CDB, China Eximbank, ICBC, and Bank of China provide $5.988 billion syndicated loan to repay debts and meet capital requirements of Las Bambas Copper Project (Linked to Project ID#55427)

In 2014, Minera Las Bambas S.A.C -- a special purpose vehicle and joint venture of MMG (62.5%), GUOXIN International Investment Group Ltd. (22.5%) and CITIC Metal Co. Ltd. (15%) -- entered into a project facility agreement with the CDB, China Eximbank, ICBC and Bank of China (Sydney Branch) for a syndicated loan worth $5.988 billion. China Development Bank is the leading bank and responsible for about 50% of the loan. The co-leading bank, Industrial and Commercial Bank of China, is responsible for about 30% of the loan. Bank of China and the Export-Import Bank of China are each responsible for about 10% of the loan. The proceeds of the loan are to be used by the borrower to repay intragroup loans, and meet the ongoing capital requirements of the Las Bambas project. The loan carries an interest rate set at 6 months LIBOR + 365 basis points (4.461%) and 18-year maturity. The loan is secured by (i.e. collateralized with) share security over the entire share capital of MMG South America Management Co Ltd and each of its subsidiaries including Minera Las Bambas S.A. (“MLB”), a debenture over the assets of MMG South America Management Co Ltd, an assets pledge agreement and production unit mortgage in respect of all of the assets of MLB, assignments of shareholder loans between MMG South America Management Co Ltd and its subsidiaries and security agreements over bank accounts of MLB. Approximately $469.0 million (2018: $699.0 million) of these borrowings are guaranteed on a several basis by China Minmetals Non-ferrous Metals Holding Company Limited (“CMNH”) and China Minmetals Corporation Limited (“CMCL”), Guoxin International Investment Corporation Limited and CITIC Corporation Limited in proportion to the respective shareholdings of MMG SA, Elion Holdings Corporation Limited and Citic Metal Peru Investment Limited in the Las Bambas Joint Venture Group. ICBC also provided a letter of guarantee for the operation of the Las Bambas copper project. There is evidence that this loan has disbursed. As of 2014, the borrower had utilized ('drawn down) $4.119 billion of the $5.988 billion facility. The Las Bambas Project is a world class copper development project located in Peru, in the provinces of Cotabambas and Grau in the districts of Challhuahuacho, Tambobamba and Coyllurqui, province of Cotabambas, and in the district of Progreso, province of Grau, region of Apurímac, 72 km from Cusco. The Las Bambas Project tenements include approximately 35,000 Ha of land, of which less than 10% has been explored for additional resources. The estimated mine life is over 20 years and further exploration could potentially increase this. The Las Bambas Project is within the Andahuaylas-Yauri copper belt, which hosts the Antapaccay and Constancia copper mines.

Additional details

AidData calculated the interest rate by taking the 2014 average 6-month LIBOR (0.329%) and adding it to 365 basis points (3.65%). However, it should be noted that the exact margin is unknown other than that it did not exceed 365 basis points per annum.MMG is a wholly-owned subsidiary of China’s Guoxin International Investment. This transaction is not a duplicate of Project ID#55427. Project ID#55426 is a project facility, and Project ID#55427 is an acquisition facility. In August 2004, XSchweiz was awarded the rights to explore and the option to develop Las Bambas through the privatisation process run by the government of Peru. The privatisation process was conducted through an international bid process run by ProInversion. XSchweiz was the successful bidder and was awarded certain rights in relation to the Las Bambas Project, including an option to develop the Las Bambas Project (the “Option”). XSchweiz subsequently appointed XPERU (as its local subsidiary) to be the holder of the Option on 1 October 2004 for a term of five years, with the ability to extend for an additional year. In 2007, XPERU assigned the Option to XTintaya and XTintaya exercised its Option right in August 2010 and entered into a transfer agreement, dated 2 September 2010, pursuant to which it acquired the Las Bambas Project for US$45.5 million plus US$0.5 million and US$0.75 million for each six-month period in year five and year six of the Option, respectively. XTintaya subsequently assigned the Las Bambas Project to the Minera Las Bambas S.A.C. on 1 January 2011. The Peruvian authorities approved the Las Bambas Project’s environmental impact assessment (EIA) in March 2011.

Number of official sources

10

Number of unofficial sources

3