Chalco Energy Holdings Co., Ltd. provides shareholder loan for Phase 1 of the Boffa Mining Project

Project narrative

On October 31, 2016, Aluminum Corporation of China Limited (Chalco) signed cooperation framework agreements with the Guinea Government and Société Guinéenne de Patrimoine Minier (SOGUIPAMI) -- a Guinean state mining company -- for the development of the Boffa mine. Then, in August 2017, CINF submitted a project feasibility study report to Chalco Hong Kong Limited. On June 8, 2018, Chalco Hong Kong Investment Company Limited (a wholly-owned subsidiary of Chalco) and Chalco Guinea Company S.A. — a special purpose vehicle and joint venture of Chalco Energy Holdings Co., Ltd. (中國鋁業能源控 股有限公司) [85% equity stake] and the Government of Guinea [15% equity stake] — entered into a mining convention with the Government of Guinea, pursuant to which Chalco Hong Kong Investment Company Limited agreed to mobilize $585,726,310 for Phase 1 of the Boffa Project while the Government of Guinea agreed to provide mining licenses and rights to transport mining products for the development and operation of Phase 1 of the Boffa Project. Then, on July 9, 2018, the President of Guinea signed a decree to grant both Boffa north area and Boffa south area a mining permit, effective from July 2018 to July 2033. Chalco must pay a royalty of $0.208 per ton to the Government of Guinea based on the volume of bauxite extracted from the Boffa mine. Then, on August 16, 2018, Boffa Port Investment Co., Ltd. (博法港口投資有限公司) was legally incorporated in Hong Kong as a joint venture between Chalco Hong Kong Investment Company Limited [95% equity stake] and Société Guinéenne de Patrimoine Minier (SOGUIPAMI) [5% equity stake]. Phase 1 had two project subcomponents: a $474,014,900 mining project (involving construction and development of a bauxite mine in the coastal town of Boffa at the mouth of River Pongo) and a $111,711,400 port project (involving the construction of a bauxite transportation wharf in the coastal town of Boffa at the mouth of River Pongo). Chalco Energy Holdings Co., Ltd. agreed to provide a $142 million equity contribution to partially finance the mining project and a 8-year shareholder loan to cover the remaining cost ($332,014,900) of the mining project. The borrowing terms of the shareholder loan to Chalco Guinea Company S.A. are unknown. However, it is known that the shareholder loan was collateralized against the project assets and the Government of Guinea’s 15% equity stake in Chalco Guinea Company S.A.. Chalco Energy Holdings Co., Ltd. agreed to provide a $19 million equity contribution to partially finance the port project and bank loans to cover the remaining cost ($92,711,400) of the port project. The borrowing terms of the bank loans to Boffa Port Investment Co., Ltd. are unknown. However, it is known that the bank loans were collateralized against the project assets, Chalco Hong Kong Investment Company Limited’s 95% equity stake in Boffa Port Investment Co., Ltd., and the SOGUIPAMI’s 5% equity stake in Boffa Port Investment Co., Ltd. China Non-ferrous Metals Industry Sixth Metallurgical Construction Co. Ltd. was the EPC contractor responsible for project implementation. Phase 1 commenced construction in September 2018 with the mine having an expected annual bauxite output capacity of 12 million tons. Then, on October 28, 2018, a formal groundbreaking ceremony took place. The project began filed mining operations on October 6, 2019. By the end of 2019, the quarry of mine had been put into operation. The first shipment of bauxite was sent to China in February 2020. Then, in April 2020, a 23 km belt conveyor was commissioned successfully under load and the supporting port project was successfully completed. On March 20, 2021, the first 300,000 tons of high-grade bauxite were shipped from Boffa mine to Rizhao Port in Shandong Province. Boffa mine was put into operation on April 30, 2020. By the end of 2021, Chalco had extracted approximately 20.4 million tons of bauxite from the Boffa mine