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News Release

Canadian Resources Company Creating Conflict in Eastern Kenya

FOR IMMEDIATE RELEASE — 18 AUGUST, 2000

Tiomin Resources Inc., a Toronto-based mining company listed on the Toronto Stock Exchange, is expecting to strip-mine for titanium in the sands of Kenya's Kwale District starting early in the year 2001.

Titanium is used as a whitener for paint, plastic, and paper.

In spite of strong opposition from the public in Kenya, the Canadian High Commission has been promoting this project. The Kenyan government has indicated its support and is dismissing the public's complaints.

Scientists from Kenyatta University, in conjunction with non-governmental organization ActionAid Kenya, produced an Environmental Impact Assessment (EIA) that raised a number of concerns not mentioned in an environmental study done for Tiomin.

Much of the land in Tiomin's 64 km2 concession will be strip-mined, exposing mineral deposits up to 30 metres in depth. In addition, damage will be caused by timbering, constructing roads, a mill, a power-generating plant, power-lines, and waste piles.

Over 450 Digo and Kamba agricultural families will be displaced and plants, trees, soil, houses, schools, and markets will be destroyed.

Although the company plans to return the land to its owners after 21 years, some of Kenya's best farmland will no longer be arable due to changes in soil structure.

The mineral deposits are associated with 309 ppm of uranium and 143 ppm of thorium, radioactive elements that have the potential to harm human health and the environment once exposed to the air.

Kenyan scientists are concerned about sulphur dioxide emissions from the combustion of diesel fuels in the mining plants. They also state that water use will exert pressure on water sources and damage aquifers.

Kenyans feel that relocation and rental fees offered by Tiomin, $120 per acre and $30 per acre respectively, are completely inadequate compensation for these large extended families who will lose not only their homes, but their communities and livelihoods.

Women and children are at greatest risk of suffering. Said one boy from the community: "Maybe after moving we shall become street children."

"There is a lot of fear that (Tiomin) is going to follow the normal historical pattern since colonization, whereby money comes in and destroys local communities, and people's greed messes the entire system up: people end up poorer than they were, and the environment always suffers." — Kamau Gachigi (quoted in Dongo Kundu, a film produced by World Wide Film Expeditions, August 2000).

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For more information, please contact Joan Kuyek, National Coordinator, MiningWatch Canada at (613) 569-3439.

Background Information: Tiomin Resources Inc. in Kenya

The coastline of Kenya, from the port of Shimoni to the ancient village of Mambrui, is under severe environmental threat from irresponsible mining. The Kenyan coast is a stunning tropical paradise, with its 250 miles of palm-fringed beaches, blue lagoons and magnificent coral beaches. Conservation International lists Kenya's coastal forest as one of the world's 25 "hotspots" — places of extraordinary biodiversity that are seriously threatened. A new threat now endangers these forests, coastal waters, and the agricultural communities of the Digo and Kamba people.

Tiomin Resources, a Canadian mining company based in Toronto and listed on the Toronto Stock Exchange, has found deposits of ilmenite, rutile, and zircon in the Kwale District of Kenya for which they would like to strip mine titanium. Titanium is primarily used as a whitener for paint, plastic, and paper. Tiomin has completed their Environmental Impact Assessment and has appointed Barclays Capital to provide financial advisory services for the project. It is currently waiting for government approval.

The project is expected to generate around $47 million in annual cash flow, according to a Tiomin news release. Much of the land in Tiomin's 64 km2 concession will be strip-mined, exposing mineral deposits up to 30 metres in depth. In addition, damage will be caused by timbering, constructing roads, a mill, a power-generating plant, power-lines, and waste piles.

There have been many concerns voiced by the people of Kenya over this project. A coalition of local communities, conservation, and human rights organizations called the Coast Mining Rights Forum is protesting the proposed Tiomin project.

The displacement of the Digo and Kamba people will have a negative impact on their social structure. On the part of Tiomin and the Kenyan government, there is a blatant lack of respect for the land to which these people are bound — economically, socially, and spiritually. Displacement means a change in the way of life for these people and inevitably results in loss of natural environment, loss of land and disruption of social ties. These fates are worsened by poor compensation that renders the people unable to maintain their livelihood.

People from the villages of Nguluku and Maumba do not feel that the committee formed by Tiomin was representative of all community members. Farmers who have engaged in negotiations with Tiomin for their land feel that they did not make informed decisions. The transparency of Tiomin's approach to this "community consultation" is therefore in question.

Tiomin says that it has negotiated a "mutually acceptable compensation and rental package" with the residents of the Kwale District area. In a letter written to Gene Bernofsky dated May 19, 2000 Tiomin stated that "this compensation will also include payment for all buildings and farm crops and will enable the people to purchase an equivalent or better plot of land elsewhere". Tiomin has negotiated a relocation fee of Ksh. 9,000 per acre and an annual lease of Ksh. 2,000 per acre. These prices translate to US $120 and US $30 respectively. Given the size of the average Kenyan family, this compensation is inadequate by Kenyan standards. It is predicted that the 10,000 people to be displaced will be left with insufficient resources to buy new land, and the majority of people will move to impoverished areas of urban centres. Women and children are at greatest risk of suffering as Kenya is based on a patriarchal structure.

Further, there are concerns about the potential disruption of sacred sites. Observers are concerned that graves as well as spiritual areas called Kayas and Mafingo need to be respected and untouched.

Since 1997, the people in these communities have been very preoccupied with their fate, and many questions remain unanswered. The issue of where these people will move is still unsettled and it is inevitable that the pending displacement will result in the dissolution of community structure.

The sustainability of the agricultural land is at risk. Coconut, cashew nut and mango trees that are essential to the livelihood of the Digo and Kamba people will be torn down in efforts to strip mine the land. Although Tiomin has told farmers that they will have their land back after 21 years, they will be unable to gain economic benefits from the land for another estimated 10 to 30 years - time that it would take the trees to grow, if at all.

Tiomin is proposing to mine rich deposits of ilmenite, rutile, and zircon that are associated with 309 ppm of uranium and 143 ppm of thorium. There are potential dangers to the environment and human health once radioactive elements are brought to the surface and discharged into the river and shallow springs aquifer systems.

There are also concerns over sulphur dioxide emissions, water quality and quantity. The processing plant will require as much as 3900 cubic metres of water per hour, which will exert pressure on water sources. An alternative Environmental Impact Assessment written by Kenyatta University in collaboration with ActionAid Kenya raises questions around water contamination, and the damage to freshwater aquifers.

Tiomin proposes to build a port facility at Shimoni Harbour that will have a negative impact on marine life, damaging coral and disrupting fish.

According to Amnesty International and other international observers, Kenya is one of the world's greatest perpetrators of ethnic violence and corruption. In 1996, Kenya ranked third on Transparency International's Corruption Index.

Despite strong opposition from the public in Kenya, the Canadian High Commission has been promoting this project.

The First Conference on the Implications of Titanium Mining on the Coast of Kenya was held from the 18-21st of June, 2000 in Ukunda, Kenya in order to establish a forum for multi-stakeholders to discuss the project. Representatives from Tiomin were invited to this conference but did not attend.

While it is true that Tiomin's proposed project will significantly increase foreign investment in Kenya and create a new industry, at what cost will this happen? As a Canadian mining company, Tiomin has the obligation to mine responsibly with respect for social and environmental impacts.

The directors of Tiomin include: Jean-Charles Potvin, President and CEO of Tiomin and Pangea Goldfields Inc., director of Gold Reserve Corporation; Oliver Lennox-King, Chairman of Southern Cross Resources Incl, director of SouthernEra Resources Ltd., and Newstar Resources Inc.; C. Thomas Ogryzlo, President and CEO of Black Hawk Mining Inc., former Chairman of Kilborn SNC Lavalin and the Kilborn Group of Companies; Peter Steen, director of Stillwater Mining Company and Dynatec Corporation, former President and CEO of International Corona Corporation, former President, CEO, and director of Homestake Mining Company, former President and CEO of Lac Minerals Ltd; and Donald Worth, director of Canarc Resource Corp., Cominco Ltd., Founders Capital Corp., Real del Monte Mining Corporation, Royal Gold Incl, and a trustee of the Labrador Iron Ore Royalty Income Fund, and former VP of the Canadian Imperial Bank of Commerce. These people must be held accountable for their actions.

We request that people take action to help persuade Kenyan government officials to immediately halt Tiomin Resources' titanium project until specific environmental and social conditions have been met.

Company Response:

Tiomin Resources has responded to some of the information presented by Action Aid and the Kenyatta University researchers. Matthew Edler, Vice President of Tiomin Resources, faxed us a letter on August 8, 2000, which you can view here.