Concession agreement on 28,5-year mandate assigned by the Government of Montenegro to Unirom-Metali's Polish partner

On 1 December 2015, Uniprom-Metali's Polish partner Onico SA (Warsaw) signed the Agreement on Assignment of Concession Agreement, acquiring the right to red bauxite mining at deposits Zagrad, Đurakov do II, Štitovo II and Biočki stan for 28,5 years.

The large bauxite deposit in Montenegro located in the Central - Western part of the in Nikšić, a municipality 55 km North - West of the capital Podgorica.

Nikšić represents the largest bauxite reserve in Montenegro and one of the largest in Europe, having estimated reserves of 135.2 million tonnes.

The Government granted the concession for period of 28.5 years. It also decided that the percentage amount for the calculation of the concession fee should amount to 4% of the market value of balance or exploitation red bauxite deposits in Zagrad, Djurakov Do II, Stitovo II and 2% for the deposits in Biocki Stan.

The Ministry of Economy, as a competent authority for the exploitation of mineral resources, proposed to the Government to assign the concessions to the company Onico SA, partner of Uniprom_Metali, given that it was the only bidder in the tender call and it has met the requirements defined in the tender documentation.

The Polish company submitted a bid for the option 1, i.e. exploitation of red bauxite deposits on the sites of Zagrad, Djurakov Do II, Stitovo II and Biocki Stan, which represents the best option for the grantor in terms of mineral resources management, since it ensures long-term exploitation of bauxite ore.

The conclusion of the concession agreement provided for reactivation of the pit Biocki Stan without which exploitation of bauxite ore had been limited to ten years, due to the inadequate quality of the ore in remaining deposits.

In the proposal for granting a concession it was stated that on the basis of the minimum concession fee, the grantor would earn about €4.76 million, whereas concession fees could be higher depending on the annual production volume and ore prices on the market.

The Polish joint stock company “Onico SA”, which has been engaged in the field of trading fuel, gas and minerals, does not have experience in the exploitation of mineral resources, it has been stated in the draft agreement.

The tender for the granting of the concessions for exploitation of red bauxite deposits included several options.

The first option was the exploitation of red bauxite deposits in Zagrad, Djurakov Do II, Stitovo II and Biocki Stan.

The second option was exploitation of deposits in Zagrad, Djurakov Do II and Stitovo II and the third option was exploitation of deposits on the site of Biocki Stan.

Bauxite produced in Nikšić shall be exported worldwide by the company Uniprom-Metali.