ING Bank - Webstreet Angels · 2012-07-22 · in emerging markets − Mandated Lead Arranger for landmark transactions for different commodities across the globe − Top 5 position

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ING Bank… your global partner in Metals and Mining Finance

Key factors in successful

mining project financing

06.2012

Andor Lips – Vice President Structured Finance MSc, PhD, FIMMM

Do not put content in

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area ING June 2012 1

Todays presentation

> Introduction

> ING Bank‟s service to the mining industry

− ING Bank Introduction

− ING‟s Lending Service Offering and Capabilities

− ING‟s track record in Metals and Mining Finance

> How to develop successful mining projects (… in Turkey)

− Criteria needed to develop money-making mines

− Having enough capital to get started in the first place

Outline

April 2012

ING co-hosted a conference on

doing business in Turkey, helping

the Netherlands and Turkey

celebrating 400 years of diplomatic

and trading relations


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My background

> Academia

− Geologist by education (MSc & PhD)

− Associate researcher Economic Geology (Utrecht University)

> Government

− Senior Geologist / Project manager (BRGM, France)

− incl. commercial contracts for multinationals

> Industry

− Pasminco Exploration (Broken Hill, Oz), geologist („93/‟94)

− Eurogold (Turkey), regional exploration geologist, („96/‟97)

− Lydian International Ltd (TSX: LYD), Technical Director („07/‟10)

> Banking

− ING Bank N.V., VP Structured Finance Metals and Mining (‟10/ >)

+ expert European Commission / Scientific Board Unesco

Introduction


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ING Bank

> ING is a global financial institution of Dutch origin

> Offering banking, investments, a variety of life insurance,

non-life insurance and retirement services to meet the needs

of a broad customer base

> More than 95,000 employees

> Serving over 67 million private, corporate and institutional

customers in over 40 countries in Europe, North America and

Latin America, Asia and Australia

ING Bank


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ING Bank – Structured Finance

> Structured finance is the specialised lending arm of ING

− providing clients with creative solutions through a broad range of

structured finance products

− products including; project finance, structured corporate debt,

acquisition finance, international trade and export finance

> ING structured finance won a combined 13 “Deal of the Year”

awards in the Americas, EMEA and Asia in 2010 from PFI

and Project Finance Magazines

ING Bank


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ING Metals and Mining

We cover all commodities…..

…. and are involved from mine to market

Precious metals

Gold, silver, PGE, …

Raw materials

Iron ore, coal, bauxite, …

Refined metals

Steel, ferroalloys, aluminium, ...

Base metals

Copper, nickel, lead/zinc, …

Mines and processing facilities Steel plantsSmelters and integrated infrastructure


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Our service to your industry

Reliable Partner for

innovative solutions

ING is well positioned and possess the right capabilities

to understand and advice the mining business

Presence

and

Service Offering

1

Capabilities

2

Reputation

and

Relationship focused

consistently amongst the leading providers of structured finance

solutions in the Metals and Mining sector

3

a detailed industry knowledge and a solid understanding of

Metals and Mining projects

a demonstrated capability of integrating less conventional elements in the financing structure

ING is well positioned and possess the right capabilities to

understand and advice the mining business

combining ING‟s local presence and global coverage

delivery on all financial services needs; from project finance to

account management

global commercial and retail service offering complemented by

extensive local knowledge

a detailed industry knowledge and a solid understanding of Metals

and Mining projects

a demonstrated capability of integrating less conventional elements in the financing structure


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ING’s service offering in a nutshell

Project FinancingLimited recourse financing for Metals and Mining projects which may include arranging, underwriting and/or

direct lending. Possibly involving financing from multilaterals, Development Banks and Export Credit Agencies

Structured

Corporate Debt

Financing to mitigate a high level of reserve or technical risk, or high levels of local transfer risk (reducing the

overall cost of funding). Allows to maximise leverage and is also used to finance a project portfolio

Project AdvisoryValue added financial advisory services to developers, sponsors, projects and government agencies e.g.

bankable feasibility studies, financial modelling, technical advisory

Acquisition

Financing

Structured and leveraged acquisition finance, including the most challenging and important (transforming)

acquisitions within the Metals and Mining sector

International Trade

& Export Financing

Finance of trade flows of clients engaged in the distribution and logistical handling and trading of commodities

e.g. letters of credit

Financial Market

Products

Provision of a wide range of financial instruments to manage our clients‟ interest rate, commodity and

currency exposures

Transaction

Services

Flow products that support our clients‟ business e.g. factoring, lease, payments and cash management,

securities services trade finance services and working capital solutions

Len

din

gN

on

-L

en

din

g

Corporate Debt Unsecured corporate debt

Lo

ng

Term

Short

Term


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ING Structured Finance - Metals & Mining

> Well established position in the metals and mining

finance sector

− Unbeaten record in the recent largest mining project financings

in emerging markets

− Mandated Lead Arranger for landmark transactions for different

commodities across the globe

− Top 5 position in the 2011 EMEA MLA league table & number 1

in Russia

− Top 10 globally with significant underwriting capabilities and

well connected to colleague banks

ING’s capabilities


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> Detailed industry knowledge and solid understanding of

metals and mining projects

− Well equipped for every role related to a financing; advisor,

coordinator, arranger, technical agent

− Large network and excellent relationships with companies and

technical service providers

− Technical know-how from hands-on industrial experiences



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> Perfectly capable of integrating less conventional elements in

the financing structure

− Experience with innovative technology applications

− Experience with jurisdictions with higher perceived country risk

− Experience in financings with multiple sources of funds (including

ECAs, Multilateral Agencies, international and local banks)

− Proven track-record in executing financings for sponsors ranging

from industry top tier players to single-asset developing companies

> In-house dedicated Financial Markets Commodities Solution

team for add-on services

− Commodity hedging for metal production or input consumables

− Interest rates and foreign exchange hedging



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… selected recent transactions

Corporate Facility

Alaska

Silver (lead-zinc) Mine

USD 60m

Hecla Mining

Corporate Facility

Global

Copper & Zinc Mining

USD 300m

Lundin Mining

Acquisition Financing

Kazakhstan

Copper Mining

USD 2.1b

Kazakhmys

Structured Term Facility

Russia

Gold Mining

USD 150m

Petropavlosvsk Mining

Kupol

Russia

Gold Mine

USD 450m

Bema Gold / Kinross

Expansion Financing

Indonesia

Coal Mine

USD300m

PT Bayan Resources

Emirates Aluminium

Abu Dhabi

Aluminium Smelter

USD 4.7b

Dubal - Mabadala

Mozal

Mozambique

Aluminium Smelter

USD 600m

BHP Billiton, Mitsubishi, IDC

Qatalum

Qatar

Aluminium Smelter

USD 2.75b

Norsk Hydro – Qatar Petroleum

Refinancing

UK

Steel Refinery

GBP 3.65b

Tata Steel UK

Ambatovy

Madagascar

Nickel Mine and Refinery

USD 2.1b

Sherritt, Sumitomo, Korea Resources

Mine Expansion

USA

Coal Mine

USD335m

Trinity Coal

Pueblo Viejo

Dominican Republic

Gold Mine

USD 1.035bn

Barrick, Goldcorp

Alunorte

Brazil

Alumina Refinery

USD 310m

Vale, Norsk Hydro

Minera Antamina

Peru

Copper/zinc mine

USD 410m

Xstrata - BHP

Minera Esperanza

Chile

Copper Mine

USD 1.05bn

Antofagasta, Marubeni

Refinancing

Germany

Lignite Mine

EUR 270m

Mibrag

ING Metals and Mining (cont’d)

Kupol II

Russia

Gold Mine

USD 200m

Kinross

Structured Term Facility

Turkey

Steel Plant

USD 209.325m

POSCO Assan TST Celik

Sanayi A.S


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> MLA League Table (EMEA, by number of transactions)

> Selected Transactions / Awards

ING’s track record

Best Trade Bank in Metals &

Mining

Awards 2011

Natural Resources

Trade & Forfaiting Review

Americas Mining Deal of the

Year

Pueblo Viejo

US$1.03bn Credit Facility

Awards 2010

Natural Resources

Project Finance

International

Deal of the Year

United Company Rusal Plc

US$4.75bn

Pre-export Finance

Awards 2011

Natural Resources

Trade Finance


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ING Turkey – a coverage across the nation

> 320 branches and 6.000 employees in 91 cities

> Service offering

− Transaction services products: collections, payments and cash

management

− Structured and corporate lending: project financing, syndicated

loans, ECA loans, trade finance

− Financial market products: swaps, FX forwards & spots, options

− Advisory services

> Qualifications

− Dedicated international team with local market understanding

ING in Turkey

Municipality

Turkey 06/10

Istanbul Metropolitan

MunicipalityEUR 100.9m

Commercial Term Loan

EUR 49.8m

Hermes Covered Export Credit

Lead ArrangerBasic Industries

Turkey/Russia 06/09

OJSC Ruscam Kirishi

EUR 41mERBD Facility

Participant


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How to develop successful mining projects

> Well-acknowledged mineral potential in Turkey

> Criteria needed to develop money-making mines

> Having enough capital to get started in the first place

Mining in Turkey


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Well-acknowledged mineral potential

> Multitude of commodities (metallic / non-metallic)

> Relatively under-explored; high potential for new discoveries

> Strong development over past 20 years (away from state-owned)

− Amended Mining Code

− Challenge for new technologies, deep large mines, ….

Turkey mineral potential

Lips (2007); >80Mt Copper; >200Moz Gold metal endowment in the Alpine-Himalayan belt

Ovacik, 1996


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Developing money-making mines

> Good practices demonstrated in country

> Be(come) a low-cost producer

− low on the commodity cost-curve,

− low energy consumption

> Hold / cultivate your licence to operate

− Stakeholders

− Environmental & Social accountability

− Satisfy requirements from investors / lenders

− Equator Principles, IFC PS, reputational issues

− Prepare / anticipate well in advance and deliver on promises

> Further integrate mine-to-market

− Improve / integrate limited processing infrastructure

> Further develop highly skilled workforce

− Adapting to international standards / professional ethics

Mining in Turkey


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Access to capital

> Turkey Mining and Quarrying valued @ USD 15b (1.5% GDP,

in growing market)

> Several sources of funding available

• Equity

− Healthy local liquidity

− E.g. 4th gold market in the world, Koza Gold IPO

− Well viewed by international investors

− …… but waiting for “the next big thing”

− DFI picking up

• Lending

− Limited understanding of sector credit risks by local banks

− …… to team up with reputable mining financiers

− Equipment lease / credit from suppliers

• Strategic Alliances

Mining in Turkey


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POSCO Assan Celik Sanayi A.S.US$ 209.325m Corporate Term Loan

Sector

Steel Industry

Company background

POSCO ASSAN TST CELIK SANYI A.S. is owned

by a joint venture, consisting of:

• the Korean POSCO Group (60%),

• the Turkish Kibar Holding (30%) and

• Daewoo International Corporation (10%)

The Company will develop, construct and operate

a 205ktpa flat cold rolling stainless steel mill near

Izmit in Turkey. The greenfield steel mill is aimed

to be built towards a capacity up to 400-600ktpa in

a second stage. Initial construction work for the

first stage started in August 2011. Full production

is targeted for 2014.

POSCO has been leading the Korean steel

industry since its establishment in 1968. POSCO

is one of the top 3 steel makers in the world and

targets to solidify its significant presence in the

global market.

Transaction details

The Facility entails a USD 209.325 million 7 year

corporate term loan for POSCO ASSAN TST CELIK

SANAYI AS. ING acted as joint MLA, Sole Co-

ordinator and Facility Agent with a F/T of USD 50m.

Other institutions involved in the financing are HSBC

(USD 30m), the Korean Development Bank (USD

50m) and SMBC (USD 79.325m).

The financing benefits from unconditional and

irrevocable several guarantees from POSCO and

Daewoo for the full tenor of the financing.

Market outlook is favourable with stainless

steel demand overweighing supply in the Turkish

market, backed by Turkey's positive economic outlook

indicating growth in stainless steel consuming

businesses. The Company will encompass the only

modern cold rolling stainless steel mill in Turkey. With

short lead times, stable quality, and the geographical

advantage the new mill will have a prevailing

competitive position compared to Asian mills.

.

ING's role

• Joint MLA

• Sole Co-ordinator

• Sole Facility Agent

Deal Highlights

• The deal represents the first Metals & Mining financing in the Turkish market.

• The combination of strong economic fundamentals and a high quality Sponsor make this an

appealing transaction.

• The financing contributes to the enhancement of POSCO's competitive profile in the sector, by

improving its geographical business and diversity.


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area ING May 2012

Company background

• 100km northwest of the capital Santo

Domingo in the Cordillera Mountains

• 60% by Barrick Gold Corporation and 40% by

Goldcorp

• ~ 1Moz pa gold production during first five

years of full production

Transaction details

• USD 1.035bn project debt financing

• The financing comprises of a commercial

tranche and ECA tranches. Ex-Im Bank and

EDC are involved

• Financial close 2Q 2010 - Americas Mining

Deal of the Year 2010

• The Sponsors provide senior debt guarantees

(pre-completion)

• Commercial tranche benefits from PRI cover

ING's role

• ING acted as:

Co- Lead Arranger,

Joint Bookrunner, and

Documentation Agent

US$ 1.035bn Project Finance

Natural Resources

Pueblo Viejo Gold Project

Deal Highlights

The Pueblo Viejo Project Financing has been the most visible

transaction in the mining project finance sector over the past

three years. The deal is considered as a landmark project

financing, due to the combination of high country risk,

impressive size of operations, diverse source of funding (ECAs

and commercial banks), and most importantly the significant

environmental and social improvements the Project will realize

in the Dominican Republic.

Natural Resources

Dominican Republic 04/10

Pueblo Viejo Project

US$1bnProject Financing Facilities

MLA & Documentation Agent

Natural Resources

Dominican Republic 04/10


US$1bnProject Financing Facilities



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Esperanza Copper Project

Company background

• The Esperanza Copper Project in northern Chile

entails the construction of an open pit copper

mine, a crusher and a concentrator at the mine

site, a 145km seawater pipeline and related

infrastructure. Annual design capacity of the mine

is 700,000t of copper concentrate containing

195,000t of copper and 229,000 ounces of gold

and 1.56m ounces of silver. First production is

expected by 2010. An EPCM contracts was signed

with Aker Kvaerner.

• Total Project costs are US$ 2.3bn.

• The Project is owned by Antofagasta Plc. (70%)

and Marubeni (30%).

• This is the third project financing for a copper

project of Antofagasta, previous transactions were

put in place for the Los Pelambres and the El

Tesoro mines. Both mines were completed within

time and on budget.

Transaction details

• The US$ 1.05bn project debt financing is being

provided through a number of loan agreements.

Loans have a 12-year term.

• The financing comprises (i) a US$ 400m JBIC

loan, (ii) a US$ 200m EDC Loan, (iii) a US$ 50m

KfW Ipex Loan, and a (iv) US$ 400m Loan from

Commercial Lenders a/o ING.

• The Sponsors provide completion guarantees.

ING's role

• ING acted as a

Mandated Lead

Arranger and Technical

Agent with a final take

of US$ 62m.


Natural Resources

Americas Mining Deal of the

Year

Minera Esperanza

US$1.05bn

Awards 2009

Project Finance

International

Natural Resources

Term Loan Facility

Natural Resources

Chile 05/09


US$1.05bnProject Financing Facilities

Joint Bookrunner, MLA and Technical Agent

Natural Resources

Chile 05/09


US$1.05bnProject Financing Facilities

Joint Bookrunner, MLA and Technical Agent


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Ambatovy Nickel Project

Company background

• The Ambatovy Nickel Project entails the

construction of an open pit nickel mine, an ore

preparation plant at the mine site, a 220km

slurry pipeline, a processing plant, a nickel

refinery and related infrastructure.

• Annual design capacity of the mine is 60kt of

nickel and 5.6kt of cobalt.

• Total Project costs exceed US$5bn, which

represents the largest ever foreign direct

investment into Madagascar.

• Owned by Sherritt (40-45%), Sumitomo

(27.5%) and Korean Resources (Kores,

27.5%); + 5% earn-in interest for SNC-

Lavalin.

Transaction details

• The US$2.1bn project debt financing is being

provided through a number of loan

agreements. All loans have a 17-year term.

• The financing comprises (i) a US$ 700mn

JBIC loan, (ii) a US$ 650m KEXIM Loan, (iii)

a US$ 300m EIB Loan, (iv) US$ 300m EDC

Loan, and (v) a US$ 150m AfDB Loan.

• The JBIC and KEXIM debt was split into

direct tranches and commercial bank backed

tranches of US$ 210m (JBIC) and US$ 195m

(KEXIM).

• The Sponsors will provide completion

guarantees Sherritt‟s share of the completion

guarantees total US$840m, of which US$

598m are counter-guaranteed by the other

Sponsors.

• Ambatovy‟s other sponsors also provide

Sherritt with subordinated loans to an

aggregate of US$ 236m to fund Sherritt‟s

equity commitments to the Project.

ING's role

• ING acted as:

Mandated Lead

Arranger, and debt

provider in the JBIC

and K-EXIM

commercial

tranches.

Natural Resources

Natural Resources

Madagascar 08/07

Ambatovy Minerals

US$2.1bnProject Finance Facilities

Mandated Lead Arranger

European Mining Deal of the

Year

Ambatovy Mining Project

US$2.1bnCredit Facilities

Awards 2007

Project Finance

Magazine

Natural Resources


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Metals and Mining

Natural Resources

US/Canada/Brazil 03/11

Kinross Gold Corporation

US$1.2bnRevolving Credit Facility

LenderNatural Resources

US 06/11

Cloud Peak Energy LLC

US$500mRevolving Credit Facility

LenderNatural Resources

US 12/10

American Gilsonite Company

US$102mCredit Facilities

Documentation Agent

Natural Resources

C anada 0 3 / 1 1 B arrick Gold Corp

US$ 2 bn Revolving Credit Facility

P articipant Natural Resources

Russia 12/10

Polymetal OAO

US$75mTerm Loan Facility

Sole Lender

Natural Resources

Canada 09/10

Lundin Mining Corporation


Co Documentation AgentNatural Resources

Russia 09/10

Lebedinskiy GOK & OAO

Metalloinvest Group


Sole LenderNatural Resources

UK 09/10

Tata Steel UK Ltd

£3.65bnSyndicated Term Loan

Joint MLA & Joint Bookrunner

Natural Resources

Germany 03/10

Mibrag mbH

EUR 270mTerm Loan Facility

Joint Mandated Lead ArrangerNatural Resources

Russia 12/09

Pokrovskiy Mine


MLA, Facility Agent & Documentation Agent

Natural Resources

US 10/11

Hecla Mining Company


Co-lead Arranger

Lender

Natural Resources

DominicanRepublic 04/10


US$1bn

Project FinancingFacilities


Selected credentials

Natural Resources

United Kingdom Mandated

Wolf MineralsGBP 50mProject Financing Facility

Joint MLA and Technical AgentNatural Resources

Australia 09/11

Wiggins Island Coal Export

Terminal Pty Ltd

US$2.85bnTerm Loan, Interest Rate & FX

Swaps

Mandated Lead Arranger

Natural Resources

Turkey Mandated

US$ 209mTerm Loan Facility

Joint MLA. Coordinator and Facility Agent

Natural Resources

Turkey 05/12

US$ 209mTerm Loan Facility

Joint MLA. Coordinator and Facility Agent

Posco Assan Steel

Natural Resources

Czech Republic Mandated

EP EnergyEUR 1bnTerm Loan Facility

Joint MLA

Natural Resources



Joint MLA

Natural Resources



Joint MLA

ING Bank - Webstreet Angels · 2012-07-22 · in emerging markets − Mandated Lead Arranger for landmark transactions for different commodities across the globe − Top 5 position

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