S.A. San Miguel A.G.I.C.I.y.F (“San Miguel”) is a world leader in citrus production and exports, with US$120 million consolidated revenues, 1,200 permanent staff and 5,500 seasonal workers, and operations in Argentina, Uruguay and South Africa. In 2007, San Miguel produced 250,000 MT of lemon on its own 5,500 Ha of plantations, exported over 110,000 MT of fresh citrus to Europe and Asia, and processed 260,000 MT of lemons to produce concentrated frozen lemon juice, essential oil and dry peel.

The proposed IFC investment is a $10 million A and C loan for IFC’s own account.

10.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	10.0
Equity

* These investment figures are indicative

Milagro owns and operates several plantations in Salto and Paysandu regions in the northern part of Uruguay were the climatic conditions and the quality of the soils is ideal for sweet citrus growing. The company’s packing and processing plants are located in Young, San Jose and Montevideo.

The project is to modernize and expand the production capacity of Milagro. This will contribute to the efficiency of the sweet citrus industry in Uruguay. The project will also contribute to maintain and generate employment and SME development in Salto.

- Providing Long term financing: San Miguel’s citrus plantations, with a ‘useful life’ of about 30 years, are capital intensive. Securing adequate financing in Argentina in the context that has prevailed since 2002 is very difficult, even for an exporter with a strong market share and sound track record. Through the new project, IFC would provide to San Miguel long term financing, with 8-year tenor, which is more adequate for the capital expenditures and expansion plans of the Group. - EHS standards and implementation: As a by-product of its lemon crushing plant, San Miguel produces a difficult industrial waste, which is highly acidic and buffered. Under IFC’s supervision, the Group is currently installing an anaerobic reactor. Once operational, the waste treatment would be the first in Argentina. It would have a strong demonstration effect in the industry. - Long term partnership: as San Miguel keeps growing through both domestically and abroad, IFC welcomes the long term partnership, to support the Group’s international expansion strategy. Additionality: - Cleaner production and carbon credit: Phase 2 of the waste treatment includes a bio-digester, which will generate biogas that can be collected and put to use on-site, thereby cutting pollution and production costs at the same time. Once phase 2 of the waste treatment is completed, the team will engage with the Group on energy efficiency and potential carbon credits from the waste treatment and industrial processing lines. - Stamp of approval: San Miguel is locally traded on the Buenos Aires Stock Exchange. Given the volatility still prevailing in Argentina, having IFC as a relationship lender supports the Group’s stable image in the market.

Milagro is an established company producing and exporting fresh fruit and industrial citrus products including essential oils and concentrated juices. The company owns and operates 3,744 ha of land situated from the northwest to southwest portion of Uruguay. Land and facilities acquisition transpired without economic or physical dislocation. The company uses a high quality assurance manual to guide management of its operations including nursery, farming and processing. Food safety is ensured through good agricultural practice certification (GlobalGAP and Nature’s Choice) on the farms and HACCP certification programs in fruit packing and industrial processing. Milagro’s labor management system and policies are transparent and adequately documented, and occupational health and safety is addressed in all operations.

Organic waste and wastewater from fruit packing and industrial operations are well managed and in compliance with local regulatory agency requirements. Bulk organic waste is sold as an animal food additive. A potential risk to local host communities posed by raw materials and product transport is adequately controlled through the use of professional transport companies for these services. The company is fully cognizant of biodiversity and resource management issues and works closely with government agencies to ensure protection of sensitive and government-designated protected areas.

While all Performance Standards are applicable to this investment, IFC’s 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:

PS1 – Social and Environmental Assessment and Management Systems
PS2 – Labor and Working Conditions
PS3 – Pollution Prevention and Abatement
PS4 – Community Health, Safety and Security
PS5 – Land Acquisition and Involuntary Resettlement
PS6 – Biodiversity Conservation and Sustainable Natural Resources Management

Based on this early review, it is anticipated that this investment will require 30 days disclosure by IFC prior to submission to the Board and has been provisionally categorized as B.