19.07.2006 Business & Finance

IFC Grants 125 Million Dollars Loan To Newmont's Ahafo Mine

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The International Finance Corporation (IFC) the private sector arm of the World Bank Group yesterday said it had granted a 125 million-dollar loan to Newmont's Ahafo Gold Mine. The loan consists of 75 million dollars from IFC's own account and an additional 50 million dollars in syndicated loans from commercial lenders to Newmont Ghana Gold Limited, a subsidiary of Newmont Mining Corporation, for the construction and operation of the Ahafo Mine, a statement from IFC said.

The participating banks are Caylon; NM Rothschild and Sons Limited, Bank of Nova Scotia, Societe Generale and Royal Bank of Scotland PLC. Production of gold at the 476 million-dollar Ahafo Mine, one of Newmont's two projects in Ghana, began on July 4 2006, with the Management hoping to pour its first gold by the end of the July 2006. The Mine would produce half a million fine ounces of gold annually.

The IFC said as a development lender, its primary role in the Project was to advise on environmental and social issues. "The mine has created over 1,200 permanent jobs and will be an important source of income, paying over 300 million dollars in taxes and royalties to Ghana, increase the country's gold production by 30 per cent and raise its foreign exchange earnings by between 8 per cent and 10 per cent," the statement said.

In order to maximise local development benefits, IFC and Newmont would also provide information and expertise on business practices to local small and medium-sized firms, putting them in the position to become potential suppliers and providers of services such as food, laundry, equipment maintenance and cleaning to Ahafo and other ventures outside the Mine.

"The programme will also help local enterprises to develop the business skills needed to obtain loans from local banks. In addition, IFC is working with the Company on the development and implementation of an effective HIV/AIDS programme."

The IFC said it considered the Project as important for Ghana, which was one of the few countries in Sub-Saharan Africa that stood a chance of meeting the Millennium Development Goals. "Mining is the biggest source of foreign direct investment in the country and IFC has dedicated a significant amount of its own resources to help to ensure Ghana benefits from the project."

The statement quoted Rashad Kaldany, IFC's Director for Oil, Gas, Mining and Chemicals, as saying the Agency's involvement would bring expertise and guidance to help to ensure that the Mine's social and environmental performance met international standards; particularly with respect to the resettlement process and community engagement and that the project provided increased benefits for Ghana generally and particularly for people living near the mine. "That is why Newmont sought our engagement."

The IFC has also instituted an ongoing independent review of the programmes established by Newmont to restore the livelihoods of more than 9,000 people either resettled or otherwise affected by the mine.

The Ahafo mine has a 20-year life and is expected to produce between 225,000 fine ounces and 250,000 ounces of gold in 2006. Ghana is Africa's second-biggest producer of gold after South Africa, that produced some 6.5 million ounces in 2005.

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