IFC, the private sector arm of the World Bank, is selectively investing - amongst others - in the mining sector in emerging market countries. As part of its development mandate IFC is providing long term funding in form of equity and long term debt. IFC is providing multiple additional services

1. IFC Global Mining
Division
Karsten Fuelster
Business Development East Asia Pacific
IFC Jakarta Office, Indonesia

2. IFC – An Overview
2

3. IFC is a Member of the World Bank Group
IBRD IDA MIGA
IFC Multilateral
International Bank International
International Investment and
for Reconstruction Development
Finance Corporation
and Development Association Guarantee Agency
Est. 1945 Est. 1960 Est. 1956 Est. 1988
To promote private
Role: To promote institutional, To promote institutional, sector development To reduce political
legal and regulatory legal and regulatory investment risk
reform reform
Private companies in
Clients: Governments of member Governments of poorest member countries Foreign investors in
countries with per capita countries with per capita member countries
income between $1,025 income of less than
and $6,055. $1,025
- Equity/Quasi-Equity
Products: - Technical assistance - Technical assistance - Long-term Loans - Political Risk Insurance
- Loans - Interest Free Loans - Risk Management
- Policy Advice - Policy Advice - Advisory Services
Shared Mission: To Promote Economic Development and Reduce Poverty
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4. IFC – investing in Emerging Markets since 1956
• Largest multilateral source of loan/equity
financing for the emerging markets private IFC FY10 Highlights
sector
• Founded in 1956 with 182 member countries Portfolio $48.8 billion
Committed $12.7 billion
• AAA rated by S&P and Moody‟s
Mobilized $5.3 billion
• Equity, quasi-equity, loans, risk management # of companies 1,656
and local currency products
# of countries 120
• Takes market risk with no sovereign
guarantees Sub-Saharan Middle East
Africa & N.Africa Global
• Promoter of environmental, social, and 19% 12% 1%
corporate governance standards South Asia
8%
• Resources and know-how of a global
Europe &
development bank + flexibility of a merchant Central Asia
bank 23%
Latin
• Holds equity in over 800 companies East Asia and America
worldwide the Pacific 24%
13%
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5. The Reach of IFC‟s Projects
IFC’s activities in the Oil, Gas, Mining and Chemicals Sectors help
raise living standards for people throughout the developing world
Last year the reach of our clients included:
• Providing over 128,000 jobs
• Paying over $7.4 billion in revenues to governments
• Spending over $9.3billion on local goods and services
• Investing over $268 million in community
development programs
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6. IFC‟s Global Reach
•100+ country and regional advisory services offices worldwide
•Tbilisi
•Almaty
•Mexico City
•Dakar
•Port-of-Spain
•Bogota •Nairobi
•Sao Paulo
•Buenos Aires
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7. IFC in Asia and the Pacific
•Ulaanbaatar
•Bishkek
•Tashkent •Almaty
•Khodjand •Beijing
•Dushanbe
•Kabul •Tokyo
•Islamabad
•Kathmandu •Chengdu
•New Delhi
•Guwahati
•Karachi •Dhaka
•Hong Kong
•Hanoi
•Mumbai •Vientiane
•Bangkok
•Chennai •Manila
•Phnom Penh
•Ho Chi Minh City •PACIFIC
•Colombo •Davao City
•Banda Aceh •OCEAN
•Makassar
•Jakarta
•Dili •Port Moresby
•INDIAN
•OCEAN
•Sydney
•IFC Hubs
•IFC Country Offices
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8. IFC in the Mining Sector
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9. The IBRD („World Bank‟) and IFC Work Together
to Promote Sustainable Mining in Developing Countries
Global Mining Group
World Bank Mining Policy Division IFC Mining Investment Division
Works with Governments to facilitate - Works with Private Companies to ensure-
• Investor-friendly policies • Sound Economic fundamentals
• Reform and modernization of Mining • Sufficient Financial Strength
Sector • Environmental Rigor
• Privatization of State-owned Assets • Sensitivity to the Community
• Community Relations & Equitable
Rent Sharing

10. IFC‟s Current Mining Portfolio
US$445 million for IFC‟s account as of July 31st, 2010
By Product By Region
MENA
US$4.8M
Gold
43% Eastern &
Other C. Europe
Metals US$49.6M Sub-Saharan
20.9%
Africa
US$255.5M
Aluminum &
Bauxite Latin America
9% Copper US$89M
Iron Ore 18%
9%
Diamonds
0.1% E Asia &
Pacific
World
US$41.7M
US$4.6M

11. Equity at Market Value
East Asia
1.0%
MENA Central Europe
0.5% 16.0% Sub-Saharan Africa
22.5%
LAC
60.0%

12. IFC Value Add in the
Mining Sector
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13. Financing and Sustainability Expertise Under One Roof
IFC Mining
Integrated Solutions Combining Capital and Expertise
Comprehensive Product Suite Advisory Services
• Loans • Supplier development (linkages)
• Equity • Community Development
• Quasi-equity • Municipal Capacity Building
• Structured products • Resettlement
• Capital markets access and • Dispute Resolution
mobilization • World-class environmental and social
advice
• Risk management
• Access to Technical Assistance Funding
• Political risk cover

14. IFC Value Add in Mining
Long-term Regional Environmental
Global Mining Country Risk Sustainability
Competitive Knowledge & Social Risk
Expertise Mitigation Toolkit
Financing Management
 Equity
 Extensive  50+ Years of  Government  Advice on  Local Supplier
 Fixed/Floating Local Office Sector Relations Environmental Development
Rates, Local Network Expertise and Social Best
Currencies  Neutral broker  Environmental
 Local Practices / Social Advice
 Greenfield Role
 Up to 15 year Transaction  Equator
Loan Maturity  Expansion/  Reduced Risk of  Corporate
Experience Principles
Modernization Expropriation, B Governance
 Flexible  World Bank Modeled after
reach of  Local
Amortization Synergies  Corporate IFC Standards
Contract, Conve Economic
Profile Strategy
rtibility  Local Development
 Catalyst for  Access to Consultation
 World Bank  Community
other Investors International and Disclosure
Synergies Development
and Lenders Investors
 Witholding Tax Funding
 Equity  Technical
Benefit
Participation Advice
 Capital
Mobilization
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15. IFC‟s Package Deal = Cost Synergies for Clients
We combine world-class talent, a global outlook and a
social/environmental mandate to deliver sustainable
business solutions
Our team consists of:
 Financial professionals
 Mining engineers
 Environmental specialists
 Development experts
 Communications specialists

16. The IFC Advantage
A long term commitment to our clients and sustainable
development in emerging markets allows us to offer:
Seal of Approval
 IFC involvement in a project is often seen as a seal of approval
Political Risk Coverage
 IFC presence in a transaction greatly reduces the occurrence of:
• Corruption
• Expropriation of funds
• Mismanagement of revenues
• Extraneous regulations
Structuring Capability
 „Honest Broker‟ reputation facilitates negotiations amongst diverse groups:
• Foreign investors
• Local partners
• Local communities
• Government representatives

17. How We Finance Mining Projects
Project Type IFC Investment
Greenfield, total cost Up to 35% of project cost
less than $50 million for IFC‟s account
Greenfield, total cost Up to 25% of project cost
more than $50 million for IFC‟s account
Expansion or rehabilitation Up to 50% of project cost
Greenfield, expansion, reh 100% project cost for IFC
abilitation and participating banks‟
accounts
•Umbrella for participants in IFC‟s syndication program: IFC lender of
record, immunity from taxation and provisioning requirements.
•IFC‟s total financing (for its own account) must be less than 25% of total
company capitalization, and IFC does not manage or have largest stake.

18. Financial Products - From Equity to Debt
• Corporate/UJV
• Typically 5-15% shareholding
Equity • Long-term investor, typically 6-8 year holding period
• Not just financial investor, adding to shareholder value
• Usually no seat on board
• Subordinated loans
Mezzanine / • Income participating loans
• Convertibles
Quasi Equity
• Other hybrid instruments
• Senior Debt (reserve, base lending. corporate finance, project finance)
• Fixed/floating rates, US$, Euro and local currencies available
• Commercial rates, repayment tailored to project/company needs
Senior Debt • Long maturities: 7-12 years, appropriate grace periods
& Equivalents • Range of security packages suited to project/country
• Mobilization of funds from other lenders and investors, through
financings, syndications, underwritings and guarantees

19. Financial Products - Syndication (“B-Loan”) Structure
Loan Agreement
IFC Borrower
A + B Loans
Participation
B Loan
Agreement
• A loan is for IFC‟s own account
• B loan is for account of participant commercial banks
• Only one loan agreement, signed by the borrower and IFC
Participants
• IFC is the lender of record for the entire loan (A+B)
• Structure allows participants to benefit from IFC
privileges and immunities
• Better pricing/tenors than otherwise available; preferred
creditor access to foreign exchange
• IFC Loans exempt from withholding taxes

20. Mining Projects Are Often Seen As
“Controversial”…
• Increased pressure by governments and communities for
a larger share of profits
• Social benefits often underestimated
• Environmental degradation often more feared
than real
• Unrelenting civil society attention
• Amplified brand and reputational risk
…and yet no sector is more important to development than ours.
Industry context

21. IFC Sustainability Approach to Mining
Generating benefits for society in addition to profits for
investors, allows projects to acquire a “social license to operate”.
Key dimensions for successful sustainable development in mining
• Broad and ongoing community consultation with affected
communities
• Generating community benefits by broadening economic
opportunities (linkages)
• Assistance in prudent government use of revenues (good governance,
revenue transparency)
The Sustainable Approach

22. Sustainable Development Offers Attractive Value
Proposition
Increased Shareholder Value/
Long Term Viability
Improved:
+ Reduced:
• Reputation/Local acceptance • Risk of disruptions
• Access to investors • Labor and healthcare
expenditures
• Access to growth
opportunities abroad • Operational liability costs
Sustainable Approach

23. IFC‟s Performance Standards:
International Stamp of Approval
“Equator Principles” adopted by 70+ of the world‟s leading
banks and based on IFC‟s Performance Standards
Apply to 85% of project financing worldwide
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24. IFC‟s Performance Standards on Social and Environmental
Sustainability: Best Practice Tools in Risk Management
Implementing the Performance Standards Guards
Against Unforeseen Interruptions in Project Execution:
• Strikes or protests
• Costly environmental clean ups
• Loss of investor confidence due to unfavorable media attention
Meeting the Performance Standards Helps to Improve the Bottom Line:
• Helps ensure smooth and continuous operations
• Maximizing local development benefits fosters good neighborly relations
• Good corporate citizenship raises project‟s acceptance locally and with governments
• Optimization of resource management (water, energy, etc)
• Helps to create reliable and cost effective supply chains
• Helps attract top talent both locally and internationally
• Enhances company brand value to investors

25. Applying IFC‟s Performance Standards on Social and
Environmental Sustainability: : A Tailor-Made Process
IFC‟s Perfomance Standards (PS)
• PS1. Social and environmental assessment and management systems
• PS2. Labor and working conditions
• PS3. Pollution prevention and abatement
• PS4. Community health and safety
• PS5. Land acquisition & involuntary resettlement
• PS6. Conservation of biodiversity and sustainable natural resource management
• PS7. Indigenous peoples
• PS8. Cultural heritage
• Meeting all 8 standards upfront not required – select PS apply to each projects and most
clients meet many of them already
• In areas in which clients do not already profit from international best practice, we agree on
a flexible action plan and guide them through the process
• Implementation process is tailored to client‟s particular situation

26. Local Supplier Linkages – Business Rationale
Using local suppliers allows clients to:
• Reduce delivery times
• Control inventories
• Increase number of local jobs created by project
• Spreads projects‟ positive impacts among members of host communities
Leads to:
• Lower operating costs
• Mutually beneficial business relationships between IFC clients and local suppliers
• Social license to operate and mitigation of social risks
• Stronger local support for project
Our advice and assistance includes:
• On the ground support for local businesses inside the supply chain of IFC clients
• Creating and identifying financing solutions for local entrepreneurs
• Establishing and operating local “enterprise centers” to train local businesses

27. Example: Supplier Development, Ahafo Gold Mine, Ghana
Issue
•Physical and economic dislocation of
people - total impacted 1,700
household (9,575 people)
•Low level business skills of local
entrepreneurs, mostly former farmers
Linkages Solution
•Supplier Development, Local Economic
Development, Institutional Capacity
Building, HIV/AIDS and Gender
•International partnership -Transferring
lessons from Minera Yanacocha in Peru

28. Example of Supplier Development:
Ahafo Gold Mine in Ghana
The opening of the Ahafo mine created an opportunity for Saveok
CO. Ltd, a supplier of anti-erosion Jute Mats to the Newmont
mine.
• The IFC Linkages program is assisting
Saveok in raising its standards and
technical expertise.
• Saveok has grown to 12 employees, 5 of
which are full-time employees, and is
actively working to increase its
production capacity.
• Saveok directly benefits local producers
of Jute mats by purchasing them from
the producers and selling them to
Newmont.

29. Local Economic Development Programs – Business Rationale
Supporting Local Economic Development:
• Spreads projects‟ positive impacts among members of host communities
• Helps to provide alternative livelihoods to local populations
• Increases effectiveness of compensation packages
Leads to:
• Stronger local support for projects
• Social license to operate and mitigation of social risks
• Management of reputational risks
• Minimized disruptions for project effected people
IFC advice and assistance includes:
• Supporting small and medium size businesses outside the supply chain of IFC clients
• Creating and identifying financing solutions for local businesses
• Strengthening the capacity of development foundations to identify needs and
priorities of communities

30. Environmental and Social Risk Mitigation
In-house environmental and social specialists to assist clients with:
•Pollution prevention •Community Development
& Consultation
•Cleaner production
•Cultural property
•Socioeconomic/workplace/
labor issues •Impact assessment
•Land acquisition/resettlement/ •E&S management systems
compensation
•Health & Safety
•Indigenous peoples
•Gender empowerment
•Biodiversity

31. IFC environmental and social specialists travel regularly to project Sites,
offering advice and lessons learned from other IFC projects.

32. Social Advice Example: Improving the effectiveness of Sadiola
Gold Mine‟s Community Foundation
IFC social specialists helped Sadiola create a long term
plan which would guide the work of its community
foundation past the life of the mine.
.

33. Social Advice Example: Improving the effectiveness of Sadiola
Gold Mine‟s Community Foundation (cont‟d)
Working directly with the local population, government authorities and
NGOs, the Sadiola Foundation is now implementing development initiatives
focusing on three main areas:
1. Development Training and
Capacity Building
2. Agricultural Assistance
3. Enterprise Development
Peanut Butter Producers
Trained by Sadiola Foundation

34. Social Advising: Sual Stakeholder Capacity
Building
Client need
Empower local mine stakeholders to participate in public consultation and disclosure
processes
Solution
• Capacity building workshop held in city of Syktyvkar
• Capacity building and stakeholder forum held in Ukhta
• Capacity building program delivered in several locations
Outcome
• Improved information flow
• Broadened participation
• Extended opportunity for dialogue Komi, Russia:Local stakeholders discuss
the project
• Improved ability to respond to questions
• Improved capacity in the company

35. Corporate Governance Program
IFC is the leading provider of advice on Corporate Governance in emerging
markets
The IFC Corporate Governance Methodology employs specialized assessment tools
tailored to the different governance priorities of:
• publicly listed companies
• founder and family-owned firms
• financial institutions
• newly privatized enterprises
IFC corporate governance experts advise clients on:
• board practices
• shareholder rights
• the internal control environment
• transparency and disclosure

36. Extractive Industries Community Development
Fund
A $12 million fund focused on helping communities receive sustainable benefits
from extractive industries projects.
-Provides funding and knowledge to IFC clients
-Tri-partite approach with key stakeholders – in order to ensure sustainability
1. Community
2. Extractive Industry investors
3. local/regional governments
-Supports:
• Capacity Building
• Training
• Technical Assistance
• Tool Development and Information Clearinghouse

37. Municipal Capacity Building Program
Program Results Benefits for
Purpose IFC Clients
• Enhancing local • A more efficient • Increased
municipalities‟ allocation and community support
ability to use leverage of royalties for projects
increased tax and taxes on the
• Supports
and royalty regional level
companies‟ own
revenues for
• Local communities local development
economic
begin to feel positive projects
development
economic and social
impacts from the use
of public revenues
Cajamarca Program, Peru Results Benefits IFC Client:
• Program helping
municipalities • Dramatic increase in
surrounding Yanacocha local development
Mine use increased tax projects financed by
revenue municipalities
Presentation Title 37

38. World Bank Mining Policy Division
National Legal and
Regulatory Policies
Extractive Industries
National Investment
Transparency Initiative
Climate Policies
(EITI)
Artisanal & Small Community
Scale Mining Development Fund

39. Working with IFC in the
Mining Sector
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40. Approaching IFC
• Foreign or Domestic Sponsors
 New venture or expansion; private sector majority ownership only
 Project must be developmentally sound and commercially viable
• Sponsor Commitment is Required
 Equity participation; pre-completion support/guarantees
• Submit Preliminary Business Plan or Feasibility Study
 Brief project description, incl. technical feasibility and market study
 Information on sponsors and operator
 Environmental studies
 Information on requirements, financing plan and cash flow projections

41. IFC‟s Approval Cycle – Loans
Internal
Early Review Due Diligence Negotiation Disclosure Approvals and Disbursement
Commitment
• Client needs • Assessment of • Conditions of • Environmental • Board • Loan disbursed
determined business disbursement and social consideration on agreed
potential, risks and information schedule, acco
• Contribution • Board approval
, opportunities covenants, per disclosed rding to
of project to
formance and • Legal review negotiated
development • Evaluation of • Opportunity
monitoring terms and
assessed financial and for public • Signing of legal
requirements, conditions
economic comment documents
• Project and action plan
soundness
screened for agreed
potential • Compliance
problems with IFC‟s
social and
• Site visit
environmental
• Mandate performance
letter standards
reviewed
We Agree on a Specific Timeline to Meet Client‟s Needs

42. IFC‟s Approval Cycle – Early Equities
Early Concept Due Finalization Disclosure Formal Board Commitment
Review Diligence of terms and Approval Disbursement
Drafting
Agreement
s/
• Early • Site visit • Agreement on • Public • Board
project • Further term sheet disclosure consideration • Signing of
screening project • Price lock-in (30/60 days) and approval equity
• Agreement screening and (if listed) • Draft equity subscription
reached on evaluation • IFC Credit subscription agreement
broad (geological Committee agreement
and technical) Approval
• Equity
equity disbursed
• Early
subscription
screening for
terms social and
• IFC Concept environmental
Review issues
Meeting
We Agree on a Specific Timeline to Meet Client‟s Needs

43. Equity Investments: Approaching IFC
Often starts with submitting brief project description, incl. technical feasibility, information on
company, and environmental studies
MONTH 1 MONTH 2 MONTH 3 MONTH 4
Early Concept Review
Due diligence
Finalization of terms and Credit committee
approval
Public Disclosure
Drafting of legal agreements
IFC Board Approval
Equity Commitment and Disbursement

44. We Agree on a Specific Timeline to Meet Client‟s Needs
Kalahari Diamonds: IFC equity
investment in Botswana aerial
surveying diamond exploration
project.
Completed in 5 Months
Nov 2002 Dec‟02 – Feb „03 March 2003 March 2003 Current
Mandate Letter
Appraisal Equity Commitment Disbursement Supervision
Initial Discussion
Financing Negotiations
Internal Approval
Time line depends on company‟s support in providing information

45. Thank you!
IFC Contact Information
IFC East Asia Pacific:
Karsten Fuelster
Senior Investment Officer
Infrastructure and Natural Resources Group
(Oil, Gas, and Mining)
Phone: +62 21 2994 8036
Email: kfuelster@ifc.org
Fax: +62 21 29948002
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