South Sudan

The Republic of South Sudan is a landlocked country of 619,745 km², making it about the size of Texas, or Spain and Portugal combined. The capital city, Juba, lies on the River Nile about 130 km north of the border with Uganda. The population of South Sudan is estimated to be about 8 million, but no census has been held in several decades and so this may be unreliable. Natural vegetation ranges from tropical forest on the DRC border to dry grassland in the north. The Luri area is open woodland and savannah. Juba has an annual average high temperature of 34.5°C and an average low temperature of 21.6°C. The average yearly rainfall is 950 mm, with the main rainy season between April and October. The economy is dominated by petroleum production but the population is predominantly rural and relies chiefly on subsistence farming.

South Sudan fought for its independence from 1955 until 2005, with a pause in the conflict between 1972 and 1983. The signature of a Comprehensive Peace Agreement in 2005 led to a referendum in which 98.83% of the population voted for independence, and South Sudan became an independent republic on 9 July 2011.  Internal political conflict broke out within the new Republic in December 2013 and continued intermittently until July 2016, when there was a major outbreak of fighting. Currently, it is not safe to operate in any of Equator’s project areas and the Company therefore declared force majeure in December 2016.

Geology and Prospectivity

Precambrian rocks with potential for gold are exposed across almost half of South Sudan, an area of 300,000 km² or 30% bigger than the whole of Ghana. Equator believes that there is a high probability that these rocks contain world class gold deposits similar to the Kibale Mine, 250 km southwest of the Luri licence in the Moto goldfield of DRC.

The country contains three principal geological terranes: the Congo Craton (Archaean and Palaeoproterozoic) in the south, sedimentary basins (Mesozoic to Recent) in the north, and the Arabian-Nubian Shield (Neoproterozoic) in the east.

Of greatest interest for Equator Gold is the Congo Craton. Occupying a zone about 250 km wide along the southern border of the country, the South Sudanese part of the craton has a complex geological history dating back at least 2,880 million years.

Despite the great mineral potential of South Sudan, the war for independence almost entirely prevented mineral exploration for more than 55 years. Independent South Sudan is now determined to develop its mineral sector and in 2012 enacted a new mining law.

Mining Law

A new mining law, the Mining Act 2012, was gazetted on 22 March 2013 and the associated Regulations were promulgated in March 2015.  As one of only two active explorers in South Sudan at the time, Equator was consulted as a stakeholder on the drafting of the law and regulations.

The Act is broadly in line with the mineral laws found in many other sub-Saharan African countries, with investor friendly intentions and the aim of creating a sustainable mineral sector in South Sudan. The Act vests all mineral resources within South Sudan in the National Government except for quarry minerals and certain near-surface deposits, which are vested in the State Governments.

The Act repealed all previous mining laws but gave holders of titles granted under repealed legislation the right to apply on a priority basis title under the Act, subject to the terms (including maximum area restrictions) and application procedures specified under the Act and Regulations.

The Act provides for the following types of Mineral Title:

  • Reconnaissance Licence (non-exclusive)
  • Exploration Licence
  • Large-scale Mining Licence
  • Small-scale Mining Licence
  • Retention Licence
  • Artisanal Mining Licence (administered by the State government)

An Exploration Licence grants an exclusive right to explore for a specified mineral for an initial term of 5 years extendible for one or two further periods of up to 5 years each. The maximum allowable area of an Exploration Licence is 2,500 square kilometres in one contiguous polygon. Holders of an Exploration Licence must submit annual work programme proposals. The Regulations will impose minimum expenditure obligations on holders of Exploration Licences, increasing with time since the grant of the licence from 20 South Sudanese Pounds (SSP) per square kilometre in year 1 to SSP 400/km² in years 10 to 15.

Royalties from a mining licence are based on gross profitability, calculated as earnings before interest, taxes, depreciation and amortization x 100, divided by the aggregate gross sales for the relevant assessment period and a factor for the assessed mineral. The royalty for gold is likely to be 5 – 6% for a typical mine. There is a corporate profit tax of 15%.  The Government will have the right to acquire up to 15% working interest participation in Large-scale Mining Licences, by means of a single special share which will carry the right to appoint up to two directors and to receive dividends and other distributions in respect of the working interest percentage.