SOLD – Gold & Emerald mine concession (Madagascar) Mananjary
What can we do with a concession
once we buy it for USD 6,25 million ?
Note: ! For better understanding of this short business plan we marked various companies with:
“ABC” = CURRENT OWNER
“XYZ” = NEW OWNER
“???” =NEWLY ESTABLISHED MINING COMPANY
Future Development Project
Please understand this chapter only as “Proposed development of a mining concession operation to new/future owners/company” (hereinafter referred to as “XYZ”) which can start only after the eventual purchase of the concession we are currently selling.
After the eventual purchase of the concession from current owners (hereinafter referred to as “ABC”) for the price of 6.250.000 USD by XYZ, we (promoters, hereinafter referred to as “SMARAGD”) are ready to cooperate with the XYZ.
We have prepared an indicative plan (short pointers for a business plan):
This proposed project is to jointly (promoters SMARAGD and XYZ) start development on selected area (after geological survey of 18,72 square kilometers and after finding out which part of the entire area is “most prosperous”) of approximately 4 square kilometers of gold field spread on approximately 10 blocks (10 “carre’s”) in one of the world best gold deposit in Madagascar Mananjary district i-e VOHILAVA AMBOSSARY GOLD BELT.
The entire operation (equipment, machines, prefabricated houses, fences, etc., etc.) is “demountable” and/or movable and can later be moved to another position.
II. THE OWNERS AND THE PROMOTERS
Principal owner XYZ (owner of the newly purchased concession priced at USD 6,25 million)
Please see https://smaragdmadagascar.wordpress.com/notre-societe/
III. THE PROPERTY / CONCESSION
Please see https://smaragdmadagascar.wordpress.com/concession/
IV. THE PROJECT
The project aims to develop the above property jointly by the new owner/company “XYZ” and the potential investors (hereinafter referred to as “INVESTOR”) into a full-fledged mine by introducing capital in infrastructure, plant, machinery, working capital and all other connected activities
As the ownership of the property came to the promoters SMARAGD due to decades of hard work, lot of risks/lobbying and huge investment over a period of time, the promoters SMARAGD want in the future to cash some of their good work through an investment from a likeminded INVESTOR. Under the joint venture mode, the INVESTOR shall be offered a stake of 50% of the paid up capital/enhanced capital thereby ensuring the co-ownership of the property.
A Joint Venture 50% (SMARAGD nad XYZ) and 50% (INVESTOR), hereinafter referred to as “newly established company ???” can be initiated by incorporation of a Holding Company in the country of Origin of INVESTOR or in Dubai/Mauritius or any other tax heaven with the agreed share holding pattern as per mutual understanding of the all partners. Subsequently a Subsidiary Company of the Holding company with the same share holding pattern can be incorporated in Madagascar “newly established company ???”, which in turn will take over the operations of mining operation along with the title of the company, property and its assets.
As regards the working of the Joint Venture, if the INVESTOR has any better workable option other than the above, such option can also be explored.
Though the original worth of the property is running into Billions of US Dollars, the company XYZ is offering the proposed stake to the INVESTOR considering a total valuation of the property as USD 100 million only, with an aim to reward the genuine initial INVESTOR for encouraging entry into an unknown business, other than in their home country. Though the promoters SMARAGD shall ensure all dealings and transactions in a highly transparent and professional manner, the promoters SMARAGD also want to doubly ensure that the INVESTOR shall be at ease in doing business with a long term perspective with very high return. In effect, the promoters SMARAGD want to upkeep their philosophy of WIN-WIN throughout the business.
Considering the valuation of the property at USD 100 million and an equity holding of 50% for INVESTOR, the INVESTOR needs to bring in an amount equivalent to USD 50 million only for enjoying the ownership of 50% in the property and for further operating the property with a good ROI (Return on Investment) and off-course with a future eye on valuation of the property. Out of the consideration of USD 50 million to be invested by the INVESTORS for enjoying 50% stake, the company XYZ shall be re-investing USD 20 million for the development of the mining operation as this amount shall ensure a smooth conduct of the project with an attractive ROI to the INVESTOR. This means that the INVESTORS NEED NOT bring in more money, other than the investment of USD 50 million, for running of the project. The balance of USD 30 million shall be paid to the XYZ as the value of stake dilution in property through convenient modes of payments to XYZ.
The promoter SMARAGD and company XYZ looks forward to have a professional INVESTOR who believes in transparent business with a long term perspective. The investment can be expected to be withdrawn within a period of 3 to 4 years, after starting commercial operations. It is expected that the commercial operations can be started within 8-12 months of signing the MOU (Memorandum of Understanding). The Implementation Time Plan of the project shall be provided to the INVESTOR. Considering the very low valuation being demanded and the potentiality of the gold field, a genuine INVESTOR can look forward to reap big dividends within a short period and still enjoy the ownership.
The potential INVESTOR NEEDS TO VISIT the country and the gold field and should have a firsthand feel of the genuineness of the project. Upon satisfaction and genuineness of the project, the finer details shall be drawn though the consultants/accounts of both the sides (between promoter SMARAGD and XYZ and INVESTOR). A detailed MOU, consisting of the terms, conditions, duties and obligations of both the parties including project implementation schedule, appointment of professional consultants etc, shall have to be signed by the parties.
The representative of the INVESTOR shall be inducted into the company as a full time director forthwith and all transactions of the company shall be done through such representative.
V. BUSINESS PLAN SCHEDULE VIS-À-VIS INVESTMENT
• Up on satisfaction of the property/project and finalization of the negotiations between the parties, MOU is to be signed between the first party Promoter SMARAGD and XYZ and second party the INVESTOR citing all points in details without any ambiguity, which shall be the pillars of operations of the project.
• An advance of USD 5 Million towards the consideration for transferring the ownership of the XYZ and the goldmine to the INVESTOR is to be paid by the INVESTOR to the XYZ, along with the signing of MOU.
• 30 days after signing the MOU, an amount of USD 20 Million need to be transferred by the INVESTOR to the accounts of the XYZ which will be re-invested to the account of newly established company “???” for initiating the project. This amount (USD 20 Million) shall be jointly and transparently managed by the Director Board consisting of the Promoter SMARAGD, XYZ and the INVESTOR, inside newly established company “???” as per the requirements of the various activities, at the appropriate time:
-All formalities as regards the transfer of the property shall be complied with Company Law of the Republic of Madagascar.
-Competent professional consultants shall be appointed and workings shall be started as per the able guidance’s of such consultants.
-SOPs ( Standard Operating Procedures) shall be finalized and due diligence shall be reviewed jointly by the promoters and the investors.
-Development of the project such as acquiring Plant and Machinery, Gravity Sorting Machines, Excavators, Trucks, 4×4 cars, Dumpers, Construction of Lockers for keeping output gold, Construction of Camp, Working Capital, Employee recruitment/training etc.
-Quotations for the plant and machinery shall be invited, finalized and order shall be placed. Machinery can be expected to supply within a period of 4 to 5 months after placing confirmed order with payment. -The Washing Plants, which are the most important machines of the project shall be purchased.
-Employees shall be inducted and trained for the job.
-Mining areas shall be marked by the Mining Engineers and Geologists and the consultant company and accordingly rehabilitation/relocation of the locals shall be conducted in a systematic way.
-Simultaneously camp construction shall be completed in the ear marked areas for mining.
-Security of the entire area shall be ensured by deploying Government Security forces. This is very much possible given the stature of the company, in this country. This shall be on payment basis.
• Approvals from Economic Development Board of Madagascar shall be obtained.
• 30 DAYS AFTER APPROVALS from DEVELOPMENT BOARD OF MADAGASCAR ARE OBTAINED the balance consideration of USD 25 Million need to be paid by the INVESTOR to the XYZ.
• The commercial operation of mining shall be started by the company in a full- fledged manner.
• It is expected to complete the entire process within a period of 8-12 months from the date of paying advance and signing MOU. Detailed Project Implementation Plan shall be prepared and submitted to Investor before signing MOU.
VI. RETURN ON INVESTMENT AND FINANCIALS
he total area envisaged under the project for mining is selected area (after geological survey of 18,72 square kilometers and after finding out which part of the entire area is “most prosperous”) of approximately 4 square kilometers of gold field spread on approximately 10 blocks (10 “carre’s”) in one of the world best gold deposit in Madagascar Mananjary district i-e VOHILAVA AMBOSSARY GOLD BELT.
A minimum of 8000 tons of output soil shall be mined and processed spending 8 hours a day using 4 Washing Plants with a processing capacity of 250 tons per hour. Eight excavators will have to be used for excavation works and adequate trucks and dumpers shall be deployed for ensuring transportation and conversion of the raw material through the Washing Plants. This projection of excavation of the fertile mine is based on the very minimum volume expected. The calculations are furnished below as under, for easy comprehension.
Though the output of gold on processing of a ton soil in this area can be varied between 2 to 22 grams of gold per ton with an average of 3 grams per ton, 1 gram output per ton only takes for calculation purpose, as it is the international practice of estimation of output of gold/ton in respect of unvalued mines.
So the output of gold expected per day by processing 8000 tons of raw materials is 8000 X 1 grams = 8000 grams of gold (8 kg per day)
!!! The present market value of 24 carat gold is +/- USD 42 per gram (Please adjust the calculation according to the daily price of gold)
The maximum projected expenditure for production of gold is USD 8 per gram. This cost arrived at after considering all direct and indirect expenses in connection with the mining operation including labor, fuel, running administrative, managerial and maintenance costs of plant and machinery.
Net Profit per gram of gold = 42-8 = USD 34
The Net Profit per day = 8000 grams x USD 34 = USD 272000
The Net Profit per year = 272000 x 300 days = USD 81.600.000/- = USD 81,6 Million
Net Annual Profit on of Investor = USD 81,6 Million x 50% = 40,80 Million
A provision for IT (Income Tax) @ 25% is made on 50% of the Net Profit, before repatriating the amount to the home country of the investor, which works out as under.
40,8 Million USD x 50%= 20,40x 25% = 5,10 Million USD, As such, the Final Position shall be as follows
Net Gain = 40,80
Less IT Provision = 5,10
Net Annual Profit for INVESTOR (with 50% stake) = USD 35,70 million
So a genuine investor can expect a HUGE return on investment in the first year itself and can aim to withdraw his investment within a period of 2 to 3 years of his investment and still can enjoy 50% of the stake in the company/property for many years.
The chances of getting precious stones like Ruby, Emerald, Gems and other such stones are very likely in this alluvial gold mining, as has been experiencing in the nearby similar fields. Such unexpected big gains running into millions of US Dollars have not been considered for, in the calculations.
VII. MARKETING OF GOLD IN INTERNATIONAL MARKETS
The daily output of the gold automatically stored in the safe chambers/ lockers planned in underground, after washing, sorting and melting into bars should be provided with foolproof security through Government Security forces on payment basis. The production needs to be transported to the capital of the country once in a month by a chartered flight and kept in lockers till actual exporting happens to Dubai or other countries. Marketing arrangement may not be very difficult as gold bullion agents of reputed Gold Refineries are available by offering us BG/LC and such bullion agents shall arrange certification and immediate realization of proceeds of the gold. On certification of 24 carats (99.9%) by the refineries and marking company’s name, the confirming bank of the buyer shall release the payment to the company’s bank forthwith. The total cycle for transportation of the output gold from the mine field to capital, then exporting to refineries, certification and realization of money shall take about 2 months after production. The maximum of working capital cycle planned is two months from the date of production.
VIII. SECOND AFTER-PHASE (THE MOST IMPORTANT PHASE)
Once satisfied with the outcome of the project, the most important phase of certification of the property should be explored.
The property is not only rich in alluvial deposits of gold, but is very rich in Primary Deposits also. Primary deposits are very much available in the property as it can be visible even by naked eyes. Primary deposits are available in quarts/rocks with veins spreading into kilometers of length, width and depth and such primary deposits are very prominent in this part of Madagascar, which is a known fact to the entire gold industry. However, the real valuation of property in eyes of big international investors in gold industry can be attracted only by conducting valuation of the property by an internationally acclaimed valuation company/geologist, approved by major Gold Councils like US, Canada, Australia, South Africa etc. This certification is known as NI431O1 certification in the international parlance. The approximate projected cost for valuation of the property for NI431O1 certification shall be USD 5 to 10 Million. The valuation expenses can be shared by the investor and the promoter in 50:50 ratios and can be earmarked a fund for this purpose from the proceeds of the first year of operations.
National Instrument 43-101 (the “NI 43-101” or the “NI”) is a national instrument for the Standards of Disclosure for Mineral Projects within Canada. The Instrument is a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada. This includes foreign-owned mining entities who trade on stock exchanges overseen by the Canadian Securities Administrators, even if they only trade on Over The Counter (OTC) derivatives or other instrumented securities. Read more about this certification: https://en.wikipedia.org/wiki/National_Instrument_43-101
The certifying company shall be camping in the property for quite some period of time and shall be conducting drilling at various places, according to their assessment, where primary deposits are evidently visible and available. It is expected that such consultants shall conduct a minimum of 100 drills with a minimum average depth of 100 meters. During the drilling, they would collect samples of every meter and conduct testing of the sample. In that case, there would be a minimum of, 100×100 = 10000 samples which should be tested. After testing, they would assess the gold deposits under the property and a do a fair valuation of the property. Though the exact valuation can be arrived at only after systematic valuation by internationally acclaimed companies with approvals from Gold Councils, given the potentiality of the gold deposits in this permit, the valuation expected is a minimum of 3 Billions of USD.
Once this certification process is completed, there would be enough investors from all parts of the world either to purchase the property or to jointly develop the property with a large scale license, which would permit the company to mine 500 meters or below from the earth surface using big machineries/lifts. In both the cases, the return of the investor shall be billions of USDs, considering the 50% stake they hold in the company/property.
The promoters SMARAGD and XYZ are looking forward to have a very transparent and meaningful association with the INVESTOR on a long term basis. All decisions shall be on mutually agreeable terms. In the event of investor becoming genuine and happening through their words and deeds, enough potential exists to jointly, explore more avenues not only in this country of Madagascar, but in the entire African Region.
© S. MA. R. A. G. D. Madagascar Company for Research, Analysis, Geology and Diagnosis of Mining Concessions Société Malgache pour la Recherche, l'Analyse, la Géologie, Diagnose et les ventes des Concessions Minières (en cours d'établissement)