The Republic of Senegal has agreed to support the Company in its plan for further development, notably:
-- To a price and formula to allow for the acquisition of the Republic's additional participation option on deposits not on the Company's Mine License and to incorporate these into the Company's existing Mine License and fiscal regime;-- To support drilling of the Niakafiri deposit on the Mine License;-- To extend the term of its renewable Mine License by five years to 2022 and extend five key exploration licences by a further 18 months beyond current expiry periods;-- To commit to work with the Company to ensure full access to exploration targets currently occupied by artisanal miners;-- To settle all outstanding tax assessments in a fair and equitable manner; and-- To resolve the Special Contribution Tax of 5% in return for the fiscal changes to our stability agreement noted below.
The Company has agreed to the following:
-- To increase the royalty rate on production from 3% to 5% effective January 1, 2013;-- The Company will make a payment of $5.4 million related to accrued dividends to the Republic of Senegal in respect of its existing 10% minority interest. The payment is to be made upon the completion of embedding the Agreement into the Company's mining and exploration concessions.-- The Company will make a payment of $4.2 million related to the waiver of the right for the Republic of Senegal to acquire an additional interest in the Gora project. The payment is to be made upon receipt of all required approvals authorizing the processing of all ore through the Sabodala plant.
MINE LICENSE (ML) RESERVE DEVELOPMENT
The Sabodala Mine License covers 33km2 and, in addition to the mine related infrastructure, contains the Sabodala, Masato, Niakafiri, Niakafiri West, Soukhoto and Dinkokhono deposits.
During the first quarter 2013, Reverse Circulation ("RC") and Diamond Drilling ("DD") on the ML totalled about 10,000 metres at a cost of $1.4 million.
The overall objective of the ML exploration program is to extend the life of mine, at a production rate of about 200,000 ounces per year, to the year 2020 to 2025, which would result in a 10 to 15 year mine life since the IPO in 2010.
Sabodala - Main Flat Extension (MFE) / Lower Flat Zone (LFZ)
In first quarter 2013, more than 3,000 metres of drilling was completed at Sabodala to further define the ore body. Drilling targeted the MFE immediately adjacent to the current ultimate pit, as well as additional mineralization located below the MFE, to confirm the continuation of these zones. The targeted zones are positioned between 150 metres and 350 metres below the surface. The MFE remains open down plunge and to the northwest.
Drilling during the first quarter was primarily from within the pit and along the perimeter to the east and west of the current pit to upgrade and increase mineral resources. Drilling confirmed continuation of these zones. The 2013 drill program for Sabodala was largely completed at the end of first quarter 2013.
Waste dump condemnation drilling to the SE of the Sabodala open pit encountered a zone of mineralization within the general trend of the NW Shear projected to the SE near the base of Sambaya Hill. Drilling continued in this area during the first quarter, following up on results received in 2012. Further analysis and modeling of results is planned during the second quarter 2013.