maybe this is of interest-------COMPANY RELEASESDRC Ministry of...

maybe this is of interest-------

COMPANY RELEASES
DRC Ministry of Mines contracts review interim status update
Tuesday , 16 Sep 2008


The Ministry of Mines of the Democratic Republic of the Congo (the DRC) is pleased to report on good progress as it undertakes the final phase of the Contracts Review. Negotiations between the key parties to a number of the 61 contracts are approaching conclusion, although the Ministry does report that some of the contract holders have yet to come to the table with anything meaningful.

H.E. Victor Kasongo, Deputy Minister of Mines, commented,

"The process does appear to be working and we have made significant progress so far, although as the deadline of 30 September 2008 approaches, there are still some companies who need to come forward and engage and I urge those whose situations are retrievable to do so, our door is open and we are ready to listen".

Two weeks ago Mr Kasongo advised that of the 61 mining companies in the renegotiation process, 14 had already satisfied all the DRC criteria. Others are approaching finalisation and details of these will be made available once negotiations are complete. However, the Government does note that there has been a certain intransigence on the part of some operators to understand that what might constitute a ‘good deal' for them does not necessarily mean that the contracts are a good deal for the DRC.

The review process has revealed the extent to which some contracts are not viable or have in some way failed on feasibility, adherence to the Mining Code, or have otherwise not realised the terms of business agreed upon at the outset.

One example is the Sengamines operation, which owned the rights over 794 square kilometres of potentially diamondiferous concessions in the Mbuji Mayi region of the DRC, including the Tschibwe kimberlite pipe and several other kimberlitic and alluvial prospects, and is one of the companies which has had its licence revoked.

The Sengamines Company has experienced a number of challenges including changes in ownership and management, and it has effectively ceased operations for more than three years, violating the Mining Convention signed with the Government of the DRC. Further audit and official records have identified that only a proportion of the required and contracted investment entered the DRC legitimately, which may shock the shareholders of the operation who assumed in good faith that the management team were executing to plan.

Furthermore, the equipment that is in place was not officially imported, and there were a number of failures in corporate governance and reporting which resulted in an overall lack of transparency.

Mr Kasongo said,

"The Sengamines situation is an unfortunate one for all parties. At its outset there was a sense of optimism and potential, yet the operation was never properly capitalised and started, and for this and a number of other reasons it fell dramatically short of the Mining Code and our own Mining Convention.

"We are committed to ensuring that all mining contracts deliver maximum value and ROI for all stakeholders, as well as employment and revenue opportunities for the Congolese people and businesses. When this cannot be identified and realised then we have to follow the letter of the law and revoke the licence concerned.

"When mining contracts are awarded, they are intended for active mining, and if no proper activity takes place then nobody benefits other than perhaps some people in the financial markets - we are having to now adopt a firm policy towards the contracts and licences of ‘Use them, or lose them'."

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Bell Pottinger: +44 (0) 207 861 3883