DFF

Jul 08, 2023

The provision of a senior loan of up to US$ 10 milion (€9 million) to Khan Altai Resource LLC, a project entity created for the purpose of developing oxide ore gold mining operation based on Khan Altai gold deposit located in southwestern Mongolia. The loan will consist of two tranches: (i) US$ 4 million of committed tranche; and (ii) US$ 6 million of uncommitted tranche.

The proceeds of a senior loan will be used to finance purchase of equipment for leach pad maintenance to achieve sustainable gold production levels

ETI score: 69

The project will contribute to the framework objectives by supporting the company in the following areas:

Primary quality "Inclusive": introduce a new, replicable and accredited training programme improving skills for significant number of people from the inclusion target group in partnership with (local) vocational schools or universities.

Secondary quality "Competitive": A local supply chain will be developed increasing the business capacity and skills of local enterprises increasing the local business competitive environment.

KHAN ALTAI RESOURCE LLC

Khan Altai Resource LLC, established in 2019, is a gold mining company that is operating one of largest gold mining operations in Mongolia.

USD 10,000,000.00

US$ 10 million (equivalent to €9 million) senior secured loan to the Company in two tranches: (i) US$ 4 million of committed tranche; and (ii) US$ 6 million of uncommitted tranche.

USD 10,000,000.00

The total project cost amounts to US$ 10 million

Standard-setting: Client seeks/makes use of the EBRD expertise on higher financial standards, including through financial covenants.

Standard-setting: Client seeks/makes use of the EBRD expertise on higher inclusion, gender standards and/or equal opportunities action plans.

Risk mitigation: the EBRD's long-term relationship with a client provides comfort to the client to be willing to take on more risk and/or finance, enabling outcomes such as innovation or expansion into new markets.

Category B (2019 ESP). Due diligence has involved discussions with the client and their advisers on the historical development of the site, the standards and procedures used in regard to EHS risk management, and the future plans for development. The client has demonstrated sufficient knowledge and experience of the E&S issues associated with mining operations; the experience of key client management gained from several year's involvement with a large scale mining project has benefited the proposed Project. The client has developed environmental and social procedures appropriate for the current operations related to the oxide heap leach. Due diligence has shown that these procedures are aligned with the Bank's PRs and are appropriate for the current operations. The client is evaluating the potential to develop additional, more significant, operations in relation to the mining and processing sulphide ore at the current location. Given this potential future development, the client will be required to commit to the completion of a full Environmental and Social Impact Assessment (ESIA) for this proposed future development, to be completed alongside the design works for these works, should the Company decide to proceed with this next development phase. This ESIA process shall include public disclosure and consultation in line with the Bank's requirements. The commitment to completion of the ESIA and continued adherence to standards aligned with the Bank's PRs are included in an Environmental and Social Action Plan (ESAP) which will be fully agreed with the client prior to Project approval.

The company is planning to purchase CAT earth moving equipment to be used in oxide ore gold mine in Mongolia, and will use the proceeds of the loan to buy more advanced and climate mitigation technology equipment. A non-TC FINTECC grant amount of around US$ 0.4 milion is calculated based on the price premium of the advanced equipment price compared to standard equipment and machineries.

Gantulga [email protected]+976 7777 2727https://khanaltai.mn/Ulaanbaatar 24 Mongolia 15141, M Plaza, 17th Floor, Sambuu Street

31 May 2023

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