mining rights, acquisitions and investment opportunities in mining in nigeria

iPAD West Africa 2008, Abuja, NIGERIA

Title of presentationBenjamin Obidegwu, Partner Hermon (Barristers & Solicitors), Lagos, Nigeria

IPAD West Africa 2008, Abuja, NIGERIA

The Law supporting the acquisition of Mining Rights in Nigeria is the Nigeria Mineral and Mining Act (NMMA) 2007.

Section 5 of the act established the Mining Cadastre Office as an autonomous body to administer Mining Rights on a 1st come 1st serve basis

Mining Rights, Acquisitions and Investment Opportunities in Mining in Nigeria.


Functions of the Mining Cadastre Office

Has exclusive responsibility for the administration of Mineral Title and maintenance of Cadastral register.

Consider applications for Mineral Titles and Permits, issue, suspend and may, upon the written advice of the Minister, revoke any Mineral Title


Functions of the Mining Cadastre Office cont’d

Receive and dispose of applications for the transfer, renewal, modification,

relinquishment of Mineral Titles or extension of areas;

Maintain a chronological record of all applications for Mineral Title in:

a Priority Book which is to be specifically used to ascertain the priority and registration of applications for exclusive rights on vacant areas:


Functions of the Mining Cadastre Office cont’d

a General Registry book which is to be used for all other types of applications where registration

of the priority is not required.

undertakes such other activities necessary for the carrying out of duties and responsibilities under the law.


TYPES OF MINERALS TITLES

S.46 NMMA 2007 provides for:

Reconnaissance Permit; Exploration Licence; Small-Scale Mining Lease; Mining Lease; Quarry Lease; and Water Use Permit.


PROCEDURE FOR OBTAINING RECONAISEEANCE PERMIT

Procedure is similar with the procedure for obtaining exploration licence and same will be discussed in the next slide


Obtaining, completion and submission of application form in triplicate. Form A-2

Submission of the coordinate of the area of application not exceeding 200sqkm

Submission of certified true copy of certificate of incorporation of applicant

PROCEDURE FOR OBTAINING EXPLORATION LICENCE


PROCEDURE FOR OBTAINING EXPL0RATION LICENCE cont’d

Indication of the type of mineral to be explored

Submission of work programme

Evidence of payment of the statutory fee – N5,000 (approx $50 US.


PROCEDURE FOR OBTAINING EXPLORATION LICENCE cont’d

Assignment of Identification code Registration with time of submission

Signing of document by applicant and cadastre officer and copy is given to the applicant for record purposes

Application is granted 30 days after submission of documents if all the documents are in order


PROCEDURE FOR OBTAINING SMALL SCALE MINING LEASE

Completion and submission of application form in triplicate. Form A-3

Submission of the coordinate of the area of application not exceeding 3sqkm

Submission of prefeasibility study which shall include a general description of the proposed mining scheme


PROCEDURE FOR OBTAINING SMALL SCALE MINING LEASE

Submission of certified true copy of certificate of incorporation of applicant

Assignment of Identification code and Registration with time of submission

Signing of document by applicant and cadastre officer and copy is given to the applicant for record purposes

Application is granted 45 days after submission of documents if all the documents are in order


ANNUAL SERVICE FEE FOR MINERAL RIGHTS IN NIGERIA

• EPL Annual Service Fee = N500 per CU/year (CU =20.25Ha)

• SSML Annual service Fee = N10,000 per CU/year

• ML Annual Service Fee = N20, 000 per CU/Year

• QLS Annual Service Fee = N15,000 per CU/Year

• Water Use Permit Annual Service Fee = N5,000 per CU/year


CANCELLATION OF LICENCES

• License and right are automatically cancelled when holders refused to pay their fee obligations by due dates, after a holder has been served with notice of impending cancellation.

• Once cancelled, a holder cannot re apply for, transfer, amend etc any license or right for 5 years.


INVESTMENT OPPORTUNITIES

Proven solid minerals available in Nigeria in commercial quantity include:

a) Tantalite b) Kaolin c) Mica d) Baryte e) Coal f) Rutile g) Talc g) Bismuth h) Gypsum i) Feldspar j) Gold k) Clays l) Silver m) Limestone


Proven solid minerals available cont’d

n) Columbite o) Cassiterite p) Diatomite q) Silica Sand r) Fluorite s) Bitumen t) Lead u) Zinc v) Bentonite w) Iron Ore x) Lithum y) Magnesite z) Kyanite aa) Gemstones bb) Mangenese cc) Copper dd) Marble ee)

Phosphate


AVAILABLE INVESTMENT OPPORTUNITIES

Local sales and export of crude and processed solid minerals.

Importation and local marketing of modern mining equipment technologies and spares

Modern mineral testing and quality control equipment technologies and reagents


AVAILABLE INVESTMENT OPPORTUNITIES

Mining equipment technologies leasing services, technical consultancy

Underground mining technologies

services, provision and maintenance of automated systems for mining and construction, engineering and high speed underground exactions and development.


INCENTIVES FOR INVESTORS

S 23-32 OF NMMA -Attractive tax policy.

Deduction of 95% of qualifying capital expenditure in the year of investment in:

a) all certified exploration and development expenditure (including feasibility study and sample assay costs in the year incurred)



all infrastructure costs for mining purpose in the year incurred;

100% of the amount set aside in any particular year for environmental protection and rehabilitation costs.



Unclaimed capital cost can be increased by 5% annually until fully recovered;

Tax relief period is for three years but may be extended by Minister for another two years

Corporate Income Tax (20%-30%) All holders of a mining lease shall be liable to the payment of a corporate income tax on the net profits or taxable income earned from the mining activities.



Exemption from Custom Duties on all equipment and capital items agreed to be required for the mining operations;

Artisan miners are exempted from corporate income Tax but must pay the local taxes in the area of activities.

Full currency conversion and full Repatriation or remittances of Profits and dividends to allow investor service its (external) loans on the mining activities.



Royalty payment is affordable and is dependent on the type of mineral being mined.

Gold N1090 per ounce Copper N900 per metric ton Granite N50 per metric ton Limestone N40 per metric ton Possible capitalization of expenditure on

exploration and surveys; Provision of 100% ownership of mining

concerns.


END OF SLIDE

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