Dominican Republic
Mining Property
All
mineral substances belong to
Dominican State.
Exploration rights are granted through
concessions or contracts by Dominican
Government
Mining concession rights is distinct from
the surface land right. Mining concessions
grant exclusive rights of exploration,
extraction and processing over the mine area
Mining Rights
Recognizes
the priority for the first to
request the area.
Exploration concession is for 3 years and
might be extended up to 10 years.
 Extraction concessions rights are for 75
years
 It’s required by the Law of Environment an
environmental license to operate an
exploration
or
extraction
mining
concession.
Tax Regime
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Mining Law
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29% net income tax (IRS).
5% of net income,tax for communities.
10% importation tax.
18% tax for local purchases.
Special Contracts
◦ Special tax regimes apply for mine properties
belonging to Dominican State:
◦ 50% sharing on net earnings as tax. No other tax
apply
◦ Applies to contracts of Gold (Barrick Gold and
Panterra Gold) and Nickel (Glencore Xstrata)
Tax Regime Under Mining Law

All mining operation should pay 28% of their
net income each year, as income tax.
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Additionally should pay 5% of their net
income to municipalities where the mine is
located, according to Environmental Law.

In case of no earnings operation, companies
should pay at least a tax rate of 5% FOB
value of any exported ore or metal product.
Ministry of Energy and Mines
• A new Ministry of Energy and Mines
(MEM) was created in 2013, to be launched
in 2014
• Responsible for State policy in mining, oil
and gas, renewable energy, conventional
power in the country.
• Responsible for monitoring, evaluation and
control of policies and strategies for
mining and energy.
• It’s integrated by five viceministries of
Energy and one viceministry of Mines.
Mining Office
• Receives and process request of
concessions for mining exploration and
extraction.
• Recommends to Minister of Energy and
Mines to grant mining concessions.
• Manage Mining Cadastre.
• Supervise all concessions granted by
Dominican Government.
• Has operational independence and
budget supervision from Ministry of
Energy and Mines
National Geological Service
• Conduct geological studies for
government
• Investigate geological risks of the country.
• Develop geological maps.
• Indentify mineral resources.
• Provide geological basic information for
mining
• Has operational independence
Affiliated Offices to
Ministry of Energy and Mines
Mining Office
National
Geological
Service
Ministry of
Energy and
Mines
National Energy
Commission
Electricity
Superintendence
Electricity State
Corporation
Barrick Gold Pueblo Viejo Project
Contract Renegotiation Case
Barrick Gold Pueblo Viejo Mine
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Deposit of gold, silver, copper
and zinc owned by Dominican
State.
Metallurgical plant owned by
Barrick Gold and Gold Corp
built with an investment of
US$ 4.4 billion. Started in
August 2012.
Proven reserves of 25.3 Moz.
of gold 160.2 Moz. of silver
and 591 Mlb. of copper.
Potential reserves up to 38
Moz. of gold.
The
estimated
annual
production for the next five
years is 1MMoz gold and 5
Moz. of silver.
Pueblo Viejo mine is one of
the largest gold deposits in
Latin America.
Barrick Gold
Original Contract Terms
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3.20% Royalty as Gross Melting Return, to be paid
since mine start up in 2012. Consequently 96.8% of
all mine total cash flows would be handled by
investors
Accelerated depreciation of 40%
Repayment by 2016 of all capital invested before
share profits.
25% income tax (IRS), payable only after 2016
28% net earnings participation (NEP), to be paid only
only after 2019, when the project reach 10%
investment return.
This means that Dominican government would only
receive RD$377 millions out of US$8 billions of
gross income for 2012-2016 period.
Barrick Gold
Amendments to Contract
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Elimination of internal rate of return of 10% a
year as a prerequisite for payment Net Earnings
Participation (NEP)
Depreciation rate reduced from 40% to 15%
Reduction from US$4.477 millions to US$
3,795.5 millions as Barrick capital investment
recognition
Repayment of all capital invested in 2026 instead
of 2016.
Reduction of interest rate on loans from Barrick
subsidiaries from Libor plus 9.9% to Libor plus 3%
Amendment to Contract
Annual Minimun Tax (AMT)
A new Annual Minimiun Tax (AMT) on gross
sales was created to collect IRS and NEP taxes.
This tax is collected on top of the 3.20% of
gross sales as royalty
 A table was calculated starting at a gold price of
US$800/oz where no minimum tax apply. Every
US$50 gold price range increase, generates an
AMT increase, starting at 1.35% from golf price
of 800 to 850 dollars per ounce, which keep
increasing up to 23.05% at a gold price in the
range of US$1,600 to US$,1650 and ending at
32.55% for gold prices over US$3,000/oz. . This
table will apply from 2013-2016
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Amendment to Contract
Annual Minimun Tax (AMT)
A new AMT table of rates will be recalculated from
a revised financial model of mine plan, every 3 years
starting 2017, dividing the 90% of projected taxes of
income tax (IRS) and Net Earnings Participation(NEP)
by estimated gross sales of gold per year at every
price range between US$800 and US$3,000
 Barrick Gold can declare Force Majeure to not pay
AMT tax, in the event of high price of fuel oil for 90
consecutive days divided by the price of gold is over
to 0.16.
 This tax regime secure an annual minimum income to
Dominican government equivalent to the 90% of
projected IRS and NEP taxes, no matters Barrick
Gold declares no earnings in the period.
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Re Negotiation Outcomes
Government earnings to be received since
2012 mine start up.
 Increase government revenue from US$
9,900 millions to US$11,615 millions at a
gold price of US.$1,600/oz
 Increase government share on LOM profits
from 37.1% to 51.3%
 Increase government revenue in the period
2013-2016 from US$ 377.4 millions to U.S. $
2.200 millions at gold price of $1,600,
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Negotiation Outcomes
The investor companies Barrick Gold and
Gold Corp accepted this new terms, to
garantee their operation of Pueblo Viejo
Mine for at least 25 years of mine life.
 Both parties and all stakeholders, believe
this new contract is fair enough to be
very sustainable and stable in the long
term
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