Zeravshan: Jilau Gold Expansion Project

completed

Summary Of Project Information (SPI)Project NameTajikistan: Zeravshan Gold Company     RegionCentral Asia, Middle East and North AfricaSectorProject No008579Projected Board DateJanuary 6, 1998Company NameZeravshan Gold Corporation (ZGC)Technical Partner and/or Major Shareholders Nelson Gold Company (NGC) is a public company listed on the Toronto Stock Exchange. NGC’s principal asset is its wholly-owned subsidiary Commonwealth & British Minerals PLC (CBM) which has a 44% interest in ZGC, a joint venture among CBM, IFC, and the Government of Tajikistan represented by the State Committee for Precious Metals.Project Cost Including proposed IFC investment The project cost is estimated at US$28.6 million comprising US$19.6 million capital expenditure of ZGC and up to US$9.0 million equity investment in NGC. IFC will provide a US$3.0 million loan to ZGC and up to US$3 million equity subscription for about 10% interest in NGC.     Location of project and Description of site The mine is located in the Khujand region of northwestern Tajikistan.      Description of Company and Purpose of Project This project will allow for completion of an expansion program of ZGC in Tajikistan and it will expand the capital base of the parent company, NGC. The expansion program involves an increase in production from the Jilau open pit mine and an increase in capacity of the “carbon-in-leach” processing plant from 0.7 million to 1.7 million tonnes of ore per year to produce about 100,000 ounces (3.1 tonnes) of gold per year. Stronger capital base of NGC will help fund NGC’s on-going exploration program in Central Asia and possible expansion in West Africa.The investment in ZGC will have a positive development impact on the economy of Tajikistan. The expansion of the mine will double project export earnings and the Government’s share of cash flow from the project, in the form of royalties, taxes and dividends. The development and continued success of an internationally competitive mining operation has also a strong demonstration value.NGC is in negotiations for the acquisition of a gold mine in West Africa. If successful, the investment in NGC will therefore contribute to the rehabilitation of a gold mine in West Africa and create jobs and export earnings. The continuation of an exploration program in Tajikistan, Kyrgyz Republic, and Kazakhstan (Central Asia) may lead to the development of new mining projects and therefore may have a large leverage effect.      Environmental Category and Issues The expansion of the existing operation is a category B project according to the IFC’s environmental review. The key issues that will be addressed as part of the environmental review include NGC''s corporate environment and social policy; land use modifications; tailings treatment and disposal; liquid effluent and solid waste disposal; water resources; and general worker safety.The environmental effects of this expansion will be limited. Studies undertaken for the previous investment demonstrated that no parks or ecologically protected or sensitive areas or historic sites are located within the areas that could be affected by the proposed expansion. The construction of the new tailings facility will result in the loss of approximately 70ha of seasonal grazing land. ZGC has developed a mutually acceptable compensation package with the collective farm and has also provided additional irrigation facilities. As part of the initial expansion phase of the project, ZGC decided to opt for the ozonation process to destroy cyanide. Unfortunately this process has not worked as well as expected. As part of the expansion program, the ozonation plant will be brought back into operation. The existing operation is in compliance with World Bank guidelines.IFC will monitor the sponsor’s ongoing compliance with World Bank policies, and environmental, health and safety guidelines during the life of the project by evaluating monitoring reports submitted annually to IFC and by conducting periodic site reviews during project supervision.     The is from the Public Information Center.Date SPI sent to PIC      December 2, 1997“This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporation’s Board of Directors. It is provided for the purpose of enhancing the transparency of IFC’s activities and should not be construed as presuming the outcome of IFC Board consideration.”For Additional Information contact: Corporate Relations Unit -telephone: (202) 473-7711facsimile: (202) 974-4384Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).