His Majesty The King Mohammed VI

Activity Report 2010

4

their efforts in 2010 to foster Morocco’s hydrocarbon and mineral exploration.

In Hydrocarbon Domain, ONHYM focused on the study and the reinterpretation of the geological and geophysical data of several promising areas in various onshore and offshore sedimentary basins. New play concepts and prospects have been identified and promoted to the international oil companies. Two new petroleum agreements and two new reconnaissance contracts were subsequently concluded, which have extended the licensing area by 5%. ONHYM continues its preparations for the drilling of MKL-110 appraisal / development well in Meskala and of BJD- 1 exploration well in Boujdour.

After the development of shale gas in the U.S., ONHYM has added to its portfolio the shale gas exploration with the signing of an MoU and a reconnaissance contract, to evaluate the potential of these unconventional resources.

For their part, ONHYM partners conducted two new natural gas discoveries in the Gharb. They also carried out the drilling of eight wells and the acquisition of 1336.38 km2 of 3D seismic, 795 km of 2D seismic, 18,572 km of airborne gradiometry, 1000 gravity stations and 568 km of electromagnetism. Deemed commercial discoveries have been the subject of concession application.

In mining research, ONHYM has conducted the exploration on 17 objectives of which 9 for precious metals, 5 for base metals and energy substances and 3 for rocks and industrial minerals.

The activity in partnership focused on 12 objectives, including 4 for base metals, 3 for precious metals, 4 for the rocks and industrial minerals and 1 for uranium. The results of ONHYM own activity confirmed the interest of the projects related to Nb, Ta, U, Fe and light rare earth elements of which the preliminary estimate of resources has yielded encouraging results, to attract the interests of several foreign companies.

These potentially promising discoveries, involving minerals of strategic importance, highly sought after in the world market, reflect the maturity of the exploration projects undertaken for several years and which have been conducted over very large areas, especially by means of an airborne geophysics.

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Two projects were sold to the private sector for their exploitation. In addition, three Memoranda of understanding, a protocol agreement and a farm-out agreement had been concluded.

Our mining laboratories are certified in accordance with the new ISO 9001, version 2008. The implementation of the master plan of the Information Systems has continued according to the updated schedule. The flagship projects of implementing the information system recorded a significant progress and are at the final stages of their realization. In all domains, the standard methodology of project management adopted by ONHYM has been applied.

The human resources management has received, according to an ongoing policy for a decade, special attention to maintain the staff excellent level of qualification and its motivated commitment for the achievement of the Office objectives.

In addition, ONHYM works with the Department of Energy and Mines to define a new mining strategy, develop a new mining code and a regulatory framework for the extraction of hydrocarbon from oil shale, in order to give a better visibility to operators and investors in these activities.

Also, the year 2010 was marked by satisfying and encouraging results, after a long process for reinforcing a management culture of excellence, based on international referential adapted to the public sector.

Those are the values that drive the daily work of the Office staff, to whom I pay tribute here for the professionalism and perseverance that allow us to continue to work with confidence for the economic and social development of our country, under the enlightened leadership of His Majesty the King Mohammed VI, may God assist Him.

Amina BENKHADRAGeneral Director

6

Hydrocarbons

• Acquisition of 795 Km of 2D seismic, 1336,38 Km2 of 3D seismic, 18572 Km of airborne gradiometry, 1000 gravimetry stations and 568 Km of electromagnetic data.• Interpretation of 6 185 Km² of 3D seismic, about 57 000 Km of 2D seismic and reprocessing of 1,000 Km of 2D seismic data.• 8 exploratory wells were spudded onshore of which one was in progress on December 31, 2010 and the re-entry of FES-1 well in FES Permit.• Signature of : 2 new Petroleum Agreements, 2 new Reconnaissance Contracts, 3 applications for Concession Exploitation, 13 Petroleum Agreements Amendments, 1 Association Contract amendment, 2 Reconnaissance Contracts Addenda, 1 Protocol Agreement and 2 Memorandums Of Understanding (MOU). • Signature of one MOU related to ShaleGas.

Mines

• Exploration of 17 objectives including 9 for base metals, 5 for precious metals and energy substances and 3 for industrial minerals and rocks. Work in partnership concerned 12

objectives of which 4 for the base metals, 3 for precious metals, 4 for industrial minerals and rocks and 1 for Uranium.• Confirmation of the interest of the projects related to Nb, Ta, U, Fe and Light Rare Earth Elements of Glibat Lafhouda and Twihinate.• Confirmation of the importance of the two new prospects in Fe, Nb, Ta, U and Light Rare Earth Elements of Drag Al Farnan and Lamlaga• Intensification of research for Uranium in the southern provinces.• Signature of 3 MOUs, 1 protocol agreement, 1convention and 4 addenda.• Assignment of 2 projects to the private sector, for their development.

Oil shale

• Signature of one MOU related to Oil Shale.• Developing a draft regulatory framework for the extraction of hydrocarbons from oil shale.

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International conjuncture

consolidation of the resumption of the global economic activity with a growth rate estimated at 4.7%, close to the highest levels recorded rates since 2005, but with regional differences: strong growth over 5 % in emerging and developing economies (China + 10.2%) and a more moderate increase of 3% in the U.S. and 1.7% in the Euro zone.

In 2010, the world consumption of primary energy increased by 5.6%, which is the highest increase since 1973. It has accelerated in all regions, reaching 3. 5% in OECD countries and 7.5% in non - OECD. China overtook the U.S. as the first global energy consumption.

Compared to 2009, the demand for oil, natural gas and coal rised respectively by 3.1%, 7.4% and 7.6% and their production

by 2.2%, 7, 3% and 6.3%. World production of renewable energy has continued to grow rapidly with increases of 5.3% for

hydroelectricity, 22.7% for wind power and 13.8% for biofuels.

Fuel prices followed the rise in consumption, especially oil. The average price of Brent stood at $ 79.50 per barrel, increasing by 29% compared to 2009, while remaining below the $ 98 reached in 2008.

The onshore drilling increased by 26% in the first half of 2010 while offshore drilling experienced a more modest increase of 7%, due to the moratorium in the Gulf of Mexico.

The international energy landscape has been marked in 2010 by the rise of global investment in exploration and production estimated at 5 to 10% by the Institut Français du Pétrole. These investments were essentially marked by the revival of drilling activities in the

sector of development-production, especially in Brazil and Iraq and in the exploitation of unconventional gas «Shale Gas» in North

Course of the 1990 Brent - 2010 ($ / bbl)

8

America. Indeed, drilling activities have experienced an increase of 42% in the United States because of the strong growth of «shale gas» drilling (+ 65% compared to 2009). As for the rest of the world, the registered increase in drilling activity is estimated at 9% according to Baker Hughes.

As for the gas industry, it has experienced a rapid development in 2010 in the context of a surplus and abundant supply with competitive prices in the industrial and power sectors.

In 2010, the global mining industry has benefited from the resumption of the economic

activity. Upstream budgets for exploration have registered an increase of 44% compared to 2009 according to the Metals Economics Group consultant.

Reinforced by renewed investors’ confidence, the prices of base metals have resumed their upward from the second half of 2010 before ceding some of their gains after the uncertainty about China demand.Moreover, the precious metals have set new records and would continue their momentum in 2011. The course of the gold reached its highest level in history with 1226 $/ounce.

Sources : IFP

G U

S$

9

National conjuncture

The macroeconomic indicators of 2010 confirmed the recovery of the economy, after showing its resilience to 2009 recession. Thus, the GDP grew by 4% with an increase of 5% for non-agricultural activity and the rise of the sectors has been affected by the crisis.

The primary energy consumption, which increased from 15,139 ktoe in 2009 to 16,150 ktoe in 2010, with an increase of nearly 6.7%, consolidates the upward trend of energy demand, particularly in petroleum products with nearly 9% and in electricity with more than 6% increase, compared to 2009. The difference of 2.7 points to GDP growth shows an increase in energy intensity and the need to deploy more efforts in energy efficiency, as is also the case for all the developed countries.

Rising energy prices in the international market coupled with increased imports especially of petroleum products have led to the deterioration of the energy bill, which reached 71.7 billion dirhams in 2010 with an increase of 41.7%, compared to 2009 and the oil bill, which rose from 43.8 billion dirhams in 2009 to 61.6 billion dirhams (+40.6%) in the same period.

The year 2010 marks the real start of a large-scale exploitation of our solar and wind resources. Thus His Majesty the King Mohammed VI, may God assist Him, launched on 28 June 2010, the Moroccan integrated wind project of 2000 MW and was published in March 2010 the call for expressions of interest, for the construction of the first phase of 500 MW solar power plant of Ouarzazate, planned as part of the 2,000 MW solar project,

launched in 2009. Also, several laws were adopted related to Renewable Energies, ( creation of the Agency for Development of Renewable Energies and Energy Efficiency (ADEREE) , the Moroccan Agency for Solar Energy (MASEN) , and the Society of Energy Investments (SIE)). This will provide a better visibility to operators and investors in the renewable energy sector.

Driven by the global recovery, the national mining activity has progressed during the year 2010. Thus, the production of raw phosphates made a big jump of nearly 50% after a decline of 32% a year earlier. Exports of phosphates and derivatives rose sharply by more than 88%, compared to 2009.

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Licensing

on a total licensing area of 341 939.20 km².For the exploration of conventional hydrocarbons, the total licensing area recorded a significant increase of 5 % at the end of 2010. This rising is due to the attribution of two new offshore reconnaissance contracts, two onshore reconnaissance contracts and five offshore permits.

For the exploration of unconventional hydrocarbons, the MoU signed covered a licensing area of 81 318.16 km².

At the end of 2010, the licensing domain is shown as follows:

ONHYM’s Activity

ONHYM continued the basins evaluation studies of Boujdour coastal areas and the offshore Rabat – Tarfaya segments as well as the appraisal of Meskala Toukimt fields.

Also ONHYM launched two new exploration projects which will focus on the offshore of Dakhla Area and Shale Gas in Morocco. At the same time, ONHYM carried out 30 Follow-up projects as well as 2 promotion projects of the Onshore and the Offshore open acreage, in order to accompany its partners and to intensify the exploration activity in the basins.

Evaluation StudiesNew promising play concepts and prospects have been highlighted through the evaluation study on the Rabat-Tarfaya Offshore segment. These play concepts and prospects will be used for promoting the open zones with the perspective to attract new partners. On the coastal areas of Boujdour South,

ONHYM has completed the acquisition and the processing of 300 Km of 2D seismic data which will be interpreted in 2011. Concerning the Meskala-Toukimt fields, the interpretation of the 3D seismic with the

Onshore exploration permits

Onshore exploration permits

Offshore exploration permits

Onshore reconnaissance licenses

Offshore reconnaissance licenses

Exploitation concessions

Exploitation concessions

Oil Shale and Shale gas MOU

13

7

57

57

3

1

8

5

25 184,90

89 862,35

101 036, 27

30 368.43

14 018.20

106.18

44.71

81 318.16

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tracking of the Paleozoic horizons, helped to define new prospects and leads and to enhance the potential of these areas.

As for new projects, including the Dakhla offshore one, the results of the seismic reprocessing of 1,000 Km of 2D in PSTM and of the 100 Km in PSDM have been gradually integrated into a regional interpretation, in order to define new petroleum concepts and prospects of this promising area. The Shale Gas project was initiated by the gathering of Paleozoic formations data, in order to assess the shale gas potential.

Play Concepts of Boujdour coastal areas Project. This project main focus was the acquisition and the processing of 300 km of 2D seismic, South of Cape Boujdour. Those tasks were respectively completed on the 6th of July and the 18th of November 2010. Preparations to spud BJD-1 well were conducted with the setting of contracts for the logging operations and mud logging and for the acquisition of the equipment and drilling logistics.

Meskala and Toukimt field development ProjectAs a result of the 3D seismic interpretation and

the economic feasibility study, a development programme for the Triassic reservoirs was established. In parallel, a first assessment of the hydrocarbon potential of the Paleozoic, using 3D seismic, enabled the definition of four prospects (three within the Middle Devonian and one within the Ordovician). The estimated reserves of these Paleozoic prospects could substantially improve the hydrocarbon potential of Meskala field. Preparations for the appraisal/development of the MKL-110 well continued with the signing of contracts for logging operations and mud logging and for material and logistic supply for drilling.

Play concepts of offshore Rabat-Tarfaya ProjectSeismic interpretation on station of more than 44 300 Km of 2D seismic and 6 000 square kilometers of 3D seismic was performed under the terms of 4 subprojects: offhore Rabat, Casablanca-Safi, Essaouira and Tarfaya-Boujdour. The studied areas cover all the Atlantic shallow and deep free zones along these segments. New exploration themes and various plays concepts were highlighted in each segment, in order to re-launch the promotion of these segments to the international oil industry.

Rabat-Safi subprojectThe evaluation study, carried out during 2010, concerned the regional interpretation of 6 875 km of 2D seismic with the correlation of 6 seismic horizons. The seismic facies, showing prograding and/or «slope-fan» bodies, would represent potential reservoirs

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deposits in the area. Some Leads linked to these facies, showing high amplitudes, near the salt structures, have been identified and will be detailed and mapped in 2011.

Safi-Essaouira subprojectMore than 2300 Km of 2D seismic and 2 200 Km² of 3D seismic, covering 5 horizons, have been interpreted highlighting new concepts in the Jurassic and Cretaceous. Some seismic facies, identified within mini-basins between the salt domes, could represent potential sandstone reservoirs.

Essaouira-Agadir subprojectThe regional interpretation, of 20 000 km of 2D seismic and 3 700 square kilometers of 3D seismic, has resulted in the definition of additional concepts represented by the Triassic tilted blocks, reefs on the edge of the Middle and Upper Jurassic carbonate platform, and low stand system tract deposits at Upper and Lower Cretaceous. Other play types (flank of diapirs, subsalt structures, toe thrust and salt pillow) have also been listed.

Tarfaya-Boujdour subprojectThe interpretation of 13 000 km of 2D seismic the Offshore and of 2 200 km onshore , by tracking 5 Cretaceous and Tertiary horizons, allowed the identification of prograding seismic facies in the Coniacian and the Barremian. The seismic attributes analysis of these facies has revealed high amplitudes, confirming the potential of these new Upper Cretaceous play concepts .

• Play concepts of Dakhla offshore ProjectData from the reprocessing of 1,000 Km of 2D seismic (PSTM), and of 100 Km (PSDM), have been integrated into the regional seismic interpretation of this area. Five isochronous maps, highlighting positive structures in the northern part of this area and a distribution map of BSR (Bottom Sea Simulator), direct indicators of hydrocarbons, have been established. This work will be followed by a detailed interpretation, based on identified potential structural and stratigraphic traps or on combined traps including those identified in the deep part of the basin.

Shale Gas ProjectAs part of a regional study of the Moroccan basins potential in terms of unconventional hydrocarbon “Shale Gas”, a data synthesis of Paleozoic formations was initiated. The results of this work (petrographic, geochemical parameters and regional maps) were used to promote the Shale Gas potential of those areas. Subsequently, a MoU was signed with Repsol, for the regional study of Shale Gas in Boudenib, Hauts Plateaux and the Haouz

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basins. Also a reconnaissance contract was signed with EOG Resources Corporation for Tadla basin, thus, reinforcing the research of this new unconventional resource.

Preliminary study project on the extension of the Atlantic Continental Shelf (cooperation project)Seismic data collection, not available in ONHYM and covering ultra deep offshore areas, is ongoing. At the same time, a synthesis of bathymetric maps and a regional geological study along the Atlantic Moroccan margin were initiated.

Promotion ProjectONHYM attended 15 international petroleum conferences. During those events, technical presentations were held and promotional materials (posters, promotion reports, CDs, brochures, gadgets...) concerning the onshore and offshore free zones were distributed.

Technical presentations and data room have been organized to the representatives of 20 companies who visited ONHYM.

Also door to door campaign was held from 4 to 12 October in Australia, to promote Onshore and Offshore free blocks to the

Australian oil companies. 16 companies were contacted in Perth, Adelaide, Melbourne and Sydney cities.

These efforts were successful since they led to the signing of two petroleum agreements: The first one with Circle Oil for the Lalla Mimouna North & South permits on January 25 and the second with Teredo for 5 permits of Boujdour Shallow Offshore signed on December 15, 2010. Two reconnaissance contracts were also signed: The first one with Repsol for the Gharb offshore area, on April 14. The second one with EOG and concerns the Tadla basin, on October 28.

The advanced negotiations with Pathfinder on Agadir offshore, with Oil Quest Limited on Maamora East and with Circle Oil on Sidi Rhalem, will lead to new agreements and will strengthen the exploration activity of ONHYM.

Project of vectorization, transcription and data transfer for partners

These works have mainly concerned: •Scanning, vectorization and the safeguarding of geophysical and well data;• Transfer and loading of 2D and 3D seismic data interpretation for Onhym own projects;• Transfer of 2D and 3D seismic data to partners;• The QC of seismic data acquired in 2010;• Participation in the development of GIS (Hydrocarbons).

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Objectives : Subsalt TAGI Reservoirs

Meskala-Toukimt

3D seismic Interpretation

Preparations to drill MKL-110 well

Objectives : the Atlantic Continental

Shelf Edge Extension

Preliminary sudies

Objectives : Jurassic & Cretaceous

Onshore Boujdour North and South

Acquisition of 300 Km of 2D seismic in Boujdour South

Preparations to drill BJD-1 stratigraphic wellObjectives : Jurassic,

Cretaceous & Tertiary

Offshore Dakhla

Studies

Objectives : Jurassic,

Cretaceous & Tertiary

Offshore Rabat - Tarfaya

Studies and Promotion

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Partners’ Activities

Onhym partners’ activities, during 2010, has been marked by:

•Discovery of 2 gas field in the Gharb basin•Drilling of 8 wells and the re-entry of one well. •Acquisition of 1 336,38 square kilometers of 3D seismic, 495 km of 2D seismic, 18 572 Km of airborne gradiometry, 1,003 stations of terrestrial gravity and 568 km of electromagnetic surveys.

These activities are detailed as follows:

Offshore zones

• Tanger - Larache permit (Repsol / Dana / Gas Natural)Repsol and its partners, Gas Natural and Dana acquired 1 336, 38 square kilometres of 3D seismic and 568 km of electromagnetic survey on the Tanger-Larache permit. The processing of these data and the preparation to drill two other wells are underway.

• Gharb offshore reconnaissance zone (Repsol)The acquisition and processing of 495 km of 2D seismic data have been completed and the interpretation is ongoing. Repsol will acquire 1500 Km of 2D seismic as part of an extension of this reconnaissance area.

An adequate logistical assistance has allowed theses partners to carry out the work in optimal conditions.

• Loukos offshore permit (MPE)This partner has continued the hydrocarbon evaluation of this area, including the highlight of biogenic gas prospects.

• Casablanca offshore permit (MPE)The evaluation studies focused on the Paleozoic and Triassic theme.

• Essaouira Deep offshore permit (Canamens) Canamens achieved the definition of Cretaceous leads and prospects, after finishing the processing and the interpretation of 1307 km of 2D seismic acquired on Essaouira offshore. An airborne geochemical survey offshore Essaouira is expected to confirm the petroleum system of this segment.

A joint venture with a new company is ongoing, following a farmout campaign. Canamens plans to acquire more 3D seismic data in 2011.

• Essaouira Shallow offshore reconnaissance zone (Canamens) Canamens has completed the processing

16

of 506 km of 2D seismic acquired on Essaouira offshore and conducted a seismic interpretation that showed potential structures. The airborne geochemical survey cited above will also cover this reconnaissance zone.

The promising results of this work encouraged Canamens to convert this reconnaissance zone into an exploration permit. Negotiations are underway to set the minimum future work program.

• Agadir offshore permit (GBP)The interpretation of seismic data in PSDM and AVO studies helped to define prospective zones, where 300 square kilometres of 3D seismic will be acquired. Preparations for this acquisition are underway.

• Ras Juby permit (Genting)Genting leads an active promotion campaign of the area to seek a partnership willing to share the risk of the first exploratory well.

• Sidi Moussa Offshore permit (San Leon, Longreach & Serica Sidi Moussa B.V) San Leon, Serica & Longreach companies began the petroleum evaluation and the seismic interpretation of vintage data. The Jurassic and Cretaceous themes are the main sought objectives in this segment. In parallel, a reprocessing program is launched to improve the imaging of potential areas.

• Foum Draa Offshore permit (San Leon, Longreach & Serica Foum Draa B.V) These companies led the regional petroleum evaluation and the 3D seismic interpretation

to highlight the Jurassic and Cretaceous play concepts. Detailed interpretation will allow the mapping of potential prospects. 3D Seismic reprocessings in PSTM and eventually in PSDM are in perspective to better define the potential prospects.

• Tarfaya offshore permit (Tangiers Petroleum) Following the gathering of geological, geophysical and well data, Tangiers Petroleum began the seismic interpretation and the petroleum evaluation of the area. Preparations for the reprocessing of 2D and 3D seismic are underway.

• Boujdour offshore (Kosmos)The 3D seismic interpretation of 2,048 Square kilometers led to the identification of new promising prospects in the Cretaceous. Berriasian - Albian Channels with high amplitude were identified and characterized by seismic attributes analysis. Data rooms have been organized for companies, who have expressed an interest to explore this region and to test the potential of these channels.

Onshore zones

• Asilah permit (TransAlantic / Direct / Anschutz / Longe)The integration of 2D seismic and the ADD – HR, acquired in 2009 as part of a new interpretation, led to the generation of new prospects. The Gharbia-1 (GRB-1) well, located on one of these prospects is in progress. The depth reached in late December is 399. 3 m.

17

• Ouezzane-Tissa permit (Transalantic / Direct / Anschutz / Longe)

operations, the HKE-1 exploration well was re entered in side track between the 5th and 14th of March. The final depth was 2 124.5 m. This well has shown gas traces and was abandoned due to unsolved technical problems. A second well, HKE-1 Bis, located on the same prospect reached the depth of 1 643. 9 m. A re entry in Side Track 1 and 2 was made and the total depth was 2 698, 5 m. This well showed gas traces in the Tertiary, a test program achievement is underway.A third well, MLK-1 has been implemented in Ouezzane region to test the Jurassic imbricates (subthrust) in a better structural position.

Biostratigraphic, palynological and petrographic studies and well log analyses were conducted to ensure the follow-up of those wells.

• Tselfat permit (Transatlantic) Two wells have been drilled in this permit: BTK-1, drilled between April 25 and June 21, reaching a final depth of 2 904,7 m and GUW-1 well, drilled between 18 and June 28, stopped in the final depth of 753 m. The first well was dry and was abandoned, while the second showed oil traces. Tests on this well showed minor oil flows.The HR 33 Bis well, drilled in 2009 and showing gas traces, was re -entered to test the Haricha formations and the Miocene infra nappe.

Biostratigraphic and micropalaeontological studies were conducted in ONHYM laboratories, as a request from Transatlantic.

• Fez permit (Cabre)The post-mortem study of the FES-1 well recommended to re-enter this well in order to reach the deep targets of the Domerian and test them as well as the gas zones of the Tertiary. The re-entry began on 23 September 2009, ending March 11, 2010 at the final depth of 4 172 m. The tests carried out in this well were not conclusive.

During this period, an airborne gradiometry survey of 14 266 Km and a terrestrial gravity of 1,003 stations were acquired and processed.

Moreover, structural modeling and mapping, integrating gradiometric and seismic data, helped to establish structural maps of Jurassic and Miocene.

• Reconnaissance zone of Taounate (Cabre)Cabre launched an airborne gradiometric survey of 4 306 Km. the processing of these data have shown an alignment of positive structures (subthrust).

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Hydrocarbon evaluation of the zone continued through the analysis of the data wells , the realization of 4 geologic cross sections for the modelling and the comparison with the gradiometric results, to verify the structural style of Taounate zone.

Following encouraging results, Cabre has expressed its interests to convert the area into an exploration permit.

• Tendrara permit (MPE)The hydrocarbon evaluation in this permit continues with geological and geophysical modeling of the Triassic reservoir. A new interpretation of the 3D seismic including seismic attributes analysis highlighted new potential prospects and recommended a simulation study to assess the gas potential in this permit.

• Reconnaissance zone of Tendrara South (MPE)The hydrocarbon evaluation of the Triassic objective is underway.

• Reconnaissance zone of Missour Est 1 (MPE)The activity focus was the synthesis study of the petroleum potential of the Paleozoic formations.

• Sidi Moktar permit (MPE)MPE is continuing the geological modeling studies of the Triassic reservoir.

• Guercif East and West permit (TransAtlantic/Stratic/Longe) As a result of the 2D seismic interpretation and the evaluation of petroleum potential,

TransAtlantic notified ONHYM its intention to withdraw from these permits.

• Sebou permit (Circle Oil)Following the seismic interpretations and processing in seismic inversion, Circle Oil achieved the drilling of the KAB-1 well, between 6 and September 19, 2010. Gas shows have been identified, but the well was abandoned due to technical problems with the intent to later perform well log operations and possibly test the potential of this well. Two other wells, CGD-11 and KSR-10, were drilled and were gas bearing. They will be put into production later.

• Lalla Mimouna permit (Circle Oil)This petroleum agreement was signed on January 25, 2010. The hydrocarbon evaluation in this area started by reprocessing and interpreting the vintage 2D seismic data. Preparations for the acquisition of a new 3D seismic program are underway.

• Gharb Centre and Gharb South permits (Cabre) This partner is analysing the potential of the prospects previously defined, to sort them in order to set up priorities. An economic feasibility study of a drilling campaign of 7 to 10 wells is ongoing to optimize the next drilling campaign.

At the same time, Cabre is planning the transfer of the Gharb Centre license and launched a promotion campaign to oil companies for farm out.

• Haha permit (PEL)The processing and the interpretation of the

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140 square kilometres of 3D seismic, led to the mapping of structures in Triassic and post doleritic reservoirs. Comparison of the interpretations made by PEL and ONHYM recommended the extension of the 2D seismic interpretation to the southern areas. The integration of these data will ensure the closure of a potential Triassic structure. Seismic attributes analysis performed by ONHYM confirmed the importance of the gas potential of the Triassic reservoirs.

PEL will launch a promotion campaign to search for partners to share the investment and the risk of the exploratory well.

• Boudenib permit (MND) MND finished the hydrocarbon evaluation of the area. Paleozoic prospects and leads have been defined. Based on the TAJ-1 well results in Bouaanane permits, MND decided, during the closing meeting of March 16, to abandon the area.

• Bas Draa permit (Suncor / RWE)The processing of 1 260 km of 2D seismic acquired in 2009 have been finalized. The first

results of the regional seismic interpretation are encouraging. Leads and plays have been identified.

After the studies of economic feasibility, Suncor has applied for an extension of 6 months to carry out a geochemical assessment and a study of the gas market.

• Zag basin permit (San Leon Energy / Longreach)Based on the results of the magnetic data, a program of 500 km of 2D seismic has been defined.Preparations for the acquisition of this survey are underway.

• Tarfaya onshore permit (San Leon Energy / Longreach)After the interpretation of the reprocessed seismic data, a program of 500 km of 2D seismic survey, focussing on the Jurassic and the Triassic objectives, has been established in the north eastern regions. Preparations for the acquisition of this survey are underway.

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Geophysical Activity

Drilling Activity

Boujdour onshore Permit

Tanger-Larache Permit

Gharb offshore reconnaissance zone

Fès Permit

Taounate reconnaissance zone

Onhym

Repsol / Dana

/ Gas Natural

Repsol

Cabre

Cabre

300

495

1336,38

14 266

4 306

1 003 Stations

568

Circle Oil

TransAtlantic/Longe/

Direct

TransAtlantic

TransAtlantic/Longe/

Direct

Cabre

KAB-1

CGD-11

KSR-10

HKE-1

HKE-1 Bis

BTK-1

GUW-1

GRB-1

FES-1

(Re-entry)

1 699 m

1 171 m

1 777 m

2 243.7 m in vertical

and 2 124.5 m

(side track)

1 643.9m in vertical &

re-entryin 2nd side trac

(2698.5 m) 2 904.7 m

753 m

399.3 m (in progress)

4 172 m

6 to 19 September 2010

01 to 12 October 2010

7 to 29 November 2010

5 to 14 March 2010

13 July to 1 November 2010

25 April to 21 June 2010

18 to 28 june 2010

12 to 31 December

23-09-2009 to 11- 03- 2010

Sebou

Ouezzane-Tissa

Tselfat

Asilah

Fès

21

Transatlantic/Direct /Longe (Asilah )

GRB-1 well in progressTransatlantic/Direct /Longe (Tissa-Ouezzane) Realisation of HKE-1 et HKE-1 bis wells. Circle Oil (Sebou)

Drilling of KAB-1, CGD-11 & KSR-10

Cabre (Taounate)Acquisition of 4 306 Km of airborne gradiometry.

Cabre (Fès) Reentry of FES-1 well and production tests . Acquisition of 14 266 Km of airborne gradiometry and 1 003 stations of terrestrial gravity.

Transatlantic (Tselfat) Drilling of BTK-1 and GUW-1

PEL (Haha)3D seismicinterpretation

SLE /Longreach (Zag Basin ) Preparations for the acquisition of 500 Km of 2D seismic

Suncor & RWE (Bas Draa)2D seismic interpretation

SLE /Longreach (Tarfaya onshore ) Preparations for the acquisition of 500 Km of 2D seismic

Kosmos (Boujdour offshore) 3D Seismic Interpretation

San Leon/Longreach/Serica (Foum Draa and Sidi Moussa) Seismic reprocessing and interpretation

GBP (Agadir Maritime) Preparations for the acquisition of 300 Km² of 3D seismic

Canamens (Essaouira offshore & ZR Essaouira Shallow Permits) seismic interpretation and hydrocarbon assessment

Repsol (Gharb offshore)Acquisition of 495 km of 2D seismic

Repsol/Dana/Gas Natural (Tanger-Larache)Acquisition of 1 336,38 km² 3D seismic and 568 km of electromagnétic Survey

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of:• 2 new petroleum agreements • 2 new reconnaissance contracts.• 1 transition to the second additional period under as part of a petroleum agreement.• 3 applications for exploitation concession.• 13 amendments to petroleum agreements• 1 amendment to association contract• 2 addenda to reconnaissance contracts.• 1 memorandum of understanding.• 2 MOU related to petroleum agreements.• 1 MOU related to oil Shale.• 1 MOU related to Shale gas.

Petroleum Agreements

Circle Oil Morocco Ltd Lalla Mimouna : Signature, on 25 January 2010, of «Lalla Mimouna» petroleum l agreement, covering North and South Lalla Mimouna Permits, with a total area of 221 1.3 km². This agreement provides, in the

course of the initial 3 year- validity period, the acquisition, the processing and the interpretation of 80 square kilometers of 3D seismic and the drilling of two wells, with a minimum total depth of 1500 meters each.

Teredo Morocco Limited Boujdour Offshore Shallow: Signature, on December 31, 2010, of the Boujdour Offshore Shallow petroleum agreement, covering the Boujdour Offshore Shallow Permits I to V, with a total area of 9055. 7 km². This agreement work program, for the initial 2 year -validity period, would be the acquisition, the processing and the interpretation of 500 Km of 2D seismic as well as the reprocessing and the interpretation of 1000 km of field data.

Transition to complementary periods

Repsol Exploracion s.a. / Dana Petroleum (E & P) Ltd / Gas Natural Exploracion SLTanger Larache Offshore: transition to the second complementary period of «Tanger-Larache» offshore petroleum agreement, for a period of one year and 9 months, from February 10, 2010. The stakeholders

are committed, during this period, to drill an exploratory well, to acquire 500 square kilometers of 3D seismic and optionally drill a second exploratory well.

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Exploitation Concessions

Circle Oil Morocco Limited

South: submission, on July 14, 2010, of applications to exploit the gas of «Ksiri Central», «Gaddari Central» and «Gaddari South» concessions, located on the «Sebou» permit .

Amendments to Petroleum Agreements

Genting Oil Morocco Limited Ras juby Offshore: Signature, on the January 4, 2010 and July 05, 2010, of the third and the fourth « amendments to Ras juby» offshore petroleum agreement, extending the initial period of the permit by 6 months, respectively to July 10, 2010 and to January 10, 2011, in order to seek a partner to share the costs and the risks of the drilling, planned during the 1st complementary period of the permits.

Island International Exploration Morocco / Serica Sidi Moussa B.V / Longreach Oil and Gas Ventures Ltd. Sidi Moussa offshore: Signature, on March 26, 2010, of the first amendment to Sidi Moussa offshore petroleum agreement, sub sequently to the surrender of 10% of the shares of interest to Island, for the benefit of Longreach, in Sidi Moussa offshore 1 to 4 permits.

Island International Exploration Morocco /

Serica Foum Draa B.V / Longreach Oil and Gas Ventures Ltd. Foum Draa Offshore: Signature, on March 26, 2010, of the first amendment related to Foum Draa offshore petroleum agreement, sub sequently to the surrender of 10% of the shares of interest to Island, for the benefit of Longreach in Foum Draa Offshore 1 to 3 permits.

Repsol Exploracion s.a. / Dana Petroleum (E & P) Ltd / Gas Natural Exploracion Sl Tanger Larache Offshore: Signature of the sixth amendment to Tanger-Larache offshore petroleum agreement, changing the amount of the bank guarantee of the second additional period.

DVM International Limited / DVM International Sarl Tarfaya Offshore: Signature, on April 7, 2010, of the first amendment to Tarfaya Offshore petroleum agreement, following the transfer of 100% of the shares in interest of DVM Ltd. for the benefit of DVM SARL in Tarfaya Offshore permits.

Kosmos Energy Offshore Morocco HC Boujdour Offshore: Signature, on May 19, 2010, of the third amendment to Boujdour Offshore petroleum agreement, related to the extension of the initial period of the licenses by 8 months to February 25, 2011, for the fulfillment of the AVO analysis and the interpretation of prospects, and the Organization of a promotional campaign.

TransAtlantic Morocco LtdTselfat: Signing, June 7, 2010, of the third

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amendment to Tselfat petroleum agreement, related to the extension, of the initial period of the licenses, by 6 months, which deadline is extended to 10/01/2011, to finalize the BTK-1 well, planned in the initial period of the permit.

Petroleum Exploration (Private) Limited Haha: Signing, June 14, 2010, of the third amendment to Haha petroleum agreement, for the extension of the initial period of the licenses by 12 months, to June 19, 2011, to carry out the reprocessing and the reinterpretation of the seismic data, and the acquisition of 2D seismic lines.

Direct Petroleum Morocco Inc. / Anschutz Morocco Corporation /Transatlantic Morocco Ltd. / Longe Energy Limited Ouezzane-Tissa: Signature, on June 16, 2010, of the fourth amendment to Ouezzane-Tissa petroleum agreement, related to the extension of the initial period of the licenses by 6 months, which deadline is extended to January 31, 2011, for the re-entry of the HKE-1 well and the achievement of the 2nd drilling, programmed for the initial period of the permits.

Canamens Energy Morocco Sarl Essaouira Deep Offshore: Signature, on July

23, 2010, of the first amendment to Essaouira Deep offshore petroleum agreement, for the extension of the initial period of the licenses by 12 months, to July 27, 2011, to carry out geology and Geophysics studies and plan the acquisition of a 3D seismic campaign .

San Leon (Morocco) Ltd. / Longreach Oil and Gas Ventures Ltd. Tarfaya Onshore: Signature, on July 12, 2010, of the first amendment to Tarfaya Onshore petroleum agreement, establishing the transfer of 100% of the shares in interest of Island, for the benefit of San Leon, with the extension of the initial period by 12 months, to July 13, 2011. This extension period was requested for the completion of the work, started by Island as a new operator.Zag Basin: Signature, on September 17, 2010, of the first amendment to Zag Basin petroleum agreement, establishing the transfer of 100% of the shares of interest to Island for the benefit of San Leon.

Amendment to Association Contract

Island International Exploration Morocco / Serica Foum Draa B.V:Foum Draa Offshore: Signature, on March 26, 2010, of the first amendment to Foum Draa offshore association contract, amending clause No. 11 to make possible the transfer of the shares of interest before the end of the initial period of the permits.

Reconnaissance Contracts

Repsol Exploracion s.a. Gharb Offshore: Signature, on 04/13/2010,

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of the reconnaissance contract related to Gharb Offshore Zone. This agreement provides, during its initial period of one year, effective from 14/05/2010, the geological and the geophysical studies, as well as the reprocessing and the reinterpretation of the available 2D seismic data.

Eogi International Company Tadla: Signature, on October 28, 2010, of the reconnaissance contract related to Tadla zone. This agreement provides, during its initial period of one year, effective November 22, 2010, the geological and geophysical studies, as well as the reprocessing and the reinterpretation of 800 km of 2D seismic data.

Addenda to the Reconnaissance Contracts

Canamens Energy Morocco Sarl Essaouira Shallow Offshore: Signature of the first amendment to the reconnaissance contract of Essaouira Shallow Offshore, extending the validity period of the reconnaissance authorization by one year duration, to 23 December 2010, to reprocess the gravity and the magneto metric data, interpret the seismic data and carry out various geological and geophysical studies.

Maghreb Petroleum Exploration Missour Est 1: Signature, on September 27, 2010, of the first amendment to the reconnaissance contract of Missour Est 1, extending the validity period of the reconnaissance authorization by one year- duration, to October 27, 2011, to perform a

seismo-structural study of the area of interest.

Other Agreements

Eesti Energia AsOil shale of Tanger, Ouarzazate, Errachidia, Agadir and Aghbala areas: Signature, on April 27, 2010, of a Memorandum Of Understanding concerning the evaluation of the potential of oil shale in these areas. The MOU provides for a work program of exploration and appraisal. The validity period of this MOU is set for two years.

Repsol Exploracion S.A.: Gas shale (Shale Gas) of the Hauts Plateaux, Boudnib and Haouz areas: Signature, on 07, 16, 2010, of a Memorandum Of Understanding concerning the evaluation of the potential of gas Shales in the above mentionned regions. The validity duration of this MOU is fixed at six months.

Kosmos Energy Offshore Morocco Hc Boujdour Offshore: Signature, on 09, 27, 2010, of the MOU related to the main provisions of the new petroleum agreement to be concluded between ONHYM and Kosmos, covering Boujdour offshore I to XXIII permits.

Société Mauritanienne des Hydrocarbures (SMH) Cooperation: Signature, on 10/14/2010, of a Protocol Of Agreement, concerning the cooperation in the domain of research and exploration of hydrocarbons with the Société Mauritanienne des Hydrocarbures (SMH).

MND Maroc Limited Boudnib Onshore: Signature, on

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12/03/2010, of a MOU to manage the six month -negotiation period ,necessary for the choice of the area of interest for seismic acquisition.

Agreements being finalized

Pathfinder Hydrocarbon Ventures Limited Foum Assaka Offshore: consignment for approval of principle of the Ministry of energy, Mines, water and the environment and of the Ministry of Finance, on 05/11/2010, of the Foum Assaka Offshore oil agreement.

Canamens Essaouira Shallow Offshore: underway finalization of the Essaouira Shallow offshore petroleum agreement covering 3 research permits, involving «Essaouira Shallow offshore I-III» for an initial validity period of 30 months. Canamens, owing to the encouraging results of the reconnaissance study, decided to enter the phase of research.

Transatlantic Morocco Limited Tselfat: underway finalization of the fourth addendum to the Tselfat petroleum agreement, related to the modification of the minimum program of research and to the amount of the bank guarantee of the first additional period.

Repsol Exploracion s.a. Gharb Offshore: underway finalization of the first addendum to the Gharb Offshore reconnaissance contract, dealing with the first one year- extension period , until 05, 13, 2012, of the reconnaissance license.

Circle Oil Morocco Limited , Oilquest and Cabre

Negotiations in progress to sign petroleum agreement with Circle Oil on Sidi Rhalem, Mamora Est with Oilquest and Taounate with Cabre

San Leon (Morocco) Ltd. / Serica Foum Draa B.V / Longreach Oil And Gas Ventures Ltd: Foum Draa Offshore: in progress finalization of the amendment No 2 to the Foum Draa Offshore petroleum agreement, establishing the transfer of 100% of Island shares of interest for the benefit of San Leon.

San Leon (Morocco) Ltd. / Serica Sidi Moussa B.V / Longreach Oil And Gas Ventures Ltd:Sidi Moussa Offshore: in progress finalization of the amendment No 2 to the Sidi Moussa Offshore petroleum agreement, establishing the transfer of 100% of the shares of interest of Island for the benefit of San Leon.

Management Committees

The TCMs and MCMs, related to «Agadir offshore», «Foum Draa Offshore», «Sidi Moussa Offshore», « Boujdour Offshore «, «Tarfaya Offshore», «Haha», «Essaouira Deep Offshore», «Bas Draa», «Ouezzane-Tissa», «Asilah», «Tselfat», «Guercif», «Gharb», «Fes» and «Tanger Larache Offshore» petroleum agreements as well as «Taounate» and «Essaouira Shallow Offshore» reconnaissance contracts, were held with the representatives of the companies, operating in these areas.The work achieved and the corresponding expenses as well as the work programs and the provisional budgets were discussed during these committees.

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Hydrocarbon Drilling

ONHYM own activity

• Equipment maintenance of H.1700 N ° II and H.525 rigs and the acquisition of the supplies and the necessary services for the execution of the operations of :• Drilling of Boujdour well «BJD - 1»• Developping Meskala well «MKL-110». • Drilling for third parties• Engineering of the platform and its accessories of MKL – 110 well.

ONHYM services to the partners• Services to third party The Office conducted, on behalf of Circle Oil Company, 3 exploratory wells in Sebou permit in the Gharb basin, planned for 2010 drilling campaign and under the 2- year contract, linking Onhym to this company, for the provision of the H.525 drilling rig as well as the H.P cementing unit and its staff.

The office has also started negotiations with Somas society, concerning the drilling of 2 wells in salt cavity C-3, in 2011.

• Follow-up Activity Daily follow - up by the Office, of the partners’ drilling activity, was achieved for the wells: «Fes – 1 well re – entry» of Cabre society, «HKE - 1», «HKE-1 bis», «HKE-1 ST 2 bis», «BTK - 1», «GUW - 1», «HR-33 bis» and «GRB - 1» wells of TransAtlantic society , «KAB - 1», «CGD-11» and «KSR-10» wells of Circle Oil

society as well as the participation to various technical and management committees.

Hydrocarbon production

Hydrocarbon ExploitationThe different exploitation centers have experienced a sustained activity in Essaouira and Gharb production areas. Thus concerning Essaouira area, several activities were performed including:

- Maintenance work of LSA-101 bis wellhead.- Mending of the gas pipeline 8, after the detection of a major leak at the crossing point of Oued Tensift.- Deviation of the 8 «Korimat - Youssoufia gas pipeline at M’ Ramer level.- Reinforcement of natural gas deliveries to the OCP, by the start-up of the Toukimt unit and the development of the well TKM-201.

The Gharb area has also experienced various activities, namely:- Deviation of the DRJ-Cmcp pipeline at the

request of the Oncf for the installation of a new line of railway.

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- Upgrading of the Gharb gas pipeline 4.- Starting of the exploitation of the KSR-8 and wells KSR-9 by the staff of Onhym, in partnership with Circle Oil. - Stopping of the production of the wells of the Gharb from 21-02 to 03-03-2010, due to the floods in the region. - Resumption of the operation of the SAR-1 well, in agreement with Cabre company.

Hydrocarbon production This activity remained concentrated on Essaouira and Gharb areas.

Compared to the year 2009, the domestic production of the hydrocarbon from the field of Essaouira has experienced an increase by 26.96% of natural gas (i.e. 32.92 million Nm3 against 25.93Nm3) and 22.18% of condensate and crude oil (10 212 T against 8 358 T).This rise of production is mainly due to the increasing tapping of the OCP. Also the gas production of Gharb wells experienced 11.41% increase (16.99 million Nm3 against 15.25 Nm3 for natural gas).

Total 7 495 32 918 620

-

-

-

-

-

-

884 894

192 308

890 711

3 394 313

8 873 185

2 755 631

SAR-1 / Cabre

BFD-1 / Cabre

ONZ-4 / Circle Oil

ONZ-6 / Circle Oil

KSR-8 / Circle Oil

KSR-9 / Circle Oil

Sidi Rhlem (RH-2) 2 717 -

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Hydrocarbon Marketing

The natural gas deliveries of the Office remain concentrated on Meskala and Gharb areas.

MeskalaIn the course of the year 2010, the natural gas deliveries reached 30.31 million Nm3 against 32.00 million Nm3 planned, that to say a realization rate of 95%. Also, deliveries of condensate (product accompanying natural gas) have reached a rate of 99%, by recording a volume of 6 911 Tons against forecasted 7 000 Tons. GharbThe recorded production share of natural gas reached 4.96 million Nm3 against 6.53 planned, with a rate of production of 76%. The total turnover, generated by the sale of hydrocarbon (natural gas and condensate) reached 100.93 million of DH against 93.24 million of DH planned, with an increase rate of 108%. This improvement is mainly due to the boost of OCP tapping and the rise of the price of the n° 2 fuel and of the barrel of oil, on which natural gas and condensate prices are respectively indexed.

Maghreb - Europe Gas Pipeline (MEG)

Given the new conditions of the consumption of the gas of the royalty by ONE of Tahaddart and Ain Beni Mathar power plant, a new agreement, related to the royalty regulation procedure of the natural gas transit through the national territory, was signed in July 2010 between Onhym, Empl and the Ministry of the energy, the Mines, the water and the environment.

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The year 2010 has been marked by: • The elaboration of a draft regulatory framework for the extraction of hydrocarbon from bituminous rocks.• The signing of a Memorandum Of Understanding, with the Enefit society (Eesti Energia), concerning Tanger, Ouarzazate, Errachidia, Agadir and Aghbala zones.• The preparation of a draft MOU with ONE, on Tarfaya area, for the construction of a power plant of 100 MW. • The initiation of cooperation with EN Rom society for the installation of one pilot unit to exploit the deep Timahdit deposit layers.• The start of the construction of a San Leon pyrolysis pilot unit IVE (In-situ Vapor Extraction) on Tarfaya.• The drilling of three cored well bores, by Total and Petrobras companies, on their Tarfaya permit.

The project status, related to this activity, is given below:

Timahdit-2 Zone

After the presentation of the results of the first phase, related to the technico-economic pre-feasibility study of the development of oil shale in the area of Timahdit 2, Onhym transmitted its comments on the report of the study. Also, this project would face two major challenges: the small amount of the mineral resources for a unit of 50 000 bbl/day, due to the reduction of the zone to exploit by Ifrane national park and the availability of

the necessary water resources for this project which requires 24 000 m3 / day. To meet these two challenges, the parties agreed on an extension of the MOU by 9 months, with an extension of the study area to the North East.

Tarfaya Zone – Eastern flank Realization of three cored bore holes on Tarfaya East flank permit, by Onhym material and logistical means, as part of a service provision of the Office. After selection of the layers to be analyzed, samples from these layers will be shipped to Petrobras laboratories, for the characterization of the shale of this zone.

X’TractThe MOU, governing the partnership agreement between Onhym and X’ Tract for the development of the oil Shale of the permit n°1 of the Tarfaya western flank, expired July 31, 2010. To continue its activity in the region, X’Tract submitted to Onhym a new work programme accompanied by an application for an extension of the initial MOU.

San Leon Engineering studies and design of the pilot unit to test the process ‘ IVE‘, that will be installed on the San Leon Tarfaya permit, have been completed. The equipment needed for the construction of the pilot plant was acquired and transported to the site. Construction operations of the pilot unit are underway. The environmental impact study was presented to the national commission.

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ENEEFIT

years, covering five potential oil shale areas (Tanger, Aghbala, Errachidia, Ouarzzazate and Agadir). Under this agreement, field trips were conducted to explore these areas of interest.

EN ROMEN ROM society is interested in the installation of a pilot unit, to test its in situ pyrolysis method named KR&E’s process on Moroccan

oil shale. A meeting is scheduled for January 2011, to finalize the cooperation modalities with EN ROM, related to the pilot unit project that would be installed at Timahdit.

ONEAs a result of ONE interest, in constructing a pilot plant of 100 MW using Tarfaya oil shale, two tenders have been preselected. A draft MOU was submitted to ONE to set the cooperation framework between the two Offices.

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For mineral exploration, the own work of the Onhym this year have involved 17 projects including 9 for precious metals, 5 for base metals and energy substances and 3 for industrial minerals and rocks. Work in partnership, on the other hand, interested 12 projects including 4 for base metals, 3 for precious metals, 4 for rocks and industrial minerals and 1 for uranium.

In terms of promotion, this period was marked by the conclusion of two Memoranda of agreement, a memorandum of understanding, a research agreement and four riders. Two projects were transferred to the private sector for their development and their operation. The certification of mine laboratories, according to the repository ISO 9001 version 2000, obtained in March 2007 was renewed successfully after a re-certification audit according to the new ISO 9001 2008 standard.

The results obtained by the own work of the Onhym confirmed the interest of Nb, Ta, U, Fe and light rare earth elements projects of Glibat Lafhouda and Twihinate (province of Awserd), where preliminary and partial estimate resources has yielded very encouraging results. Several foreign companies have expressed their interest for these projects. The work also confirmed the importance of two new prospects in Fe, Nb, Ta, U and light rare earth elements of Lamlaga and Drag Al Farnan, where a preliminary estimate of resources will be done after obtaining the results of the campaigns of surveys carried

out or in progress in 2010 and early 2011. Many anomalies in precious metals, were also the subject of work of geological control in the Southern provinces , Khzama, Bas Draa and Kerdous. The exploration for platinum-group elements continues in the province of Awserd.

Research of uranium has been intensified in the southern provinces and identified several interesting targets, notably the Aghracha prospect in the region of Awserd. This prospect

will be subject to recognition by drilling surveys in early 2011 to confirm his interest. Many anomalies in base metal (Sn, W, Cu, Pb, Zn) have been the subject of geological control in the central Morocco and the Western Anti-Atlas. For rocks and industrial minerals, very interesting areas were defined in Sidi Kacem and Taza provinces for fibrous clays and in Meknes province for feldspar and kaolin.

Partnership work concerned the continuation of the feasibility study on Achmmach (Sn) with Kasbah Resources (Australia) and the research of uranium with Areva (France) and the bentonite clays with Tolsa (Spain).

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The development of the Andalusite deposit of Sidi Bou Othmane (province of Kalaat Sraghna) continued in partnership with the Group Damrec (France) - society Rhassoul (Morocco) and zircon from Bou Issafen deposit (province of Guelmim) is ongoing with the Chinese company Jiangxi. Furthermore, the development of Zrahina deposit (F-Ba-Pb) continued in partnership with the French group Garrot-Chaillac.

This year also saw the launch of programme of work in partnership for the assessment and development of Tafrent gold deposit with the Archean Group company (India), occurences of Ain Kerma-Toufrite (Au, Pb, Zn, Ag) by Agricola Resources (England) and the resumption of the development of gold deposits of Tizegouine-Moumjjoud by Akka Gold Mining (Morocco).

Mining activity was also marked by the continuation of strategic research by external benefits, namely airborne hyperpectrale campaign covering Sirwa sector and regional geochemistry campaign in the region of Awserd. The hyperspectral campaign has identified targets in precious metals and base metals, which will be the subject of research in 2011 fiscal year.

Precious metals

Glibat Lafhouda (Nb, Ta, REE) On the prospect of Glibat Lafhouda (province of Awserd) which had been the subject of detailed geological survey, a geophysical survey by ground magnetometry and gravimetry and two campaigns of drilling

totaling 1882m in 2007 - 2008, resources are evaluated to 49 million tons at 0.4% Nb2O5; 265 Ta2O5; 510 ppm U3O8, 35% Fe2O3 and 0.24% of light rare earth elements (Ce+ Eu + La + Nd + Pr + Sm). Valorisation tests of the ore from this project will be performed by an external laboratory in 2011.

Drag - Al Farnan (Nb, Ta, U, REE) On the objective of Drag Al Farnan, located 90 km to the WSW of Awserd, exploration continued in the 1er half of this year by the realization of two drill holes totaling 181.7m for the completion of the campaign started at the end of 2009 with sampling and chemical analysis of 367 samples. Following the encouraging results obtained, a second campaign of drillings is running; 552 m are made in 2010 bringing the overall length on this project to 1067m. 140 samples from cores of drilling are being analysed.

The average of the currently available grades is 0.18% Nb2O5; 282 ppm Ta2O5; 478 ppm U3O8 and 0.24% of light rare earth elements (Ce + Eu + La + Nd + Pr + Sm), on an average thickness of 30 m. A 1/2000 geological survey was also carried out on an area of 3 km2 with collection of 86 samples.

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Twirga-Amwaga (Pt, Pd, Au, Ag) On the Twirga Amwaga project, the research continued by detailed lithogeochemical sampling which totaled 708 samples including 250 already analyzed and showed grades up to 63 ppb Palladium and 80 ppb Platinum; other samples are under analysis. This sampling was conducted with the geological survey at 1/5000 in an area of approximately 10 km².

Twihinate (Nb, Ta, U, Fe) On the project of Twihinate (province of

Awserd), the drilling results showed grades from 29 to 54% Fe2O3 ; 2100 to 3600 ppm Nb2O5 and 150 to 650 ppm U3O8 on a thickness ranging from 29 to 58 m. Work continued on the peripheral ring by a detailed geological survey to the 1/2000 covering an area of 5 km². A systematic sampling by 533 samples was carried out to control the anomalous gold points. On the other hand, the exploration also concerned the vicinity of Twihinate by the control and sampling of the structures of Laknouk and Tagneddest where 376 rock and soil samples were collected. The results of chemical analyses show grades up to 394 ppm U3O8 ; 1.5 ppm Au and 456 ppm Mo for Laknouk anomaly and 800 ppm U3O8 for the anomaly of Tagneddest. Valorisation tests of the Twihinate ore will be performed by an external laboratory in 2011.

Lamlaga (Fe, Nb, U, REE) The Lamlaga prospect (Awserd Province) was tested in late 2009 by 3 drill holes that have given an average grade of 0.57%

Nb2O5, 0.77% LREE, 132 ppm U3O8 and 44.70% Fe2O3 on a thickness of 21m in iron oxides and average grades of 0.29% Nb2O5, 0.59% LREE, 129 ppm U3O8 and 16.79% Fe2O3 on a thickness of 90m in the breccias silica. In 2010, this target has been recognized by geophysics (gravimetry, magnetometry and resistivity), which showed the presence of five gravity anomalies and one magnetic anomaly. 6 diamond drill holes totaling 943 m have been done on this prospect; the preliminary results of the sample analysis confirm the data from the first campaign. The grades vary between 0.7 and 1.89% REE and between 0.3 and 0.6% Nb2O5 on a thickness ranging between 26 and 78m. On the other hand, exploration continued around Lamlaga by geological control of spectrometric anomalies of Ataf, Mjihida and Lourag. The preliminary result analysis showed grades reaching 0.5% Ce, 0.2% Nb, 384 ppm U and 792 ppm Mo for Lourag anomaly.

Tichka-Est (Au) In the Tichka-Est project, located 140 km south of Marrakech, the ferruginous quartz structure with arsenopyrite located just north of the village of Analghi has been sampled in detail. The results show interesting gold grades varying between 0.5 and 8 g / t Au over a thickness from 2 to 4 m, with grades of up to 13 g / t Au over a metric thickness.A second structure located 2 km SE of the first, consists mainly of quartz stringer with pyrite and arsenopyrite revealed gold grades varying between 0.4 and 5 g/t over a thickness range from 4 to 6 m for an extension of about 400 m.

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Bas Draa (Au) In the Bas Draa Cover project (provinces of Guelmim, Tan Tan and Assa Zag), the survey continued in the Cambrian and Infracambrian formations formed mainly by dolomites, conglomerates and microconglomerates. Those same facies who host the polymetallic mineralization of Azougar n’Tilili, are injected by veins of quartz with iron oxides, which have been sampled, but the grades are low (<0.1 g / t Au).

Kerdous (Au)On the Kerdous project, in the Assif M’kkorn sector located 120 km NE of Tiznit, the gold soil anomalies has been controlled by geological maping and lithogeochemical profiles that revealed two located grades on two separate profiles with values of 9 g / t Au over 3m and 44 g / t over 1.5 m.A trench has been made in the point of 9 g / t Au with 7m length, 0.6 m width and a 1m depth. A zone of greenish silicified sandstones with quartz over 60 cm thickness shows visible gold. The average grade along the trench (7m) is 17 g / t Au.

Khzama (Au, Ag)In the Khzama project, located in the Sirwa massif (Ouarzazate Province), the work done allowed identifying gold mineralization in ferruginous greywackes injected by quartz stringer. The majority of the samples showed gold grades ranging from 0.1 to 12 g / t Au. The hyperspectral campaign conducted on the sector showed a zoning of alteration minerals from porphyry type. A geophysical resistivity and induced polarization survey was also conducted in the area. The results of apparent resistivity sections identified an anomaly at a depth of about 100 m. A campaign of 4 core drilling totaling 323.40 m is achieved.

General research (Precious Metals)

As part of the general research for precious metals, soil geochemistry works have been made in the Matallah sector (southern provinces) over an area of 120 km² with sampling of 1100 samples. Meanwhile, geological control works were carried out by geological mapping at 1l20000 over an area of 120 km² and sampling of 549 samples. The results of some samples show indicial grades up to 40 ppb Pd and 30 ppb Pt.The general research works has also concerned the carbonate formations located about twenty km SE of Tiznit. The copper-silver structure of Sidi Belghzal where grades reached 9% Pb, 156 g/t Ag, 5.3% Cu and 0.6 g/t Au has been the subject of resistivity/ chargeability geophysical survey in order to explore its depth extension. The results of

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this survey have shown the lateral and depth continuity of the structure, characterized by its conductivity and by a strong negative chargeability indicating a lack of concentration of metallic mineralization. In the western High Atlas south of Amezmiz, results from controlling alluvial gold anomalies are low (<0.1 g / t).

Base Metals

Achmmach “Kasbah Resources Ltd” (Sn) The Australian company Kasbah Resources Ltd. follows on the feasibility study on the Achmmach tin project (El Hajeb Province). Since November 2007, starting date of the drilling work, 79 core drills totaling 22 470 m have been achieved.Large tin ore zones were intersected in the central part, confirming that mineralization is open at depth and laterally. A new resource estimate made in conformity with the Australian JORC standard defined 7 million tonnes of total resources (indicated + inferred) at 0.8% Sn, containing about 54000 tonnes Sn, for a cutoff grade of 0.5% Sn .

A scoping study has also been completed on the project, assuming an underground operation by the «Mechanized cut and fill» method and an annual production of 800000 tonnes of ore. On these assumptions, the project could generate gross operating margins of US $ 72 per tonne of ore and provide a net present value (NPV) of US$ 126 million and an internal rate of return (IRR) of 43.3%.

Anti-Atlas (U) A Geographic Information System (GIS) on the Anti-Atlas, dedicated to the exploration for uranium was carried out under a Memorandum of Understanding between Onhym and Areva NC. Through the compilation and processing of multi-criteria data made available by both parties (geology, geochemistry, geophysics, remote sensing, uranium occurrences), areas with high uranium potential were defined and four areas were selected: Sirwa, Ougnat, Ouarzazate and Ifni. These areas have been checked in the field by a joint team of geologists from Onhym and Areva.

Bled Jemaa (Pb, Au, Ag, Zn) At Bled Jemaa (Khenifra Province), located in central Morocco 1.5 km SW of Moulay Bou Azza, 5 diamond drill holes totaling 730.10 meters were achieved in a second campaign to increase resources of this deposit. The drill holes intersected the mineralized target level in thickness ranging from 6 to 10 m, which is manifested by zones of crushing shale with microdiorite dykes, lenses of quartz and rare sulfides. The assays show grades ranging between 0.75 and 2.7 ppm Au, 0.3% Pb, 1.4% Zn over an average thickness of 0.65m. A resource assessment, based on the results of both drilling campaigns defined 336 301 tonnes at 2.99 ppm Au, 0.82% Pb, 0.49% Zn and 21.1 ppm Ag (variant 1) or 514 708 tonnes at 2.21 ppm Au, 0.60% Pb, 0.40% Zn and 15.7 ppm Ag (variant 2).

In addition, the drill hole BJ.11, performed on a parallel structure, intersected 5.2 m of a quartz vein structure with massive sulphides

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(pyrite, galena, arsenopyrite, ..) with average grades of 2.44% Pb, 2.02% Zn, 2.64% As, 44ppm Ag, 813ppm Sn and 0.56 ppm Au. This vein was also intersected in downstream by the drill hole BJ.5 of the first phase, over 1.60 m thickness with 3.45% Pb, 3.46% Zn and 56 g / t Ag. The resource evaluation of this structure defined 167 110 tonnes at 4.09% Pb, 1.75% Zn, 84.4 ppm Ag and 0.55 ppm Au over an average thickness of 3 m.

Bou Mimoune (Sn, W) In the area of Bou Mimoune (Khénifra Province), situated in central Morocco, 20 km northwest of Aguelmous, control of Sn-W geochemical anomalies continued with geological mapping and sampling within the potential areas.The assays from samples of some tourmaline-quartz veins, located in the contact formations with granite, have only shown indicial grades.

Hauts Plateaux (Coal) In the “Hauts Plateaux” project (Jerada Province), the drill hole started from the second half of 2009, at El Mechtet basin, was stopped at the depth of 687 m (242.20 m in 2010) due to various technical problems during its execution. It reached the Triassic formations (saliferous clays and basalts) after crossing the Jurassic carbonate formations and the quaternary and tertiary cover.

The orientation sampling conducted at the Jurassic carbonate formations, with a possible interest in the Zn-Pb mineralization of Touissit type, shows grades that do not exceed 1.2% Pb and 0.11% Zn.

Zone Sud Uranium (U) The exploration for uranium in the southern provinces has continued in the sector of Bir Anzarane (Awserd Province), about 100 km northwest Awserd. The work has mainly concerned the prospect of Aghracha and helped to highlight strong radioactive anomalies (> 15000 c/s) which appear in two different paragenesis; one with uranium monazite and LREE related to carbonatite dykes, the other in calcretes with carnotite. Investigations by small pits and rock chip sampling confirmed the presence of carnotite mineralization hosted in calcrete over an area exceeding 20 km², the thickness is still undetermined. The chemical analysis of samples shows an average grade of 560 ppm U3O8, with a maximum of 0.81% U3O8. Thus, 20 short drill holes for a total length of 500 m have subsequently been implemented in this sector and will be completed in early 2011.

Moreover, strategic reconnaissance continued in the SE of Aghracha sector and helped locate radioactive pegmatites (up to 2000 c/s) around iron showings of Glyeb Ediab and Awhifrite. These radioactive pegmatites are probably the source of the secondary uranium mineralization expressed in the outcropping calcretes, some twenty km further north.

Also, in the same prospect, uranium-thorium anomalies (1500 ppm U, 6000 ppm Th), rich in LREE (LREE = 13%) and related to carbonatite dykes have been identified. An iron-copper-gold anomaly linked to a magnetic metaquartzite shows grades of

38

44% Fe2O3, 0.2% Cu and 2.22 ppm Au.

Matallah (U, Cu, Ni, Fe): In the Matallah sector, located about 250 km SSE of Dakhla (Awserd Province), the work has focused on the geological and radiometric control of 5 uranium soil geochemical anomalies. Four anomalies appear to be related to granitic intrusions, whereas the anomaly U7 having high radioactivity exceeding 10000c/s, is hosted in calcretes occupying a paleochannel. It covers about 5 km long and 200 m wide and shows an EW average orientation.

Yellow minerals of uranium (carnotite) have been identified. The early assay results of samples collected by digging small wells show grades of uranium that exceed 360 ppm.

General research (Base Metals)

The general research for base metals concerned the sectors of Bent Maamar in central Morocco for tin-tungsten mineralization and of Adrar Ouanas in Western Anti-Atlas for copper.According to the mitigated results of

exploration work carried out at the two sectors, no further action is planned for the identified showings.

Rocks and industrial minerals

Sidi Bou Othmane (Andalusite) Work on the andalusite deposit of Sidi Bou Othmane, located in central Jebilet 25 km north of Marrakech, were made through a memorandum of understanding between Onhym and the group Ghassoul Company / Damrec. Andalusite-rich schist was mapped at 1 / 25 000. Smina East and Smina West placers were mapped at 1 / 2000 and 109 samples were collected and sent to Gomel in France for technological studies and processing tests.

Bouissafen (Zircon)In the Bouissafen zircon deposit (Guelmim Province), the work done under the preliminary agreement between Onhym and the Chinese Company Jiangxi Kingan, have mainly consisted of collecting samples of zircon sand and its concentration. 5.6 tonnes of zircon concentrate was collected and sent to China for industrial testing.

Ad Doukat (fibrous clay) In the area of Ad Doukat, located in the province of Taza, 60 km south of Nador, the work done for the research of fibrous clays cons i s ted o f geo log ica l mapping a t1/25000 and sampling for Chemical analysis and X-ray identification. This work allowed locating layers of absorbent clay with a thickness of about 3 m. The assay results are pending.

39

Jbel Zerhoun (feldspar, kaolin) The work performed for the research of feldspar and kaolin in Jbel Zerhoun, in the Meknes Province, consisted of geological mapping at 1/1000 and detailed geological cross-sections at 1/5000 with sampling for Chemical analysis and X-ray identification. X-ray identification shows a more or less constant composition: kaolinite, quartz, muscovite, orthoclase, smectite and / or dolomite. Petrographic and chemical analysis are underway.

General research (rocks and industrial minerals) General research for industrial rocks and minerals has continued in the regions of Jebilet and Rehamna for electrometallurgical silica and in the region of Khenifra, at Aouinat, for diatomite.

Laboratories mining activity

Certification and accreditationMine Laboratories have performed successfully the transition of the standard ISO 9001 version 2000 to version 2008. They are certified in accordance with the provisions of the new ISO 9001 2008 version repository.

Mineralogy• Preparation of samplesDuring this year, 303 thin blades, 24 polished blades and 46 polished sections are assembled and 104 alluvial and artificial concentrates have been prepared. For a total of 477 samples.• Petrographic and mineralogical studies Studies have concerned 167 samples and

are divided into 64 petrographic and 103 mineralogical studies of alluvial and artificial concentrates.These studies concerned mainly samples from Onhym’s own projects, particularly those of rare earth elements, uranium and precious metals.

Mineral processing The number of samples prepared for chemical analysis during the year 2010

stands at 12047 .Concentration by flotation tests were performed on the Nb, U and rare earth elements ore of Twihinate. The obtained recoveries are not satisfactory. The results of a first received mineralogical study end of November shows that mineralization is too fine. The mesh liberation of pyrochlore and monazite is probably less than 20 microns. This explains the low results obtained so far.

Mineral chemistry The number of determinations carried out in the inorganic chemistry department during the year 2010 stands at 137 435. These determinations concerned 11 095 samples.

Onhym sites

Subsidiaries and Third parties

Tests

10 617

1 019

411

ONHYM site

Subsidiaries and Third Parties

10 314

781

133 975

3 460

40

41

The year 2010 was marked by the signature of :• 2 contracts of assignment;• 2 research agreements;• 3 memorandum of understanding;• 6 amendments.

Assignment contacts

Akka Gold Mining ‘AGM’Azougar N’tilili: Signature on 26/02/2010 of the contract for the assignment of the Azougar N’tilili polymetallic-gold deposit to AGM.Signature on 16/07/2010 of the act of assignment transferring the licenses covering the deposit to AGM.

ManagemOumjerane: Signature on 26/02/2010 of the contract for the assignment to Managem of the Oumjerane copper deposit.Signature on 16/07/2010 of the act of assignment transferring the licenses covering the deposit to AGM.

Research agreements

HodgesHaute Moulouya, Tamazeght, Argana corridor and Wafaga: Signature on 16/03/2010 of a research agreement on the evaluation of the uranium potential of the Haute Moulouya, Tamazeght, Argana corridor and Wafaga deposit.

Archean GroupTafrent: Signature on 21/07/2010 of a

research agreement on the evaluation and development of Tafrent gold deposit.

Memorandum of Understanding

Thani Emirates Resource HoldingGlibat Lafhouda, Twihinate, Zone Sud Uranium, Kerdous and Tichka-Est: Signature on 15/02/2010 of a MOU on the areas of Glibat Lafhouda, Twihinate (U, Fe, Nb, REE), Zone Sud Uranium ( uranium), Kerdous and Tichka-Est (Gold) for the realization of the necessary studies to enable the company to decide whether to continue its cooperation with the Onhym. This MOU was extended until 13/12/2010 by the signing of four amendments.

Garrot ChaillacZrahina: Signature on 02/12/2010 of a MOU covering the terms and conditions of a purchase option for Garrot Chaillac of the Zrahina fluorite deposit.

Archean GroupTafrent: Signature of a MOU on 18/02/2010 on the Tafrent gold deposit. This MOU has led to the signing on 21/07/2010, of the research agreement mentioned above.

Amendments

Office Mauritanien de Recherches Géologiques ‘OMRG ‘Signature on 18/03/2010 of the amendment to the Memorandum of Understanding on training and experience exchange in mineral

42

exploration. This Amendment covers activities programmed for 2010.

Mctp GroupNkob: Signature on 14/10/2010 of the amendment to the lease agreement to extend the provisions of the Convention to the exploitation of all mineral substances of the 2nd category while raising the fee to pay on these substances except talc, 2% of turnover tile mine.

Thani Emirates Resource HoldingGlibat Lafhouda, Twihinate, Zone Sud Uranium, Kerdous and Tichka-Est: Signature of four amendments extending the MOU from 15/02/2010 until 13/12/2010.

Agreements being finalized

ManagemHad Imawn: Finalization of a draft of memorandum of agreement on the terms and conditions of realization by Managem of a program of works and studies aimed at assessing the Had Imawn gold deposit, for its eventual transfer to the company.Alous sector: Finalization of a draft of agreement covering the terms and conditions of realization by Managem of a program of works and studies aimed at evaluating the potential in copper of Alous sector, for its eventual transfer to Managem or any of its subsidiaries.

NewmontAnti-Atlas: Elaboration of a draft memorandum of agreement on the terms and conditions of realization by Newmont, of geochemical

investigations aimed to evaluate the mining potential in precious and base metals of the area selected in the Anti-Atlas, for its development.

MetalexSouth Zone of the Kingdom of Morocco: Finalization of a draft research agreement for the execution of a program of works and studies directed at identification of mineral deposits (precious metals ‘’diamond and gold’’ and base metals) in the south of Morocco.

CMG-OCPCentral Jebilet: Elaboration of a draft agreement for the research of pyrrhotite in central Jebilet.

OCPEl Brouj, Essaouira, Agadir, Tadla and Aghbala: Elaboration of a draft research agreement for exploration of oil shale in El Brouj and for recognition of oil shale in the areas of Essaouira, Agadir, Tadla and Aghbala.

Terminations

Given the discouraging results of the work done by Onhym partners on the projects below, it was proceeded to the termination of the following agreements:

KasbahEl Karit: Termination on 01/06/2010 of the second memorandum of agreement on the El Karit tin deposit.

43

Thani Emirates

Archean Group

AGM

Managem

Hodges Resources

OMRG

Archean Group

Thani Emirates

Mectp Group

Garrot Chaillac

Azougar N’tilili

Oumjerane

deposit

Year 2010

Polymetallic

Gold

Polymetallic & Gold

Copper

Cooperation

Gold

Polymetallic

Talc and all

the 2nd

category

Fluorine

15/02/2010

18/02/2010

26/02/2010

26/02/2010

16/03/2010

18/03/2010

21/07/2010

14/04/2010

14/06/2010

14/08/2010

13/10/2010

14/10/2010

02/12/10

15/02/2010

08/03/2010

04/05/2010

04/05/2010

21/04/2010

25/05/2010

25/08/2010

14/04/2010

14/06/2010

14/08/2010

13/10/2010

ongoing

17/12/2010

Azougar N’tilili Polymetallic-gold deposit

Oumjerane copper deposit

Cooperation in mineral exploration training

Assignment contract

Assignment contract

Research agreement

Research agreement

Amendment to a lease contract

OdysseyAlous sector: Termination on 10/06/2010 of the lease agreement with purchase option on the Alous copper sector.

FuyuanHigh-Atlas, Middle-Atlas and Rif: Termination on 17/06/2010 of the MOU on evaluating the potential of zinc in the High-Atlas, Middle-Atlas and the Rif.

CMGBoumadine: Termination on 25/10/2010 of the memorandum of agreement for the transfer to CMG of the Boumadine polymetallic deposit.

Executive Committees

Agricola Ain Kerma and Toufrite: Meeting on 06/05/2010 of the 1st Executive Committee of the Convention on the mineralized gold area of Ain Kerma and Toufrite for starting the work planned under this agreement.

TolsaTertiary basins of Morocco: Meeting on 02/07/2010 of the 19th Executive Committee resulting from this agreement for clays (bentonites) in the Tertiary basins of Morocco.

44

During 2010, the volume of drilling activity reached the same level as in 2009. Thus the total meterage made this year is 3 975.90 ml against 3 952.65 ml achieved in 2009.

The drilling carried out for the Onhym own projects and for third parties are comparable to those achieved in 2009. Thus, the volume of drilling done for its own account is 2796.90 ml against 2851.55 ml in 2009 and the

volume done for third parties is 1179 ml against 1101.10 ml in 2009.

Realization at 31 December 2010

During 2010, mining drilling teams have operated over 8 work sites including two for third parties.

Onhym own Projects

Bled Jemaa

Drag Al Farnan 1

Drag Al Farnan 2

Lamlaga

Hauts Plateaux

Khzama

Khenifra

Awserd

Awserd

Awserd

Jerada

Ouarzazate

5

2

6

6

1

4

721.10

181.70

370.40

948.90

242.40

310.80

9.00

12.60

730.10

181.70

370.40

948.90

242.40

323.40

Third parties projects:

Drilling Salt Mohammedia

Tarfaya Petrobras

Mohammedia

Tarfaya

2

3

625.00

370.00

184.00

809.00

370.00

45

Comparison of realization / Forecast

to the annual budget estimates is as follows:

The rate of achievement of mining drilling work for own projects, lower than expected, is mainly related to the stopping of the program on coal research (the expected volume represents 39% of annual forecast), failure to complete drilling on Tichka-Est project for problems of access, and on Bou Mimoune

and Twirga Amwaga due to low results and the deferral of drilling planned on Twihinate, Bled Rmel, Ad Doukat and Jbel Zerhoun in 2011. Indeed, on these projects, additional works were necessary before proceeding to

drilling phase.In a crisis context, the campaigns of drilling in agreement projects were not made because of financial difficulties of our partners who are operators.

Own projects

In agreement

Third parties

10 210.00

2 280.00

-

2 796.90

-

1 179.00

27.39%

-

-

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Workforce, to December 31- 2010, was 899 employees of which 186 engineers and executives, 408 supervisory agents, 18 employees and 287 workers.

The ratio of advisory is 21%. The goal is to rise this ratio to 30% in the medium term.

The overall work-force of the office, after a regular decrease from 2001 to 2007, under the combined effect of the retirements and

the operation of voluntary departures, saw a kind of stagnation during three years, and resumed a decreasing trend, due to the very

Staff

Evolution of the staff number

EMPLOYEES BY CATEGORY AS AT 31 DECEMBER 2010

EVOLUTION OF THE STAFF NUMBER 2001-2010

47

limited recruitment and mass retirements.The 2010 framework law is limited to the recruitment of 8 engineers, managers and supervisory agents, to replace those who resigned. Concerning the recorded departures for this year, there are 56 of which: 42 retired - 10 resignations - 4 deaths.

Actions for consolidating organizational foundations

As far as the human resources management is concerned, Onhym continues a sustained training program of young recruits in terms of a rapid employability and integration. During this period, continuing training of all the staff covering all disciplines remains one of the pillars of the strategy of upgrading the human capital of the office. Regarding the organizational foundations, in addition to the consolidation of the principles and practices of project management methodology, adapted to the Onhym context, an upgrading project of HRIS tools is in phase of implementation and will optimize the use of resources and enhance the quality of internal services.

Social activities

Exceptional salary advances for personal convenience An amount of DH 1.64 million was awarded to 87 agents.

Housing loans A budget of 3 Million DH is allocated as loans for the housing and the fitting out.

Summering Centers195 agents have benefited from stays in Cabo Negro, Ifrane and Kettara summering centers.

Vacation camps254 children have benefited from holiday

camps at Ben Smim and Tangier.

Cultural activities for children120 children have been registered for the

year 2009-2010 to benefit from multiple activities: language courses, computer

science, chess practice, music, civil education, designing and sewing, manual work, educational excursions and associative activities. The recruitment of one temporary English teacher and one plastic artist will reinforce the activities of the center for the year 2010-2011.

Pilgrimage 15 officers have been supported by the Office to accomplish pilgrimage to the Holy places of Islam.

Medical assistance 258 medical visits and 3600 takeovers for hospitalization, biological analyses and

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x-rays have been granted. Collective medical care: 1910; Vaccine anti - influenza: 456; systematic medical care at the fields : 94; systematic medical care to children at the vacation camps: 58; blood donation: 68 donors; systematic ophthalmologic care: 108.

Training

Key indicators The training activity recorded:-The realization of 139 actions as continuous short-term training, totaling 2 010 HJF -The registration of 30 Onhym staff in English courses, under the terms of Onhym- Amideast contract. These courses have a total of 355 HJF carried out in 8 sessions. -The continuation of actions as long-term formation (6 of which 2 abroad) for 570 HJF The total is 153 actions for 2 827 HJF and a global cost of 6790 KDH

The following table presents the physical and budgetary indicators related to the training activity from 1/ 1 to 12 /31/ 2010.

Domain of Para-training- The Organization and the supervision of 360 trainees from different educational institutions, including 50% of students from institutions of higher education (schools, faculties, institutes...).- The grant of 800 scholarships to 350 children of Onhym agents, with an amount of 120 KDH.

153

751

2827

410

6790

Number of training actions

Number of participations

Number of men-days-training

Number of beneficiaries

Cost in 1000 DH

30

39

13

29

9

20

6

8

218

89

33

189

110

60

5

46

456

381

150

504

365

154

462

355

Conferences, Forums, seminars, journées…...

Exploration, Exploitation Processing & technical themes

Computing - Office Automation and IS

Personnel development management & HRM

Quality, safety & environment

Techniques of management & other topics

Long-term training

Sessions of English courses

49

The implementation of the Managerial Plan of Information System (MPIS) has continued in accordance with the updating of the planning and the re-adjustment of the priorities for the year 2010.

The flagship projects for setting up the information system recorded a notable progress and are in the final stages of their achievement. From now on, all the projects are carried out in projects mode, according to the methodology adopted by Onhym.

The achievements of each sector of activity are:

Mines and Hydrocarbons

• For the hydrocarbon GIS project, the product is about to be finalized, after different tests on various modules. For the data entry and loading, the first loadings have been carried out, after finishing the data gathering.

• Completion of the study of the convergence of the LIMS (laboratory Integrated Management System), acquired for the implementation of the IS for Mining Laboratories, with delivery of specific developments operated on the module, and the holding of training sessions of initiation for all the participants.

• Acquisition and strengthening of geo scientific tools of processing and interpretation of the data of mining and hydrocarbon domains.

• The projects of scanning and archiving mining and hydrocarbon reports have covered 95% of the mining reports and 58% of the hydrocarbon reports.

• Closing of the project of scanning the geophysical campaigns’ support documents, as well as the gathering, the transcription and the archiving of the navigation data of hydrocarbon geophysical campaigns. Therefore, 65% of the documents have been archived.

• Closing of the project of transcription of the hydrocarbon geophysical data (approximately 15 000 media). A second project, covering the transcription of about 10 000 media and the scanning of the rest of the support documents, has been attributed. Its launch is scheduled for early 2011

• Launching of the project concerning

the archiving of the documents, related to the archives of the subsidiaries and to the hydrocarbon reports.

50

• Ongoing of the project related to the entry of the technical data of mining GIS. The project is 50% complete.

Financial management

• Reception of deliverables related to the redesign of the analytical accounting and of part of the deliverables, concerning the organizational study of the computer service, as part of the assistance to master the SDSI global work.

• Ongoing preparation of parameters realized as part of the IMP acquisition project, for the implementation of the integrated management system.

Human resources

• Validation of deliverables, related to the implementation of the references list of the jobs and skills, to the optimization of the training service, to the update of the HR procedures manual and to the HR staff training plan.

• Conduct of the activity concerning the analysis of convergence and the parameters of the software package, acquired as part of the project of urbanization of human resources management system.

Common means and infrastructure

• Implementation and launching of the infrastructure reinforcing projects, as part of 2009 and 2010 budgets.

• Acquisition and set up of workstations for the geoscientists.

• Acquisition and implementation of workstation for the office automation,

• Renewal of the contract rights framework Onhym/Microsoft, for using Microsoft products for a period of three years from 01/01/2011,

• Reinforcing of the storage capacity of the technical soft wares

• Provision of assistance for the management and the administration of the infrastructure.

• Closing of the project related to : (1) the upgrading of the infrastructure network; (2) the redesign of the Web site and (3) the implementation of the project management methodology and the projects references.

• Ongoing closing of the intranet development project.

• Deployment of a solution Open Source for the mail management at some entities.