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International Finance Corporation WMMF 2008

IFC EARLY EQUITY MANAGING RISKS IN FRONTIER COUNTRIES. International Finance Corporation WMMF 2008. Challenges and Risks in Frontier Countries. Governance/Political Revenue Management Environmental Management Achieving Sustainable Communities

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International Finance Corporation WMMF 2008

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  1. IFC EARLY EQUITY MANAGING RISKS IN FRONTIER COUNTRIES International Finance CorporationWMMF 2008

  2. Challenges and Risks in Frontier Countries • Governance/Political • Revenue Management • Environmental Management • Achieving Sustainable Communities • Necessary Associated Infrastructure in Undeveloped Regions • NGOs/Civil Society: Biodiversity Issues, Indigenous Peoples, Transparency, Benefits Sharing,etc • Artisanal Mining … Industry context

  3. IFC Contribution - Examples World class standards in environmental, social, health and safety review (IFC Standards are basis for Equator Principles). Examples: Help ensure successful community/stakeholder consultations, obtaining social license Help ensure successful implementation of resettlement and influx management Well respected “Honest Broker”, assist in interactions between: Governments and client companies; local and international NGOs and client companies and governments Facilitate discussions with local government, World Bank, and other donors/development institutions on necessary associated infrastructure Provide technical assistance for supplier linkages, local economic development, vocational training, local government capacity Internal Corporate Governance group to assist pre-IPO companies … WMMF 2008 3 Industry context

  4. Examples of Value Added on Early Equity Investments Simandou – Rio Tinto Guinea Honest broker role in resolving the stalemate between Rio Tinto and the Government of Guinea on the mining concession for the project Honest broker / advisory services role in advising the Rio Tinto and Government on transportation solutions for the export of iron ore from the country Assistance on environmental and social assessments during the pre-feasibility for the project Guyana Gold Engaged with Guyana Gold and WWF to conduct rapid biodiversity assessment of project area due to potential sensitivity on rainforest issues Recently launched a community health initiative with Guyana Gold to increase scope and sustainability of medical outreach to local community … WMMF 2008 4 Industry context

  5. Examples of Value Added on Early Equity Investments Kolwezi Tailings – DRC World Bank advised DRC Government on new mining code to attract foreign investment under fair, transparent, and sustainable conditions IFC worked with Government and original Sponsor (Adastra) to restructure concession under new mining code IFC environmental and social specialists worked with Adastra during the pre-feasibility study stage Many of these initiatives can mitigate the additional risks faced by mining companies in frontier countries WMMF 2008 5 Industry context

  6. IFC Early Equity Program Importance of Engaging at the Beginning of the Project Cycle Exploration stage – pre-feasibility $3-$15 million equity investment Expedited review, appraisal, and disbursement process IFC’s investment opens door to in-house technical, environmental, and social specialist resources and technical assistance programs Helps companies prepare projects for project development/financing stage, and in many cases IFC subsequently provides debt financing for project development Early stage engagement enables IFC to partner with the project sponsor and help mitigate risk going forward WMMF 2008 6 Industry context

  7. Selection Criteria Sponsor/Management Team Reputation and Quality, Commitment to E&S and Development Impact Potential For IFC/WB Value Added: E&S Risks, Community Development Plans, Government Policy and Political Risks, Infrastructure Needs Host Government Transparency and Governance Relationship With Local Communities Outstanding Geology & Technical Feasibility Attractive Risk/Reward Tradeoff Please speak with us if you have a project that meets these criteria … WMMF 2008 7 Industry context

  8. International Finance CorporationWorld Bank Group Mining Investments Division Natalie Halich Senior Investment Officer +1 202 473 1902 nhalich@ifc.org 2121 Pennsylvania Avenue, N.W. Washington, D.C. 20433 – U.S.A. WMMF 2008 8

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