A democratic government with a mining friendly regime
Located in West Africa, Senegal has an estimated population of 13.7 million people and a total area of approximately 197,000 km. Of the country’s population, 94% are Muslim and 5% are Christian (mostly Roman Catholic). While French is the official language, the Wolof, Pulaar, Jola and Mandinka dialects are also spoken. The capital of Dakar is located on the most westerly point of Africa and has one of the largest deep-water seaports along the West African coast.
Senegal gained its independence in 1960, following approximately 75 years of French rule. It is a democratic republic governed under multiparty rule based on the French civil law system, making the country a location of choice for many foreign embassies and international banks to position their headquarters for the West African region.
Senegal lies within the Sahel, the semi-desert, or savannah region that forms a broad band across Africa between the Sahara desert to the north and the forested countries to the south. The landscape is generally low, rolling plains rising to foothills in the southeast. The climate is tropical, with a hot and humid wet season (May - October) and a dry season (November - April) dominated by hot Harmattan winds.
Senegal’s economy is based on agricultural exports, primarily consisting of groundnuts, cotton, grain crops, livestock and fishing; core industries such as food processing, gold, iron ore and phosphate mining, fertilizer and cement production; and downstream petroleum products and services, which is the main contributor to Senegal’s GDP.
Mineral Policy and Legislation
The government is supportive of the mining industry, passing a new Mining Code in November 2003 established to attract and promote mineral resource investment and development in the country. Under the Mining Code, proper governmental authorization is required to undertake any form of mining activity. In this regard, the right to explore minerals is conferred only by a permit of exploitation or a mining concession.
A permit for mineral exploration activities is granted for a period not exceeding three years, and is renewable. During the exploration phase, the permit holder is exempt from sales tax and duties on imported equipment and supplies necessary for exploration activities, as well as on fuel used for the operation of stationary installations.
Following exploration success, the permit holder may enter into a mining contract agreement with the State, which provides the State a free carried interest of 10% of the project. Under the Senegalese Mining Code, numerous fiscal incentives are offered to mining license holders, including a minimum seven-year exemption from income tax, among other tax exemptions, and the opportunity to secure a lease of up to 25 years for a major project. All mining activities are currently subject to a 3% royalty of the value of the mine site payable to the Government. Following the completion of the Global Agreement with the Republic of Senegal, Teranga agreed to increase the royalty on sales from 3% to 5% effective January 1, 2013. Foreign mining companies are allowed to expatriate profits.
Global Agreement with the Republic of Senegal
The Company signed a definitive Global Agreement (“Agreement”) with the Republic of Senegal in late May 2013, which was the execution of the long-term comprehensive Agreement in Principle signed in April with the Republic of Senegal. The Agreement includes amendments to the Company's 90% held Sabodala Mining Convention, certain of its exploration permits, and a financial settlement agreement that addresses most of the outstanding tax assessments (associated with the years 2007 through 2010) as well as future royalty and other payments to the Republic of Senegal as outlined previously. Collectively, the definitive documentation constitutes a Global Agreement that sets out a predictable and stable fiscal operating environment for the Company's future investment in exploration, acquisitions and development to increase reserves and production in Senegal.