Ghanian Australian Goldfields Ltd. IV Restructuring

completed

The reason for the disclosure of this ERS is the construction of a new waste rock dump at the operations of Ghanaian Australian Goldfields Ltd (GAGL) in connection with a restructuring of the existing IFC investments. It is unusual for an ERS to be disclosed at this stage of a project but the land take associated with the waste rock dump required a Resettlement Action Plan (RAP) under current IFC procedures and the RAP is being disclosed by means of this ERS. The RAP is attached to this ERS which also describes the history and current status of IFC’s involvement in the GAGL project together with environmental and social requirements (which have changed significantly since the first investment was made). GAGL operates an open pit gold mine at Iduapriem, near Tarkwa, in the Western Region of Ghana. Mining development commenced in 1991, the first gold pour was in 1992 and the mine was formally opened on 28 February 1993. GAGL was purchased by Ashanti Goldfields Ltd. in 1997 and is currently being financially supported through credits of an international consortium which includes the International Finance Corporation (IFC), the German Development and Investment Company (DEG), and the Dutch Bank, FMO.IFC has made a series of investments in the course of the Company’s history, as shown below (the dates shown are the date of IFC Board Approval). Environmental and social requirements have increased with each investment in line with IFC’s development of their Environment and Social Policies and Guidelines over the period. Feb-90 $2.5 m Equity Exploration PhaseJun-91 $35.4 m A&B Loans, Sub-loans Development PhaseJul-95 $2.6 m Shareholder Loans Expansion Mar-96 $4.5 m Senior Loan Heap Leach ProjectJun-00 Restructuring (being finalized)Currently, ore treatment facilities include a 2.8 million tpa carbon-in-leach (CIL) plant rated to produce 150,000 oz of gold per annum and a 2.4 million tpa heap leach facility to process low grade ore from mining operations and from the existing low grade stockpile to produce 40,000 oz of gold per annum (20,000 oz per annum once the stockpile is exhausted). The Iduapriem mine was scheduled to close in 2000 because of depleting resources. Ore available for processing was becoming increasingly hard such that, given its relatively low grade, it was no longer economic to produce gold. In early 2000, GAGL’s main shareholder, Ashanti Goldfields Ltd, proposed acquiring a neighboring mine, Teberebie, and forming a joint venture that would mine Teberebie’s ore to be processed by GAGL’s carbon-in-leach plant. This joint operation, which is projected to extend over a period of eight to ten years, is currently underway and includes an expansion to 4.0 mtpa capacity. The restructuring of the loans of both GAGL and Teberebie to allow this joint operation is in advanced stages of completion but is dependent on GAGL meeting latest IFC policy and guideline requirements.