Page 37 - Sundance Resources 2014 Annual Report

SUNDANCE RESOURCES LIMITED ANNUAL REPORT 2014 35
Government Relations – Republic of Congo
On 24 July 2014, the Congo Government signed the Nabeba Mining Convention (‘the Nabeba Convention’). The
Convention was agreed and signed at a ceremony in the country’s capital city of Brazzaville with representatives of
Sundance, Congo Iron and the Government.
Signing of the Nabeba Convention follows the issuing of the Nabeba Mining Permit which was approved by the Ministerial
Council for the Congo on 28 December 2012. A Presidential Decree confirming the grant of the mining permit was issued to
Congo Iron on 6 February 2013.
The Nabeba Convention outlines the fiscal and legal terms and the conditions to be satisfied by Congo Iron for the
development and management of the Nabeba Iron Ore Project.
The key terms of the Nabeba Convention are:
• ➢ 25-year operating license effective from the publication of the Mining Permit Decree and renewable for successive
terms of up to 15 years, depending on remaining reserves.
• ➢ A mining royalty equal to 3% of the mine gate value of the ore extracted from the mines in the Mining Permit.
• ➢ 5-year corporate tax holiday following start of production. Corporate tax will then be levied at a rate of 7.5% for 5 years
and 15% thereafter.
• ➢ The State will take a 10% stake in Congo Iron, which will be non-dilutory during the term of the Nabeba Convention.
• ➢ There will be no fees, levies or taxes charged in respect to the export of iron ore. There will be exemptions from import
duties and taxes on plant and equipment imported temporarily for project construction and limited import duties and
taxes on other mining equipment and consumables throughout the production phase.
• ➢ Congo Iron will make annual contributions to a fund established as an association or non-profit foundation whose
purpose is to promote the economic, social and cultural development of local communities that are impacted by the
mining operations.
Government Relations - Cameroon
Sundance’s subsidiary Cam Iron and the Government of Cameroon agreed to review the terms of the Mbalam Convention
and signed the Rail Agreement and Mineral Terminal Agreement for the rail and port infrastructure servicing the Mbalam-
Nabeba Iron Ore Project at a signing ceremony in Cameroon on 5 June 2014.
The purpose of both agreements is to regulate the rights and obligations of Cam Iron and the Government of Cameroon in
relation to the ownership, construction, operation and regulation of the key infrastructure assets servicing the Mbalam and
Nabeba mines, as well as detailing the procedure for eventual transfer of those assets back to the Government of Cameroon.
The Mineral Terminal Agreement governs the conduct of the construction, operation and maintenance of the Mineral
Terminal Facilities and Blending Operations. The Railway Agreement governs the conduct of the railway operations, namely,
the construction, operation and maintenance of the Railway Facilities.
This follows the signing of the Mbalam Convention in November 2012 which outlined the fiscal and legal terms and the
conditions to be satisfied by Cam Iron for the development and management of the Project.
The Government of Cameroon continues to express its support for Sundance which should lead in due course to the
granting of the Mbalam Mining Permit following the fulfilment of a number of conditions and the endorsement of the Mbalam
Convention by the Cameroon National Assembly.
Financial Position
Cash and cash equivalents decreased during the financial year to $14.4 million at 30 June 2014 from $19.6 million at 30
June 2013.
The consolidated statement of cash flows indicates that expenditure continues to be directed towards exploration and
development activities on the Project of $23.0 million (2013: $25.5 million) and payments to suppliers and employees $20.0
million (2013: $21.1 million).
The financial position of the Group as at 30 June 2014 remains positive. Net assets of the Group amounted to $234.3
million (30 June 2013: $242.3 million). Mine development assets increased to $253.8 million (30 June 2013: $225.0 million)
of which $5.8 million is as a result of the movement in the exchange rate.
The total loss for the period amounted to $32.9 million for the year ended 30 June 2014 (2013: loss $31.6 million); of this
total loss, $8.9 million related to non-cash convertible note financing charges (2013: Nil).
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2014