July 6, 2007 – Panama

 

What was far to Colon and Cocle inhabitants is now part of them. The Petaquilla project develops social programs in health, education, sports, government support and infrastructure – road, municipal schools, hospitals, recreation, and environmental projects in these provinces of direct influence, in which thousands of families in poverty and extreme poverty have been lagging for years.

 

In support of improving the quality of life for these sectors’ residents, Petaquilla Mine has coordinated various plans, simultaneous to the development of the project itself, as established by the Panamanian laws and legislation, within the corporate social commitment in 50 km surrounding the project area.

 

For this reason, Petaquilla Gold, S. A. created in 2005 the Social Development Department, called “My Friend Petaquilla” which, as its Coordinator, Leonel Arosemena, says “seeks to combine business objectives with the aspirations and hopes of the communities near its facilities, as well as take home proactive activities, in team work, involving them with their own inhabitants, interacting and being partakers of the benefits of the sector’s development, which includes positive impact gains in terms of direct or indirect employment, mostly.” Only in the initial phase of the project it has generated over 1,000 jobs and is estimated that once the Molejón plant becomes operational these will increase considerably.

 

The La Pintada-Llano Grande-Coclesito-Nazareno-La Ceiba-Molejón road’s renovation and expansion has made ​​available to the country today the connection and access to several towns along 50 km.  The completely transitable road brings the consequent benefits that come with a work of this kind in quality of life for community members and infrastructure for the country.

 

Among the various social support programs, all funded with resources from the company, it has invested $654,000 at the end of 2006 plus $325,000 this year. The deployment and support in this area includes:

 

-          The “Adopt a Godson” program seeks to improve the geographically remote populations’ conditions, and contribute to the reduction of extreme poverty, benefiting children in Southeast Colón, Northern Coclé and Northwestern Veraguas. To date, there are about 180 foster children who receive support with school supplies, shoes, and more from Minera Petaquilla employees. Until now there are 176 children in the program who enjoy this benefit.

-          In the “Hot Meals” program more than $923,000 have been invested in the reduction of school dropouts due to malnutrition and other factors, with over 3,800 children attended in 2007. It is planned to gradually benefit 5,000 infants by 2008.

-          Through the government support program residents of surrounding areas are served in coordination with health authorities, for example, through public health campaigns among other emerging health care services, medical health tours, drugs and equipment. In its outlooks the construction of an emergency section for the Coclesito Hospital is planned.

-          Coclesito internal streets have been improved and ​​those that did not exist have been made; they are working right now on Villa del Carmen’s inner streets.

-          With the production module, the company plans to provide employment for villagers, men and women who participate in production and sustainability projects, creating production programs for birds, eggs, agroforestry, raising goats –milk production- that incorporate leading edge technology.

-          The community development program also includes the creation of seven new rural aqueducts and the revision and / or suitability of those that are outdated.

-          Through the “good neighbor” program employment solutions are provided to the residents, supporting them with a review of good urban development in the presentation of their homes (paint, roof, infrastructure, parks, gardens, etc.) Material is donated and the community is included to be a participant in their own changes without falling into paternalism.

-          Scholarships. Through the Institute for Training and Human Resources Utilization (IFARHU) over 60 scholarships are granted to Cocle del Norte, Cascajal, Molejón, Veraguas and Cocle students. In 2007, scholarships were granted to over 130 children and youth to continue their studies for a total of $61,000. Teachers specializing in English, computer science, library science, among others, have been hired. For 2008, the establishment of a high school degree that responds to the Coclesito sector is foreseen to provide young people living near the project with an opportunity to expand their secondary studies in tourism services and electro mechanics.

-          Recreation: in sport, five physical education teachers were hired to train students in various disciplines of sport, sports fields were fitted, and several implements were delivered to members of each team with an investment of about $60,000 dollars.

-          “One of our missions is to develop our surrounding in a substantial way, playing the role of facilitators,” Fifer states. “Being a strategic partner, avoiding any kind of paternalism, will provide the necessary tools for these communities to develop and improve their quality of life as we develop our business responsibly, always looking for alternatives to mitigate environmental impacts while also enabling an environment that will improve the quality of life for all, using resources efficiently with the right technology, restoring ecosystems that may be affected and, above all, recognizing that respect for nature is vital for the good of all. In short, a model of sustainable mining.”

 

1. 1. Have you implemented a sustainable development model for the exploitation of minerals that ensures social and economic development of communities of influence, I wonder if that sustainability includes the protection of the environment?

The environmental obligations we must meet for a sustainable mining activity are critical for Petaquilla mining. In our model of sustainable development for mining we always look for alternatives to mitigate environmental impacts while allowing an environment that enhances quality of life for all, using resources efficiently with the right technology, restoring ecosystems that may be affected and above all, recognizing that respect for nature is vital for the good of all.

In fact, the mining environmental management that we develop is based on a legal regime that we respect and that lets us gauge the importance of the contribution of mining in a framework of sustainable development. In this sense, we know that Panama is one of the top in the world of mineral reserves.

This natural resource will only bring wealth and prosperity to the Panamanians as long as mining operations in Panama operate with a commitment to sustainability.

The development plan submitted by Petaquilla Minerals to the state for the exploitation of gold deposits in Molejón and copper in Cerro Petaquilla ensures that the extraction of these materials with appropriate prevention and mitigation measures generates significant economic and social development throughout its area of influence and improves the conditions of the inhabitants of the provinces of Cocle, Colon and Veraguas, contributing decisively to Panama’s economic and social advancement.

 

1. 2. How do you protect the environment?

By developing a series of action items that take into consideration all the environmental impact caused by the mining activity.  For this reason, our environmental impact studies contain measurements such as re-vegetation and erosion control, and stabilization and filling of cut slopes; programs for the purchase of seedlings for the community in the influenced area of the project, which includes the sowing tools needed; protection and relief of the sedimentation to surface water sources; adequate management of fuel; safety and occupational and environmental hygiene; erosion and sedimentation control in the area of the plant; environmental training and consulting; conservation and pollution prevention of wood, as well as measurements oriented to the preservation of wildlife native to the area.

1. 3. Are you devastating hundreds of acres, entire hills, with machines that enter the rivers and creeks without any control?

No, not at all, sustainable mining requires a series of actions that have an impact on the environment, but accompanied by environmental mitigation measurements that reduce the negative effects that could take place.  In our case, the gold extraction area will take up to 100 hectares in a period of 12 years.

The company, on its own initiative, has chosen to take ecological mitigation measurements by tripling the plantation of felled trees, well above from what is required by law, an opposite decision to any devastating action.

The model of sustainable development mining chosen for the exploitation of the gold and copper deposits of Molejon and Cerro Petaquilla, guarantee the economical and social development of all their influenced area.  This mining development taken into consideration all the environmental impacts inherent to this activity, and actions of prevention and environmental mitigation are being taken according to the national and international laws and regulations.

1. 4. Environmental impacts inherent to this activity?

When we refer to the inherent environmental impacts of the activity, we refer to those impacts typical of mining, for which all the actions undertaken in the Donoso District (province of Colon) for the construction of infrastructures associated to the mining project are being accompanied by the required mitigation measurements by the international standards and in accordance to the current Panamanian law.

Petaquilla Minerals presented in November 06 and May 07 environmental impact studies to the National Environmental Authority (ANAM) that explain all the technical details of the work in the area and the influenced zone, as well as the environmental mitigation measurements and compensation provided.

Petaquilla Minerals has shown to the National Environmental Authority (ANAM) the legal and environmental arguments that demonstrate that their actions are being developed in accordance to the law, and with this, all doubts the administration of ANAM had were absolved.

1. 5. Name four specific mitigation measurements.  What are you doing?

Richard Fifer and Petaquilla’s actions follow the parameters of the contract Law 9 and the environmental studies presented to the competent authority corresponding to the following:

• Restoration of roads of Coclesito and Villa Del Carmen (category I)
• Road Nazareth  – Molejon (category II)
• Gold Project – Molejon (category III)

 

Petaquilla Minerals has taken into consideration all the environmental impacts inherent to their activity; and in that sense, each Environmental Impact Study contains mitigation measurements, that in a greater o lesser degree, depending on the category, include the following activities:

 

1. Road Project

-        Re-vegetation and erosion control, and stabilization and filling of cut slopes.

-        Program for the purchase of seedlings for the community in the influenced area of the project, which includes the sowing tools needed.

-        Tree nurseries (Villa del Carmen, Las Ceibas, Los Tablones and Molejones) where native species such as the Bateo, Mary, Guachapali, Guarango, etc., are produced.

-        Support to the community’s Eco-tourist project of the Cope, Omar Torrijos National Park

-        Protection and relief of the sedimentation to surface water sources.

1. Molejon Mining Project (plant, camps, pits, tailings, ponds, and others)

-          Adequate management of fuel; safety and occupational and environmental hygiene.

-          Re-vegetation and erosion and sedimentation control in the area of the plant.

-          Re-vegetation and reforestation of cut slopes and fills on roads within the area of ​​the plant.

-          Environmental control of the drillings in the area of the project.  All contractors have an environmental protocol.

 

The company counts with an Environment and Hydrology Department, responsible for the implementation of these measurements.  Under its direction the company trains and advises through a program called “Green Brigades” which consists of environmental scholarships for the employees in the surrounding districts.  The training program extends to other communities as well; it addresses topics regarding techniques for a cleaner production (P+L) and preservation of grounds, so that with this knowledge they can aim towards the protection of the environment, from both, the company and the communities in their own economical activities, such as subsistence farming and ranching, which have a great environmental impact.

To date, Mineria Petaquilla has trained approximately 400 residents of Coclesito, Cascajal and Molejones.

The program also counts with an approach to the schools (46 in the district of Donoso), high school teachers, leaders of the communities far aside, and the Pro-mine Committee.

Petaquilla has also presented ANAM an additional proposal to their reforestation commitment, oriented to cushion the effect of the advance of extensive live stock feed and to protect the forest of the Omar Torrijos Herrera National Park.

 

1. Environmental monitoring

-          Measurement of surface water flows in the road and Oro projects; for which water volume meters have been placed in several points along the rivers.

-          Water quality control; for which the company acquired a sensor that monitors the quality of the water in order to give follow up to the following factors: pH, turbidity, temperature, conductivity, dissolved oxygen, in the surface waters inside the area of the project

-          Precipitation measurement, through electronic rain gauges

-          Sampling of air quality

In environmental development, until December 2006, the company had invested 500 thousand dollars and 200 thousand so far this year.

 

 

1. 6. Over one thousand direct and indirect employees? How much is the worker-employer fee the company pays for social security product of this employment generation?

We have already generated over 1000 direct and indirect employment positions and at the time production begins, there will be several thousand more people that will have jobs related to the activity.  Petaquilla Minerals respects the labor law and complies with all the commitments and agreements within the labor and social security contexts.  With regards the contributions from the company for the social security fund, they add up to approximately $114,000.00 monthly.

1. 7. Appealing to the company’s transparency policy, we understand that ANAM has requested the presentation of Environmental Impact studies according to the current law, for all the works being performed, is this true?  Have you presented them, at what stage are they, how much do these studies cost?

Petaquilla Minerals presented in November of 2006 and May 2007, before the National Environment Authority (ANAM), three environmental impact studies in which all the technical details from the work and influenced area where explained, as well as the concrete environmental mitigation measurements and compensation provided, adapting ourselves to the new requirements demanded by the norms to date.

1. 8. There is an administrative process at the ANAM and the peasants that oppose to the project have presented a lawsuit requesting the closure of the company, what is your opinion? Have you been called to the ANAM?

Petaquilla Minerals has presented to the National Environment Authority (ANAM), legal and environmental arguments that show their actions are being developed according to the law, and trusts that this will help absolve all the doubts that motivated the administration of the ANAM to take action.

In this sense, the company will maintain a constant collaboration with the ANAM and the General Office of Mineral Resources, as we have so far, because we are convinced that this will clarify any doubts the ANAM may have.

1. 9. How much have you invested in the construction of public infrastructures and in the establishment of social programs?

The development plan presented by Petaquilla Minerals to the State for the exploitation of the deposits in Molejon (gold) and Cerro Petaquilla (copper), guarantee the extraction of these materials with the adequate measurements of prevention and mitigation, generates an important economical and social development in all the influenced area improving the conditions of the residents of the provinces of Cocle, Colon and Veraguas, decisively contributing  to the economical and social progress of all the country.

As a part of this development plan, Petaquilla Minerals began, through the exploration phase in the 90s, and continues today, an ambitious social program, financed by the company’s own resources within different fields of action representing benefits for the residents of the area.

The following infrastructures were built as a result of this program:

• Coclesito Rural Hospital
• Road from La Pintada-Llano Grande-Coclesito
• Coclesito-Nazareno road
• Miguel de la Borda Police Station
• Coclesito Senior High School
• Renovation of the La Pintada City Hall
• Improvements and maintenance to the rural aqueduct of the communities of Coclesito, San Juan de Turbe, Villa del Carmen, Boca Limon, San Benito, etc.
• Renovation of the sports centers in Donoso and La Pintada
• Improvements to the Belen Community

It also includes an educational program that grant scholarships for low income families (112 scholarships granted in 2006); a school feeding program called “Comida Caliente”(59 schools, 3500 students in 2006); sports programs that include 1000 games a year in different sports focused on children and teens; health programs with monthly medical tours that give follow up to the persistent illnesses of the communities in the influenced area, with special attention to toddlers and children; training programs called “Brigadas Verdes” where the neighbors of the area are taught how to better use their lands for their subsistence agriculture and live stock ranching; volunteer program “My Friend Petaquilla” through which employees of the company sponsor families of the area.

1. How much have you invested so far in the development of the project?

A mining project of this magnitude requires an investment of over one billion dollars.  For a country like ours it’s a golden opportunity, since through the development of a sustainable and responsible mining activity, Panama will be known as one of the most important centers of processing in the world, for possessing the Canal, which opens the door to the economical growth of the region, and for maintaining a mining activity which is known for being an efficient model that focuses on the future of the region.

1. 11. You mentioned you are currently constructing the gold processing plant, does this mean you will begin the exploiting gold first?

The Panamanian government approved by resolution of the Ministry of Commerce and Industries, the development plan in phases presented by the company and its associates.  The first phase of the development plan of the deposit of Gold Molejon began in 2006.

 

1. 12. When do you have scheduled the beginning of the exploitation?  It was supposed to begin this year, will this phase be accomplished or does the pressure of the opposing groups and the administration process the ANAM follows has delayed it?

Once all the doubts the ANAM has are clarified and continuing with our sustainable development plans in the mining activity, we will begin the exploitation.  The company will constantly collaborate with the ANAM and the General Office of Mineral Resources because we believe this project will bring wealth and prosperity to Panamanians as a responsible mining activity is developed in the country.

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