China Eximbank provides RMB 650 million government concessional loan for Azelik Uranium Mine Project (Linked to Record ID#58973, ID#91977, ID#91979, ID#91980)

Project narrative

On June 5, 2007, Société des Mines d'Azelik SA (SOMINA) was legally incorporated in Niger as a special purpose vehicle and limited liability corporation. SOMINA is the registered holder of the mining license for the Azelik Uranium Mine granted by the Government of Niger on November 8, 2007 for a period of 20 years covering a mining area of 220 square kilometers. On June 23, 2009, China Eximbank and SOMINA -- a joint venture of SOPAMIN (33% equity stake), CNNC International Limited (37.2% equity stake), Beijing Zhongxing Joy Investment Co., Ltd. (ZXJOY Invest) (24.8% equity stake), and Trendfield Holdings Ltd (5% equity stake) -- signed a $230,000,000 buyer’s credit loan (BCL) agreement for the Azelik Uranium Mine Project (captured via Record ID#91977). Under the terms of the BCL agreement, SOMINA was required to repay the loan in 11 installments, and pay interest on a quarterly basis. The loan was backed by a Sinosure credit insurance policy and a corporate guarantee from China National Nuclear Corporation (CNCC). It was collateralized against equipment and vehicles owned by SOMINA and CNNC International Limited’s 37.2% equity stake in SOMINA. The BCL ultimately achieved a 62% disbursement rate ($142,000,000 out of $230,000,000). On March 17, 2009, the Chinese Government and the Government of Niger signed a preferential loan framework agreement for the Azelik Uranium Mine Project. Then, in April 2011, China Eximbank and Société du Patrimoine des Mines du Niger (SOPAMIN) -- a Nigerian public holding company that manages the Government of Niger’s holdings in mining companies operating in the country — signed an RMB 650 million ($103 million) government concessional loan (GCL) agreement for the Azelik Uranium Mine Project (captured via Record ID#256). The GCL carried the following borrowing terms: a 20 year maturity, a 5 year grace period, and a 2% interest rate. The outstanding principal of the GCL was approximately $90,880,000 on October 30, 2014, $78,100,000 on June 30, 2015, on $78,100,000 on August 19, 2015. The proceeds of the GCL were on-lent to SOMINA and used to finance the Government of Niger's 33% ownership stake in SOMINA. The loan proceeds were also used by SOMINA to partially finance a $139.92 million commercial contract between Sinohydro Corporation Limited and China National Nuclear Corporation (CNCC), which was signed on March 31, 2008. Then, on August 24, 2009, SOMINA, as seller, and China Nuclear Energy Industry Corporation (中國原子能工業有限公司) (CNEIC), as purchaser, entered into a Long-term Sales Contract. Under the terms of the Long-term Sales Contract, SOMINA agreed to sell and CNEIC agreed to purchase all uranium ore concentrates produced by SOMINA for a term ending on December 31, 2022. The purpose of the Azelik Uranium Mine Project was to develop the Teguidda mine at the Azelik uranium deposit. In addition to the development of the uranium mine, this project supported the construction of two coal-fired power plants and a hydrometallurgy plant. China Nuclear International Uranium Corporation was responsible for the design of the project, and Sinohydro Corporation Limited was responsible for the implementation of the project. Trial operations of the mine began on December 10, 2010, with the first barrel of yellow cake uranium being produced on December 30, 2010. The mine officially started operations on March 17, 2011 and it reached a maximum capacity of 700 tons per year in 2012. However, mine production was suspended in mid-February 2015 due to cash flow problems. SOMINA reported at the time that its cash flow problems were the result of multiple factors, include the low and declining international price of uranium, delays in certain construction works related to the uranium mine, delays in the granting of a ‘favorable’ loan to SOMINA by the Government of Niger due to a military coup in Niger in 2010, and certain production process difficulties. In August 2015, SONIMA informed its shareholders that it extended a settlement with the local workforce for a temporary redundancy arrangement in compliance with the Niger labour law, until the end of August 2015. At that time, the mine was under temporary suspension and its production was expected to resume as soon as SOMINA’s cash flow position improved. However, as of 2021, mine production had still not resumed. SOMINA also faced criticism and pressure related to local protests over the lack of employment of local ethnic groups, low wages, and environmental degradation. Then, on June 28, 2023, SOMINA and SinoU signed a Memorandum of Understanding to resume operations at the Teguida mine and explore the possibility of SinoU acquiring SOMINA. However, on July 28, 2023, the Nigerien Presidential Guard carried out a military coup, detaining President Mohamed Bazoum and declaring General Abdourahamane Tchiani the new leader of Niger. Although the new regime placed greater significance on maintaining sovereignty over the country's natural resources, Nigerien state media reaffirmed on May 13, 2024 that SOMINA would resume operations with greater profitability due to increased uranium prices. Then, in November of 2024, Niger's Ministry of Mines signed a framework agreement with Hejian International and China Nuclear Industry Huaxing Construction Co., Ltd., a subsidiary of CNNC, to assist SOMINA in restarting production at the Azelik Uranium Mining Project. It is unclear when operations are planned to resume. The project also encountered a series of debt repayment problems. On January 11, 2014, Focus International Development Corporation (FIDC) — a wholly-owned subsidiary of CNNC International Limited — and SOMINA signed a $4,500,000 bridge loan agreement with a 1-year maturity and an annual interest rate of 5.8% (captured via Record ID#91979). As of the bridge loan’s final maturity date (December 31, 2014), the loan’s outstanding principal and interest were $4,343,257.88 and $182,856.78, respectively. Then, on January 2, 2015, FIDC and SOMINA signed a second bridge loan agreement worth $9,135,096.40 with a 2-year maturity and an annual interest rate of 7.8% (or the Hong Kong Dollar Best Lending Rate plus a 0.8% margin). The proceeds of the loan (captured via Record ID#91980) were to be used to refinance the accounts payable by SOMINA to CNNC (including the outstanding amount under the January 11, 2014 loan from FIDC), such that CNNC was not required to advance any new monies to SOMINA. Also, in October 2014, SOMINA asked China Eximbank for an extension of the deadline for a $12,780,000 BCL (principal) repayment installment that was due on October 31, 2014 (and interest payment of approximately $444,000 for the third quarter of 2014). By February 2015, SOMINA met this repayment obligation. However, due to its tight cash flow position, SOMINA was not able to repay on time the next BCL (principal) repayment installment of $12,780,000 that was due on April 30, 2015. The borrower asked the lender for a repayment extension, and as of June 30, 2015, China Eximbank had not made any demands for immediate repayment of all outstanding debt or taken enforcement actions related to CNNC International Limited’s pledged 37.2% equity stake in SOMINA (which China Eximbank was entitled to do under the original terms of the June 23, 2009 loan agreement). SOMINA was ultimately unable to meets its BCL repayment obligations to China Eximbank. In 2019, CNNC, as the loan guarantor, signed a subrogration agreement with SOMINA and China Eximbank. Under the terms of the agreement, it agreed to (a) assume responsibility for SOMINA’s BCL repayment obligations to China Eximbank and (b) assume responsibility for the liquid and illiquid assets (including the rights of its shareholders). CNNC subsequently repaid China Eximbank in full and assumed responsibility for CNNC International Limited’s 37.2% equity stake in SOMINA.