Argentex Mining Corporation is a listed (TSX V.ATX) Canadian junior mining exploration company. The Company was founded in 2004 by a team of experienced geologists and has a strong management team with the relevant experience and capacity to progress the project through the exploration phase. The Company has a market capitalization of approximately CAD30 million (US$28.5 million, as of May 27, 2010). The single largest shareholder is the CEO, who holds a 7% interest. Management and Directors hold approximately 18% of the Company.

The total project cost to bring the Pinguino project up to completion of pre-feasibility study is preliminary estimated to $10 million, but will depend on exploration results. The proposed IFC investment consists of an initial equity investment of $7 million and a potential future investment of $11.7 million for the exercise of warrants.

18.78 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan
Equity	18.78

* These investment figures are indicative

The project is a remote greenfield site located 400 meters above sea level in arid low-relief topography in the Deseado Massif in the Santa Cruz province in southern Argentina. There are no settlements and no farming or other competing economic interests in the license area. The closest population center is Puerto San Julian, which is 70km away and has a population of around 6,200 people. There is an existing system of all-weather roads that provide year-round access to the property.

The proposed investment will be made before the completion of a full project feasibility study that would confirm the commercial viability of the Pinguino project. The IFC investment will thus fund exploration and further studies and will not fund development of a mine or result in any immediate incremental production. Development impacts from exploration activities are typically limited but nonetheless create local employment. The proposed project is located in a remote region of Santa Cruz province that suffers from depopulation and economic stagnation. A volcanic eruption in 1991 covered the area with a thick layer of ash that put an end to the then vibrant cattle industry in the region. There are few other sources of potential economic growth and job creation in the area.

Should Pinguino be developed into a commercial mining operation, significant economic development impacts are likely to be realized during the construction and production phases, including employment opportunities, tax revenues/foreign exchange contribution to the national economy, purchase of local goods and services and associated economic development.

Whereas Argentex has expressed its intent to achieve E&S best practice already at exploration stage, it is a junior mining company that lacks in-house resources/expertise and the Company seeks IFC advice/help in this regard. IFC’s deep experience helping other junior mining companies address the needs to build HSEC risk management capabilities in South America and elsewhere makes IFC uniquely positioned to add value to the Company in this regard. IFC has already provided key guidance for the development of the Company’s HSEC policy and has identified several areas of potential IFC input.

IFC will provide financing at a time when the Company needs to raise additional equity financing to continue to fund its exploration program and the completion of a pre-feasibility study. In addition to the proposed up-front equity funding plus potential additional funds from exercise of warrants, IFC would consider potentially providing debt funding on its own account and help mobilize funding from other banks if the project were to move to project development.

This is a Category B project according to IFC’s procedures for Environmental and Social Review of Projects because the project only involves exploration and therefore has limited adverse impacts and risks which are manageable.

IFC’s appraisal of this potential investment has identified the following environmental, social, health and safety issues as well as potential issues if and when mine development commences:

Management of exploration activities – Control of erosion and rehabilitation of drill roads, drill sites, safe disposal of oils, waste, etc.
Social issues - Management of community relations and expectations through on-going consultation and disclosure.
Potential future impacts (if Argentex’s prospects are developed into mines) typical of those associated with open pit and underground mining – community impacts, land acquisition, waste management, surface and groundwater protection, health & safety, hazardous materials exposure and management, emergency preparedness & response.

The identified risks will be managed through the implementation of an Health, Safety, Environment and Community (HSEC) Policy ensuring that the operations are compliant with the requirements of IFC Performance Standards. Prior to developing any mine activities a full Environmental and Social Impact Assessment (ESIA) will be conducted in line with IFC Performance Standard requirements.

Refer to the Environmental and Social Review Summary for more detail.

Governance risks to the development impacts are assessed as acceptable. Argentina discloses revenues received from the extractive industries sector and the Company is committed to disclose publicly all payments made to the host governments. Governance in the mining sector is good both with regard to regulatory and legal framework and implementation.