20-F 1 f20f_112917.htm FORM 20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

_________________________

 

FORM 20-F

_________________________

 

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12 (g) OF THE SECURITIES EXCHANGE ACT OF 1934

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended August 31, 2017

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

 

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ____________

 

 

Commission File Number 001-32500

 

TANZANIAN ROYALTY EXPLORATION CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

ALBERTA, CANADA

(Jurisdiction of Incorporation or Organization)

 

82 Richmond Street East, Suite 200,

Toronto, Ontario

M5C 1P1

(Address of Principal Executive Offices)

 

James Sinclair

President and Director

Tanzanian Royalty Exploration Corporation

82 Richmond Street East

Toronto, Ontario

M5C 1P1

 

Telephone: 1.844.364.1830

Fax: 860.799.0350

 

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Common Shares, without Par Value  NYSE MKT LLC
(Title of Class)  Name of Each Exchange on Which Registered

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: NONE

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: NONE

 

 

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 121,784,619. (as of August 31, 2017)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☐ Yes      x No

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.      ☐ Yes       x No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes      ☐ No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

☐ Yes      ☐ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐      Accelerated filer ☐      Non-accelerated filer ☒

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐

International Financial Reporting Standards as issued by the International Accounting Standards Board ☒

Other ☐

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Company has elected to follow.

Item 17 ☐Item 18 ☐

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes      ☒ No

 

 

 

 

TABLE OF CONTENTS

 

Cautionary Note to U.S. Investors Concerning Estimates of Mineral Resources 1
Currency 1
Foreign Private Issuer Filings 1
Glossary of Technical Terms 2
PART I  
  Item 1. Identity of Directors, Senior Management and Advisers 7
  Item 2. Offer Statistics and Expected Timetable 7
  Item 3. Key Information 7
    A. Selected Financial Data 7
    B. Capitalization and Indebtedness 8
    C. Reasons for the Offer and Use of Proceeds 9
    D. Risk Factors 9
  Item 4. Information on the Company 17
    A. History and Development of the Company 17
    B. Business Overview 18
      Plan of Operations 18
      Governmental Regulations 36
    C. Organizational Structure 37
    D. Property, Plant and Equipment 38
      Buckreef Property 38
      Kigosi Property 46
      Lunguya Property 52
      Itetemia Property 55
      Luhala Property 59
  Item 4.A. Unresolved Staff Comments 62
  Item 5. Operating and Financial Review and Prospects 62
    A. Operating Results 64
    B. Liquidity and Capital Resources 72
    C. Research and Development, Patents and License, etc. 75
    D. Trend Information 75
    E. Off Balance Sheet Arrangements 75
    F. Tabular Disclosure of Contractual Obligations 75
  Item 6.   Directors, Senior Management and Employees 75
    A. Directors and Senior Management 75
    B. Executive Compensation 80
    C. Board Practices 87
    D. Employees 92
    E.  Share Ownership 92
  Item 7. Major Shareholders and Related Party Transactions 93
    A. Major Shareholders 93
    B. Related Party Transactions 94
    C. Interests of Experts and Counsel 95
  Item 8. Financial Statements 95
    A. Consolidated Statements and Other Financial Information 95
    B. Significant Changes 96
  Item 9. The Offering and Listing 96
    A. Offering and Listing Details 96

 

 
- i

 

    B. Plan of Distribution 97
    C. Markets 97
    D. Selling Shareholders 97
    E. Dilution 97
    F. Expenses of the Issue 97
  Item 10. Additional Information 97
    A. Share Capital 97
    B. Articles of Association and Bylaws 98
    C. Material Contracts 102
    D. Exchange Controls 103
    E. Taxation 105
    F. Dividends and Paying Agents 111
    G. Statement by Experts 112
    H. Documents on Display 112
    I. Subsidiary Information 1126
  Item 11. Quantitative and Qualitative Disclosures About Market Risk 112
  Item 12. Description of Securities Other than Equity Securities 113
PART II        
  Item 13. Defaults, Dividend Arrears and Delinquencies 113
  Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds 113
  Item 15. Controls and Procedures 114
  Item 16 A. Audit Committee Financial Expert 114
  Item 16 B. Code of Ethics 115
  Item 16 C. Principal Accountant Fees and Services 115
  Item 16 D. Exemptions from the Listing Standards for Audit Committees 115
  Item 16 E.  Purchases of Equity Securities by the Issuer and Affiliated Purchasers 115
  Item 16 F.  Change in Registrant's Certifying Accountant 115
  Item 16 G. Corporate Governance 116
  Item 16 H  Mine Safety Disclosure 116
PART III        
  Item 17. Financial Statements 116
  Item 18. Financial Statements 116
  Item 19. Exhibits 117

 

 

 

 

 

 
 

 

Cautionary Note to U.S. Investors Concerning Estimates of Mineral Resources

 

As an Alberta corporation, Tanzanian Royalty Exploration Corporation (the “Company”) is subject to certain rules and regulations issued by Canadian Securities Administrators. The Company files this Annual Report on Form 20-F as its Annual Information Form (“AIF”) with the British Columbia, Alberta and Ontario Securities Commissions via the System for Electronic Document Analysis and Retrieval (“SEDAR”). Under the filing requirements for an AIF, the Company is required to provide detailed information regarding its properties including mineralization, drilling, sampling and analysis, security of samples, and mineral resource and mineral reserve estimates, if any. Further, the Company may describe its properties utilizing terminology such as “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” that are permitted by Canadian securities regulations, but are not recognized by the SEC. For clarification, the Company has no properties that contain “mineral reserves” as defined by either the SEC or Canadian securities regulations.

 

The “Company” advises U.S. investors that while the terms “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” are recognized and required by Canadian securities regulations, the SEC and its regulations do not recognize them. U.S. investors are cautioned not to assume that any part or all of mineral resources in these categories will ever be converted into mineral reserves. Further, these terms are not defined terms under SEC Industry Guide 7 and are not recognized in reports and registration statements filed with the SEC. In addition, National Instrument 43-101, “Standards of Disclosure for Mineral Projects”, as adopted by the Canadian Securities Administrators (“NI 43-101”) permits disclosure of “contained ounces” of mineralization. In contrast, the SEC only permits issuers to report mineralization as in place tonnage and grade without reference to unit measures.

 

For clarification, the Company has no properties that contain “mineral reserves” as defined by either the SEC or Canadian securities regulations.

 

 

Currency

 

All references to dollar amounts are expressed in the lawful currency of Canada, unless otherwise specifically stated.

 

Foreign Private Issuer Filings

 

As a foreign private issuer registered under section 12(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), the Company is subject to section 13 of the Exchange Act, and is required to file an Annual Report on Form 20-F and Reports of Foreign Private Issuer on Form 6-K with the SEC. However, the Company is exempt from the proxy rules under section 14 of the Exchange Act, and the short-swing profit and other rules under section 16 of the Exchange Act.

 

 

1
 

 

Glossary of Technical Terms

 

alteration Mineralogical change at low pressures due to invading fluids or the influence of chemical reactions in a rock mass resulting from the passage of hydrothermal fluids.
   
anomaly Any concentration of metal noticeably above or below the average background concentration.
   
assay An analysis to determine the presence, absence or quantity of one or more components.
   
Au The elemental symbol for gold.
   
background Traces of elements found in sediments, soils, and plant material that are unrelated to any mineralization and which come from the weathering of the natural constituents of the rocks.
   
Barrick Barrick Gold Corp.
   
BLEG Acronym for “bulk leach extractable gold” sampling.
   
dyke A tabular body of igneous rock that has been injected while molten into a fissure.
   
exploration information Geological, geophysical, geochemical, sampling, drilling, trenching, analytical testing, assaying, mineralogical, and metallurgical and other similar information concerning a particular property that is derived from activities undertaken to locate, investigate, define or delineate a mineral prospect or mineral deposit.
   
fault A planar fracture or discontinuity in a volume of rock, across which there has been significant displacement.
   
feasibility study Is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of realistically assumed mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations together with any other relevant operational factors and detailed financial analysis, that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable).  The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project.  The confidence level of the study will be higher than that of a Pre-Feasibility Study.
   
fracture Any local separation or discontinuity plane in a geologic formation, such as a joint or a fault that are commonly caused by stress exceeding the rock strength.
   
grade The concentration of each ore metal in a rock sample, usually given as weight percent.  Where extremely low concentrations are involved, the concentration may be given in grams per tonne (g/t or gpt) or ounces per ton (oz/t).  The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.
   

 

2
 

 

hectare or ha An area totalling 10,000 square metres.
   
hydrothermal Hot fluids, usually mainly water, in the earth's crust which may carry metals and other compounds in solution to the site of ore deposition or wall rock alteration.
   
IP Induced polarization survey, a form of geophysical survey used in the exploration for minerals.
   
intrusive A rock mass formed below earth's surface from magma which has intruded into a pre-existing rock mass.
   
JORC The Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
   
JV A joint venture, which is a term for a contractual relationship between parties, usually for a single purpose, which is not a partnership.
   
kilometres or km Metric measurement of distance equal to 1,000 metres (or 0.6214 miles).
   
mill A facility for processing ore to concentrate and recover valuable minerals.
   
mineral reserve That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.
   
mineralization The hydrothermal deposition of economically important metals in the formation of ore bodies or "lodes”.
   
net smelter or NSR royalty Payment of a percentage of net mining profits based on returns from the smelter, after deducting applicable smeltering charges.
   
NI 43-101 National Instrument 43-101, “Standards of Disclosure for Mineral Projects”, as adopted by the Canadian Securities Administrators, as the same may be amended or replaced from time to time, and shall include any successor regulation or legislation.
   
ore A mineral or an aggregate of minerals from which a valuable constituent, especially a metal, can be profitably mined or extracted.
   
outcrop An exposure of rock at the earth's surface.
   
overburden A general term for any material covering or obscuring rocks from view.
   
porphyry A variety of igneous rock consisting of large-grained crystals, such as feldspar or quartz, dispersed in a fine-grained feldspathic matrix or groundmass.
   
ppm or parts per million A unit of measurement which is 1000 times larger than parts per billion (i.e. ppb); 1 ppm is equivalent to 1000 ppb, and is also equivalent to 1 gram/tonne.
   

 

3
 

 

prefeasibility study and preliminary feasibility study Each mean a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on mining, processing, metallurgical, economic, marketing, legal, environmental, social and governmental considerations and the evaluation of any other relevant factors which are sufficient for a Qualified Person, acting reasonably, to determine if all or part of the Mineral Resource may be classified as a Mineral Reserve.
   
Pyrrhotite A bronze coloured mineral of metallic lustre that consists of ferrous sulphide and is attracted by a magnet.
   
pyrite Iron sulphide mineral.
   
Qualified Person An individual who is an engineer or geoscientist with at least five years of experience in mineral exploration, mine development or operation or mineral project assessment, or any combination of these; has experience relevant to the subject matter of the mineral project and the technical report; and is a member or licensee in good standing of a professional association.
   
quartz Silica or SiO2, a common constituent of veins, especially those containing gold and silver mineralization.
   
RAB Rotary air blast drilling.
   
RC Reverse circulation drilling.
   
reef A geological discontinuity which served as a trap or conduit for hydrothermal mineralizing fluids to form an ore deposit.
   
silicification Replacement and or impregnation of the constituent of a rock by quartz rich hydrothermal fluids or (silica).
   
Sloane Sloane Developments Ltd., a corporation based in the United Kingdom.
   
Songshan Songshan Mining Company.
   
Stamico State Mining Corporation of Tanzania.
   
Tancan Tancan Mining Company Limited, a wholly-owned Tanzanian subsidiary of the Company.
   
Tanzam Tanzania American International Development Corporation 2000 Limited, a wholly-owned Tanzanian subsidiary of the Company.
   
test pits Shallow holes dug at spots along the strike of any mineralization or, if it is disseminated, anywhere in the area where the shallow holes might reach mineralized bedrock.
   
ton Imperial measurement of weight equivalent to 2,000 pounds (sometimes called a “short ton”).
   

 

4
 

 

tonne Metric measurement of weight equivalent to 1,000 kilograms (or 2,204.6 pounds).
   
tuff A rock comprised of fine fragments and ash particles ejected from a volcanic vent.
   
veins Distinct sheetlike body of crystallized mineral constituents carried by hydrothermal aqueous solutions that are deposited through precipitation within the host country rock. These bodies are often the source of mineralisation either in or proximal to the veins.
   

Canadian Terminology

 

The following terms may be used in the Company’s technical reports to describe its mineral properties and have been used in this Annual Report (see “Cautionary Note to U.S. Investors Concerning Estimates of Measured and Indicated Mineral Resources”). These definitions have been published by the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) as the CIM Standards on Mineral Resources and Reserves Definitions and Guidelines adopted by the CIM Council on November 27, 2010, and have been approved for use by Canadian reporting issuers by the Canadian Securities Administrators under NI 43-101, and as those definitions may be amended:

 

Measured Mineral Resource That part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit.  The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological grade and continuity.
   
Indicated Mineral Resource That part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.  The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

 

Inferred Mineral Resource

That part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

 

Confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability worthy of public disclosure.

 

5
 
   
Mineral Reserve

A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.

 

Mineral resources are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves. A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve. The term “mineral reserve” need not necessarily signify that extraction facilities are in place or operative or that all governmental approvals have been received. It does signify that there are reasonable expectations of such approvals.

   
Mineral Resource

A concentration or occurrence of diamonds, natural solid inorganic material, or natural solid fossilized organic material including base and precious metals, coal, and industrial minerals in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.

 

A Mineral Resource is an inventory of mineralization that under realistically assumed and justifiable technical and economic conditions might become economically extractable.

 

Probable Mineral Reserve Is the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study.  This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.
   
Proven Mineral Reserve

Is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

 

The term should be restricted to that part of the deposit where production planning is taking plce and for which any variation in the estimate would not significantly affect potential economic viability.

 

 

 

6
 

 

PART I

 

Item 1.Identity of Directors, Senior Management and Advisers

 

A.       Directors and Senior Management:

 

Not applicable.

 

B.       Advisers

 

Not applicable.

 

Item 2.Offer Statistics and Expected Timetable

 

Not applicable.

 

Item 3.Key Information

 

A.       Selected Financial Data

 

The audited financial statements for the Company’s fiscal years ended August 31, 2017, 2016, 2015, 2014 and 2013 are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The following selected financial data is based on financial statements prepared in accordance with IFRS and is presented for the five most recent financial years. Unless stated otherwise, reference to dollar amounts shall mean Canadian dollars.

 

For each of the years in the five year periods ended August 31, the information in the tables was extracted from the more detailed audited financial statements of the Company.

 

The selected financial data should be read in conjunction with Item 5, “Operating and Financial Review and Prospects” and in conjunction with the consolidated financial statements of the Company and the notes thereto contained elsewhere in this Annual Report. The Company’s fiscal period ends on August 31 of each year.

 

The following is a summary of certain selected financial information for the Company’s five most recently completed fiscal years (in Canadian dollars, except number of shares):

 

   2017($)   2016($)   2015($)   2014($)   2013($) 
Operations:                         
                          
Revenues  $--   $--   $--   $--   $- 
                          
Net loss   (6,434,112)   (12,781,902)   (8,995,697)   (2,416,265)   (3,225,998)
                          
Basic and diluted loss per share   (0.05)   (0.12)   (0.09)   (0.02)   (0.03)

 

 

7
 

 

   2017   2016   2015   2014   2013 
Balance sheet:                         
                          
Working Capital (deficiency)   (6,552,376)   (11,836,214)   (4,684,253)   1,325,667    5,416,104 
                          
Total Assets   51,353,088    49,885,545    53,108,859    52,792,901    58,193,340 
                          
Net Assets   36,254,043    35,156,483    46,072,190    51,503,996    52,319,699 
                          
Share Capital   125,174,377    122,380,723    120,532,634    117,153,440    115,614,202 
                          
Number of Shares   121,784,619    109,068,492    107,853,554    101,325,880    100,922,582 
                          
Deficit   96,566,577    90,600,819    77,970,955    69,095,649    67,117,263 

 

Exchange Rates

 

The following table sets forth information as to the period end, average, the high and the low exchange rate for Canadian Dollars (“CDN”) and U.S. Dollars for the periods indicated based on the noon buying rate in New York City for cable transfers in Canadian Dollars as certified for customs purposes by the Federal Reserve Bank of New York (Canadian dollar = US$1):

 

Year Ended:
August 31
   Average   Period End   High   Low 
 2017    1.3205    1.2535    1.3726    1.2471 
 2016    1.3261    1.3122    1.4592    1.2544 
 2015    1.2109    1.3223    1.3301    1.0862 
 2014    1.0777    1.0858    1.1251    1.0237 
 2013    1.011    1.0554    1.0578    0.971 

 

The following table sets forth the high and low exchange rate for the past six months. As of August 31, 2017, the exchange rate was CDN $1.2535 for each US$1.00.

 

Month  High  Low
October 2017   1.2893    1.2472 
September 2017   1.2480    1.2128 
August 2017   1.2755    1.2482 
July 2017   1.2982    1.2447 
June 2017   1.3504    1.2977 
May 2017   1.3743    1.3446 

 

B.       Capitalization and Indebtedness

 

Not applicable.

 

8
 

 

C.       Reasons for the Offer and Use of Proceeds

 

Not applicable.

 

D.       Risk Factors

 

An investment in the Company’s common shares involves a high degree of risk and should be considered speculative. You should carefully consider the following risks set out below and other information before investing in the Company’s common shares. If any event arising from these risks occurs, the Company’s business, prospects, financial condition, results of operations or cash flows could be adversely affected, the trading price of common shares could decline and all or part of any investment may be lost.

 

The operations of the Company are highly speculative due to the high-risk nature of its business, which include the acquisition, financing, exploration and, if warranted, development of mineral properties. The risks and uncertainties set out below are not the only ones facing the Company. Additional risks and uncertainties not currently known to the Company, or that the Company currently deems immaterial, may also impair the Company’s operations. If any of the risks actually occur, the Company’s business, financial condition and operating results could be adversely affected. As a result, the trading price of the Company’s common shares could decline and investors could lose part or all of their investment. The Company’s business is subject to significant risks and past performance is no guarantee of future performance.

 

Risks relating to the Company

 

Risks Relating to the Company

 

The Company has decided to begin production at the Buckreef Project after preparing an NI43-101 compliant Mining Feasibility Report published in April 2017. The production plans contained therein include process plant schedule and financial analysis projections for the Buckreef encompassing the Buckreef Main, South, Eastern Porphyry, Bingwa and Tembo deposits. Management has recommended immediate implementation of the mining and processing plan once the renewal certificate has been received from the Ministry of Mines. The Mining Feasibility report as published is the bankable feasibility study that may be subject to future unforeseen risks.

 

The Company has decided to begin production at the Buckreef Project based on the latest and comprehensive pit-design optimized mining feasibility study or bankable feasibility study, which is a more common practice within the mining industry, and therefore may subject it to some unforeseen business risks.  The Company’s decision to begin production at the Buckreef Project was based on prior historical and current information, drilling programs, modeling, and positive metallurgical testing.  Therefore, its decision to begin production at the Buckreef Project was based on detailed information which may or may not be representative of information regarding the mine based on the latest independent and comprehensive study results that were published in April 2017.  In addition, basing its decision to begin production on this updated information may make the Company susceptible to risks, including:

 

  • certain difficulties in obtaining expected metallurgical recoveries when scaling up to production scale;

  • the preliminary nature of mine plans and processing concepts and applying them to full scale production;

9
 

 

  • determining operating/capital costs estimates and possible variance associated with constructing, commissioning and operating the Buckreef facilities based on limited information;

  • that metallurgical testing is always in development and may not be representative of results of all the deposits that make up the Buckreef Project; and

  • that the Company may have underestimated capital and operating costs despite the independent and comprehensive bankable mining feasibility study.

The Company has incurred net losses since its inception and expects losses to continue.

 

The Company has not been profitable since its inception. For the fiscal year ended August 31, 2017, the Company had a net loss of $6,434,112 and an accumulated deficit on August 31, 2017 of $96,566,577. The Company has never generated revenues and does not expect to generate revenues from operations until one or more of its properties are placed in production. There is a risk that none of the Company’s properties will be placed in production.

 

The Company’s exploration activities are highly speculative and involve substantial risks.

 

All of the Company’s properties are in the exploration stage and no proven mineral reserves have been established. The Company’s exploration work may not result in the discovery of mineable deposits of ore in a commercially economical manner. There may be limited availability of water, which is essential to milling operations, and interruptions may be caused by adverse weather conditions. The Company’s future operations, if any, are subject to a variety of existing laws and regulations relating to exploration and development, permitting procedures, safety precautions, property reclamation, employee health and safety, air quality standards, pollution and other environmental protection controls.

 

The Company has uninsurable risks.

 

The Company may be subject to unforeseen hazards such as unusual or unexpected formations and other conditions. The Company may become subject to liability for pollution, cave-ins or hazards against which it cannot insure or against which it may elect not to insure. The payment of such liabilities may have a material adverse effect on the Company’s financial position.

 

The Company depends on key management personnel.

 

The success of the operations and activities of the Company is dependent to a significant extent on the efforts and abilities of its management including James E. Sinclair, President and Director, former Chief Executive Officer. Investors must be willing to rely to a significant extent on their discretion and judgment. The Company does not have employment contracts with the President and Chief Executive Officer. The Company maintains key-man life insurance on the President and Chief Executive Officer.

 

The Company will need additional capital.

 

As at August 31, 2017, the Company had cash and cash equivalents of $1,011,293 costs to fund its plan of operations and may need to raise additional capital. Ultimately, the Company’s ability to continue its exploration activities depends in part on the Company’s ability to commence operations and generate revenues or to obtain financing through joint ventures, debt financing, equity financing, production sharing agreements or some combination of these or other means. Further the raising of additional capital by the Company may dilute existing shareholders.

 

10
 

 

Substantial doubt about the Company’s ability to continue as a going concern.

 

Based on the Company’s current funding sources and taking into account the working capital position and capital requirements at August 31, 2017, these factors indicate the existence of a material uncertainty that raises substantial doubt about the Company’s ability to continue as a going concern and is dependent on the Company raising additional debt or equity financing. The Company must obtain additional funding in 2018 in order to continue development and construction of the Buckreef Project. Furthermore, the Company is currently negotiating project financing terms with a number of lending institutions, which the Company believes will result in the Company obtaining the project financing required to fund the construction of the Buckreef Project. However there is no assurance that such additional funding and/or project financing will be obtained or obtained on commercially favourable terms.

 

The Company has no cash flow from operations and has historically depended on the proceeds from equity financings for its operations.

 

The Company’s current operations do not generate any cash flow. Any work on the Company’s properties may require additional equity financing. If the Company seeks funding from existing or new joint venture partners, its project interests will be diluted. If the Company seeks additional equity financing, the issuance of additional shares will dilute the current interests of the Company’s current shareholders. The Company may not be able to obtain additional funding to allow the Company to fulfill its obligations on existing exploration properties. The Company’s failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development and the possible partial or total loss of the Company’s potential interest in certain properties or dilution of the Company’s interest in certain properties.

 

The Company’s former auditor communicated deficiencies to its Audit Committee regarding the 2015 impairment assessment and financial statement closing process.

 

In connection with the audit investigation of the Company’s 2015 financial statements, the Company’s former auditor identified to the Audit Committee significant deficiencies in the impairment assessment and financial statement closing process. The Audit Committee considered the auditors’ position and concluded there was no deficiency in the impairment assessment and that the financial statement closing process for 2015 was consistent with prior year audits, and the audit opinion delivered by the auditor on the 2015 financial statements was not qualified.

 

The Company may be characterized as a passive foreign investment company.

 

The Company may be characterized as a passive foreign investment company (“PFIC”). If it is determined to be a PFIC, its U.S. shareholders may suffer adverse tax consequences. Under the PFIC rules, for any taxable year that the Company’s passive income or its assets that produce passive income exceed specified levels, it will be characterized as a PFIC for U.S. federal income tax purposes. This characterization could result in adverse U.S. tax consequences for the U.S. shareholders, which may include having certain distributions on the Company’s common shares and gains realized on the sale of its common shares treated as ordinary income, rather than as capital gains income, and having potentially punitive interest charges apply to the proceeds of sales of the Company’s common shares and certain distributions.

 

11
 

 

Certain elections may be made to reduce or eliminate the adverse impact of the PFIC rules for holders of the Company’s common shares, but these elections may be detrimental to the shareholder under certain circumstances. The PFIC rules are extremely complex and U.S. investors are urged to consult independent tax advisers regarding the potential consequences to them of our classification as a PFIC.  See “Taxation – Material United States Federal Income Tax Considerations”.

 

Risks relating to the Mining Industry

 

The Company cannot accurately predict whether commercial quantities of ores will be established.

 

Whether an ore body will be commercially viable depends on a number of factors beyond the control of the Company, including the particular attributes of the deposit such as size, grade and proximity to infrastructure, as well as mineral prices and government regulations, including regulations relating to permitting, prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The Company cannot accurately predict the exact effect of these factors, but the combination of these factors may result in a mineral deposit being unprofitable. The Company has no mineral producing properties at this time. Although the mineralized material estimates included herein have been prepared by the Company, or, in some instances have been prepared, reviewed or verified by independent mining experts, these amounts are estimates only and there is a risk that a particular level of recovery of gold or other minerals from mineralized material will not in fact be realized or that an identified mineralized deposit, if any, will ever qualify as a commercially mineable or viable reserve.

 

The exploration for and development of mineral deposits involves significant risks.

 

Mineral resource exploration is a speculative business and involves a high degree of risk. The Company has completed a diamond drilling program on the Buckreef Project and has been reviewing the results of the drilling program in the context of analyzing the economic significance of the deeper resources at the Buckreef Project using current gold prices. However, the exploration for and development of mineral deposits involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. Although the discovery of a resource may result in substantial rewards, few explored properties are ultimately developed into producing mines. Significant expenditures may be required to locate and establish reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site.

 

The Company may not be able to establish the presence of minerals on a commercially viable basis.

 

The Company’s ability to generate revenues and profits, if any, is expected to occur through exploration and development of its existing properties as well as through acquisitions of interests in new properties. The Company will need to incur substantial expenditures in an attempt to establish the economic feasibility of mining operations by identifying mineral deposits and establishing ore reserves through drilling and other techniques, developing metallurgical processes to extract metals from ore, designing facilities and planning mining operations. The economic feasibility of a project depends on numerous factors beyond the Company’s control, including the cost of mining and production facilities required to extract the desired minerals, the total mineral deposits that can be mined using a given facility, the proximity of the mineral deposits to a user of the minerals, and the market price of the minerals at the time of sale. The Company’s existing or future exploration programmes or acquisitions may not result in the identification of deposits that can be mined profitably.

 

12
 

 

The Company depends on consultants and engineers for its exploration programmes.

 

The Company has relied on and may continue to rely upon consultants for exploration development, construction and operating expertise. Substantial expenditures are required to construct mines, to establish ore reserves through drilling, to carry out environmental and social impact assessments, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the exploration infrastructure at any site chosen for exploration. The Company may not be able to discover minerals in sufficient quantities to justify commercial operation, and the Company may not be able to obtain funds required for exploration on a timely basis.

 

The Company may not have clear title to its properties.

 

Acquisition of title to mineral properties is a very detailed and time-consuming process, and the Company’s title to its properties may be affected by prior unregistered agreements or transfers, or undetected defects. Several of the Company’s prospecting licenses are currently subject to renewal by the Ministry of Energy and Minerals of Tanzania. There is a risk that the Company may not have clear title to all its mineral property interests, or they may be subject to challenge or impugned in the future. See “Mineral Properties”.

 

Mining exploration, development and operating activities are inherently hazardous.

 

If the Company experiences mining accidents or other adverse conditions, the Company’s mining operations could be materially adversely affected. The Company’s exploration activities may be interrupted by any or all of the following mining accidents such as cave-ins, rock falls, rock bursts, pit wall failures, fires or flooding. In addition, exploration activities may be reduced if unfavourable weather conditions, ground conditions or seismic activity are encountered, ore grades are lower than expected, the physical or metallurgical characteristics of the ore are less amenable than expected to mining or treatment, dilution increases or electrical power is interrupted. Occurrences of this nature and other accidents, adverse conditions or operational problems in future years may result in the Company’s failure to achieve current or future exploration and production estimates.

 

Development of the Company’s projects is based on estimates and the Company cannot guarantee that its projects, if any, will be placed into production.

 

Any potential production and revenues based on production from any of the Company’s properties are estimates only. Estimates are based on, among other things, mining experience, resource estimates, assumptions regarding ground conditions and physical characteristics of ores (such as hardness and presence or absence of certain metallurgical characteristics) and estimated rates and costs of mining and processing. The Company’s actual production from the Buckreef Project, if it ever achieves production, may be lower than its production estimates. Each of these factors also applies to future development properties not yet in production at the Company’s other projects. In the case of mines the Company may develop in the future, it does not have the benefit of actual experience in its estimates, and there is a greater likelihood that the actual results will vary from the estimates. In addition, development and expansion projects are subject to unexpected construction and start-up problems and delays.

 

The Company’s exploration activities are subject to various federal, state and local laws and regulations.

 

Laws and regulation govern the development, mining, production, importing and exporting of minerals; taxes; labor standards; occupational health; waste disposal; protection of the environment; mine safety; toxic substances; and other matters. The Company requires licenses and permits to conduct exploration and mining operations. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation thereof could have a substantial adverse impact on the Company. Applicable laws and regulations will require the Company to make certain capital and operating expenditures to initiate new operations. Under certain circumstances, the Company may be required to close an operation once it is started until a particular problem is remedied or to undertake other remedial actions.

 

13
 

 

The Company’s mineral interests in Tanzania are held under prospecting licenses granted pursuant to the Mining Act, 2010 (Tanzania) for a period of up to four years, and are renewable two times for a period of up to two years each. There are initial preparation fees and annual rental fees for prospecting licenses based on the total area of the license. Renewals of prospecting licenses can take many months and possibly even years to process by the regulatory authority in Tanzania and there is no guarantee that they will be granted. With each renewal at least 50% of the licensed area, if greater than 20 square kilometres, must be relinquished and if the Company wishes to keep the relinquished one-half portion, it must file a new application for the relinquished portion. There is no guarantee on the timing for processing the new application and whether it will be successful.

 

Risks relating to the Market

 

The Company’s competition is intense in all phases of the Company’s business.

 

The mining industry in which the Company is engaged is in general, highly competitive. Competitors include well-capitalized mining companies, independent mining companies and other companies having financial and other resources far greater than those of the Company. The Company competes with other mining companies in connection with the acquisition of gold and other precious metal properties. In general, properties with a higher grade of recoverable mineral and/or which are more readily mineable afford the owners a competitive advantage in that the cost of production of the final mineral product is lower. Thus, a degree of competition exists between those engaged in the mining industries to acquire the most valuable properties. As a result, the Company may eventually be unable to acquire attractive gold mining properties.

 

The Company is subject to the volatility of metal and mineral prices.

 

The economics of developing metal and mineral properties are affected by many factors beyond the Company’s control, including, without limitation, the cost of operations, variations in the grade ore or resource mined, and the price of such resources.  The market prices of the metals for which the Company is exploring are highly speculative and volatile.  Depending on the price of gold or other resources, the Company may determine that it is impractical to commence or continue commercial production.  Gold prices fluctuate widely and are affected by numerous factors beyond the Company’s control, including central bank purchases and sales, producer hedging and de-hedging activities, expectations of inflation, the relative exchange rate of the U.S. dollar with other major currencies, interest rates, global and regional demand, political and economic conditions, production costs in major gold-producing regions, speculative positions taken by investors or traders in gold and changes in supply, including worldwide production levels.  The price of gold and other metals and minerals may not remain stable, and such prices may not be at levels that will make it feasible to continue the Company’s exploration activities, or commence or continue commercial production. The aggregate effect of these factors is impossible to predict with accuracy.  

 

The Company’s business activities are conducted in Tanzania.

 

The Company’s principal exploration and development properties are currently located in the United Republic of Tanzania, Africa. Although the Company believes that the Tanzania government is a stable, multi-party democracy, there is no guarantee that this will continue. Tanzania is surrounded by unstable countries enduring political and civil unrest, and in some cases, civil war. There is no guarantee that the surrounding unrest will not affect the Tanzanian government and people, and therefore, the Company’s mineral exploration activities. Any such effect is beyond the control of the Company and may materially adversely affect its business.

 

14
 

 

The Company may be affected in varying degrees by political stability and government regulations relating to the mining industry and foreign investment in Tanzania. The government of Tanzania may institute regulatory policies that adversely affect the exploration and development (if any) of the Company’s properties. Any changes in regulations or shifts in political conditions in this country are beyond the control of the Company and may materially adversely affect its business. Investors should assess the political and regulatory risks related to the Company’s foreign country investments. The Company’s operations in Tanzania are also subject to various levels of economic, social and other risks and uncertainties that are different from those encountered in North America. The Company’s operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, restrictions on foreign exchange and repatriation, income taxes, expropriation of property, environmental legislation and mine safety. Other risks and uncertainties include extreme fluctuations in currency exchange rates, high rates of inflation, labour unrest, risks of war or civil unrest, government and civil unrest, regional expropriation and nationalization, renegotiation or nullification of existing concessions, licences, permits and contracts, artisanal mining, corruption, hostage taking, civil war and changing political conditions and currency controls. Infectious diseases (including Ebola virus, malaria, HIV/AIDS and tuberculosis) are also major health care issues where the Company operates.

 

Mineral exploration in Tanzania is affected by local climatic and economic conditions.

 

The Company’s properties in Tanzania have year round access, although seasonal winter rains from December to March may result in flooding in low lying areas, which are dominated by mbuga, a black organic rich laustrine flood soil. Further, most lowland areas are under active cultivation for corn, rice, beans and mixed crops by subsistence farmers. As a result, the area has been deforested by local agricultural practices for many years. The seasonal rains and deforested areas can create a muddy bog in some areas, which can make access more difficult, and could impede or even prevent the transport of heavy equipment to the Company’s mineral properties at certain times of the year between December and March.

 

The Company’s operations are subject to issues relating to security and human rights.

 

Civil disturbances and criminal activities such as trespass, artisanal mining, theft and vandalism may cause disruptions at the Company’s operations in Tanzania which may result in the suspension of operations. There is no guarantee that such incidents will not occur in the future. Such incidents may halt or delay exploration, increase operating costs, result in harm to employees or trespassers, decrease operational efficiency, increase community tensions or result in criminal and/or civil liability for the Company or its employees and/or financial damages or penalties. The manner in which the Company’s personnel respond to civil disturbances and criminal activities can give rise to additional risks where those responses are not conducted in a manner that is consistent with international standards relating to the use of force and respect for human rights. The failure to conduct security operations in accordance with these standards can result in harm to employees or community members, increase community tensions, reputational harm to the Company and its partners or result in criminal and/or civil liability for the Company or its employees and/or financial damages or penalties. It is not possible to determine with certainty the future costs that the Company may incur in dealing with the issues described above at its operations.

 

15
 

 

Risks relating to the Securities of the Company

 

As a foreign private issuer, the Company is subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly available to U.S. shareholders.

 

The Company is a foreign private issuer under applicable U.S. federal securities laws. As a result, the Company does not file the same reports that a U.S. domestic issuer would file with the SEC, although the Company is required to file with or furnish to the SEC the continuous disclosure documents that the Company is required to file in Canada under Canadian securities laws. In addition, the Company’s officers, directors, and principal shareholders are exempt from the reporting and “short swing” profit rules of Section 16 of the Exchange Act. Therefore, shareholders may not know on as timely a basis when the Company’s officers, directors and principal shareholders purchase or sell common shares, as the reporting dates under the corresponding Canadian insider reporting requirements are longer. In addition, as a foreign private issuer, the Company is exempt from the proxy rules under the Exchange Act.

 

The Company may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.

 

In order to maintain the Company’s current status as a foreign private issuer, a majority of its common shares must be either directly or indirectly owned by non-residents of the United States, unless the Company also satisfies one of the additional requirements necessary to preserve this status. The Company may in the future lose its foreign private issuer status if a majority of its common shares is held in the United States and it fails to meet the additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs under U.S. federal securities laws as a U.S. domestic issuer may be significantly more than the costs incurred as a Canadian foreign private issuer eligible to use the multijurisdictional disclosure system (“MJDS”). If the Company is not a foreign private issuer, it would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. In addition, the Company may lose the ability to rely upon certain exemptions from NYSE Mkt corporate governance requirements that are available to foreign private issuers.

 

United States investors may not be able to obtain enforcement of civil liabilities against the Company.

 

The enforcement by investors of civil liabilities under the United States federal or state securities laws may be affected adversely by the fact that the Company is governed by the Business Corporations Act (Alberta), that the some of the Company’s officers and directors are residents of Canada or otherwise reside outside the United States, and that all, or a substantial portion of their assets and a substantial portion of the Company’s assets, are located outside the United States. It may not be possible for investors to effect service of process within the United States on certain of the Company’s directors and officers or enforce judgments obtained in the United States courts against the Company, certain of its directors and officers based upon the civil liability provisions of United States federal securities laws or the securities laws of any state of the United States.

 

Common Share prices will likely be highly volatile, and investment could decline in value or the entire investment may be lost.

 

The market price of the common shares is likely to be highly volatile and may fluctuate significantly in response to various factors and events, many of which the Company cannot control. The stock market in general, and the market for mining company stocks in particular, has historically experienced significant price and volume fluctuations. Volatility in the market price for a particular issuer’s securities has often been unrelated or disproportionate to the operating performance of that issuer. Market and industry factors may depress the market price of the Company’s securities, regardless of operating performance. Volatility in the Company’s securities price also increases the risk of securities class action litigation.

 

16
 

 

The Company’s common shares must meet the requirements of the NYSE MKT.

 

The NYSE MKT rules provides that the NYSE MKT may, in its discretion, at any time, and without notice, suspend dealings in or remove any security from listing or unlisted trading privileges, if, among other things, where the financial condition and/or operating results of the issuer appear to be unsatisfactory or it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to make further dealings on the NYSE MKT inadvisable.  Although the Company has received no indication or notification that its common shares may be delisted, in light of the current per common share price, there is no assurance that the Company’s common shares will continue to be listed on the NYSE MKT.

 

Offers or availability for sale of a substantial number of common shares may cause the price of our common shares to decline.

 

Sales of a significant number of the Company’s common shares in the public market could harm the market price of its common shares and make it more difficult for the Company to raise funds through future offerings of common shares. The Company’s shareholders may sell substantial amounts of its common shares in the public market. The availability of these common shares for resale in the public market has the potential to cause the supply of its common shares to exceed investor demand, thereby decreasing the price of the common shares.

 

In addition, the fact that the Company’s shareholders can sell substantial amounts of its common shares in the public market, whether or not sales have occurred or are occurring, could make it more difficult for the Company to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that it deems reasonable or appropriate.

 

Item 4.Information on the Company

 

A.       History and Development of the Company

 

The Company was originally incorporated under the name “424547 Alberta Ltd.” in the Province of Alberta on July 5, 1990, under the Business Corporations Act (Alberta). The name was changed to “Tan Range Exploration Corporation” on August 13, 1991. The name of the Company was again changed to “Tanzanian Royalty Exploration Corporation” on February 28, 2006. The Company is also registered in the Province of British Columbia as an extra-provincial company under the Business Corporations Act (British Columbia) and in the Province of Ontario as an extra-provincial company under the Business Corporations Act (Ontario).

 

The principal executive office of the Company is located at 82 Richmond Street East, Toronto, Ontario, M5C 1P1, Canada, and its telephone number is (860) 355-3253.

 

For the year ended August 31, 2017, the Company reported a net loss of $6,434,112. Included in the net loss is $124,717 of mineral properties and deferred exploration expenses that was written off relating to abandoned mineral properties. The Company incurred deferred exploration expenditures of $1,242,162 during the year ended August 31, 2017.

 

17
 

 

In connection with the Company’s disclosure of mineral resources and the cut-off grade associated with each mineral resource, it has made certain assupmtions for mineral pricing and cost associated with each cut-off grade to determine the reasonable prospects for economic extraction as discussed below.

 

Significant Acquisitions and Significant Dispositions

 

The Company’s principal capital expenditures and divestitures (including interests in other companies and amounts invested) for the last three fiscal years are described as follows:

 

The Company awarded a contract to Venmyn Independent Projects (Pty) Limited, a subsidiary of Venmyn Rand (Pty) Limited, to undertake an update of the 21 August 2012 National Instrument 43-101 Independent Technical Report on the Buckreef Project in Tanzania. The updated report is dated February 24, 2014 (the “Updated Buckreef Technical Project”) and it was filed on SEDAR on February 24, 2014. See “Mineral Properties”. Further to this, the Company awarded another contract to MaSS Resources Pvt Ltd of Tanzania to undertake an NI43-101 Compliant updated Buckreef Pit Optimized Resource Technical Mining Feasibility Report that was completed and published on 5th April 2017. Major Assumptions in the report included a gold price of $1250/oz, an effective Tax Rate of 15.25%; a Royalty Rate of 4.3%; transport refining cost of $15.00/oz Au and discount rate of 5%.

 

The Company wound down the pilot heap leach and Carbon-in-Column pilot ore processing program at its Buckreef redevelopment gold project, located in the Lake Victoria Goldfields of Tanzania in September 2016. In addition, the Company has also completed a significant portion of the Buckreef main Pit preparation, including grade control drill-hole marking and surveying, road detour surveys and cost estimations, Tailings Storage Facility site preparation, installation of the process plant crusher circuit, Carbon-in-Column process plant designs and site plan designs. The Company also produced an updated internal report on the financial projections for the Buckreef Mine Closure Conceptual Plan.

 

B.       Business Overview

 

The Company is a mineral resource company with exploration stage properties, which engages in the acquisition of interests in and the exploration of natural resource properties in the future and the possible development of those properties where warranted. The Company commits its own resources to the initial evaluation of mineral properties and in select situations, if and when warranted, the Company enters into joint venture agreements with other corporations to further the exploration of such properties, in exchange for annual rental/option payments and post-production royalty payments or with a view to direct development of a mine for the purpose of earning income from the sale of gold and other mined materials. At present, the Company’s natural resource activities do not generate any income from production.

 

The Company’s main area of interest has been in the exploration and development of gold properties, with a primary focus on exploring for and developing gold properties in Tanzania. Tanzania remains the focus of the Company’s exploration and development activities.

 

In the Company’s view, its use of a joint venture and royalty strategy in addition to its planned direct exploration and development offers investors leverage to precious and base metal prices with lower risk and shareholder dilution. Future production royalties from any producing properties discovered by joint venture partners would provide the Company with a direct interest in the mine’s cash flow, with exposure to any benefits from new discoveries and production growth, but without the capital obligations, and environmental and social liabilities, associated with direct ownership.

 

18
 

 

Plan of Operations

 

Exploration Activities

 

All of the properties in which the Company holds an interest are in the exploration, preliminary economic assessment or extraction (pre-production) stages of mining. Mineral exploration and extraction involves a high degree of risk and few properties, which are explored, are ultimately developed into producing mines. There is no assurance that the Company’s mineral exploration activities will result in any discoveries of commercial bodies of ore. The long-term profitability of the Company’s operations will be in part directly related to the cost and success of its exploration programs, which may be affected by a number of factors beyond the control of the Company.

 

By way of general description of the Company’s operating activities, the Company’s business operations involve using known or published geological and geophysical data to locate mineral resource properties meriting further exploration or development. Once identified, the Company must stake and apply for registration to title of the mineral properties, or negotiate the acquisition of such properties from any third party owners. Upon registration or acquisition of title, the Company then designs a program of preliminary exploration which can involve grid mapping, geophysical and magnetic surveying, geochemical surveying, geological mapping and sampling, grab sampling, assaying and other forms of prospecting as circumstances may require. Based on the preliminary results, mineral properties are ranked according to merit for further exploration work, which may involve further mapping, more detailed geophysical and geochemical surveying, and trenching to identify potential drill targets. If mineralization is indicated which merits further investigation, drill targets are selected and a preliminary RC drilling program commences for underground sampling and assaying. If the results are positive, then a diamond drilling program will commence mainly to check, verify and confirm the mineralization potential of the prospect.

 

Based on the drilling program results, the Company will develop models of the underlying geology and mineralized zones for more detailed testing. After further drilling, some mineralized zones will then be modeled using relevant geological software and ultimately be classified as inferred or indicated mineral resources. With sufficient infill drilling, these inferred or indicated mineral resources can be confirmed as a measured mineral resource, upon which a pre-feasibility study can be prepared by a qualified, independent mining engineer or geologist to determine whether mining activities are economic in the circumstances of the particular property. A pre-feasibility study must be completed under the requirements of NI 43-101 in Canada in order for mineral reserves to be designated and to confirm the appropriate mining and mineral processing method based on the geological and metallurgical studies of the ore. A final or bankable feasibility study must be completed for the designation of reserves under the SEC’s Industry Guide 7. If the bankable feasibility study is favorable, the Company can then use the feasibility study to seek out the necessary financing from a merchant banker or other financial institution for mine construction and development.

 

The Company continued its efforts for the “farming-out” of identified properties for royalty agreements with other mining companies, and continues to examine and review other exploration opportunities in Tanzania.

 

Highlights for the year ended August 31, 2017

 

Financial:

 

Subsequent to the period, the Company received loans in the amount of US$339,710 maturing in 1 year with a right to extend by 1 additional year by mutual consent, carrying an 8% interest rate payable quarterly. The convertible loans may be repaid in cash or common shares of the Company at the option of the lender. The convertible loan may be converted into common shares of the Company at the sole discretion of the lender at an exercise price of US$0.36 per share. Interest is payable quarterly, either in cash or in shares at the option of the lender at a price of US$0.36 per share.
     

 

19
 

 

In connection with the loans, the Company paid a finder’s fee via the issuance of an aggregate of 214,864 common shares.
   
The Company also entered into extension agreements in regards to USD$1,530,000 in gold loans closed on June 22, 2015, extending the term by one year to June 22, 2018, but modifying no other terms of the 2015 loans.
   
During the year ended August 31, 2017, the Company received loans in the amount of US$884,078 with a one year term with a right to extend by 1 additional year by mutual consent, carrying an 8% interest rate payable quarterly. The convertible loans may be repaid in cash or common shares of the Company at the option of the lender. The convertible loans may be converted into common shares of the Company at the sole discretion of the lender at an exercise price of US$0.36 – US$0.38 per share. Interest is payable quarterly, either in cash or in shares at the option of the lender at a price of US$0.34 – US$0.36 per share.
   
  In connection with the loans, the Company paid a finder’s fee via the issuance of an aggregate of 132,577 common shares with a value of $92,805.
   
On July 19, 2017, the Company settled $63,075 (US$50,000) of principal amount of outstanding loans through the issuance of 83,333 shares with a value of $49,166 resulting on a gain on settlement of $13,909.
   
On September 1, 2016, the Company closed the first tranche of a $5 Million private placement of securities with Crede CG III, Ltd.
   
  In the initial round of financing, the Company privately placed 1,840,400 shares of its common stock and warrants for US$1.25 million. The common stock issued in the first tranche of the financing, which closed on September 1, 2016, was priced at US$0.6792 per share. The investor also received five-year warrants to purchase 1,840,400 shares of Common Stock with an exercise price of US$0.8291 per share. The common stock issued in the first tranche of the financing or issued upon exercise of the warrants issued in the first tranche of the financing will be restricted until a valid registration for such common stock becomes effective.
   
  On September 26, 2016, the Company closed the second tranche of the $5 million private placement of securities with Crede CG III, Ltd.
   
  In the second round of the financing, the Company privately placed convertible notes and warrants for US$3.75 million. The convertible notes were issued in the principal amount of US$3.75 million, carried a coupon of 2.0% and matured on September 26, 2046. The Company immediately exercised its right to cause the conversion of the convertible notes, resulting in the cancellation of the notes and the issuance of 5,357,143 shares of common stock to the investor. The investor also received five-year warrants to purchase 4,017,857 shares of common stock at an exercise price of US$1.10 per share. The closing of the second tranche of the financing was conditioned upon a valid registration statement for the common stock issued or issuable to the investor upon exercise of warrants being declared effective by the U.S. Securities and Exchange Commission. The Commission declared the Company’s Form F-3 Registration Statement registering the stock effective on September 23, 2016.
     

 

20
 

 

Buckreef Project: Mine Development and Operations

 

Q1_2017 (September 2016 – November 2016)

 

  • The Company successfully completed the renewal application process for the 12 Buckreef_Buziba project Prospecting Licenses (PLs). Renewal certificates for all 12 PLs were received after successful payment of the annual rental fee payments for the period 2016-2017.
  • The company also successfully engaged with the Mining Commissioner on requested additional technical information related to the renewal application for the Buckreef Special Mining License (SML04/92).
  • The company also engaged a local Tanzanian consultant group, MaSS Resources Consulting Company who commenced the Review and Update of the Buckreef Preliminary Economic Assessment Report (published in 2012 & 2014) by Venmyn Deloite Resource Consultants Ltd. of SA into an NI43-101 compliant Buckreef Technical Mining Feasibility Report.

Q2_2017 (December 2016 – February 2017)

 

  • The Company received the Buckreef Gold Mine Company Environmental Management Plan Upgrade certification from NEMC.
  • The company also received the Buckreef SML04/92 Special Mining Licence Renewal offer letter from the Ministry of Energy & Minerals. Renewal period was for a further 10 years to 2027. Annual rental fees for the SML were paid upfront to June 2018 as per regulations.
  • MaSS Resources in consultation with company qualified technical persons, continued work on updating the Buckreef Technical Mining Feasibility Report.
  • The National Audit Office of Tanzania (NAOT) team led by the Deputy Auditor General and in the company of senior personnel from Stamico audited the Buckreef Project JV working partnership and current status.
  • Stamico MD made a presentation to the relevant Parliamentary Committee overseeing all government related JV projects in Tanzania to brief the government on project status.
  • Emisha Mining Solutions, a South African based consultant company continued work on the new CIL process plant design.

Q3_2017 (March 2017 – May 2017)

 

  • The Company received a letter of notification requesting the presence of Chairman and CEO to attend the official signing ceremony for the Buckreef renewal certificate issuance which was scheduled to be held at Dodoma on 7th March 2017. Ceremony was however postponed indefinitely as the Minister was busy with other issues.
  • In addition, the company hosted a delegation of MPs that make up the Parliamentary Mining Audit Committee (PMAC) on Energy & Minerals at Buckreef on 22nd March 2017 whose task was to assess the Buckreef Gold project re-development progress since the signing of the Tanzam2000 and State Mining Corporation Joint Venture Agreement in October 2011.
  • Ground-work on the Buckreef project resumed with the main activity being marking and initial clearing of the site covered by the Buckreef main pit outline.
  • Site marking and survey pick-ups of the planned Grade Control drill-holes commenced.
  • The company also completed and successfully published the NI43-101 Compliant updated Buckreef Pit Optimized Resource Technical Mining Feasibility Report during the quarter.

21
 

 

Q4_2017 (June 2017 – August 2017)

 

  • Tanzania suspended granting of new mining licenses and froze the renewal of expired mining permits until further notice under their new legislative changes that seek to enable the government to re-negotiate of Mining Developments Agreements among other things.
  • The company successfully completed ground clearing and surveying the demarcated Buckreef mega-pit outline.
  • In addition, all the proposed Grade Control drill collars were marked and surveyed covering the entire Buckreef mega-pit site.
  • The company also commenced ground clearing of the two sites proposed for the construction of the tailings storage facility (TSF) for the Buckreef mining operation.
  • The company also commenced work on an updated internal report on the financial projections for the Buckreef Mine Closure Conceptual Plan.
  • Artisanal mining activities at the Buziba, Eastern Porphyry Prospect, Bingwa Prospect, Kihesa Area and Tembo North have persisted throughout the 4th quarter as efforts to evict the artisanal miners from these areas have been unsuccessful and/or tied up by local government authorties to the issue of the outstanding land compensation for house-holders within the special mining license.

Exploration

 

Following the Company’s decision to include mine development to its strategy of generating maximum revenue from its extensive portfolio of properties and with the rising costs of maintaining prospecting and other licenses in Tanzania, management decided to review, revamp and clean up the TRX PL portfolio with a view to discard certain licenses and/or alternatively farm them out in JV packages.

 

A detailed in-house geological review reports on each respective project area and its potential for discovery of gold mineralization were reviewed by the Executive Technical team and their recommendations are now being implemented. The in-house review of all the company’s various Prospecting License (PL) holdings established three project categories Retention, Joint venture & Discard/Abandon as described in the respective sections below:

 

Projects/Licenses to Retain (Mining projects)

  • Buckreef – 12 PLs & 1 SML
  • Buziba – 1 PL
  • Itetemia – 8 PLs & 1 ML (Application)
  • Kigosi – 13 PLs & 1 ML
  • Luhala – 2 PLs

Five (5) critical target projects were identified as Buckreef project, Buziba project, Kigosi project, Itetemia project and Luhala project. The Buziba project was traditionally lumped up under Buckreef project in previous annual reports but will now be treated as a standalone project. Brief descriptions of PL holdings and financial obligation status for each respective project area as of 31st August 2017 are summarized in the sections below.

 

Buckreef Project

The Buckreef Project is in the Geita District of the Geita Region south of Lake Victoria, some 110km southwest of the city of Mwanza (see Figure, overleaf). The project area can be accessed by ferry across Smiths Sound, via tarred national road and thereafter via unpaved but well-maintained gravel roads. The Project comprises five prospects namely Buckreef, Bingwa, Tembo, Eastern Porphyry and Buziba. The Buckreef prospect encompasses three ore zones namely Buckreef South, Buckreef Main and Buckreef North. The Project is fully-licensed for mining and extraction of gold.

 

22
 

 

The following cumulative work was completed up to 31st August 2017:

 

  • No mining or ore processing activities conducted at the Buckreef project during the year. Status of the project for the year-ended 31st August 2017 is still care and maintenance while we wait for the issuance of the renewed SML certificate.
  • Historical cumulative total ore mined from the Buckreef South pilot pit as of 31st August 2017 remains at 119,725.59t averaging 1.86g/t Au with total contained metal ounces of 7,161.24.
  • The disposition of the Ore stockpiled as of 31st August 2017, remains as follows: ROMPAD: 72,315.66t @1.39g/t Au (3,237.96 Ozs); Pad#1: 20,931.75t @2.29g/t Au (1,541.77 Ozs); Pad#2: 12,943.78t @2.78g/t Au (1,155.55 Ozs); Pad#3: 9,237.90t @ 3.85g/t Au (1,143.49 Ozs) & Crusher Pad: 4,245t @ 3.86 g/t Au (526.62 Ozs).
  • An NI43-101 Compliant updated Buckreef Pit Optimized Resource Technical Mining Feasibility Report was completed and published. Major Assumptions in the report included a gold price of $1250/oz, an effective Tax Rate of 15.25%; a Royalty Rate of 4.3%; transport refining cost of $15.00/oz Au and discount rate of 5%.

The Study results reflect the continued refinement of pit optimized mining reserves, mine production schedule, process plant ore feed schedule and financial projections & analysis based on comprehensive cost estimations for process plant (design, fabrication, construction and operation) and mining (equipment purchase and mine production) on the Buckreef Project. Major highlights are:

Conventional open pit mining methods selected in pit designs.
Over LoM, a total of 17.49Mt of ore with a strip ratio of 8.1:1 will be mined.
Pre-existing stockpile (ROMPAD) ore totaling 119,726t grading 1.89g/t to be used for process plant commissioning.
1.064Moz of gold mined over the life of the project.
Recoveries of 89% for primary ore and 93%for saprolite ore, utilizing a simple EDS comminution, flotation and leaching process with gravity recovery circuit for free Au component collection.
0.91Moz of gold will be produced over the life of the project.
Initial capital cost outlay estimated at US 32.5 Million with a Life of mine cost over the three phases of $59.6 million and sustaining capital, excluding closure costs.
Cash operating costs of $696/oz produced equivalent US $35.95 per tonne milled.
Generation of a positive NPV of $243 million at a 5% discount rate and an IRR of 53.7%

 

Buziba Project

The Buziba Project comprises a single prospecting license (PL6545/2010) located some 25km east of the Buckreef project in the Geita district (see Figure, overleaf). The project area can be accessed from Buckreef via unpaved and poorly maintained gravel roads. The Project is a pre-development stage medium grade gold deposit and principal host lithologies include basalt, co-magmatic dolerite and a suite of intrusive quartz-albite felsic porphyries. Gold mineralization associated with shear-hosted vein quartz arrays in meta-basalts and as extensive stock works in the felsic porphyries. Geometry of the mineralization is highly irregular, forming a zone 200m thick and extending E-W for at least 2,500m.

 

Based on an NI43-101 compliant Preliminary Economic Report published in 2012 and subsequently in 2014, the global gold resources (Measured, Indicated & Inferred) estimated over approximately 2.5km strike length and to a depth of 230 metres below surface amounts to 29Mt@1.04g/t containing 984,144ozs of gold.

 

23
 

 

During the reporting period, no fieldwork was conducted in the project area.

License Holding and Status (Buckreef & Buziba)

 

At the end of Q4_2017, the Buckreef and Buziba projects had 13 PLs and 1 SML covering a surface area of 95.40km2. The license status and statutory liabilities for the two projects are as shown in the table below:

 

Book # Licence Name PL_ID Application Date Granted Date Rent Paid To Renewal Submission Date  Expiry Date Area (km2) Status Company_ID Application Fee (US$) Preparation Fee (US$) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
288 Nyambale (2) Busanda PL6427/10 12-Mar-10 21-Jun-10 20-Jun-17 20-May-18 20-Jun-18 2.1 Active Buckreef             0.0 Paid up to 2018
289 Mabamba PL6428/10 12-Mar-10 21-Jun-10 20-Jun-17 20-May-18 20-Jun-18 3.0 Active Buckreef             0.0 Paid up to 2018
295 Rwamagaza North PL6429/10 12-Mar-10 21-Jun-10 20-Jun-17 20-May-18 20-Jun-18 20.0 Active Buckreef             0.0 Paid up to 2018
291 Rwamagaza West PL6430/10 12-Mar-10 21-Jun-10 20-Jun-17 20-May-18 20-Jun-18 8.9 Active Buckreef             0.0 Paid up to 2018
290 Nyamalimbe (2) Geita PL6431/10 12-Mar-10 21-Jun-10 20-Jun-17 20-May-18 20-Jun-18 2.7 Active Buckreef             0.0 Paid up to 2018
294 Rwamagaza South PL6432/10 12-Mar-10 21-Jun-10 20-Jun-17 20-May-18 20-Jun-18 2.0 Active Buckreef             0.0 Paid up to 2018
293 Rwamagaza South PL6544/10 30-Mar-10 12-Jul-10 11-Jul-17 11-Jun-18 11-Jul-18 2.6 Active Buckreef             0.0 Paid up to 2018
284 Buziba PL6545/10 30-Mar-10 12-Jul-10 11-Jul-17 11-Jun-18 11-Jul-18 5.3 Active Buckreef             0.0 Paid up to 2018
292 Rwamagaza PL6546/10 30-Mar-10 12-Jul-10 11-Jul-17 11-Jun-18 11-Jul-18 17.4 Active Buckreef             0.0 Paid up to 2018
285 Buseresere PL6547/10 30-Mar-10 12-Jul-10 11-Jul-17 11-Jun-18 11-Jul-18 5.3 Active Buckreef             0.0 Paid up to 2018
287 Nyambare Boss-Reef PL6548/10 30-Mar-10 12-Jul-10 11-Jul-17 11-Jun-18 11-Jul-18 1.9 Active Buckreef             0.0 Paid up to 2018
286 Nyamalimbe PL6549/10 30-Mar-10 12-Jul-10 11-Jul-17 11-Jun-18 11-Jul-18 2.7 Active Buckreef             0.0 Paid up to 2018
381 Rwamagaza N., Geita PL9968/14 21-Oct-13 10-Jul-14 9-Jul-17 9-Jun-23 9-Jul-23 5.6 Active Buckreef             0.0 Paid up to 2018
296 Buckreef SML SML04/92 12-Jun-00 12-Jun-00 11-Jun-17 11-Jun-26 11-Jun-27 16.0 Active (No SML cert) Buckreef             0.0 Paid up to 2018
            TOTAL 95.38     0.00 0.00 0.00 0.00 0.00 0.00 0.00  
            PENALTY (50%)           0.00 0.00        
            GRAND TOTAL 95.38     0.00 0.00 0.00 0.00 0.00 0.00 0.00  

PL and SML annual fees for 2017/2018 paid up.
The Buckreef Renewal Licence SML04/92 certificate issuance ceremony was postponed indefinitely by the Ministry of Energy and Minerals (MEM) after the Minister failed to sign the document as planned on 7th March 2017.

 

Itetemia Project

 

The Itetemia gold deposit includes the mineral resources of the Golden Horseshoe Reef (“GHR”), and is an advanced stage exploration project focusing on the development of the GHR. A total of 9,833m of diamond core drilling (51 holes) and 8,339m of RC drilling (138 holes) was completed on the project. Modeling and processing of assay results from both the core drilling and RC drilling so far completed over the GHR and surrounding areas culminated in the estimation of the following Mineral Resources by CSA Australia Pty (Ltd) (“CSA”). The gold resource numbers for the GHR are as at 30th May 2016 using a cut-off grade of 1.0g/t: -

 

 

 

The process to convert the PL covering the Horseshoe Gold Prospect at Itetemia into a Mining License (ML) commenced on 4th November 2015. The Company re-submitted all documentation required for the conversion of the Itetemia PL into a Mining License at the request of the relevant authorities in the Ministry of Mines. A follow up on the Mining License renewal shows that the application is still under review.

 

24
 

 

As of the 31st August 2017, the retained portion of the Itetemia project area has 8 active PLs and 1 ML application all covering a surface area of 41.23km2. The Itetemia Project license status and statutory liabilities are as shown in the table below:

 

Book # Licence Name PL_ID Application Date Granted Date Rent Paid To Renewal Submission Date  Expiry Date Area (km2) Status Company_ID Application Fee (US$) Preparation Fee (US$) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
  Itetemia ML App no/01722 04-Nov-15         4.99 Application Tancan           14,970.00 14,970.00 Application under review
253 Itetemia PL6059/2009 18-May-07 03-Dec-09 30-Dec-16 30-Nov-17 30-Dec-17 9.24 Active Tancan         1,848.00   1,848.00 Renewal Applic due Nov 2017
261 Itetemia PL6520/2010 01-Nov-07 13-Aug-10 12-Aug-16 12-Jul-16 12-Aug-16 4.32 Pending Renewal Tanzam   500.00     648.00   1,148.00 Renewal Applic submitted
104 Itetemia PL8638/2012 02-Nov-10 21-Dec-12 20-Dec-15 20-Nov-16 20-Dec-16 4.21 Pending Renewal Tancan   500.00   421.00 421.00   1,342.00 Renewal Applic submitted
322 Itetemia PL8661/2012 18-May-09 24-Dec-12 23-Dec-15 23-Nov-16 23-Dec-16 4.62 Pending Renewal Tancan   500.00   462.00 462.00   1,424.00 Renewal Applic submitted
341 Itetemia PL8958/2013 14-Jun-10 08-Feb-13 7-Feb-16 07-Jan-17 07-Feb-17 2.27 Pending Renewal Tancan   500.00     227.00   727.00 Renewal Applic submitted
84 Itetemia PL9198/2013 19-Sep-11 21-Jun-13 20-Jun-16 20-May-17 20-Jun-17 4.62 Active Wakawaka 300.00       462.00   762.00 Renewal Applic overdue May 2017
357 Itetemia PL9229/2013 16-Jun-08 21-Jun-13 20-Jun-16 20-May-17 20-Jun-17 4.69 Active Tancan 300.00       469.00   769.00 Renewal Applic overdue May 2017
166 Itetemia PL9374/2013 15-Oct-12 04-Oct-13 3-Oct-16 03-Sep-17 03-Oct-17 2.27 Active Tanzam 300.00       227.00   527.00 Renewal Applic due Sept 2017
            TOTAL 41.23     900.00 2,000.00 0.00 883.00 4,764.00 14,970.00 22,990.00  
            PENALTY (50%)           0.00 441.50 2,382.00   11,495.00  
            GRAND TOTAL 41.23     900.00 2,000.00 0.00 1,324.50 7,146.00 14,970.00 34,485.00  

  • All the Itetemia PLs nominated for retention by the company have outstanding annual fee payments as shown above.
  • Two (2) PLs expired in June 2017 and applications for renewal are now overdue while one (1) PL will expire in October 2017 and is now due for renewal application submission.
  • Renewal applications for 4 of the critical licenses are still being processed and application fee payment was completed and posted online. We now await offer letters.
  • The ML application is still under review for close to 2 years now and no response on the delayed application have been received from MEM offices. The ML application covers three (3) licenses viz 9198/2013, 9229/2013 & 9374/2013 that have now also expired or are soon to expire.

Kigosi Project

 

Kigosi Project area remains subject to a Game Reserve Declaration Order. Upon repeal or amendment of that order by the Tanzanian Government, the Kigosi Mining Company will be legally entitled to exercise its rights under the Mineral Rights and Mining Licence. The procedures for de-gazetting the Kigosi mining licence project area from a game reserve area to a mining area on the government gazette has not been completed by government of Tanzania.

 

Gold Mine development plans at Kigosi continue to be shelved mainly since under the 2010 Mining Act, only exploration and mining of energy minerals, including uranium, gas and petroleum is permitted in any game reserve. Historical exploration on the project established a resource as shown in table below.

 

Kigosi Gold Project: Historical published Resource/Reserve results

 

Description: Kigosi Resource Table

 

 

25
 

 

The table below shows the status (as of 31st August 2017) of the Kigosi Project license portfolio (identified as critical to the project) has 13 active PLs and 1 ML all covering a surface area of 177.01km2. The license status and statutory liabilities are as shown in the table below:

 

Kigosi Gold Project PL Portfolio Status – PLs Proposed for Retaining

Book # Licence Name PL_ID Application Date Granted Date Rent Paid To Renewal Submission Date  Expiry Date Area (km2) Status Company_ID Application Fee (US$) Preparation Fee (US$) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
368 Kigosi ML 496/2013 09-Nov-12 11-Oct-13 10-Oct-14 10-Oct-21 10-Oct-23 9.91 Active Tanzam           29,730.00 29,730.00 Paid up?
379 Kigosi PL 9712/2014 25-Feb-11 08-May-14 7-May-15 07-Apr-18 07-May-18 13.97 Active Pamwe Tutafika       2,794.00 2,794.00 2,794.00 8,382.00 Outstanding payments
162 Kigosi PL10140/2014 22-Aug-12 29-Aug-14 28-Aug-15 28-Jul-18 28-Aug-18 2.49 Active Tancan       498.00 498.00 498.00 1,494.00 Outstanding payments
382 Kigosi PL10169/2014 02-May-13 29-Aug-14 28-Aug-15 28-Jul-18 28-Aug-18 12.16 Active Tancan       2,432.00 2,432.00 2,432.00 7,296.00 Outstanding payments
20 Kigosi PL10170/2014 15-Oct-13 29-Aug-14 29-Aug-15 28-Jul-18 28-Aug-18 14.9 Active Tanzam       2,980.00 2,980.00 2,980.00 8,940.00 Outstanding payments
385 Kigosi PL10171/2014 13-Dec-13 29-Aug-14 28-Aug-15 28-Jul-18 28-Aug-18 22.69 Active Tanzam       4,538.00 4,538.00 4,538.00 13,614.00 Outstanding payments
216 Kigosi PL10184/2014 15-Oct-13 29-Aug-14 28-Aug-15 28-Jul-18 28-Aug-18 19.5 Active Tanzam       3,900.00 3,900.00 3,900.00 11,700.00 Outstanding payments
159 Kigosi PL10277/2014 22-Aug-12 25-Sep-14 26-Sep-15 24-Aug-18 24-Sep-18 21.18 Active - In Default Tancan         4,236.00 4,236.00 8,472.00 Outstanding payments
45 Kigosi PL6273/2009 05-Dec-08 31-Dec-09 30-Dec-14 30-Nov-17 30-Dec-17 5.44 Active Tanzam     1,088.00 1,088.00 1,088.00   3,264.00 Renewal Applic due Nov 2017
264 Kigosi PL6564/2010 22-Apr-08 13-Aug-10 12-Aug-15 12-Jul-16 12-Aug-16 20.46 Active Tancan 300.00 500.00   4,092.00 4,092.00   8,984.00 Renewal Applic overdue July 2016
339 Kigosi PL8921/2013 22-Apr-10 08-Feb-13 7-Feb-15 07-Jan-17 07-Feb-17 2.95 Active-Expired Tancan 300.00 500.00   590.00 590.00   1,980.00 Renewal Applic overdue Jan 2017
338 Kigosi PL8925/2013 22-Apr-10 08-Feb-13 7-Feb-15 07-Jan-17 07-Feb-17 21.65 Active-Expired Tancan 300.00 500.00   4,330.00 4,330.00   9,460.00 Renewal Applic overdue Jan 2017
330 Kigosi PL8938/2013 22-Apr-08 08-Feb-13 7-Feb-15 07-Jan-17 07-Feb-17 5.51 Active-Expired Tancan 300.00 500.00   1,102.00 1,102.00   3,004.00 Renewal Applic overdue Jan 2017
96 Kigosi PL9785/2014 01-Mar-12 05-Jun-14 4-Jun-15 04-May-18 04-Jun-18 4.2 Active Tancan       840.00 840.00 840.00 2,520.00 Outstanding payments
            TOTAL 177.01     1,200.00 2,000.00 1,088.00 29,184.00 33,420.00 51,948.00 66,892.00  
            PENALTY (50%)           15,409.00 14,592.00 16,710.00   46,711.00  
            GRAND TOTAL 177.01     1,200.00 2,000.00 16,497.00 43,776.00 50,130.00 51,948.00 113,603.00  

All the Kigosi PLs nominated for retention by the company have outstanding annual fee payments.
Kigosi ML payments all up to date and the 2017/2018 annual fees are due in October 2017.
PLs highlighted in red text have technically expired and no renewal application has been submitted due to the outstanding annual fee payments and prevailing uncertainty with the new laws enacted recently with especial reference to game reserves.

 

Luhala Project

 

The Luhala Project is an advanced stage exploration project focusing on the development of the Luhala gold deposit which consists of five anomalous hilltops. The mineralization is stratabound shear-zone hosted gold mineralization (stratigraphic and structural control) within a distinct unit of felsic rocks with associated ferruginized mafic and felsic rocks.

 

Drilling at the Luhala Project has been concentrated on the Luhala Hills (Luhala Hill, Kisunge Hill, Shilalo Hill South and Shilalo Hill West). A total of 3,279m of diamond core drilling (26 holes) and 8,665m of RC drilling (144 holes) was completed on the project. Modeling and processing of assay results from both the core drilling and RC drilling conducted over the various deposits at Luhala, has to-date resulted in the estimation, by CSA, of the following Mineral Resources for Luhala as at 8th March 2011 using a cut-off grade of 1.0g/t:

 

Luhala Gold Project: Historical published exploration results

 

 

 

26
 

 

The process of selecting a consultant to carry out feasibility study at the Luhala gold project has been completed and once funds are available the contract to engage the consultant to carry out the study will be signed to initiate the FS study works.

 

At the end of this reporting quarter critical Luhala project area had 2 PLs covering a surface area of 17.31km2. The Luhala Project license status and statutory liabilities are as shown in the table below:

 

Luhala Gold Project PL Portfolio Status - PLs Proposed for Retaining

Book # Licence Name PL_ID Application Date Granted Date Rent Paid To Renewal Submission Date  Expiry Date Area (km2) Status Company_ID Application Fee (US$) Preparation Fee (US$) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Status
340 Luhala PL8937/2013 14-Jun-10 08-Feb-13 07-Feb-15 07-Jan-17 07-Feb-17 3.45 Pending Renewal Tanzam   500.00         500.00 Application submitted
102 Luhala PL5278/2009 15-Jun-10 13-Feb-09 12-Feb-15 12-Jan-17 12-Feb-17 13.86 Pending Extension Tancan   500.00         500.00 Application submitted
            TOTAL 17.31     0.00 1,000.00 0.00 0.00 0.00   1,000.00  
            PENALTY (50%)             0.00 0.00   0.00  
            GRAND TOTAL 17.31     0.00 1,000.00 0.00 0.00 0.00   1,000.00  

Payment of outstanding annual fees for the critical Luhala PLs was completed as one of the conditions to submit renewal or extension applications.
Online renewal application for PL8937/2013 was successfully lodged on the MEM portal. Application fee payment has been done and posted inline.
Response from MEM awaited.

 

As of 31st August 2017, the Projects to Retain license portfolio’s outstanding and current financial liabilities and obligations arising from unpaid rents including the penalties are US$125,974 as summarized in the table below.

 

Liabilities - PLs to Retain (Mining Projects)

 

 

Projects Licenses to Joint Venture

  • Biharamulo – 6 PLs
  • Lunguya – 8 PLs
  • Manonga – 6 PLs
  • Ushirombo – 2 PLs

Prospecting Licenses within four project areas, identified as Biharamulo project, Lunguya project, Manonga project and Ushirombo project were selected as possible licenses to farm out in JV agreements. Brief descriptions of PL holdings and financial obligation status for each respective project area as of 31st August 2017 are summarized in the section below.

 

Biharamulo project area

 

No work done during the reporting period. Biharamulo Gold Prospect is a green-fields to brown-fields stage project focusing on the defining the mineralization along a regional WNW-ESE trending shear. Historical preliminary exploration results show a very high potential for gold mineralization associated and/or controlled by the prominent NW-SE parallel structures over a strike length of >600m covered by the cluster of 5 contiguous PLs. Joint Venture Partner for the Project are being sought.

The Biharamulo Project license status and statutory liabilities are as shown in the table below:

 

27
 

 

Biharamulo Gold Project PL Portfolio Status - PLs Proposed for JV partnerships

Book No License Name PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Application Fee (US$) Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
254 Biharamulo PL6222/2009 10-May-07 31-Dec-09 30-Dec-14 30-Nov-17 30-Dec-17 25.6 Active Tanzam         5,120.00 5,120.00 5,120.00   15,360.00 Renewal Applic due Nov 2016
9 Biharamulo PL8914/2013 26-Mar-10 08-Feb-13 7-Feb-15 07-Jan-17 07-Feb-17 17.56 Active Tanzam           3,512.00 3,512.00   7,024.00 Expired
378 Biharamulo PL9672/2014 11-May-09 24-Apr-14 23-Apr-15 23-Mar-18 23-Apr-18 25.61 Active - In Default Tanzam           5,122.00 5,122.00 5,122.00 15,366.00 Notice of default received
380 Biharamulo  PL9777/2014 02-May-13 05-Jun-14 4-Jun-15 04-May-18 04-Jun-18 24.96 Active - In Default Tancan           4,992.00 4,992.00 4,992.00 14,976.00 Notice of default received
34 Biharamulo PL9781/2014 10-Sep-13 05-Jun-14 4-Jun-15 04-May-18 04-Jun-18 25.59 Active Tanzam           5,118.00 5,118.00 5,118.00 15,354.00 Overdue payments
            TOTAL 119.32     0.00 0.00   0.00 5,120.00 23,864.00 23,864.00 15,232.00 68,080.00  
            PENALTY (50%)             0.00 2,560.00 11,932.00 11,932.00   26,424.00  
            GRAND TOTAL 119.32     0.00 0.00 0.00 0.00 7,680.00 35,796.00 35,796.00 15,232.00 94,504.00  

All the Biharamulo PLs nominated for potential JV partnerships by the company have outstanding annual fee payments as shown in the table above.
PL highlighted in red technically expired on 7th February 2017. No renewal application was submitted due to the outstanding annual fee payments. PL still considered by MEM as still registered to the company.
PL highlighted in purple expire in mid-2018 but due to non-payment of annual fees, we have received Notice of Default letters from MEM. The licenses will forfeit to the state if no payments are made with the statutory 3-month period.

 

Lunguya project area

 

No work done during the reporting period. Based on historical in-house exploration data, three zones were identified and are associated with extensive artisanal workings (±30 m depth), with more extensive workings at Nyamakwenge. These known gold prospects include the Nyamakwenge Reefs (NE corner of PL 6941/11); the Nyikoboko Reefs (NE corner of PL 5289/08) & NW-SE trending Shilela reef system (PLs 8940/13, 10145/14 & 9626/14). Gold occurs principally as free gold within multiple quartz veins or stock-works, often associated with felsic intrusives.

 

The Lunguya Project license status and statutory liabilities are as shown in the table below:

 

Lunguya Gold Project PL Portfolio Status - PLs Proposed for JV partnerships

 

Book No License Name PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Application Fee (US$) Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
183 Lunguya PL10145/2014 30-Dec-12 29-Aug-14 28-Aug-15 28-Jul-18 28-Aug-18 8.53 Active Tanzam           1,706.00 1,706.00 1,706.00 5,118.00 Overdue payments
384 Lunguya PL10150/2014 28-Dec-11 29-Aug-14 28-Aug-15 28-Jul-18 28-Aug-18 5.68 Active Pamwe Tutafika           1,136.00 1,136.00 1,136.00 3,408.00 Overdue payments
229 Lunguya PL5289/2008 12-Mar-07 28-Aug-08 27-Aug-15 27-Jul-16 27-Aug-16 19.9 Active Tanzam           3,980.00     3,980.00 Expired
28 Lunguya PL6941/2011 15-Aug-08 28-Feb-11 28-Aug-15 27-Jan-18 27-Feb-18 17.59 Active Tanzam           3,518.00 3,518.00 3,518.00 10,554.00 Overdue payments
332 Lunguya PL8940/2013 31-Aug-09 08-Feb-13 7-Feb-15 07-Jan-17 07-Feb-17 8.53 Active Tancan           1,706.00 1,706.00   3,412.00 Expired
358 Lunguya PL9228/2013 09-Aug-10 21-Jun-13 20-Jun-15 20-May-17 20-Jun-17 8.88 Active Tanzam           1,776.00 1,776.00   3,552.00 Expired
37 Lunguya PL9626/2014 11-Jul-11 14-Mar-14 13-Mar-15 13-Feb-18 13-Mar-18 12.79 Active Chomoza           2,558.00 2,558.00 2,558.00 7,674.00 Overdue payments
            TOTAL 81.90     0.00 0.00 0.00 0.00 0.00 16,380.00 12,400.00 8,918.00 37,698.00  
            PENALTY (50%)             0.00 0.00 8,190.00 6,200.00   18,849.00  
            GRAND TOTAL 81.90     0.00 0.00 0.00 0.00 0.00 24,570.00 18,600.00 8,918.00 56,547.00  

All the Lunguya PLs nominated for potential JV partnerships by the company have outstanding annual fee payments as shown in the table 11a above.
PL highlighted in red technically expired and no renewal applications were submitted due to the outstanding annual fee payments. PL still considered by MEM as registered to the company.

 

Manonga project area

 

No work done. The Manonga Project licences are located within the Nzega Greenstone Belt of the southern margin of Lake Victoria Gold Fields. Manonga Gold Project is a greenfield gold exploration project focusing on identification of potential Golden Pride mine type mineralization in the Nzega East Goldfield and the Chomachankola artisanal workings to the south. Geophysical anomalies to the North of the Resolute Golden Pride closed mine and that at Igurubi (PL8957/2013, PL8964/13) could turn out prospective if more detailed prospecting work is completed on the area to the east.

 

28
 

 

The Manonga Project license status and statutory liabilities are as shown in the table below:

 

Manonga Gold Project PL Portfolio Status - PLs Proposed for JV partnerships

Book No License Name PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Application Fee (US$) Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
310 Manonga PL8458/2012 17-Mar-09 16-Nov-12 16-Nov-13 15-Oct-16 15-Nov-16 5.36 Active Tancan       536.00 536.00 536.00     1,608.00 Expired
314 Manonga PL8475/2012 23-Dec-08 10-Dec-12 10-Dec-14 09-Nov-16 09-Dec-16 2.9 Active Tancan         290.00 290.00     580.00 Expired
312 Manonga PL8485/2012 18-Jul-08 10-Dec-12 10-Dec-13 09-Nov-16 09-Dec-16 13.64 Active Tancan       1,364.00 1,364.00 1,364.00     4,092.00 Expired
  Manonga PL8957/2013 19-Jul-10 08-Feb-13     07-Feb-17 2.37 Active Tancan       237.00 237.00 237.00     711.00 Expired
347 Manonga PL8964/2013 12-Jul-10 08-Feb-13 08-Feb-14 07-Jan-17 07-Feb-17 13.93 Active - In Default Tanzam         1,398.00 1,398.00 1,398.00   4,194.00 Expired, default notice
355 Manonga PL9035/2013 31-Dec-09 08-Apr-13 08-Apr-14 07-Mar-17 07-Apr-17 4.87 Active Tanzam         487.00 487.00 487.00   1,461.00 Expired
            TOTAL 43.07     0.00 0.00 0.00 2,137.00 4,312.00 4,312.00 1,885.00 0.00 12,646.00  
            PENALTY (50%)             1,068.50 2,156.00 2,156.00 942.50   6,323.00  
            GRAND TOTAL 43.07     0.00 0.00 0.00 3,205.50 6,468.00 6,468.00 2,827.50 0.00 18,969.00  

All the Manonga PLs nominated for potential JV partnerships by the company have outstanding annual fee payments as shown in the table above.
PL highlighted in red technically expired and no renewal applications were submitted due to the outstanding annual fee payments. PL still considered by MEM as registered to the company.
One of the PLs is also under a default notice and will forfeit as the default notice period has also matured.

 

Ushirombo project area

 

No work done. Ushirombo Gold Project is a brown field stage gold project focusing on the finding of gold deposit in the 12km long x 6km wide Ushirombo Gold Corridor in the Ushirombo area. Historical exploration work indicates that gold prospectivity in the area include anomalous au-in-soil, RAB drilling, pit sample, grab sample localities established by BEAL and TRE previous works within the Ushirombo Gold Corridor (UGC).

The Ushirombo Project license status and statutory liabilities are as shown in the table below:

 

Ushirombo Gold Project PL Portfolio Status - PLs Proposed for JV

Book No License Name PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Application Fee (US$) Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
  Ushirombo PL8642/2012 19-Oct-10 24-Dec-12 23-Dec-14 23-Nov-16 23-Dec-16 2.37 Active Tancan         237.00 237.00     474.00 Expired
359 Ushirombo PL9227/2013 11-Mar-09 21-Jun-13 20-Jun-14 20-May-17 20-Jun-17 18.27 Active-in-default Tanzam         3,654.00 3,654.00 3,654.00   10,962.00 Expired, default notice
            TOTAL 20.64     0.00 0.00 0.00 0.00 3,891.00 3,891.00 3,654.00 0.00 11,436.00  
            PENALTY (50%)             0.00 1,945.50 1,945.50 1,827.00   5,718.00  
            GRAND TOTAL 20.64     0.00 0.00 0.00 0.00 5,836.50 5,836.50 5,481.00 0.00 17,154.00  

All the Ushirombo PLs nominated for potential joint venture agreements by the company have outstanding annual fee payments as shown in the table above.
PL highlighted in red technically expired and no renewal applications were submitted due to the outstanding annual fee payments. PL still considered by MEM as registered to the company.

One of the PLs is also under a default notice and will forfeit as the default notice period has also matured.

 

As of 31st August 2017, the Projects to JV license portfolio’s outstanding and current financial liabilities and obligations arising from unpaid rents including the penalties are US$182,715 as summarized in the table below.

 

Liabilities - PLs to JV (Exploration Projects)

 

 

29
 

 

Projects Licenses to Discard/Abandon

  • Biharamulo – 2 PLs
  • Kabanga – 2 PLs
  • Kanegele – 10 PLs & 1 Application
  • Kigosi – 19 PLs
  • Kibara – 3 PLs
  • Kongwa- 1 PL
  • Luhala – 2 PLs
  • Mwadui – 4 PLs
  • Nzega – 2 PLs
  • Nyanzaga – 2 PLs
  • Tulawaka – 4 PLs
  • Shinyanga – 1 PL

Prospecting Licenses within the eleven (11) project areas, identified as above were selected as possible licenses to discard and surrender back to the Ministry of Mines or respective original JV partners. Brief descriptions of PL holdings and financial obligation status for each respective project area as of 31st August 2017 are summarized in the section below.

 

Biharamulo project area

 

No work done. Historical preliminary exploration results showed a very low to negligent potential for gold mineralization within some of the PLs that make up the regional Biharamulo project. Consequently, it has been recommended that these licenses be abandoned or returned to original owners to cut liabilities. The license status and statutory liabilities for these PLs are as shown in the table below:

 

Biharamulo Gold Project PL Portfolio Status - PLs Proposed for Discard

Book # PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
7 PL8963/2013 24-Dec-09 08-Feb-13 7-Feb-14 07-Jan-17 07-Feb-17 22.15 Active-in default Tanzam   500.00   4,430.00 4,430.00 4,430.00   13,790.00 Expired, default notice
366 PL9295/2013 23-Feb-09 02-Aug-13 1-Aug-14 01-Jul-17 01-Aug-17 19.72 Active Tanzam   500.00   3,944.00 3,944.00 3,944.00   12,332.00 Expired
          TOTAL 41.87     0.00 1,000.00 0.00 8,374.00 8,374.00 8,374.00 0.00 26,122.00  
          PENALTY (50%)             4,187.00 4,187.00 4,187.00   13,061.00  
          GRAND TOTAL 41.87     0.00 1,000.00 0.00 12,561.00 12,561.00 12,561.00 0.00 39,183.00  

The two (2) Biharamulo PLs nominated for discarding or surrender to MEM by the company have outstanding annual fee payments as shown in the table above.
Both PLs have technically expired as per the dates in the table above. No renewal applications were submitted due to the outstanding annual fee payments. PL still considered by MEM as registered to the company.

 

Kabanga Nickel project area

 

No work done. Though the Kabanga Nickel project was abandoned some years back, two licenses have been pending surrender to the Ministry of Energy and Minerals since 2013. The license status and statutory liabilities for these PLs are as shown in the table below:

 

Kabanga Nickel Project PL Portfolio Status - PLs Proposed for Discard

Book # PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
230 PL5290/2008 25-Jul-11 27-Aug-08 26-Aug-14   26-Aug-14 96.76 Pending Surrender NWBM   500.00           500.00 Expired
232 PL5292/2008 26-Jul-11 28-Aug-08 27-Aug-14   27-Aug-14 97.74 Pending Surrender NWBM   500.00           500.00 Expired
          TOTAL 194.5     0.00 1,000.00 0.00 0.00 0.00 0.00 0.00 1,000.00  
          PENALTY (50%)           0.00 0.00 0.00     0.00  
          GRAND TOTAL 194.50     0.00 1,000.00 0.00 0.00 0.00 0.00 0.00 1,000.00  

Surrender fees for the two remaining Kabanga PLs were never paid.
The two PLs have since technically expired though they still appear under our portfolio on the MEM portal.

 

Kanegele project area

 

No work done. Kanegele Gold Prospect is a green stage exploration project that just barely got off the ground. Historical preliminary exploration results showed a very low to negligent potential for gold mineralization within some of the PLs that make up the regional Kanegele project. Consequently, it has been recommended that these licenses be abandoned or returned to original owners to cut liabilities. However, an Australian based company, Liontown Company that has since closed shop in Tanzania had initiated talks with TRX top management on the possible takeover/JV of the entire project.

 

30
 

 

The license status and statutory liabilities for these PLs are as shown in the table below:

 

Kanegele Gold Project PL Portfolio Status - PLs Proposed for Discard

Book # PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
383 PL10141/2014 12-Oct-12 29-Aug-14 28-Aug-15 28-Jul-18 28-Aug-18 9.5 Active Tancan   500.00     1,900.00 1,900.00 1,900.00 4,300.00 Overdue payments
99 PL10186/2014 30-Mar-12 29-Aug-14   28-Jul-18 28-Aug-18 2.32 Active Tanzam   500.00       464.00 464.00 964.00 Overdue payments
35 PL8171/2012 20-Oct-08 23-Aug-12   22-Jul-16 22-Aug-16 9.25 Active Tanzam       1,850.00 1,850.00 1,850.00   5,550.00 Expired
317 PL8664/2012 17-Sep-09 21-Dec-12 20-Dec-14 20-Nov-16 20-Dec-16 3.19 Active Tanzam       638.00 638.00 638.00   1,914.00 Expired
319 PL8666/2012 02-Oct-09 24-Dec-12 23-Dec-14 23-Nov-16 23-Dec-16 1.3 Active Tancan       260.00 260.00 260.00   780.00 Expired
318 PL8676/2012 05-Jul-05 31-Dec-12 30-Dec-14 30-Nov-16 30-Dec-16 2.36 Active Tanzam       472.00 472.00 472.00   1,416.00 Expired
99 PL9037/2013 30-Nov-07 27-Mar-13   26-Feb-17 26-Mar-17 5.23 Active Tanzam   500.00   1,046.00 1,046.00 1,046.00   3,638.00 Expired
363 PL9224/2013 10-Mar-08 01-Jul-13 30-Jun-15 30-May-17 30-Jun-17 16.16 Active Tanzam   500.00     3,232.00 3,232.00   6,964.00 Expired
369 PL9361/2013 18-May-09 04-Oct-13   03-Sep-17 03-Oct-17 14.74 Active-in-default Tanzam   500.00   2,948.00 2,948.00 2,948.00   9,344.00 Default notice received
370 PL9373/2013 02-Oct-07 04-Oct-13 3-Oct-14 03-Sep-17 03-Oct-17 2.83 Active Tancan   500.00   566.00 566.00 566.00   2,198.00 Renewal applic due Sep 2017
373 PL9465/2013 10-Mar-08 01-Nov-13 31-Oct-14 30-Sep-17 31-Oct-17 12.9 Active-in-default Tanzam   500.00   2,580.00 2,580.00 2,580.00   8,240.00 Default notice received
          TOTAL 79.78     0.00 3,500.00 0.00 10,360.00 15,492.00 15,956.00 2,364.00 45,308.00  
          PENALTY (50%)           0.00 5,180.00 7,746.00 7,978.00   20,904.00  
          GRAND TOTAL 79.78     0.00 3,500.00 0.00 15,540.00 23,238.00 23,934.00 2,364.00 66,212.00  

All the Kanegele PLs nominated for potential discard by the company have outstanding annual fee payments as shown in the table above.
PL highlighted in red technically expired and no renewal applications were submitted due to the outstanding annual fee payments. PL still considered by MEM as registered to the company.
PLs highlighted in purple are active but officially notified to us as being in default. The default notice gives us 3 months in which to pay all outstanding fees failure to do that will result in automatic forfeiture of the license.

 

Kigosi Project

 

Gold Mine development plans at Kigosi continue to be shelved mainly since under the 2010 Mining Act, only exploration and mining of energy minerals, including uranium, gas and petroleum is permitted in any game reserve. Historical preliminary exploration results showed a very low to negligent potential for gold mineralization within some of the PLs that make up the regional Kigosi project. Consequently, it has been recommended that these licenses be abandoned or returned to original owners to cut liabilities.

 

The license status and statutory liabilities for these PLs are as shown in the table below:

 

Kigosi Gold Project PL Portfolio Status - PLs Proposed for Discard

Book # PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
18 PL10185/2014 23-Jun-11 29-Aug-14 28-Aug-15 28-Aug-18 28-Aug-18 8.42 Active Chomoza   500.00   1,684.00 1,684.00 1,684.00 1,684.00 3,868.00 Overdue payments
157 PL10187/2014 13-Apr-12 29-Aug-14 29-Aug-15 28-Jul-18 28-Aug-18 4.89 Active Tanzam   500.00   978.00 978.00 978.00 978.00 2,456.00 Overdue payments
386 PL10605/2015 23-Feb-15 07-May-15   06-Apr-19 06-May-19 36.51 Active Tancan   500.00     7,302.00 7,302.00 7,302.00 7,802.00 Overdue payments
242 PL5369/2008 19-Feb-07 24-Oct-08 23-Oct-14 23-Sep-16 23-Oct-16 36.11 Active Tancan   500.00 7,222.00 7,222.00 7,222.00     22,166.00 Expired
259 PL6455/2010 06-Dec-07 08-Jun-10 7-Jun-15 07-May-16 07-Jun-16 21.5 Active Tanzam   500.00   4,300.00       4,800.00 Expired
16 PL8300/2012 11-Sep-08 28-Sep-12 27-Sep-15 27-Aug-16 27-Sep-16 10.02 Active Tanzam   500.00   2,004.00 2,004.00     4,508.00 Expired
315 PL8476/2012 23-Feb-09 10-Dec-12 9-Dec-14 09-Nov-16 09-Dec-16 8.64 Active Tanzam   500.00 1,728.00 1,728.00 1,728.00     5,684.00 Expired
17 PL8477/2012 04-Oct-08 10-Dec-12 9-Dec-14 09-Nov-16 09-Dec-16 21.33 Active Tanzam   500.00 4,266.00 4,266.00 4,266.00     13,298.00 Expired
320 PL8663/2012 07-Dec-09 21-Dec-12 20-Dec-14 20-Nov-16 20-Dec-16 14.71 Active Tanzam   500.00 2,942.00 2,942.00 2,942.00     9,326.00 Expired
321 PL8667/2012 30-Oct-09 24-Dec-12 23-Dec-14 23-Nov-16 23-Dec-16 4.35 Active Tancan   500.00 870.00 870.00 870.00     3,110.00 Expired
19 PL8922/2013 29-Mar-10 08-Feb-13 7-Feb-15 07-Jan-17 07-Feb-17 35.65 Active Tancan   500.00   7,130.00 7,130.00 7,130.00   14,760.00 Expired
349 PL9030/2013 09-Aug-10 27-Mar-13 26-Mar-15 26-Feb-17 26-Mar-17 4.9 Active Tancan   500.00   980.00 980.00 980.00   2,460.00 Expired
364 PL9225/2013 30-Oct-07 01-Jul-13 30-Jun-15 30-May-17 30-Jun-17 8.65 Active Tancan   500.00   1,730.00 1,730.00 1,730.00   3,960.00 Expired
371 PL9338/2013 09-Sep-10 04-Oct-13 3-Oct-14 03-Sep-17 03-Oct-17 44.18 Active Tancan   500.00 8,836.00 8,836.00 8,836.00 8,836.00   27,008.00 Overdue payments
376 PL9565/2014 16-Apr-10 27-Jan-14 26-Jan-15 26-Dec-17 26-Jan-18 21.4 Active - In Default Tancan   500.00   4,280.00 4,280.00 4,280.00 4,280.00 9,060.00 Default notice received
244 PL9956/2014 02-May-12 10-Jul-14 9-Jul-15 09-Jun-18 09-Jul-18 17.06 Active Tancan   500.00   3,412.00 3,412.00 3,412.00 3,412.00 7,324.00 Overdue payments
          TOTAL 298.32     0.00 8,000.00 25,864.00 52,362.00 55,364.00 36,332.00 17,656.00 141,590.00  
          PENALTY (50%)           12,932.00 26,181.00 27,682.00 18,166.00 8,828.00 84,961.00  
          GRAND TOTAL 298.32     0.00 8,000.00 38,796.00 78,543.00 83,046.00 54,498.00 26,484.00 226,551.00  

 

31
 

All the Kigosi PLs nominated for discard or surrender to MEM by the company have outstanding annual fee payments as shown in the table above.
PLs highlighted in blue technically expired between 7th June 2016 to 30th December 2016. No renewal applications were submitted due to the outstanding annual fee payments. PLs still considered by MEM as still registered to the company.
·PLs highlighted in red expired on 7th February 2017 and 26th March 2017 respectively.
·PL highlighted in purple is active but officially notified to us as being in default. The default notice gives us 3 months in which to pay all outstanding fees failure to do that will result in automatic forfeiture of the license.

 

Kibara project area

 

No work done. Kibara Gold Prospect is a green field exploration project focusing on the finding of gold prospects like those in the Mara-Musoma belt which are mostly located near the major NE and NW regional shear structures. Historical preliminary exploration results showed a limited potential for gold mineralization within some of the PLs that make up the regional Kibara project. Gold prospectivity target areas on the Kibara Project should be located within the two-major regional structural shears, namely the NE-SW shears and the NW-SE shears, with most favorable loci where the two structures crosscut e.g. Suguti, Sirori Simba, Maji Moto and Buhemba prospects areas.

Consequently, it has been recommended that these licenses be abandoned or returned to original owners to cut liabilities.

 

The license status and statutory liabilities for these PLs are as shown in the table below:

 

Kibara Gold Project PL Portfolio Status - PLs Proposed for Discard

Book # PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
346 PL8920/2013 21-Apr-10 08-Feb-13 07-Feb-14 07-Feb-17 07-Feb-17 25.08 Active-in default Tancan       5,016.00 5,016.00 5,016.00   15,048.00 Expired, default note received
132 PL9201/2013 06-Sep-10 21-Jun-13 20-Jun-14 20-Jun-17 20-Jun-17 13.06 Active-in default Tancan       2,612.00 2,612.00 2,612.00   7,836.00 Expired, default note received
360 PL9231/2013 30-Oct-09 21-Jun-13 20-Jun-14 20-Jun-17 20-Jun-17 22.48 Active-in default Tanzam       4,496.00 4,496.00 4,496.00   13,488.00 Expired, default note received
          TOTAL 60.62     0.00 0.00 0.00 12,124.00 12,124.00 12,124.00 0.00 36,372.00  
          PENALTY (50%)           0.00 6,062.00 6,062.00 6,062.00 0.00 18,186.00  
          GRAND TOTAL 60.62     0.00 0.00 0.00 18,186.00 18,186.00 18,186.00 0.00 54,558.00  

All the Kibara PLs nominated for potential discard by the company have outstanding annual fee payments as shown in the table above.
PLs highlighted in red technically expired and no renewal applications were submitted due to the outstanding annual fee payments. PL still considered by MEM as registered to the company.
All the PLs under a default notice and will forfeit as the default notice period has also matured.

 

Kongwa Gold project area

 

As of 31st August 2017, Ministry of Energy and Minerals (MEM) portal posting shows that, the single remaining Kongwa PL has forfeited to the ministry.

 

Luhala Project

No work done during the reporting period. Historical preliminary exploration results showed a very low to negligent potential for gold mineralization within some of the PLs that make up the regional Luhala project. Consequently, it has been recommended that these licenses be abandoned or returned to original owners to cut liabilities. The license status and statutory liabilities for these PLs are as shown in the table below:

 

32
 

 

Luhala Gold Project PL Portfolio Status - PLs Proposed for Discard

Book # PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
109 PL6402/2010 11-Jul-07 05-May-10 4-May-15 04-Apr-16 04-May-16 10.23 Active Tancan   500     2,046.00     2,546.00 Expired
108 PL6759/2010 11-Jul-07 21-Oct-10 20-Oct-14 20-Sep-16 20-Oct-16 8.96 Active Tancan   500   1,792.00 1,792.00     4,084.00 Expired
          TOTAL 19.19     0.00 1,000.00 0.00 1,792.00 3,838.00 0.00 0.00 6,630.00  
          PENALTY (50%)           0.00 896.00 1,919.00     2,815.00  
          GRAND TOTAL 19.19     0.00 1,000.00 0.00 2,688.00 5,757.00 0.00 0.00 9,445.00  

All the Luhala PLs nominated for discarding or surrender to MEM by the company have outstanding annual fee payments as shown in the table above.
PLs highlighted in red technically expired between 4th May 2016 and 20th October 2016. No renewal applications were submitted due to the outstanding annual fee payments. PLs still considered by MEM as still registered to the company.

 

Mwadui project area

 

No work done during the reporting period. The Mwadui Diamond Project is a brown field exploration project that focused on the initial identification of regional-scale targets for the development of diamondiferous kimberlite pipes in the Mwadui area kimberlite province. Preliminary drilling completed on some of the high magnetic dipolar signatures on kimberlitic pipes along the NE & NW dykes in the Mwadui Project area resulted in the identification of areas with potential diamondiferous gravels that could be further tested for economic kimberlite pipes.

 

Consequently, it has been recommended that these licenses be abandoned or returned to original owners to cut liabilities. The license status and statutory liabilities for these PLs are as shown in the table below:

 

Mwadui Diamond Project PL Portfolio Status - PLs Proposed for Discard

Book # PL_ID Application Date Grant Date Rent Paid To Renewal Submission Date  Expiry Date Area km2 Status Company_ID Preparation Fee (US$) Surrender Fee (US$) Annual Rent (US$- 2013/14) Annual Rent (US$- 2014/15) Annual Rent (US$- 2015/16) Annual Rent (US$- 2016/17) Annual Rent (US$- 2017/18) Total  (US$) Comment
323 PL8671/2012 18-May-09 31-Dec-12