Hopes and Reality

1. Hopes and Reality US/UK Investment Forum Niger - London Stéphane Brabant, Senior Partner, Herbert Smith LLP 14 June 2012

2. Table of contents • Niger at a glance • Niger profile • Niger’s aspirations • Overview of African legal systems • A civil-law based country • Sub-regional organisations within francophone West African countries • African sub-regional legal systems • Mining regulations • Conditions to be fulfilled for the granting of mining titles • Overview of existing mining titles • Overview of tax regime • Main tax exemptions • Large-scale mining projects: concept • Large-scale mining projects: overview of benefits available • Is a mining convention negotiable? • State’s right to participate in exploitation projects • Stability of the tax regime • Niger’s local content requirements • Settlement of disputes • International treaties

3. 1. Niger at a glance • French speaking country in West (and Central) Africa • Legal system is civil-law based

4. 2. Niger profile • Growth: 4% in 2011 and expected to be 14% in 2012 • Population: 16 million in 2011 and 55 million in 2050; by then it will be the second largest country in West Africa after Nigeria • Capital: Niamey • Area: 1.27 million square km (489,000 square miles) • Life expectancy: 55 years (men), 56 years (women) (UN) • Major languages: French (official), Arabic, Hausa, Songhai • Major religions: Islam, indigenous beliefs • Challenges: • Climate • Landlocked country • Population unequally spread and excessive population growth • Main exports: Uranium currently constitutes up to approximately 70% of export revenues but oil & gas might take lead from 2013. Also coal and hydroelectric power.

5. 3. Niger’s aspirations • Democratically elected government • The Niger presidentialelection: an example for Africa • HisExcellency Mr Mamadou Issoufou’selectionmarked a return to democracyafter a year of militaryrule. • Stabilised currency • The CFA franc (as member of the "BanqueCentraledes Etatsd’Afriquede l’Ouest"); • The CFA is linked to the EURO with a rate of 655.957 CFA per EURO. • A (large) mining potential • Third largest uranium producer in the world, slightly ahead of Kazakhstan and Russian Federation in terms of output; • Uranium mining is the largest Niger industrial employment provider; • Niger is also rich in other minerals: coal, gold, gypsum, iron ore, tin, salt, petroleum.

6. 4. Overview of African legal systems NATIONAL LEGAL SYSTEMSCommon law and civil law traditions Two main legal systems in Africa(sometimes complemented by Islamic law or customary law) * * * * * * * * * * * * * French legal system (Napoleonic Code) * (*) Portuguese, Spanish and Italian legal systems (largely based on Roman law) * * Systems based on common law principles Mixed civil law / common law based systems * OHADA signatory States

7. 5. A civil-law based country • Civil Law • (Law of projects in mostnon-English speaking countries) • Main source of law: • Written rules • Administrative law and courts • Mandatory provisions Common Law (usual law for financing, international contracts and of a number of energy/ natural resources companies) Contractual approach Law of precedents  • Differences in: • Property Law • Criminal Law • Company Law • Laws on taking security • Insolvency Law  • Negotiation (negotiable vs. non negotiable) • Drafting • Settlement of disputes 7

8. 6. Sub-Regional organisations within francophone West African countries OHADA WAEMU CAEMC ECOWAS Organisation for the Harmonisation of Business Law in Africa West African Economic and Monetary Union Central African Economic and Monetary Community Economic Community of West African States * * membership pending

9. 7. African sub-regional legal systemsOHADA: Organisation for the harmonisation of business law in Africa 16 signatory States(including 14 Sub-Saharan Franc zone States): • Benin, Burkina Faso, Cameroon, Central African Republic, Comoros, Republic of Congo (Congo Brazzaville), Côte d'Ivoire, Gabon, Guinea (Conakry), Guinea-Bissau, Equatorial Guinea, Mali, Niger, Senegal, Chad, Togo. • Democratic Republic of Congo (pending) Ambition of extending to non French-speaking States (adoption of new working languages, although the French version prevails) Aim • Harmonising business law with a view to securing legal certainty and to encourage investments • Implementing a legal and judicial environment favourable to economic activities • Progressive unification of legislations

10. 8. Mining regulations • The mining industry is regulated through national legislation and regulations issued by the Niger Parliament and the Niger executive branch, mainly by the Mining Code. • Constitution of the VIIe République, adopted on 25 November 2011. • Mining code enacted by Ordinance No 93-16 of 2 March 1993 as further amended by Law No 2006-26 of 9 August 2006 (the “Mining Code”). • The implementing measures of the Mining Code are provided by Decree No 2006-265/PRN of 18 August 2006. • Law No 2008-30 of 3 July 2008 granting derogatory advantages for investments in large-scale mining projects. • A model mining agreement is attached to Decree No 2006-265/PRN of 18 August 2006.

11. 9. Conditions to be fulfilled for the granting of mining titles

12. 10. Overview of the existing mining titles

13. 11. Overview of the tax regime • Mining royalty • Individuals/legal entities carrying out mining operations are liable for the payment of a mining royalty, the tax base of which is the market value of the extracted product. • Miningroyalties are calculated according to a specific formula presented below: • A = Mining products • B = Operating income • C = B/A (%) • If C is lower than or equal to 20%, the mining royalty rate is 5.5%; • If C is higher than 20% and lower than 50%, the mining royalty rate is 9%; • If C is equal to 50% or above, the mining royalty rate is 12%.

14. 12. Main tax exemptions

15. 13. Large-scale mining projects: concept Law No 2008-30 of 3 July 2008 granting derogatory advantages for investments in large-scale mining projects defines “large-scale” mining projects as follows: • Any new mining project with a positive social and economic impact on the country and fulfilling the following two cumulative conditions: • Investments of at least CFA300 billion (taxes excluded); and • Creation of at least 800 new permanent jobs for Nigeriens. • Any existing mining exploitation about to be expanded, diversified or modernised and which therefore has a positive economic and social impact for the country and meets both the aforesaid cumulative conditions.

16. 14. Large-scale mining projects: Overview of benefits available

17. 15. Is a mining convention negotiable? • Its purpose is to define the rights and obligations of the parties with respect to the legal, technical, financial, fiscal, administrative, environmental and social terms and conditions applicable to mining titles (i.e. an exploration or exploitation permit). • It covers the exploration period as well as the first validity period of the exploitation permit. • Valid for a maximum period of twenty (20) years. • Negotiable upon each renewal.

18. 16. State’s right to participate in exploitation projects • The granting by the State of an exploitation permit entitles it to benefit from a non-dilutable 10% participation in the share capital of the company throughout the exploitation phase. • The State is also entitled to contribute, either financially or in-kind, directly or through a public entity, to the exploitation of mineral substances by partnering with the exploitation permit holder. • The nature and terms of this participation shall be expressly defined by mutual agreement between the parties to the mining convention. • State’s participation in the operating company shall not exceed 40%.

19. 17. Stability of the Tax Regime • Exploration or exploitation mining companies benefit from tax stabilisation and other advantages granted by the mining law, from the date of execution of the mining convention and during its period of validity. • During the stabilisation period, rates, tax bases and tax recovery rules will remain the same as those which were in place on the date of entry into force of the mining convention: no new tax or requirement of any kind shall apply to the holder or beneficiary during this period.

20. 18. Local content requirements(as provided by the Mining Code) • Local preference • to Nigerien companies for any construction, supply or service contracts. • to Nigerien labour. • Training and Promotion Obligations • Transfer of skills in favour of Nigerien contractors and workers.

21. 19. Settlement of disputes Under the Mining Code: • Nigerien Administrative Courts (tribunauxadministratifs) have jurisdiction over any dispute arising out of the application of an administrative act. • Nigerien Courts have jurisdiction over other disputes. • The arbitration clause contained in the model mining agreement provides for the following: • Parties undertake to seek amicable settlement of any dispute which may arise out of the interpretation or performance of the mining convention. • Any dispute arising out of the interpretation or performance of the mining convention shall be settled by the Court of Justice of UEMOA, in case of failure to reach an amicable settlement. • Any dispute relating to technical aspects, which cannot be settled through an amicable procedure, shall be settled by an expert. • Any other dispute shall be settled through ICSID arbitration: • arbitration shall take place in Paris, and in French; • the arbitration tribunal shall be made up of three (3) arbitrators; and • the law applicable shall be that of the Republic of Niger. • In the event the Centre declares itself incompetent, the Common Court of Justice and Arbitration of the OHADA shall have jurisdiction.

22. 20. International treaties