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Operation Title MOMA TITANIUM (2001 Moma Titanium)

Country/Region Mozambique / Region Southern African Development Community (SADC)

EIB Ref. 20010242

Operation Start

date & End date Signed 29/4/2003

Project implementation to start 2d quarter of 2003 and to last for a period of 24 months, followed by commissioning and a ramp-up period of another 12 months. Full production therefore foreseen for 2d quarter of 2006 (Source Appraisal Report February 2003)

Financing

Committed € 15 000 000 Senior loan from IF resources€ 40 000 000 Subordinated loan from IF resources € 2 750 000 Subordinated loan from IF resources.

The total investment cost is $US 314.1m or € 290.4 m. (status early 2003)

Source: ADE Mid Term Evaluation of IF and EIB OR, Inception Report, Annex 3

Amount cancelled

Budget disbursed

N° projet

Dénomination de l'opération MOMA TITANIUM MINERALS MOMA TITANIUM MINERALS MOMA TITANIUM C Nom du pays de la transaction

Type IF IF IF Date de signature 18/06/2004 18/06/2004 30/06/2005 montant signé 15 000 000.00 40 000 000.00 2 750 000.00 montant augmentation 0.00 0.00 0.00 2003 0.00 2004 0.00 2005 0.00 2006 0.00 2007 2 750 000.00 2008 0.00 2009 0.00 TOTAL 55 000 000.00 2 750 000.00 DECAISSEMEMTS 2001_Moma Titanium 20010242 MOZAMBIQUE 0.00 29 469 548.00 15 217 952.00 7 500 000.00 2 812 500.00 0.00

Beneficiary Borrowers: Kenmare Moma Mining Ltd (KMML) and Kenmare Moma Processing Ltd (KMPL) which

are local subsidiaries of Kenmare Resources PLC, Ireland.

Operation’s Description and Project Background & History Operation:

A senior loan from IF resources (€ 15 M), tenor 13 years including 3-year grace period.

A subordinated loan from IF resources (€40 M), tenor ³15 years including 5-year grace period. The loans bears a fixed interest of 10%p/a capitalized until financial completion. Remuneration also comprises US$4 M shares in Kenmare Resources plc (at the 2003 rights issue price), and pre-payment premium of +30% of the outstanding loan in the event of sale of Kenmare or the project. The IF finances 17% of the total project cost estimated €325.4 M.

A further standby facility was provided by EIB and two other lenders in June 2005 for a total of $US 7.5M to which the Bank contributed with € 2.75 M. (Source Project Progres Report 2007)

The project concerns the development of the Moma heavy mineral sands project on the coast of Nampula Province in Northern Mozambique and comprises its detailed engineering, procurement, construction, implementation, commissioning and operation. It is initially based on some 400 Mt of exploitable sands grading 4.3% heavy minerals, composed of ilmenite, zircon and rutile. The facilities

are planned with a capacity to dredge 22 Mt/a of sand for a period of 20 years, with a final concentraction and separation capacity of some 625 000 t/a ilmenite, 24 000 t/a zircon and 12 000 t/a rutile. Ilmenite (main product), rutile and zircon (by products) are used primarily in the paint industry, as titaniuèm oxide pigments.

The project comprises the following main components:

 The exploration and the predevelopment of the deposit

 A new dredge, a used concentrator and a used mineral separation plant as well as their adaptation to the project specific conditions

 The tailings handling system

 The necessary infrastructure including the export facilities (conveyor, jetty, barge), housing, power generation and distribution

 A new 170 km long 110 kV power line connection from the existing national grid at Nampula Chronology:

June 2004: finance contracts were signed in by the group of lenders (EIB, ADB, KfW, FMO, EAIF and ABSA) along side new capital raised by equity in the market.

2004: Main Engineering, Procurement and Construction (EPC) was awarded to a joint venture between Bateman of South Africa and Multiplex Australia.

April 2007: beginning of mining and heavy concentrate production at Moma. Expected annual production levels of 800 000 tonnes of ilmenite, 21 000 tons or rutile and 56 000 tons of zircon. Kenmare has extension plans to increase production levels of ilmenite and co-products by end of 2009 July 2007, the project was regarded as by and large completed (Cf.EIB Project Progress Report, Moma Titanium (Serapis 200010242), Luxembourg 25 July 2007, OPS B/ACP-IF-3/2007-1460/mh.) (4 month delay to the initial plan). Delays in the ramp-up phase do not yet (2010) permit the mine to reach full production capacity.

The project cost has increased from $US 314.1 at appraisal stage to $US 401.9 (30/11/2009), i.e. 28% increase, covered by additional subordinated debt provided by EIB and FMO in 2005.

Commercial production started in January 2008 although the project was not fully completed; it was expected to be completed in June 2009 but various events (cyclone, missed deadlines by the construction contractors, faulty equipment, poor management by Kenmare) led to the postponement of the technical completion till December 2010.

These developments had led Kenmare to initiate in September 2008 a dialogue with the lender in view of preserving liquidity. The lenders, including the Bank, agree to a deferment of capital repayments during 2009. Kenmare issued additional equity shares ($15 million); the willingness of other DFI to participate in this share issue was such that the Bank did not have to participate.

Overall

objectives Strengthening the productive base and private sector of the Mozambique economy, reduce poverty in the Nampula Province in Northern Mozambique

Specific

objectives To stimulate the regional economy and infrastructure in Northern Mozambique, a particularly poor are, which currently lacks investment.

Expected results The Moma Titanium Minerals production site (Northern Mozambique) is developed with a profitable production capacity of 625 000 t/year of ilmenite (used by pigment industry) 24 000 t/year of Zircon and 12 000 t/year of rutile as by-products.

Activities Engineering, implementation, commissioning and operation of a production facility for ilmenite of titania-feedstock-marl<el grade, wilh zircon and rutile as by-products. It comprises a suction dredge, a floating barge, a wei feed preparation and a concentration plant 10 produce some 900 000 t/a mixed concentrate, and a land based wet and dry separation plant to separate and 10 clean the various valuable minerals. An ilmenite fluid bed roaster is included in order to reduce the unwanted chromium content. A 2.5 km long overland conveyor with a capacity of 1000 t/h will transport the products from the separation plant 10 a 720 m long marine jetty. The products will then be transhipped to a mooring point - for ocean-going vessels sorne 10 km offshore - through a 4000 dwt self-propelled, self- unloading barge. The project further includes adequate storage, support, administration and infrastructural facilities, including a 170 km long 110 kV power line and a back-up diesel generation station on site.

Main

achievements The project is regarded as an example of innovation in project financing and has won several awards: “The African Mining Deal of the Year “(in 2004), “Most Effective Financing of a Mine or Expansion Project”, and is presented as a case study in many universities world wide (Source : EIB Project Progress Report, Moma Titanium (Serapis 200010242), Luxembourg 25 July 2007, OPS B/ACP-IF-

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3/2007-1460/mh.)

Project's main

weak points Kenmare, the promoter, was a small company to undertake such a large project. This created difficulty in organising the project’s financial montage for the project should have required more resources upfront. However, this was resolved because additional finance could be obtained at a later stage, as had been anticipated by the Bank.

At the end of the ramp up phase the project did not achieve 100% of the production target and faced difficulties in honouring its debts. Creditors had to postpone 2 instalments and also postponed the date of completion.

The profitability of the Moma mine remains uncertain at the end of 2009. However, the promoter expect relatively high returns in the future

Issues

Documentary  EIB, Relevé quotidien, Luxembourg, 2d April 2001, OP3/ACP-III/AGORA n°20010242/GSF- rm

 EIB Fact Sheet A: proposal to appraise new operation, Luxembourg 28th _{February 2002, Ops} B/ACP-3/A° 2001-0242

 EIB Note to OP3. Opinion for Appraisal Authorisation, Luxembourg, 15th _{May 2001,} PJ/I&S/2001-0556/GCE/IK/sp

 EIB Fact Sheet B: financing proposal, Moma Titanium Mozambique, Luxembourg, 27th _February 2003. Ops B/ACT-IF-3/2001-0242

 EIB Mozambique Moma Titanium, Ops B – Financial Report, Luxembourg27th March 2003, OpsB/ACP-IF-3/2003-320Q/GSF (Agora n°2001 0242 Investment Facility)

 EIB Moma Titanium Project Mozambique, RM/CRD on operation already approved, 27th _March 2003.

 EIB Appraisal Report, Moma Titanium, Luxembourg 27th _{February 2003, PJ/I&S/2003-} 259/GCE/MUG/ms

 EIB Moma Titanium Mozambique. Environmental Summary (no date

 EIB Moma Titanium Mozambique: map and process flowsheed. February 2003

 EIB Project Progress Report, Moma Titanium (Serapis 200010242), Luxembourg 25 July 2007, OPS B/ACP-IF-3/2007-1460/mh.

 Mozambique-European Community, Country Strategy Paper for the period 2001-2007 (not dated).  Mozambique - European Community, Country Strategy Paper and National Indicative Programme

for the period 2008-2013, 9th _{December 2007.}

 Southern African Development Community - European Community. Regional Strategy Paper and Regional Indicative Programme for the Period 2002 – 2007, Draft, (not dated).Addendum to the  Southern African Development Community - European Community. Regional Strategy Paper and

Regional Indicative Programme for the Period 2002 – 2007, Draft, 10/01/2007.

 Southern African Development Community - European Community Regional Strategy Paper and Regional Indicative Programme for the Period 2008 – 2013, (18/9/2008).

 ADE: Mid-term evaluation of the Investment Facility and EIB own resources operations in ACP countries and the OCTS, Inception Report, Annex 3: List of EIB operations in ACP countries and the OCTs, November 2009.

 EIB: Cotonou Risk Report 31st _{December 2009, 3/2/2010.}

 EIB Appraisal Report Moma Titanium. Luxembourg 27, 2003. PJ/I&S/2003- 259/GCE/MUG/ms. (NB complementary to D24).

 EIB. Moma Titanium. PJ-PPR, Summary Report, 12/10/2009

 EIB. MOZAMBIQUE- MOMA TITANIUM (FI No, 22604, 22605 and 23084; Serapis No 2001- 0242) Finance contract signed between the EIB and Kenmare Moma Processing (Mauritius) Ltd and Kenmare Moma Mining (Mauritius) Ltd on 18'" June 2004, 18'" June 2004 and 30th June 2005 respectively. Luxembourg, 30/11/2009

 EIB. Moma Titanium Minerals. Change to operation after Board Approval. Luxembourg 5/2/2010, Refs: Ops B/ACP-IF-3/OP-2010-223.

 SRK Consulting. Moma Titanium Minerals Project: December 2009 Project Update. Report Prepared for the Lenders, February 2010.

 EIB. Mozambique Moma Titanium. Project Progress Report, 25/7/2007. OpsB/ACP-IF-3/2007- 1460/mh

 EIB. Board of Directors. Moma Titanium Mozambique, 29 April 2003. Doc. 03/181.  EIB. Moma Titanium C. Note Conjointe N° FI/2004-695; Operation number: 2001-0242,

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2003_BOAD PG IV

1 _{Sources : « Relevé quotidien (RQ) » (for this operation), EIB, 9 April 2003 ; « Fact Sheet B : proposition de} financement », EIB, 11 mars 2004

2 _{Economic Community of West African States (ECOWAS or UEMOA in French): Benin, Burkina Faso, Côte} d’Ivoire, Guinea-Bissau, Mali, Niger, Sanegal and Togo

Intervention Title Banque Ouest Africaine de Développement PG IV1

Country/Region West Africa (regional)

EIB Ref. OPS B/ACPIF-1/n°20030186/MM

Project Start date

& End date Signature date: 10/12/2004Term loan: 15 years maximum, of which grace period of 5 years maximum Term guarantee: 10 years maximum

Financing

committed This operation consists of a global loan, a guarantee facility, and an equity participation for the following maximum amounts (on both OR and the IF): a) Global loan (on OR): €25m

b) Guarantee facility (on IF): €25m

c) Participation to capital increase (equity investment on IF): €4.6m

Amount

cancelled a) Global loan (on OR): n/ab) Guarantee facility (on IF): Amount allocated: 0 (according to the IF Annual Report 2008) c) Participation to capital increase (on IF): n/a

Budget disbursed

Beneficiary Borrower: Banque Ouest Africaine de Développement (BOAD)

Final beneficiaries : Private sector companies in countries of intervention of the BOAD2 _{and operating} in the following sectors : industry, agro-business, mining, tourism, transportation, communications, services related to those sectors and health and education

Project Background & History

The BOAD is the reference regional development bank in the ECOWAS zone. This is the fourth global loan with the EIB.

See also the information below under “Activities”.

Overall

objectives Favouring private sector companies of the ECOWAS zone Specific

objectives Reinforcing the financial sector Expected results See the information below under “Activities”.

Activities This operation consists of the following:

a) a new global loan on OR of €25m aimed at medium to long term support in favour of private sector companies of the UEMOA zone. This loans come after three earlier loans to the BOAD amounting to a total of €37m (e.g. BOAD III signed in 1998);

b) a €25m guarantee facility (on the IF) for counter- or co-guaranteeing partially (i) bond issuance for private companies guaranteed by the BOAD ; (ii) BOAD loans to private companies ; and (iii) credit lines in favour of local financial institutions specialised in micro-finance. Note. This was the first guarantee operation under the Cotonou Agreement’s IF. It was undertaken with a trusted partner. The regional local financial market regulation requires that bond issues be guaranteed at 100%;

c) a participation to the BOAD capital increase, through a €4.6m equity investment on IF resources increasing the EIB’s share in the BOAD from 0.3% to 0.6%, or from 1 to 2 billion FCFA (+ €1.5m) for taking it to the same level as the other BOAD’s B shareholders. The EIB participation to the capital increase marks its support to this institution which seeks rating in the future.

Documentary  Operation’s « Relevé quotidien (RQ) » (for this operation 2003_BOAD PG IV), EIB, 9 April 2003

 Operation’s « Fact Sheet B : proposition de financement », EIB, 11 mars 2004

 Operation’s « Fact Sheet A : Proposition portant sur l'instruction d'une nouvelle opération », EIB, 26 September 2003

MID-TERM EVALUATION OF THE IF AND EIBOR OPERATIONS IN ACP/OCTS

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