1. An Expanded Role for EBRD in Mining Finance: Exploration Stage Equity
Kevin Bortz
CERBA International Mining Conference
Toronto – 4 March 2008

2. Agenda Introduction to the EBRD EBRD in the Natural Resources Sector
EBRD and Health, Safety and the Environment
EBRD in the Mining Sector
EBRD Equity Investments
Case Studies

3. Agenda Introduction to the EBRD EBRD in the Natural Resources Sector
EBRD and Health, Safety and the Environment
EBRD in the Mining Sector
EBRD Equity Investments
Case Studies

4. Cumulative commitments €35 billion
What is the EBRD?
International financial institution, promotes transition to market economies in 29 countries from central Europe to central Asia
Owned by 61 countries and two inter-governmental institutions
Capital base of €20 billion
Cumulative commitments €35 billion
Unaudited September 2007

5. What are the EBRD’s objectives?
To promote transition to market economies by investing mainly in the private sector
To mobilise significant foreign direct investment
To support privatisation, restructuring and better municipal services to improve people’s lives
To encourage environmentally sound and sustainable development

6. Foundations of EBRD operations
1 Apply sound banking principles to every project
2 Support but not replace private investors
3 Advance the transition to a full market economy

7. Sound banking principles
Each project requires:
careful assessment of risk / rewards for all parties
commercial viability
good prospect of returns

8. Complementary to the private sector
Innovative and flexible financial structures
Extending boundaries / breaking new ground (maturity, equity, political risks)
Opportunity for commercial partners

9. IFI with investment banking skills
Specialised knowledge of central and eastern Europe and the CIS
Multi-national staff from our member countries
In-depth legal know-how
Dedicated teams with expertise in a variety of sectors

10. Agenda Introduction to the EBRD EBRD in the Natural Resources Sector
EBRD and Health, Safety and the Environment
EBRD in the Mining Sector
EBRD Equity Investments
Case Studies

11. EBRD, a major natural resources player
As of today €2.3 billion have been lent to projects worth €14.3 billion of investment
Metal ore mining 11%
Petroleum refineries 14%
Gasoline stations 1%
Pipeline transportation 20%
Oil and gas extraction 52%

12. Natural Resource sector objectives
Increase private sector participation and promote direct foreign investment
Reduce bottlenecks and ensure competitive market access
Improve regulatory and institutional frameworks
Set high standards of business conduct, transparency, corporate governance and environmental protection

13. Some EBRD resource partners

14. Agenda Introduction to the EBRD EBRD in the Natural Resources Sector
EBRD and Health, Safety and the Environment
EBRD in the Mining Sector
EBRD Equity Investments
Case Studies

15. Environmental mandate
EBRD takes account of the
environment in all its operations
Every project is screened for environmental impact
Around 17% of total commitments are designed to make environmental improvements

16. Environmental standards for EBRD projects
Local, national, EU and World Bank standards and regulations
Where standards cannot be met initially, project will include programme for achieving compliance
Environmental Action Plan

17. EBRD environmental policy and procedures
Ensure environmental soundness of all EBRD operations
Invest in projects with specific environmental and energy efficiency benefits
Disclosure of environmental information

18. Environmental appraisal
Helps the Bank decide if an activity should be financed and how to address environmental issues
Helps identify ways in which operations can be designed to provide environmental benefits

19. Environmental, Health & Safety Loans (EHS)
Purpose: protect the environment, cut emissions and prevent accidents by investing in:
Pollution clean-up
Pipeline replacement
Gas flaring and emission safety measures
Energy efficiency
But NOT production related investments that do not have an overriding environmental benefit
Attractive Credit Profile: A loans from €3 million to €450 million with long tenors available (10 years+)
Client-driven programme with straightforward funding procedure and simple monitoring

20. EHS Loans track record Projects totalling €530 million signed to date
Mittal Steel Temirtau
LUKOIL
CGI
MOL
Rosneft SMNG
Loans in € millions
€75 m
€75 m
€223 m
€33 m
€150 m
€52 m

21. Agenda Introduction to the EBRD EBRD in the Natural Resources Sector
EBRD and Health, Safety and the Environment
EBRD in the Mining Sector
EBRD Equity Investments
Case Studies

22. Mining Sector Investments
Total EBRD debt and equity investment of EUR 240 million in
support of EUR 1.2 billion in mining capital investments.
241,311
Total
7,300
Other
24,234
Iron Ore
10,125
Bauxite
30,375
Coal
169,277
Gold
EBRD
Mining Investments
(EUR, 000)

23. Mining Sector Equity Investments
Total Natural Resource Equity Portfolio of EUR Million;
Mining Equity Investments of EUR 44.8 million (23%);
Five equity investments with an average size of just under EUR 10 million;
Four out of five equity investments have been in the precious metals sector;
Pipeline of more than a dozen equity investments in the mining sector.    

24. Selected EBRD mining partners

25. Agenda Introduction to the EBRD EBRD in the Natural Resources Sector
EBRD and Health, Safety and the Environment
EBRD in the Mining Sector
EBRD Equity Investments
Case Studies

26. Equity Investments - Previously
Maximum 20% stake
USD 5 million – USD 20 million
Board Representation
Proven Reserves
Bankable Development Plan
EBRD Appetite
Prospecting
Exploration
Development
Operation
Mine Closure

27. Equity Investments - Today
Maximum 20% stake
USD 1 million – USD 20 million
Board Representation
Positive Exploration Results
Reasonable Exploration Program
EBRD Appetite
Prospecting
Exploration
Development
Operation
Mine Closure

28. Early Stage Equity Criteria
Experienced sponsor with proven track record and financial capacity, or in parallel with a seasoned sector investor;
Typical 4 – 6 year investment period, with exit strategies identified up-front (put option, IPO, sale to strategic investor, etc.);
Positive mineralogy / metallurgy– confirmed by our own consulting geologist;
Very rigorous analytical methodology.

29. Agenda Introduction to the EBRD EBRD in the Natural Resources Sector
EBRD and Health, Safety and the Environment
EBRD in the Mining Sector
EBRD Equity Investments
Case Studies

30. Case Studies Bulgaria – Chelopech EADS
Kyrgyzstan – Kumtor Gold Company
Armenia – Deno Gold Mining Company

31. Chelopech EADS (Bulgaria/2006)
Signed in April 2006
USD 10 million direct loan, guaranteed by Dundee Precious Metals
Mine produces copper/gold concentrate which is processed off-shore
Financing of environmental remediation, resource definition and ore mining and concentrate production capacity

32. Kumtor Gold Company Kyrgyzstan
Kumtor Gold Company is 100% owned by Centerra Gold
EBRD and IFC made debt and quasi-equity investments into Kumtor Gold in 1995
EBRD and IFC converted some of their investments into equity investments in Centerra
EBRD continues to be an investor in Centerra

33. Deno Gold Mining Company Armenia
Loan of USD 4.5 million signed December 2005
DGMC acquired by Dundee Precious Metals in August, 2006
DGMC produces copper, gold, silver and zinc concentrate
Original financing of equipment purchases for expansion and environmental improvements
Currently considering USD 25 million for further expansion and delineation drilling program.

34. Contacts
Kevin Bortz
Director, Natural Resources Tel:
Raymond Conway Senior Banker, Natural Resources Tel:
European Bank for Reconstruction and Development
One Exchange Square, London EC2A 2JN
Fax: