Avnel Gold has made a commitment to the communities surrounding the Kalana Project.

We are proud of how we have delivered above and beyond of what was expected of us when we were officially awarded the Kalana Permit in 2003.

One of the conditions of the Avnel Gold’s winning the Kalana tender was that we had to bring the small Soviet-era underground mine back into production and operate it for a minimum of three years. We resumed production from the underground mine in 2004 and are now in our 13th consecutive year of production and had produced 168,180 ounces as at the year-ended December 31, 2015.

In addition to being a great exploration tool and supplying a great wealth of metallurgical data, it is primarily operated to maintain the socio economic balance in the surrounding communities. We currently directly employ about 400 people at the project site, which makes us the largest employer in the region. The surrounding communities were founded on gold mining and the community is very keen to see the Kalana Main Project developed into an open-pit mine.

Despite the size of the small Kalana Gold Mine, the Company has made significant contributions to the Malian economy, particularly in the region near the mine. Measureable contributions include the employment of mainly local people at the mine, direct and indirect taxes paid, and the purchase of goods and services from Malian companies, which is summarised in the following table:

Economic Contributions

($, millions)

2004 – 2012 2013 2014 2015
Net Salaries & Employee Benefits 31,733 4.249 4.419 3.411
Direct Taxes & Duties 11,183 1.733 1.356 1,116
Indirect Taxes & Duties 7.095 0.944 0.979 1.050
Local Goods & Services 43,177 5,392 5.353 5.243
Total 93,188 12,318 12.107 10.820

The Company has a policy to purchase goods and services from Malian suppliers, including accommodation, laboratory analysis, auditors, fiscal advisors, insurance, engineering services, electric power, explosives, safety equipment, computer hardware, and spare equipment. In 2015, local services and goods represented approximately 89% of the total goods and services purchased.

The Company is also committed to employing qualified Malian nationals in key positions and, as a result, has an expatriate staff of only five people. Malian nationals hold key management positions such as Financial Manager, Plant Manager, Chief Geologist, Human Resources Manager, Mechanical and Electrical superintendents, Medical Doctor, Chief of Security, Chief Surveyor, Environmental Officer, Chief Safety Officer, and Country Manager.

In addition to employing a local workforce at the Kalana Gold Mine, Avnel has a number of social obligations in respect of the Kalana Project that it funds, which contribute significantly to the socio-economic stability of the region. These include: building and maintaining schools, including the employment of teachers and staff; establishment and maintenance of a local health clinic to service the Kalana village, including the employment of health personnel and staff; supplying drinking water to its employees; and funding the supply of electricity to certain public facilities in the Village of Kalana including local administration buildings, mosques, churches, and a health clinic. The Company makes an annual contribution to a local development budget, which for example, includes funding for a new childcare facility, a youth centre, new medical equipment, plus supplies and ongoing support for these facilities. A summary of these investments is presented in the table below:

Community Investments

($, millions)

2004-2012 2013 2014 2015
Special Projects 0.205 0.134 0.037 0.019
Village Electricity 1.179 0.006 0.007 0.010
Other Community Development 0.258 0.053 0.053 0.053
Total 1.642 0.193 0.097 0.082

From 2004 to 2012, a signification contribution from the Company was free electricity to a significant portion of the Village of Kalana. Following a decision to electrify the majority of the village, the Company contributed $80,000 to this capital project. The electrification is complete and the consumers make direct payment for services to the power supplier.

Community investments are made in consultation with stakeholders through formal events to provide an open forum for communication. Community leader meetings are held regularly where management provides information on the Company’s performance and future plans for the development of a new open pit, bulk tonnage gold mine.

Employees are represented by two formal structures: An employee representative committee and the Union. Regular meetings are held with both parties to provide a constructive dialogue to enable the effective operation of the Kalana Gold Mine and discuss the Company’s future plans.

The Company is also committed to improving the health of its employees, their families, and the residents of the local communities. The Company maintains a medical clinic at the Kalana Gold Mine that is staffed by a full-time doctor and a qualified nursing staff that is for the care of the Company’s employees and their families. The Company also provides financial aid to four other medical clinics in area. The impact of the health services provided has had a significant impact on the health of the community. There has been a significant reduction in mortality of children under the age of five that has been achieved through the active participation in malaria prevention, education on health care through radio and community meetings, and the availability of qualified staff and medicine.

The Company has also committed to improving the level of education available to children. As part of this initiative, the Company has constructed eight classrooms in the Village of Kalana and three classrooms in the nearby Village of Niessoumala.

Before we can commence open-pit mining at Kalana Main, a northeastern portion of the Village of Kalana will need to be relocated. Community consultations are well underway and the feedback to date has generally been in favour of redeveloping the project into an open-pit mining operation. The Company received Environmental and Social Impact Assessment (“ESIA”) approval from the Ministry of Environmental and Sustaining Development on April 28, 2016 for the development of the Kalana Main Project.