4 December 2012
("Teknomining" or "the Company")
Award of Mining Royalty Agreement
Teknomining Plc is pleased to announce that through its wholly owned subsidiary Teknomining Madencilik
Insaat Turizm Ithalat Ihracat Sanayi Ve Ticaret Ltd. Sti, ("Mining Licence Holder") it has signed a Mining
Royalty Agreement with Teysel Insaat Nakliyat Taahhut Ticaret Ltd ("Royalty Holder") to operate the subject
mining licence 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 five (5) years commencing on
14th November 2012 and is within the term of the Mining Operations Licence.
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 Licence, no. 200800729, as approved by a decision of
the Ministry of Energy and Natural Resources, no. 3161073 dated 16th March 2012, and as identified in the
agreement by location and coordinates. The North Eastern portion of this Operation Licence, no. 200800729
will be retained by the Mining Licence 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 Licence Holder.
Other Operation Licence and Exploration Licence 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:
* Infrastructure operations for the Turkish Petroleum Corporation.
* Mining operations with a Dubai partnership in the Middle East and Korean peninsula.
* Dubai road, bridge, tunnel and airport construction projects.
* Engineering software services.
* Coal importation and distribution network.
* Major dam construction projects such as Dargecit, Ilisu and Hasenkeyf.
* Several road construction projects in Turkey and Northern Iraq.
* Construction and operation under licence of a 760 student college.
* Building company involved in the construction of Government facilities, commercial and several
private apartment developments.
* Communication and infrastructure projects in Northern Iraq.
* Real-estate assets valued in excess of EURO 15 million.
Key points of the Mining Royalty Agreement
* The Agreement is for a term of 5 years.
* The Mining Royalty Holder's area of operation is within the coordinates of the Operation licence
number 200800729 as defined in the agreement.
* A royalty fee will be due and payable to the Mining Licence 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.
All operating costs, fees and duties payable by the Mining Licence Holder to the Mining Department shall be
the responsibility of the Royalty Holder as well.
* 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
Iskenderun/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 Licence Holder or its
* The Royalty Holder shall commence the production and extraction works on the area within a maximum
of ninety (90) days from the commencement of the agreement (14th November 2012).
* Local and security issues are the responsibility of the Royalty Holder.
* The Royalty Holder has no legal rights against the Company's Operating Licence.
* 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 no. 5177 - 3213 and other applicable relevant laws, bylaws and regulations.
* 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 licences,
forest permits, EIA (Environmental Impact Assessment) Not Required Certificate and GSM (Non-sanitary
Business Enterprise) Licence that may be additionally required for the relevant mining area.
* The Mining Licence 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
* 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 no. 3213 - 5177 - 5995 and associated regulations.
Michael Holden, CEO of Teknomining, commented:
"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.
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.
An initial target of 10,000 tonnes per month is envisaged ramping up for maximum extraction.
The Royalty Holder is presently preparing their technical team to visit the licence 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.
Expected income derived from this agreement will enable further exploration and exploitation of our other
two Operation and three Exploration Licence areas."
The directors of the issuer accept responsibility for this announcement.
Michael Holden, Managing Director
Mob. Ireland: +353 87 249 10 22
Mob. Turkey: +90 50 79 66 2557
LHM Casey McGrath
Con Casey, Corporate Adviser
Phone: +353 1 495 9200