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LICENSING PROCEDURE The Mining Act, 1998 establishes state ownership of minerals and provides rights and conditions whereby the rights to explore, develop and produce such minerals are granted. Licensing procedures are streamlined to ensure transparency to and fairness by conferring ownership of mineral rights on first come, first served principle. There are seven types of licences issued under the Act as follows: Prospecting Licence The Act groups minerals into categories for purpose of facilitating targeting of incentives, penalties, specialized skills development and mineral administration, as follows: i) all minerals other than building materials or gemstones; ii) building materials; or iii) gemstones. A Prospecting Licence is granted for an initial prospecting period of three years, except in the case of an application for a Prospecting Licence for gemstones where the period may not exceed two years and is not subject to renewal. A Prospecting Licence covering a preliminary reconnaissance period for all minerals other than building materials and gemstones may be granted for a period not exceeding two years. The holder shall relinquish 50% of the prospecting area on each renewal. The size of each Prospecting Licence shall be as follows: i) for a Prospecting Licence with a preliminary reconnaissance period, the maximum area shall be 5,000 sq. km.. ii) for a Prospecting Licence for all minerals other than building materials or gemstones the maximum area during the initial prospecting period shall be 200 sq. km. iii) for a Prospecting Licence for gemstones or building materials the maximum area shall be 10 sq. km. Retention Licence The holder of a Prospecting Licence, other than a Prospecting Licence for building materials or gemstones, may be granted a Retention Licence for a period not exceeding five years when an

exploration programme and feasibility studies have identified the existence of a significant ore body, which cannot be immediately developed as a mine due to adverse market conditions. The licence may be renewed for a single period of five years. Special Mining Licence A Special Mining Licence is granted in respect of the development and production stages of a large mining operation. The licence may be granted for a period not exceeding 25 years which it is proposed to mine. On application duly made, it may be renewed for a period not exceeding twenty-five years. Application for a Special Mining Licence must be accompanied by a proposal of mining operations, Environmental Management Plan (EMP), employment of citizens of Tanzania and an Environmental Impact Assessment (EIA). The application under this licence must also be submitted to the Mining Advisory Committee for advice before issuance of licence. Mining Licence A Mining Licence may be granted for a period not exceeding ten years, or the estimated life of the ore body which it is proposed to mine. It may be renewed for a period not exceeding ten years. Each application under the Mining Licence must include a feasibility study, which shall set out the proposed programme of mining operations and must be accompanied by an EMP and an EIA. The size of each Mining Licence shall be as follows: for a Mining Licence for all minerals other than building materials or gemstones the maximum area shall be 10 sq. km; and for a Mining Licence for building materials the maximum area shall be 0.5 sq. km. Gemstone Mining Licence A Gemstone Mining Licence confers on the holder the exclusive right to carry on mining operations for gemstones in the mining area. The licence may be granted for a period not exceeding ten years, and may be renewed for the period not exceeding ten years. No Gemstone Mining Licence shall be granted to a non-citizen of Tanzania, unless the Gemstone Mining

Licence is held by that person in undivided participating shares with a citizen of Tanzania whose share or shares amount to not less than twenty five per cent. For a Gemstone Mining Licence, the maximum area shall be 1.0 sq. km.

Minerals Legislation Overview Administration of the Mining Act 1998 is by the Minister responsible for mineral affairs and Commissioner of Mineral Resources. Under the Act, Mineral Rights concern large scale and small-scale operations.

A Reconnaissance License is issued for one year and renewed for a period not exceeding a year. License preparation fee is US$250, annual rent is US$10/km2 and renewal fee is US$200. The license may be either exclusive or non-exclusive. Applications should provide a work programme. Half yearly reports must be submitted and on expiry of the period, all data, maps and reports under license must be surrendered to Government. The license holder may apply for a prospecting license covering all or part of the area. A Prospecting License is issued for a period of up to three years and renewable two times for a period up to two years each. At each renewal at least 50% of the area is relinquished. License preparation fee is US$400, annual rental is US$30/km2 and renewal fee is US$200. Applicants must submit particulars of financial and technical capabilities, work programme and budget, and proposals for employment and training Tanzanians. License holders must submit quarterly reports, including copies of all data, maps, logs, interpretations, etc. A Mining License will only be granted to the holder of a Prospecting License over the area. The license is granted for a period of 25 years or the life of the mine. It is renewable for a period not exceeding 15 years. License preparation fee is US$600, annual rent is US$1500/km2 and renewal fee is US$200. The applicant must submit a feasibility report including environmental and health safeguards, plans for local sourcing of goods and services and employment and training of Tanzanians. The license holder must submit regular reports according to regulations.

IN ADDITION:

Under section 15 of the Mining Act the Minister may enter into a mineral agreement (not inconsistent with the Act) for the purpose of

granting a Prospecting or Mining License in order to define terms and conditions to be included in the license.

Agreement should be made with the lawful occupiers of land and their written consent obtained to carry out mining or prospecting operations. Compensation may be payable. The Minister may intervene if consent is withheld unreasonably. There are prospecting rights and mining claims for small-scale operations by Tanzanian citizens, companies or cooperatives. These rights are available only in designated areas for prescribed minerals. Prospecting rights are granted for a period of 12 months and are renewable. The holder can peg a claim and register with the Commissioner. The claim holder can prospect and mine this claim. It is valid for one year and renewed as long as mining operations continue. Claim holders must pay royalties and submit returns. Non compliance leads to cancellation of rights. Claim preparation and annual fees are TSh5000 and TSh6000 per annum respectively. There is no state obligation to participate in mining ventures nor requirement for local equity. A mineral right may be transferred upon application and approval by the Minister

Holding

of

mineral

rights

by foreign

companies

in Tanzania

Typically, foreign mineral exploration companies hold their mineral rights as Prospecting Licences (PLs) which have been granted to them by the Ministry of Energy and Minerals (The Ministry) under the terms of the Mining Act or indirectly through joint venture or option agreements with local companies and individuals who already hold the PLs. PLs have a maximum area of 200 square kilometres and are valid for a period of seven years during which time they have to be renewed after three years and again after 5 years There is a requirement to relinquish 50% of the PL area at each renewal. Annual rents are payable at a rate of US$20 per square kilometre. Minimum exploration expenditure requirements progress from US$300 per square kilometre during the initial 3 year grant period to US$1,000 per square kilometre during the 1st renewal period to US$3,000 during the second renewal period. To accommodate evaluation of larger areas of ground, a PL may be applied for and granted as a PL with reconnaissance period (PLR). PLRs may be up to 5,000 square kilometres in area and are granted for an initial two year period. Following this period, one or more PLs of maximum area 200 square kilometres each may be excised from the area and retained

under the conditions for a PL outlined above i.e. 7 year life with two periods of renewal. The Ministry is obliged to renew PLRs (i.e. re-issue as one or more PLs) and PLs unless a default notice has been issued to the licencee and the default has not been rectified within the appropriate time. Prospecting Licences can be seamlessly converted to Mining Licences following production of a positive feasibility study for commercial production of a commodity and contingent on the holder meeting other criteria e.g. implementation of appropriate environmental impact studies. Mining Licences are issued for a period of 10 years or "life of mine" whichever is shorter. Should the result of a feasibility study indicate that a mineral deposit is not commercial under current conditions, a PL can be converted to a Retention Licence which has a period of 5 years thus allowing the deposit to be retained pending improvement in economic conditions or implementation of a new feasibility study. Other Mineral Rights

Mining Licences and Gemstone Mining Licences are commodity specific mineral rights. Mining Licences are typically issued for extracting building materials only while Gemstone Licences are issued for extraction of gemstones only. Issue of Primary Prospecting Licences and Primary Mining Licences is confined to Tanzanian nationals and have been created to accommodate the small scale artisanal mining communities that are found throughout the gold mining areas of the Country. These primary mineral rights which cover maximum areas of 10 hectares take precedence over subsequently issued PLs and access to these areas for exploration is by private arrangement with the holders.