THE WORLD BANK

MINERAL SECTOR SUPPORT FOR ECONOMICDIVERSIFICATION PROJECT (MinDiver)

(MINISTRY OF MINES & STEEL DEVELOPMENT)

FINANCIAL STATEMENTSFOR THE YEAR ENDED 31Sr DECEMBER, 2018

AUDITED BY

OFFICE OF THE AUDITOR-GENERAL FOR THE FEDERATIONPlot 273, Samuel Ademulegun Street,

Central Business District,Abuja.

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MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER)

MINISTRY OF MINES AND STEEL DEVELOPMENT.

CONTENT PAGE(S)

CORPORATE INFORMATION__ 2-3

REPORT OF THE PROJECT MANAGEMENT TEAM 4

STATEMENT OF THE PROJECT MANAGEMENT RESPONSIBILITIES 5

REPORT OF THE AUDITORS 6

STATEMENT OF FINANCIAL POSITION 8

STATEMENT OF FINANCIAL PERFORMANCE 9

CASHFLOW STATEMENT 10

NOTES TO THE ACCOUNT 11-14

MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER)MINISTRY OF MINES AND STEEL DEVELOPMENT.

FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018

CORPORATE INFORMATION

Project Name: MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER)

Project ID: P159761

Total Project Cost: US$150 million

Commitment Amount: US$41million

Responsible Agency: MINISTRY OF MINES AND STEEL DEVELOPMENT.

ABUJA

PROJECT MANAGEMENT TEAM

1. MR. ADIE LINUS UTSU - PROJECT COORDINATOR

2. ENGR. FRANK ODOOM - DEPUTY PROJECT COORDINATOR

3. MRS FUNKE DASYLVA - PROJECT ASSISTANT

4. MR. OLUMOYEGUN AYO OLUGBENGA - PROJECT ACCOUNTANT

5. MR JOHN MAXWELL EYRE - TECHNICAL ADVISOR

6. MR ABDULLAHI K. ALSO - NATIONAL TECHNICAL ADVISOR

7. MR. ABDULLAHI ALIYU - DEPUTY DIRECTOR MMSD

8. MR. AKINTUNDE BABARINDE - PROCUREMENT SPECIALIST

9. MR. ADEDOTUN AJIBOLA - MONITORING AND EVALUATION

10. MRS. AMANDA LUMUN FEESE - POLICY AND GOVERNANCE SPECIALIST

11. CHIDI NNABUGWU DANIEL - PROJECT ADMIN OFFICER

12. KELVIN EZEWU - IT OFFICER

13. LAWAL BELLO - PROJECT INTERNAL AUDITOR

2 P

Project Beneficiaries: Ministry of Mines & Steel Development

Solid Mineral Development Fund & its Facilitators Fund

(SMDF)

Mines Operators & Investors

Mineral Producing States

Women & Civil Society

General Public

Bankers: Central Bank of NigeriaGTB UK

Auditors: Office of the Auditor-General for the Federation, Abuja

Project Development Objective:

To enhance the mining sector's contribution to the economy by strengthening keyInstitutions, improving information infrastructure and knowledge, and fostering domesticinvestment in the sector.

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MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER)

MINISTRY OF MINES AND STEEL DEVELOPMENT.

FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018

REPORT OF THE PROJECT MANAGEMENT TEAM

The Project Management Team has the pleasure of presenting this report and accounts for theyear ended 3 1st December, 2018.

Project overview

The project overview is for the FGN to embark on an economic diversification campaign with theaim of leverages on the Nation's vast national resources to diversify the economy from oil and

gas sector to achieve economic.

Functions of the Team

The team is to ensure that the project work plans are properly coordinated and implemented bythe different agencies and departments involved and coordinate strategic planning for projectimplementation

Funding of the Project

The MinDiver total project cost was USD 150m which is a loan from the International

Development Association (IDA)

Expenditure of the Project

Disbursements to the project in line with the provisions of the PAD is designed in threecomponents as follows:

Component A: Establishing a strong foundation for mining Sector Development US68, 800,000.00

Component B: Facilitating Downstream Sector Development and Enhancing CompetitivenessUS67, 600,000.00

Component C: Project Management and Coordination US9, 600,000.00

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MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MINDIVER)MINISTRY OF MINES AND STEEL DEVELOPMENT.

FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018

STATEMENT OF THE PROJECT MANAEMENT RESPONSIBILITIES

1. A dedicated Project Implementation Unit (PIU) will be established within MMSD and willbe responsible for day-to-day project implementation activities, including procurement,disbursement, financial management, and monitoring and evaluation. All PIU staff will behired following a competitive and open selection.

2. The head of the PIU is the Project Coordinator, who will report directly to the PermanentSecretary (PS) and Minister on issue related to project implementation. The PlU may alsoinclude two to three staff seconded from key departments within MMSD or other relevantagencies (i.e. Cadastre office, ASM department, NGSA, Admin). In addition to its fiduciary(Safeguards, Financing Management, and Procurement) responsibilities, the PIU's mainfunctions are to ensure that the project work plans are properly coordinated andimplemented by the different agencies and departments involved, coordinate strategicplanning for project implementation. The PlU will be strengthened by additional nationaland international experts as necessary, in particular a technical expert.

3. The PlU will also compile a bi-annual (six months) implementation progress report forsubmission to the Bank and IFRs on a quarterly basis. The detailed terms of reference forthe PIU will be further elaborated in the Project Operational Manual. The PIU also preparedthe financial Statement in line with IPSAS Accrual and made it available to the externalauditors for audit. The Financial Statement were prepared in a true and fair manner.

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MR. U.L ADIE MR OLUM6GUN AYO 0.Project Coordinator Project Accountant

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THE AUDITOR-GENERAL FOR THE FEDERATIONAudit House, Plot 273, Samuel Ademulegun Street, Central Business District,

RM.B. I28, Garki - Abuja, Nigeria.

The Project Coordinator,Mineral Sector Support for Economic Diversification (MinDiver),Federal Ministry of Mines and Steel Development,Wuse, Abuja.

AUDIT OF THE MINERAL SECTOR SUPPORT FOR ECONOMICDIVERSIFICATION (MinDiver) PERFORMED BY THE AUDITOR-GENERAL FORTHE FEDERATION

AUDITOR'S REPORT

OpinionI have audited the financial statements of Mineral Sector Support for EconomicDiversification (MinDiver), for the year ended 3 1st December, 2018. These financialstatements comprise the Statement of Financial Position, Statement of Financialperformance, Cashflow Statement and Statement of Net Assets/Equity for the yearthen ended, and a summary of significant accounting policies and other explanatoryinformation.

In my opinion, the accompanying financial statements present fairly, in all materialrespects, the financial position of the Entity as at 3 1st December, 2018, and of itsfinancial performance and its cash flows for the year then ended in accordance withInternational Public Sector Accounting Standards (IPSAS).

Basis for OpinionI conducted the audit in accordance with International Standards for Supreme AuditInstitutions (ISSAls). My responsibilities under those standards are further describedin the Auditor's Responsibilities for the Audit of the Financial Statements Section of myreport. I am independent of the entity in accordance with the Code of Ethics forSupreme Audit Institutions together with the ethical requirements that are relevant tomy audit of the financial statements and I have fulfilled my other ethical responsibilitiesin accordance with these requirements and the Code of Ethics.

I believe that the audit evidences obtained are sufficient and appropriate to provide abasis for my opinion.

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Responsibilities of Management and Those Charged with Governance for theFinancial StatementsManagement is responsible for the preparation and fair presentation of these financialstatements in accordance with IPSAS, and for such internal control as managementdetermines is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing theEntity's_ability to continue as a going concern, disclosing, as applicable, mattersrelated to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the project or to cease operations, or has norealistic alternative but to do so.

Those charged with governance are responsible for overseeing the entity's financialreporting process.

Auditor's Responsibility for the Audit of the Financial StatementsMy objectives are to obtain reasonable assurance about whether the financialstatements as a whole are free from material misstatement, whether due to fraud orerror, and to issue an auditor's report that includes my opinion. Reasonable assuranceis a high level of assurance, but is not a guarantee that an audit conducted inaccordance with (ISSAls), will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Financial Audit Methodology (FAM), which isconsistent with the Fundamental Auditing Principles (ISSAIs 100-999) of theInternational Standards for Supreme Audit Institutions, I exercise professionalscepticism throughout the audit. I also:

* Identify and assess the risks of material misstatement of the financialstatements, whether due to fraud or error, design and perform audit proceduresresponsive to those risks, and obtain audit evidence that is sufficient andappropriate to provide a basis for my opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal controls.

* Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the Entity'sinternal control.

* Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made bymanagement.

* Conclude on the appropriateness of management's use of the going concernbasis of accounting and, based on the audit evidence, obtained, whether amaterial uncertainty exists related to events or conditions that may castsignificant doubt on the Entity's ability to continue as a going concern. If Iconclude that a material uncertainty exists, I am required to draw attention inmy auditor's report to the related disclosures in the financial statements or, ifsuch disclosures are inadequate, to modify my opinion. My conclusions arebased on the audit evidence obtained up to the date of my auditor's report.However, future events or conditions may cause the Entity to cease to continueas a going concern.

* Evaluate the overall presentation, structure and content of the financialstatements, including the disclosures, and whether the financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.

I communicate with those charged with governance regarding, among other mattersthe planned scope and timing of the audit and significant audit findings, including anysignificant deficiencies in internal control that I identify during my audit.

I also provide those charged with governance with a statement that I have compliedwith relevant ethical requirements regarding independence, and to communicate withthem all relationships and other matters that may reasonably be brought to bear on myindependence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, I determinethose matters that were of most significance in the audit of the financial statements ofthe current period and are therefore the key audit matters. I describe these matters inmy auditor's report unless law or regulation precludes public disclosure about thematter or, when, in extremely rare circumstances, I determine that a matter should notbe communicated in my report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of suchcommunication.

A. M. AYINE, FCAAuditor-General for the FederationJune 17, 2019

MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MinDiver)5 FEDERAL MINISTRY OF MINES AND STEEL DEVELOPMENT

STATEMENT OF FINANCIAL POSITION AS AT 31ST DECEMBER, 2018

Notes 2018 2017ASSETS NN

CURRENT ASSETSInventories

Cash and Bank Balances 1 10,452,755,187.38 25,655,595.86Receivables 2 34,722,629.82 35,570,202.03Advances

Total current assets 10,487,477,817.20 61,225,797.89

NON-CURRENT ASSETSOffice Equipment 3 62,145,443.53 43,164,787.62Furniture/Fittings 3 42,194,744.80 26,037,165.48Motor Vehicle 3 155183,615.00 29,649,375.00TOTAL NON-CURRENT ASSETS 259,523,803.33 98,851,328.10

TOTAL ASSETS 10,747,001,620.53 160,077,125.99

NET ASSETS AND FUNDS

Payables (Unremitted deductions) 4 88,983,278.25 78,467,895.18

10,658,018,342.28 81,609,230.81

Financed By: 5Accumulated Fund-Surplus/(Deficit) (1,399,522,569.79) 1,451,648.03IDA Fund 6 11,613,095,344.80FGN Fund 300,000,000.00Exchange rate Difference 144,445,567.27 80,157,582.78TOTAL LIABIUTIES&NET ASSETS/FUNDS 10,658,018,342.28 81,609,230.81

U T LNUS ADIE OLUMOY GUNA OLUGBENGAPROJECT COORDINATOR PROJECT ACC NTANT

DATE 1 DATE o 05 2019

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MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MinDiver)

E FEDERAL MINISTRY OF MINES AND STEEL DEVELOPMENT

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31ST DECEMBER, 2018

NOTE 2018 2017N N

IncomeRevenue 0.00 1,180,616,629.65Interest Received -

Expenditure

Works (Renovation) 7 11,546,096.00 194,410,598.51Consultancy Services 8 476,241,298.60 342,784,154.60Operating cost 9 473,969,480.08 347,422,872.40Training, Study, Tours and Workshops 10 348,941,941.68 294,547,356.11Depreciation 3 88,823,753.43

1,399,522,569.79 1,179,164,981.62Surplus/Deficit from operating activities (1,399,522,569.79) 1 ,4 5 1 ,6 4 8 .0 3

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MINERAL SECTOR SUPPORT FOR ECONOMIC DIVERSIFICATION (MinDiver)

FEDERAL MINISTRY OF MINES AND STEELCASHFLOW STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018

2018 2017

Cashflows from operating activitiesInflows:

CASHFLOW FROM OPERATING ACTIVITIESSurplus/(Deficit) for the year (1,399,522,569.79) 1,451,648.03Items not Involving Movement of CashExchange rate Difference 144,445,568.01 80,157,582.78Depreciation 88,823,753.43 35,181,876.68Working Capital changesReceiva ble 847,572.21 (35,570,202.03)Payables 10,515,383.08Net Cashflow from Operating Activities -1,154,890,293.06 -35,570,202.03

Cashflow from Investing Activities 0.00 0.00Property,Plant and Equipment -249,496,228.62 98,851,328.10

Net cashflow from investing activities (249,496,228.62) 63,281,126.07

CASHFLOW FROM FINANCING ACTIVITIES

IDA Loans 11,613,095,344.80FGN 300,000,000.00

11,913,095,344.80 63,281,126.07CASH AND CASH EQUIVALENT

Opening Balance 31,784,511.00Closing Balance 10,452,755,187.38 31,784,511.00

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FINANCIAL STATEMENT FOR THE YEAR ENDED 31ST DECEMBER, 2018NOTES TO THE ACCOUNTS

1 Cash and Bank Balances NGN Exchange rate USD

IDA Designated

Account (Dollar) 10,270,443,996.53 304.9885739 33,674,848.42IDA Drawdown Account(Naira) 133,943,797.13FGN Support Fund 48,367,393.72

10,452,755,187.38

2 RENT RECEIVABLES

46,296,839.7/12*9 34,722,629.82

Property, Plant &3 Equipment Motor Vehicles Furniture & Fittings Office Equipment

25% 12.50% 33.33% TotalN N N N

29,649,375.00 26,037,165.48 43,164,787.62 98,851,328.10Bank Charges

Additions 177,262,111.62 22,185,400.00 50,048,717.00 249,496,228.62Disposal

As 31 December, 2018 206,911,486.62 48,222,565.48 93,213,504.62 348,347,556.72

Depreciation 25% 12.50% 33.33%As 1 January, 2018 9,883,125.00 3,719,595.07 21,579,156.61 35,181,876.68Charge for the Year 51,727,871.66 6,027,820.69 31,068,061.09 88,823,753.43Accumulated Dep. 61,610,996.66 9,747,415.76 52,647,217.70 124,005,630.11Net Book Value As at

31 December, 2018 155,183,614.97 42,194,744.80 62,145,443.53 259,523,803.29

4 Unremitted DeductionsWHT & VAT 88,983,278.25

88,983,278.25

5 Accumulated Fund

IDA/FGN 11,913,095,344.80Surplus /( deficit) for

the year (1,399,522,569.79)Exchange Difference 144,445,568.01

10,658,018,343.02

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Exchange6 IDA Credit/FGN Support fund NGN rate USD

Initial Deposit (IDA) 4,093,911,675.00 305.55 13,398,500.00Replenishments (IDA) 7,519,183,669.80 304.50 24,677,334.00FGN Support Fund 300,000,000.00

11,913,095,344.80 38,075,834.00

7 RENOVATION

Renovation and partioning of Offices (IDAfund) 4,296,096.00Renovation and partioning of Offices (FGNSupport fund) 7,250,000.00TOTAL 11,546,096.00

8 Consultancy Services

COMPONENT A ESTABLISHING A STRONGFOUNDATION FOR MINING SECTOR DEVT. 198,616,624.48COMPONENT B FACILITATINGDOWNSTREAM SECTOR DEVELOPMENT &ENHANCING COMPETITIVENESS 78,745,424.23COMPONENT C PROJECT MANAGEMENT &COORDINATION 198,879,249.89

TOTAL 476,241,298.60

9 Operating CostIDA 318,618,356.05FGN Support fund 155,351,124.03TOTAL 473,969,480.08

10 Training, Study, Tours and WorkshopsPromotion of Mines and Steel ActivitiesNationwide (IDA) 262,309,459.43

Training and workshop (FGN Support Fund) 86,632,482.25TOTAL 348,941,941.68

11 GOODS

Stationery and printing 15,310,946.44Office and Computer Equipment (IDA Fund) 34,670,320.00Office and Computer Equipment (FGNSupport Fund) 600,000.00Furniture and Fittings 19,853,851.56Furniture and Fittings (FGN Support Fund) 1,799,000.00Motor Vehicles 177,262,111.62TOTAL 249,496,229.62

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12 Principal Accounting Policies

The preparation and content of these financial statements are in compliance with therequirement of the International Public Sector Accounting Standard (IPSAS) AccrualBasis

a) Basis of Accounting

The financial statements have been prepared under the historical cost convention.

b) Accounting Period

The Financial Statement for the period January to December, 2018

c) Furniture & Fittings, Office Equipment and Motor VehicleThey are stated at cost less accumulated depreciation or impairment loss. The initial cost ofan asset comprises of its purchase price, any cost directly attributable to bring the asset intooperation. Within the period, there was no impairment recorded on the asset hence nobasis for revaluation of the assets.

d) Inventories:

Inventories are assets held in the form of materials or supplies to be consumed or distributed inthe rendering of services. Inventories are stated at the lower of costs and net realizable value,determined under first-in, first-out (FIFO) method. Net realizable value is determined byreference to prices existing at reporting date.

e) Depreciation

Furniture & Fittings, Office Equipment and Motor Vehicle are depreciated on straight linebasis at rates considered adequate to write off their cost over their estimated useful life.The rates applied during the year are as follows:

Furniture & Fittings - 12.50Motor Vehicles - 25.00Office Equipment - 33.33

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f) Foreign currency transaction

MinDiver financial statement is presented in Naira as the functional currency.

Transaction balances: Transactions in foreign currencies are initially recorded at the functionalcurrency spot rate at the date the transaction first qualifies for recognition. Monetary assetsand liabilities denominated in foreign currencies are retranslated at the functional currencyspot rate of exchange ruling at the reporting date. Differences arising on settlement ortranslation of monetary items are recognized in excess or deficit. Non-monetary items that aremeasured in terms of historical cost in a foreign currency are translated using the exchange rateat the dates of the initial transactions.

g) Employee Benefit

MinDiver is a project that has initial estimated life span of five years. The project staff aredrawn from the Federal Ministry of Mines, Steel and Accountant General of the Federation andPrivate as support staff. The benefit plans in terms of staff emoluments is the responsibilities ofthe project, but pensions and gratuity is not that of the respective parent ministries.

h) IDA Loans:

The loans are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. It is measured by the functional currency spot rate as at the date itis recognized.The loan is a liability to the Project and not an income and is treated as such in thepreparation of the Financial statement.

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