Sierra Rutile 2

completed

 The proposed IFC mining investment of approximately $60m equity will support Sierra Rutile Limited (“SRL” or the “Company”) in the planned expansion projects, as well as safety and operational improvements. SRL has an existing mineral sand mine that has operated since 1967 with gaps in production due to the civil war between 1995 and 2006. The first tranche of up to $20 m will support efficiency improvements in the existing brownfield operation (area 1) while a second tranche of up to $40 m will be invested in a potential new greenfield mining area known as Sembehun (also known as area 5) for which a 35 km access road and parallel transmission line will be required which together constitute the project (the “project”). This ESRS covers the existing area 1 and its proposed expansion together with the haul road which will be constructed as “early-stage” works ahead of any construction on area 5. IFC is providing guidance to SRL on developing the environmental and social documentation for area 5 for which the date for the start of construction is under review but could be from Q2 / 2020 onwards. IFC believes that this phased approach is acceptable as the documentation for area 5 will be fully consulted upon and disclosed prior to any substantive construction taking place.SRL is a wholly owned subsidiary of Iluka Resources Limited based in Perth, Australia (“Iluka”) who acquired the project in December 2016. SRL hosts one of the largest natural rutile deposits in the world. Natural rutile is the highest titanium bearing ore produced at ~95% titanium dioxide (TiO2). TiO2 is used as a pigment in paints and production of titanium metal. IFC made a previous loan investment in SRL in 1992 which was subsequently paid off.Iluka’s primary operations have historically been mostly in the Australia / USA and SRL is their first investment in Africa. The SRL operation is situated 30 km inland from the Atlantic Ocean and 135 km geodesic distance south east of the Sierra Leone capital Freetown. SRL currently undertakes both dredge and open cast mining (also known as dry mining). Dredge mining is due to cease on 9th March 2019. The SRL operation has sensitive receptors within and adjacent to their current and proposed operations, including an extensive mangrove and estuarine system; wetlands (marshes and swamps); watercourses; subsistence agriculture and multiple small settlements. Extensive resettlement has historically been taking place since 1985 and further resettlement is anticipated in coming years.SRL holds mining leases covering a land area of 559 km2, which comprise 19 separate alluvial rutile deposits mainly located around the Gbangbama and Moyamba Hills. SRL’s mining leases currently have a reported Joint Ore Reserves Committee (JORC) compliant resource of 900 million tonnes (Mt) of high-grade ore which provide a future mine life of at least 16 years. The project will implement more cost-effective and higher production dry mining methods at the Lanti and Gangama pits in area 1 as well as by increasing the throughput capacity of the Mineral Separation Plant (MSP). The MSP consists of a feed preparation plant and a dry plant. Flotation and heavy mineral concentration processes are utilised in the feed preparation plant. The dry plant, which has been a dusty environment historically, will be upgraded to meet good international industry practice (GIIP) with respect to dust minimisation and management as well as workforce occupational exposure, supported by appropriate monitoring. SRL currently produces approximately 120-165 kt of rutile per annum, however is looking to achieve production of 250-275 kt per annum through the expansion projects.Export of product is undertaken through a small inland port facility at Nitti, located on a tributary to the Sherbro River. The facilities at Nitti are limited but include a jetty, undercover stockpiles, generator, offices and marine fuel oil as well as diesel storage tanks. The product is loaded onto barges through a conveyor on the jetty. The barges are pushed some 37 km to transfer buoys in the Sherbro River estuary where the product is transshipped onto ocean going vessels. In addition, the mine maintains an extensive network of engineered ponds / dams and has various ancillary infrastructure such as power generation facilities, T-lines, accommodation, offices, clinic and roads.