Section 4: Validating the Fort Dauphin Madagascar mines.
We moved to validating the Fort Dauphin gold mine in Madagascar as we continue going down the list of the Statement and facts about the KaratCoinBank. According to the statement of facts document as listed on the section of the Memorandum of understanding Article 1, Karatbars state that the three parties agree in advance with the existence to the facts to an agreement with Century Mining SARLU Madagascar being a valid holder of the operating license No. 1575 and No. 39756 in For Dauphin Madagascar as shown in figure 65 keep that in mind. And the company holds 100% of the shares that is owned by Top Alliance International Limited on behalf of GCC Gazella Corporate Capital GmbH. Now Century Mining SARLU is obligated to transfer the profits to GCC Gazella Corporate Capital GmbH or Karat Gold Cooperation PTE as shown in figure 65. I would assume for the investment in production plant and all infrastructure of gold no less than $200 million for a period until 12/31/2021. Article 2 states that the parties have an agreement of a business association and Article 3 states that GCC Gazella Corporate Capital GmbH has rights to consolidate Century Mining SARLU Madagascar. The last Article 4 shows the three parties business stamps and initials as shown in figure 66 and this is where the second anomaly that stuck out like a sour thumb after reviewing the document. Now after analyzing the business stamps, only two of three CEO’s were present during this agreement meeting and Top Alliance International Limited only shows an on behalf of type of stamp which implies someone that is signing on behalf of the company. You would think for such important agreement of $200 million that the CEO of Top Alliance International Limited would be there. And the third anomaly that stuck out was no notary public or a state licensed official who authorizes the identity of each signatory and bears witness to the execution of a document with a valid date of the signatures. Now this document is dated back in 8/2/2018 and after looking up the Guide to Signing Legal Contracts with www.lawdepot.com validates this fact. This fact means that the date listed on the contract does not mean anything if it can’t be validated by a third official party. Also on the basic structure of a business contract www.template.net they give a list of the 6 parts of the structure of a business agreement. And based on Karatbar’s agreement they failed to even list for a Cancellation Clause based on their agreement as shown in figure 67 which we would consider concerning since who gives $200 million investment to improve the mine and not have some type of exit clause in an agreement in the event something happens with any of the parties and one or two don’t fulfill their part of the agreement. I’ll tell you who would do something like that someone that knows beforehand that it will not be an issue since they know too well that it will never happen. Hint hint.
Figures 65-66: The screenshots below are from the Memorandum of Understanding Articles.
Figure 67: The screenshot below is the basic structure of a business contract.
Now we checked with the Cadastral Mining Office of Madagascar (BCMM) which handles all mining licenses and permits for Madagascar and did a search on their site as shown in figure 68. The site contained a viewer but it was very useless since it did not display the graphics for either Firefox or Chrome but it did contained a searchable table of all the permits for all the companies in their data base. After searching for both companies in question, the results validated Tsaravintana Mining SARLU but the results for Century Mining SARLU Madagascar resulted with no hits as shown in figure 69. Now on the same site we also have Madagascar’s Mining Code that all mining companies have to follow in order to be operational. We analyzed the document so we can get a good understanding in how Madagascar governs and regulates the mining societies. After the analysis of the 120 page document we confirmed the questions regarding what the mining companies are able to mine based on the Lots that they have the license permit for as stated as shown in figure 70. Article 30 of the mining code would make both Century Mining SARLU Madagascar & Tsaravintana Mining SARLU substances that are listed on both the BCMM and EDBM sites are the substances that they would hold the license for only and anything else they would have to get additional permissions with extension of the permit before any operation can continual.
MINING PERMITS SYSTEM
First Chapter GENERAL POINTS
– A mining permit covers the existing substances listed among mines in the perimeter, for which it is granted. In case of finding some clue for other mineral substances listed among mines and which is not the subject of the mining permit, which holder suggests to undertake research and/or mining, he should deposit a statement for this purpose at the Mining Cadastral Registry Office, and obtain before any operation that relates to these new substances, the extension of his mining permit and, if necessary, an environmental authorization from the relevant authority.
In order to answer the questions about the mining law regarding Mining societies agreements between other societies or partnerships and what happens when a mining license is not renewed with the Government of Madagascar. We will analyze the mining code and see what we can find. After a review of the mining code we found the following articles of the code that answers our questions.
Article 9 (new).
.- Subject to provision of the below articles 10 and 11, any natural person of Malagasy citizenship and any legal entity by Malagasy law, can acquire and hold the mining permits as well as the authorizations for gold washing, fossils or celestite mining or aragonite mining.
– To be eligible to acquire and to hold mining permits and authorizations to mine legal fossils, legal entities have to, moreover, live in or reside in Madagascar. They should have each a responsible representative living in Madagascar. In order to contribute to the integration of national small mining developers into the formal circuit and to direct foreign investments towards the development and the modernization of the mining activity, only Malagasy citizens and organizations legally formed with Malagasy citizens, using traditional techniques, can acquire and hold mining permits for small mining developers. The latter can benefit from the necessary technical supports given by the training departments. In the case of partnership with a foreign investor, the holder of the “PRE” permit should apply for the transformation of his permit into the standard one.
MINING PERMITS SYSTEM
First Chapter GENERAL POINTS
.- Mining Permits are classified by: The Permit ” E “, which confers on its holder the exclusive right to undertake mining as well as prospecting and research within the delimited perimeter;
Mining Permits Granting and Renewal
Section first Mining Permit Granting
– The Mining Cadastral Registry Office issues the initial mining permit after the payment, by the holder, of the annual mining administration fees per plot of land related the first year.
Article 48-1 (Law n°2005-021 of October 17, 2005).
– The annual mining administration fees of the first year must be paid in a delay specified in the Decree of enforcement. For lack of payment in the granted delay, the procedure foreseen to the article 200 of this mining Code is applied.
The Renewal of the mining permit
–The renewal of a mining permit, on request of the holder, is granted de facto if he has fulfilled legal and regulatory duties concerning the maintenance of his permit validity.
– The renewal of a mining permit is granted, with the same conditions as the granting of it, by the authority that has issued the initial permit. The holder should not provide in support of his renewal application, an environmental commitment plan or an environmental impact study, unless there is a significant change of the initial operation plan. For all mining permits, the cases when the production of a new environmental document is required are specified through a regulation. The renewal application is deposited at the Mining Cadastral Registry Office before the expiry date of the mining permit validity.
– The renewal application is recorded by the Mining Cadastral registry against the payment of the corresponding renewal charge, which amount and collection terms and conditions are set through a regulation.
– The mining developer, who requests for the renewal of his permit, encloses with his application the receipt justifying the respective payment of the mining tax and the annual mining administration fees per plot of land concerning the previous year.
(Law n°2005-021 of October 17, 2005)
.- In case no beginning of research or mining activities has been undertaken by the holder, the renewal or the transformation of the type of permit can be granted only no more for half size of the initial perimeter. The renewal or the transformation is refused when the perimeter subject of the corresponding request includes one single plot of land.
Annual Mining Administration fees per plot of land
Article 54 (new).
– The holders of research permit (the permit ”R”), exploitation permit (the permit “E”) and reserved permit for small mining developers (the permit “PRE”) fulfill the mining administration fees per plot of land before the end of the first quarter of the concerned calendar year.
Nature and Transfer of Mining Permits
– The exploitation permit or permit “E” constitutes a transferable right, transferable right, amodiable right and right liable for mortgage. It is only divisible on the whole plots of land.
– Transfer and transmittable of mining permits are available to acquire and to hold for any eligible person as per provisions in article 9 of this Code.
– The act of transfer, amodiation, transmission, pledge or mortgage, is established as per statutory and regulatory provisions in force, and should be registered at the Mining Cadastral Register. At the time of the registration, a new permit is drawn up and the rights and obligations of the initial permit are transferred to the new holder, subject to provisions in the bellow article 62. All act of transfer, all ledge or mortgage, that affect the mining permits cannot be opposed to the Administration as long as they are not registered at the Mining Cadastral Registry Office. The holder, for conservation, deposits copies of the registered acts at the Mining Cadastral Registry Office.
– Obligations commitments of the buyer are asserted between parties and with regard to the Ministry of Mines, once the act of transfer is registered on the Mining Cadastral Register, except for the environmental obligations corresponding to the completed works by the yielder, which is the subject of the environmental discharges stated in article 103 of this Code. However, if the buyer does not claim at the moment of the transfer by the yielder, for the production of these environmental discharges, the interdependent responsibility will be implemented to the two parts, concerning the written commitments by the yielder, in proportion to the completed works of the latter.
– The holder of a mining permit can work within his perimeter in association with a natural person or a legal entity, as a partnership, with any eligible person to acquire and hold mining permits as per provisions in article 9 of this Code. The act of partnership should be registered at the Mining Cadastral Registry Office, for fear of non-invocability to the Administration.
BREACHES OF OBLIGATIONS AND ADMINISTRATIVE MEASURES
– The non-payment of annual mining administration fees per plot of land within legal time is sanctioned by the cancellation of the corresponding permit, after the exhaustion of right procedures.
(Law n°2005-021 of October 17, 2005).
– If the formal notification has not yet received satisfaction at the expiry of the second period, the offender is liable for Ar 200,000 per month until the regularization.
Article 178 (new).
– The lack of communication, for all mining permit, of the obligatory periodical reports that are compulsory within the regulatory delay is subject to a reminder letter, in which is stated the obligation to give documents within two (2) months. At the expiration of the assigned delay, in case when the defaulter person did not provide the required reports, he would be subject to a formal notification.
(Law n°2005-021 of October 17, 2005)
– The non-satisfaction to the formal notification is fined to Ar 50,000 per month of delay, all started month being entirely due, pronounced by the relevant court. The non-payment of the mining tax or refund within three (3) month from the date of the notification of the issue of related regulatory of payment is sanctioned by the temporary withdrawal of the permit accompanied by an activity suspension during a delay to fix in the Decree of enforcement of this Code. At the expiration of this delay, if the tax or the refund is not even paid, it is proceeded the cancellation of the corresponding permit in accordance with provisions of the article 200 of the present Code, after exhaustion of the legal procedures.
CANCELLATION OF MINING PERMITS
(new – aw n°2005-021 of October 17, 2005)
.- Mining permit can be cancelled in case of non-payment, within the legal or regulatory delay, according to the case of the mining administration fees per plot of land or of the relating mining tax or refund, as per procedure stated in the below article 200.
Article 200 (new).
– The cancellation of the permit is chronologically proceeded as follow:
(Law n°2005-021 of October 17, 2005)
.- observation of non-payment of mining administration fees or mining tax or refund;
– posting at the Mining Cadastral Registry Offices of the list of holders who did not pay, the publication of this list is done through media;
(Law n°2005-021 of October 17, 2005)
– court injunction to the holder and information to any creditor secured by pledge or mortgage on the permit ;
– response right of the holder, who can present all document aiming at his defense, within forty five (45) days following the postmarked receipt date;
– decision by the authority who has delivered the permit within thirty (30) days following the resentation of the file to the counsel for the defense;
– The observation of non-payment carrying to the decision to cancel the permit;
(Law n°2005-021 of October 17, 2005)
.- notification on the cancellation decision to the interested party and information to any creditor secured by pledge or mortgage on the permit;
– registration of the cancellation decision on the register of the granted permits;
– publication of the cancellation act in the Official Journal.
Article 201 (new).
– (Law n°2005-021 of October 17, 2005).
– Natural persons or legal entities, whose permits have been canceled to enforce provisions of this Code, will only be able to get the granting of new mining permits within three (3) years from the registration date of the cancellation on the register kept by the Mining Cadastral Registry Office. Moreover, the cancellation of the mining permit does not have the effect to free the holder from his environ mental obligations.
Figure 68: The screenshot below is for Tsaravintana Mining SARLU from the BCMM.
Figure 69: The screenshot below is for Century Mining SARLU Madagascar from the BCMM.
Figure 70: The screenshot below is the Madagascar Mining Code.
The research into the Mining Company listed on the agreement as Century Mining SARLU Madagascar sent us to the Ministry of Mines & Minerals Resources, after our search. And one of their links on the site guided us to the Resource Contracts website as shown in figure71. We did a search on the site for Madagascar along with every selection possible of contract types but the results only revealed four contracts for Madagascar for 1998 for company QIT-Fer et Titane Inc as shown on figure 77. Also a search on the Mindat.org site only showed two mining companies in Madagascar QIT Madagascar Minerals and Red Island Minerals as shown in figure 73. We continued with our search and we came across with the site that Investreport linked on his report regarding the license at www.eitimadagascar.org as shown in figures 74-79. After a search on their site, we validated the Tsaravintana Mining SARUL as the valid holder of the mining site with license No. 15745 and No. 39756 via the two documents one for 2015 and the other 2016 listed on the site as shown in figures 74, 77. Also analyzing the Substance Column between the two licenses, it seems that the substances listed are the only substances that are allowed to be mined for the license as stated on the Madagascar’s Mining Code Article 30. We also did the same search on the documents for Century Mining SARLU Madagascar and didn’t get any results.
Now that we validated the Tsaravintana Mining SARLU via the BCMM website but not Century Mining SARLU Madagascar, we did a search with the Economic Development Board of Madagascar (EDBM) which handles the societies information and Notices of Incorporations for businesses for Madagascar for further validating the two companies in question. The results for the site showed that there is a Century Mining SARLU Madagascar with a Notice of Incorporation date of 10/12/2016 with a Madagascar’s Professional Card number STAT of 08994112016010990, FISICAL Yearly Tax ID of 4002498415 and a RCS of 2016 B 00906 as shown in figure 80. Based on the name of Century Mining SARLU Madagascar this name has been validated to exist in Madagascar according to the EDBM, but the activities that the company operates according to the site is shown as (Achat, exploitation et exportation des produits miniers (pierres industriels: cuivre, chrome, zinc, galène, niobium, colombite, calcium)). After translation from French to English, it says “Purchase, exploitation and export of mining products (industrial stones: copper, chromium, zinc, galena, niobium, colombite, calcium” as shown in figure 81. It does not say anything about gold, silver, copper, magnesium and quartz crystals like it’s listed on the Memorandum of understanding figure 65.
In order to confirm Century Mining SARLU Madagascar status after 2016, we contacted the EDBM and had an email exchange regarding some questions regarding the company. We also contacted the Cadastral Mining Office of Madagascar (BCMM) which handles all mining permits and licenses for Madagascar. The results of those emails exchanges revealed that Century Mining SARLU Madagascar still exist but the shocker is that they don’t seem to have the Professional Card that is required for them to be in business for the year and to make it worse they also don’t have any current agreements with any other company according to the EDBM as shown in figures 82-83. Now getting that reply from the EDBM was like getting hit in the stomach by a 7 ft wrestler. After taking an hour break to let the raised in blood pressure to go down some after that shocker, we will continue on to get to the bottom of this whole mess.
We did the same search for Tsaravintana Mining SARLU like we initially did with Century Mining SARLU Madagascar and the results were the opposite from what we got from the EITI website www.eitimadagascar.org through the EDBM search so that was confusing but after looking into the number of entries in their data base for Notice of Incorporations it seems that the data base only goes back to 3/3/2016 which means Trsaravintana Mining SARLU was created prior to that date. In order to find out the Notice of Incorporation date on their data base, we had an email exchange with EDBM with some questions regarding the company which Madagascar calls them Societies and the results of my queries confirmed my suspicion. They informed us that Tsaravintana Mining SARLU Notice of Corporation date was April 2015 which we said “ok that explains and validates the reason it did not show up in the EDBM site”. As we read after that statement, the shocker two for the day as EDBM said that Tsaravintana Mining SARLU doesn’t have the current Professional Card for the year and that their last card was for 2017 as shown in figure 84-85. We would hate to see the reply from BCMM for Tsaravintana Mining SARLU. The email response that we were waiting for BCMM came in and it was a surprising response from BCMM regarding Tsaravintana Mining SARLU after our email exchanges. According to the BCMM, Tsaravintana Mining SARLU has a partnership with Century Mining SARLU Madagascar for permit No. 15745 dated 3/2017 only non for permit No. 39756 as shown in figure 86. This explains why Karatbars used this mining company and the fact that this partnership was in March 2017 way before the inception of the KBC and the fact that Tsaravintana Mining SARLU has not had a Professional card since 2017 would make this company according to Madagascar laws as not legal to operate as a society since all societies have to have a valid Professional Card that has to be renewed yearly. We also validated that Century Mining SARLU Madagascar does not have any partnership in country or out of country with any other society according to the BCMM as shown in figure 87. According to Article 63 of the Mining code for Madagascar any partnership with any mining societies has to be registered with the Cadastral Registry Office and as according to Article 9 of the Mining code in order to be in a partnership the company would also have to be with a natural person of Malagasy citizenship any legal entity by Malagasy law. And this is the point where Top Alliance International Limited comes into play the Front Company.
Figures 71-72: The screenshots below are from the Resource Contract website.
Figure 73: The screenshot below is the results for Mindat.org.
Figures 74-79: The screenshots below are EITI’s documents that Investreport used.
Figure 80: The screenshot below is for Century Mining SARLU Madagascar with the EDBM.
Figure 81: The screenshot below is the translation for Century Mining SARLU Madagascar Activities.
Figures 82-83: The screenshots below are from the EDBM email response for Century Mining SARLU Madagascar.
Figures 84-85: The screenshots below are from the EDBM email response for Tsaravintana Mining SARLU.
Figure 86-87: The screenshots below are from the BCMM email response for Tsaravintana Mining SARLU.
During this extensive research regarding Section 4, there were three anomalies that were observed with the Memorandum of understanding that needed to be researched in order to determine the reasons for the missing company registration number, the stamp of the company and not having the document notarized. These anomalies were very suspicious for Karatbars not to have the registration number for Top Alliance International Limited, using the type of stamp that implies that the CEO of the company was not present during the signing of the document and no notary. We suspect that due to the lack of a business presence of Top Alliance International Limited that it’s possibly a front company. The search for the document that Investreport used to validate that the mining permit numbers belonged to Tsaravintana Mining SARLU not Karatbars was validated via the BCMM website. We determined that the substances listed on the substance column are the only resources that are allowed to be mined according to Article 30 of the Mining Code. We validated that Century Mining SARLU Madagascar did not exist with the BCMM data base and was not listed in the EDBM data base since the Date of Incorporation in the data base didn’t go back far enough in time. We contacted the BCMM and EDBM regarding Century Mining SARLU Madagascar current status of the mining company since we were getting in-consistence results. We determined after clarification from BCMM and EDBM that the company doesn’t have a valid Professional Card for the year and no agreement with any other company according to their records. We validated that Tsaravintana Mining SARLU exist with the BCMM data base but not with the EDBM since the Date of Incorporation did not go back far enough in time. We contacted both the BCMM and EDBM regarding Tsaravintana Mining SARLU current status of the mining company since we were also getting the same in-consistence results. We determined after clarification from both the BCMM and EDBM that the company doesn’t have a valid Professional Card for the year. Also that their last card was from 2017 and they seem to have a partnership with Century Mining SARLU Madagascar for permit No. 15745 dated 3/2017 only and not for permit No. 39756 according to their records. Keep in mind the date of the partnership is well before the KBC project. We determined, according to Article 63 of the Mining code for Madagascar states any partnership with any mining societies has to be registered with the Cadastral Registry Office and as according to Article 9 of the Mining code. After these findings regarding the two mining companies, we begin to understand why Century Mining SARLU Madagascar was used for the Memorandum of understanding by Karatbars. We determined both of these mining companies don’t have the current Professional Cards to be even in operation but Tsaravintana Mining SARLU seems to still hold the permits with permit No. 15745 in partnership with Century Mining SARLU Madagascar.