reconciliation report of payments made by the extractive

Reconciliation report ofpayments made by theextractive companies to theMalagasy State and ofrevenues collected by theMalagasy StateFiscal Year 2012

January 2015

Conducted on behalf of theEITI by :

Reconciliation reportEITIFiscal Year 2012

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Executive summaryPresentation of the assignment

Context and purpose of the reportThis document, entitled « EITI Madagascar Report – Year 2012 », is the fourth official reconciliationreport of Madagascar, commissioned by the National Committee of EITI. Its first aim is thereconciliation of cash flows between the State and the main extractive industries (mining andupstream oil companies) in Madagascar for the 2012 fiscal year. The report also reflects therequirements of the EITI standards, including:

► the governance arrangements, tax and regulatory framework applying to extractivesindustries ;

► an overview of the extractive sector in Madagascar ;► the contribution of the extractive sector in 2012 in relation to the economy and an overview

of the extractive sector's tax contribution to the economy to the total of the tax revenues ofthe country ;

► the production per product and per company including : 1/ the total production volume andits value 2/ the total volume exported and the value of the export by raw material ;

► the specific information on the companies of the EAE (Entreprises Appartenant à l'Etat) whichare State-owned companies, in particular : an explanatory of the rules and common practicesruling the financial relationship between the governement and the State-owned companies ;

► the situation regarding the procedures for granting licences in 2012 ;► information on the actual property of the extractive companies ;► information on the oil contracts ;► the summary of the donations from extractive companies to the collectivity ;► information related to the decentralised authorities (regions and municipalities) ;► the use of the funds received from the extractive companies by the municipalities the system

of which is the participatory budget.

The exchange rate used for the report is the average exchage rate of the Central Bank of Madagascarfor 2012 which is 1 USD equals to MGA 2,194.97.

Scope and approachThe mission of the Reconciler is governed by the International Stantard ISRS 4400 related to the «Engagements to perform agreed-upon procedures regarding financial information » and the standardISRS 4410 related to « Compilation Engagements ».

In accordance with the Terms of Reference, the approach consists of the following steps :Phase 1 : Preliminary analysisPhase 2 : Collection of the data to be reconciledPhase 3 : Initial reconciliationPhase 4 : Investigating discrepancies and drafting the reportPhase 5 : Final report

Materiality-defined scope


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The results of the materiality process, duly validated by the National Committee, have enable studyto define the scope presented in the table below :

CharacteristicsScope of the

report

Number ofentities per

group

Group AFilling of the reconciliation canvas required for the companies and for the State

47

Group BDisaggregated statement by company provided by the State

13

Group CAggregate statement provided by the State

66

Total 126Materiality threshold of Group A (USD) 54,876.12

Coverage rate reached by Group A 97.01%

126 entities, including companies and natural persons, were identified as having made a total ofsignificant payments to the main public authorities. These entities whose payments exceed USD5,000 are included in the scope of « EITI Madagascar Report – Year 2012 ».

They were classified into 3 groups:

• The group A consists of 47 entities, including two natural persons connected to companiesin the same group. Filling the reconciliation canvas is required of the companies of this group, aswell as of the authorities receiving payments from them. The work performed on this groupenabled us to achieve a coverage rate of 97.01% with companies having made paymentsexceeding the materiality threshold of USD 54,876.12 ;

• The group B ompte 13 entités, pour lesquelles seul l’Etat est tenu de fournir une déclarationdésagrégée par société ;

• The group C includes 66 entities, for which only the State is required to provide an aggregatestatement.

Update of the Materiality rateDuring the reconciliation engagement, we performed updates that enabled us to redefine the scopeof the materiality process.

The materiality threshold goes from USD 54,876.12 to USD 55,417.43 and the coverage rateupdated to 99.03% instead of 97.01%.


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Background information

Overview of the extractive sectorMadagascar has a great potential in terms of minerals.

The major commercial-scale projects currently ongoing or planned in the mining sector are outlinedbelow :

Company name Ongoing or planned projectsQMM Ongoing operation: ilmenite, zirsill. Region Anosy

Projet AmbatovyOngoing operation: nickel, cobalt. Mine in Moramanga, processing plant inToamasina.

Kraoma Ongoing operation : chromeWisco Research : Iron of SoalalaMadagascar ConsolidatedMining and PAM Sakoa

Pre-feasibility stage: Coal of Sakoa

Toliara SandsOperating permit since 2011, currently performing the Environmental ImpactAssessment : Ilmenite of Ranobe

MainlandCurrently performing the Environmental Impact Assessment : ilmenite on theEast Coast of Madagascar

Aziana Owns mining licences for the bauxite of Manantenina

HolcimExploitation of pozzuolana, clay and cipolin in Antsirabe and Tamatave for theproduction and sales of cement

Moreover, the malagasy mining sector is also characterized by small mines, mostly informal.According to the data of 1990, this sector employed more than 500,000 workers, which is equivalentto the formal working population registered at the CNaPS in 2012, of all sectors. According to theENEMPSI study, performed in 2012 by INSTAT1, 8% of the 2.2 millions of Individual Production Units– of which 99% are informal – pertain to the branch of the mining extractive industry.

Gold illegal exploitation and export is a striking aspect of the small mines. As a matter of fact, no goldexport was officially recorded in Madagascar until the first semester of 2012. Approximately 150kilograms of gold were legally exported ; this has doubled the royalties and taxes collected by theMining Authority as for April 2012. However, a decision of the Council of Ministers prohibited the goldexploitation after this once off experience. Inspite of the prohibition of the exploitation of thisprecious metal, the United Nations estimated the value of the export from Madagascar at USD 18millions in 2012; this is equivalent to 600 kg of gold and could be representative of MGA 790 millionsof royalties.

Concerning oil, 16 international petroleum companies signed 25 contracts with OMNIS forhydrocarbon exploration and exploitation. Madagascar Oil SA has officially announced that theproject Tsimiroro – block 3104 is a « commercial discovery ». In October 2014, the company hassubmitted his Development Plan to the Steering Committee for approval.

1Enquête Nationale sur l’Emploi et le Secteur Informel – Enempsi 2012 , November 2013 , vol. 1


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Gouvernance of the extractive sectorThe key actors in the mining governance are:► the Ministry of Mines ;► the Mining Cadastre Office (Bureau du Cadastre Minier de Madagascar, BCMM) ;► the Gold Agency (Agence de l’Or) ;► the Mine Police ;► the decentralized territorial units.

In the upstream oil sector, we have the following entities:► the Ministry of hydrocarbons ;► the OMNIS, as a technical body, in charge of the regulation in one hand ; and in the other hand

as a national company in charge of the contracts with the oil companies.

Legal and tax framework

Legal :► the common law of the mining sector is governed by theMining Code of 1999, modified in 2005

and updated in 2006 and 2007. It monitors the mining companies, except those governed by thefollowing two specific legislations : the Framework Agreement, signed by the Malagasy State,represented by OMNIS, and Qit-Fer and Titane Inc, monitoring the ilmenite project of QMM, andthe Large Scale Mining Investment Law (Loi sur les Grands Investissements Miniers, LGIM) forthe companies the investment of which exceeds 50 billions MGA. Currently, Ambatovy is the onlyproject under the LGIM. Moreover, many sectoral laws are applicable to the mining sector ;

► the upstream oil sector is ruled by a decree of 1997, and oil contracts signed between the OMNISand the companies. It is currently being reviewed.

TaxThe main specific tax regulation provided by the specific legislations, promoting the investment in themining sector are :► in the frame of the Framework Agreement :

o decrease of the Income Tax and the Investment Income Tax (Impôt sur le revenu desCapitaux Mobiliers, IRCM) ;

o decrease of the taxable base to the Tax on Transfers ;o 0% VAT ;o exemption of registration fees ;o low unique rate for the Tax on Insurance Contracts ;o decrease of the rate of the Building Property Tax (Impôt Foncier sur la Propriété

Bâtie, IFPB) ;o stability of the tax framework.

► in the frame of the LGIM :o decrease of the taxable base to the Tax on Transfers ;o the right for the refun of the VAT credit ;o decrease of the rates and an upper limit amount for the registration fees ;o decrease of the rates and an upper limit of the amount of IFPB ;o stability of the tax framework.

In the oil sector, a taxation that exempts from three other taxes is applied during the productionphase. During the exploration phase, le tax regime is that of the common law, provided by the GeneralTax Code (Code Général des Impôts, CGI). The key measures provided by the Oil Code are:


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► the Direct Tax on Hydrocarbons (Impôt Direct sur les Hydrocarbures) is set at the same rate as ofthe Income Tax (Impôt sur le Revenu, IR) of the common law, that exempts teh oil companies fromthe payment of the IR and the IRCM ;

► the exemption from the tax on dividends (Impôt sur les dividendes) ;► the taxes of common law for all the other taxes such as VAT (TVA), Wage Income Tax (IRSA) etc.The Oil Code does not provide for the stability of the tax framework.

Projects of reform of the Mining and Oil Codes were announced in 2014 by the Government. Desprojets de réforme des Codes Minier et Pétrolier ont été annoncés en 2014 par le gouvernement.

Situational analysis of the licensing proceduresIn the mining sector, the various types of licenses are delivered by the Registry Office (Bureau duCadastre Minier de Madagascar, BCMM). The licencing needs, among other things, a technical advice,the publishing of a decision and the verification of the administrative fees. The delivery of newlicences has been suspended since April 6th, 2011 and this suspension still remains to this day.In the oil sector, the "mining rights for hydrocarbons" are granted following a tender processmanaged by the OMNIS.

Licenses recordsFor the mining sector, a record is available at the Bureau du Cadastre Minier de Madagascar (BCMM).This record is available on request and gives information on the mining squares, the request date andthe licensing date, etc.Regarding the oil sector, such record is non existent. However, the website of OMNINS provides, amap that has been reproduced in this report, showing the available blocks and the ones on whichcontracts were signed with OMNIS. The names of the parties of these contracts are available.

Information on the beneficial ownershipNo record of the beneficial owners2 is available in the public domain in Madagascar. For the companiesin the group A, it has been recommended without compulsion to disclose the name of the beneficialowners. 22 companies of the 47 accepted to do so in the frame of the 2012 EITI report.

Disclosure of the oil contractsThe oil contract does not provide for procedures of conclusion and the publishing of the oil contracts.The CCP (Contrat de Partage de Production which is a Product Sharing Agreement) has aconfidentiality clause. The main information available are the presidential decree for the approval ofthe oil contract and the onshore and offshore standard contracts.An overview of the standard contracts is available on the website of OMNIS, via the followinglink:http://www.omnis.mg/en/download-contracts-models.

2 Persons controling the company as a last resort.

http://www.omnis.mg/en/download-contracts-models


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Financial relationships between the government and the State-owned companiesOnly KRAOMA was identified as a State-owned company, meaning that the State owns the majorityof the share capital (97% of the shares). KRAOMA is a public limited company ruled by the Law oncommercial companies. In the frame of EITI, the companies have the same obligations as the othercompanies in the extractive sector.

Moreover, it should be noter that following an increas of the share capital of QMM SA en 2012, theOMNIS, representing the State with a 20% share accepted that this company, member of the GroupRio Tinto, pays on behalf of OMNIS for an amount of 33,2 millions USD. Rio Tinto will get additionaldividend until full repayment of the debt.

Contribution the extrative sector to the economyThe impact of the extractive sector in the GNP is assessed by INSTAT and the General EconomyDirectorate at 0.7% in 2012. This figure is to be analysed carefully, given the fact that INSTAT reliedon the production structure of 1984, due to lack of recent investigation.

Regarding foreign direct investments, the extractive sector prevails, as this sector representsapproximtely 42% of foreign investments received by Madagascar in 2012. During the constructionphases of the projects QMM and Ambatovy, this proportion could represent more than the double ofthat which of 2012 (86% in 2008).

As for tax revenues, the chart below shows that the extractive sector represents 7% of the totalrevenue of the General Tax Directorate (Direction Générale de Impôts, DGI) in 2012.

Regarding employment, for lack of more accurate information, the schedule below shows that thecompanies of the group A, employing more than 4000 persons, represent 0,9% of the workersaffiliated to the Caisse Nationale de Prévoyance Sociale (CNaPS).

7%

93%

Contribution of the extractive sector to the tax revenues in2012

Montant des recettes fiscales reçues par la DGI en provenance des entreprises desGroupes A, B et C

Montant des recettes fiscales totales de la DGI


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Description 2012Number of workers from the group A 4,752Number of workers affiliated at the CNaPS 527,862Percentage of the workers from Group Acompared to the total of workers affiliated tothe CNAPS

0.9%

As for the exported quantity, the schedule below shows the exported quantity reported by thecompanies. In 2012, the ilmenite is the first exported mining product.

COMPANIES PRODUCTS Region oforigin

FROM COMPANIESPRODUCED

QUANTITY (intonnes)

EXPORTEDQUANTITY (in

tonnes)

VALUE OF EXPORTEDPRODUCTS (in MGA)

GALLOISEtablissement Graphite Atsinanana 3,628.90 3,459.50 8,725,622,181.00

HOLCIM.Poozzole Vakinankaratra 54,979.00 N/A N/ACipolin Vakinankaratra 164,183.00 N/A N/AClay Vakinankaratra 24,085.00 N/A N/A

MADAGASCARCHROMIUMCOMPANY LTDS.A.R.L.U.

Sample ofraw Rocks

Betsiboka

0.25

N/A N/A

Sofia-Alaotra

MangoroSample of

alteredRocks

VatovavyFitovinany 0.15

MADAGASCARMININGRESOURCES LTDS.A.R.L.

Rocks

Betsiboka

0.42 N/A N/AAlaotraMangoro

Bongolava

PROCHIMADDolomite

Amoron'iMania

2,540.00 N/A N/ACalcite 175.00 N/A N/AKaolin 230.00 N/A N/A

PROJETAMBATOVY

AmmoniumSulfate

AlaotraMangoro 15,822.00 - N/A

Cobalt Atsinanana 493.00 378.00 20,048,112,763.16Nickel 5,695.00 4,471.00 162,036,083,652.55

RED GRANITIMADAGASCARS.A.R.L.

Labradorites AtsimoAndrefana 1,563.35 2,564.50 N/D

KRAOMA S.A. Concentrate Betsiboka 40,512.00 43,000.00 16,020,407,123.65Bedrock 51,551.00 67,000.00 23,732,565,900.94

MAINLANDMINING LTDS.A.R.L.U

Ilmenite Analanjirofo 38,500.00 38,500.00 8,372,501,424.00

QITMADAGASCARMINERALS S.A.

Ilmenite Anosy 582,179.00 582,179.00 175,694,618,815.38Zircon

Concentrate Anosy 31,242.00 31,242.00 82,022,568,675.65

N/D : Not available (not provided)N/A : Not applicable to the company


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Main outcome of the reconciliation

Analysis of the results

Entities from Group A

To have the same understanding in the reading, a negative discrepancy means that the State hasreported more revenues than those paid by the companies. In the opposite, a positive discrepancy iswhen the companies reported payments are greater than those reported by the State.

The total amount of the financial flows in the report, represented by the total flow reported by the State,all groups included, amounts to MGA 307.29 billions which is USD 140.50 millions. This amountrepresents the total amount received by the Malagasy State from extrative companies in 2012.

The table below shows that the percentage of the residual discrepancy for the group A is equivalent to0,36% of the total flow received by the State :

CurrencyTotal amount paid by

the companiesTotal amount receivedby the administrations

Amount of totalresidual

discrepancy

Total residualdiscrepancy

(in thousands) (in thousands) (in thousands) (in %)MGA 304,322,320.21 305,424,639.27 -1,102,319.06

-0.36%USD 138,645.32 139,147.52 -502.20

a) Main flows

The flows totaling to the amount received by the Administrations are mainly :

► non-refunded VAT3amounting to MGA 151.76 billions equivalent to USD 69.12 millions, 98% ofwhich is from the Ambatovy Projet;

► Wage Income Tax (IRSA, Impôt sur les Revenus Salariaux) amounting to MGA 40.80 billionsequivalent to USD 18.6 millions mainly from the Ambatovy Project for 83% and QMM for 10% ;

► Unrecovered VAT amounting to MGA 19.90 billions, equivalent to USD 9.1 millions from theAmbatovy Project for 61% and from TULLOW Madagascar for 26% ;

► Mining administration fees (FAM) amounting to MGA 16.47 billions equivalent to USD 7.50millions mainly from : PAM Madagascar, Madagascar Chromium Company, Mainland et Goldsand;

► Net VAT (due) amounting to MGA 11.37 billions equivalent to USD 5.18 millions correspondingto payments made from Ambatovy Project and HOLCIM.

The other payments comprise flows that are 3% of the global amount of the payment flows received bythe State.

Note on the non-refunded VATIn a letter dated January 22nd, 2015 to the Minister attached to the Presidency in charge of the StrategicResources, the Minister of Finances and Budget has precised the status of many requests for VAT refundthat were submitted by the extractive companies at the end of the fiscal year 2012. The letter reflects

3 The non-refunded VAT corresponds to the VAT paid to suppliers, the refund of which is claimed from the State in compliance withthe law for the companies to which it applies, but the refund of which has not yet been received by the companies within the timelimit set by the law.


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the refunds approved by the Tax Directorate (Direction Générale des Impôts, DGI) mainly during the firstquarter of 2014, for a total amount of MGA 127.73 billions, equivalent to USD 58.19 millions.

b) Ecart résiduelFollowing our reconciliation work, the residual discrepancy is negative and amounts to MGA 1.11 billionsequivalent to USD 0.50 millions for the fiscal year 2012. This discrepancy represents 0.36% of thetotalrevenue received by the State the per-company breakdown of which is provided below :

Companies

Reported bythe Company

Reported bythe State

Residualdiscrepancie

s

Residualdiscrepan

ciesResidualdiscrepanciesin

% (in millionsMGA)

(in millionsMGA)

(in millionsMGA)

(inmillions

USD)001. PROJET AMBATOVY 214,180.19 214,551.22 -371.03 -0.17 33.66%002. HOLCIM 22,019.96 21,361.75 658.21 0.30 -59.71%003. QIT MADAGASCAR MINERALS S.A. 23,319.49 22,876.56 442.94 0.20 -40.18%004. GROUPE PAM 4,611.71 5,207.63 -595.92 -0.27 54.06%005. MADAGASCAR OIL 5,063.23 5,021.30 41.93 0.02 -3.80%006. MAINLAND MINING LTD S.A.R.L.U 4,322.31 4,222.43 99.88 0.05 -9.06%007. KRAOMA S.A. 6,615.55 6,738.09 -122.54 -0.06 11.12%008. GOLD SAND S.A.R.L. 1,570.73 1,520.13 50.60 0.02 -4.59%009. NOVA RESOURCES S.A.R.L.U 512.26 504.95 7.30 0.00 -0.66%010. MADAGASCAR CHROMIUM COMPANY LTDS.A.R.L.U 1,406.40 1,354.94 51.47 0.02 -4.67%

011. GALLOIS Etablissement 1,512.13 1,302.82 209.31 0.10 -18.99%012. EXXON MOBIL 1,994.59 1,994.90 -0.31 -0.00 0.03%013. MADAGASCAR INTERNATIONAL TAK MININGS.A.R.L. 880.32 859.48 20.84 0.01 -1.89%

014. TULLOW MADAGASCAR 5,782.97 5,784.32 -1.35 -0.00 0.12%015. MADAGASCAR MINING RESOURCES LTDS.A.R.L. 836.18 825.48 10.70 0.00 -0.97%

016. NIKO RESSOURCES [ENERMAD] 901.08 901.08 - - 0.00%017. OPHIR ENERGY - 761.29 -761.29 -0.35 69.06%018. MADA-AUST S.A.R.L. 752.29 771.88 -19.59 -0.01 1.78%019. TANTALUM RARE EARTH (MALAGASY)S.A.R.L.U 804.55 568.87 235.67 0.11 -21.38%

020. CALIBRA RESOURCES & ENGINEERSMADAGASCAR S.A.R.L.U 368.54 684.62 -316.08 -0.14 28.67%

021. TOTAL EXPLORATION 916.49 918.05 -1.56 -0.00 0.14%022. STERLING ENERGY LTD 421.01 419.78 1.23 0.00 -0.11%023. PETRA OF MADAGASCAR S.A.R.L. - 121.64 -121.64 -0.06 11.03%024. MINVEST MADAGASCAR S.A.U. 6.63 6.63 - - 0.00%025. URAMAD S.A 354.37 354.37 -0.00 -0.00 0.00%026. MINERAL PRODUCTS INTERNATIONALGROUP S.A.R.L. 348.39 348.26 0.13 0.00 -0.01%

027. LABRADOR MADAGASCAR 363.87 358.70 5.17 0.00 -0.47%028. AMICOH RESOURCES 334.58 334.58 - - 0.00%029. ROC OIL/SAPETRO 430.73 430.73 0.00 0.00 0.00%030. ACCRINGTON MINERALS S.A. 0.10 328.63 -328.53 -0.15 29.80%031. MADAGASCAR CONSOLIDATED MINING S.A. 394.85 404.44 -9.60 -0.00 0.87%032. TANETY LAVA S.A.R.L. 558.29 484.83 73.46 0.03 -6.66%033. ACCESS MADAGASCAR S.A.R.L. 410.83 338.98 71.85 0.03 -6.52%034. TOLIARA SANDS S.A.R.L. 371.66 328.04 43.62 0.02 -3.96%035. CLASSIC REAL STONES S.A.R.L. 81.79 202.85 -121.06 -0.06 10.98%036. PETROMAD - 197.55 -197.55 -0.09 17.92%037. EAX /CANDAX 393.69 393.69 - - 0.00%038. MADAGASCAR MINING INVESTMENTSS.A.R.L.U. 196.45 196.45 0.01 0.00 0.00%

039. UNIVERSAL EXPLORATION MADAGASCARS.A.R.L. 210.17 203.47 6.70 0.00 -0.61%

040. PROCHIMAD 137.36 137.27 0.09 0.00 -0.01%041. FARASANDS S.A.R.L. 183.92 184.65 -0.73 -0.00 0.07%


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Companies

Reported bythe Company

Reported bythe State

Residualdiscrepancie

s

Residualdiscrepan

ciesResidualdiscrepanciesin

% (in millionsMGA)

(in millionsMGA)

(in millionsMGA)

(inmillions

USD)042. INTERNATIONAL MINING CORPORATIONLTD S.A.R.L. 170.67 170.67 - - 0.00%

043. MADAGASCAR RESSOURCES S.A.R.L. 165.14 164.82 0.32 0.00 -0.03%044. VELONAODY Fabien 137.55 160.13 -22.58 -0.01 2.05%045. MADAGASCAR WISCO GUANGXIN KAM WAHRESSOURCES S.A.U. 244.31 244.31 - - 0.00%

046. ENERGIZER RESSOURCES (Minerals)S.A.R.L. 0.20 142.58 -142.39 -0.06 12.92%

047. RASAMIZAFINDROSOA Dauphin 34.80 34.80 - - 0.00%

304,322.32 305,424.64 -1,102.32 -0.50 100.00%

The canvas of OPHIR ENERGY, PETRA OF MADAGASCAR S.A.R.L, ACCRINGTON MINERALS S.A.,PETROMAD et ENERGIZER RESSOURCES (Minerals) S.A.R.L were not filled out and/or signed within thetime limit. The data from the State amounting to MGA 1 551.69 millions equivalent to USD 0.71 millionsare considered as residual discrepancies on the companies' side.

The residual discrepancy by payment type is mainly explained by the following reasons:► the customs duties and the Taxes on Petroleum Products (Taxes sur les produits pétroliers, TPP)

show a positive discrepancy of MGA 381.12 millions equivalent to USD 0.173 millions in favourof the companies. These discrepancies were mainly noted for : QMM, PAM Madagascar, HOLCIMand the Ambatovy Project.

► the net VAT (due VAT) has generated a positive discrepancy for a total of MGA 326.42 millionsequivalent to USD 0.15 millions comprising a positive discrepancy of MGA 537.14 millions forHOLCIM and a negative discrepancy of MGA 209.46 millions for OPHIR Energy.

► The administration fees paid to OMNIS generated a negative discrepancy of MGA 582.84 millionsequivalent to USD 0.27 millions mainly for OPHIR ENERGY and PETROMAD. They have notprovided the canvas during the reconciliation;

► the social contributions paid to the CNaPS correspond to a negative discrepancy of MGA 746.83millions equivalent to USD 0.34 millions which could not be reconciled with the data from PAMSAKOA ;

► the Mining Administration Fees (Frais d’Administration Minière, FAM) show a negativediscrepancy in favour of the State for MGA 837.46 millions equivalent to USD 0.38 millionsexplained by :

o the payments traced at the BCMM, mainly by the companies that did not provide thecanvas;

o the fact that the data at the BCMM is not up to date regarding the new owner of themining license in the case of transfer between companies, the payments are recorded inthe name of the former owner for the license that was transferred.

c) Breakdown of flows per public entityThe breakdown of flows per public entity is presented in the table below and shows that the DGI hasreceived the most significant flows from the extractive companies for 2012, which is 80% of them.


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Entity namePayment flows received by the Public Entities

(in thousands MGA) (in thousands USD) (In %)Direction Générale des Impôts (DGI) 244,352,002.67 111,323.62 80%BCMM 17,027,948.78 7,757.71 6%OMNIS 7,839,628.52 3,571.63 3%Customs 7,720,497.55 3,517.36 3%CNAPS 5,617,876.49 2,559.43 2%Other entities 22,866,685.26 10,417.77 7%Total 305,424,639.27 139,147.52 100%

Entities from Group B

Entity type

Total amountreceived by the

Statein thousands MGA


Statein thousands USD

Mining entity 1,060,798.75 483.29Legal persons 1,033,193.95 470.71Natural persons 27,604.80 12.58

Total 1,060,798.75 483.29

As presented in the table below, the amount of the flows reported unilaterally and disaggregated by theState amounts to MGA 1.07 billions, equivalent to USD 0.48 millions for the group B.

Entities from Group C

Entity type


Statein thousands MGA


Statein thousands USD

Mining entity 1,897,594.95 864.52Legal persons 1,512,389.81 689.03Natural persons 385,205.14 175.49

Oil company 18,591.30 8.47Total 1,916,186.25 872.99

As presented in the table below, the amount of the flows reported unilaterally and aggregated by theState amounts to MGA 1.92 billions, equivalent to USD 0.87 millions for the group C.


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Other results

Donations4

15 companies from the Group A made donations during 2012. The total amount of these donations isMGA 1.42 billions equivalent to USD 0.65 millions, 47% of which is cash and 53% in kind. These voluntarycontributions were mainly made for building local public infastructures in favour of the community, suchas: Primary Public Schools (Ecole Primaire Publique, EPP), Secondary Schools, market places, roads,well drilling, etc. and also donations in form of education and sport support.

Mining companiesAmount of voluntary contributions Total

Cash donations (inMGA)

Donations in kind (inMGA) (in MGA) (in USD)

QIT MADAGASCAR MINERALS S.A. 291,473,156.73 176,591,264.75 468,064,421.48 213,244.11MADAGASCAR OIL 31,236,000.00 270,187,179.13 301,423,179.13 137,324.51PROJET AMBATOVY - 241,154,259.22 241,154,259.22 109,866.77KRAOMA S.A. 144,747,000.00 - 144,747,000.00 65,944.86MADAGASCAR CONSOLIDATEDMINING S.A. 89,159,390.00 15,810,000.00 104,969,390.00 47,822.70

TOTAL EXPLORATION 80,684,383.18 - 80,684,383.18 36,758.76HOLCIM - 39,711,414.20 39,711,414.20 18,092.01TOLIARA SANDS S.A.R.L. 8,268,117.20 12,093,650.00 20,361,767.20 9,276.56MAINLAND MINING LTD S.A.R.L.U 11,330,000.00 - 11,330,000.00 5,161.80MADA-AUST S.A.R.L. 6,235,710.00 - 6,235,710.00 2,840.91MADAGASCAR WISCO GUANGXINKAM WAH RESSOURCES S.A.U. 1,000,000.00 643,000.00 1,643,000.00 748.53

SAPETRO 320,000.00 - 320,000.00 145.79MADAGASCAR CHROMIUMCOMPANY LTD S.A.R.L.U - 264,000.00 264,000.00 120.27

TANTALUM RARE EARTH(MALAGASY) S.A.R.L.U 120,000.00 - 120,000.00 54.67

PROCHIMAD 31,000.00 - 31,000.00 14.12Total 664,604,757.11 756,454,767.30 1,421,059,524.41 647,416.37

Social expenditures5

5 companies from the Group A made social expenditures payments during fiscal year 2012. These socialexpenditures amount to MGA 4.49 billions equivalent to USD 2.05 millions, 80% of which is in cash and20% is in kind.The social expenditures mainly comprise integrated development projects (Projets de DéveloppementIntégrés, PDI) of QMM, the rehabilitation of the National Road RN5 by Mainland et various constructionworks.

4Definition of a donation according to the EITI standards: «Any cash or in-kind transfer from the mining and oil companies.The following shall not be considered as donations :- Sponsorings that are within the communication activities ;- Environmental and social requirements defined in the clear specifications by a government entity ;- Port, road, railway… infrastructures for the mining or oil operation. Even though the local population benefit from theseinfrastructures, they shall not in any case be considered as donations.By contrast, routing infrastructures made by mining companies for strictly public usage as well as social infrastructuresconstructions, free of charge, are considered as donations.»5« Significant social expenditures from companies are ones that are made compulsory by the law or by a contract signed with thegovernment. »


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Mining companies

Amount of voluntary contributions TotalSocial expenditures in

cash(in MGA)

Social expendituresin kind (in MGA) (in MGA) (in USD)

QIT MADAGASCAR MINERALS 3,390,923,060.49 - 3,390,923,060.49 1,544,860.78MAINLAND MINING LTD 1,816,000.00 739,772,217.00 741,588,217.00 337,858.02EAX 158,782,336.82 - 158,782,336.82 72,339.18PROJET AMBATOVY - 160,313,112.85 160,313,112.85 73,036.58SAPETRO 30,299,825.00 7,554,212.00 37,854,037.00 17,245.81

Total 3,581,821,222.31 907,639,541.85 4,489,460,764.16 2,045,340.37

Decentralised authorities

Flows received by the decentralised authorities (Regions and Municipalities) are mainly the Miningrebates and the Mining Administration Fees (FAM).

• Mining Rebates: GALLOIS, HOLCIM, MAINLAND MINING and QMM paid a total of MGA 3.52billions for the rebates related to 2012. The benéficiairies are repectively the regionsVakinankaratra, Anosy, Toamasina and Analanjirofo, as well as the municipalities located in theseregions.

• Mining Administration Fees: the mining companies in the group A paid to the municipalities andthe regions a total amount of MGA 15.38 billions.

Moreover, the schedules showing the repayment and non-repayment of the FAM by the BCMM to themunicipalities and the regions for all the mining operators in 2012 are presented in the tables below.

Administration Fees of 2012 for the group A relevant to the fiscal year repaid by theBCMM to the municipalities and the regions

Companies

Amounts receivedby the

municipalities

Amounts receivedby the regions

Total amount received

(In thousands MGA) (In thousands MGA) (In thousands MGA)(In thousands

USD)ACCESS MADAGASCAR 7,459.28 4,351.25 11,810.53 5.38ACCRINGTON MINERALS 39,423.74 22,997.18 62,420.93 28.44AMBATOVY MINERALS 12,944.99 7,551.25 20,496.24 9.34CALIBRA RESOURCES & ENGINEERSMADAGASCAR

31,307.95 18,262.97 49,570.92 22.58

CLASSIC REAL STONES 6,739.58 3,931.42 10,671.01 4.86DYNATEC MADAGASCAR 22,964.58 13,396.01 36,360.59 16.57ENERGIZER RESSOURCES (Minerals) 10,955.14 6,390.50 17,345.63 7.90GALLOIS Etablissement 11,243.10 6,558.48 17,801.58 8.11GOLD SAND 113,038.72 65,939.25 178,977.97 81.54GRANITEX 2,048.41 1,194.91 3,243.32 1.48INTERNATIONAL MININGCORPORATION LTD

13,270.75 7,741.27 21,012.02 9.57

KRAOMA 27,049.68 15,778.98 42,828.66 19.51LABRADOR MADAGASCAR 3,270.72 1,907.92 5,178.64 2.36MADA-AUST 69,545.11 40,567.98 110,113.09 50.17MADAGASCAR CHROMIUM COMPANYLTD

119,600.35 69,766.87 189,367.22 86.27

MADAGASCAR CONSOLIDATED MINING 28,480.55 16,613.65 45,094.20 20.54MADAGASCAR INTERNATIONAL TAKMINING

80,570.23 46,999.30 127,569.53 58.12


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Companies

Amounts receivedby the

municipalities

Amounts receivedby the regions

Total amount received

(In thousands MGA) (In thousands MGA) (In thousands MGA)(In thousands

USD)MADAGASCAR MINING INVESTMENTS 15,020.46 8,761.94 23,782.40 10.83MADAGASCAR MINING RESOURCES LTD 64,357.52 37,541.89 101,899.41 46.42MADAGASCAR RESSOURCES 19,618.56 11,444.16 31,062.72 14.15MAINLAND MINING LTD 164,813.80 96,141.38 260,955.18 118.89MINERAL PRODUCTS INTERNATIONALGROUP

31,615.16 18,442.18 50,057.34 22.81

MINVEST MADAGASCAR 37,961.71 22,144.33 60,106.04 27.38NOVA RESOURCES 122,319.42 71,353.00 193,672.42 88.23PAM Atomique 77,442.96 45,175.06 122,618.02 55.86PAM Madagascar 332,989.86 194,244.09 527,233.95 240.20PAM SAKOA COAL 8,828.93 5,150.21 13,979.14 6.37PETRA OF MADAGASCAR 20,818.94 12,144.38 32,963.33 15.02PROCHIMAD MINES & CARRIERES"P.M.C"

449.69 262.32 712.01 0.32

PROCHIMAD 1,328.41 774.91 2,103.32 0.96RED GRANITI MADAGASCAR -245.76 -143.36 -389.12 -0.18TANETY LAVA 12,002.98 7,001.74 19,004.71 8.66TANTALUM RARE EARTH (MALAGASY) 14,489.12 8,451.99 22,941.11 10.45TOLIARA SANDS 7,018.85 4,094.33 11,113.18 5.06UNIVERSAL EXPLORATIONMADAGASCAR

14,768.57 8,615.00 23,383.57 10.65

URAMAD 34,305.70 20,011.66 54,317.36 24.75VELONAODY Fabien 15,968.71 9,315.08 25,283.79 11.52TOTAL 1,595,786.50 930,875.46 2,526,661.95 1,151.11

(*)The nominative list of the beneficiary municipalities is presented in the Annexes.

Statement of the Administration fees of 2012 the repayment of which by the BCMMto the municipalities is pending

Region / municipality

Total FAM notpaid to the

municipalities

Total FAMnot paid to

themunicipalities

in MGA in USDEN MER 14,326,444.44 6,526.94ALAOTRA MANGORO 11,669,808.00 5,316.61AMORON'I MANIA 18,097,056.00 8,244.79ANALAMANGA 20,448.00 9.32ANALANJIROFO 14,508,924.00 6,610.08ANDROY 4,675,039.38 2,129.89ANOSY 38,111,814.76 17,363.25ATSINANANA 43,846,308.00 19,975.81BETSIBOKA 26,446,728.00 12,048.79BOENI 22,123,392.00 10,079.13BOENY 5,758,668.00 2,623.57

Region / municipality

Total FAM notpaid to the

municipalities

Total FAMnot paid to

themunicipalities

in MGA in USDBONGOLAVA 786,864.00 358.49DIANA 4,557,948.00 2,076.54IHOROMBE 4,979,088.00 2,268.41ITASY 1,852,416.00 843.94MELAKY 29,574,546.55 13,473.78MENABE 50,935,606.91 23,205.61SAVA 67,786,944.00 30,882.86SOFIA 15,006,276.00 6,836.67VAKINANKARATRA 26,855,208.00 12,234.89VATOVAVY FITOVINANY 5,252,052.00 2,392.77TOTAL 407,171,580.04 185,502.12

The Minings Administration fees yet to be repaid are mainly for the share of the municipalities thatdo not have a dedicated bank account the details of which are given to the BCMM and are pending.


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Participatory budget

In compliance with the provisions mentionned in the sections 3.7 and 3.8 of the EITI standards 2013,the use of the mining revenues in the municipalities and the regions, having applied the participatorybudget, has been highlighted in the frame of the reconciliation.

The participatory budget is a process and an instrument giving the population the possibility todetermine the use of the public resources (part or overall investement budget for the localcommunity).

The table below presents the total resources and the use for each local community, the details ofwhich are categorised as investment and operating resources, but also in investment and operatinguse. The amounts which are not provided are the uses non-reported by the municipalities.

Miningcompany

Municipality / RégionResources Uses

in MGA in USD in MGA in USD

AMBATOVYMunicipality of Ambohibary –Moramanga

11,000,000.00 5,011.46 11,000,000.00 5,011,46

HOLCIM Municipality of Ibity 62,525,896.00 28,485.99 Nonfourni Non fourniHOLCIM Tritriva 23,180,072.00 10,560.54 Non fourni Non fourniHOLCIM Andranomanelatra 13,101,534.38 5,968.89 Non fourni Non fourni

QMMRural municipality ofAmpasy Nahampoana

949,314,068.00 432,495.24 949,314,068.00 432,495,24

QMMMunicipalityofMandromodromotra

581,285,055.00 264,825.97 430,745,739.30 196,242,20

KRAOMAMunicipality ofAntsiafabositra

16,796,044.80 7,652.06 16,558,841.56 7,543,99

KRAOMA Municipality of Antanimbary 6,252,686.40 2,848.64 5,449,080.40 2,482,53

KRAOMAMunicipality of MaevatananaII

13,742,176.80 6,260.76 13,792,500.00 6,283,68

Total 1,677,197,533,38 764,109.55 1,426,860,229.26 650,059.10

Recommendations

Follow-up of previous recommendations

RECEPIENT RECOMMENDATIONS

EITI

- Reinforce the sensitization of the mining and oil companies, and of thepublic Administration, to make sure of the integration of the EITI processand to ease data collection.

- Exclude dissolved companies from the reconciliation of the year.

Companies andPublicadministrations ingeneral

- Implement a system that will enable to distinguish the revenues bysector for the same company, at the Tax Administration and thecompany.

- Design a procedure for the follow-up of the regimes applicable to themining companies.

Mining and upstreamoil companies

- Make the datas in the canvas reliable:following the guide for the filling,support from a competent person during the preparation workshop,making available all supporting document and presence of a dedicatedcontact person during the reviews within the companies, etc.


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RECEPIENT RECOMMENDATIONS- Certify the canvas by an independant auditor.

Treasury, Ministry ofDecentralisation,Regions andMunicipalities

- Implement within the Treasurya system for identifying the payingcompanies when redistributing the payments to the decentralisedauthorities.

- Provide the decentralized authorities with a system that will enable themto follow-up on the revenues.

CustomsDirectorateand SRI6

- Update the database of the information on the companies and themapping of the old and new NIFs7.

BCMM8, Ministry ofDecentralisation,Regions andMunicipalities

- Within BCMM, inform the decentralised authorities on the details of therepaid FAM9and link the payment to the real owners after the disposal orthe transfer of the mining titles.

- Within the decentralized authorities, perform a follow-up of thepayments from the mining companies in the sector and create a bankaccount.

Tax administration- Provide exhaustive information related to the payments of taxes, duties

and taxes by the companies such as : paying company, period, principaltax amount, fines and penalties, etc.

EDBM10 and theMinistry of theInterior

- Centralise the database for the delivery of visa and resident card at theEDBM or the Ministry of the Interior with all the information about theinquirer or the company for which they work so as to ease the trackingof these information.

New recommendations following the reconciliation

RECEPIENT RECOMMENDATIONS

The Administrationand its divisions

- Implement a centralised and updated database of all the existingcompanies and an archiving electronic system of the data.

Trésor, Ministry ofthe Decentralisation,Regions andMunicipalities

- Provide in each BTR11all information related to the receipt of payments.

Customs Directorate- Set up a database that will enable to provide the coordinates of the

Customs broker and the final beneficiary.INSTAT, Ministry ofEconomy, Ministry incharge of theextractive sector

- Perform an annual study of the actual contribution of the mining andupstream oil sectors after an update of the structure.

6SRI : Service de Renseignements des Immatriculations (Registration Information Service)7 NIF : Numéro d’Identification Fiscale (Tax Identification Number)8 BCMM : Bureau des Cadastres Miniers de Madagascar (Mining Registry Office)9 FAM : Frais d’Administration Minière (Mining Administration Fees)10 EDBM : Economic Development Board of Madagascar11 BTR : Bons de Transfert de Recettes (Revenues Transfer Coupons)


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Sommaire

Presentation of the assignment ................................................................................................. 1

Context and purpose of the report.............................................................................. 1Scope and approach ................................................................................................... 1Materiality-defined scope ........................................................................................... 1Update of the Materiality rate .................................................................................... 2

Background information ............................................................................................................ 3

Overview of the extractive sector .............................................................................. 3Gouvernance of the extractive sector ......................................................................... 4Legal and tax framework ............................................................................................ 4Situational analysis of the licensing procedures .......................................................... 5Licenses records ........................................................................................................ 5Information on the beneficial ownership ..................................................................... 5Disclosure of the oil contracts .................................................................................... 5Financial relationships between the government and the State-owned companies ....... 6Contribution the extrative sector to the economy ....................................................... 6

Main outcome of the reconciliation ............................................................................................. 8

Analysis of the results ............................................................................................... 8Entities from Group A ........................................................................................................ 8

Entities from Group B ...................................................................................................... 11

Entities from Group C ...................................................................................................... 11

Other results .......................................................................................................................... 12

Donations ................................................................................................................12Social expenditures ..................................................................................................12Decentralised authorities .........................................................................................13Participatory budget ................................................................................................15Recommendations ...................................................................................................15

1 Presentation of the assignment ..................................................................................... 26

1.1 Context and purpose of the report .................................................................261.1.1 EITI worldwide and in Madagascar ......................................................................... 26

1.1.2 Purpose of the EITI report ..................................................................................... 28

1.2 Context of work .............................................................................................291.2.1 Scope ................................................................................................................. 29

1.2.2 Reconciler’s procedures ....................................................................................... 29

1.2.3 Methodological approach ...................................................................................... 31

1.2.4 Limitations of the works ....................................................................................... 32

1.2.5 Coverage ............................................................................................................ 32

1.2.6 Fiscal year ........................................................................................................... 32

1.2.7 Type of flow ........................................................................................................ 33

1.2.8 Entity type .......................................................................................................... 33


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1.2.9 Thresholds .......................................................................................................... 33

1.2.10 Update of the coverage rate .............................................................................. 34

1.2.11 Discrepancies and adjustments .......................................................................... 35

1.2.12 Exchange rate .................................................................................................. 36

1.2.13 Companies included in the reconciliation ............................................................ 36

2 Background information ............................................................................................... 39

2.1 Overview on the formal exctractive sector .....................................................392.1.1 The mining sector ................................................................................................ 39

2.1.2 Upstream oil sector .............................................................................................. 40

2.2 Overview of the small mines and informal mining activities .............................422.2.1 Definition and weight of the small-scale mining ....................................................... 42

2.2.2 Results of the studies on the informal extractive sector ........................................... 42

2.2.3 Gold’s case .......................................................................................................... 43

2.3 Significant events of 2012 .............................................................................462.4 Governance of the sector: key actors .............................................................46

2.4.1 The mining sector ................................................................................................ 46

2.4.2 The upstream oil sector ........................................................................................ 46

2.5 Legal framework ............................................................................................472.5.1 The minig sector .................................................................................................. 47

2.5.2 The upstream oil sector ........................................................................................ 47

2.6 Tax framework ...............................................................................................482.6.1 Comparative table ................................................................................................ 48

2.6.2 Specificities for State taxes and local taxes ............................................................ 49

2.7 Royalties and rebates ....................................................................................502.8 Administration and training fees ....................................................................502.9 Current state of the licensing procedures .......................................................52

2.9.1 Mining sector ....................................................................................................... 52

2.9.2 Secteur pétrolier amont........................................................................................ 54

2.10 Registry of licences and permits ....................................................................552.10.1 Reiterating the standard ................................................................................... 55

2.10.2 Situation in Madagascar .................................................................................... 55

2.11 Information on the beneficial ownership of the extractive companies ..............552.11.1 Reiterating the standard ................................................................................... 55


2.12 Disclosure of oil contracts ..............................................................................592.12.1 Reiterating the standard ................................................................................... 59


2.13 Financial relationships between the government and State-owned companies .602.13.1 Reiterating the standard ................................................................................... 60


2.14 Contribution of the extractive sector to the economy .....................................612.14.1 Contribution to the GDP .................................................................................... 61


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2.14.2 Contribution to foreign direct investments .......................................................... 62

2.14.3 Contribution of the total tax revenues ................................................................ 62

2.14.4 Contribution in terms of employment ................................................................. 64

2.15 Exported quantities .......................................................................................643 Results of the reconciliation .......................................................................................... 66

3.1 Total flows and total residual discrepancy ......................................................663.2 Entities in the Group A ...................................................................................66

3.2.1 Schedule of the payment flows per company, with amounts paid, amounts received anddiscrepancies .................................................................................................................. 66

3.2.2 Comments ........................................................................................................... 89

3.3 Entités du Groupe B .......................................................................................953.3.1 Tableau des flux de paiements par société, au niveau des entités publiques en milliersMGA 95

3.3.2 Commentaires ..................................................................................................... 96

3.4 Entités du Groupe C .......................................................................................973.4.1 Tableau des flux de paiements par société, au niveau des entités publiques en milliersMGA 97

3.4.2 Commentaires ..................................................................................................... 98

4 Autres résultats ........................................................................................................... 99

4.1 Résultats relatifs aux dons .............................................................................994.1.1 QIT MADAGASCAR MINERALS S.A. ........................................................................ 99

4.1.2 MADAGASCAR OIL ............................................................................................. 100

4.1.3 PROJET AMBATOVY .......................................................................................... 102

4.1.4 KRAOMA ........................................................................................................... 103

4.1.5 MADAGASCAR CONSOLIDATED MINING S.A. ........................................................ 103

4.1.6 TOTAL EXPLORATION ........................................................................................ 103

4.1.7 HOLCIM............................................................................................................. 104

4.1.8 TOLIARA SANDS S.A.R.L. ................................................................................... 104

4.1.9 MAINLAND ........................................................................................................ 104

4.1.10 MADA-AUST SARL .......................................................................................... 105

4.1.11 MADAGASCAR WISCO GUANGXIN KAM WAH RESSOURCES S.A.U. ..................... 105

4.1.12 SAPETRO....................................................................................................... 105

4.1.13 MADAGASCAR CHROMIUM COMPANY .............................................................. 105

4.1.14 TANTALUM RARE EARTH ................................................................................ 106

4.1.15 PROCHIMAD .................................................................................................. 107

4.2 Résultats relatifs aux dépenses sociales .......................................................1074.2.1 QMM ................................................................................................................. 107

4.2.2 MAINLAND MINING LTD S.A.R.L.U ....................................................................... 108

4.2.3 EAX .................................................................................................................. 108

4.2.4 PROJET AMBATOVY .......................................................................................... 108

4.2.5 SAPETRO .......................................................................................................... 110

4.3 Résultats au niveau des collectivités décentralisées .....................................1114.3.1 Ristournes minières ........................................................................................... 111


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4.3.2 Frais d’administration minière ............................................................................. 112

4.3.3 Impôts fonciers sur les propriétés bâties (IFPB) .................................................... 116

4.3.4 Property tax on land (IFT) ................................................................................... 116

4.3.5 Utilisation des fonds reçus par les collectivités appliquant le budget participatif ...... 117

5 Observations et recommandations .............................................................................. 122

5.1 Suivi des recommandations antérieures .......................................................1225.1.1 Recommandations pour l’EITI .............................................................................. 122

5.1.2 Recommandations générales (sociétés et administrations) .................................... 123

5.1.3 Recommandations pour les sociétés minières et pétrolières amont concernées par laréconciliation ................................................................................................................ 124

5.1.4 Recommandations pour les administrations et ses démembrements ....................... 126

5.1.5 Recommandations pour la Direction des Douanes et du Service de Renseignement desImmatriculations (SRI) ................................................................................................... 128

5.1.6 Recommandations pour le BCMM, Ministère de la Décentralisation, Régions et Communes129

5.1.7 Recommandations pour l’Administration fiscale .................................................... 130

5.1.8 Recommandations pour l’EDBM et le Ministère de l’Intérieur .................................. 131

5.2 Recommandations générales suite à la réconciliation ...................................1315.2.1 Recommandations pour l’administration et ses démembrements ............................ 131

5.2.2 Pour le Trésor, le Ministère de la Décentralisation, les Régions et les Communes ..... 132

5.2.3 Pour la Direction des douanes ............................................................................. 132

5.2.4 Pour l’INSTAT, le Ministère en charge de l’Economie, le Ministère en charge du secteurextractif ....................................................................................................................... 133

6 Annexes .................................................................................................................... 134


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Reconciliation report EITIFiscal Year 2012

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Listof abbreviationsACRONYM MEANING

Public entities:ANDEA Autorité Nationale de l’Eau et de l’AssainissementADEMA Aéroport de MadagascarBCMM Bureau du Cadastre Minier de MadagascarCnaps Caisse Nationale pour la Prévoyance SocialeDGE Direction des Grandes EntreprisesDGI Direction Générale des ImpôtsDIR Direction Interrégionale des MinesDRI Direction Régionale des ImpôtsEDBM Economic Development Board of MadagascarEITI Extractive Industries Transparency InitiativeENEMPSI Enquête Nationale sur l’Emploi et le Secteur InformelITIE Initiative de la Transparence des Industries ExtractivesOMERT Office Malagasy d'Etudes et de Régulation des TélécommunicationsOMNIS Office des Mines Nationales et des Industries StratégiquesONE Office National pour l’EnvironnementOSIE Organisation Sanitaire Inter-EntreprisesSONAPAR Société Nationale de ParticipationSPAT Société du port à gestion autonome de ToamasinaSRE Service Régional des EntreprisesSMMC Société de Manutention de Marchandises Conventionnelles

Mining companies :AMSA Ambatovy Minerals Société AnonymeCOMINA Compagnie Minière d’AndriamenaDMSA Dynatec Madagascar Société AnonymeKRAOMA Kraomita MalagasyMOIL Madagascar OilMCM Madagascar Consolidated MiningQMM Qit Madagascar MineralsWISCO WUHAN Iron and Steel Co GuanxinPAM Pan African Mining

Oil companies :EMEPML ExxonMobil Exploration and Production Madagascar LimitedEMEPMML ExxonMobil Exploration and Production Madagascar Majunga LimitedEMEPNML ExxonMobil Exploration and Production Northern Madagascar LimitedSAPETRO South Atlantic Petroleum BP SASEAX East African Exploration Madagascar

Taxe :AERP Autorisation Exclusive de Réservation de PérimètreDA Droit d'acciseDD Droit de douanesFAM Frais d'administration minièreHTVA Hors TVAIBS Impôts sur les bénéfices des sociétésIFPB Impôts fonciers sur la propriété bâtie


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ACRONYM MEANINGIFT Impôts fonciers sur les terrainsIR Impôts sur les revenusIRCM Impôts sur les revenus des capitaux mobiliersIRSA Impôts sur les revenus salariaux et assimilésIPVI Impôts sur les plus-values immobilièresREU Redevance sur les eaux uséesTAFB Taxe annexe à l'IFPBTFT Taxe forfaitaire sur le transfertTP Taxe professionnelleTPF Taxe de publicité foncièreTVA Taxe sur la valeur ajoutéeTVST Taxe sur les véhicules de tourisme des entreprisesENR Entreprises non résidentes

Texts and Laws:LGIM Loi sur les Grands Investissements Miniers

Others:AC Avis de créditAD Avis de débitAMIT Association Médicale Inter-Entreprises de TananariveBRGM Bureau de Recherches Géologiques et MinièresCAD Commissionnaire agrée en douaneCNUCED Conférence des Nations Unies pour le Commerce et le Développement

Corp. CorporationCPP Contrat de Partage de productionCTD Collectivités territoriales décentraliséesDAU Déclaration administrative uniqueEY Ernst & YoungISRS International Standards on Related ServicesKg KilogrammeKm KilomètreLtd LimitedMECIE Mise en Compatibilité des Investissements avec l’EnvironnementMGA Malagasy AriaryNIF Numéro d'identité fiscaleOMSI Organisation Médico-Sociale Inter-professionnelleOV Ordre de VirementPDI Projet de Développement IntégréPV Procès-VerbalS.A Société AnonymeSARLU Société A Responsabilité Limitée UnipersonnelleSMIMO Service Médical Inter-Entreprises MoramangaSE Secrétaire ExécutifUSD Dollar des Etats-Unis d'Amérique


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1 Presentation of the assignment

1.1 Context and purposeof the report

1.1.1 EITIworldwideand in Madagascar

1.1.1.1 EITIworldwide

EITI, or Extractive Industries TransparencyInitiative,has been officially founded in London in 2003.This initiative was the result of a coalition of governments, companies, civil society organisations,investors and international organizations. It establishes a standard enabling the companies of theextractive industry to publish the payments they made to the State, and for the governments todisclose their revenues. It aims to reinforce the governance by improving the transparency and theresponsibility in the extractive sector. It is financed by a multi-donor fund in place since 2004, towhich many governments (British, German, Dutch, Norwegian, and French) contribute and it ismanaged by the World Bank.The diversity of this coalition is represented in the Board of Directors. The latter is assisted by aGeneral Secretary who materialises his political decisions and coordinates the international effortsaiming to implement EITI.For a country to take part in the EITI, two steps are required : first, acquiring the status of candidatecountry, and the recognition to compliance to EITI standards. These steps are both under membershipconditions and principles that are to be respected by each country wishing to take part in the initiative.The integration within EITI generally brings many advantages to the member country : governancecapacity development, improvement of the international credibility and the investment climate, theevidence of the will to fight againts corruption and the commitment to good governance.

EITI International has adopted and published a new standard, edition 2013, at the International EITIConference held in Sydney in May 2013. Applying this norm in its entirety is compulsory starting from2014.

1.1.1.2 EITI in Madagascar

Madagascar expressed the desire to take part in the EITI process by meeting the membershipconditions and principles. For this purpose, Madagascar was accepted as an EITI candidate country in2008. A first communication and dissemination of information on the payments was made. AMultiparty National Group was established, consisting of members from all extractive regions(Regional Committees), and the Central Region.The group and the board are tripartite, withrepresentatives of the civil society, the Administration and the extractive companies. The NationalCommittee represents the Board of Directors of the Multiparty National Group.

In October 2011, the Board of Directors suspended Madagascar from his status of candidate country,due to a lack of international recognition of the government. The suspension prevailed until thenational situation is resolved. However, the Council trusts the Multiparty Group to go on implementingEITI and produce a reconciliation report according to the new standards. To this end, the NationalCommittee of EITI Madagascar ordered a reconciliation report of the financial flows between the Stateand the key taxpayers in the extractive industry for the fiscal year 2012. The new report, preparedby Ernst & Young in 2012, was presented to the Board of Directors, who after seeing all these efforts,decided to extend the suspension of Madagascar instead of excluding the country. This extensionenabled Madagascar to be among the countries implementing the EITI.


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The Board of Directors of EITI decided, on June 6th 2014, to lift the suspension of Madagascar and toreestablish his status of Candidate country. The Council noted the commitment of the new Malagasygovernment to implement the EITI standard. They were glad that the required structures for anefficient implementation of the EITI, was in place and could be sustained. The reintegration ofMadagascar as a Candidate country is under some conditions. In compliance with the EITI standard,Madagascar must publish each year EITI reports compliant to the requirements of EITI so as to keepits status of Candidate country.

The National Committee has decided to order 2 reports for the reconciliation of 2014 for the fiscalyear 2012 and 2013, prepared by Ernst & Young.For the current report, the new requirements EITI 201312 in force the recapitulation of which ispresented below, are applicable:

N° Requirements Application1 EITI requires an efficient follow-up by the multiparty group (National Committee EITI) Compulsory

2EITI requires a regular and punctual publishing of the data: the EITI reports must includethe data that are not of the two previous fiscal years.

Compulsory

3

EITI requires that the EITI reports also include contextual information about the extractiveindustries :- summary of the legal and tax regime Compulsory- an overview of the extractive industry in the country Compulsory- the contribution of the extractive industries in the economy Compulsory- the information on production in quantity and in value Compulsory- the form of participation of the State in the extractive industries Compulsory- the allocation of the revenue from the extractive industries Compulsory- the management of the revenue from the extractive sector Compulsory- the licences and permits registry Compulsory- the licensing procedure for the mining licences Compulsory- the beneficial owners of the extractive companies Suggested- the oil contracts Suggested

4

EITI requires the publishing of a reconciliation report including entirely and exhaustively allthe significant payments received by the State from the extractive sector :- complete definition of the taxes, and other revenues that should be included in the reportdéfinition

Compulsory

- providing infrastructures or a barter trade arrangement (if applicable) Compulsory- the social expenditures (according to the social commitment required from the company) Compulsory- transfer of funds between State-owned company and other State departments Compulsory- subnational payments and transfers Compulsory

5EITI requires a methodology and a process of reliable statement and verification, in linewith the international standards when the independent reconciler prepares the report.

Compulsory

6EITI requires that the EITI reports be reader friendly and promoted and contribute to publicdiscussion.

Compulsory

7EITI requires of the Multiparty Groupe (National Committee) to adopt measures in order toact in line with the lessons learnt and assess the results and the impact of theimplementation of EITI.

Compulsory

12Source : eiti-madagascar.org


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1.1.2 Purpose of the EITI report

The Terms of Reference describe the purpose of the assignment as performing reconciliation of thefinancial flows between the State and the main extractive industries (mining and upstream oilcompanies) in Madagascar for the fiscal year 2012.

Specific services required from the Reconcileras per the terms of reference

► Verify if the assumptions of the materiality process of 2011 arecompatibel to the realities of 2012 ;

► Collect information from the selected companies from the process as wellas from the related administration offices and compile them;

► Perform the reconciliation of the figures reported by the extractiveindustries and those from the State ;

► Analyse the differences ;► Compare the information related to the transactions in the Regions and

the Municipalities beneficiaries and those reported by the taxpayingcompanies, and explain the differences ;

► Provide in the report the current state of the licensing procedures of2012 ;

► Give the current state of the mining and upstream oilcontracts and/orlicences available in the public field, in Madagascar ;

► Assess the contrubition of the extractive sector in 2012 compared to theoverall economy for the same period by referring to the GDP. Thiscomparison will also be tax-wise.

► Give an overview of the contribution of the extractive sector to the overalltax revenues of the country ;

► Disclose the exported production per product and for each companyduring 2012 and also per region if applicable;

► Provide specific information about the State-owned companies or thosewhere the State owns shares, as well as information related to theownership of the extractive companies ;

► Provide a summary of the donations to public entities from the miningand oil companies ;

► Organise workshops for consulting the National Committee ;► Publish and disseminate the report and the information;► Prepare the extracts of the reports for local, regional, national and

international publishing;► Translate the EITI report into English ;


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1.2 Context of work

1.2.1 Scope

1.2.1.1 Verification standards

1.2.1.1.1 Standards related to the Reconciler’s work

We conducted our works based on International Standard on Related Services: ISRS 4400 related tothe « Engagements to perform agreed-upon procedures regarding financial information » and thestandard ISRS 4410 related to « Compilation Engagements ».In accordance with these standards, ourintervention does not constitute an audit, or a limited review of revenues from the mining andupstream oil sectors. Auditing and certifying the transmitted data do not fall within the scope of ourwork.Likewise, our intervention was not designed to detect errors, fraud or irregularities. As theauditor provides only a report on the findings based on the agreed upon procedures, he does notexpress any level of insurance. The receipeients of the report will themselves assess the proceduresand the findings of the auditor, and draw their own conclusions from the auditor’s work.

1.2.1.1.2 Standards related to the extractive companies’canvas

Collecting a certification of the auditors of the companies involved in the reconciliation is included inthe scope of our work.This document should enable to complete the work on the basis of reliabledata.However, without the certification of canvas, reliability procedures were undertaken by theReconciler, including the control of supporting documents.Regarding the reconciliation for the fiscal year 2012, 20 companies out of 47 receiving thereconciliation have provided the certification from their auditors and 17 are not audited. Furtherdetails are provided in the annexes.The companies are bound to submit their Financial Statements to the Tax Administration. However,the auditor’s certification on the accounts is not compulsory for certain types of companies asprovided by the current legislation in Madagascar.

1.2.1.1.3 Standards related to the administration’s canvas

Regarding the certification of public accounts, a study by Ernst & Young in 2012 showed that aprocess for independent certification of the administration's canvas according to internationalstandards was yet to be designed. Reliability procedures were undertaken by the Reconciler, includingthe control of supporting documents.

1.2.2 Reconciler’s procedures

It is the Reconciler’s responsibility to:► Collect and compile the data receivedfrom mining and upstream oil companies, and

administrations from the canvas and/or statements that were given to him ;► Check the consistency of the financial flowscompleted by these entities with the adopted

repository form, “the canvas” of reporting ;► Check the reliability of data contained in these canvas and/or statements with the analysis of

the procedures of their registration and the supporting documents (returns, payment vouchers,etc.).

► Perform a reconciliation of the compiled data ;


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► Perform an analysis of information discrepancies, provide an explanation on the discrepanciesand if applicable, make appropriate recommendations based on weaknesses noted and inreference to good practices in other countries to address them.

It should be noted that our data collection works are not limited to the receipt of the canvas andits annexes.To overcome the lack of certification of accounts of some companies and theadministration, work has been carried out to improve the reliability of the data collected:

• An understanding of the system of financial flows:for each financial flows (taxes, duties, fees,…)listed on the canvas, we reconstructed the flow of funds paid by the company, through thereceiving entities (primary bank, treasury…) to the final beneficiary for the monitoring oftraceability of the revenues collected by the State. A diagram showing the most significantfinancial flows is provided in the annexes ;

• A verification of supporting documents : concerning the numerical data on the canvas and itsannexes, we have tested their reliability (accuracy of amounts, correct allocation period, non-existence of duplicates or omission, etc.) by reviewing a sample or all of the supportingdocuments return, receipt of payment or voucher, bank debit notice, etc.) for the significantpayment flows of each reconciled company following the verification threshold predefined at thepoint 1.2.9.1 ;

• An analysis of the recording procedures of financial flows in the canvas and its annexes: wereviewed the correct classification of financial flows by their nature while ensuring the objectiveof comparability and consolidation of the data from all concerned entities (company, State andits divisions). An arithmetic verification of the total amount put in the canvas compared to thedetails in the canvas was made as well as a control of the consistency of the information recordedin the annexes with the supporting documents ;

• Payments confirmation from entities receiving the funds: payments made to public entitiessuch as Large Companies Directorate, Customs, Directorate of Mines, Regions and somemunicipalities, etc. are directly paid to the Treasury’s account that is their manager. Each entityhas proof of payment from the extractive companies (transfer order, copies of checks, etc.) butonly the Treasury can attest to the effectiveness of the payment. We have collected thereferences of the Revenues Transfer Voucher (Bordereau de Transfert des Recettes, BTR) andthe credit notice from each entity and then returned them to the Treasury for paymentconfirmation. The funds of entities such as the BCMM, OMNIS, ANDEA, ONE, and OMERT are heldat primary banks.

• Data reconciliation and analysis of the discrepancies: the data collected from the extractivecompanies and the State have been reconciled and showed discrepancies. Each stakeholder hasbeen asked to explain these discrepancies. Corrections to these discrepancies were made,justified by supporting documents and accepted by both parties.The remaining discrepancies arerelated to information that was not tracked by the other stakeholder, or of which we did not getany explanation.

In particular, it is asked of the auditor to take into account, in addition to financial flows, all donationsand social expenditures from extractive companies for the State and its subdivisions in one hand, tohighlight financial information on the regions and municipalities in the other hand.We must submit, in a consolidated then disaggregated form by company, for each type of consideredEITI income, the reported income flows paid by mining companies, as well as the reported incomeflows received by the State.


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Details of the methodological approach to execute the engagement are presented in the followingsection « Methodological approach» of the Reconciler.

1.2.3 Methodological approachIn accordance with the terms of reference, the methodological approach for the reconciliationengagement is presented in the diagram below:

Phase 1:Preliminary analysis1.1 Preliminary review of the contextual information collection strategy

1.2 Determination of the payment field and elaboration of the reconciliation canvas1.3 Materiality process: determination of the companies selected for the reconciliation

1.4 Analysis on the credibility of the data1.5 Validation of the National Committee

Deliverables:Reporting canvas (tax and non-tax part) Initial report

Phase 2:Collection of the data to be reconciled2.1 Kickoff meeting woth the stakeholders for launching the engagement

2.2 Data collection from the extractive companies2.3 Data collection from the State

Phase 3:Initial reconciliation3.1 Reconciliation of the data received

3.2 Collection and analysis of the data regarding the contextual information

Deliverable:Report for the Initial reconciliation

Phase 4: Investigating discrepancies and drafting the report4.1 Collection of the explanations of the lack of information4.2 Evaluation and follow-up of previous recommendations

4.3 Situation of the licensing process4.4 Preparation of the draft report

4.5 Presentation of the draft report to the National Committee

Deliverable: Draft report

Phase 5: Final Report5.1 Organisation of a consulatation workshop

5.2 Publishing of the report and information dissemination5.3 Elaboration of excerpts of the report for local, regional, and national publishing

5.4 Approval and translation of the report and excerpts from the report

Deliverables: Final report and excerpts from the report


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Comments regarding the methodological approach:

• Details of the above methodological approach are presented in the annexes.

• Regarding the materiality process :In accordance with the Terms of reference, the definition of the scope of reconciliation consisteof a prior exhaustive inventory of the extractive companies having paid above 5,000 USD to theBCMM and the OMNIS durinf the fiscal year 2012. From a list of extractive companies in thescope of reconciliation, the data collection has been performed per entity according to the TaxIndentification Number (NIF) and the Statistical Number (STAT) of each entity. Note that the NIFand the STAT enable the public entities such as the General Directorate ofTaxes and the Customsto identify a tax payer at their level and also the related payments.

1.2.4 Limitations of the works

Our data collection was limited due to blockages we met, which were:

• The Tax Identification Numbers (NIF) of 9 natural persons and 3 legal persons were not foundneither with the Tax Administration nor with other data sources from the State (Researche andInvestigation Service of the Tax General Directorate, Customs Directorate…) during themateriality process ;

• The data loss related to the revenues collected by the Interregion Directorate of Mines inToamasina from January to March 2012.Thus, the payments made by the companies during thisperiod are not available and became a discrepancy during the reconciliation ;

• The unavailability of some data whether from the companies or from the State (supportingdocuments of returns, of payments,…) ;

• The absence of a digitalised database, for some Directorates and divisions of the State, hindersthem from ensuring that the completeness of the data received on the payments made byextractive industries;

• the existence of defaulting companies, that did not receive the reconciliation, which has resultedto unreconciled discrepancies ;

• the reshuffle of the staff within the Administration following the change of the governement hasresulted to blockages and delays in the data collection.

Moreover, our intervention consists only of the collection to the reconciliation of the data andanalysisof the discrepancies. We are not supposed to express our opinion on the quality of theinformation andof estimations, or to perform investigations in case of fraud suspicion.

However, inspite of these limitations, we estimate having performed satisfactory and correctreconciliation of the data.

1.2.5 Coverage

In accordance with the Terms of reference, the reconciliation will cover the significant payments flowfrom the extractive industries in the mining and upstream oil sectors.

1.2.6 Fiscal year


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The fiscal year concerned by the reconciliation is 2012. Thus, it is about the payments made by theextractive industries to the State related to the fiscal year 2012, regardless of when they were paid.We note the following exceptions:

· for the payment of penalties and tax ajustments, the date of payment will be considered overthe fiscal years to which they are related to;

· payments made outsited the the date of the reconciliation engagement but related to thefiscal year 2013 are not taken into account in this report.

1.2.7 Type of flowThe flows considered by the National Committee that fall within the scope of the reconciliation areclassified in five categories, as cited below:

► State taxes► Segment revenues► Other payments► Withholding taxes► volontary contributions in kind and in cash

The details per flow type are presented in the annexes.

1.2.8 Entity type

In accordance with the Terms of reference, the entities concerned by the EITI report are the extractiveindustries in the mining and upstream oil sector.However, the significant payment flows recorded in the name of the individuals, but the mininglicenses of whom are actually the property of companies included in the reconciliation and thepayment of which are the responsibility of the companies are taken into account.At the same time, the natural persons source of the significant payment flow are included in thecoverage threshold for the reconciliation.

1.2.9 Thresholds

1.2.9.1 Verification threshold of the financial flows

We have performed the verification of the reliability of the data and information in the reportingcanvas on the basis of, at least, the following audit thresholds:► Materiality threshold set at 1% of the total value of the annual amounts paid for each mining or

upstream oil company;► Tolerable error threshold of 50% of the Materiality threshold;► Nominal error threshold of 5% of the Materiality threshold;► The materiality is a limit beyond which potential errors, inaccuracies or omissions are considered

problematic. It is the amount from which an informed reader's judgement on the statements ofrevenue could be changed.

The tolerable error threshold is the maximum error in the selected population that the auditor cantolerate while concluding that the sampling results have achieved the aim of the audit.Therefore, the amounts of taxes, duties, fees and royalties exceeding 50% of the materiality thresholdwere subject to verification with data and supporting documents (payment declarations and receipts)up to at least 50% of the supporting documents.


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1.2.9.2 Materiality threshold and coverage rate validated by the National Committee

On the basis of the materiality process performed by EY, the National Committee decided to keep theextent of the EITI report of 2012 to 47 companies including two natural persons having madesignificant payments.In conclusion, considering 45 companies and two natural persons from the group A, the coveragerate of the EITI report of 2012 reaches 97.01% of the revenues of the State for 2012 and themateriality threshold is 54,876.12.

As a reminder, the companies included in the scope of the reconciliation are classified into 3categories, which are:

• Group A: the companies of which the accumulated payments to the administrations reach 97%of the significant flows received by the State. The companies included in this group weresubject to the reconciliation, and the data have been collected from the companies andcompared with the data from the administration via the canvas.

• Group B: the companies of which the cumulated payments to the administration is between97% and 98% of the significant flows received by the State. Each of the companies includedin this group did not have to fill out the reconciliation canvas, but was subject to a one-sideddisaggregated statement by the administrations that received the payments from them.

• Group C: the companies of which the accumulated payments to the administrations is between98% and 100% of the significant flows received by the State. The companies included in thisgroup did not have to fill out the reconciliation canvas, but were subject to a one-sidedagregated statement by the State.

Regarding this matter, EITI rules provide that, in case the Multiparty Groupe agrees to define specificmateriality thresholds, it has to specify the options that were considered and the justification of theestablishement of the threshold to a certain level.

Hereafter the table approved by the National Committee:

Characteristics Coverage rate to 97%Fiscal Year 2012

Numberof entitiesper group

Group A 47Group B 13Group C 66

Total 126Materiality threshold (USD) 54,876.12

Coverage rate 97.01%

The chart of methodology that led to the assumptions validated by the National Committee ispresented in the annexes.

1.2.10 Update of the coverage rate

While collecting the data from the companies, we noted that the data from the adminsitration duringthe materiality process should be completed by the non recurring and specific payments such as : theTax on International Financial Transfer (Taxe Forfaitaire sur les Transferts, TFT), fines and penalties,non-refunded VAT, documents registration fees, etc.


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However, 2 companies did not reach this materiality threshold after the reconciliation works and thedata analysis. Indeed, some of the flows initially reported by the State were not related to them orwere not related to the fiscal year 2012. It was the case of MINVEST MADAGASCAR S.A.Uand of thenatural person RASAMIZAFINDROSOA Dauphinwhose payment flows were below the materialitythreshold of USD 54,876.12 which amounted respectively toMGA 6,630,740 (equivalent to USD3,020.87) and MGA 34,787,840 (equivalent to USD 15,848.90).However, we have respected theclassification ot the companies as per the materiality process and the two companies were kept in thegroup A.

42 companies out of the 47 included in the scope of the materiality filled out their EITI statementcanvas.5 companies did not receive the reconciliation or did not fill out and/or signed the canvaswithin the time limit:

017. OPHIR ENERGY023. PETRA OF MADAGASCAR S.A.R.L.030. ACCRINGTON MINERALS S.A.036. PETROMAD046. ENERGIZER RESSOURCES (Minerals) S.A.R.L.ENERGIZER

The materiality threshold goes from USD 54,876.12 to USD 55,417.43 and the coverage rateupdated to 99.03% instead of 97.01% as per the table below.

Characteristics Scope of the report

Fiscal Year 2012 Initial materiality threshold Updated materialitythreshold

Number of entities pergroup

Group A 47 47Group B 13 13Group C 66 66

Total 126 126Materiality threshold (USD) 54,876.12 55,417.43Taux de couverture atteint 97.01% 99.03%

1.2.11 Discrepancies and adjustments

In general, the following types of discrepancies are met during the reconciliation:► Resolved discrepancies related to the reconciled discrepancies and the supporting documents

of which were submitted to us after the signature of the canvas ;► The adjustments made on the taxes that were not reconciled because the value was low and/or

the reconciliable data were not available to this day. These are the statements withoutcounterpart of the health organisations (OSIE, OSTIE, AMIT, FUNHECE, OMSI, OMIT, SMIMO), cartax, technical visits, non-refunded VAT, etc. Note that we have checked, in accordance with thepredefined audit threshold, the reliability of the data and related documents with the companies ;

► Residual discrepancies or remaining discrepancies after the correction of the canvas of the Stateand the ones of the companies for the amounts of the resolved discrepancies and adjustmentsof the statements of the statements without counterpart.

The comments on the discrepancies are related to the residual discrepancies in this document.It is necessary to note that there are three kinds of residual discrepancie which are:► Explained discrepancy, but the other party cannot bring corrections to this day (case des FAM

on the sold licenses recorded at BCMM to the name of the seller) ;


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► Discrepancy not acknowledged by the other party ;► Discrepancy unexplained at the moment of the report.These different types of discrepancies are commented in the report when appropriate.

1.2.12 Exchange rate

The exchange rate used for the report is the average rate from the Central Bank of Madagascar for2012 where 1 USD is equivalent to MGA 2,194.97.

1.2.13 Companies included in the reconciliation

The outcome of the materiality process was the identification of 126 entities included in the 2012EITI report. These are the entities the significant payments of which exceeded or equaled USD5,000and are classified in groups according to their size as presented below:

1.2.13.1 Entities in the Group A

The 47 entities in this group were subject to the reconciliation and data were collected from them,which were compared to the data from the administrations using the canvas. The list is presentedbelow:

Companies in the Group A001. PROJET AMBATOVY002. HOLCIM003. QIT MADAGASCAR MINERALS S.A.004. GROUPE PAM005. MADAGASCAR OIL006. MAINLAND MINING LTD S.A.R.L.U007. KRAOMA S.A.008. GOLD SAND S.A.R.L.009. NOVA RESOURCES S.A.R.L.U010. MADAGASCAR CHROMIUM COMPANY LTDS.A.R.L.U011. GALLOIS Etablissement012. EXXON MOBIL013. MADAGASCAR INTERNATIONAL TAK MININGS.A.R.L.014. TULLOW MCAR015. MADAGASCAR MINING RESOURCES LTD S.A.R.L.016. NIKO RESSOURCES [ENERMAD]017. OPHIR ENERGY018. MADA-AUST S.A.R.L.019. TANTALUM RARE EARTH (MALAGASY) S.A.R.L.U020. CALIBRA RESOURCES & ENGINEERSMADAGASCARS.A.R.L.U021. TOTAL EXPLORATION022. STERLING ENERGY LTD023. PETRA OF MADAGASCAR S.A.R.L.024. MINVEST MADAGASCAR S.A.U.

Companies in the Group A025. URAMAD S.A026. MINERAL PRODUCTS INTERNATIONAL GROUPS.A.R.L.027. LABRADOR MADAGASCAR -028. AMICOH RESOURCES029. SAPETRO030. ACCRINGTON MINERALS S.A.031. MADAGASCAR CONSOLIDATED MINING S.A.032. TANETY LAVA S.A.R.L.033. ACCESS MADAGASCAR S.A.R.L.034. TOLIARA SANDS S.A.R.L.035. CLASSIC REAL STONES S.A.R.L.036. PETROMAD037. EAX038. MADAGASCAR MINING INVESTMENTS S.A.R.L.U.039. UNIVERSAL EXPLORATION MADAGASCARS.A.R.L.040. PROCHIMAD041. FARASANDS S.A.R.L.042. INTERNATIONAL MINING CORPORATION LTDS.A.R.L.043. MADAGASCAR RESSOURCES S.A.R.L.044. VELONAODY Fabien045. MADAGASCAR WISCO GUANGXIN KAM WAHRESSOURCES S.A.U.046. ENERGIZER RESSOURCES (Minerals) S.A.R.L.047. RASAMIZAFINDROSOA Dauphin

Note:


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► On the side of the companies, 5 have not filled out the canvas on time and did not take part inthe report, namely:OPHIR ENERGY, PETRA OF MADAGASCAR, ACCRINGTON MINERALS,ENERGIZER RESSOURCES et PETROMAD.However, they were kept in the scope of the report.Consequently, the data from the State related to these companies show a discrepancy.

► On the side of the administrations :· We did not obtain the information related to the Port fees, municipal and regional royalties

and the maritime and inland waterways royalties from MICTSL ;· At the date of this report, the exhaustive information on the non-refunded VAT for some

companies were yet to be obtained from the Tax administration.

The data which we did not get from the administration were included in the report as a unilateralstatement of the extractive entities and generated discrepancies.

The summary table for the canvas and the certificate from the auditor’s of the companies in the groupA and the administration is presented in the Annexes.

1.2.13.2 Entities in the Group B

The entities included in this group do not have to fill out the reconciliation canvas, but are subject toa disagregated unilateral statement from the administration to whom they paid taxes. 13 entities arein the group B. They are presented in the following table:

Companies in the Group B

048. AVANA RESOURCES S.A.R.L.U.

049. INTERNATIONAL MINING RESEARCH GROUPS.A.R.L.U050. RECHERCHES MINIERES DE MADAGASCARS.A.R.L.

051. HOLA FIRM S.A.R.L.

052. IRON ORE CORPORATION OF MADAGASCARS.A.R.L.

053. NAN TIN POLYCHROME S.A.

054. COAL MINING MADAGASCAR S.A.R.L.

Companies in the Group B

055. INDUSTRIE MINIERE SINO-AFRIQUE S.A.R.L.

056. MAZOTO MINERALS S.A.R.L.

057. INTERNATIONAL MINING DEVELOPMENT LTDS.A.R.L.

058. RAMAROSON Anjoanina Harivahy

059. VATOSOA MINING S.A.

060. CAPRICORN ENTERPRISES MADAGASCAR (C.E.M)S.A.R.L.

1.2.13.3 Entities in the Group C

The entities in this group do not have to fill out the reconciliation canvas, but are subject to anaggregated unilateral statement from the State. 66 entities are in the group C. They are presented inthe following table :

Companies in the Group C

061. MADAGASCAR EXPLORER S.A.R.L.

062. ZIRCON MINING CORPORATION-ZMC S.A.R.L.

063. RAHERIMANDIMBY Rija Tantely Andriantiana

064. MADA GONDWANA S.A.R.L.

065. VARUN INTERNATIONAL S.A.R.L.

066. LE QUARTZ -

067. OSHO MADAGASCAR S.A.R.L.

068. CHRYSOCOLLE -


069. SIAM S.A.R.L.

070. COPAX RESOURCES S.A.R.L.

071. ANDRIANANTOANDRO Faly

072. TANETY ZINA S.A.R.L.

073. BLUE CRYSTAL S.A.R.L.

074. MINERAL RESOURCES of MADAGASCAR S.A.R.L.

075. OSHO Ventures Madagascar S.A.R.L.

076. VS-GEMS S.A.R.L.


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077. SP GROUP S.A.R.L.

078. RANDRIANTAVY TOJOHERY Romaric

079. SUCCESSION RASAMOEL Jean Baptiste -

080. SOMIDA S.A.

081. MILLENIUM STAR S.A.R.L.

082. ZOLOST MINERALS S.A.R.L.

083. SOCIETE MALGACHE DU GRAPHITE S.A.

084. BRIGHT STAR EXPLORATION S.A

085. SHANDI S.A.R.L.

086. SINBAD RESOURCES S.A.R.L.

087. RED ISLAND RESOURCES S.A.R.L.U.

088. MADAGASCAR ENERGY CORPORATION S.A.R.L.

089. BEBY RASOLOMALALA

090. GENYUS S.A.R.L.U.

091. DARAINA EXPLORATION SARLU

092. ETABLISSEMENT RENE IZOUARD

093. LEMURIA S.A.R.L.

094. SMGI - SOCIETE MINIERE DE LA GRANDE ILE

095. M.B GOLD COMPANY S.A.R.L.U.

096. ORIENTAL MINING S.A.R.L.U

097. LILIANE Marie

098. RABETRENA Roland

099. BLUE SUN MINING COMPANY S.A

100. SOGEMINE S.A.R.L.

101. ANDRIANJAFY RENGER Thierry DINO

102. SOCIETE LATVIA MADAGASCAR S.A.R.L.

103. GROUPE KALETA -

104. LA TERRASSE S.A.R.L.

105. FINEBRIDGE (AFRICA) MINING LTD S.A.R.L.

106. RABEZORO Anjarisitraka

107. WORLD GEMS COMPANY S.A.R.L.

108. RATSIMBAZAFY Jean Kinne

109. MADCORE MADAGASCAR S.A.R.L.U.

110. GRANITEX S.A.R.L.

111. RAKOTOMAROLAHY Jean Pierre

112. VARUN PETROLEUM

113. MANAMPISOA RALANDIRANTO Marie Bernadette

114. RAZANAKONDEVO Benjamin

115. PARADISE GEMS S.A.R.L.

116. ARSENE LOUYS & Cie Sa

117. RAKOTONDRAINIBE Andrianjaka Christian

118. UNIVERSAL GEMS S.A.R.L.

119. MEDARD Sarah

120. RAHANTAMANANA Leontine Eléonore

121. RANAIVOARIMANANA Ionjaniaina


122. ALPHA Madagascar S.A.R.L.

123. MINERAL DEVELOPMENT MADAGASCAR

124. TAFITA MINING S.A.R.L.

125. MADAGASCAR INVESTIMENT COMPANY S.A.R.L.

126. RAMANANTSOA Jean Christian


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2 Background information

2.1 Overview on the formal exctractive sector

2.1.1 The mining sector

2.1.1.1 Potentials in Madagascar

Madagascar has great potentials in terms of minerals. We can find the following :• Non-metal minerals : these are those used for construction purposes and for public works, such as

sands, clay, marble (Ambatofinandrahana), etc. ;• Industrial use minerals : these are the minerals such as iron (Soalala, Bekisopa, Fasintsara), cobalt,

nickel (Ambatovy, Valozoro), chromium (Ranomena, Andriamena, Mahakiry), le manganese, levanadium, le titanium, le zirconium, ilmenite (Fort-Dauphin, Ranobe), etc. ;

• Base metals : copper, lead, coal, lignite, bauxite (Manantenina, Analavory, Marangaka), aluminium,tin, etc. ;

• Precious metals : mainly gold (Andavakoera), silver or platinum ;• Precious and semi-precious stones : beryl, sapphire, emerald, ruby, rose quartz, topaz, tourmaline,

amethyst, aquamarine, etc. ;• Strategic minerals : radioactive minerals such as mercury, minéraux radioactifs comme le mercure,

lithium, magnesium, radium and rare earths ;• Mineral waters : minerals from drinking water.

2.1.1.2 Main ongoing or planned projects

Identification forms are presented in annexes fro the companies in the Group A. The current mainindustrial ongoing or forecasted indusctrial scale projects include:• QMM, who operates ilmenite and zirsill in the region of Fort-Dauphin. The site is composed by the

mine, the mill, the separation plant and the power generation plant. Afterwards, the project wascompleted by a port, Ehoala ;

• The project Ambatovy, operating nicked and cobalt, composed by the mine in Moramanga, thepipeline crossing many locations and reaching Tamatave, where the processing plant is. Theproducts are exported from the port of Tamatave;

• KRAOMA, a State-owned company operating chromium ;• Wisco, having its interest in the iron of Soalala ;• Madagascar Consolidated Mining and PAM Sakoa, having their interest in the Coal of Sakoa and are

currently in the pre-feasibility study phase;• Toliara Sands, the Exploration Permit of which has been changed into an Operating License in 2011,

is currently in the stage of the Environmental Impact Study for the operation of ilmenite of Ranobe;• Mainland, who is interested in the Ilmenite on the East coast of Madagascar and who is currently in

the environmental impact assessment phase;• Aziana, who holds licences related to the bauxite of Manantenina, near Fort-Dauphin• Holcim, who exploits pozzolana, clan and cipolin while producing cement for the local market. This

company, present for more than 50 years now, operates in Antsirabe and Tamatave.


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2.1.2 The upstream oil sector

Madagascar has 988 000 km2 of onshore and offshore sedimentary basin fit for hydrocarbonexplorationand spread mainly on the north-east and west coasts.Today, 445 000 km2 were subject to research reviews, which is 45% of coverage rate.

Sixteen international oil companies signed 23 contracts with OMNIS for hydrocarbonsexploration andoperation, regarding 17 onshore blocks and 6 offshore ones. The number of available blocks is 229, 225of which are offshore and4 are onshore. A promotional campaign and international calls for tender willbe made soon regarding these blocks.

The various ongoing projects in Madagascar are presented the table below and in the map in the followingpage:

Block name Related companyAntsiranana (onshore) Afren / OysterAmbilobe (offshore) Sterling Energy / Pura VidaAntsohihy (onshore) Madagascar Northern Petroleum CompanyAmpasindava (offshore) ExxonMobil Madagascar / Sterling EnergyMajunga profond (offshore) ExxonMobil Madagascar / British Gas / Petro Vietnam / Seoul KoreaCap Saint-André (offshore) ExxonMobil MadagascarBekodoka (onshore) Madagascar Petroleum EnergyBemolanga (onshore) Total Exploration / Madagascar OilTambohorano (onshore) Varun EnergyMelaky (onshore) Essar Energy Holding LimitedTsimiroro (onshore) Madagascar OilManambolo (onshore) Madagascar OilGrand Prix (offshore) OMV Exploration & Production / Niko Oil / EnermadBelo profond (offshore) South Atlantic Petroleum / MarexMorondava (onshore) Madagascar OilManandaza (onshore) Madagascar OilManja (onshore) Amicoh CorporationMandabe (onshore) Tullow OilMorombe (onshore) Essar Exploration & Production LimitedBerenty (onshore) Tullow OilToliary (onshore) Madagascar Southern Petroleum CompanySakaraha (onshore) Madagascar International ExplorationBezaha (onshore) Petromad


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2.2 Overview of the small mines and informal mining activities

2.2.1 Definition and weight of the small-scale mining

The mining code of 2005 defines the small-scale or artisanal mining as being: « Traditional methods usingmainly manual and applied human or animal effort for the extraction of the mineral from the soil or subsoil.» The small-scale operators are defined as « underground and open pit mines […] using craft techniqueswithout processing the minerals at the extraction site ». Thus, gold-washers are included in this category.

Small-scale mining is often done by small-scale operators without mining title; this is the informalcharacteristic of this kind of operation. These are mainly related to gold and precious or semi-preciousstones (ruby, emerald, sapphire, amethyst, topaz, tourmaline, etc.).

2.2.2 Results of the studies on the informal extractive sector

2.2.2.1 Information from the World Bank

In its Compendium of policy notes for Madagascar (published in May 2014), the World Bank estimatedthat 500,000 people work in the artisanal mining sector in the late 90s, which makes it one of the mostsignificant employers before the textile sector, but after the agricultural one.Moreover, the suspensionof the issue of new licences in 2009 has pushed many operators to go informal. Indeed, the number ofPRE has gone from 1,500 in 2008 to less than 500 in 2012.

2.2.2.2 ENEMPSI information for 2012

The National Employment and Informal Sector Survey, ENEMPSI,performed in 2012 by INSTAT13hasenabled to have quantitative and qualitative useful indicators to analyse the employment market and theinformal sector in Madagascar. The presented results are related to the activities conditionsof theIndividual Production Units (IPU)14,the characteristics of the labour force and employment in the IPU, theproduction, the insertion and the competition of the IPU, the relationship between the informal sectorand the State and at last the issues and perspectives of the informal sector, in particular for the branchof the mining extractive industry.

In 2012, in Madagascar, the Individual Production Unites « IPU » (not including agriculture, farmin,hunting and fishing) are estimated to 2,268,900 units.Most of these Individual Production Units « IPU »(99.9%) are classified as informal production units. Thus, in the IPU, there are neither written contracts,nor paid leaves nor social security for the workers.

INSTAT’s study has shown that:• The branch of the mining extractive industry represents 8% of all these IPU: 13.3% are seen in the

urban area, and 86.7% in the rural area.

13Enquête Nationale sur l’Emploi et le Secteur Informel – Enempsi 2012, Novembre 2013, vol 1 14 The Individual Production Units (Unités de Production Individuelles, « UPI ») are considered as « informal » as: they do not havea Statistical Identification Number, or they do not have an accounting system with an administrative value.


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• The main reason motivating the creation of IPU in the mining extractive sector is the increase of therevenue (54%) for the small-scale operators, in front of the impossibility of finding a formal job or the« family tradition ».

• IPUs last in average 8.7 years; at the date of our study, they have existed for 6.8 years in average.Indeed, the IPU that existed long ago are characterised by a particular or traditional know-how(transformation, design activities). Conversely, the « young »IPUs are ones the activity of which doesnot necessarily require much funding.

• 70.7% of the share capital of the branch of the mining extraction is funded by savings.• The share of employees is low in the IPU, as the job creation remains limited (3.9% in the mining

extraction IPUs).• Men are more than women in the informal extractive branch.• 44% of those who are active in this branch are aged under 26.• Those who are active in this branch have had in average 3.1 years study.

2.2.3 Gold’s case

There is not yet gold industrial exploitation in Madagascar. According to the information from the GeneralDirectorate of Mining Resources, the first official exportation of god was authorised in the first quarterof 2012. Approximately 150 kilograms of precious metal have been declared for export, this made a highvalue of the export in one hand, and mechanically in the royalties and taxes in the other hand, as shownin the graphs below. However, the Council of Ministers suspended the export of gold in April 2012.

- 1,000,000.00 2,000,000.00 3,000,000.00 4,000,000.00 5,000,000.00 6,000,000.00 7,000,000.00

Jan-

12Fe

b-12

Mar

-12

Apr

-12

May

-12

Jun-

12Ju

l-12

Aug

-12

Sep-

12O

ct-1

2N

ov-1

2De

c-12

Jan-

13Fe

b-13

Mar

-13

Apr

-13

May

-13

Jun-

13Ju

l-13

Aug

-13

Sep-

13O

ct-1

3N

ov-1

3De

c-13

Value of mineral export in 2012 and 2013(in USD)


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Despite the export ban, tonnes of gold are extracted from the Malagasy soil and illegally exported.Thelocal media regularly issues the seizures of these precious metals at airports crossing borders. However,it is difficult to obtain data on these phenomenons from the Malagasy authority.

At international level, estimations could be made from the comparison of the trade balances per countryand per product.The statistics of the UNCTAD (United Nations Conference on Trade and Development)estimate the value of import of Malagasy gold to the United Arab Emirates respectively to9.8 millions(approximately 327 kg) and 16.3 millions USD (approximately 543 kg) in 2012 and 2013. The samesource has provided an estimation of the value of gold exported from Madagascar as exceeding 18millions USD (approximately 600 kg) in 2012, with a peak of 56.5 millions USD (approximately 1.8 tonne)in 2011based upon these information. Thus, it is possible to estimate that the State and for the localcommunities have lost an income of 360,000 USD, equivalent to more than790 millions MGA in 2012,which corresponds to non-received royalties.

-

50.00

100.00

150.00

200.00Ja

n-12

Feb-

12M

ar-1

2A

pr-1

2M

ay-1

2Ju

n-12

Jul-1

2A

ug-1

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Oct

-12

Nov

-12

Dec-

12Ja

n-13

Feb-

13M

ar-1

3A

pr-1

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ay-1

3Ju

n-13

Jul-1

3A

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3Se

p-13

Oct

-13

Nov

-13

Dec-

13

Royalties and taxes in 2012 and 2013 (inmillions Ariary)


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Export of gold from Madagascar to the rest of the worldfrom 2005 to 2013, in thousands USD

(Source : unctadstat.unctad.org)Note: “(5)” in front of figures in the table means that it is an estimation

Gold importation made by the United Arab Emirates from Madagascarfrom 2005 to 2013, in thousands USD

(Source : unctadstat.unctad.org)Note: “(5)” in front of figures in the table means that it is an estimation


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2.3 Significant events of 2012

The following are the significatnt events for the extractive sector in 2012:► First quarter 2012 : application of the legal provisions in force authorising the export of gold ; export

of 150 kilograms of gold.► April 2012: export ban for gold by the Council of Ministers.► June 2012 : The french Bureau for Geological and Mining Researches presented a geological and

metallogenic summary of Madagascar at a scale 1/1,000,000, which is three paper mapscomplemented by a general notice (a geological map, a map dedicated to metallic substances andanother to industrial minerals), also provided as digital databases in a GIS (Geographical informationsystem).

► September 2012: Ambatovy received the first operating license, enabling them to send the firstexpedition of nickel to the international market.

2.4 Governance of the sector: key actors

2.4.1 The mining sector

Here are the main key actors in the mining governance:

► The Ministry in charge of Mines (Ministry of Mines in 2012 and 2013, within the Ministry ofstrategical Resources in 2014): in charge of the design, the execution and the follow-up of thegovernment policy with regards to the mining.

► The BCMM : this industrial and commercial public bureau aims to manage the mining licences andauthorisations, from their request to their expiry date ;

► The Gold Agency (Agence de l’Or) ;► The Mine Police is mainly in charge of the tracking, on one hand, the circulation, the illegal custody

and commercialisation of mining products, and on the other hand of all mining violation as providedin the Mining Code.

► The Decentralised Terrotorial Units, beneficiaries of the rebates and the place of interaction of thecommunities.

Moreover, we note that many mining operators gathered within the Chamber of Mines of Madagascar, anassociation, the goals of which are « to encourage, to promote and protect the mining investments inMadagascar while developping a good business professional ethics in the mining sector.»


The main key actors in the governance of the upstream oil are:

► The Ministry in charge of Hydrocarbons (Ministry of Hydrocarbons in 2012 and 2013, included inthe Ministry of Strategic Resources in 2014) : it is in charge of the desing, the execution and thefollow-up of the government’s policy in terms of hydrocarbons ;

► The OMNIS, as a technical body, in charge of the regulation ;► The OMNIS, as a national society, in charge of the contracts with the international oil companies.


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The companies in the sector are gathered in the Association Professionnelle des Pétroliers Amont deMadagascar (APPAM) which is the Professional Association of Upstream Oil Operators of Madagascar.

2.5 Legal framework

2.5.1 The minig sector

In Madagascar, the mining sector is mainly governed by the law n°99-022 of 19 August 1999 establishingthe Mining Code. Later, this law has been completed by:

► The law n°2005-021 of 17 October 2005 ;► The decree n°2006-910 of 19 December 2006 setting the implementing arrangements;► The interministerial decree n°21985-2007 of 2O December 2007 setting the recovery arrangements

for the mining royalties and rebates.This legal set is the common law of the mining sector in Madagascar. The Mining Code does not providefor the participation of the State in the mining companies.

Above the common law, Madagascar also has two specific legislations:

► The Framework agreement, signed between the Malagasy State and the Group Rio Tinto. Promulgatedin the Official Journal, it governs specifically the ilmenite exploitation project of QMM S.A in the Anosyregion. It also provides for the participation of the State in the project via the OMNIS, who has 20% ofthe share capital;

► The Large-Scale Mining Investment Law : it is in one hand the law 2001-31 of 8 October 2002, saidLGIM, modified bu the law n°2005-021 of 02 August 2005 and in the other hand by the decreen°2003-784 of 08 January 2003 setting the terms of application. This law applies to any companymeeting the stipulated application eligibility conditions, namely the amount of investment amountingto MGA 50 milliards. This law does not provide for the participation of the State in the miningcompanies. To this day, only Ambatovy project is governed by this law.

Moreover many non-sectoral laws such as the Environment Charter, the various Finance Acts and thedecree MECIE (Mise en Compatibilité des Investissements avec l’Environnement) are also applicable tothe mining sector.

It is planned that the Mining Code will be subject to a reform in 2014-2015. The government announcedone of the key measures, which is the creation of a national mining company.


The upstream oil sector is governed by two main sectoral laws, which are the Lawn°96-018 of 04September 1996 establishing the Oil Code inone hand, and the decree n°97-740 related to the miningexploration and operation titles, and the transport of hydrocarbons in the other hand.

Based on the principle that « hydrocarbons deposits are not likely to be subject to private appropriation »,companies wishing yo operate in the upstream oil sectorare to sign a contract with OMNIS. It can be aPetroleum Sharing Contract (PSC) or a joint-venture contract. The related mining title is deliveredfollowing a decree of the President of the Republic. These contracts form an integral part of the tax


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regime applicable to the sector.OMNIS helps his contracting partner in their relationship with theauthorities and the local administrations, and provides the available data and information related to theframework of the contract.Moreover many non-sectoral laws such as the Environment Charter, the various Finance Acts and thedecree MECIE (Mise en Compatibilité des Investissements avec l’Environnement) are also applicable tothe sector.

It is worth noting that the revision of the Oil Code is currently under study.Specifically, it is about:updating the Oil Code to the standards of neighbouring countries, such as East Africa; and to make itmore attractive for the investors; adapting it to the situation of the upstream oil sector in Madagasca –the shifting to the exploitation is planned at short and medium term for Madagascar Oil; and allowing aclear and fair redistribution of the resource royalties.

2.6 Tax framework

2.6.1 Comparative table

The Tax framework of the mining sector is presented in the Mining Code, or the Oil Code and the GeneralTax Code for the common law. The special regimes of the mining sector (Framework Agreement andLGIM) have their own tax framework, which can refer to the General Tax Code. Hereafter a presentationof the flows:

TAXES/DUTIESQMM

(FRAMEWORKAGREEMENT)

AMBATOVY(LGIM)

COMMON LAW (CGI, MININGCODE, OIL CODE)

Finance Acts 2012 and 2013

INCOME TAX (IR)

10% : 6th to the 10th yearof actual exploitation15% : until the expiry of theprivileged tax regime

25% : AMSA andsubcontractors10% : DMSA andsubcontractors

2012 : 21%2013 : 20%Oil Sector : 0% (included in IDH)

DIRECT TAX ONHYDROCARBONS (IDH, oilsector only, productionphase)

N/A N/A 2012 : 21%2013 : 20%

TAX ON INTERNATIONALFINANCIAL TRANSFERS(TFT) /NON-RESIDENTSINCOME TAX (IRNR)

Works : 3,50%Services : 15,75% 4,5% Mining sector : 10%

Oil Sector : 0% (included in IDH)

COMBINED TAX N/A N/A 5%

WAGES INCOME TAX (IRSA)

Rate in line with thecommon law, withoutexceeding 35% forexpatriates

Rate in line with thecommon law, withoutexceeding 35% forexpatriates

For national expatriates :2012 :- Up to Ar 250,000 = 0- Part exceeding Ar 250 000 =21%2013 :- Up to Ar 250,000 = 0- Part exceeding Ar 250 000 =21%

TAXES ON INCOME FROMMOVABLE CAPITAL (IRCM)

10% 10% 2012 : 21%2013 : 20%Oil sector : 0% (included in IDH)

TAXES ON REAL ESTATEGAINS (IPVI)

Rate in line with thecommon law

Rate in line with thecommon law

2012 : 21%2013 : 20%

VALUE ADDED TAX (TVA) 0% 20% 20%TRANSFER ANDREGISTRATION FEES

Emphyteutic leases :reduced rate of 50%

Duty for company creationof continuance; capital

Fixed duties :2 000 Ar


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TAXES/DUTIESQMM

(FRAMEWORKAGREEMENT)

AMBATOVY(LGIM)

COMMON LAW (CGI, MININGCODE, OIL CODE)

Finance Acts 2012 and 2013

Share capital subscriptionduty of QMM : 1%

Other documents : 0%

duty : de 0% to 2% notexceeding 10 millions MGA

Any other documentsrelated to the above : 0%

Proportional duties :2% : commercial lease1% : protected tenancy0,5% :Documents for companycreation of continuance

PROPERTY TAXES ONLANDS (IFT) Non-Submitted 1% 1%

PROPERTY TAX ON BUILTPROPERTY (IFPB)

3% 1%.Not exceeding 200millions MGA per year

5 to 10%

TAFPB 2%1%Not exceeding 200millions MGA per year

Repealed

TAXES ON INSCURANCECONTRACTS (risks) 4% 4 % 4%

ROYALTIES AND REBATES In line with the miningsector common law

In line with the miningsector common law

1) Mining sector :Royalties : 0,60%Rebates : 1,40%

2) For crude oil :- Between 8 % and 20%according to the dailyproduction in barrels

3) For the natural gas- Between 5% and 10% accordingto the daily production in cubemeters

ADMINISTRATION FEES Set by the BCMM Set by the BCMM Set by the BCMM (mining sector)and OMNIS (oil sector)

2.6.2 Specificities for State taxes and local taxes

The main specificities allowed by the specific regulations in the framework of the investments incentivesin the mining sector are:► Within the Framework Agreement:

► Lowered rate of the Income Tax and the taxes on income from movable capital(IRCM);► Decrease of the taxable base for the Tax on International Financial Transfers;► 0% VAT;► Exemption for the registration fees ;► Unique rate for the Tax on Insurance Contracts ;► Decrease of the rate for the Property Tax on built property ;► Stability of the tax framework.

► In the framework of the LGIM :► Decrease of the taxable base for the Tax on International Financial Transfers ;► The right to be refunded with the VAT credit;► Lowering of the rate and an upper limit for the registration fees;► Lowering the rate and an upper limit for the Property Tax on built property► Stability of the tax framework.


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In the oil sector, a unique tax exempting from three other taxes is applied durin the production phase.During the exploration phase, the tax regime is that of the common law, provided by the General TaxCode.

2.7 Royalties and rebates

2.7.1.1 In the mining sector

The Mining Code provides that the rates for royalties and rebates are respectively set to 0.6% and 1.4%of the value of the products at their initial sale. They also apply to the special legal regime of the miningsector. The allocation of the rebates between the decentralised authorities was subject to the followingprecisions as per the Interministerial decree No. 8887/2014 of 21th February2014:► 60% for the exctracting communities ;► 25% for the communities in the location of the transformation and processing entities, in proportion

of the transformation or processing level made in these disctricts ;► 15% for the communities other than those previously mentioned and in which other components of

the mining project are located ;The Decree also states that the share of rebates intended for the non-existent categories of communitiesare to be shared equally between other categories. In practice, this measure applies to the AutonomousProvinces, which to this day are not yet implemented.

2.7.1.2 In the oil sector

The Oil Code provides that the royalties shall be between 8% and 20% for the crude oil, and between 5%and 20% for the natural gas.

2.8 Administration and training fees

In the mining sector, the administration fees are those received by the State intended to be as acontribution of the private operators in the development of the mining sector in Madagascar. The MiningAdministration Fees (FAM) by square are levied by the BCMM as refunding of the services andmanagement costs for the the rights associated to the mining licences. They are annually paid by anyowner of a mining square and a mining licence holder. The amount is set by annual decree for each licencecategory.

In the same way, in the oil sector, the Administration and Training Fees are paid on a regular basis as alegal requirement by the mining title holder. The fees are levied by OMNIS as a refund for the servicesand management costs associated to the oil contracts.

The chart in the next page shows the various administrations to which taxes, duties and fees are paid forthe mining sector and the allocation of the revenues.


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2.9 Current state of the licensing procedures

2.9.1 Mining sector

The different types of mining titles are presented in the following table:

Mining titles Squares15 Validity PurposeAERP : ExclusiveAuthorization for PerimeterReservation

38 400 which is15 000 Km2

3 months Ground reconnaissanceto confirm geologicaland ore-deposits modelsNot renewable

PRE : Permits Restricted toSmall-scale Miners

256 which is100 Km2

8 years Renewableonce or severaltimes for four (4)years

Research ProspectionExploitation

PR : Research Permit25 600 which is 10000 Km2

5 yearsResearch ProspectionRenewable twice for

three (3) years each

PE : Exploitation Permit

2560 which is 40 years renewableonce (1) or severaltimes for twenty(20) years

Research ProspectionExploitation1 000 Km2

The procedures for granting minint titles, unchanged compared to 2011, are presented in the graph inthe next page, made on the basis of information from the Ministry of Mines.

During the related period, the extractive sector was subject to a freeze for the licensing, pursuant to thenote of Council No. 34/2011-PM/SGG/SC, signed by the General Secretary of the Government.Thisfreeze let to prohibition of the granting of new permits from the date of the release of the note, the 06th

April 2011. Moreover, the letter No. 682/MMH signed by the Minister of Mines and Hydrocarbons on the31st May 2011 has suspended the Permits for small scale operators (PRE). The suspension periodcovered by this letter started on 8th September 2009 and to is yet to be lifted to this day.

15Geometrical setting on the surface of the earth, representing the basic unit of space in which the rights are conferred by thepermits. Each side of the square is six hundred and twenty five meters (625 m).


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Step 1 : Submission ofthe requestReception of therequest, admissibilitycheck, delivery of thepayment order, of thereceipts of payment,coding and processingof the requests, updateof the mining map

Etape 2 : ConfirmationReception of additionaldocuments for the file, thereceipt of the remittance of thefile and receipt for the relatedfees, verification of thecompleteness of the file and therequired number of copies,update of the mining map if thefolder is complete, delivery ofthe refusal letter and additionaldocuments required ifuncomplete file

Step 3 : Processing of filesStudy of filesSignature of the techcnical advice,elaboration and signature of the draftdecree in Malagasy and French (ifapproved), elaboration of the refusaldocument (if not approved), signatureof the decree/decision by competentauthorities, verification of theconsistency between the decree andthe "Traitement Alpha" (TAN),validation and signature of the title Etape 4 : Delivery of mining titles

Verification of the payment ofthe administration fees : 3/4 and1/4Recording registry of deliveredlicencesDelivery of the original title andthe decreeFiling the copies of the titles

Mining licensing procedures


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2.9.2 Upstream oil sector

There is no change in the procedure of the signature of an oil contract as compared to 2011; it ispresented in the following chart:

Procedure for the signature of an oil contract

1•Promotional campaign

2•Issuance of a notice of anInternational Tender

3•Submission of offers byinterested oil companies

4•Study of the offer by theOMNIS

5•Negotiations

6•Conclusion and signatureof the contract betweenthe OMNIS and thecompany winning of theoffer

7•Request for approval ofthe oil contrat by theOMNIS to the Presidentof the Republic

8•Request of allocation ofthe hydrocarbon miningtitle by the OMNIS to thePresident of the Republic

9•Approval of the contractby the President of theRepublic and enactmentof the PresidentialDecree approving the oilcontract

10•Attribution of the miningtitle and and enactmentof the PresidentialDecree granting thehydrocarbon mining title


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2.10 Registryof licences and permits

2.10.1 Reiterating the standard

As provided by the EITI requirement No. 3.9, Madagascar has the responsibility to hold a public registryor cadaster systemwith updated and complete information, related to the licence holders, the coordinatesof the related area, the date of the request and that of the licencing, as well as the duration and for theexploitation licences, the produced raw materials.

2.10.2 Situation in Madagascar

Regarding the mining sector, a registry is available with the Mining Cadastre Office (BCMM). Available ondemand, the coordinates on the mining squares, the request and delivery date, etc. can be consulted.The addresses and the details of the permits holders are not disclosed for the sake of the confidentialityof personal information principle, and sometimes they are not up to date.Moreover, in some cases, delayshave been noted in the update of the registry in case of disposal of the licences.

Regarding the oil sector, such registry is nonexistent. However, the website of OMNIS, via a map that isreproduced in this report, discloses the available blocks and the blocks on which contracts are signed withOMNIS. The names of the signing parties of the contracts are also available.

2.11 Information on the beneficial ownership of the extractivecompanies


The EITI requirement EITI No. 3.11 provides for the implementation of a publicly available register of thebeneficial owners of the corporate entity entities that bid for, operate or invest in extractive assets,including the identities) of their beneficial owner(s) and the level of ownership.A beneficial owner inrespect of a company means the natural person(s) who directly or indirectly ultimately owns or controlsthe corporate entity, holding licence in Madagascar.

The same requirement recommends that where such registers do not exist or are incomplete, it isrequested from companies participating in the EITI process to provide this information for inclusion in theEITI Report.


Owners register does not publicly exist in Madagascar. Inded, the Trade Register within the Trade Courtrecords only the name of the direct shareholders for the Limited Companies.

The information on the beneficial ownership given by the companies in the group A that accepted theirdisclosure are presented in the table in the next pages. It is to be noted that filling out of the informationon the owners as a last resort was not compulsory in the canvas of the companies, but it was onlyencouraged. The information presented in the table below are strictly based upon the statements of thecompanies and were not investigated.


EY | 56


EY | 57

Information on the beneficial ownership of the extractive companiesIn the scope of EITI report 2014

(Source:canvas filled out by the companies)

CompaniesDirect shareholders with the

percentage of the shares

Shareholder at lastresort (natural or legal

person)

Is any of theshareholder companies

listed ? Which one ?Provide the name of the

stock exchange.ExxonMobilExploration andProductionMadagascar Limited

100% ExxonMobil MadagascarVentures BV

100% ExxonMobilMadagascar Ventures BV

NO

MAINLAND MINING Hong Kong Sino AfricaResources Investment Ltd -100%

Hong Kong Sino AfricaResources InvestmentLtd - 100%

N/D

Holcim (Madagascar)S.A.

Holcim Outre-mer (99,64%)Holcim Réunion (0,35 %)Divers minoritaires (0,01%)

Holcim Ltd (Legalpersonne)

N/D

TOLIARA SANDSSARL

MADAGASCAR MINERALFIELDS LIMITED - 100%

WORLD TITANIUMRESOURCES

YES (ASX:WTR)

TANTALUM RAREEARTH MALAGASY

N/D Tantalum HoldingMauritius

N/D

STERLING ENERGY(UK) Succursale

N/A N/A N/A

AMBATOVYMINERALS S.A.(AMSA)

MADAGASCAR MINERALINVESTMENTS Ltd(MMI): 40%SUMMIT AMBATOVY MINERALSINVESTMENT B.V. (SAMRI) :27.5%KOREA RESSOURCESCORPORATION(KORES): 27.5%SNC - LAVALIN MADAGASCARVENTURE INC. : 5%

MADAGASCAR MINERALINVESTMENTSLtd(MMI)/SHERRITTINTERNATIONALCORPORATIONSUMMIT AMBATOVYMINERALS INVESTMENTB.V.(SAMRI)/SUMITOMOCORPORATIONKOREA RESSOURCESCORPORATIONSNC - LAVALINMADAGASCAR VENTUREINC. /SNC - LAVALIN INC

SHERRITTINTERNATIONALCORPORATION:

TORONTO STOCKEXCHANGE

SUMITOMOCORPORATION: TOKYO

STOCK EXCHANGE

SNC - LAVALIN INC.:TORONTO STOCK

EXCHANGE

CALIBRA RESOURCEAND ENGINEERSMADAGASCAR.

SOCIETE HENGSHENG MININGGROUP Ltd (HMG)

SOCIETE HENGSHENGMINING GROUP Ltd(HMG)

YES. HENGSHENGMINING GROUP Ltd

(HMG).BVIETABLISSEMENTSGALLOIS S. A.

N/A N/A N/A

PAM MADAGASCARSA

PAN AFRICAN MINING CORP:99.952 %

PAN AFRICAN MININGCORP

NON

PAM SAKOA COAL SA PAN AFRICAN MINING CORP:99.7 %

PAN AFRICAN MININGCORP

NON

MADAGASCARCONSOLIDATEDMINING S.A.

YOXFORD HOLDINGS LTD: 80%NASSCO: 20%

YOSFORD HOLDINGSLTD

NON


EY | 58

CompaniesDirect shareholders with the

percentage of the shares

Shareholder at lastresort (natural or legal

person)

Is any of theshareholder companies

listed ? Which one ?Provide the name of the

stock exchange.MADAGASCAR OIL SA Benchmark Advantage Fund

Ltd: 39.02%,Outrider Management LLC:22.84%,SEP African Ventures Limited(formerly Persistency CapitalLLC): 20.10%,The John Paul DEJORIA FamilyTrust: 5.78%,RAB Capital: 1.79%

N/A Madagascar Oil Limited,société mère de

Madagascar Oil SA estinscrite à la Bourse deLondres, AIM London

Stock Exchange

M'PUMALANGAMINING RESOURCESS.A.U

TAHL (Mauritius) MiningProjects Limited 100%

Groupe TATA AFRICAHOLDINGS PTY LIMITEDTATA INTERNATIONAL

N/D

QIT MADAGASCARMINERALS SA

RIOTINTO 80% etETAT MALAGASY 20%(représenté par Omnis)

RIO TINTO RIO TINTO (LondonStock Exchange ou LES)

SOUTH ATLANTICPETROLEUM BP SAS

MARTIN TRASCHEL 100% MARTIN TRASCHEL100%

NON

TANETY LAVA SARL Blue Sky Corporation, Maurice:99 %

AZIANA LIMITED,Australie

AZIANA LIMITED,Australia StockExchange (ASX)

TOTAL E&PMADAGASCAR

TOTAL SA 100% TOTAL SA TOTAL SA - Paris etNew-York

EAST AFRICANEXPLORATIONMADAGASCAR LTD

East African Exploration : 90%Compagnie pétrolière AnglaiseOYSTER Energy : 10%

AFREN, PLC, détient100%

AFREN est cotée auLondon Stock Exchange

(LSE)PROCHIMAD MINESET CARRIERES

UPB INTERNATINAL: 33.90%SEPCM: 15%PROCHIMAD: 0.90%

ANDRIANTSITOHAINACharles: 50%ANDRIANTSITOHAINANaina: 0.10%Jean Michel GIRAUD:0,10%

NON

CLASSIC REALSTONES

Auzonz Mining Private Limited:90%Jamnadas Divias Kumar: 5%Shantilac Elesh : 5%

Auzonz Mining PrivateLimited: 90%Jamnadas Divias Kumar:5%Shantilac Elesh : 5%

N/D

UNIVERSALEXPLORATIONMADAGASCAR SARL

IPR Universal limited: 100% Indian Pacific ResourcesLtd

N/A

ACCESSMADAGASCAR

CLEROUX Denise, DESLANDESJean Pierre

CLEROUX Denise,DESLANDES Jean Pierre

N/A

MADAGASCARRESSOURCES SARL

MALAGASY SANDS NR.2 ltd :100%

WORLD TITANIUMRESOURCES

NON

RED GRANITIMADAGASCAR SARL

RED GRANITI France : 99% RED GRANITI France :99%

NON


EY | 59

2.12 Disclosure of oil contracts


According to the EITI standards EITI No. 3.10, the report has to document the policy of the governmentin terms of disclosure of the contracts and permits setting the prospection or exploitation conditions ofoil, gas and minerals. The relevant legal provisions, the actual disclosure practice and the planned reformsor in progress are to be included in the report with an overview of the contracts.


2.12.2.1 Disclosure policy

Regarding the government’s policy in terms of contracts and licences disclosure, it appears that the OilCode does not provide for specific on the conditions of the conclusion or the disclosure of oil contracts.Only the presidential decree approving the oil contrat and the standard contract are available.

The production sharing contract, governing the relationships between the State and the companies,include a confidentiality clause representing the government policy in terms of contracts disclosure.Thus, the article 36.5 of the onshore standard contract provides that « None of the parties shall discloseany information related to Oil Operations to any person, organisation, affiliated company, employees,consultants, subcontractors, bank or financial institution without prior signing a confidentiality agreementallowing to keep the strictly confidential information, unless required by the law.»

In practice, OMNIS confirmed that:► The disclosure, at present, is not possible unless legal requirement, following an agreement with oil

companies.► The current confidentiality of the oil contracts should be part of the subjects in the framework of the

reformed Oil Code.

2.12.2.2 Overview of the oil contracts

An overview of the standard contracts, onshore and offshore, is available on the website of OMNIS, atthe following address: http://www.omnis.mg/en/download-contracts-models

A brief summary of the contracts are presented below:

Key elements of an oil contract

The production sharing contract is established for the following reasons:

► The oil resources in the soil and subsoil of the malagasy territory, on the floorsand territorial seas, in the exclusive economic zone and on the continental shelf,are owned by the malagasy State ;

http://www.omnis.mg/en/download-contracts-models


EY | 60

► No legal entity cannot carry on activities in the national mining industry, unlessan association wth OMNIS as custodian of a mining title is signed ;

► No activity related to the exploration, the production, the transformation and thetransportation of Hydrocarbons in the national can be undertaken unless by anoil contract with OMNIS.

It defines the terms and conditions according which the Operator will undertake theOil Operations. Any right and obligation related to the contract and any forecasted oilactivity or conducted on the Contract will also be undertaken in accordance with anypossible amendment done to the Contract and to the malagasy law.

The production sharing contract is composed of 46 articles and 6 annexes.

It is established according to the main clauses as follows :- Obligation of exploration minimum works (article 8)- Program of the exploration works and budgets (article 10)- Assistance of OMNIS (article 17)- Recovery of oil costs (article 23)- Oil profit sharing (article 24)- Customs provisions (article 28)- Tax provisions (article 29)- Production bonus (article 31)

The production sharing contract comprises the following annexes :- Annexe A : Map of the Contractual Scope- Annexe B : the accounting and financial procedures

- Annexe C : Association contracts for the contractors- Annexe D : Bank guarantee- Annexe E : Quarantee from the mother company for each Contractor- Annexe F : Information and reports

2.13 Financial relationships between the government and State-ownedcompanies


According to the EITI standard No. 3.6, the report must include the prevailing rules and practicesregarding the financial relationship between the government and state-owned enterprises (SOEs), e.g.the rules and practices governing transfers of funds between the State-owned companies and the state,retained earnings, reinvestment and third-party financing.

Moreover, the disclosures from State-owned companies on their quasi-fiscal expenditures such aspayments for social services, public infrastructure, fuel subsidies and national debt servicing on fuelsare also required in the report.



EY | 61

Until September 2014, the regime of the State-owned companies was set by an old law, the Law n°67-007 du 28 juin 1967 related to the participation of the State and other public entities in the public limitedcompanies and on semi-public companies. The State as a shareholder must always be represented in theBoard of Directors.

From September 2014, a law currently in the process of promulgated states the separation between theState as a « public power » and the State « shareholder », so as to avoid the interference of the State inthe management of the companies. The undertaken measures aim to give more weight to the PubicTreasury in comparison to other representatives of the State in the Boards of Directors, and includingthe territorial communities.

In the framework of EITI, Kraomita Malagasy (Kraoma) SA, where the State owns 97% of shares, was theonly State-owned company identified as meeting the definition adopted by the National Committee.Oilcompanies in which the State is a shareholder by means of OMNIS, are not considered as State-ownedCompanies because the share of the State, set at 20%, does not reach the majority in the share capital.

Regardless of the public participation in its capital, KRAOMA is a public limited company under the law oncommercial companies. It is worth noting that KRAOMA, having participated in the EITI process since thefirst report, has the same obligation as the other extractive companies in the framework of EITI. KRAOMAdid not pay any dividend to the State for 2012.

Moreover, even though QMM SA does not meet the definition of a State-owned company as per EITI’scriterion, it is important to note that the State, via the OMNIS, owns 20% of the share capital. QMM SAincreased its capital of an amount of 166 millions USD, which was a significant event for 2012. In orderto keep its proportion in the share capital, as provided by the Framework Agreement, OMNIS should haveparticipated 33.2 millions USD. As they lack funds and thus cannot do so, the State has accepted that thecontrolling shareholder, Rio Tinto, advances the funds for OMNIS. According to the information receivedfrom QMM SA, when the company starts to distribute dividends, the controlling shareholder Rio Tinto willreceive an additional dividend until full payment the debt owed by the State.

2.14 Contribution of the extractive sector to the economy

2.14.1 Contribution to the GDP

As per the requirement No. 3.4 of the EITI standards, the report must disclose, when available,information about the contribution of the extractive industries to the economy for the fiscal year coveredby the EITI Report. The table below presents the data about the contribution of the extractive sector tothe GDP of Madagascar, collected from the INSTAT and the General Directorate of Econony, the GDPdefined as an economic indicator of the produced wealth per year in the country, calculated from theadded value of each sector.

(Source: INSTAT, General Directorate of Economy)(In billions MGA)

CURRENT PRICES Amount 2012Added Value of theextractive industry

40.44


EY | 62

Secondary 3,193.55GDP 19,900.00CONSTANT PRICES (1984) Amount 2012Added Value Extractiveindustry

6.89

Secondary 74.93GDP 548.18WEIGHT OF THEEXTRACTIVE BRANCH INTHE GDP

Part 2012

Weight in the GDP (in %) 0.7

The table indicated a 0.7% contribution of the extractive sector to the GDP in 2012. However, thisinformation present a limited interest when they partially and unfaithfully reflect the new productive orintermediate consumption or prices structuresthat evolved since the last 20 years.Indeed, the databaseof INSTAT comprises a series of yearly adjustments to the exctractive branch structure in 1984. Forexample, the oil sub-branch was not yet integrated in the database of 1984. However, these data are theonly official ones as there were no recent and reliable studies on the contribution of the extractive sectorto the GDP during the period concerned by the report.

2.14.2 Contribution to foreign direct investments

In the absence of a reliable estimation of the contribution of the extractive sector to the economy, theeconomic contribution can also be measured by the flows of foreign direct investments (FDI). The tablebelow shows that in 2012, the extractive sector represented more than 40% of the received FDI flows,according to a study of the Central Bank of Madagascar. A decrease in FDI compared with 2008 to 2010is noted since the beginning of the exploitation phase for QMM and the Ambatovy Project.

(In billions MGA)Description 2007 2008 2009 2010 2011 2012

FDI amounts in theextractive activities

886.20 1,637.50 2,069.80 1,360.00 1,000.60 750.50

FDI total amount 1,456.90 1,914.80 2,532.50 1,689.10 1,639.90 1,783.40Weight of the extractivesector FDI in the totalFDI

61% 86% 82% 81% 61% 42%

Source: Study on the Foreign Direct Investments in Madagascar,Central Bank of Madagascar, January 2014

2.14.3 Contribution of the total tax revenues

The table and the chart below present the contribution of the extractive companies to the total taxrevenues in Madagascar:

(in thousands MGA)Description 2012Amount of tax revenues received by the DGI from the companies of theGroups A, B and C

92,770,615.23

Total amount of tax revenues of the DGI 1,214,396,969.17


EY | 63

Thus, the tax revenue of the extractive sector in 2012 represent 7% of the total revenues received by theGeneral Tax Directorate (DGI).

7%

93%

Contribution of the extractive sectorto the tax revenues in 2012

Montant des recettes fiscales reçues par la DGI en provenance des entreprisesdes Groupes A, B et C

Montant des recettes fiscales totales de la DGI


EY | 64

2.14.4 Contribution in terms of employment

For the years under review in the framework of EITI, there is no official statistics or reliable study resultson the contribution of the overall formal extractive sector in terms of direct of indirect employment.The data from the statements made by the companies in Group A give an overwiew of the number of theirdirect employees. Linked with the number of workers affiliated to CNAPS, they can be used to estimatethe weight of the formal extractive sector, inspite of some flaws that could skew the results, namely forthe companies that are not CNAPS-affiliated, though registered to the tax office.Indeed, the companiesand the employees must be affiliated at the CNAPS.Thus, 0.9% of the CNAPS-affiliated employees work for a company of the Group A in 2012. The weaknessof these figures should nevertheless be put into perspective as the great industrial mining projects cangenerate leverage effects, namely the indirect jobs via subcontractors.

Description 2012Numbers of workers of the Group A 4,752Numbers of CNAPS-affiliated workers 527,862Percentage of workers of the Group A comparedto the total number of CNAPS-affiliared workers

0.9%

2.15 Exported quantities

As required by the new EITI standard n°3, the contextual information, including the information aboutthe production of exporting companies, form an integral part of the reconciliation report.

The exporting extractive companies have disclosed the volume of total production and the value of theproduction of raw material as well as the total volume of export and the value of these exports per rawmaterial for the fiscal year 2012.

The table below, prepared on the basis of statements from exporting companies, present the quantity ofexported products per company in 2012 (in tonnes).

COMPANIESNATURE OF

THEPRODUCTS

Region oforigin

SOURCE COMPANYPRODUCEDQUANTITY

EXPORTEDQUANTITY

VALUE OFEXPORTEDPRODUCTS

(in tonnes) (in tonnes) (in MGA)

GALLOISEtablissement Graphite Atsinanana 3,628.90 3,459.50 8,725,622,181.00

HOLCIM.Poozzole Vakinankaratra 54,979.00 N/A N/ACipolin Vakinankaratra 164,183.00 N/A N/AClay Vakinankaratra 24,085.00 N/A N/A

MADAGASCARCHROMIUMCOMPANY LTDS.A.R.L.U.

Sample ofRaw rocks

Betsiboka

0.25 N/A N/A

Sofia-Alaotra

MangoroSample of

altered rocksVatovavyFitovinany 0.15

Rocks Betsiboka 0.42 N/A N/A


EY | 65

COMPANIESNATURE OF

THEPRODUCTS

Region oforigin

SOURCE COMPANYPRODUCEDQUANTITY

EXPORTEDQUANTITY

VALUE OFEXPORTEDPRODUCTS

(in tonnes) (in tonnes) (in MGA)

MADAGASCARMININGRESOURCES LTDS.A.R.L.

AlaotraMangoro

Bongolava

PROCHIMADDolomite

Amoron'iMania

2,540.00 N/A N/ACalcite 175.00 N/A N/AKaolin 230.00 N/A N/A

DYNATECMADAGASCAR

AmmoniumSulfate

AlaotraMangoro 15,822.00 - N/A

Cobalt Atsinanana 493.00 378.00 20,048,112,763.16Nickel 5,695.00 4,471.00 162,036,083,652.55

RED GRANITIMADAGASCARS.A.R.L.

Labradorites AtsimoAndrefana 1,563.35 2,564.50 N/D

KRAOMA S.A. Concentrated Betsiboka 40,512.00 43,000.00 16,020,407,123.65Rocky 51,551.00 67,000.00 23,732,565,900.94

MAINLAND MININGLTD S.A.R.L.U Ilmenite Analanjirofo 38,500.00 38,500.00 8,372,501,424.00

QIT MADAGASCARMINERALS S.A.

Ilmenite Anosy 582,179.00 582,179.00 175,694,618,815.38Zircon

Concentrate Anosy 31,242.00 31,242.00 82,022,568,675.65


EY | 66

3 Results of the reconciliation

3.1 Total flows and total residual discrepancy

The EITI report – Fiscal Year 2012 covers a total amount of MGA 308.4 billions equivalent to USD 140.50millions. The details of the flows received by the State, per entities group are presented in the followingtable:

Entities group Number of entitiesAmount of flows

received by the StateAmount of flows

received by the State

(in thousands MGA) (in thousands USD)

A 47 305,424,639.27 139,147.52

B 13 1,060,798.75 483.29

C 66 1,916,186.24 872.99

Total 126 308,401,624.26 140,503.80

The table below shows that the percentage of the residual discrepancy for the group A is 0.36% of thetotal flows received by the State:

CurrencyTotal amount paid by

the companiesTotal amount receivedby the administrations

Amount of thetotal residualdiscrepancy

Total residualdiscrepancy

(in thousands) (in thousands) (in thousands) (in %)MGA 304,322,320.21 305,424,639.27 -1,102,319.06

-0.36%USD 138,645.32 139,147.52 -502.20

Explanations are provided in the following pages.

3.2 Entities in the Group A16

3.2.1 Schedule of the payment flows per company, with amounts paid, amountsreceived and discrepancies

Reading principle:The tables below mention remainders that were not intended to be in the canvas. These categories werecreated to save some space through the aggregation of some kinds of payments. Aggregated paymentsunder this header are detailed in Annexes as well as the USD version of the tables.

16Companies of which the cumulated payment to the administrations, reach 97% of the significant flows received by the State. Thecompanies included in this group will be subject to reconciliation through the data collection from the companies, and theconfrontation of these with the data collected from the administrations via a canvas.


EY | 67

(en millions de MGA)

Type of payment

001. PROJET AMBATOVY 002. HOLCIM 003. QIT MADAGASCARMINERALS S.A. 004. GROUPE PAM 005. MADAGASCAR OIL

Paid bythe

entity

Receivedby theState

Discrepancy

Paid bythe

entity

Receivedby theState

Discrepancy

Paid bythe

entity

Receivedby theState

Discrepancy

Paid bythe

entity

Receivedby theState

Discrepancy

Paid bythe

entity

Receivedby theState

Discrepancy

A - State Taxes 170 981.40 171 341.44 (360.03) 19 456.04 18 798.84 657.20 7 700.11 7 535.07 165.04 351.77 203.25 148.53 1 776.02 1 734.09 41.93Export fees - - - - - - - - - - - - - - -Import fees 246.51 246.51 - 51.00 51.00 - - - - - - - - - -Lease registrationfees 65.62 54.80 10.81 - - - 4.50 4.50 - 6.36 6.36 - 7.56 7.56 -

Custom duties andtaxes on oil products(TPP)

101.25 187.92 (86.67) 3,015.05 2,949.20 65.85 4,379.73 4,168.00 211.73 149.19 - 149.19 155.53 143.18 12.35

Income taxes (IR) 0.10 0.10 - 2,498.91 2,498.91 - - - - 0.30 0.20 0.10 0.32 0.32 -Non-resident IR orTFT 1,568.91 1,569.86 (0.95) 1,101.76 1,101.86 (0.10) 3,313.86 3,360.55 (46.69) - - - - - -

Unrecovered VAT 12,053.84 12,053.84 (0.00) 26.62 26.62 - - - - 195.93 195.93 - 1,284.45 1,284.45 0.00Non-refunded VAT 149,130.2 149,130.2 - - - - - - - - - - - - -State taxesremainders 7,814.95 8,098.19 (283.23) 12,762.69 12,171.24 591.45 2.02 2.02 (0.00) - 0.76 (0.76) 328.16 298.59 29.58

B - Local taxes 11.06 11.06 - 134.00 133.85 0.15 3,577.32 3,373.00 204.33 - - - - - -Property tax on builtproperty (IFPB) - - - 9.03 8.88 0.15 - - - - - - - - -

Property tax on land(IFT) 11.00 11.00 - - - - - - - - - - - - -

Mining rebates - - - 78.62 78.62 - 3,573.91 3,369.58 204.33 - - - - - -Taxiing charges - - - 46.35 46.35 - - - - - - - - - -Local taxesremainders 0.06 0.06 - - - - 3.41 3.41 - - - - - - -

C - Segmented fees,duties and royalties 3,167.38 3,178.37 (10.98) 1,581.42 1,580.24 1.18 3,260.18 3,172.03 88.15 3,986.33 3,986.33 - 2,168.48 2,168.48 -

Mining administrationfees 381.87 381.87 - 29.73 28.55 1.18 260.64 260.64 - 3,986.33 3,986.33 - - - -

Administration feespaid to OMNIS - - - - - - - - - - - - 1,618.79 1,618.79 -

Training fees paid toOMNIS - - - - - - - - - - - - 548.74 548.74 -

Port 2,149.94 2,149.94 - 739.21 739.21 - - - - - - - - - -Segmentedremainders 635.58 646.56 (10.98) 812.48 812.48 - 2,999.54 2,911.39 88.15 - - - 0.95 0.95 -

D - Other payments 973.32 973.33 (0.01) 5.15 5.26 (0.11) 23.63 23.63 - 16.98 2.58 14.40 35.05 35.05 -Other commonpayments (nature andamount provided inannexes) (Note b)

11.30 11.30 - - - - 2.61 2.61 - - - - - - -

Other segmentedpayments (nature andamount provided inannexes) (Note b)

8.80 8.80 - - - - 0.02 0.02 - - - - - - -

Alien’s identity card 682.14 682.14 - 4.13 4.13 - - - - 1.73 1.73 - 3.30 3.30 -Visa fee 270.22 270.22 - 0.02 0.02 - 7.86 7.86 - 0.30 0.30 - 1.63 1.63 -Permits release fees - - - - - - - - - - - - - - -Processing fees(BCMM) - - - - - - - - - - - - - - -

Penalties 0.86 0.88 (0.01) 1.00 1.11 (0.11) 13.13 13.13 - 14.96 0.56 14.40 30.12 30.12 -


EY | 68


Type of payment

001. PROJET AMBATOVY 002. HOLCIM 003. QIT MADAGASCARMINERALS S.A. 004. GROUPE PAM 005. MADAGASCAR OIL

Paid bythe

entity

Receivedby theState

Discrepancy

Paid bythe

entity

Receivedby theState

Discrepancy

Paid bythe

entity

Receivedby theState

Discrepancy

Paid bythe

entity

Receivedby theState

Discrepancy

Paid bythe

entity

Receivedby theState

Discrepancy

Other paymentsremainders - - - - - - - - - - - - - - -

E - Withheld at source 38,645.56 38,645.56 - 803.63 803.84 (0.21) 4,899.28 4,913.86 (14.58) 256.62 1,015.47 (758.85) 782.26 782.26 0.00CNAPS 2,912.50 2,912.50 - 217.34 217.34 - 819.87 834.44 (14.58) 77.13 841.88 (764.75) 108.49 108.49 0.00Taxes on wage incomeand similar (IRSA) 33,955.48 33,955.48 - 559.24 559.45 (0.21) 4,038.95 4,038.95 - 143.06 137.16 5.90 523.95 523.95 -

Withheld at sourceremainders 1,777.58 1,777.58 - 27.05 27.05 - 40.46 40.46 - 36.42 36.42 - 149.81 149.81 -

F –Donations 241.15 241.15 - 39.71 39.71 - 468.06 468.06 - - - - 301.42 301.42 -In kind (Expertevaluation orsupportingdocuments)

241.15 241.15 - 39.71 39.71 - 176.59 176.59 - - - - 270.19 270.19 -

En numéraire - - - - - - 291.47 291.47 - - - - 31.24 31.24 -G - Government’sshare of production(Oil companies)

- - - - - - - - - - - - - - -

H - Various premiums - - - - - - - - - - - - - - -I - Socialexpendituresrequired by law or byan agreement withthe government

160.31 160.31 - - - - 3,390.92 3,390.92 - - - - - - -

Social expendituresinkind (Expertevaluation orsupportingdocuments)

160.31 160.31 - - - - - - - - - - - - -

Dépenses sociales ennuméraire - - - - - - 3,390.92 3,390.92 - - - - - - -

J - Transportationexpenses - - - - - - - - - - - - - - -

GRAND TOTAL 214,180.19 214,551.22 (371.03) 22,019.96 21,361.75 658.21 23,319.49 22,876.56 442.94 4,611.71 5,207.63 (595.92) 5,063.23 5,021.30 41.93


EY | 69


Type of payment

006. MAINLAND MINING LTDS.A.R.L.U 007. KRAOMA S.A. 008. GOLD SAND S.A.R.L. 009. NOVA RESOURCES

S.A.R.L.U

010. MADAGASCARCHROMIUM COMPANY LTD

S.A.R.L.U

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

A - State Taxes 742.22 724.59 17.63 3,652.94

3,766.40 -113.46 0.74 0.74 - 33.12 33.14 (0.02) 2.98 0.10 2.87

Export fees 17.63 - 17.63 83.42 83.42 - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees 0.80 0.80 - - - - - - - 0.51 0.51 - 0.60 - 0.60Custom duties andtaxes on oil products(TPP)

- - - 135.31 133.45 1.86 - - - - - - - - -

Income taxes (IR) 70.61 70.61 (0.00) 646.03 646.03 - 0.64 0.64 - 26.53 26.53 - 0.10 0.10 -Non-resident IR or TFT - - - - - - - - - - - - - - -Unrecovered VAT 643.81 643.81 - - - - - - - - - - - - -

Non-refunded VAT - - - 2,514.37

2,629.96 -115.59 - - - - - - - - -

State taxes remainders 9.37 9.37 - 273.81 273.54 0.27 0.10 0.10 - 6.08 6.10 (0.02) 2.28 0.00 2.28B - Local taxes 277.29 246.04 31.25 12.81 19.16 -6.35 0.38 0.38 - - - - - - -Property tax on builtproperty (IFPB) - - - 10.77 10.77 -0.00 - - - - - - - - -

Property tax on land(IFT) - - - 0.01 0.01 - - - - - - - - - -

Mining rebates 246.04 246.04 - - - - - - - - - - - - -Taxiing charges 31.25 - 31.25 - 6.35 -6.35 - - - - - - - - -Local taxes remainders - - - 2.02 2.02 - 0.38 0.38 - - - - - - -C - Segmented fees,duties and royalties

1,879.77

1,830.12 49.65 1,594.0

21,596.7

4 -2.72 1,567.84

1,517.24 50.60 458.51 453.60 4.91 1,351.2

21,351.2

2 -

Mining administrationfees

1,721.17

1,721.17 - 395.38 395.38 0.00 1,567.8

41,517.2

4 50.60 458.51 453.60 4.91 1,351.17

1,351.17 -

Administration feespaid to OMNIS - - - - - - - - - - - - - - -

Training fees paid toOMNIS - - - - - - - - - - - - - - -

Port - - - 837.34 837.34 - - - - - - - - - -Segmented remainders 158.60 108.94 49.65 361.29 364.01 -2.72 - - - - - - 0.05 0.05 -D - Other payments 636.61 635.27 1.34 22.49 22.49 - - - - 19.94 17.53 2.41 51.95 3.35 48.60Other commonpayments (nature andamount provided inannexes) (Note b)

21.64 20.00 1.64 - - - - - - - - - 0.92 0.92 -


9.64 9.94 (0.30) - - - - - - 17.49 17.53 (0.04) 50.95 - 50.95

Alien’s identity card - - - - - - - - - - - - - - -Visa fee 35.06 35.06 - - - - - - - - - - - - -


EY | 70


Type of payment

006. MAINLAND MINING LTDS.A.R.L.U 007. KRAOMA S.A. 008. GOLD SAND S.A.R.L. 009. NOVA RESOURCES

S.A.R.L.U

010. MADAGASCARCHROMIUM COMPANY LTD

S.A.R.L.U

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Permits release fees 486.45 486.46 (0.01) - - - - - - - - - - - -Processing fees (BCMM) 35.97 35.97 - - - - - - - - - - - - -Penalties 47.84 47.84 - 22.49 22.49 - - - - 2.45 - 2.45 - 2.35 (2.35)Other paymentsremainders - - - - - - - - - - - - 0.08 0.08 -

E - Withheld at source 33.49 33.49 - 1,188.56

1,188.56 - 1.77 1.77 - 0.68 0.68 - - - -

CNAPS 21.66 21.66 - 366.90 366.90 - 1.77 1.77 - - - - - - -Taxes on wage incomeand similar (IRSA) 11.83 11.83 - 752.32 752.32 - - - - 0.68 0.68 - - - -

Withheld at sourceremainders - - - 69.34 69.34 - - - - - - - - - -

F - Donations 11.33 11.33 - 144.75 144.75 - - - - - - - 0.26 0.26 -In kind (Expertevaluation orsupporting documents)

- - - - - - - - - - - - 0.26 0.26 -

En numéraire 11.33 11.33 - 144.75 144.75 - - - - - - - - - -G - Government’s shareof production (Oilcompanies)

- - - - - - - - - - - - - - -

H - Various premiums - - - - - - - - - - - - - - -I - Social expendituresrequired by law or byan agreement with thegovernment

741.59 741.59 - - - - - - - - - - - - -

Social expenditures inkind (Expert evaluationor supportingdocuments)

1.82 1.82 - - - - - - - - - - - - -

Cash socialexpenditures 739.77 739.77 - - - - - - - - - - - - -


GRAND TOTAL 4,322.31

4,222.43 99.88 6,615.5

56,738.0

9 -122.54 1,570.73

1,520.13 50.60 512.26 504.95 7.30 1,406.4

01,354.9

4 51.47


EY | 71

(en millions deMGA)

Type of payment

011. GALLOIS Etablissement 012. EXXON MOBIL013. MADAGASCAR

INTERNATIONAL TAKMINING S.A.R.L.

014. TULLOW MADAGASCAR 015. MADAGASCAR MININGRESOURCES LTD S.A.R.L.

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

A - State Taxes 957.84 809.72 148.12 165.80 165.82 (0.01) 0.23 0.10 0.13 5,108.68

5,110.03 (1.35) 0.20 0.10 0.10

Export fees 1.81 - 1.81 - - - - - - - - - - - -Import fees 0.28 - 0.28 - - - - - - - - - - - -Lease registration fees 0.59 0.59 - 5.30 5.30 - - - - - - - - - -Custom duties andtaxes on oil products(TPP)

88.22 72.58 15.64 - - - - - - - 0.43 (0.43) - - -

Income taxes (IR) 363.22 363.22 - 0.30 0.30 - 0.10 0.10 - 0.32 0.32 - 0.10 0.10 -Non-resident IR or TFT 202.51 202.51 - - - - - - - - - - - - -

Unrecovered VAT 7.77 7.77 - 160.20 160.20 - - - - 5,108.36

5,108.36 - - - -

Non-refunded VAT 97.00 - 97.00 - - - - - - - - - - - -State taxes remainders 196.45 163.05 33.40 0.00 0.01 (0.01) 0.13 0.00 0.13 - 0.92 (0.92) 0.10 0.00 0.10B - Local taxes 22.62 13.99 8.63 - - - - - - - - - - - -Property tax on builtproperty (IFPB) - - - - - - - - - - - - - - -

Property tax on land(IFT) - - - - - - - - - - - - - - -

Mining rebates 19.36 13.99 5.37 - - - - - - - - - - - -Taxiing charges 3.26 - 3.26 - - - - - - - - - - - -Local taxes remainders - - - - - - - - - - - - - - -C - Segmented fees,duties and royalties 269.44 251.30 18.14 1,771.1

51,771.1

5 - 879.57 858.86 20.71 658.41 658.41 - 819.66 825.05 (5.39)

Mining administrationfees 245.30 245.30 - - - - 858.82 858.82 - - - - 819.52 824.91 (5.39)

Administration feespaid to OMNIS - - - 1,205.9

51,205.9

5 - - - - 438.99 438.99 - - - -

Training fees paid toOMNIS - - - 565.21 565.21 - - - - 219.41 219.41 - - - -

Port - - - - - - - - - - - - - - -Segmented remainders 24.14 6.00 18.14 - - - 20.76 0.05 20.71 - - - 0.14 0.14 -D - Other payments 6.15 5.89 0.26 - 0.30 (0.30) 0.51 0.51 - - - - 16.33 0.33 16.00Other commonpayments (nature andamount provided inannexes) (Note b)

0.26 - 0.26 - - - 0.51 0.51 - - - - 0.33 0.33 -


- - - - - - - - - - - - 16.00 - 16.00


EY | 72

(en millions deMGA)

Type of payment

011. GALLOIS Etablissement 012. EXXON MOBIL013. MADAGASCAR

INTERNATIONAL TAKMINING S.A.R.L.

014. TULLOW MADAGASCAR 015. MADAGASCAR MININGRESOURCES LTD S.A.R.L.

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Alien’s identity card - - - - - - - - - - - - - - -Visa fee - - - - - - - - - - - - - - -Permits release fees - - - - - - - - - - - - - - -Processing fees (BCMM) - - - - - - - - - - - - - - -Penalties 5.89 5.89 - - 0.30 (0.30) - - - - - - - - -Other paymentsremainders - - - - - - - - - - - - - - -

E - Withheld at source 256.08 221.92 34.15 57.63 57.63 - - - - 15.87 15.87 - - - -CNAPS 136.87 109.95 26.91 5.33 5.33 - - - - 2.46 2.46 - - - -Taxes on wage incomeand similar (IRSA) 111.97 111.97 - 39.96 39.96 - - - - 12.37 12.37 - - - -

Withheld at sourceremainders 7.24 - 7.24 12.34 12.34 - - - - 1.04 1.04 - - - -

F - Donations - - - - - - - - - - - - - - -In kind (Expertevaluation orsupporting documents)

- - - - - - - - - - - - - - -

En numéraire - - - - - - - - - - - - - - -G - Government’s shareof production (Oilcompanies)

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -

Cash socialexpenditures - - - - - - - - - - - - - - -


GRAND TOTAL 1,512.13

1,302.82 209.31 1,994.5

91,994.9

0 (0.31) 880.32 859.48 20.84 5,782.97

5,784.32 (1.35) 836.18 825.48 10.70


EY | 73


Type ofpayment

016. NIKO RESSOURCES[ENERMAD] 017. OPHIR ENERGY 018. MADA-AUST S.A.R.L. 019. TANTALUM RARE EARTH

(MALAGASY) S.A.R.L.U

020. CALIBRA RESOURCES &ENGINEERS MADAGASCAR

S.A.R.L.U

Paidbythe

entity

Received by the

StateDiscrepancy

Paidby theentity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

A - StateTaxes 1,82 1,82 - - 209,78 (209,78) 22,43 22,60 (0,17) 566,4

5 485,19 81,25 0,32 0,32 (0,00)

Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Leaseregistrationfees

1.77 1.77 - - - - - - - - - - - - -

Customduties andtaxes on oilproducts(TPP)

- - - - - - - - - 21.87 - 21.87 - - -

Income taxes(IR) 0.05 0.05 - - 0.32 (0.32) 3.20 3.38 (0.18) 0.10 0.10 - 0.32 0.32 -

Non-residentIR or TFT - - - - - - - - - 135.4

7 135.47 - - - -

UnrecoveredVAT - - - - - - - - - 270.9

4 270.94 - - - -

Non-refundedVAT - - - - - - - - - - - - - - -

State taxesremainders - - - - 209.46 (209.46) 19.22 19.22 0.00 138.0

7 78.69 59.38 - 0.00 (0.00)

B - Localtaxes - - - - - - - 8.93 (8.93) 0.02 0.02 - - - -

Property taxon builtproperty(IFPB)

- - - - - - - - - - - - - - -

Property taxon land (IFT) - - - - - - - - - - - - - - -

Miningrebates - - - - - - - 8.93 (8.93) - - - - - -

Taxiingcharges - - - - - - - - - - - - - - -

Local taxesremainders - - - - - - - - - 0.02 0.02 - - - -

C -Segmentedfees, dutiesand royalties

763.78 763.78 - - 383.94 (383.94) 592.5

8 597.42 (4.84) 2.62 0.42 2.20 291.55 607.63 (316.08)


EY | 74


Type ofpayment




S.A.R.L.U

Paidbythe

entity

Received by the

StateDiscrepancy

Paidby theentity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Miningadministration fees

- - - - - - 591.26 589.89 1.37 2.20 - 2.20 291.5

5 607.63 (316.08)

Administration fees paid toOMNIS

374.63 374.63 - - 383.94 (383.94) - - - - - - - - -

Training feespaid to OMNIS

389.15 389.15 - - - - - - - - - - - - -

Port - - - - - - - - - - - - - - -Segmentedremainders - - - - - - 1.31 7.53 (6.21) 0.42 0.42 - - - -

D - Otherpayments - - - - 167.56 (167.56) - - - 147.6

5 0.71 146.94 58.42 58.42 -

Othercommonpayments(nature andamountprovided inannexes)(Note b)

- - - - - - - - - - - - - - -

Othersegmentedpayments(nature andamountprovided inannexes)(Note b)

- - - - - - - - - - - - - - -

Alien’sidentity card - - - - - - - - - - - - - - -

Visa fee - - - - - - - - - - - - - - -Permitsrelease fees - - - - - - - - - - - - - - -

Processingfees (BCMM) - - - - - - - - - - - - - - -

Penalties - - - - 167.56 (167.56) - - - 147.65 0.71 146.94 58.42 58.42 -

Otherpaymentsremainders

- - - - - - - - - - - - - - -


EY | 75


Type ofpayment




S.A.R.L.U

Paidbythe

entity

Received by the

StateDiscrepancy

Paidby theentity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

E - Withheldat source

135.47 135.47 - - - - 131.0

5 136.69 (5.64) 87.70 82.42 5.28 18.24 18.24 -

CNAPS 3.92 3.92 - - - - 22.33 22.33 - 18.01 12.73 5.28 3.93 3.93 -Taxes onwage incomeand similar(IRSA)

102.84 102.84 - - - - 88.62 94.26 (5.64) 69.69 69.69 - 13.13 13.13 -

Withheld atsourceremainders

28.71 28.71 - - - - 20.10 20.10 - - - - 1.18 1.18 -

F - Donations - - - - - - 6.24 6.24 - 0.12 0.12 - - - -In kind(Expertevaluation orsupportingdocuments)

- - - - - - - - - - - - - - -

En numéraire - - - - - - 6.24 6.24 - 0.12 0.12 - - - -G -Government’s share ofproduction(Oilcompanies)

- - - - - - - - - - - - - - -

H - Variouspremiums - - - - - - - - - - - - - - -

I - Socialexpendituresrequired bylaw or by anagreementwith thegovernment

- - - - - - - - - - - - - - -

Socialexpendituresin kind(Expertevaluation orsupportingdocuments)

- - - - - - - - - - - - - - -



EY | 76


Type ofpayment




S.A.R.L.U

Paidbythe

entity

Received by the

StateDiscrepancy

Paidby theentity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

Paidbythe

entity

Received by the

State

Discrepancy

J -Transportation expenses

- - - - - - - - - - - - - - -

GRANDTOTAL

901.08 901.08 - - 761.29 (761.29) 752.2

9 771.88 (19.59) 804.55 568.87 235.67 368.5

4 684.62 (316.08)


EY | 77


Type of payment

021. TOTAL EXPLORATION 022. STERLING ENERGY LTD 023. PETRA OFMADAGASCAR S.A.R.L.

024. MINVESTMADAGASCAR S.A.U. 025. URAMAD S.A

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

A - State Taxes 176.23 176.23 - 1.33 0.10 1.23 - - - 0.18 0.18 - 1.16 1.17 (0.00)Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees 20.15 20.15 - 1.23 - 1.23 - - - - - - - - -Custom duties andtaxes on oil products(TPP)

- - - - - - - - - - - - - - -

Income taxes (IR) - - - - - - - - - 0.03 0.03 - 1.16 1.16 -Non-resident IR or TFT - - - - - - - - - - - - - - -Unrecovered VAT 155.98 155.98 - - - - - - - - - - - - -Non-refunded VAT - - - - - - - - - - - - - - -State taxes remainders 0.10 0.10 - 0.10 0.10 - - - - 0.15 0.15 - - 0.00 (0.00)B - Local taxes - - - - - - - - - 0.02 0.02 - - - -Property tax on builtproperty (IFPB) - - - - - - - - - - - - - - -


Mining rebates - - - - - - - - - - - - - - -Taxiing charges - - - - - - - - - - - - - - -Local taxes remainders - - - - - - - - - 0.02 0.02 - - - -C - Segmented fees,duties and royalties 641.17 642.73 (1.56) 419.68 419.68 - - 121.64 (121.64) 6.13 6.13 0.00 353.20 353.20 -

Mining administrationfees - - - - - - - 121.64 (121.64) 6.13 6.13 0.00 353.20 353.20 -

Administration feespaid to OMNIS 547.39 548.74 (1.35) 309.93 309.93 - - - - - - - - - -

Training fees paid toOMNIS 82.11 82.31 (0.20) 109.75 109.75 - - - - - - - - - -

Port - - - - - - - - - - - - - - -Segmented remainders 11.67 11.67 - - - - - - - - - - - - -D - Other payments 0.10 0.10 - - - - - - - 0.30 0.30 - - - -Other commonpayments (nature andamount provided inannexes) (Note b)

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -

Alien’s identity card - - - - - - - - - - - - - - -Visa fee - - - - - - - - - - - - - - -Permits release fees - - - - - - - - - - - - - - -Processing fees (BCMM) - - - - - - - - - - - - - - -Penalties 0.10 0.10 - - - - - - - 0.30 0.30 - - - -


EY | 78


Type of payment

021. TOTAL EXPLORATION 022. STERLING ENERGY LTD 023. PETRA OFMADAGASCAR S.A.R.L.

024. MINVESTMADAGASCAR S.A.U. 025. URAMAD S.A

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy


E - Withheld at source 18.31 18.31 - - - - - - - - - - - - -CNAPS 1.78 1.78 - - - - - - - - - - - - -Taxes on wage incomeand similar (IRSA) 16.00 16.00 - - - - - - - - - - - - -

Withheld at sourceremainders 0.53 0.53 - - - - - - - - - - - - -

F - Donations 80.68 80.68 - - - - - - - - - - - - -In kind (Expertevaluation orsupporting documents)

- - - - - - - - - - - - - - -

En numéraire 80.68 80.68 - - - - - - - - - - - - -G - Government’s shareof production (Oilcompanies)

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -



GRAND TOTAL 916.49 918.05 (1.56) 421.01 419.78 1.23 - 121.64 (121.64) 6.63 6.63 0.00 354.37 354.37 (0.00)


EY | 79


Type of payment

026. MINERAL PRODUCTSINTERNATIONAL GROUP

S.A.R.L.

027. LABRADORMADAGASCAR 028. AMICOH RESOURCES 029. ROC OIL/SAPETRO 030. ACCRINGTON

MINERALS S.A.

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

A - State Taxes 0.20 0.10 0.10 308.44 307.17 1.28 0.32 0.32 - - - - 0.10 0.10 -Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees - - - 0.19 0.20 (0.00) - - - - - - - - -Custom duties andtaxes on oil products(TPP)

- - - - - - - - - - - - - - -

Income taxes (IR) 0.10 0.10 - 114.16 114.16 - 0.32 0.32 - - - - 0.10 0.10 -Non-resident IR or TFT - - - - - - - - - - - - - - -Unrecovered VAT - - - - - - - - - - - - - - -Non-refunded VAT - - - - - - - - - - - - - - -State taxes remainders 0.10 0.00 0.10 194.09 192.81 1.28 - - - - - - - - -B - Local taxes - - - 7.00 3.60 3.41 - - - - - - - - -Property tax on builtproperty (IFPB) - - - - - - - - - - - - - - -


Mining rebates - - - 7.00 3.60 3.41 - - - - - - - - -Taxiing charges - - - - - - - - - - - - - - -Local taxes remainders - - - - - - - - - - - - - - -C - Segmented fees,duties and royalties 348.04 348.04 - 30.26 29.77 0.49 331.04 331.04 - 392.56 392.56 0.00 - 328.53 (328.53)

Mining administrationfees 348.04 348.04 - 27.26 27.26 - - - - - - - - 328.53 (328.53)

Administration feespaid to OMNIS - - - - - - 220.69 220.69 - 219.43 219.43 0.00 - - -

Training fees paid toOMNIS - - - - - - 110.35 110.35 - 109.71 109.71 0.00 - - -

Port - - - - - - - - - - - - - - -Segmented remainders - - - 3.00 2.51 0.49 - - - 63.41 63.41 - - - -D - Other payments 0.15 0.12 0.04 - - - - - - - - - - - -Other commonpayments (nature andamount provided inannexes) (Note b)

0.12 0.12 - - - - - - - - - - - - -


0.04 - 0.04 - - - - - - - - - - - -

Alien’s identity card - - - - - - - - - - - - - - -Visa fee - - - - - - - - - - - - - - -Permits release fees - - - - - - - - - - - - - - -


EY | 80


Type of payment

026. MINERAL PRODUCTSINTERNATIONAL GROUP

S.A.R.L.

027. LABRADORMADAGASCAR 028. AMICOH RESOURCES 029. ROC OIL/SAPETRO 030. ACCRINGTON

MINERALS S.A.

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Processing fees (BCMM) - - - - - - - - - - - - - - -Penalties - - - - - - - - - - - - - - -Other paymentsremainders - - - - - - - - - - - - - - -

E - Withheld at source - - - 18.16 18.16 - 3.22 3.22 - - - - - - -CNAPS - - - 9.96 9.96 - - - - - - - - - -Taxes on wage incomeand similar (IRSA) - - - 5.78 5.78 - 3.22 3.22 - - - - - - -

Withheld at sourceremainders - - - 2.42 2.42 - - - - - - - - - -

F - Donations - - - - - - - - - 0.32 0.32 - - - -In kind (Expertevaluation orsupporting documents)

- - - - - - - - - - - - - - -

En numéraire - - - - - - - - - 0.32 0.32 - - - -G - Government’s shareof production (Oilcompanies)

- - - - - - - - - - - - - - -


- - - - - - - - - 37.85 37.85 - - - -


- - - - - - - - - 30.30 30.30 - - - -

Cash socialexpenditures - - - - - - - - - 7.55 7.55 - - - -


GRAND TOTAL 348.39 348.26 0.13 363.87 358.70 5.17 334.58 334.58 - 430.73 430.73 0.00 0.10 328.63 (328.53)


EY | 81

(en millions deMGA)

Type of payment

031. MADAGASCARCONSOLIDATED MINING S.A. 032. TANETY LAVA S.A.R.L. 033. ACCESS MADAGASCAR

S.A.R.L.034. TOLIARA SANDS

S.A.R.L.035. CLASSIC REAL STONES

S.A.R.L.

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

A - State Taxes 16.95 26.41 (9.45) 174.09 95.11 78.98 0.06 0.14 (0.09) 111.33 68.02 43.30 5.32 8.39 (3.07)Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees 1.14 1.17 (0.03) - - - 0.01 - 0.01 0.68 0.68 - - - -Custom duties andtaxes on oil products(TPP)

- - - 37.50 25.31 12.19 - - - 16.91 17.12 -0.21 0.59 1.00 (0.41)

Income taxes (IR) 0.10 10.71 (10.61) 0.32 0.32 - - 0.10 (0.10) 0.43 0.43 - 1.30 1.80 (0.50)Non-resident IR or TFT 1.19 - 1.19 - - - - - - 17.18 17.18 - - - -Unrecovered VAT 1.72 1.72 - - - - - - - - - - - - -Non-refunded VAT - - - - - - - - - 43.17 - 43.17 - - -State taxes remainders 12.81 12.81 (0.00) 136.27 69.48 66.79 0.05 0.04 0.01 32.96 32.61 0.35 3.43 5.59 (2.16)B - Local taxes - - - - - - - - - - - - - - -Property tax on builtproperty (IFPB) - - - - - - - - - - - - - - -


Mining rebates - - - - - - - - - - - - - - -Taxiing charges - - - - - - - - - - - - - - -Local taxes remainders - - - - - - - - - - - - - - -C - Segmented fees,duties and royalties 242.90 243.01 (0.12) 179.39 191.53 (12.14) 405.63 296.66 108.97 56.70 56.70 - 28.54 137.42 (108.88)

Mining administrationfees 242.90 243.01 (0.12) 179.34 191.53 (12.19) 405.63 296.66 108.97 56.04 56.04 - 28.54 137.42 (108.88)



Port - - - - - - - - - - - - - - -Segmented remainders - - - 0.05 - 0.05 - - - 0.66 0.66 - - - -D - Other payments 6.49 6.51 (0.03) 11.72 5.10 6.62 0.46 37.49 (37.03) 2.01 2.01 - 23.49 32.60 (9.11)Other commonpayments (nature andamount provided inannexes) (Note b)

0.55 0.55 - - - - - - - - - - - - -


- - - - - - - 7.57 (7.57) - - - - 5.85 (5.85)

Alien’s identity card - - - - - - - - - 1.71 1.71 - - - -Visa fee - - - 6.62 - 6.62 - - - 0.30 0.30 - - - -Permits release fees - - - - - - - - - - - - - - -


EY | 82

(en millions deMGA)

Type of payment

031. MADAGASCARCONSOLIDATED MINING S.A. 032. TANETY LAVA S.A.R.L. 033. ACCESS MADAGASCAR

S.A.R.L.034. TOLIARA SANDS

S.A.R.L.035. CLASSIC REAL STONES

S.A.R.L.

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Processing fees (BCMM) 5.65 5.65 - - - - - 29.51 (29.51) - - - - - -Penalties 0.29 0.32 (0.03) 5.10 5.10 (0.00) 0.46 0.41 0.04 - - - 23.49 26.75 (3.26)Other paymentsremainders - - - - - - - - - - - - - - -

E - Withheld at source 23.54 23.54 - 193.09 193.09 - 4.69 4.69 - 181.26 180.95 0.31 24.44 24.44 -CNAPS 6.45 6.45 - 59.85 59.85 - 2.73 2.73 - 23.80 23.49 0.31 11.51 11.51 -Taxes on wage incomeand similar (IRSA) 12.44 12.44 - 116.32 116.32 - 0.33 0.33 - 128.92 128.92 - 12.93 12.93 -

Withheld at sourceremainders 4.66 4.66 - 16.92 16.92 - 1.62 1.62 - 28.53 28.53 - - - -

F - Donations 104.97 104.97 - - - - - - - 20.36 20.36 - - - -In kind (Expertevaluation orsupporting documents)

15.81 15.81 - - - - - - - 12.09 12.09 - - - -

En numéraire 89.16 89.16 - - - - - - - 8.27 8.27 - - - -G - Government’s shareof production (Oilcompanies)

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -



GRAND TOTAL 394.85 404.44 (9.60) 558.29 484.83 73.46 410.83 338.98 71.85 371.66 328.04 43.62 81.79 202.85 (121.06)


EY | 83


Type of payment

036. PETROMAD 037. EAX /CANDAX 038. MADAGASCAR MININGINVESTMENTS S.A.R.L.U.

039. UNIVERSALEXPLORATION MADAGASCAR

S.A.R.L.040. PROCHIMAD

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

A - State Taxes - - - 0.10 0.10 - 0.16 0.16 - 0.15 0.15 - 69.16 69.16 -Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees - - - - - - - - - - - - - - -Custom duties andtaxes on oil products(TPP)

- - - - - - - - - - - - - - -

Income taxes (IR) - - - 0.10 0.10 - 0.16 0.16 - 0.15 0.15 - 5.09 5.09 -Non-resident IR or TFT - - - - - - - - - - - - - - -Unrecovered VAT - - - - - - - - - - - - - - -Non-refunded VAT - - - - - - - - - - - - - - -State taxes remainders - - - - - - - - - - - - 64.06 64.06 -B - Local taxes - - - - - - - - - - - - 2.74 2.74 -Property tax on builtproperty (IFPB) - - - - - - - - - - - - 1.85 1.85 -


Mining rebates - - - - - - - - - - - - 0.89 0.89 -Taxiing charges - - - - - - - - - - - - - - -Local taxes remainders - - - - - - - - - - - - - - -C - Segmented fees,duties and royalties - 197.55 (197.55) 205.09 205.09 - 196.19 196.19 0.01 137.72 137.72 - 31.06 31.06 -

Mining administrationfees - - - - - - 196.19 196.19 0.01 137.41 137.41 - 29.98 29.98 -

Administration feespaid to OMNIS - 197.55 (197.55) 131.58 131.58 - - - - - - - - - -

Training fees paid toOMNIS - - - 54.76 54.76 - - - - - - - - - -

Port - - - - - - - - - - - - - - -Segmented remainders - - - 18.75 18.75 - - - - 0.32 0.32 - 1.08 1.08 -D - Other payments - - - 0.21 0.21 - 0.10 0.10 - 6.80 0.10 6.70 0.09 - 0.09Other commonpayments (nature andamount provided inannexes) (Note b)

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -

Alien’s identity card - - - - - - - - - - - - - - -Visa fee - - - - - - - - - - - - - - -Permits release fees - - - - - - - - - - - - - - -Processing fees (BCMM) - - - - - - - - - - - - - - -Penalties - - - 0.21 0.21 - 0.10 0.10 - 6.80 0.10 6.70 0.09 - 0.09


EY | 84


Type of payment

036. PETROMAD 037. EAX /CANDAX 038. MADAGASCAR MININGINVESTMENTS S.A.R.L.U.

039. UNIVERSALEXPLORATION MADAGASCAR

S.A.R.L.040. PROCHIMAD

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy

Paid bythe

entity

Received by the

State

Discrepancy


E - Withheld at source - - - 29.50 29.50 - - - - 65.50 65.50 - 34.29 34.29 -CNAPS - - - 1.34 1.34 - - - - 11.39 11.39 - 23.73 23.73 -Taxes on wage incomeand similar (IRSA) - - - 28.16 28.16 - - - - 54.11 54.11 - 4.14 4.14 -

Withheld at sourceremainders - - - - - - - - - - - - 6.42 6.42 -

F - Donations - - - - - - - - - - - - 0.03 0.03 -In kind (Expertevaluation orsupporting documents)

- - - - - - - - - - - - - - -

En numéraire - - - - - - - - - - - - 0.03 0.03 -G - Government’s shareof production (Oilcompanies)

- - - - - - - - - - - - - - -


- - - 158.78 158.78 - - - - - - - - - -


- - - - - - - - - - - - - - -

Cash socialexpenditures - - - 158.78 158.78 - - - - - - - - - -


GRAND TOTAL - 197.55 (197.55) 393.69 393.69 - 196.45 196.45 0.01 210.17 203.47 6.70 137.36 137.27 0.09


EY | 85


Type of payment

041. FARASANDS S.A.R.L.042. INTERNATIONAL

MINING CORPORATION LTDS.A.R.L.

043. MADAGASCARRESSOURCES S.A.R.L. 044. VELONAODY Fabien

045. MADAGASCAR WISCOGUANGXIN KAM WAHRESSOURCES S.A.U.

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

A - State Taxes - 0.29 (0.29) 0.33 0.33 - 1.61 1.29 0.32 - - - 0.10 0.10 -Export fees - - - - - - - - - - - - - - -Import fees - - - - - - - - - - - - - - -Lease registration fees - - - - - - - - - - - - - - -Custom duties andtaxes on oil products(TPP)

- - - - - - - - - - - - - - -

Income taxes (IR) - 0.10 (0.10) 0.10 0.10 - 0.32 - 0.32 - - - 0.10 0.10 -Non-resident IR or TFT - - - - - - - - - - - - - - -Unrecovered VAT - - - - - - - - - - - - - - -Non-refunded VAT - - - - - - - - - - - - - - -State taxes remainders - 0.19 (0.19) 0.23 0.23 - 1.29 1.29 - - - - - - -B - Local taxes - - - - - - - - - - - - - - -Property tax on builtproperty (IFPB) - - - - - - - - - - - - - - -


Mining rebates - - - - - - - - - - - - - - -Taxiing charges - - - - - - - - - - - - - - -Local taxes remainders - - - - - - - - - - - - - - -C - Segmented fees,duties and royalties 122.62 122.62 - 133.65 133.65 - 163.54 163.54 - 137.55 160.13 (22.58) 231.04 231.04 -

Mining administrationfees 122.62 122.62 - 133.59 133.59 - 163.49 163.49 - 137.55 160.13 (22.58) 70.55 70.55 -



Port - - - - - - - - - - - - - - -Segmented remainders - - - 0.05 0.05 - 0.05 0.05 - - - - 160.50 160.50 -D - Other payments 61.31 61.74 (0.43) 36.69 36.69 - - - - - - - 9.86 9.86 -Other commonpayments (nature andamount provided inannexes) (Note b)

- - - 0.13 0.13 - - - - - - - - - -


- - - 3.16 3.16 - - - - - - - - - -

Alien’s identity card - - - - - - - - - - - - - - -Visa fee - - - - - - - - - - - - 9.19 9.19 -Permits release fees - - - - - - - - - - - - - - -


EY | 86


Type of payment

041. FARASANDS S.A.R.L.042. INTERNATIONAL

MINING CORPORATION LTDS.A.R.L.

043. MADAGASCARRESSOURCES S.A.R.L. 044. VELONAODY Fabien

045. MADAGASCAR WISCOGUANGXIN KAM WAHRESSOURCES S.A.U.

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Paid bythe

entity

Received bythe

State

Discrepancy

Processing fees (BCMM) - - - - - - - - - - - - - - -Penalties 61.31 61.74 (0.43) 33.40 33.40 - - - - - - - 0.67 0.67 -Other paymentsremainders - - - - - - - - - - - - - - -

E - Withheld at source - - - - - - - - - - - - 1.66 1.66 -CNAPS - - - - - - - - - - - - - - -Taxes on wage incomeand similar (IRSA) - - - - - - - - - - - - 1.66 1.66 -

Withheld at sourceremainders - - - - - - - - - - - - - - -

F - Donations - - - - - - - - - - - - 1.64 1.64 -In kind (Expertevaluation orsupporting documents)

- - - - - - - - - - - - 0.64 0.64 -

En numéraire - - - - - - - - - - - - 1.00 1.00 -G - Government’s shareof production (Oilcompanies)

- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -


- - - - - - - - - - - - - - -



GRAND TOTAL 183.92 184.65 (0.73) 170.67 170.67 - 165.14 164.82 0.32 137.55 160.13 (22.58) 244.31 244.31 -


EY | 87


Type of payment

046. ENERGIZER RESSOURCES (Minerals)S.A.R.L. 047. RASAMIZAFINDROSOA Dauphin Total Paid by

the entityTotal Received

by the StateTotal residualdiscrepanciesPaid by the

entityReceived by

the State Discrepancy Paid by theentity

Received bythe State Discrepancy

A - State Taxes - 51.09 (51.09) - - - 212,388.43 211,749.26 639.18Export fees - - - - - - 102.86 83.42 19.44Import fees - - - - - - 297.79 297.51 0.28Lease registration fees - - - - - - 117.00 104.39 12.61Custom duties andtaxes on oil products(TPP)

- 21.85 (21.85) - - - 8,101.15 7,720.03 381.12

Income taxes (IR) - - - - - - 3,735.31 3,746.70 -11.39Non-resident IR or TFT - - - - - - 6,340.88 6,387.43 -46.55Unrecovered VAT - - - - - - 19,909.63 19,909.63 0.00Non-refunded VAT - - - - - - 151,784.75 151,760.17 24.57State taxes remainders - 29.24 (29.24) - - - 21,999.07 21,739.98 259.10B - Local taxes - - - - - - 4,045.26 3,812.78 232.48Property tax on builtproperty (IFPB) - - - - - - 21.65 21.51 0.15

Property tax on land(IFT) - - - - - - 11.01 11.01 -

Mining rebates - - - - - - 3,925.82 3,728.00 197.82Taxiing charges - - - - - - 80.87 46.35 34.51Local taxes remainders - - - - - - 5.91 5.91 -C - Segmented fees,duties and royalties - 91.29 (91.29) 33.14 33.14 - 31,890.76 33,154.00 -1,263.24

Mining administrationfees - 91.29 (91.29) 33.14 33.14 - 15,632.90 16,470.37 -837.46

Administration feespaid to OMNIS - - - - - - 5,067.39 5,650.23 -582.84

Training fees paid toOMNIS - - - - - - 2,189.19 2,189.40 -0.20

Port - - - - - - 3,726.49 3,726.49 -Segmented remainders - - - - - - 5,274.79 5,117.51 157.27D - Other payments - - - 1.66 1.66 - 2,175.60 2,146.80 28.80Other commonpayments (nature andamount provided inannexes) (Note b)

- - - - - - 38.38 36.47 1.91


- - - - - - 106.09 52.87 53.22

Alien’s identity card - - - - - - 693.00 693.00 -Visa fee - - - - - - 331.21 324.59 6.62Permits release fees - - - - - - 486.45 486.46 (0.01)Processing fees (BCMM) - - - - - - 41.62 71.13 (29.51)Penalties - - - 1.66 1.66 - 478.77 482.22 (3.44)Other paymentsremainders - - - - - - 0.08 0.08 -


EY | 88


Type of payment

046. ENERGIZER RESSOURCES (Minerals)S.A.R.L. 047. RASAMIZAFINDROSOA Dauphin Total Paid by

the entityTotal Received

by the StateTotal residualdiscrepanciesPaid by the

entityReceived by

the State Discrepancy Paid by theentity

Received bythe State Discrepancy

E - Withheld at source 0.20 0.20 - - - - 47,911.75 48,651.28 (739.54)CNAPS - - - - - - 4,871.05 5,617.88 (746.83)Taxes on wage incomeand similar (IRSA) 0.20 0.20 - - - - 40,808.31 40,808.26 0.05

Withheld at sourceremainders - - - - - - 2,232.38 2,225.15 7.24

F - Donations - - - - - - 1,421.06 1,421.06 -In kind (Expertevaluation orsupporting documents)

- - - - - - 756.45 756.45 -

En numéraire - - - - - - 664.60 664.60 -G - Government’s shareof production (Oilcompanies)

- - - - - - - - -

H - Various premiums - - - - - - - - -I - Social expendituresrequired by law or byan agreement with thegovernment

- - - - - - 4,489.46 4,489.46 -


- - - - - - 192.43 192.43 -

Cash socialexpenditures - - - - - - 4,297.03 4,297.03 -

J - Transportationexpenses - - - - - - - - -

GRAND TOTAL 0.20 142.58 (142.39) 34.80 34.80 - 304,322.32 305,424.64 -1,102.32

EITI Reconciliation ReportFiscal Year 2012

EY | 89

3.2.2 Comments

3.2.2.1 Regarding the significant flows per type of payment

The following charts present the total payment flows from the extractive companies to the publicentities for the fiscal year 2012:

The total flows received by the State from the extractive industries for the fiscal year 2012 amountsto MGA 305.42 billions which is USD 139.15 millions.

As shown in the above chart, the most significant flows are essentially the non-refunded VAT whichrepresents 50%, the Taxes on wage income and similar (IRSA) which represents 13%, the UnrecoveredVAT which represents 7%, the Mining administration fees representing 5%, the net VAT which is 4%,and other payments which are 21% of the payment flows received by the State.

► The VAT17non-refunded by the State to the extractive companies, for the fiscal year 2012amounts to MGA 151.76 billions which is USD 69.12 millions. 98% of these flows weregenerated by the Ambatovy project.

► The IRSA paid to the State by the extractive companies for the fiscal year 2012 amounts toMGA 40.80 billions which is USD 18.6 millions.83% of these flows were from the Ambatovyproject and 10% from QMM.

► The VAT unrecovered by the companies from the tax administrations amounts to MGA 19.90billions, which is USD 9.1 millions.The Ambatovy project generated 61% of these flows, andTULLOW Madagascar generated 26%.

► The Mining Administration Fees (FAM) amounts to MGA 16.47 billions which is USD 7.50millions.The extractive companies that contributed most to this flow are PAM Madagascar,Madagascar Chromium Company, Mainland and Goldsand.

► The net VAT (Due VAT) represents MGA 11.37 billions which is USD 5.18 millions.These flowswere mainly generated by the Ambatovy Project and Holcim.

17The non-refunded VAT corresponds to VAT paid to suppliers, the refund of which has been claimed from the State inaccordance with the law for the concerned companies, but the refund was not paid to the companies within the time limit asprescribed by the law.

50%

13%

7%

5%4%

21%

Payment flows received in 2012 per typeof payment

TVA non remboursée

Impôts sur les revenussalariaux et assimilés (IRSA)

TVA non récupérée

Frais d’administration minière

TVA nette (TVA à payer)

Autres paiements


EY | 90

The other payments are the flows that individually taken are less than 3% of the payment flowsreceived by the State.

Note on the non-refunded VATIn a letter dated January 22nd 2015, addressed to the Minister attached to the Presidency in chargeof the Strategic Resources, the Minister of Finances and Budget has precised the status of manyrequests of VAT refund submitted by the extractive companies for the fiscal year 2012.The letterreports on the refunds approved by the Tax General Directorate, especially during the last quarter of2014, for a total amount of MGA 127.73 billions, which is USD 58.19 millions.

3.2.2.2 The significant flows per public entity

The following charts present the total of the payment flows paid by the extractive companies for themain public entities or the administrations and their branches.The details per type of payment per public entity are presented in the annexes.

As seen in the above chart, the main payment flows were paid to the Tax General Directoraterepresenting 80% for MGA 244.35 billions which is USD 111.32 millions. The flows paid to the DGIare mostly the State Taxes (non-refunded TVA, unrecovered VAT, TFT, IR etc.) and the payment oftaxes withheld at source (IRSA).

3.2.2.3 Regarding the statements without counterpart by the State

During our reconciliation works, some payment flows were considered as being statements withoutcounterpart on the State’s side where the unilateral statements of the extractive industries were

80%

6%2%

3% 2%7%

Payment flow per public entity

Direction Général desImpôts (DGI)

BCMM

Douane

OMNIS

CNAPS

Autres entités


EY | 91

taken into account. As a result, to cancel the discrepancy, an adjustment of the corresponding amounthas been made to the information from the State.We have classified as statements without counterpart, the payment flows to the entities the flow ofwhich were:

► Very different and/or collected by various companies (health contribution, …);► Non-traceable per company within the administration (Alien’s identity card…);► Traceable only within the companies by their nature (unrecovered VAT, social expenditures,

donations…);► Small and were not collected (car tax…).

The total of the statements without counterpart of the State for the fiscal year 2012 is MGA 28.48billions which is USD 12.97 millions.

As illustrated above, the statements without counterpart are essentially the unrecovered VATrepresenting 68% of the flows, the cash social expenditures that represent 12% of the flows and otherpayments representing 14% of the statements without counterpart at the State.

3.2.2.4 Regarding the residual discrepancy

It is to be noted that a negative discrepancy means that the State has reported more revenues thanthe payments made by the companies. Conversely, a discrepancy is positive when the companies havereported payments superior to the revenues received by the State.

Following our reconciliation, the total amount of the residual discrepancy amount to MGA 1.11 billionswhich is USD 0.50 millions for the fiscal year 2012, representing 0.36% of the total revenues receivedby the State.

68%

12%

6% 14%

Statement without counterpart fromthe State

TVA non récupérée

Dépenses sociales ennuméraire

Organisation sanitaired'entreprise

Autres paiements


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The table below presents the details of the discrepancies:(in millions MGA)

Type of tax

Amount paidby the

extractivecompanies

Amountsreceived bythe State

Residualdiscrepan

cies

Residualdiscrepan

cies(source:

companies)

Residualdiscrepancies (source:

State)(1) (2) (1)-(2)

Custom duties and taxes on oilproducts (TPP) 8,101.15 7,720.03 381.12 -851.15 1,232.27

Net VAT (due VAT) 11,696.96 11,370.54 326.42 -210.82 537.24Mining rebates 3,925.82 3,728.00 197.82 203.34 -5.53Mining royalties 1,685.17 1,584.03 101.13 87.03 14.11Administration fees paid to OMNIS 5,067.39 5,650.23 -582.84 -582.84 0.00CNAPS 4,871.05 5,617.88 -746.83 -752.41 5.59Mining Administration Fees 15,632.90 16,470.37 -837.46 -557.87 -279.60Other non significant payments 253,341.89 253,283.56 58.33 -591.99 650.32

TOTAL 304,322.32 305,424.64 -1,102.32 -3,256.72 2,154.40

(in millionsUSD)

Type of tax

Amount paidby the

extractivecompanies

Amountsreceived bythe State

Residualdiscrepan

cies

Residualdiscrepan

cies(source:sociétés)

Residualdiscrepancies(source:

État)(1) (2) (1)-(2)Custom duties and taxes on oilproducts (TPP) 3.69 3.52 0.17 -0.39 0.56

TVA nette (TVA à payer) 5.33 5.18 0.15 -0.10 0.24Mining rebates 1.79 1.70 0.09 0.09 -0.00Mining royalties 0.77 0.72 0.05 0.04 0.01Administration fees paid to OMNIS 2.31 2.57 -0.27 -0.27 -CNAPS 2.22 2.56 -0.34 -0.34 0.00Mining Administration fees 7.12 7.50 -0.38 -0.25 -0.13Other non significant payments 115.42 115.39 0.03 -0.27 0.30TOTAL 138.65 139.15 -0.50 -1.48 0.98

The explanation and breakdown of the significant discrepancies are provided below:

3.2.2.4.1 Custom duties and taxes on oil products (TPP)

Les Custom duties and taxes on oil products (TPP) have shown a negative discrepancy ofMGA 381.12 millions which is USD 0.17 millions for the benefit of the companies. The discrepancy ismainly composed of negative discrepancies from the companies amounting to MGA 851.15 millionsand positive discrepancies from the State for MGA 1,232.27 millions.It is worth noting that the negative discrepancies are related to the flows that were traced with theCustoms, but not tracedwith the companies and the positive discrepancies are those traced with thecompanies but not found with the Customs.

This discrepancy is mainly composed of the discrepancies traced during the reconciliations of theinformation from the customs and the following companies: QMM, PAM Madagascar, HOLCIM and theAmbatovy project, the details of which are presented in the following table:


EY | 93

(in MGA)

Company

Elements traced at thecustoms, but not with

the company(1)

Elements traced withthe companies, but not

with the customs(2)

Residual discrepancy(2 – 1)

QMM -651,958,161.00 863,693,054.00 211,734,893.00PAM Madagascar - 113,434,560.00 113,434,560.00HOLCIM -71,138,701.00 136,986,749.00 65,848,048.00DYNATEC Madagascar -116,792,196.00 36,679,554.00 -80,112,642.00Other companies 11,265,054.00 81,479,613.49 70,214,559.49TOTAL -851,154,112.00 1,232,273,530.49 381,119,418.49

3.2.2.4.2 Net VAT (due VAT)The net VAT paid to the General Tax Directorate has generated a positif discrepancy of MGA 326.42millions which is 0.15 millionswhich is mainly composed with a positive discrepancy from HOLCIM forMGA 537.14 millions and a negative discrepancy of MGA 209.46 millions which is the result of thethe absence of the information from OPHIR Energy.

3.2.2.4.3 Mining rebatesThe mining rebates paid to the Mines Directorate have generated a total positive discrepancy of MGA197.82 millions which is USD 0.09 millions mainly composed with a positive discrepancy of MGA204.32 millions which are not traced at QMM and negative discrepancies with MADA AUST andKRAOMA.

3.2.2.4.4 Redevance minièreThe mining royalties paid to the Mines Directorate have generated a total positive discrepancy of MGA101.13 millions which is USD 0.05 millions, discrepancies that are mainly with the QMM and Mainland.

3.2.2.4.5 Administration fees paid to OMNISThe administration fees paid to the OMNIS have generated a negative discrepancy of MGA 582.84millions which isUSD 0.27 millions.This discrepancy is mainly related to the administration fees recorded at the OMNISon behalf of OPHIR ENERGYand PETROMAD that did not provide the canvas during the reconciliation.

3.2.2.4.6 CNAPSCNAPS has generated a total negative discrepancy of 746.83 millions which is USD 0.34 millionscorresponding mainly to the contributions paid and were not reconciled with the data of the groupPAM, especially those of PAM SAKOA.

3.2.2.4.7 Mining Administration fees (FAM)The mining administration fees paid to the BCMM have shown a total negative discrepancy of MGA837.46 millions equivalent to USD 0.38 millions to the benefit of the State.

This discrepancy is mainly composed in one hand by mining administration fees traced with the BCMMand is also related to the companies that did not provide filled out and/or signed canvas whicharePETRA OF MADAGASCAR (MGA – 121.64 millions), ACCRINGTON MINERALS (MGA – 328.53millions) andENERGIZER RESSOURCES (Minerals) S.A.R.L (MGA – 91.29 millions).In the other hand, a negative discrepancy has been noted regarding the payments of miningadministration fees related to licences that were disposed at the time of the reconciliation, but withinthe BCMM, they are still recorded to the name of the seller. This was the case of CALIBRARESSOURCES MINERALS (CREM) that sold their licences to SINBAD. Mining administration fees arerecorded with the BCMM at the name of CREM, for an amount of MGA 316.08 millions which is USD0.14 millions.


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3.3 Entities from the Group B18

3.3.1 Schedule of the payment flows per company, within the public entities in thousands MGA(In thousands MGA)

NAME OF THE COMPANY

PAYMENT FLOW

BCMM OMNISMINES

DIRECTORATE

DGI CUSTOMS ONEOMERT

MICTSL/SMMC

ANDEA CNAPS MININ

TER TOTAL

Legal persons – Mining companies 877,397.80 - 4,290.00 46,818.07 104,688.08 - - - - - - 1,033,193.95048. AVANA RESOURCES S.A.R.L.U. 92,461.20 - - 2.00 - - - - - - - 92,463.20049. INTERNATIONAL MINING RESEARCHGROUP S.A.R.L.U

15,680.00 - - 102.00 - - - - - - - 15,782.00

050. RECHERCHES MINIERES DEMADAGASCAR S.A.R.L.

107,878.40 - 4,290.00 1,330.05 - - - - - - - 113,498.45

051. HOLA FIRM S.A.R.L. 35,270.60 - - 1,144.00 62,803.21 - - - - - - 99,217.81052. IRON ORE CORPORATION OFMADAGASCAR S.A.R.L.

100,378.40 - - - - - - - - - - 100,378.40

053. NAN TIN POLYCHROME S.A. 64,811.30 - - 15,713.84 14,582.81 - - - - - - 95,107.95054. COAL MINING MADAGASCAR S.A.R.L. 40,480.00 - - 16,045.30 27,302.06 - - - - - - 83,827.36055. INDUSTRIE MINIERE SINO-AFRIQUES.A.R.L.

116,302.70 - - 922.41 - - - - - - - 117,225.11

056. MAZOTO MINERALS S.A.R.L. 84,956.00 - - 202.00 - - - - - - - 85,158.00057. INTERNATIONAL MININGDEVELOPMENT LTD S.A.R.L.

80,088.00 - - 102.00 - - - - - - - 80,190.00

059. VATOSOA MINING S.A. 60,046.40 - - 10,934.47 - - - - - - - 70,980.87060. CAPRICORN ENTERPRISESMADAGASCAR (C.E.M) S.A.R.L.

79,044.80 - - 320.00 - - - - - - - 79,364.80

Personnes physiques - Sociétés Minières 27,604.80 - - - - - - - - - - 27,604.80058. RAMAROSON Anjoanina Harivahy 27,604.80 - - - - - - - - - - 27,604.80Total payment flows 905,002.60 - 4,290.00 46,818.07 104,688.08 - - - - - - 1,060,798.75

18 The companies whose cumulated payment were between 97% and 98% of the significant flows perceived by the State. Each of these companies in this group won’t have to fill out a reconciliation

canvas, but will be subject to a disaggregated unilateral statement from the administrations that received the payments.


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3.3.2 Comments

The payment flows from the extractive companies of the group B for the fiscal year 2012 that amountto MGA 1.06 millions which is USD 0.48 millionscomposed by 97% of legal persons with a flow of MGA1.03 billions and 3% of natural persons with a flow of MGA 0.027 millions.

As noted in the chart below, the main flows for the extractive companies of the group B are the miningadministration fees paid to the BCMM that amounts to MGA 905.02 millions which is USD 0.41millions.

(in thousands MGA)


EY | 97

3.4 Entities of the Group C19

3.4.1 Schedule of the payment flows per company, at the public entities inthousands MGA(en milliers de MGA)

Category

FLUX DE PAIEMENT

BCMM OMNISMINES

DIRECTORATE DGI CUSTOMS ONE OMERT

MICTSL/SMMC ANDEA CNAPS

MININTER TOTAL

Mining companies 1,634,855.22 - 64,946.10 131,647.47 55,354.12 10,792.04 - - - - - 1,897,594.95

Legal persons 1,282,799.82 - 42,097.30 127,904.28 48,796.37 10,792.04 - - - - - 1,512,389.81

Natural persons 352,055.40 - 22,848.80 3,743.19 6,557.75 - - - - - - 385,205.14

Oil companies - 18,271.30 - 320.00 - - - - - - - 18,591.30

Legal persons - 18,271.30 - 320.00 - - - - - - - 18,591.30

Total 1,634,855.22 18,271.30 64,946.10 131,967.47 55,354.12 10,792.04 - - - - - 1,916,186.25

19Companies, whose cumulated payment to the administration are between 98% and 100% of the significant flows received by the State. The companies included in this group don’t have theobligation to fill out the reconciliation canvas, but will be subject to an agregated unilateral statement filled out by the State.


EY | 98

3.4.2 Comments

The total payment flows of the extractive companies of the group C amount to MGA 1.92 billionswhich is USD 0.87 millions.This amount is mainly related to the mining administration fees paid to the BCMM that amounts toMGA 1.63 billions which is USD 0.74 millions.


EY | 99

4 Other results

4.1 Donations-related results

In accordance with the Terms of reference for the reconciliation of 2014, the multiparty Groupedefines donation as:« any cash and in-kind transfers from themining and oil companies.It is to be noted that the following shall not be considered as donations:- Sponsorings that are within the communication activities;- Environmental and social requirements defined in the clear specifications by a government entity ;- Port, road, railway… infrastructures for the mining or oil operation. Even though the local populationbenefit from these infrastructures, they shall not in any case be considered as donations.By contrast,routing infrastructures made by mining companies for strictly public usage as well as socialinfrastructures constructions, free of charge, are considered as donations. »

Donations from exctractive companies can be cash or in kind.

For 2012, the total of the donations amounts to MGA 1,421.06 millions which is USD 647,416.38,MGA 664 millions of which is cash and MGA 756.45 millions in kind.

Les tableaux ci-dessous montrent le détail des dons octroyés par société pour l’exercice 2012.

4.1.1 QIT MADAGASCAR MINERALS S.A.

Description Beneficiary Amounts MGAAmounts

USDCash donationsSupport to sport association Sport club, Army 108,090,402.06 49,244.59Various donations Chamber of Commerce, Community 44,451,915.00 20,251.72Support to communityassociation

Community, miscellaneous, army 36,421,333.48 16,593.09

Miscellaneous for training Miscellaneous, Community 34,336,055.14 15,643.06Miscellaneous Miscellaneous, army, Anosy region 23,981,767.03 10,925.78Scolarship and educationalassistance

Miscellaneous, Anosyregion, Municipality 16,566,294.00 7,547.39

Support to music association Miscellaneous 11,874,693.12 5,409.96Purchase of zebus Miscellaneous 10,500,000.00 4,783.66KADAHA Project KADAHA Tour 4,651,696.90 2,119.25

Machinery and equipmentMiscellaneous, army, Anosy region,Municipality

599,000.00 272.90

SUBTOTAL 291,473,156.73 132,791.41Donations in kind

Machinery and equipmentMiscellaneous, army, Anosy region,Municipality

45,259,502.50 20,619.65

Scolarship and educationalassistance

Community 33,924,800.00 15,455.70

KADAHA Project KADAHA Tour 23,255,788.00 10,595.04Miscellaneous Miscellaneous 18,729,000.00 8,532.69Goodies Miscellaneous 16,410,568.00 7,476.44IT equipments Miscellaneous, Community 9,984,500.00 4,548.81Purchase of zebus Miscellaneous 9,450,000.00 4,305.30Foodstuffs Miscellaneous, Community 6,245,200.00 2,845.23Support to music association Miscellaneous 4,000,000.00 1,822.35


EY | 100


USD

Miscellaneous donationsChamber of Commerce, Army,Community

4,000,000.00 1,822.35

Support to sport association Sport club, Army 2,750,000.00 1,252.86Study for bus stop shelters Divers 2,581,906.25 1,176.28SUBTOTAL 176,591,264.75 80,452.70TOTAL 468,064,421.48 213,244.11

4.1.2 MADAGASCAR OIL


USDDonationsin cash

Financial Contribution to policebarracks of Ankondromena

Telovavy 10,000,000.00 4,555.87

Financial contribution andtransport of children duringCEPE exams

Ankondromena 9,740,000.00 4,437.42

District of Miandrivazo,donations for sinister victims

Miandrivazo 9,246,000.00 4,212.36

Contribution to the COJMMelakyday and COJM Melaky games

Melaky 2,000,000.00 911.18

OPCI fair OPCI Miandrivazo 200,000.00 91.12Travel costs for the FRAMteacher in Ankisatra

Ankisatra 50,000.00 22.78

SUB TOTAL 31,236,000.00 14,230.73Donations in kind

Construction of AnkisatraPublic Primary School

ECSON 115,503,962.10 52,622.11

Bush proof –water researchand study folakara & ankisatra

Bush proof 64,128,891.74 29,216.30

Transport of materials (schoolkits, bush proof)

Etienne Rakotonoely 29,400,000.00 13,394.26

Pharmacie ofAnkazomanga,medicines

Pharmacie d'Ankazomanga 23,387,200.00 10,654.91

Purchase of toys, Maintenance(School and hospital)

Ankisatra 11,648,295.89 5,306.81

Pharmadiff Pharmadiff 10,342,724.40 4,712.01Donations of medicines PHAGDIS Salama Maintirano 5,999,335.00 2,733.22Pharmacie Principale,medicines

Pharmacie Principale 3,989,400.00 1,817.52

SNGF –training of the peasantsFolakara

SNGF 2,587,750.00 1,178.95

Miscellaneous purchases Commune Ankondromena 2,257,380.00 1,028.44MEXI Trading, medicalequipments

Maexi Trading 748,740.00 341.12

SOAM - oxygene for medicinaluse

SOAM 147,900.00 67.38

Training of the peasantsFolakara

ABC Construction 45,600.00 20.77

SUBTOTAL 270,187,179.13 123,093.80TOTAL 301,423,179.13 137,324.53


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EY | 102

4.1.3 PROJET AMBATOVY4.1.3.1 DYNATEC MADAGASCAR S.A

Description Beneficiaries Amounts MGA Amounts USD

Donations in kind

SHEETMETAL/PLANK/FALAFA MUNICIPALITYOF BRICKAVILLE 64,286,800.00 29,288.24

NERVURE ALUZINC UNIVERSITYOF TOAMASINA 22,267,620.00 10,144.84

4 LAPTOPS GENERAL DIRECTORATE OF THE LAND SERVICEOF TANA 20,675,200.00 9,419.35

FULL DESKTOPCOMPUTERS

GENERAL DIRECTORATE OF THE LAND SERVICEOF TANA 20,187,150.00 9,197.00

19CANS 25KG VALNYL INT UNIVERSITYOF TOAMASINA 15,522,538.00 7,071.87

GANT GARDIEN DE BUT FOKONTANY CITE CANADA TOAMASINA 10,184,800.00 4,640.06

CONSTRUCTIONMATERIALSFOR BRIDGES FOKONTANY TANANDAVA TOAMASINA 6,768,000.00 3,083.41

300 STYLO BLEUS Service de Santé de District 5,910,000.00 2,692.52

DESKTOP COMPUTER/INVERTER DIRECTION GENERALE CCIT 5,645,000.00 2,571.79

FULL SET OF DESKTOPCOMPUTER DISTRICT TAMATAVE II 4,996,000.00 2,276.11

SPRAY 16L FOKONTANY MORARANO GARA 4,817,420.00 2,194.75

JERSEYS FOKONTANY TANANDAVA TOAMASINA 4,508,000.00 2,053.79

3049KGS WHITE RICEMAKALIOKA

Sinistrés communes Maroseranana, Fetraomby,Anjamany 4,204,200.00 1,915.38

INSECTICIDE-TREATEDNETS District Health Service 3,520,000.00 1,603.67

RECTANGLE TABLE AGRICULTURE TRAINING IN BRICKAVILLE 2,718,748.00 1,238.63

COMPLETE SET OFDESKTOP COMPUTER MILITARY REGION 3 TAMATAVE 2,498,000.00 1,138.06

REFEREE’S JERSEY SUBURB MUNICIPALITY OF TAMATAVE 2,472,600.00 1,126.48

CONFERENCE CHAIRS REGION ATSINANANA 2,385,000.00 1,086.58

PROPELLER PAPS VOHITRAMBATO 2,364,500.00 1,077.24

6 WATER-BASED PAINT NATIONAL GENDARMERIE CIRCONSCRIPTION 1,839,583.37 838.09

SUBMERSIBLE PUMP 5" AGRICULTURAL TRAINING CENTER BRICKAVILLE 1,446,899.85 659.19

COMPUTER DESK RURAL MUNICIPALITY MORARANO GARA 1,406,000.00 640.56

DOORS 1/2 OF GLASS ANDWOODEN

LYCEE TECHNIQUE PROFESSIONNELLEMORAMANGA 1,260,000.00 574.04

MICROPROCESSEUR INTELCELERON1.8 SUBURB MUNICIPALITY OF AMBOHIBARY 942,000.00 429.16

OFFICE CUPBOARD/ DESK/CHAIR MUNICIPALITY OF MORARANO GARA 840,000.00 382.69

14M3 FINE SAND TECHNICAL AND VOCATIONAL HIGH SCHOOL 523,600.00 238.55

SAFETY ROPE FOKONTANY CITE CANADA TOAMASINA 445,600.00 203.01

SOCCER BALL/JERSEYS FRAM EPP CITE CANADA 271,000.00 123.46

TOTAL 214,906,259.22 97,908.52

4.1.3.2 AMBATOVY MINERALS S.ADescription Beneficiaries Amounts MGA Amounts USDDonations in kind

Training feesLocal Association locale SurveillancePPL

18,848,000.00 8,586.91

Emergency supportAMBLARNGRA

Municipality of Ambalarondra 4,670,500.00 2,127.82


EY | 103

Emergency support Brickaville COMMUNE BRICKAVILLE 2,729,500.00 1,243.52TOTAL 26,248,000.00 11,958.25

4.1.4 KRAOMADescription Beneficiaries Amounts MGA Amounts USDCash donationsDonations for the renovation of the CityHall of Tamatave

Urbane Municipality ofToamasina

120,000,000.00 54,670.45

Participation to the Project Betsiaka Treasury of DIANA 10,000,000.00 4,555.87Contribution to the social component ofthe DIANA region

DIANA Region 10,000,000.00 4,555.87

Various donations Miscellaneous 1,825,000.00 831.45Cash donations for the Fokontany Fokontany Ampefiloha 1,305,000.00 594.54Indemnity given to the Chancellor Chancellor 1,000,000.00 455.59Donations given to the socialcomponent in the company

Employés 317,000.00 144.42

Participation to the 'organisation of thecelebration of the 50th anniversary ofl'OECFM

OECFM 160,000.00 72.89

Participation to the social component ofthe association NY HAVANA MIRAYHINA

NY HAVANA MIRAY HINA 140,000.00 63.78

TOTAL 144,747,000.00 65,944.86

4.1.5 MADAGASCAR CONSOLIDATED MINING S.A.Description Beneficiaries Amounts MGA Amounts USDCash donationsDonations for therehabilitation of the highschool Laurent BotokekyTuléar

Association FIHAMI -Tuléar

52,040,300.00 23,708.89

Donations for therehabilitation of the EPPSaint Augustin

Association FIHAMI -Tuléar

35,619,090.00 16,227.60

Donations to the SouthWest region

South West region -Tuléar 1,500,000.00 683.38

SUBTOTAL 89,159,390.00 40,619.87Donations in kindDonations of rice for thevictims of the cycloneGiovanna

PM’s palace -MAHAZOARIVO

6,525,000.00 2,972.71

Donations of rice to thevictims of the cycloneGiovanna

Palais du PM -MAHAZOARIVO

6,525,000.00 2,972.71

Donations in kind for theSouth West region : rice,soap, cooking, sugar

South West region -Tuléar 2,760,000.00 1,257.42

SUBTOTAL 15,810,000.00 7,202.83TOTAL 104,969,390.00 47,822.70

4.1.6 TOTAL EXPLORATIONDescription Beneficiaries Amounts MGA Amounts USD

Cash donations


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Control and surveillance of theconstruction works for theTranompokonolona

Rural municipality ofMorafenobe

22,054,467.08 10,047.73

Construction works for theTranompokonolona

Commune rurale deMorafenobe

58,629,916.10 26,711.03

TOTAL 80,684,383.18 36,758.76

4.1.7 HOLCIMDescription Beneficiaries Amounts MGA Amounts USDDonations in kindCement donation to the AssociationMiarintsoa (UNICEF’s Partner) for theprogram Wash in urban area in themunicipality of Antsirabe

Unicef 27,192,675.10 12,388.63

Donations of cement for theconstruction of an environmentalcampus for the MamaBaie à Landscapein Maroanstetra

Wildlife Conservation Society 6,760,992.00 3,080.22

Donation of cement Alliance française 2,340,920.00 1,066.49Donation of cement Ecole des Maçons 1,696,939.50 773.10Donation of cement Commune Andranomanelatra 655,053.00 298.43Donation of cement Commune Tritriva 555,206.60 252.94Donation of cement Happy life 509,628.00 232.18TOTAL 39,711,414.20 18,092.01

4.1.8 TOLIARA SANDS S.A.R.L.Description Beneficiaries Amounts MGA Amounts USDDons en numérairePayment of the expenses of theAssociation ADFA

ADFA 8,268,117.20 3,766.85

SUBTOTAL 8,268,117.20 3,766.85Donations in kindForage Pump Vernier Municipality of Tsifanoka 5,856,000.00 2,667.92Forage Pump Vernier Municipality of Ranobe 3,859,000.00 1,758.11Forage Pump Vernier Municipality of Tsianishia 2,378,650.00 1,083.68SUBTOTAL 12,093,650.00 5,509.71TOTAL 20,361,767.20 9,276.56

4.1.9 MAINLANDDescription Beneficiaries Amounts MGA Amounts USDCash donationsSchooling aid Region Antsinanana 6,000,000.00 2,733.52Support for the construction of themarket BAZAR

Manankatafana SoanieranaIvongo

2,000,000.00 911.17

Contribution to the Regional fairRégionale Ankarena

Region Vatovavy Fitovinany 1,000,000.00 455.59

Schooling aid Region Analanjirofo 400,000.00 182.23Financial support to the feast of thefokontany

Fokontany Anjahambe 360,000.00 164.01

Support to the regionRegion VatovavyFitovinany/District ofManakara

300,000.00 136.68


EY | 105

Description Beneficiaries Amounts MGA Amounts USD

Delivering the donations to the victimsRegion VatovavyFitovinany/District Manakara

200,000.00 91.12

Contribution to the JME 2012

Environment and ForestsRegional Directorate del'environnement et des Forêtsde Vatovavy Fitovinany

200,000.00 91.12

Financial support to the regionVatovavy Fitovinany

Region VatovavyFitovinany/District Manakara

200,000.00 91.12

Participation to the festival Sakilio Région Vatovavy Fitovinany 200,000.00 91.12Contribution to the JME 2012 Region Tamatave 150,000.00 68.34Support to the graduation of theMalagasy Military Academy

Military Academy/ 10thspecial platoon

100,000.00 45.56

Support to the regional teamCustoms Office of the port ofToamasina

100,000.00 45.56

Aide social pour les jeunes deToamasina à partir de FIFAFIFI

Région Tamatave 100,000.00 45.56

Participation au FIZOMA Région Vatovavy Fitovinany 20,000.00 9.11TOTAL 11,330,000.00 5,161.80

4.1.10 MADA-AUST SARL

Description Beneficiaries Amounts MGA Amounts USDCash donationsSupport to the doctors in the South Westregion

ADFA 4,299,710.00 1,958.89

Support to the development of the Southregion

REGION SUD 1,936,000.00 882.02

TOTAL 6,235,710.00 2,840.91

4.1.11 MADAGASCAR WISCO GUANGXIN KAM WAH RESSOURCES S.A.U.Description Beneficiaries Amounts MGA Amounts USD

Cash donationsDonation for the end of theyear- region Boeny

Region Boeny 1,000,000.00 455.59

SUBTOTAL 1,000,000.00 455.59Donations in kindDonations of basic commoditiesto the Fokontany Antanetibe

Fokontany Antanetibe 643,000.00 292.94

SUBTOTAL 643,000.00 292.94TOTAL 1,643,000.00 748.53

4.1.12 SAPETRODescription Beneficiaries Amounts MGA Amounts USD

Cash donationsAssociation of the women from the'OMNIS

OMNIS 320,000.00 145.79

TOTAL 320,000.00 145.79

4.1.13 MADAGASCAR CHROMIUM COMPANYDescription Beneficiaries Amounts MGA Amounts USDDonations in kind


EY | 106

DONATION: 40 jerseys -site rural municipality Betrandraka 240,000.00 109.34DONATION: 3 balls -site rural municipality Betrandraka 24,000.00 10.93TOTAL 264,000.00 120.27

4.1.14 TANTALUM RARE EARTHDescription Beneficiaries Amounts MGA Amounts USDCash donationsJAONTSOTSOLAHY Service projects Miscellaneous Associations 80,000.00 36.45Service projects Miscellaneous Associations 20,000.00 9.11Service projects for the elderly Miscellaneous Associations 20,000.00 9.11TOTAL 120,000.00 54.67


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4.1.15 PROCHIMADDescription Beneficiaries Amounts MGA Amounts USD

Cash donationsDonations Municipality of Ambohimanjaka 31,000.00 14.12TOTAL 31,000.00 14.12

4.2 Results related to the social expenditures

In accordance with the new EITI standard, version of July 11th 2013, :« material social expendituresby companies are mandated by law or the contract with the government that governs the extractiveinvestment, the EITI Report must disclose and, where possible, reconcile these transactions and wherereconciliation is not feasible, the EITI Report should include unilateralcompany and/or governmentdisclosures of these transactions.»For the fiscal year 2012, the total social expenditures disclosed by the extractive companies amountto MGA 4,489 billions which is equivalent to USD 2,045,340.38, and MGA 3,581 millions of which iscash andMGA 907 millions in kind.The tables below disclose the details of the social expenditures made by the companies for the fiscalyear 2012.

4.2.1 QMM

Description Beneficiaries

References of thelaw or the contract

with thegouvernment

Amounts MGA Amounts USD

Cash social expendituresPDI20 Mandena Community Not provided 1,048,531,011.60 477,697.19Transfer Clairefontaine Community Not provided 811,132,287.55 369,541.40FAFAFI Project (PDI) Community Not provided 452,859,463.20 206,316.93ASOS Project (PDI) Community Not provided 226,252,200.00 103,077.58MANOA Project (PDI) Community Not provided 202,194,200.00 92,117.07APICULTURE Project (PDI) Community Not provided 182,561,430.90 83,172.63Construction Community Not provided 177,441,817.53 80,840.20AGRIVET Project (PDI) Community Not provided 121,707,620.60 55,448.42

MiscellaneousMiscellaneous,Community

Not provided 77,815,488.61 35,451.73

Lost acces compensation Community Not provided 25,727,170.00 11,720.97HIMO Project (PDI) Community Not provided 20,392,006.50 9,290.33Training Community Not provided 15,142,500.00 6,898.73Tourism Community Not provided 10,568,864.00 4,815.04Study contract Miscellaneous Not provided 10,557,000.00 4,809.63Scholarship and schooling aid Community Not provided 5,040,000.00 2,296.16

Geology Symposium ParticipationMinistry of strategicresources

Not provided 3,000,000.00 1,366.76

TOTAL 3,390,923,060.49 1,544,860.78

20 Projet de Développement Intégré (Integrated Development Project)


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4.2.2 MAINLAND MINING LTD S.A.R.L.U

Description BeneficiariesReferences of the lawor the contract withthe gouvernment

Amounts MGAAmounts

USD

Cash social expendituresAssessment of socialactions made byMainland Mining

Fenerive Est- SoanieranaIvongo -

N°10/12/MINDEC/SG/DGRD/DADGL

1,816,000.00 827.35

SUBTOTAL 1,816,000.00 827.35Social expenditures in kindMaintenance of RN5(national road)

Atsinanana Region 739,772,217.00 337,030.67

SUBTOTAL 739,772,217.00 337,030.67TOTAL 741,588,217.00 337,858.02

4.2.3 EAX


References ofthe law or thecontract with

thegouvernment


Cash social expenditures

Office Construction for theFokontany Antafiakasaka

Urban municipality ofAmbilobe - DistrictAmbilobe

107PROJECTS26581RQ

99,945,905.91 45,534.06

Construction of 3 classroomswith 2 boxes restrooms

Fokontany WestSIRAMA – Ruralmunicipality ofAntsohimbondrona -District Ambilobe

107PROJECTS27248RQ

29,864,759.45 13,606.00

Construction of 3 classroomswith 2 boxes restrooms

Fokontany Anjavibe -Rural municipality -District Ambilobe

107PROJECTS27245RQ

28,971,671.46 13,199.12

TOTAL158,782,336.8

272,339.18

4.2.4 AMBATOVY PROJECT4.2.4.1 DYNATEC MADAGASCAR S.A


References ofthe law or the

contract with thegouvernment


Social expenditures in kindSchool supplies CP1 CP2 Vohitrambato Not provided 82,989,800.00 37,809.08

MedicinesFokontany BeranoMunicipality ofAmbohibary

Not provided 10,349,220.00 4714.97

Pamphlets People living along thepipeline route

Not provided 10,223,000.00 4657.47

Bags of white rice PAPS Tanandava Not provided 9,625,000.00 4,385.03Writing copybook1200 bottles of sur'eauBlack sheath de 15cmLime 4kg60 semi-metal chairs

PAPS Vohitrambato

Not provided

7,129,275.33 3248


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References ofthe law or the



Manure POPULATION ofVohitrambato/Marovato

Not provided 5,680,000.00 2,587.73

PP non-woven metallicbag/draft costs

People living along thepipeline route betweenMoramanga andToamasina

Not provided

5,260,000.00 2,396.39

Cement bags Manda FokontanyTanandava/Toamasina

Not provided 4,004,780.00 1,824.53

School fees of theAmbatovy scholarshipholders

Enfants PAPS boursierscamp

Not provided3,860,300.00 1,758.70

School suppliesStudents in thesecondary school inVohitrambato

Not provided 3,646,333.33 1661.22

432 round timbers/72falafa wall

PAPS glissés Tailings(purchase of materials) Not provided 3,618,000.00 1,648.31

Payment of the expensesincurred during exchangevisit

Ambatovy Not provided 2,398,000.00 1,092.50

Kininina square timbers Soamahatsinjo tailings,School Not provided 2,003,950.00 912.97

Basket of basiccommodities

PopulationinVohitrambato Not provided 1,777,000.00 809.58

Protective metal grill coverLTP MRG

Technical-vocational Highschool

Not provided 1,589,499.99 724.16

Illustration on the SRAyouth - 24 ans District of Brickaville Not provided 750,000.00 341.69

10 board foldersPAPS childrenscholarship holders fromthe camp

Not provided712,000.00 324.38

Plastic board foldersPAPS childrenscholarship holders fromthe camp

Not provided518,000.00 235.99

Nitrile gloves District Health Service Not provided 398,250.00 181.44

Black permament marker PGEDS - Child protectionprogram

Not provided 385,000.00 175.4

Lohmann ster compress Basic health centerVohitrambato

Not provided 360,204.20 164.11

8 plastic brooms CAP EPP Vohitrambato Not provided 327,400.00 149.16Wheel barrow Community Not provided 280,000.00 127.56TOTAL 157,885,012.85 71,930.37

4.2.4.2 AMBATOVY MINERALS S.A


References of thelaw or the


AmountsMGA

Amounts USD

Social expenditures in kind

Drinking water supplyMunicipality ofSeranantsara

Not provided 2 428 100,00 1 106,21

TOTAL 2 428 100,00 1 106,21


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4.2.5 SAPETRO


References ofthe law or thecontract with thegouvernment


Cash social expendituresWell installation budget 30% FANOITRA NGO Not provided 5,329,200.00 2,427.91Adult literacy - 30% social budget FANOITRA NGO Not provided 5,154,625.00 2,348.38

School kits distributionVONYASSOCIATION

Not provided4,396,000.00 2,002.76

Setup monitoring mission vony FANOITRA NGO Not provided 4,108,000.00 1,871.55Budget installation alphabétisation FANOITRA NGO Not provided 4,081,000.00 1,859.25Remaining adult literacy FANOITRA NGO Not provided 3,081,000.00 1,403.66First installment for well FANOITRA NGO Not provided 2,180,000.00 993.18

Children education debit noteVONYASSOCIATION

Not provided1,970,000.00 897.51

SUBTOTAL 30,299,825.00 13,804.21Social Expenditures in kind

Account school kitsMITIA LEMARQUEUR

Not provided2,925,000.00 1,332.59

School kits : rest of 50% accountMITIA LEMARQUEUR

Not provided2,292,500.00 1,044.43

School kits BADRI Not provided 2,205,000.00 1,004.57Moving school kits to maintirano TRANSMELAKY Not provided 131,712.00 60.01SUBTOTAL 7,554,212.00 3,441.60TOTAL 37,854,037.00 17,245.81


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4.3 Results with the decentralised authorities

The decentralised authorities, such as the regions and the municipalities, receive mining rebates andadministration fees, property taxes on built property and Property taxes on lands. These are the mainpayment flows received by these authorities in 2012.

4.3.1 Mining rebates

Mining rebates are local taxes due on the value of mining products at their first sale. They are paid bythe mining companies during the exploitation phase.

Mining rebates are calculated by using a percentage of the quantities exported by the miningcompanies.

Hereafter the distribution rate for the received mining rebates:► 60 % for the municipality► 30% for the region► 10 % for the autonomous province (currently in a suspense account within the Treasury)

We have obtained the information from the Mines Directorate regarding the rebates collected fromthe 4 companies who are in their exploitation phase during the fiscal year 2012: HOLCIM, QMM,MAINLAND and ETS GALLOIS.

The following tables display the reconciliation of the rebates paid by the mining companies and theamounts received by the municipalities and the regions, in MGA and in USD.

(In MGA)

Municipality/RegionMining

Company Amounts paid by

the company

Amounts received bythe

municipalities/regions Discrepancies

Municipality of Ampasimadinika Tamatave ETS GALLOIS 4,491,078.90 4,491,078.90 0,00Region of Tamatave ETS GALLOIS 4,197,270.00 4,197,270.00 0,00Municipality of Sahamatevina Tamatave ETS GALLOIS 3,819,515.70 3,819,515.70 0,00Province of Tamatave ETS GALLOIS 1,399,090.00 1,399,090.00 0,00Municipality of Anjahamana Tamatave ETS GALLOIS 83,945.40 83,945.40 0,00Municipality of Ibity HOLCIM 31,720,156.00 30,805,740.00 914 416,00Region of Vakinankaratra HOLCIM 23,584,669.20 23,584,669.20 0,00Municipality of Tritriva HOLCIM 10,621,994.00 10,621,994.00 0,00Municipality of Andranomanelatra HOLCIM 4,827,188.00 0.00 4 827 188,00Municipality of Soanierana-Ivongo MAINLAND 95,035,867.92 89,874,403.92 5 161 464,00Region of Analanjirofo MAINLAND 73,811,998.68 70,725,703.84 3 086 294,84Municipality of Ampasina Maningory MAINLAND 38,142,111.84 35,989,237.20 2 152 874,64Municipality of Ampasimbe Manatsatrana MAINLAND 14,446,017.60 14,446,017.60 0,00Region of Anosy QMM 1,072,172,418.64 934,314,068.00 137 858 350,64Municipality of Ampasy Nahampoana QMM 1,072,172,418.64 934,314,068.00 137 858 350,64Municipality of Mandromodromotra QMM 536,086,209.32 468,804,956.00 67 281 253,32Municipality of Fort Dauphin QMM 536,086,209.32 422,295,949.00 113 790 260,32

Total 3,522,698,159.17 3,049,767,706.76 472,930,452.41


EY | 112

(In USD)

Municipality/Region Mining company Amounts paid

by the company


municipalities/regions Discrepancies

Municipality of Ampasimadinika Tamatave ETS GALLOIS 2,046.08 2,046.08 0,00Region of Tamatave ETS GALLOIS 1,912.22 1,912.22 0,00Municipality of Sahamatevina Tamatave ETS GALLOIS 1,740.12 1,740.12 0,00Province of Tamatave ETS GALLOIS 637.41 637.41 0,00Municipality of Anjahamana Tamatave ETS GALLOIS 38.24 38.24 0,00Municipality of Ibity HOLCIM 14,451.29 14,034.70 416,60Region of Vakinankaratra HOLCIM 10,744.87 10,744.87 0,00Municipality of Tritriva HOLCIM 4,839.24 4,839.24 0,00Municipality of Andranomanelatra HOLCIM 2,199.20 0.00 2 199,20Municipality of Soanierana-Ivongo MAINLAND 43,297.11 40,945.62 2 351,50Region of Analanjirofo MAINLAND 33,627.79 32,221.72 1 406,08Municipality of Ampasina Maningory MAINLAND 17,377.05 16,396.23 980,82Municipality of Ampasimbe Manatsatrana MAINLAND 6,581.42 6,581.42 0,00Region of Anosy QMM 488,467.91 425,661.43 62 806,49Municipality of Ampasy Nahampoana QMM 488,467.91 425,661.43 62 806,49Municipality of Mandromodromotra QMM 244,233.96 213,581.49 30 652,47Municipality of Fort Dauphin QMM 244,233.96 192,392.58 51 841,37

Total 1 604 895,81 1,389,434.80 215,461.01

The main discrepancies are related to the following locations:

a) Andranomanelatra, beneficiary of the payments made by HOLCIM, that were notreceived by the municipality in 2012 but received in 2013;

b) Region of Anosy, municipality of Ampasy Nahampoana, municipality ofMandromodromotra and municipality of Fort Dauphin, beneficiaries of the rebates paymentsmade by QMM part of which was not reconciled with the authorities, due to unsufficientsupporting documentation and payments that were not traced with the municipalities.

Discrepancies were noted at each stage of the reconciliation of the rebates from QMM, detailsare provided below:

A B C D E

QMM MinesTreasury ofTaolagnaro

Minicipalities Autonomous Province

3,573,908,062.14 3,369,862,653.08 3,114,380,224.00 2,759,729,041.00 311,438,028.00

A-B A-C C-D-E

Discrepancies 204,045,409.06 459,527,838.14 43,213,155.00

c) Municipality of Ampasimbe Manantsatrana, Municilality of Ampasina Maningory andthe Region of Analanjirofo, beneficiaries of the rebates paid by MAINLAND of which part ofthe amounts paid could not be reconciled with the authorities due to unsufficient supportingdocumentation.

4.3.2 Mining administration fees

The mining administration fees presented hereafter are related to the shares intended to themunicipalities and the regions related to the administration fees paid by the companies selected inthe Group A.


EY | 113

4.3.2.1 Administration fees paid by the BCMM to the decentralised authorities as for the fiscalyear 2012 for the mining companies from the group A (MGA and USD) :

Companies

Amountsreceived by themunicipalities

Amountsreceived by the

regionsTotal amounts received

(In thousandsMGA)

(In thousandsMGA)

(In thousandsMGA)

(In thousandsUSD)

ACCESS MADAGASCAR S.A.R.L. 7,459.28 4,351.25 11,810.53 5.38ACCRINGTON MINERALS S.A. 39,423.74 22,997.18 62,420.93 28.44AMBATOVY MINERALS S.A. 12,944.99 7,551.25 20,496.24 9.34CALIBRA RESOURCES & ENGINEERSMADAGASCAR S.A.R.L.U

31,307.95 18,262.97 49,570.92 22.58

CLASSIC REAL STONES S.A.R.L. 6,739.58 3,931.42 10,671.01 4.86DYNATEC MADAGASCAR S.A 22,964.58 13,396.01 36,360.59 16.57ENERGIZER RESSOURCES (Minerals) S.A.R.L. 10,955.14 6,390.50 17,345.63 7.90GALLOIS Etablissement 11,243.10 6,558.48 17,801.58 8.11GOLD SAND S.A.R.L. 113,038.72 65,939.25 178,977.97 81.54GRANITEX S.A.R.L. 2,048.41 1,194.91 3,243.32 1.48INTERNATIONAL MINING CORPORATION LTDS.A.R.L.

13,270.75 7,741.27 21,012.02 9.57

KRAOMA S.A. 27,049.68 15,778.98 42,828.66 19.51LABRADOR MADAGASCAR - 3,270.72 1,907.92 5,178.64 2.36MADA-AUST S.A.R.L. 69,545.11 40,567.98 110,113.09 50.17MADAGASCAR CHROMIUM COMPANY LTDS.A.R.L.U

119,600.35 69,766.87 189,367.22 86.27

MADAGASCAR CONSOLIDATED MINING S.A. 28,480.55 16,613.65 45,094.20 20.54MADAGASCAR INTERNATIONAL TAK MININGS.A.R.L.

80,570.23 46,999.30 127,569.53 58.12

MADAGASCAR MINING INVESTMENTSS.A.R.L.U.

15,020.46 8,761.94 23,782.40 10.83

MADAGASCAR MINING RESOURCES LTDS.A.R.L.

64,357.52 37,541.89 101,899.41 46.42

MADAGASCAR RESSOURCES S.A.R.L. 19,618.56 11,444.16 31,062.72 14.15MAINLAND MINING LTD S.A.R.L.U 164,813.80 96,141.38 260,955.18 118.89MINERAL PRODUCTS INTERNATIONALGROUP S.A.R.L.

31,615.16 18,442.18 50,057.34 22.81

MINVEST MADAGASCAR S.A.U. 37,961.71 22,144.33 60,106.04 27.38NOVA RESOURCES S.A.R.L.U 122,319.42 71,353.00 193,672.42 88.23PAM Atomique S.A 77,442.96 45,175.06 122,618.02 55.86PAM Madagascar S.A 332,989.86 194,244.09 527,233.95 240.20PAM SAKOA COAL S.A. 8,828.93 5,150.21 13,979.14 6.37PETRA OF MADAGASCAR S.A.R.L. 20,818.94 12,144.38 32,963.33 15.02PROCHIMAD MINES & CARRIERES SA 449.69 262.32 712.01 0.32PROCHIMAD S.A. 1,328.41 774.91 2,103.32 0.96RED GRANITI MADAGASCAR S.A.R.L. -245.76 -143.36 -389.12 -0.18TANETY LAVA S.A.R.L. 12,002.98 7,001.74 19,004.71 8.66TANTALUM RARE EARTH (MALAGASY)S.A.R.L.U

14,489.12 8,451.99 22,941.11 10.45

TOLIARA SANDS S.A.R.L. 7,018.85 4,094.33 11,113.18 5.06UNIVERSAL EXPLORATION MADAGASCARS.A.R.L.

14,768.57 8,615.00 23,383.57 10.65

URAMAD S.A 34,305.70 20,011.66 54,317.36 24.75VELONAODY Fabien 15,968.71 9,315.08 25,283.79 11.52

TOTAL 1,595,786.50 930,875.46 2,526,661.95 1,151.11

4.3.2.2 Administration fees of which the payments to the municipalities are still pending


EY | 114

The table below presents the mining administration fees paid by the permit holders companies fromthe group A, but not paid in accordance with the allocation defined by the law.

CompanyAmount of which the payment is still pending(In thousands MGA) (In thousands USD)

ACCESS MADAGASCAR S.A.R.L. 20,171.63 9.19AMBATOVY MINERALS S.A. 9,495.39 4.33CALIBRA RESOURCES & ENGINEERS MADAGASCAR S.A.R.L.U 3,678.48 1.68CLASSIC REAL STONES S.A.R.L. 2,400.00 1.09DYNATEC MADAGASCAR S.A 419.10 0.19GALLOIS Etablissement 18,193.38 8.29GOLD SAND S.A.R.L. 5,273.03 2.40GRANITEX S.A.R.L. 221.03 0.10HOLCIM Industrie S.A. 1,962.43 0.89INTERNATIONAL MINING CORPORATION LTD S.A.R.L. 2,760.48 1.26KRAOMA S.A. 19,627.63 8.94MADA-AUST S.A.R.L. 1,242.22 0.57MADAGASCAR CHROMIUM COMPANY LTD S.A.R.L.U 10,111.54 4.61MADAGASCAR CONSOLIDATED MINING S.A. 163.58 0.07MADAGASCAR INTERNATIONAL TAK MINING S.A.R.L. 1,876.10 0.85MADAGASCAR MINING INVESTMENTS S.A.R.L.U. 8,521.81 3.88MADAGASCAR MINING RESOURCES LTD S.A.R.L. 14,316.16 6.52MADAGASCAR WISCO GUANGXIN KAM WAH RESSOURCES S.A.U. 8,465.47 3.86MAINLAND MINING LTD S.A.R.L.U 32,012.10 14.58MINERAL PRODUCTS INTERNATIONAL GROUP S.A.R.L. 1,796.87 0.82MINVEST MADAGASCAR S.A.U. 4,979.09 2.27NOVA RESOURCES S.A.R.L.U 30,156.08 13.74PAM Atomique S.A 65,116.66 29.67PAM Madagascar S.A 118,580.89 54.02PETRA OF MADAGASCAR S.A.R.L. 10,146.82 4.62PROCHIMAD MINES & CARRIERES "P.M.C" SA 3,147.62 1.43PROCHIMAD S.A. 429.16 0.20RED GRANITI MADAGASCAR S.A.R.L. -2,780.16 -1.27TANETY LAVA S.A.R.L. 3,864.67 1.76TANTALUM RARE EARTH (MALAGASY) S.A.R.L.U 1,205.72 0.55UNIVERSAL EXPLORATION MADAGASCAR S.A.R.L. 1,426.25 0.65URAMAD S.A 7,653.59 3.49VELONAODY Fabien 536.76 0.24TOTAL 407,171.58 185.50

4.3.2.3 FAM kept in a suspense account within the BCMM for the other beneficiaries

The shares intended for the following beneficiaries are kept in the bank account of BCMM:► Autonomous Province,► Gold Agency,► Mine and environment Police,► Mines National Committee.

The shares that are yet to be paid to the Autonomous Provinces and the Mines National Commiteeare kept in a suspense account within the BCMM as these structures are not actually set up. Moreover,the shares of the FAM of 2012 that is intended to the Gold Agency are managed by BCMM on behalfof the Gold Agency and the shares of the Mine and Environment Police are managed by the Ministryof Mines on their behalf.We have not received a certified statement from the BCMM confirming that these funds are availablein their bank account.


EY | 115

The allocation per entity is detailed in the table below:

Paying companyAutonomousprovince 5%

Mines andEnvironment

Police 8%

MinesNational

Commitee5%

GoldAgency 2%

Total

(Inthousands

MGA)

(In thousandsMGA)

(Inthousands

MGA)

(Inthousands

MGA)

(Inthousands

MGA)

(Inthousandsde USD)

ACCESS MADAGASCARS.A.R.L.

8,404.85 13,447.75 8,404.85 3,361.94 33,619.38 15.32

AMBATOVY MINERALS S.A. 3,956.41 6,330.26 3,956.41 1,582.57 15,825.65 7.21CALIBRA RESOURCES &ENGINEERS MADAGASCARS.A.R.L.U

1,532.70 2,452.32 1,532.70 613.08 6,130.80 2.79

CLASSIC REAL STONESS.A.R.L.

1,000.00 1,600.00 1,000.00 400.00 4,000.00 1.82

DYNATEC MADAGASCAR S.A 174.63 279.40 174.63 69.85 698.50 0.32GALLOIS Etablissement 7,580.58 12,128.92 7,580.58 3,032.23 30,322.30 13.81GOLD SAND S.A.R.L. 2,197.10 3,515.35 2,197.10 878.84 8,788.38 4.00GRANITEX S.A.R.L. 92.10 147.35 92.10 36.84 368.38 0.17HOLCIM Industrie S.A. 817.68 1,308.29 817.68 327.07 3,270.72 1.49INTERNATIONAL MININGCORPORATION LTD S.A.R.L.

1,150.20 1,840.32 1,150.20 460.08 4,600.80 2.10

KRAOMA S.A. 8,178.18 13,085.09 8,178.18 3,271.27 32,712.72 14.90MADA-AUST S.A.R.L. 517.59 828.14 517.59 207.04 2,070.36 0.94MADAGASCAR CHROMIUMCOMPANY LTD S.A.R.L.U

4,213.14 6,741.02 4,213.14 1,685.26 16,852.56 7.68

MADAGASCAR CONSOLIDATEDMINING S.A.

68.16 109.06 68.16 27.26 272.64 0.12

MADAGASCARINTERNATIONAL TAK MININGS.A.R.L.

781.71 1,250.74 781.71 312.68 3,126.84 1.42

MADAGASCAR MININGINVESTMENTS S.A.R.L.U.

3,550.76 5,681.21 3,550.76 1,420.30 14,203.02 6.47

MADAGASCAR MININGRESOURCES LTD S.A.R.L.

5,965.07 9,544.10 5,965.07 2,386.03 23,860.26 10.87

MADAGASCAR WISCOGUANGXIN KAM WAHRESSOURCES S.A.U.

3,527.28 5,643.65 3,527.28 1,410.91 14,109.12 6.43

MAINLAND MINING LTDS.A.R.L.U

13,338.38 21,341.40 13,338.38 5,335.35 53,353.50 24.31

MINERAL PRODUCTSINTERNATIONAL GROUPS.A.R.L.

748.70 1,197.91 748.70 299.48 2,994.78 1.36

MINVEST MADAGASCAR S.A.U. 2,074.62 3,319.39 2,074.62 829.85 8,298.48 3.78NOVA RESOURCES S.A.R.L.U 12,565.04 20,104.06 12,565.04 5,026.01 50,260.14 22.90PAM Atomique S.A 27,131.94 43,411.10 27,131.94 10,852.78 108,527.76 49.44PAM Madagascar S.A 49,408.71 79,053.93 49,408.71 19,763.48 197,634.82 90.04PETRA OF MADAGASCARS.A.R.L.

4,227.84 6,764.54 4,227.84 1,691.14 16,911.36 7.70

PROCHIMAD MINES &CARRIERES "P.M.C" SA

1,311.51 2,098.42 1,311.51 524.60 5,246.04 2.39

PROCHIMAD S.A. 178.82 286.10 178.82 71.53 715.26 0.33RED GRANITI MADAGASCARS.A.R.L.

-1,158.40 -1,853.44 -1,158.40 -463.36 -4,633.60 -2.11

TANETY LAVA S.A.R.L. 1,610.28 2,576.45 1,610.28 644.11 6,441.12 2.93TANTALUM RARE EARTH(MALAGASY) S.A.R.L.U

502.39 803.82 502.39 200.95 2,009.54 0.92

UNIVERSAL EXPLORATIONMADAGASCAR S.A.R.L.

594.27 950.83 594.27 237.71 2,377.08 1.08


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Paying companyAutonomousprovince 5%

Mines andEnvironment

Police 8%

MinesNational

Commitee5%

GoldAgency 2%

Total

(Inthousands

MGA)

(In thousandsMGA)

(Inthousands

MGA)

(Inthousands

MGA)

(Inthousands

MGA)

(Inthousandsde USD)

URAMAD S.A 3,189.00 5,102.40 3,189.00 1,275.60 12,755.99 5.81VELONAODY Fabien 223.65 357.84 223.65 89.46 894.60 0.41TOTAL 169,654.83 271,447.72 169,654.83 67,861.93 678,619.30 309.17

4.3.3 Property taxes on built property (IFPB)

Property taxes on built property that were paid by HOLCIM et KRAOMA, and were reconciled aredetailed as follows:

(In MGA)

Municipality/Region CompanyAmounts paid by

the company


municipalities/regionsDiscrepancies

Rural Municipality of Ibity HOLCIM 9,034,567.00 8,881,308.00 153,259.00Municipality of Brieville KRAOMA S.A. 8,149,500.00 8,153,500.00 -4,000.00TOTAL 17,184,067.00 17,034,808.00 149,259.00

(In USD)

Municipality/Region Company Amounts paid by

the company



Rural Municipality of Ibity HOLCIM 4,116.03 4,046.21 69.82Municipality of Brieville KRAOMA S.A. 3,712.81 3,714.63 -1.82TOTAL 7,828.84 7,760.84 68.00

We have noted non-significant discrepancies during the reconciliation.

4.3.4 Property tax on lands (IFT)

The property taxes on lands that were paid by AMBATOVY MINERALS S.A. are presented below:(In MGA)

Municipality/RegionAmounts paid by the

company



Rural municipality of Ambohibary 11,000,000.00 11,000,000.00 0.00TOTAL 11,000,000.00 11,000,000.00 0.00

(In USD)

Municipality/RegionAmounts paid by the

company



Rural Municipality of Ambohibary 5,011.46 5,011.46 0.00TOTAL 5,011.46 5,011.46 0.00


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The property taxes on lands that were paid by QMM and KRAOMA are detailed as follows:

Municipality/Region CompanyAmounts paid bythe company (in

MGA)

Amounts paid bythe company (in

USD)Domaines Taolagnaro QIT MADAGASCAR MINERALS SA 2,201,000.00 1,002.75Municipality of Ampanefy KRAOMA S.A. 14,800.00 6.74TOTAL 2,215,800.00 1,009.49

4.3.5 Use of the funds received by the authorities that apply theparticipatory bydget

In accordance with the provisions in the sections 3.7 and 3.8 of the EITI standard of 2013, the use ofthese revenues within the municipalities and regions practicing the participatory budget washighlighted in the reconciliation.

The participatory budget is a process as well as an instrument with which the population candetermine how the public resources will be used, mainly a part of or the overall investment budget ofthe local community.

Thus, the reconciliation report displays the sharing of the revenues put in the State budget and fromthe extractive industries, as well as the information regarding the use of these funds to the benefitingentities.

During the fiscal year 2012, the participatory budget has been collected for the regions and themunicipalities that benefit from the payment flows of the following main mining companies that arecurrently in their exploitation phase: AMBATOVY MINERALS, HOLCIM, QMM and KRAOMA.

4.3.5.1 Participatory budget: Municipality of Ambohibary – District of Moramanga(AMBATOVY MINERALS S.A.)

Resources UsesCaption Amount Caption Amount

Property Tax on Land (IFT) 2008-2009 of AMBATOVY paid in 2012

11,000,000.00 Overheads (staff costs, supplies) 7,700,000.00

Purchase of cement for theconstruction of the stadium wallAmbohibary

3,300,000.00

TOTAL 11,000,000.00 TOTAL 11,000,000.00


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4.3.5.2 Participatory budget: Ibity, Tritriva, Andranomanelatra (HOLCIM)

The municipalities could not provide the details regarding the uses for the two fiscal years.

Authority: IbityYear: 2012 - 2013 (In MGA)

Resources UseCaption Amount Caption Amount

Mining rebates 201331,720,156.0

0Municipality staff costs


0

Housing of gendarmes, Landline,“quartier mobile”, salaries ofgendarmes

TOTAL62,525,896.0

0TOTAL Not provided

Authority: TritrivaYear: 2012 - 2013 (In MGA)



0Municipality’s account


0Municipality’s staff costs, share ofschools, inter-fokontany roads

TOTAL23,180,072.0

0TOTAL Not provided

Authority: AndranomanelatraYear: 2012 - 2013 (In MGA)



0Budget for overheads

Mining Administration Fees 2,487,735.38Municipality’s staff costs, electricity,high school’s teacher salary

TOTAL13,101,534.3

8TOTAL Not provided

The related authorities mentioned that the use of the payment flows from HOLCIM, however, they didnot provide accurate amounts.

4.3.5.3 Participatory budget: Rural municipality of Ampasy Nahampoana (QMM)(in MGA)


INVESTMENT

Rebates 2012 934 314 068,00

Miscellaneous constructions(sports field, meeting room,housing for 28 families,warehouse, stables, nurseries)

466,045,079.00


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(in MGA)Resources Use

Caption Amount Caption AmountRoad rehabilitation,sundryarrangements, bridgeconstruction,

112,412,031.00

Staff costs, external serviceprovides, miscellaneousindemnities

105,561,135.00

Contributions de the expenditureson education, health, sports,fokontany

83,362,290.00

Purchase of a municipality bus,maintenance and fuel

75,158,117.00

Holdback on variousinfrastructures

38,266,632.00

Miscellaneous festivals,inaugurations, receptions

18,691,984.00

Participation on equipments andmaterials for a church

12,452,300.00

Roadway (street sweeping) 3,150,000.00SUBTOTAL 934,314,068.00 SUBTOTAL 934,314,068.00

FONCTIONNEMENT

Passes 15,000,000.00,Office supplies, mailing, printing,copies, bookbinding

4,427,964.00

Travel expenses 4,055,763.00Participation to a world day 2,410,000.00Transfer charges (vehicles) 1,399,000.00Addition costs to the fencerehabilitation, road maintenance

935,785.00

Tools and equipments 662,000.00Water and electricity consumption,insurance

556,988.00

Furniture maintenance, CSB II,Town hall, Schools

552,500.00

SUBTOTAL 15,000,000.00 SUBTOTAL 15,000,000.00TOTAL 949,314,068.00 TOTAL 949,314,068.00

4.3.5.4 Participatory budget: Municipality of Mandromodromotra (QMM)


Mining rebates QMM 468,804,956.00Road construction andarrangement

248,173,184.70

Report 2011 89,661,599.00Staff costs, sundry indemnities,health

79,236,932.00

Operating grants 12,000,000.00Meals (meeting, new year,independance day)

41,119,380.00

Test fees 9,168,000.00Miscellaneous supports (schooling,social, sports)

17,444,145.00

Civil status and health grant 800,000.00Tools and equipment, officesupplies

16,960,410.00

Action support 500,000.00 Overheads, electricity 15,471,304.00


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Miscellaneous administrative taxes(Civil status, technicalspecifications)

350,500.00Fuel, vehicle maintenance(motorbike)

9,174,000.00

Participation OPCI (municipalassociation)

2,578,383.60

Bank charges, petty cash 588,000.00TOTAL 581,285,055.00 TOTAL 430,745,739.30


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4.3.5.5 Participatory budget: Municipality of Antsiafabositra, Antanimbary, Maevatanana II(KRAOMA)

Authority: Municipality of AntsiafabositraYear: 2012 (In MGA)


Mining administration fees 16,796,044.80Repairs for the room of the townhall

11,063,487.00

4 months wages for the staff 5,495,354.56TOTAL 16,796,044.80 TOTAL 16,558,841.56

Authority:Municipality ofAntanimbary

Year: 2012 (In MGA)Resources Use

Caption Amount Caption AmountMining administration fees 2,675,112.00 Salary and indemnités de fonction 2,780,000.00

Mining administration fees 2,040,000.00Rehabilitation (2 buildings in themunicipality and the SecondarySchool)

2,195,000.00

Mining administration fees 803,606.40Other overheads for the ruralmunicipality (Office supplies, fuel,etc….)

474,080.40

Mining administration fees 733,968.00TOTAL 6,252,686.40 TOTAL 5,449,080.40

Authority: Municipality of Maevatanana IIYear: 2012 (In MGA)


Mining administration fees 13,742,176.80, Unpaid wages 13,792,500.00TOTAL 13,742,176.80, TOTAL 13,792,500.00


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5 Observations et recommendations

The follow-up on the previous recommendations as well as the new recommendations from thereconciliation of 2012 are presented below.

5.1 Follow-up of previous recommendations

5.1.1 Recommendations for EITI

Section Observations Recommendations Follow-upWillingness of theextractive companies tobe part of thereconciliation

Mining companies oftenfind it difficult to makeavailable any part ofinformation and datarelated to paid taxes.

Their behaviour,although voluntary to theEITI process, can bedescribed ascontradictory. Indeed apersistent distrust,justified or not, for theTax Administration or itsthird parties is usuallyconstated. Miningcompanies fear that theirinformation generatesharmful problems orpolemics that may affecttheir brand, reputation orinterests, or that it will beused for purposes otherthan transparency.

We believe that mutualdialogues, respect andtrust between the TaxAdministration and theextractive companies arecrucial for transparency.Thus we recommend thatthese principles areobserved over time bythe extractive companiesand the publicadministrations as ofnow to ensureintegration of the EITIprocess.

Recommendationmaintained.

We sensed the lack oftrust during ourinterventions whilecollecting theinformation and whileperforming theverification of thesupportingdocumentations withinthe extractivecompanies.

Improvement the scopeof the reconciliation

A company included inthe scope ofreconciliation has beensubject of a takeover byanother company at adate subsequent to theperiod of reconciliation.Thus we encountereddifficulties in obtaining acanvas completed andsigned by an appropriateofficial. The formeremployees of the soldcompany, the onlypeople with a goodknowledge of itspayments and activities,are no longer available,while those of the

We recommend to theEITI to exclude from thereconciliation companiesalready dissolved at thetime of reconciliation.

Recommendationmaintained.OPHIR MADAGASCARwas dissolved in 2013.We could not obtaininformation related tothis company.


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Section Observations Recommendations Follow-upacquiring company arehesitant about signing adocument that theycannot certify theaccuracy, due to lack ofcomplete and accurateinformation.

5.1.2 General recommendations (companies and administrations)

Section Observations Recommendations Follow-upDistinction of revenuesby sector for companieswith several activities

Some companiesincluded in the scope ofreconciliation carryseveral activities,includind those related toextractive activities.

They have a NIFregistered at the taxauthorities. Declarationsand payments related tothese companies, allactivities combined, arelinked to that number.

Therefore, for sometaxes and dutiesdeclarations, it wasimpossible to distinctpayments related tomining activities withother activities notincluded in thereconciliation (as for theIRSA). Indeed, the taxadministration data doesnot distinguish paymentsby activity.

We recommend, for thecompanies and the State,to implement a system ofregistration that allow todistinguish well therevenues from eachsector of activity of acompany.


Implementation ofmeans of monitoringcustoms and tax

Mining companiesvoluntary in the EITIprocess benefit fromspecific tax and customsrules. However,

We recommend, for theState and companies, toimplement proceduresthat will ensure the



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Section Observations Recommendations Follow-upsystems specific to themining industry

payments of customduties and Import VATnot conform to theirspecific rules were stillfound.These mistakes might bedue to a lack ofknowledge of the specificrules applicable to theirprojects.Payments of thesecompanies are based onfreight bills that do notspecify the nature of thecleared goods. Inaddition, somestatements were notavailable during the auditof reconciliation to judgeon whether or notapplying the exemption.

application of rulesapplicable to miningcompanies.

5.1.3 Recommendations for the mining and upstream oil companiesconcerned by the reconciliation

Section Observations Recommendations Follow upReliability andavailability of data forthe reconciliation

A filling guide wasprovided to thecompanies with thecanvas. A workshop forthe preparation of themission took place. Thecalendar wascommunicated and thedates of interventionware agreed in advancewith the companiesofficials.However, we noticed thatsometimes the data filleswas not exhaustive andmost of the canvas waschanged following theconstatation of mistakesor omissions by theReconciler.Also, we had to face theunavailability of severalinterlocutors and delays,many times, of the dateof intervention on field ofthe Reconciler for somecompanies.

We recommend eachconcerned company to :

- Look at the fillingguide prior to theestablishment of thecanvas

- Be represented by anadequate andcompetent individualto fill the canvas atthe workshop for thepreparation of themission ofreconciliation

- To improve theirinternal organizationfor the availability ontime of data andsupportingdocuments

Recommendationsmaintained.

The companies selectedin the scope of thereconciliation for 2012have submitted thecanvas on time. We havenoted an improvement inthe filling out of thecanvas and theavailability of the contactpersons.

The companies who werenew in the process werelate in submitted theinformation.

Certification of thecanvas by anindependent auditor

The prior reliability of thecanvas by an

We recommend eachcompany to certify thecanvas and its annexes



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Section Observations Recommendations Follow upindependent auditor isnot yet effective.Indeed, a reconciliationmade by an independentauditor on amountsreported and/or paid bythe entity and/or theadministration with thoseaccounted, should be aprerequisite forreconciliation; and ifapplicable, theReconciler could directlycollect and establishexhaustively the amountof taxes, duties andcharges reported andpaid.

as well as the financialstatements during theintervention of itsindependent auditors.

It should be noted thatthe financial statementsand the canvas of thereport are independentdocuments; one refers tothe financial situation,and the other on taxsituation.

We did not obtain canvasfrom independentauditors.

However, for thecompanies listed in theannexes, we havereceived the cerficationfrom the auditors.


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5.1.4 Recommendations for the administrations and its subdivisions

5.1.4.1 For each Directorate of the Administration

Section Observations Recommendations Follow upAccess to informationand awareness of theexecutive staff

Meetings for informationand awareness of eachdepartmentrepresentative of theAdministration wereorganized by the EITI tobring all stakeholders tothe same level ofinformation and toensure proper conduct ofthe work during thecollection.However, we noted thatthe awareness of theAdministration to join theEITI process has notreached the executivestaff of somedepartments of theAdministration, despitethe appointment ofdedicated interlocutorsto facilitate thecollection.Thus, some members ofthe executive staff aresuspicious or evenhostile to the auditorsand required the dispatchof a formal letter to theirrespective directors, sothat they can give theirconsent to the disclosureof information, despitethe note from theMinistry of Finance.This situation created anissue to collect the dataon time.

We recommend theinvolvement of theDirectorates of theAdministration ineducating their staff atall levels.

Recommandationmaintained.

We recommend to EITI roraise the awarenessregarding thereconciliationassignment for the keycontacts persons withinthe administration.


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5.1.4.2 For the Treasury, the Ministry of Decentralization, the regions and municipalities

Section Observations Recommendations Follow upTraceability of cashinflows from miningrevenues as provided bythe regulations in force

The disparity indistribution methods ofthe cash inflows of minigroyalties, rebates andmining administrationfees to the variousentities concernedcompared to thatprovided by the MiningCode and itsimplementingregulations do notprovide traceability andconsistency in themanagement of miningrevenues received bymining and decentralizedadministrations(municipalities, regions),especially with the manybeneficiaries of therevenues.

We recommend settingup a system thatimproves the traceabilityof cash inflowsdistributed to thebeneficiaries of therevenues under theregulations in force. Foreach final beneficiary,sub-accounts specificallydedicated to each type ofincome, including adefinition of theprocedures for thetransmission ofcorrespondingsupporting documents,could be implemented forexample.


Reliability of data issuedby decentralizedcommunities

Data received from theAdministration havebeen amended severaltimes. This could bepartially due to a lack offamiliarity of the usedsoftware for registrationof revenues and thenonexistence of anadequate system ofregistration and archivalof supportingdocuments.Indeed, we found thatsome members of theadministrative andfinancial staff ofmunicipalities andregions have notmastered the notion ofliquidity and the readingof a bank statement.Thus, they rarely trackthe collection ofrevenues that theyreceive, which preventthem from knowing theorigin and nature of theirrevenues.

We recommend :► To theTreasury :

- To accompany eachpayment with adetailed statementtracing the origin andnature of therevenues;

- To inform the revenuesofficials of themunicipality andregion on the differenttypers of income toreceive from extractiveindustries with theirfrequency andpayment circuit;

► To the Ministryof Decentralization:

- To organize training oncach accounting forthe revenues officialsof the State for abetter monitoring ofthe cash flows;

► To the regionand municipalities:



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Section Observations Recommendations Follow upThese situations delayedthe collection of data andinformation.

- To set up a system ofdata recording andarchival of reliablesupporting document

Reconciliation ofcompanies data withthose of non-stateentities

Rebates are collectivelypaid by non-stateentities, such as themanagement company ofthe Port of ToamasinaMICTSL, to theconcerned decentralizedcommunities.The document sent tothem does not enable theconduct of an audit ofpayments made bycompany.It is therefore tedious toperform a reconciliationwith the mining and oilcompanies’ data.

We recommend thedecentralized authoritiesto get a workable statefor the audit andmonitoring of theirrevenues.

Recommandationmaintained.

5.1.5 Recommndations for the Department of Customs and IntelligenceService of Registrations (SRI)

Section Observations Recommendations Follow upUpdate of the databaseon the companies

Data collection will beconducted by entity, andfor that the TaxIdentification Number(NIF) of each mining andoil entity is necessary.However, information atthe SRI has not beenupdated, making itdifficult to collect datafrom the Administration.At the Customs, the NIFof extractive industriesrecorded in its databaseis not consistent withthose at the SRI. Thiscould be linked todifferent changes of NIFof the companies inrecent years or animputation error. In facta single company can befound in the SIGTASdatabase with a similarname but a different NIF.

We recommend :► To the SRI :

- To keep up to date theinformation in theirpossession;

- To reset thecorrelation table withthe Customs thatwould link the new NIFof each company withthe old ones.

► To the Customs:- To educate importers

to inform their currentNIF in theirdeclaration;

- To update and clean upits database.



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Section Observations Recommendations Follow upTherefore, we proceededto identify the companiesthrough the imports list.

5.1.6 Recommendations for the BCMM, Ministry of Decentralization, regionsand municipalities

Section Observations Recommendations Follow upTraceability ofdistribution of the FAMby company at themunicipalities andregions

Mining AdministrationFees paid by thecompanies are registeredin the BCMM system. Thedistribution to thevarious beneficiaries,including regions andmunicipalities,depending on thedefinition of operatingperimeter, isautomatically calculatedby internal software at agiven date.The parts of thebeneficiarymunicipalities/regionsare directly sent to theirrespective accounts,without prior notice fromthe BCMM.In addition, the parts ofmunicipalities/regionsthat do not have a bankaccount deposited withthe BCMM areautomatically kept in asuspense account, whilethe municipality orregion is not alertedabout the situation.These situations createat the subdivisions of theState a failure in themonitoring,management andtraceability of their fundsif they do not track thebank cashing.

We recommend :► To the BCMM :

- To notify thebeneficiary entities inadvance by letterremittances in theirfavor with relevantdetails, such as theperiod covered by theFAM, date of dispatch,amount transferred,company or personwho paid the FAM

- To approachmunicipalities/regionswhose parts are held ina suspense account forlack of bank accountinformation.

► Tomunicipalities/region:

- To file with the BCMMthe account number ofthemunicipality/regionduly approved by theMinistry ofDecentralization,

- Ensure at the BCMMthe effective paymentsof FAM by theoperators within itsscope so that they canclaim their rightfulpart.


Actual ownership andpayment of miningadministration fees

Some sold andtransferred permits arestill registered in thename of the sellers in theBCMM database.Treatment at its level is

We recommend theBCMM to distinguishpayment flows by actualowner during the work ofreconciliation.



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Section Observations Recommendations Follow upin progress. Thissituation createddifficulties for themateriality assessmentas well as for the work ofreconciliation.Indeed, gaps identified inthe miningadministration feesmainly result from thefact that payments madeby the actual owners ofthe mining permits areregistered in the name ofthe former owners.

5.1.7 Recommendations for the Tax Administration

Section Observations Recommendations Follow upAttachment ofregistration fees paid toreporting companies

It was particularlydifficult to reconcileregistration fees (DE) of2011 of some companieswith the taxadministration data.Indeed, for some taxcentres, the DE were notregistered in the name ofthe paying company butlinked to the NIF of themain receptor of theadministration thatcashed them.

We recommend the taxcentres to directly attachall taxes and dutiescashed by the taxadministration toindividuals or legalentities that actuallymade the payment. Thiscould enable anexhaustive statement oftheir tax situation.


Reliability of data at theTax Administration

Tax administration datahas been amendedseveral times. Indeed,the periods to which thepayments are attachedare not always properlyor sufficientlyknowledgeable in theused software. Thisobservation wasparticularly noted fornonrecurrent taxes suchas fines and penalties,the flat rate taxe onTransfer (TFT) or thenonresident income tax(IRNR) at the DGE andsome taxes at the SREand tax centres.

We recommend eachentity of the taxadministration :► To properlyinform the period ofattachment of eachpayment in the recordingsoftware.

► To fill in thesame informationsystem all data relatedto a company.



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Section Observations Recommendations Follow upMoreover, VAT refundsare manually processedand are not reported inthe DGE computersoftware.These facts delayed theinformation collection.

5.1.8 Recommendations for the EDBM and the Department of Home Affairs

Section Observations Recommendations Follow upEstablishment of amonitoring tool for visafees and resident cards

Data on fees issuing visaand resident cards couldnot be indentified bycompany at the EDBMand the Ministry of theInterior. Indeed, theirdatabase does not sortby company. Data isrecorded by visacategory and registrationnumber. However,manual records with thecompany names areavailable, but it wouldrequire taking theinformation one by one.Nevertheless, we wereable to verify thepayment vouchers offees for issuing visa andresident cards from thereconciled companies.

We recommend :

► Centralizingdata on the fees forissuing of visa andresident cards either atthe EDBM or at theMinistry of the Interior,

► Recording allthe information (name,address, date ofpayment, amount paid,duration, EmployerCompany…) regardingthe expatriate and theemployer company inthe database,

► A softwaresetting to analyze theissuance of visa andresident cards bycompany.


5.2 General recommendations following the reconciliation

5.2.1 Recommendations for the administration and its subdivisions

Section Observations Recommendations

Reliability of the information forthe reconciliation

Obtaining the information relatedto the payments made by theextractive industries to theInterregional Directorate of Minesof Antananarivo have beendifficult.The data collection was delayedbecause there is no digitalizeddatabase but manual registers

We recommend to eachDirectorate:► To acquire an adequate

software in order to recorddata ;

► To set up a database ofrelevant information such asthe Company name, the type


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were used, making it impossible toensure the completeness of thepayments made by the extractiveindustries.At the same time, payments madeby extractive companies were nottaken into account due to the factthat datas related to the revenuescollected by the InterregionalMines Directorate of Toamasinafrom January to March 2012 werelost, and there is not anyappropriate archiving system.

of flow (rebates, taxes,…), theperiod, the paymentreference ;

► To regulary update theinformation in their hands;

► To implement an archivingsystem ;

Follow up of information related tonon refunded VAT

We have requested the informationrelated to the non refunded VAT forthe mining and oil companies fromthe Large Enterprise Department(DGE).The DGE has redirected our requestto the Ministry of Finance.However, we had difficultiesobtaining the information. Someinformation could not be tracedthrough time.

We recommend to eachDirectorate:► To set up a database of the

information related to theVAT that is yet to be refundedper company;

► To ensure that theinformation is the regularlyfollowed upon and updated.

5.2.2 For the Treasury, the Ministry of decentralisation, the regions and theMunicipalities


Traceability of the paymentsreceived from the extractiveindustries

Cashing confirmations were madewith the General Revenues ofAntananarivo (RGA) via RevenueTransfers Vouched (BTR). TheseBTRs are provided by the Regionalbusiness tax departments (SRE)and tax centres.However, we noted that the namesof tehe corporate taxpayers, theamount, and the nature of thetaxes paid are not mentionned inthe BTRs. The total amount oftaxes received each month ismentionned.Thus, i twas impossible for us totrace the amounts paid by themining and oil companies to theSREs and tax centres in the BTRsclaimed by the RGA.

We recommend to each SRE andtax centre :

► To mention in each BTR withaccuracy all the informationsuch as the name of thetaxpayer, the nature of thetax, the amount, the relatedfiscal year and the paymentdate.

5.2.3 For the Customs Directorate


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Monitoring of the customs duty,taxes on oil products and VAT onimort paid by the extractivecompanies

The tax identification numbers(NIF) of the extractive companieswere used to collect theinformation from the customsdirectorate.The recording of the information inthe system SYDONIA is based uponreferences of the declarantmentionned in the singleadministrative document (DAU).This situation has causeddifficulties during ourreconciliation work.Some companies usesubcontractors for dealing withtheir export and importtransactions. Thus, thetransactions are recorded by thecustoms Directorate under thenames of the subcontractors andnot under the name of the finalbeneficiary. Because of this, thecompleteness of the paymentsmade by extractive industriescannot be ensured.

We recommend to the CustomsDirectorate Nous recommandonsto include the references of therepresentative as well ads the finalbeneficiary in the database (NIF ofthe company).

5.2.4 For the INSTAT, the Ministry of Economy, the ministry in charge of theextractive sector


Analysis of the economiccontribution of the extractivesector

There is not yet reliable informationrelated on the contribution of themining sector. These statisticswould be important decisionmaking tools, particularly to helpdebate on the reforms on thelegislation of the extractive sector.

We recommend to the Ministry incharge of the extractive sector, tothe Ministry of Economy and to theINSTAT :

► To perform an annual study onthe actual contribution of themining and upstreal oil secotrsafter updating the structure.


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6 Annexes