ICBC contributes $100 million to $1.8 billion syndicated loan with Sociedad Minera Cerro Verde S.A. for general corporate purposes and the Cerro Verde Mining Expansion Project

In March 2014, Sociedad Minera Cerro Verde S.A.A. (Cerro Verde) — a special purpose vehicle and joint venture of SMM Cerro Verde Netherlands N.V., Freeport-McMoRan Copper & Gold Inc. (FCX), and Compañía de Minas Buenaventura S.A.A.— signed a five-year, $1.8 billion senior unsecured term loan credit agreement with 22 banks. Participants in the loan syndicate included Mitsubishi UFJ Financial, SMBC, Mizuho Financial, Credit Agricole, Citi, ING, BNP Paribas, Banco Santander, Natixis, SG, HSBC, BBVA, Scotiabank, Intesa Sanpaolo, KfW IPEX-Bank, CBA, Sumitomo Mitsui Trust, and ICBC, among others. The Bank of Tokyo-Mitsubishi UFJ, Ltd., BNP Paribas, Citigroup Global Markets Inc., and HSBC Securities (USA) Inc., served as joint lead arrangers and joint bookrunners, and Citibank, N.A., as administrative agent. Amounts are expected to be drawn over a two year period to fund a portion of Cerro Verde’s $4.6 billion mining expansion project and for Cerro Verde’s general corporate purposes. The loan is not guaranteed, is subject to amortization, matures in March 2019 and bears interest at LIBOR plus 190 basis points, subject to adjustments based on Cerro Verde’s leverage ratio. The credit facility amortizes in three installments in amounts necessary for the aggregate borrowings and outstanding letters of credit not to exceed 85 percent of the $1.8 billion commitment on September 30, 2017, 70 percent on March 31, 2018, and 35 percent on September 30, 2018, with the remaining balance due on the maturity date of March 10, 2019. As of March 31, 2014, there were no borrowings and no letters of credit issued under Cerro Verde’s credit facility. Cerro Verde operates an open-pit copper, molybdenum and silver mining complex located some 30km southwest of Arequipa, Peru, equipped with a concentrator and SX/EW leaching facilities. Its mining expansion project involves increasing the concentrator plant capacity to 360,000t/d of ore from 120,000t/d, making it the world's largest concentrating facility. Project implementation commenced in September 2015. The expanded mine is expected to increase annual production to approximately 600Mlb of copper and 15Mlb of molybdenum.

Additional details

1. Project name in Mandarin is "绿山铜矿" (Green Mountain Copper Mine) or the sound transliteration "塞罗佛得" (Cerro Verde). 2. Freeport-McMoRan Copper & Gold Inc. (FCX) has a 53.56% ownership interest in Sociedad Minera Cerro Verde S.A.A. (Cerro Verde). The remaining 46.44% is held by SMM Cerro Verde Netherlands B.V. (21.0%), Compañia de Minas Buenaventura S.A.A. (19.58%), and other stockholders whose shares are publicly traded on the Lima Stock Exchange (5.86%). 3. AidData has estimated the all-in interest rate by adding 1.9% to average 6-month LIBOR in March 2014 (0.331%). 4. ICBC’s estimated contribution to the loan syndicate was $100 million (according to Project Finance International’s 2014 League Tables). However, this issue warrants further investigation. 5. Compañía de Minas Buenaventura S.A.A. a firm engaged in the extraction, production, and marketing of cathodes and copper concentrate from its mining unit that is located in Uchumayo, Arequipa, Peru.

Number of official sources

5

Number of total sources

10