SUNI RESOURCES S.A. GRAPHITE PROJECT, MONTEPUEZ, MOZAMBIQUE DRAFT ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT Prepared for: SUNI RESOURCES S.A. Edificio Solar das Acacias, Avenida Julius Nyerere 4000, Loja 05, Cidade de Maputo, Mozambique Prepared by: COASTAL & ENVIRONMENTAL SERVICES MOZAMBIQUE LDA Avenida da Mozal, Porta 2334 Beluluane Celula D. Quarteirao 02, Matola Cidade, Maputo, Mozambique With offices in Cape Town, East London, Johannesburg, Grahamstown and Port Elizabeth (South Africa) www.cesnet.co.za Original report drafted in English and translated to Portuguese 23 August 2017 Draft Environmental and Social Impact Assessment – August 2017 SUNI RESOURCES S.A.GRAPHITE PROJECT, MONTEPUEZ, MOZAMBIQUE DRAFT ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT Prepared for: SUNI RESOURCES S.A. Edificio Solar das Acacias, Avenida Julius Nyerere 4000, Loja 05, Cidade de Maputo, Mozambique Prepared by: COASTAL & ENVIRONMENTAL SERVICES MOZAMBIQUE LDA Avenida da Mozal, Porta 2334 Beluluane Celula D. Quarteirao 02, Matola Cidade, Maputo, Mozambique With offices in Cape Town, East London, Johannesburg, Grahamstown and Port Elizabeth (South Africa) www.cesnet.co.za Original report drafted in English and translated to Portuguese 23 August 2017 Coastal & Environmental Services ii Suni Resources S.A, Montepuez Project Draft Environmental and Social Impact Assessment – August 2017 NON-TECHNICAL SUMMARY Suni Resources S.A. (“Suni Resources”) is a Mozambican subsidiary company of the Battery Minerals Group (prior to December 2016 it traded as Metals of Africa Limited) and is focused on developing graphite mining projects in Mozambique. Suni Resources S.A. intend to develop a graphite mine at the Montepuez Project area (referred to as the “Project Site” or “site”) located in the district of Montepuez in Cabo Delgado Province, northern Mozambique. The Project Area is located approximately 60km north-west of the town of Montepuez and the license area (Exploration License 6216) covers approximately 12,500 ha within which there are three resources that they intend to exploit. However, only two of the deposits form part of this Environmental and Social Impact Assessment (ESIA) as it is intended for the third deposit to be mined at a later stage and will be subject to a separate ESIA process. Each deposit contains large flake graphite which is ideal for creating cost efficient battery grade anode material which will be sold into the American and Asian markets for primary use in Lithium ion storage batteries. Lithium ion storage batteries are used for clean, renewable energy. Coastal & Environmental Services Limited Mozambique Lda (CES) was appointed by Suni Resources to complete this Environmental and Social Impact Assessment (ESIA) and ensure that it meets the National Environmental Laws, as well as various international standards. CES is a company registered in Mozambique, with the Ministério da Terra, Ambiente e Desenvolvimento Rural (MITADER) and has solid knowledge and multidisciplinary teams to conduct environmental impact assessments and environmental management programs. The primary objectives of an ESIA process is the identification and assessment of environmental and social impacts and critical risks so that: A decision can be made on whether or not to proceed with the project, Modifications to the project to reduce impacts and risks can be made, The conditions under which the project can proceed are made known, and Management strategies can be put forward to reduce the significance of negative impacts and enhance positive ones. The latter are discussed in detail in the Environmental and Social Management Programme (ESMP) produced as part of the ESIA process. Below is a list of the key issues that were identified by the ESIA process and the proposed key mitigation and management actions required to reduce the environmental risks to an acceptable level: Terrestrial habitat loss and fragmentation The habitats and vegetation communities present within the study area are for the most part undamaged with minimal evidence of harvesting or exploitation by local communities. The vegetation, rivers and rocky outcrops are intact and therefore provide an important habitat for faunal species, including mega herbivores such as elephant. They are also important floristically as there are a number of mature, seed bearing trees that are important for contributing to the continued dispersal of seeds throughout the site. Since these plant communities and faunal habitats are intact, the unmitigated impacts associated with the construction and operation of the mine are anticipated to be high. However, if mitigation measures, such as the siting of ancillary infrastructure outside of sensitive areas are implemented, and a conservation corridor is created and managed to ensure connectivity between the different vegetation types and, the majority of these impacts can be reduced to either moderate or low. Loss of Biodiversity Coastal & Environmental Services iii Suni Resources S.A, Montepuez Project Draft Environmental and Social Impact Assessment – August 2017 The loss of vegetation communities and habitats will result in the loss of both floral and faunal species, as well as species of conservation concern. Plant species will be lost through active clearing for the mine infrastructure, while faunal species will be displaced through a loss of habitat. Further faunal species loss will be experienced due to increased mortalities related to an increase in the number of project vehicles using roads, increased hunting as a result of an influx of job seekers, and associated increase in local community dependence on fauna for both food and cash sale; and lastly persecution of reptiles, specifically snakes - both venomous and non-venomous. Since there is high floral and faunal biodiversity, the unmitigated impacts associated with the construction and operation of the mine are anticipated to be high. However, if these impacts are mitigated, for example preventing the employees from harvesting indigenous species and hunting for bush meat, and implementing a conservation corridor, most of these impacts can be reduced to either moderate or low. Invasion of Alien Flora and Fauna Species Invasive floral and faunal species can displace indigenous species by outcompeting them for resources such as sunlight, nutrients and food etc. Left unmitigated, this can become a problem when plant communities are transformed or faunal species become locally extinct. Given that the site is intact with little evidence of alien plant and animal species, it would be a concern if they were introduced into the area through negligence as a result of the construction and operation activities of the mine. However, these impacts are easy to mitigate and provided the study area is monitored for alien fauna and flora, and that these are eradicated as and when they appear, these impacts will be of low significance. Human/Wildlife Conflict and the increase in the presence of elephants within the project area The increase in elephants is likely to increase human-elephant conflict since elephants are known to feed on crops grown in machambas, and the owners of machambas generally report these individual elephants as problem elephants. A consistent water supply in the dry season is likely to attract faunal species including prey species, and hence also predators, which pose a risk to both fauna and humans. The presence of elephants is also likely to attract poachers, given the high elephant poaching rate reported in Mozambique by the Ministry for the Coordination of Environmental Affairs (2014). The unmitigated impact associated with the general human/wildlife conflict will be high, but this can be mitigated to moderate if precautionary measures, including education and training, are implemented. The potential for the increased presence of elephants at the site, as a result of the introduction of a permanent water source, is uncertain for the following reasons: There is uncertainty around the size of the existing population of elephants in the region. There is uncertainty about the effect of the dam on elephants. There is uncertainty about the elephant associated pressure on resources within 0-15km of the WSF. There is uncertainty about the resource impacts on vegetation dynamics, faunal species and other groups. As such, two impact scenarios have been presented where the unmitigated impacts are either moderate because elephants have a limited impact on the receiving environment, or it is very high because elephants have a significant impact on the environment. With mitigation measures it is anticipated that the impacts can be reduced to a significance of low and moderate respectively, but this will need to be monitored continuously, and an ecologist with in depth knowledge of elephants consulted, if or when, the need arises. Alteration of Flow Regimes on the Aquatic Habitat There will be a cumulative impact on the quantity of river water flow resulting from the abstraction of Coastal & Environmental Services iv Suni Resources S.A, Montepuez Project Draft Environmental and Social Impact Assessment – August 2017 water from the Messalo River into a raw water dam (Water Storage Facility - WSF) to be constructed for project use. This may affect the receiving streams and downstream users of these water sources. The uncontrolled discharge of effluent into nearby water courses could also affect flow regimes and water quality in the projects operational phase if not managed appropriately. This will alter