Section 6: FINANCIAL OBLIGATIONS OF THE COMPANIES

(1)The Companies shall : (i) pay a cash bonus of twenty leones (Le20) per retained square mile or part thereof on discovery of oil in commercially exploitable quantities; (ú) pay a cash bonus of five hundred thousand dollars ($500,000) when production shall have reached seventy. five thousand (75,000) barrels per day for thirty (30) consecutive days; (ii)pay a cash bonus of one million dollars (S1,000,000) when production shall have reached one hundred thousand (100,000) barrels per day for thirty (30) consecutive daysi (iv) pay a cash bonus of two million dollars ($2,000,000) when production shall have reached two hundred thousand (200,000) barrels per day for thirty (30) consecutive days; (1) pay a cash bonus of three million d llars (S3,000,000) when production shall have reached three hundred thousand (300,000) barrels per day for thirty (30) secutive days; No. 2 Exploraion,Mining dnd Processing Mineral 1982 (2) i)Rental shall be payable half-yearly in advance on the Explo ration Area held by the Companies at an anual rate of fity cents (Le0.50) per retained square mile or part thereof for the frst five (5)years, thereafter twenty leones (Le20) per retained square mile or part thereof during the exploratory period. (ii) The Companies shall pay to the Government half-yearly in advance a mining lease rent at the rate of nine hundred leones (Le900) per square mile or part thereof per year for the first ten (10) years of the term of the lease. Thereafter the Com panies shall pay to the Government half-yearly in advan a mining leaso rent at the rate of one thousand three hundred and fifty leones (Lel,350) per square mile or part thereof. The first payment shall be made within thirty (30) days of the coming into force of this Agreement and shall be proportionate to the amount of time remaining in the half-year. (111) The Companies shall pay to the Government a surace rent in respect of any enjoyment of any easements, right of way and the like as specified in this Agreement. (3) (i) Expenditure obligation shall ba ten leones (Le10) per square mile or part thereof for the first two (2)years of the explora tion period and fifty leones (Le50) per square mile or part thereof thereafter. (ii) Within six months after the end of the exploration period, the Companies shall in the event no commercial mineral oil deposit has been found, submit a full report to the Govern ment, supported by adequate documents, indicating the total amount spent by it on exploration operations during the said period. Áfter verification of such report, any sum by which the total expenditure may fall short of the total minimum expendi ture obligation herein laid down shall be paid by the Companies to the Government. (i)During the first two (2) years after the commencement of exploration operations, the Companies may not suspend or stop operations for any reason except Force Majeure as prescribed in this Agreement. But at any time after the end of the said two years period, it may relinguish its rights subject to the requirement of notice as laid down in Clause 5 of this Agreement and to having fulfilled all obligations that it may have incurred up to thedate of relinquishment, including in particular the relevant minimum expenditure obligation. In,the event that there remains an unexpended balance, up to fhc date of notification of relinguishment, such balance shall be € paid by theCompanies to the Government. However, should the Companies ccase oxploration at the end of the two years from the obligation to pay such shortfall to the Government provided the Companies have fully carried out their under taking set out in Clause 6 (3) of this Agreement. (4) (a) The Companies shall be subject to the provisions of the Income Tax Act in force applicable to Companies generally. (6) In addition to Sub-clause (4) (a) the Companies shall be liable to Surtax in force in accordance with the Surtax (Temporary Imposition) Act. (c) Notwithstanding Sub-clause (4) (a) and Sub-clause (4) (b) the total tax liability of the Companies to the Government in respect of Income Tax and Surtax for any year of assessment shall be an amount equal to fifty percent (50/%) of its charge able income ascertained in accordance with the provisions of the Income Tax Act in force. (d) In computing the total amount of Income Tax and Surtax tobe paid by the Companies in respect of any year of assess ment there shall be deducted from the amount of tax payable payments made in respect of Royalty as provided for in Sub clause (6)in so far as such payments fall due within the same year of assessment; so that in any year of assessment the tax paid by the Companies under Sub-clause (4) (a) and Sub clause (4) (b) together with the said Royalty shall not exceed 1ffty per centum of the chargeable income of the Companies ascertained in accordance with the provisions of the Income Tax Act in force: Provided that if the said Royalty exceeds fifty per centum iiof the chargeable income of the Companics the Royalty shall tbibe payable in full for that year. (5)(a) In computing the chargeable income of the Companies no deduction shall be allowed for payments made in respect of Royalty as provided for in Sub-clause (6), depletion, amorti 9zation of debts, taxes and other imports paid by the Companies outside Sierra Leone. (6)Capital Allowances shall be granted in accordance with the Third Schedule to the Income Tax Act. Provided that: i: i) all expenditure, including prospecting expenditure, other than on plant, machinery and buildings incurred by the Companies during the exploration No, 2 Exploration, Mining and,Processing Mineral 1982 period, less the Companies net procceds from the sale of materials produced in the conduct of its activities in SierrLeone under and pursuant to this Agreement and sold prior to beginning of pro duction period, and the market value of stocks, unsold petroleum held by the Companies less the anticipated expenses of transporting and selling the same shall be deemed to constitute exploration expenditure and as such shall be subject of capital allowances at the rate of ten per centum per annum. (ii) Cash bonus paid as provided for in Sub-clause 6 (1) shall be subject of capital allowance at the rate of ten per cent per annum. (6) (a) The Companics shall pay to the Government aRoyalty equal to 12 of the value of all crude oil produced and saved in the Authorised Area cach year, excluding Petroleum used by it in its operations. The value of Petroleumn shall be calculated on the basis of posted prices as defined in Clause 14. (6) The Royalty provided for in the preceding Sub-clause (6) (a) shall be paid in whole or in part cither in cash or in kind at the Government's choice. Where the Government elects to receive Royalty in kind, it shall give the Companies notice in writing of the quantities required during a specific year not less than (3)months before the beginning of the ycar. (c) The Royalty payable in respect of Natural Gas sold in or exported from Sierra Leone or used by the Companies to manufacture any substances for sale or export shall be equal to 124% of the proceeds of the sale thereof. (a) Royalties shall be paid quarterly. The amount payable in respect of each quarter of the calendar ycar shall be paid by the Companies not later than thirty (30) days after the end of the quarter. (7) from the Companies in respect of Authorised operations, except Notaxes shall be imposed on, or payments of any nature required for the following: (a) Payments to be made to the Government as laid down in Clause 6 of this Agreement: (b) Income Tax as provided for in Clause 6; (c) Customs duties as laid down in Clause 9; (d) Payments to the Government of taxes required by the Income Tax Law to be withheld from salaries paid to , Employees and payments made to Contractors in Sierra Leone as provided for in Clause 6; 10 Exploralion, Mining and Processin Mineral 1982 Oil Agreement (|979) (Ratification) (e) Reasonable and non-discriminatory charges and fees for services rendered by Government Authorities on request or to the public in general such as tolls, water rates and sanitary charges; ()Non-discriminatory taxes and fees of general application, such as documentary stamp taxes, registry, patent and copyright fees; (g) Payroll taxes in accordance with Payroll Tax Act.