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Award of Mining Royalty Agreement
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Thursday, 06 Dec 2012

Teknomining Plc announced that through its wholly owned subsidiary Teknomining Madencilik Insaat Turizm Ithalat Ihracat Sanayi Ve Ticaret Ltd Sti, it has signed a Mining Royalty Agreement with Teysel Insaat Nakliyat Taahhut Ticaret Ltd to operate the subject mining license permit area as defined below and deal with extraction, processing, production, enrichment and shipment of iron and chromium ore's.

The term of this Agreement is for 5 years commencing on 14th November 2012 and is within the term of the Mining Operations License.

The Agreement sets down the terms and conditions of extraction and production of iron and chromium ores under royalty on a specific area within the Operation License, number 200800729, as approved by a decision of the Ministry of Energy and Natural Resources, number 3161073 dated 16th March 2012, and as identified in the agreement by location and coordinates.

The North Eastern portion of this Operation License, number 200800729 will be retained by the Mining License Holder for further exploration activities including drilling and extraction of minerals. All of the associated legal rights and interests will be retained by and under the title of the Mining License Holder.

Other Operation License and Exploration License areas within the Company's portfolio do not form part of this Mining Royalty Agreement.

The Royalty Holder is part of the Teysel Group of companies which was founded in 1988 and which is involved in the following spheres of activity:

1. Infrastructure operations for the Turkish Petroleum Corporation.

2. Mining operations with a Dubai partnership in the Middle East and Korean peninsula.

3. Dubai road, bridge, tunnel and airport construction projects.

4. Engineering software services.

5. Coal importation and distribution network.

6. Major dam construction projects such as Dargecit, Ilisu and Hasenkeyf.

7. Several road construction projects in Turkey and Northern Iraq.

8. Construction and operation under license of a 760 student college.

9. Building company involved in the construction of Government facilities, commercial and several private apartment developments.

10. Communication and infrastructure projects in Northern Iraq.

11. Real estate assets valued in excess of EURO 15 million.

Key points of the Mining Royalty Agreement

1. The Agreement is for a term of 5 years.

2. The Mining Royalty Holder's area of operation is within the coordinates of the Operation license number 200800729 as defined in the agreement.

3. A royalty fee will be due and payable to the Mining License Holder in an amount equal to 10% of total tonnage of the Iron/Chromium ores extracted and produced by the Royalty Holder on the royalty area.

4. All operating costs, fees and duties payable by the Mining License Holder to the Mining Department shall be the responsibility of the Royalty Holder as well.

5. The royalty fee will be payable either by payment of the agreed 10% of the total amount extracted multiplied by the sales price of Iron and Chromium Ores sold at the then current market price with all costs being borne by the Royalty Holder, or by transfer and delivery of the agreed 10% of the total tonnage of iron and chromium ore extracted from the site and delivered to a pre-determined point at skenderun/Mersin shipping port. All costs up to delivery at agreed pre-determined point shall be the responsibility of the Royalty Holder. The tonnage shall be calculated by the Mining License Holder or its appointed representative.

6. The Royalty Holder shall commence the production and extraction works on the area within a maximum of 90 days from the commencement of the agreement.

7. Local and security issues are the responsibility of the Royalty Holder.

8. The Royalty Holder has no legal rights against the Company's Operating License.

9. The Royalty Holder will perform and carry out its Iron and Chromium mines exploration, prospecting, preparations, extraction and production activities on the subject area in strict compliance with the Mine Law number 5177 to 3213 and other applicable relevant laws, bylaws and regulations.

10. A Technical Supervisor for the mining area will be appointed by the Royalty Holder and all fees and expenses of such Technical Supervisor will be to the cost of the Royalty Holder. All kinds of costs and expenses such as Environmental Compliance Security Deposits, royalties payable to the government, taxes, duties, funds, imposts, social security premiums and accessories shall also be paid by the Royalty Holder in a timely manner. The Royalty Holder will further pay all costs and expenses of operating licenses, forest permits, EIA Not Required Certificate and GSM License that may be additionally required for the relevant mining area.

11. The Mining License Holder cannot transfer or assign the agreed subject area or a portion thereof to third parties for extraction of Iron or Chromium ore therefrom, without the prior consent of the Royalty Holder.

12. The Royalty Holder shall perform all of its liabilities and obligations towards the employees and workers employed in this jobsite as imposed by the workers' health and job safety bylaws and regulations and the Mine Laws number 3213 - 5177 - 5995 and associated regulations.

Mr Michael Holden CEO of Teknomining said that "Following on from our suspension of operations as highlighted in our October 30th announcement which subsequently led to the suspension by mutual agreement of our Iron Ore Extraction contract with Asa Sondaj Insaat Sti, I am pleased to announce the successful conclusion of this Mining Royalty Agreement with Teysel Insaat Nakliyat Taahhut Ticaret Ltd. Sti, following extensive negotiation.”

Mr Holden said that as part of the diversified Teysel Group we are confident that the Royalty Holder's experience, technical ability and involvement with major domestic and foreign projects will lead to successful exploitation of our mineral deposits.

He said that an initial target of 10,000 tonnes per month is envisaged ramping up for maximum extraction.

He added that the Royalty Holder is presently preparing their technical team to visit the license area in order to commence the operational planning process and we understand that they have already agreed a preliminary contract with a major logistic's company for delivery of ore to Iskenderun/Mersin Harbour.

He further added that expected income derived from this agreement will enable further exploration and exploitation of our other two Operation and three Exploration License areas.

Source - Teknomining Plc


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