MINISTRY OF ENERGY AND MINES The State of

MINISTRY OF ENERGY AND MINES

The State of Eritrea Area 124, 000 km² including about 350 Red Sea islands Sea Coast 1, 200 km coastline along the Red Sea Population Approximately 3. 5 million Capital Asmara Main Ports Massawa and Assab Climate Varies with altitude : Temperate central highlands plateau; Hot and humid Eastern lowlands; and Hot and arid Western lowlands. Time zone GMT + 3

Eritrea In Pictures

REGIONAL GEOLOGY

THE GEOLOGY OF ERITREA Precambrian basement rocks Greenstone proterozoic rocks underlie > 60% of the land area Mesozoic sediments Outcrop in southern parts of the country and in the Danakil Tertiary volcanics and sediments Tertiary plateau basalts Lower Afar stratified flows Afar basalts Quaternary Sediments Great exposure of rocks makes target generation by Landsat & Aster imagery possible for rapid cost effective targeting

THE GEOLOGY OF ERITREA

KNOWN MINERAL OCCURRENCES The geological setting is prospective for: § Gold deposits…e. g. Zara Gold project Volcanogenic massive sulphide (VMS) deposits…e. g. Bisha, Debarwa, Emba Derho etc. § § Base metals in quartz vein settings …e. g. Adi Rassi § Evaporites…e. g. Common Salt and Potash in the Eastern Lowlands § A variety of Construction & Industrial mineral deposits Geothermal energy sources in various places of the eastern depression §

KEY POLICY ISSUES • All mineral resources are state property. • The Government aims for a sustainable development of the minerals sector. • Adherence to internationally accepted mining industry practice are cardinal requirements. • Foreign investment in mineral exploration and extraction is encouraged. • A National Mining company holds Government interests of up to 40% in mining operations.

CURRENT EXPLORATION AND MINING ACTIVITY Currently 19 companies are operating in Eritrea

MAJOR ACTIVITIES IN THE SECTOR Bisha Mining Project • Commissioning has commenced; • Commercial gold production is expected to begin by the end of this year.

Bisha Mining Share Company

MAJOR ACTIVITIES IN THE SECTOR ZARA PROJECT • Definitive feasibility study submitted; • Processing of application for a mining license underway; • Development will commence in 2011 with a 40/60 joint venture with the national mining company.

MAJOR ACTIVITIES IN THE SECTOR Asmara Project Feasibility and Prefeasibility Studies for different discoveries within the property underway

MAJOR ACTIVITIES IN THE SECTOR COLLULI PROJECT • Assay results from 3 holes confirm extensive shallow potash over a 4. 5 km 2 area with mineralization open in all direction; • To confirm these results, drilling programs is continuing. RAS KASAR

WHY INVEST IN ERITREA Geology § Untapped resources coupled with a highly prospective geology § More complex and extensive than is apparent. RAS KASAR

WHY INVEST IN ERITREA RIGHT TO SELL MINERALS PRODUCED FREE OF EXPORT DUTIES OR TAX. RIGHT TO EXPLOIT DEPOSITS DISCOVERED INCOME TAX – 38 % RIGHT TO CARRY FORWARD OPERATIONAL LOSSES EQUITABLE FOREX REGULATIONS PERMIT 0. 5% IMPORT DUTY NO TAX ON DIVIDENDES TAXATION SYSTEM 3, 5% ROYALTY ON BASE METALS 5% ROYALTY ON PRECIOUS METALS SIMPLE AND STABLE TAXATION SYSTEM

WHY INVEST IN ERITREA Governance §Peaceful, politically stable Corruption free system and §Strong Government commitment to develop the Minerals sector in partnership with foreign investors, RAS KASAR

WHY INVEST IN ERITREA Infrastructure §Two international ports adjacent to the Red Sea international sea lane §All parts of the country are easily accessible by road RAS KASAR

WHY INVEST IN ERITREA People Hardworking, disciplined and motivated RAS KASAR

SECRET FOR SUCCESS • Equal partnership and equitable share of Benefits • The host-state must derive real benefits from the exploitation of its resources • The investor must derive reasonable rate of return on its investment RAS KASAR

MINISTRY OF ENERGY AND MINES See you in Eritrea