ICBC provides loan for Luisha South Copper and Cobalt Mining Acquisition Project (Linked to Record ID#103037)

Project narrative

The Luisha South Copper and Cobalt Mining Project site is 75 km (47 mi) northwest of Lubumbashi and covers an area of 16.2 square km (6.3 sq mi). It lies to the south of the main Luishi orebody. The Kipoi copper/cobalt exploration project of Tiger Resources lies to the southeast. The Luisha South Copper and Cobalt Mining Project includes a small historical open pit mine and waste rock pile, as well as the underlying Roan group sediments assumed to hold major deposits of copper and cobalt. The Luisha South ore was explored between 1923 and 1928 through shafts and tunnels, finding that there was about 350,000 tonnes of ore at 8.6% copper. Most of this was later mined in a small open pit. Since closure, artisanal miners have continued to work the site sporadically. The pit is in the northwest corner of the property at coordinates 11.178886°S 27.016658°E. On March 26, 2010, African Metals Corporation — a company incorporated on May 12, 1980, in British Columbia, Canada — acquired 100% of Chevalier Resources Inc, a company incorporated under the Canada Business Corporations Act, which held a 57% equity stake in Luisha Mining Enterprise SARL, a company incorporated in the Democratic Republic of the Congo which held a 100% interest in the Luisha copper-cobalt property in DRC. In 2010, African Metals Corporation, through its subsidiary, Chevalier Resources Inc, acquired an additional 18% equity stake bringing its total equity stake in Luisha to 75%. On July 27, 2016, the DRC Government, in accordance with Article 71 of the DRC Mining Code (2002), granted a full Exploitation Permit license valid until April 3, 2046. As per the DRC Mining Code (2002), African Metals Corporation transferred 5% of its existing LME shares to the DRC Government, which interest cannot be diluted. African Metals Corporation incorporated Kundelungu Minerals Resources Sprl (KMR) in the DRC for the purpose of acquiring other mineral properties and related business activities in that country. African Metals Corporation also incorporated two BVI subsidiaries, African Metals Holdings (BVI) Ltd., which owned the 75% interest in LME in replacement of Chevalier Resources Inc, and African Metals Resources (BVI) Ltd. KMR was 99% owned by African Metals Corporation. On July 27, 2016, the application for the renewal and conversion of the Luisha South PEPM 4881 permit to a full 30-year mining exploitation permit (PE) was approved and granted. As a condition of the granting of the permit in accordance with the DRC Mining Code Article 71, African Metals Corporation approved the transfer to the DRC government of a 5% interest in the shares of Luisha Mining Enterprises, which held the exploitation permit for the Luisha South Copper and Cobalt Mining Project, as one of the final stages before the issuance of the PE 4881 permit certificates. The DRC Government share interest was to be free of charge and could not be diluted. Following the Article 71 share transfer, African Metals Corporation held a 71.25% interest in the Luisha South Copper and Cobalt Mining Project and TSM Entreprise S.A.R.L. (TSM) held the remaining 23.75% interest. All fees were paid for the PE 4881 permit and the permit was issued to Luisha Mining Enterprises. Then, on May 23, 2018, African Metals Corporation entered into a purchase agreement with Luisha Mining Enterprise SARL (LME), Excellen Minerals SARL (the “project company”) and Simeon Tshisangama, the President of TSM Entreprise S.A.R.L. (TSM). The agreement was subsequently amended and supplemented by the parties by a supplemental agreement dated August 9, 2018. Then, on December 6, 2018, the acquisition was finalized. In order to facilitate the acquisition, ICBC and China-Africa Fund for Industrial Cooperation Co., Ltd. (CAFIC or 中非产能合作基金有限责任公司) provided a loan to Hong Kong Excellen Mining Investment Co., Limited (a wholly-owned subsidiary of Shanghai Putailai New Energy Technology Co., Ltd.), which it apparently used to inject equity capital into the project company (Excellen Minerals SARL). Under the terms of the purchase agreement, African Metals Corporation agreed to sell its 71.25% equity stake in the Luisha Mining Enterprise SARL — and, by extension, the Luisha South Copper and Cobalt Mining Project — to Excellen Minerals SARL for $10 million. Prior to the acquisition, African Metals Corporation indirectly owned 71.25% of Luisha Mining Enterprise SARL, TSM owned 23.75% of Luisha Mining Enterprise SARL, and the Government of the Democratic Republic of Congo owned 5% of Luisha Mining Enterprise SARL. Ownership of Luisha Mining Enterprise SARL conferred control over (i) mining rights in the Luisha South copper and cobalt mining area governed by No. 4881 mining license in the DRC; (ii) ore mined from the Luisha South copper and cobalt mining area; (iii) other movables and real estates; and (iv) a dense medium separation (DMS) plant.