GLS 16 to GLS 21) totaling 574.5 m. Chemical assays results from GLS16 to GLS21 showed average grades of 5,208 - 3,858 - 8,924 - 3,127 - 4,116 and 4,739 ppm Nb2O5; 352 - 322 - 275 - 492 - 419 and 708 ppm Ta2O5; 397 - 794 - 702 - 823 - 1,692

and 616 ppm U3O8 on respective thicknesses of 48.8 m; 53 m; 59.4 m; 68 m and 46 m.

• Alwarma (Au) The research consisted of a geological survey of the gold soil anomalies identified on the east of Alwarma, by lithogeochemical sampling whose chemical assays results yielded gold grade up to 681 ppb.

28 • Saghro South (Ag, Cu) The works carried out during 2017 concerned the Tizi N’Ousatour copper-silver occurrence by the completion of 4 diamond drill holes totaling 572 m, bringing the total length since the beginning of the campaign in October 2016, to 1,061 m. The drill hole 1 intersected three mineralized passes with respective thicknesses of 6 m at 2.5% Cu and 253 g/t Ag; 3 m at 0.65% Cu and 123 g/t Ag; 2.3 m at 0.25% Cu and 34 g/t Ag. The drill hole 6 intersected three intervals with respective thicknesses of 2.1 m at 0.56% Cu and 64 g/t Ag; 2.1 m at 0.83% Cu and 55 g/t Ag; 3 m at 0.54% Cu and 34 g/t Ag. The drill hole 3 showed contents of 0.15% Cu and 21 g/t Ag over a thickness of 25 m. Drill hole 7 intersected an interval grading 0.56% Cu and 20 g/t Ag over a thickness of 2 m.

• Tidili (Au, Cu) The work carried out focused on the gold veins of Aoudid and the copper structures of Talat n’Outbir and Tighermt, hosted in Neoproterozoic formations. In Aoudid, the gold veins show grades up to 5 g/t Au and 45 g/t Ag. At Talat n’Outbir, the copper structure showed copper grade up to 3%. The copper structure of Tighermt has been the subject of detailed surveys and sampling of which chemical assays are in progress. A field magnetism survey on the Aoudid and Talat n’Outbir structures and 8 induced polarization profiles on the Aoudid structures were carried out. The results show areas with high chargeability that coincide with the vein structures.

• Tizgzaouine (Au, Cu) The work carried out concerned the Merzoug sector, located in the southern part of Tizgzaouine, where a first drill hole of 98.2 m was carried out for the recognition of a structure showing a high chargeability contrast. The targeted structure has been intersected with low grades. The remaining drill holes (300 m), planned on the northern part, require the development of the access tracks.

ANNUAL REPORT ONHYM 2017 29 • Tanalt (Au, Cu, Pb, Zn, Cu) The work carried out was focused on the follow up of alluvial gold anomalies that overlap with those of the BLEG geochemistry, by geological mapping and sampling. The grades obtained on the analyzed samples are low.

• General research in the South Zone (GR-PM-SZS) The general research for precious metals in the southern provinces concerned five sectors. In the area, about 55 km West of Tichla, soil geochemistry on green rocks shows gold anomalies up to 120 ppb in a N30° trend. Geological follow up with soil and rock sampling of these anomalies yielded a gold grade of 761 ppb in a decimetric quartz structure. In the Bir Gandouz sector, geological sections at 1/2,000 were carried out near the Laknouk occurrence to search for gold structures in a context similar to Chenna. The Al Malhate sector was followed up by performing a geological section and sampling. Chemical assays revealed gold grades up to 1,828 ppb and copper grades ranging from 1,000 to 2,402 ppm. The Imatlane area has been mapped at 1/10,000 scale with sampling. In the Jalwa-Umm Tlayha area, West of Tichla, a soil geochemistry survey was carried out..

• General research in the Anti-Atlas (GR-PM-SAA) The general research for precious metals in the Anti-Atlas concerned the Nessissa sector, near Bouarfa, in the Eastern High Atlas, the Inki sector in Siroua and the Taznakht sector in the Zenaga inlier. In the sector of Bouarfa, a systematic sampling concerned a breccia zone with small veins and lenses of quartz and oxidized carbonates. The results of the chemical assays show gold grades up to 0.3 g/t. In the Siroua sector, a sampling in 10 old trenches of the Inki cobalt occurrence, show grades up to 1.2% Co, 238 ppb Au, 0.1% Ni, 0.41% Cu and 0.11% Mo. In the Taznakht area, a 1/5,000 geological survey was carried out on the quartz veins of the Tiwiyyine gold occurrence and of the Azib Ikerrouchen area. The analyzed samples show gold grades from 100 to 674 ppb.

30 Base metals

• Western Tiouli The geological work to follow up the Pb-Zn target, highlighted as part of the integrated mining research project in eastern Morocco, consisted of geological reconnaissance, detailed geological surveys and systematic lithogeochemical sampling of mineralized structures. The grade varies between 0.02% and 13.7% Zn and between 0.01% and 3% Pb on metric thicknesses (between 1 and 9 m). The area has also been the subject of a geophysical survey by magnetometry and induced polarization (IP). The results revealed a magnetic structure oriented ENE-WSW, 4 km long and which coincides with the mineralized structure. The IP profiles show that this structure has a rooting of about 150 m. Following these results, a campaign of 9 cored drill holes (1,500 m) has been implemented. A geochemical campaign was also carried out in order to identify geochemical anomalies of Pb-Zn at the east of the drilling area.

• Awark (REE, U) The work carried out consisted on geological mapping, uranium counting with different grids and sampling. The radiometry of the samples varies between 800 and 6,500 c/s. Chemical assays of the samples show encouraging grades that exceed 9% REE and 1,100 ppm U. Field gravimetric and magnetic surveys were also carried out to characterize the mineralized pegmatite structures. These geophysical surveys allowed mapping the mineralized structures and confirming their roots. Following the interpretation of these results, 10 cored drill holes totaling 602.6 m were carried out and intersected the targeted pegmatites. Chemical assays are in progress.

• Rhouirat N’has (Sb, Cu, Fe) The geological work concerned the follow up of the Cu occurrence of Rhouirat N’has, the Sb-Cu occurrence of Rhar El Anz and the iron occurrence of Sahri and Touemeta sectors. On the vein structure of Rhouirat N’has, a geological mapping and 5 detailed cross sections with sampling were carried out. Chemical assays showed grades reaching 1.78% Cu. 7 cores drill holes totaling 383.6 m were subsequently realized. The majority of the drill holes intersected the targeted structure at 30 m deep with thicknesses between 0.15 and 1.5 m. Chemical assays are in progress. On the Ghar El Anz Cu-Sb occurrence, a detailed geological mapping with sampling was carried out, showing grades reaching 1.9% Sb and 2% Cu. In the sector of the Sahri and Touemeta iron occurrences, the samples show grade reaching 40.2% Fe.

ANNUAL REPORT ONHYM 2017 31 • Merija (Cu) Exploration work started in the sector located about 20 kilometers NW of Talsint, by carrying out 15 induced polarization (IP) profiles and a soil geochemistry campaign. The geophysical survey allowed identifying resistivity anomalies coinciding with the gravity anomaly, probably related to the Merija anticline. The resistivity showed encouraging results and help to determine the continuity of the Merija anticline. 8 geological cross sections were carried out to implement the 8 programmed drill holes (2,000 m). In addition, the results of the geochemical survey revealed the presence of some Cu anomalies that show E-W alignments, following the directions of the hosted formations.

• Western Anti-Atlas (Cu) The geological follow up of the AFMAG anomalies (ZTEM) continued on the Taâdant target by carrying out a field gravimetric survey. Some gravity anomalies are identifiable below the dolomitic cover, assuming the presence of a basement in line with these anomalies. Following these results and those of the two drilling campaigns conducted during 2014-2016 (1,508.6 m), a third campaign was performed with the completion of 5 drill holes totaling 598 m. Geological mapping and lithogeochemical sampling were also carried out in the Idikel, Touzlimt and Tazka sectors. Chemical assays are in progress.

• Aït Tamellil (Cu) The geological work concerned the El Had copper occurrence. It consists of an EW fracture zone located near the faulted contact between Paleozoic and Permo-Triassic formations. This work consisted of geological mapping and sampling whose chemical assays are in progress. In addition, the campaign of 4 diamond drill holes HD1 to HD4 (300 m) has been implemented and will be carried out during early 2018.

• Ras Kemmouna (Cu) The work carried out consisted of geological mapping and sampling that allowed highlighting in the areas of Bou Maiz, Tisjert and Ouzina, kilometric structures with barite and traces of galena, pyrite, malachite, chalcopyrite and iron. Chemical assays of samples are in progress. In the Ras Kemmouna sector, samples were collected from the copper structure for processing tests.

• General research (base metals) As part of the general base metals research, the exploration work concerned areas in Central Morocco, the Western Meseta, the Central Anti-Atlas, the Sirwa Massif and the “Pays des horsts”. Antimony and lead occurences in the Enta sector (Central Morocco) showed grade ranging from 0.7 to 2.2% Pb and from 1.4 to 6.9% Sb. The geological work in the central Anti-Atlas focused on the areas of Daousdrem (grade up to 45% MnO), Tikrt and Offremt (grades exceeding 45% MnO), Tamazirt (average grade of 1% Cu on a thickness of 1.1 m),

Tifernine (grades up to 1% Cu and 145 ppb Au), Aït Saoune (grade up to 85% Fe2O3 and 67% MnO) and Bou Izagane (grade ranging from 0.04% to 3.8% Cu and from 20 to 235 ppm Ag). In the Sirwa area, research work on cobalt and copper has been conducted in the Tala-Tin’yder and Tifadine sectors. In the Tifadine occurrence, a geological mapping coupled with sampling was carried out and show grades reaching 2.2% Co, 4.45% As, 611 ppb Au and 0.2% Zn on an average thickness of 0.5 m. In the “Pays des horsts”, the results show grades reaching 65.7% MnO and 5.6% Pb.

32 Industrial rocks and minerals

• Toulal (silica sands) Detailed geological mapping and sampling was carried out for the research of extra- siliceous sands at Toulal in the Meknes region. White silica sand horizons were localized

with grades up to 98.24% SiO2, with an average grade of 95.5%.

• Jbel Kharrou (Clays) Geological mapping and sampling was carried out for the research of ceramic clays at the Jbel Demja sector. Clays of white to light gray color resulting from the alteration of the upper Llandeilo silty-clay pelites were located and sampled. The results of the chemical

assays show that it is an illitic clay with an average content of 19.20% Al2O3.

• General research (industrial rocks and minerals) As part of the general research of industrial rocks and minerals, geological reconnaissance and sampling concerned the dolomitic limestones, dolomites and limestones of the Chefchaouen area and in the Middle Atlas, the silica sands of Ouazzane area, and micas and beryl of Taznakht area. The first results show the presence of pure industrial dolomites with contents of 30%

CaO and 21% MgO in the “dorsale calcaire” and grades up to 96% SiO2 in the silica sands of the Ouazzane area.

ANNUAL REPORT ONHYM 2017 33 Strategic research

• Integrated Mineral Exploration Project in the Southern Provinces The Integrated Mineral Exploration Project in the Southern Provinces aims to evaluate in all the work carried out in this area since 2002, reassess the identified prospects and highlight new potential targets. The first part of Phase I of the project on the identification of mining potential of the study area was conducted. The second part of this phase focusing on the identification of potential targets for the different themes identified during the first part is being finalized after the completion of the first reconnaissance mission of the 8 identified targets.

• Geochemical campaign in the Central High Atlas An alluvial and stream sediment geochemistry campaign in the Central High Atlas, covering an area of 10,000 sq. km, started in March 2017 with the completion of Phase I fieldwork concerning the orientation test. Phase II fieldwork (stream sediment and alluvial sampling) is in progress.

• Multispectral Image processing in the Southern Provinces This project was focused initially on the gold prospect of Chenna. The work consisted on spectroradiometric measurements and mapping of alteration minerals that show a zonality, which helped guide the work towards new processing and propose other study areas.

• Follow up of the hyperspectral targets in the Western Anti-Atlas This project consisted at first in the compilation of existing data (geochemical, geophysical, geological and remote sensing) in the terminal part of the Anti-Atlas. Several targets have been identified.

• Geothermal Energy A study of geothermal potential in North Eastern Morocco was launched in January 2017. Phase I related to the synthesis of all geoscience data in the area and Phase II related to geological, geochemical and geothermal follow up of the targets defined during the study, were achieved. Meanwhile, research activity conducted by ONHYM continues in the rest of Morocco to determine other areas of geothermal potential.

34 « In 2017 Zgounder Millenium Silver Mining produced 16,085 kg of silver metal. »

• Economic evaluation of mining projects - SGS ( Canada) This project focuses on support for the technical and economic evaluation of ONHYM’s mining projects.

Partners’ activities

• Jebilet agreement (polymetallic) - MANAGEM (Morocco) The activity during 2017 focused on the prospects of Roc Blanc and Jbel Haïmer known respectively by the presence of silver veins exploited in the 1980s and copper veins. The work consisted of geological mapping, sampling and core drilling at the Jbel Haïmer prospect. 4 drill holes totaling 322 m were performed to recognize the rooting of Jbel Haïmer’s copper-gold structures and intersected mineralized passes at apparent thicknesses ranging from 0.1 to 1.5 m, with grade between 0.45% and 3.45% Cu, 1.23 and 3.56 ppm Au, 14.1 and 38.8 ppm Ag.

• Tekna agreement (polymetallic) - MANAGEM (Morocco) In order to recognize the extensions and the morphology of the orebody of Khwadra and the distribution of grades, a program of 3 drill holes totaling 1,234 m was carried out. The first drill hole intersected a brecciated and chloritized rhyolitic facies with sulphide dissemination. The second drill hole crossed the horizon with sulphide dissemination, over 5.6 m between 396 and 401.6 m. The chemical assays are in progress. The third borehole intersected massive pyrrhotite with pyrite and sphalerite over 6 m thickness, with average grades of 1.48% Zn; 0.27% Pb; 0.42% Cu and 14.92 ppm Ag.

ANNUAL REPORT ONHYM 2017 35 • Zgounder (Silver) - MAYA (Canada) Zgounder Millenium Silver Mining (ZMSM), of which ONHYM owns 15% and who operates the Zgounder silver deposit, produced 16,085 kg of silver metal at the end of December 2017. The flotation cells will be integrated into the processing circuit by the end of the first quarter of 2018, which will increase the tonnage of ore processed from 187 t/d to 500 t/d (an increase of 267%), thus reducing the processing costs of 15%.

• Tiouine (manganese) - Garrot Chaillac (France) During 2017, Garrot Chaillac continued the administrative actions for the validation of the file of exploitation of the quarry in order to replace the depletion of the tailings. In addition, site rehabilitation is continuing.

• Clay Prospects - MASCIR (Morocco) Under the agreement between ONHYM and MASCIR (Moroccan Foundation for Advanced Science, Innovation and Research), two attapulgite samples from the Aït Ali deposit were collected for characterization study and technological testing in Mascir’s laboratories. A trial for use as bleaching earth for the recycling of used oils will also be carried out.

• Khemisset (potash) - OCP (Morocco) As part of the partnership agreement between ONHYM and OCP on the Khemisset potash deposit, a meeting of the technical committee was held in Rabat on March 16, 2017 to review the progress of the start-up phase. OCP team will proceed to the synthesis, compilation, modeling and reinterpretation of all the available data. A presentation of these results is planned at the next technical committee during which OCP will also present the work program to be carried out over the next six months corresponding to the stage 1 of the research works phase.

• Tertiary basins (bentonite) - TOLSA (Spain) As part of the ONHYM-TOLSA research agreement for the exploration and development of clay rocks in the tertiary basins of northern Morocco, geological mapping at 1/5,000 scale over an area of 8 sq. km and sampling was carried out in the Ouled Mansour sector. A total of 32 samples were collected for chemical analysis, X-ray identification and technological testing in TOLSA laboratories.

36 Mining exploration activities during 2017

Tanger Nador ! 30 Oujda F 21 " Rabat Meknes Fes Casablanca ! 29 " 20 28 19 ! " Errachidia 22" Marrakech " 18 26 23 " " 8 7 # " 24 # 27 12 " Ouarzazate 16 # !# " Agadir 25 5 13 " 31 6 # Atlantic Ocean # " 14# 17

Laâyoune

Smara Quaternary Cenozoic Mesozoic

Dakhla Paleozoic Proterozoic 15 3 "# 4 # Awserd 9# 2 # 11 10 # 1 # Lagouira 0200 400km

Precious Metals Base Metals Rocks & ONHYM Projects ONHYM Projects Industrial Minerals 1- Tlayha (U, Au) 15- Awark (REE, U) ONHYM Projects 2- Lafhouda Est (Nb, REE, Fe) 16- Ras Kemmouna (Cu, Fe) 28- Jbel Kharrou (Clays) 3- Chenna (Au) 17- Western Anti Atlas (Cu) 29- Toulal (Silica sands) 4- Al Warma (Au) 18- Ait Tamellil (Cu, Pb, Zn) 5- Tizegzaouine (Au, Ag, Cu) 19- Merija (Cu) Projects in Partnership 6- Tanalt (Au, Ag, Zn, Pb, Cu) 20- Rhouirat Nhas (Cu, U) 30- Bassins tertiaires (Bentonite) (ONHYM-TOLSA) 7- Tidili (Au, Cu) 21- Tiouli West (Pb, Zn) 31- Nqob (Talc) (ONHYM-MECTP) 8- Saghro South (Ag, Cu, Au) 9- Twihinate-Lamlaga (Nb, REE, Fe, U, Projects in Partnership Au, Mo) 22- Jebilet (Polym) (ONHYM-CMG) 10- Lafhouda-Drag (Nb, Ta, REE, U) 23- Guemassa-Haouz (Polym) (ONHYM-CMG)

Projects in Partnership 24- Tekna (Polym) (ONHYM-CMG) NB : The projects of general research 11- Tichla Awserd (Au, Cu) 25- Ighrem Domain (Cu) (RG-MP-ZN, RG-MP-ZS, RG-SMB, (ONHYM-Metalex) (ONHYM-MANAGEM) RG-SRM and RG-Geochemistry), Geothermal, Strategic Campaigns and 12- Zgounder (Ag) 26- Boumadine (Zn, Pb, Au, Ag) Integrated Projects concern many regions (ONHYM-Maya Gold & Silver) (ONHYM-MAYA) and are not plotted in the map. 13- Had Imawn (Au) 27- Tiouine (Mn (ONHYM-Managem) (ONHYM-Garrot Chaillac) 14- Tighmi (Au) (ONHYM-Abalioglu)

ANNUAL REPORT ONHYM 2017 37 MINING LABORATORIES

Certification

Preparing the transition to the revision 2015 of the ISO 9001, a review of the Quality Management System (QMS) was planned and targeted training actions were carried out. Similarly, a new procedure for managing risks and opportunities has been established.

Mineralogy

453 samples from ONHYM’s projects were studied in 2017 split in 305 thin blades, 76 polished blades, 19 polished sections and 53 artificial concentrates. Petrographic and mineralogical studies involved 201 samples, divided in 148 petrographic studies and 53 mineralogical studies of artificial concentrates.

Mineralurgy

Worksite Number of samples ONHYM projects 7,440 Subsidiaries and third parties 271 Total 7,711

Mineral chemistry

Worksite Number of samples Number of determination ONHYM projects 8,536 103,757 Subsidiaries and third 290 1,125 parties Total 8,826 104,882

38 « … a new procedure for managing risks and opportunities… »

Mining drilling

108 holes were drilled in 2017, for ONHYM’s account, totaling 3 247,90 m:

Worksite Provinces Number of drillings Total coring (ml) Lafhouda Est Aousserd 6 573.60 Awark P2 Aousserd 10 602.60 Tlayha P2 Aousserd 74 457.40 Saghro Sud P2 Tinghir 4 571.90 Tizgzouine Taroudant 1 98.20 Rhouiret Nhas Khemisset 7 383.60 Anti-Atlas Taroudant 6 560.60 Occidental P3 Total 108 3,247.90

ANNUAL REPORT ONHYM 2017 39 MINING COOPERATION AND PARTNERSHIP

Mining partnership and cooperation activities have seen in 2017 the signature by ONHYM of:

1 Lease agreement

1 Protocol of agreement 2 Deeds of assignment

1 Amendment

Lease agreement

• Tiouine : Signed on 07/07/2017 with Garrot Chaillac Maroc for the leasing of the “Tiouine” mining domain for the exploitation of manganese and for treating and marketing barite.

Deeds of assignment

• Tizza : Signed on 28/07/2017 with Mabensa for the transfer of the mining domain “Tizza” for its exploitation. • Khemisset : Signed on 05/12/2017 with OCP for the transfer of the mining domain “Khemisset” for its development.

Protocol of agreement

• Majmaa Salihine : Signed on 09/11/2017 with Nado Meneral regarding the exploration of the “Majmaa Salihine” mining sector for its development and exploitation.

Amendment

• Dar Chaoui : Signed on 20/10/2017 with Sonsit reducing the royalty rate from 3% to 1.5%.

40 HUMAN RESSOURCES

Human capital at the heart of ONHYM’s interests

At the end of 2017, ONHYM’s staffing was 542, including 188 engineers and managers, 176 senior supervisors, 84 first-level supervisors and 94 classified agents.

Workforce by category

Engineers and Classified Executives 17% 35%

Primary supervisors 15%

Superior supervisors 32%

Supervision rate improved to 35%, thanks to the cumulative action of retirements, targeted recruitments as reflected in the GPEC approach and the succession plan.

Office jobs, after a steady decline between 2001 and 2007 due to retirements and voluntary departures policy, remained almost stable until 2009. The trend resumed downward from 2009 by the impact of massive retirements, voluntary departures and very limited recruitments that were limited to those for ONHYM’s core business and on specific sharp profiles. ONHYM recorded 68 departures in 2017.

ANNUAL REPORT ONHYM 2017 41 Social activities

ONHYM pays particular attention to social activities, with the aim of optimizing and making pleasant the working conditions. For this purpose, several actions are organized each year. These include, among others, summer camps for employees’ kids, supports for pilgrims to Mecca and housing loans. This can also be seen in medical campaigns organized by ONHYM, such as mammographies, chest radiographies and influenza vaccinations.

Culture Center

Created in 1984, the socio-cultural center offers social and cultural activities and courses to ONHYM’s employees’ children, that spread throughout the year, such in languages, theater, music, drama, computer, chess, poetry or civic education. Children are also involved in actions for disabled and sick children or elderly people.

Knowing that “a child who reads is a child who succeeds”, the center provides children with a very furnshed library.

ONHYM signed a partnership with the Al Amal association implementing activities for the benefit of the users of the center and for the development of the “child artist” project, in partnership with the INDH (french acronym of the National Initiative for the Human Development). This partnership includes also the setup of an artistic institute and the training of talents in the fields of painting, music, dance, poetry and theater.

« Children are also involved in actions for disabled and sick children or elderly people. »

42 Holiday camps: To meet nature

Wishing to offer playful holidays to all its staffs’ children, ONHYM has long maintained this tradition of organizing summer camps. The objective is to offer kids a way of living their leisure in a constructive way by encouraging participation and good integration. ONHYM mobilizes supervisors, animators and administrative agents for managing those summer leisure camps, ensuring: • They spend safely their holidays out of their daily routine; • They develop life behaviors such as listening to others, participating in different tasks of everyday life; • They integrate hygiene and food rules; • They become self-sufficient for organizing, tiding up, making bed and sharing various activities; • They discover nature and learn how to respect the environment.

Training

Indicators Total Training actions 156 Participants 965 Trained person/day 3,855.50 Beneficiaries 257

Training distribution

Person/day Training domains Actions Participants training Congresses, forums, workshops, 41 82 285 promotion, ... Exploration, exploitation, treatment 23 56 292 & technical topics IT and Information System 19 155 348 Management, personal development 40 402 810 & HRM Quality security environment 3 28 120 Management techniques & other 12 17 35.5 themes Medium and long-term courses 13 13 1,011 (in Morocco and abroad) English 5 212 954 Total 156 965 3,855.50

ANNUAL REPORT ONHYM 2017 43 44 HYDROCARBON LICENSING MAP Petroleum Agreements, Reconnaissance Contracts, Blocs under Negotiation and Open Acreages Petroleum Agreements, Reconnaissance Contracts, Blocs under Negotiation and Open Acreages 5, Avenue Moulay Hassan B.P. 99, ANNUAL 10 000 Rabat - Morocco Tel. : +212 (0) 537 23 98 98 REPORT 2017 Fax : +212 (0) 537 70 94 11 [email protected] www.onhym.com