While all Performance Standards are applicable to this investment, IFCs environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards. If IFCs investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

PS 1 – Assessment and Management of Environmental and Social Risks and Impacts
PS 2 - Labor and working conditions
PS 3 - Resource Efficiency and Pollution Prevention
PS 4 – Community Health, Safety and Security
If IFC’s investment proceeds, IFC will periodically review the the project’s ongoing compliance with the Performance Standards

This is a category B project according to IFC’s Environmental and Social Review Procedure because the Environmental, Social and Health & Safety (ESHS) impacts related to the investment in exploration are limited, site specific and therefore adequately managed through implementation of appropriate mitigation measures. IFC’s review did not identify any significant adverse impacts or high risk exposures.

IFC’s categorization of this project is based on the impacts of exploration activities, which consist primarily of construction of drill pads and access road for exploration drilling, construction of 20 rooms for staff at its base camps and a core shed located a few meters away, limited emissions of dust and waste streams from camp activities and machinery maintenance. The key social and environmental risks associated with the exploration drilling currently ongoing at La India are (i) environmental, social and health and safety management of exploration activities – specifically erosion control, restoration and rehabilitation of drill pads and access roads, safe management and disposal of waste and oils, dust and noise control, water and effluent management, management of flora and fauna resources, occupational health and safety, community safety and emergency preparedness and response, (ii) potential impact to local communities from use or impacts to local water sources, (iii) temporary and limited land access resulting in reduced grazing ground for livestock or agricultural use, (iv) managing community expectations with respect to job opportunities and community investment and, (v) ongoing community consultations and land use compensation planning.

Key environmental and social issues relating to the project are summarized below, along with specific information about how potential impacts will be addressed by the Company. Upon implementation of the necessary mitigation measures described below and in the attached ESAP, the project will comply with environmental and social requirements, namely IFC’s Performance Standards on Social and Environmental Sustainability and Access to Information Policy, and applicable World Bank/IFC environment, health and safety (EHS) guidelines.

Regarding PS5 (Land Acquisition and Involuntary Resettlement), this PS is not relevant as current exploration activities only require temporary use of land with limited impacts on local land holders. Regarding PS6 (Biodiversity Conservation and Sustainable Management of Living Natural Resources), no sensitive habitats have been preliminarily identified in the project area with limited impacts from exploration activities on biological resources. PS7 (Indigenous Peoples) is also not relevant to this project because of the absence of Indigenous People in the area of influence of the Company’s operations. Finally, regarding PS8 (Cultural Heritage), although no cultural resources have been identified the Company will prepare a “chance finds” procedure to be applied in the event of any accidental unearthing of paleontological/cultural relics.

Any IFC investment in any future mining development would be assessed as a new project and its categorization would be determined after the necessary due diligence. Even without an additional investment, IFC would require any future mine development with major impacts to follow PS1 in its requirements for a full ESIA as well as independent monitoring of project social and environmental performance and stakeholder engagement. Condor will ensure that social and environmental assessment documents associated with such a development will be consistent with IFC’s Performance Standards and EHS Guidelines and be publicly available and consulted upon in accordance with IFC’s Access to Information Policy prior to the start of construction.

To address the above identified issues and meet the requirements of IFC’s Performance Standards, Condor has committed to developing a comprehensive Health, Safety, Environment & Community (HSEC) Policy which will contain management plans and procedures to address existing risks and impacts from the exploration phase with commitments relating to any future mine development. Any gaps with IFC Performance Standards will be outlined in an Environmental and Social Action Plan (ESAP).

IFC's appraisal considered the environmental and social management planning process and documentation for the project and gaps, if any, between these and IFCs requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through the implementation of these measures, the project is expected to be designed and operated in accordance with Performance Standards objectives.

Environmental Policy:

The Company will develop and implement a HSEC Policy to identify, assess and adequately manage existing ESHS risks and impacts from exploration activities. The HSEC Policy will be developed with assistance from IFC, with key components, including the manual, management plans and standard operational procedures (SOPs) developed by Condor with support from an external consultant experienced in the use of good international industry practices (GIIP) for this phase of work (See Action 1 of the ESAP).

Based on the findings of the site visit, key management plans and/or SOPs to be developed as part of the HSEC Policy include those addressing pollution prevention (fuel management, spills, dust, noise, etc), solid and liquid waste, erosion control and re-vegetation, footprint management, biodiversity management, surface and ground water resources management, environmental monitoring, occupational, health and safety, emergency response and contingency planning, road safety and transportation, stakeholder engagement and a grievance mechanism, among others (See Action 1 of the ESAP).



Identification of Risks and Impacts:



The management of risks discussion in this ESRS consists of those associated with exploration, as IFC is only financing exploration and feasibility study activities which have limited impacts on social and environmental receptors. If any of the exploration prospects proceed to the mining development phase, Condor will prepare the necessary environmental and social impact assessment (ESIA) documentation to demonstrate compliance with IFC’s Performance Standards.



Nicaragua is a post-conflict country which is considered the second poorest in Latin America. Nearly 25% of Nicaragua’s population is considered on the verge of extreme poverty with much of it concentrated in rural areas. Because of this, expectations for support on improved living conditions in the community are very high. The Company is aware of this and is taking steps to engage with the local communities to provide information on the Project and manage expectations. Furthermore, the development of a formal Stakeholder Engagement Plan and Communications Plan as part of IFC’s investment will support the Project in providing adequate and timely information on the Project to local communities and other key stakeholders, receiving feedback, adequately addressing any concerns or grievances and managing expectations and perceptions.



The Company holds several concessions in Nicaragua with La India being the one where drilling efforts are focused. Nicaraguan regulations require environmental permits for prospecting work such as trenching and soil sampling and require an environmental impact assessment (EIA) for exploration drilling activities. The process to develop an EIA is for the Ministry of Environment and Natural Resources (MARENA) to provide the Company with TOR for the impact assessment and for the Company to secure an independent consult
ant to develop the EIA for submittal to the government. As part of the annexes to the EIA, the Company must have previously obtained written agreements (“Aval”) from the representatives from the local communities for the work to be permitted.



In terms of impact assessment permits for current exploration activities, the Company has obtained all relevant permits to carry out work at La India and its other concessions. The impact assessment for La India includes a project description, some level of baseline characterization, impact assessments and proposed mitigation measures.



As mentioned above, the development of the HSEC policy and management plans/SOPs will assure the commitments defined within the approved EIAs are complied with and that performance is tracked by the Company.



Management Programs:



The Company is currently developing a number of environmental and health and safety procedures to manage existing risks. These include procedures to address the use of personal protection equipment (PPE), safe working practices and spill prevention and response. These documents will be enhanced and additional management plans/SOPs developed to incorporate GIIP practice as part of the HSEC Policy (Action 1 of the ESAP). Key management plans and/or SOP to be developed include, among others, those addressing pollution prevention (fuel management, spills, dust, noise, etc), solid and liquid waste, erosion control and re-vegetation, footprint management (to minimize the amount of land used), biodiversity management, surface and ground water resources management, environmental monitoring, occupational, health and safety, emergency response and contingency planning, road safety and transportation, ESHS training, stakeholder engagement and a grievance procedure (see Action 1 of the ESAP).



Organizational Capacity:



The Company’s current organizational structure includes a Chief Operating Officer (“COO”) who is a mining engineer with 35 years of experience and spends 50% of his time in Nicaragua, a Country Manager who is also the Chief geologist with 17 years of experience, two senior geologists, a Chief Financial Officer, a logistics manager, a field camp manager, Managua officer manager, data room manager, and a human resource manager. The Country manager and COO report to the CEO who visits the La India project one week per month. The Company’s senior management values a relationship with IFC to assist the Company carry out its exploration activities in line with GIIP.



In terms of ESHS personnel, the Company has a Chief Environmental Officer and assistant who report to the COO, a Health & Safety Officer who reports directly to the Country Manager. A Community Affairs Officer and assistant are also responsible for managing human resources for the Company and reports to the Country Manager.



In order to strengthen its E&S capacity, the Company will hire additional ESHS support in the form of an experienced ESHS consultant for devel
opment of the relevant plans and procedures part of the HSEC Policy and to assist in their implementation. Also, Condor will hire an experienced social specialist who will oversee the implementation of the HSEC Policy during the exploration phase (see Action 2 of the ESAP).



Land Access and Resettlement Issues:



The government grants one single license for mining exploration and exploitation activities, with each phase also requiring various other permits including approval of an EIA. Condor has 100% exploration and exploitation (mining) rights for 8 concessions that comprise the La India Project. In terms of surface land, several private land holders claim rights to the land with a formal title-granting process currently in the hands of the government. The Company does hold surface rights for a smaller area called Espinito Mendoza (200 ha) within the La India Concession. Land in the project area is mostly used for grazing and agriculture with some patches of forested areas.



As part of obtaining access to exploration activities (drill pads and small access roads) the Company establishes a written agreement with each landholder while the drilling activities are carried out (usually 1-3 month duration). For this, the Company has established set payment rates dependent on the number of drill pads or trenches to be constructed. For standing crops, additional compensation is provided. As part of the formal agreement, which is signed by both the Company and the land possessor, Condor also commits to re-establishing the area to the original conditions.



The Company has done an initial effort to map surface land owners in several areas of the Concession focusing on the high mineral resource areas.



Based on information obtained from the Company and community representatives, surface land owners do not yet possess formal titles to the land. However, in recent years, the government has made an effort to formalize this process and has already conducted the necessary land surveying work (through a program called “ALBA Solidaria”), with the granting of titles pending as the final step.



The Company will update the existing Land Use and Compensation Plan (LACP) to outline the principles, guidelines and approaches that will be followed for any future land acquisitions and compensation activities in accordance with PS5 requirements (see Action 3 of ESAP).



Biodiversity Issues:



Based on a desktop review, the La India Concession does not lie in any legally protected areas or internationally recognized KBAs/IBAs or AZE sites. The Concession lies a few kilometers south from the North Central American Highlands Endemic Bird Area which runs along El Salvador, Guatemala, Honduras, Mexico and Nicaragua. Also, on a regional scale, the concession lies within the Mesoamerican Biodiversity Hotspot which runs through Panama, Costa Rica, Nicaragua, Honduras, Guatemala and Mexico.



From a visit to several areas around the Concession it was no
ted that the general habitat was previously tropical rainforest which has been heavily disturbed by clear-cutting, agriculture, farming and to a lesser extent, artisanal mining. The habitat can initially be defined as both modified and natural with some forested areas still present mostly in the hills. As part of the preparation for EIAs for exploration activities, limited baseline studies have been conducted to assess the sensitivity of the area. These give preliminary indications that the area is of low sensitivity due to extensive human interventions. The site visit also noted timber harvest for fuel in many areas.



In order to address biodiversity related impacts of current activities at La India, the Company will carry out biodiversity baseline studies to assess the sensitivity of the project area and determine if a Biodiversity Management Plan or SOP is needed.











Training:



Health and safety training to staff and contractors on the use of PPE and the identification of risks is done on an ad-hoc basis. The development of the HSEC Policy and a training plan (Action 1 of the ESAP) will address the necessary competency training requirements for this phase of work including frequency, training topics and documentation necessary to assess the level of environmental, social and health and safety awareness of direct workers and contractors.



On July 17-18, 2014, four employees of Condor attended the IFC International Norms Seminar organized by in Guatemala City where IFC’s Performance Standards were presented.



Monitoring and Review:



The company has carried out several baseline studies as part of the PFS level work including baseline data collection on climate, air quality, geology, soils, hydrology and hydrogeology, water quality, flora and fauna, socio-economic, archeology, among others.



As part of the development of the HSEC Policy, a monitoring, inspection and audit program will be developed together with key performance indicators to track information on environmental, health and safety and social management, training, incidents and spills, etc. The Company will also develop an Environmental Monitoring Plan to establish monitoring requirements for this phase of work and in preparation for any future ESIA as indicated in Action 1 of the ESAP.



Community Investment:



The Company currently provides targeted community investment support to La India. During the last few years, this has included support in the areas of education (through school materials and English classes), health through inoculation and fumigation to prevent dengue fever, security (through the donation of motorcycles to improve security in the community) supporting local sports teams, organized rubbish (garbage) collection, donation of first aid kits and donating funds in support of local cultural festivities and supported a hostel in Managua



Reporting:



As part of external reporting the Company provides environmental reports to the local
and national MARENA office and the Ministry of Energy and Mines on a quarterly basis. These reports include information on issues such as re-vegetation, any sampling done during the reporting period, management of waste and hydrocarbons, etc. Reporting on health and safety issues to the government is only required for major accidents.



As part of internal reporting, the Company does report on ESHS matters to the Project Manager on a weekly basis. However, limited reporting on statistics and key performance indicators is provided both on environmental and health and safety matters.



As part of IFC’s investment, Condor will submit and Annual Environmental and Social Monitoring Report (AMR) to IFC to describe its environmental and social performance. As part of the Stakeholder Engagement Plan, the Company will also report regularly to local communities on the progress made on its activities and progress in implementing the Company’s Environmental and Social Action Plan.

Human Resources Policy:



Condor is in the process of maturing its management systems and in developing the necessary procedures related to labor. The Company does not have a Human Resource Policy in place and will develop one to meet the requirements of Performance Standard 2 (see Action 4 of ESAP).



Working Conditions and Terms of Employment:



Work conditions for Condor are governed by a labor contract and in line with the national labor law. Workers are provided with written work contracts and are covered by health and accident insurance. The hiring process includes the candidate sending the CV to the local office and then completing a standardized employment form. As part of this process, the Company also requests submittal of police background checks and copies of identification cards.



Third party contractors are hired through written contracts which meet national labor requirements.



Condor has developed a grievance mechanism for workers to be able to raise and address workplace concerns promptly.



Workers’ Organizations:



Workers are currently not organized in any labor union but local labor law has provisions for unionization. The Company is also supportive of any unions forming in the future as per established legislation and as required by PS2.



Child and Forced Labor:



The Company does not employ child or forced labor. Child labor is controlled through the review of CVs and personal documentation prior to hiring.



Occupational Health and Safety:



Condor has developed a Health and Safety Policy document in January 2013 as well as detailed procedures consistent with GIIP to minimize accidents and incidents associates with these activities. The procedures include provisions for worker health and safety training (including contractors), emergency preparedness and response and contingency planning. Condor has established a formal health and safety incident reporting system to document and track incidents and implement corrective and preventative measures as required.

Condor’s recent drill program of 23,600m was completed in September 2013, since which time there has been no further drilling. Since October 2013 the Company’s main focus has been on PFS studies. Exploration has been confined to rock chip sampling and trenching. Prior to October 2013, exploration activities carried out at La India included the construction of drilling platforms, short connecting access roads. To support these activities, a base camp has been established at a rented house in the community of La India with accommodations, a drill core shed and supporting services.



During exploration work potential impacts from Condor’s activities to surface and ground water, soil and air are limited and have been adequately managed through the establishment of the necessary EHS practices. During the IFC’s walk-through within the camp and the drilling areas in 2012 it was observed that, a certain level of housekeeping is maintained at these locations, with opportunities for improvement noted, especially on pollution prevention issues.



Solid and Liquid Waste:



Condor generates minimal amounts of solid waste mainly from the camp and from the drilling sites. Waste is collected in plastic bags at each drill site and picked up by the Company for transport to a waste disposal facility located approximately 25 km away. It is understood that the disposal area is not a sanitary landfill but a dump and the Company will do additional efforts to minimize the amounts of waste generated by reuse and recycling of materials as much as possible. Also, the Company will need to start evaluating other alternatives for disposal of waste at a more secure facility.



Regarding sanitary liquid waste, this is managed through the construction of latrines at each drill site, which are closed out once the drilling work is finalized in the area. Sanitary waste at the camp is managed through a septic system.



Water Quality and Use:



Water for drilling activities is obtained from a local river located several kilometers away and within the wider concession and transported to the drill sites via tank trucks. According to Condor, no permit is required at the time for water extraction. At the drill sites, water is re-circulated to minimize its use. Also, contractor drill companies are required to use biodegradable drilling muds during their activities to avoid impacts on surface and ground water resources.



In terms of monitoring of water quality, a sampling event of local water bodies and wells was conducted in 2011. More recently, in July 2014 a water quality report for baseline studies for the PFS was completed.



Hydrology Studies



In September 2014 a Hydrology study to PFS level will be completed at the site. Ground water monitoring for 18 months took place on 5 weirs and continues to date. Water sampling continues on a weekly basis on 24 locations, 10 piezometers and 14 hand dug wells has been undertaken for the past 18 months.



Restoration and Re
-vegetation:



Restoration and re-vegetation of drill pads varied from site to site. The Company has put together a crew of workers from the local community to assist in restoration and re-vegetation activities. As part of the HSEC Policy, the Company will develop and Erosion Control and Revegetation Plan to formalize existing practices for minimizing the footprint of disturbed areas, establishing preventative erosion control measures and establishing effective re-vegetation practices of disturbed areas.



Management of Hazardous Materials (Fuel):



Fuel is currently stored in large steel or plastic drums at each drill site with some level of secondary containment system provided. As part of the HSEC Policy the Company will develop a Pollution Prevention Plan to set specific procedures for the storage and handling of fuel products and requirements in case of accidental spills.



Noise:



Current noise generated from exploration activities is limited with the distance to any households or single potential receptors (such as local land owners) being several hundred meters to several kilometers away. At the drill sites, drilling operators and helpers are required to use hearing protection in areas of high noise levels.



Emergency Preparedness and Response:



As part of IFC’s investment, Condor will develop a robust Emergency Response Plan (ERP) outlining emergency scenarios and response actions, key contacts, responsible staff. The Company will also conduct training to employees and contractors on the information within this Plan.



Management of Contractors:



The Company currently has no contractors on site. The management of EHS issues currently varies from contractor to contractor, in part, due to different sets of EHS requirements within the legal contracts with these firms. The Company has recently standardized these contracts and the ESHS requirements within to provide clarity on the obligations of the contractors in this regard.

Community Health and Safety:



The closest community to the drilling areas is the Community of La India with a population of about 1,000 people. Access to La India is via paved road from Managua. As mentioned earlier, several other communities exist within the wider concession but farther away from the exploration work including Nance Dulce, Agua Fria, El Bordo, Cristalito, Los Rastrojos and El Tranque. Water resources around La India’s main targets include a small seasonal river (Agua Fria) which drains from east to west into the Sinecapa River.



During exploration work potential impacts from Condor’s activities to surface and ground water, soil and air and, subsequently to human health, are limited and can be adequately managed through the establishment of the necessary EHS practices. As noted earlier, Condor’s camp is located within the community of La India. However, there have been no reported issues or impacts related to the establishment of the camp within this location.



Regarding health and safety, it is important that procedures be formalized within the HSEC Policy to manage existing risks on workers and communities. This, in relation to use of PPE, safe working practices during the operation of drill rigs and other equipment, response activities in case of emergencies, etc.



Although the current level of traffic to the site is relatively small (currently around 7 light trucks between Condor and its contractors), there are potential risks of road incidents or accidents related to workers and to the local communities. The HSEC Policy will address road safety and the management of risks from transportation of any materials and personnel.



Security Personnel:



Condor has secured the services of a local contractor to provide security services to drilling rigs when in operation and staff members. Approximately 25 security guards work for the Company (93% are from the local community) with 6 of them in possession of firearms. All personnel in possession of firearms carry a license granted by the relevant government authority. According to the Company no major security issues have occurred in the past.



The Company will develop a Security Policy and a Code of Conduct for security personnel in line with GIIP which incorporates the relevant guidelines of the Voluntary Principles on Security and Human Rights. The Code of Conduct should set clear objectives for the work of security personnel and permissible actions, and be based on applicable law and professional standards. These instructions will also be communicated as terms of employment and through periodic training. The Company will also review existing contracts with the security contractor and, as necessary, incorporate the relevant principles of GIIP in the use of firearms as required in PS4 (see Action 5 of the ESAP).



Any grievances from the community relating to security incidents will be captured through the community grievance mechanism and will be investigat
ed to identify any necessary corrected or preventative actions.

Local regulations require a public hearing to be held after the EIA has been submitted to the government. The Company has complied with this legal requirement and, on a voluntary basis, is also conducting periodic meetings (at least every 3 months) with representatives from the La India Community and other nearby communities. Representatives include those from the local health service office, local major’s office, artisanal gold miners’ cooperative, water supply and sanitation committee, women’s group and a representative from the local school. To date there have been no recordable grievances related to the Project.

Condor has developed a Stakeholder Engagement Plan to ensure that the local community and other stakeholders (NGOs, government agencies, interested groups, etc) are kept up to date with the progress of the project and to manage community expectations with respect to employment opportunities, issues associated with land access and community investment. The Company has also developed a Grievance Mechanism for stakeholders to manage complaints and claims in a systematic and timely matter. Both documents will be updated as part of IFC’s involvement. Given the proximity of the operations to the local community, this will be key to building a positive relationship with communities and to minimize grievances associated with project activities (Action 3 of the ESAP).

Location: Nicaragua Administration OfficeAddress: Reparto San Juan, Apartamento Isolsa II, Managua, NicaraguaTelephone: +505 2270 1930Fax: NA.

For further information, questions or comments please contact:

Mr. Mark Child Chief Executive Officer and Director Condor Gold Plc. 7th Floor, 39 St James’s Street London SW1A 1JD Phone: +44 0 20 7493 2784 Fax: +44 0 20 7493 8633 Email: mailto:chairman@condorgold.com

Broad Community Support is not applicable for this project

Title	Anticipated completion Date
Develop and implement a Health, Safety, Environment and Community (HSEC) Policy that defines how the project will be operated in line with the requirements of IFC’s Performance Standards, EHS Guidelines and Nicaraguan legislation appropriate to the level of activities. (Disclose on the Company’s website upon approval by IFC).	12/30/2014
Retain an experienced international EHS consultant to satisfaction of IFC to support the company with: Development the necessary management plans/SOPs as part of the Operational Control of the HSEC Policy which are aligned with GIIP to address existing environmental, social and health and safety risks form current exploration activities	04/30/2015
Retain an experienced international EHS consultant to satisfaction of IFC to support the company with: Design and implement a surface and ground water participatory monitoring program to identify existing water quality and quantity conditions in the area, communicating these to the local population and to serve as baseline for the future ESIA.	04/30/2015
Retain a social specialist with experience in the application of GIIP and the Performance Standards to implement the HSEC Policy and build capacity with the local staff.	01/30/2015
Retain IFC’s Advisory Services or an experienced social consultant to satisfaction of IFC to support the company with: Update the Stakeholder Engagement Plan, a Grievance Mechanism and Procedure and develop a Communications Program to identify/map key stakeholders and engage and communicate with the affected community and stakeholders in a frequent and effective manner. Reference: Stakeholder Engagement: A Good Practice Handbook for Companies Doing Business in Emerging Markets (May 2007).	01/30/2015
Retain IFC’s Advisory Services or an experienced social consultant to satisfaction of IFC to support the company with: Update the Land Use and Compensation Plan (LACP) to outline the principles, guidelines and approaches that will be followed for any future land acquisitions and compensation activities in accordance with PS5 requirements.	01/30/2015
Develop a Human Resources Policy consistent with the requirements of PS 2 and disclose it on its website.	04/30/2015
Develop a Security Policy and a Code of Conduct for security personnel in line with the requirements of GIIP and the Voluntary Principles on Security and Human Rights.	04/30/2015