2. 2009 EITI Reconciliation Report. ORDER OF PRESENTATION. 1.Objectives of EITI/Reports. 2. Scope of Work/Approach and Methodology 3.Highlights of 2009 report 4 Mineral Royalty Disbursement. 5.Significant Findings. 8.Challenges 9.Concluding Remarks.

3. Objectives of EITI Improve Development Outcomes from payments made to Governments by the Extractive Industries Reduce Potential for Corruption and large scale Embezzlement of these payments. 3

4. Achieving the EITI Objectives. Through Enhanced Transparency in Relation to: Payments Receipts Disbursements and Utilization of these benefits.

5. Objectives of Aggregated EITI Reports. To Collect, analyze, aggregate and reconcile payments made by mining companies to the receipts by the Government of Ghana. To validate payments by mining companies. To ascertain if all revenues received by G’ovt Agencies have been accounted for. Ascertain correctness of disbursements to the District Assemblies and MDF Check the utilization of the funds to the District Assemblies and MDF

6. Scope of Work Mining Benefits: The mining benefits considered in these reports are:  Mineral right licences(reconnaissance, prospecting and Mining lease)  Ground rent  Property rates  Mineral royalties  Corporate taxes  Dividends

7. Scope of work (cont’d) Basis for Selected companies:  Contribution to Mineral Royalty Receipt for the period January - December 2009. Selected companies were in active production of minerals in the year 2009 and together contributed up to 99% of the mineral royalties paid in the year. Accounting basis:  Cash Basis.

8. Approach/Methodology Questionnaires accompanied by one-on-one discussions. Collection of data relating to the payments and receipts of mining benefits from mining companies and Government Agencies’ Analysis of the correctness of payments. Aggregation and Reconciliation Examining Disbursements and Utilization of mining benefits.

9. Selected companies Mine/CompanyLocation Mineral Mined Anglo Gold Ashanti Obuasi, Ashanti Region Gold Anglo Gold Ashanti Iduaprim,Western Region Gold GSR Prestea/Bogosu Ltd Bogosu, Western Region Gold GSR (Wassa) Ltd Akyempim, Western Region Gold Gold Fields (Ghana) Ltd Tarkwa, Western Region Gold Abosso Gold Fields Ltd Damang, Western Region Gold Chirano Gold Mines Ltd Chirano, Western Region Gold Newmont (Ghana) Ltd Kenyasi, Brong Ahafo Region Gold Ghana Bauxite Company Awaso, Western Region Bauxite Ghana Manganese Ltd Nsuta, Western Region Manganese

10. Aggregated/Reconciled results Mining Payments /Receipts Aggregated Payments (Ghana cedis)-A Aggregated Receipts (Ghana cedis)-B Deviation Mineral Right Licences 0 00 Ground Rent 0 00 Property rate 918,626 913,773 4,853 Mineral Royalty 96,611,30896,618,197 -6,889 Corporate Tax 17,501,13017,501,1291 Dividends 2,476,818 2,477,830-1,012 Total 117,507,882 117,510,929 -3,047

11. DISCREPANCY The discrepancy of -3,047 cedis was brought about by. Mineral Royalty difference of Company payment GHS 96,611,308 and Government receipts of GHS 96,618,197. The reconciled figure is GHc96,678,197.00 Property Rate: Company payment GHS 918,626 and Government Receipts GHS 913,773 Dividend : Company payment of GHS 2,476,818 and Government receipt of GHS 2,477,830.

12. RESULTS – 20O9 AGGREGATION Royalties Receipts(reconciled)amounted to GHS 96,678,197.00. All mining companies paid 3 % royalties. All companies paid property rates save Newmont in the year. Anglogold Ashanti (Iduaprim), Ghana Manganese Ltd and Abosso Goldfields Ltd paid corporate taxes in the year. Anglogold Ashanti group and Ghana Manganese Ltd paid dividends in the year.

14. Mineral Royalty Disbursements Government retains 80%. Of the remaining 20%: 10% is paid to OASL for disbursement to the district assembly, the traditional Council and the stool, after administrative expenses have been taken care of. 10% is paid to the MDF for research and Special Projects.

15. Disbursement of Mineral Royalty

16. DISBURSEMENTS -ASHANTI AUGUST-NOVEMBER 2008:24/02/09: GHS 227,268.58 JANUARY-FEBRUARY 2009: 08/07/09:GHS 243,639.09 MAY –JULY 2009: 17/11/09:GHS 363,731.53

17. Disbursements-Brong Ahafo AUGUST-NOVEMBER 2008:24/02/09: GHS 373,017.91 JANUARY-FEBRUARY 2009:08/07/09: GHS 383,745.21 MAY-JULY 2009:17/11/09: GHS 486,579.38

18. Disbursements-Western Region AUGUST-NOVEMBER 2008:24/02/09:1,261,185.82 JANUARY-FEBRUARY 2009:08/07/09:1,045,183.91 MAY-JULY 2009: 17/11/09:1,899,193.12

19. REGIONAL OASL TO MUN/DISTRICT ASSEMBLY District Amount Due Received Obuasi 182,587.42 254,169.00 Adansi South 52,144.91 71,475.00 Adansi North 26,083.66 30,108.98 Bekwai Municipal 25,348.66 34,731.00 Amansie Central 47,077.47 64,502.00 Asutifi 683,109.34 716,498.00

20. Amount Due Amount received Tarkwa Nsuam 864,363.30 926,096.72 Prestea Huni Valley 1,166,229.96 824,367.91 Mpohor Wassa East 450,650.29 340,544.45 Bibiani Ahwiaso 134,071.61 123,174.24 REGIONAL OASL TO MUN/DISTRICT ASSEMBLY-CNTD

21. COMPANIES VRS MUN/DIST ASSEMBLIES Tarkwa Nsuaem Bibiani /Ahwiaso - Goldfields (Ghana)Ltd -Ghana Bauxite Co.Ltd - Ghana Manganese -Chirano Goldmines Ltd. - Anglogold Ashanti-Iduaprim Prestea Huni Valley - -Goldfields (Ghana)Ltd - -Golden Star (Prestea/Bogosu) - -Abosso Goldfields Ltd Mpohor Wassa West - Golden Star (Wassa)Ltd

22. Utilization Obuasi and Tarkwa Municipal Assemblies had budgets for utilizing mineral royalty receipts. These Assemblies had dedicated Bank Accounts for royalty receipts.

23. Utilization -Obuasi Municipal Assembly

24. Tarkwa Nsuaem Municipal-Royalty

25. 1.Corporate tax: Finding: Goldfields Ghana Ltd which had paid corporate tax for over a period of five years did not pay any corporate tax in 2009 due to capital allowance resulting from the acquisition of fixed assets. Corporate tax receipt may be difficult to be budgeted for, as it is heavily impacted upon by the acquisition of fixed assets. Recommendation: There should be information on the development plans of extractive companies in order for the government to effectively plan on its revenues. In order to ensure regular receipts of corporate tax, the capital allowance regime should be amended to remove the 80% first year allowance. Using a capital allowance regime which allows writing the cost over say 5 years would be more appropriate. Significant Findings:

26. 2. Disbursements-Omission. The disbursement relating to the period January –February 2009 was made in July 2009. Subsequently the release of November 2009 was in relation to the period May to July 2009. The disbursement for the period March to April 2009 was omitted.(see below). Judging from the fact that the major mining companies made royalty payments in April 2009, the district Assemblies were denied substantial funds on a timely basis.

27. Recommendation: The OASL and the District Assemblies should monitor and scrutinize disbursements and indicate as quickly as possible any lapses therein. In particular they should keep records on the periods that disbursements relate to. Disbursements-Omission (cntd)

28. . 3. Discordance between Head Office and Regional OASL releases. Finding:Some regional OASL offices did not release funds to District Assemblies in tandem with releases from the Head Office. For example the Tarkwa Nsuaem District Assembly received payments on four occasions. Recommendations: The Regional OASL offices should be encouraged to pay promptly all amounts due to District Assemblies.

29. 4.Mineral Development fund. Finding; Actual lodgments of GHS 2,690,520.19, made into the MDF account in 2009 was far lower than 10% of relevant collections amounting to GHS 70,150,668 by the IRS. There were indications that payments from the account were specifically tailored to lodgments. Therefore lodgments made found their way out for specific payouts. Recommendations: In the interim, an oversight agency should be appointed to run the Fund prior to the appointment of a substantive Fund Manager. There is still the need for reconciliation of inflows and outflows especially with regards to the 10% mineral royalty payment ceded to the Fund account.

30. Challenges Some challenges encountered included the following: -High staff turnover in some companies/agencies meant new contact persons had to be established. -There were undue delays in the submission of data by some companies, whilst others initially refused to endorse the reporting templates. -Some organizations applied accruals instead of actuals in the completion of templates. Reporting Currency: Some companies report in dollars. Reporting currency is Ghana cedi.

31. Conclusions: A discrepancy of GHS-3,047 resulting mainly from differences in mineral royalty and property tax reported on the company and government templates was obtained. As observed in the years 2004-2008, mineral royalty receipt was the largest of the mining benefits received in 2009. In percentage terms it accounted for 82% of the total benefits. Corporate tax receipt which was next in quantum to mineral royalty represented 15% of total benefits received. However compared to 2008, corporate tax percentage of total benefits has declined. In 2008, corporate tax made up 34% of total benefits received by the government of Ghana. Ground rent and mineral right licences receipts were not significant in 2009. For increased and regular benefits, changes should be made to the legislation governing the payment of ground rent and corporate tax respectively. Regular training of contact persons in EITI reporting requirements is needed to facilitate the earlier completion of reports.

32. THANK YOU