APPRAISALr OF THE BOKE BAUXITE PROJECT REPUBLIC OF GUINEA. August. 30, 1968

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized R EST R I C T E D Report No. TO-672a This report was orepared,for use 'within the Bank a'nd its affilioted organizations. They do not accept responsibility for its accuracy or cdmpleteness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT. ASSOCIATION APPRAISALr OF THE BOKE BAUXITE PROJECT REPUBLIC OF GUINEA August. 30, 1968 Projects Department

2 CURRENCY EQUIVALENTS Currency Unit: GF US$1 - GF250 GFIOO = US$0. 4 GF1 billion = US$40. 0 million. FISCAL YEAR October 1 - September 30 Weight and Measures: Metric METRIC: BRITISH/U. S. EQUIVALENTS 1 Kilometer (Km) = miles (mi) 1 Meter (m) = 3.28 feet (ft) 1 Hectare (ha) = 2.47 acres (ac) 1 Liter (1) = 0.22 imperial gallons = gallons US 1 Metric ton (m. ton) = 2205 pounds (lb) ACRONYMS CBG - Compagnie des Bauxites de Guinee Bamidi - Bauxites du Midi OFAB - Office d'amenagement de Boke

3 GUINEA APPRAISAL OF THE BOKE BAUXITE PROJECT TABLE OF CONTENTS Pages SUKNARY i - iii 1. INTRODUCTION 1 2. BACKGROUND 2 (i) General 2 (ii) Mining and Minerals 2 3. THE BOKE PROJECT 3 (i) Location of the Boke Project 3 (ii) The Bamidi Venture 3 (iii) The Halco Agreement of THE OFAB INFRASTRUCTURE 5 (i) Summary 5 (ii) The Railway 5 (iii) The Port 5 (iv) The Townsite, Housing and Buildings 6 (v) Engineering 6 (vi) Summary Cost Estimates OFAB Infrastructure 7 (vii) Construction Financing and Disbursement Procedures 9 (viii) Procurement 9 (ix) Construction Schedule and Management 10 (x) Management of Government Responsibilities (OFAB) CBG I-HNINTG OPERATIONS AND 1NSTALLATIONS 14 (i) Ore Reserves 14 (ii) Sales 14 (iii) CBG Installations 15 (iv) Summary Cost Estimate CBG Installations 16 (v) CBG Technical Assistance and Training Agreement 16 This report has been prepared by members of the Working Party, Messrs. J. Brechot (Railway), F. Higginbottom (Ports and Townsite), J.M.R. Feige (Mining Operations), F. Sander (Finance), V. Wouters (Economics) and H. van Helden (Project Co-ordinator).

4 Table of Contents (Cont'd) FINANCIAL 17 (i) Investment 17 (ii) Financing 17 (iii) Forecast of Operating Results 19 (iv) Balance Sheet and Cash Flow 20 (v) Summary of Results 22 (vi) Rate of Return 23 (vii) Pay Back Period 24 (viii) Return to Government per ton of Bauxite 24 (ix) Harbor Costs and Dues 24 (x) Financial Advice and Audit of OFAB Accounts ECONO1IC EVALUATION DEBT SERVICE SECURITY AND OTHER IMPORT LEGAL ARRANGEMENTS COMCLUSIONS AND RECOMI1ENDATIONS 29 APPENDIX A (i) (ii) (iii) APPENDIX B - APPENDIX C - APPENDIX D - APPENDIX E - Description of Boke Deposits and Summary of Scofield Report Bauxite Prospects Proposed FOB Selling Price of Bauxite Summary of the Basic 1963 Agreement Creating CBG Statutes of OFAB Detailed Description and Cost Estimates of the OFAB Infrastructure Contracts, Contractual Arrangement and Construction Schedule TABLE 1 - CBG - Equipment and Construction Cost Estimate 2 - CBG - Replacements and Additions to Equipment 3 - CBG - Income Statements 4 - CBG - Balance Sheets 5 - CBG - Source and Application of Funds 6 - OFAB- Cash Flow and Balance Sheet 7 - CBG - Estimated Advances to Government of Guinea - t'for Service of I.B.R.D. Loan 8 - Financial Rate of Return 9 - Guinea - Estimated Increase in National Income 10 - Guinea - Generation of Foreign Exchange MAP 1 - Guinea - Boke Bauxite Project 2 - General Layout of Kamsar Region 3 - Kamsar Townsite

5 GUriL;A APPRAISAL OF THE BOKE BAUXITE PROJECT SUMMARY i. As early as 1964 the Government of Guinea approached the Bank for participation in the financing of a bauxite mining project which was to make an important contribution to the development of the country's economy. At that time the Government had already entered into an agreement with a US aluminum producer, Hiarvey Aluminum Company (later Hlalco Mining, Inc. was established by this firm for the Guinean project) to create the Compagnie de8 Bauxit 4e Guinee (CBG) which would mine some l-1½ million tons of bauxite in Guinea. The Government owns 49 percent and Halco 51 percent in CBG. The Government was to provide the infrastructure for the project, consisting of a railway, a port and a township, and Halco was to supply the mining, processing and bauxite train equipment. ii At the time the Bank considered that much more detailed engineering would be needed before the project would be appraised, and in early 1966 made a US$1.7 million engineering loan (SI-GUI) for the infrastructure project. When in early 1967 several other large aluminum firms also became interested in purchasing Guinea's high grade bauxite, the project had to be enlarged so as to accommodate the mining and transportation of some 5-6 million tons annually. As a result thereof, Halco was reorganized by including the prospective buyers as shareholders in the company. The increased mining capacity called for revision of the engineering plans; this, and the reorganization of Halco, requiring the settling of many financial and legal issues, has occupied the time to date. iii. The above developments have also caused the Bank to be involved in the preparation of the revised project from the beginning. Consequently, negotiations between the Bank and Guinea, CBG and Halco have taken place concurrently with the preparation of the project as it is now presented in this report. Compared with its original concept, the project has been greatly improved, particularly since the increased mining volume has strengthened the economic return on the investment for the infrastructure which is the Bank's project. Its successful completion and operation will contribute greatly to the country's economy; in addition it should also contribute to the development of the country's administrative, technical and managerial skills.

6 iv. The total initial investment required to provide capacity to mine, transport, process and export bauxite at the projected level of up to 6.6 million tons a year is estimated at US$182.5 million equivalent, of which CBG will provide, through its private participants, US$99 million equivalent to finance the mining and processing facilities. The Government, which wishes to retain the transport infrastructure in public hands so that it may also be used for general development, has requested a Bank loan of US$64.5 million equivalent to meet the foreign exchange costs, and the US Agency for International Development (USAID) for a loan in local currency to the eauivalent of US$21 million (this loan includes the sum of US$.2 million as margin over and above the cost estimates, if needed). These loans would together finance the whole of the Government's estimated initial investment of US$83.5 million for the transport infrastructure and related facilities. An agency of Government, the Office d'amenagement de Boke (OFAB) has been established to supervise the construction of the infrastructure and subsequently to operate end maintain the facilities. v. The infrastructure will comprise a new port installation at Kamsar on the Rio Nunez, with a dredged access channel; a 136 km railway from Kamsar to the Sangaredi mining area and a new town at Kamsar to house OFAB personnel engaged in operating the project. Some ancillary buildings and works are also included in the project, together with housing for OFAB personnel in a town to be built by CBG at Sangaredi. CBG will provide housing for its personnel in the new town at Kamsar. The total cost of the infrastructure is estimated to be US$79.5 million, which, together with the consolidation of the US$1.7 million Bank loan SI-GUI for the detailed engineering of the project and some US$2.3 million for additional technical and legal services prior to and during the construction period, give the total estimated cost of US$83.5 million. Construction is expected to require 31 years. vi. Firm contracts for the sale of 5.1 million tons per annum having already been signed and CBG is confident that it will be able to sell some additional 1.5 million tons in the future. The bauxite is of high quality and reserves in the present concession are estimated at 250 million tons. The ore can be cheaply mined by open cast methods and loaded direct to railcars for transportation to Kamsar, where it will be crushed, stockpiled, and dried as necessary before loading to ships for export. One calcining kiln for production of high value calcined bauxite will be built at the outset and a second one provided later. Locomotives and rolling stock for transporting the ore to Kamsar, and loading equipment at the pier, will be provided by CBG.

7 vii. The engineering for the project was carried out under Loan SI-GUI by TRACTIONEL, a Belgian consulting firm which also undertook CBG's engineering work. A Dutch consulting firm, Nedeco, assisted OFAB in its review of TRACTIONEL's work. Supervision and management of construction will be controlled by a Construction Coordinating Committee composed of OFAB and CBG representatives with an independent chairman. CB3G will provide technical assistance to OFAB for this phase of the work, and TRACTIONEL are expected to continue as consulting engineers for supervision of construction. Price Waterhouse and Company have been retained as financial advisors to the Government. viii. On the basis of the projected sales and selling price, the latter protected by an escalation clause, it is estimated that the discounted financial rate of return on the Government's investment will be 14.5 percent and the economic rate of return 18 percent, over an economic life conservatively estimated at 20 years. The increase in net foreign exchange earnings of Guinea, starting at US$7.7 million equivalent in the first year of operation, should amount in aggregate to over US$300 million over the 20 years. The annual average of US$15 million is equal to about half of the present annual foreign exchange earnings of the country. ix. In Guinea an investment of this magnitude and complexity raises two problems, namely a shortage within the country of the techniques and skills necessary for the successful execution and management of the project, and a lack of creditworthiness. The former problem will be overcome by agreements between Government and Halco whereby the latter will provide technical assistance and train local personnel; the second will be met by financial agreements under which CBG, Halco and the Halco shareholders will guarantee the service of the Bank loan and at the same time assure the Government an adequate minimum income. The obligations of CBG, Halco and its stockholders will be subject to suspension or termination only if certain events should arise from political causes or acts of war. x. The project provides a suitable basis for a Bank loan of US$64.5 million equivalent to the Government of Guinea, for a term of 24 years including a 5 years' grace period.

8 GUINEA APPRAISAL OF THE BOKE BAUXITE PROJECT 1. INTRODUCTION 1.1 The Government of Guinea has asked the Bank for a US$6h.5 million loan to finance the foreign exchange component of the estimated total cost of US$83.5 million for the construction of a railway, port and township. This infrastructure is to be built by the Government as part of a bauxite mining operation by the Compagnie des Bauxites de Guinee (CBG), a joint undertaking of the Government and a U.S. firm, Halco (Mining)Inc. An appraisal mission in April 1965 concluded that the infrastructure was a project suitable for Bank financing, but that detailed engineering and firm cost estimates were needed before the project would be ready for appraisal. The Government then asked the Bank to finance the foreign exchange cost of consultant services required to carry out this work and, on March 30, 1966, an engineering loan (SI-GUI) of US$1.7 million was made. 1.2 Since then, production and sales prospects have improved considerably. Whereas Halco initially consisted of only one company, Harvey Aluminum Company of Delaware, by 1967 several large aluminum companies (Alcan, Alcoa, Montecatini, Pechiney-Ugine and VAW), joined Harvey as partners in Halco and signed contracts guaranteeing the sale initially of 4.7 million and later of 5.1 million tons of metal-grade bauxite a year; this compares with a projected output of 1-3 million tons a year in the original project proposal. To achieve this higher output, the project had to be enlarged and its total estimated cost, including both the mining facilities and the infrastructure, has risen from about US$80 million to US$182.5 million. The enlargement of the project and the time required to reach agreement amongst all parties concerned on many complex technical, financial and legal issues, account for the time needed to bring the project to this stage. 1.3 This appraisal report was prepared by Messrs. J. Brechot (railway), F. Higginbottom (port and township), F. Sander (finances), and V. Wouters (economics) of the Projects Department; Messrs. H. C. Phillips, J.M.R. Feige and G. Kreuter of IFC, acted as advisors on the CBG mining part of the project. Irr. H. J. van Helden has coordinated the preparation and appraisal of the project as a whole. 1vessrs. R.A. Hornstein (Africa Department) and G. Delaume (Legal Department) worked closely with the above members of the Projects Department. 1.4 The appraisal is based on (a) an engineering report on the infrastructure, prepared by the Belgian consulting firm, tracticneit (b) a similar report on the CBG installations, prepared by the same consulting firm in collaboration with technical staff of the aluminum companies included in Halco; (c) production and operating cost estimates prepared by Halco for the mining and processing operations and by Nedeco and the Bank for the infrastructure; (d) financial projections made by Kuhn, Loeb and Co., investment bankers, acting as financial advisors to Halco and (e) findings of the Bank following visits in Conakry, at Fria and on the site of the project.

9 2. BACKGROUND (i) General 2.1 Agriculture is by far the largest sector of the Guinean economy. It accounts for more than half of total output and provides a living, at subsistence level, for about 90 percent of the population of 3.5 million. The growth of agricultural production has barely been sufficient to keep pace with population growth, estimated at percent per year. As a result, per capita income is still low, approximately US$80 per annum. 2.2 Government economic policy since independence in 1958 has been conditioned by a brand of indigenous socialism, which calls for the State to carry out, or to exert strong control, over many economic activities. Most enterprises are state-owned and the Government's drive to industrialize the country has been based mainly on investment in public enterprises. The productivity of recent investments in manufacturing is low and this sector has contributed only about 3 percent to GDP. (ii) ;Ldning and Minerals 2.3 Mining is largely by private foreign interests and has shown considerable growth during the past years. It accounts for 10 percent of GDP and about 5 percent of salaried employment, while it contributes 70 percent to gross exports and 50 percent to total net foreign exchange receipts. Diamond mining, which was taken over by the Government in 1961, was started by foreign interests in All other important mining ventures are of more recent origin. There are considerable iron ore deposits not at present in production. Bauxite mining began in 1952 on the island of Karsa, off the coast from Conakry, by Bauxites du Midi (Rimidi), a French subsidiary of Alcan. In 1961 the venture was taken over by the Government (see 3.2). More recently, in March 1966, Harvey Aluminum Company was granted the exclusive right to mine bauxite on the island of Tamara, near Conakry. 2.4 The most important bauxite mining venture now in operation in Guinea is kria, a private company established in 1956 by Olin Mathieson Corp., British Aluminium, Aluminium Suisse and Pechiney, later joined by Vereinigte Aluminium Werke. Fria owns and operates the mining facilities, an alumina plant, a railway, certain port facilities at Conakry and a town at Fria. Construction cost was about US$150 million. Alumina exports commenced in 1960 and are currently running in excess of 500,000 tons per year, with a sales value of more than US$30 million. Fria accounts for about 40 percent of total net foreign exchange earnings of the country. The company experiences some difficulties from the inconvertibility of the Guinean currency and from shortages in the supply of some items in the local market. Niegotiations with the Government to expand production to lower production costs are well advanced.

10 -"3-3. THE BOKE PROJECT (i) Location of the Boke Project 3.1 The project will be located in the Boke administrative district, in northwest Guinea. (See Map No. 1). The district's commercial and administrative center is the town of Boke, with about 15,000 inhabitants, situated some 55 km from Conakry, about mid-way between the proposed mining site near Sangaredi, and the port of Kamsar on the Rio Nunez. (ii) The Bamidi Venture 3.2 The bauxite deposits in the Boke administrative region have been estimated to contain in excess of 1.75 billion tons of high grade bauxite, which makes them one of the richest deposits in the world. More details are presented in Appendix A. In 1958, Bamidi obtained an extensive mining concession from the then Federation of West Africa and the Territory of French Guinea, on condition that certain facilities would be constructed by In 1959, Alcan (Bamidi's parent company) invited several aluminum companies to participate in the mining project, but its construction was stopped in the second half of 1961, when almost US$20 million had been spent. The Government regarded this stoppage as a repudiation of the 1958 convention and took over without compensation all of Bamidi's assets,and those of the independent contractors working on the project. The latter were paid compensation by Bamidi. 3.3 On March 14 and 21, 1967, respectively, Alcan and Bamidi signed a general and complete waiver of all rights to compensation from the Government. Counsel for Alcan has asserted that if any lender to Bamidi were to make a claim against Guinea, Halco or CBG, such lender would not be successful. (iii) The Halco Agreement of The Boke project was revived on October 1, 1963, when the Government signed a long-term contract with Harvey Aluminum Company of Delaware, the name of which was changed to Halco (IMining) Inc., on April 1, This agreement, which was ratified by the National Assembly and signed by the President of the Republic, governs the terms and conditions for the exploitation of bauxite deposits in the Boke region. Appendix B gives details of its main provisions and of the events which have led to the formation of Halco in its present form. The agreement gives Halco the exclusive right to explore, mine and market all bauxite in northwest Guinea, including the Boke bauxite deposits, through the establishment of a mixed company called "Compagnie des Bauxites de Guinee"' (CBG) owned 51 percent by Halco and 49 percent by the Government of Guinea.

11 3.5 CBG will own the mine, mine township, bauxite locomotives and rolling stock and the processing plant and loading equipment at the port, and will through Halco, finance the cost thereof. The Government has insisted that it shall retain sole ownership of the transport infrastructure, comprising (a) a railroad, (b) a port, and (c) a new township near Kamsar (see Chapter 4), and that the facilities thereof shall be available for development of the general economy of the region as well as bauxite exports. Government will therefore be responsible for securing finance for the cost of the infrastructure and for subsequent servicing of the debt so incurred. Its only source of income for this latter purpose is from its share of the profits of CEG. In consideration of Government's acceptance of financial responsibility for the infrastructure the 1963 agreement therefore provides that the operating profits of CBG will be divided 65 percent to the Government of Guinea and 35 percent to Halco. 3.6 In order to achieve maximum exploitation the original single Halco partner, Harvey Aluminum Company, associated itself with other international aluminum producers to obtain financial assistance to exploit the bauxite reserves. After a recent reorganization the Halco principal shareholders are: Percentage of Cwnership Aluminum Gompany of America 27% Alcan Aluminium Limited 27% Harvey Aluminum Company 20% Vereinigte Aluminium Werke 10% Pechiney-Ugine 10% Montecatini Edison 6% 3.7 The Bank became involved in the Boke project only after signature of the 1963 agreement. The basic agreement has never been amended, but for certain purposes including the Bank's security arrangements and the financing and operating of the project, certain provisions thereof including the force-majeure clause have been superseded (see also para. 8.5). Subsequent development of the project has resulted in various other departures from the 1963 agreement, and the Bank has insisted that all these later agreements between the parties include a clause that they supersede those of earlier date, including the 1963 agreement. 3.8 To carry out its part of the project, the Government, by decree, established in 1965 a semi-autonomous organization, the "Office d'amenagement de Boke (OFAB). Details of OFAB t s duties are given in Chapter 44, (para et seq.).

12 5 4. THE OFAB INFRASTRUCTURE (i Summary 4.1 As the OFAB infrastructure is an integral part of the CBG mining operation as a whole and could not be justified without the bauxite transport requirements, this report considers and appraises the combined CBG and OFAB facilities and operations as one project. The object of a Bank loan, however, is only the CFAB infrastructure consisting of the following: (i) (ii) (iii) a railway estimated to cost US$40.9 million; an approach jetty and loading wharf with a dredged entrance channel; the whole to cost US$15.7 million; and a township at Kamsar estimated to cost US$22.9 million. 4.2 The above cost estimates, which total US$79.5 million, are shown in greater detail in Appendix D, together with a detailed description of the project. A summary is given in the following paragraphs. (ii) The Railway 4.3 The proposed railway (Map No. 1) is to be a standard gauge, heavy weight, single track railway from Kamsar to Sangaredi, a distance of 136 km, with three stations along the line and two terminal stations. Dispatching and train control will be by radio telephone. Topography and terrain do not present any particular difficulties. On the first 65 km from Kamsar earthworks, ballasting and bridges were already completed by Bamidi before 1962 (see para.. 3.2), but rehabilitation of the roadbed and strengthening and reconditioning of bridges is required. 4.4 OFAB intends to acquire three 1400 hp diesel locomotives, 26 service and freight wagons and four passenger coaches which will be required during construction and for local traffic on completion. CBG will supply the equipment Tor the movement of bauxite (see para. 511). (iii) The Port 4.5 The new port of Kamsar (i4ap No. 2) is some 17 km from the open sea in the Rio Nunez estuary and a channel is to be dredged to enable vessels of about 30,000 dwt capacity to navigate it at half tide. The channel will terminate at the landward end in a turning basin upstream of, and a loading basin alongside, the new port installation.

13 The port installation will comprise a 1,536 m approach jetty and a 240 m loading wharf with independent fendering dolphins. The wharf can be extended upstream and will permit future deepening to accommodate. 60,000 dwt vessels. These structures will carry the bauxite loading equipment, which will be built, owned and operated by CBG. Capacity is at least 6.6 million tons of bauxite per year. 4.7 There is an existing wharf at Kamsar, 120 m long and 12 m wide, which will have 6 m depth of water alongside. It will be provided with a heavy lift derrick crane and a mobile crane to land materials and heavy equipment during construction, and to discharge general cargo from barges thereafter. OFAB equipment includes a 750 hp tug, two 125 hp motorboats and motorized barges, and there will be some ancillary buildings. (iv ); The Township, Housing and Buildings 4.8 OFAB will build a new township at Kamsar some 2 km upstream of the port (Maps 2 and 3). The land will have to be cleared, and raised. and levelled by hydraulic sand fill. OFAB is to build 225 houses for its personnel and CBG 370 houses and a guest house; a 30-bed hospital, a school, an administrative center and a commercial center are included in OFAB's investment. All necessary public utilities are to be provided. 4.9 Present plans call for water to be supplied from a natural reservoir in the Tinguilinta river, near Boke, through a pipeline 60 km long. This pipeline is expensive, but its cost is included in the cost estimate for the time being until the capacity of local wells to meet daily requirements throughout the year has been proved. Contractor's experience in arranging for their own water supply should provide solid evidence on the reliability of local wells. The contract for the pipeline scheme will not be let until this evidence is available The township to be built by CBG at Sangaredi, with a guest house and 225 houses, will primarily serve the mining operations (Chapter 5). OFAB's investment will be limited to 41 houses and some road works. Four houses will also be built by OFAB at wayside stations on the railway. (v) Engineering 4.11 After signing the 1963 agreement the Guinean Government entrusted preliminary engineering of the OFAB infrastructure to Societe de Traction et d'electricite (TRACTIONEL), a Belgian consulting firm. When in 1965 the Government requested Bank participation in the Boke project, it was obvious that the preliminary reports and cost estimates available were not sufficiently detailed to form a basis for project appraisal. Accordingly, a Bank engineering loan of US$1.7 million (SI-GUI) was made in March 1966 to cover the cost of additional engineering work required, including

14 preparation of tender documents, for the construction of the railroad, the port and the township; this work was also entrusted to TRACTION4EL. The same firm is also consultant for the design of the CBG installation in conjunction with representatives of Halco OFAB lacks the administrative and engineering skill to review TRACTIONEL's performance and work, and to comment thereon. Arrangements were therefore made to retain the Dutch engineering firm Nedeco to assist OFAB in reviewing the scheme and documents prepared by TRACTIONEL TRACTIONEL completed the design and all documents for the CFAB infrastructure by mid-1967, in accordance with its client's instructions. It was apparent, however, that the project cost estimates had increased much more than was justified by the increase of production envisaged in the expanded sales contracts. Savings had to be made, and TRACTIONEL was instructed to make necessary revisions, which have resulted in the project appraised in this report. This required further engineering work, including revision of all the drawings and tender documents, and the Bank's engineering loan is insufficient to cover the additional cost - some US$300,000. This additional amount will have to be paid by the Government, but its reimbursement is recommended for inclusion in the proposed Bank loan for the project, together with the original engineering loan No. SI-GUI The Bank considers the project and cost estimates satisfactory and both are acceptable to IHalco, CBG, OFAB, and the latter's advisors, Neded6. However, in a complex project such as this, not every detail can be finalized in advance. Some additional studies and investigations will have to be made concurrently with the execution of the project, to determine whether further improvements or justifiable economies are possible; as for example, with respect to the water supply system for Kamsar (4.9). When several alternatives are still under consideration, the most expensive has been included in the cost estimates to ensure that sufficient funds are provided It has been agreed that TRACTIONEL will be retained by both OFAB and CBG for supervision of construction of the project (see also 4.25). (vi) Summary Cost Estimates OFAB Infrastructure 4.16 The cost estimate of the infrastructure is summarized below:

15 Foreign Local Total (million US$ equivt Port (loading wharf, jetty, access channel, floating equipment plus cranes) Railway (earthworks, bridges, track, stations, three locomotives plus 28 cars) Towns1iip (fill terrain, houses, comrunity buildings, public utilities) l Direct Cost Engineering Contingencies (10%) and Escalation (13.5%) Interest during construction Indirect Cost o 27.0 Total Construction Cost Engineering Loan SI-GUI Additional engineering cost Management and advisory services 1.h Total Investment Cost Of which: Port Railway Township Other 3.4 o

16 -9" 4.17 The infrastructure estimate includes the cost of housing accommodation and of a number of buildings required for services which would normally be regarded as the responsibility of the central or local government, e.g., housing and office accommodation for port health, police and customs officers, a post office, a school, housing for school teachers, and a covered market. In view of the essentiality of these services to the success of the project and the need to ensure their timely provision, their construction cost has been included in the project. The sum involved is US$1.5 million, or US$2.25 million including indirect costs. (vii) Construction Financing and Disbursement Procedures 4.18 The proposed Bank loan would finance the total foreign currency cost of the infrastructure amounting to US$61 million equivalent. It is also proposed to include in the loan the refunding of the US$1.7 million provided under the engineering loan SI-GUI, the additional cost of about US$300,000 for further engineering, and the foreign exchange element of the cost of management, legal and other advisory services prior to and during construction. This would bring the Bank loan to about US$64.5 million equivalent The local currency cost estimated at about US$19 million equivalent is to be financed by Guinea, through a loan from USAID, for which negotiations have been completed. The AID loan will be signed and made effective as a condition of effectiveness of the Bank loan Disbursement of the loan will be on the basis of actual expenditures for equipment supply contracts and supervision costs. For civil engineering contracts, contractors will be required to indicate the cost in foreign exchange and in local currency separately; the percentage of foreign exchange thus determined will be used for purposes of disbursement under the contract up to the maximum indicated in the list of goods If there are savings in the Bank loan, the undisbursed portion will be cancelled. If actual foreign costs prove to be in excess of the estimates, an arrangement has been made between the Government, CBG, Halco, and the shareholders that the latter group will advance the overrun on the same terms and conditions as the Bank loan, to be repaid by the Government out of future profits from the CBG operations. As to a possible overrun in local currency, the AID loan will actually be for US$21 million equivalent, which reflects an extra margin of US$2 million equivalent over and above allowances for escalation and unforeseen. In the unlikely event that this proves insufficient, the Financial Assurance Agreement includes a clause to the effect that Halco, CBG and Guinea will consult with the Bank as to the manner in which such deficit shall be financed. The Bank considers this arrangement to be satisfactory. (viii) Procurement 4.22 All construction of civil works for the railway, port and township and the procurement of all equipment have been divided into six OFAB contracts which are listed in Appendix E, and 19 CBG contracts. Since some

17 of the OFAB and CBG contracts will be for identical or similar facilities (for example, housing) contractors will, where appropriate, be given the option of submitting bids for both OFAB and CBG contracts and to show the reduction offered in the event they receive an order for both sections. In addition, joint ventures by groups of contractors for a combination of several contracts will be encouraged. Such combinations are likely to lead to savings on project costs, and would greatly simplify its supervision To the extent that all or a part of any contract or a combination of contracts will be financed by the Bank, the Bank's normal international bidding procedures will be applied. Prospective contractors are being pre-qualified following procedures satisfactory to the Bank. (ix) Construction Schedule and Management 4.24 It is estimated that the completion of both the OFAB and CBG parts of the project will take 42 months, including the time required for bidding and the award of contracts. An integrated construction schedule for the combined works is shown in Appendix E. It is obvious that the various steps to be taken for the award of contracts and the completion thereof should be carefully coordinated, to ensure that the start of mining operations is not delayed because of a delay in one or more contracts An agreement has been reached between Halco and the Government that Halco will provide technical assistance to OFAB for the construction of the OFAB infrastructure (para. 4.29). To ensure that implementation of the technical assistance agreement will not adversely affect the interests of the various parties it has been agreed to set up a Construction Coordinating Committee in which both CBG and OFAB are represented, with an independent Chairman of considerable experience in the execution of similar construction projects. The responsibility of this Committee will be to deal with the consultants, to recommend the approval of OFAB, CBG and combined contracts, to divide the cost of combined contracts between the two parties, to ensure that the construction schedule is maintained, to maintain liaison with the Bank and to certify all disbursement requests prepared by the consulting engineers. Detailed arrangements as to the responsibilities and authority to be given to the Coordinating Committee have been agreed between the Government, CBG, Hlalco and the Bank. Appointment of the Chairman of the Committee by agreement between the Government, CBG, Halco and the Bank, is a condition of effectiveness of the proposed loan. (x) Management of Government Responsibilities (OFAB) 4.26 To carry out its part of the project, the Government established in 1965 a semi-autonomous organization, the "Office d'amenagement de Boke" (OFAB). The Statutes of OFAB, reflecting its duties and responsibilities,

18 have been drafted and are acceptable to the Bank. Enactment of the Statutes by the Government of Guinea is a condition of effectiveness of the proposed loan. The objectives of CFAB are: (a) to implement the Government's responsibilities under the agreements between the Republic of Guinea, CBG, and Halco; (b) to arrange for the engineering and construction of the infrastructure; (c) to maintain and administer the infrastructure; (d) to operate the infrastructure to the extent that such operations are not, by mutual agreement, carried out by CBG. (CBG will, for example, own and operate all bauxite trains on the railway while CFAB will own and operate trains for passenger and freight other than bauxite) OFAB will be responsible for maintaining accurate cost accounts of all its expenditure related directly or indirectly to the land transport and handling of bauxite and will claim reimbursement of such costs from CBG. Similar accounts will be maintained for costs incurred in connection with harbor operations and maintenance, which will be recovered through the medium of harbor dues levied against ships using the harbor. OFAB will be provided with working capital by Government and will be empowered to borrow money in its own right for its operations, if need should arise. The Bank and AID loans for the initial construction of the infrastructure will, however, be made to the Government of Guinea and not to OFAB (see para. 3.5). An English translation of the draft statutes of OFAB is presented in Appendix C In addition to participation in the Construction Coordinating Committee (para. 4.25), OFAB's specific responsibilities for the operation and maintenance of the infrastructure will be as follows: (a) Railway Unit (i) (ii) (iii) to maintain the track, stations, and signalling and communications equipment; to provide operating personnel therefor; to operate all stations and run its own trains for traffic other than bauxite traffic.

19 12 - (b) Port Unit (i) (ii) to maintain the entrance channel, navigation aids, approach jetty and loading wharf; to control all ship movements, provide pilotage, tug and launch services; (iii) to handle general cargo and all equipment provided therefor. (c) Township (i) (ii) to maintain all houses and public buildings, roads, water and electricity distribution systems, and all other public utilities; to administer the public buildings and provide teaching and medical staff for the school and hospital The Government recognizes that there is insufficient competent Guinean staff available to meet all OFAB's supervisory and technical staff requirements. Accordingly, an OFAB Technical Assistance Agreement has been drawn up between the Government and Halco. Its terms are satisfactory to the Bank, and it will be signed and made effective as a condition of effectiveness of the Bank loan. Briefly, this agreement provides that Halco will: (a) (b) (c) provide such assistance as the independent chairman of the CBG-OFAB Construction Coordinating Committee may require to carry out the supervision of construction and the work of consultants; designate individuals for positions on the staff of OFAB during the construction period as and when required; designate individuals for the positions of director of the railway and port and provide up to 24 individuals to the staff of OFAB as required to ensure efficient operation;

20 13 (d) provide technical information in connection with the construction, control, administration, and operation of the railway and port An OFAB Training Agreement has also been drawn up between the Government, O.'AB, CBG, and Halco under which CBG will establish an institute of technical training in Conakry, and Halco, through its shareholders, will provide facilities for on-the-job training outside Guinea. This agreement, which takes effect in 1968, is agreed in final form and will be signed and made effective as a condition of effectiveness of the Bank loan The declared intention of both the Government and Halco is that the number of Guinean citizens employed by OFAB in a supervisory capacity shall be at least 75 percent of the total personnel employed in such capacity by five years after the export of bauxite commences.

21 CBG MINING OPERA rons AND INSTALLATIONS (i) Ore Reserves 5.1 Bauxite deposits located in the Boke area are estimated to contain at least 1.75 billion tons of high grade bauxite. The initial mining area granted to CBG near the settlement of Sangaredi covers an area of 500 square miles and is estimated to contain a minimum of 250 million tons of high quality bauxite with an average alumina content of 59.7' percent and a *silica content below 1.5 percent. The best ore body discovered in the mining area contains 53 ndillion tonis with an alumina content of 61.6 percent and a silica content of only 0.8 percent. 5.2 These estimates are based on a review in 1965 of the geological data by a Bank-appointed consultant, and are in line with the findings of CBG (see Appendix A ii). It can therefore be concluded that there are sufficient bauxite reserves in the Sangaredi concession area to sustain a mining rate of 6 million tons of bauxite per year for the next 40 years. (ii) Sales 5.3 In late 1966 and early 1967 CEG concluded firm contracts with Halco shareholders, running for 20 years and guaranteeing CBG, subject only to CBG's production of the required quantity, the sale of 4.7 million tons of bauxite for the first 5 years of operations and 5.1 million tons per year thereafter, at a basic price of US$7.00 per ton. This basic price will be adjusted for alumina, silica and water content. Price escalation clauses protect CBG against increases in production cost, the price adjustment and escalation clauses have been reviewed by the Bank and have already resulted in an increase of US$0.14 per ton. 5.4 Because of the high quality of Boke bauxite, CBG expects that additional contracts for metallurgical grade bauxite will be realized. In addition to the metallurgical grade bauxite, the Company expects that some 200,000 tons of calcined bauxite, to be used for abrasives and in the chemical industry, could be sold on the free market at a price of about US$25.00 per ton. The CBG processing equipment has been designed for an initial annual production of 5.1 million tons of bauxite. By the addition of a second calciner and a fourth drying kiln, it is intended to increase the designed capacity to 6.6 million tons in the fifth year. 5.5 The maximum capacity of the infrastructure is 8 million tons of bauxite per year, and there would be no problem to increase the mining and processing capacity to the same level by minor additions of equipment if the demand for Boke bauxite should warrant this.

22 (iii) CEG Installations Sangaredi 5.6 The Sangaredi deposits will be mined with 3 shifts for 290 days per year to produce up to 6.6 million tons of raw ore per annum. The ore body is near or at the surface, and little overburden has to be removed. The deposit will be mined in 2 benches; the bottom of the initial mining cut will be located about 40 feet below the top of the ore body. After drilling and blasting, the ore will be loaded directly into railcars by 8-cubic-yard electric shovels. The initial mining cut will be located in a site which will also contain the necessary qualities of bauxite for the production of chemical and calcined grades. A summary of equipment required for the mine is given in Table CEG will build a to9nship. with 225 houses near the Sangaredi mine. The settlement will also contain a school, dispensary, store, guest house, and a police station, and will be served by a 1,150 m air strip. Auxiliary facilities will include a water supply system fed from a river, with a water treatment plant at the intake, and pumping and storage facilities, and a diesel power plant. A spur connection from the Kamsar/ Sangaredi railway will serve the mine site and the "technical zone" which will include not only the power plant and water tank but also small workshops and stores. Port Kamsar 5.8 The CBG installation at the port will consist of equipment to empty the ore cars, to crush bauxite, to stockpile and reclaim bauxite, to dry the ore when required, to place dry bauxite in covered storage, and to withdraw ore for delivery to the conveyor on the OFAB jetty and then to ships by means of the ship loader on the OFAB wharf (para 4.6). Facilities for stockpiling of special grades for calcining, a calcining kiln, and storage for calcined bauxite will also be provided. A general layout of the port facilities is shown in imap 2. The equipment for the Kamsar operations is described in greater detail in Table To construct the plant site near the jetty and pier, drainage and sand fill will be required. The plant site will include auxiliary facilities such as a 15,000 kw diesel power plant; a workcshop for maintenance of rolling stock and a workshop for general maintenance work; an office building and quality control laboratory; and a plant utility system for steam, gas, oil and water. A rail spur connection of 4 km will connect the plant site to the main line close to Kamsar station, and a 3 km access road will be built.

23 The township at Kamsar will be built and administered by OFAB, but CBG will construct for its own staff 370 houses; again, the number of lower class houses is 15 percent less than the corresponding number of Guinean employees, for the same reason as at Sangaredi. Rolling Stock 5.11 CBG will be responsible for supplying and operating the orecarrying trains and equipment. On the basis of 290 operating days a year an initial investment of 230 ore-cars of 75 ton load capacity, eight 3000 hp main-line locomotives, three shunting locomotives and nine general freight cars are expected to be sufficient to transport up to 6 million tons of ore per year, operating six ore trains per day, double traction, 46 cars per train. Additional locomotives and cars will be purchased as and when warranted by increased production. (iv) Summary Cost Estimates CBG Installation 5.12 Halco has submitted a project cost estimate amounting to US$99 million at start-up, summarized as follows: US$ millions Plant and equipment 76.7 Interest during construction 5.1 Pre-operating expenses 11.2 Mining rights 1.0 Working capital 5.0 Total 99.0 Details of the construction cost estimate are given in Table 1. Although most of the equipment cost estimates are based on pro-forma tenders, variations in individual equipment cost and total cost estimates remain possible until firm tenders have been received. In the Bank's view the costs as projected are satisfactory. Halco has also prepared a schedule for replacement and addition of equipment after start-un as shown in Table 2. Major additions include a second calcining kiln in the 4th year after start-up (US$4.o million), a fourth bauxite drying kiln in the 5th year (US$3.1 million), and additions to the dry bauxite storage building in the 7th year (US$2.6 million). (v) CBG Technical Assistance and Training Agreement 5.13 Under the terms of this agreement, Halco, in addition to furnishing CBG with all the technical assistance needed to construct and operate the mining project, will set up a training institute and provide on-the-job training for Guineans with the ultimate objective of teaching locally-recruited staff to man the operation. The terms of the agreement are satisfactory, and it will be signed and made effective as a condition of effectiveness of the loan.

24 FINANCIAL (i) Investment 6.1 The initial investment in the facilities to be provided by CBG, together with preliminary expenses incurred by Halco and its shareholders and the working capital necessary to start operations, is estimated at US$99.0 million. A summary of this figure has been given in para and details are shown in the related table. In the first nine years of operation further capital expenditure of US$9.7 million is expected to be incurred on additional plant, the main items of which are also detailed in para Further major additions should not be needed unless output should substantially exceed the maximum of 6.6 million tons presently envisaged. 6.2 The investment of the Government of Guinea is expected to be of the order of US$83.5 million, as detailed earlier in para The total initial investment in the integrated mining and transport operation will therefore be about US$182.5 million. (ii) Financing a. CBG 6.3 The financial projections are based on the assumption that funds will be provided for the CBG investment on the following terms: US$ million Senior Debt 62.0 US$47.o million, average 7½ percent per annum interest, including guaranty fees varying from 1/2 to 3/4 of 1 percent; amortization over 15 years beginning in second half of 1972, US$15.0 million, 61 percent per annum interest through 1973, 6 percent thereafter, plus insurance approximately 1½percent; amortization over 10 years from commencement of operations. Equity Subordinated Debt - Interest Free and Pcinc-'.al Moratorium for 1st 5 years 20,0 Capital Stock Class A Stock (h9 percent) - Government of Guinea $.98 Class B Stock (51 percent) - Halco (Mining), Inc Class B Stockholders Capital Contribution Total Capital Stock 17.0 Total Original Equity Total Initial Financing $99.0

25 The Financial Assurances Agreement between Halco, its individual shareholders, CBG, the Government of Guinea, CFAB and the Trusteel/ defines, inter alia, the obligation of Halco and its shareholders to provide all the funds needed to complete the mining project. This agreement has been approved by all the parties thereto and by the Bank, and it will be signed and made effective as a condition of effectiveness of the Bank loan. The Agreement prescribes the amounts and dates on which the equity must be subscribed by Halco and its shareholders. Pending completion of arrangements for the long-term debt financing, Halco has entered into a five-year stand-by commitment with a bank syndicate headed by the Bank of America whereby the banks have agreed to make available a revolving credit facility in Eurodollars up to US$75,ooo,0oo. Advances under the credit, which is severally and proportionately guaranteed by the Halco shareholders, will bear interest at 3/4 of 1 percent over the London rate for six month Eurodollar deposits prevailing at semi-annual adjustment dates. For purposes of the financial projection the rate of interest on the credit has been forecast at 7½ percent per annum. Kuhn, Loeb and Co., investment bankers have been retained by Halco to assist in obtaining finance for the mining project, and discussions with lending institutions in a number of countries are reasonably well advanced. The proportion of overall longterm finance which will be forthcoming from any individual country will largely depend upon actual procurement in that country. The terms and conditions of borrowing outlined in the previous paragraph are based on an assessment of the likely international distribution of contracts for equipment and civil works and the terms of finance obtainable in the countries concerned. Whatever final arrangements are concluded for financing the mining project the financial results are not likely to be less favorable than those projected in this report. As a condition of effectiveness of the Bank loan, the proposals for financing the mining project must be satisfactory to the Bank. 6.5 CBG investment for additions to plant and equipment after the start of operations will be financed from retained earnings. In order to ensure the timely provision of funds to construct a second calciner, a fourth drying kiln and additional dry storage in the fourth, fifth and seventh years respectively, CBG will set aside sufficient money in a Trustee Expansion Account out of uncommitted cash flow in the second and third years. Funds for replacements will be provided directly out of current cash flow. Agreement on the establishing of the Trustee Expansion Account has been reached. 1/ Repayments of the Bank's loan under the Financial Assurances Agreement will be effected through a trustee (probably the Bank of America) which will be authorized to collect the money directly from the stockholders if CBG and Halco have not made payments by the prescribed dates. The trustee will also perform other functions concerned with the collection and payment of funds, including the making of any loans in case of cost overruns and the retention of the moneys of the Harbor Depreciation Account (para. 6.15).

26 b. Government of Guinea 6.6 The Government's investment of US$83.5 million is expected to be financed by a Bank loan of US$64.5 million to meet the foreign exchange cost, and a USAID loan to meet the local currency cost (see para. 4.21). The financial forecast is based upon a Bank loan for 24 years including a five years' grace period, and interest at the rate of 6.5 percent per annum. The annual debt service on such a loan will be US$5,882, The term of the USAID loan will be 30 years inclusive of a grace period of 14½ years counting from the date of the first interest payment. Interest will be at the rate of 2½ percent per annum. Repayment will be by equal half-yearly installments, with reducing interest. Estimated debt service of the loan will begin at about US$1.2 million equivalent in the firs year of repayment, reducing by about US$18,000 equivalent each year until final repayment. Debt service of the AID loan will be payable in local currency. (iii) Forecast of Operating Results 6.8 A forecast of CBG operating account is shown in Table 3 which also includes a sales projection. This latter begins at 4.7 million tons of metal grade bauxite in the first year of operation, rising to 6.6 million tons in the 10th year, including 200,000 tons of calcined bauxite. 6.9 The basic sale price of metal grade bauxite was fixed at US$7.00 a ton in the sales contracts entered into between CBG and the six participating purchasers, subject to a price escalation clause which provides for prescribed increases in the sale price for specific increases in the cost of wages, oil fuel and other materials. "Zero indices" for each relevant element of cost were determined as at February 15, Since that date certain increases in the price of diesel and fuel oil and in the wholesale price index have taken place and consequently the basic sale price of Boke metal grade bauxite has increased to US$7.14 a ton. Calcined bauxite will be sold at US$25 a ton These prices have been applied throughout the financial projections. The price escalation clauses of the sales contracts have been tested and have been found to be favorable to CBG. The adoption of constant prices in the income account projection will therefore produce a conservative estimate of net profits Against the gross revenue of CBG calculated on the basis of the sales projection and the prices quoted above, the following operating expenses will be charged, in accordance with the 1963 Agreement and its subsequent modifications: - Working costs, whether incurred by CBG or OFAB, for the administration, operation and maintenance of:

27 (i) mine and mine township; (ii) railway; (iii) port plant, loading equipment and fixed installations; (iv) port township, to the extent it is provided directly or indirectly for bauxite operations; (v) CBG administration; (vi) OFAB administration to the extent it is directly related to bauxite operations. - Depreciation of all CBG fixed assets - Depreciation of OFAB port township assets directly or indirectly related to bauxite operations - Renewals of OFAB owned fixed assets of the railway and dock - Amortization of CBG pre-operating expenses - Interest charges on CBG senior debt and equipment financing loans 6.12 Of the Net Taxable Profits remaining after deduction of the charges detailed in the previous paragraph, 65 percent will be paid to the Government of Guinea and the remaining 35 percent will be available for distribution as dividends to the holders of Class B Shares to the extent that they exceed the needs for working capital and investment for additional capacity. (iv) Balance Sheet and Cash Flow a. CBG 6.13 Forecast balance sheets and cash flow of CBG are reproduced as Tables 4 and 5. They project a sound financial position for the company. Specific points worthy of note are: The creation of a "Trustee Expansion Account" for extension of productive capacity to 6.6 million tons (para. 6.5). The payment and repayment of advances by CBG to the Government of Guinea (para. 6.18). A conservative depreciation policy. Retention of earnings in the business to ensure that in no single year will payments by way of dividends to the Class B Shareholders exceed the payments received by the Government by way of profits tax (plus advances or minus repayment of advances) less debt service.

28 The diminution in shareholders' equity from about US$40 million at the end of the first year of operation to about US$22 million at the end of the fif teenth year at which latter figure it seems likely to stabilize thereafter. A summarized projection of CBG's operating results and balance sheet is presented in para b. OFAB 6.14 OFAB t s financial responsibility during the operational period will be that it pays the operating and maintenance costs of the infrastructure and claims reimbursement thereof partly from CBG and partly through the medium of harbor and dock dues. It has further been agreed that such charges will include depreciation of Kamsar township and harbor assets related directly or indirectly to the bauxite operation. Replacements of all other bauxite related assets of the infrastructure (mainly the railway, loading wharf and related assets) will be paid for by CBG as and when they become necessary The method of treating depreciation charges has been further subdivided as follows: (a) payment by CBG in respect of depreciation of Kamsar township assets will accrue directly to OFAB and in accordance with the Statutes of OFAB will be placed in a special account with the Central Bank of Guinea, and (b) payments representing the depreciation element included in the charges levied on port users will be paid direct to the Trustee, (see footnote page 18) who will release the money only on certification that it is needed to pay for replacement of harbor assets (navigational aids, tug, pilot launches, etc.) or for major maintenance dredging of the harbor and approach channel The Government will provide OFAB with working capital, through the medium of its initial capital subscription which at the best estimate that can be made on the evidence available, should be about GF 100/125 million, or approximately two months' cash operating outlays. OFAB will not be a revenue-earning entity and the only funds at its command will be those essential for its operations and for the timely replacement of its assets other than those for the replacement of which CBG will be responsible. This position is clearly illustrated by the pro-forma projection of OFAB's cash flow and balance sheet shown in Table The Statutes of OFAB direct that, in addition to its responsibilities for the bauxite transport operation, OFAB will operate trains for passenger and general freight traffic. In fixing rates and fares for

29 such traffic OFAB will need to forecast traffic demand and to calculate the estimated cost of providing the servicesj including depreciation based on the residual life and value of the locomotives and rolling stock at the end of the construction period and a proportionate part of the cost of providing Kamsar township services and OFAB administration. Should the provision of the services result in financial loss, which is possible in view of the uncertain traffic demand, such loss will be borne by Government. c. Government of Guinea 6.18 Government's income from CBG operations will consist of its 65 percent share of "net taxable profits"., out of which the service of Government's debt to the Bank (in foreign currency) and AID (in local currency), will have to be paid. The Financial Assurances Agreement entered into between Government and Halco provides that Government under any circumstances will receive, after service of the Bank loan, at least 60 percent of its share of 65 percent of the net profits by CBG. This guarantee will be made effective in the early years of working by means of advances from CBG, which will be repaid in later years when there is more than 60 percent of Government's share of the profits remaining after service of the Bank loan. The mechanics of the operation, which will be effected through the Trustee acting in the interests of both the Bank and the Government, are shown in Table 7. The net'incomie of the Government, after service of the Bank and AID loans is estimated at US$3. 4 million in the first year of working US$6.2 million in the fifth, US$10.9 million in the tenth and about US$17.0 million a year from the sixteenth year onwards (Table 9). (v) Summary of Results 6.19 The estimated results for all the parties concerned with the project are shown in detail in Tables 3, 6, and 9. The following summary which is presented for the first year of operation and at five-yearly intervals thereafter, shows, among other things, satisfactory profits for Government and its partners in the venture and an acceptable debt/equity ratio.

30 Year CBG operating account Sales in millions of tons h (S million) Revenue Operating costs Pre-tax income Tax at 65 percent Net income available for dividends 21 0l.1 CBG balance sheet Fixed assets - net Pre-operating expenses Mining rights Current assets less current liabilities Advances to Government T Debt p Equity Revenue of Government Profits tax Advances from CBG (or repayments) ( 1.6) (.8) Depreciation charges to CBG & port users Less: Debt service, IBRD and AID Net gain to Government 37 T (vi) Rate of Return a. On the combined investment 6.20 A discounted cash flow calculation of the financial rate of return on the CBG/OFAB investment of US$182.5 million in the integrated bauxite production/transport operation produces a figure of 14.5 percent over an assumed economic life of 20 years (Table 8). b. On the Government's investment 6.21 It is projected on a conservative estimate of the economic life of the assets, that the discounted cash flow financial rate of return to Government on its investment of US$83.5 million will also be about 14.5 percent. In this context, as also in the previous paragraph, the economic

31 service life of the assets has been assumed to be only 20 years, because the term of the bauxite sales contracts entered into between CBG and the shareholders of Halco is 20 years, after which it is conceivable that the infrastructure assets may not be required for the purpose for which they were built, or may be used only at sub-economic levels. The average technical service life of the assets included in the infrastructure is of the order of 37 years but a calculation based on this longer life would not add significantly to the rate of return If the yield were to be calculated on an undiscounted basis, on the assumption that it is not important to Guinea when the income of the project will be received and that a dollar of inflow in any year is worth as much as in any other year, the average rate of return on the average net value of the fixed assets in use would be about 28 percent per annum over an economic life of 20 years. c. On Halco's investment 6.23 Dividends which it is estimated will be distributed to the Class B Shareholders over the 20-year period of the existing sales contracts will represent an undiscounted rate of return of 25 percent on the average shareholder's equity. (vii) Pay-back Period 6.24 At the average rate of interest payable on the whole of the borrowing for the infrastructure, namely about 5.6 percent per annum, the pay-back period would be slightly less than 10 years. A similar calculation for the integrated mining and transport investment produces the same result. (viii) Return to Government per ton of Bauxite 6.25 The net financial benefit to the Government per ton of bauxite sold will amount to US$1.78, taken as an average over the 20-year period of the existing sales contracts. A comparison of this return with that derived by other bauxite producing countries is contained in Appendix A (iii) to this report. (ix) Harbor Costs and Dues 6.26 In accordance with the 1963 Agreement and later modifications, OFAB will recover the maintenance and operating costs of the harbor and entrance channel (including depreciation of floating equipment and navigational aids and amortization of initial dredging costs) through the

32 medium of harbor dues levied on ships using Kamsar port. No profit element will be included in the dues because the formula for division of CBG profits is based on the assumption that the Government of Guinea will derive its financial return only from the bauxite venture through the medium of its 65 percent share of CBG profits. Harbor dues on bauxite and bauxite-related traffics are expected to be of the order of US$0.23 per ton in the first year of operation, reducing to US$0.16 per ton in the sixth year and thereafter. (x) Financial Advice, and Audit of CFAB Accounts 6.27 The Railway-Port Project Agreement, the main purpose of which is to define the responsibilities of CFAB to maintain and operate the infrastructure, to make its use available to CBG, and to define the charges which OFAB shall levy against CBG and port users for so doing, requires that the accounts of OFAB shall be subject to audit by international independent public accountants in accordance with generally accepted accounting principles in the United States. The auditing requirement is also covered by the Project Agreement between OFAB and the Bank. The Railway-Port Project Agreement is satisfactory to the Bank and will be signed and made effective as a condition of effectiveness of the Bank loan. The Government has retained Price Waterhouse and Co. as its financial advisers during the period of its extensive discussions with Halco, AID and the Bank. 7. ECONOMIC EVALUATION 7.1 The Boke project will make a substantial contribution to the economic development of Guinea. Its benefits include the creation of employment, the generation of foreign exchange and an increase in tax revenues to the Government, as well as an increase in technological skills and administrative experience. 7.2 In macro-economic terms it will directly increase national income (more precisely, "net domestic income") by: (a) wage and salary payments (before tax) to: (i) Guinean staff (1050)11 (ii) expatriates (150) (net of repatriated sums); (b) profits - i.e., the Government's share in CBG's profits; (c) payroll tax (5 percent) paid by CBG; 1/ Because of the prevailing levels of unemployment and underemployment in Guinea, it has been assumed that the total gross wage and salary bill represents additional income.

33 (d) employers' social security contribution (e) import duties on materials for the bauxite operation; (f) net additional income generated through direct purchases of local supplies. 7.3 The future stream of the annual additions to national income as pompared with that of the Government's initial investment of US$83.5 million and such further small investments as may be needed to increase the capacity of the infrastructure, discounted over 20 years, yields a rate of return of 18 percent. The net annual increment to national income is estimated to be US$7.5 million in the first year of operation, US$10.0 million in the fifth year, US$144. million in the tenth year and US$19.6 million in the fifteenth year, and should remain around the last meiltioned figure for as long as the demand for Boke bauxite continues at the level projected in the present estimate (Table 9). 7.4 The net increase in income accruing directly to the Government from items (b), (c), (d) and (e) and the tax element in (a) of para. 7.3 above after allowance for debt servicing is approximately US$4.3, 7.3, 12.0 and 17.2 million in the first, fifth, tenth and fifteenth operating years respectively. 7.5 By its nature the Boke project will generate a considerable amount of foreign exchange for Guinea. The net amount accruing to the country consists of the F.O.B. value of bauxite sales minus: (i) the c.i.f. value of OFAB and CBG direct and indirect imports; (ii) profits and other payments made outside Guinea; (iii) salary payments repatriated by foreign staff; (iv) loan interest and amortization payments in foreign exchange. The net foreign currency contribution is estimated to be US$7.7, 11.1, 15.8 and 20.8 million equivalent in the first, fifth, tenth and fifteenth years respectively (Table 10). The expected stream of foreign exchange earnings to Guinea net of foreign exchange debt service payments should yield a surplus, undiscounted, of about US$300 million over the loan repayment period of 20 years. This sum, if stated as an annual average of US$15 million, is equal to about half of the annual foreign exchange earnings of the country from all sources at the present time.

34 A project of this magnitude will undoubtedly stimulate other activities in the country as a result of "multiplier effect", e.g., the wages paid locally will be used to consume greater supplies of local goods and services. It is not possible to quantify with any degree of precision such secondary effects on the basis of available information. While conceptually such effects might be expected from any project of a similar size and nature in Guinea, in a sense they are attributable to the project since the supply of foreign funds is being made available only for this particular project, and alternative projects of a similar magnitude do not exist. 7.7 The Government expects that the provision of the railroad, which is fundamental for the Boke project, will generate a considerable volume of non-bauxite freight and passenger traffic for the railway. The Bank considers that, at least in the near future, this expectation is probably too optimistic. The total length of the railroad is only 135 km. For other than bauxite traffic the average haul or travel distances would be considerably less. This, together with the low frequency of train schedules for non-bauxite freight and passenger traffic, suggests that road transport is likely to be more economical and convenient. In the earlier years, therefore, it is doubtful that the additional revenues from such sources will be sufficient to cover the additional cost of operating nonbauxite trains, estimated to be about US$300,000 annually. On the other hand, much of the equipment for this traffic is needed for the railroad construction anyway, and therefore it is acceptable to let experience show what the prospects are. 8. DEBT SERVICE SECURITY AND OTHER IMPORTANT LEGAL ARRANGEENTS 8.1 A project as complicated as the Boke project, with many responsibilities divided among the Government, OFAB, CBG and the Halco shareholders, will require numerous legal documents. The substance of some of these has already been discussed in this appraisal report. Others are discussed and all are summarized below. 8.2 The Participation Agreement, which concerns the reorganization of Halco as described in para. 3.6, is acceptable to the Bank, and will be signed and made effective as a condition of effectiveness of the Bank loan. A competent official has been designated as the future president of Halco. At or prior to effectiveness a full management team will assume office. 8.3 The basic 1963 agreement is discussed in para. 3.4 and Appendix B. It is now supplemented by detailed agreements regarding financing, construction and operation of both the infrastructure project and the mining project and the sale of bauxite. these last agreements provide that to the extent there is inconsistency with the basic agreement, their provisions shall prevail.

35 _ The most recent report on the Guinean economy (No. AF63b dated September 1, 1967) shows that the country has practically no creditworthiness at present. Therefore the Bank has insisted upon satisfactory arrangements which secure service of the Bank loan from funds provided by CBG and the Halco shareholders. These arrangements are treated in a Financial Assurances Agreement as supplemented by a Trust Agreement. If CEG's operations do not provide sufficient profits to enable the Government to fulfill its debt service obligations to the Bank, then CBG, Halco and ultimately the shareholders themselves are bound to make payment to the trustee in amounts adequate to cover the debt service; any such payments will be treated as advances against CBG's obligation under the basic agreement to pay a profits tax to Guinea. The Financial Assurances Agreement also incorporates the arrangements mentioned in para whereby the shareholders will advance through the trustee, funds to complete the infrastructure in case of an overrun in the foreign currency cost of the project. The Financial Assurances Agreement and the Trust Agreement are acceptable to the Bank and will be signed and made effective as a condition of effectiveness of the Bank loan. 8.5 The Financial Assurances Agreement includes a "force majeure" t clause which relieves CBG and the Halco shareholders of their obligations under certain conditions. These obligations are subject to suspension only upon events making it impossible to construct or operate the railway, the port or the mining project for a period of 180 days and only when such events arise from political causes within, or acts of war directly relating to, Guinea or its territory. These obligations may be terminated if the suspension continues for 600 days, or if the Bank loan is accelerated because of the suspension, or because of compulsory deprivation by Guinea of the shareholders' fundamental rights of ownership, of the effective control of CBG, or of the ownership or control by CBG of its property or assets essential to the construction or operation of the mining project. There are of course considerable political uncertainties connected with such a project, as illustrated by the history of the project itself and of its predecessor, Bamidi. However, the numerous assurances which have been obtained and the great importance of the success of the project to the economy of the country justify consideration of the proposed loan. 8.6 The shareholders are in process of arranging finance in order to comply with the requirements of the Financial Assurances Agreement (para. 6.4). 8.7 The following additional agreements have been submitted to and approved by the Bank and will be signed and made effective as a condition of effectiveness of the Bank loan:

36 (i) (ii) (iii) (iv) Railway-Port Project Agreement among Guinea, OFAB and CBG dealing with the management and administration of the infrastructure (para. 6.27). OFAB Technical Assistance Agreement among Guinea, OFAB and lialco wherein Halco undertakes to furnish technical assistance to OFAB in connection with the construction and operation of the infrastructure (para. 4.29). CBG Technical Assistance and Training Agreement among Guinea, CBG and Halco wherein Halco agrees to provide technical assistance to CBG in the construction and operation of the mine, and CBG undertakes to train Guinean personnel (para. 5.13). OFAB Training Agreement among Guinea, OFAB, CBG and Halco wherein Halco and CBG undertake to train Guineans to work on the infrastructure (para. 4.30). 9. CONCLUSIONS AND RECOMSENDATIONS 9.1 The CBG bauxite mining venture and the OFAB infrastructure project related thereto will contribute greatly to the Guinean economy and strengthen its balance of payments position. The financial return to the Government on its US$83.5 million investment is estimated at 14.5 percent; the economic rate of return at 18 percent. The project t s contribution to the country's foreign currency earnings are estimated at US$7.7 million, US$11.1 million and US$15.8 million in the first, fifth and tenth year respectively. 9.2 An important factor which should contribute to the success of the project is that six of the world's largest aluminum companies are partners in the CBG venture, and have firm 20 year contracts for the purchase from CBG of sufficient bauxite to justify the project. Prospects for even larger sales are favorable. 9.3 Another important favorable factor is that the Government will accept large-scale technical assistance from its experienced partners in the undertaking, for the construction and operation of the project, and for the technical training and instruction of Guinean staff and labor. 9.4 Arrangements have been made whereby the six aluminum companies assure the debt service of the Bank loan under all circumstances, with

37 the exception only of political risks. The technical and financial arrangements made by the Halco shareholders of CBG are satisfactory to the Bank. 9.5 The project has been satisfactorily engineered and the cost estimates are realistic. USAID has undertaken to finance the local currency cost of the project. To provide for the event that actual costs would exceed the estimates, a satisfactory arrangement has been made whereby the six aluminum companies will advance to the Government, against future profits taxes, any additional foreign exchange needed to complete the project. As to local currency overruns, the USAID loan includes an extra margin of US$2 million over and above the ample allocations for escalation and unforeseen included in the cost estimates. 9.6 Continuous negotiations between the Bank, Guinea, CBG and the Halco shareholders on numerous technical, financial, managerial and legal issues have taken place largely concurrently with the preparation of the project. The most important negotiation issues are reflected in the legal documents mentioned in paras. 8.1 to 8.7. Conditions of Effectiveness 9.7 Signature and effectiveness of the following documents is a condition of effectiveness of the Bank loan: (i) (ii) the USAID Loan Agreement to finance the local currency cost of the infrastructure (h.19); Financial Assurances Agreement (4.21, 6.4 and 8.4); (iii) CFAB Technical Assistance Agreement (4.29); (iv) OFAB Training Agreement (4.30); (v) CBG Technical Assistance and Training Agreement (5.13); (vi) Railway-Port Project Agreement (6.27); (vii) Participation Agreement (8.2); (viii) Trust Agreement (8.4). 9.8 In addition to the routine legal requirements, fulfillment of the following conditions are also conditions of effectiveness of the Bank loan:

38 (i) (ii) OFAB's Statutes shall have been duly authorized or ratified by all necessary action by the Government (4.26); a chairman of the Construction Coordinating Committee acceptable to the Bank, shall have been appointed (4.253; (iii) CBG, Halco and its stockholders shall have entered into agreements or otherwise made arrangements, satisfactory to the Bank, for the financing of the mining project (6.4). 9.9 The project provides a suitable basis for a Bank loan to the Government of Guinea of US$64.5 million equivalent for a term of 24 years, including a grace period of 5 years. August 30, 1968

39 APPENDIX A (i) Page 1 BOKE BAUXITE PROJECT DESCRIPTION OF BOKE DEPOSITS AND SUMMARY OF SCOFIELD REPORT Bauxite deposits located in Guinea in the area northwest of Boke are estimated to contain at least 1.75 billion tons of high grade bauxite. These reserves are among the largest concentrated deposits known in the world, amounting to about 18 percent of potential reserves, excluding the USSR and some Eastern Bloc countries. The initial mining area granted to CBG near the settlement of Sangaredi covers an area of 500 sq. miles and is estimated to contain a minimum of 250 million tons of high quality bauxite with an average alumina content of 59.7 percent and a silica content below 1.5 percent. The best ore body discovered in the mining area contains 53 million tons with an alumina content of 61.1 percent and a silica content of only 0.8 percent. All Boke bauxite is predominantly of the desirable trihydrate type which, together with the low silica content, facilitates chemical processing to alumina, which is the basic raw material for aluminum smelters. The Boke deposits begin approximately 50 miles inland and the bauxite is found at the top of low, flat-topped hills. There is virtually no overburden on these deposits, thus mining costs are low. Bauxite depth varies from 8 feet to more than 100 feet, and the initial mining area has an average depth of about 70 feet. The original geological exploration of this area was conducted by the former concessionaire, a consortium led by Alcan. At the termination of the consortium's concession all of the geological information was turned over to the Government of Guinea, and has subsequently been made available to CBG (Halco). In April 1965 the Bank appointed -r. Lloyd M. Scofield to review the existing Boke geological data in the office of Harvey Aluminum, Torrance, California. The conclusions of Mr. Scofield's report, sent to the Bank under his covering letter dated May 4, 1965, are as follows: "From the foregoing, and in view of the fact that the southern and eastern limits of the bauxitic area on Sangaredi claim covered by permit No. 883 have not yet been reached, it is my opinion that there are on Sangaredi 883 at least a quarter of a billion natural metric tons of bauxite containing 5 percent of moisture, with a dry available alumina content of more than 57 percent. Other elements are within the U.S. Government specifications for 'stockpile' metallurgical bauxite. A considerable amount of this bauxite, particularly near the bottom of the deeper portion of the deposit, is of such grade as to make it highly suitable as raw material for premium calcine.

40 APPENDIX A (i) Page 2 Although I cannot offer any opinion on the total tonnage of bauxite within the entire Boke concession, nevertheless, estimates by others do exist which suggest the existence of over one-half billion tons of bauxite averaging over 55 percent of available alumina, and over 1.75 billion tons of bauxite averaging over 50 percent of available alumina including the half-billion tons of high-grade." From the foregoing it is evident that there are sufficient bauxite reserves in the Sangaredi concession area to sustain a mining rate of 6.6 million tons per year for the next 40 years. The proposed standard-gauge railroad from the port of Kamsar to Sangaredd&,. wi!th;:+spur connection to the mini.ng`site, vzill adequately service the bauxite reserves of that area. Map No. 1 shows the general location of the bauxite reserves.

41 APPENDIX A (ii) Page 1 BOKE BAUXITE PROJECT BAUXITE PROSPECTS Bauxite Markets Aluminum production accounts for about 90 percent of the total demand for bauxite and has been the dominating force in the growth of bauxite mining. According to a leading producer, for reserves becoming available,an average of approximately 4.5 tons of bauxite will yield 2 tons of alumina which in turn yield 1 ton of aluminum. On page 3 free world aluminum production is given for the period ; the compounded growth rate for aluminum production during this period amounted to 9.5 percent per year. The Economics Department of the Bank forecasts an annual increase in aluminum consumption at a rate of 9 percent over the period , and 8.5 percent over the period Projections prepared by a leading aluminum producer are somewhat more conservative and predict a growth rate of 7 percent over the period , and of 7.5 percent over the period If the more conservative figures are adopted, aluminum consumption would increase from 6.1 million tons in 1966 to 11.5 million tons in On the basis of 4.5 tons of bauxite per ton of aluminum, this increase in aluminum consumption would create a demand for an additional 24 million tons of bauxite a year by 1975 for aluminum production alone. CBG has secured a share of this expanding market for bauxite. In December 1966 Halco shareholders agreed to firm 20 year sales contracts for a total of about 5 million tons a year of metallurgical grade bauxite after start-up of the CBG operations, as shown below: Years 1-5 Years 6-20 Alcan 1,200,000 ( 25.6%) 1,400,000 ( 27.57) Alcoa 1,200,000 ( 25.6%) l,400,000 ( 27.5%) Harvey 1,000,000 ( 21.3%) 1,000,000 ( 19.6%) Pechiney-Ugine 500,000 ( 10.6%) 500,000 ( 9.8%) Vereinigte Aluminium Werke 500,000 ( 10.6%) 500,000 ( 9.8%) Montecatini 300, % (5.8% 4,77,ooo { 7. 5Tloo00 (100. %) In view of the excellent quality of the Boke bauxite and the desire of most aluminum producers to obtain raw materials from a number of different sources to insure continuity of supply, CBG expects that additional sales of Boke metallurgical grade bauxite will be possible, as well as sales of calcined bauxite for use as abrasives and, possibly, in ceramics.

42 APPENDIX A (ii) page 2. The ''BG assumptions are considered realistlc, and on this basis total sales are projected as follows: Bauxite Sales (thlousands of tons, -- dry basis) Year after start-up Hietallurgical Calcined 1 4,700 _ 2 4, , , , ,6oo , , , ,

43 GUINEA: BOKE PROJECT APPENDIX A (ii) Page 3 WORLD ALUNINUM PRODUCTION BY COUNTRIES FOR SELECTED rears (In 1,000 metric tons) North America Canada United States 1, , , , , , , , ,692.4 Total 1, , , , , , , , ,512.8 Latin America Brazil Mexico Surinam Total Western Europe Austria France W. Germany Greece Italy Netherlands Norway Spain Sweden Switzerland United Kingdom Yugoslavia Total , , , , ,441.9

44 APPENDIX A (ii) Page Asia Australia Formosa India Japan Total Africa Cameroon Total (excluding USSR and Eastern Bloc 2, , , , , , ,11.9 5,614.3 Note: Data prior to 1960 were based on Pechiney Company, thereafter, Metal Statistics, Frankfurt am Main. Source: IBRD Economics Department - Past and Prospective Trends in World Aluminum Industry - Draft dated February 29, 1968.

45 APPENDIX A (iii) Page 1 BOKE BAUXITE PROJECT PROPOSED FOB SELLING PRICE OF BAUXITE Marketing of bauxite is a very complex matter and the price agreements which have evolved can only be understood with full background knowledge of the aluminum industry. Host bauxite is mined by subsidiaries of the limited number of large international aluminum companies; the arrangements which these organizations make with the countries where the bauxite is mined, and the production costs involved, are not normally revealed by the parties concerned. Bauxite of a certain specification will have different values for aluminum companies depending on location of the alumina plant in relation to mine and smelter, the tax agreements which cover the contracts, and whether the companies' alumina plants are adapted to handle the type of bauxite offered. For example, European countries have used French and Yugoslavian mono-hydrate bauxite extensively and have therefore built plants adapted for the higher temperatures and pressures required to process this type of bauxite to alumina. Such a company would therefore not be willing to pay a substantial premium to obtain tri-hydrate bauxite which can be processed at lower temperatures and pressures. On the other hand, American and Canadian producers have plants designed to treat the Caribbean tri-hydrate type of bauxite, and their equipment cannot process mono-hydrate efficiently without costly modifications. As another example, shipping costs of bauxite from the Caribbean area to Canada or Europe would not be greatly different from those from Guinea, and bauxite of similar quality in both locations would therefore have the same f.o.b. values for aluminum producers in these countries. However, American companies with alumina plants on the Mexican Gulf coast would incur considerably higher shipping charges for Boke bauxite than for bauxite from Jamaica, Surinam or Guiana, and this difference in transportation cost must be compensated by lower prices for Boke bauxite to make it attractive. Another important factor affecting the cost of bauxite is the quality, and due allowances must be made for silica content, which affects the processing cost to alumina because of caustic requirements, as well as for other impurities and water which affect not only the processing cost but also the shipping cost. A summary of the Boke bauxite specifications and the price adjustment clauses is given on page 3 of this Appendix. IFC has carefully considered the proposed basic price for Boke standard grade metallurgical bauxite of US$7.00 per ton, f.o.b. Kamsar, and concludes that the proposed price and price adjustment clauses are not unreasonable, particularly in view of the investments which the H-alco shareholders have to make in Guinea. This conclusion is based on discussions with industry sources, with the Economics Department of IBRD, and on comparisons with the price of other bauxites.

46 APPENDIX A (iii) Page 2 To check this conclusion, a comparison was made between the royalties and taxes which other countries derive on the export of bauxite and those which would accrue to Guinea. In most cases no clear comparative data could be obtained, because the confidential tax data of the countries concerned are not available. However, the figures for Jamaica are generally known, and the total benefits which that country receives from its bauxite exports are considered among the highest in the world; Jamaica accounts for about 50 percent of Western Hemisphere bauxite production, and about 25 percent of total world bauxite production. The corporation profits taxes and the royalties are established amounts in Jamaica, independent of the total mining cost, and come to approximately US$1.85 per metric ton of bauxite. Calculations show that Guinea will derive directly from its participation in CBG operations (exclusive of customs duties, payroll taxes and other imposts of a general revenue nature) a net benefit of US$1.78 per ton of bauxite sales during the 20 year term of the existing sales contracts. These figures indicate that the proposed price for Boke bauxite of US$7.14* per ton is not unreasonable. *Basic price US$7.00 per ton, increased by US$0.14 per ton in implementation of the price escalation clauses of the Sales Contracts, and resulting from increases in prices of diesel and fuel oils and in the Wholesale Commodity Index from February 15, 1967, (the date on which the "zero indices" were determined), to June 30, 1968.

47 APPENDIX A(i{;) Page 3 BOKE BAUXITE PROJECT COMPAGNIE DES BAUXITES DE GUINEA (CBG) PRODUCT SPECIFICATIONS Guaranteed Analysis Technical Analysis Bauxite Min. Max. Metallurgical Grade Alumina (A ) 59.0% 59.7% Silica (SiO ) 1.5% 0.8% Iron Oxide tfe ) 7.0% 6.3% Titania (TiO 2 ) 3.5% 3.2% Chemical Grade Alumina-(A ) 61.0% 63.8% Silica (SiO ) 1.75% 1.4% Iron Cxide?Fe 2 O 3 ) 2.25% 1.7% Titania (TiO 2 ) 3.50% 2.9% Organic 0.20% Trace Calcined Bauxites Abrasive Grade Alumina (A ) 88.0% 89.5% Silica (Sio 2 ) 1.5% 1.4% Total Alkalies 0.1% Trace Total Iron (Fe ) 5.0% 4.6% Phosphorus (P Trace - Minor Elements Trace - Titania (TiO 2 ) 3.5% 4.5% 4.0% Loss on Ignition (L.O.I.) 0.6% 0.5% Refractor,y Grade Alumina (A ) 90.0% 92.50% Silica (SiOg) 1.50% 1.25% Iron Oxide (Fe ) 2.75% 2.65% Titania (Ti0 2 ) 3.75% 3.35% Loss on Ignition 0.30% 0.25% Bulk Density 3.10% 3.18% The basic price for all of the bauxite sold and purchased under the sales agreements shall be US$7.00 per ton, 3 percent free moisture, f.o.b. vessel at the seller's loading facilities Port Kamsar, Guinea, for material containing percent alimina (A1203) and 1.5 percent silica (SiO2) or less. Such price shall be increased by US$0.15 per ton for each percent of A120 3 contained in the material over 60 percent and up to 66 percent. Such price shall be decreased by US$0.30 per ton for each percent of A contained-in the material below 58 percent. Such price shall also be decreased by US$0.70 per ton for each percent of SiO2 contained in the material above 1.5 percent. Such price shall also be decreased by US$0.10 per ton for each percent of free moisture above 6 percent. In each case the increase or decrease in the price shall be prorated for fraction of a percent. The bauxite shall be delivered crushed at below 100 mm with less than 5 percent in might of lumps larger than 100 mm. A detailed formula has also been arranged for potential price increases based on the variation in local wage costs, the cost of diesel and fuel oil, and the U.S. Wholesale Commodity Index. (According to the latest information received frcm Halco, price increases through June 30, 1968 amounted on that date to US$0.14 per ton, bringing the standard Boke bauxite price up to US$7.14 per ton, f.o.b. Kamsar.)

48 BOKE BAUXITE PROJECT APPENDIX B (page 1) Summary of the Basic 1963 Agreement, Creating CBG 1. The Agreement was signed October 1, 1963 between Harvey Aluminum Company of Delaware and the Guinean Minister of Economic Development. The agreement was ratified by the National Assembly October 24, and signed by the President of Guinea October 26, The name Harvey Aluminum Company was later changed to its present name Halco (Mining) Inc., incorporated under the laws of the state of Delaware, USA. The agreement establishes the terms and conditions of the exploitation of the Boke bauxite deposits, of which the main features are summarized in the following paragraphs. Structure of CBG 2. A mixed-economy corporation, the "Compagnie des Bauxites de Guinee"' (CBG) was established within six months after the effective date of the agreement. The corporation is a Delaware corporation which is also registered in Conakry. The initial capital stock is USI,2 million, diivided in 100,0fY share. of a par value of US$20. Of these, 49,000 "A" shares were issued to the Government against granting of mining rights, and 51,000 "B" shares to Halco, when the latter deposited the par value of its shares (US$1,020,000) in the country's central bank. Voting rights of each "A" and "B" share are equal in stockholders meetings. The stock capital may be increased up to million by mutual agreement of the parties. Before selling their shares to others, each party must offer them first to the other party at equal prices and conditions& "B" shares may be transferred to any other corporation belonging to the Halco group. Only "B" shares are entitled to dividend, which is repatriable in the original currency of investment. Government, as holder of the "A" shares, does not receive dividends but derives its profits from defined "profit taxes". 3. The President of the corporation, who is not a member of the Board of Directors, shall perform the function of general manager. He will be designated by the directors representing the "B" shares. The Government designates the Vice President. The Board of Directors is composed of ten members, of which the "A" and "B" stockholders each designate five. The nomination is for four years. In case voting in the Board would result in a tie, the non-member President (designated by the "B" shareholders) will have the decisive vote for that particular case. 4. The Board of Directors is generally responsible for the managing of CBG's affairs and its finances. The President of the corporation assisted by the Vice President, assumes the general management and is responsible for all transactions including sales, the corporation's finances, the recruiting and dismissal of staff, etc. Mining Rights 5. The agreement defines the perimeters of the region in which CBG is entitled to mining rights and exploitation permits. The duration of the permits is 75 years; they grant the rights to explore, to mine and to export bauxite (and if later so decided, to transform it into alumina or aluminium), and to construct all plants and installations required therefor.

49 APPENDIX B page 2. Financing 6. Under the Agreement the Government undertakes to finance and build the infrastructure as described in the report; the Government will own it, and it may be used also for other purposes than those related to CBG activities. The Agreement grants Halco the option to realize the infrastructure for the Government's account, but this procedure will not be followed. The Government shall make the infrastructure available to CBG at rates reflecting the operating cost of the use of the infrastructure, excluding financial charges corresponding to amortization and interest of funds borrowed by the Government. It is assumed that the latter charges be paid out of the "profit taxes", paid by CBG to the Government. The Agreement stipulates, however, that CBG may pay advances against future profit taxes, so as to allow the Government to meet its financial obligations. 7. Halco will advance to the corporation all funds needed for the original installations of machinery and equipment, and for the initial working capital for CBG's mining operations. The terms for such advances, including interest rates, are to be mutually agreed upon between the parties. These advances were to be considered as loans to CBG, and the resulting financial charges would be charged to the corporation. Later it was agreed to change these arrangements along the lines as now presented in paragraph6.18 of the main report. Fiscal Rlegime 8. The Agreement includes a special fiscal regime, granted by the Government to CBG for 25 years, of which the arrangements are as follows: (a) all imports needed for the original installations shall be free of import duties; (b) all imports needed for subsequent operations shall be subject to an import duty of 5.6 percent (on FOB value); (c) there will be no export duty on CBG's exported products; and (d) CBG will pay to the Government a "profits tax" computed as first 30 percent of "net taxable profits", and 50 percent of the remainder thereof, thus working out as 65 percent of the total net taxable profits. The net taxable profits, the 65 percent share whereof replaces dividend to the "A" shareholders, is defined as: gross income, minus (i) interest and other expenses related to funds advanced by Halco to CBG; (ii) exploitation charges incurred by both CBG and OFIB; (iii-) depreciation of CBG plant,

50 APPENDIX B Page 3. equipment and buildings; (iv) any profits actually reinvested in CBG; and (v) provisions for renewal of equipment and tools. This definition of net taxable profits has been modified, as shown in para of the present report. 9. CBG will pay, in accordance with normal tax laws, payroll taxes and social security taxes. Wages of expatriate personnel, however, will be exempt from the social security tax, and only the locally paid part of expatriate salaries will be subject to income tax. Since CBG arranges for its own apprenticeships, it is excluded from the usual apprenticeship taxes. Dividends to "B" shareholders will be exempted from all taxes and duties. Mining Volumes 10 The 1963 Agreement provided that a minimum of one million tons of bauxite should be exported annually, and if not, that the Government would receive profit taxes as if the above volume were actually exported. It also established the principle that CBG would accept all reasonable orders for additional sales to others, and if not, tlat other parties would be allowed to infringe on CBG's mining rights. It further stipulated that CBG would examine, at an appropriate time, the feasibility of erecting in Guinea a plant for transforming all or part of the extracted bauxite into alumina or aluminum. The mining volumes stated above have since been greatly increased, as stated in paras. 5.3 and 5.4 of the main report. Technical Assistance 11. Under the Agreement Halco shall make available to CBG, at cost, technical assistance. Guinean personnel will exclusively be used for work for which specialization is not necessary. As to staff requiring specialization, preference will be given to Guinean personnel if it is of equal competence and has the same qualifications as expatriate staff. Other Conditions 12. The Government reserves the right to have 50 percent of exported bauxite shipped in vessels under Guinean flag, if this would not adversely affect the bauxite sales. 13. The Agreement included a "force majeure" clause which, in the Bank's view, covered a rather wide assortment of risks. Insofar as the Bank's security arrangements and the financing and operations of the project are concerned the "force majeure" clause has been superseded. (See paras. 3.6 and 9.5) 14. The Agreement further stipulates that Guinean law will apply as the laws and regulations were at the date of the Agreement, and that subsequent changes therein will not apply to the Agreement. An arbitration clause is included, calling for the appointment of three arbitrators in case of disputes.

51 APPENDIX B Subsequent Events 15. The mining rights decree, based on the Agreement, was signed in June When the Bank made an engineering loan in March 1966, bringing the realization of the plans for the exploitation of the Boke bauxite a step further, several aluminum companies began to show interest in the high grade Boke bauxite. As a result, in April 1967 firm sales contracts for 4.7 million tons annually, to be increased to 5.1 million tons after five years, were concluded between CBG and six large aluminum companies: Harvey Aluminum, Alcoa, Alcan, Pechiney-Ugine, Vereinigte Aluminium Werke and Montecatini-Edison. By mid-1967 it became apparent that the cost of both the infrastructure and the CBG installations would be close to three ti-mesthe initially envisaged us$ 55 to 'US$36O million, largely as a result of increased capacity of the installations, and to some extent because of initial under-estimation. The investment requirements and other obligations having increased so much it was decided in October 1967 to expand and reorganize Halco by making the purchase contractors shareholders in the company. This event strengthened the case of a Bank loan for the infrastructure; not only because the increased volume of sales improved the financial and economic justification of the project but also for another important reason, namely that the expansion of Halco made it possible to make the shareholders ultimately responsible for guaranteeing the service of the Bank loan under all circumstances, except if so-called political risks should occur. 16. The reorganization of Halco caused the role played by its initial single shareholder, Harvey Aluminum, to be greatly reduced, and the lead in further preparation of the project and the negotiations and discussions between shareholders, the C-overnment and the Bank to be taken over by Alcoa and Alcan, who now together own 54 percent of the Halco shares. This, together with the fact that, in mid-1967, the Bank started with the preappraisal of the pro.ject, has led to the need forclafifying the interpretation of the original 1963 :reement and superseding certain of its provisions in a number of agreements, the sijnature and effectiveness whereof is a condition of effectiveness of the Bank loan.

52 GUINEA-BOKE BAUXITE PROJECT APPENDIX C Page 1 "S T A T U T S" 0 F O.F.A.B." I - PURPOSES: AIMS, GENERALITIES Article 1. The Office d'amenagement de Boke (O.F.A.B.), established by Decree No. 425/PRF of December 31, 1965, is a public industrial and commercial institution, with the head office located in Conakry. O.F.A.B. has an independent legal and financial status. O.F.A.B. is under the supervision of the Minister of Economic Development. Article 2. The capital of this public institution is fixed at the amount of 125,000,000 Guinea francs. It has been completely subscribed by the Republic of Guinea, and has been paid in. Article 3. The essential purpose of O.F.A.B. is to facilitate the exploitation of the bauxite deposits, the transportation and the removal of the bauxite to the harbor. As a secondary aim, it shall insure the transportation of persons or of merchandise. Article h. In addition, the purposes of O.F.A.B. are: 1) the study and the formulation of draft agreements between the Republic of Guinea, or one of its local subdivisions, on the one hand, and the Compagnie des Bauxites de Boke (CBG) or a third party purchaser of bauxite, on the other. 2) the adoption of means intended to facilitate the completion of infrastructure works for the development of the bauxite deposits of Boke, such as the railway, the harbor, and the town. 3) the management of the buildings in the town and the control of the operations of the railway and the harbor. 4) furnishing certain services related to its activities. 5) the conclusion and signature of all agreements necessary to the attainment of its purposes, and in particular of all agreements to be concluded with IBRD. 6) the carrying out of the agreement dated October 1, 1963 between the Government and the Harvey Aluminum Company of Delaware and of related documents.

53 APPENDIX C Page 2 Article 5. The Board of Directors of O.F.A.B. shall be composed of: - the "Ministre du Developpement Economique", President; - the "Ministre du Commerce, des Transports et des Teleconmmunications"; - the IMivinistre Delegue de la Guinee Maritime"; - the "Secretaire d'etat au Controle Financier"; - the "Secretaire d'etat a la Fonction Publique et au Travail"; - the "Secretaire d'etat aux Travau.x Publics"; - the "Secretaire Federal de Boke"; - the "Gouverneur de Boke". The presence of five members of the Board shall constitute a quorum for any meeting. The Board shall meet at least once every six months. Article 6. The budget shall be prepared annually by the Director General of O.F.A.B., submitted to the President of the Board of Directors and approved by the Board. The Board shall approve the annual balance sheet. The Board shall approve the railway rates, the harbor fees, the rental charges for buildings. It snall be competent to deal with loans and the terms thereof; it shall approve construction entered into to that end by the Director General. The principles applicable to procurement of goods and to the supply of services and works shall be the responsibility of the Board of Directors. Furthermore, the Board shall be competent to approve the acquisition byo.f.a.b. of immovable assets, as well as the documents purporting to dispose of such goods. The Board shall approve the by-laws of O.F.A.B. Article 7. The Director General shall perform all acts of administration and, if need be, of disposition, under the control of the Board of Directors. In particular, he shall carry out the budget of O.F.A.B., shall negotiate and enter into contracts for the supply of services, those relating to the works of O.F.A.B, and represent O.F.A.B. in all legal acts. In particular, he shall have the capacity to sue. Article 8. He shall be assisted by 3 (three) deputy directors respectively in charge of the town, the railway, and the harbor, all appointed as he is by decree and all entitled thereby to the benefits of the Guinean civil service.

54 APPENDIX C Page 3 The status of the Guinean personnel shall furthermore be governed by Article 12 of Decree rio. 175/PRG. O.F.A.B. may in addition use the services of foreign experts, either as technical consultants, or as superior managerial personnel. Article _!. The Director and each deputy director shall be liable under civil and criminal law for all their acts of administration. Article 10. In accordance with the provisions in force relating to its enterprise, the State shall control the administration of O.F.A.B. The accounting documents and books shall to that end be communicated at the end of each fiscal year, and, as often as necessary, to the "Ministre d'etat, Charge du Domaine Financier" as well as to the M4inister of Economic Development who, in addition, may at any time visit the installations, with the help of the competent officers of their departments. II - OPERATION Article 11. O.F.A.B. shall study and determine the elements of the cost price with respect to tlhe harbor, the railway, and the town. In this determination, it shall take into account the interest and the principal of loans as well as expenses in Guinean francs. Article 12. O.F.A.B. shall maintain accurate records of expenditures for administration and other incidentals during the construction period, and shall provide reports to the Board of Directors in such manner and at such intervals as the Board shall direct. At the completion of the construction, the Republic of Guinea shall convey to O.F.A.B. title to all the infrastructure assets necessary to achieve its objectives as defined in Article 3 above. O.F.A.B. shall maintain its accounting records in an orderly fashion in order to expedite the preparation and presentation for audit of a periodic balance sheet and statement of operations. O.F.A.B. shall keep its accounts in accordance with the National Accounting Plan. Article 13. Within a month following receipt from CBG of the plan of production, O.F.A.B. shall submit to the Minister of Economic Development its comments regarding the possible consequences thereof for the operations of the railway and of the harbor. Article 14. The resources of O.F.A.B. shall include: - income from the operation of the railway - harbor fees - building rental - compensation for service and various works - subsidies from the Government - borrowed monies - advances from CBG

55 APPENDIX C Page 4 Article 15. The liabilities of O.F.A.B. shall includeb - the cost of personnel and material necessary to its activities - the interest and reimbursement of principal relating to loans - amortization - maintenance of all facilities and buildings - other fixed or variable charges Article 16. O.F.A.B. shall transfer each month to a special account held at the Central Bank of the Republic of Guinea the funds representing that part of depreciation which, in accordance with the agreed definition of operational cost, shall be charged by O.F.A.B. against CBG. The balance of the aforesaid special account shall be freely available for the replacement of fixed assets or additions thereto, and for such other purposes relevant to the development of the bauxite deposit as the Board of Directors may direct. Article 17. In accordance with the provision of Article 2 of organic decree 175/PRG, B.C.R.G. may accept, discount, endorse, or receive as guarantee negotiable instruments issued by O.F.A.B. The activities of the Office, its administration and its accounting procedures shall be governed by commercial rules and usages. Article 18. Any bearer of these '"Statuts't is authorized to deposit the same with the clerk of the Tribunal of Conakry. Article 19. If any provision of these "Statuts" is inconsistent with a provision of Decree No. 425/PRG instituting O.F.A.B. or of Decree No. 175/PRG, containing "Statut types" of state enterprises, the provision of these "Statuts" shall govern. Article 20. The Minister of Economic Development is charged with the execution of the present Decree, which will be registered and published wherever necessary. Conakry, AIHED SEKOU TOURE

56 APPENDIX D Page 1 DETAILED DESCRIPTION AND COST ESTIMATES OF THE OFAB INFRASTRUCTURE (i) Detailed Description (a) Summary 1. As the OFAB infrastructure is an integral part of the CBG mining operation as a whole and could not be justified without the bauxite transport requirements, this report considers and appraises the combined CBG and OFAB facilities and operations as one project. The object of a Bank loan, however, is only the OFAB infrastructure consisting of the following main parts: (a) a 136 km railway between Sangaredi near the mining site and the port near Kamsar (see Map 1); (b) an approach jetty and loading wharf which will carry CBG-owned facilities and accommodate vessels up to 30,000 tons, a dredged entrance channel 17 km long, and port equipment (see Map 2); and (c) the preparation of a township by filling low level terrain, the building of houses for OFAB staff and a community center including a hospital, a market building and administration offices for OFAB and some Government staff, plus the necessary streets and public utilities (see lhp 3). (b) The Railway 2. The proposed railway is to be a standard gauge, heavy weight, single track railway from Kamsar to Sangaredi, a distance of 136 km. There will be three stations along the line in addition to the two terminal stations. Dispatching and train control will be by radio telephone. 3. Topography and terrain do not present any particular difficulties; 24 bridges are needed for crossing of the rivers Nunez, Tinguilinta and their tributaries. Difference in altitude between Kamsar and Sangaredi is only 225 m and curves and grades pose no problems. On the first 65 km from Kamsar, earthworks, ballasting and bridges were already completed by Bamidi before 1962 (see para. 3.2), but rehabilitation of the roadbed and strengthening and reconditioning of bridges is required. Beyond km 65 the entire line remains to be built.

57 APPENDIX D Page 2 L. CBG will operate its own trains and own the motive power and rolling stock needed for bauxite transport. OFAB intends to acquire three 100 hp diesel locomotives, 26 service and freight wagons, and four passenger coaches. This equipment will be required during construction, and will be retained thereafter for local traffic. The 26 wagons include 16 hopper wagons for ballasting, 6 flat wagons for transporting rails and 4 covered wagons for general cargo. The four passenger coaches have been designed to suit local short distance traffic. OFAB also intends to acquire some track maintenance equipment. 5. Maintenance and repair of OFAB locomotives and rolling stock will be done at OFAB's expense in the CBG shops established for maintenance of the bauxite train equipment. 6. As presently designed, the railway will be able to transport up to 8 million tons of bauxite, and with minor modifications up to 11 million tons. Initially, local OFAB trains are expected to be limited to one or two per day, and are to be coordinated so as not to interfere with bauxite traffic. It would be possible to increase line capacity further by installing an automatic block signalling system or centralized traffic control (CTC), increasing train loads and train speed, using more powerful engines or triple or quadruple headings, lengthening sidings and adding new crossings. In view of such a possibility, the sidings have been designed to permit further extension from 1,000 m to 1,700 m. (c) The Port 7. The new port of Kamsar is some 17 km from the open sea in the Rio Nunez estuary, which cannot at present accommodate large bulk carriers. Location nearer the open sea would be uneconomic from the point of view of rail connection due to the swampy nature of the terrain lower down the estuary. A channel is therefore to be dredged with sufficient depth of water to enable vessels of about 30,000 dwt capacity, 9.3 m draft, to navigate it at half tide (2.8 m above low water); the dredged depth will vary from 10.5 m to m according to the safety margin required, depending upon the normal wave conditions expected in any particular section. At the landward end it will terminate in a turning basin upstream of the new port installation, and alongside the installation a loading basin with 13.8 m depth of water will be dredged so that a loaded vessel can await sailing on mid-tide, as necessary. 8. Total volume of dredging is estimated to be 1.4 million mi 3, excluding additional dredging required to provide hydraulic sand fill for the township and elsewhere.

58 APPENDIX D Page 3 9. The port installation will comprise an approach jetty (1,536 m long and 7.6 m wide), angled from the shore, so that the loading wharf (2h0 m long and 17.7 m wide) is located at a deeper section of the existing estuary, thus reducing the amount of dredging required. The alignment will also minimize maintenance dredging. The loading wharf is protected by independent fendering dolphins, and has a dowinstream mooring dolphin. All these works are built on steel piling which will have cathodic protection. The approach jetty provides a single lane access road for 5-ton trucks, and carries pipelines for fresh water, sea water, diesel and bunker oil. The wharf can be extended upstream when an additional berth is required, without building another approach jetty. The loading wharf is designed to permit future deepening to accommodate 60,000 dwt vessels and the fender dolphins for future 45,000 dwt vessels. 10. The above structures will carry the bauxite loading equipment, which will be built, owned and operated by CBG. Bauxite will be carried by a 1.60 m wide conveyor, from CBG storage area, along the approach jetty to a loading tower on the wharf, which will incorporate an automatic weighing station. The theoretical capacity of the loading equipment is tons/hour and the rated capacity 2,500 tons/hour. The port will be able to handle 6.6 million tons of bauxite per year, and could handle as much as 8 million tons. Its maximum capacity depends on the size of ore ships, their sequence of arrival and delays in sailing which may occur after loading is completed, while waiting for the tide to reach midlevel. 11. In addition to bauxite, the loading wharf will be used to discharge petroleum products for use by CBG or OFAB. It will also be able to handle spare parts shipped in ore ships up to the limit of the carrying capacity of the approach jetty. Heavier items wiill be handled by floating equipment over the existing wharf. A buoy berth will be provided at the edge of the turning basin for general-cargo vessels to discharge to motorized barges. 12. There is an existing wharf at Kamsar, 120 m long and 12 m wide, built by Bamidi. before 1961, alongside which a depth of water of 6 m will be dredged. It will be provided with a heavy lift derrick crane and a mobile crane so that it can be used to land materials and heavy equipment for new construction, and to discharge general cargo from the motorized barges. A slipway alongside the old wharf will also be renewed for maintenance of floating craft included in the project. 13. Floating equipment to be owned and operated by OFAB can be divided into two categories: (1) that required for controlling the movement of bulk carriers, a tugboat of 750 hp and 2 motorboats of 125 hp

59 APPENDIX D Page 4 each; and (2) that required to handle general cargo and to maintain navigation aids, motorized barges and cranes. The contracts for this equipment will include the service of specialists for training local personnel in its operation and maintenance. 14. Ancillary works and equipment include an office building for the harborma2ster, customs, immigration officials and police, a warehouse with 2,000 m of floor space, cold storage, forklift trucks and navigation aids. The office will house necessary telecommunications equipment to control the movements of ore ships and floating equipment. 15. OFAB will collect ships' dues sufficient to cover the cost of operating the port infrastructure on the basis of the tariff set forth in the Port-Railway Project Agreement (para. 6.26). Police, immigration, health, and customs services will be provided at Government expense. (d) The Township2 Housing and Buildings 16. OFAB and CBG will have to provide housing to attract and keep the necessary labor force, both at Sangaredi and the port of Kamsar. At present very few people are living in the mining area, and there are about 5,000 in scattered villages around Kamsar. Consequently, it has been agreed that OFAB will build a new township at Kamsar where CBG will provide the houses that it requires, and CBG will build a township at Sangaredi where OFAB's investment will be limited to houses and minor road works for its own use. The township at Kamsar will be more important than that at Sangaredi and will include such facilities as a school, a hospital, an administrative center and a commercial center. 17. The proposed township at Kamsar (see Maps 2 and 3) is located 2 km upstream from the port, alongside the river, comprising an area of about 88 ha. The land will have to be cleared, raised by hydraulic sand fill and levelled. The immediate surrounding area will be drained. The main access to the town will be from the existing Kamsar-Boke Road, and generally in a north-south direction. All commercial buildings, except the hospital, are to be grouped along another generally east-west central axis road which also roughly divides the OFAB and CBG sections. These two roads and the main streets serving the houses will total 6.8 km; there will be an additional 4.75 km of secondary roads. 18. Consideration has been given to the alternative of using the existing towns Kalaboui (pop. 5,000) and Boke (pop. 15,000) 27 and 55 km away from Kamsar respectively, as the base for operations. This would save investments in the site preparation for the Kamsar township, and

60 APPENDIX D Page 5 would require somewhat less for roads and other public facilities. However, neither town could, without sizeable investments, absorb the large influx of some 820 staff with their families, leading to an additional population of some 5,000 people. Resulting savings would be more than offset by additional transportation cost and the great disadvantage that key personnel would not be immediately available in case of emergency during the three shift operations. 19. The only housing facilities now existing at the Kamsar site are army barracks, together with a few houses built by Bamidi OFAB proposes to build 225 houses for its personnel and CBG 370 houses and a guest house with 26 bachelors' quarters. The total, 621 quarters is less than the theoretical requirement to accommodate all staff, and it is assumed that 15 percent of the houses will accommodate families with two or more employees, that various construction contractors will leave useable housing behind, and that some local recruitment will be possible. More houses will be needed, say, two years after the start of operations when increased maintenance will require additional employees, and later again as sales increase. 20. It is to be expected that the town will attract people not connected with CBG or OFAB, who may build facilities for their own use. It is probable that the township will accommodate some 10,000 people in due course. 21. CFAB and CBG have agreed to construct the same four basic types of houses, to be allocated to staff in accordance with qualifications and position held. Their estimated total cost, including equipment, but excluding indirect cost, varies from about US$33,000 for the highest class to US$5,150 for the lowest type house. A 30-bed hospital, a school, an administrative and commercial center are to be provided. 22. For the hospital the consultants have proposed two alternatives costing, respectively, US$1.12 million and US$0.88 million excluding indirect cost. The first alternative has been used for the present cost estimates. The Bank has asked the World Health Organization for advice on this matter, including a check on the equipment and cost estimates, and a final decision on the actual construction will be deferred until all information is available. 23. The school is a one-story building, designed to accommodate about 630 pupils, in twenty-one classrooms, or 30 per class. According to the Bank's Education Division this is reasonable, assuming that about 35 percent of the Kamsar population will be of school age. The total cost of the school complex, including a small gymnasium and administrative bloc, and

61 APPENDIX D Page o school room furniture, is estimated at us$563,000, or between US$ per pupil. This seems high, but is not inconsistant with estimated costs for other buildings included in the project. All building costs are high due to the necessity to import practically all materials. 24. The administrative center comprises a fire station, post office and a two-story administrative building to provide OFAB headquarters; the commercial center provides a department type store with cold storage facilities, a large covered open sided market place and some additional locl-up stalls. A service station for motor vehicles is also included. 25. The township will have necessary public utilities -- electricity, telephone, drinking water, drainage and sewerage. CBG will generate all electricity for its own needs and those of the town, and OFAB will purchase electricity in bulk from CBG and assure its distribution. 26. A special problem is the provision of drinking water. Present plans call for water to be supplied from a natural reservoir in the Tinguilinta river, near Boke, through a treatment station, and a pipeline 60 km long to a water tower at Kamsar. This piepline is expensive, but its cost is included in the cost estimate for the time being because the consultant is not prepared to guarantee that locai wells could meet daily requirements of about 1,735 m 3, including 1,000 m for industrial use. Local wells provide an adequate supply of water for the villages, but the results of test drillings to date are conflicting and insufficient to conclude that these wells could provide the much larger volume of water required throughout the dry season (8 months). Experience during the construction period when contractors have to arrange for their own water supply should provide more solid evidence on the reliability of local wells. The contract for the pipeline scheme will not, therefore, be let, until this evidence is available. The cost of the water supply system would be significantly reduced if the necessary water could be obtained from local wells. 27. Because of heavy rainfall in the wet season, surface water drainage must be provided, and a system of sewerage disposal via underground pipes to pumping stations, whence it will be discharged into the Rio Nunez. 28. The township at Sangaredi, with a guest-house for 11 staff and 225 houses, will primarily serve the mining operations (Chapter 5) and will be built by CBG. OFAB's part will be limited to an additional 41 houses and some roadworks. Four houses will also be built by OFAB at wayside stations on the railway.

62 APPENDIX D Page 7 (ii) Preparation of Cost Estimates 1. The attached table shows a breakdown of the summary cost estimates shown in paragraph 4.16 of the report. The total construction cost estimates add up to US$79.5 million of which US$61.1 million is in foreign currency and US$18.4 million equivalent in local currency. As mentioned in para of the report it is suggested that the following items should also be included in the Bank loan: (a) (b) incorporation of engineering loan SI-GUI US$1.7 million; additional engineering cost resulting from the change in the project in mid 1967 US$300,000; (c) a reasonable share in the cost of management and advisory services prior to and during construction - US$1.4 million. This would bring the total foreign cost up to about US$64.5 million, and the total cost of the project to about US$83.5 million, including US$0.6 million equivalent local currency costs of (c) above. 2. The US$79.5 million total construction cost estimates are subdivided between direct and indirect costs. The US$52.5 million direct costs (see page 9 of this Appendix) reflect the expected payments to contractors and manufacturers. Indirect costs, amounting to 51 percent of the direct cost, are shown below: US$ million equivalent Engineering and supervision of construction 5.9 Contingencies, 10 percent 5.8 Escalation 13.5 percent 8.7 Interest during construction or 51 percent of US$52.5 million direct cost. The escalation allowance assaues a 6 percent annual price increase of foreign cost during the 3A year bidding and construction period. Although the Government exercises a strict wage control, a similar escalation percentage has been applied for local cost since experience shows that the mere fact of such a large construction job being executed in a limited region frequently causes "job escalation" which the Government may be unable fully to control.

63 APPENDIX D Page d 3. The cost estimates are based upon detailed engineering by the consultants TRACTIONEL, including the preparation of tender documents and detailed drawings; as explained in paras and 4.14 they were checked by Nedeco. Detailed estimates were prepared for unit prices of each item of the civil works, and information from manufacturers was obtained for estimates of equipment items. As to the civil works, comparisons also were made with similar works in neighboring countries. The Bank staff is satisfied that the consultants made serious efforts to achieve the greatest possible accuracy. It should be recognized, however, that a degree of uncertainty must remain for works in a country like Guinea where experience with similar works on such a large scale is only limited. Competition between contractors depends on how attractive or risky they may consider a 3A year job in Guinea. Since the Government lacks the resources to supplement borrowed funds, the Bank has asked for an arrangement whereby the Halco group will advance to the Government, against future profit taxes, any shortfall in foreign exchange funds for the completion of the project. As to a possible overrun in local cost, the USAID loan includes an extra margin of USP2.0 million over and above the normal allocations for unforeseen and escalation (see para. 4.21).

64 GUINEA - BOKE BAUXITE PROJECT INFRASTRUCTURE CONSTRUCTION COST ESTIMATE Engineering, price escalation, contin- Construction Ancillary gencies and interest Total Cost Services during construction Estimated Cost Foreign Local Foreign Local Foreign Local Foreign Local Currency Currency Currency Currency Currency Currency Currency Currency Total (Figures in US$'000 or equivalent in local currency) Harbor Dredging, including preliminary works 2, , , ,458 Navigational aids Floating equipment (tug and pilot launches) Total, harbor 3, , , ,991 Port structure and cargo-handli euipment Loading wharf and approach Jetty 4, , ,632 1,297 8,929 Cranes and barges Other equipment and buildings in port area Total, port 5,555 1, , ,121 1, Power grid, telecommunications, etc , ,861 Water supply 3, , , ,313 Kamsar township Land and landscaping (including hydraulic fill) 1, , ,320 Buildings 3,279 1, ,835 1,028 5,380 3,152 8,532 Roads, drains and sewers ,447 2,846 Total, Kamsar township 5,8b7 3, ,226 1, ,240 14,698 Railwayt ia thworks, including drains, staking out and access roads 3,947 2, ,215 1,249 6,231 3,837 10,068 Track (including tracklaying) 8, , ,081 1,335 14,416 Turnouts Ballast 1,495 1, ,309 1,798 4,107 Buildings Bridges and culverts 3,549 1, , ,647 2,554 8,201 Signals Total, railway 18,263 6, Y,o22 3, ,078 38,608 Locomotives and rolling stock CD Locomotives so Freight cars w Passenger vehicles Total, locomotives and rolling stock 1, ,323 Total, all works 38,792 11,937 1, , ,400 79,533 Total, by class of expense 50,729 1,776 _27, Grand Total _,%33 1/ Ancillary services comprise provision of screened and washed sand, aggregate, water, and temporary buildings for construction use.

65 APPENDIX E BOKE BAUXITE PROJECT page 1 Contracts, Contractual Arrangement, and Construction Schedule In accordance with existing proposals, there will be six separate contracts to provide the OFAB infrastructure. These are: (a) Harbor Works: Construction of approach jetty and loading wharf, dredging, provision and location of navigation aids, and provision of hydraulic sand fill. (b) Floating and Lifting Equipment: Supply of 110 ton derrick, 30 ton mobile crane, two motorized barges, two launches and one 750 hp tug. (c) Kamsar Township: Construction of roads, public services, houses, public buildings and water supply. Also railway and port buildings required. (d) Railway: Construction of roadbed, track and bridges. (e) (f) Supply of OFAB locomotives. Supply of OFAB rolling stock. There will be 19 separate CBG contracts which can be classified into 5 mainly civil engineering construction, 9 mainly mechanical equipment supply and erection, 2 mainly electrical, and 3 supply only equipment. The possibility of all OFAB contracts being undertaken by a single main contractor with approved sub-contractors or by a consortium, is not excluded, and may be desirable, in view of the complexity of the supply and logistic problems which will arise in the event of separate contracts for items (a), (c) and (d) above. In any event bidders for construction contracts will be invited to submit separate and combined bids for OFAB and CBG works of a similar nature, so that the best alternative can be selected. A summary construction schedule is attached overleaf.

66 GUINEA - BOKE BAUXITE PROJECT TABLE 1 COMPAGNIE DES BAUXITES DE GUINEE EQUIPMENT AND CONSTRUCTION COST Foreign Local Exchange Currenc Total (US$ 000 or equivalent) Sangaredi Mine area and townsite: Land, roads and services 2,291 1,053 Housing and community buildings 2,460 1,371 7,175 Mine railroad track 1T, ,258 Mine plant: Electric drills, 4 no Electric shovels, 8 cu. yds., 3 no. 1,500 - Bulldozers, 3 no Miscellaneous plant ,983 Locomotives and rolling stock: Main-line locomotives, b no. Shunting locomotives, 3 no. 2, Ore-cars, 230 no. 3,772 Other freight cars, 9 no Breakdown crane, 1 no ,884 Kamsar Land and buildings 5,718 2,251 7,969 Electricity supply 5, ,756 Water and other services ,056 Railroad tracks ,259 Plant and machinery: Workshops plant 1, Ore-car discharging plant installation Crushing plant 1, Drying kilns, 3 no., and accessories 3, Recovery and stacking equipment 3, Calciner, with conveyor and accessories 1, Transporter to jetty with sampling plant and accessories 1, Conveyors, shiploader and other equipment on jetty and wharf 2, Miscellaneous equipment and spares ,472 Foundations, piling and general civil engineering works (for plant installation) Conakry - Office building 2, ,742-4, Total construction cost estimate 49,338 9,895 59,233 Contingencies and price escalation 11,005 2,206 13,211 Engineering, administration and supervision 3, ,238 Interest during construction 4, ,114 Total cost estimate 68,308 13,488 81,796

67 GUINEA - BOKE BAUXITE PROJECT COMPAGNIE DES BAUXITES DE GUINEE REPLACEMENT AND ADDITIONS TO EQUIPMENT (Thousands of Dollars) YEAR Replacements New Additions MAJOR EQUIPMENT INCLUDED ABOVE 2nd Calciner th Drying Kiln 3131 Add'1 100,000 m.tons dry storage 2618 NOTE: This includes cost escalation from 1968 (not compounded) (a) for equipment only 3% per year. 3 (b) for kilns and ore storage 4% per year.

68 B0KE BA TTFf PROJECT COMPAGNIED RkIITTTRg ORE OUTWEE PRO FORNA INCOME SThTF"T Year of Operation h 1S Sales S ILL 198S 1986 Metal Grade Bauxite (tons 000) 4,700 4,800 h,900 5,00o 5,200 5,600 5,800 6,000 6,200 6,400 6, ,400 6,400 6,hoo 6,400 Calcined Grade Bauxite (tons 000) _ hi. 9' 9S 19' 19$ ReveHuea (USS thousands) Metal Grade Bauxite at $7.1Wton 33,558 34,272 3h,986 35,700 37,128 39,98h h1,412 h2,840 44,268 45,696 45,696 45, ,696 45, ,696 Calcined Bauxite at $ /ton ' h.875; h.87$ S.5OO S.030 S OOO '.000 S.OOO ' Total Revermes ,397 37,361 38,075 42,003 44,859 h6,12 4i7,840 h9,268 So ,696 5o, ,696 50,696 Oneratinz Costs (0USS thousands ) Production Costs (including administration) 12,182 12,911 11,836 11,871 12,239 12,430 12,538 12,622 12,738 12,821 12,821 12,821 12,821 12,821 12,821 Depreciation 7,657 7,669 7,787 8,216 8,5h7 8,707 8,998 7,948 6,387 6,338 6,359 6,390 2,380 2,388 2,328 Amortization of Corporate Pre-operating Expenses 1,016 1,016 1,016 1,016 1,017 1,017 1,017 1,017 1,017 1,017 1,017 1, Interest on CBG Debt hi.690 L.h , ; S S Total Operating Costs 25,54,5 26,022 24,600 24,724 25,085 25,096 25,155 23,850 22,066 21,759 21,442 21,214 15,955 15,731 15,441 Pre-Tax Income 8,013 9,375 12,761 13,351 16,918 19,763 21,257 23,990 27,202 28,937 29,254 29,482 34,741 34,965 35,255 Tax at 65% , , , ,163 22, Net Incame Available for Dividends 2.80; , , , ,33I

69 Total Liabilities and Eouity 99,100 99,889 33,638 98,372 95,007 70, ,260 7,73 6 6,66~3 61,275 53,813 67,163.1,153 34,953 29,926 23,986 BOK2 BADUZT POJIECT F:U'A2NIE DES IAO.CIT!S DE 001UI M0619A 2ALANCE, SIEOIT %(Thousands of Dollars),SSETS Prior to h ,ash - BG Account 2, ,ash 1,32 1,320 - Trustee Expansion 1, Aczount , 933-3, 769 3, - 2, ,0o60 6,0o86 7,56 6, 366 6,501 Accounts,0,0,0,0 )0 2, 161 Receivable - 7, ,869 9,3h0-9,51? - 10,600-11,219-11,603 - Sczores 2, ,000 12,317 2, ,676 2,000 12,676 2,000 12,676 2,000 12,674 2,0O0 12,676 2,000 12,676 Bauxite Inventories 2, , , ,000 96o~ 2,0(X) 1,038 2,000 1,112 2, 000 1,112 2, 000 1,169 1,139 1,189 1,189 1,189 1,189 1,189 1,189 Total Current Assets5 6,339 11,018 lb,488 19,624 33,303 17,863 19, ,088 18,789 19,923 21,96'7 23,319 22,227 22,364 18,026 Advances to Guinean Government 790 2,859 6,303 Gross 1,367 Fixed Assets 11,270-12,7u! ,835 13,6MU0 81,835 13,609( 81,925 12,319 10,673 32, '"6' 37, 8, Q 0, 7,166 1, 6,016 j: 3,2, Less, Depreciation I z1 0, , ,ti57 98,863 i10o, ,114 N4et Fixed 1, I 3,7 <s3 6,0 101,545 Assets u.2 103, ,7 6, !6 79,29 86, ,00F3 93,383 95,77 'Corporate 630 5,0 i1o 3,2 3, ,099 For~mation, Training 2, ,731 6,77,2 and?re-operating Expense 11,200 10,856 10J,168 Mining i,~ Rights J, I-o" 0,uo , , ,017 - QdC IA BILI TI ES Tot,al Assets 99,100 99,889 98,538 9', C), ISO 13,260 75,973 65, ,275 53, ,153 36,953 29,924 23,986 Account-s Payable Dividends 600 Deferred i,00 ~ C00-2,806.,0 6, , , , , 631~ 600 3,993 uoo Senior Debt 62,000 59,686 9,267 99, ,6420 5,629 :~5, 739 3, ,703 16, ,392 27,260 22,628 17,9;96 14,116 10,982 7,850 6,718 1,986 c,nui t Subordinated Debt 20,000 20,000 20,000 20,000 20C,0OOC 20,000 18,000,lass A Stock 16,000 lo,000c 12, ,000O 980 8, ,000 64, ,000 - Class B Stock,f 1, , , Class 980 B 1,020 Stockholders 1,020 1,020 1,020 1, G 980 1, Capital 1, 020 1,020 1,020 1,020 1,020 1,020 Contribution 19,000 19,000 15,000 19,000 19~, ,0,000 I000 1_,00 1,00 15,000 19, ,000 19,000 15,000 19,000 19,000 Total Original Eouity 37,000 37,000 37,000 3letained 37,000 Earninigs i7, ,o,0 3 3,100X - 23,00-29,000-27,000 29,U00 23, ,000 19, ,000 Ne:. Income - - 2,805-3,281 t,666 1,000 o4,673 2,000 9,21-~. 3,000 6,917 i,000 7, 9,000 Le ss Dividiend Declared L,r 6,397 - (2,d09) 9,621 (3,281) 10,126 (6,b666; 10,239) o~,673) 10,319 (6,921) 12,159 (6,917) 12,238 (7,ijLw) 12,339 (9~,397) (9,521) (9,128) (9,239) (9,319) (11,159) (11,238) (12,339) TtlShareholders Funds 37,000 37,000 37,000 37, , O 33, J00 31,0~00 29,000 29,000C 27,UOO 26,000C 25,000 24,000 22,000

70 BOKE B&UXITE PROJECT COlPAGNIE DES BAUXITES DE GWINEE PRO FORMAl SOURCE AND APPLICATION OF FU?D3 (Thousands of Dollars) Prior to il 15 Y-ar ol Op-ratioos ,9 12)j 19 ) j N-t nco-e 2,805 3,281 4,466 4,673 5,921 6,917 7,440 8,397 9,521 10,128 10,239 10,319 12,159 12,238 12,339 n3rr.c istoon 7,657 7,669 7,787 6,216 8,51.7 8,707 8,998 7,948 6,387 6,338 6,359 6,390 2,380 2,386 2,326 AeartiZatson , Cash generation 11,478 11,966 13,269 13,905 15, h 17,455 17,362 16,925 17,163 17,615 17,726 11,53Y 1h,626 11,667 S Dnbor Deot 62,000 ia4uityz- Subordinated Debt 20,000 Cl.ss A Stock 980 Class B Stock 1,020 Class b Stv. i'-:,.,,' Capital Co-tL-wLtioo 1S 000 Total -- urces 92.0O , ,905 1.h85 16, ,362 16, L1, il.l67 APPLICATION Fined Assets: Oripnal Piast and Replace2ente 81, , , , ,536 lopuoxcon _ ,111 3,343-2, Tirustee kapansioo Account - - 2,000 1,ooo (1,500) (1,500) _ (2,820) - (180) Corporate For-ation, Trainiog and PreopeLating Eavenlse 11, Ilioi.g Rights Working Capital (excluding cash) 1,900 8,169 1, , b3h Advances to Suinan 0oeereswnt 750 2,109 3,1.1 2,56 2,h11 1 h, (355) (1,190) (1,642) (1,721) (1,783) (3,151) (3,209) (806) RepYme-nt of Senior Debt - 2,316 4,632 4,632 h,632 h,632 h,632 h,632 h,632 4,632 h,632 3,882 3,132 3,132 3,132 3,132 Repaynent o' Subordinated Debt ,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 2,000 Payent ol' Deferred asrd Current Dividends ,hO6 6,116 7,205 8,095 9,095 10,257 10,958 11,027 11,177 13,227 12, lh Cash (1.786) _ - 1,613 _ 826 ( h ) 137 (31.0) 180) Total Applications 99, ,h85 16,641 17, S

71 TABLE 6 GUINEA - BOKE BAUXITE PROJECT OFAB PRO-FORMA SOURCE AND APPLICATION OF FUNDS Year of Operation (1) (2) (3) (h) (5) (6) Source of Funds: (US$ in thousands or equivalent in Guinean Francs) Capital subscribed by Government Railway revenue from non-bauxite rail traffic Subvention by Government to meet losses on non-bauxite rail traffic h Reimbursement by CBG of operating and maintenance costs of railway, dock and townsite: In respect of cash outlays 1,920 1,500 1,500 1,!060 1,)090 1,416 In respect of depreciation Port and harbor dues Payment received from Trustee for maintenance dredging and renewals of harbor assets Interest on balance of Harbor Deoreciation ' Account Reimbursement by?o-vernment for services performed on i.ts behalf i156 Total funds available 3,X971 7T 3,900 3,979 3,913 Application of Funds: Operating and maintenance costs reimbursable by CBG 1,-00 1,500 1,500 1,450 1,-.00 1,00 Operatin! costs of non-bauxite trains Harbor operating and maintenance: Costs other than mrintenance dredging B Maintenance drednin' cos.s and renewal ol harbor assets Government services costs Additions to, and improvemenit ot, f'ixed assets Payment to Trustee of element., of harbor dues representing depreciation Total funds applied 3,008 3,073 3,250 3,263 3,007 3,309 Cash balance for period )1-600 Cumulative cash balance 803 1,11 2,235 2,872 3,004 4,048 PRO-FORMA BALANCE 3HEETS Fixed assets, gross book value 83,000 83,000 83,150 83,300 83,500 83,700 Less accumulated depreciation , ,325 70,26 Net fixed assets Receivables - CBG Government Trustee - Harbor Depreciation Account Cash in hand and at bank 843 1,611 2,235 2,872 3,444 _,008 82,107 80,731 79,373 77,977 76,590 75,231 Government Equity: Capital subscription Net value of assets vested in OFAB 80,769 78,538 76, ,376 72,325 70,-60 OFA'3 reserves 838 1,693 2,U6 3,101 3,765 0,467 82,107 80,731 79,373 77,977 76,590 75,231

72 GUINEA - 3)KE BAUkITE PROJECT OA.PAEITE DES BAULITES DE GUINEL Estimated 03G Advances to aovernment of Guinea for Service of IB:tD Loan Based on a Loan of US $66, 500,000 atot Profits Tax Payment by Trustee Balance of Profits Debt Service Balance tc be Advanced to Trustee Cumulative Balance Payments by to )overnment of Tax Aemaining Paymernt by by CBG for Payment of IBRD Debt of Interest Free CBG to Guinea (Minimum in the Trustee's Trustee to Service - ( ) Balance Remaining to CBG Advances to Year Trustee of 60% Profits Tax) Hands (Lo') Horld Bank be Applied to Reimbursement of Advances Government of Guinea (Table 3) (USB in thousands) 0 Prior to ,208 3,125 2, U83 6,192 2,109 2, ,094 3,656 2,638 5,882 3,644 6, ,295 6,977 3,31d,,82 2,564 8, ,678 5,207 3,!571 9, 62 2,L11 11, ,997 6,598 1i,399 3,582 1, , ,866 7,708 5,136 5,8f , ,817 8,290 S,527 SEE , ,593 9,355 6,237,6B2 (355) 13, ,681 10,609 7,072 3,132 (1,190) 12, ,809 11,285 7,526 5,8682 (1,662) 10, ,015 11,409 7,60)6 5,882 (1,724) 8, ,163 11,498 7,665 5,8S2 (1,783) 7, ,582 13,549 9,033 3, 52 (3,151) 6, ,727 13,636 9,091 5,562 (3,209) 8o ,916 16,228 6,638 5,83,2 (806) 1/ Now outstanding, not related to debt service.

73 GUINEA - BOKE BAUXITE PROJECT DISCOUNTED CA&i FLOW CALCULATION OF FINANCIAL RATE OF RETURN Return on Total Investrant Return on Government Investment Depreciation charges re- Total Government Cash Net covered by receipts investment Capital investment Discounted Gross operating workirg Discounted Profits OFAB from CBG Total discounted discounted Year of Oneratlon C Guijea Tota2 at 14.5% - receiots exderses receipts at IL.5% tax and Dort users receipts at lh.5% at l4.ss L/ J/ a/ o h ) L ] ) ) h ) ) ) ) ) ) ) ) ) ) * * ) / Future investm.nts of CBG are as shown in Table 2. 2 In addition to cash operating and maintenance costs of the infrastructure 0tkB will charge to CBG and the port users an annual sum of about $1.1 million in respect of depreciation and amortization of Kamsar town and harbor assets. Out of this sum OFAB will be required to pay for maintenance dredging (est. $350,000 a year) and replacement of fixed assets of the town and harbor (est. $0.9 million in year 15 and $6.2 million in year 20). Nominal provision of $0.2 million a year is made for additians and improvements to fixed assets of OFAB.

74 0 s RH~~~~ ~~~ H.o...e 7~~~~~~~o U;, A A ;A im ' t > X : ^ > 0 Jf Z D O.N h~~~~~~~~~~~~ 1 ;0

75 GUNIEA - BOKE BAUXITE PROJECT GENEPATION OF FOREIGN EXCHANGE FOR GUINEA Ye-r Gross Overseas Less in- generatimn Imported passages, Imported Profits and Debt service Total Net gmerbatiai Sales crease in Harbor of foreign consumable Salaries leave, pay, capital other funds (foreign exchange only) external of foreign Yepr FOB receivables dues exchange goods repatriated etc. goods repatriated 1/ CBG Guinea payments exchange (US$ million) (8.4) (1.8) (.4) I 37.4 (.5) (.2) (1.0) (.7) U (.4) (.4) (.3) (.3) i.j& Total for 20 years Annual average 15.5 I/ Includes funds transferred to Trustee for credit of the Trustee Expansion Account and the Harbor Depreciation Account.

76 _,_ S E N _ E G _ A _ L,_ ( M A L MAI' I P O R T U G U E S E?vw 0 Yoonko.nkoo.. \ G U I N E A MCI,~~~~I Mo!, (,/ ~ r GAOUAL 6' ~ U CTougue SIGUIRI. Songoredi U LABE Minoing >A. ' 4' BOKE S PITA /? { ~~~~~~~~~~~~~~~~~~~DABOLAJr, F. rt of Kamsor -t ~~~ ~ ~ ~~FRIA <r /S O'. / /t KOUROUSSAs>< j~~~~~~~~~~~~~k < BOFFA &,AMOU f ~~~~~~~~ ~ ~~~~~~~~~~~ r.onakky',;-/ DUB RE, A, t FORECARIAH ^ ' o I. : I/.g / X ft- {) KISSIDOUGOU Ke,owrneC 0 REPUBLIC 0~~~~~~~~~~~~~~~~~~~~GEKDU OMACENTA EL REPUBLIC OF GUINEA f ( BOKE BAUXITE PROJECT L I BE R I A Pro,osed ra.1lrod f-r Bole :Arns tg Pro 3 cc rot B*kL M-nr g rira -]'' 6 -()Z < <, ( ExistLrig r311ro3d /,/ NZEREKORE t.cbet } 1 \ avigaolc C,ors '/ Y (g GUINE FRICA / * lilo 5! // /0 KILOMETERS '!,. ',, -. fr;rr 1d;.3

77 MAP 2 REPUBLIC OF GUINEA BOKE BAUXITE PROJECT GENERAL LAYOUT OF KAMSAR REGION.LIFIFl TO X I 0 PORT TURNING BASIN JUNE 1968 IBRD-2318

78 P B I FG IE MAP3 RIO NUNEZ. ' 7y 7 POST.-OFFICE 2 HEADMASTER'S 13 HOSPITALBOKE PROJEC HOUSE..,. 9 AREA RESERVED,j? f/// / ' 10~~~~~~S SHOPPING CENTRE R fi TRADE AND CRAFTSMASRIP 41 FOR SOCIAL CENTRE RP BI FGIE 14 AREA RESERVED FOR SPOE TS FIELD 59 AREA RESERVED FOR GOVERCIENT S4 AREA RESERVED FOR AN HOTEL 17 MEETING PLACE SR PUMPING-STATION SEWAGE SR HATER TOWER-TANKR.5 s P> 20 SERVICE STATION 21 GUEST-ROUSE KAMSAR TOWNSITE.,NOIHOUSE A S BR' C' C' C D E US N II 25, S OFAB _ I ME~~~~~~~~~~~~~~~~~~~~~~~TERS CRG JUNE !O7-2ISO