-Agreement to pay additional voluntary one percent royalty
-Further evidence of commitment to Tanzania and broader stakeholder base
-Follows a number of positive developments in our operating environment
-Strong endorsement for the move from the Government
ABG has concluded discussions with the Tanzanian government with respect to the level of royalty payments made by its operations and, in light of the current gold price environment, agreed to a voluntary additional 1% royalty going forward. This is in addition to the 3% rate stipulated in our Mineral Development Agreements, which remain unchanged.
Commenting on the news, CEO Greg Hawkins said: “This decision to pay an additional voluntary royalty payment is an important step for ABG and one we have taken after careful consideration. As our results over the last two years have shown, the business is delivering strong financial returns given the strength in the gold price and it is important that our broader stakeholder base see the benefit of that. We believe that the mining industry has a well-founded regulatory framework in Tanzania which the government has fully respected, and this initiative is reflective of that and will further strengthen our operational platform over the long term.”
Since its creation, ABG has built a strong operating relationship with the Government in Tanzania at all levels, which has been instrumental as we have developed the business. This stability is in contrast to many other areas in the world and is one which gives us the confidence to continue investing in Tanzania at our current operating mines as well as in our portfolio of brownfield and greenfield growth projects. This will not only improve the financial returns of the company but it will also enable us to continue progressing the sustainable development of our host communities and raising the living standards around our mines.
Our focus on building stronger relationships has enabled us to address a number of legacy issues over the past year which will underpin our licence to operate as we further develop our operations. These range from the indirect tax settlement in 2011, as a result of which we started paying corporate tax at our Tulawaka mine, to the recently signed village benefit agreements at North Mara whereby we will invest $8.5 million in our local communities over the next three years and settle a range of longstanding issues.
We have also strengthened our ties with our host country through the establishment of the ABG Maendeleo Fund, to which we are contributing $10 million per year across a range of community development projects. These projects will bring a wide range of benefits to our host communities, with particular emphasis placed on health and education programmes. At the same time, ABG became the first mining company to be cross listed on the Dar es Salaam Stock Exchange in December 2011 and we will continue to work with relevant authorities to facilitate the development of the capital markets in Tanzania and their ability to attract additional investment to the country.
As we have increased our level of commitment to Tanzania, we have been encouraged by the support we have received from the Government and other regulatory bodies. This has been evident in the conclusion of the indirect tax settlement last year as well as the recent granting of waste permits at our North Mara mine. We have also been encouraged by the formation of the Mining Advisory Board which will deal with the renewal of our Special Mining Licence at North Mara as one of its immediate priorities.
In 2011, ABG made a direct contribution to Tanzania of $176 million in taxes borne and collected and spent a further $400 million with Tanzanian registered suppliers and contractors and today’s agreement will help to sustain our contribution going forward. At the same time, we tripled our dividend payout for the year, demonstrating that the continued success of our business will bring benefits to all our stakeholders.