ok this section states whereby approval for AGY giving them mining concession will incorporate a new burundian company in which govt holds 15% interest. when AGY have finance for full mine development then the burundi govt will be reimbursed their previous expenditure of $US 8.3 million.
Mining Convention
In 1998, Andover Resources N.L. (“Andover”), now a wholly-owned subsidiary of the Registrant,
negotiated a Mining Convention (the “Convention”) with the Government of Burundi to explore and
develop the Musongati deposits. The Convention was ratified by the Burundian National Assembly on
March 10, 1999, giving the Registrant the exclusive right to develop the Musongati deposit. The
Convention is a comprehensive agreement that awards mineral rights to the Registrant and sets out a work
program and a detailed framework for future development and operation of a mine. During the initial 3-
year exploration period, geological and engineering studies were to be completed, leading to a full project
feasibility study. The Registrant planned a staged exploration program including scoping and prefeasibility
studies that would lead to a full feasibility study. The program included drilling, ore reserve
estimations, metallurgical testing, infrastructure studies and an environmental impact study. Upon
completion of the feasibility study and a decision to proceed, the agreement provides for the awarding of a
mining title known as a Mining Concession. The term of the Mining Concession is 25 years, renewable
twice for successive periods of 10 years. If the project proceeds, a new Burundian company in which the
Burundian government will have 15% interest, will be incorporated to develop and operate the project.
Within 30 days of receipt of project finance for full mine development, the government will be
reimbursed their previous expenditure of US$8.3 million. A 5-year tax holiday will apply to the project,
followed by a 35% income tax rate. Mine equipment, materials and fuels will be tax and duty exempt.
Force majeure and internatio nal arbitration provisions normal to the industry apply.
here is states the steps that AGY have to undertake to secure the extension of mining convention
In order for the Registrant to complete the current stage of the development of the Burundi Nickel Project
there must be a sustained return to political stability and security and it must conclude an agreement with
the government for an extension to the mining Convention following which, it must undertake various
steps, including the following:
i. secure a commitment from a financial and/or technical joint venture partner;
ii. establish the PGM potential at Musongati;
iii. complete the feasibility study;
iv. obtain any necessary approvals and permits required in order to operate the nickel processing
facility;
v. acquire the right to lands on which the nickel and cobalt processing facility and associated
infrastructure will be constructed; and
vi. create a Burundian company to be owned 85% by the Registrant and 15% by the government of
Burundi.
Once the Registrant completes these steps in its current stage of activity, and if the results of the
feasibility study are positive, the second stage in the development of the Burundi Nickel Project which the
Registrant must undertake is to obtain project financing to raise the funds necessary to be able to acquire
the land and construct the processing facilities. The third and final stage in the development of the
Burundi Nickel Project would be the construction and commissioning of the processing facilities. There
can be no assurance that any of the preceding steps will be completed to allow for the Burundi Nickel
Project to move forward.
As a result of not yet being able to conclude discussions with the government regarding an extension to
the Mining Convention, the Registrant was unable to conduct any significant activity at its Burundi
Nickel Project during 2006. Future activity depends on the Registrant obtaining an extension to the
Mining Convention and continued improvement in the security situation in Burundi.
so i am assuming that these steps COUPLED with the fact that one of the previous ann from AGY was regarding options following successful JV partner could show that AGY may have JV partnership on the table BEFORE going to the burundi govt.
i agree these are assumptions but there are some guidelines the burundi govt has implemented, which would need to be resolved to carry on development of the mine.
what i actually see is
1) AGY need a JV partner to develop mine
2) AGY have asked shareholders to grant options for successful JV partner
3) AGY would best have these steps taken care of before meeting with burundi govt to best ensure they agree to granting the mining convention
this was taken from ann AGY annual information form on 3/4/07