43-101 2008 Technical Report On The La Fortuna Project, Durango ...

More documents

Recommendations

Info

16.2.1.4 Mexican Taxation 16.2.1.4.1 Federal Corporate Tax Corporate taxable income is subject to federal corporate tax at a rate of 28% for 2008 and subsequent years. The income tax laws recognize the effects of inflation on the following items and transactions: depreciation of fixed assets, costs of sales of fixed assets, sales of capital stock (shares), monetary gains and losses, and tax loss carried forward. In addition, mandatory Profit Sharing (see below) is now deductible when calculating taxable income. Taxable income is computed in accordance with generally accepted accounting principles. Depreciation of tangible fixed assets and amortization of intangible assets is made with the straight-line method. Howe has assumed that all new capital has been depreciated over 10 years using the straight line method. No opening tax pools have been assumed. Business losses may be carried forward for 10 years and as noted above are subject to adjustment for inflation. 16.2.1.4.2 Net Assets Minimum Tax The Net Assets Minimum Tax was eliminated in Mexico starting January 2008. The federal government has replaced this tax with a new IETU flat minimum tax. The tax is calculated as 16.5% of the company's monthly profits. The tax is not paid in additional to the federal corporate tax (ISR - see section 16.2.4.1). At the end of each month the company calculates the taxes owing using both the ISR and IETU protocols. The higher of the two calculated values is then paid for that month. The main difference in the calculation procedures for the ISR and IETU taxes is that tax losses from previous years cannot be carried forward for the calculation of the new IETU. The IETU can be deducted or credited by the parent company in Canada. 16.2.1.4.3 Value Added Tax (IVA) The 15% IVA is payable on any supply of goods and services including imports. The IVA payable can be reduced by IVA collected by the taxpayer in the course of its annual business operations. 16.2.1.4.4 State Tax State taxes are based on salaries paid in the state during the tax year. The tax rate for State of Durango is 1.375%. 16.2.1.4.5 Other Payroll Taxes The company must pay a 15% Social Insurance Tax and a 5% Housing Contribution Tax based on annual payroll. 16.2.1.4.6 Mining Tax During the period of exploitation, the mining lands tax is approximately $10 per hectare in year 1, and increases approximately 10% per year thereafter. For the purposes of this financial evaluation, it has been assumed that payroll related tax costs are included in the operating costs (i.e. State Tax, Social Insurance Tax and Housing Contribution Tax). It has also been assumed that IVA payable on contract mining services is included in the contract mining costs. 16.2.1.4.7 Profit Sharing The company is required to pay a 10% profit sharing tax to its employees. Profit sharing is calculated in the same manner as Corporate Tax but is calculated before Corporate Tax and is deductible when calculating the Corporate tax. On the other hand, Corporate Tax is not be deducted when calculating Profit Sharing. Castle Gold has advised Howe that it will not be required to pay Profit Sharing Tax as it 54
will be operating the mine indirectly through the use of a separate services company. All employees will be employed by the services company and any profits will flow directly to Castle Gold and will not incur Profit Sharing Tax. 16.2.1.4.8 Financial Results The Base Case ($625 Gold) The Base Case scenario produces 488,000 ounces of gold, while mining 46.9 million tonnes of ore and 28.2 million tonnes of waste at an overall cash cost of $3.58 per tonne of ore, or US$370 per ounce of recovered gold and a total of $4.6 million in capital costs over the mine life. The Base Case produces a Net Cash Flow of $95 million after all operating and capital costs, and corporate taxes are deducted. The overall waste to ore ratio is 0.6:1.0. Sensitivity Howe has tested the sensitivity of the El Castillo project to changes in Gold Price and Operating and Capital Costs. As one would expect, the project is most sensitive to the price of gold followed by changes in the operating costs. Since El Castillo is an operating mine with most of its capital already sunk, the impact of changes in capital costs is quite small. Howe tested the Base Case for sensitivity by varying the prices and costs by changes of ± 30%. Tables 16, 17, and 18 illustrate the Sensitivity of the El Castillo project. 55
Page 1 and 2:
TECHNICAL REPORT ON THE EL CASTILLO
Page 3 and 4:
SUMMARY Introduction At the request
Page 5 and 6:
Castillo Remaining Mineral Resource
Page 7 and 8:
Undiluted Reserves at $550 per Ounc
Page 9 and 10:
epresent an incremental increase in
Page 11 and 12:
TABLE OF CONTENTS 1.0 INTRODUCTION
Page 13 and 14: Table 4. Driving distances from Dur
Page 15 and 16: Castle Gold has accepted that the q
Page 17 and 18: 2.0 PROPERTY DESCRIPTION, LOCATION,
Page 19 and 20: Figure 2. Map showing mining conces
Page 21 and 22: 2.1.2.3 Property Taxes The property
Page 23 and 24: Table 5. Maximum precipitation in a
Page 25 and 26: 3.0 HISTORY The El Castillo Project
Page 27 and 28: commonly reach elevations of 2,500
Page 29 and 30: Figure 4. Cross-section through the
Page 31 and 32: At El Castillo, the presence of cha
Page 33 and 34: Toward the center of the mineralize
Page 35 and 36: 7.0 EXPLORATION In 2006, Castle Gol
Page 37 and 38: 9.0 SAMPLING METHOD AND APPROACH Th
Page 39 and 40: 11.0 DATA VERIFICATION 11.1 INTRODU
Page 41 and 42: Morgain Minerals Inc. El Cairo Gold
Page 43 and 44: 13.0 MINERAL PROCESSING AND METALLU
Page 45 and 46: Table 9. Castle Gold test heap leac
Page 47 and 48: material is relatively consistent a
Page 49 and 50: Plate 6. View of the El Castillo si
Page 51 and 52: 14.2.1 Methods A shift of -500,000
Page 53 and 54: 14.2.4 Pit Optimization Parameters
Page 55 and 56: Undiluted Reserves at $600 per Ounc
Page 57 and 58: Table 13. Comparison of Howe 2003 a
Page 59 and 60: 15.2.2 Change of Land Use The Compa
Page 61 and 62: 16.2.1 Capital and Operating Cost E
Page 63: Table 15. Operating Cost Summary (U
Page 67: Table 17. Sensitivity Analysis - Gr
Page 70 and 71: 16.2.2 Economic Evaluation The Base
Page 72 and 73: Table 23. US$ - Mexican Peso Exchan
Page 74 and 75: • Castle Gold should complete geo
Page 76 and 77: Panteleyev, A., 1996, Epithermal Au
Page 78 and 79: 9. To the best of my knowledge, inf
Page 80 and 81: CERTIFICATE OF AUTHOR dated July 31
Page 82 and 83: Appendix A Pit Optimization Level P
show all

43-101 2008 Technical Report On The La Fortuna Project, Durango ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?