Tumad Gold Mines Development Loan

Location:

Turkey

Project number:

49041

Business sector:

Natural resources

Notice type:

Private

Environmental category:

A

Target board date:

29 Nov 2017

Status:

Disbursing

PSD disclosed:

29 Sep 2017

Translated vrsion of this PSD: Turkish

Project Description

A USD 40 million senior project finance loan (the "Loan") to Tumad Madencilik Sanayi ve Ticaret A.S. ("Tumad" or the "Borrower"), a 100% subsidiary of Nurol Holding Inc ("Sponsor") to finance the development of the Lapseki and Ivrindi gold projects located in the Canakkale and Balikesir provinces of Turkey, respectively (the "Project)". The loan is fully guaranteed by the Sponsor.

Project Objectives

The Bank's financing will support the development of the above projects.

Lapseki mine contains NI43-101 compliant proven & probable reserves of 424 koz of gold at 1.85g/t and 426 koz of silver and a potential for resource upgrade. Lapseki will produce up to 58 koz/year gold and 39 koz/year silver during its 9.5-year life-of-mine using conventional agitated tank leaching or carbon-in-pulp processing.

Ivrindi mine contains NI 43-101 compliant proven & probable reserves of 964 koz of gold at 0.67g/t and 2.4moz of silver with a potential for a resource upgrade. The mine will produce up to 159 koz/year gold and 348 koz/year silver during its 6-year LOM using conventional carbon-in-column cyanidation.

Tumad will start construction of the Irvindi project after completion of Lapseki one (being completed).

Transition Impact

The expected transition impact of this project is derived from the promotion of regional and youth inclusion and operational efficiency with the use of best available technology in mining (dry stacking to the tailings management at Lapseki). The Project is expected to improve the linkages between the industry and training/educational institutions and address skill mismatches through developments of standardised training for youth and increased workforce diversity. The Project will also promote the implementation of international standards including the International Cyanide Management Code, as well as other best practices in the environmental, social, health and safety management of mines. The Borrower will also seek to become a signatory of the UN Global Compact.

Client Information

TUMAD MADENCILIK SANAYI VE TICARET AS

Tumad was established in 1989 originally to supply construction materials (i.e. aggregate, concrete and plastering) for the Sponsor's construction business. Between 2012 and 2014, Tumad expanded into the metals mining sector by acquiring several mineral exploration licences in Balikesir, the Black Sea region, Gumushane and Ankara. Earlier this year Tumad divested its construction materials business has focused entirely on the metals mining.

EBRD Finance Summary

USD 40,000,000.00

Up to USD 40million loan for the account of EBRD.

Total Project Cost

USD 333,216,851

Environmental and Social Summary

Categorised A (ESP 2014): Greenfield mining projects may be associated with various, potentially significant, environmental and social (E&S) impacts, and which require a formalised and participatory environmental and social impact assessment (ESIA) process in line with the EBRD Environmental and Social Policy.

Independent consultants have been contracted by the Client to prepare the ESIA and carry out related field surveys, including hydrogeology analysis, biodiversity studies, socio-economic baseline and impact assessment studies.  The ESIA disclosure package consists of the Supplementary Information Package (SIP) with supporting technical studies and reports, Non-Technical Summary (NTS), Stakeholder Engagement Plan (SEP), Livelihood Restoration Framework (LRF), an overarching E&S Management and Monitoring Framework Plan (ESMMFP), as well as a number of specific E&S management plans. 

The documents are disclosed on TUMAD's website, in hard copy at the Sponsors office in Ankara and Istanbul; the Company's offices in Ankara, local offices in Lapseki district (Canakkale Province) and Ivrindi district (Balikesir Province); at the Lapseki and Ivrindi Municipalities; and respectively at the Canakkale and Balikesir Governorships and in EBRD resident offices in Ankara and Istanbul. During the 60-day disclosure period the comments to the ESIA are received in writing, and public consultations have been carried out in November 2017 in Deginmerbasi Village, Irvindi Disrict, Küçükılıca Village, Sahinli village and Lapseki District with additional focus group meetings for women in Kocabaşlar and Sahinli villages. The ESIA disclosure package documents can be found at the EBRD website.

The Project had already been subject to national EIA, and public consultations in 2015 for Lapseki and 2016 for Ivrindi, and both received positive decisions from the Ministry of Environment and Urbanization in Turkey.

The ESIA builds upon the already approved local EIA reports; addresses any design updates since the approval of the national EIAs; and includes a suite of management and monitoring plans. The key impacts and risks considered include land acquisition and impacts on land users and livelihoods (particularly on livestock breeding), impacts to biodiversity, water use, cyanide risks, impacts on surface and groundwater, emissions including dust, noise, worker and community health and safety risks, traffic impacts, labour and contractor issues and site closure and rehabilitation planning.

The Project will not result in any physical displacement but will impact pasture land users of the Project site such as farmers, herders from directly impacted settlements, and farmers along the routes of associated power lines.  The Project has developed a Livelihood Restoration Framework for each mine which will be developed into a full plan to address livelihood issues for the mine sites and all associated facilities.  A Livelihood Restoration Plan specific to each mine is being prepared in consultation with herders, community representatives and farmer associations and disclosed publically prior to implementation. An independent LRP close out audit will take place two years after completion of the LRP at each mine.

The Project will adopt specific measures to manage and avoid cyanide-related risks, including the implementation of a cyanide management plan, a closed loop system with no discharges for Ivrindi site, dry stacking of tailings at the  Lapseki site, and certification to the International Cyanide Management Code (ICMC). The ICMC is regarded as best practice for the sourcing, transport, storage and handling of cyanide in mining operations.  A Transport Management Plan has been developed and has been integrated into the Supplier's implementation plans to ensure safe transportation of cyanide from the selected port to the mine site. 

Regarding potential environmental impacts, the necessary dust control measures have been put in place at Lapseki mine, and will be implemented at Irvindi to minimise impacts on air quality. Modelling of noise and vibrations impacts suggest that the Project Environmental Standards, which are based on compliance with Turkish and EU regulations, should not be exceeded.  However, the Company has put in place a comprehensive monitoring plan to verify these findings and revise activities on site (including blasting) if required.  Detailed monitoring reports received in February 2018 confirm compliance with established Project Standards. Detailed studies conducted as part of the ESIA have not identified potentially significant impacts to surface and groundwater resources. The quality and quantity of available water resources will be extensively monitored, and further mitigation measures will be implemented if any deviations from the Project Standards are observed.  The Project has made specific commitments to ensure that any observed impacts to water will be addressed. As part of the Lapseki site construction, the company has constructed an additional water supply pipeline and provides improved quality water to the nearby villages.

The Project committed to set up Participatory Monitoring Mechanism, through the establishment of a Community Advisory Committee with the involvement of community representatives both at Lapseki and Ivrindi. The company will share environmental and social monitoring results with the committee in line with its commitments in the Stakeholder Engagement Plan. Community and worker health and safety impacts will be avoided and managed through specific management plans and internal procedures. 

The Company has committed to recruiting part of its workforce from the neighbouring communities and the wider area, and will also develop and implement skills development and vocational training projects as part of the Community Development Plan to ensure maximisation of the sustainable Project benefits for the local communities. In addition to the local hiring, the Company developed a Local Procurement Management Plan and are willing to support the development of a local supply chain (focusing on catering, transportation and cleaning services), which will help to create long-term business opportunities for local people. Labour and contractor issues will be managed through internal procedures which are in line with PR2 requirements and national labour laws. To further underline their commitment to responsible business practices, the Company recently became the first Turkish mining company to sign up to the UN Global Compact, a United Nations initiative for businesses willing to contribute their share towards achieving the Sustainable Development Goals.

To meet the Bank's stakeholder engagement and disclosure requirements, the Company has developed a Stakeholder Engagement Plan (SEP), a public complaints procedure, as well as a Non-Technical Summary (NTS) of the ESIA.  ESIA disclosure will include a series of meetings with stakeholders and the public in November 2017. Details of these meetings and the other methods by which the public can engage with the consultation process will be broadcasted through local and regional media.

An ESAP has been agreed with the Company.  Key actions are described above and also include the implementation of the prepared Environmental, Health and Safety and Social (EHSS) framework management plans under the integrated Environmental and Social Management System certified to ISO 14001, OHSAS18001 and SA 8000; allocation of adequate  EHSSS  resources at site, acquire ICMC certification; implementation of the Biodiversity Action Plan and implementation of other detailed measures to manage  EHSS risks. The Project will be monitored by an independent environmental and social consultant with semi-annual reporting to the Bank during construction and first two years of operation and annual reporting at a later stage.

ESIA disclosure package

Technical Cooperation

None.

Company Contact Information

Hasan Yucel, General Director
hasan.yucel@tumad.com.tr
(0.312) 4551610
(0.312) 4551601
www.tumad.com.tr
Bugday Sokak No: 9 Çankaya Ankara

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