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FIGUEIRA BRANCA GOLD MINING PROJECT BUSINESS PLAN

FOREWORD
ACCEX HOLDING CORPORATION is a private company headquartered
in Brazil which holds active portfolio asset management of Brazilian companies and
organizations focused in sustainable development and large-scale mining projects
through national and international joint venture working agreements.
ACCEX has been structured to develop and perform the most challenge
and profitable projects in Brazil, aiming at achieving great results in short, medium
and long terms.
In view of the above findings, our main purpose is to provide
information on profitable business opportunities to the investors who shall be
interested in joining our company to venture outstanding entrepreneurships
concerning to mining by understanding the Brazilian and international commodities
market to be henceforth presented by ACCEXs professional team who has taken all
reasonable care to ensure that the facts stated herein are true to the best of their
knowledge, information and belief and is distributed only to and directed at persons
who have professional experience in matters relating to mining investments. Any
person who does not have professional experience in the matters relating to
investments should not act or rely on this document or any of its contents.
No reliance may be placed for any purpose whatsoever on the
information or opinions contained in this document or on its completeness and no
liability whatsoever is accepted for any loss howsoever arising from any use of this
document and other documents related to Figueira Branca Gold Mining Project.
In addition, this Business Plan includes general information on the
Brazilian Mining, Environment and Tax Legislation for prospective Investors
who are interested in full acquisition of mining areas or in performing joint venture
agreement (JVA) to start in December, 2014.
Prospective Investors are encouraged to obtain separate, independent
and rigorous verification of information and opinions contained in this Business
Plan and other related documents as part of their own due diligence.
By accepting this document, the Recipient agrees that the information
contained herein or sent herewith or made available is for information purposes
only without prejudice to the foregoing, neither the Provider, nor its advisers nor its
representatives accept liability whatsoever for any loss howsoever arising, directly
or indirectly, from the use of this document or otherwise arising in connection
therewith.
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FIGUEIRA BRANCA GOLD MINING PROJECT BUSINESS PLAN

INDEX
SECTION I INTRODUCTION
1. BUSINESS ACTIVITIES .................................................................................................................................. 5
2. CORPORATE STRUCTURE ........................................................................................................................... 6
3. ENVIRONMENT PROTECTION .................................................................................................................. 7
4. MARKET ANALYSIS ........................................................................................................................................ 9
4.1 NATIONAL MARKET .............................................................................................................................. 9
4.2 INTERNATIONAL MARKET ............................................................................................................. 11
SECTION II LEGAL ASPECTS
1. MINING IN THE BRAZILIAN CONSTITUTION ................................................................................. 12
2. MINING CODE .................................................................................................................................................
2.1 SYSTEMS ...................................................................................................................................................
2.1.1 BOARD OF APPLICATION ............................................................................................................
2.1.2 EXPLORATION AUTHORIZATION APPLICATION ............................................................
2.1.3 RESTRICTED APLICATION ...........................................................................................................
2.1.4 EXPLORATION AUTHORIZATION SYSTEM .........................................................................
2.2 MINING COMPANY ...............................................................................................................................
2.3 RESEARCH AUTHORIZATION PERMIT .....................................................................................
2.4 FORFEITURE OF EXPLOITATION CONCESSION ...................................................................
2.5 CONCESSION FOR USE .......................................................................................................................
2.6 PERMISSION FOR GEOLOGICAL RECONNAISSANCE ..........................................................
2.7 CLAIMSTAKE MINES ...........................................................................................................................
2.8 MINING GROUPING AND MINING CONSORTIUM .................................................................
2.8.1 MINING GROUPING .........................................................................................................................
2.8.2 MINING CONSORTIUM ...................................................................................................................
2.9 LAND OWNERS SHARE IN MINING RESULTS ........................................................................
2.10 LICENSING SYSTEM ..........................................................................................................................
2.11 EXTRACTION SYSTEM ....................................................................................................................

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3. ENVIRONMENTAL LAW APPLYING TO MINING ...........................................................................


3.1 CONSTITUTIONAL PRINCIPLES ....................................................................................................
3.1.1 ENVIRONMENTAL IMPACT STUDY FOR MINING ACTIVITIES ..................................
3.1.2 ENVIRONMENTAL LICENSING FOR MINING ACTIVITIES ............................................
3.2 FEDERAL ENVIRONMENTAL LEGISLATION ...........................................................................
3.3. REHABILITATION OF AREAS DEGRADED BY MINING ACTIVITIES ..........................

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3.4 NATIONAL ENVIRONMENTAL SYSTEM ..................................................................................... 28


SECTION III FISCAL ASPECTS
1. MINING TAXATION .....................................................................................................................................
1.1 FEDERAL AREA GENERAL TAXATION ...................................................................................
1.2 WITHHOLDING INCOME TAX ON INTEREST AND ROYALTIES ....................................
1.3 IMPORT TAX ...........................................................................................................................................
1.4 FEDERAL AREA GENERAL LEVIES ............................................................................................
1.5 STATE AREA GENERAL TAXATION .........................................................................................
1.6 SPECIAL LEVY FOR MINING COMPANIES .................................................................................

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2. FISCAL TREATMENT OF FOREIGN CAPITAL ..................................................................................


2.1 CONCEPT OF FOREIGN CAPITAL ..................................................................................................
2.2. LEGAL AND TAX ISONOMY .............................................................................................................
2.3 CENTRAL BANK REGISTRATION ..................................................................................................
2.4 AGREEMENTS OF TECHNICAL ASSISTANCE AND ROYALTIES ......................................
2.5 BILATERAL TAX AGREEMENTS ....................................................................................................

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SECTION IV GOVERNMENT INCENTIVES


1. FEDERAL MINING INCENTIVES .............................................................................................................
1.1 INCOME TAX EXEMPT ..........................................................................................................................
1.2 REDUCTION IN INCOME TAX AND NON-REBATABLE ADDITIONAL TAXES ..........
1.3 STATE MINING INCENTIVES ...........................................................................................................

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SECTION V SOURCES OF FUNDING


1. CHARACTERISTICS OF THE BRAZILIAN FINANCIAL MARKET ............................................. 40
2. BNDES SYSTEM .............................................................................................................................................
2.1 FINANCIAL SUPPORT OBJECTIVES .............................................................................................
2.2 SUPPORTABLE ITEMS .......................................................................................................................
2.3 WORKING METHODS .........................................................................................................................
2.4 GUARANTEES ..........................................................................................................................................

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3. OTHER LONG TERM FINANCING SOURCES .....................................................................................


3.1 INCENTIVATED REGIONAL INVESTMENT FUNDS ...............................................................
3.2 DEBENTURES .........................................................................................................................................
3.3 OVERSEAS LONG TERM RESOURCES .........................................................................................
3.4 OTHER FINANCING MECHANISMS ..............................................................................................

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FIGUEIRA BRANCA GOLD MINING PROJECT BUSINESS PLAN

SECTION VI GEOLOGICAL SURVEY OF BRAZIL


1. MINERAL RESOURCES SURVEY COMPANY (CPRM) ................................................................... 46
2. BRAZILS GEOLOGY AND MINERAL POTENTIAL ......................................................................... 47
SECTION VII MINING INDUSTRY IN BRAZIL
1. PROFILE OF BRAZILIAN MINING PRODUCTION .......................................................................... 49
1.1 BRAZILIAN RESERVES ....................................................................................................................... 49
1.2 MINERAL PRODUCTION ................................................................................................................... 49
2. PROFILE OF BRAZILS MINERAL GOODS TRADE BALANCE ................................................... 50
SECTION VIII TECHNOLOGICAL KNOW-HOW IN MINING INDUSTRY
1. TECHNOLOGICAL KNOW-HOW .............................................................................................................
1.1 HUMAN RESOURCES TRAINING ...................................................................................................
1.2 MINERAL TECHNOLOGY CENTERS .............................................................................................
1.3 ENGINEERING COMPANIES .............................................................................................................
1.4 FOREIGN TRADE COMPANIES .......................................................................................................

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SECTION IX GOLD MINING VENTURES


1. FIGUEIRA BRANCA GOLD MINING PROJECT ..................................................................................
1.1 LOCATION AND DESCRIPTION ......................................................................................................
1.2 INTEGRATED SECURITY SYSTEM (ISS) .....................................................................................
1.3 SUSTAINABLE MINING ......................................................................................................................
1.4 FINANCIAL PLAN ..................................................................................................................................
1.4.1 BOARD OF DIRECTORS PRO-LABORE ..................................................................................
1.4.2 EMPLOYEES PAYROLL .................................................................................................................
1.4.3 MACHINERY, EQUIPMENT, AND FACILITIES .....................................................................
1.4.4 PHYSICAL INVESTMENTS AND MACHINERY TRANSPORTATION ..........................
1.4.5 FIXED COSTS AND EXPENDITURES ........................................................................................
1.4.6 ESTIMATE PRODUCTION AND REVENUES UPON INVESTMENT .............................
1.4.7 RETURN ON INVESTMENT (ROI) .............................................................................................

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2. FINAL STATEMENTS .................................................................................................................................. 59


3. FIGUEIRA BRANCA GOLD MINING PROJECTS MAPS, PLANS & IMAGES ......................... 60
4. REFERENCES .................................................................................................................................................. 74

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SECTION I INTRODUCTION
1. BUSINESS ACTIVITIES
All business activities developed by ACCEX HOLDING CORPORATION
are subject to the federal, state, provincial, regional and local environmental laws
and regulations in the jurisdictions in which ACCEXs activities and facilities are
located, duly registered and authorized by the Brazilian Revenue Office (RFB) with
CNPJ/MF n. 17.830.482/0001-00, and by the Commercial Office of The State of
Amazonas (JUCEA) with n. 1320060766-0, in compliance with the National
Classification of Economic Activities (CNAE), to perform diversified businesses,
including, but not being restricted to, the following ones:
HOLDINGS OF NON-FINANCIAL INSTITUTIONS, comprising the
activities of economic entities that have control of capital (shares) of a group of
companies with predominantly non-financial activities and may even act as
management and administration business of such group companies; representation
of other companies, national or worldwide, on their own or third parties, equity
interests in other private commercial or service companies, as business partner or
shareholder;
HOLDINGS OF FINANCIAL INSTITUTIONS, comprising the activities
of economic entities that have control of capital (shares) of a group of companies
with activities mainly financial, inclusively being able to exercise functions of
management on the affairs of such group companies;
OTHER FINANCIAL SERVICE ACTIVITIES NOT OTHERWISE
SPECIFIED, including the services of purchasing receivables tax to pay federal taxes,
state and local, except factoring and securitization;
ACTIVITIES OF FUNDS MANAGEMENT, comprising the activities of
portfolio management and securities for third parties;
NON-FINANCIAL INTANGIBLE ASSETS MANAGEMENT, comprising
activities that enable the use of non-financial assets by third parties, as by
guaranteeing the right of use from the payment of royalties or license to use asset
owner being or not being responsible for its creation, with permission for
reproduction, utilization in various processes and products, operation of franchises,
among others, including the purchase, sale and licensing (leasing) by the use of
trademarks and patents, as well as the sale and licensing of franchises and receiving
royalties and mineral rights;

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ENGINEERING SERVICES, including technical services, engineering


and the design and management of projects and technical inspection services in the
engineering, technical expertise, evaluation, arbitration, appraisal and engineering
technical opinion;
MARKETING CONSULTING, comprising consulting activities in
marketing and advertising;
ACTIVITIES OF INTERMEDIATION, AGENCY SERVICES AND
GENERAL BUSINESS (EXCEPT REAL ESTATES), comprising the brokering activities,
mediation services or business in general, without defined specification, promoting
integration between professionals and companies, well as the brokering of purchase
and sale of patents;
PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES,
comprising the activities of advisory and consulting services in professional,
scientific and technical areas, including those carried out by independent
professionals or constituted as individual companies and corporations;
TECHNOLOGY INFORMATION CONSULTING, comprising the
analysis to determine customer needs or market potential and technical specification
of the system in defining the features and application field; monitoring, management
and oversight of information technology projects such as the coordination of
activities involved in the definition, implementation and operation of projects;
BUSINESS MANAGEMENT AND TECHNICAL CONSULTING
ACTIVITIES, including advisory services, consultancy, guidance and operational
assistance for the management of business provided to companies and other
organizations in the scope of planning, organizing, reengineering, budget control,
information management, by defining methods and procedures of general
accounting, cost accounting, budget control, consulting in public relations and
communication, internal and external, to advising on logistics.
Besides all above mentioned activities, we will hereinafter provide
more specifical information pursuant to mining, environment, sustainable
development sectors and some related issues.
2. CORPORATE STRUCTURE
ACCEX is structured and governed by the Board of Directors which is
composed by the Executive, Financial & Operating, and Advisory Councils.

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The Board of Directors is ruled by the Chairman & Chief Executive


Officer (CEO) who is in charge of decision-making role involving high-level decisions
on marketing strategies and management of the Executive Council and the entire
organization by advising directors and managers, motivating employees, driving
change within the organization, presiding over the organization's day-to-day
operations and establishing broad policies and objectives to achieve.
The Financial & Operating Council is governed by the Vice-President
& Chief Financial Officer (CFO) who is in charge of managing the financial risks of
the corporation, strategic financial planning and record-keeping and data analysis, as
well as financial reporting to the Board of Directors. The CFO reports directly to the
President and directly assists the Chief Operating Officer (COO) on all strategic and
tactical matters as they relate to budget management, cost benefit analysis,
forecasting needs and the securing of new funding, and the COO who is in charge of
ensuring that business operations are efficient and effective and that the proper
management of resources, distribution of goods and services to customers, and
analysis of queue systems is conducted, developing and cascading the organizations
strategy/mission statement to the lower-ranking staff, and implementing
appropriate rewards/recognition and coaching/corrective practices to align
personnel with company goals, maintaining and monitoring staffing, levels,
expectations and motivation to fulfill organizational requirements, as well as driving
performance measures for the operation (including a consideration of efficiency
versus effectiveness), often in the form of dashboards convenient for reviewing of
high level key indicators.
The Advisory Council is composed either by natural persons who
high-skilled professionals and organizations held by or ACCEXs business partners,
including legal, tax, accounting, foreign trade, logistics, civil, environment, and
mining engineering.
3. ENVIRONMENT PROTECTION
ACCEX is also subject to similar laws in other jurisdictions in which it
operates. In all jurisdictions in which ACCEX operates, environmental licenses,
permits and other regulatory approvals are required in order to engage in
exploration, mining and processing, and mine closure activities. Regulatory approval
of a detailed plan of operations and a comprehensive environmental impact
assessment is required prior to initiating mining or processing activities or for any
substantive change to previously approved plans. In addition, specific statutory and
regulatory requirements and standards must be met throughout the life of the
mining or processing operations in regard to air quality, water quality, fisheries,
wildlife and biodiversity protection, archaeological and cultural resources, solid and

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hazardous waste management and disposal, the management and transportation of


hazardous chemicals, toxic substances, noise, community right-to-know, land use,
and reclamation, and ACCEX is in compliance with all applicable national and
international environmental laws and regulations.
A strong environmental ethic and sound environmental management
program have been by ACCEX integrated with its core business functions at all levels,
and at all locations throughout the organization, mainly in the scope of the United
Nations Reducing Emitions from Deforestation and Forest Degradation (UNREDD+) for conservation of huge native forest lands and the social, economic, and
sustainable development of local and traditional communities.
As part of ACCEXs Corporate Responsibility Management System,
corporate environmental governance programs that ACCEX has implemented
include:
(a) STANDARDS Corporate environmental management standards
provide a clear bottom line for all ACCEXs activities in all jurisdictions in which we
carry on business. Where legal requirements are unclear, ACCEXs environmental
management standards provide clear direction regarding performance expectations
and minimum design and operating requirements.
(b) AUDITS Comprehensive environmental compliance audits are
conducted at all operations and at selected residual properties on a biennial basis.
The audit program assesses compliance with applicable legal requirements,
measures effectiveness of management systems, and includes procedures to ensure
timely follow-up on audit findings.
(c) METRICS ACCEX has identified operational parameters that are
key indicators of environmental performance, and measures these indicators on a
regular basis. The Company tracks an index of these key performance indicators and
sets performance targets to encourage continuous environmental improvement.
(d) ENGINEERING To effectively manage environmental risk,
programs are in place to assess the management and stability of tailings and other
engineered facilities. They include detailed water balance accounting, to assure
sufficient storage capacity, and a review of operational procedures. Every ACCEX
operation has a tailing or heap management plan in place. In addition, ACCEX
performs periodic assessments of engineered systems to assure adequate systems
are in place to minimize or eliminate environmental risks.

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(e) RECLAMATION ACCEX recognizes its responsibility to manage


the environmental change associated with its operations, and requires all material
sites to develop and maintain reclamation and closure plans to address the
Companys reclamation and closure obligations in a way that demonstrates
excellence and establishes industry-wide leadership through example.
ACCEX is engaged in mining entrepreneurships and related activities,
including geological prospecting, mineral surveys, exploration and acquisition of inground assets, especially gold, iron, niobium, tantalum, bauxite, diamond and
emerald. ACCEXs businesses are carried out in several Brazilian States such as
Amazonas, Mato Grosso, Minas Gerais, Para, Rondonia, Roraima, and Tocantins. Most
of these assets are located in one of the greatest gold mines in Brazil, which is
introduced hereinafter.
In this Business Plan, the focus is gold which is produced in the form
of dor and shipped to refineries for final processing into ingots. ACCEXs strategy is
to increase shareholder value through increases in precious metal reserves, net asset
value, production, long-term cash flow and earnings per share. It also consists of
optimizing the performance, and therefore, the value, of existing operations,
investing in quality exploration and development projects and acquiring new
potentially accretive properties and projects. ACCEXs operations and mineral
resources are impacted by, among other things, changes in the metal prices. The
average price during 2012 was approximately US$ 1,670/t oz/Au (One Thousand
and Six Hundred and Seventy United States Dollars per Troy Ounce of Gold).
ACCEX used the price of US$ 1,200/t oz/Au (One Thousand and Two hundred
per Troy Ounce of Gold) at the end of 2012 to estimate mineral reserves, and from
the first semestre to the 31st of December, 2013, the average price of US$ 1,400/t
oz/Au (One Thousand and Three Hundred per Troy Ounce of Gold).
4. MARKET ANALYSIS
4.1 NATIONAL MARKET
The largest volume of gold trading is done through the Brazilian
Commodities & Futures Exchange (BM&F), which is the only one in the world that
trades gold in the physical market. The international price of gold is established in
troy ounce, which equals 31.104 g (Thirty-One Grams and One Hundred and
Four Milligrams). In Brazil, the quote is done in real per gram of pure gold.
The price of gold is linked historically to the prices in London and New
York, reflecting therefore the expectations of the international market. It suffers,
however, directly influence of the prospects of the internal market and, especially,

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the fluctuating dollar rate. Thus the domestic price is calculated directly for the
changes in the market price of the dollar and fluctuating metal prices on the NYSE.
The price of gold in real grams, calculated from the price in dollars per troy ounce
(the U.S. dollar floating) provides a benchmark price. Traditionally, the price of the
BM&F maintains parity with this reference value ranging 2% (Two Percent) on
average.
There are two types of investors in the gold market in Brazil: the
traditional investor - which uses gold as a store of value and speculators who are
looking for immediate gains in relative gold/dollar/stock looking for the best
alternative at the time.
There are 02 (Two) markets in Brazil for the gold:
I Over-the-counter (OTC): operations are closed via phone, after the
payment, the buyer has two options: leave the gold deposited in escrow with a
financial institution, carrying a certificate of custody; or physically remove the
amount of gold gained;
II Spot Market on Stock: the delivery of the gold occurs in 24 hours,
trading volumes are transferred automatically between customer accounts in
different banks without the metal passes through who negotiates.
In the stock market, certificates are exchanged property. And in any
case, the responsibility for the quality of the metal is the mining companys, and not
the bank, which is only the commodity custodian.
There are three ways to purchase gold on BM&F Bovespa. The most
common is to purchase the metal in the spot market. But investors can also make the
purchase through the futures market and options. The futures market contracts
allow the purchase of gold by a certain fixed price on a set date. But until maturity,
sellers and buyers of contracts should go pay adjustments to each other depending
on the variation of the metal price (appreciation or depreciation).
In option contracts, the investor pays for the right to make the purchase
at a given price on the exercise date. In option contracts, the investor has no
obligation to buy, unlike the futures business.
Contracts available are traded on the spot market. This same standard
lot is futures and options contracts of purchase and sale (for which the investor
acquires the right, but not the obligation, to negotiate the asset at a specified price
fixed in a future period).

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The 10 g (Ten Grams) fractional contract is specialized in small


amounts. Although there is no restriction to the negotiation of fractional contracts,
rescue along the custodian can be done only in standard lots. The forward market
has a function similar to the futures market, to establish a fixed price and an
expiration date. However, unlike the futures market, does not require the payment of
daily adjustments due to changes in the prices of these contracts.
Currently, the most traded contract is the 250 grams (two hundred
and fifty grams) available standard in sight. On certain days, the contract represents
100% (one hundred percent) of all deals closed in the Brazilian market.
The standard lot traded is 249.75 g (Two Hundred Forty-Nine Grams
and Seven Hundred and Fifty Milligrams) of fine gold, corresponding to a 250 g
bar (Two Hundred and Fifty grams). The purity content is 999 (Nine Hundred
and Ninety-Nine) parts of pure gold for every 1000 (One Thousand) metal parts.
In this type of contract operations are allowed to buy and sell daily settlement (Day
Trade).
4.2 INTERNATIONAL MARKET
In the international market, the main trade centers of gold are London and
Zurich where gold is traded in the OTC market and not via stock exchange. Another
major business center is the Commodities Exchange of New York (COMEX) which
only operates in the futures market. There is also in it a strong market for physical
gold. The gold market, like the stock market, is part of the group of so-called risk
markets since their prices vary according to the law of supply and demand.
The following are worldwide known evidences of gold: 375, 500, 583,
585, 750, 958, 996, 999.9 (used in the aerospace industry). It is more often the
mixture (also called alloy) of gold with number 583. The alloys of this test may have
different colors, depending on the amount and composition of metals. The gold proof
number 958 is of three components which contains, besides gold, silver and copper
and is used generally to make wedding rings. This league has a strong yellow color
and is close to the color of pure gold.
The export of gold bullion reached a record high in value in 2010,
bringing foreign exchange to the country at the range of US$ 2,000,000,000.00
(Two Billion United States Dollars), and from 2015 on, we are proposing to
enlarge this very substantial foreign currency inflow.
Gold is the second most important mineral exported from Brazil and iron
ore is the first one. The countries that import from Brazil are the United Kingdom

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(45%), Switzerland (32%), the United Arabic Emirates (12%), the United States
(9%) and Canada (2%). The major gold reserves are located in South Africa (6,000
tonnes), accounting for 14% (Forteen Percent) of the total reserves on Earth.
SECTION II LEGAL ASPECTS
1. MINING IN THE BRAZILIAN CONSTITUTION
The fundamental principles governing the use of mineral resources in
Brazil are defined and consolidated in the current Federal Constitution enacted on
the 5th of October, 1988 and in the Constitutional Amendments 6 and 9 dated the
15th of August, 1995.
In the light of constitutional rights, the constitutional legal framework
of the mining activity in Brazil is described as follows:
Mineral resources, including those in the subsoil, are property of the
Federal Government;
Deposits, mines and other mineral resources are distinct properties
that differ from property of the soil for the purpose of survey and exploitation,
guaranteeing the concessionaire company the ownership of the mining product;
Mineral resources may only be explored and mined under the
authorization or concession of the Federal Government, by a Brazilian person or
company incorporated under the Brazilian law which has its head office and
administration in Brazil, being the mining product ownership guaranteed to the
concessionaire;
The following is under the Federal Governments monopoly:
Exploration and exploitation mining of oil, natural gas and other fluid
hydrocarbon deposits;
Import and export of products and basic by-products resulting from
exploitation of oil and natural gas and other fluid hydrocarbons, and from oil
refining;
Maritime offshore transportation of crude oil from Brazilian origin or
basic oil by-products produced in the country, as well as transportation of crude oil,
its by-products and natural gas from any origin through pipelines;
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Brazilian or foreign oil refining;


The economic activities relating to oil, natural gas and other fluid
hydrocarbon monopoly may be performed by companies founded under the
Brazilian laws, with main office and administration in Brazil, under an agreement
with the Federal Government;
Geological prospecting, exploration, mining, processing, enrichment,
reprocessing, industrialization and trade of nuclear ore and minerals and their byproducts;
Exploration and exploitation of other mineral resources may be
performed by authorization or concession from the Federal Government, in the
national interest, by a Brazilian or by a foreign company incorporated under the
Brazilian laws and which has its main office and administration in Brazil, as defined
by law. There are limitations for mining near border line and in areas reserved for
indigenous peoples, mainly in the Legal Amazon;
The States, Federal District and Municipalities, as well as the
Federal Government are assured a share in the result of oil or natural gas
exploitation and other mineral resources in their respective territory, continental
shelf, territorial waters or exclusive economic zone, or a financial compensation for
this exploitation;
The owner of the land is ensured a share in the mining results;
Whoever exploits mineral resources is obliged to recuperate the
devastated environment using a technical solution demanded by state agencies;
Exploration of mineral resources will always be authorized for a
limited fixed set period; the mining concession is for an unlimited period;
Exploration and mining concession rights may not be assigned or
transferred, wholly or partially, without prior consent by the Federal Government;
Small-scale mining cooperatives (garimpos) organized to perform a
mining activity will have priority in authorization and concession for exploration and
exploitation, small-scale mining reserves and deposits, in the areas where they are
operating, and in those established by the Federal Government;

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The Federal Government, States and Federal District shall have


concurrent legislative to leg power over the nature conservation, soil and natural
resources protection, environmental preservation and pollution control;
The National Congress is responsible for authorizing exploration and
exploitation of mineral resources in lands of indigenous peoples, the affected,
indigenous peoples being assured a share in the results of the mining activities;
The Federal Government, States, Federal District and Municipalities
shall register, follow-up and oversee the concessions to the rights for exploration
and exploitation of mineral resources in their territories;
The Federal Government is the sole responsible for legislating on
deposits, mines, of mineral resources and metallurgy;
2. MINING CODE
The Mining Code defines and classifies deposits and mines, sets
requirements and conditions for obtaining authorization, license and concession,
explains the rights and duties of the holders of mining rights, regulates cases for
cancellation, forfeiture and repeal of the mineral rights and regulates other aspects
of the mining industry and mining company operations. It also decides upon the
competence of the specific government agency of the Ministry of Mines and
Energy, the National Department of Mineral Production DNPM, in the
management of mineral resources and supervision of the mining activities in Brazil.
2.1 SYSTEMS
The systems for exploration and exploitation of mineral resources in
Brazil are structured, defined and regulated in the Mining Code of 1967 (Executive
Law n. 227 dated 28th of February, 1967), its regulations and corresponding
legislation, which have still prevailed with the amendments and innovations
introduced by the laws subsequent to the current Constitutions enactment and its
amendments.
2.1.1 BOARD APPLICATION
Authorization System refers to the mineral exploration stage and
precedes the Concession System (mining stage).
Concession System relates to the mining stage or industrial use of a
deposit considered technically and economically exploitable.
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2.1.2 EXPLORATION AUTHORIZATION APPLICATION


Application for exploration authorization for any mineral substance,
except for those under constitutional monopoly, is addressed to the DNPMs General
Director and, on delivery, is given a protocol receipt by the Federal Agency, where it
is mechanically and chronologically numbered and registered, and the intended
mineral substance class, region, and maximum size of the area to be claimed, as
shown in the following table:
REGIONS IN BRAZIL
MINERAL SUBSTANCES

LEGAL
AMAZON1

OTHER
REGIONS

Metallic, fertilizers, coal, diamonds, bituminous and


pyrobituminous rocks, peat and rock salt

10,000 ha

2,000 ha

Sands2, smelting sands (industrial), gravels2, grit2, clay3,


limestones4, mineral waters, feldspars, gems (except for
diamonds), micas, trimmed and crushed rocks6

50 ha

50 ha

1,000 ha

1,000 ha

Ornamental stones5 and other mineral substances

The Legal Amazon covers the region including the States of Rondonia, Acre, Amazonas, Roraima, Para, Amapa and
Tocantins, and by some areas of the State of Mato Grosso North Latitude 16, and the State of Maranhao West
Longitude 44.
1

For immediate use in civil construction, preparing aggregates and mortar, providing that they do not undergo
industrial processing.
2

Used for manufacturing red pottery.

Used as a soil corrective.

Ornamental stone is understood as the mineral asset used as an object of decoration.

Rock trimmed or chiseled for cobbles, crosshead guides, gutters, stays and similar products. Rock crushed for
immediate use in civil construction.
6

2.1.3 RESTRICTED APPLICATION


Small-scale Mining Permission (Garimpo) System regulates the
use of small-scale mining deposits, independently of previous exploration works.

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Licensing System regulates the exploitation of exploitation of


mineral substances of immediate use in civil construction in natura and others
specified by law, independently of previous exploration work. And exploitation of
mineral deposits is subject of state monopoly which are regulated by special and
specific laws.
2.1.4 EXPLORATION AUTHORIZATION SYSTEM
Mineral research or Exploration is understood, for purposes of this
system, as performing the necessary work for defining the deposit, its evaluation
assessment and for determining its economic feasibility. A deposit is regarded as
being any individualized mass of mineral or fossil substance, either occurring above
or below the surface, with economic value.
2.2 MINING COMPANY
Every and any company incorporated under Brazilian laws, with main
office and administration in Brazil, and whose corporate objective is the survey and
exploitation of mineral resources, is able to obtain a Research Authorization Permit
and an Exploitation Concession.
Nevertheless, every and any company is obliged, in accordance with the
law, to file at the National Department of Mineral Production (DNPM) the
prevailing articles of incorporation or company bylaws and shareholder agreements
as well as future articles or bylaw amendments, in the latter case having a maximum
period of 30 (Thirty) days after registering in the National Trade Registry
Department and the companies that already hold mining rights are also obliged to
do so.
In addition, the intended area(s) must be free for exploration, that is,
not to be the subject of:
Any mineral right already granted;
Permission for a geological survey;
Prior request application for exploration, licensing, and small-scale
mining permission;
Availability for exploitation. The priority right is ensured to whoever,
in compliance with the legal requirements, is the first to register in protocol the
claim at any DNPM office;

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Presentation of the specific application forms for exploration duly


completed with the instruction items information about the applicant, the mineral
substance to be explored, and the location of the area, accompanied by the following
technical documents prepared under the responsibility of a legally qualified
professional: a Geologist or Mining Engineer;
Descriptive memorial and location masterplan of the claimed area
and its boundaries;
An exploration plan with the budget and physical-financial schedule
planned for its execution; under the responsibility of a legally qualified geologist or
mining engineer - with a budget forecast for its execution, maps of the intended area
and other elements of information and evidence requested by the Mining Code;
Evidence of emoluments payment to the amount calculated according
to the claim area (in hectares) and the existence of own funds or financing for the
investment forecast in the exploration plan.
2.3 RESEARCH AUTHORIZATION PERMIT
Once the legal and regulation requirements have been met, the
exploration authorization is granted by under an Authorization Permit from the
DNPMs General Director, giving its holder rights and obligations relating to public
authorities and third parties. The rights and obligations involved in the Research
Authorization Permit are as follows:
To perform the work necessary for defining the deposit, within the
term of maximum validity of the Research Authorization Permit, which is 3
(Three) years, and can be extended for no longer than another equal period, at
DNPMs discretion and in full compliance with the conditions stipulated by the
Mining Code. With regard to the mineral substances in an exploration area within a
maximum area of 50 ha (Fifty Hectares), the valid period is 2 (Two) years with the
limited extension of another year over a three-year period, renewable for a further
period, by DNPM criteria, under the conditions stipulated in the Mining Code;
To negotiate the deed, which is personal and has asset value, and the
holder may grant or transfer it before the approval of the final report of the
exploration work, only requiring the DNPM prior consent;
To apply for the Exploitation Concession no later than a year from
the date of the exploration report approval by the DNPM, and which can be extended
for equal periods. The holder may negotiate the exploitation permit during this

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period; which confirmed the existence of a technically and economically feasible


deposit. In this period the aforementioned right may be negotiated
To relinquish the title, without detriment to meeting the obligations
arising from the Mining Code and the submission of the exploration report may, as
an exception, be waived.
To start exploration work no later than 60 (sixty) days after the
Permit has been published in the Federal Register and do not stop or interrupt it,
without due reason, for over 3 (Three) running months or 120 (One Hundred and
Twenty) non-consecutive days;
To perform exploration work under the responsibility of a Geologist
or Mining Engineer legally qualified in Brazil;
To inform the DNPM of the occurrence of any other mineral
substance not included in the Permit, and the start or resumption of the exploration
work and any possible interruptions;
To perform the respective exploration work and submit to the DNPM,
before the expiring of the Permit, or its extension, the report on the exploration
work done, independent of the results achieved, and it may be when:
Approved There is evidence of that a technically and economically
feasible deposit has been found;
Filed A technically and economically feasible deposit has not been
found;
Not Approved Evidence is impossible due to insufficient work or
technical failure; or
Suspension of The Decision on The Report It is found that the
technical-economic feasibility of the mining is temporarily impossible. In this event,
the DNPM will fix a date for the holder to submit a new technical-economic
feasibility study for mining, under penalty of filing. In this case, the DNPM may grant
the holder new dates or make the area available if it is understood that a third party
may be able to make any mining activity feasible;
To respect the rights of third parties, compensating them for eventual
possible damages and losses as a result of the exploration work;

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To facilitate access for the DNPM agents to inspect installations,


equipment, etc.
To pay the Federal Government when the total exploration
authorization areas held exceed 1,000.00 ha (One Thousand Hectares) and until
the corresponding exploration report has been delivered to the DNPM, the annual
charge for the extra area, fixed an annual charge per hectare, determined in the
Exploration Permit, and its application may vary according to criteria, values and
conditions of payment stipulated by the Ministry of Mines and Energy, limited,
however, to the maximum value of 2 (Two) UFIR, according to payment criteria,
values and conditions stipulated by the Ministry of Mines and Energy. These
charges are defined as follows (as of March-December, 2012):

PERIOD

CHARGE VALUE
(UFIR/HA/YEAR)

Within the prevailing normal Term

1.0

Within the prevailing normal Term

1.5

To inform the DNPM of the waiver of at least 50% (Fifty Percent) of


the area in the relevant License, or request to maintain, with good reason, all or a
fraction over 50% (Fifty Percent), after 18 (Eighteen) months of the deed term,
when the total land under the exploration authorization is over 50,000 ha (Fifty
Thousand Hectares);
To inform the DNPM and the National Nuclear Energy Commission
(CNEN) of any discovery of nuclear minerals, under penalty of sanctions of the such
discovery.
To pay for the costs of the inspections carried out by the DNPM
during exploration and exploitation work.
2.4 FORFEITURE OF EXPLOITATION CONCESSION
Forfeiture of the Exploitation Concession only occurs in four
extremely serious situations after completing the administrative process started by
the DNPM:
Proven evidence of exploration work abandonment or shut down;

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When the holder, in spite of the sanctions of admonishment or fine,


continues to disobey the starting and re-starting terms of the exploration and
deliberately performs work against the conditions stipulated in Permit;
When the holder, after having been fined more than twice in one year,
continues to disobey the decisions of the DNPM inspection;
Not paying the annual fee per hectare required by the DNPM.
2.5 CONCESSION FOR USE
As an exception, it is admissible to extract mineral substances in an
area specified in an Exploration Concession before the mining concession has been
granted, by prior authorization from the DNPM, which will involve the issue of the
corresponding Concession for Use, on compliance of the agreement with the land
owner and obtaining the pertinent environmental license.
2.6 PERMISSION FOR GEOLOGICAL RECONNAISSANCE
This is an authorization eventually that may be granted by the DNPM to
a mining company which requests and meets the legal and regulation requirements
to perform a geological reconnaissance, using airborne aerial survey methods, to
obtain useful regional preliminary information for formulating an exploration
request application. The area is restricted to a maximum boundary of 12,000 sq.
km (Twelve Thousand Square Kilometers).
The permission is valid for a maximum unextendable period of 90
(Ninety) days from the date when the authorizing act is published in the Official
Federal Gazette, and the mining company is ensured the right of priority to request
apply for exploration authorization in the granted area, until the final date of the
Permissions validity, providing that the following conditions have been fulfilled:
The area in question must be free for exploration and restricted to the
maximum boundary stipulated for the mineral substance and region under study;
The report of the geological reconnaissance results have report of the
geological reconnaissance results has been delivered to the DNPM.
2.7 CLAIMSTAKE MINES
The 1934 Constitution stipulated the basic concept of separation of the
ownership of the soil from that of the subsoil, for the economic exploitation of

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Brazils mineral resources, which then became fell under federal domain. The
Constitution itself acknowledged, however, the right acquired by the owners of
mining deposits, albeit temporarily suspended or stopped, providing that they were
documented and registered at DNPM, within the period and as stipulated by an
infra-constitutional law (1934 Mines Code).
The mining rights of manifest claimstake mines still prevail, and their
holders are liable subject to the same conditions and obligations stipulated by the
Mining Code and its Regulations for assigned mines (Mining Concession System),
concerning in relation to mining, taxation and inspection.
2.8 MINING GROUPING AND MINING CONSORTIUM
Also under the Mining Concession System, it is worth mentioning the
existence of two important legal figures instituted to allow greater economic
efficiency and productivity in mining activities as follows:
2.8.1 MINING GROUPING
On DNPMs authorization, several mining concessions of the same
holder and the same mineral substance, in an area of the same deposit or
mineralized zone, can be joined into a single mining unit called Mining Grouping;
The concessionaire company of the Mining Grouping, by DNPMs
criteria, can concentrate the mining activities in one or a group of concessions,
providing that the intensity of the mining is compatible with the importance of the
total combined reserve;
The Mining Grouping is subject to the same obligations and penalties
stipulated under the mining law for mining concessions in general.
2.8.2 MINING CONSORTIUM
This is a legal entity constituted by nearby or neighboring holders of
mining concessions, open or situated on the same deposit or mineralized zone, in
order to increase extraction productivity;
The authorized Consortium is liable for fulfilling all conditions and
obligations set out in the Book of Burdens Charges, included the respective
authorization;

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The constitution of the Mining Consortium depends on express


authorization by the DNPM, by delegation from the Ministry of Mines and Energy,
after an analysis and conclusive report by the DNPM of the elements of evidence and
information required on by the mining legislation.
2.9 LAND OWNERS SHARE IN MINING RESULTS
The land owner is guaranteed a share in the mining results under the
Constitution equal to 50% (Fifty Percent) of the total value due to the State,
Federal District, Cities and Federal Government, as financial compensation for
exploiting of mineral resources the so-called Federal Royalty. The payment to the
landowner is made on a monthly basis no later than the last working day of the
month after the generating month, that is, at the time of invoicing (See details of the
calculation basis for financial compensation in the section relating to Fiscal Aspects).
2.10 LICENSING SYSTEM
The licensing system is restricted and applies exclusively to the
economic exploitation of the deposits of civil construction material such as:
Sands, gravel, grit, when used in natura in the civil construction
industry, industrial minerals for immediate use in civil construction:
Clays used in manufacturing red ceramic tiles;
Also limestone used as a corrective in agricultural soils, may be object
of Licensing System;
Crushed rocks for immediate use in civil construction; and
Rocks when chiseled for cobbles, cross-guides, slabs, among others
mineral products specified under law, independent of exploration work previously
authorized by the DNPM. The regulations of this system are as follows:
Licensing is exclusively granted to the owner of the land or to
whoever is given express authorization, the authorized party being obliged to pay to
the holder of the property income for occupying the land and compensation for the
damage caused to the property, as a result of the mining activity;
The party interested in licensing may be a Brazilian national or a
company incorporated under Brazilian law which has its head main office and
management administration in Brazil;
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Licensing, restricted limited to a maximum area of 50 ha (Fifty


Hectares), depends on obtaining the following:
Express Authorization, from the owner of the land where lies the
deposit of the mineral substance to be exploited;
Special License, issued by the local administrative authority in the
municipality where the deposit is located;
Registration of License at the DNPM;
Prior Environmental License (LP) from the competent State
Environmental Authorities. A copy of the respective environmental operating
license shall be filed at DNPM;
The licensing deed will be registered at DNPM, its term being
conditioned to the shortest period existing in the specific license issued by the
municipal authority or in the authorization of the land owner. If the interested party
does not have a License Registration at DNPM when presenting the installation
license, is the mining activity may not start;
The licensed holder is obliged to immediately inform the DNPM if any
other useful mineral substance occurs which is not included in the licensing, and
present a production and sales report every year;
The license holder is responsible for any damages caused to the
environment;
DNPM may request, if considered necessary because of the economic
potential of the area, that exploration work be performed and an mining plan for the
deposit be presented submitted;
Cancellation of the license registration, and consequent loss of the
deed, will occur in the following main cases:
Stoppage, without any good reason, of extraction activities for a
period of more than six months;
Extraction of mineral substances not included in the license, after
formal admonishment. It is worth mentioning that the licensed holder has at any
given moment, the right to choose the systems of exploration authorization and
mining concession, if interested.

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2.11 EXTRACTION SYSTEM


The Extraction System applies exclusively to direct and public
administration agencies, whether in the Federal Government, States, Federal
District and Municipalities. It refers to the use exclusively in public works of
mineral substances that are immediately used in civil construction.
This system was only regulated in February, 2000, and complies with
an old demand, especially of mayors, who can, among other possibilities, have an
element of civil construction added cost ballast to improve negotiations with
construction companies when carrying out works in their respective municipalities.
Some of the main rules for this system are as follows:
The public agencies may extract minerals for use in their respective
public works, but cannot market or outsource extraction activities. The application
for registering extraction will be sent on its own form to the General Director of the
DNPM, with the relevant documents required to facilitate the analysis;
One of the documents to be submitted in the application stage is the
operating license, issued by a competent environmental agency;
The maximum area that may be requested is 5 ha (Five Hectares). If
this area is already held by a third party, the DNPM may only give authorization if
this holder gives his express consent;
The extraction registration will have a deadline fixed by the DNPM,
due to the strict requirement of using the mineral substance in duly specified public
works, then the DNPM may authorize only one extension provided that is justified.
3. ENVIRONMENTAL LAW APPLYING TO MINING
3.1 CONSTITUTIONAL PRINCIPLES
The fundamental principles governing the compatibility of the mining
activity with environmental protection are outlined in the 1988 Constitution, which
defines the tools of the Public Administration to achieve this objective and the
obligations of the mining company.
Article 225 of the Constitution stipulates that it is the responsibility of
public administration authorities to:

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"Demand a prior environmental impact assessment, to which publicity


will be given, under the law, for any installation of work or activity which may be a
potential cause of major environmental degradation , a prior environmental impact
study, to which publicity will be given" and "Control the production, marketing and use
of techniques, methods and substances which endanger health, quality of life and the
environment", also prescribing that: "Whoever exploits mineral resources is obliged to
recuperate rehabilitate the degraded environment, using a technical solution legally
required requested by the competent public agency".
As a result of such constitutional conditions, the exercise of the mining
activity in Brazil is conditioned to three specific control instruments of the public
authorities, concerning the potential risks of damage to the environment as a result
of mining: Environmental Impact Assessment (EIA), Environmental Licensing
(LA) and Plan for Recovery of Degraded Areas (PRAD).
3.1.1 ENVIRONMENTAL IMPACT STUDY FOR MINING ACTIVITIES
The Environmental Impact Study (EIA), which is required for
environmental licensing of any activity exploiting mineral resources and is separate
from it, has its definition, regulations and basic criteria, and implantation guidelines
stipulated by CONAMA Resolution n. 001/86 (based on Law n. 6.938/81),
amended and complemented by the same Resolutions n. 009/90 and n. 010/90.
The EIA requirement applies to mining projects of any mineral
substance. However, in the case of mineral substances for immediate use in civil
construction, due to the characteristics of the project, presentation of the EIA may be
waived. In this event, the mining company shall submit the Environmental Control
Report (RCA).
The EIA, to be prepared obligatorily by qualified specialists, must be
consolidated in the Environmental Impact Report (RIMA), which is submitted to
the relevant state environmental agency, in the National Environmental System
(SISNAMA), for analysis and approval. At this stage, the RIMA must be made public,
so that the collective or any other interested party has access to the project and any
of its eventual environmental impacts and can know and discuss them freely, even in
open court. EIA/RIMA approval is the basic requirement for the mining company to
be able to request Environmental Licensing for its mining project.
3.1.2 ENVIRONMENTAL LICENSING FOR MINING ACTIVITIES
Obtaining Environmental Licensing (LA) is obligatory for locating,
installing or expanding and operating any mining activity subject to the mining
concession mining system or licensing.
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Such licensing is regulated by Decree n. 99.274/90, which authorizes


the state environmental agency to issue and control the following licenses:
Prior License (LP) This belongs to the mining projects preliminary
planning stage and contains the basic requirements to be met during the locating,
installing and operating stages, in accordance with the Municipal, State or Federal
plans for soil use. Such requirements must meet the regulations, criteria and
standards set out in the general guidelines for environmental licensing issued by the
National Environmental Council (CONAMA).
In addition, the criteria and standards established by the state
environmental agency must be met, in the scope of its competence and area of
jurisdiction, providing that they do not conflict with those at the federal level;
Mining Plan, the Plan for Recovery/Rehabilitation Plan for of
Degraded Areas (PRAD) and the EIA/RIMA are technical documents required to
for obtaining the Prior License, whose legal procedure is concurrent with the
request for Mining Concession;
Installation License (LI) Authorizes the start for of the mining
project implementation/installing the mining project, according to the specifications
in the approved Environmental Control Plan;
Operating License (LO) Authorizes, after necessary confirmation,
the start of the licensed activity and functioning of its pollution control equipment
and installations, according to that set out in the Prior (LP) and Installation
Licenses (LI). In cases of mining projects with a major environmental impact on a
national or regional scale, the Brazilian Institute for The Environment and
Renewable Resources (IBAMA), a federal agency linked to under the Ministry of
the Environment, is responsible for the issue of the environmental license.
3.2 FEDERAL ENVIRONMENTAL LEGISLATION
Infra-constitutional legislation governing the environmental issue
relating to mining activity is basically consolidated in the following legal statutes,
resolutions and rules:
Federal Laws:
Law n. 6.938, dated the 31st of August, 1981, and its amendments
(Acts n. 7.804 of the 18th of July, 1989, and 8,028 dated 12th of April, 1990

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Provides for the National Environmental Policy, its purposes and mechanisms of
formulation and application;
Law n. 9.605 dated the 12th of February, 1998 Provides for penal
and administrative sanctions derived from conduct and activities harmful to the
environment;
Federal Decrees:
Decree n. 97.632 dated the 10th of April, 1989 Provides for a Plan
for rehabilitating an area degraded by mining;
Decree n. 99.274 dated the 6th of June, 1990 Regulates Law n. 6,938
dated the 31st of August, 1981;
Resolutions of the National Council for the Environment CONAMA:
CONAMA Resolution n. 1 dated the 23rd of January, 1986 Fixes
basic criteria and general guidelines for the Report on Environmental Impact (RIMA);
CONAMA Resolution n. 009, dated the 6th of December, 1990
Regulates on specific rules to obtain the environmental license for mineral extraction,
except those for immediate use in civil construction;
CONAMA Resolution n. 010, dated the 6th of December, 1990
Regulates on establishing specific guidelines for extracting mineral substances for
immediate use in civil construction;
CONAMA Resolution n. 2, dated the 18th of April, 1996 Provides for
compensation for environmental damages caused by projects of relevant
environmental impact;
CONAMA Resolution n. 237 dated the 19th of December, 1997
Provides for the procedures and guidelines used in environmental licensing.
The states and municipalities have supplementary jurisdiction, decreed
by the Federal Legislation itself, to discipline on a complementary basis, in its areas
of jurisdiction, the regulations set by the Federal Government pursuant to
environmental issues, and the latter cannot, therefore, contest them.

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3.3. REHABILITATION OF AREAS DEGRADED BY MINING ACTIVITIES


According to Decree n. 97,632/89, mining projects, when presenting
the Environmental Impact Assessment (EIA) and Environmental Impact Report
(RIMA), are obliged to submit the Plan for Recovery of Degraded Areas (PRAD)
for approval by the competent state environmental agency. This plan considers the
suitable technical solution visualized by the mining company, to rehabilitate the soil,
eventually degraded by the mining activity, for future use. The approved PRAD can
be reviewed or altered later, with the agreement of the competent environmental
agency, to incorporate technological innovations or more suitable alternatives as a
result of the development of the mining work.
3.4 NATIONAL ENVIRONMENTAL SYSTEM
Given the size of Brazil and the particular regional or local features, the
Brazilian environmental policy is executed at three different levels of public
administration Federal, State and City. Coordinating and formulating the Brazilian
Environmental Policy is the responsibility of the Ministry for the Environment. In
connection to it is the CONAMA, the deliberative and consultant board for
environmental policy.
CONAMAs responsibility is to establish the rules, standards and
criteria guidelines so that environmental licensing can be granted and controlled by
the state and municipal local environmental agencies which are part of the National
Environmental System (SISNAMA), and by the Brazilian Institute for The
Environment and Renewable Resources (IBAMA) as its substitute, which is the
government agency under the jurisdiction of the Ministry of the Environment, is
the agency responsible for executing the Brazilian Environmental Policy.
SECTION III FISCAL ASPECTS
1. MINING TAXATION
The Brazilian mining industry, like any other industrial activities in
Brazil, is subject to taxation, charges and levies at all spheres Federal, State and
City.
The following tables list the most relevant federal and state taxes and
levies which are currently collected from mining companies for mineral products
commercialization:

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COMPETENCE

TAX/LEVY

CALCULATION BASIS

Federal

Corporate Income Tax

Taxable Net Profit

Federal

Social Charges

Federal

Welfare Contribution on Net Income


(CSLL)

Net Profit

Federal

Contribution to Social Integration Program


(PIS)

Gross Operating
Income

Federal

Contribution for Social Security Fund


(COFINS)

Billings

Federal

Other Social Expenses Charges


(FGTS and INSS)

Payroll

State

Tax on Sales and Services of Interstate


and Inter-Municipal Transportation and
Communication (ICMS)

Sale of Products

COMPETENCE

LEVY

CALCULATION BASIS

Federal

Financial Compensation for Exploiting


Mineral Resources Federal Royalty

Net Billings

1.1 FEDERAL AREA GENERAL TAXATION


CORPORATE INCOME TAX (IRPJ) The Corporate Income Tax is a
federal tax, paid monthly, and is collected on the taxable net profitcorporate income,
its regulation, standardization, collection and inspection under the responsibility of
according to regulation instructions from the Federal Revenue Department
(Secretaria da Receita Federal SRF), which examines and collects federal taxes
and is under subordinated to the Ministry of Finance (MF).
Due to the size of its total revenue, mining companies in Brazil are
liable for paying income tax through one of the following systems:

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Taxable Income Companies having over R$ 24,000,000.00


(Twenty-Four Million Brazilian Reais), equivalent to US$ 10,000,000.00 (Ten
Million United States Dollars) total earnings, for the previous calendar year are
bound to the tax system based on taxable income, and may choose to calculate the
taxable income on a quarterly or annual basis. No change in the option is admissible
during the calendar year or when submitting the annual income declaration.
Quarterly Taxable Income In this first option, companies shall
calculate the income tax on a quarterly basis on net income through a quarterly
balance sheet. The IRPJ is calculated on the basis of the book net income adjusted by
additions, exclusions and compensations foreseen in fiscal law. Collection is made in
the month after the quarter in which it was calculated at a sole rate, without
addition, or in three monthly installments with interest at the reference rate of the
Special System for Settlement and Custody SELIC (interest rate adopted by the
Federal Revenue Department for federal taxes).
Any due income tax is calculated based on the sole rate of 15%
(Fifteen Percent) on the taxable net income, the portion of taxable income of over
R$ 60,000.00 (Sixty Thousand Brazilian Reais), equivalent to US$ 25,000.00
(Twenty-Five Thousand United States Dollars), being charged an extra tax at the
rate of 10% (Ten Percent).
Annual Taxable Income In this second option, companies will have
to pay on a monthly basis the income tax on estimated income, while the taxable
income is to be calculated in the balance sheet at the 31st of December.
The tax is collected in a single installment by the last working day of the
month following the calculation. The estimated income is calculated on a percentage
basis, fixed by law, on the gross income of the month of calculation, which is 8%
(Eight Percent) for mining companies, plus capital gains, other revenue and taxable
positive results calculated in the month.
The income tax due is calculated based on the sole rate of 15% (Fifteen
Percent) on the estimated monthly income, and an extra tax at the rate of 10% (Ten
Percent) on the portion of income of over R$ 20,000.00 (Twenty Thousand
Brazilian Reais), equivalent to approximately US$ 8,350.00 (Eight Thousand
Three Hundred and Fifty United States Dollars).
To calculate the income tax on the taxable income at the end of the
year, the same 10% (Ten Percent) rate is used, and any portion of income more
then R$ 240,000.00 (Two Hundred and Forty Thousand Brazilian Reais),

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equivalent to approximately US$ 100,000.00 (One Hundred Thousand United


States Dollars) is subject to the extra tax at a rate of 10% (Ten Percent).
Assumed Income Mining companies earning a total income under
R$ 24,000,000.00 (Twenty-Four Million Brazilian Reais), equivalent to almost
US$ 10,000,000.00 (Ten Million United States Dollars), for the previous calendar
year may choose irretrievably in favor of the simple tax based on assumed income.
The income tax is collected every quarter as the income is being earned. In this
system, the income tax will be calculated every quarter on the basis of the income at
an 8% (Eight Percent) rate on the gross income earned in the mining activity, plus
other revenue, earnings and capital gains.
The income tax to be withheld at source or paid separately on those
portions relating to non-operating income is considered an advance of the tax due
for the quarter. The due income tax is calculated based on the sole rate of 15%
(Fifteen Percent), the portion of taxable income over R$ 60,000.00 (Sixty
Thousand Brazilian Reais), equivalent to US$ 25,000.00 (Twenty-Five Thousand
United States Dollars), being liable for an extra tax at a rate of 10% (Ten Percent).
Since the 1st of January, 1996, the taxable net profit of companies is
liable for Corporate Income Tax (IRPJ) based on the sole rate of 15% (Fifteen
Percent) and an additional tax of 10% (Ten Percent) on any net profit over R$
240,000.00 (Two Hundred and Forty Thousand Brazilian Reais), equivalent to
approximately US$ 100,000.00 (One Hundred Thousand United States Dollars).
Mining companies, with annual earnings of less than R$ 12 Million
(almost US$ 5 Million), are given the option to pay the IRPJ on the profit forecast or
taxable net profit calculated normally.
SRF fixes as calculation base for the profit forecast the sum of 30%
(Thirty Percent) of net earnings, on which is collected the tax rate of 15% (Fifteen
Percent). The company is also liable for the additional tax if the real net profit
calculated, at the end of the year, is over R$ 240,000.00 (Two Hundred and Forty
Thousand Brazilian Reais).
Independent of the system under which it is taxed quarterly or annual
taxable income, or assumed income , the company is obliged to submit every year
the corporate income tax declaration relating to its earnings from operations
between 1st of January and 31st of December. Adjustments made with the Federal
Revenue Department in relation to any surplus or deficit payments during the
base-year are based on the declaration. In the companys annual corporate income
tax declaration presented to SRF, the monthly results for the previous year are

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consolidated, and an annual base obtained to calculate too many or too few
payments made during the year. In addition to depreciation, amortization of preoperating expenses, compensation for losses in previous years, losses in foreign
currency exchange and other deductions foreseen in tax law and applicable to any
industrial activity, in the specific case of mining the following are also considered
deductible when calculating the taxable profit:
Depletion Allowance Calculated on the volume of production in
the year in relation to the mines known reserves, based on the cost of acquiring or
obtaining the restated mining rights or, if the company is not the holder, the duration
of the mines leasing contract;
Exploration Expenses Any expenses incurred during the
exploration stage and when expanding the reserves of the mine can be deducted as
working expenses, or capitalized and amortized for the minimum period of 05 (Five
years) from the start-up date of the mine;
Expenses Incurred in The Mines Development They may be
capitalized and amortized for the minimum period of five years from the start-up of
the mine. It is important to stress that dividends, bonuses and any other kind of
profit distribution, when paid or credited to individuals or companies resident and
domiciled in Brazil or abroad, will no longer be liable for withholding income tax,
(IRRF - Imposto de Renda Retido na Fonte), nor will be considered in the
calculation of income tax calculation base of its beneficiaries.
1.2 WITHHOLDING INCOME TAX ON INTEREST AND ROYALTIES
The payment of interest and royalties to non-residents is liable for
withholding tax (IRRF) on the basis of 15% (Fifteen Percent) or a lower tax rate,
when existing there is a treaty between Brazil and the receiving country.
1.3 IMPORT TAX
A federal tax on the Free on Board (FOB) value of goods imported by
Brazil, whether primary, semi-manufactured or manufactured.
Concerning primary mineral goods, the tariff applicable to almost all is
practically zero today. It is worth mentioning that the products, when coming from
any Southern Common Market (MERCOSUR) member country have preferential
tariff treatment.

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1.4 FEDERAL AREA GENERAL LEVIES


SOCIAL CONTRIBUTION TAX ON NET INCOME (CSLL) The Social
Contribution Tax on Profit is owed to the Federal Government and collected
according to the same rules as for on the adjusted net profit, before income tax,
under the terms of the prevailing law.
Under the tax system, the general rules for calculating and collecting
CSLL are as follows:
COMPANIES TAXED BY THE QUARTERLY TAXABLE INCOME CSLL
shall be calculated on a quarterly basis and collected from the contribution the
month following the calculation period. The calculation will be based on the book net
income per balance sheet and adjusted by additions, exclusions and compensations
set by specific fiscal laws. CSLL is owed on the basis of the sole rate of 12% (Twelve
Percent) on taxable net income, its value not being deductible when calculating the
taxable income for income tax (IRPJ) purposes;
COMPANIES TAXED BY ANNUAL TAXABLE INCOME (CSLL) Shall be
calculated on a monthly basis and collected the month after the calculation, which is
based on the monthly estimated income. When calculating the annual net income on
the 31st of December, the monthly contributions are deducted from the CSLL sum
calculated. The monthly CSLL owed is calculated based on the sole 12% (Twelve
Percent) rate on estimated income.
COMPANIES TAXED UNDER ASSUMED INCOME The mining
companies under this system will calculate and pay CSLL every quarter. The
calculation is based on the 12% (Twelve ercent) rate on the gross income of the
quarter, plus capital gains and other non-operating revenue by law. A sole rate of
12% (twelve percent) is charged on this total.
SOCIAL INTEGRATION PROGRAM (PIS) The PIS was created by
under the 1970 Complementary Law n. 7 with the purpose of integrating the workers
into the operations corporate life and development and growth of the company.
Since the 1988 Federal Constitution, its collection has been focused on financing the
unemployment insurance program.
The rate of the respective monthly contribution is 0.65% (Zero Point
Sixty-Five Percent) and is collected on the gross working revenue, that is, the sum
of the earnings which result in the working profit, added to the financial earnings
and monetary variations. This tax is not collected on income from exports.

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CONTRIBUTION FOR SOCIAL SECURITY FUND (COFINS) The


COFINS is a contribution owed to the Federal Government to pay for aid-related
investments. It is charged on the monthly earnings with an aliquot of 2 (Two) at a
rate of 3% (Three Percent). Income from exports is exempt from such contribution.
SOCIAL CHARGES (INSS & FGTS) Some of the other social expenses
to be paid by a company are as follows:
The contribution to the National Social Security Institute (INSS)
corresponding to 20% (Twenty Percent) on the payroll; and
The Severance Indemnity Fund for Employees (FGTS)
corresponding to 8% (Eight Percent) of wages paid or owed to employees.
1.5 STATE AREA GENERAL TAXATION
TAX ON SALES AND SERVICES OF INTERSTATE AND INTERMUNICIPAL TRANSPORTATION AND COMMUNICATION (ICMS) A noncumulative levy administered by the Brazilian States and the Federal District, is
due at all stages of selling a product, along the chain from producer to end customer.
All mineral goods, produced in Brazil or imported by the country, are
liable for ICMS collection, with rates varying from state to state, according to the
local governments interest, but respecting the maximum limit valid for all Brazilian
States. The maximum rates in practice charged today are the following ones:
OPERATION

MAXIMUM RATE

Interstate

18%

Interstate Tax Payer

12%

Interstate End User

18%

Exportation

13% (*)

Importation

18%

(*) The calculation base for some goods may be reduced to zero. In the case of iron ore exports, for
instance, this reduction may even be approximately 53%.

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Gold from small-scale mining areas or mining and sold to financial


institutions is liable for paying 1% (One Percent) of tax on Financial Operations
(IOF), since it is considered a financial asset by the Federal Constitution and Tax
Law. ICMS is also collected in this case.
1.6 SPECIAL LEVY FOR MINING COMPANIES
FINANCIAL COMPENSATION FOR THE EXPLOITATION OF MINERAL
RESOURCES FEDERAL ROYALTY (CFEM) Financial Compensation for
Exploiting of Mineral Resources (CFEM), established by the 1988 Constitution, is
owed to the State, Federal District, Municipalities, and the Federal Government,
as a counter-loan for the economic use of mineral resources, as these are property of
the Federal Government. The CFEM is no more than 3% (Three Percent) and its
calculation base is the net revenue from the sale of the mineral product, understood
as the total of sales less taxation, transportation and insurance expenses.
2. FISCAL TREATMENT OF FOREIGN CAPITAL
In recent years the Federal Government has been making ongoing and
in-depth readjustments in its policy on foreign capital in order to encourage new
direct investments in several segments of the Brazilian economy, now seen, within
the government strategy for economic growth and industrial development.
In this sense, the Stabilization Plan, the National Privatization Program,
reforms to the Federal Constitution in its clauses dealing with the economic order,
and making the foreign capital-related institutional and tax laws more flexible
eliminating restrictions in the foreign investor participation in Brazilian stock
exchanges and privatized companies, opening financing lines in the BNDES System
to foreign capital companies installed in Brazil, decreasing the bureaucracy and
reducing the tax load on repatriation of capital, profits and dividends, as well as in
remitting royalties and interest, among other measures , have already placed Brazil
in a highly competitive position in the international community to attract capital.
The increasing flow of foreign capital after July 1994 is an undeniable
proof of international investors and financial institutions confidence in Brazil.
2.1 CONCEPT OF FOREIGN CAPITAL
The basic legislation on foreign capital in Brazil is consolidated in Laws
n. 4.131/1962 and 4.390/1964, regulated by Decree n. 55.762/1965, such
statutes complemented by Law n. 9.249/1995, which stipulates new legislation for
income tax.
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The legal concept of foreign capital is explained quite broad, ranging


from current or intangible assets, such as trademarks and patents, machinery and
equipment received in Brazil from overseas without initial expenditure of foreign
reserves as assets, machinery and equipment received in Brazil from overseas,
invested in the country and destined for the production of assets and services,
financial or monetary resources coming into the country, to be invested in economic
activities.
Its holders individuals or companies must be resident, domiciled or
have the main office overseas. Financial or monetary resources brought into Brazil
for investment in the economic activity, whose holders - individuals or companies reside, are domiciled or have their head office overseas, are also considered foreign
capital.
2.2. LEGAL AND TAX ISONOMY
Once it has legally entered the country internalized, foreign capital
invested in mining is addressed on the same basis of legal or tax treatment as capital
of Brazilian origin and any discrimination is being vetoed by the Constitution.
2.3 CENTRAL BANK REGISTRATION
Foreign capital invested in Brazil, and as well as re-investments and
foreign exchange remittances abroad are registered at the Brazilian Central Bank
(BACEN). The concept of registered foreign capital is crucial for investments in
Brazil. Registered foreign capital gives the investor the right to repatriate its funds
from local currency again into foreign currency at commercial exchange rates and
without extra taxation, when the investment is sold or when it produces dividends. If
there is no registration at the Central Bank, no remittance of capital or dividends
may be made overseas.
The foreign investor may remit overseas the return of its investment,
either as dividends or capital gains. Capital gains are from the reduction of capital,
settlement or sale of an investment in Brazil. There is no limit on the value of profits
that may be remitted as dividends overseas, and they are exempt from the 15%
(Fifteen Percent) rate withholding income tax.
The capital gains may be repatriated without being taxed, providing
that they do not exceed the sum amount of the registered foreign capital registered.
Remittances above this value will be liable for a 15% (Fifteen Percent) rate
withholding tax.

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2.4 AGREEMENTS OF TECHNICAL ASSISTANCE AND ROYALTIES


The basic rules controlling contracts agreements of technical assistance
or transfer of technology between Brazilian mining companies and individuals or
companies resident and domiciled abroad are set out in Regulation Act n. 15 of the
National Institute of Industrial Property (INPI), according to which such
contracts must be registered and approved by the INPI and, only after this legal
procedure, then registered at BACEN.
The registration at BACEN will permit future remittances in payment of
services rendered or royalties, defined in the contracts, and they will be made with
prior authorization of the bank itself.
2.5 BILATERAL TAX AGREEMENTS
In order to avoid double taxation, Brazil has signed agreements with
the following countries: Germany, Korea, France, Norway, Argentina, Denmark,
Hungary, the Netherlands, Austria, Ecuador, India, Portugal, Belgium,
Spain, Italy, Sweden, Canada, Philippines, Japan, Czech Republic, China,
Finland, and Luxembourg.
SECTION IV GOVERNMENT INCENTIVES
1. FEDERAL MINING INCENTIVES
The main federal tax incentives today are basically to encourage
development of the less economically and socially favored regions of Brazil, which
require a greater support from the Federal Government in order to leverage up the
commercial, industrial and livestock farming development, benefiting companies
established or in the process of installing there.
Such incentives are only for the Northeast and Amazon regions and are
administered by the Northeast Development Agency (SUDENE) and the Amazon
Development Agency (SUDAM), respectively.
The tax incentive features are the exemption or reduction in income tax
and extra taxes over the profit income from exploiting the project installed in such
region or additional results produced by the project installed in such region which
are granted in the following cases:

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1.1 INCOME TAX EXEMPT


NEW PROJECTS The companies that had industrial or farming
projects approved or enrolled by November 14, 1997 in SUDENE or SUDAM will be
exempt of income and additional non-rebatable taxes on income from exploiting the
project, for a period of 10 (Ten) years from the first fiscal year after start-up;
MODERNIZATION, EXPANSION OR DIVERSIFICATION PROJECTS
The companies that had projects approved or enrolled by 14th of November, 1997 in
SUDENE or SUDAM, relating to modernization, expansion or diversification of their
industrial or farming projects located in the regions awarded incentives, will be
exempt of income and non-rebatable taxes on the additional results produced by
them, for a period of 10 (ten) years after the start-up of the modernization,
expansion or diversification project.
This exemption does not include income from exploitation resulting
from the previous production. A basic condition for enjoying this tax benefit is that
the modernization, expansion or diversification project provides an increase in at
least 50% (fifteen percent) in the installed capacity of the respective project.
1.2 REDUCTION IN INCOME TAX AND NON-REBATABLE ADDITIONAL TAXES
NEW PROJECTS The corporate industrial projects approved after the
1st of January, 1998 in SUDENE or SUDAM will enjoy a decrease in income and other
taxes on exploration income since the start-up on the following bases:
75% (Seventy-Five Percent), from the 1st of January, 1998 to the
31st of December, 2003;
50% (Fifty Percent), from the 1st of January, 2004 to the 31st of
December, 2008; and
25% (Twenty-Five Percent), from the 1st of January, 2009 to the
31st of December, 2013.
MODERNIZATION, EXPANSION OR DIVERSIFICATION PROJECTS
The companies that have already implemented approved modernization, expansion
or diversification projects, in SUDENE or SUDAM, after the 1st of January, 1998, will
enjoy a decrease in income tax and additional non-rebatable taxes on the increased
results produced by these new projects, on the following bases:

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75% (Seventy-Five Percent), from the 1st of January, 1998 to the


31st of December, 2003;
50% (Fifty Percent), from the 1st of January, 2004 to the 31st of
December, 2008; and
25% (Twenty-Five Percent), from the 1st of January, 2009 to the 31st
of December, 2013.
PROJECTS IN OPERATION after the 1st of January, 1998, companies
that continued to operate industrial or farming projects in the SUDENE or SUDAM
areas, in relation to the aforementioned projects, will pay income and additional
non-rebatable taxes as follows:
37.5% (Thirty-Seven Point Five Percent), from the 1st of January,
1998 to the 31st of December, 2003;
25% (Twenty-Five Percent), from the 1st of January, 2004 to the 31st
of December, 2008; and
the

31st

12.5% (Twelve Point Five Percent), from the 1st of January, 2009 to
of December, 2013.

Companies that, on the 31st of December, 1993, were enjoying the 50%
(Fifty Percent) decrease for continuing to operate projects in the areas with
incentives under the terms of the law prevailing at the time will continue to enjoy the
incentive until the 31st of December, 2001, when the new reduced percentages will
apply. It is worth mentioning that the income tax which was not paid because of tax
incentives will constitute a capital reserve to be used in the actual project itself and
cannot be distributed to shareholders. All current tax incentives for the Northeast
and Amazon regions will be extinguished after the 1st of January, 2014.
1.3 STATE MINING INCENTIVES
Most Brazilian States grant ICMS (Refer to Section II, Item 1.3) tax
incentives to companies which may eventually start up in their territories, by
reducing the calculation base of the tax or defer its collection.
Another incentive used by some states is to convert the tax to be
collected by the company into financing at preferential rates. Such reductions vary
from state to state and are being renewed, altered or eliminated from year to year,
according to the interest of the state public sector and within its scope of jurisdiction.
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As a stimulus to foreign trade and development of the states, they


usually adopt ICMS exemption or reduction policies. Such policies vary according to
the interest of each particular state and have to be unanimously approved by the
National Council of Finance Policy Council (CONFAZ).
SECTION V SOURCES OF FUNDING
1. CHARACTERISTICS OF THE BRAZILIAN FINANCIAL MARKET
The Brazilian Financial System consists of a widespread, diversified
and dynamic network of financial intermediaries, comprising commercial (also
private savings) banks, savings-and-loan institutions, development banks,
investments banks, multiple-service banks, credit financing and investment
(financial) companies, insurance companies and stock brokers and securities
distributors.
The systems structure is marked by the presence of institutions under
both federal and state government control, with scopes in the commercial, savings
and development (investment financing) sector and from Brazilian and foreign
owned private institutions. There is increasing activity of foreign major banking
corporations in the Brazilian financial market, either through branches or a majority
or minority shares in local institutions.
The banking network is highly computerized and today covers almost
all Brazil, while using state-of-the-art telecommunication technologies. On the other
hand, in response to the requireneedmentss of a growing and sophisticated
consumer market, especially in the large urban centers and more developed inland
areas resulting from the expansion of the farming frontier financial institutions
offer a diversified modern line of products and services.
It is worth mentioning that the Brazilian Financial System has
recently undergone in-depth radical structural changes in an effort to adapt to the
countrys new reality, with landmarks such as the stabilization of the Brazilian
currency, a drop in the domestic inflation rate, flexible exchange rate and the
growing demand for long term capital, which can help revive the economic and social
development.
Given the long period which Brazil experienced high inflation rates, the
basic long term financing mechanisms available to companies and the government
itself to maintain and expand national economic activities and development, have
depended on compulsory savings, government resources and foreign savings.
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In short, the Brazilian financial market still has a limited capacity for
provideing resources at compatible terms and costs with production and investment
requirements, and it is up to the companies resorting to foreign capital, the National
Bank for Economic and Social Development (BNDES) which is the main
institution that offers long term financing in Brazil or to a few state or regional
development banks.
2. BNDES SYSTEM
The BNDES System, controlled by the Federal Government, consists
of the National Bank for Economic and Social Development (BNDES), Special
Industrial Financing Agency (FINAME) and BNDES Holdings S/A (BNDESPAR).
In addition to those subsidiaries, BNDES uses a network of financial
institutions (commercial, investment, state and regional development banks, among
others) known as BNDES System Financing Agents (private and state commercial
banks, investment banks, state and regional development banks).
One of the BNDES Systems major objectives is to support the
industrial development in Brazil and it therefore offers several lines of financing and
shareholdings. For developing the mining sector, in particular, the BNDES System
has been playing a major role as provider of financing resources for most of the
varying sizes of mining projects, whatever their size, installed or in the process of
installation in Brazil.
The credit system lines are available to Brazilian or foreign owned
mining companies, independent of the origin and control of their capital.
2.1 FINANCIAL SUPPORT OBJECTIVES
It is the policy of the BNDES System to support industrial projects
which create jobs and income, are cost, productivity and quality competitive, by
financing investments whose objectives, among others, are: industrial installation,
expansion, relocation and modernization; technological training; quality and
productivity upgrade; energy and environmental conservation; business downsizing
and streamlining; and costs with economic and social infrastructure in the private
project sphere.
2.2 SUPPORTABLE ITEMS
In fundable investments for the mining project, the following items,
among others, can be the purpose of the operation, such as:
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Construction, materials and installations,;


Acquisition, leasing and import of new machinery and equipment;
Expenses with civil construction, material and installations;
Expenses with economic and social infrastructure; expenses with
studies, consulting and engineering projectsdesigns;
Expenditure with mineral exploration;
Development of products and processing, including expenses in
buying, absorbing and adapting technology; expenditure with projects relating to
technological, quantity, quality and productivity improvement, including product
development and processing, purchase, absorption and adaptation of technology,
training and information systems;
Environmental expenditures, energy rationing and consumption;
Working capital and manpower education and training; capital
associated with fixed investments;
Expenditure with pre-operating expenses of the project;
Working capital associated to fixed investments;
Pre-operating expenditures of the project;
Expenditure with social and economic infrastructure in the private
project sphere.
2.3 WORKING METHODS
The BNDES System uses 03 (three) working methods for projects
financing:
Direct Through BNDES and BNDESPAR;
Indirect Through BNDES System Financing Agents network;
Mixed Where BNDES participates in the operation in conjunction
with its financial agents, ranging from direct to indirect financing resources.
2.4 GUARANTEES
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The BNDES System, in its financing operations, requires a constitution


of warrants guarantees, real and/or personal, which are defined in the analysis of the
operation or negotiated between the financial institution and customer, and the
Guaranty Fund for Encouraging Competitiveness FGPC (Guarantee Fund) may
also be used, whose basic financial conditions is:
Participation Levels of the BNDES System Share in the fundable
investment, generally up to 60% (Sixty Percent), may be up to 90% (Ninety
Percent), depending on the product offered by the system, the supportable item,
size of company (micro-companies and small companies are favored), economic
sector and location of project in the areas covered by regional programs
Competitive Northeast Program (PNC), Integrated Amazon Program (PAI), MidWest Program (PCO) and Reconversul;
Financial Cost This is made up of the following installments:
TJLP Long Term Interest Rate A variation on the North
American dollar plus Libor, or a variation of the BNDES monetary unit (UMBNDES)
plus charges of basket of currencies;
Basic Spread margin covering the BNDES expenses, guaranteeing
the institutions profitability;
Risk Spread rate reflecting the credit risk, and may vary from one
customer and operation to another;
Agents Spread rate defined by the financial agent of the BNDES
system who performs the operation (indirect operation);
Total Financing Term the maximum total term (grace period plus
amortization) varies according to the paying capacity of the project or company.
3. OTHER LONG TERM FINANCING SOURCES
3.1 INCENTIVATED REGIONAL INVESTMENT FUNDS
The Federal Government, with its policy to encourage regional
development, created the Regional Investment Funds, whose resources are solely
and exclusively to be invested in industrial and farming projects in the areas under
SUDENE and SUDAM jurisdiction, and also in the State of Esprito Santo, as follows:
Northeast Investment Fund (FINOR);

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Amazon Investment Fund (FINAM); and


Economic Recuperation Fund for The State of Espirito Santo
(FUNRES). Such funds have as a partial source of resources, among others, income
tax collection part of which is from the option exercised by the corporate taxpayer in
investing part of their tax payable in regional funds. Through this tax benefit,
corporate tax payers become investors in the beneficiary fund of their choice.
FINOR, FINAM and FUNRES resources are invested in the subscription
of debentures convertible or otherwise in shares, issued by companies which have
project approved by SUDENE, SUDAM or the Executive Group for the Economic
Recovery of the State of Esprito Santo. The characteristics of such debentures are
regulated by law.
3.2 DEBENTURES
The procurement operations by issuing debentures, convertible or not,
on the private financial market have been widely used in Brazil in recent years, as
middle and long term funds. In general, the costs and terms of such resources are
supportable by long term maturation projects.
3.3 OVERSEAS LONG TERM RESOURCES
A foreign currency loan, raised on the international financial market, is
still an important funding source for Brazilian companies. The sum and conditions of
this flow of resources have considerably improved the Brazilian economy, mainly
due to the increasing confidence in Brazil by the international financial community
regarding investment in mining and other sectors.
Both direct loans to companies, with or without an intervening local
institution, and those passed on by Brazilian banks, are regulated and controlled by
the BACEN. In the latter case, the terms of passing on resources vary from 180 (One
Hundred and Eight) days to 5 (Five) years and the costs are normally higher than
those of direct loans, since the local banks assume the credit risk, as well as
attributing their charges and margins to the borrower.
Foreign resources, whatever the method may be, are received
in Brazilian Reais, even though most of the loans are made in United States dollars
or Euros.
As a result of todays economic stability in Brazil and the increase in
competition on the local financial market by the ever increasing number of incoming
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foreign institutions commercial and investment banks there are already major
reductions in the spread in the cost of foreign financing and greater availability of
resources.
3.4 OTHER FINANCING MECHANISMS
Some other financing mechanisms for Brazilian mining/venture
companies are detached as follows:
Credits from foreign suppliers, normally guaranteed by banks in their
respective countries;
American Deposit Receipts (ADRs);
Pre-sale production operations, such as, for instance, the issuances of
future gold sale contracts by mining/venture companies home and on the foreign
markets;
Issuance of commercial papers overseas, with the collaterization of
Brazilian and/or foreign financial institutions;
Discounting of Export Receivables (ACCs) and Export Invoices,
normally widely used by export companies and with terms of up to 180 (One
Hundred and Eight) days supported by commercial banks;
Participation of different institutional kinds of funds, such as pension
funds of public organizations and private corporations, long term capital loans,
mutual investment funds, free portfolio investment funds, foreign investor funds,
equity and insurance funds.
Although their implementation is still underway by the private sector,
the Sectoral Stock Investment Funds of The Mining Sector, regulated by the
Securities and Exchange Commission (CVM), under the CVM Instruction n. 171,
dated 23rd of January, 1992, is another important source of funding for mining
projects in Brazil.
These funds, which have similar characteristics to those existing on the
Canadian market, may acquire, by private subscription, stock from any mining
companies incorporated as private companies, which provide evidence of ownership
of an area to be surveyed and exploited.

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SECTION VI GEOLOGICAL SURVEY OF BRAZIL


1. MINERAL RESOURCES SURVEY COMPANY (CPRM)
Mineral Resources Survey Company (CPRM) is a state-owned
company, under the jurisdiction of the Ministry of Mines and Energy, commonly
known as the Geological Survey of Brazil.
CPRMs mission is to carry out programs, projects and services
required for planning and the rational use of the countrys natural potential
resources, with emphasis on the knowledge and development of its mineral and
water resources. It undertakes institutional government programs and works as a
service provider, supplementing the work of the private sector.
Some of the Geological Survey objectives are worth mentioning:
To cooperate in implementing Federal Governments mineral and
water policies;
To undertake geologic and hydrologic surveys in Brazil, providing
basic information for the control of mineral and water resources and planning other
sectors, such as agriculture, energy, logistics, transportation, environment and urban
areas;
To coordinate, sistematise and integrate the geological data of
mineral deposits, organizing texts, charts, geological maps and other relevant
information, both for the government or interested companies;
To direct small-scale mining towards the discovery of strategic
minerals for the countrys development.
CPRM is the institution which holds a vast amount of information and
data available on the geology of Brazil, and anyone interested may access its
databases and acquire, among other things, basic and detailed geologic maps, on
different scales, metallogenic and mineral resource forecast maps, in addition to
aerial surveys of regions with a high mineral potential, and obtain guidance and
support with any geologic work required for mineral exploration.
Based in Braslia, the Geological Survey of Brazil has eight regional
operating offices and three residences in the main capitals of the country, all active,
in addition to the Rio de Janeiro office, where the main technical and administration
departments are based.

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It is also worth mentioning that most Brazilian states also operate, on a


supplementary and autonomous basis, through their the state mining companies,
both in terms of geologic surveys of their respective territories, and in encouraging
the use of their mineral resources. The state mining companies, in their respective
territories, play a major role in discovering and developing ore deposits, many of
which may be negotiable with the private sector.
2. BRAZILS GEOLOGY AND MINERAL POTENTIAL
Brazils vast mineral potential is the result of the geological diversity of
its lands and the continental expanse (8.5 million km) of territory.
Almost half this area is covered with sedimentary, intracratonic, rift
and Atlantic coastal basins. These basins have vast deposits of coal (Paran basin),
potassium, magnesium and sodium salts, gypsum-associated evaporites, phosphorite
and barite, uranium in continental sediments (Paran and Parnaba basins),
widespread limestone deposits (natural pozzolana for cement), clays for fine
porcelain, and large petroleum and natural gas deposits.
Another 4.5 million km consist of Precambrian rocks no more than
3.2 Gigayear (Gy) old. The Archean lands form the Amazon and Sao Francisco cratons
as well as other lesser craton fragments. They are surrounded by mobile Proterozoic
belts consolidated in the Trans-Amazonian (2.0 Gy), Uruauana (1.2 Gy) and
Brasiliana (0.7 to 0.5 Gy) orogenies. In the cratonic areas, greenstone and similar
sedimentary volcanic belts occur with gold, silver, iron, manganese, copper, nickel,
cobalt and chromium deposits.
Archean-Paleoproterozoic platforms cover the greenstone-granite
lands, consisting of extraordinarily large bifs iron ore (Carajs province in Par and
the Iron-Bearing Quadrilateral in Minas Gerais). Vast layers of carbonate rocks are
associated with the Paleoproterozoic sequences (sometimes with large magnesite
deposits), quartzite and meta-conglomerates (with debris deposits of gold and
uranium).
The Paleoproterozoic belts generally consist of highly metamorphic
lands. They represent zones of continental uplift around the Archean nuclei, of major
metallogenic importance, consisting of:
Layered mafic-ultramafic complexes (occurrences and deposits of
chromium, vanadium, nickel + cobalt and asbestos, as well as having a high potential
of Platinum Group Metals PGM);

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Pre-orogenic association (deposits of manganese, copper + nickel +


cobalt and copper + zinc + lead + silver);
Magnetic arch plutonic-volcanic associations (deposits of copper +
gold and gold + silver). In the Mesoproterozoic period (1.8 to 1.5 Gy), intense
volcanic and plutonic activity in the continental areas was responsible for numerous
deposits of uranium, tin, tungsten, molybdenum, zircon, tantalum, niobium, gold and
topaz.
Vast transgressive terrigenous sedimentation occurred over the
volcanic-plutonic sequences, with continental/fluvial facies, rich in diamonds and
some gold, and another marine sedimentation with high potential for lead, zinc,
copper and silver mineralization of the sedimentary-exhalive type.
Neoproterozoic occurrences (<1.0 Gy), preferentially carbonate rocks,
are rich in lead, zinc, silver, phosphate, barium and fluorine-related minerals.
The Meso-and Neoproterozoic belts developed in basins on the edge of
the cratonic areas, and underwent successive compressive tectonic occurrences (1.2
to 1.0 Gy and 0.7 to 0.5 Gy), followed by the collision, cratonization and formation of
the supercontinent Gondwana.
The main mineral deposits are associated with late to post-tectonic
rocks (tungsten + molybdenum + gold), skarn deposits and pegmatite (barium,
niobium, tantalum, lithium, tin and precious stones).
Pre-orogenic (rift type) or post-orogenic (arch type) volcanicsedimentary sequences may contain nickel and copper mineralizations in the maficultramafic rocks; titanium and vanadium in gabbro-anorthositic rocks; and veins of
gold + silver + sulfide deposits in shear zones. In the cratonic areas, during the late to
post tectonic Brazilian (0.55 to 0.46 Gy) stage, basins occurred in pull apart zones,
filled by continental terrigenous sediments in an oxidizing environment (stratabound copper sulfide deposits) and by acid alkaline to intermediary volcanism (gold
+ copper vein deposits).
Later, Paleozoic sedimentation occurred in the vast intracratonic
basins, rifting occurred in the Mesozoic, the Atlantic Ocean opened up and marginal
basins developed again, repeating with Gondwana the same story of the TransAmazonian megacontinent.
Lastly, the Cenozoic layers present a potential for bauxite, kaolin and
diversified clay deposits, as well as alluvial ores of gold, gems (including diamonds),
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tin, ilmenite, zirconite, rutile, monazite and other heavy minerals. The wide diversity
of lands and geological environments in Brazil are the main characteristics that
provide Brazil the status of possessing one of the largest mineral potentials in the
world, comparable to the United States, Russia, Canada, Australia, China and
South Africa.
Brazilian mineral production, which currently includes more than 100
(One Hundred Substances), is a natural consequence of such characteristic. Despite
such a significant variety of minerals, the value of the production is still very much
concentrated principally on iron, gold and bauxite which, given the existing great
potential, shows that there is plenty of room for the Brazilian mining sector to grow
faster and faster.
SECTION VII MINING INDUSTRY IN BRAZIL
1. PROFILE OF BRAZILIAN MINING PRODUCTION
1.1 BRAZILIAN RESERVES
Brazil has a privileged position in the ranking of worldwide reserves,
notably in relation to pyrochlorine (niobium ore), tantalite, niobium, kaolin, graphite,
fluorite, vermiculite, talc, magnesite, cassiterite, bauxite, iron, magnesite, manganese
cassiterite and nickel.
The oil and natural gas reserves total 7.3 Billion barrels and 226
Billion m (1.4 Billion of oil equivalent barrels OEB), respectively. Due to the
opening up of the state monopoly to permit private enterprise to undertake the
exploration, development and production of oil and gas, a significant increase in
reserves and production is expected, which will make the country self-sufficient.
The total uranium reserves, under state monopoly, are estimated at
over 300,000 t (Three Hundred Thousand tons) of U3O8.
1.2 MINERAL PRODUCTION
Brazil has a considerably diversified mineral production and stands
out, in the world context, as the largest exporter of iron ore and niobium alloys. It is
also one of the major producers of petroleum, niobium, tantalum, iron, kaolin,
tantalite, bauxite, graphite, cassiterite, magnesite, ornamental rocks, phosphate rock,
silver, gold, etc.

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The Brazilian production of primary mineral goods adds up more then


US$ 6,000,000,000.00 (Six Billion United States Dollars), representing around
1% (One Percent) of Brazils Gross Domestic Product (GDP).
The contribution from the mineral sector rises to 8.2% (Eight Point
Two Percent) of the GDP when adding to the extractive industry the transformation
of its primary minerals into metals and alloys, cement, ceramics, fertilizers, glass,
chemical compounds, among other products.
Brazils self-sufficiency extends to most mineral products, with an
exportable surplus concentrating mainly on iron ore, gold, manganese, ornamental
rocks, bauxite/aluminum, niobium alloys, tin and gems.
Brazils foreign dependence lies particularly in crude oil, metallurgic
coal, potassium and raw materials for the metallurgy of non-ferrous metals
(principally copper and zinc).
2. PROFILE OF BRAZILS MINERAL GOODS TRADE BALANCE
According to a government policy to substitute imports, implemented
since the early 1970s and based mostly on the mineral goods industry, Brazil has
become self-sufficient in most of the ferrous and non-ferrous metals and industrial
minerals, andalso with its surplus, has becomeoming a major exporter of bauxite,
kaolin, aluminum, nickel and tin, besides consolidating its position in iron ore and
niobium. Gold, ornamental rocks, manganese, lithium minerals, among other primary
mineral goods also contribute favorably to the trade balance.
As a result of this increased domestic production, together with the
market diversification strategy adopted by the Brazilian export companies, mineral
goods have been contributing significantly to the steady trade balance of Brazil.
The trade balance has a heavy expenditure with petroleum and its byproducts that, separately, are still responsible for over 50% (Fifty Percent) of the
mineral sectors imports.
In the exports of the Brazilian mineral sector, the contribution from the
mineral extractive industry is quite significant, being responsible for over 58% (fiftyeight percent) of all mineral goods exported.
Imported Brazilian mineral goods are over US$ 7 Seven Billion United
States Dollars), the largest portion of this total existing petroleum (US$ 4.1
Billion).
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In addition to petroleum, other products on the list of imports, in order


of expenditure, are metallurgical coke, potassium, phosphate fertilizers and nonferrous metals.
SECTION VIII TECHNOLOGICAL KNOW-HOW IN MINING INDUSTRY
1. TECHNOLOGICAL KNOW-HOW
The manufacturing industry in Brazil attracts both companies and
investors from all over the world, particularly at this historical time of our
development. More than ever, Brazil is a market of great opportunities. The Brazilian
mining industry has satisfactory support in the areas of human resources training,
research and technological development, engineering and capital goods for mining.
1.1 HUMAN RESOURCES TRAINING
Graduation schools training top level specialists in the geology and
mining engineering areas have been available for a long time in Brazil, starting in
1876 when the first mining engineering course in Brazil began at Ouro Preto
Mining School, in the State of Minas Gerais, cradle of the Brazilian mining industry.
The federal universities are the main centers for qualifying
professionals for the mining industry, and 16 (sixteen) of them still offer courses and
programs of geology, geophysics, geochemistry and geostatistics, among others,
while seven provide a mining engineering course. Masters and Ph.D. courses are
available at most of those institutions.
Skilled laborLabor with a secondary school education, mostly of which
is trained in a widespread network of public industrial technical collegesschools, is
recruited by companies from the market in which they work. The companies also
have the support of the National Industrial Apprenticeship Service (SENAI) for
specific training courses.
1.2 MINERAL TECHNOLOGY CENTERS
Brazil has several research and mining technology development
centers in the main states with major mineral production. And of all of them are
federal or state controlled.
The most important of them, the Mineral Technology Center for
Mineral Technology (CETEM), run by the National Research Council (CNPq), is

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located in Rio de Janeiro, and is an organization linked to the Ministry of Science


and Technology (MCT). The CETEM works in developing and the diffusion of
technology, with focus on the mining- and metallurgy areas, as well asworking and
materials areas. It has a highly qualified team and a modern laboratory and pilotplant infrastructure, which helps meet any demand for service from the public ad
private sectors in the areas of extractive metallurgymining, ore dressing treatment,
chemical and instrumental analysis, and environmental technology, among other
ones.
Over its 21 (Twenty-One) years of existence, CETEM has created over
6,500 (Six Thousand and Five Hundred) research and technological development
projects and provided services to more than 300 (Three Hundred) companies in
the mining, metallurgy-metalworking and chemical sectors, and Brazil has no longer
has restrictions on free and mostly unrestricted transferring of technology or knowhow from overseas to its mining and capital goods industries and to technological
centers local industry as well.
The law concerning to this matter only requires the transfer or
technical assistance contract to be approved and registered at the National Institute
of Industrial Property (INPI), concerning trademarks and patents. After registering
at this federal department, the contract must be registered at the BACEN for
royalties control and service payment remittances.
1.3 ENGINEERING COMPANIES
The experience of Brazilian engineering design, construction and
assembly engineering companies is of worldwide renown and needs no more
comment. As an example, there is the Mine-Railroad-Port Complex of the Carajs
Iron Ore Project, installed by the Companhia Vale do Rio Doce (VALE) in the
Eastern Amazon region, all of which was designed, built and assembled by
Brazilian engineering companies.
1.4 FOREIGN TRADE COMPANIES
The Brazilian Trade and Investment Promotion Agency (ApexBrasil) organizes diversified trade promotion actions with the aim of promoting
Brazilian exports and marketing Brazilian products abroad, coordinates the actions
related to Foreign Direct Investment (FDI) attraction into Brazil, seeking to
allocate resources in sectors of strategic relevance for the development of the
competitiveness of Brazilian companies and of the country itself.

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SECTION IX GOLD MINING VENTURES


1. FIGUEIRA BRANCA GOLD MINING PROJECT
1.1 LOCATION AND DESCRIPTION
The Figueira Branca Gold Farm is located in the Municipality of
Nova Santa Helena, Northern Mato Grosso, 601 km from the Cuiab Capital City
of the State of Mato Grosso by car on through the Federal Highway BR-163, which
is located at 42 km from the Municipality of Terra Nova do Norte and 80 km from
the Municipality of Peixoto de Azevedo, both in Mato Grosso, which is a
traditional region of occurrence of huge gold deposits and several mining ventures in
their productive activity of the metal, therefore forming a huge traditional Gold
Production Pole.
The Municipality of Terra Nova is located on paved Federal Highway
BR-163 linking Cuiab State of Mato Grosso to Santarm State of Par (1,772
km in straight line) through the Municipality of Novo Progresso.

The access to the Figueira Branca Farm is done by dirt road that
works well so terrestrial logistics is very good for machinery, equipment, products,
and personnel transportation and the final gold in bullions can transported in small
aircrafts up the main centers of the country and abroad.
The gold deposit is quite near the farm, located about 50 km from
Terra Nova do Norte downtown. The gold mineralization has been formed in veins
of Proterozoic granites.

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The Figueira Branca Farm has a total surface of 2,700.00 ha (Two


Thousand and Seven Hundred Hectares), duly registered at the local Registry
Office, has the following improvements:
1,300.00 ha (One Thousand and Three Hundred Hectares) area
with 20 (Twenty) paddocks of pasture;
Landing strip for small planes (1.200 m length x 40 m width);
Headquarters consisting of 4 (Four) bedrooms, 2 (Two) suites,
bathrooms, a large living room, kitchen and balconies;
Dining room and guest house;
3 (Three) houses for employees;
Equipment and products storage shed;

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The mining area has many clean water sources and the region is
served with three-phase electric light power plant;
The Operation License (LO) has already been issued by the Mato
Grosso State Secretary of Environment (SEMA-MT) for all processes.
It currently has 37 (Thirty-Seven) Mineral Rights Mining
Permissions (Permisses de Lavra Garimpeira PLG) throughout the gold
mining project area duly granted by the DNPM and its Final Report Positive
Research has been filed at the DNPM in April, 2011, demonstrating proven and
probable reserves at the range of 48.800 t/Au (Forty-Eight Tonnes and Eight
Hundred Kilograms of Gold) have been identified through the geological survey
performed by Ambiogeo Consulting Ltd. and the geological analysis by fire assay
performed by SGS Geosol Laboratories Ltd. has shown results ranging from 6-10
ppm (Six to Ten Parts per Million).
Nevertheless, the gold mining precarious methods applied at the
project site area demonstrate considerable waste of gold found in the quartz
seams/veins which often happens because the lack of modern machinery and skilled
labor force for maximizing the current profitability based on this outstanding
mineralogical potential verified through drilling surveys duly registered at the
DNPM, around 15 kg (Fifteen Kilograms) per month have been produced in the
Figueira Branca Gold Mine.
1.2 INTEGRATED SECURITY SYSTEM (ISS)
An Integrated Security System through electronic surveillance must
be installed on strategic site dependencies (Electronic Surveillance Monitored by
Tracer High Definition Cameras) in order to enable monitoring and tracking at
distance and in real time from all movement and operational flowchart of the key
points in all mining areas with those special cameras.

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FIGUEIRA BRANCA GOLD MINING PROJECT BUSINESS PLAN

1.3 SUSTAINABLE MINING


Developing a mine cost model that will provide an opportunity to
define and establish a clear understanding of where dollars are expended and for
what reason in the mining process is very important to run this mining project as
costs and expenses are attributed to waste rock tailings, sludges, water treatment etc
as they arise based on the mine output. In effect, we would have mass balance of
operating costs. This model could also be used to view a future scenario (75%
during the mine lifetime).
It is imperative to use an environmental cost model to evaluate
comparative costs for mining versus underground concentration and direct fill
placement and other evaluations which can drive lower environmental and closure
costs.
Research developments and rehabilitation practices that utilize
sustainable practices that can lead to low impact footprint developments and
maintainable technologies; establishment of a developmental mine to put these
practices into application and evaluation; develop a closure cost model that looks at
the economics with closure costs built into annual operating costs.

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FIGUEIRA BRANCA GOLD MINING PROJECT BUSINESS PLAN

1.4 FINANCIAL PLAN


1.4.1 BOARD OF DIRECTORS PRO-LABORE
PROFESSIONAL/
FUNCTION
President & CEO
Vice-President & CFO
General Director
Trade Director
Managing Director
Marketing Director
Legal Counselor
TOTAL

*NET P.L.
(R$)
131,380.86
131,380.86
131,380.86
131,380.86
131,380.86
131,380.86
131,380.86
919,666.02

WORK/SOCIAL BENEFITS (R$)


IRPF
FGTS
INSS
39,000.00
15,600.00
9,019.14
39,000.00
15,600.00
9,019.14
39,000.00
15,600.00
9,019.14
39,000.00
15,600.00
9,019.14
39,000.00
15,600.00
9,019.14
39,000.00
15,600.00
9,019.14
39,000.00
15,600.00
9,019.14
273,000.00 109,200.00 63,133.98

TOTAL
(R$)
195,000.00
195,000.00
195,000.00
195,000.00
195,000.00
195,000.00
195,000.00
1,365,000.00

WORK/SOCIAL BENEFITS (R$)

TOTAL

1.4.2 EMPLOYEES PAYROLL


PROFESSIONAL/
FUNCTION
Attorney
Accountant
Assistant of B.D.
Bucket Operator
Chef
Cook
Chemist
Doctor
Drill Operator
Excav. Operator
Exec. Secretary
Gen. Manager
Gen. Workers
Jr. Geologist
Jr. Min. Eng.
Labor Sec. Chief
Loader Operator
Log. Manager
Mechanic
Nurse
Nutritionist
Pilot
Sr. Min. Eng.
Sr. Geologist
Warehouse Chief
Security Guard
TOTAL

N.

NET
SALARY
(R$)

IRPF

FGTS

02
169.162,00 52.000,00
20.800,00
01
37.780,86 13.000,00
5.200,00
04
29.952,00
Exempt
3.328,00
04
86.027,76 31.200,00
12.480,00
04
78.991,12 26.000,00
10.400,00
08
93.600,00
Exempt
10.400,00
04
260.000,00 80.860,00
32.340,00
04
300.883,34 93.600,00
37.440.00
04
86.027,76 31.200,00
12.480,00
04
86.027,76 31.200,00
12.480,00
07
133.426,02 54.600,00
21.840,00
01
56.500,86 18.200,00
7.280,00
200 3.250.000,00
Exempt
260.000,00
01
56.500,86 18.200,00
7.280,00
01
56.500,86 18.200,00
7.280,00
02
34.516,82 10.400,00
4.160,00
04
86.027,76 31.200,00
12.480,00
02
43.013,88 15.600,00
6.240,00
02
34.516,82 10.400,00
4.160,00
04
86.027,76 31.200,00
12.480,00
02
69.009,80 24.180,00
9.672,00
01
84.580,86 26.000,00
10.400,00
01
75.220,86 23.400,00
9.360,00
01
75.220,86 23.400,00
9.360,00
04
52.417,00
Exempt
5.824,00
12
207.100,00 62.400,00
24.960,00
279 5.465.474,00 726.440,00 570.128,00

INSS
18.038,28
9.019,14
8.320,00
26.292,24
14.608,88
26.000,00
31.200,00
36.076,66
26.292,24
26.292,24
63.133,98
9.019,14
357.500,00
9.019,14
9.019,14
2.923,18
26.292,24
13.146,12
2.923,18
26.292,24
18.038,20
9.019,14
9.019,14
9.019,14
14.560,00
17.539,00
928.018,00

(R$)
260.000,00
65.000,00
41.600,00
156.000,00
130.000,00
130.000,00
404.400,00
467.960,00
156.000,00
156.000,00
273.000,00
91.000,00
3.867.500,00
91.000,00
91.000,00
52.000,00
156.000,00
78.000,00
52.000,00
156.000,00
120.900,00
130.000,00
117.000,00
117.000,00
72.800,00
312.000,00
7.744.160,00

Source: MTE and Labor Unions

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FIGUEIRA BRANCA GOLD MINING PROJECT BUSINESS PLAN

1.4.3 MACHINERY, EQUIPMENT, AND FACILITIES


ITEM/DESCRIPTION
Complete Ores Processing and Casting Industrial Plants
Haul truck CAT-797B (400 tonnes capacity)
Aircraft Cessna Grand Caravan 208A
Headquarter, housing, storage, refectory, health, etc.
Hydraulic crawler excavator CAT-320C
Wheel loader CAT-963D
Bulldozer CAT-D9T
Portable compressor Atlas Copco PR600-GD
1,000-KVA power generator
Support parts and accessories
Portable compressor Atlas Copco VT-5Dd
Rotative hydraulic drill CAT-MD6290
TOTAL

N.
06
01
01
04
02
02
02
04
02
01
-

UNIT (R$)
65.000.000,00
11.500.000,00
6.500.000,00
2.500.000,00
800.000,00
600.000,00
400.000,00
320.000,00
130.000,00
500.000,00
180.000,00
250.000,00
-

TOTAL (R$)
65.000.000,00
11.500.000,00
6.500.000,00
2.500.000,00
2.400.000,00
1.200.000,00
800.000,00
640.000,00
520.000,00
500.000,00
360.000,00
250.000,00
92.170.000,00

1.4.4 PHYSICAL INVESTMENTS AND MACHINERY TRANSPORTATION


DESCRIPTION
Infrastructure (access roads openings, earthwork, bridges, etc).
Logistics (machines, equipment and vehicles transportation)
TOTAL AVERAGE

TOTAL (R$)
2.000.000,00
250.000.00
2.250.000,00

1.4.5 FIXED COSTS AND EXPENDITURES


DESCRIPTION (YEARLY ESTIMATES)
Board of Directors pro-labore and work/social benefits
Employees salaries and work/social benefits
Fuel, equipment repair, food, drink, clothing, security materials, etc.
Marketing and advertising
Fixed office expenditures
TOTAL AVERAGE

TOTAL (R$)
1,365,000.00
7,744,160.00
5,500,000.00
900,000.00
640,000.00
16.149.160.00

1.4.6 ESTIMATE PRODUCTION AND REVENUES UPON INVESTMENT


YEAR
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
TOTAL

VOL. AU (T)
1.520
4.240
4.680
4.960
5.200
5.400
5.400
5.600
5.800
6.000
48.800

GROSS REVENUE (R$)


152,000,000.00
424,000,000.00
468,000,000.00
496,000,000.00
520,000,000.00
540,000,000.00
540,000,000.00
560,000,000.00
580,000,000.00
600,000,000.00
4,880,000,000.00

PROD. COSTS/T (R$)


38,000,000.00
106,000,000.00
117,000,000.00
124,000,000.00
130,000,000.00
135,000,000.00
135,000,000.00
140,000,000.00
145,000,000.00
150,000,000.00
1,220,000,000.00

NET REVENUE (R$)


114,000,000.00
318,000,000.00
351,000,000.00
372,000,000.00
390,000,000.00
405,000,000.00
405,000,000.00
420,000,000.00
435,000,000.00
450,000,000.00
3,660,000,000.00

Based on R$ 100.00 per g/Au (Jan, 2015 London Metal Exchange)

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FIGUEIRA BRANCA GOLD MINING PROJECT BUSINESS PLAN

1.4.7 RETURN ON INVESTMENT (ROI)


YEARS
2

VOL. AU (T)
5.760

TOTAL INVEST. (R$)


110,570,000.00

PROD. COSTS (R$) 25% TOTAL NET REV.(R$)


144,000,000.00
432,000,000.00

2. FINAL STATEMENTS
The complete survey data shown in the Final Positive Research
Report concernes to a total of 2,037.00 ha (Two Thousand and Thirty-Seven
Hectares) comprehending almost the entire project site. The calculation of the
reserves resulted in 48.817 t/Au (Forty-Eight Tonnes and Eight Hundred and
Seventeen Kilograms of Gold) with excellent content per cubic meter of material
analyzed and excellent purity content of 97% (Ninety-Seven). In addition, the
Operating Licenses (LO) have already been issued by the DNPM for all the 37
(Thirty-Seven) PLG and need to have a Gold Exploitation, Processing and Casting
Plant installed there in order to start large-scale production of thousands of bullions.
The Figueira Branca Gold Mining Project is undoubtedly one of the
greatest gold projects in Brazil. It is currently procuding around 500 kg/Au (Five
Hundred Kilograms of Gold) per year and can produce up to around 6,000 (Six
Thousand Kilograms of Gold) per year, therefore reaching US$ 2,400,000,000.00
(Two Billion and Five Hundred Million United States Dollars) during the first 10
(Ten) years of large-scale gold production, casting and trade upon the estimate
investment described in this Business Plan.
Brazil, January 30th, 2015.

DIONE EVANGELISTA
Chief Financial Officer (CFO)
cfo@accexholding.com

TIAGO GONDIM
Chief Executive Officer (CEO)
ceo@accexholding.com

ACCEX HOLDING CORPORATION


Head Office: 120, Salvador Street, Vieiralves Business Center, 12th Floor Adrianopolis
ZIP: 69.057-040 Manaus, Amazonas, Brazil Website: www.accexholding.com
Phone Fax: +55 (92) 3021 6717 3878 2650 Skype: accex.holding

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3. FIGUEIRA BRANCA GOLD MINING PROJECTS MAPS, PLANS & IMAGES

Source: DNPM (SIGMINE)

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4. REFERENCES
VILA, C. A. Geologia, petrografia e geoqumica das rochas pr-cambrianas (Unidade
Metadiortica Ibitutinga e Unidade Metatrondhjemtica Caburu) intrusivas nas rochas do
Greenstone Belt Barbacena, So Joo Del Rei, Minas Gerais. 1992. 265 f. Dissertao
(Mestrado) - Departamento de Geologia, Universidade Federal do Rio de Janeiro, Rio de
Janeiro, Rio de Janeiro, 1992.
BACEN (1997) Investimentos Estrangeiros no Brasil principais modalidades, anexo II,
Boletim do Banco Central do Brasil, maio.
BALASSA, B.(1982) Development Strategies in Semi-industrial Economics, N.Y. and
London: Oxford University Press.
BANCO MUNDIAL (1987) World Development Report, Washington D. C., Oxford
University Press.
BROWN, G. C.; THORPE, R. S.; WEBB, P. C. The geochemical characteristics of granitoids
in contrasting arcs and comments on magma sources. Journal of Geological Society of
London, London, v. 141, p. 411-426, 1984.
DNPM/MME Departamento Nacional de Produo Mineral/ Ministrio de Minas e
Energia, Fernando da Silva Rodrigues. Sumrio Mineral (2006) Braslia: DNPM/DIDEM.
MANIAR, P. D.; PICOLLI, P. M. Tectonic discrimination of granitoids. Geological Society of
American Bulletin, Boulder, v. 101, p. 635-643, 1989.
NOCE, C. M.; TEIXEIRA, W.; QUMNEUR, J. J. G.; MARTINS, V. T. S.; BOLZACHINI, E.
Isotopic signatures of paleoproterozoic granitoids from the southern So Francisco
Craton and implications for the evolution of the transamazonian orogeny. Journal of
South American Earth Sciences, Oxford, v. 13, p. 225-239, 2000.

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