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Projects

Project Brief

Summaries of proposed guarantees are provided prior to Board consideration and before final contract signing, and they are therefore subject to change. Project briefs are disclosed after Board consideration and contract signing and reflect the terms of the project at the time of contract signature. Environmental and Social Review Summaries are provided for projects assigned an Environmental Assessment Category of A or B.

 

Project name
Kupol
Project ID
6279
Fiscal year
2006
Status
Active
Guarantee holder
Mitsubishi Corporation
BEMA Gold Corporation
Société Générale S.A.
Investor country
United Kingdom
France
Canada
Host country
Russian Federation
Environmental category
A
Sector
Mining
Gross exposure
 $304.6 million
Project type
Non-SIP
MIGA has issued $304.6 million in guarantees to Bema Gold Corporation of Canada, Société Générale SA of France on behalf of itself and Bayerische Hypo-Und Vereinsbank AG of Germany, and Mitsubishi Corporation (UK), covering their respective equity investment in and loans to the Chukotka Mining and Geological Company for the development of the Kupol gold project in the Russian Federation. The guarantees cover a portion of Bema’s $122.8 million equity investment and $361 million in non-shareholder loans from the banks and from Mitsubishi. The guarantees are for eight years, and protect against the risks of transfer restriction, expropriation, and war and civil disturbance. Export Development Canada has reinsured MIGA’s gross exposure for $130 million, thus limiting net exposure to $110 million.

Bema will develop the Kupol property, which contains a high-grade gold and silver deposit, for the extraction and processing of the metals. Average annual production of the mine is estimated at 550,000 ounces of gold and 4.7 million ounces of silver. The ore will be processed through primary crushing and grinding, conventional gravity separation, whole ore leaching, and precipitation to produce doré bars. The bars will be refined into bullion gold for sale.

The Kupol project is expected to stimulate economic development in the remote, desolate Chukotka region of Siberia, where unemployment has jumped 50 percent since the breakup of the Soviet Union and where poverty is widespread. Once fully operational, the mine will employ 600 mostly local workers, who will earn wages at the high end of the local pay scale. The company plans to invest $3 million over eight years to help local communities, including indigenous populations, with health care, job training, and support for SMEs. Once operational, the mine should attract additional foreign direct investment, given the region’s significant untapped natural resources, while generating an estimated $345 million in taxes over an initial mine life of up to December 2014.

MIGA’s involvement was the critical piece needed to put together the financing package, which lenders said would not have been possible without political risk coverage. The project supports the World Bank Group’s poverty reduction strategy for the region.

Environmental Impact Information: Kupol Mine (with IFC). For information on the environmental impact of the Kupol project, please click here. Posted: July 19, 2005

 
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