21766 - Marlin

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Summary of Proposed Investment

Project Number

21766

Company Name

Montana Exploradora de Guatemala S.A.

Date SPI Disclosed

Mar 24, 2004

Country

Guatemala

Industry

Metals and Mining

Projected Board Date

May 28, 2004

Status

Completed

Sector

Gold

Department

Energy & Mining - Global Infra

Environmental Category

A - Significant

Previous Events

Approved : Jun 3, 2004
Signed : Jun 29, 2004
Invested : Nov 5, 2004

Project Description

The Marlin project (Marlin, the company or the project) is a promising greenfield gold project located in the western Guatemalan highlands approximately 90 air miles northwest of Guatemala City. The $254 million open pit/underground project is estimated to produce about 217,000 oz per annum over 11 years at about $93/oz cash cost (lowest quartile on the cost curve). Total open pit and underground reserves in the current mine plan are estimated 13.3 million tonnes at 5.4 g/t gold. In addition, there is significant exploration potential. The metallurgy appears simple and conducive to a simple treatment circuit with high recoveries.

The project is owned by Montana Exploradora de Guatemala, S.A. (ME), a 100% subsidiary of Glamis Gold Ltd. (Glamis or the sponsor), a mid tier gold producer listed on both the Toronto and New York Stock Exchanges. ME holds other exploration stage properties in Guatemala in addition to Marlin.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	45.0
Equity

Development Impact

This is a category A project according to IFC’s Environmental and Social Review Procedure. Potential environmental, health and safety issues associated with this project include: associated facilities; longer-term cumulative impacts; natural habitats; international waterways; safety of tailings dam; solid and liquid waste management; hazardous materials management; water resources management; reclamation and closure; management of occupational health and safety issues, as well as emergency preparedness and response. Social issues include: management of impacts on indigenous communities; resettlement, compensation and sustainable economic rehabilitation/development; direct and induced impacts of associated facilities; induced migration to the project area; and management of work camps and residential areas.

Location of environmental documents In locally affected community
The environmental documentation will be made available at the following locations:

Montana Exploradora de Guatemala, S.A.
20 Calle 24-60 Zona 10
Ofi-Bodegas Pradera #20
Guatemala City, Guatemala

Marlin Project Office
Project Site
San Miguel Ixtahuacan
Departamento San Marcos
Guatemala

San Miguel Ixtahuacan Municipal Office
San Miguel Ixtahuacan
Departamento San Marcos
Guatemala

Fundacion Sierra Madre Office
San Miguel Ixtahuacan
Departamento San Marcos
Guatemala

Sipacapa Municipal Office
Sipacapa
Departamento San Marcos
Guatemala

IFC Role:

Glamis wants IFC’s participation in Marlin first, to mitigate the political risk associated with working in Guatemala. Marlin is one of the first significant mining projects in Guatemala and as such the mining environment in Guatemala is virtually untested.

Second, Glamis is committed to achieving international best practice at Marlin and ensuring that project’s benefits outweigh the negative impacts. IFC can play a strong and positive role in the project by facilitating community partnerships, enhancing project’s environment and social management capacity and identifying and developing any potential SME linkages.

Development Impact

- Environmental Protection And Community Development:

ME has aligned with Citizen’s Development Corps (CDC), a Washington-based NGO, to develop and fund, with IFC’s assistance, Fundación Sierra Madre (FSM). The foundation’s specific mission is to plan and implement sustainable, community-based, development and capacity building programs in the municipalities of San Miguel Ixtahuacán and Sipacapa.

IFC will be providing both technical and financial assistance to FSM. Specifically, IFC’s Corporate Citizenship Facility (CCF) is coordinating with the FSM in the development of a program to establish community-managed nurseries to supply the mine''s reforestation needs. CCF would supply funding for a consultant to provide TA to the communities in getting the nurseries up and running and possibly provide marketing assistance. In addition, as part of project supervision, IFC would assist FSM with monitoring and evaluation of its various programs.

This program would lay the groundwork for further IFC involvement including IFC SME assistance. The objective would be to not only create supplier linkages but also opportunities beyond the mine, thereby creating employment in the mine communities that should outlast eventual closure.

- Local Hiring and Skills Transfer:

Montana intends to train and hire as many local residents of surrounding communities as practical. Montana’s local hiring target is 80% of the operations workforce.

- Local Capacity Building and Infrastructure Improvements:

Through FSM, Montana will assist local governments and appropriate non-governmental organizations (NGO’s) in the development and improvement of community facilities and services, such as health care, schools, utilities and municipal management.

- Demonstration Impact:

Marlin will be one of the first mining investments in Guatemala in years. Its commercial success and its community programs should both provide a demonstration impact and help encourage new investment in the sector.

Contacts

For Inquiries About the Project, Contact

Mr. J. Michael Swetye, Principal Investment Officer
Oil, Gas, Mining and Chemicals Department F8K-254
International Finance Corporation
2121 Pennsylvania Avenue NW
Washington DC 20433
Email: Jswetye@ifc.org
Fax: 202-974-4323

This Summary of Project Information (SPI) 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. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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