CNMIM provides RMB 530 million loan for Pakrut Gold Project

Project narrative

On May 24, 2012, China Nonferrous Metals International Mining Co. Ltd (CNMIM) provided a secured loan facility on commercial terms to Kryso Resources PLC — the mineral exploration and development company (special purpose vehicle) responsible for developing the Pakrut Gold Project in Tajikistan — for $10 million and RMB 530 million to finance the development of the Pakrut Gold Project (as captured via Record ID#70174 and #70319). The loan proceeds were to be used exclusively for the design, construction, operation and administration of the Pakrut Gold Project, including operating costs, capital expenditure, and general working capital. The USD tranche was disbursed by CNMIM transferring the funds into a designated bank account of Kryso Resources PLC. The term of the loan went from the date of the first advance until May 31, 2017. The annual fixed interest rate was 9% for both tranches and a management fee at 0.5% on the total amount of the loan was paid within 30 days of the first advance. Default interest of 13.5% per annum was payable on overdue amounts on the tranches. The borrower was to repay all amounts of principal and interest in respect in USD at a fixed exchange rate of 1 USD to 6.30 RMB. The repayment dates were May 31, 2015, November 11, 2015, May 31, 2016, November 11, 2016, and May 31, 2017 for both tranches. November 30, 2014 was the end of the loan availability period. Kryso Resources PLC drew down $10 million under the USD tranche and RMB 384,802,696 (equivalent to $61,079,793 USD at the fixed repayment exchange rate) under the RMB tranche. Kryso Resources PLC pledged its 100% equity interest in LLC Pakrut to CNMIM as security for repayment of the loan. On June 19, 2014, Industrial and Commercial Bank of China (Macau) Limited provided a $120 million term loan facility to China Nonferrous Mining Group for the Pakrut Gold Project (as captured via Record ID#70220). The loan was secured by China Nonferrous Mining Group via standby letters of credit. The loans advanced under the facility were not to exceed 95% of the value of the standby letters of credit. Standby letters of credit were issued on June 24, 2014 and June 18, 2015 in order to enable China Nonferrous Mining Group to draw down $80 million and $40 million respectively under the facility. Principal repayments commenced on January 30, 2016. As of December 31, 2015, China Nonferrous Mining Group had fully drawn down the loan facility extended. The loan availability period ran from July 9, 2014 until June 19, 2015. If the facility was not fully drawn down within the loan availability period, the principal repayments were to be reduced in inverse order of the repayment schedule. In the event of default, ICBC had the right to demand full repayment of the outstanding loan and charge default interest at 3% over the contracted interest rate. The interest rate on the loan was 2.90% per annum over the quarterly (3-month) LIBOR rate (average 3-month LIBOR rate in June 2014 was 0.231%). Therefore, the all-in interest rate at the time the loan was issued was 3.131% (2.90%+.231%). The loan was repayable in USD and principal repayments commenced on January 30, 2016. The repayment schedule was as follows: - January 30, 2016 – $5,000,000 - July 30, 2016 – $10,000,000 - January 30, 2017 – $10,000,000 - July 30, 2017 – $15,000,000 - January 30, 2018 – $20,000,000 - July 30, 2018 – $20,000,000 - January 30, 2019 – $20,000,000 - June 8, 2019 – $20,000,000 On April 27, 2016, China Nonferrous Mining Group obtained a loan facility $120 million from CNMC International Capitals Company Limited (CNMC) — an associate of CNMIM — to refinance the loan facility that it contracted with Industrial and Commercial Bank of China (Macau) Limited on June 19, 2014 for the Pakrut Gold Project (as captured via Record ID#70324). The loan from CNMC was repayable on December 31, 2018 and included an annual fixed interest rate of 4% on the amount drawn down, payable in arrears. The loan was fully drawn down on April 27, 2016. In 2019, the loan was transferred from CNMC International Capitals Company Limited to CNMC Trade Company Limited. On July 15, 2020, a maturity extension changed the loan’s the final repayment date to December 20, 2020 (captured via Record ID#100937). Then, on March 26, 2021, another maturity extension was granted until December 20, 2022 (as captured via Record ID#100936). The loan’s interest rate was also set a 3-month LIBOR plus a 3.25% margin. On June 14, 2016 China Construction Bank Corporation Macau Branch (CCBC) provided a loan facility of $100 million to China Nonferrous Mining Group to refinance its 2012 loan agreement with CNMIM (captured via Record ID#70174 and ID#70319) and also for working capital purposes. The CCBC loan, which is captured via Record ID#70367, carried a 5-year maturity and was repayable 60 months from the date of first drawdown. Its annual interest rate was 3-month LIBOR plus a 2.1% margin. The average 3-month LIBOR rate in July 2016 was 0.696%. Therefore, the all-in interest rate at the time the loan was issued was 2.796% (2.10%+0.696%). The loan was secured by Standby Letter(s) of Credit issued by China Construction Bank Corporation, Beijing Branch, and guaranteed by CNMC under the terms of the loan agreement, for an aggregate amount of not less than $103,092,783.51, with validity of not less than 60 months in favor of CCB. The loan was fully drawn down in 2016 and it was repayable in 8 installments commencing 18 months from the drawdown date. The repayment schedule was as follows: - December 31, 2017 – $5,000,000 (payment made in January 2018) - June 30, 2018 – $5,000,000 - December 31, 2018 – $5,000,000 - June 30, 2019 – $5,000,000 - December 31, 2019 – $5,000,000 - June 30, 2020 – $5,000,000 - December 31, 2020 – $5,000,000 - June 30, 2021 (or 14 working days prior to the expiry date of relevant Standby Letter(s) of Credit – whichever was earlier) On June 27, 2016 the China Nonferrous Mining Group obtained another loan, worth $19,114,809, from CNMIM for working capital purposes related to the Pakrut Gold Project (as captured via Record ID#70354). Then it was announced on October 30, 2017 that China Construction Bank Corporation Macau Branch agreed to provide China Nonferrous Gold Limited with a loan facility of up to $20 million (as captured via Record ID#70407). The loan facility was for a maximum of one year and repayable 12 months after the first drawdown. The loan included an annual interest rate of 3-month LIBOR plus a 1.3% margin and was governed by the law of Macau. The average 3-month LIBOR rate in October 2017 was 1.361%. Therefore, the all-in interest rate at the time the loan was issued was 2.661% (1.361%+1.3%). The loan was secured by a standby letter of credit from China Construction Bank Corporation Beijing Branch, for the aggregate amount of $20,618,556.70, which expired 12 months after the date of first drawdown (1-year maturity). A standby letter of credit fee of 1.15% was payable per annum. The CCBC loan was expected to be drawn down shortly after its signing and was to be used for working capital and to fund the restoration of production of the Pakrut gold mine. On February 8, 2018, CNMC International Capitals Company Limited and China Nonferrous Gold Limited signed an agreement for a loan facility of $90 million (captured via Record ID#70430), which was fully drawn down full on February 9, 2018. This loan was reportedly intended to pay the $30 million of outstanding debt with the Macau Branch of the China Construction Bank Corporation and $30 million of the outstanding debt with CNMC International. The remainder of the loan was to pay for the restoration of production at Pakrut, including the purchase of equipment, the completion of a ventilation system, a tailings pond, and a back-fill station. CNG reported that the loan's purpose was for the construction, operations and management of the Pakrut Gold Project, including operating and related expenses. The loan period, per the contract, was from February 9, 2018 to December 8, 2020. The interest was fixed at 5.8% per annum, which was calculated on a half yearly basis from December 21 to June 20, and from June 21 to December 20. Payment of interest was to be made biannually in June and December of each year. If the loan was used for a purpose other than that stated in the contract, the proportion of the loan used was to incur interest at a fixed rate of 11.6% per annum. At the repayment date, interest was to be charged at 8.7% rate on any unpaid balance. On January 29, 2019, China Construction Bank and China Nonferrous Gold Limited signed a $20 million loan agreement (captured via Record ID#101055). The loan was to be used for working capital purposes related to the Pakrut gold project. The full loan amount was drawn down on January 29, 2019. The loan carried an interest rate of 3-month LIBOR plus 1.2%. It was repaid on January 29, 2021. The loan was secured by standby letters of credit issued by China Construction Bank Corporation, Beijing Branch and guaranteed by CNMC under the terms of the loan agreement, for an aggregate amount of not less than $20,620,000, with validity of not less than 12 months in favor of CCB. On March 9, 2020, China Construction Bank (Asia) and China Nonferrous Gold Limited signed a $30 million loan agreement (as captured via Record ID#101056). In April 2020, the borrower drew down $14.5 million. The full amount was drawn down on April 13, 2020. The loan carried an interest rate of 3-month LIBOR plus a 1.15% margin. The loan was used for general working capital related to the Pakrut gold project, and it was repaid on March 16, 2021. The loan was secured by (i.e. collateralized against) standby letters of credit issued by China Construction Bank Corporation (Beijing Branch) and guaranteed by CNMC. In January 2021, China CITIC Bank Corporation Limited and China Nonferrous Gold Limited signed a $20 million loan agreement (captured via Record ID#100753). The loan facility was for a maximum of 12 months, repayable 12 months after the first drawdown. It was drawn down in January 2021, with an interest rate of six month LIBOR plus a 2.7% margin. The loan was repaid on January 20, 2022. In March 2021, China CITIC Bank Corporation Limited and China Nonferrous Gold Limited signed a $14.55 million loan agreement (captured via Record ID#100754). The loan was drawn down in March 2021. It carried an interest rate of 12-month LIBOR plus a 2.7% margin. The loan was repaid on January 26, 2022. On June 28, 2021, China Nonferrous Gold Limited drew down the entirety of a $65 million loan from Bank of Shanghai (Hong Kong). The loan, which is captured via Record ID#100757, carried a 24 month maturity and was repayable 24 months from drawdown. It was used to partially repay a $120 million loan from ICBC Macau (captured via Record ID#70220). The loan was secured with standby letter(s) of credit issued by Bank of Shanghai, Beijing Branch, and guaranteed by CNMC under the terms of the loan agreement, for an aggregate amount of not less than $66,000,000, with validity of not less than 24 months in favor of BOS. The loan was repaid in full on June 9, 2023. In January 2022, China Nonferrous Gold Limited and China CITIC Bank Corporation signed a $20 million foreign currency loan agreement for working capital purposes (captured via Record ID#100756). The loan carried an interest rate of 6-month LIBOR plus a 3% margin. In January 2022, CNMC Trade Company Limited also issued a $34.55 million loan to China Nonferrous Gold Limited (captured via Record ID#100755). This loan was to be used to repay the $20 million loan (captured via Record ID#100753) from China CITIC Bank Corporation and the $14.55 million loan (captured via Record ID#100754) from China CITIC Bank Corporation. $20 million of the $34.55 million loan was repaid with a $20 million loan from China CITIC Bank Corporation (captured via Record ID#100756). A further $1 million of this loan was repaid in December 2022. On January 24, 2023, China Nonferrous Gold Limited executed a $19.5 million loan agreement with CNMC Trade Company Limited (captured via Record ID#101057). The loan carried an interest rate of 3-month LIBOR plus a 0.5% margin. The loan was repayable 3 months from the drawdown date. The loan was used to make repayments worth $20 million on an existing China CITIC Bank Corporation Limited loan (captured via Record ID#100756). The outstanding balance ($0.5 million) was repaid from the company's cash reserves. In July 2023, China Nonferrous Gold Limited and CNMC Trade Company Limited signed an agreement extending the loan’s final maturity date to April 19, 2024 (captured via Record ID#101082). Then, in June 2023, China Nonferrous Gold Limited executed a $65 million loan agreement with CNMC Trade Company Limited captured via Record ID#101058). The loan carried an interest rate of 3-month LIBOR plus a 0.5% margin, and it was repayable three months after the drawdown date. The loan’s maturity date was September 6, 2023. The proceeds of the loan were used to repay an existing June 2021 Bank of Shanghai (Hong Kong) loan worth $65 million (captured via Record ID#100757). LLC Pakrut, a mine that is 100% owned by Kryso Resources Ltd (which itself is wholly owned by China Nonferrous Gold Limited), was first established in 2003 and it operates the Pakrut deposit located on the southern slope of the Gissar range, 107 km from the city of Dushanbe. The geological exploration at Pakrut deposit started in 2004. The pre-gold reserves at the deposit, approved by the State Reserves Committee (CRC) of the Republic of Tajikistan, were 28.1 tons. The reserves of Pakrut gold mine are currently estimated to be 100 tons. In November 2011, the Government of the Republic of Tajikistan issued a mining license to LLC Pakrut. Construction started in September 2012. The mine went into production on June 5, 2016. However, in February 2017, high levels of snowfall caused significant damage to the facilities and equipment, and interrupted reconstruction work, which was restarted in the second half of 2017. All reconstruction work was originally expected to be complete by the fourth quarter of 2018 and production was originally expected to recommence in April 2018. All reconstruction work was ultimately completed by the end of 2018.