Mine Permit

The Bamissing Gold Miners Permit 

The Permit in respect of the Bamissing Gold Mine and Concession held by SOMIKA covers an area of 387 km 2 in Eastern part of Cameroon, of which the Bamissing Gold Mine accounts for an area of 2.0 km 2. The property is a developed mine site consisting of an underground mine operation, open pit workings, a gravity plant and related infrastructure. The Bamissing Gold Mine was actively mined from 1985 to 1991 and was placed on care and maintenance until operations were resumed by SOMIKA in January, 2004. 


The Permit is unique in Cameroon, as under Cameroonian law exploitation permits are normally only granted in respect of areas covered by a complete approved feasibility study. Additionally, exploration permits are normally granted for a limited time (usually three years, twice renewable for three year terms), with a set amount of minimum required spending and on the basis that the area covered by the permit halveseach time the Permit is renewed. The Permit, on the other hand, is a combined exploitation permit that is derived from the legislation passed originally passed to enable the Soviet aided state company, SOGEMORK, to develop the Bamissing Gold Mine. The original permit was created in 1984 for a period of 15 years, renewable at five year intervals thereafter up to a maximum 30 year term. In April 2003, during its first renewal period, the Permit was transferred to ABU Gold,Limited (a 100% owned subsidiary of ABU Gold Mining Limited) and was simultaneously reinstated for a new term of 30 years. Should the exploitation of the mineral deposit, or subsequent mineral finds not be completed at the end of this 30 year period, the Permit may be renewed at the discretion of the Cameroon Government, and on terms negotiated at such time, for additional 10 year terms until the deposit is exhausted. 


History of the Bamissing Permit 

The Bamissing region has a long history of gold extraction with artisanal miners exploiting the alluvial placers. The first report of gold at Bamissing was in 1931 by a geologist conducting regional exploration when a high-grade quartz-gold vein was found in an artisanal working. 


The Permit area was initially explored between 1967 and 1982 by two Cameroon national companies as part of a Soviet Technical Assistance Program to Cameroon. As a result of this exploration, a decision was taken to develop the Bamissing Gold Mine as a small underground operation using a recovery process based on crushing, milling and gravity concentration. Production commenced in 1985 and a total of 227,000 tonnes of ore was treated at an average head grade of 13 g/t to produce 81,000 ounces of gold by 1991. Upon the break-up of the former Soviet Union, personnel, financial and technical resources were withdrawn and the mine was placed on care and maintenance. In February 1992, the Cameroonian national company holding the Permit was dissolved and the Permit reverted to the Cameroonian Government. 


In 1994, the Cameroonian Government embarked on a privatization program with the assistance of the World Bank. In connection with this program, the Cameroonian Government developed and commissioned an electricity supply infrastructure specifically for the Bamissing Gold Mine in 1995.Under the privatization program, a joint venture of Ashanti Gold Fields Co. Ltd. (“ Ashanti”) and Johannesburg Consolidated Investments Ltd. (“JCI”) was awarded the tender and issued the Permit in 1995 and conducted exploration activities at Bamissing between 1995 and 1996. JCI withdrew from the joint venture in 1996. Thereafter, Ashanti reached an agreement with Nelson Gold Corporation (“Nelson Gold”) in respect of the development, operation and acquisition of a majority interest in the Permit, subject to approval of the Cameroonian Government. At this time, Mr. Roy Meade, Chief Executive Officer of ABU, and Mr. Musa Ibrahim, a director of ABU, held the positions of Chief Executive Officer and Executive Director of Trade local  Gold miners, respectively. Elliott and a sister trust to Fern were also significant shareholders of trade local  Gold miners. Commencing in 1997, trade local  Gold miners completed a bankable feasibility study on the Bamissing Gold Mine. The Cameroonian Government did not ratify this agreement between Trade local  Gold miners and ABU. 

On March 18, 1999, the Cameroonian Government issued a parliamentary decree cancelling the transfer of the Permit to the Ashanti-JCI joint venture as it had failed to meet its contractual commitment to put the Bamissing Gold Mine into production within the prescribed three-year term. 


The Cameroonian government re-issued an international invitation to tender for the Permit in July 1999.Trade local  Gold miners submitted a tender at this time, but was unsuccessful. However, the successful company did not meet its initial financial commitments, as a result of which the tender was cancelled and a Permit was never issued. 

In July 2000, Trade local  Gold miners changed its business objectives away from mining and sold to Elliott Associates, L.P. for $100,000 its intellectual property in the various feasibility studies which it had undertaken in respect of the Bamissing Gold Mine. In September 2001, Elliott Associates L.P. formed ABU Gold,Limited specifically to tender for the Bamissing Gold Mine. 


Acquisition of the Permit by ABU 

On October 3, 2001, a tender comprising a technical bid and financial bid for the Permit was submitted by ABU Gold, Limited to the Cameroonian Government. The technical bid was based on the bankable feasibility study completed by trade miners Gold in August of 1999, which relied on trade miners  old’s own work as well as a number of prior studies. 


The tender contemplates the refurbishment of the existing Bamissing Gold Mine to enable re-commencement of underground mine production at a rate of 60,000 tonnes of ore per year processed in a gravity circuit, with the possibility of increasing the tonnage of ore mined and processed to 175,000 tonnes per year processed through a gravity and a carbon in leach (“CIL”) circuit, conditional on increased gold prices and reconfirmation of the prior operators’ data and independent assessments. 


ABU Gold,Limited originally lost the tender to another company. Management of ABU was subsequently informed by the Cameroonian Government that the successful bidder had defaulted on its financial obligations, and that its tender rights were cancelled. As a result, the Cameroonian Minister of State Domain formally awarded the tender to ABU Gold,Limited on December 23, 2002. 


The financial terms of ABU’s tender, as accepted by the Cameroonian Minister of State Domain, include the payment of 
 a $500,000 entry fee, payable on signing of the Foundation Agreement (paid by ABU in March 2003); 
 $800,000 for the tangible assets, payable upon the signing of the Accord de Cession (paid by ABU in March 2003); 
 $1,200,000 for the reserves, payable in instalments, with $300,000 payable on signature of the Deed of Transfer (paid by ABU in March 2003), $300,000 payable at the end of the first year after signature of the Deed of Transfer (paid by ABU in February 2004) and $600,000 at the end of the second year after signature of the Deed of Transfer (payable in February 2005 for which an extension to June 2005 was granted, and payment was made in May 2005). 


The terms of the tender also require ABU to make an equity contribution to SOMIKA of $1,685,000, composed of a cash payment of $350,000 and $1,335,000 deemed to have been expended by ABU on the completion of the feasibility study. ABU was also required to bear 50% of the care and maintenance costs of the Bamissing Gold Mine and Permit area from the date of the award of tender up to the date of signature of the Foundation Agreement. This amounted to $45,000 which was paid by ABU in February 2003. 


Pursuant to the terms of the Permit, ABU is required to return the mine to commercial production by February 2006 and to spend $1.335,000 on exploration over a three-year period ending February 2006.

Date	Document	Download Options
April 7th, 2003	Mine Permit was issued by the Government of Cameroonian