Upper Volta - Perkoa Mining Exploration And Technical Assistance Project : Credit 1482 - Credit Agreement - Conformed

CREDIT NUMBER 1482 UV Development Credit Agreement (Perkoa Mining Exploration and Technical Assistance Project) between REPUBLIC OF UPPER VOLTA and INTERNATIONAL DEVELOPMENT ASSOCIATION Dated C ,1984 CREDIT NJMBER 1482 UV DEVELOPMENT CREDIT AGREEMENT AGREEMENT, dated C 2A , 1984, between the REPUBLIC OF UPPER VOLTA hereinafter called the Borrower or Upper Volta) and INTERNATIONAL DEVELOPMENT ASSOCIATION (herein- after called the Association). WHEREAS (A) the Borrower has requested the Association to assist in the financing of the Project described in Schedule 2 to this Agreement by extending the Credit as hereinafter provided; and (B) the Project will be carried out by BUVOGMI (as herein- after defined) with the Borrower's assistance and, as part of such assistance, the Borrower will make available to BUVOGMI the proceeds of the Credit as hereinafter provided; and WHEREAS the Association has agreed, on the basis inter alia of the foregoing, to extend the Credit to the Borrower upon the terms and conditions hereinafter set forth and in the Project Agreement of even date herewith between the Association and BUVOGMI; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I General Conditions; Definitions Section 1.01. The parties to this Agreement accept all the provisions of the General Conditions Applicable to Development Credit Agreements of the Association, dated June 30, 1980, with the same force and effect as if they were fully set forth herein (said General Conditions Applicable to Development Credit Agree- ments of the Association being hereinafter called the General Conditions). Section 1,02. Wherever used in this Agreement, unless the context otherwise requires, the several terms defined in the General Conditions and in the Preamble to this Agreement have the respective meanings therein set forth and the following addi- tional terms have the following meanings: (a) "BUVOGMI" means Bureau Voltaique de la G6ologie et des Mines created and operating under the Borrower's Decrees No. - 2 - 78-165/PRES/MCDIM, No. 78-166/PRES/MCDIM and No. 78-167/PRES/ MCDIM, all dated May 17, 1978. (b) "BUVOGMI Legislation" means collectively the Borrower's Decrees No. 78-165/PRES/MCDIM, No. 78-166/PRES/MCDIM, No. 78-167/ PRES/MCDIM, all dated May 17, 1978, as amended from time to time. (c) "Project Agreement" means the agreement between the Association and BUVOGMI of even date herewith, as the same may be amended from time to time, and such term includes all schedules to the Project Agreement and all agreements supplemental to the Project Agreement. (d) "Project Preparation Advance" means the project prep- aration advance granted by the Association to the Borrower pur- suant to an exchange of letters dated April 8, 1983 and April 27, 1983 between the Borrower and the Association. (e) "Special Account" means the account to be opened and thereafter maintained pursuant to Section 2.02 of the Project Agreement. (f) "Project Preparation Unit" means the Unit established within BUVOGMI pursuant to Section 3.04 of the Project Agreement. ARTICLE II The Credit Section 2.01. The Association agrees to lend to the Bor- rower, on the terms and conditions set forth or referred to in this Agreement, an amount in various currencies equivalent to seven million Special Drawing Rights (SDR 7,000,000). Section 2.02. (a) The amount of the Credit may be withdrawn from the Credit Account in accordance with the provisions of Schedule 1 to this Agreement, as such Schedule may be amended from time to time by agreement between the Borrower and the Asso- ciation, for expenditures made (or, if the Association shall so agree, to be made) in respect of the reasonable cost of goods and services required for the Project and to be financed out of the proceeds of the Credit. (b) Promptly after the Effective Date, the Association shall, on behalf of the Borrower, withdraw from the Credit - 3 - Account and pay to itself the amount required to repay the prin- cipal amount of the Project Preparation Advance withdrawn and outstanding as of such date and to pay all unpaid charges there- on. The unwithdrawn balance of the authorized amount of the Project Preparation Advance shall thereupon be cancelled. (c) Deposits into, and payments out of the Special Account, shall be made in accordance with the provisions of Schedule 3 to this Agreement. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to the Project Agreement. Section 2.04. The Closing Date shall be June 30, 1988 or such later date as the Association shall establish. The Associa- tion shall promptly notify the Borrower of such later date. Section 2.05. (a) The Borrower shall pay to the Association a commitment charge at the rate of one-half of one per cent (1/2 of 1%) per annum on the principal amount of the Credit not with- drawn from time to time. The commitment charge shall accrue from a date sixty days after the date of the Development Credit Agree- ment to the respective dates on which amounts shall be withdrawn by the Borrower from the Credit Account or shall be cancelled. (b) The commitment charge shall be paid: (i) at such places as the Association shall reasonably request; (ii) without restrictions of any kind imposed by, or in the territory of, the Borrower; and (iii) in the currency specified in this Agreement for the purposes of Section 4.02 of the General Conditions or in such other eligible currency or currencies as may from time to time be designated or selected pursuant to the provisions of that Section. Section 2.06. The Borrower shall pay to the Association a service charge at the rate of three-fourths of one per cent (3/4 of 1%) per annum on the principal amount of the Credit withdrawn and outstanding from time to time. Section 2.07. Commitment charges and service charges shall be payable semiannually on March 1 and September 1 in each year. -4- Section 2.08. The Borrower shall repay the principal amount of the Credit in semiannual installments payable on each March 1 and September 1, commencing September 1, 1994, and ending March 1, 2034, each installment to and including the installment payable on March 1, 2004, to be one-half of one per cent (1/2 of 1%) of such principal amount, and each installment thereafter to be one and one-half per cent (1-1/2%) of such principal amount. Section 2.09. The currency of the French Republic is hereby specified for the purposes of Section 4.02 of the General Condi- tions. ARTICLE III Execution of the Project Section 3.01. (a) The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and to this end, without any limitation or restriction upon any of its other obligations under the Development Credit Agreement, the Borrower shall cause BUVOGMI to perform in accordance with the provisions of the Project Agreement all the obligations therein set forth, shall take and cause to be taken all action, including the provision of funds, facilities, services and other resources, necessary or appropriate to enable BUVOGMI to perform such obligations, and shall not take or permit to be taken any action which would prevent or interfere with such performance. (b) The Borrower shall make the proceeds of the Credit available to BUVOGMI as a grant. ARTICLE IV Remedies of the Association Section 4.01. For the purposes of Section 6.02 of the Gen- eral Conditions the following additional events are specified pursuant to paragraph (h) thereof: (a) BUVOGMI shall have failed to perform any of its obliga- tions under the Project Agreement; (b) as a result of events which have occurred after the date of the Development Credit Agreement, an extraordinary situa- tion shall have arisen which shall make it improbable that BUVOGMI will be able to perform its obligations under the Project Agreement; (c) BUVOGMI Legislation shall have been amended, suspended, abrogated, repealed or waived so as to affect materily and adversely the ability of BUVOGMI to perform any of its obliga- tions under the Project Agreement; and (d) the Borrower or any other authority having jurisdiction shall have taken any action for the dissolution or disestablish- ment of BUVOGMI or for the suspension of its operations. Section 4,02. For the purposes of Section 7.01 of the Gen- eral Conditions, the following additional events are specified pursuant to paragraph (d) thereof: (a) the event specified in paragraph (a) of Section 4.01 of this Agreement shall occur and shall continue for a period of 60 days after notice thereof shall have been given by the Borrower to the Association and BUVOGMI; and (b) any event in paragraphs (c) and (d) of Section 4.01 hereof shall occur. ARTICLE V Effective Date; Termination Section 5.01. The following events are specified as addi- tional conditions to the Pffectiveness of the Development Credit Agreement within the meaning of Section 12.01 (b) of the General Conditions, namely, that: (a) the Project Preparation Unit, with, among its staff, the mineral economist referred to in Section 2.03 of the Project Agreement, has been established pursuant to Section 3.04 of the Project Agreement; (b) the exploration consultants referred to in Section 2.03 of the Project Agreement have been employed as provided in such Section; and (c) the Special Account has been opened pursuant to Section 2.02 of the Project Agreement. - 6 - Section 5,02. The following is specified as an additional matter, within the meaning of Section 12.02 (b) of the General Conditions, to be included in the opinion or opinions to be fur- nished to the Association, namely that the Project Agreement has been duly authorized or ratified by BUVOGMI, and is legally binding upon BUVOGMI in accordance with its terms. Section 5.03. The date October 1, 1984 is hereby specified for the purposes of Section 12.04 of the General Conditions. Section 5.04. The provisions of Section 4.02 of this Agreement shall cease and determine on the date on which the Development Credit Agreement shall terminate or on a date seven (7) years after the date of this Agreement, whichever shall be the earlier. ARTICLE VI Representative of the Borrower; Addresses Section 6.01. The Minister responsible for finance of the Borrower is designated as representative of the Borrower for the purposes of Section 11.03 of the General Conditions. Section 6.02. The following addresses are specified for the purpose of Section 11.01 of the General Conditions: For the Borrower: Ministere des Finances Ouagadougou Upper Volta Cable address: Telex: MINIFINANCE 5256 Ouagadougou MIFICOM For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America -7- Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) 64145 (WUI) or 197688 (TRT) IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. REPUBLIC OF UPPER VOLTA By 5 0 0a t horized Representative INTERNATIONAL DEVELOPMENT ASSOCIATION et/ Regional Vice President Western Africa - 8 - SCHEDULE 1 Withdrawal of the Proceeds of the Credit 1. The table below sets forth the Categories of items to be financed out of the proceeds of the Credit, the allocation of the amounts of the Credit to each Category and the percentage of expenditures for items so to be financed in each Category: Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (1) Mining works 2,000,000 90% under Part C (1) (2) Equipment 680,000 100% (3) Materials and supplies (a) for Parts A 470,000 100% and B of the Project (b) for Part C 240,000 100% of the Project (4) Consultants (a) for Parts A 2,300,000 100% and B of the Project (b) for Part C 800,000 100% of the Project (5) Refunding of 80,000 Amount due under Project Prepara- Section 2.02 (b) tion Advance of this Agreement (6) Initial deposit 330,000 Amount due under to the Special Section 2.02 of Account the Project Agreement - 9 - Amount of the Credit Allocated % of (Expressed in Expenditures Category SDR Equivalent) to be Financed (7) Unallocated 100,000 TOTAL 7,000,000 2. The disbursement percentages have been calculated in com- pliance with the policy of the Association that the proceeds of the Credit shall not be disbused on account of payments for taxes levied by, or in the territory of, the Borrower on goods or services, or on the importation, manufacture, procurement or supply thereof; on this basis, if the amount of any such taxes levied on or in respect of items in any Category decreases or increases, the Association may, by notice to the Borrower, in- crease or decrease the disbursement percentage then applicable to such Category as required to be consistent with the aforemen- tioned policy of the Association. 3. Notwithstanding the provisions of paragraph 1 above, no withdrawals shall be made in respect of: (a) expenditures made prior to the date of this Agreement, except that withdrawals, in an aggregate amount not exceeding the equivalent of SDR 500,000, may be made in respect of Category (2) on account of expenditures made before that date but after April 1, 1984; and (b) expendi- tures under Categories (1), (3) (b) and (4) (b) unless the Asso- ciation is satisfied with the plan of action prepared under Section 2.05 (b) of the Project Agreement for carrying out Part C of the Project. 4. Notwithstanding the allocation of an amount of the Credit or the disbursement percentages set forth in the table in para- graph 1 above, if the Association has reasonably estimated that the amount of the Credit then allocated to any Category will be insufficient to finance the agreed percentage of all expenditures in that Category, the Association may, by notice to the Borrower: (i) reallocate to such Category, to the extent required to meet the estimated shortfall, proceeds of the Credit which are then allocated to another Category and which in the opinion of the Association are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall., - 10 - reduce the disbursement percentage then applicable to such expen- ditures in order that further withdrawals under such Category may continue until all expenditures thereunder shall have been made. 5. If the Association shall have reasonably determined that the procurement of any item in any Category is inconsistent with the procedures set forth or referred to in this Agreement, no expen- diture for such item shall be financed out of the proceeds of the Credit, and the Association may, without in any way restricting or limiting any other right, power or remedy of the Association under the Development Credit Agreement, by notice to the Bor- rower, cancel such amount of the Credit as, in the Association's reasonable opinion, represents the amount of such expenditures which would otherwise have been eligible for financing out of the proceeds of the Credit. - 11 - SCHEDULE 2 Description of the Project The objectives of the Project are to provide: (i) a complete technical and economic evaluation of the sulfide zinc-silver deposit at Perkoa which is located in the province of Bourkina in Upper Volta, in order to attract potential investors; (ii) legal assistance to BUVOGMI in connection with future contractual arrangements for the exploitation of the Perkoa deposit; and (iii) assistance to BUVOGMI to strengthen its capacity to evaluate mining deposits and promote such deposits to potential investors. To that end, the Project consists of the following Parts: Part A: (1) Detailed drilling and delineation of the Perkoa deposit and neighboring areas. (2) Geochemical and geophysical surveys of the Perkoa deposit area. (3) Preparation of an ore reserve and prefeasibility report. Part B: (1) Establishment of a mineral-dressing unit and strength- ening of BUVOGMI's Project Preparation Unit to enable it to (i) monitor the progress of a development project at Perkoa, and (ii) evaluate and promote the develop- ment of mining deposits in Upper Volta by, inter alia, the publication, if deemed appropriate, of a general description of the mining sector for the benefit of potential investors. (2) Review of mining legislation, mining concession agree- ments, tax legislation applicable to mining operations and the Borrower's Investment Code, and preparation of model agreements and draft contracts for the Perkoa mining development to be entered into between BUVOGMI and potential investors. - 12 - (3) Promotion of the Perkoa deposit to potential investors, including the preparation of an investment prospectus required therefor. Part C: (1) Construction of ramp for access to the deposit, under- ground drilling and bulk sampling of ore for metallurgical testing. (2) Preparation of a feasibility study for the development of the Perkoa deposit. Part D: Acquisition and utilization of equipment to carry out Parts A (1) and (2), B (1) and C (1) above. The Project is expected to be completed by September 30, 1987. - 13 - SCHEDULE 3 Special Account 1. For the purposes of this Schedule: (a) the term "Category" means a category of items to be financed out of the proceeds of the Credit as set forth in the table in paragraph I of Schedule 1 to this Agreement; (b) the term "eligible expienditures" means expenditures in respect of the reasonable cost of goods and services required for the Project and to be financed oit of the proceeds of the Credit allocated from time to time to Categories (1) through (4) in accordance with the provisions of Schedule 1 to this Agreement; and (c) the term "initial deposit" means an amount in dollars equivalent to the amount allocated to Category (6) and to be withdrawn from the Credit Account and deposited in the Special Account pursuant to the first sentence of paragraph 3 to this Schedule. 2. Payments out of the Special Account shall be made exclu- sively for eligible expenditures in accordance with the provi- sions of this Schedule. 3. The Association shall, at the request of the Borrower, withdraw on behalf of the Borrower from the Credit Account and deposit into the Special Account the initial deposit. Thereafter and on the basis of requests by the Borrower furnished to the Association at such intervals as the Association shall specify, the Association shall further so withdraw from the Credit Account and deposit into the Special Account such amounts as shall be required to replenish the Special Account with amounts equal to payments made out of the Special Account for eligible expendi- tures, but only to the extent that the amount of any such depo- sit, together with any amount remaining on deposit in the Special Account as of the date of such request, shall not exceed in the aggregate the equivalent of the initial deposit. Except as the Association may otherwise agree, each such deposit after the initial deposit shall be withdrawn by the Association from the Credit Account under the respective Categories (1) through (4), and in the respective equivalent amounts, as shall have been justified by the evidence supporting the request for such deposit furnished pursuant to paragraph 4 of this Schedule. - 14 - 4. Prior to or at the time of each request by the Borrower for a deposit by the Association into the Special Account after the initial deposit, the Borrower shall furnish to the Association in respect of each payment made by the Borrower out of the Special Account such documents and other evidence as the Association shall reasonably request, showing that such payment was made for eligible expenditures. 5. Notwithstanding the provisions of paragraph 3 of this Sched- ule, no further deposit into the Special Account shall be made by the Association (a) when the Association shall have determined at any time that all further withdrawals can be made directly by the Borrower from the Credit Account in accordance with the provi- sions of paragraph (a) of Section 2.02 of this Agreement, or (b) when the total unwithdrawn amount of the Credit allocated to Categories (1) through (4) for the Project, minus the amount of any qualified agreement to reimburse made by the Association and of any special commitment entered into by the Association pur- suant to Section 5.02 of the General Conditions with respect to the Project, shall be equal to the equivalent of twice the amount of the initial deposit, whichever shall be sooner. Withdrawal from the Credit Account of the remaining unwithdrawn amount of the Credit allocated to Categories (1) through (4) for the Proj- ect shall follow such procedures as the Association shall specify by notice to the Borrower and shall, except as the Association shall otherwise agree, be made only after and to the extent the Association shall have been satisfied that all such amounts remaining on deposit in the Special Account as of the date of such notice have been or will be utilized in making payments for eligible expenditures. 6. If the Association shall have determined at any time that: (a) any payment out of the Special Account (i) was made for any expenditure or in any amount not eligible pursuant to paragraph 2 of this Schedule, or (ii) was not justified by the evidence furnished pursuant to paragraph 4 of this Schedule, the Borrower shall, promptly upon notice from the Association and, unless otherwise agreed by the Association, prior to any further deposit into the Special Account by the Association, deposit into the Special Account or, if the Association shall so request, refund to the Association an amount equal to the amount of such payment or the portion thereof not so eligible or justified; or - 15 - (b) any amount outstanding in the Special Account will not be required to cover further payments for eligible expenditures, the Borrower shall, promptly upon notice from the Association, and unless otherwise agreed by the Association, refund to the Association such amount then outstanding in the Special Account. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 198 FOR SECRETARY