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This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision.
Summary of Project Information (SPI)
Date SPI disclosed
June 13, 2000
Projected board date
July 15, 2000
Invested: September 28, 2000
Signed: September 15, 2000
Approved: September 14, 2000
Project sponsor and major shareholders of project company
The project operator and manager is Bema Gold Corporation (Bema), a junior gold mining company listed on the Toronto and American Stock Exchanges. Bema’s principle assets include the producing Refugio gold mine in Chile, the Julietta mine, and exploration projects in South America. The project will be developed by Omsukchansk Mining and Geological Company (OMGC), a Russian company owned by Bema (79%), and two Russian companies Nedra TOO (11%) and JSC Ducat Mining and Geological Company (10%).
Total project cost and proposed IFC investment
The project cost is estimated at $41 million for capital expenditure (excluding sunk costs). It will be financed by $6 million of an additional equity from Bema and $35 million of loans. IFC will provide $10 million in loans to OMGC for its own account. The balance of $25 million will be provided by commercial banks on a parallel basis with the Multilateral Investment Guarantee Agency's (MIGA) coverage of political risks
IFC investment as approved by Board
IFC Investment (million USD)
Location of project and description of site
The mine is located in the Magadan Region of the Russian Federation Far East.
Description of company and purpose of project
The project will develop the Julietta gold and silver mine, including development of an underground mine and a processing plant, and construction of associated infrastructure facilities and access roads. At full capacity, Julietta will process 122,500 tonnes of ore per year to produce 0.4 million oz. of gold and 6 million oz. of silver over the initial 4.5 year mine life. The mining resources estimated at 0.6 million tonnes can be upgraded to the proven and probable category with additional capital expenditure which would extend the life of the mine by another 5 years. A combination of high gold grades and high gold recovery should make Julietta one of the world's lowest cost producers.
The project will have a positive development impact on Russian economy. The successful implementation of the project will support local government's efforts in attracting foreign investors to the mining sector and will further contribute to the development of the business environment conducive to the foreign investment. It will earn foreign currency through metal export, and generate tax revenues for the local and central governments. Technology and management skills will be transferred, and jobs will be created in the remote community where there are few alternatives
IFC's involvement in the project will mitigate political risks and provide a demonstration effect for future private sector mining investments. In addition, the presence of IFC would further ensure that environmental care and diligence at Julietta would be maintained at appropriate standards, which can be used for future mining projects in Russia.
Environmental and social issues - Category
This is a category A project according to IFC’s environmental and social review procedure, because it will potentially have significant adverse environmental impacts that are sensitive, diverse, or unprecedented. The Omsukchan Mining and Geological Company (OMGC), a subsidiary of Bema Gold Corporation (Bema) has retained DewPoint International LLC, an independent consultant to prepare a comprehensive Environmental and Social Impact Assessment (EIA) in English, which addresses several key environmental and social issues associated with the project's implementation, construction, and operation. The EIA includes a detailed Environmental Action Plan (EAP) that will be updated and expanded during the development of the project. Public consultation and disclosure (PCD) were carried out in accordance with Russian and World Bank group requirements. A separate Russian version of the EIA (the OVOS) was prepared in accordance with local and national regulations. The Russian version was also disclosed in country and received final approval by the authorities in September 1997. The results of these consultations as well as the OVOS updates and subsequent recommendations have been incorporated into the EIA/EAP which were released to the World Bank InfoShop and in Russia on January 3, 2000.
Based on a review of the information supplied in the EIA and related documents, IFC’s Environment Division concludes that the project is consistent with applicable Russian standards and World Bank Group policies and guidelines. More details are provided below.
- Environment, Health and Safety
This is a greenfield project. Key environmental issues include: air and dust emissions, water resources and water quality, habitat and ecology, tailings impoundment, dam stability and sedimentation ponds, solid and liquid waste management, handling and storage of hazardous materials, noise and visual impacts, and reclamation and closure. Health and safety issues include underground safety, employees training, occupational health and safety, general housekeeping and fire prevention.
The EIA includes a detailed review of the environmental conditions of the exploration facilities, an updated baseline study on ecology, wildlife, surface water and ground water, soil and hydrobiology, and a discussion on impacts from previous activities as well as impacts during construction, and potential impacts when underground mining and milling and processing (including tailings disposal) will take place. An analysis of alternatives is complete. The EAP presents a set of mitigation measures, a risk assessment, detailed monitoring activities, and various management plans (staffing and training, occupational health and safety, underground safety, emergency response, waste, reclamation and closure). Detailed implementation schedules and cost estimates were developed with clear benchmarks to meet and achieve.
To comply with IFC requirements and Russian regulations, the EAP will be updated as needed. It will include any required additional mitigation measures, a revised version of plans for monitoring, assessing and preventing impacts, and all necessary modifications of the schedules and estimates. Full public disclosure will take place along the same lines as taken for the EIA and OVOS. It is anticipated that the first EAP revision will be published in July 2000.
OMGC has agreed to prepare a detailed mine reclamation and closure plan and to set aside financial provisions over the life of the mine to implement it. OMGC also has agreed to adopt and implement an Environmental Management Plan (EMP) which will assist mine and mill management to meet both current and future environmental issues. IFC also carried out a review of Bema’s environmental practice and management. Environmental and safety issues are integrated into all aspects and stages of their business activities.
- Social Aspects
The main population center in the project's impact area is the mining settlement and administrative center of Omsukchan with a population of 6,100. Approximately, five percent of the population living in Omsukchan Region is officially recognized as indigenous peoples, with most of them fully integrated in the Omsukchan community. This area has been seriously affected by the cessation of operation of the surrounding mines after the collapse of the Soviet Union. Unofficial estimates put rates of unemployment and underemployment at close to 100%.
According to the EIA, negative social impacts, if any, are very limited. There is potential to enhance mainly positive impacts in terms of employment created by the start up of construction phase and mining operations and the generation of tax revenue for the local municipality which will lead to much needed improvements in infrastructure and service provision. In addition, the Company is considering making available employment opportunities for Indigenous People and establishing a community development program.
In conjunction with the Dukat Silver Mine investment, IFC has initiated a Technical Assistance Program in the Magadan Oblast mainly focused at the Omsukchan region. OMGC has agreed to support this program.
According to the EIA, other social safeguard policies such as involuntary resettlement, forced labour and impacts on cultural property have been assessed and found not to be issues for this project.
Annual environmental and social monitoring reports (AMRs) will be required which detail project performance against the requirements of these documents, host country regulation and any other requirements incorporated into the investment agreement.
To view the environmental documents for this project,
Location of environmental documents in locally affected community
1.Omsukchan Adminstrative Building, 685246-Omsukchan, Magadan Oblast; and
2. OMGC Offices, 11 Proletarskaya St., 685007-Magadan, Magadan Oblast
To contact the project company, please write to:
Bema Gold Corporation
Suite 3113, Three Bentall Centre, 595 Burrard St.
PO Box 49113, Vancouver, British Columbia,
Canada, V7X 1G4
Tel: (604) 681-8371
Fax: (604) 684-3249
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