OTCBB Symbol: EGDD
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Furthermore, for purposes of mining right conversions and effective May 1, 2004, the MPRDA requires mining company ownership for historically disadvantaged South Africans to be at a minimum of 15% within the first five years and 26% within 10 years, such transfer of ownership to be at fair market value. Accordingly, on February 2, 2006, and pursuant to the requirements of the MPRDA, EGL sold 26% of its ordinary stock to Lomshiyo Investments (Proprietary) Limited ("Lomshiyo") for a consideration of ZAR9,900,000 ($1,630,000). Lomshiyo is a South African corporation whose majority shareholders are historically disadvantaged persons, who are employees of the Company and members of the local community.
The management teams of both EGL and Lomshiyo share a common strategy of growth, namely to reach the goal of changing EGI from a modest but profitable gold producer into a significant junior resources company.
The existing mining license at the Lily Mine (No. 15/2003) was granted on May 26, 2003. It is valid for 7 years (i.e. until May 25, 2010), or if the mine ceases production and terminates operations prior to this date. This license was granted in accordance with Section 9 of the Minerals Act 50 of 1991.
South African Mining Legislation and Black Economic Empowerment
The current South African mining legislation promulgated under the Mineral and Petroleum Resources Development Act 2004 (“MPRDA”) seeks, among other things, (i) to expand opportunities for historically disadvantaged South Africans to enter the mineral industry and obtain benefits from the exploitation of mineral resources; and (ii) to promote employment, social and economic welfare as well as ecologically sustainable development. In order to convert an old mining right to a new mining right the holder is compelled to lodge a social and labor plan and an undertaking on how it is intended to expand opportunities for historically disadvantaged persons to enter the mineral industry.
