ReportNo. 5283-SUR Sufiname EconomicMemorandum OnTwo Volumes) Volume II: Sector Reviews Public Disclosure Authorized

January16, 11985 LatinAmerica and the CaribbeanRegional Office FOR OFFICIAL USE ONLY Public Disclosure Authorized

I,- - - - .f~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I- . - -- - . . -

0~~~~ ~ Public Disclosure Authorized

Documentof the WorldBank Public Disclosure Authorized

This eoths a restricteddistribution . -:; ' - . - and may be usedby recipients - . - ' - . - .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ onlyin theperformance of their offidal duties- Its contents may not othierwise N.-disclosed without World Bank authorizatio n. CURRENCYEQUIVALENTS

Currency Unit: Suriname Guilder

Exchange Rate Prior to December 27, 1971

US$1.000 = Sur.f. 1.885 Sur.f. 1.000 = US$0.531

Exchange Rate fxom December 27, 1971 to Present

US$1.000 = Sur.f. 1.785 Sur.f. 1.000 = US$0.560 FOR OICIAL USE ONLY

SURINAME: VOLUXEII

TABLE OF CONTENTS

I* MINING ......

A. Mining Sector: Role and Struicture ...... 1 B. Bauxite Subsector ...... 6 C. Bakhuis P.roject ...... 29 D. Gold Subsector ***9*******e*s***...... **... we. 44 E. Other Metals and Minerals ...... 58 F. Sector Organization: Legal and Fiscal Environmeut ...... 62 G. Mining Sector Issues ...... , 68

Mining: Attachment I ...... 82 Attachment II...... 85 Attachment III ...... 132

II. AGRICULTURE ...... o...... 9...... 0 174

A. Economic Performance ...... ******....*.**. S... S***...... *..e 174 B. Major Agricultural Activities ...... 176 C. Pricing Policy and Marketing ...... 181 D. Major AgriculturalInstitutions ...... 184 E. Agriculture Sector Issues ...... 187 F. Prospects and Recommendations ...... -198

Agriculture: Statistical Appendix (Tables I to 14) ...... 202

HII. ENERGY ...... 218

A. Energy Resources, Import Substitution and Conservation .oe& 218 B. Sector Organization .... we...... 224 C. The Oil and Gas Subsector...... 226 D. The Electric Power Subsector ...... 229 E. Demand Projections ...... 0.*... 235 P. Projection of Investment Requirements . 237 G. Summary of Conclusions and Recommendations ...... 239

Energy: Annexes 1 to 9 ...... 242

Thi document has a resticted distributionand may be used by recipients only in the performansc of ftir official duties. Its contents may not otherwise be discosed without World Bank authorization. I. MINING

A. MINING SECTOR ROLE AND STRUCTURE

The Mining Sector in the Economy of Suriname

1.01 Bauxite mining and associated processing, including alumina refining, aluminum smelting and the production of non-metallurgical bauxite is the main industrial activity in Suriname. Poaer generation is closely associated with it because of the relatively high power consumptions at the alumina refinery and the smelter. In fact, the only hydroelectric generating plant in the country was built by 1965 at Afobalca on the Suriname river as a result of the Brokopondo agreement, signed in 1958 between the Government of Suriname and Suralco, one of the two foreign companies then mining bauxite in the country.

1.02 As there is practically no other mining activity than bauxite mining and processing, economic statistics relative to mining can, for all practical purposes, be equated to bauxite related operations. Table 1 shows that, while the sector represented 18.2% of GDP in 1979, its weight dropped to 11.7% in 1983 (at constant 1973 prices, the drop is from 15.5% to 9.5Z over the same years).

Table 1: SECTORAL ORIGIN OF GDP AT FACrOR COST, 19 79-83 (millions of Suriname Guilders)

1979 1980 1981 1982 1983

Current Prices

Agriculture & Forestry 156 174 198 213 206 Mining and bauxite Processing 261 273 282 261 244 Industry 113 131 181 198 209 Gas, water, electricity 33 37 36 39 39 Government 313 318 379 474 519 All other 558 602 709 802 873

GDP (factor cost) 1434 1535 1785 1987 2090

Real Terms (1973 prices)

Mining and bauxite processing 119 104 92 78 77 Government 198 194 202 220 230 All other 450 444 483 492 500

GDP (factor cost) 767 742 777 790 807 1.03 It is probable that, after a limited recovery in 1984, the mining share of the GDP will deteriorate slightly further in 1985 and 1986.

1.04 The foreign exchange impact of the sector is illustrated in Table 2 below (data provided by the Research Department of the Central Bank of Suriname). 3-

Table 2; BALANC(OF PAYME; SHAREOF TdE BfAUXCESUBSECDR 198D0-1983 (cah basis, mUioas of Siuriame guiders)

1980 L981 1982 X 1983 Total bauxite Tbtal bauxite Total bauxite Tbtal bawdte

Cwrent acunt

1. 1rckandise Exports 918.2 754.1 845.7 675.5 765.1 601.9 296.2 218.0 Imports (900.3) (297.8) (1013.7 (294.2) (921.2) (218.4) (377.8) (78.3) Balance of trade 17.9 456.3 (168.0) 381.3 (156.1) 383.5 (81.6) 139.7 2. Services Receipts 176.0 .7 164.1 .3 144.4 - 50.7 1.2 i9peoditure.s (278.9) (42.6) (244.4) (39.4) (269.6) (31.7) (114..9) (16.4) Balance of services (102.9) (41.9) (80.3) (39.1) (125.2) (31.7) (64.2) (15.2) 3. Pri:exy Income Receipts 45.7 1.9 64.7 .9 63.9 .1 19.0 .2 cpesxiLtures (76.4) (57.4) (41.7) (31.00 (51.6) (35.1) (46.3) (42.1) Balance (30.7) (55.5) 23.0 (30.1) 12.3 (35.0) (27.3) (41.9) 4. Privaw transfers Heceipts 34.3 - 26.8 - 20.6 - 8.5 - 1i--peadLtures # (22.6) (2.9) (20.2) (3.2) (25.3) (3.7) (16.0) (1.9) Balance 11.7 (2.9) 6.6 (3.2) (4.7) (3.7) (7.5) (1.9)

BMALN OF CUeMREACXUULcs (104.0) 356.O (218.7) 308.9 (273.7) 313.1 (180.6) 80.7

CaDiLtal acmua

5. Private capitaL 33.0 13.0 71.4 55.8 33.7 (21.0) 59.6 60.3 6. Grats 131.6 - 169.0 - 172.9 - 3.7 - 7. Goersnmt (4.1) - .3 - .4 - 1.5 -

B&ANCE OF CAPIEALADNXfJ 160.5 13.0 240.7 55.8 207.0 (21.0) 64.8 60.3

Uwcaswified 1.4 - (.1) - (.1) - 2.4 -

B&ANE OFTOTAL AJO&S 57.9 369.0 21.9 364.7 (66.8) 292.1 (113.4) 141.0

On a current accounts basis and annualizing the 1983 data, receipts from the sector in that year would be 438.8 million SF (247.9 million US dollars) against expenditures of 277.4 million SF (156.7 million US dollars) for a net balance of 161.4 million SF (91.1 million US dollars). Bauxite and related exports would represent 74X of total merchandise exports; ia 1978, this percentage was 82%. The dominance of the sector on the balance of payments account is obvious: in the first half of 1983 the sector balance was 80.7 million SF versus minus 261.3 million SF for the rest of the economy on current accounts while, otl total accounts, the com- parable numbers were 141.0 million SF and minus 254.4 million SF, respec- tively.

1.05 The identified bauxite deposits are numerous; they are reviewed in some detail in the next section but it should be noted however that proven mineable resources (i.e. which can be iainedunder present economic condicions) are on the order of 200 million tons if the Bakhuis area is included and 130 million tons otherwise. The figure of 1 billion tons which is sometimes quoted includes iron laterites which are of no economic value for the foreseeable future.

1.06 There are two deposits presently mined, one near Moengo in Iastern Suriname's coastal plain, the other ia Paranam on the Suriname river; both are of high quality, but the Paranam deposit is buried under clayish sediments and has a very high stripping ratio (presently about 4 or 5 to I in volume). The Bakhuis orebody in Western Suriname has been prospected extensively. A project for the development of an integrated industry around it, which would have included an alumina refinery and a smelter, both powered by the KabaLebo dam project, was considered very seriously in the late seventies but has been shelved. A 74 km railroad was built in 79-82 to transport the ore from Bakhuis to Apoera on the Corantyne river, but is presently unused. The issues related to the Bakhuis deposit are discussed in the last part of this report.

1.07 Two foreign companies are engaged in mining and processing bauxite. Suriname Aluminum Company (Suralco), a wholly owned subsidiary of Aluminum Compaay of America (Alcoa, USA), was founded in 1916 and opened the Hoengo mine in 19l0; it also opened the Lelydorp mines near Paranam in 1941. The Brokopondo agreement was signed in 1958 and the related alumina refinery, with a design capacity of 600,000 dlTPY,was started in 1965, to- gether with a small aluminum smelter of 70,000 LITPYcapacity. The company now mines about 2.2 million tons of bauxite. The refinery capacity has reached 1.4 million i4TPY through additions and improvements; the smelter cannot produce more than 40,000 I4TPY on average because of inflow limita- tions at the dam. *fheComnpany also produced refractory grade bauxite in Paranam until 1982.

1.08 N.Y. Billiton Maatschappij (Billiton) is a wholly owned subsi- diary of Billiton, itself owned by Royal Dutch Shell (Nederlands/UK),which started operating concessions adjacent to those of Suralco in 1941. Billiton operates the Para mine, near Paranam, which produces presently about 1.8 million tons of bauxite, 1.3 million tons of which were converted to alumina in Suralco's refinery under a tolling agreement until the end of 1983.

1.09 A major restructuriag took place in late 1983 and was finalized in early 1984. Suraico and Billtoa hiavenow formed a joint venture for mining, with 76% of the equity to Billiton and 24% to Suralco; the joint venture now operates only the former Billiton mine at Para, which is cheaper to mine than Lelydorp because of a large stripping advance. Most -5-

of the reserves have been pooled, but Suralco also continues to operate the lioengo mine independently. Separately, the two companies have also formed a joint venture for refining, in which Suralco kept 55% of the equity with 45Z to Billiton. Suralco kept its aluminum smelter as a separate operation which it fully owns. The transaction is rumored to have involved a 100 millioa US dollars payment by Billiton, with US$60 million in cash and the balaniceto be paid over 7 years with major but unspecified tax benefits. Hence, the net present value, while unknown, would be substantially less than the 100 million dollars price usually quoted in the industry.

1.10 The Bakhuis project was considered seriously until relatively recently; the state owned company formed to operate the integrated project, N.V. Grasshopper Aluminum Company (Grassalco) was created in 1975 when Reynolds Metals Company (Reynolds, USA), which had prospected the deposit, pulled out. Grassalco took over the assets and has been in existence ever since. fithout any activity on its initial objective, the company became involved in other projects, with the de facto status of State mining company.

1.11 Grassalco's main activity at present is the completion of the prospection and the finalization of the feasibility study of a gold project, the Rosebel/Royal Hill deposit near Brokopondo, which has merit, as discussed in the section on gold.

1.12 Prospection for gold in other locations is relatively active and carried out by the Geological and Mining Service (GdD), which is essentially the only organism directly concerned with the sector within the Ministry of Natural Resources and Energy. The Ministry has authority over the sector but other major responsibilities. The GMD is relatively weak and should be strengthened urgently. Many metallic ores besides bauxite and gold are known in Suriname, but prospection is by ao means complete although much work has already been done. Uafortunately, the results for metals (besides aluminum and gold) have been disappointing so far from the feasibility standpoint: no known such deposits have significant economic value under present market or technical conditioas. Such is not the case for quarry minerals. There are possibilities for good grade kaolin, white glass sands and kyanite, among others.

1.13 Numerous sector issues must be raised, even in this brief analysis, among which are government policies and structural problems, bauxite short term prospects, loag term alumina competitivity, aluminum fabricating opportunities and prospects in non bauxite subsectors. In addition, the Bakhuis bauxite project itself is reviewed separately in detail. - 6 -

B. BAUXITESUWBSECTOK

1.14 The subsector'sactivities include bauxite mining in two locations (Onverdacht and J4oengo), alumina refining (Paranam) and aluminum smelting (Paranam). Three distinctentities are involved:

- Suralco, which is the sole owner of the Moengo bauxite mine and the Paranam smelter, and also holds sole title to some bauxite reserves in the Lelydorp area.

- The mining joint venture (HJV), owned 76 percent by Billiton/Shell and 24 percent by Suralco, which operates the Onverdacht bauxite mines.

- The refining joint venture (RJV), owned 55 percent by Suralco and 45 percentby Billiton/Shell,which operates the alumina refinery.

1.15 As both the productionand market situationsdiffer substantiallyfor each one of the three products,bauxite mining, alumina refiningand aluminumsmelting are discussedsuccessively in the following paragraphs.

BauxiteMining: Geology and Ore Reserves

1.16 Two distinct types of bauxiticdeposits are found in Suriname: the coastal deposits, either exposed at Hoengo or buried near Paranamand the interiordeposits in the Bakhuis, Nassau and Brown mountains area.

1.17 In the coastalareas, the surfacedeposits (at Loengo) have a typical 55% total aluminacontent with relativelyhigh iron (10% ferric oxyde) but low silica (about3%) and very littleoverburden. The buried deposits (Lelydorpand Onverdachtnear Paranam)have more total alumina (up to 60%) less iroa (about4%) but more silica (about5%) and are overlainby 20 to 40 meters of overburdenincludiag surface swampswhich generate specialmining problems. There is also a burieddeposit at Moengo which is in a drier environment;the exact grades of the depositare not known.

1.18 The coastaldeposits contain gibbsite (aluminumtrihydrate) almost exclusively, which means that the alumina can be extracted at low temperature (about 150 degrees C) in the American Bayer process with good recoveries (about 95-96 percent), as opposed to the high temperature (about 250 degrees C) and high pressure extraction required to recover the monohydrate alumina content in bauxites containing a significant amount of boehmite.

1.19 The interior bauxite deposits, in spite of minimal overburden (typically about 0.5 meter), are of substantially lower economic value: They contain much less alumina (about 45%) and much more iron (about 20%) than the coastal deposits and ore thickness varies considerably even over a few meters which involves specific mining problems.

1.20 Other bauxite horizons are known, but they are insufficiently bauxitized and of high iron content and hence have little economic significance for the foreseeable future. -7-

Table st Sirl"a Bauxite Res.erve (all lions of mtrle tern - grden Is percent)

Cetogary I Stripping

(deeeits prxerstly oimed) To.as.ea AL0 3 5102 Fsax0 rat. I Owner Schdule /

A. Nongo group wVternre arer 53-5- 2.5 9..7 J5 Suralce prefest-91l1 Easterx area j/ 32 55-57 2.5 9.7 .3/ Suraleo Igg-2006

B. Peramit Srnp Form .1ms 15.4 *0 5.4 3.5 35/y iiviI ItI km proent-l1UI Pale wet 1.0 61 5.4 3.5 SWS wvn/mllI tn future Lelyderp I 4.4 61 5.1 3.5 3064 lUV4eralao futar Lalydarp 3 est 15.0 61 4.6 3.S 2U15 MVi/Sarai. 1992-200 Lelydorp 3 west U2.S 61 4.7 3.5 211S IIJV/Serco futbro

Total Category 1 30.1 So 4.2 5.3 N.A. N.A. N.A.

Categwry 2 (extem of promnt depeits) Mlap. burlied deposIt 9/ 20 56 S unkrn 35fl Surglel fatara Loiydorp *oxteaai 1/ 20-30 60 5 4 304 Saralee fb10er

Tetal Categery 2 40-50 S9 5 N.A. MA. N.A. NA.

Category 3 (prove reorves Uakhxlsi Bakhle ari 10 55 46 2 21 .56 Orresuico poesllo Bakimls area 5 14 45 2.5 20 S/3 Orsasalce peoalblo

Total Categpry 3 61 45 LI 220 .A. NAh. NA.

Cateoety 4 CPO" lb te/probab to reserves eBable) 30 43 2-3 22 .5/3 Oraeslco doubtful

Total Categery 4 30 43 2-3 22 .5s3 N.A. N A.

Category 5 Cposilhle reserves other area) Kansas mutFais 9o 4-20 46 3 21 .5/.5 Sto t doubtful Brown munta ns h/ Unknown 45 3 24 anrwn Stxbt doubtful

Tot I Cateory 5 14-20 45 3 22 N.A. N.A. N..A

ToteI lineabig CI & 2) 121-130 59 4.5 - - - -

Total BOselgleml (1 to 5) 2D0-2S0 - - -

a/ Stripping ratios the first woer Is thi rmendd averap overburden thlcknes., the "cad in tin romd- ed everep b_*its thickness, both oxprmeed In mtere. StrIpplng ratloe are often oupresred In ether emits, I.e. tsa/tens. cubic yarwdstosn.etc. If SchedueIs When eo approxaiets dates are stated. 'futere Indicates probeble mlaing after the yoer 2DO0; 'posibe' Indlebtes tint. eder favorable mrket conditiema, mining _y be endertakSen 'dubtful Indi- cates that the peiebillty of *Inlag Is net forersebl- at preisrt. c.d/ The vctarn gouap consiats of Now Doe hill, 10n. South cad BusIhIe HiiJs the rcters group cceelatl of Adjoem I end3. Nadephks. Labeto I to 3. Male 1 cad 2). Reerves for the Ecatern area are a mlisson *stlmtis the ce_any _cotloned oely 16 m11110 tons. which poseibly exclueda the eastermot deposits. a/ Hlgh selphr cnstent Ccassitarits)and posxlble process dlfflceitles. f/* Saraice reserveenot Included in the Hiding Joint Veeture agreemnt. Enatc *o the wvs Ulostain Lekx and 121 he tooth *I Possa. PerinAk foeatleo. driI led by the O.1.0 In 1951- and subsequently by Suralco. He Infrastrecturs. Very high titeola IS perc t). hI West of the wen Olesteln Lal.. Per_bmu for_ntlon. drilledby the 6.0.D. Ino Infrestruecter.Very hlg titanlIm CS pereoat). - 8 -

1.21 'fable3 gives proven and possible reserves of bauxite. Care should be exercised in distinguishing geological reserves from mineable or economic reserves whienmeasuring the total bauxite potential of Suriname: only categories 1, 2 and 3 can at present be considered for economic purposes.

Bauxite 4ining: The Moengo i4ine

1.22 The Moengo deposit is located on the coast in the eastern part of Suriname, and is easily reached from Parasaribo by an excellent road. The town of Aoengo is essentially a Company town. The bauxite is found in a seam of variable tnickness averaging 4 to 5 meters, with aa overburden of about I foot on average. As can be seen in Figure 1, the hill tops not yet mined can be regrouped in a western and an eastern zone for which transportation methods will differ. The mine presently produces about 1.7 to 1.8 million tons of bauxite per year and is the property of Suralco: about .5 million tons per year are exported (this is expected to continue through 1987), the balance being barged to the Paranam refinery to be processed into alumina. The bauxite quality, with about 53 percent of American Bayer available alumina and 1.i percent of reactive silica at present, is high if slightly lower overall than that of the exceptional Paranam orebody. Until January 1984, a calcining plant was used to produce refractory grade bauxite. This was shut down because of poor market conditions and is not likely to be resumed in che future.

1.23 At present operations are concentrated in the Western Group but by 1989, these will be exhausted and a mnajorchange in operations will take place. The present plant will essentially be abandoned and a new crusher installed 10 km east of doengo on the Coermotibo river, a tributary of the Cottica river (see Figure 1). Draft liiiitatioaswill then prohibit further bauxite exports from Moengo, as only 2,50U tons barges can navigate the river. Export shipping costs with transhipment would become prohibitive.

1.24 Employment has decreased from 989 employees in August 1981, to about 668 in May 1984, a loss of 20 percent in less than 3 years. It will decline much further when the transfer takes place, to about 400 people. Morale is reported to be high, with very low turnover and absenteeism, perhaps due to the heavy iafrastructure in this quasi-enclave environment where the Company owns 600 houses, operates a hospital and a school (up to the junior high school level) and is deeply involved in community activities.

1.25 No cost information was provided by the company, but operating costs are estimated at 12 US dollars per ton or slightly less f.o.b. Moengo and barging costs at perhaps 7-8 US dollars per ton, giving a C.I.F. Paranam operating cost of less than 20 US dollars per ton and perhaps as low as 17 US dollars per ton. The low volume of operation does not seem to justify the apparent accumulation of large inventories at almost every step of the process: typically, a total in process inventory of 500 to 600 thousand toas or 4 months of production. Although the rainy season requires some shifting of activities on a yearly cycle, it seems that the working capital tied up in process inventories could be reduced substantially.

1.26 In brief, I4oengois a well-equipped and well-operated mine which is run much below its capacity. It could easily operate at 3 million tons /t . ' 2t DQ~~~~~~~~ORIEDDEPOSIT% lX | ~~~~~~ntwcrushrrsit j_ _.

4 >~~~~4 : 1,>~~~~~~~~~1g 4m

. I \ \ . , * 0 v---- OVERALLI MAP r&.LzWL \ ]tAOENGO ORE-DEPOSITS NOT ON SCALE

37. 20.01.79

,~~~~~~~~~~~~~~~~~~~~~~~~ _.eeI - 10 -

per year (compared to the present 1.8 million tons) with very little additional investment ir mark:et conditions warranted it. It is said that present reserves would not ju.stify any production increases, as 40 million tons of reserves represent 23 years of operations only, but better knowledge of the buried deposit is required to substantiate this argument, as there are total reserves of 60 million tons (including the buried deposit). It can be tentatively concluded that the production rate is constrained strongly by market c-onditions, rather weakly by reserve considerations and not at all by operating costs (in terms of cost per alumina unit delivered to the rei7inery excluding levies). Shipping costs for export are also a major constraint, but efforts to lower them are probably not warranted because exports will no longer be possible after 1988.

Bauxite Mining: The Onverdacht/Lelydorp Mines

J.27 The OnverdachtlLelydorp depoosits are located on the west bank of the Suriname river, accessible from Paramaribo by a major road and close to the town of Paranam. The bauxite presently mined is buried under 25 to 35 meters of sediments and the seam averages 6 to 8 meters at Onverdacht and 5 to 6 meters at Lelydorp. Operations began in the southernmost areas where the overburden was smallest and moved progressively northwards with a slow increase of the strippingratio over tiime. Such ratio is now at about 4.5 to 1 (volume to volume) in the Para mine and will increase to 5-6 to 1 in Lelydorp III West, then eventually to 6-7 to 1 in the northernmost part of Para. The mine production is at present on the order ~A 2 million tons per year, slightly higher than at Moengo. Billiton/Shell exports about .5 million tons of bauxite per year, (and is expected to continue at this level for the next several years) and the balance of 1.4 to 1.5 million tons is hauled to the refinery next door. The bauxite quality is extremely high with, at present, almost 55 percent cutAmerican Bayer recoverable alumina (total alumina of 59-60 percent), 4.2 percent of reactive silica and very low iron. In fact, desilication is difficult with such low iron and blending with Moengo bauxite is required at the Paranam refinery. 1.28 As a resultof the formationof the mining joint venturebetween Billiton,/Shelland Suralco, the costlieroperations at Suralco'sLelydorp mine were discontinuedand all mining is nom concentratedat Billiton's Onverdachtmine. Equipmentfrom the two cozipaniesis being pooled in the joint venture,but the major transferof the large Suralco draglinewill not be completedbefore July or August.

1.29 Employmenthas decreasedas a result of the consolidations:it is expected to stabilizeat about 800 employeesfor the MJV until 1987, when furtherdecreases are possible, if bauxie-eexports are curtailedat that time. Labor relations are reported to be satisfactory, January 1984 strike notwithstanding (the strike was not directed against the Companies), which is not surprising with the high salary levels and their sharp yearly increases.

1.30 The cost informationsupplied by the Company,provides some basis for comparisons and assessment. It includesa 'breakdownof budgeted1984 costs and the historical total cost record for 1979-83. The 1984 budget provides the following information: Table 4: Paranam Mining Costs Budget, 1984 (US dollars per metric ton)

Direct Costs, mine Direct Costs, Export Indi rects

Clearing - Hauling .45 Administrative 5.08 Dredging - crushing 1.73 Gener.l overhead 1.58 Primary Strip 3.12 tramming .60 Secondary Strip .52 drying 6.14 Total .ash 25.88 Mining 1.02 shipping 2.07 Mine de,pre- ciatioinxa/ 4.90 Mine preparation .95 Unallocated 1.24 plant depre- ciation .81 Unallocated 1.38 Total Mine Cash 6.99 Total Plant Cash 12.23 Total Cost- 31.59

a/ includes prepaid expenses for clearing and dredging.

The direct cash cost, at US$19.22 per metric ton, is on the one hand, an understatement of normal cash costs as clearing and dredging ,:ostsare not at present cash costs, but, on the other hand, drying costs a re extremely high for unknown reasons. If normal clearing and dredg2 t ng cash costs are evaluated at about US$5 per ton and drying cash costs no rmalized at 3 dollars, a standard operating cash cost of about 21 US dollars per ton is derived, excluding levy'and administrative costs. Even taking ti'e exceptional quality of the bauxite into account, this is a somewhat high cost ir competitive terms. It is expected that the efficiency improvements, which should result within the next two years fror the consolidation of Suralco and Billiton operations, will reduce such coe:ts appreciably in real terms.

1.31 As to historical costs, indices for export bauxite show a fai.rly regular increase of about 15 percent per year from 1979 to 1983. -The 19 84 budget level shows a decrease of about 7 percent from the 1983 value. Substantial further gains can probably be expected in the next few years.

1.32 The overall impression at the Onverdacht mine (or the fairly similar future Lelydorp 3 West operations) is that of a surplus of equipment at the present capacity, as the mine could easily run at 3.5 million tons per year (instead of the present 2.0 million) under appropriate market conditions. The overall efficiency cannot be judged fairly during the present transition period but major productivity and cost gains (in real terms) should be feasible. As in Moengo, it is said in Paranam that the higher production rate mentioned above cannot be sustained because of the reserve level of 40 million tons. This cannot be accepted fully: not only Suralco's separate reserves of 20 to 30 million tons should be added to the 40 million tons above but the cut-off grades for silica which are presently used to define mineable reserves may be excessively strict from a long-term standpoint. The conclusion is that the Paranam mines are not constrained strongly by reserve or technical considerations but are limited by market weakness and high technical costs, although the latter should decrease substantially in real terms within a relatively short time. For export bauxite, the high shipping costs - 12 -

associated with lotg vessel drafts compound the cost problem. Some improvement in rel.ation to these costs, could probably be achieved, if a long term bauxite export policy warranted the required re-evaluation and investments.

Bauxite Producti on and Exports

1.33 The p roduction and exports of bauxite for the period .80-1983 and the Bauxite: Institute projections for 1984-86 are summarized in Table 5 below:

T.' ble 5. MetaLLurgicaL uxwdteProductim and Exports 1980-1986 (thousauf of uetric tos, 2%misture for Suralco, 3%misture for Biliton and BoneDry for 1984-1986)

1980 1981 1982 1983 1984a/ 1985 1986 Actual. Actual ctuail Acteal Arojected Projected Projected

Bandte exports

Suraloo 802.1 410.8 9.9 - 600.0 600.0 50L0 Billitocx 640.3 60t.3 28.5 253.4 351.0 600.0 450.0

Toal Ex;ort 1,442.4 1,012.1 308.4 253.4 951.0 1,200.0 950.0

Baudte Processerj

Suralco 1,919.5 1,740.1 1,550.5 1,463.1 1,405.3 1,350.5 1,350.5 BiUliton 1,224.0 1,095.6 920.1 892.5 1,189.0 1,234.8 1,234.8

Total Procesed 3,143.5 2,835.7 2,470.6 2,355.6 2,594.3 2,585.3 2,585.3

fmnay O ge

Suralco (1.6) (7.5) (49.9) 11.0 6.5 - - Billiton (15.1) 28.5 139.0 (21.2) 7.8 - _

Total xwge (16.6) 21.0 89.1 (10.2) 14.3 - -

Total rctiin, 4,569.1 3,868.7 2,868.0 2,598.8 3,559.7 3,785.3 3,535.3 a/ Actual for 1984 and projections for April-eceiler 1984. Ihe effects of the strike durig the first quarter are tak into accnt in the projection.

1.34 The massive loss of production from 1980 to 1983 is the most striking aspect of the table, as the 1983 output is only 57 percent of the 1980 level; the drop in exports is the principal reason for the decrease, as processed bauxite decreased to 75 percent of the 1980 value while export bauxite collapsed to only 18 percent of the 1980 level. The underlying causes are obvious:

- Market conditions for aluminum started to deteriorate in mid-1980 and aluminum production decreased sharply in 1981 and 1982, thus -reducing the bauxite requirements in both the Alcoa and Billiton systems: hence the drop in processed bauxite totals during the - 13 -

period. However, as aluminum markets improved in 1983, the processed bauxite levels should have kept up but did not, indicating that another factor was still depressing this output at that time.

The decreases in bauxite exports themselves were entirely out of proportion with the bauxite market deterioration during the same period. Even if it is noted that bauxite sales were much more affected than alumina and aluminum during this period, it is still obvious that Suriname exports were constrained by other forces than the market shrinkage.

The conclusion that the cost of Suriname bauxite and alumina was the principal factor for the collapse in export levels in 1982 and 1983 and an important factor in the poor alumina production performance in 1983 is inescapable.

1.35 Data for bauxite export values for the same period are included in Table 6 below:

Table 6: Metallurgical Bauxite F.O.B. Export Value Including Net Levy 198D-86 (miLlios of US dollars and dollars per mtric ton)

198D 1981 1982 1983 1984a/ 1985 1986 Actual Actual Actl1 Actal Projected Projected Projected

Exort Revenes

Suralco a/ 27.650 16.249 .427 - 18.510 20.004 18.044 Billiton b/ 20.899 24.943 13.268 11.128 12.383 19.956 15.750

Total Revenues 48.549 41.192 13.695 11.128 30.893 39.960 33.794

Unit Prices

Sualco at 34.47 39.55 43.13 - 30.85 33.34 36.09 Billitonb/ 32.64 41.48 44.45 43.91 35.28 33.26 35.00 Average 33.66 40.70 44.41 43.91 32.48 33.30 35.57

a/ Trarsfer price plus net levy, i.e. the amont of gross levy over the inoume tax liability of Suraco. b/ Contract price.

1.36 There is a clear inverse correlation between export revenues and unit prices. The inverse correlation between export quantities (Tables 5 and 6) and unit prices is even more pronounced. For an increase in unit price by 10 US dollars the export volume dropped by 1.1 million tons. Although export volumes have decreased in part because of the shrinkage of the market, and unit price have increased in nominal terms because of inflation, it is clear that the increase in unit costs caused a significant part of the volume drop. Suriname bauxite was becoming increasing less competitive over the period considered. - 14 -

1.37 The table also illustrates the massive impact on the overall economy of the decline in bauxite export revenues: the net loss between 1980 and 1984 was 37 million US dollars or 77 percent in current terms and even more (probably about 82 percent) in real terms.

1.38 The revenue projections of the Bauxite institute for the period 1984-1986 are discussed in the issues section of the report.

Bauxite: Capital Investments

1.39 The investments made in and projected for the bauxite production segment of the sector are summarized in Table 7 below.

Table 7: Investments in Bauxite Mining 1979-1988 a/ (millions of US dollars)

Suralco Billiton Mining Joint Venture Total

1979 6.3 3.7 - 10.0 1980 9.5 7.3 - 16.8 1981 9.7 7.9 - 17.6 1982 6.2 12.1 - 18.3 1983 3.9 6.3 - 10.2 1984 4.5 b/ - 8.5 13.0 1985 9.0 5/ - 4.3 13.3 1986 13.0 5, - 4.5 17.5 1987 13.0 5/ - 5.7 18.7 1988 6.0 i/ - 11.1 17.1 a/ Current terms 1979-1983. 1984 constant terms for 1984-1988. .I Moengo operations only from 1984 onwards.

1.40 The major and cyclical variations that can be seen in the investment pattern relate to two factors:

- For Suralco, the move to the new crusher in 1989 which triggers large expenditures, including bridge construction, in 1985 to 1987.

- For the Mining Joint Venture, the time discontinuity in dredging and other mine preparation expenditures at the Paranam mines. The cycle period is 5 to 6 years. Preparation costs are almost nil in 1985, are relatively small in 1986, then exceed half of the total in 1987-1989, more or less repeating the 1979-1984 cycle.

It seems that investment plans are more than adequate to maintain the quality of the bauxite mining tool and that it is not unreasonable to expect some improvements in the technical factors affecting competivity.

Bauxite Export Levies

1.41 The levy system which, until the end of 1981, did not differentiate between the bauxite exported and the bauxite processed into alumina in Suriname, was modified retroactively in July 1983 for the period - 15 -

1982 to 1985 (both included). Levies prior to 1982 were in principle calculatedat 6-percentof the actual Alcoa realizedprice on aluminum ingot for the total amount of bauxite incorporatedin such ingot, however, ingot prices above 51.5 cents per lb (or 58 cents per lb. for the Billiton levy) were only levied at 3 percent.

1.42 From 1982 to 1985 included,the levy on bauxiteexports was brought down to 3 US dollars per metric ton for Billiton and 2.75 US dollars per metric ton for Suralco. It should be noted, that the amounts mentioned above representthe gross levy; the Company's income taxes are paid only to the extent that they exceed the gross levy, hence the net levy is the gross levy minus income taxes. However, as income taxes during the next few years are likely to be very small or non-existent,because of poor market conditions,the gross and net levies are likely to be closely related during this period.

Alumina Refining: The Paranam Refinery

1.43 Alumina refining in Suriname is carried out in the Paranam refinery,now jointlyowned by Suralcoand Billitonand locatedclose to the Suriname river,about 30 kus south of Paramaribo. The plant which started operation in 1965 has not reached a production capacity of 1.4 million metric tons of alumina per year and is typical of American Bayer low tempezaturerefineries.

1.44 The major operating parametersof the refinery are listed in Table 8 below: - 16 -

Table 8: Major Parameters, Refining 1979-1983

1979 1980 1981 1982 1983 Bauxite Processed

Tonnage (million tons) 2.826 3.118 2.712 2.384 2.339 Total SiO2, percent 4.6 4.6 4.6 4.4 4.5 Reactive SiO2, percent 3.5 3.5 3.5 3.5 3.5 Fe2 O3, percent 7.4 7.4 7.0 5.8 6.2 TiO2, percent 2.4 2.5 2.5 2.5 2.5 Moisture, percent 10.4 10.4 10.9 11.6 11.3 Loss on ignition, percent 29.7 29.6 29.8 30.1 30.0 Total alumina, percent 55.9 55.9 56.3 57.0 56.9 Available alumina, percent 51.2 51.1 51.4 51.7 51.7 Organic carbon, percent .29 .31 .31 .29 .29

Alumina Produced

Tonnage (million tons) 1.311 1.440 1.248 1.137 1.159 Tons per day (tons) 3,590 3,930 3,422 3,116 3,232 Alumina recovery, percent 90.3 90.3 89.5 92.3 95.7 Bauxite alumina ratio 2.18 2.17 2.18 2.10 2.02 SiO2, percent .013 .013 .014 .015 .015 Fe 2O3 , percent .013 .014 .014 .017 .015 TiO2 , percent .003 .003 .004 .002 .002 Na2O, percent .50 .46 .51 .47 .45 Coarse, plus 100 mesh, percent 6 5 4 2 1 Medium, 100-225 mesh, percent 66 66 66 63 58 Medium, 225-325 mesh, percent 21 23 24 28 31 Fines, minus 325 mesh, percent 7 6 6 7 10

Consumptions per ton of Alumina

Caustic consumption, kg/ton 88.9 88.6 81.7 79.4 75.7 Lime consumpticn, kg/ton 41.1 40.1 45.9 46.0 35.8 Starch used kg/ton mud 4.9 5.2 3.8 4.9 5.9 Starch used kg/ton alumina 2.6 2.6 2.6 2.3 2.5 Steam, ton/ton 2.02 1.95 2.06 1.90 1.66 Auxiliary power, kwh/ton 166 161 169 170 116 Fuel oil, gigajoules/ton 12.5 12.2 12.0 10.6 10.4 Water, ton per ton 1.11 .97 1.06 .91 .57 Mud per ton of alumina .533 .534 .561 .551 .510 Mud per ton of bauxite .244 .246 .257 .262 .252

Process Parameters

Digestion yield, g/liter 51.9 51.3 48.2 53.7 63.4 Precipitation yield, g/liter 48.6 48.6 49.1 51.7 55.3 Digestion Steam, ton/ton 1.44 1.40 1.46 1.34 1.23

1.45 Employment in the refinery, which included 3,545 employees in August 1981, dropped to 3,107 in January 1983 and to 2,684 in May 1984, a 24 percent decrease in less than 3 years with relatively little change in the production rate. - 17 -

1.46 On the whole, the Paranam refinery is an excellent and well operated production tool, which can compete technically with all refineries and only concedes a slight edge in terms of process control to a handful of the most modern units built during the last few years.

Alumina Refining: Production Costs

1.47 The production cost data supplied by the company are summarized at Table 9 below:

Table 9: Alumina Production Costs, 1979-1983 (US dollars per metric ton) a/

1979 1980 1981 1982 1983

Caustic 15.0 19.0 19.5 9.5 14.5 Other raw materials 14.0 15.0 20.0 15.5 9.5 Energy 28.0 45.0 50.5 43.5 46.0 Labor 13.5 14.0 20.0 20.0 33.0 Other costs 15.0 14.0 18.0 26.5 14.0

Total Refining Cost 85.5 107.0 128.0 115.0 117.0

Bauxite cost b/ 53.5 61.0 69.0 71.0 76.0

Total Alumina Cost 139.0 168.0 197.0 186.0 193.0

a/ Values were read on a chart and thus imprecise, except for the total cost, which was supplied directly. b/ Based or.standard bauxite cost, the computational basis of which is unknown.

1.48 The data shows indirectly the Company's efficiency gains: the refining cost increased by 31.5 dollars per ton or 37 percent in 5 years, at an average of 8 percent a year which is less than the rate of international inflation. Further, the processing cost exclusive of energy increased only by 23 percent in 5 years, from 57.5 US dollars per ton in 1979 to 71.0 dollars per ton in 1983, an average yearly increase of 5 percent. The largest increase is in labor costs, which went from 13.5 to 33 dollars per ton, an average yearly increase of 25 percent; although other indications point to a yearly increase of roughly 15 percent.

1.49 It can be concluded that efficiency gains contained the price increases quite well, except in three major areas, namely:

- bauxite costs, mostly related to inflation and levies

labor costs, due to wage increases in real terms exceeding productivity gains, at least according to the Company data above.

energy costs.

The fact remains that, when the bauxite c(,sts are excluded, the refining cash costs are competitive and the refining full costs including depreciation are very competitive. - 18 -

1.50 Further gains related to efficiency improvement investments are projected for the joint venture as follows:

Table 10: Projected Alumina Production Costs 1984-1991 (US dollars per metric ton, 1984 terms except for 1983 data)

1983 1984 1985 1986 1987 1988 1989 1990 1991 Actual

Caustic 14.5 15.5 15.3 15.1 15.7 16.9 19.3 8.5 8.5 Other raw materials 9.5 12.6 12.5 12.0 11.8 11.5 11.4 11.4 10.7 Energy 46.0 47.8 47.4 45.5 44.5 41.8 41.1 39.7 39.0 Labor a/ 33.0 21.9 21.8 21.6 21.4 20.6 20.4 20.3 19.9 Other costs 14.0 12.7 11.1 10.8 10.2 9.8 9.5 9.3 9.2

Total Refining

Cost 117.0 110.5 108.3 105.0 103.7 100.6 101.7 89.1 87.3 a/ Assuming labor unit costs remains constant in 1984 terms.

1.51 Even if such gains in processing costs may be somewhat optimistic (especially after 1989), or if the assumptions are disputable (labor cost increases contained in real terms), it is reasonable to expect processing cost gains in the next five years of about 2 to 3 percent per year on average, unless wage costs continue to exceed inflation by a large margin.

Alumina Production and Exports

1.52 The data for 1980-1983 and the Bauxite Institute projections for 1984-1986 are summarized in Table 11 below. - 19 -

Table 11: Alumina Production and Exports 1980-1986 (thousands of metric tons)

Production 1980 1981 1982 1983 1984 1985 1986 actual actual actual actual proj. proj. proj.

Suralco 810.8 730.4 608.6 673.3 696.0 658.8 658.8 Billiton 634.5 518.3 526.6 498.4 617.8 630.0 630.0

Total Prod. 1,445.3 1,248.7 1,135.2 1,171.7 1,313.8 1,288.8 1,288.8

Exports

Suralco 694.7 647.3 527.7 644.8 580.0 600.0 600.0 Billiton 634.5 518.3 527.0 498.4 570.0 630.0 630.0

Total Exports 1,329.2 1,165.6 1,054.7 1,143.2 1,150.0 1,230.0 1,230.0

Inventory Change Suralco 8.6 2.4 (2.8) (31.0) 109.1 - -

Smelter feed, Suralco 107.4 83.7 83.7 59.5 54.7 58.8 58.8

Total Prod. 1,445.2 1,251.7b 1,135.6 1,171.7 1,313.8 1,288.8 1,288.8

a/ Actual for 1Q84; projections for April-December 1984. The strike impact is included. b/ Discrepancy of 3,000 tons in the Bauxite Institute data for 4Q81. e/ Suralco 61.2 and Billiton 47.8.

1.53 The production loss from 1980 to 1983 is significant; it represents a 19 percent decrease and mostly results from the market deterioration and the subsequent reduction in alumina requirements for the two owners. It is important to note that the decrease is significantly less than for the worldwide production of the two companies involved. Suriname production has held up substantially better than elsewhere, which probably reflects some measure of owners commitment to the country. It can probably also be said that the maintenance of relatively high operating rates in the refinery reflected the relationship between alumina refining and bauxite costs including levy, the first being competitive and the second not. Hence, the companies maintained a relatively high operating rate for the refinery, in which competitive processing costs are available but cut off bauxite exports almost completely.

1.54 Alumina export values, either actual for the period 1980-83 or projected by the Bauxite Institute for 1984-86, are summarized below: - 20 -

Table 12: Alumina F.O.B. Export Values 1980-86 (millions of US dollars and dollars per metric ton)

1980 1981 1982 1983 1984 1985 1986 Actual Actual Actual Actual Proj. Proj. Proj. Export Revenues

Suralcoa/ 148.001 152.234 116.182 119.272 117.105 127.140 133.500 Billitonb/ 135.126 116.131 116.614 97.168 98.464 119.496 126.000

Total Revenues 283.127 268.365 232.796 216.440 215.569 246.636 259.500

Unit Prices

Suralcoa/ 213.04 235.18 220.17 184.98 201.91 211.90 222.50 Billitonb/ 212.96 224.06 221.28 194.96 172.74 189.68 200.00

Average 213.01 230.24 220.72 189.33 187.45 200.52 210.98

a/ transfer price including levy. b/ contract prices.

1.55 It should be emphasized that the export prices listed above, which were at normal levels in 1980 and probably higher than market in 1981, were considerably higher than market (by 10 to 15 percent approximately) in 1982 and 1983. Absolute data are not available for alumina prices, but a typical blend of spot and long term prices for an alumina supplier would have yielded significantly less revenue than the two companies reported.

1.56 The revenue projections of the Bauxite Institute for 1984-86 are discussed in the last section of the report.

Alumina: Capital Investment

1.57 The investments actually made in 1979-1983 and projected by the companies for 1984-1988 are summarized below:

Table 13: Investments in Alumina Refining 1979-1988 a/ (millions of US dollars)

Suralco Joint Venture Suralco Joint Venture

1979 12.1 - 1984 - 10.2 1980 16.4 - 1985 - 14.9 1981 18.1 - 1986 - 15.0 1982 15.6 - 1987 - 11.5 1983 10.0 - 1988 - 10.4

a/ current terms 1979-83. Constant 1984 tetms for 1984-1988.

1.58 The average yearly expenditure for the next five years is 12.4 million US dollars or 9 US dollars per ton of capacity per year; this - 21 -

amount is probablyslightly higher than averagebut seems low in comparison with the ambitiousgains in productivityand efficiencyprojected for the same period. Hence, there is a possibilitythat, shouldinvestments be kept at the projectedlevel becauseof cash flow constraintsor poor financialresults, competitivity gains will not materializeor be acquired only in part.

Alumina Export Levies

1.59 The complexpre-1982 coefficient for bauxite,which reflectsthe actual alumina to bauxiteconversion ratio is simplifiedwhen expressedper ton of alumina,as the aluminato aluminumratio is fixed at 1.95, which is in fact the industryaverage. Hence, the levy per ton of aluminawas 6/1.95or 3.08 percentof the adjustedaluminum ingot price until 1982.

1.60 From 1982 onwards,a premiumor discountwas incorporatedat a fixed rate per ton of bauxite,thus complicatingthe coefficientagain. The final gross levy is shown in Table 14 below. - 22 -

Table14: GrossLevy Variations With Ingot Price a/ b/ f/ (USdollars per metric ton) ingotPiced Basc levyWithout ULacot 1982levy 1983levy 1984Levyd/ 1985Ievy Swalco Billiton SuralcoBilliton SuralcoBillitoa SuralcoBilliton SuralcoBilliton

PerTon of Ba.udte

60 cents/lbAl 18.44 19.51 20.64 N.A.e/ 17.44 12.76 15.44 12.01 12.44 9.51 65 cents/lb Al 19.26 20.34 21.46 18.26 13.59 16.26 12.84 13.26 10.34 70 cents/lb AL 20.09 21.16 22.29 19.09 14.41 17.09 13.66 14.09 11.16 72 ceants/lb A1l 20.42 21.49 22.62 19.42 14.74 17.42 13.99 14.42 11.49 74 cnts/lbAl 20.75 21.83 22.95 19.75 15.08 17.75 14.33 14.75 11.83 76 cents/lb Al 21.08 22.16 23.28 2D.08 15.41 18.08 14.66 15.08 12.16 78 cents/lbAl 21.41 22.49 23.61 20.41 15.74 18.41 14.99 15.41 12.49 80 cents/lb Al 21.74 22.82 23.94 20.74 16.07 18.74 15.32 15.74 12.82 82 cents/lb Al 22.07 23.15 24.27 21.07 16.40 19.07 15.65 16.07 13.15 84 cents/lb Al 22.40 23.48 24.60 21.40 16.73 19.40 15.98 16.40 13.48 86 cents/lb Al 22.73 23.81 24.93 21.73 17.06 19.73 16.31 16.73 13.81

?r Ton of AdIlna

60 cents/lbAl 37.82 40.02 42.33 N.A.e/ 35.77 26.17 31.67 24.64 25.51 19.51 65 cents/lbAl 39.51 41.72 44.02 37.46 27.87 33.36 26.34 27.20 21.21 70 cents/lb Al 41.21 43.41 45.72 39.16 29.56 35.06 28.03 28.90 22.90 72 cents/lb Al 41.89 44.09 46.40 39.84 33.24 35.74 28.71 29.58 23.58 74 cnts/lb Al 42.57 44.77 47.08 40.52 30.92 36.42 29.39 30.26 24.26 76 cents/lbAl 43.24 45.45 47.75 41.19 31.60 37.09 3D.07 3D.93 24.94 78 cents/lbAl 43.92 46.13 48.43 41.87 32.28 37.77 30.75 31.61 25.62 80 cents/lb Al 44.60 46.81 49.11 42.55 32.96 38.45 31.43 32.29 26.30 82 cents/lbAL 45.28 47.48 49.79 43.23 33.64 39.13 32.10 32.97 26.97 84 cents/lb Al 45.96 48.16 50.47 43.91 34.31 39.81 32.78 33.65 27.65 86 cents/lb Al 46.64 48.84 51.15 44.59 34.99 40.49 33.46 34.33 28.33 a/ For the levy per ton of batxite, it is assumd that 4 metric tonsof bauxite yield 1.95 metric ton of alumina whidh yields one metric ton of almimrmningot. As the levy formuilas Inclde a conversion ratio whidhrelates netric tonsof bauxite to short tons of a]iinlnm, this is equivalent to a convertiun ratio in the sense of theforimi levy agreements of 3.63. bI For the levy per ton of aiumLna, the basic levy calculation only involves an alumina to aliLdna oriver- sioaratio of 1.95 (or 1.77 when expressed in metric toosof alxdnna per short toaof alinim); however, the discount being specified per ton of bauxite, the baudxte to aluminmn ratio is again invoLvedto re- flect this discount in alumina levy terms. c/ As :eported for unalloyed ingot in Alooa's 1OKstatement. d/ For Suralo in 1984 the levy averages the stated amuntfor the year but formally Is I USdollars per metric ton of bawxite (2.05 per ton oE alubmna) nmre for ooe half of the production and I doLlar less for the secood half of tbeproductiaoi e/ Ihe Billiton Agreenent for 1982 stated a value of US$14.83per metric toa of bawdte (includirg other than uDtalblrgical grades), difficult to equate badc to a specific level for metallmrical bawdxte. f| For in 1983, 1984, 1985, the levy is as stated in the table exept as follows: 1983: levy 6 lS dollars per netric ton of ahzmLnaexorted above 426,000 tws 1984: ' 12 406,000 tons 6 576,000 tons 1985 12 " 406,000 tons 6 " 556,000 tons - 23 - 1.61 The Alcoa realizedprice in 1982 was about 53 cents per pound and thus generateda gross levy of 17.5 US dollars per metric ton of bauxite for Suralco (as the conversionfactor was much higher than normal for com- plicatedreasons) and of 14.43 dollarsfor Billiton. The 1983 price is close to 60 cents, yieldinga gross levy of about 17.4 dollarsfor Suralco and 12.7 dollars for the first Billitonslice and averaging11.1 dollars for the total productionof Billiton becauseof the lower marginalrates.

1.62 The table suggeststhree comments:

- The approach to the 1982 revision of the levy systemwas fragmen- tary, in the sense that the variousdiscounts agreed upon were obviouslyarrived at in an ad hoc manner,without much regard for the internal logic of the system.

- The method arrived at is fairly complicated,with, in essence, three components: the unchangedbasic levy, the discountfor the year, the marginalamount beyonda given volume (3illitononly).

- The two Companiesare treatedquite differently: in 1985 for instance,if the ingot price averages,say, 80 cents/lb,Suralco would pay 32.29 US dollars per ton of aluminaproduced, while Billitonwould pay 26.30 dollars per ton for the first 406,000 tons and, on average,20.63 dollars per ton for its nominalen- titlementof 630,000tons. Again, the approachhas been frag- mented probablybecause Suralcois perceivedto be part of the Alcoa supply systemwhile Billitonsells alumina to third parties and is more directlysubjected to competitivepressures in the alumina market.

1.63 Additionialcomments on the alumina levy systemare made in the last section of this report.

AluminumSmelting: the Paranam Smelter

1.64 Aluminumsmelting is a relativelysmall componentof the total bauxite subsectorand so is discussedonly briefly.

1.65 The smelteris locatedwithin the perimeterof the alumina refineryin Paranamand is equippedwith the Soderbergtechnology. The technology,favoured in the fiftiesand sixties becauseof its low capital requirement,has now been abandonedfor the modern prebakedsystem. The major disadvantagesof the Soderbergprocess are that:

- power consumptionis on the order of 16.4 kwh per kg, compared to the 13 kwh per kg of modern prebakedplants. This is a minor handicapwith the cheap hydropower(with a prebaked power cost of 5 cents per lb and a Soderbergcost of 6 cents per lb), but an unbearableburden at gas turbinerates (a prebakedpower cost of 25 cents per lb);

- fume control,now stringentin many locationsis difficultto achieve.

- less importantlythe large anodes are more difficultto keep in shape than the prebakedblocks used in modern plants. - 24 -

1.66 The Paranam smelter consists of two potlines of 76 side by side cells each, presently run at approximately 140,000 Amperes (instead of the nominal 175,000) to minimize power consumption (through a low current density) and to maximize current efficiency. Only 58 cells (38 percent) are now in operation because of the low power availability from hydro sources resulting from the relative drought of the last two years. Although this situation is temporary, Suralco believes that only 110 cells can be run on average on hydropower: this represents only 72 percent of the nominal capacity, further reduced to 58 percent or 40,000 tons per year when the lowered amperage is taken into account. Power costs are a major component of total aluminum costs. The marginal power cost of hydro power, reported by Suralco at 6 or 7 US mils per kwh is very favorable but the next slice of gas turbine power, reported to cost 30 US mils per kwh is prohibitive for aluminum smelting. Costs are also increased by the need to stop cells and restart them to adapt to the power availability: this disturbs operations, as did the recent strike which forced a complete shutdown and a difficult restart of the smelter.

1.67 Within its technical limitations, the plant is well operated. The current efficiency, at 93 percent, is excellent and the voltage, at about 5.1 volts is reasonable for Soderberg cells. Major improvements on metal purity, a plague for most Soderberg plants, were achieved in 1983.

1.68 Suralco provided time series on total plant cost which are given below; it is not known precisely how these values relate to the total accounting cost. - 25 -

Table 15: Aluminum Smelter Plant Cost, 1978-1983 (cents per lb and thousands of metric tons) 1978 1979 1980 1981 1982 1983

Metal Cost 34.1 39.9 47.2 52.6 56.9 57.8 Production volume 55.8 53.6 55.4 41.4 41.4 33.6 Cells Operated 129 128 132 98 101 88

1.69 These costs are relatively competitive, although somewhat higher than average, because the low hydropower cost compensates for the high alumina cost, the relatively high labor cost and the size nandicap. The use of 30 mils per kwh for gas turbine power would increase the 1983 plant cost to 77 cents per lb which is utterly non-competitive.

1.70 No gains in real terms smelter costs can be expected for the foreseeable future.

Aluminum Production and Exports

1.71 The 1980-83 data and the Bauxite Institute projections for 1984-86 are summarized below.

Table 16: Aluminum Production and Exports 1980-86 (thousands of metric tons)

1980 1981 1982 1983 1984a/ 1985 1986 Actual Actual Actual Actual Proj. Proj. Proj.

Production b/ 54.921 40.519 42.519 33.573 26.552 30.000 30.000 Inventory Change 9.668 8.943 (17.735) 4.923 (5.685) - - Exports 45.253 31.576 60.254 28.650 32.237 30.000 30.000 a/ Actual for 1Q84; projections for April-December 1984. The strike impact is included. b/ Small discrepancieswith the Company data in the previous table.

1.72 Market conditions for this smelter were irrelevant in the past, as the governing constraint has always been the hydropower availability.

1.73 Aluminum export values on the same basis are as follows: - 26 -

Table 17: Aluminum F.O.B. Export Values 1980-86 (millions of US dollars and dollars per metric ton)

1980 1981 1982 1983 1984 1985 1986

Export Revenues 65.057 49.379 70.240 34.795 51.700 50.708 55.780 dollars per metric ton 1437.6 1563.8 1165.7 1214.5 1603.8 1690.3 1859.3 cents per lb. 65 71 53 55 73 77 84 Alcoa 10 K price 73 74 53 60 - - -

The prices for 1980-83 reflect the market conditions then prevailing; they are lower than the Alcoa 10 K averages (except for 1982) but higher than the average realized prices of non-US producers at the time.

1.74 The Bauxite Institute projections for 1984-86 are discussed in the issues section of this report.

Aluminum: Capital Investments

1.75 The smelter investments reported or planned by Suralco for the period 1979-88 are as follows:

Table 18: Investments in Aluminum Smelting 1979-88 a/ (millions of US dollars)

Suralco Suralco

1979 3.0 1984 3.5 1980 7.9 1985 4.8 1981 4.1 1986 6.5 1982 2.6 1987 4.3 1983 2.4 1988 2.6 a/ current terms 1979-1983. Constant 1984 terms for 1984-1988.

The average yearly expenditure for the next 5 years is 4.3 million US dollars or 62 US dollars per ton of true installed capacity (108 dollars per ton on average production), which is in the normal range for a smelter, slightly higher than average.

Aluminum Levies

1.76 Aluminum is not treated separately for levy purposes. Hence, the levy applicable to it per metric ton of aluminum produced is the value projected for alumina (Suralco) at Table 14 multiplied by the conversion factor of 1.95, or about 3.2 cents/lb for the probable ingot realized price in 1984 and 2.8 cents per lb for the 1985 probable ingot realized price. - 27 -

Non-Metallurgical Bauxites

1.77 Other bauxite for non-metallurgical uses have been produced in Suriname in the past; unfortunately,their productionhas been discontinued becauseof the collapseof pricingwhich startedin 1982 and continuedto this day. As these markets are now dominated by the Chinese and Guyanese productions,with the prospect of further competitionand littlehope for price gains in real terms in the foreseeablefuture, the chances of revival of such production are slim. Production facilities are not described as they are likelyto remain unused. Past productionand export value data is included in Table 19 below for the sake of completeness. - 28 -

Tabe 19: NLo:-ietalurgi Bandte Data (thotisarls of netric tow, mllions of US do1Ia TJSdolla3U per mtric tbol)

1980 1981 1982 1983 1 984a/ 1985 1986 Actual ctal t- tal Prjetd Projected Projected

Calined Refracory BaixLte

Productiorivohm 41.034 35.395 13.884 - Inventory cbange - - .825 (5.773) - - Export wlume 41.034 35.395 13.059 5.773 - - Export value 6.204 6.218 2.243 .883 - - Ucit Price 151.19 175.69 171.76 152.95 - -

Calcined Abrasive BauxLte

Productioanvohune 135.201 158.440 153.749 142.898 - - - Inveatory charge - - 4.553 (4.47D (14.166) - - Export volnme 135.201 135.201 149.196 147.375 14.166 - - Export value 10.296 13.289 11.979 11.458 1.084 - - Unit Price 76.15 83.87 80.29 77.75 76.50 ChemicalGrade Bauxite

Productrioxnvohme 148.459 62.876 29.296 41.284 39.928 40.000 40.000 b; Inwtory change ------Export volime 148.459 62.876 29.296 41.284 39.928 40.00 40.000 b/ Export value 6.882 3.271 1.169 1.652 1.454 1.617 1.750 Unit Price 46.36 52.02 39.90 40.02 36.42 40.42 43.75

Total Nbreta1lurgcal

ProductIn vohume 324.694 256.711 196.929 184.182 39.928 40.oDo 40.000 b/ Inentory change - - 5.378 (10.250) (14.166) -- Export volume 324.694 256.711 191.55 194.432 54.094 40.000 40.000 b/ Export value 23.382 22.778 15.391 18.883 2.538 1.617 1.750 Unit Price 72.01 88.73 80.35 97.12 46.92 40.42 43.75

a/ Actual for IQ 84. Projectiors for Apri.l-December1984. b/ Discrepancy in the BamdLteIcstitute dataz volume is projected at 50,000 tors btit revenue is ccaputed at 40,000 tots; wumeammbere that 40,000 tons is implied.

1.78 As can be seen in the table, export values were significant in the past, if relatively small compared to those of the metallurgical products. The continued production and sale of chemical bauxite assumed above by the Bauxite Institute is disputable at the level projected; the impact is small in any event. - 29 -

C. THE BAKHUIS PROJECT

History

1.79 Bauxite was found in Western Suriname in 1959 in a very isolated part of the Bakhuis mountains, about 50 km South East of the town of Apoera on the Corantyne River. Early exploration in the sixties indicated possi- ble reserves of about 100 million tons of dry bauxite (see map at Figure 2).

1.80 As a result the State created Grassalco, Reynolds Metals (US) carried out detailed exploration work in the 1971-1975 period, and estimated the total of proven and probable reserves was 62 million tons of dry bauxite.

1.81 Such reserves were calculated by including as ore any bauxite having no less than 35% of maximum %xtractable alumina and no more than 7% of reactive silica. On average, the proven and probable reserve tonnage above had 43.8% of maximum extractable alumina and about 2.5% of reactive silica. It should be noted that the ore quality was, even by the optimistic assumptions then used, established to be low. The maximum extractable alumina corresponds to a high temperature plant's process, which undoubtedly would not be cost justified to recover the very low boehmite content of 1 or 2Z present in Bakhuis bauxite. A cheaper low temperature plant would yield about 1.5 X less alumina by recovering only gibbsitic (trihydrate) alumina. Hence, the economic grade (technically known as American Bayer Extractable Alumina or ABEA) was about 42% of recoverable alumina and 2% of reactive silica. Roughly speaking, any bauxite having less than 50% of recoverable alumina can be characterized as medium grade, while bauxite with less than 45% of recoverable alumina must be classified as low grade, (even when reactive silica is low as is the case at Bakhuis) and not suitable for export within the foreseeable future. It should also be said that the Reynolds criteria were not very strict: a more recent re-evaluation of the same boreholes carried out by Billiton in 1979, using realistic mining criteria, established a similar tonnage of reserves but with an overall lower grade of about 40% of recoverable alumina (42% in area 10-1 for 20 million tons) and 2.1% of reactive silica.

1.82 Coincidentally or not, Reynolds' interest in the deposit waned in 1975 but the State nevertheless decided to build a 72 kilometer railroad between the deposit and Apoera; construction started in 1976 and was completed in 1980 at a reported cost of 180 million Suriname guilders (US$103 million).

1.83 At that time, the State obviously contemplated the construction of a major complex in Western Suriname, which would have included the 800 MW Kabalebo hydroelectric project, the 2 million tons per year Bakhuis bauxite mine, a 575,000 tons per year alumina refinery in Apoera, a 100 to 150 thousand tons per year aluminum smelter in Apoera, related infrastructure and other facilities. This plan was abandoned in the early eighties. 30 - Figure 2-1

TRINIDAD'

A"rL ANrl SC& OCf(A AN

GUYANA *11>sirx TRIN l OA%ONVEROACHD

APtJRA~~~~~~ U NAE 3.Bakhuisbauxitearea A

. OulnA RE AA _ Ic,T A'

4. aora zi_ _l { z X e~~~~~~~~R A Z I LIEt.2

$#'~~~ ~w ~ ~~~~~~' 5S 100 %W1

Key: 1. Atlantic ocean BILLITON ALUMINIUM EI.V. 2. Lake_ 3. Bakhuis bauxite area BAKHUIS, SURINAME 4. 3razil S. French Gu_una FEAWSIBILITY STUD)Y 6. Outl ine map OVERZICHTSKAART42 7. Date: August '79 IDatum Au usius 79 _ 8. Drawing no: __ _ [{[ 9. Attachwent

6 -31- Figure 2-2

Key: 1. Creek APURA~ ~ ~~~' 2.Mountai n range 3. Scal e 4. Date: August 1979. 5. Drawing no: 6. Attachment i . \ ?~~~~~~~~~~~~.Figure \ >_ \< DI~STRICT NICKERIE g

PATAPI

DEVIS DAM \I

.:x...... ' '11.t\0K>Zt

...... _. \.. 4

I 4~~~~~~~~~~I

j~~~~~3 . d~~~~~~~~~r. ,~~~~~~~~~~~~~~~~~g- 4v/r

): : C~:' ' CoPpenra KABALEBODAM BILLITON ALUMINIUM B.V. BAKHUIS, SURINAME FEASIBILITY STUDY. .3Schaol 1:410000

._Tek No 38886/1 ail ,- - 32 -

1.84 In October 1977, Grassalco commissioned Billiton to perform a technical and economic study of the mining of 2 million tons of bauxite per year at Bakhuis,to be transportedto Apoera and shippedfrom there, either abroador to Paranam (for processinginto alumina). Billitonsubmitted its report in 1979, in which it concluded:

- That about 21 million tons of proven mineablereserves at 42% recoverable alumina and 2% reactivesilica were availablein the area 10-1, as mentionedabove, with probableand possible reservesof 68 milliontons in other areas at a lower alumina grade of approximately39% on average.

- That the capitalcost of the projectedmine and Apoera loading facilitywould be on the order of US$56 million in 1978 (first quarter)terms, or US$77 milLion in currentterms if the project,was implementedin 1980-1982. This cost of course excludedthe cost of the railroaditself, as well as that of non-technicalinfrastructure.

- That operatingcosts includingdepreciation would amount to US$16 million per year or 8 dollars per ton FOB Apoera in 1978 terms excludingrailroad transport costs, or 11 dollarsper ton includingrailroad transp-rt costs. Depreciationcharges were estimatedat 2.3 dollars per ton excludingrailroad depreciationor 3.5 dollars per ton includingit.

- That, as a result,bauxite would have to be sold at 21.8 dollars per ton FOB Apoera in 1983 terms excludinglevies to insure an 8% after taxes return on investment,or 19.6 dollars per ton FOB Aporea excludinglevies in 1983 terms to insure the same return on investmentif income taxes were also waived.

- That river transportationcosts on the Corantyneriver would be high because of the severe draft limitationsnf the river.

- That the bauxitewould not be competitivein the export markets,but could be of interestif processed further in Surinameinto alumina,thus displacingexisting high grade bauxitefrom the Paranam plant and makingit availablefor other uses.

1.85 Accordingly,Billiton recommendedthat this latest possibilitybe studiedimmediately.

1.86 In the meantime,the bauxite levy negotiationsof 1979 between Suralcoand the Governmentled, at the government'sinstigation, to the creationin August 1979 of a joint commissionfor the study of the develop- ment of the Bakhuis deposit. While Suralcohad, at the time, very little if any interestin Bakhuis bauxite,Billiton, which joined the commission shortlythereafter had, as just said, reachedthe conclusionthat displacingexisting bauxite in the Paranam plant might have merit. (In fact, Billitonwas then consideringthe use of some Onverdachtore for - 33 -

the manufactureof refractorybauxite.) The commission,which by statute had to submit its report in May 1980, concludedthat two alternatives warrantedfurther study:

- An expansionof the Paranam refineryby 575,000tons of yearly capacity,(which would absorb 2 million tons of Bakhuisore) and the opening of the Bakhuis mine at a productionlevel of 2 milliontons per year.

- The opening of a 500,000 tons per year mine at Bakhuis,to displace325,000 tons per year of Onverdachtore from the Paranamrefinery.

1.87 Suralco carriedout the recommendedstudy and submittedits report in February1982 on three alternativesat the respectiveproduction levels of 1, 1.9 and 2.4 million tons per year of wet bauxite (equivalent respectivelyto .86, 1.64 and 2.08 million tons of dry bauxite). The pro- ject scope includedthe mine, incrementalrailroad equipment, loading faci- lities at Apoera, river transportequipment and additionalunloading facilitiesat Paranam,but excludedthe existingrailroad investment and all non-technicalinfrastructure costs. The followingconclusions were reached by Suralco:

- Capitalcosts would, in 1982 terms, reach 134 million, 186 million and US$202 million, respectively,for the three levels considered,excluding escalation, working capitaland interest during construction.

- Cash operatingcosts would, in 1982 terms, reach 20.75, 13.60 and 12.46 US dollars per dry ton respectively,including 1.78, 1.10 and 1.00 dollars per ton of trammingand 3.56, 3.31 and 3.23 dollars per ton for river transportfrom Apoera to Paranam,respectively.

- Non-technicalinfrastructure at Apoera would cost about US$51 millionin 1982 terms.

- Additionalfacilities to process the bauxite into alumina at Paranam in the last two alternativeswould cost respectively US$258 and US$268 millions in 1982 terms,while additional working capitalwould reach US$34 million in both cases.

1.88 Althoughno recommendationswere made by Suralcoas to further steps, if any, the impliedconclusion was that, at a minimum 1982 cost of 19 US dollars per ton includingdepreciation but excludingany financial costs,return on investmentor levy, the Bakhuis bauxitewould be most unattractiveas a feed to the Paranam refinery. After adjustmentto reflect the differencein recoverablealumina contents, this cost would be about 30 percent higher than the Paranam bauxite costs actuallywere in 1982 terms, on a comparablebasis excludinglevy or financialcosts.

1.89 To make the prospectseven worse, three major factors externalto the Bakhuis project itselfhad also to be taken into account then or shortly after the reportwas submitted: - 34 -

- The world aluminumindustry markets startedto deterioratein the fall of 1980, and the industryendured, in 1981 and 1982, its worst period in more than two decades,with vast over- supply of aluminum,alumina or bauxiteand drasticdeteriora- tion in pricesfor each of the three products. Although the aluminummarkets started to improvein December1982 - January 1983, recoveryhad not occurredin mid 1984 (and wasn't pro- jected to occur for several years) for either aluminaor bauxite. Aluminummarkets themselveshave deterioratedagain in the last few months.

- The Dutch aid to Surinamewas suspendedafter the events of December1982, leading to a drasticdecrease in capitalcost financingcapabilities.

- The markets for refractorybauxite collapsed in 1981, making any Billitonplans to use Onverdachtbauxite for the manufac- ture of refractorymaterials utterly unlikely in the foresee- able future.

1.90 As result,the Bakhuis project was shelvedmore or less openly since early 1983.

Assessment

1.91 A re-evaluationof the project'sfeasibility is entirelybeyond the scope of this reviewof the mining sector of Suriname,but the issue is too importantto be ignoredand that the commentsbelow may be helpfulin clarifyingthe status of the Bakhuis project.

1.92 As the questionat hand is whether the projectshould be re-evaluated fully, an expensiveand time consumingprocess if carried out seriously, the obvious approach is to review the economics of the project after updatingthe basic data roughly,quickly and as optimisticallyas possible,making adjustmentsto reflect all significantimprovements that could conceivablytake place, in an attempt to derive a "best case" (which may or may not be attainable). If or when the economicsof this best case are acceptable,a serious re-evaluationshould be undertaken. If not, there is no point in re-evaluationuntil major changesin the bauxite marketsoccur, and the projectshould be fully shelveduntil then.

1.93 For this purpose,the followingassumptions are made:

- The mine productionwould be 2.4 milliontons of wet bauxite per year (or 2.08 million tons of dry bauxite);any smaller mine would obviouslybe uneconomical.

- The outputwould be deliveredto Paranamfor refininginto alumina,thus making 1.56 million tons of dry Onverdacht bauxiteavailable for export (eitherby Billiton,Suralco, the State or any combinationsthereof). - 35 -

- The State would thereforeswap 2.4 millionwet tons of Bakhuis bauxitedelivered to Paranam againsttheir equivalentor 1.56 million tons of bone dry Onverdachtbauxite (1.66 million tons of bauxiteas shipped) availableF.O.B. Paranamexport dock, pay to the Companies the cash cost differentialbetween making Onverdachtbauxite availableto the refineryand crushing, drying and loading it on an export vesselat the Paranamdock, and sell such exportedbauxite for its own account. This theoreticalscheme (which probablywould not be actually followedand ignoressome unfavorableaspects in this best case evaluation)would leave the Companiesunharmed (and unhelped). They would receiveat the Paranamrefinery the amount of Bakhuis bauxiteneeded to replacethe displaced quantity;be reimbursedas a contractorto the State for the cash cost of crushing,drying and loadingadditional quantitiesof export bauxite;and continue to produceand sell the same quantitiesof alumina and export bauxiteat the same costs. They would continue to pay the same amount of levy as they otherwisewould (i.e. because of the qualitydifference, and on a dry basis, about 75 percentof the otherwise applicableamount per ton of dry Bakhuisbauxite). The state would also be left unharmed in terms of bauxite levy revenues and compete in the export market. 1.94 To illustratethe methodology,assume that Onverdachtquality export bauxiteF.O.B. Paranam is worth about 27 dollars per ton, which is the estimateof presentconditions. The contractualamount to be paid for drying,crushing and loading,after creditinga haulage cost differential, would be at least 5 US dollars per ton of exported bauxite; hence the state would receive revenuesof about 22 dollars per ton net for each of 1.66 million tons of bauxite. It would be obligated to deliver 2.4 million tons of wet Bakhuis bauxite at Paranam in exchange, and would thus break even if its cost for such bauxitewere on the order of 15.2 US dollars per wet ton CIF Paranam. For each dollar of Bakhuis cost above this amount, the export value of Onverdachtbauxite would have to increaseby 1.45 dollar per ton to reach break even.

1.95 The methodused, although a little complicatedavoids assumptions on levy levels, Onverdachtoperating or other costs and, most importantly, Suralcoor Billitonexport capabilities. The only such assumptionso far is the crushing/drying/loadingdifferential of 5 dollarsabove, which the mission believesro be a minimum but reasonableestimate.

1.96 The issue is thereforesimplified as follows:can Bakhuis bauxite be deliveredto Paranamfor about 15.2 US dollars per wet ton? If it is the case, the projectshould be re-evaluatedthoroughly; if not, the difference between the estimatedcost and US$15.20,multiplied by 1.45, gives the amount by which exportbauxite prices must improve,in 1984 terms, before a re-evaluation of the project is justified.

1.97 Suralcoestimated that, in 1982 terms, Bakhuisbauxite would cost 12.46 dollars per ton CIF Paranam in cash operatingcosts alone, excluding taxes and levies;updated to 1984 terms,such costs would be re-evaluated - 36 -

to at least 13.70 dollars per ton, leavinga cash flow of only 1.5 dollars per ton or 3.6 million dollars per year to providea return on investment on 222 million dollars of capital costs *xcluding infrastructure and 275 million dollars including it. This is obviously utterly impossible, as debt servicealone would be more than 10 times this cash flow, at least in the first years. On this basis, the Bakhuis projectshould clearlybe abandonied.

1.98 The objectioncould be made that the Suralco study overestimates both capitaland operatingcosts. In line with the 'bestcase" methodology,it is now assumed:

- That Bakhuis and Apoera capitalcosts are reducedfrom Suralco'supdated estimateof 98 milliondollars by lowering the contingencylevel from 30 percent,which is high, to 15 percent,which is an absoluteminimum and by arbitrarily reducing all other costs by 10 percent. Hence the capital cost in 1984 terms for these facilities is assumed to be 78 million dollars,excluding working capital,escalation and interestduring construction. It should be noted here that the Billitonestimate of 50 million dollarsin first quarter 78 terms,escalated by 6 years to be comparable,yields a much higher figure of about 90 milliondollars;

- That Bakhuis cash operatingcosts could be reduced to 3.90 dollars per ton in 1984 terms (a level essentiallyderived by updatingthe 1979 Billitoncosts and reducingthe resulting amount of 4.60 per ton by a third of the loadingand haulage costs on the assumptionthat the mining method improvements conceivablecould, at best, reduce these costs to such a level). Althoughsignificant improvements are possible,for instanceby selectingmore cost efficientloaders than backhoes,by using larger trucksthan the 27 tonnersselected and mostly by relocatingthe crushermuch higher above the railroadin order to eliminatepart of the haulagedownhill and the uphill travel of empty trucks,the gains assumed above are extremelyoptimistic;

- That Apoera cash operatingcosts, can, somehow,be reducedby fifteenpercent from the updatedBilliton estimate of 2.69 dollarsper ton to 2.30 dollarsper ton. There are no grounds for such a reduction;

- That Bakhuis - Apoera railroadtransportation costs as evaluatedby Canac in 1981 and updatedto US$11.5million in capitalcosts and .80 US dollarsper ton in operatingcosts in 1984 terms can be achieved. It should be noted that Suralc''supdated estimatesin this area would be 14.6 million dollarsand 1.10 dollars per ton respectively,and that the Billitonestimate of the railroadoperating costs would exceed 3 dollars per ton excludingdepreciation; - 37 -

- That river transportationcosts, evaluatedby Suralcoat US$90 million of capital investmentand 3.55 dollars per ton of cash operatingcosts, both in 1984 terms, can be loweredto 68 milliondoliars and 3.00 dollars per ton, respectively.For the presentpurpose, we assume that 10,000ton self propelled barges,drafting 5.1 meters, can be used and that two such barges can replacethe five smallerSuralco barges of 5000 tons with substantiallylower operatingcosts at the expense of dredgingthe Washabo crossing. This assumptionis extremelyoptimistic, especially in terms of the abilityof the two barges to move 2.4 million tons of bauxite per year;

- That the unloadingand hauling facilitiesat Paranam generating,per Suralco,19.2 milliondollars of capitalcosts and .87 dollars per ton of cash operatingcosts, both in 1984 terms,are left unchangedas these estimatesappear to be alreadyquite optimistc,considering that a largerunloader would be requiredto improve the ship unloadingtime and thus increasethe ships' yearly capacityas just assumedabove.

1.99 On this basis, the total capital cost of the projectwould be 177 million dollarsexcluding social infrastructure,or twenty percentless than the updated Suralcoestimate of 222 million dollars,both expressedin 1984 terms. The cash operatingcosts would be US$10.9 per wet ton, or also twenty percent less than the updated Suralco estimate,both expressedin 1984 terms (the fact that both reductionsare by 20% is purely coincidental). Hence, the cash flow would be 15.2 minus 10.9 or US$4.3 per Bakhuis ton in 1984 terms,or 10.3 milliondollars per year. It cannot be emphasizedenough that neither these new capital costs or operatingcosts are consideredto be good estimates. Tiieyare the most optimisticlevels that can be derived,but are, most probably,unattainable.

1.100 On these premises,and with reasonablecomplementary (and mir.sr) assumptionscomparable to those made for the Rosebelgold project,the followinggenerated cases u.erederived:

- First, the assumed export value of Onverdachtbauxite of 27 dollarsper dried ton was used to derive Case 1, in which :lie cost of social infrastructureis ignored. As the case unfortunatelyyielded most unfavorableresults, as the ratc of returnon investmentand on equitywas computedfor a range of Bauxiteprices and yieldedFigure 3 and 4. Then the selling price at which the return on equity first reacheszero percent,which is 33.13 dollars per ton in 1984 terms,was used to yield Case 2 and generatethe relatedfinancial statements.

- Second,a similar method was used, but the capitalcosts of social infrastructureat the most optimisticlevel conceivable (51.9million dollars instead of Suralco's56.3 million,both ir.1984 terms)were included. This, at the same present bauxitevalue of 27 dollars per dried ton, generatedCase 3. A plot of the ROI and the ROE for a range of sellingprices - 38 -

yielded Figures 8 and 9. The price at which a null return on equity is first reached, which is 36.41 dollars per dried ton in 1984 terms, was used to genera.e Case 4 and the related financial statements.

- Last, the method was used again with Suralco's own capital (including social in^rastructure) and operating costs updated to 1984 terms, first at the 27 dollars per dried ton 1984 bauxite price which yielded Case 5, and then with the null return on equity bauxite price of 42.12 dollars per dried ton in 1984 terms which yielded the financial statements of Case 6. The ROI and ROE plots are given as Figures 10 and 11.

1.101 The six sets of financial statements are included as Attachment 3.

1.102 The results are quite obvious:

- The minimum selling price at which the rate of return on equity is non negative is US$33.13 per dried ton or 23% higher than the estimated present market price (Case 2). At the present market price, the results would be dreadful: Case 1 shows that profits, even without taxes, would not be positive until 1999 (the thirteenth year of operation), that no dividends would ever be paid, that equity contributions of 187 million in the period 1987-1998 would be unavoidable even under the best lending assumptions and that $365 million of net debt would still be outstanding at the end of the 20 year life of the project. Even at 33.13 dollars per dried ton (Case 2), the project is far from attractive: profits would be negative until 1992, no dividends can be paid until 2002 (the sixteenth year of operation), equity contribution oi 91 million would be unavoidable in the 1987-1990 period and long term debt would not be extinguished until 2001.

- Unfavorable as they are, these results do not represent the actual situation realistically. The project, as defined here, is strictly of the enclave type and thus the social infrastructure costs must, in all fairness, be included. In this instance, Case 3 at the present market price shows that profits are negative until 2002 (the sixteenth year of operation), that no dividends would ever be paid, that equity contributions totalling 310 million dollars would be unavoidable in the 1987-2001 period and that 524 million dollars of net debt would still be outstanding at the project's end. Even at 36.41 dollars per dried ton (Case 4), the profits are negative until 1992, dividend payments only start in 2002, 113 million of equity contributions cannot be avoided in the 1987-1991 period and long term debt is not extinguished until 2001.

1.103 The last two Cases should also be mentioned briefly; they provide some indication of the extent of the favorable bias included in the - - r.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~- g. -39 -, 7-. Figure 3

BAKHUIS BAUXITE PROJECT: ROOTS OF THE CONSTANT TERMS INVESTMEHT CRSH FLOW. CRETURNS ON INVESTMENT).VRRIRT[ON WITH 19S5 BAUXITE PRICES.

Bauxite prices shown in 1983 terms. Cto relat, to the report's 1984 prices,dtvide shown prices by 1.07)

Data source: Billiton Feasibility Study Suralco Feasibility Study Nedelco River transportation Study Canac Railroad transportaticA Study ALL RDJUSTED RS STRTED Il THE REPORT.

NOTE: Returns on Investment shown on the Y scale are represented as factors. C& 18X ROL is shown as 1.18, a -10% RO! is shown as .90) Values lower than, say, .8 have little financial significance

1.5 1.45 2R ROOTS VS FRIC.- Return on rnvestment ac a. Factor 1.4 1.335 . 1.3 1.25 1.2

1.13

1.05 I

.85 .8 .75 .7 .65

.55 Bauxrte price in 1985 .terms .5 21.4 24.61 27.92 31.8 34.24 37.45 46.66 43.87 47.08 5.2e 53.5

l ,.

All data per Ca5t one ex.ep: for the variation .Or the B&uxite priCf. -40: -40- Figure 4

BAKHUIS IAUXITE PROJECT: ROOTS OF -THE COHSTRAT TEP1S EOUITY CASH FLOW.

Bauxite prices shown in 1985 terms. Cto relate to the report's 1984 prices,divide shown prices by 1.0?.)

Data source: Billiton feasibility Study Suralco feasibility Study Nedelco River transportation Study Canac Railroad transportation Study ALL RDJUSTED RS STATED IN THE REPORT.

NOTE: Returns on Equity-shown on the Y scale are represented as factors. (a 10% ROE is shown as 1.10, a -10% ROE is shown as .90) Values lower than, say, .8 have little financial significance

1.5 __ .-45 -a R TS YS PRICE Return on Equity ws a factor 1.4 1..35 1.3 1.25_ . . 1.25 1.1/

I.

.95 .85

.75 .7 .65 .6

Rll da e 3eoexep o h witoBauxito prioo. in 1985 turm. .5 21.4 24.61 27.82 31.83 34.24 37.45 48.56 43.87 47.08 30.e-.9 53.5

All data per Case one except for the variation of the Bauxite price. - 41 -

previous cases. Should the Suralco estimates be correct, as they weli might turn out to be, Case 5 shows that, at the present market price of 27 dollars per dried ton, profits would never be obtained during the life of the project, no dividends would ever be paid, equity contributions would be required each single year of the project life and would total 643 million dollars; net debt outstanding at the end of the project would total 6b3 million dollars. Even at the break even price of 42.12 dollars per dried ton (Case 6), more than 56Z higher than the present market value, profits are not generated until 1992, dividends cannot be paid before 20U2, equity contributions totalling 133 million are unavoidable in the 1987-1991 period and long term debt is not extinguished until 2002.

1.1U4 The apparent conclusion is that there is no merit in re-evaluating the project seriously until bauxite prices FOB Paranam for the high quality Onverdacht bauxite reach 36.41 dollars per dried ton in 1984 terms, or 35 percent more than the present level, as Case 4 above is the first which could conceivably be considered. Even then, a null &OE is not really acceptable: as Figures 5 show, using a barely sufficient 8% return on equity, a selling price of 40 dollars per dried ton of Onverdacht bauxite (487 higher than the present market value of 27 dollars per ton) would really be required co make this optimistic capital and operating costs situation financially acceptable. Further, there is no representation whatsoever that such re-evaluation, if and when undertaken, would confirm the optimistic a_sumptions made hereia. It may turn out that the Suralco estimates are correct (or even optimistic), which would mean, as Figure 6 shows, that the same minimum ROE of 8% is not reached until the market value of dried Unverdacht bauxite reached 46.2 dollars per ton or more, 71% higher than the present warket level.

1.105 In conclusion, a detailed re-evaluation of the Bakhuis project is not justified until the market value of dried Onverdacht bauxite improves to 40 dollars per ton in 1984 terms, or rougnly 50% more than the present level. Even then, it may well turn out that a still higher price of 46 dollars or more is required to justify the project.

1.106 There is, little probability that sucn improvement in bauxite prices will occur before the end of the decade; hence, the Bakhuis project should be shelved at present. The alternative of refining Bakhuis bauxite into alumina at Paranam through an expansion of the refinery there has not been considered. The companies did not supply enough data to proceed with an evaluation of this possibility, even with the rough and rather disputable methods utilized above. There are however, considerable doubts that such an expansion of the Paraaam refinery would have any merit until the present worldwide alumina overcapacity is reduced dramatically, rnich is not likely until 1988 or 1989 at the very earliest. Even then, the financial justification would be problematical, at least for a few years. -42- 1 . Figure 5

BAKHUIS BRUXITE PROJECT: ROOTS OF THE CONSTRHT TERMS EQUrTY CRSH FLOW. (RETURNS ON EQUITY>.VRRIATION WITH 1985 BRUXITE PRICES.

Bauxite prices shown in 1985 terms. (to relate to the report's 1984 prices,diuide shown prices by 1.87)

Data source: Billiton Feasibillty Study Suralco Feasibility Study Nedelco River transportation. Study Canac Railr-oad transportation Study RLL ADJUSTED AS STATED IN THE REPORT.

NOTE: Returns on Equity shown on the Y scale are represented as factors. (a 10% ROE is shown as 1.1e, a -l0C ROE is shoun as .90) Values lower than, say, .9 haue little financial significance

1.5 1.45 IRR ROOTE wS PRICE Re-turnon Equity as a factor 1.4 1.35 1.3 1.25 1.2 1.15

1.L

.85 .SS .8 .75 95 .7 * 65

.55 Bauxite prices in 1SSS tarrmc

U. 21.4 24.61 27.82 31.03 34.24 37.45 40.66 43.87 47.98 58.29 33.5

Rll data per Case three except for the variatlon of the Bauxite price. 43 - Figure 6

RAKHUIS BRuXITEPROJECT: ROOTS OF THE COtlSTART TERMS EQUITY CASH FLOW. (RETURNS ON EQurTY).VRRIAT1ON WITH 1985 BAUXITE PRICES.

Bauxite prices shown in 1985 terms. (to relate to the report's 1984 prices,divide shown prices by 1.07)

Data source: Suralco Feasibility Study NO ADJUSTMENTS MADE EXCEPT UPDRTINC TO 1984.

NOTE: Returns on Equity shown on the Y scale are represented as factors. (a 10% R:.. is shown as 1.10, a -10% ROE is shown as .90) Values lower than, say., 8 have little financial significance

1.3 1.45 IRR ROOTS VS PRICE 1F!elurn on Equity m* a factor 1.4

1.35

_.25

1.15 1.,5 1.L i

L * 95 -8t

.85

.8S5

.6 .5

.55 ~~~~~~~~~Baxi%* pricez in 1935ten

21.4 24.61 27.92 31.63 34.24 37.45 40.66 43.37 47.08 50.23 S3.5

Rlt data per Case five except for the variation of the Bauxite price. - 44 -

D. GOLD SUBSECTOR

1.107 Gold prospectingand mining is the only significantnon-bauxite activityin the mining sector: it is the main prospectingobjective of the Geologicaland Mining Service (GDM after the Dutch initials);the GrasshopperAluminum Corporation (Grassalco), the state-ownedmining company(see Section5) is completingthe feasibilitystudy of a small gold mine in the Rosebelarea near Brokopondoafter 4 years of prospection; mining artisans,the "porknockers,"mine gold in alluvialdeposits in small quantities.

Gold Occurrences

1.108 Primarygold depositsand the placerdeposits they generatedare associatedwith the greenstonebelt, either in the older volcanicParamaka formationor in the more recent and sedimentaryRosebel formation. The primarygold appearseither as free gold in quartzveins or disseminated within veins; blanketdeposits are found in the Royal Hill area of the Rosebel formation discussed below as a Grassalco project, and which is the most promising gold prospect at present.

1.109 Secondaryor minor primarygold is found in severallocations, namely:

- Benzdorp,on the Lawa river (at the border of French Guyana) perhaps the most importantplacer area; production,which reached 125 kg per year, dates back to 1861 with the typicalsuccession of companies(including Billiton which carriedout prospection programsin 1941 and 1946/47)and was discontinuedin 1969 after an unsuccessfulattempt at dredging. A few porknokersare reported to work the placers at present; the GMDis fielding a prospection crew in this area. Reserves of 9 million cubic meters at a grade of .47 grams per cubic meter have been reported to be dredgeablein 1974, but the G?iDreports .5 g/ton over 1.5 million tons.

LoksieHatti, on the Sarauacariver at the confluentwith the Little Saramacariver. The GMD estimatesthat the grade does not exceed .5 gramsltcnand with wide variations.

The UNDPRevolving Fund prospected a small vein in the south east area, locatedabout 40,000 tons of rich ore at one ounce per ton, but determinedthe zone to be too small for commercialmining.

Many old placers,some of which are still worked by artisans, were mined in the Gonini river,at the confluentof the Litani and Harowinirivers, in the lower Tapanahoniriver, south and east of Lake van Blommesteinand even south of Apoera in Western Suriname. The GdD estimatesthat none of these areas holds seriouspromise.

A geochemicalgold anomalyhas been located at Kwakoegron, on the lower Miendrienetie creek near the confluent with the Saramaca river; it is presently investigated by the GMD. - 45 -

The Rosebel Project

1.110 Grassalco, originally created to operate the Bakhuis mountains bauxite mine was, after the rejection of the project, put in charge of various mining or quarrying activities by the Government and is presently considered to be the appropriate vehicle fox all state related mining activities. As such, it took over a 17,000 hectares concession (the Janapaw concession) near Brokopondo which had been granted to N.V. Surplacer and prospected quite extensively in 1975 and 1976. Surplacer was a joint venture of the government and Placer Development, Ltd. (Canada). Surplacer had concluded then that about 2 million tons of blanket deposits at 2 g/ton had been proven in the Royal Hill area, that another 8 million tons at about the same grade were possible, but reportedly concluded that the operation would have, although profitable, been too small to warrant its involvement. it is possible that other factors may have played a role in this decision. As the field work was based on auger drilling at 25 meter intervals on lines drawn with 100 meters spacing, and as the grade was found to be erratic, the classification of 2 million tons as proven was considered to be marginal (even by the Placar Engineers) and Grassalco undertook, with funding from the UNDP revolving fund of 1 million US dollars, a complementary prospection campaign. The new campaign, carried out in 1983 and just completed, inserted new lines equidistant to the Placer lines with drilling at 10 to 12 meter intervals, with the express purpose of confirming the 2 million tons of reserves and, in a latter stage, of proving an additional 1.5 million tons and thus justifying the required cyanidation plant. The prospection work was carried out under UNOP supervision, and the feasibility study of the project is being concluded by Grassalco's consultant, Mr. Eoin MlcDonald,with assistance from vlrightEngineers (Canada).

1.111 The following paragraphs are based on this feasibility study, dated May 1984 and made available in mid-June.

1.112 Gold is found in four locations within the concession (see figure 7): Royal Hill, Rosebel, Xayo and Pay Caro; the thickness varies from .5 to 8 meters.

1.113 The prospection prograa added 600 holes (a total length of 3300 meters) at 12.5 meters intervals on 100 meters spaced lines, to the 2300 meters of drilling done by Placer. The new lines are generally located halfways between the Placer lines which were drilled at 25 meters intervals. Only the Royal Hill area was covered in the new study. The reserve estimates below are mineable reserves: they include allowances (in an unknown amount) for ore losses and dilution. The cutoff grade is 0.7 grams per ton. I I.

- f -E~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1

>T1s S~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~a

. .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.. - 47 -

Table 20: ORE RESERVES, SOUTH&EN DEPOSITS

(millions of metric tons and grams per metric ton)

Proven Probable Total rons Crade Tons Grade Tons Grade

Royal Ldill Blanket 1.844 1.97 - - 1.844 1.97 Alluvials .078 Z.53 .393 2.45 .471 2.46

Rosebel 1/ Blanket - .567 2.15 .567 2.15

Mayo 1/ Blanket - .627 1.73 .627 1.73

Total Blanket 1.844 1.97 1.194 1.93 3.038 1.95 Total Alluvials .078 2.53 .393 2.45 .471 2.46

Total 1.922 1.99 1.588 2.06 3.509 2.02

1/ Placer study - No additional work done on the new program.

Possible reserves were estimated by Placer at an additional 5.1 million tons grading 2.40 grams per ton. These represent the drilling intersections within the known mineralization, under the blanket but within open pit mining methods' reach; most are ia the Royal Hill area (3.8 million tons at 2.45 grams per ton). Considering the economic parameters applying to the proven and probable reserves, it is doubtful that the possible reserves, even if confirmed, could be extracted economically unless gold prices increased rather substantially.

1.114 It should be emphasized that serious questions arise on the reliability of the sample analyses on which the reserve calculations are based. The concern on this point is obvious from the very fact that no less than five studies were conducted in an attempt to clarify the matter. To mention them briefly, the first test compared Grassalco results to those of the Gt4 and those of Louvain University (Belgium) on 12 low grade samples; the second test compared sample preparation techniques by Grassalco and by GMD, with chemical analysis by X-Ray Laboratories (Canada) on 6 samples; the third test compared duplicates of the same samples with chemical analyses by X-Ray Laboratories, on a total of 15 samples and duplicates. The last test compared 29 samples as analyzed by Grassalco and by Chemex Laboratories (Canada). A detailed analysis of the problem is beyond the scope of this report, but its magnitude can be illustrated by a brief discussion of the last test, which is chosen here because it includes the largest number of samples. For these samples, Grassalco finds an average grade of 1.337 g/ton, with a standard deviation of .99, while Chemex obtains an average of 2.252 g/ton and a standard deviatioa of 2.25; - 48 - as can be seen, the averageGrassalco grade is about 60% of the Chemex grade. Further,the coefficientof correlationbetween the 2 analysesof the samplesis only .516,which is a very poor value. The regression line's equation is:

Grassalcoanalysis - .878 + .204 - Chemexanalysis (in grams per ton) which indicatesa very seriousbias betweenthe two sets of analyses. The discrepanciesare illustratedin the graph includedas Figure 7 bis: as can be seen, Chemex values are often 3 times higher than Grassalcovalues, and the dots representingthe samplesare widely scatteredinstead of being lined up along the diagonalY - X as they should be in an ideal situation. We attemptedto fit 4 differentregression curves to the data; quadratic, polynominalor exponentialfits are essentiallyas poor as the linear fit. A power functionyielded a better (althoughunsatisfactory) fit (see figure 7 bis for results).

1.115 The discrepanciesare very difficultto explainor even to under- stand,especially as the precise sample preparationprocedures are not known. The feasibilitystudy interpretsthe variationsas due to faulty samplepreparation, i.e., failureto grind at minus 80 mesh before splittingthe samples. This argumentwould explain a wide scatterof values around the diagonalbut does not explain the bias by which Chemex finds,on average,much more gold than Grassalco. The other explanation proposed,i.e, a nugget effect, is difficultto accept also: why does Chemexget more nuggetsthan Grassalcoin all six of the samplesgrading above 4 g/ton?

1.116 With the data available, it can only be coacluded that the diffi- culty lies with analysisprocedures (as opposedto faulty sample preparation),as only this can explain a systematicbias; hence, the values obtained by Grassalco, which are the foundation of the feasibility study, are open to question. The grade discrepancies,which could affect the feasibilityof the prcjectmuch more than any other parameter,should be investigatedfurther and the matter clarifiedurgently. It should be noted, however,that the Grassalcovalues may well be underestimated,hence the projectmay be in fact more attractivethan statedin the feasibility study.

1.117 The consultantproposes to mine the depositover 10 years, at the rate of 360,000tons per year and to orocessthe ore in a 1,000 tons per day plant. As the mining requirementsare low, the ore would be mined only during the dry seasonand stockpiled.

1.118 Capital cost estimatesare includedin the study, and total approximatelyUS$18 millionin 1984 terms and US$20.5million in current terms,as follows: 49- Figure 7-bis ROSENEL GOLD PROJECT: SAMPLE RNRLYSIS DISCREPANCIES.

DAta source: Eoin H. Macdonald Feasibility Study May 1984 VOLUME 1,Section 4,Page 4-15,Tabl* 4-6

29 Sample splits analyzed by Grassalco and Chemex Laboratories

Power function regression Correlation coefficient: .797 Snedecor F: 47.20

Quadratic regression Correlation coefficient: .534 Snedecor F: 5.19 Linear r-gression Correlation coefficient: .517 Snedecor F: 9.82 Exponential regression Correlation coefficient: .496 Snedecor F: 8.81

18~~ ~ .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.

CRRSSRLCO RNRLYSrs grum. per ton Ru

U~~~~~~~~~~~~~~~ .

CORRELRTON GRRSSRLCO VS CHEMEX RNRLYSES

Pouwr function fits Grae.alco( peFr ton)-. 983*Ch.rs.x(g per ton)-.5S3 Corretation coefficSint: .85

.S

4 *

GHEMEX RNRLYsrs grimm per ton Ru U I a 3 4 5 8 7 8 9 28

Rll data available taken into account. - 50 -

Table 21: ROSEBEL GOLD PROJECT, CAPITAL COSTS

(million of US dollars, 1984 constraint terms and current terms)

1985 1986 1987 Total 85-87

Site preparation .222 .238 .460 Mining & service equipment - 1.032 1.853 2.885 Process plant 1.097 4.060 - 5.157 Service facilities 3.224 1.216 - 4.440 Residential .271 - - .271 Freight - .303 - .303 Contingency .481 .685 - 1.166 Total direct costs 5.295 7.534 1.853 14.682 Engineering & construction supervision .800 1.000 - 1.800 Contingency .080 .100 .180 Total unescalated fixed assets 6.175 8.634 1.853 16.662 Preoperating expenses .544 .2U0 - .744 Contingency .054 .020 - .074 Total unescalated assets 6.773 8.854 1.853 17.480 Working capital I/ - .409 .255 .664 Total unescalated technical costs 6.773 9.263 2.108 18.144

Escalation .474 1.342 .507 2.323 total financing excluding IOc 7.247 10.605 2.615 20.467

I/ Adjusted from the feasibility study.

The data above is sumurarizeddirectly from the feasibility study except for the working capital which, at 262,000 dollars in 1984 terms in the study, included only inventory but excluded financial components, i.e., receiva- bles, payables and operating cash; reasonable values for these components were inserted to yield the total working capital above of 644,000 dollars in 1984 terms.

1.119 A contingency of IOZ for 1985 and 1986 (but not, curiously, for 1987) was assumed in the study. It should be noted that financial costs, i.e., interest during construction, are not included: the study assumes, except for one case, complete equity financing. Escalation is not included either. All cases are in constant terms, except one for which escalation at 7Z per year is assumed.

1.120 Operating costs are estimated in the study on the basis of costs per ton of ore treated, and vary over the 10 years of operation because hauling distances are longer when the Rosebel and Mayo deposits are mined after 1990. dost importantly, the cost per ounce of gold varies with the _ 51 -

grade of the ore in any specific year. The yearly amounts are reported in the Table below, where an attempt to break such costs by nature has been made. (Such a breaicdownis not available in the study and some reasonable assumptions were made when the data was not detailed enough to yield the appropriate amounts per nature; the study is written in such a way that identification of these amounts is far from straightforward.)

Table 22: HOSEHILGOL PSaEC, OPMTIf CSS (thusaodsof US dollars,1984 terms)

Year 87 88 89 90 91 92 93 94 95 96

Labor & supervision 1147.4 1147.41147.4 1147.4 1134.6 1194.21274.9 1274.9 1247.9 1249.2 Rcagmets 671.0 671.0 671.0 671.0 671.0 671.0 671.0 671.0 671.0 671.0 Pbel 1268.2 1268.21268.2 1268.2 1241.5 1315.01383.2 1379.8 1379.8 1164.3 Operatingsupplies 523.2 523.2 523.2 523.2 512.2 542.5 569.2 567.8 567.8 481.6 Mbiitenancesupplies 721.5 721.5 721.5 721.5 7)6.3 74d.2 789.4 787.4 787.4 658.5

Ibtaldirect costs 4331.3 4331.3 4331.3 4331.3 4265.6 4470.94687.7 4680.9 4680.9 4224.6 General and achzioltrative 212.5 172.5 160.0 160.0 160.0 160.0 160.0 160.0 160.0 160.0 Fatrlates 40U.0 277.0 223.0 ------Ibtal indirects 612.5 449.5 383.0 160.0 160.0 160.0 160.0 160.0 160.0 160.0

lbtl operating costs 4943.8 4780.8 4714.3 4491.3 4425.6 4630.9 4847.7 4840.9 4840.9 4384.6 Ouncesof goldprodued 26237 24424 27730 18558 17064 18985 21971 22824 18451 1383 Costper ouxe 188.4 195.7 170.0 242.0 259.3 243.9 220.6 212.1 262.4 316.8

As caa be seen, the operating costs per ounce in constant terms vary significantly, in inverse relation to the grade of the ore, and in direct relation to the distance from the orebody. The average cost over the ten years is US$223.2 per ounce on a total production of 210,000 ounces (6534 kg).

1.121 The study concludes with a financial assessment, in which cash flow projections are provided and net present values calculated for a series of cases. In essence, the selling price is assumed to be US$400 per ounce in the base case and seasitivity cases include gold prices of 350,450 and 500 US dollars per ounce; then, at the base price of US$400, capital cost variations of plus and minus ten percent, operating cost variations of plus and minus ten percent, and a doubling of the reserves are explored. The results are poor to mediocre, except when gold prices are chosen at un- realistically high levels.

1.122 Unfortunately, these results cannot be used for the present purpose for several reasons:

- the financial evaluation is prepared from the standpoint of a foreign investor; both royalties and income taxes are deducted. From the standpoint of Suriname itself, such costs are irrelevant and must be eliminated; - 52 -

- full equity financing is assumed in all but one of the cases. This is unrealistic under present conditions and debt financing aspects must be explored;

- constant terms are assumed in all but one of the cases. While this simplification yields relatively few distortions in an all equity financing situation, it is unacceptable with debt financing, as debt amortization would otherwise be grossly overestimated; and

- less important difficulties relate to the underestimate of the working capital mentioned earlier and to the absence of full financial statements (no profit and loss statements or balance sheets are provided in the study).

Accordingly, new financial projections were prepared, using the basic data supplied by the Grassalco consultant in a high speed computer program. The program itself is described briefly at Attachment 1. Twelve of the several thousands of cases run automatically by the program are included as Attachment 2. These individual cases and tle results are described briefly below. All cases considered exclude taxes and royalties and include a realistic working capital level, but otherwise use the basic data used in the feasibility study, except, as noted, for sensitivity evaluation purposes.

Cases 0 to 3 are provided to illustrate the variation which results from the gradual relaxation of the constraints of constant prices and full equity financing assumed by the consultant. All share the same level of revenues at a gold price of US$350 per ounce in 1984 terms, which, while quite conservative, is considered to be appropriate for the evaluation of the project.

1.123 Case 0 is a duplication of the consultant's base case, except for the lower gold price, the exclusion of taxes and royalties and the more realistic working capital. It therefore uses constant terms and full equity financing. Under these conditions, the project has an internal rate of return of 6.5% in constant terms; the return on equity is obviousl' the sanme. The total equity contribution required is about US$16 million, less than the total of 18.1 million of unescalated technical costs because the project is self financing in year 3 (1987). A total of US$21.7 million of dividends is paid over the ten years of the project and the initial investment has been recovered at the end of 1993, after 7 years of production. The net present value of the project is constant terms at no discount is US$5.8 million.

1.124 Case I is identical to Case 0 except that inflation at 7% (the value assumed by the consultant in the single inflated case, which is reasonable) is assumed. The internal rate of return drops slightly to 6.3% in constant terms because of the timing of the additional working capital funding required; the return is 13.7% in current (inflated) terms. The major change is, of course, the increase in the capital contributions to US$17.9 million because of inflation; the project is still self financing in year 3. Total dividends, in inflated terms, amount to US$34 million and the net present value in constant terms at no discount drops slightly to US$5.6 million. _ 53-

1.125 Case 2 is identicalto Case 1 except that some debt financingis assumed. The debt ratio was chosea,for illustrativepurposes only, so that it would cover all direct foreigncapital costs by debt and all local capitalcosts by equity. As far as can be determined,the direct foreign cost componentwould be on the order of 45X of the total capital cost. Hence the debt to equity ratio would be about .82, which is reasonable in this situation. It is also assumed that 90Z of foreign equipment costs would be financed by export financingmethods, a total of US$5.44million; hence, the complementary loan amounts to US$4.24 million. Under these conditions, the equity contribution drops to very slightly less than $10 million (significantself financingstill occurs in 1987). The return on investment remains obviously the same as in Case 2, but the return on equity increases to 10.2Z in constant terms because of the leveraging. Interestinglyenough, the net presentvalue of the projectin constant terms at no discount remainsfairly close, at US$5.2 million,to the result for Case 1. Total dividendsin inflatedterms drop to US$22.5million. It should also be noted tuat the assumed debt structureis quite acceptable: as can be seen at Attachment 2, the debt coverage ratio never drops below a comfortable 1.5 and the current ratio has been maintained by the program at a minimum of one by restrictingearly dividendsa little. It is clear that, if the State had the equity to invest $10 million in the project, this option would be, although not particularly exciting, a feasible one (subjecthowever to the caveatsmentioned below). Unfortunately,it appears that, in essence,there are no equity funds availableto Suriname in a broad sense and that full debt financingwould be required. What is meant here is not necessarilythat the state would not contributeequity to the Rosebelproject: a contributionon the order of the 10 millionUS dollarsmentioned above would probablybe requiredby the lenders. The point is that the State would have to borrow this amount itself to pass it on to the projectif the projectwere approvedand would not have to borrow it otherwise;hence, the net effect is that such equity is really debt aad projectevaluation should treat it as such.

1.126 Case 3 is thereforethe final case of this series and is consideredto be the Base Case. It differs from Case 2 in that the project is entirelydebt financedand also because some constraintsare now put on debt coverageratio (whichcannot drop below 1, chosenarbitrarily as the lowest conceivablelevel acceptableto lender)and maintainedon the curreat ratio (whichcannot drop below 1 either for the same reason). The necessaryloans are now of three types:

- export financing,obviously in the same amountof 5.4 millionUS dollars;

- internationalagency financingand commercialbank financingin equal amountsof 8.8 millionUS dollarseach, on the notional coaceptthat co-lenderfinancing would be available;and

- deficit financing. The two constraintsmentioned above on debt coverageand current ratio now force,from time to time, both equity and loan inflowswhen the cash flow is insufficientto maintaineither or both at the requiredminimus level. This is why some equity finally has to be put into the project, _ 54 _

as well as some additionaldebt, during the difficult 1990-1993 period, when the good Royal Hill ore is gone and before the better parts of Mayo and Rosebel are producing (see Attachment 1 for funding priorities).

Under these conditions, the return on equity is infinite and the notion it- self looses its value; the meaningful measurement is the net present value in constant terms at no discount,which is a little below 4 million US dollars; in other words, the State gets 4 million US dollars for ao ia- vestment, but, of course, uses its credit.l/

Cases 4 to 11. These are essentially sensitivitycases, first on gold prices (4 to 7) second on investmentand operating costs (8 and 9) last on depreciationeffeccs (10 and 11); all other assumptioasare those of the base case. The results are given in the chart below:

Table. 23: SENSITIVITYOF THE BASE CASE

(prices in dollars per ounce, NPV and loans in millions of US dollars)

Case number Capital Operating Gold Price Costs Costs Total 1/ Nvp 2/ Nivp3/

Base (3) 350 - - 23.031 3.953 3.199 4 331 - - 23.033 0.000 .441 5 400 - - 23.075 14.449 10.632 6 450 - - 23.119 24.924 13.360 7 500 - - 23.165 35.400 19.152 a 400 +10% +10% 25.347 7.483 5.720 9 364 +10% +10% 25.315 0.000 .485 10 400 - - 21.975 19.050 13.876 11 309 - - 21.895 0.000 .407

1/ Tne loans increase slightly with higher gold prices as the working capital increases. 2/ Net present value in constant terms at no discount. 3/ Net present value in constant terms at a 5% discount.

1/ This sentence should be interpreted somewhat loosely. At the mathe- matically inclined reader knows, the net present value of a 13 years cas. flow is a 12th order polynominal function of the discounting factor; this cash f' w, when equaled to zero, yields 12 roots, all mathematically meaningful and the inverses of which could all be called internal rated of return. In usual cases, only one of the roots is real, and this is the usual financialmeaning of the internal rate of return. However, when all cash flows are non-negativeand the first cash flow is zero only an infinite rate of return yields an inverse of zero which is a real root of the equation;when the cash flow changes sign more than once, there may be as many real roots as there are sign changes. Also, on an entirely different subject, the state in fact gets dividends first, then reinvests some, then gets some more dividends, which, strictly speaking, is a little more complex than said above, _ 55 -

1.127 Case 4 was run to yield the lowest gold price still returning non-negative Npv. In other words, if the price of gold averages US$331 per ounce in 1984 terms, there is no merit in the investment (as defined and quantified by the consultant) 2/

1.128 Cases 5 to 7 show that the project becomes quite attractive at higher gold prices (or, more precisely, at higher revenue levels as discussed below). While the US$450 or US$500 per ounce in constant 1984 terms are somewhat utopic, the $400 case is not unreasonable and would, justify the project (as quantified by the consultant), subject to the caveats discussed below.

1.129 Cases 8 and 9 summarize in a nutshell the risks of costs underestimates by considering an increase in the total cost estimate of 10%. The result is that the project still has some merit at $401 per ounce (Case 8) and that the lowest gold price at which the Npv is non negative is $364 per ounce in 1984 tons (Case 9).

1.130 Case 10 and 11 are of a different nature: they were run out of curiosity to see what would happen if a devaluation occurred. They are directly comparable to Case 5, with the same price of $400 an ounce, except that a 30% effective devaluation is assumed arbitrarily, which is estimated to reduce capital costs by 5% and operating costs by 8%. As can be seen, the impact is major: at the $400 gold price level, the Npv increases by US$4.5 million in 84 terms, or 30% (Case 10) and the lowest feasible gold price drops to US$309 per ounce in 1984 terms from the earlier $331 level (more precisely from 340 to 318, see previous note).

1.131 Before leaving the Rosebel project, it may be useful to summarize the preliminary conclusions reached:

- First, Grassalco should prove the 1.5 million tons of probable reserves in Rosebel and Mayo, essentially by completing the exploration program.

- Second, and most important, the grade uncertainty mentioned earlier is critical and must be clarified. The parameter in the financial cases above is not only the gold price but also the assumed grade, as only the overall revenue, proportional

21 It should be noted here, as in Case 9 and 11, that, as Attachment 2 shows, the Npv at a 5X discount is positive when it is, by definition, nil at no discount. The reverse is usually true, but the present anonaly results from operating deficit financing through debt repayed later: at a positive discount rate, this doubtful practice is advantageous. The anomaly occurs because of the peculiar behavior of cash flow roots with unusual cash flows occurring at high debt financing; it can be seen at Figure 3 quater, which shows the positive root increases when the price decreases. The practical result is that the bottom gold price is not US$331 (about 354 on the chart in 1985 terms) but about $340 (about 364 on the chart) when all real roots vanish. _ 56._

to both price and grade, matters. Hence it is obvious that the difference between Cases 3 and 4 can equally reflect the drop of the gold price from $350 to $331 an ounce (in 1984 terms) at the grades presently assumed or the drop of the grade by 5% below these assumed values at a constant price of $350 for gold. To illustrate this major risk, say that a reasonable gold price long term projection is US$400 per ounce in 1984 terms, which yields a Npv US$14.5 million. The Npv would drop to zero if the grades were about 20% lower than presently assumed and this certainly cannot be ruled out on the basis of available evidence. It should however be emphasized that actual grades may be found to be higher than presently assumed; hence the clarification could conceivably increase the attractiveness of the project.

- Third, some assumptions on grindability should be checked and it is recommended that bulk samples be test grinded. Such checking also could actually resolve the previous issue. a sample of reasonable size taken under the strictest controls in, say, a dozen areas representing the deposit fairly, could be ground and processed; the amount of gold recovered would directly verify the assumed gold production per ton of ore.

1.132 Subject to these caveats, and assuming that the consultant's cost estimates are appropriate (which was not verified), it can be concluded that the project may have merit.

Artisanal Mining

1.133 Next to nothing is known of artisanal mining, which is mostly carried out illegally, the gold being smuggled to French Guyana. One small placer operation involving about 15 miners is known in the Bafuchin area; it mines perhaps 100 TPD of .7 g/m3 ore by manual methods and legally; no other legal operations were mentioned. However, the total gold production is estimated at 500 kg per year by the Governor of the Central Bank and at 400 kg by a private source. If these estimates are valid, the number of artisanal operations is probably substantial and there would be merit ia considering steps by which part of this production, worth 6 to 7 millioa US dollars per year, can be brought back to legal channels.

Gold Collection and Buying

1.134 The only legal ultimate buyer of gold in Suriname is the Central Bank, which buys only ingots. Three buyers are licensed to purchase gold dust from miners, but only one of them operates a small ingot plant; they must sell the finished ingots to the Central Bank. The Bank sets purchase prices every sixty days, a given price being valid for this whole period. The price is close to the LAE price at the time of the setting, but payment is made in Suriname guilders, at the official exchange rate of 1.77 guilder per dollar. A private source reports that illegal transactions are handled at up to 3.25 guilder to the dollar. If this is correct, then the primary drive for smuggling is the illegal acquisition and export of foreign currency which in turn fuels the black market exchange rate premium. 57 -

1.135 If the situationfound in other countrieswith similarproblems (although on a much larger scale) is comparable to the situation in Suriname,some of the steps that could be consideredto curb gold smuggling would include:

- the setting up of a few governmentbuying officesin the main mining areas and in Paramribo.

the purchaseof gold dust (as opposed to ingots)directly from the miners at these officeson the basis of rudimentarygravi- metric assaying,with the immediatepayment of an advance and final paymentafter proper assayingof parcels.

the setting up of a buyingprice at a level close to that of the black market rate: the drawbacksof such a policyare known, but the volume involvedis small enough that it should be considered.

- the study of the depositsand the existingmining methods, with a view to increasingthe productivityof the artisans,perhaps by the rentingof small bulldozers,waterjets or suctiondredges, or even the sale of minor equipmentand suppliesat reasonable prices and the providingof rudimentarytechnical assistance.

1.136 Surinameis a net importerof gold; reversingthis situationmay be possible,but experienceelsewhere shows that repressiveaction is not effectiveagainst smuggling;only the removalof economicincentives to smugglingcan be hoped to be effective. E. oTHER METALSAND HINERALS

1.137 Other metallic occurences in Suriname besides bauxite and gold are not believed to be. of present economic value. As to non-metallics, minerals of possible interest include kaolin, sand, phosphates, kyanite (disthene) and building materials.

LETALLICS

Copper

1.138 Four groups of copper occurrences are known in the country:

- The Bakhuis mountain area was investigated quite thoroughly. The best hole averages only .28 percent copper over 50 meters, and the best 2 meters grade in cores is 1.56 percent; this is clearly uneconomical for the foreseeable future.

- In the Upper Tapanahony river area, about 80 km north of the Brazilian border, copper was found west of Weko Soela in lateritic soils and in weathered granites and diorites. The copper content of the blanket is generally less than .4X and in the weathered bedrock, the grade is even lower, ranging from .1 to .4% with a few localized higher values in small areas. The low grades, probably small quantities, and remoteness rule out any economic potential.

In the Saramaca river area, near Wedeboh Soela, exploration carried out over 5 square kilometers showed small and extremely localized amounts of copper which are of geological interest only.

Small sulphide occurrences, including chalcopyrite in locally minor amounts are Known in the volcanic parts of the Marowyne series.

Nickel

1.139 Nickel laterites were found at the south eastern end of the Bakhuis mountains near the Adampada creek. The reserves were estimated at 2.4 million tons grading .9 percent nickel at a cut-off of .75 percent Ni, with an average thickness of 2 meters. This is obviously non-economical.

1.140 Nickel sulfides (pentlandite) are known in ultramafic rocks at the Saramaca river. A fairly constant but very low value of .2 to .3 percent nickel was found in sections over 2U0 meters thick, but most of the nickel is in the form of silicate. The main part of the body contains even less or no nickel. The occurrence is purely of geological interest.

Chromium

1.141 Small residual chromite deposits have been located in the Upper Saramaca river; but the ore is highly localized and amounts to only a few thousand tons of chromite ore according to one estimate, and to 150,000 - 59 - tons embedded in 1.5 million tons of weathered materials according to another. In either case, the economic potential is nil. A 200,000 tons occurrence is also known at the Benzdorf gold placer. Conceptually, chromite cuuld be recovered as a by-product if the gold were dredged, which is rather doubtful.

Manganese

1.142 There are four important occurences of marganese in Suriname:

- In the upper Tapanahony river, about 30 km north of the Brazilian border, there is an estimated 500,000 tons of ore with about 40 percent Mn, but heavily contaminated with iron laterites and with an average Mn/Fe ratio of 5. The ore occurs in isolated blocks and lenses, which probably cannot be mined economically in this remote area.

On the western shore of lake van Blommestein, manganese occurs in two distinct forms: (a) about 700,000 tons of spessartite rock containing 24% Mn are embedded in clay; although the clay is washable, Mn recovery would probably be low and mining uneconomical; (2) about 500,000 tons of weathered ore grading 28% Ma in the upper blanket over 2 meters thickness. Primitive dressing of this weathered ore is not effective. The investment in treatment plait and the small size of the deposit rule out any potential value.

The Plet ridge deposit, almost at the headwaters of the Saramaca river, contains estimated reserves of 150,000 tons at 35% Mn; these are too small to warrant consideration.

The Apoema Soela occurrence at the upper end of the Marowyne river is small and contaminated with iron.

Sterile Pegmatites

1.143 Two main pegmatitic occurrences are of interest because of their tin, beryl, lithium, columbium/tantaliteand amblygonite content.

- In the north east, about 80 km upriver from the Marowyne estuary, the so-called "Billiton" concession at Jorka creek was investigated in 1961-63; a pilot plant was operated during the period and recovered tin (cassiterite), lithium (amblygonite), columbium (columbite) and tantalum (tantalite). Although the economic potential of this area cannot be estimated properly on the basis of available evidence, the GMD believes that it has little merit; a re-evaluation carried out a few years ago yielded negative results.

The second major pegmatitic zone occurs in the Sipaliwini river area, close to the Brazilian border. The G1(Dplans to investigate the area as soon as resources allow and there would be merit in such an undertaking; the main objective is tin (cassiterite). _ 60 _

Iron Ore

1.144 Iron ore has to be mentioned for the sake of completeness. Huge so called reserves of iron laterites are reported, including 5 billion tons in the Bakhuis mountains and 2 billion tons around lake van Blomiaestein (Lely, Nassau and Brown mountains), to name only the two largest. Unfortunately, no economic value can foreseeably be given to these deposits with their low iron content and, more importantly, the high alumina content. Recovery would imply fine grindiag, exotic separation methods and pelletization, and thus prohibitive investment costs.

1.145 Itabirites (magnetite-hematitequartzites), are known in two small areas near the Brazilian border at the headwaters of Tapaje creek, an affluent of the Paloemeu river. Although the area is estimated to hold 125 million tons at 50% Fe at least, because of the remoteness of the region transport costs are prohibitive.

Other 4etals

1.146 Small radiometric anomalies are known, in the Avanavero area. Uranium traces were found ia the Jaikreek area and the upper Kabalebo river; small thorium anomalies are known in the Bakhuis mountains.

1.147 Traces of cinnabar were found by pitting near the Mlarowyneriver in the Paramaka series, but the Hg content is very low and most of the rocks were eroded away.

1.148 Tungsten, cobalt and molybdenite are known only as minor geochemical indications.

NION-METALLICS

1.149 Serious interest is given to phosphate enrichments which were noticed during the copper exploration campaign in the Bakhuis mountains. A 1,500 meters long zone of subvertical lenses of phosphorites was located, with up to 15 percent P2 05 in drill holes and pits averaging 7 to 9 percent. Indications support the possibility that phosphate concentrations could be expected over large areas of the Bakhuis mountains, with localized areas of high grade. The GdD plans some prospection efforts as soon as resources allow.

1.150 Kyanite (used in some types of abrasives and refractories) is known at Du Bois hill, northeast of lake van Blommestein; a GMD crew is prospecting the area at present. Earlier reports mention 3 million tons at 43 percent but the GMDhas made no preliminary results available.

1.151 Kaolins are widespread, within and without the bauxite areas. A project for a kaolin based ceramic plant in the Paranam area is presently under study by Index, but several feasibility studies reportedly completed were nor made available and neither grades nor quantities are known (except to the extent that the grade is not sufficiently high for the best application, in the paper coating industry). Suralco engineers report that the kaolin underlying the bauxite seams at Moengo is locally of extremely _ 61 - high grade suitable for paper coating and could be mined cheaply once the bauxite has been removed, but they believe that Index prefers the Paranam area which does not involve cooperation with Suralco. The possibility of mining kaolin at Moengo merits further consideration if this alternative has not yet been explored. A burnt brick industry based on lower grades is also considered.

1.152 White sands from fossil beaches are extremely common along the coasts of the three Guyanas and are reported to be of very high purity: washed sand near the airport at Zanderij yielded 99.4 to 99.7 percent Si02 and less than .1 percent Fe2O3. A project for a glass plant in the area is presently studied by Index.

1.153 Construction materials abound. Crushed stone (gneisses) of excellent quality were used to ballast the Bakhuis railroad and the quarry, at Camp 52 on the railroad, is still mined by Grassalco on a small scale; the stonteis trammed to Apoera and barged to Paramaribo. Grassalco reportedly intends to open a new quarry closer to the capital and move most of the operation there. Materials for dimensioned stone uses are presently investigated and construction gravels are dredged in the Marowyne, Surinamp and Saranaca rivers.

1.154 Microscopic diamonds have been reported in alluvials from several areas, from the Brazilian border to the northern coast, but most are within the Suriname river watershed. The Rosebel area was prospected for gold and, serendipitically, 230 diamonds were recovered, the largest weighing .8 carat and the average being less than 1/4 carat. The potential is negligible. The Tafelberg (almost at the geometrical center of Suriname), was prospected with negative conclusions, in spite of an earlier fund of a 1/4 carat diamond which is disputed evidence, as the concentrates may have been salted. There is also a report of small diamond findings near the Assici creek, a tributary of the Lawa river: the G&D relates the find to the exploration carried out by the BKGH in French Guyana which located very small but good quality diamonds about L40 ka from the Suriname find. - 62 -

F. SECTOI ORGANIZATION:LEGAL AND FISCAL ENVIRONMENTS

1.155 The mining sector is under the authorityof the Ministryof NaturalResources and Energy. Other organismsrelated directly or indirectlyto tne sectorare also mentionedin this section,in which the mining law and fiscal policiesare discussedbriefly.

Ministryof NaturalResources and Energy

1.156 The Ministryhas two major units. It is also responsiblefor a number of parastatalcompanies. The overallresponsibility obviously extendsfar beyond the mining sectoritself.

1.157 The directionof Land Administratioais by far the most numerous; it is involvedin land and geodesicalmapping, cartography and cadaster functions,domain administrationand land inspection,thus relatingonly very marginallyto the sector,except that the Ministry'sadministrative functions(budget and personnel)are attachedto it. The directionof Mines and Energyhas three subdivisions: the serviceof TechnicalAffairs and the service of Energyare not relatedto the sector. The third subdivision,the Serviceof 1Mines,is, in turn, dividedinto 3 units: the Geologicaland Mining Service (GMD),the divisionof Water Supply and the CentralTransport Unit.

1.158 Hence, the responsibilityfor the sector lies entirelywith the GKD, at two hierarchiiallevels below the Minister,and with only 20% of the total staffingof the Ministry. An argumenttherefore could be made that the sector does not have much weight in the Miaistry,at least on the basis of organizationcharts and staffingtables.

1.159 Most of the G?IDactivities have alreadybeen mentioned incidentallyin the course of reviewiagindividual subsectors; only additioaalobservations are made here. In principle,the role of any governmentin the miningsector can be relatedto five basic functions:

- the geologicalsurvey and the geologicalmap, involving exploration,prospection and mapping

- the licensingof concessions,involving the researchon concessionapplications, the grantingof prospectingand mining licenses,the collectionof relatedfees and royalties,if any.

- the inspectionof Mines, involvingthe physicalinspection of prospectionand mining works, the detectionand preventionof illegalmining, the controlson safety.

- the evaluationfunction, which, broadlyspeaking, draws on the findingsof the three previousfunctions v insure that the miningpotential of the countryis developedin an appropriate and timely manner. This involvesfollow up and analysisof prospectionand mining reportsfrom public or privatecompanies, selectionof outside prospectionservices, if and when necessary, approvalof prospectionprograms, revocation of licensesor reductionsin concessionsizes when appropriate,study and - 63 -

promotion (if warraated) of specific projects and, most importantly, definition of work programs, especially in terms of prospection and promotion of projects.

- the supervision of and assistance to artisanal mining.

It appears that the first activity is carried out to a fair extent considering the limited availabili.:yof resources; that little work is necessary in the second activity because of the specifics of the situation in Suriname; that there is not much evidence of action related to the last three activities. If this is indeed the case, it is suggested that steps be taken to remedy the situation. The preparation of work programs, the definition of priorities and the evaluation of results are of paramount importance, and the support and control of artisanal mining, although almost universally neglected, is a valuable tool in the development of mineral resources which cannot, because of size, grade or location, be undertaken by industrial means.

1.160 With regard to prospection itself, the professional staff is very limited with only five junior geologists (compared with 25 geologists, most of them highly qualified, in earlier times). The pay scale for civil servants rules out the recruiting of senior geologists. The GHD fields 10 crews, averaging 20 hourly workers each, recruited locally and each under the supervision of a team leader with many years of service but questionable productivity, as evidenced by the low average of 50 km of line cut per quarter, less than a kilometre and 5 samples a day for 20 men. The crews operate about 9 months per year, which is normal, but the geologists spend less than 4 months per year in the field which would be insufficient by a factor of 3 or so even if they were highly experienced. No geological mapping has been done since the map was finished in 1977 and the major emphasis is on gold prospection; base metal exploration has been (properly) shelved in 1983. The main asset of the G1D is an analytical laboratory, well equipped even by modern standards but underutilized.

1.161 Although there are problems in extending and improving GHD activities, most notably the incompatitibity involved in the recruiting of qualified professionals at the reported civil servant salary levels, it is important that solutions are found. A strong and highly qualified GID is esseatial to the development of the sector.

1.162 The third major unit within the tinistry is the group of parastatal companies. Four of these are not related directly to mining, namely ESS (the state electricity supply company), JAI/PHE (the Jai Kreek-Phedra hydro project), Staatsolie (the state oil company) and Surinaamse Waterleiding (the water supply company). Of course, EBS, JAI/PHE and Staatsolie are indirectly of major importance to the energy supply aspects of the alumina and aluminum components of the bauxite subsector. The last two parastatal companies, Grassalco and the Bauxite Institute of Suriname, are directly related to mining.

Grasshopper Aluminum Company (Grassalco)

1.163 Grassalco evolved into what it is today for reasons of convenience and availability of talent. When the Bakhuis project for which - 64 - it was created was shelved, Grassalco tried to maintain its staff and thus inherited at various points in time the Camp 52 quarry, the maintenance of the Bakhuis road network and camps, and the limited operation of the otherwise unused Bakhuis-Apoera railroad. This evolution can be understood as a pragmatic if temporary step. It relates clearly to Grassalco's geographical location and survival. However, Grassalco is now also managing the gold project in the Brokopondo district, will shortly open a stone quarry near Paramaribo and rumor has it that Grassalco is even intended to negotiate joint ventures with private companies in the mining sector, supervise these and collect royalties when applicable. In other words, Grassalco seems to be turning into a State Mining Company covering all subsectors in all of Suriname.

1.164 While understanding the practicalities of the matter, it is now necessary to pause and reflect as to the best structure in which the major involvement of the State in mining can be fitted. The fact is that, even at present, Grassalco fulfills some of the functions that belong to tthe normal hierarchy of the Hinistry: prospection is the busiaess of the GMD; project evaluation and negotiations should be directly under the control of the Minister, as major policy and other cabinet level decisions are involved. The granting of licenses and collection of royalties, if there is any truth to the rumors reported above (which are viewed as groundless by the Permanent Secretary) is a government's prerogative which should not in any case be devolved to any parastatal organization involved, even remotely, in operations.

1.165 While it is fully recognized that the basic intent, is to insure that the Government is deeply involved in, (and in sole control of), the development of the mining sector, there is nevertheless a fundamental disagreement with the orientation presently beiag taken on the basis of disappointing exposure to similar structures elsewhere. Experience suggests that small, single purpose operating companies are most efficient and most easily supervised and organized, whether they are public or private. Large, multi-purpose organisms, whether they are multi-national corporations, conglomerates or state agencies like the French BP.GI, have detractors, with a considerable body of evidence to support their views. It is therefore recommended that consideration be given for instance to the creation of a state owned company to operate the Royal Hill gold project if such project is implemented, of another one to open quarries if and where needed or justified, and to the reintegration of Grassalco's prospecting crews within the GKI or their transfer to the gold project operating company, as appropriate. There is a need for a state holding company to own the mining operating companies and supervise them, but such ownership and supervision should, be as independent and remote as possible from the operators themselves to insure (1) accountability and (2) that resources allocated to a specific objective are not diverted into another.

Bauxite Institute of Suriname

1.166 The last parastatal organism is the Bauxite Institute, which is in charge of all research, documentation, monitoring and international representation related to the bauxite subsector. The Institute is also the Minister's and C.H.O.B.'s technical advisor on bauxite matters, including the study and preparation of policy options. - 65 -

1.167 The need for the Institute is obvious, considering both the importance of the subsector in the economy and its many international aspects. Inasmuch as the Institute is clearly and unequivocally under the Minister's authority, its existence, organizational position and vocation are entirely appropriate. In terms of the relatioaship with C.H.O.B., some comments are made.

Parastatal Organizations

1.168 It should be said, before other governmental agencies are discussed, that the growth of parastatal organizations elsewhere often corresponds to a fundamental incompatibility common to many countries between the need for recruiting highly competent technicians and administrators at decent if not lavish salaries and the rigidity of the remoneration system for civil servants in general. Parastatal companies are a time-honored but not necesssarily correct method to circumvent the difficulty.

1.169 It should also be said that the relative scarcity of talented in- dividuals in Suriname and other factors have led to the appointment of a few individuals to a variety of functions: the director of the GMW is also the President of Grassalco, the chairman of the Bauxite Institute is also a director of C.H.O.B. (see below), the President of the Union of Bauxite Workers is also the Chairman of C.H.0.B. Although the practicalities that led to such multiple appointments are recognized, it should be said that some difficulties are very likely to result at some time or another.

Commission for the Renegotiation of Bauxite Agreements (C.H.O.B.)

1.170 The commission was created in 1981 to renegotiate the existing agreements (which were deemed to be unsatisfactory) with Suralco and Billiton to provide the government with policy options for the sector and to implement such policies as may be chosen by che Government. The role of C.H.O.B. in the bauyite sector cannot be overestimated. Its recommendations have always been approved by the government, it was highly instrumental in the successful completioa of the joint venture agreemerts between Suralco and Billiton and it negotiates the levies. In short, C.A.O.B. runs the sector.

1.171 C.H.O.B. has five members who are, at present, the President of the Bauxite Workers Union (Chairman), the chairman of the Bauxite Institute, the director of the Jai Kreek-Phedra Company, a private economist/accountant and an official (Secretary) of the Bauxite Institute. Although C.H.O.B. reports in principle to the Ministry, it also deals in fact with other cabinet level officials. The Bauxite Institute is the technical arm of both C.H.O.B. and the Ministry while two of the Institute's officials are, in a sense, their own bosses. The Chairman of C.H.0.B. is both a government official and a union leader.

Development and Promotion of Exports Institute (Index)

1.172 The interface between mining in the strict sense, and manufacturing is always complex and sometimes difficult to delineate: alumina refining and aluminum smelting are manufacturing activities and in - 66_. that sense are also the business of the Ministry of Trade and Industry. The sector's vertical integration up to smelting is such that it is (properly) handled as a whole by the Ministry of Natural Resources and C.U.O.B. as said above and there is no real interfacing problem. However, the situation is less clear where related light industry is concerned. The point here is not the merits of involvement in aluminum fabricatiag in Suriname or of a kaolin-ceramic tile project, both of which are under the jurisdiction of Index; the point is that coordination between light and heavy industry is needed.

1.173 Index is under the authority of the Iinistryof Trade and Industry but in fact deals also with other cabinet level officials and might, as was also said of C.H.O.B., evolve into a parallel structure. C.H.O.B. itself seems to claim some jurisdiction over the two projects mentioned above because of their close relationship to the bauxite sector. Cooperation between private companies and the governmeat, which is a possibility that should not be rejected a priori, will require better co-ordination between Index and the mining sector.

The Mining Law

1.174 A new mining law is currently being introduced to replace the now antiquated old dining Law. On the whole, the proposed law is modern and well structured, however, the following comments may be of interest:

- There is some uncertainty as to the progression from recon- aaissance (prospectioa without disturbance of the earths surface) to exploration and to exploitation. The holder of a reconnaissance permit should have absolute exploration rights within the area and time limitations of the law, subject only to compliance with the specifications of the permits and submission of acceptable prospection or exploitation prograsR. The law seems oaly to say that the Minister "will take steps to arrive at an agreement with the applicaat within a short period of time-. The intent may be the same, but prospective investors may be quite reluctant to put monies at risk unless they know exactly what will happen if a deposit is found. In this respect, it could be useful to specify that rejection by the Minister of any "downstream" permit can only be made for technical, financial or magnitude inadequacy and is subject to judicial recourse.

- The State's right to participate in the exploitation phase should be defined more precisely, again to allow for prospective investors' potential fears. It could be stated for instance that such participation shall not exceed 49 percent of the total ownership and be subject to a share of reconnaissance and prospecting expenses calculated retroactively and on a prorated basis. More complex stipulations should be made if majority ownership by the State is deemed desirable, by separating ownership from entitlement to production and profits. - 67 -

The royalties applying to various minerals should be defined as soon as possible. Ad valorem royalties are almost universal, but it is generally found that percentages should vary between different groups of minerals. M4orecomplex structures for royalties applying to some specific minerals should be considered.

The definition of rhe rights of the land owners versus those of the holder of mining rights is left entirely to the courts, which can be a very lengthy process, ut.lessamicable settlement is arrived at, which, in the mining world, would be a rarity. Consideration should be given to steps which could speed up the process and provide for acceptable alter- nate methods of resolution.

Serious objections can be made to the proposed law with regard to small scale mining. Among those are the large size of the concessions, the obligatory definition by polygon, the lack of consideration of technical factors (for

instance, large quantities . finely dispersed gold, if present, will be lost to artisanal miners) and, most importantly, the restriction of the areas made available to small scale mining by the Minister.

The Levy System

1.175 The two bauxite producers pay a gross levy, amended from time to time, from which the amount,of income tax due, if any, is deducted to arrive at the net levy, provided however that the net levy does not become negative. From a Suriname cash flow standpoint, Billiton and Suralco pay in total either the amount of the gross levy or the amount of the income tax, whichever is higher (the net levy being deductible for Suriname income tax purposes). However, there is a major differeace from the parent companies' standpoint: under US tax law for instance, the net levy is an expense and only deductible as any other expense, stile the Suriname income tax itself generates a US tax credit (if other conditions are met) which is of course deducted in its entirety from the US tax liability of the parent. Hence, even from the standpoint of Su-iname, the breakdown between tax and net levy appears to te unimportant as far as revenues a-e concerned but in fact is extremely important in terms of competitiveness. For a fixed levei of tax plus net levy revenues to Suriname che higher the income tax is (and thus che lower the net levy), the more competitive are Suriname's exports. - 68 -

G. HINING SECTOR ISSUES

1.176 The major sector issuesrelate to:

- general policies and structure - bauxiteshort and medium term prospects - bauxite long term competitivity - aluminum fabricating opportunities - prospects in non-bauxitesubsectors

General Policiesand Structure

1.177 The mining sectorneeds a consistentset of basic long term policiesif it is to developproperly, consistently and speedily. It is obvious that Surinamehad, in recentyears, to addressmany fundamental problemsin a very short time and that, in many cases, pragmaticsolutions to pressingissues had to be found quickly. In addition,the suspensionof the Dutch aid programhas put considerableand unexpectednew strainson the economicsystem. As a result,many decisionsof importancehave been made on an ad hoc basis,without alwaysgiving the properweight to all relevantfactors.

1.178 It has become necessaryto formulateSuriname's fundamental policies,particularly with respectto:

- the export strategy the respectiveroles of governmentagencies and private Surinamesecompanies in the sector

- that part, if any, that foreigncompanies should play in the development of the mining industry as there already is some evidence that the uncertainty perceived outside of Suriname on these matters is not helpful. 1.179 It is recognizedthat these questionshave major political implications; those can only be decided upon by Suriname and the brief discussionwhich followswill only focus on economicaspects.

1.180 The government has stated repeatedly its present intent to supportand developexports, particularly with the objectiveof increasing its foreignexchange revenues. However,export promotionis a long-term goal, at least in the mining sector,because investments are needed, medium-termcontracts have to be sought and negotiated,worldwide supply systems canaot accommodate sudden changes without major disruptions and additional costs. The point here is not that exports have to be developed, which is for Surinameto decide,but that if the decisionis to develop them, then it must be a long-termdecision, not a temporaryexpedient, if it is to be effective. M4oreover,such a decision,if takca,must be perceived by the outside as a long-term commitment on which the risks of reversal are minimal. - 69 -

1.181 It is perceived,that the state had decided,at least implicitly, that it would assume alone the burdenof developmentand that private industrywould hold only a minor role, if any, in this respect. Reference is not made here to foreigncompanies, which is another subjectdiscussed next, but to Local privateenterprise. The issue is mostly rhetoricalfor the bulk of the mining sector but is very practicalas far as light industry,for instaacealuminum fabricating,is concerned: should the state manufacturedoors and windows,or should private (but Surinamese) companiesdo so? In other words, it is obvious that major projectswhich requirevery large investmentshave to be handled by the public sector because local privatecompanies do not have access to such funds;where the line should be drawn is less obvious. Should it be decided politically that private industrydevelopment is desirable,then steps have to be taken to support such private industryand to prevent overzealousencroachment of the public sectorupon it. Again, a clear statementof long term policy is needed. Moreover,the supportingsteps would have to be taken if the decisionwere positive.

1.182 It is obvious (and unavoidablein view of the historyof Suriname)that foreigncompanies are not particularlypopular among the governmentand other officials. However,uader proper safeguardson both sides, foreigninvestment, know-how and personnelcan accelerate development. It should be recognizedthat foreign capitalcannot be attracted to Suriname(if it is decided to do so) without providing investors with a reasonable expectation of profit for a reasonably long time, while insuring that the country will benefit at least equally and that the government maintains control of the sector. In the eveat that foreign investment is deemed desirable, a long term comnitment to that policy would also be requiredand it should be perceived as such by potentialinvestors.

1.183 There are potentialproblems with the lack of senior personnelat the GMD, with the relationshipbetween the Ministryof NaturalResources and Energy, the C.H.O.B.,the Bauxite Instituteand Index, as well as the presentstructure and objectivesof Grassalco. A reassessmentof the role of various governmentagencies and of their interactionis necessary.

1.184 In terms of the bauxite subsector,the major issue in the long term is the competitivityof the Surinameseproducts, which is discussed below. Lasting results can only be expected if a global and long term plan involving the government, the labor union and the foreign companies is arrived at and implemented to achieve the necessary gains in terms of operating efficiencies, wage levels and levy levels.

1.185 As to other mining subsectors, priorities have to be set and an action plan should be developedand put into effect. There is at present, quite correctly,a de facto priorityput on gold but which targetsshould be investigated and for how long, which fundamental geological work should be done, and which other targets than gold should be set does not seem to have been decided. Any organization similar to the G.M.D. anywhere needs directives for its activities of the next five years or so, with yearly reassessment (and redirection if required) from governmental policy makers. Without such directives, the risk of driftinginto inappropriate directions is substantial. In turn, the GND should then submit an action 70 - plan for approval, with -veryspecific objectives and time limits. The execution of the plan should then be monitored closely from the outside. Similar procedures should be set when prospection turns into mining: should the Rosebel project for instance be found to be feasible, a specific action plan which could have been prepared earlier as a contingency plan should be triggered immediately.

The Bauxite Sector in the Short and Medium Term

1.186 The characteristics and constraints of the various bauxite sector components, which were mentioned separately in the body of the report, can be summarized as follows:

the tool itself is excellent, well equipped and well operated on the whole.

significant efficiency gains are still possible on bauxite and alumina.

bauxite reserve constraints are probably less stringent than usually stated, i.e. higher production rates, if warranted by market conditions, would be consistent with known reserves (Moengo buried deposit, Suralco's non-joint venture reserves in Paranam).

non-metallurgical bauxites are probably uncompetitive in the foreseeable future.

bauxite exports from Moengo will no longer be practicable after 1988.

excluding levies for the time being on all three products, bauxite mining costs are or can be competitive at Moengo and are higher than average at the Paranam mine; refining costs are competitive; smelting costs are competitive with low hydro power costs and prohibitive with fuel based power costs.

alumina production is limited to 1.4 million tons a year unless a major expansion is undertaken: an addition of, say, 500,000 tons of capacity would involve an investment on the order of 250 million US dollars in 1984 terms.

aluminum production is limited to about 40,000 tons per year on average as additional energy cannot be supplied at a cost which produces competitive ingot costs.

shipping costs on export bauxite and alumina are high because of draft limitations.

levies on export bauxite are reasonable; levies on alumina are quite high. In both cases, the levy levels beyond 1985 are not known. - 71 -

1.187 In addition to these factual constraints, probable market conditions in the medium term for the three products are, likely to be the following:

for aluminum, the market should be reasonably good for the next three years, but major price gains should not be expected as demand will not be strong enough to approach maximum capacity worldwide.

for alumina, major overcapacity overhangs the market. It is not believed that prices can deteriorate much further because the lowest FOB prices approximate the marginal cost of the cheapest producers. However, price improvements in real terms cannot be expected seriously before 1987-88 at best and before the end of the decade according to most experts.

- for metallurgical bauxite, the situation is worse than for alumina for two major reasons: (1) in addition to the large overcapacity, the expansion of many bauxite mines is possible at low investment costs (which is also true of alumina but to a lesser extent, and (2) there are signs of increased restlessness in the bauxite producting countries which have levies and levy erosion will probably continue and possibly accelerate. Equilibrium at the delivered cash cost of the cheapest non-levy producers (i.e. Australia or Brazil, depending on client location) is likely to ensue for the next few years.

1.188 Last, the probable short-term constraints for the two specific producers in Suriname can be projected as follows for the period 1984-86:

- alumina may continue to be produced at, or close to, maximum capacity, say 1.3 million tons, barring force majeure situations (including strikes), provided that Billiton finds one or several buyers for the 280,000 tons of excess capacity it will have starting in 1985.

- the Venezuelan contract for bauxite which expires by end 1985 is likely to be renewed for another 2 or 3 years because of the specifics of the situation in Veaezuela, provided that Suriname bauxite remains competitive with Brazilian bauxite (Trombetas) in C.I.F. Puerto Ordaz terms. Suralco is likely to continue bauxite exports at the present level of 5 to 600,000 tons per year and that Billiton will probably maintain its exports at 500,000 tons per year (except for 1984 at 350,000 tons).

- aluminum production will be on the order of 25,000 tons in 1984 because of the drought but exports for that year will approximate 30,00U toas because of inventory reduction; both 1985 and 1986 exports will probably average 40,000 tons, weather permitting.

1.189 Price hypotheses are also necessary to project revenues and levies. Aluminum ingot prices will approximate 72 c/lb on average in 1984, 80 c/lb in 1985 and 84 c/lb in 1986. The levies would in that event be, per ton of alumina: - 72 -

in 1984, 35.74 US dollars for Suralco and 28.71 US dollars for Billitoa

in 1985, 32.29 US dollars for Suralco and 26.30 US dollars for Billiton

in 1986, 33.65 US dollars for Suralco and 27.65 US dollars for Billiton (assuming that 1986 levies are the same as those for 1985 and subject to Billiton's marginal discounts).

1.190 The projections for alumina prices are:

- for Billiton, 170 US$ per ton in 1984, 185 US$ per ton in 1985, 190 US$ per ton in 1986

- for Suralco, 202 US$ per ton in 1984 to 1986, on the basis of Suralco's own projection for 1984 and assuming further that, the price being far above market, it will be kept constant at that level. This assumption may be somewhat conservative.

For bauxite export prices, the projections are:

- For Billiton, the contractual amounts of 35 and 33 USS per ton in 1984 and 85. 32 USS per ton is projected in 1986 because this value is believed to be equivalent to the Trombetas price at the time the Venezuelan contract is renegotiated.

- for Suralco, the contract amounts of 31 and 33 USS per ton are used in 1984 and 85, and, again, 32 US$ per ton in 1986.

1.191 Under this set of assumptions, it is possible to project exports, foreign exchange earnings and gross levies for the sector as follows: - 73 -

Table 24: 1984-1986 Sector Export Volumes and Revenues (thousands of metric tons - millions of US dollars)

Bauxite Institute's This Report's Projections Projections 1984 1985 1986 1984 1985 1986

Export Volumes

Suralco bauxite 600 600 500 600 600 500 Billiton bauxite 350 500 500 351 600 450 Total Bauxite 950 1100 1000 951 1200 950

Suralco alumina b/ 646 635 635 580 600 600 Billiton alumina 618 585 585 618 630 630 Total Alumina 1264 1220 1220 1150 1230 1230

Suralco aluminum a/ 30.0 40.0 40.0 32.3 30.0 30.0

Export Revenues Suralco bauxite 18.600 19.800 16.000 18.510 20.004 18.044 Billiton bauxite 12.250 16.500 16.000 12.383 19.956 15.750 Total eiuxite 30.850 35.3U0 32.U00 30.893 39.960 33.794

Suralco alumina 130.492 128.270 128.270 117.105 127.140 133.500 Billiton alumina 105.060 108.225 111.150 98.464 119.496 126.000 Total Alumira 235.552 236.495 239.420 215.569 246.636 259.500

Suralco Aluminum 47.619 70.547 74.075 51.700 50.708 55.780

TOTAL EXPORT REVENUES 314.021 342.342 341.495 298.162 337.304 349.074

a/ including 5,000 tons inventory reduction in 1984. b/ after deduction of smelter requirements, i.e. 50,000 tons in 1984 and 80,O00 tons in 1985 and 1986.

There are i. naajordifferences in total revenues between this report's projections and those of the Bauxite Institute: the former include somewhat higher export revenues than the Institute in 1984 and 1985 and lower revenues in 1986. The good correlatLon stems from compensating differences: this report projects lower price levels than the Institute but a significantly higher aluminum volume in 1985 and 1986, as well as a higher alumina volume in 1984 (the Institute's projected inventory increase of 109,000 toas is not understood).

1.192 There is a downward risk, of course. Billiton may not sell its excess of 280,0U0 tons in 1985 and 1986; renewal of the Venezuelan bauxite contracts in 1986 is not a certainty either. If both events developed unfavorably, the 1985 revenue would be reduced by 52 million and the 1986 - 74 - revenue would drop by 87 million US dollars. This is, rather unprobable and we would put the downward risk at no more than 20 or 3U million US dollars in either year, barring force majeure conditions. As to the upward potential, it does not realistically exceed 5 million on bauxite and 20 million on alumina in each of 1985 and 1986, even if most developments are favorable.

1.193 The resulting gross levies would be as follows:

Table 25: 1984-86 Sector Gross Levies (millions of US dollars) bauxite Institute's This Report's Projections Projections 1984 1985 1986 1984 1985 1986

Suralco Bauxite 1.650 1.650 1.375 1.650 1.650 1.750 a/ Billiton Bauxite 1.050 1.500 1.500 1.053 1.950 1.471a/ Total Bauxite 2.700 3.150 2.875 2.703 3.600 3.221

Non-e tallurgical Bauxite .176 - - .463 .287 .359 Suralco alumina 23.088 20.504 21.368 21.093 19.963 20.910 Billiton alumina 13.948 12.651 13.200 13.601 13.052 16.380 Total Alumina 37.036 33.155 34.568 34.694 33.015 37.290

Suralco Aluminum 2.091 2.518 2.625 2.129 1.947 2.040

TOTAL GROSS LEVY 42.U03 38.823 40.068 39.989 38.849 42.910 = = =

d/ export bauxite levy increased from 2.75 to 3.50 for Suralco and from 3 to 3.37 for Billiton in 1986.

There is again good agreement with the Bauxite Institute numbers. As a result of higher quantities of alumina in 1984 and of aluminum in 1985 and 1986, but of less optimistic levy level projections for 1986, this report's levy income projection is higher than the Institute's in 1984; identical (by coincidence) in 1985 and lower in 1986.

1.194 The table above also provides the total net levy plus income tax projection for the period, as this total is equal to the gross levy as long as income tax does not exceed the gross levy. This undoubtedly will be the case during the period. Hence, with reasonable assumptions oa the other taxation items based on historical levels, the total government income from the sector can be projected as follows: - 75 -

Table 26: 1980-1986 Total Government Revenues a/ (millions of US dollars

1980 1981 1982 1983 1984 1985 1986 Actual Actual Actual Actual Proj. Proj. Proj. Suralco

Income tax & net levy 54.337 41.147 25.303 26.739 26.829 24.672 25.368 Royalty 1.007 .830 .593 .622 .650 .650 .620 Import duties 6.418 5.646 4.288 3.739 2.000 3.000 3.200 Statistical duties .297 .297 .297 .297 .297 .297 .297 Other .065 .078 .078 .082 .086 .090 .094 Alcoa Steamship .809 .754 .832 .863 .900 .940 .980

Total Suralco 62.933 48.752 31.391 32.342 30.762 29.649 30.559

Billiton

Income tax & net levy 30.344 25.225 18.371 14.400b/ 14.998 14.151 14.575 e.oyalty .553 .459 .367 2e300F/ .350 .600 .600 Import duties 1.058 1.019 1.199 2.30UV/ 1.600 2.500 2.600 Statiscal duties 2.539 2.139 2.303 2.300 b/ .250 .250 .250 Other .475 .566 .218 2.300D/ .300 .310 .320

Total Billiton 34.969 29.408 22.459 16 .700 b/ 17.498 17.811 18.345

Total Sector 97.902 78.160 53.850 49.042 48.260 47.460 48.904

a/ Actual to 1983; estimates from 1984 to 1986. b/ Nio precise data for 1983: the three values were read from a graph.

1.195 'Theconclusion is that the total government revenues from the sector will be on the order of 48 million US dollars per year for the three years projected; these values are projected in current terms, so in real terms revenues will decrease somewhat. The revenue level is close to the level reached in 1983 and about half of the peak revenue achieved in 1980 in current terms (significantly less than half in real terms).

1.196 This disappointing outcome essentially results from tb- market situation and the efforts made in 1982-83 to stem the volume decrease by a reduction of the levy rates: the volume increases projected in 1984-86 more or less compensate for the increased discounts granted duriag the 1984-85 period. It should however be emphasized that there was no other - 76' - alternative: under the present market conditions, the government revenues for 1984-1986 would have been substantially less, because of sharply reduced volumes, if the pre-1982 levy rates had been left unchanged.

1.197 There is no realistic expectation that short term action may change these projections significantly. Long term factors only can have such an effect, and those will not affect the next 3 years materially. Improvements, if any, will come from (1) increasing strength in the market conditions which, cannot be expected realistically and (2) increased competitiveness for Suriname bauxite and alumina which can only result from long-term action.

Competitiveness of the Bauxite Sector

1.198 Cost constraints o'iviouslyare, at least for bauxite, alumina and aluminum, the main competitLve factors in a given market. The major controllable cost factors :,reproductivity, wage rates, levy rates and transportation costs. Although these costs are common to bauxite, alumina and aluminum, the analysis of the overall mechanism is stated more easily if only one product is used for the purpose of the discussion. Alumina seems to be the best choice because:

- aluminum production is entirely constrained by hydro power availability, as no new power source can yield costs low enough to increase the output at acceptable costs no matter what else is done. Suralco's ingot is competitive now; hence, aluminum is a special case, which would have to be snalyzed in a detailed approach but which can be ignored for the present argument;

- bauxite (for export) benefits from levy rates of 2.75 to 3.25 US dollars per ton at present, which it would be unreasonable to decrease even under the prevailing market situation. It could be said here that government has already done its share to contribute to bauxite export competitivity and that it is up to the other two interested parties, labor and the companies, to do the rest. It could also be said that bauxite exports are far from being under the level of competitive pressure that prevails for alumina, although there is undeniably some on exported Suriname bauxite (a few dollars per ton).

1.199 At present, alumina production is limited to 1.4 million tons per year by technical constraints and the question therefore is whether this production will be maintained indefinitely (beyond the 1984-86 period already discussed) or whether it will decrease. In 1984, projected costs are per metric ton: - 77 -

- imported raw materials and spare parts US$28.09

- energy, mostly imported fuels US$47.83

- labor costs US$21.88

- otter costs, mostly depreciation and administrative expenses US$12.66

- bauxite costs (including levy) per ton of alumina at a conversion factor of 2.0:

- supplies US$10 - energy US$9 - labor US$25 - other costs, mostly depreciation US$d - levies (effective average Suralco and Billiton) US$32 ience, in the total cost of about US$194, materials and supplies represent $38 dollars or 20%, energy $57 or 29X, labor $47 or 24Z, depreciation and administrative burden $21 or 11X and ievies $32 dollars or 16X.

1.200 The cash cost itself is about US$172 per ton (if it is assumed that administrative costs are essentially non cash) and the foreign cost about $116 dollars. As it is generally estimated that the most efficient producers nave a cash cost which is on the order of about $130 per ton, it follows that Suriname has a maximum handicap (ignoring transportation costs and other extraneous factors for the time being) of something like $40 per ton against its cheapest competitors: competition to gain (or lose) market share is done oa cash costs when the market is very weak, as it presently is. It should be noted here that "competitors" is meant in a broad sense: witkdina major corporatioa's supply system, non cash costs are sunk costs anyway and who gets the production is decided on a cash (marginal) cost basis. In fact, if freight differentials are taken into account, intangibles are allowed for and if corrections are made to recognize that cash costs are not strictly marginal costs, the competitive disadvantage of Suriname is probably on the order of US$20 per ton. It should be emphasized at this point that the number is only an order of magnitude because many subjective elements enter into the passage from the objective (but incomplete) value of $40 above to the notional US$20 finally arrived at.

1.201 It can be concluded that, if a total cost improvement of US$20 per ton is achieved, the risk of an alumina production decrease is practically nil, while this risk becomes very substantial if no gain is achieved. Whether or not Suralco and Billiton would in fact reduce their offtake in that event is a question that only these Companies can answer, but the Government and the workers should be aware that there is such a risk. It is of course for them to decide then whether or not to take it.

1.202 So far, for toe sake of simplicity, it has been assumed that the relative components of the costs remain the same. In fact, at least three of the components are not likely to remain constant. - 78 -

1.203 Figure 8 shows in index form the evolution of wages in the bauxite industry and the increase in the cost of living from 1977 to 1983, 1977 being taken as the base of 10) for both. It is clear that, should the trend continue, the relative weight of labor costs will increase. To put an order of magnitude on it, the 1987 level would exceed the 1984 level by about $7 per ton in real terms. On the other hand, the companies project efficiency gains (at constant labor costs) of also S7 per ton. Should the bauxite levy remain unchanged in real terms in 1987 (which is unknown as the agreements do not go beyond 1985) the competitive disadvantage will remain, ia real terms, the same in 1987 as in 1984. If the bauxite levy is increased, as muayhappen, the disadvantage will increase.

1.204 Tne point here is not to provide precise data: each side will argue that the numbers above are not really valid, and possibly that historical and social reasons demand that the respective components be redistributed or, on the other side, that non cash costs are very real and that profits must also be generated. de that as it may, the risk of a production decrease will have to be taken unless the competitive disadvantage is removed through concerted action on a long-term basis between the three parties. Who should do what is another matter eatirely: this is an issue to be resolved between the parties themselves.

1.205 The next question is whether or not it is feasible (technically and economically) and appropriate for alumina production to be expanded. M4arginalinvestment costs in Paranam are as low as anywhere else and therefore an expansion when the market is able to absorb it would probably miakesense to the owners if the expansion's operating cost is competitive with other locations. The key is, again, efficiency, labor rates and levy rates. Whether or not such an expansion is appropriate is a political decision. Incidentally, an expansion of the refinery capacity is not predicated upon the source of the bauxite but on its overall impact on the operating cost; hence, the present conclusion is valid whether the present mines are expanded or the Bakhuis mine is developed, provided that they yield equal alumina operating costs, including bauxite cost, levy and differential quality or freight costs. The issue of the Bakhuis deposit was discussed under the assumption specified here that its bauxite cost, as just defined, cannot exceed the comparable cost from Hoengo or Paranam.

1.206 One more factor of competitiveness has not been mentioned so far: the cost of bauxite transportation from Hoengo or the incremental cost of shipping alumina with small vessels. The present situa:ion may not be optimal. Within the overall discussion of long-term policies mentioned above, the possibility of lowering such costs by dredging, topping off or otherwise altering the status quo should certainly be investigated.

1.207 The structure of the present levy system resulted from ad hoc adjustments which have had and will have effects on its impact under changing conditions. Desirable features of any levy system would be:

existence of a floor to the revenues of the host country at low volumnes (i.e., a fixed lump sum levy plus a levy related to volume); -79 - Figure 8

BAUXITE AND ALUMINA COMPETITIvITY

Yarlatlon of industry and general wage levels in current terms

*INFLRTION RND WRGE INDICES 1977-1983

200

160

149- t> ' -'1

I 0 ~ ~ ~ ~ ~~'

i ndex . 1977 1978 1979 1986 1981 1982 1983

First bar : Cost of living index Second bar: Average C.L.R. wages Third bar : Average Suralco/Billzton wages

INDEX VALUES

1977 1978 1979 1980 1981 1982 1983

Cost of living Lee 109 118 136 152 163 172

Average C.L.A 1s 113 127 142 161 182 205

Suealcow',i l l iton 166- 116 127 145 165 187 212 -80 -

- long-term predictability;

- steep degressivenesswith increasedvolume (i.e.,a levy which decreases on a per ton basis as volume increases);

- favorableposition within the buyer or producer'sworldwide supply systemunder low market demand conditions;

- simplicity;

These are, in general terms,not presentin the existingsystem or, at best, only in embryonicform.

1.208 A last but major subjectwarrants comment. The foreigncomponent of the alumina cost was estimatedearlier at about US$116 out of a total of USS194; hence, the local cost is about $78 dollars,of which $47 is labor and $32 is levy. Accordingly, a devaluation would (unless it is followed by wage rate increasesnullifying its effects)also increase competitiveness: an effective devaluation rate of 10 (effective being definedas what remainsafter wage increasesif any) would improve competitivenessby about US$5 or fuLly 25Z of the present disadvantage without decreasingin any way the foreignexchange revenues of the Goverament;any largeror smallereffective devaluation rate would have a proportionallylarger or smallerimpact. Thus it is aot correct that a devaluationwould not have no impact on the bauxiteindustry, although this argument is often heard in Suriname. This would be the case only if wage adjustments nullified it and it would otherwise contribute very significantly to the bridging of the competitivity gap.

Aluminum Fabricating Opporcunities

1.209 Excluding a priori the aluminum products which necessitate very high volumes and highly proprietary technology to be competitive (for instance beverage can stock), three types of fabricating can be considered in principle: extrusion, soft-rolled products and electrical cable. It is understood that Iadex, quite properly, is considering all three.

1.210 As to cable, unless there is a national market of substantial size on a continuingbasis (severaltens of thousandsof tons per year for a single modern machine), any local industry has to rely on export markets. Unfortunately, not only is the premium over ingot low, competitLonou cable stock is of the cutthroat variety and depends almost exclusively on government contracts.

1.211 As to extrusions and soft-rolled products, the minimum volumes are lower, perhaps on the order of 10,000 tons per machine per year if the smallest extrusion press size is used for extrusions or if a typical continuous caster and associated rolling equipment is installed for roofing or siding applications.As the internalmarket for such products in Suriname is unknown (Index did not have this information immediately at hand), it is difficult to expand on the subject. However, domestic demand is likely to be significantly smaller than the minimum machine sizes in both cases. Involvementwould thus involveexports, which implies - 81 - marketing abroad. The often made assumption that sales to an international broker take care of that problem is a fallacy that always ends in disaster because the busindssof brokersis to gent ate commissions, not to sell products at acceptable prices.

1.212 Ccnsideration should not be given either to selling such fabricatedproducts abroad at fixed prices over a relativelylong period, because the price of the raw materialitself, ingot or liquidmetal, varies widely over time. The cardinalrule about any kind of fabricatingis to consider the fabricatingmargin only (i.e.,the premiumabove ingot or liquid metal) to evaluatefeasibility; any other approachis pure speculation,which few survive. There is no such thing as a fixed ingot price unless it resultsfrom a subsidy,either from a governmentwhich bears the risks of the variationsitself or from a producer,which gets its money back some other way (for instancein reducingtax or costs on other expenses). The net impacton the countryis still that of variableingot prices.

1.2±3 It should be specifiedthat the commentsabove apply to the extruded products(i.e., the extrudedand thus shaped lengthsof metal, with or without furtherfabrication into doors,windows or other products),not to the homogenizedextrusion billets themselves 'i.e., the long or cut aluminumcylinders later processedia extrusionpresses). These billetsare similar to the cable stock mentionedabove, becauseunit capacityis also of several tens of thousandsof tons per year and because their sale on export marketsalso bringslow premiumsdue to fierce competitionfrom all major smelterswhich are almost all equippedto produce billetsat high volumes and low costs. The only major difference is that governmentcontracts are not involvedhere so marketingis very difficultbut straightforward.

Prospects in nonbauxitesubsectors

1.214 In the short term, the Rosebelgold projectappears to have merit, but that there does not seem to be a plan of action to define which specificsteps should be taken (if the projectis approved)to financeit and implementit withoutdelay. A plan should be preparedquickly for immediateimplementation in the event of a favorablegovernment decision or. the subject; this includes a decision as to the creationof a Rosebel operating compaay other than G 'ssalco.

1.215 Yore generally,the observationsmade with regard to the lack of strengthand of specificguidance at the G.H.D. are believedto be extremelyimportant to the long-termdevelopment of Suriname'smining sector and early considerationof the issues mentionedthere is strongly recommended. - 82 - AttachmentI Page 1 of 3

ProgramDescription

1. The computerprogram used of this analysis,T&ARBI, was designed specificallyfor speed and ease of use in the financialanalysis of either existingCompanies or new projects. It is non specific,in the sense that any such Companyor Projectis handledwithout any reprogrammingunless some very unusualand unconventionaldata handlingis required,which seldomhappens. It evolvedmore or less continuouslyover the last four years,and the version used in this report is the most recent;cash flow roots were needed to explainabnormal NPV behaviorin some cases and two utilitiesfor plotting the real roots of the cash flow equation automaticallywhien one or severalparameters vary over an analystdefined rangewere added.

7. - The centraldesign principlehas been to input manuallyas little informationas possible,because manual inputtingis boring,time consuming and error prone. Accordingly,the computerhandles all support calculationsincluding depreciation, amortization, loan service,interest during construction,etc. ... in additionto the basic calculationsneeded for the preparationof financialstatements, of productand cost data and summaries,of returnon investmentand net presentvalues among others. Althoughthe typicalnumber of variablesinput for a new study is large and caa take up to an hour, furtherchanges of only a few variableswhich typicallyoccur for additionalcases beyond the first can be made in seconds. All the data is set up in matricesand almostall routine sensitivity analyses can be handled by answering 2 or 3 questions asked by the program. The price of this degree of flexibilityis that the relativelylarge programof about 3,000 instructionsneeds about 200 Kilobytesof KMs to run. Most of the programis writtenfor convenience: the computingroutines have only about 400 instructions.

3. As said in the report,three financialconstraints are available to the analyst, at whichever level is selected, and operate concurrently or individually. They limit the current ratio, the debt to equity ratio and the debt coverage ratio to analystselected values. When funds are required to meet the cotistraints,short term debt is used first, then loig term loans, then equity,each within the constraint'slimit. The fact chat a constraintis operativeduring a particularyear can be detectedeasily by lookingat the ratiosat the bottomof the balancesheet: if a ratio is at the selectedlimit, this constraintis operative. Equity contributions are the funds of last resort: they end up as excess cash to compensatefor high currentliabilities in the current ratio,loi earningsin the debt coverageratio or high long term debt in the debt to equity ratio. This can be a littleconfusing at first in understandingthe statementswhen several constraints operate concurrently but can always be sorted out by identifying the operating constraints as said above.

4. Loan balances, interest and amortization are calculated on the basis of the input provided, namely the amount of the loan increment each year, the iaterest rate, the grace period and the amortizatioa period; the last two variables can be fractional, which allows for exact interest - 83 - AttachmeatI Page 2 of 3 calculationswhen precisematurities are known;otherwise, the interest rate is appliedto the average loan balanceduring the year.

5. Dividendsare calculatedunder two modes. In the "milking mode, the Company is alwaysborrowed to the hilt (to the maximumallowed under the specificconstraints) and pays out whatevermoney is left as dividends; borrowingsto pay dividendsare frequent. In the "normal mode (the only one used in this analysis),dividends cannot be paid unless reasonably strict criteriawhich are too complex to be summarizedhere are net.

6. Depreciationand amortizationare calculatedindependently for up to 10 classesof equipmnentor assetseach. The requiredinput for each class is the amountadded each year and the depreciationperiod.

7. Capitalimprovements or major capitalexpenditures can be input in two ways, either directlyor as a percentageof the plant'sunamortized assets in any year. Direct input was used this analysisto duplicate the consultant'svalues.

8. The programsegregates foreign and domesticfunds for all calculations;they are consolidatedonly for printingpurposes in the conventionalfinancial statements. Up to 10 productscan be tracked separately,with independentdomestic and foreignsales volumesand prices, differentialescalations, etc. Costs are handled(for each product)in four categories;foreign variables, local variables,foreign fixed, local fixed, for each year; when the quantitiesstart to vary linearly,only a single input and the rate of linearvariation are required(this is also true of all other variablesin the program). In the "direct'mode, the variablescosts per ton are input directly(for each productand year) without regard to the nature of the cost; in the "normal"mode, the analyst inputsspecific consumptions in each of twelve types of costs (typically labor, materials,oil or power, supplies,maintenance and other,each both in foreignand local funds) and a seriesof unit costs (per year) for each. As to fixed costs, 12 are similar(i.e., labor, materials, etc. ia both foreignand local funds) and 8 are user defined. The programalso handlesup to ten loans, includingan export financingloan (type Eximbank),two refinancingloans (to refinanceold debt),a deficitloan (to plug the long term debt called for under the constraintsabove) and 6 user definedlcans which can be either automatic(to fund project expendituresexactly) or input by the user for each year. Variable interestrates are accommodated.

9. Inflationand escalationare handledin two fashions. For each quantitypotentially subject to escalation,an inflationrate for each year can be input directly; alternately, up to 10 inflationmatrix modules"can be used by specifying for a quantity which module is to be used.

10. Sensitivity studies, as already said, are handled through matrix operations and two numbers are generally sufficient to specifya conventional change (i.e. increase all maintenance costs five percent). - 84 - Attachment I Page 3 of 3

11. Formatting is automatic. In an extreme case, the computer will handle about 8,OOU different variables, most of which were calculated automatically; typically the matrices are 70Z empty. The typical total input for very simple situations like Rosebel's is about eighty quantities. The running time per case on a 32 bit computer is about 2 seconds, but the limiting factor is the speed of the printer, which may take up to 10 minutes per case when all the schedules are printed in a complex case, but about two minutes in Kosebel's cases which are very simple. Printing can be done to the CRT when the analyst wants a preview before solid printing. The root finding utilities are entirely automatic: the program actually calculates fully several hundred cases, determines the roots in each case and plots them; the whole process takes about 20 minutes for a wide range of parameter variation, as in Figure 3 quater. All the parameters used are printed in a separate schedule. All the data relevant to a case is recorded on a mass storage maediumif desired. Attachment 11

ROSEBEL *OLD PROJECTSCASE I)

-PROFIT AND LOSS STATEMENT

IISILLIONS OF DOLLARS * YEAR 19-85' 2986 1987 1988e 1989 1990 1991 1992 1993 19794 1995 5996

* TOTAL SHIPMENTS 0.000 0.000 .024 .024 .029 .019 .017 .019 .022 .023 .018 .014

TOTAL REVENUES 0.000 0.000 9.183 8.549. 9.706 6.495 5.973 6.645 7.690 7.909 6.458 4.844

TOALCOSTS- 0.000 0.000 4.331 4.331 4.331 4.331 4.266 4.471 4.689 4.681 4.691 4.225 * OTALRFIODSTS T OTHERCOSTS FIXED ~ ~ ~ ~~ ~0.00 .1213 .173 .160 .340 .160 .160 .10 .160 .160* .160 EXPATS. 0.000 0.000 *400) .277 .223 0.000 0.000 0.000 0.000 0.000 0.000 0.000

OPERATINO PROFIT 0.000 0.000 4.239 3.768 4.991 2.004 1.547 2.014 2.842 3.148 1.617 .459 INTEREST EXPENSE 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0:000 0.000 AMIORTIZATION 0.000 0.000 .164 .164 .164 .164 .164 0.000 0.000 0.000 0.000 0.000 .'.,.DEPRECIATION..- .0 .O.-564-1~4~_1*71_I.SS~ 94... 61

* NET INCOM4EBEFORE TAXES 0.000 0.000 2.462 1.788 3.012 .021 -.519 .297 1.092 1.333 -.227 -1.402

_:_T4AXALE INCOME 0.000 0.000 2.462 1.768 3.012 .021 0.000 .297 1.092 1.333 0.000 0.00ON * INCOME TAXES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

NET INCOIIEAFTER TAXES 0.00') 0.000 2.462 1.788 3.012 .021 -.519 .297 1.092 1.333 -.227 -1.402

CUMUAiTIVE liNOI A.T. 0.000 000 2.462 4.249 7.241 7.282 6.743 7.00 9151 .8 927 795

6-21 -84 JEAN L.LOYER Attachment II

ROSESEL GOLD PROJECT.CASE 0 SOURCEAND APPLICATIO4 OF FUNDS.IIILLIONS OF DOLLARS

_Y,EAR, . 1985 ,984 1987 1988 1999. 1990 I9 .Il4_ .199..f5 . .1996 : SOURCESOF FUNDS

- NET iNCOME AFTER TAXES o0.00 0.o00 2.462 1.7E:8 3.012 .021 -.519 .297 1.092 1.333 -.2ii -3.402 ¾; AMORTIZATION 0.000 0.000 .164 .164 .164 .164 .164 0.000 0.000 0.000 0.000 0.000 '. DEPRECIATION 0.000 0.000 1-614 1.816 1.816 1.819 1.903 1.717 1.751 1.815 1.844 1.861 - -INTEREST EXPENSt o,ooo o667-o;o o.ooo 0 o.obo 0o.0ob o0.oo0000.o00 ooo 0.0° a CAPITAL CONTRIBUTIONS 6.773 9.263 0.000 _ 0.000 0.000 - 0.000 0.000 0.000 0.000 0.000 0.000° 0.00° °° LONO TERM LOAN.EXP.FIN. 0.000 0.O00 -O. 0.OO0 0.000 0.000 0.000 0.000 0._000 0.000 0.000 0.00 01- .11 SHORT TERM LOANS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 00 00 ... ~~~~~~~~~~~_ .______. TOTAL-SdURCES .7.23i 49 01 2.004 i;5ii 2.014 2.842 a-;4 7 .459 ,_JiAPPILICATIONS OF FUNDS

- PLANT & EQUIPMENT 6.175 9.634 1.953 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 * _ _ PREOPERATINOEXPENSE- .59B .220 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 * INT.DURINDCOUSTRUCTOIYJ 0.000 0.000 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000Q0 0.000 0.000 - WORKINO CAPITAL 0.000 .409 .255 -.018 .032 -.095 .005 .039 .028 .008 -.086 -.444 CAPITAL IMPROVEMENTS 0.090 0.000 Q.000 0.000 _0_0 .764 .744 .612 .593 .269 .283 *0.000

INTERESTsEXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 !- SHORT TERM INTEREST 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

AMORTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 SHORT tERM AIOR!TIZATI0N 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000-0.000 0.000 DIVIDEND PAYMENT 0.000 0.000 2.132 3.785 4.929 1.335 .798 1.363 2.221 2.871 1.419 .903 Iii

TOTAL APPLICATIONS 6.773 9.263 4.239 3.768 4.991 2.004 1.547 2.014 2.842 3.148 1.6,17 ,459

NET CASH FLOW.YEAR 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 * _ _F,CAStHFLOW & DIVID.sYEAR . -. °°.000..S 0 2.132 _485 4.929 1.33,5, .799 .363 2.221 2.971 _--. 419 .903 CU11UL. NET CASH FLOW 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4'' CUMUL. SHORT TERM DEBT __C.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0C' 0.O000..t - 0._ 0 C~~UHULLATIVEDIVIDENDS 0;040soOWGflY2.132rrmw17--TeTr46 iie 12.980 14.343 16.564 i9.435 20B.54 21.75i7i5

&-21-84 JEAN L.LOYER Attachment II

ROSEBEL GOLD PROJECT.CASE 0

.BALANCESHEET .. , _ .._.*,_,

IlILL:ONS OF DOLLARS YEAR 1£985 1986 1987 1988 1989 1990 1991 1992 1993 1994 199S 1996

__QS4Et,S . ______;-~______OPERATINO CASH 0.000 .120 .120 .120 .120 .118 .124 .130 .130 .130 .117 0.000 .. _-R ECEIVABLES , 0.000 0.000 ..255 __.237_..._.270 166.._ .18a _ .80._214 _._.222-..._.I79 INVENTORY 0.000 .450 .650 .650 .650 .640 .671 .703 .702 .702 .634 0.000 EXCESS CASH 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

') CURRENTASSETS 0.000 .770 1.025 1.007. 1.040 .939 .941 1.019 1.046 1.054 .930 .135

PLANT & EQUIPMENT ___ _ 4.57544.809, 16.662 16.662., 16.692 17.456. 18.200-_1Se81L _ 19.404 19.673_19.956 _12.956 LESS DEPRECIATION 0.000 0.000 -1.614 -3.430 -5.246 -7.066 -8.968 -10.686 -12.436 -14.251 -16.095 -17.956 OTHER ASSETS .598 .818 .818 .818 .810 .818 .818 .818 .828 .818 .818 .818 LESS AMORTIZATION , 0.000 0.000 ,564_ -32 ,-.495 , .65P -. 95 _ I1,-1t81t.ru-t8_-,819

TOTAL FIXED ASSETS 6.773 15.427 15.702 13.722 11.773 50.554 9.231 8.126 6.968 5.421 3.861 2.000

TOTAL ASSETS 6.773 16.397 16.727 14.730 12.812 11.493 10.192 9.144 8.014 6.475 4.791 2.134

PAYABLES 0.000 .361 .361 .361 .361 .355 .373 .391 .390 .390 .352 0.000 -.... TRtJERI- DEBT.-__ _ 00_,_p, 00. _.0.000.. .0.000._...0.Ooo S.000..Q o00_ Q.0QO0.0O&..00...... 0.000 _.-000_.0.000_.000 _0.000 LONG TERN DEBT.CURRENT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

'' ,CURRENT LIABILITIES 0.000 .361 .361 .361 .361 .355 .373 .391 .390 .390 .352 0.00A4-m LONO TERN DEBT.EXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 SOCIAL RESERVES - -' 0 000 0.0&00 o00 0.000 0.00-0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 NET PAID-IN EQUITY 6.773 16.036 16.036 16.036 16.036 16.036 16.036 16.036 16.036 16.036 16.036 16.036 RETAINED EARNINGS 0.000 0.000 .330 -1.667 -3.585 -4.899 -6.217 -7.283 -8.412 -9.951 -11.597 -13.902

TOTAL EQUITY 6.773 16.036 16.366 14.369 12.451 11.537 9.820 8.753 7.624 6.085 4.439 2.134

TOTAL LIABILITIES 6.773 16.397 16.727 14.730 12.812 11.493 10.192 9.144 8.014 6.475 4.791 2.134

DEBT COVERAGERATIO N.A. N.2A N.A. N,A. H.A. N.A. H.A. , N.A. *4.A. - N.A. . N N.A. C-_URAENT RATIO 2.A.2.33 2.840 2.791 2.Sa0 2.641 2.579 2.606 2.681 2.702 2.643 N.A. DEBT/EQUITY RATIO 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

6-21-84 JEAN L.LOYER Attachment LL

ROSESEL GOLD PROJECT.CASE 0

CASH FLOWS.RATESOF RETLUN & NET PRESENT VALUES. ,

FUNDS IN HILLIONS OF DOLLARS AND IIJ1984 REAL TERMSOR INFLATED (CURRENT) TERMS.AS SPECIFIED. ;

' ______CASHFLOW IN REAL TERMS CASH FLOI ?N WNFLATEDTERMS

AFTER TAXIS BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITY

-6.773 -6.773 -6.773 -6.773 -6.773 -b.773 -9.263 -9.263 -9.263 -9.263 -9.263 -9.263 2.132 2.132 2.132 _ 2.132 2.132 2.132 _ 3.785 3.785 3;785 3.i85 3.785 3.785 4.929 4.929 4.929 4.929 4.929 4.9299 " 1.335 1.335 - 1.335 _. _____ .798 .798 .798 .79a .790 .798 ;.363 1.363 1.363 1.363 1.363 1.343 2.221 2.221 2.221 2.221 _ 2.221 . 2:871 2.871 2.671 2.871 2.871 2.871 1.419 1.419 1.419 1.419 1.419 1.419 :,,_,_.903 ,.903.. , .903. _._-03 ' - i.03 .903.- .135 .135 .135 .135 .135 .135

REAL IRR AFTER TAXES 6.521 2 INFLATED IRR AFTER TAXES 6.521 X REAL IRR BEFORE TAXES a 6.521 X _ _ INFLATED ERR BEFORE TAXES * 6.521 X_ REAL&XMb#NC EQUl.tY i 6;52 I INFLATED IRR ON EQUITY a .521i : REAL 1984 NPV AFTER TAXES e o.ooo0 a 5.855 INFLATED 1984 WV AFTER TAXES 8 0.00074 s 1.055 .. co I RtCL-TNUWWREF5I U 6R0.o.0oo a 5*.855 INFLATED I984 I*PyBEFORE TAXES @ 0.000X 5.855' C REAL 1964 NPV ON EQUITY 6 0.000X 5.955 INFLATED 1904 NPV ON EQUITY e 0.000oox S.85S '.

RAEAL - 8904 NFV AFTER TAXES 9 5.000X a 1;5.050 INFLATED 5984 NPV AFTER TAXES 6 5.000X * 1.050 REAL 1984 NWV BEFORE TAXES 6 5.OOO I 1.050 INfLATED 1984 NPV BEFORE TAXES 6 5.004X * 1.050 REAL 1984 NPV 01 EQUITY 6 5.000 * _ 5.0Q50 IWLATEDJ1994 NPV ON EQUITY 6 5.000X * 1.050 REAL 1984 PV AFTER TAXES 6 10.000K a -1.893 INFLATED 1984 NPV AFTER TAXES 6 10.000 * -1.893 REAL 1984 NPV BEFORE TAXES 6 10.000K * -1.893 INFLATED 1984 NPV BEFORE TAXES 6 IO.O00X * -1.893 REAL 1904 NPV ON EQUITY 6 10.00KOX -1.893 INFLATED 1984 NPV ON EQUITY - 1o.oooX * -5.89j

NOTEa THE SALVAGE VALUE IN 1997 IS EQUAL TO THE WORKINOCAPITAL ONLY.

6-21-84 JEAN L.LOYER Attachment II

ROSESEL GOLD PROJECT.CASE I

PROFIT AND LOSS STATEMENT .,..-

;.ILLIONS Cr DOLLARS , YEAR 1995 1996 1987 1908 1989 1990 1991 1992 1993 199i4 295 199 ,

SIIPMENTS_ TOTAL SHIPHENTS 0.000 O-A^A .026 .024 .028 .019 .017 .019 .022 .023 .018 .014 'i 'I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~'

:' i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.

'..INCOME 000 000 15 ,' TOTAL REVENUES 0.000 0.000 11.250 11.205. 13.613 9.748 9.591 11.417 14.138 15.715 13.593 10.909

_COSTS -_ -_ - ______- TOTAL COSTS 0.000 0.000 5.306 5.677 6.075 6.500 6.630 7.682 8.618 9.208 9.853 9.515

OTHERFIXED COSTS , GEN. t ADM 0.000 0.000 .260 .226 .224 .240 .257 .275 .294 .315 .337 .360 EXPATS. C.000 0.000 .490 .363 .313 0.000 0.000 0.000 0.000 0.000 0.000 0.000

OPSRATINO PROFIT 0.000 0.000 5.193 4.939 7.001 3.008 2.704 3.460 5.225 6.192 3.404 1.034 * INTERESTEXPENSE 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 AMORTIZATION 0.000 0.000 .178 .178 .179 .178 .178 0.000 0.000 0.000 0.000 0.000 '_ _.DEPRECIATION . . _Q.0.000 0.000. -1.798 2.0.45-2..045_2.050-2.175-2.008_2..082__ 2.201 __2.25.2 2.302. _.&

l lNET INCOME BEFORE TAXES 0.000 0.000 3.217 2.715 4.777 .7eO .351 1.452 3.144 3.992 1.147 -1.2680 TAXAbLE INCOME 0.000 0.000 3.217 2.715 4.777 .780 .351 1.452 3.144 3.992 1.147 0.000 INCOME TAXES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0D

NFT INCOIE AFTER TAXES 0.000 0.000 3.217 2.715 4.777 .7S0 .351 1.452 3.144 3.992 1.147 -1.268

CUILLATIVE INCO E A.T. 0.000 0.0003.217 5.933 10.710 11.490 13.840 13.292 16.436 20.427 21.574 20.306 Ar

6-21-64 JEAN L.LOYER Attachment II

ROSESEL GOLD PROJECT.CASE I .SOURCE AND APPLICATION OF FUNDS.IIILLIONS OF DOLLARS

.YEAR_ _ ___,__98S I286 - ?4. 5998 JS9 1990 5991 1992 5993 1994 1995 1jfl SOURCES OF FUNDS NET INCOME AFTER TAXES 0.000 0.000 3.217 2.715 4.777 .780 .351 1.452 3.144 3.992 1.147 -1.269 * AMORTIZATION 0.000 0.000 .178 .178 .178 .178 .178 0.000 0.000 0.000 0.000 0.000 * DEPRECIATION 0.000 0.000 1.798 2.045 2.045 2.050 2.175 2.008 2.2.09 2.1 2 .._25.7 2-.30 INTEREST EXPENSE o0000 0.000 o.0o6o o.ooo o00.o0 b .o6 o.0oi0 .ooo o.d5 Woo. CAPITAL CONTRIBUTIONS 7.248 10.605 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONG TER LOAN.EXP.FIN. 0.000 0.000 0.000 o.ooo 0.000 0.000 0.000 0.000 0.000 ' SHORT TERN LOANS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

TOTAL SOURCES - 7;a48 br1.ir 7013 3.008 -2.704 3460 5.i25 6.192 3.i04i.034

APPLICATIONS OF FLUINDS _ _- -- -__

PLANT & EQUIPMENT 6.607 9.885 2.270 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 PREOPERATINOEXPENSES ___ .640 .252 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.DURINO CONSTRICTION 0.o0o 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.o00 "WRKINO CAPITAL 0.000 .448 .345 .034 .104 -. 096 .088 .133 .128 .101 -. 089 -. 914 CAPITAL IMPRrIP'ENTS 0.000 0.000.0. O.OO Q09.OOO _ 4? . _ J.95.1.051 1.090 .529 .597 0.000 INTEREST,EXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 SHORT TERN INTEREST 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

AMORTILATION.EXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 bSVODTTEN *AMORTIZATION ____ - 0.009 0.000 0.000 0.000 0.000 0.000 0.000__0.00 0.000 0.000.0.000 blVIDEN6pTPAYMENT 0 0.000 2.578 4.905 6.854 1.956 1.421 2.276 4.008 5.564 2 5.948

TOTAL APPLICATIONS 7.248 10.605 5.193 4.939 7.001 3.008 2.704 3.460 5.225 6.192 3.404 1.034 . *,

NET CASH FLOW.YEAR 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 CASH FLOW & DIVID.YEA,R __ _. Qf. 2.57.e 90SA,1f l.AJ A.AS.....Zb.2Z. 4-OO-._.Qos __5.564 _ 2.896_. .1.t.4 4 _

CUMUL. NET CASH FLOW 0.000 0.000 0.000 0.000 0.000 0.000 0.000 O.COO 0.000 0.000 0.000 0.000 CVMVL. SHORT TERM DEBT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 n.0oo 0o.0o 0.000 0.000 0.000 . ' WCLMLATIYEDIVIDENDS0 0. 0.000 -2.78 71.4 14.338 16.294 17.715 19.991 23.998 29.562 32.458 34.406

6-21-84 JEAN L.LOYER ALL4LAIDUeIL A.

ROSESEL OOLD FROJECT,CASE I BALANCE SHEET

MILLIONS OF DOLLARS

YEAR 1985 1996 1987 5989 19Bi 1990 1991 1992 1993 1994 1995 199 ASSETS

OPERATINO CASH 0.000 .138 .147 .I50 .169 .172 .199 .224 .239 .256 .247 0.000 RECEIVABLES 0.000 0.000 .312 2_311 -378-.271 _.266 31Z _ .393 .437 . .378 - .303 INVENTORY 0.000 .744 .796 .832 .911 .929 1.077 1.208 1.291 1.381 1.334 0.000 EXCESS CASH 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

CURRENT ASSETS 0.OQO .892 1.256 1.321 . 1.458 1.372 1.543 1.749 1.923 2.074 1.958 .303

PLANT & EQUIPIENT . 6.607 .16.492 18.762 [email protected] -f21.146-22.196 _23.286 .23.814 .24.411 24.411 LESS DEPRECIATION 0.000 0.000 -1.798 -3.943 -5.988 -7.937 -10.112 -12.120 -14.202 -16.402 -18.659 -20.961 OTHEF: ASSETS .640 .@92 .892 .992 .892 .892 .892 .892 .892 .892 .892 :892 LESS AMORTSZATIO. . ._ 0.OO0Q0P0 t . -.357 -. 2. TOTAL FIXED ASSETS 7.248 17.384 17.678 15.454 13.273 12.192 11.034 10.074 9.095 7.412 5.751 3.450 TOTAL ASSETS ,.248 18.26U18.934 16.775 14.731 13.564 12.576 11.825 11.007 9.485 7.710 3.753 * LIABILITIE' _ __ __.__ _ _ ------

PAYABLES 0.000 .413 .442 .473 .304 .516 .59S .671 .717 .767 .741 0.000 _ SHORT TERM DEBT 0.000 _O.OOO_ O..O__QwQ).90O ° °°-. 0 0 LONG TERM DEDT.CURIRENT - 0.000 0.000 0.000 0.000 0.000 O.000 0.000 0.000 0.000 0.000 0.000 0.000 CURRENT LIABILITIES 0.000 .4j13 .442 .473 .504 .516 .598 .671 .717 ._67 _ *74t 0,°00 *e LONL TERM CEBT.EXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0° 0.000° 0.000

SO 80CIALRESERVES 0.000 0.000 0.000 0.000 0.000 0.00) 0.000 0.0g0 0.000 0.000 0.000 0.000 *t NET PAID-IN EQUITY 7.248 17.853 17.853 17.853 17.853 17.853 17.453 17.853 17.853 17.S53 17.853 17.853 RETAINED EARNINGS 0.000 0.00_ .39 -1.55I -3.628 -4.805 -5.974 -6.698 -7.562 -9.134 -10.884 -14.100 1:. TOTAL EQUITY 7.248 17.953 19.491 16.302 14.225 13.048 11.978 31.154 10.290 8.718 6.969 3.753

TOTAL LIABILITIES 7.246 18.266 58.934 5173.564 12-576 II.S251l.007 i.4ss 710

DEBT COVERA4g RATIO N.A. N.A. N.A. _ N.A. N.A. _N.A. N.A. N.A. N.A. N. N. A._ .A. CURRENT RATIO N.A. 2.133 2.840 2.791 2.680 2.6.8 2.579 2.606 2.681 2.702 2.643 N.A. DEBT/EQUITY RATIO 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

6-21-64 JEAN L.LOYER Attachment II

ROSEBEL OOL PROJECT.CASE I

,CASH,FLOWS.RATES OF RET'IJN & NET PRESENT VALLES-. FLUNS IN MILLIONS OF DOLLARS AND IN 1964 REAL TERMSOR INFLATED 4CURLENT1 TERMS.AS SPECIFIED.

;_ CASH_fLOIj.IflRgALkTgftH__ .SASSHLELOWINtINFLATED.TERMS.______

AFTER TAXES BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITY

-4.773 -6.773 - -4.73 -7.248 -7.245 -7.24. -9.243 -9.243 -9.263 -10.605 -10.605 -10.605 2.105 _ 2.103 2.105 2.578 2.578_ 2-.5-8 3.742 3:742 3.7i 4.905 4.905 4.905 4.6S7 4.887 4.887 6.S54 6.854 6.8S4 ' A !.304 1.304 1.304 _ _ . _1.956 _1_ 5.956 3.95 _ .896 .388 .88 i.42i -. 4-3 - 1.42i 1.3?ZP 1.325 1.325 2.276 2.276 2.276 2.lu -O 2.180 -2.1584.0.8 .5.00.±'e 4-.006 2.828 2.6282 ------6- 5.564 5.564 5.564 1.374 1.374 1.374 2.896 2.896 2.896 .86 .64 5 _ _ 1.94 1.948 _ 1.948...... 126 .126 .126 .303 .303 .303

t, .

REAL IRR AFTER TAXES * 6.261 X INFLATED IER AFTER TAXES 153.700 X _ _ REAL IRR BEFORE TAXES * 6.261 2 ILA I TED IRM BEFORE TAXES A13J.70XO_ RLAL IRRON EQU)ITY I 6.251 X INFLATED IRR ON EQUITY ' t2.700 X

REAL 1964 NPV AFTER TAXES 6 0.000t a 5.58 INFLATED 1964 NPV AFTER TAXES 6 0.0002 I 5.857V ThEACT9OUWUEPV-CEF*CE-TAKESV 0.0002 5.58S IWfLATED 5964 NPV BWFORETAXES C 0.0002 * 46.957 '4 REAL 14 NPWYC' EQUITY 6 0.0001 5 5I583 INFLATED 1994 NPV ON EQUITY a 0.0002a 1*.057 4 R-tAL i894 NPI AFTEA TAXES 0 5.000a * .844 INFLATED 1964 NPV AFTER TAXES 0 5.0002 * 8.059 ,' REAL 1964 NPY SEFORE TAXES 6 5.0002 .*66 INFLATED 1964 NPV BEFORE TAXES 6 5.0002 * 8.059 1: REAL .4 NPY CN EQUITY 6 5.0001 a .064 INFLATED 1964 NPV O1 EQUITY a 5.000X 8.059 REAL 1964 NPV AFTER TAXES 6 10.000 a -2.024 INFLATED 1994 NPY AFTER TAXES 6 10.0002 a 2.663w REAL I984 NPV BEFORE TAXES 1 10.0002 I -2.024 INFLATED 1964 PIY DEFORESTMES U J00P.Q0* .2.453.. REAL 5If4 NPV ON EQUITY 0 I0.000 i -2.024 INFLATED 5964 NCY ON EQUITY 6 I0.00O a 2.653

NOTE THE SALVAGE VALUIE IN 1997 IS EOUAL TO THE WORKINOCAPITAL 0LY.

6-21-04 JEAN L.LOYER Attachment II

ROSEZI.ELC'OLD PROJEC.T.CASE 2

.PWI'~fT AND LOSS STAMEIENT- - ...

MILLIONS CF DOCLLARS YEAR £905 £98 £987 1980 199 1990 5991 1992 1359 19'94 1995s £994

TOTAL SHIPMIENTS 0.000 0.000 .026 .024 .020 .019 .017 .019 .022 .023 .019 .014

TOTAL REVENM.ES 0.000 0.000 11.250 11.205 13.433 9.748 9.591 11.417 14.13$ 15.715 13.593 10.909

COSTS - - TOTAL C'OSTS 0.000 0.000 5.304 5.677 4.075 4-.500 4.630 7. "2 8.418 9.200 9.853 9.515

OTHER FIXED COSTS GEN. &tAD- O.C 0i.000 .260 .226 .224 .240 .257 .275 .294 .315 .337 .340 EXPATS. 0.000 0.000 .491 .363 .313 0.0.30 0.000 0.000 0.000 0.000 0.000 0.000

OPERATING PROFIT 0.000 0.000 53.193 4.;f39 7.001 3.00* 2.704 3.460 5.225 6.192 3.404 1.034 INTEREST EXPENSE 0.000 0.000-0-.09)1 .643i .445 .37 .44'4 .434 .310 .202 .112 .030 AflORT1ZATION 0.000 0.000 .238 .389 .389 .3,3 .3*9 .150 0.000 0.000 0.000 0.000 DEPRECIKATION . --..... 0 Q...9 ~0. 2.. 2 4 .i.....5 2AL....0....2 8~221..A 5....0

MET IWCC4IEBEFORE TAXES 0.000 0.000 3. 157 1.SU 4.121 .202 -.303 .867 2.825 3.790 1.035 -1.2"0:

"IAiA§LIINCOME ~~~~~0.0000.000 3.157 1.856 4.121 .202 0.000 .367 2.325 3.790 1.035 0.000 INCOME TAXES 0.000 0.000 0.000 0.000 0.0"00 0.000 0.000 0.000 0.000 0.000 0.000 0.000

NET INCOME AFTER TAXES 0.000 0. O)') 3.157 1.054 4.121 .202 -. 303 .37 2.325 3.790 1. 035 -1. 29 * CW9AATIVEZNCCEIE A.?. - 0.000 0.000 3.557 5.014 9.13! 9.337 1.0349034 $.9019.901 82.7242.72 14.554 57.5553 16.501429135393V

6-21-84 .JEAN L.LIDYER AttachmentII

ROS-7EDEL.G01.D PRCL.ECT.CASE 2 .SOURCE ANDi APFLISCATION OF FUINDS.MILL IONS. OF DOCLLARS.

YEAR I*8 *..S-196 39187 ---1988 .... 19L;9 -- 19 I99t 1992 19935 1994 19-95 19P96 SOURCESOF FUNDS

NET INCOMEAFTER TAXES 0.000 0.000D 3.157 1.856 4.121 .202 -. 0 .66.7 2.6825 .790i 3.0315 -I.2*8i AMORTIZATION 0.000 0.000 .238 .389 .389l .38$9 .38P * 350 0.000 0).0 0.000 0.000 -.- DEPREUIATION ... 0. 000--O. 000---1. 798 .- 2. 045 -2.045 -2.050O .4175 a.Oot..2.0s.2201-. . .2.257 -2.302 INTERESTEXPENSE 0.000) 0.000 0.000 .643 .445 .367 .444 .4.34 .318 .202 .112 .030

-CAPITAL CONTRIOUTIONS - 3.986 -..5.998 -. 0.000-~0.000-.0.000 --0.000 --0.000 - 0.000 0.000 0.000 0.000 .0.000 LONO TERM LOAN.EXP.FIN. 1,936 2.867 .6589 0.0'') 0.000 0.000 0.000D 0.000 0.000 0.000 0.000 0.000 L-ONGTERM LOAN.IBRD 1.345 2.041 .857 0. 0Cr) 0.00loc 0.000 0.000 0.000 0.000 ('.000i 0.000 0.000 .-..---L0N0.TERMLOAN, DEFIcIrF.. .---D.00o0. 000...... Ot00 0.000 0.000 1.000.000....O00..0. 000-0.000. --0.000.. 0.000 *0.000. - * SHORT TERNLOANS 0.000 0.000 0.0CC' 0.000. 0.000 0.000 0.000i 0.000 0.000 0.000 0.0(00 0.000

TOTAL SOURCES . -. 7.248 10.903 ---6.709 .. 4.939-.7.001I.3.. .00$ .-2.704 -.3.440 --5.225 6.192 3.404 1.034 * APPLICATIONSCiF FUINDS PLAN4TS. EQUIPMENT 6.607 9.895 2.270 0.000 0.000 0.000 0.000 0.000i 0.000 0.000i 0.000 0.000 PREOPERATINOEXPENSES .640 .252 0. 000 0. 000 0. 000 0. 000 0.000 0.000 0.000 0. 000 0.000 0. 000 ....-....INT.DURINOCONSTRUCTION ...... 0.000 -. 300..5 ...... 05-.000. .-...0000.. 0.000 -. 0.000-..0.000-..0.000. - 0.000C 0.000 .0.000 WORKINO CAPITAL 0.000 .46a3 .345 .034 .104 -.096 .088 .333 .328 .301 -.089 -.914 CAPITAL IMPROVEMENTS 0.000 0.000 0.000) 0.000 .042 1.147 3.195 3.051 1.090 .52e8 .597 0.000

INT REST.EXP.FIN. 0.0030 0.000 0.000) .49') .475 .425 .340 .267 .185 .304 .034 .005 INTEREST:IEBRD 0.000 0.000 0.000 .403 .378 .328 .277 .227 .376 .326 .076 .025 ZNTEREST DEFICIT. -. O.000,.... 0O00 . -0.000...0-.000..0.000..-...000 .SO.0*00-,.0.000--0.000) O..000....0.f00.-.-O.000 SHORT TERM IN4TEREST 0.000 0.000 0.000 -.244 -.408 -.386 -.182 -.059 -043 -02P~ 0.000 0.000

'--AMORTIlZAT ION.EXP.FAN. 0. 000 .0... 00..0. OOL....0.0."Oz....3 It 71L.OZ.... SO...... 07-...-.72-.38--.3I * AIIORTIZATSON,IBRD 0.000 0.000 0.000 0.000 .530 .530 .330 .530 .530 .530 .530 .530 ANIORTIZATION.DEFICIT 0.000 0.000 0.000 0.000) 0.000) 0.000) 0.000 0.000 0.000) 0.000 0.000 0.000 SHORT TERM MRIANN- ---. 0..000-O00-.00O-.JI.-..JO-.C0-O00 000 00)..000...0-.-. DIVIDEND PAYMIENT 0.000 0.000 3.305 2. a89S53.744 1.959 .56.3 .5336 2.380 4.356 3.664 1.278

...... XOTP. PPLICATIOJ4S -...... 4. 4i~..f3Z.zt.,Q32La 2L3.15n0....44.2~3 .

NET CASH FLOW.YEAR 0.000 0.000 2.036 1.362 -. 165 -3.6*7 -1.023 -. 333 -. 3263 -. 232 0.000 0,000 CASH FLO1W14 DIVID..YEAR 0.000 0.000. 3.342 .-A.25&....5.55*-..-.262..-.....460...... 405.....2.252. 3.925 .. 4..1.2780. CIMUIL. PIET CASH FLOW 0.000) 0.000 2.0:36 3. 398 .3. 213 1.516 .49.3 .359 .232 0.000 0.000 0.000 C-UMUL.SHORT TERIMD'EBT 0.000 0.000 , 0. 000.0000--0.0O....0. 000 -...0000 . 0. 000. . 0. 000. 0.000 0.000 0.000 CUMULATIVE DIVIDENDS 0.000 0.000 1.305 4.200 9.944 11.90.3 12.464 1.3.004 15.384 19.540 21.206 22.484

6-23 -84 JEAN L.L.OYER At_tachmentII

RC'SEPELGOLD PROJECT.CASE 2

MILL.IONS OF DOLLARS

YEAR 1985 5984 1987 1988 1989 1990 5991 5992 5993 1994 1995 1996

OPERATING0CASH 0.000 .138 .147 .159 .149 .172 .199 .224 .239 .256. .247 0.000 RECEIVABLES 0.000 0.000.. .1....1..7...7. .26...17.-.3.. .437 --. 378 .-. 303. INVENTORV 0.000 .744 .796 .852 .951 .929 1.077 1.208 1.291 1.381 1.334 0.000 2 EXCESS CASHi 0.000 0.000 2.036 3.393 3.213 1.514 .49.3 .359 .232 0.000 0.000 0.000 CURRENT ASSETS 0.00 .88 3i.292 4.7 18 T.6C71- 2.8 2.035 2.108 2.1-54 2.4 198 .303

.._.PLANT At EQUIPMiENT ..-. 6.607 16.492. 1.2.876..88.L.121..21.146. _22.196...23.286.,.23.814.24.411 .-24.41L LESS DEPRECIATrON 0.000 0.000 -1.790 -3.843 -3.$S8 -7.937 -10.1I2 -1Z. 120 -14.202 -16.402 -18.659 -20.96! OTHER ASSETS .640 1.192 1.945 1.143 1.945 1.9)4 5 1.945 1.945 1.945 1.945 1.945 1.945 LESS AMORTIZATION 0.000 0.000 -.23.S..._.ztA27r-1. 014%6 4.174 595 :.4 1.t-45 -1.945 1:-.945

TOTAL FIXED ASSETS 7.248 17.685 18.670 16.236 13.844 12.553 11.164 10.')76 9.085 7.412 5.751 3.450

TOTAL ASSETS 7.248 19.564 21.94'2 2...54O 1851 .4 13.-2-2' 12.185 11.239 9.4*5 7.710 3.753

PAYABLES 0.000 .413 .442 .473 .506 .516 .3989 .671 .717 .767 .741 0,000 -SHORT TERM DEDT_000 0...S00 .00.0 .0 ..._0O0000.e.Oj.0'...0 oO000.000_...... LONG TERIM DEBT.CUIRRENT 0.000 0.000 0.000 .650 1.;327 3. 4*7 1.4.37 1.437 1.437 1.11$ .640 0.000

CURRENT LIABZLITI, 01.0A9g_.41±a 442, 1.323 J.8:4 1.954 2.1135 2.108 21-54 18 -91-.O

LONG0 TEAlS DEBTvEXP.FlN. 1.916 4.783 5.441 3.122 4.324 3.418 2.511 1.604 .697 .1*0 0.000 0.000 *LONO TERtlDEBT , WD-D.1.345.. LONG0TERM DEBT.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000) 0.000 0.000 0.000

___S-OCIAL RESERVES -- ~ O...0 0 NET PAID-IN EQUITY 3.986 9.984 9.984 9.984 90.984 9.984 9.984 9.984 9.984 9.984 9.984 9.984 RETAINED EARNINGS 0.000 0.000 1.032 .813 -.809 -2.564 -3.432 -3.103 -2.657 -3.024 -3.656 -4.231 TOTAL EQUITY 3.984 9.984 1.3 1077 9.175 7.41$9 6.552 4.8*1 7.327 4.960 6.329 3.753

TOTAL LIABILITIES 7.248 18.566 .21.962 .20..254..-f...1L.5ti5.4l41. 13.220.12i5..1.3..48 7.710.._,3. 753

DEBT COVERAGE RATIO N.A. N.A. N.A. 9.338 5.999S 2.175 1.550 1.978 3.034 3.715 2.768 1.542 CURRENT RATI1O N.A. 2.1333 7.445 3.567 2.547 1.479 1.000 3.000) 1.000 1.100 1.418 N.A. DFLOT/EQUIITYRATIO .828 .85 .818 . 818 . 838SI .81* .707 .46.4 .240 .092 0.000 0.000

6-215-*4 ..IEAN L.*I OVECR Attachment II

ROSESEL OOLD PROIEC T.CA$E 2

CASHFLOW$.RATES OF RETURN & NET PRESENTVALUIES.. . FUNDS IN MILLIONS OF DOLLARS AND IN 1984 REAL TERMIS OR INFLATED (CURRENT)TERMS.AS SPECIFIED.

_ ___ .... __.C.ASH FLOW IN REAL TERMS- ...... _ CAS-FLW-IN -INFLATEDRMS- AFTER TAXES BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITY

-6.773 -6.773 -3.725 -7.248 -7.248 -3.986 -9.263 -9.263 -5.239 -10.605 -10.605 -5.99 ... __., .__ 2.105. 2.105.-1.0_6 . 3.742 3.742 2.209 . 4.905 4,905 2.995 4.887 4.687 4.095 6.654 4.654 5.744 ~. . . .. I.304 I 1.304 ..I.305. _____ ._._ 1.956___ -.--. 959-.- .... - .Ces .865 .35W 1.421 1.421 .563 ''I .325 1.325 .313 2.276 2.276 .5S3 __. 2. 1eo ....2.18 I I ...... 9_.O _2380__.-_...... '_400a 2.828 2.628 2.113 5.564 5.564 4.155 : 1.376 1.376 .792 2.894 2.094 5.464

.126 .526 .124 .303 .303 .303

REAL IRR AFTER TAXES * 6.261 Z INFLATED IRR AFTER TAXES t 13.700 X; __...REAL._._ IRR BEFORETAXES t .TE2616 XItDNAOtEt-BE_lRETAX XES...zo.13..._ 0-... _. ': REAL [RR 014 EQUITY t 10.181 X , INFLATED IRR ON EQUITY a 17.893 X4

'; . REAL.12584-NP%AFJER_-TAXES_9_6.O.OODXI . 565 'sEL&N-ATEnE 984 NOU Aeat rSAXES-J-0.40Z -O--- 16.857. , . REAL 1984 NPV BEFORE TAXES 6 O.OOOX * 5.585 INFLATED 1984 NPV BEFORE TAXES 6 0.000X l65. 857 REAL 1984 WV ON EQUITY 6 0.OOO t 5.266 INFLATED 1984 NPV ON EQUITY 6 0.000X a 12.803 ;J -.-....-. ___ ..-...... -...-.----.------.- *. -- _._--_-. ;, ~~-.-.. _,--__._ _....-...--.- REAL 1964 NPV AFTER TAXES 6 5.000X .866 INFLATED 1984 NPV AFTER TAXES 6 5.000 * 8.0o59 ,, REAL 1984 NPV BEFORE TAXES 6 5.0ooo a .866 WLATED 1984 NWVBEFORE TAXES A 5.000? a 8.059 ______.__ t_.EAL-5F1.4lNRV_QNLEQUITY . 9_.5.0X a_ _.0o !NELATELIS4 NeV lLEQULLY __5.000X _6.931___ .;

REAL 1984 NPV AFTER TAXES 6 10.000X I -2.024 INFLATED 1984 NPY AFTER TAXES Q i0.000Y. a 2.653 REAL.... 1984 NPV BEFORETAXES 0 50.000o 8 -2.024 .... _4NELATED-1924-1.PV.-BEEORE...TAXES.. W. 6.10.000X t. . 2.653 . REAL 1984 NPV ON EQUITY a 50.000X a .057 INFLATED 1984 NWV ON EQUITY a 10.00oY. t 3.230

NOTESTHE SALVAOEVALUlE IN 1997 IS EQUALTO THE WORKINOCAPITAL ONLY.

6-21-84 JEAN L.LOYER Attachment:_II

RO$EDEL GOLD rROJECT.CASE 3

PROFIT AND LO0$SSTATEMENT . - -~-~~. * IIILLICOiS OF DOLLARS

* YEAR 1985 1994 1%97 1996 1989 1990 1991 1992 199 1994 1995` 1996

* SHIPMENTS______I. 0.00 .000 .026 .024 .028 .019 .017 .019 o022 .023 .0,e .0a4

., I

*_ INCOME ______I.. * TOTALREVENUES-_ .co"oo .2011.20 13.613 9.748 V.591 11.417 14.1f38 575 353i0,,

_COSTS______' TOTAL COSTS ~~~~~~0.0000.000 5.306 5.677 6.075 6.500 6.630 7.682 8.618 9.208 9.853 9.515

* OTHER FIXED COSTS______--- GEN.- -li'AM . . - . -25 .24 a.4 Ti. .275 .24 31 .37 .0 . EXPATS. 0.000 0.000 .490 .363 e313 0.000 0.000 0.000 0.000 0.000 0.000 0.000

OPERATING PROFIT 0.000 0.000 5.193 4.939 7.001 3.008 2.704 3.460 5.225 6.192 3.404 1.034

'- INTEREST-EXPENSE 0.10.032oO~U~r ~ 5TS E W 9~ 59 * 5 .3 AM1ORTIZATION 0.000 0.000 .322 .691 .691 .691 .691 .3969 0.000 0.000 0.000 0.000 DEPRECIATION 0.000 0.000 178 205 2.045 2.050 2iZ.171 2.0,08 2.082 _-, .OA 1 2.30? NET INCOME DiEFORE'TAXES 0.000 0.000 3.074 .14.5 2.678 -1.034 1.1 .051 2.215 3.424 .989 -1.236 1 f~~~~jcjjj~~~~~ oTb.6_ 0.000 3.074 .165 2.678 0.000 0.000 .0at 2s215 3.335 .999 O.0O" INCOME TAXIES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

NET INCOMEAFTER TAXES 0.000 0.000 3,074 .365 2.678 -1.036 -1.319 .051. 2.215 3.424 .989 -1.236 ~~ ~~~~~'0003.074' 325~~~~~~~---67Y1~~~~Io ~3.561 3.612 5.e27 C 011O2464

6-21-84 ~JEANL. LOYER--. --.- --.--. ... , ... . Attachment II -V ROSEEEL GOLD 'PROJECT,CASE3 .SOURCEAND AFPLICATIONOF FUNDS.,MILLIONSOF DOLLARS

YEAR 1985 .1986 1987 .198'?I.....J2...... 19?1. 1992 19'3 19P4 1995 1996 SOURCES OF FUNDS NET INCOMEAFTER TAXES 0.OOO 0.4000 3.074 .545 2.678 -1.036 -1.319 .051 2.215 3.424 .989 -1.234 * AMORTIZATION 0.000 0.000 .322 .691 .691 .691 .691 .369 0.000 0.000 0.000 0.000 * -- DEPRECIATION__ .. 0..QO.0,.. _IQ.0_.1.....1,.79.~2.C. _ _tH000 ...... 2..C.2.1798_ 2.0t.45..2.O2...... 2. . 2572 . 2.3o2._ __' INTERESTEXPENSE 0.000 0.000 0.000 2.0.39 1.587 1.303 1.157 1.032 .928 .366 .158 -.032

CAPITAL CONTRIBUTIONS 0.000 0.000. OO0.o O.00...O.00_.o.._I.036 _.1,319 0.000 - 0.000 0.000 0.000 0.000 LONG TERM LOAN.EXP.FIN. 1.916 2.047 .658 0.000 0.000 0.000 0.000 0.000 0.o00 0.0o0 o.o000 0.000 LONG TERM LOAN.10RO 2.666 4.229 1.900 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .:L___LONO TERMLOAN,COMMERCIAL - _ 2.466 __4.22? _ t.Q..S.Qu) .0.OsL Q)Q'> f ) _!.00.00 Q0..000..0000-. LONO TERM LOAN.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 .097 1.777 .835 0.000 .076 0.000 SHORT TERM LOANS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.079 n

TOTAL SOURCES 7.246 1i.32i 9.652 4.939 7.001 4.043 4.120 5.237 6.06 6.192 3.i480 2;.12 ;-_APPLICATIONS OF FUNDS _.

PLANT & EQUIPMENT 6.607 9.885 2.270 0.000 0.000 0.000 0.000 0.000 0.000) 0.000 0.000 0.000 : ___PREOPERATINO EXPENSES.M..640 _. 252..QOQj)&...... 0.000..00..0. 000___...... : £NT.DURINOCONSTRUCTION 0.000 .719 1.844 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WORKINO CAPITAL 0.000 .468 .345 .034 .104 -.096 .0156 .133 .128 .101 -. 089 -.914 1; CAPZIAL IMPROVEMENTS.. -Q, _

INTEREST.EXP.FIN. 0.000 0.000 0.000 .490 .475 .425 .343 .267 .185 .104 .036 .005 INTEREST.IDBRD _ . -.,00 9.000. .-. .000..0... QO._ 3 ... Z3. .Z_.5Z4_ A .A.4.4_.24 IS7-052 .-. INTEREST,CWIMERCIAL 0.000 0.000 0.000 .967 .907 .704 .465 .544 .423 .302 .161 .060 K fl'" INTEREST,DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .011 .203 .241 .118 *031 " SHORT TERM INTEREST 0.000 0.000 0.000 -.254 -.579 -.587 -.430 -.259 -. 249 -.340 -.334 -. 018 AMORTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 .319 .797 .907 .907 .907 .907 .567 .lo0 AMORTIZATION.sIBRD 0.000 Q0.00 0.000 _0000 1.099 Al29 h00L.O'? 1.099 1,0f J2L _ Q29 .;I s AM0RTIZATION.COMMEAtIALT 0.000 0.000 0.000 0.000 1.099 1.099 1.099 1.09 1.099 1.099 1.099 1.099 AMORTIZATION,DEFICIT 0.000 0.000 0.000 0.00O 0.000 0.000 0.000 0.000 .048 .937 1.304 .418 SHORT TERM AMORTIZATION 0.000.0L000 0.000 0.000 0.00 0.'.0O 0.000 0.000 O.qOO OSOQp_. .. QO_ ._piQQ.,__ - DIVIDENDPAYMENT 0.000 0.000 3.074 .165 2.67a 0.00'i 0.000 0.000 0.000 1.004 0.000 0.000

TOTAL APPLICATIONS 7.248 11.324 7.532 _.2.237.-4.j2t__5..350.5SC6_.3...5S322.5.300 6.243. .. 4.758 -11780. NET CASH FLOW.YEAR 0.000 0.000 2.120 2.702 .071 -1.306 -1.426 -.065 .741 -.051 -1.277 .333 CASH FLOW & DIVID.,YEAR 0.000 0.000 5.193 2.a4? _2.749*.__ -1.426 .Q .,279..1 .2333 CUHUL. NET CASH FLOW 0.000 0.000 2.120 4.822 4.893 3.587 2.141 2.076 2.637 2.786 1.509 1.641 CUIIUL.SHORT TERM DEBT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.079 CUMULATIVEDIVIDENDS 0.000 0.000 3.074 3.230 5.916 5.916 5.916 5.916 5.916 6.920 4.920 6.920

6-21-84 JEAN L.LOYER Attachment 11

ROSEBEL GOLD P'ROJECT.CASE 3

BALANCE SHEET

MILL IONS 0F DOLLARS

YEAR 1985 - 906 -1987 1988 5989 3990 19I3 1992 1993 1994 *1995 3996

* ASSETS ______

* OPERATING CASH 0.000 .138 .147 .158 .169 .172 .I" .224 .239 .256 .247 0.000 RECEIVABLES p.900 o.ooo .312 31 lL .378 .27t.2 .. 37 .7**.303_~!9 INVEN4TORY 0.000 .744- .79 _52.8_ .911 .929~ -1.07~7 1.208i 1.291 1.381 1.334 0.000 * EXCESS CASH 0.000 0.000 2.120 4.822 4.893 3.5a7 2.361 2.076 2.837 2.786 1.509 1.841 * CURRENT ASSETS Ob" ThS6 6.143 6.3T41 5 3.04 3.825 475 4.9 347 2.4

PLANT & EQUIPMENT _6.607 16.492 18±762 16.762 38.804 -22. -"LEss DEPRECIATION 0.00 0.00 1.78 3.43 -5.88$ -7.937 -10.112 -12. 120 -14.202 -16.402'-18.659 -20.941 OTHER ASSETS .640 1.611 3.455 3.455 3.4535 .3.455 3.455 3.455 3.455 3.455 3.455 3.455 -.LESS AMIORTIZATION 0.000 0.OQO:-.322h1013 -1.704 -2.395_ 3,06 -___3,455 -345345 -3.455445

TOTAL FIXED ASSETS 7.248 19.103 20.097 17.361 14.667 33.07:3 11.402 10.076 9.085 7.412 5.751 3.450 TOTAL ASSETS 7.248 18:985 23.472 23.503 23.018 10.0-33 15.106 13.901 13.844 12.271 9.218 5.594

; --* LIABILITIES...... ______- PAYABLES 0.000 .413 .442' .473 .506 .514 .598 .671 .71L7 .767 .741 0.000 -SHORT TEAM DEBT 0.000 0.000 9.000 0.000 0.000 0.000 0.100' 0.000 0. 000 .9.- . IS,9Q.zQ7 LOGTERM DEBT.CURRENT 000 .00 .00 258 2.996 3.1059 3.105 3.154 4.02 402 .76 03 CURRENT LIABILITIES 0.000 .413 .442 2.99t 3.502 3.622 3.704 '3.1125 4.759 4.859 3.467 1.117

LONG TERN DEDT,EXP.FIN. 1.916 4.783 5.441 5.122 4.324 3.418 2.511 1.404 .697 .110 0.000 0.000 __LONO TERM DEBT, lBRD -. 66 6.,895.4 1 Zt3. ,A5L.....A59' AVJ4....ALf7_%2...lj..Ql....QQO...A___ * LO TERM DEBT,COMMERCiAL 2666 6.894 8.795 -7.695 6.596 5.497 4.a97 3.298 2. 19S9 1.09S9 0.000 0.000 LONG TERM DEBT.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000) .097 1.825 1.724 .418 .076 .038

__09CIAL RESERVES - -- ooo o.cb obW.00 .0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 NET PAID-IN EQUITY 0.000 0.000 0.000 0.000 0.000 1.036 2.355 2.355 2.355 2.355 2.355 2.355 RETAINED EARNINGS 0.000 0.000 0.000 0.000 0.000 -1.036 -2.355 -230 - :089 2.331 3.320 2.084

TOTAL EQUITY 0.000 0.000 0.000 0.000 0.00') 0.000) 0.00') .051 2.267 4.684 5.675 4.439

TOTAL LIABILITIES 7.248 18.985 23.472 23.50.3 21018-l i8O.b3Ji 1571'04 13. 901 13.844 '12.271 9.238e 5.594

DEBT COVERACGE RATIO N.A. N.A. N.A. 4.258 2.540 1.350 1.037 1.259 1.861 1.814 1.072 1.000 CURRENT RATIO N.A. 2.133 7.634 2.054 1.814 3.36.9 1.000 5.0)0 5.000 3.000 1.000 1.920 DEBT/EQUITY RArTIo N.A. N.A. N.A. N.A. N.A. N.A. N.A. 1%. 174 :3.008 .592 .013 .009

6-231-04 JEAN L.LOYER Attachment II

ROSEE.gLGOLD PROJECT.CASE 3

CASH FLOWS.RATES OF RETURN & NET PRESENT VALUIES. -- ______FUNDS IN MILLIONS OF DOLLARS AND IN 2984 REAL TERMS OR INFLATED (CURRENT) TERNIS,ASSPECIFIED.

______CASH FLOw,~IN?E!Jgf~ISCASH FLOW IN INFLATED TERM AFTER TAXES BEFORE TAXES ON EQUJITY AFTER TAXES BEFORE TAXES ON EQUITY

-6.773 -*.773 -.000 -7.248 -7.248 -.000 -9.243 -9.263 -.000 -10.605 -50.405 -.000 ______2~~~~~205.3_--___2,509. '2.szs I.MzO - 3Z4. 3.742 3.742 .126 4.905 4.905 .145 4.887 4.887 1.909 6.054 4.854 2.476 v * .~~~~~- .1.304 . .. .1.304.. -690..~ .5.... .5 .885 .635 -.822 1.421 1.421 -1.319 1.325 1.325 0.000 2.274 2.274 0.000 ______~~2.160.)21280... . . 4LQ0S 008 40000 2.828 ~~~2.828 .515 5.564 5.54A4 1.004 1.374 5.374 0.000 2.696 2.896 0.000 ____ .84~05 __ _8.6k5. Z . 9 t0 9 1.948 6.2______.126 .126 .11 .303 .303 .989

REAL ERR AFTER TAXES 6 .241 V. INFLATED tRR AFTER TAXES 1 3.700 K U~ ~ REAL..IRR ~~BEFORETAXES I .. 21N - IELATEftJ-BR.BEEORE-TAXES.'--.13.700..Y.. REL REAL ERR ON EQUITY a INFINITE INFLATED IRR ON EQUJITY I INFINITE

REAL S4EY AT5B ZT-JAXkLL.t.A1 000K I . 5~A ~ INFLATED1984 NM? AFTRFLTAJaNKtJOQJ2JL. I I 4...J&..ftS 31 ~~REAL1984 ICYVBEFORE TAXES I 0.000% I 5.5e5 INFLATED.1994 NP) BEFORETAXES 0 0.000K a 16.657 * ~~~REAL1984 NWV ON EQUITY a 0.000% I 3.953 .INFLATED 1984 WY ON EQUITY a 0.000K a 5.555 J REAL 1964 NWV AFTER TAXES I 5.000K .946 INFLATED 1964 NPV AFTER TAXES 0 5.000% a 8.059 REAL 1984 WV BEFORE TAXES 0 5.000% I .866 IWFLATED 1984 NPV BEFORE TAXES 0 5.000K I 6.0591. .9 ~~~REAL2984 WV ON EQUITY 0 5.000% 1 3.199 IN4FLATED1984 WY~ ON EQUITY 0 S. )00K a 4.319 I.

REAL 1994 NPV AFTER TAXES 0 50.000%I -2.024 INFLATED1984 NPV AFTER TAXES 0 10.0007. 2.453 - REAL 1984 NPV BEFORE TAXES 0 10.000% a -2.024 * IN!lLATEOJI9S4.WeY DEFORE.TAXES eI j0OOOK a .2.653. * ~~~REAL2984 NPV ON EQUITY 0 10.000K 2.661 INFLATED 1964 NPV ON EQUITY e 10.0007. 3.496

NOTEs THE SALVAGE VALUE IN 2997 15 EQUAL TO THE WORKING3 CAPITAL OILY.

6-22-64 .JEANL.LOYER - Attachment II

ROSEBEL COLD PROCECT,CASE 4

PROFIT AND LOSS STATEMENT A

MILLIONS OF DOLLARS

YEAR 1985 1986 1987 1968 1989 1990 1991 1992 1993 1994 1995 1996

SHIPMENTS' .. . TOTAL SHIPMENTS 0.000 0.000 .026 .024 .020 .019 .017 .019 .022 .023 .010 .014

INCOME ______,______. . TOTAL REVENIES -o-.0oo 0.000 10.639 10.596 12.872 9.217 9.069 10.796 135368 14.060 12.954 10.315

_ COSTS - ______. - TOTAL COSTS 0.000 6.o00 5.306 5.677' 6.075 6.500 6.630 7.682 8.618 9.208 9.853 9.515

OTHERFIXED COSTS 0 .. 3 OEN. & ADM 0.000 0.000 .260 .226 .224 .240 -.237 .275 .294 .315 337 .340 EXPATS. 0.000 0.000 .490 .363 .313 0.000 0.000 0.000 0.000 0.000 0.000 0.000

OPERATING PROFIT 0.000 0.000 4.501 4.329 4.260 2.477 2.102 2.039 4.456 5.337 2.664 .440 ;

INTEREST EXPENSE 0.000 0.000 b.ooo 2.034 1.595 1.301 1.156 1.031 .932 .654 .211 .099 AMORTIZATION 0.000 0.000 .322 .691 .691 .691 .691 .369 0.000 0.000 0.000 0.000 - DEPRECIATION . 0.000 0.000 1.798aR_2...j 2.04S 2.05 2dnS _2,40_ -2.4e.a 3 * NET INCOME BEFORE TAXES . 0.000 0.000 2.441 -.443 1.939 -1.544 -1.640 -.549 1.443 2.493 .196 -1.960 ; JAXA1E INCOKE 0.000 0.000- 2.461 0.000 1.939 0.000 0.000 0.000 0.000 0.000 .196 0.000 * INCOME TAXES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 ,0.000 0.000 0.000 tO

NET INCOME AFTER TAXES 0.000 0.000 2.461 -.443 1.939 -1.564 -1.840 -.549 1.443 2.4033 .194. -1.960 U' CItIUATIVt INCO1E g.T. 0.000 0.660 2.461 2.019 3.957 2.393 .553 -.015 1.427 3.910 4.106 2.146

6-21-84 JEAN L.LOVER Attachment II

ROSEBEL GOLD PROJECT.CASE 4 .SOURCE AND APPLICATION OF FUtIDS.MILLIONSOF DOLLARS

YEAR *~- 1985 3986 1987 3988 Ij,98- JfG.Il. 1f2A93..19l4. -1?95I -996--. SOUIRCES OF FUINDS

* NT IjNCOMEfAFTER TAXES' 0o.000 0.0001 2.461 -.443 17.9539-1. 564 -1.'840 -.369 1.443 .8 14-.6 AMORTIZATION 0.000 0.000 .322 .491 .691 .491 .691 .369 0.000 0.000 0.000O 0.000a DEPRECIATION 0.000 0.000 1.798 2.045 2.0C45 2.050 2.175 2.008 2.092 2.201 2.257 2.3022] IhTFAE4T_E*0ERS0.000 0-.O000 0.000 2.036 1.585 1.301 1.356 3.031 .932 .5 21 .9

CAPITAL CON'TRIBUTIONS. 0...P~00 0.000 - .9000 .443 0.0O0. .5.4J1.840,569* 0.000 0.000 0.000 090____ - i3$bO TERN LOAN.EXP.FIN. 1.1 .867 '.58 0.00 .00 000 0.000 0-.00bd 0.-0b00 0.000 -0.000 0.000 6 LONG TERM LOAI4,IBRD 2.666 4.2291 1 .892 0.000 0.000-I 0.000 0.000.C 0.000D 0.000 0. 000 0.000 0.000 * LONG TERM LOAN.CONMERCIAL 2.666 4.229 _1.892 _0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONG _TERN LONDFCIfT 0.000 0.00 000 .00 000 0.00 .05 193 147 32 1.449 .564 * SHORT TERM LOANS 0.000 0.000 0.000 0.000 0.000 0.000 .335 0.000 0.000 0.000 .343 2.296 TOTAL SOURCES ~~~~~~~~7.24811.324 9.023 4.772 6.260 4.041 4.442 5.237 6.093 5.499 4.457 3.300 * APPLICATION-S OF FUJNDS

* PLANT & EQUIPMENT 6.607 9.885 2.270 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 -.- PREOPERATINO EXPENSES .440 .252 0.000 *0.OOQ 0.900 9.000 0.000 0.000 0.000 0.000. ._.-Q..00p.9.0goo.*. -INT.DUJRING CONSTRUICTION' " 0.000 .719' 1.8644 0. 000 0l.000l 0.000) 0.000 0.000 0.000 0.000 0.000 0.000b WORKING CAPITAL 0.000) .468 .328 .034 .101 -.090 .089 .231 .124 .0OSS -.036 -.910 CAPITAL IMPROVEHIENTS 0.000 0.000 0.000 0.000 .042 1.147 1.195 1.053 1.090 .528 .597 0.000

INTEREST.EXP.FIN. 0.000 0.000 0.000 .490 .473 .42$ .348 .267 .385 .104 .036 .005 t NTEREST, laRD .0 0.0000.Q90.85 78 .479 5S Z...... 5 2JNf~~RE4fi~~~5,41~~g5Ij$L 0.000 0.000 0.000 ~~~~.9466 .906 .785 .66,4 .544 .423 .302 .181 .060 INTEREST,DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .012 .210 .334 .225 .234 :. SHORT TERM INTEREST 0.000 0.000 0.000 -.254 -. 579 -.588 -.431 -.261 -.251 -.346 -.389 -.253...... t

AIIORTIZATIONPEXP.FIN. 0.000 0.000 0.000 0.000 .319 .797 .907 .907 .907 .907 .587 .110 0 9 0 AMORTIZATZ0NPIIRD 0.000 0.000 0.000. L ! 1,98 3.024 10J20A9t6...... I A-j- 9110 ~AMORTIZATION.CO1MNERCiAL0.0 0.000 0.000 0.000 1.099 1.098 1.098 1.098 1.098 3.098 3.098 1.096 - AIIORTIZATION.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .053 .968 3.733 .999 -SHORT TERM AMORTIZATION 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .335 0.000 0.000 0.000 0.000 * DIVIDEND PAYMENT' ---. .o6oobITO, -- -606-3

TOTAL APPLICATIONS 7.249 11.324 4.903 2.070 4.183 5.351 5.543 5.650 5.303 5.351 5.239 2.494 NET CASH FLOW.YEAR 0.000 0.000 2.120 2.702 .077 -1.310 -1.081 -.413 .791 .348 -.763 .806 CASH FLOW Is DIVID..YEAR 0.000 -0.000 4.581 2.702 2.034 -1.310 -3.083l -.413 .791 .348 -.783 *.994

COMML. NET CASH FLOW 0.000 0.000 2.120 4.822 4.899 3.589 2.508 2.096 2.887 3.235 2.452 3.250 CUMIUL. SHORT TERM DEBT 0.000 0.000 0.000 0.000 0.000i 0.000 I.335 0.000 0.000 0.000 .343 2.440 CUMULATIVE DIVIDENDS 0.000 0.000 2.461 2.461 4.4030 4.400 4.400) 4.400 4.400 4.400 4.400 4.400

4-21-84 O'EAN L.LOYER Attachment II

ROSEDEL GOLD PROJECT.CASE 4

-CASH3.FLOWJS.RATES OF RETURN & NET PRESENr VALUES. ~. FUNDS IN MILLIONS OF DOLLARS AND IN 1984 REAL TERMS OR IFLATED (CLIRRENT) TERMS.AS SPECIFIED.

* ------_. -. - CASHFLOW IN REAL TERMS __,__,___ - - CASH FLOW.",1NFL4TgpgTjS AFTER TAXES BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITY

-4.773 -6.773 -. 000 -7.248 -7.248 -.000 -9.263 -9.243 -.C0O -0.405 -10.605 -.000 1.619 1.619 2.009 _ _ 1.983 1.983 2.461 3.277 -3.277 -;338 -. 2-5 4.295 43 - 4.361 4.341 1.382 6.117 6.117 15.939 9 4 _ . t...6 . ..946.. .. .!-1.042 __ 142p._ 1.420 -1.54 .560 .560 -1.146 .698 .898 -1.840 .945 .945 -.331 1.458 1.658 -.569 1.764 1.764 , 0.000 -3-4 - - . .. 34 7 . 3.24_24 3 2.395 2.3P5 0.000 '4'.711 4-.711 0...000 1.023 1.023 0.000 2.153 2.153 0.000 .600 .600 0.000 , , _ _.350 1 1.350 .0.000.- .119 .119 -.535 .287 .287 -1.288

REAL IRR AFTER TAXES I 1.917 2 INFLATED IRR AFTER TAXES 3 9.051 X REAL tRR BEFORETAXES 15.917 2 __ ,_ -__INFLATED IRR BEFORE ThXES! _,9.051._ _ _ .- REAL IRR OlEQJTY--IFLATEDiERR9 OkdEUITY I 7000

-h REAL 1984 WY AFTER TAXES 0.000. 1.592 INFLATED 1984 NPV AFTER TAXES 6 O.OOOX a 502631 . I REAL 59J84 IPVSEFORE TAXES 6 O.OOOX 3 1.592 INFLATED 1984 NPV BEFORE TAXES 6 0.0002 * 10.263 REAL 1984 NPV ON EQUITY 6 0.000% .000 INFLATED 1984 WV ON EQUITY 6 0.00O * -1.304 .

REAL 1984 NPV AFTER TAXES 0 5.000X a -1.982 INFLATED 1984 WCYAFTER TAXES 6 5.000K I 3.484 REAL 1984 .NV BEFORE TAXES e 5.000o , -1.982 INFLATED 1984 WV BEFORE TAXES 6 5.000 * 3.494 - -_ __ REAL 1984 NFV ON EQUITY * 5.000X .441 INFLATED1984 W.Y ON EQUITY 6 5.000 -.. **...... ?4Z_ - REAL 1934 NPV AFTER TAXES 6 10.0002 a -4.124 INFLATED 1984 WV AFTER TAXES 6 10.000 * -.636 REAL 1984 WV BEFORE TAXES e t0.O0OX t -4.124 INFLATED 1984 NF1VBEFORE TAXES 6 10.000 1 -.636 REAL 194 NPV ON EQUITY 6 10.000 * .651 INFLATED 1984 NPV ON ECUITY e 10.00o0 : .283

NOTE' THE SALVAOE VALUE IN 1997 IS EQUAL TO THE WORKING CAPITAL ONLY.

4-21 -84 JEAN L.LCtVER Attachment II

ROSEBEL OOLD PRO.JECToCASE 5

PROFIT AND LOSS STATEMENT ,,, ,,, ,,_, MILLIONS OF DOLLARS

YEAR 1985 1984 1987 1988 1989 1990 5991 5992 1993 1994 195 1996.

0 _ SHIPMENTS , _ ,_ _ _ ,_'_ ; TOTAL SHIPMENTS 0 0.000 .026 .024 .028 .019 .017 .019 .022 .023 .08 .014

INCOME TOTAL kEVENL-ES 0.000 0.000 12.857 12.006 15.558 11.140 10.961 13.048 16.157 17.960 15.535 12.467-

' fl COSTS ,,__ ._____ TOTAL COSTS 0.000 0.000 5.306 5.677 6.075 6.500 6.630 7.482 e.618 9.208 9.853 9.515

OTHER FIXED COSTS OEN. & ADM 0.000.0;000 .260 .2i- .22i ;240 .2S7 .275 .294 .315 ;337 ;360 EXPATS. 0.000 0.000 .490 .363 .313 0.000 . 0.000 0.000 0.000 0.000 0.000 0.000

OPERATINO PROFIT 0.000 0.000 4.801 6.540 8.945 4.400 4.074 5.091 7.245 8.437 5.346 2.592 ,

INTEREST EXPENSE '0;000 0 60 .0 2.043 1.591 1.30d 1.161 1.031 .751 .448 .201 -.007 AMO1RTIZATION 0.000 0.000 .322 .691 . .91.691 .691 .369 0.000 0.000 0.000 0.000 DEPRECIATION 0.000 0.000 1.798 2.045 2.045 2.050 2.175 2.0M8 2.0f2 2.201 _2257 a

NET INCOME BEFORE TAXES 0.000 0.000 4.681 1.761 4.615 .3S1 .047 1.483 4.413 5.788 2.888 .298

T*XASLt-tNCOHE'''--' ' 4.681 1.761 4.618 .351 .047 1.683 4.413 5.788 2.888 .298 INCOME TAXES 0.000 0.000 0.000 0.000 0.000 0.00) 0.000 0.000 0.000 0.000 0.000 0.000 .1

NET INCOME AFTER TAXES 0.000 0.000 4.681 1.761 4.619 .35I .047 1.683 4.413 5.788 2.680 .298

CUIMULATIVE INCOME A.T. 0.000 0.000 4.681 6.441 11.060 11.411 11.458 13.141 17.554 23.342 26.230 26.528

6-21-84 JEAN L.LOYER Attachment II

ROSEC.ELGOLD FROCECT.CASE 5 .SOtRCE AND APPLICATION OF FUNDS.hMLLIONS OF [WLLARS

YEAR 1995 1966 8967 1988. .1939____1990 191 . -1992 r1993 £994 1995 1996 SOURCESOF FLNDS

NET INCOME AFTER TAXES 0.000 0.00O 4.691 1.761 4.619 .351 .047 1.683 4.413 5.788 2.89O .29b AMORTIZATION 0.000 0.000 .322 .691 .691 .691 .691 .369 0.000 0.000 0.000 0.000 DEPRECIATION ______Q198 _ 2fl.2. Q. Q5Q.2.i 2LQQ2 Q82 2,8 _2.25Z 2.302 INTEREST EXPENSE 0.000 0.000 0.000 2.043 1.591 1.306 1.161 1.031 .751 .448 .201 -. 007

CAPITAL CONTRIBUTIONS 0.000 0.000 0.0.00 0.O0 .OOO_.QC0.0 .Q.OOO_0.000. .0.0 0.000 _0.000 -_ 0.000 0.000 LONO TERM LOAN.EXP.FIN. 1.916 2.867 .658 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONO TERM LOAN.IDRD 2.666 4.229 1.923 0.ObO 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 * - _LONQ TERM LOAN.COPMEftCIAL ?2!-- .8 Lt..S __..... D-. S..AQO ,66...._2. 000_..... 000 .. -. LONG TERN LOAN.DEFICIT 0.000 0-000 0.000 0.000 0.000 0.000 .026 .116 0.000 0.000 0.000 0.000 SHORT TERM LOANS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL SOURCES 7.248 15.324 11.304 6.540 0.945 4.400 4.101 5.207 7.245 9.437 5.34 2.592

_-APPLICATIONS OF FUNDS ,,_ ,, ,, , _

PLANT & EQUIPMENT 6.607 9. 85 2.270 0.000 0.000 0. 0.000 0.000 0.000 0.000 0.000 0.000 _ _PREOPERATINO EXPENSES .. .. .640 _.252. 0.QQQ--Q.OQL. 0-Q.000900._QL. _0 0 Q .0_0.Q..OO...00000 --°-°° _0.000. 'NT.DINO CONSTRICTION 0.000 .719 1.844 0.000 0.000 0. 0.000 0.000 0.000 0.000 0.000 0.000 WORKINO CAPITAL 0.000 .468 .390 .034 .114 111 .088 .141 .138 .107 -. 097 -. 925 __ PITL IPROVENENTS 0.000 0.000 _ .042 t47 1.195 1.058 _J1°090____t_97 _ Q,_

INTEREST.EXP.FIN. 0.000 0.000 0.000 .490 *47 .425 .348 .247 .1895 .104 .036 .005 INTEREBT.vIRD ,0.000 0.000 .0.00-.,__3.8....79 .6d1._._-574--.4281._.36 --. 262 _-.157 _ .052. INTEREST.COMNERC2AL 0.000 0.000 0.000 .970 .90- .7S8 .647 .546 .424 .303 .162 .061 INTERESToDEFICIT 0.000 0.000 0.000 0.000 0. 0.000 0.000 .003 .015 .010 .003 0.000 ;_SHOR,TTjRJNTEREST_ __ ._ 2OzOQtSsQL 0.000 -. 254 -. 579 -. 565 -. 430 -. -. 240 -.2't -J, -. 125

A: ORTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 .319 .797 .907 .907 .907 .907 .5#7 .110 .ANIORTIZATION.ISAD ,, -000, _0-00,0 AMMOTIZATION.COtUERCIAL 0.000 0.000 0.000 0.000 1.102 1.102 1.102 1.102 1.102 1.102 1.102 1.102 AMORTIZATION*DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .014 .072 .056 0.000 __SHORT TERN AMORTIZATION 0.000.0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 _ 3 9O .j.O0 0.00_ DIVIDEND PAYMENT 0.000 0.000 4.4681 8.76 4.416 .351 0.000 0.000 2. 222 4.612 2.235 2.253 TOTAL APPLICATIONS 7.240 81.324 9.1B4 3.937 S.89_ 5.697 5.555 5.333 7.326 8.877 5.784 _ 3.635

fNET CASH FLOE.YEAR 0.000 0.000 2.120 2.702 .056 -1.297 -1.453 -.127 -.08t -.440 -.43S -1.043 CASH FLOW & DIVID..YEAR 0.000 0.000 6.808 4.463 4.75 -. 94S -1.453-. 1,27 2.141 4.171 1.796 1.210

CULUL. NET CASH FLOW 0.000 0.000 2.120 4.022 4.678 3.582 2.129 2.002 1.921 1.481 1.043 0.000 CLUItR. SHORT TERM [OEDT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.Q00 0.000 0.000 CULILLATIVE DIVIDENDS 0.000 0.000 4.481 4.441 11.060 11.411 11.418 11.411 13.633 19.244 20.479 22.732

6-21-94 JEAN L.LOVER Attachment II

ROStEEL GOLD FrOJECT.CASE 5 ALWEE WHEET MILLIONS (F DOLLARS

YEAR 5985 59l 1987 908 -1989 -90 1995 5992 - 5993 1994 1995 1994

- ASSETS

OPERATINO CASH 0.000 .138 .147 .55e .169 .172 .199 .224 .239 .234 .247 0.000 RECEIVABLES 0.000 0.000 .357. ._ 26 _.32___. 3Q2 _ _9V0.._.342.__ 449 _.499? _.432. .344 INVENTORY 0.000 .744 .794 .832 .911 .929 1.077 1.208 1.2"I 1.381 1.334 0.000 EXCESS CASH 0.000 0.000 2.120 4.922 4.878 3.5d2 2.129 2.002 1.921 1.481 1.043 0.000

CtRRENT ASSETS 0.000 .F92 3.420 6.507 6.391 4.993 3.709 3.79 3.900 3.647 3.055 .346 PLANT & EQUIPHENT 6.407 1%.492 10.762 Il.742? 599880 11.9521.1_46 22.ifl...fl6 86 23.814 24.411. 24.411 LESS DEPRECIATION 0.000 0.6000 -5 .798 -3.943 -5.8*S -7.937 -10.5112-12.120 -14.202 -16.402 -10.459 -20.941 OTHER ASSETS .640 1.411 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 LESS AMIRTIZATION 0.000 0.000 -. 322 -1.013 -1.704 -2.395 -3.06 -3.455 -3.455 -3.455 -3.455 -3.455

TOTAL FIXED ASSETS 7.248 10I.03 20.097 17.361 14.647 13.073 11.402 10.076 9.095 7.412 5.751 3.450

TOTAL ASSETS 7.249 10.985 23.517 23.548 21.058 se.oC4 15.12 13:872.52.984 15.029 8.804 3.7i

LIABILITIES _ _ _- - -

PAYABLES 0.000 .413 .442 .473 .506 .516 .5°8 .671 .717 .767 .741 0.000 SHORT TERM DEBT 0.000 0.000 O,OOQO_ 000 LOmo TER" DEBT.CURtRENT 0.600. .000 0.000 2.524 3.001 3.111 3.111 3.125 3.183 42.849 2.314 0.000 *I CURMENT LIABILITIES 0.000 .413 .442 2.997 3.50e 3.427 3.709 3.796 3.900 3.417 3.055 0.000

LONW TER" DEBT*EXP.FIN. 1.916 4.783 5.441 5.122 4.324 3.418 2.511 1.604 .697 .110 0.000 0.000 LONO TERM DEBt.lBRD 2.444 4.894 9.917 7.715 4.413 5.511 4.408 3.30b 2.204 1.102 0.000 0.000 -- LO TERM DEBT.COCfERCIAL 2.446 6.894 - s.715. r i 11 5.Sil 4.408 3.304 2.004 1.02 0.000 0.000 LONG TERN DEBT.DEFICIT 0.000 0.000 O.O 0.000 0.000 0.000 .02 .129 .058 0.000 0.000 0.000

SoCIAL RESERVES 0.000 0.000 0. boo.o.01 0.000. 0.o 0.000 o.ooo o.ooo o.ono 0.000 0.000 NET PAID-IN EQUITY 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 RETAINED EARNINGS 0.000 0.000 0.000 0.0001° 0.°0°_ 0.°O_ .047_ 1.730 _3.921 5.098 5.751 3.794

TOTAL EQUITY 0.000 0.000 0.000 0.000 0.000 0.000 .047 1.730 3.921 5.098 5.751 3.794 TOTAL LIABILITIES 7.248 IB.985 23.517 23.549 21.058 18.0ou f5ssiz 13.872 12.9S4 11.029 9.906 3.796

DEBT COVERAGE RATIO N.A. N.A. N.A. 4.946 2.945 1.431 1.319 1.413 2.227 2.549 1.979 5.064 CURRENT RATIO N.A. 2.133 7.7)5 2.065 1.822 1.374 A. o0 1.000 1.000 1.000 1.000 M.A. DEBT/EQUITY RATIO N.A. N.A. M.a. N.a. N.A. N.A. 241.710 4.924 1.317 .454 0.000 0.000

6-25-84 JEAN L.LOYER Attachment II

ROSEDL GCOL' FMRECT.CASE S

CASH FLOUS.RATEI OF RETURN &i NET PRESENt VALUES. . .. ~ . -

FUNDiS IN MILLIONS OF DOLLARS ANiD IN 3984 RIEAL TEASISOR INFLATEID (CLNT) TERMS.AS SPECIFIED. ¶

CASH FLOW IN REAL TEAMt - ______CASK FLQ0UANIFWLA7E1DAERNS _____

AFTER TAXES BEFORE TAXES ON EQUITY MIAP' TAXES BEFORE TAXES 0CMEQUITY -6.773 -6.773 -. 000 -7.248 -7.240 .0 -9.263 -9.243 -. 000 -10.405 -10.405 -000 -- . - ~~3.3*)0 3.380) .. 3.021 .... - 4.963 4.94.3 8.3*43 6.506 4.504 1.761 . 6.247 4.267 3.293 6.7ff 0.789 4.616 . . 2.242 2.242 .234 ._ .1 3.738 3~~~.738 0.000 2.791i 2.791 0.000 2.270 2.270 0.000 3.900 3.900 0.000 -. *.3.273 3.273 1.208 ___- ...... 6QL .1..-- .2 3.964 3.964 ~~~~~2.344 7.602 7.602 4.6122 2.303 2.303 1.062 .4.646 4.646 2.235 - ~~~1.562 1.562 -1.000 - ... 1 352.. 2.253- - .144 .144 .144 .346 .346 .346

iREAL IAR AFTER TAXES 1 5.760 1 INFLATED EAR AFTER TAXESz 23.663 2 REAL EAR BEFORE TAXES I15.760 2 ___ - .jf.qLf"-TygEPLRJ-FOflE-TA.XES.$-.2,6X REAL IRR ON EQUITY a ININITE IWFLATED IRRCON EQUITY IWININITE * ~~REAL1984 NPV AFTER TAXES 0 .9.000 347 ILAE1949 FTR AXj, REA 94tYBFR AXS0000 6 7 IWFLATED 8984 N99 WEORE TAXES I 0. 0002 1 34.169 a REAL £984 N9V ON EQUITY a 0.0001 a 14.449 IWFLATED 1984 WY ONfEQU ITY t 0.0007. 2 23.0768.

REALi 1984 NWVAFTER TAE 5.0001 I .3f42 IWFLATED 2954 WV9 AFTER TAXES I 5.0002 a 20.072 REAL £984 NV BEFORE TAXES 0 5.0002 8.342 INFLATED 1984 N99 BEFORE TAXES I 5.0002 20.072 1.I REAL 3904 1EV C _EQUITY 0 S. -!0X I9JO632.... INFLATED 1964 #99V ON EQUITY I .2..**f5

REA 1964 NM? AFTER TAXES 0 10.0002 3.487 INFLATED 1984 NPY AFTER TAXES 0 10.000 a 1128 REAL 5984 NPY BEFORE TAXES 6 30.0001 3.487 INFLATIED 1984 WV PEW.05E TAXES 0 10.0002 a __ 21.289 REAL 1904 NPV ON EQUITY 68 0.0002 8.114 INFLATED 1984 NPY ON EQUITY a0*0.0002 12.1*07

__ REAL 198:4 NPY AFTER TAXES 0 15S.0CK02a .368 LILATED.11 Ift WAOfTEI 74tE5 0 I5.00 1 . .44_ RtEAL 1984 WV9 BEFORE TAXES 0t 15.0002 S .368 INFLATE'D 1'994 NWY BEFORE TAXES 0 15.0002 a S.664 REAL 5984 WVY CU EQUITY 6 15.0001 1 .380 INFLATED 1I84 NP9 ON EQUJITY 0 15.0002 9.241

NOTEs THE SAVAG-E VALUIE IN 1997 IS EQUAL TO THE 1ARKI1*3 CAPItAL ONLY.

4-23-84 JEAN L.LOYER Attachment II

ROSEBEL GOLD FROJECT*CASE 6

PROFIT AND LOSS STATEIIENT- - .. *.-. . .- MIILLIONSOF DOLLARS YEAR 1985 3986 3987 1988 1989 1~~~~~~~191 ~~~~~~~~991992 199 1994 3995 3996

--- 1SHIPMIENTS - - - . -- ______TOTAL SH4IPIIENTS 0,000 0.000 *C026 *C024 .028 .019 .017 .039 .022 .023 .0a -.034

__NCOME..I TOTAL RAEVENUES 0.'0-00"0-.0'(>00 "14.4-64 314.-407. 17.502 12.533 12.331 14.479 18.177 20.205 17.477 14.025

TOTAL COSTS ~~~~~~~0.0000,000 5 50.4-77 6.075 6.500 4.630 7.602 8.438 9.200 9.053 9,515

OTHER. FW P.QMS -- -- .- . - - . . - . - - ..------. . OE.AMiI 0.000 0.000 .260 .226 .224 .240 .257 .275 .294 .315 .337 .6 EXPATS. 0.000 0.000 .490 .363 0313 0.000 0.000 0.000 0.000 0.000 0.000 0.000

OPERATINOPROFIT 0.0(DOD 0.000 0.400 8.140 30.890 5.793 5.444 4.722 9.265 30.602 7.266 4.150 INTERESTEXPENSE 0.000 0.000~~~6000 2.047 1.595 1.314 1.165 1.035 .744 45 .12 -001 AMORTIZATION 0.000 0.000 .322 .691 .691 .691 .491 .369 0.000 0.000 0.000 0'.000 ...DEI~~(~QAtWtL..~~ . -. 0.000.0.900 LJf0.....A)2...'1- -21002Z2A...... 22 MET INCOMEBEFORE TAXES 0.000 0.000 6.283 3.357 6.559 1.730 1.412 3.311 4.439 8.0209 4.010 1.050 TAXABLEINCOM 0.000 0.000 4.288 3.'.57 4.559 1.730 1.413 3.311 4.439 0.028 4.810 1.850 INCOMETAXES 0.000 0.000 0.000 O.Clo0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0,000 j-

NET INCOK~EAFTER TAXES 0.000 0.000 6.288 3.357 6.559 1.738 1.413 3.311 6. 4 3 8.028 4.818 1.850 CUwIULATIVEINCOME A.T, 0.000 0.000 6.2e8 9.645 16.203 17.942 19.355 22.666 29.10!5 37.132 41.951 43.603

6-21-64

.. J EAN' LLOYER. Attachment LL

ROSEBEL GOLD PROJECTiCASE 6 .SOUIRCEAND APPLICATIONOF FLINDS.MILLIONS07 DOLLARS YEAR 5985 1986 5987 9L1.49.fl...9t..59f _91. 594 15,95l 1996 * SOURCESOF FUNDS

N4ETINCOME AFTER TAXES 0.000 0. 000 6.288 3.357 6.559 1.739 1.413 -3.311 6.439 8.028 4.018 1.850 AMORTIZATION 0.000 0.000O .322 .691 .691 .491 .691 .369 0.000 0.0')' 0.000 0.000 '>.DEPRECIATION - - 0.0(90 9,000 .2.0453,Pi 2.045 I.QS...L?- 2j0l..3 1 'tO___ I -INTEREST EXPENSE 06.000 ;0.000 0.000 2.047 1.595 1.314 1.165 1.035 .744 .454 .212 -.001 * CAPITAL CONTRIBUITIONS 0.000 0.000 0.9000 0.00 p_QQ.~O Qt9..S,iQL.SI,S0t.A. POP.90.. (.000 .0,.000.9, 000 LONO TERM LOANvEXP.FIN, 1.916 2.867 .569 0.000 0).000 0.000 0.000 0.000 0.000) 0.000) 0.000 0.000 LONO TERtiLOAN, ZBRO 2.666 4.229 1.945 0.000 0.000 0.000 0.000) 0.000 0.000 0.000 0.000 0.000 * LONOTERM LOAN.COMMIERCIAL 2.666 4.229..IustijS.&9.22Q QLAL-.LQ.A00 0 0. q~QQQ,0Q.....0 LNoTERM LOAN4.VIEFICIT 0.0 .0 .0 .000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 * SHORT TERM LOANS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000) 0.000 0.000 0.000

TOTAL SOUIRCES 7.248 11.324- 12.956 8'I.5140-10.9 .9 .44 672 25"1.8 .8 4.550 A.P!PLICATIONSOF FUNDS

* PLANT I. EQUIPMENT 4.4607 9.885 2.270 0.000 0.000 0. 000 0. 000 0.1000 0.000 0.00C0 0.000 0.000 PREOPERATINOEXPENSES .640 .252 .0.000~~.... 00p....9...0.0 Q!...90I!. q90.....000 9..Q00. .9000.A.p.. )NT.DURINOCONSTRUCTION' 0.000 .719 1.844 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WORKING CAPITAL 0.000 .4-68 .435 .033 .124 -.127 .0837 .148 .149 .113 -.106 -.936 9 CAPITAL IMPROVEMENTS __0.000 0.009 0.000 9Ž000 .042 1.1L47 1A.195 1.051 .tO 0 .528 .597 0.000

INTEREST.EXP.FIN. 0.000 0.000 0.000 .490 .475 .425 .346 .267 .165 .104 .034 .005 INTERESTCoSIMRCIL 0.000 0.000 0.000 .840 .787 .4692....77 -. 4 72....,1*47- 62 1..5Z_,%.0jR ICOiMgRCAL'0.000' NTREST 06.6000 0.00 .972 .912 .790) .666 .547 .425 .304 .182 .061 INTEREST,DEFICIT 0.000 .000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0000 SHORT TERNI INTEREST 0.000 0.000 0.000 -.254 -.579 -.5694 -.429 -.252 -.234 -.216 -.164 -1 AMIORTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 .319 .797 .907 .907 .907 .907 .587 .110 u AMORTIZATION4iIBRD 0,.O0009..0,000 .. 0.0SIQ._UQ_ tO AH6ORTIZATI6N.COMIIERCIAL- 0. 000 0.000I 0.000 0. C000 5.105 5.505 5.505 1.105 1.105 1.105 1.105 1.105 AMORTIZATION.OEFICIT 0.1000 0.000 0.000 0.000 0.000 0.000 0.000 0.000) 0.000) 0.000O 0.000 0,0000 SHORTTERM AtIORTIZATION . 0,O 0.000 0.000 0.000 0.000 0.000 000 0.000 0.000 01.000 0.000 0.000 - bIVIDEND'PAYMENT .. '..0000 0.000.;-0e Ta-5r.3 .4 .241693 4. 10TT3.762

*TOTAL APPLICATIONS 7.248 11.324 10.934 5.438 1O.Lft3 .9..t95 .6.R! NET CASH FLOW.YEAR 0.000 0.000 2.120 2.703 .041 -1.287 -1.481 -.1483 -.149 -.4.33 -.372 -.994 CASH FLOW It DIVID.vYEAFt 0.000O 0.000 8.408 6.059 4.600. A2 .20 1.3272 4.165 647093,?7....2.7AZ . ...

CWIIUL. NET CASHI FLOWS 0.000 0.000 2.520 4.822 4.863 3.577 2.096 1.948 1.799 1.366 .994 0.000 CULIULL.SHORT TERM DEBT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 ).000 CUIIULATIVE DIVIDENDS 0.000 0.000 6.2698 9.645 16.203 17.942 59.303 20.62:3 25.1:37 32.040 36.199 39.965

4-21-04 JEAN L.LOYER Attachment LI

ROIEBJELCOLD PRCLJECT,CASE 6 BALANCE SHiEET MILLIONS OF DOLLARS YEAR 1965 1986 1967 3I6199 1 1091 199 193 14 95 36

* OPERAT1IN0 CASH 0.000 .138 .147 .150D .169 .172 .199 .224 .239 .256 .247 0.000 RECEIVABLES 0.000 0.000 .42.-.0 -46.... 33-343 _-.-409 .--.505 ... 561 ..,495 . INVENTORY .390 0.000 .744 .796 .852 .911 .929 1.077 1.200 1.291 1. GI 1.334 0.000 * EXCESS CASH 0.000 0.000 2.120 4.822 4.863 3.577 2.096 1.948 1.799 1.366 .994 0.000

CURRENT ASSETS 0.000~~~~~*~.882 3.465 ~~6.232.6.430 5.026 3.715 3.788 3.0343.565 3.061 .390* PLANT & EQUJIPMIENr..6.607 16.492 .3.19762 *1.6.66I9.5.2.14.2.9..2.6.364.24..411...24.411 * ..... LESS DEPRECIATION 0.000 0.000 -1.798 -3.843 -5.666 -7.937 -30.112 -12.1320-14.202 -16.402 -18.659 -20.961 OTHER ASSETS .640 1.613 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 ISSAMORTIZATION. -0.00 _qP -. 2---_A_-.04 24 " TOTAL FINED ASSETS 7.246 18.103 20.097 17.361 14.667 13.073 11.402 10.076 9.085 7.412 5.751 3.450 * TOTAL ASSETS.7.248 1-98 235323.6 1.097 18.100 15.117 13.864 12.918 10.977 6,812 3.e39

PAYABLES 0.000 .413 .442 .473 .506 .516 .590 .671 .717 .767 .741 0.000 LONOTERII DEDT,CURRENT 0.000 0.000 0.000 2.529 3.007 3.117 3.117 3.117 3.117 2.797 2.320 0.000 CURRENT LIABILITIES 0.000 .433 .442 3.002 3.513 3.63.3 9.715 3.70til 3.134 3.§65 3.061 0.000 LONG TERM DEBT,EXP.FIN. 1.916 4.783 5.441 5.122 4.324 3.418 2.511 1.604 3 .697 .130 0.000 0.000 ,, LONGTERM DE9T,I6R0 2.666_ 1;14?.3~7734 6.629 5.§254. ~20) L21L...21!O. Ot, Q0 ~~.7LoDEBT.C0t1l1~RbIALTERM 2.666 6.894 .8.39 7.734 6.629 5.525 4.420 3.315 2.210 1. 105 0.000 0.000 LONO TERM DEBToDEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0. 000) 0.000 0.000 0.000 SbOCIA RSRE io .0 000 00.000 .0 0.000 0.000 0.000l 0.000T 0.00 NET PAID--IN 0.000 0.00(3 EQUITY 0.000 0.000 0.000 0.000 0.000 0.00') 0.00') 0.000 0.0')') 0.')')) 0.000 0.000 RETAINED EARNINOS 0.000 0.000 0.000 Q. (0.0 (1Q0Qi Q5J,A3.3-6 .. 02.5.51 TOTAL EQUITY 0.000 0.000 0.000 0.000 0.000 (1.000 .052 1.843 3.?6:3 5. 092 5.751 3.839

* TOTALLIABILITIES 7.248 18.985 23.562 23.593 21.097 18.100 15.117 13.864 12.9113 10.977 8.812 3.839 DEBT COVERAOE RATIO N.A. N.A. N.A. 5.632 3.349 1.910 1.601 1.969 2.702 3.182 2.610 1.703 CURRE14T RATIO N.A. 2.133 7.836 2.076 1.830 1.384 1.000 1.000 3.3) .000 3.lo1000 N.A. DEBT/EQUITY RATIO N.A. N.A. N.A. N.A. N.A. N.A. 216.844 4.46:3 1.29') .455 0.0')') 0.00')

46-21-84 .JEANL.LOYER Attachmentit

ROSEBEL OOLD PROJIECToCASE 6

CASH- FL%S441RATES OF RtETUJRN& NET PRESENT VALUES. FUtNDS IN tIILL10I42. OF DOLLARS AND 1141984 REAL TERMS OR INFLATiED (CLIRREI4T)TERIIS.AS SPECIFIED.

- C~SH LOW ,IN ~EAI9 ERJI$... -.-- - CA1Sjj EOW IN.JNFLATED_ERJER....______

AFTER TAXES BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITY

-6.773 -6.77.3 -oc.00 7243 - 7824 . -.000 -9.263 -9.263 -.000 -20.605 -0.6i05 -.000 4.656 4.656 5 -3 .736.8 S.70 6.585 8.50 857 3.357' 7.646 7.646 4.676 10.724 10.724 6.559

3.1800 . 3.180 . 1.158 - 4.772_.4. 772*. 1.73 2.512 2.592 .840 4.162 4.162 1.361 3.215 3.215 .885 5.524 5.524 1.520 .4.36-5 4.365 2.346 6.023 8.025 - 4.314 3;104 '5.104 3.509 10.041 10.041 4.903 3.229 3.229 1.976 6.797 6.797 4.160

2.258 . 2.258 . 467-. . ... o6 -14 o.06 .3.762-2 .162 .862 .562 .390 .390 .390)

REAL IRR AFTER TAXESa 23.753 K INFLATED IRR AFTER TAXES 1 32.418 7. _ __REAL ERR BEFORE TAXES a2:3.755~ X WhT0 NBgFQ0g TAXES.., 324§_%______- REAL ~~iRrcON EQUI TY.a . NFINIT INFLATED,IRR ON EQtUITY aIFNT

______REAL 198s4NPV AFTER TAXES S 0.000?. 26.556 I__NFLALTEi9 VATRTAXES S 0.OQ 51,479 A9hLLI*4CNPT'B6RCTf_AXES 5 0.000K 26.556 INFLATED 1984 NPV BEFORE TAXES I 0.000K 5 .479P REAL 1984 NPY ON EQUITY 6 0.0007. 24.924 INFLATED 1904 NPV OiN EQUITY 6k 0.0007 40.351 4

-*REAL 1984 NPY AFTER TAXES e I.&56KC IT999INLTD14NP AFTER TAXES 10.000OO.' 19.925 REAL 1984 NPU BEFORE TAXES 6 10.000K 0.999 INFLATED 1964 NPV BEFORE TAXES 6 10.900K% 1 9.925 _____REAL 1984 NPY ON EQUITY 6t 10.000% I 3.430 INFLATED 1984 NPV ON EQUITY.t10.0007.% -_20.739~ _%

REAL 1984 NFY AFTER TAXES 6 20.0007. 1 .582 INFLATED 1904 NPV AFTER TAXES 6 20.000K 6.85?1 -. REAL 1984 NPV BEFORE TAXES a 20.0007. S .582 INFLATED 1984 1NPVBEFORE TAXEs e 20.0007. 6.859... REAL 1984 NFV ON EQUITY 6 20.0007.Z 8.405 INFLATED 1984 NPV ON EQUITY 6 20.000. 12. 176

.REAL1934 NPV AFTER TAXES 6 25.000?. -. 432 INFLATED 1934 NPV AFTER TAXES 6 25.0007. 3.330 .. REAL 19z34 NPV BEFORE TAXES 0t 25. 000?. -. 432 INFLATED 0894 NPV BEFORE TAXES e 25.000% 1 3.330 REAL 19*4 NPV ON EQUITY 0 25.000?. 6.824 INFLATED 1984 NPV ON EQUITY I 25.000?. 9.497

NOTEI THE SALVAOE VALIJE IN 1997 1$ EQUJALTO THERWORKINO CAPITAL OJNLY.

6-21-84 JEAN L.LOVER Attachment II

ROSEDEL GOLD PRO~JECT,CASE 7

PROFI ANiO LOS STATEIIENT.. ..- . . .-

MIZLLIONS OF DOLLARS YEAR. 5985 596 11 98 99 19 991 5992 1993 5994 595 99

* SHIPMENTS -T04 2~... .2 T 06 .5 0.000 ~~~~.026 .019 .~017 .1 02 .2 0 .1

INCOMIE

COSTS TOTAL C S~~-:~d~5;~ .3 .8 OTHER FIXED COSTS * GEN. &'AWI - b6& 0.0ooT260I.22 .224 .2407257iT 275Ti2947i15 .337T2360 EXPATS. 0.000 0.000 .490 .342 .352 0.000 0.000 0.000 0.000 0.000 0.000 0.000

OPERATING PROFIT 0.000 0.000 10.015 9.741 12.835 7.585 6.954 8.353 51.284 12.927 9.230 5.709

INTEREST ElXPENSE- -- i i 0.000 0.000o 2.082 1.600Wi7319 51.569 1 .01 .751 .461 .220 .005 AIIORTIZATION 0.000 0.000 .322 .691 .491 .691 .695 .349 0.000 0.000 0.000 0.000 DEPRECIATION 0.000 0.000 5.799 ... 105205S95...jt.t2L.sfZuQZfLL9.... n NET INCOME BEFORE TAXES 0.000 0.000 7.895 4.953 8.4991 3.523 2.780 4.935 8.452 10.265 6.753 3.402

i.TAyAgEflN~~~~~bFie~0.000 0.000- 7.695 4.953 9.899 3.125 2.780 4.935 8.452 10.265 6.753 3.402 INCOME TAXES 0.000 0.000 0.000 0.000 0.300 0.000 0.000 0.000 0.000 0.000 0.000 0.000

NET INWOtE AFTER TAXES 0.000 0.000 7.895 4.953 8.499 3.125 2.780 4.935 9.452 50.265 6.752 3.402 i * ~~ 27.252 32.58840.639 50.904.57.657 61.059

* 6-21-84 %JEAN L.LQYER Attachment II

ROSEBEL O0LD PROJECT,CASE 7 .SOURCE AND APPLICATION OF FUNDS.IIILLIONS OF DOLLARS

.YEAR 1905 .1986 1987 .198. _.19SW 11990 1991 1912 993 1994 1995 1996

SOURCES OF FUNDS

NET INCOME AFTER TAXES 0.000 . 0.000 7.S95 4.t53 8.499 3.125 2.780 4.935 S.452 10.245 6.753 3.402 AMORTIZATION 0.000 0.000 .322 .691 .691 .691 .6.91 .369 0.000 0.000 0.000 0.000 '_ DEPRECIAT1QI4.... 0,§00..0,,S~Q0Q .l.ZF9-...... 4Q,_pS.0.aQL.flS_. t 2.g7 2.050e_2.082 ...... 2.201 . 2.257__2.302 INTEREST EXPENSE 0.000 0.000 0.000 2.052 1.600 1.319 1.169 1.041 .751 .461 .220 .005

-. CAPITAL CONTRIBUTIONS .. . 0.000 .0.000 0.0 00 ...... S0..-Q.000.. 0.000 0.000...O.000 0.(000 0.000 0.000 0.000 LONG TERM LOAN,EXP.FIN. 1.916 2.867 .653 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 * LONG TERM LOAN.IBRD 2.666 4.229 1.947 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONO TERM LO0N,COMMERCIQ L 4 4.. 29!_.....AQ....Q, ...... 0Q0.Q. 0.000 ° 0.000 0.000 * LON0 TERM LOAN,DEFICIT 0.000 0.000 0.000 0.000. 0.000 0.000 0.000, 0.000 0.000 0.000 0.000 0.000 SHORT TERN LOANS 0.O0') 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 *.

YOTAL S0URCES 7.248 11.324 14.607 9.741 12.835 7.385 6.814 8.353 11.284 12.927 9.230 5.709

APPLICATIONS OF FUNDS _,_ _, ______

PLANT I EQUIPMENT 6.607 9.865 2.270 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 :,_PRE0PERATINOE.,EXPENSES__ _*,* .. . .4 4,52..2. .,0,00,Q0Q,D0Q.°.?..Q00 0_Q ,.Q, 0,.00..0.000 INT.DURINO CONSTRUCTION 0.000 .719 1.844 0.000 0.000 0.000 0.000 0.000 o0.000 0.000 0.000 0.000 WORKINO CAPITAL 0.000 .460 .479 .033 .133 -.142 .087 .155 .160 .119 -.114 -.946 CAPITAL IMPROVEMENTS 0.040 0.00 o0.000 0.000 .042 1.147 1.195 1.05t 1. 090 .52& *.597__ 0.000

INTEREST,EXP.FIN. 0.000 0.000 0.000 .490 .475 .425 .348 .267 .195 .104 .036 .005 INTEREST.IBRD ... ,0.000 0.000. .0.00 ..... 6842,.. 57tP8t...484....S7,47.74_ .368 ... 263 * .I58 _.053 INTEREST.COMMERCIAL 0.000 0.000 0.000 .975 .914 .792 .670 .548 .426 .305 .183 .061 INTEREST,DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 *...... H9RT TERN!; RX,S"O!! INTEREST_ ERE$T 1 0.OQj°-oz1Q- ').00O~~~.00003..90 0.-1000 ..-.2544 -..59579 -3S2 -49 -28 -2E z-2,,-IZ 5..l7 51.1 2LI -~~~~~~~~~~~~~~~~~~~~~A AhORTIZATIONsEXP.FIN. 0.000 0.000 0.000 0.000 .319 .797 .907 .907 .907 .907 .587 .550 _IAWRTIZATIO1I,JBRD. , ,. .0.000 0.000 0.000 0.00. _.I.Q 1..0,t.l.108._ ..108__1.108 - 1.109 1..108 .1,.08 AMIORTIZATION,COMMERCIAL 0.000 0.000 0.000 0.000 1.108 1.103 1.108 5.108 5.508 1.108 1.108 J.508 AMtORTIZATION,DEFtCIT 0.00V) 0.000 0.000 0.000 0.000 0.000 0.00 0.000 0.000 0.000 0.000 0.000 ' SHORT TERII AMORTIZATION 0.000 0.000 0.000 0.000 0.000 0.000 __.Q,00 0.000 __0',00 0.000 0.000 0.000 DIVIDEND PA4YME@NT 0.000ffi;0.000o 7.835 4.953 8.499 3.125 2.750 3.139 6.321 9.135 6.089 5.271 TOTAL APPLICATIONS 7.248 11.324 12.488 7.038 12.809 8.462 8.322 8.508 11.444 53.366 9.593 4.655

ET CASH FLOW.YEAR 0.000) 0.00) 2.120 2.703 .026 -1.277 -1.508 -.155 -.160 -.439 -.364 -.946 CASH FLOW & DIVID.vYEAR 0.000 0.000 10.015 7.656 8.525 1.848 1.242 2.984 6.161 8.696 5.724 4.325

CUMtL. NET CASH FLOW 0.000 0.000 2.120 4.823 4.649 3.571 2.064 1.908 1.748 1.310 .946 0.000 CUiMLL. SHORT TERM DEBT , 0.000 O.OCO 0.000 0.000 0.000 0.000 0.000 0.000 0.OO 0.000 0.000 0.000 CLIlLATIVE DIVIDENDS 0.000 0.00 7.895 12.048 21.347 24.473 27.222 30.361 36.683 45.818 51.906 57.177

6-21-84 JEAN L.LOVER Attachment II

ROSEBEL GOLD PROJECT.CASE 7 BALANCE SHEET ,

MILLIONS OF DOLLARS

YEAR 1985 198S 1987 193a 1989 1990 1991 1992 1913 1914 1995 1996

ASSETS ,_ __ ---- 7

OPERATING CASH 0.000 .138 .147 .558 .169 .172 .199 .224 .239 .256 .247 0.000 , RECEIVABLES , __0.0Q0 _.0.000 _.446 -4 4t..1_4 _...387..301. .453. - 561 .624 ...539. .433._- INVENTC*RY 0.000 .744 .796 .852 .911 .929 1.077 1.20S 1.291 1.381 1.334 0.000 EXCESS CASH 0.000 0.000 2.120 4.823 4.849 3.571 2.064 1.908 1.743 1.310 .946 0.000 CURRENT ASSETS 0.000 .882 3.510 6.277 4.469 5.060 3.720 3.793 3.839 3.570 3.064 .433

_.PLANT & EQUIPMENT ,, 6.607_ 1.492 ,,1,62 18.762 1194i 11 951 21.546 22,194L,23.284 .23.814 24.411 _24.411 LESS DEPRECIATION 0.000 0.000 -1.798 -3.843 -5.888 -7.937 -10.112 -12.120 -14.202 -16.402 -18.659 -20.961 OTHER ASSETS .640 1.611 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 3.455 LESS AMORTIZATION 0.000 0.000 -.322 -1.013 -1.704 -2.395 -3.086 -3.455 -3.455 -3.455 -3.455 -3.455 TOTAL FIXED ASSETS 7.248 18.103 20.097 17.361 14.667 13.073 11.402 10.076 9.085 7.412 5.751 3.450

TOTAL ASSETS 7.248 18.985 23.406 23.437 21.136 18.133 15.123 13.070 12.924 10.982 0.817 3.882

LIABILITIES ,______------

PAYABLES 0.000 .413 .442 .473 .506 .516 .598 .671 .717 .767 .741 0.000 SHORT TERM DEBT 0.000_ 0.000 0.000 0.000 0.000 0.000A9'0.00.0.0_0 0.000 O.000 0.000 0.000 LONG TERM DEBT.CURRENT 0.000 0.000 0.000 2.535 3.013 33.122 .122 3.122 3.52i 2.803 2.325 0.C00 CURRENt LIABILITIES 0.000 .413 .442 3.008 3.519 3.639 3.720 3.793 3.839 3570 _3.066 0.000

LONG TERM DEBT.EXP.FIN. 1.916 4.783 5.441 5.122 4.324 3.418 2.511 1.604 .697 .110 0.000 0.000 LONO TERM DET. IDRD 2.666 6.894 8.862 7.754 6.646 5.539 4.431 3.323 2.215 1.108 0.000 0.000 LO TERM DEBT,COMIIERCIAL 2;1 .& .54 666 559 441 .26.1 .0 0.000 0.600 LONO TERh DEBT.DEFICIT 0.000 0.000 0.000 0.00W 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 SC IAL RESERVES o 0 bo 0.000 0'.0 0.000 0.000tt.000 0.000 0.000 0.000 0.000 0.000 NET PAID-IN EQJITY 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 RETAINED EAR1NINGS 0.000 0.000 0.000 0.000, 0.000 0.00 ,,.030. -lJ.826.- 3.457 5.087 5.751 3.882

TOTAL EQUITY 0.000 0.000 0.000 0.000 0.000 '0.000 .030 1.826 3.957 5.007 5.751 3.882

TOTAL LIABILITIES 7.248 18.985 23.406 23.637 21.i36 18. 13 is. 523 13.870 12.924 10.982 8.817 3.862 DEBT COVERAGE RATIO N.A. N.A. N.A. 6.315 3.752 2.139 1.831 2.326 3.177 3.753 3.200 2.336 CURRENT RATIO N.A. 2.133 7.937 2.097 1.83S 1.391 1.000 1.000 5.00') 1.00P 1.000 N.A. DEBT/ECUITY RATIO N.A. N.A. N.A. N.A. N.A. N.A. 378.813 4.518 1.296 .457 0.000 0.000

6-21-84 JEAN L.LOYER Attachment II

ROSEBEL GOLD PROJECT.CASE 7

CASH FLOWISPRATES OF RETURN & NET PRESENr VALUES. . .

FUNDS IN MILLIONS OF DOLLARS AND IN 1984 REAL TERMS OR INFLATED (CURRENT) TERMStAS SPECIFIED.

-. .. .. CASH.FLOW IN REAL.JTERMS_...... _.._ __. CASH..ELOW..IN..INFLATEDOTERMS......

AFTER TAXES BEFORE TAXES ON EOUITY AFTER TAXES OEFORE TAXES ON EQUITY -6.773 -6.773 -.000 -7.24S -7.248 -.000 -9.263 -9.263 -.000 -10.405 -10.605 -.000 _-.- __ ... 5.931 ..- .f . __.015.931... _ ___.264 . .2?4 .e5. 7.404 7.404 3.779 9.708 9.708 4.953 9.026 9.026 6.060 12.660 12.640 8.499 4.118 4.118 ..083 .-.. l0 .ISO_.... - .3.125. 3.446 3.446 1.712 5.533 5.533 2.750 4.160 4.160 1.827 7.147 7.147 3.139 ..45$.45;3.._3_....3 45 ...... 10.034 - 6.321 . 6.242 6.242 4.644 12.280 12.280 9.135 4.156 4.156 2.892 8.747 8.747 6.08 2.955 2.955-... 2.340 .__...... _ 6.655 .. 5.271.. .190 .180 .180 .433 .433 .433

REAL IRR AFTER TAXES I 30.910 X INFLATED IRR AFTER TAXES I 40.073 X REAL IRR DEFORE TAXES' 30.910 Y._ .WLTD IEp EP6E TAXES t _4p.073.X REAL IRR ON EQUITY a INFINITE INFLATED IRR 014 EQUITY s INFINITE

REAL 1984 NPV AFTER TAXES a o.ooox * 37.041 INFLATED1984 NPV AFTE__TAXES e 790 _ _ REAL 3984 NPV SEFORE TAXES I O.OOOX * 37.041 INFLATED 1984 NPV BEFORE TAXES e o.ooo0X 68.790 REAL 1984 NPV ON EQUITY a 0.000 a 35.400 INFLATED 1984 NPV ON EQUITY e 0.00ox. 57.610

REAL J984 NPV AFTER TAXES e io.ooox 134.511 INFLATED 194 NPV AFTER TAXES Q 10.000 3 28.541 U REAL 1984 NPV BEFORE TAXES 0 10.000X * 14.51I INFLATED 1934 NPV BEFORE TAXES e 10.000K a 28.3461 REAL 1984 NPV ON EQUITY _ S..IQO..Q t._. 1 9.152 INFLATED 1984 NPV ON EQUWD_UI_UO_OOOX_t3 29.373 REAL 1984 NPV AFTER TAXES 6 20.000X a 4.8:34 INFLA.ED 1984 NPV AFTER TAXES 0 20.00K a 11.738 REAL 1984 NPV BEFORE TAXES e 20.000K 1 4.836 INFLATED 1984 NPV BEFOREJTAXES 0 20.000KO 11.738 REAL 1984 NPV ON EQUITY e 20.000X a 11.672 INFLATED 1984 NPV ON EQUITY 6 20.000K s 17.069

REAL 1984 NPV AFTER TAXES e 30.000K t .277 INFLATED 1984 NPV AFTER TAXES 6 30.000X 3.929 REAL 1984 NPV BEFORE TAXES 6 30.000XO .277 INFLATED 1984 NFV BEFORE TAXES e 30.000X s 3.929 REAL 3994 NPV ON EQUITY a 20.00O0 8 7.746 INFLATED 1984 NPV ON EOUITY e 30.000K 10.926

NOTE: THE SALVAGE VALUE IN 1997 IS EOUAL TO THE WORKINO CAPITAL ONLY.

6-21 -e4 J..EANL.LOtER Attachment It

ROSEBEL GOLD PROJECT.CASE 8

PROFIT AND LOSS STATEIIENT .-.- .

IILLIONS OF DOLLARS

YEAR 1985 l984 1987 1988 l989 1990 991i 1992 1993 1994 1995 1996

- SHIP.YENTS -_-__-_ TOTAL SHIPMENTS 0.000 0.000 .024 .024 .028 .019 .017 .019 .022 .023 .018 .014

*INCOIIE ______..______.. , TOTAL REVNUES 0.000 0.000 J2.857 12.804 15.S58 11.140 10.941 13.048 16.157 17.9i0 15.535 12.467 COSTS TOTAL COSTS 0.000 0.000 5.837 6.245 4.682 7.150 7.293 8.450 9.480 10.129 10.838 10.444

OTHER FIXED COSTS _ ___ GEN. & ADM 0.000 0.000 .286 .249 .247 .264 .283 .302 .324 .346 .370 .396 EXPATS. 0.000 0.000 .539 .399 .344 0.000 0.000 0.000 0.000 0.000 0.000 0.000

OPERATING PROFIT 0.000 0.000 6.195 5.913 8.284 3.726 3.385 4.295 4.354 7.465 4.327 1.405

iNTEREST EXPENSE 0.000 0.000 0.000 2.243 1.747 1.435 1.274 1.137 .969 .514 .17i -.013 AMORTIZATION 0.000 0.000 .354 .760 .740 .760 .740 .406 0.000 0.000 0.000 0.000 _DEPRECIATION. O0000. 7_ 2 .. 1P 2 . .. 2...... 2.421....2.4_3._.._.2.532

* NET INCOME BEFORE TAXES 0.000 0.000 3.863 .660 3.529 -. 723 -1.041 .544 3.095 4.548 1.672 -. 914

TAXABLE INCO"E 0.000 0.000 3.463, .660 3.528 0.000 0.000 .544 3.095 4.Y48 1.672 0.000 INCOIE TAXES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

.-. -.- _...... -- __._....__ _ ._ ,.__ .__ ._. _ -.-- ...... -.--* - -. .... ______-- *.---______. - . -. -.--...... -. .. - _*. I NET INCOME AFTER TAXES O.QOO 0.boo 3.843 .460 3.528 -. 723 -1.041 .544 3.095 4.548 1.672 -. 914

CUMULATIVE IIEA.t. 0.000 0.000 3.843 4;523 8.051 7.328 6.284 6.830 9.925 14.473 16.145 15.231

4-21-84 JEAIN L.LOYER Attachment II

ROSEFEL GOLD PROJECT,CASE 8 *SOURCE AND APPLICATION OF FUNDS.eIILL1N4SOF DOLLARS YEAR 9- 1986 1987 12_ ---- .A210. 1291_.lla _.199i . 1994. 1995- l96 SOURCES OF FUNDS

NET INCOME AFTER TAXES 0.000 0.000 3.863 .. 60 3.S2S -. 723 -I;Oii .544 3.095 4.548 1.672 -. 914 ANORTIZATION 0.000 0.000 .354 .740 .760 .760 .760 .406 0.000 0.000 0.000 0.000 DEPRECIATION 0.000 0.000 1.977 2.250 2.250 2.255 2.392 2.209 2.2902:q4 Le83 3.532 INTEREST EXPENSE 0.0000.000 0.000 2.243 747 .435 1.274 137 .969 .516 .171 -. 013 * CAPITAL CONTRIBUTIONS 0.000 0.000 p.000 0. ,2 0.0OQO ..723 1.0410.0090.OOO 0.00 0.0000.000 LONW TERN LOAN.EXP.FIN. 2.108 3.153 .724 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0006 LONO TERM LOANJIDRD 2.932 4.652 2.097 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONO TERN LOAN.COMMERCIAL 2.932 4.652' 2.097 0.000 0.000 0.001) 0.000 0.000 0.000 0.000 0.000 0.000 LONO TERM LOAN.DEFICIT O.0ooo 'ob o.o66 o. 0.000 0.000 .300 1.465 .014 0.000 0.000 0.;00 - SHORT TERN LOANS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 SOURCES TOTAL 7.972 12.456 11.113 S.913 8.284 4.449 4.526 5.760 6.368 7.485 4.327 1.605 APPLICATIONS OF FUNDS

PLANT & EQUIPMENT 7.268 10.873 2.497 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 PREOPERATINO EXPENSES .704 .277 0.000 0.000 0-000 0.000 0.00) 0.000 0.000 0.000 0.000 0.000 INT.CURINO CO4STRUCTION 0.000 .791 2.028 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WORKINO CAPITAL 0.000 .515 .393 .037 .118 -. 110 .097 .149 .144 .113 -. 100 -1.009 _CAPITAL IMPROVEMENTS 0.000 0.000 0.000 0.000 .044 1.242 1.314 1.154 1.399 .583 .456 0.000

INlEREST.EXP.FIN. 0.000 0.000 0.000 .539 .523 .468 .38:3 .293 .204 .114 .040 .005 INTEREST. IERD 0.000 OOOOO.0 . 2O,6 ,3: P .. 2,.1 2,8774L INTEREST,COhMERCIAL 0.000 0.000 0.000 1.065 .998 .865 .732 .599 .466 .333 .200 .067 * INTEREST.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .011 .149 .125 .041 0.000 SHORT3 TERtI!tNTEREST 0.000_ 0,_0 Q0000 -.280 -.637 -. 645 -.473 -. 284 -. 272 -. 24-.232 -. 14. *,I ANORTIZATIONsEXP.FIN. 0.000 0.000 0.000 0.000 .351 .877 .997 .997 .997 .997 .444 .121 . AWORTIZATION,IDRD 0.000 0.000 _._ .. 210 1,210 _ 2 1.212..... 1.210 1.21Q_1.210 - AHORTIZA1ION.CONMERCIAL 0.000 0.000 0.000 0.000 1.210 1.210 1.210 1.210 1.210 1.210 1.210 1.210 ,4 AMORlTZATION.DEFICIT 0.000 0-000 0.000 0.000 0.0 0.0 .000 0.000 .050 .782 .739 .007 it. SHORT TERtIAMORTIZATION O.OQO 0-000 0-000 0-000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 DIVIDEND PAYMENT o.00 0.o00 3. .640 T 52S O 0.000 0.000 0 000 2.582 .951 *1i.

TOTAL APPLICATIONS 7.972 12.456 e.781 2.940 .210 5.683 4.1036 s.59 5.779 7.991 5.485 1.724

NET CASH FLOW,YEAR 0.000 0.000 2.332 2.972 .074 -1.434 -1.577 -.099 .589 -.507 -1.158 -.119 CASH FLOW & DIVID..YEAR 0.000 0.000 6.195 3.632 3.402 -1.434 -1.577 -.099 .5861 2.0?75 -204 .079

CUtUL. NET CASH FLOW 0.000 0-000 2.332 5.304 5.378 3.944 2.367 2.268 2.657 2.350 I 193 1.073 CLUKJL. SHORT TERN DEBT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.OOb 0.000 0.000 CUMULATIVE DIVIDENl.S 0.000 0.000 3.863 4.523 0.051 8.051 8.05S. .051 8.051 10.633 11.584 11.782

6-21-*4 JEAN L.LOYER Attachment II

ROSEDEL GOLD PROJEC.TiCASE 8

BALANCE SHIEET , .,,

MILLIONS OF DOLLARS

YEAR 1985 1984 1987 1983 1989 1990 1991 1992 1993 1994 1995 1996 i'. _ ASSETS - .

OPERATING CASH 0.000 .152 .162 .173 .186 .189 .219 .246 .263 .281 .272 0.000 * RECEIVAOLES ._ .. 0.000 0.000 .. 357 .._-.356 _--.432.....309 .304. .. 362 .449 .499 .432 .346 INVENTORY 0.000 .813 .875 .937 1.002 1.022 3.385 1.329 1.420 1.519 1.467 0.000 ;' EXCESS CASH 0.000 0.000 2.332 5.304 5.378 3.944 2.367 2.268 2.857 2.350 1.193 1.073

CURRENT ASSETS 0.000 .970 3.727 6.770 6.9V8 5.465 4.076 4.206 4.989 4.650 3.343 3.420

-. kPLANT & EQUIPMENT ,, _ ,...7.268 .18.141, .20.638..20.638. .20.684 21.946. 23.260 24.416 25.615 26.19S6 26.852 26.852 LESS DEPRECIATION 0.000 0.000 -1.977 -4.227 -6.476 -8.731 -11.123 -13.332 -15.622 -18.042 -20.525 -23.057 OTHER ASSETS .704 1.772 3.800 3.000 3.800 3.800 3.800 3.800 3.800 3.800 3.800 3.800 ,,LESS AMORTIZATION - 0.0O.Q.99 -1A11§5 1.,75* :?,k .- 3,5_ -3 .800 F5. -3.800 -3.800 -3.800

TOTAL FIXED ASSETS 7.972 19.913 22.106 19.097 16.134 14.301 12.543 11.084 9.993 9.153 6.326 3.795 TOTAL ASSETS 7.972 20.883 25.833 25.867 23.132 19.846 16.643 15.290 14.982 12.803 9.689 5.214

,,_LIABILITIES,_,__

PAYABLES 0.000 .455 .486 .520 .557 .568 .658 .738 .789 .844 .815 0.000 SHORT TERN DEBT 0.o000 0.0004 0.000 0.000). 0.Q00.__O._0000.000 0.000 _0.000 0.000 .0.000 0.000 LONG TERN DEBT,CURRENT 0.000 0.000 0.000 2.771 3.297 3.418 3.418 3.468 4.200 3.806 2.548 0.040

CURRENT LIABIITIEI 0.000 .455 .486 3.292 3.854 3.986 4.076 4.206 4.989, 4450 I3.3Q.99P LONG TERN DEBT,EXP.FIN. 2.108 5.261 5.985 5.634 4.757 3.759 2.762 1.764 .767 .121 0.000 0.000 LONO TERM DEBT.IBRD 2.932 7.5S4 9.6S1 8.471 .7.261 6.051 4.84_ 3.630 2.420, 1.210 ,,0.000,Q.,,00. LO TERM DEBT.COMMERCIAL 2.932 7.584 9.68I1 .471 i.261 6.051 4.840 i.630 2.420 1.210 0.000 0.000 LONG TERM DEBT,DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 .100 1.515 .747 .007 0.000 0.000

SOCIAL RESERVES 0bo00 0 4.000 o.000 0.000o.oOG 0.000 0.000 0.000 0.000 0o000 0.000 NET PAID-IN EQVUITY 0.000 0.000 0.000 0.000 0.000 .723 1.765 1.765 1.765 1.765 1.765 1.765 RETAINED EARNINOS 0.000 ,,0.000 0.000 .OOOO _.0.Q.00. .-723._ 1.765 ,-1.220 .1.875 3.841 4.562 3.450

TOTAL EQUITY 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .544 3.639 5.605 6.326 5.214 TOTAL LIABILITIES 7.97220.883 23 25. 25.847 23.132 19.846 36.;63 35.290 14.982 12.803 9.689 5.234

DEBT COVERAGE RATIO N.A. N.A. N.A. 4.446 2.650 1.426 1.114 1.357 1.956 1.944 1.296 1.000 CURRENT RATIO N.A. 2.133 7.662 2.057 1.834 1.371 1.000 1.000 1.00) 1.000 1.000 N.A. DEBT/EQUITY RATIO N.A. N.A. N.A. N.A. N.A. N.A. N.A. 19.364 1.746 .455 0.000 0.000

6-21-84 JEAN L.LOYER Attachment it

ROSEBEL OOLD PROJECTCASE 0 CASH FLOWS.RATES OF RETURN & NET PRESENT VALUES. FUNDS IN MILLIONS OF DOLLARS AND IN 1984 REAL TERIIS OR INFLATED (CURRENT) TERMIS.ASSPECIFIED.

CASSHFLOW JN REAL~TR1 CASHEOII.LTDEM ,

AFTER TAXES BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITYY

- - -. - -7.451 -7.451 -. 000 -7.972 ---. 7 -10.189 -10. 189 -.000 -11.466 -1144 -00 ______~~~2.4916 2.698 3.153 3.0 "3a ." 'a 4.483~~~~~~-- 4.4-3 .5 5.974' -5. 06 .6,60 3.790 5.790 2.515 8.120 8.120 3.528 ______~~~1.715 1.715 -. ~8..-4 254254-.723 . 1.229 1.229 -.649 1.974 1.974 -1.041 1.741 1.741 0.000 2.991 2.991 0.000 ------2.726 2.?24 .0.000 5.031 5.011 0.000 3.453 3.452 1.3~12 6.791 6.791 2.582 1.792 1.792 .452 3.771 3.771 .951 .1.140 1.160 .008 2.414 2.414 .590 .144 .144 .589 .346 .346 1.420

REAL IRR AFTER TAXESa 9.071 2 INFLATED IRR AFTER TAXES 2.7061 2X REAL IRR BEFORE TAXES 1 9.071 2 INLAEDIR BFRETAES 1_70_ -AEACIAR' f-iNIFINiTtINWLATED 6N'EdUItY IRR ON EQUITY aINFINITE REAL 1904 NPV AFTER TAXES 6 0.0007. 9.289 INFLATED 1984 NPV AFTER TAXES 6 0.0002 a 23.736.§ REA -19erRNPwutnw-r-TAxuI.-a o-.ooox a 9299 INWLATEB 1984 NPVY BEFORE TAXES e 0.00O(DZ2* 23.734 y

REAL 1904 NPI/ON EQUITY 0 0.0007. 7.483 INFLATED 2984 N499 ON EQUITY 0 0.000t a 11.437 4

REAL 1984 NPV BEFORE TAXES 0 5.000% 1 3.195 INFLATED 1P94 WVY BEFORE TAXES 0 5.0002 12.469 REAL 3984 NPV ON EQUITY 0 5.0007. I 5.720 INFLATED__ 194 . CWEQIT 0 5.0002 * _ .369 1

REAL 1984 NWVAFTER TAXES 6 10.0002 -. 573 INFLATED 1984 NPV9AFTER TAXES e 10.000% 5.509 REAL 1934 NPV BEFORE TAXES 6 10.0002a -.573 IN4FLATED1904 WV BEFORE TAXES a I20.0002OZ 5.509 REAL 1984 NPV aYeEQUITY 0 20.0007.a 4.333 INFLATED 3I04 NWV ON EQUITY 0 I20.000%a 6.404

REAL 1984 NFl.AFTER TAXEs e 15.0007. -2.942 INFLATED 1*04 WPV AFTER TAXES 1 15.0*02 1 1.100 - - EAL 19034NPV BEFORE TAXES 0 15.01002 -2.942 INFLATED 1934 NPU.BEFORE TAXES 0 35.0002 * 2.300 REAL 1984 NFV ON EQUITY 0 MO00M 3.693 IWFLATED 3984 NPV90N EQUITY a 13.0002 5.077

NOTEI THE SALVAGE VALUE IN t197 IS EOUJALTO THE WORKINGCAPITAL ONLY.

4-21-94 JEAN L.LOYER Attachuent 1I

ROSEBEL OOLD PROJECT.CASE 96* -PROFIT AND LOSS STATEMIENT MILLIONS OF DOLLARS

YEAR 1905 5984 5987 5988 599 3IT0 193 15592 1993 5994 1995 19940

SH_OIPMENTS- - .- ______*5 TOTAL SHIPMIENTS 0.000 0.000 .026 .024 .020 .059 .017 .019 .022 .023 .018 .014

*- TOTAL REVENLES 0.000 0.000 55.701 15.455 L14.5159 50.5I" 9.976 15.875 14.705 16.346 14.539 53.347

.TOTALCOSTS - .0.000 0.000 5.037 6.245 4.482 7.150 7.293 - .450 9.480 10.129 50.838 1O.4M

*OTH4ER !IXED COSTS - GEN. & Al------0.000 0.000 .284 .249 .247 .244 .283 .302 .324 .344 .370 .296 EXFPATS. 0.000 0.000 .539 .399 .344 0.000 0.000 0.000 0.000 0.000 0.000 0.000

OPERATING0PROIT 0.000 0.000 5.039 4.742 6.884 2.725 2.400 3.523 4.902 5.875 2.9131 .484 INTEREST EXPENSE "' _ _~0.0i00 0.0_00' '- .'00'0 2-.2'40 1.744 4 4313._2 7 2 -1.53 5. 021 .719 .232 .109 AMORTIZATION 0.000 0.000 .354 .740 .760 .740 .740 .404 0. 000 0.000 0.000 0.000 * R PBgCI0TJtc------0.00 9.9 -1.977.-3W. .Z. 2.252.. 2.3l.2.M..2l.

NET INCOME B FORtE TAXES 0.000 0.000 2.700 -. 488 2.1313 -5.720 -2.024 -. 425 1.507 2.731 .214 -2.156

*;__IAXASLE INCOME 0.000 0.000 -2-.700G 0.000 2.133 0.000 0.000 0.000 0.000 0.000 .216 0.0040 INCOME TAXES 0.000 0. 000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Id

NET INCOMEAFTER TAXES 0.000 0.000 2.700 -. 409 2.133 -1.720 -2.024 -. 425 1.507 2.731 .236 -2.354

CLMULTV!COIAT .00 000 .0 .20-433 .3 :09 -. 017 1.70 4. 301 4.517 2.341

4-21-84 JEAN L.LOYER ---- *- Attachment II

ROSEPEL OWLD PRO.*CT.CASE 9 .SC&RCE AND FFtICATION OF FfN.D."ILLICVS OF ((LARS [ .

YEAR 1905 154 159*7 5988 1989 199O.5 1991 . 12 ..1IflJ..4..14s . I_ - SOURCESOF FUNDS

NET INCOME AFTER TAXES 0.000 0.000 2.708 -. 488 2.133 -1.720 -2.024 -. L25 1.587 2.731 .21;. -2.154 AIORTIZATION 0.000 0.000 .354 .760 .760 .760 .760 .406 0.000 0.000 0.000 0.000 DEPRECIATION-0.000 0.0000 1 .977 2.250 2.250 2.255 2.392 2?209? .L20 f42L LA 32,_fl * INTEREST EXPENSE 0.000 0.000 0.000 2.240 1.744 1.431 1.272 5.134 5.025 .719 .232 .109 CAPITAL CONTRIBUTIONS 0.000 0.000 0.000 .488 0.000 1.720 2.024 .625 0.000 0.000__.OOO,AO, LOWN TERNLOAMEXP.FIN. 2.100 3.153 .724 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.00 0.000 LONO TERN LOAM.IBRD 2.932 4.652 2.081 0.000 0.000 0.000 0.000 0.0o0 0.000 0.000 0.000 0.000 LONO TERN LOANCOWRCIAL _ 2.932 4.652 2.001 0.0 0.000 0,000 0.0000o000 0,000_ 0000 0.900_Q,Q0 0 - --- LONOTERN LOANMOEFICIT 0;.000 0.0000 0000 0.000 0.000 0.000 .116 2.013 1.600 .2* 1.594 .620 SHORTTERN LOANS 0.000 0.000 0.000 0.000 0.000 0.000 .346 0.000 0.000 0.000 .378 2.524 tOTAL SOURCES 7.972 12.456 9.925 5.250 4. 4.445 4.90 5.764 6.702 4.249 4.902 3.30 APPLICATIONS OF FUNDS

PLANT & EQUIPMENT 7.246 10.873 2.497 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 PREOPERASTINOEXPENSES .704 .277 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.DURINO CONSTRkCTION 0.000 .791 2.028 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WORKINOCAPITAL 0.000 .315 .361 .037 .111 -. 0" .098 .144 .136 .105 -. 094 -1.001 CAPITAL INPROv,E_NrS 0.000 0.000 0.000 0.0O0 .046 1.262 1.314 1.154 .199" .55 .656 0.000

INTEREST.EXP.FIN. 0.000 0.000 0.000 .539 .523 .46S ,383 .293 .204 .114 .040 .005 INTERESToInBD 0.000 0.000 0.000 .919 .8511.744 .431 .t554 f2 - .287 .1g2 ... 7 INTEREST.COMiERCIAL 0.000 0.000 i.0 .997 .864 .731 .S9S .445 .332 .1 .0 INTEREST.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .013 .231 .347 .246 .250 SHORT TERN INTEREST 0.000 0.000 0.000 -. 280 -. 636 -. 647 -. 474 -.207 -. 277 -. n8l -zJ.7 -. 278

AMORTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 .351 .077 .W7 .997 .997 .997 .644 .121 ; . -AORTIZA1tON.ISRD _.000 .OOO0.000 * 0.0j0__6208 _.20 12200O .206 1.206 5.208J.206J.2Q6-. AtIORTIZAtlCN.COMMERCIAL 0.000 0.000 0.000 0.000 5.201 5.200 1.208 1.200 1.208 1.208 1.208 1.208 ANORTIZATtONIDEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0. 000 0.000 050 1.065 1.907 1.099 ; SHORT TERN AMIORTIZATION 0.000 0.000 0.000 0. 000 0.000o 0.000 0.000 .348 0.000 0.000 0.000 0.000 °WIWOEN06.2-d-6:o6°P°E ° @°°°--°-°°kl70c-:b°r°h3r- b;dod o.oo-o o.ooo o.-o 6 0.°°° TOTAL APPLICATIONS 7.972 12.454 7.593 2.277 6.801 5.884 4.097 6.215 5.831 5.88b 5.763 2.743

NET CASH FLOW.YEAR 0.000 0.000 2.332 2.972 .083 -1.441 -1.159 -. 454 .871 .383 -.861 .887 CASH FLOW & DIVID..YEAR 0.OC0 0.000 5.039 2.972 2.218 -1.441 -1.189 -. 454 .871 .383 -.,61 .887 _

CurL*. NET CASH FLOW 0.000 0.000 2.332 5.304 5.389 3.948 2.759 2.305 3.176 3.S58 2.697 3.584 CI*JL. SHORT TERN DEBT 0.000 0.000 0.000 0.0o0 0.0o. 0.000 .348 0.o0o 0.o0o 0.000 .378 2.903 CUMULATIVE DIVIDENDS 0.000 0.000 2.708 2.70S 4.840 4.840 4.040 4.040 4.040 4.840 4.840 4.840

6-21-84 JEAN L.LOYER Attachment It

ROSEBEL GOLD PROJECT.CASE 9

..BALANCE SHEET .-- . . NiILLIONS OF DOLLARS

VEAR .1985 3949 3987 19* 38 90 55S 1992 3993 1994 1995 1996

OPERATING CASH 0.000 .352 .142 .373 .184 .389 .239 .246 .263 .282 .272 0.000 ...R ECEIVABLES ...... -0.000 ..0.000 .....325 . .324 ....#393.. .282 .. 277 ... 330 .4)8 .454 .393 .335 INVEN4TORY 0,000 .818 .875 .937 3.002 1.022 2.385 1.329 3.420 1.519 3.467 0.000 EXCESS CASH 0. 000 0. 000) 2.33)2 5.304 5.389 3.948 2.759 2.305 3.176 3. 550 2.697 3.584

CURRENT ASSETS 0.000 .970 3.695 4.73S 6.970 5.441 4.440 4.230 5.247 5.613 4.829 3.899

.PLANT & EQUIPMENT.___.... - 7.268 18.1.41 20.6328 20.638 .20.68.4.21.946-. 23.24') 24.436 25.635 26.394 24.852 26.952 * LESS DEPRECIATION 0.000 0.000 -1.977 -4.227 -6,476 -8.733 -33.323 -33.332 -35.622 -38.042 -20.525 -23.057 OTHER ASSETS .704 1.772 3.800 3.800 3.80') 3.800 3.800 3.800 3.800 3.300) 3.800 3.800 LESS A91.eHRtrZATION 0.000 0.000 -.354 -1.138 -1.8175 -2,635 -3.395 .3..89Q.:3.800 -3.800 -3.800 -3.800 TOTALFIXEsD ASSETS 7.972 19.913 22.106 19.097 34.134 34.383 12,543 13.084 9.993 8.353 6.326 3.795 TOTAL ASSETS 7.972 20.883 25.801 25.835 23.104 19.822 14.983 15.294 15.260 33.9646 13.155 7.494

PAVABLES 0.000 .455 .486 .520 .557 .568 .458 .738 .789 .844 .835 0.000 -... SHORT TERI.EB..- 0.00') 0 Q....0L..0 0Q0....36...ooO..000 0.00...378.. ..2.903. LONG fEB31IDEDT,CLIRRENT 0.000 0.000 0.000 2.747 3.293 3.414 3.414 3.472 4.478 4.949 3.434 .994

X~CURRENt LIABILITIES 0).0030 .455 .4834 :3.288 3.850) 3.91t.2.4..440..4..LZI'L..A,67 5.41t._ 102L .._12t 4 LONGTERN VEBT.EXP.FIN. 2.106 5.241 5.965 5.434 4.757 3.759 2.742 1.744 .767 .123 0.000 0.00 LOGTR.DB9BD2.9:327.58 . .ML... 7..... ZALtQt.Af .A42I ... 3 . j28 . .0..~QQ0-. LO TkRM' dEbT"&&IRi2.932L7.594 9.645 8.457 7.249 4.040 4.832 3.624 2.414 1.208 0.000CI 0.000 LONNO TERN DEBT.DEFICIT 0.000 0.000o 0.000 0.000 0.000 0.000 .136 2.073 2.807 3.298 3.793 3.417

SFciIAC kbiEVkk 0.0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0,000o 0.000 0.000.o.o0o0 NET PAID-IN EQUITY 0.000 0.000 0.000) .4898 .488 2.208 4.232 4.857 4.857 4.857 4.857 4.857 88 RETAINED EARNINGS...... AP.9000 .0.000 0.000 -:. ... r.4 =2.20S...:4.2t32 .- 4.857 -3.270 -.539 -.324 -2.400 TOTAL EQUITY 0.00') 0.000) 0).000 0. 000 0.000 0.000 03.000 0.000 3.587 4.338 4.534 2.377

TOTAL LIABILITIES 7.972 20.*03 25.031 25.835 23.304 19.822 16.983 15.2914 15.260 33. 966 33.155 7.694

DEBT CO"ERAOE RATIO N.A. N.A. NI.A. 3,995 2.385 1.243 3.000 1.333 1,692 1.490 3.000 1.000 CUIRRENTRATIO N.A. 2.1333 7.596 2.049 3.833 1.367 3.000 1.000ci 2.0 3oit.000i 3.00 3co.000 DEPT/EQUITY RATIO N.A. N.A. N.A. Hl.A. N.A. N.A. Ni.A. N.A. 5.297 .888 .395 .596

4-231-84 JEAN L.LOYER Attachment II

ROSEDEL OOLD PROJECT.CASE 9

CASH FLOWS.RATES OF RETURN 1. NET PRESENT VALUES...-

FUNDS IN MILLIONS OF DOLLARS AND IN 1984 REAL TERMS OR INFLATED (CUIRRENITITERMSIAS SPECIFIED.

CASH FLOW IN REAL TURNS -CASH___ FLOW IN INFLATED TERMS

AFTER TAXES BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITY

-7.451 -7.451 o.0o -7.972 -,-7.972 -.000 -10'.189 -50.199 -.000 -15.444 -15.444 -.000

1.7e4. 4O.74 .2-..0 - 2.182 2...1.J82 . 2.708 3.04 "6;'604.37 C75 4725' -.488 4 .790 4.798 1.521 6.729 4.729 2.133 * 1.041 t.04. t 146. . ..I.562 . 1.562 -1.720 .415 .455 -1.24') .988 .908 -2.024 1.061 1.061 -.344 5.823 1.923 -.625 1.940 1.940 0.9.O0 3.5-p.67 -. *3.567 0.000 2.634 2.634 0005.182 5.182 0.000 1.825 1.525 0.000 2.369 2.369 0.000 .660 . .660 0.000 -.. 1.404 .. .;.486 .0.000 .131 .131 -.508 .355 .315 -5.417

REAL IRR AFTER TAXES 1.957 K INFLATEDIR AFTER TAXES5 9.052 V.

RELIRBFR.REALIRkRc*N EQUITY- AE ~.. :ai197K___ -INFLATED-xtRBFR~!~St IRR ON EQUITY ' 9O2.~.--.999

REAL 5984 NPV AFTER TAXES 6 0.000K 1.7Z1 INFLATED 1984 NPV AFTER TAXES 6 0±99?A...... A.p N-EA171*41QPQfdf hU .COK2 1.*751 INFLATED 5984 NPV BEFORE TAXES e60.000K 2 11.*290 REAL 1984 NM' ON EQUITY 0 0.000K a .000 INFLATED 1984 NPV ON foullY a 0.0007. * -1.434 '

-REALAI984-NPYAFTER TAXESF0 s.6ok. i -0 INFLATED 1984 I#PVAFTER TAXES I 5.000K 8 3.832 REAL 5984 NPV BEFORE TAXES 6 5. 000K a -2.580S INFLATED 1904 NMV BEFORE TAXES 6 5.000K 5 3.832 REAL 198,4NOV ON EOIITY a 5.000K a .485 INFLATED 1904 NWV ON EQUITY 41 5.29QJ. . .Qf . REAL 1984 NPV AFTER TAXES 6 5.00074 -2.130 INFLATED 1784 NPV AFTER TAXES 0 5.000K 3.832 REAL 1904 NPV BEFORE TAXES 0 5.000X ' 210 INFLATFD..1984NPy DEOR TAXES e 5.000K 3.832*. REAL 8984 NPV ON EQUITY a 5.000K i* 2.458 --- iq#LMTE61*84 WPv ON EQUITY.4-5. 000K a -.208

NOTE' THE SALYACGEVALUE IN 1997 IS EQuIAL TO THE WORKINO CAPITAL ONLY.

4-25-84 ..lEAN L.LOYER - AttachmentIT

ROSEBEL GOLD PROJECTsCASE 50 .PROFITAND LOSS STATEMENT MILLIONS OF DOLLARS YEAR 5985 5986 £1987 £988 5989 5990 1991 1992 1993 1994 £995 1994 I

TOTAL SHISP14ENTS 0.000 0.000 .026 .024 .028 .019 .017 .019 .022 .023 .018 .054 -

TOTAL COSTS 0.000 0.000 4.882 5.223 5.599 5.980 6.500 7.067 7.929 8.475 9.064 9.753 it

ADM_ 0.000 0.000 .239 .209 ~.206 .225 .236 .253 .271 .290 .310 .332 EXPATS. 0.000 0.000 .490 .363 .313 0.000 0.000 0.000 0.000 0.,000 0.000 0.000

OPERATINGPROFIT 0.00') 0.000 7.246 7.012 9.449 4.939 4.625 5.728 7.958 9.199 4.141 3.382 IMTERESTSXPENSE 0.000) 0.000 0.000 5.945 1.554 1.245 5.550 .978 .702 .425 .194 -.008 AMORTIZATION 0.000 0.000 .314 .467 .467 .647 .667 .355 0.000 0.000 0.000 0.000 DEPRECIATION-0.000 0OO.4,8 tLi..jZl..j.4L.JQf..JuZ NET INCOME BEFORE TAXES 0.000 0.000 5.222 2.457 5.326 1.080 .775 2.478 5.260 6.459 3.795 1.173 so TAXABLEINCOMIE 0.000 0.000 5.222 2.457 5.324 5.080 .775 2.476 .6 469 379 .7 * INCOMETAXES 0.000 0.000 0.000 0.000* 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 4

NET INCOME AFTER TAXES 0.000 0.000 15.222 2.457 5.326 1.080 .775 2.4783 5.240 6.459 3.795 1.173 TuAUL~tivriMc0i~&A.T. o6ob o.odo .ai0T 7.6180 Thd.oos-14.084 54.865 57.3--I.59 9.25 33.0 34.224

* 6-21-84 %IEANL..LOYER Attachment 11

ROSEBEL GOLD PROJECTiCASE 10 *SOURCE AN4D AP'PLICATION OF FUINDS.IIILLIONS OF DiOLLARS

YEAR 3935 3936 19-37 3983 I..;?9 3P990 3991 .~.- 1992 .... 1993 ... l*4 .- 1995 .-....196...- SOUJRCESOF FUONDSa

NET INCOME AFTER TAXES 0.00loc 0. 000 5.222 2.457 5.326 .080i .775 2.478 5. 260l 6,459 3.795 317 AMORTIZATION 0.000 0.000 .316 .667 .647 .447 .667 .351 0.000 0.000 0.000 0.000 3 D__EPRECIATION -. 0.000 0.000 1.703 1.943 1.943 1.947 2.072 1.921 1.9962.115 2.172 2.216__ INTEREST EXPENSE 0. 000 0.000 0o.000 I.945-IE.5i4 -I 24'5 1.- IC 0r-.702C .425 .194 .008 * CAPITAL CONTRIBUTIONS 0.000 0.000 0.000 0.000 0.000 0.000O 0.000i .99.'9 ... OO .400cp.- AkQ..S!QpAO... -LONGTERM LOAN.EXP.FIM. 3.820 2.723 .425 0.000i 0).000l 0.0o00 0.000) 0.000 0.000 0.000) 0.000 ). 0)00 LONG TERM LOAN.IBRD 2.548 4.038r 1.8937 0. 000 '. 000 0i.000 0. 000 0i.000,O.o 0.0CC:0 0,000 0.0000.00 LONO TERII LOANiCOMMERCIAL -2.548 4.018 1.837 0.000 0.000 0.000 0.000 0.000 0.000 0.00') 0.1)10 0 t0O01 -LoNo TERNi LOAN.DEFICIT 0.00 000 0.0000 0.C 0.000 -(.I0 .0 00C 0.000 MO00 O.00 .0 .0 SHORT TERM LOANS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.u)00 0.'000

TOTAL SOURCES 6.917 30.740 33.544 7;012.9.449 4.939 4.625 5.728 7.958 9.199 4.1431 3.3*2 APPLICATIONS OF FUNDS

PLANT L. EQUIPMENT 6.277 9.391 2.156 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 PREOPERATINO EXPENSES .640 .252 0.000 0.000 0.000 0.000 0.000 0.0900.000.0,0000 0.000 .0.0?'? _INT.DURIV4O CONSTRUCTION "'O.000 .686 1.755 0.000 0i.000 0.000 6.000 0.000"b 0.00 0.000~'O660.0 0.000 WORKINO CAPITAL 0.000 .431 .387 .031 .113 -.112 .080 .134 .134 .102 -. 0-95 -. 35.3 CAPITAL IMPROVEMENTS 0.000 0.09000.000i 0.000 .042 1.14 1h195 '.SAL .090 528 .59?. 0.000

INTEREST.EXP.FIN. 0.000 0.000 0.000 .465 .452 .404 .331 .253 .376 .098 .034 .0035 INTEREST.IBRD 0:000. 0.000 0.000 _.flB.. ?8 ,4.dt L At2 % tNTERElT;tbhMEA I 6'odo o'ooo 0).o0o 924 847 .751 .435 .520 .404 .281P .17:3 .058 INTEREST.DEFICIT 0.000 0.000 0.0o00 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 SHORT TERM INTEREST 0.000 0.000 0.000 -. 243 -. 552 -.558 -. 405 -. 244 -228 -. 212 -.36:3 -. 20) ANORATIZATIONsEXP.FIN. 0.000 0.000 0.000 0.000 .303 .757 .843 .941 .861 .841 .55* .104 ' AMORTIZATION,tlARD 0.000 0.000 0.000 0.000 1.0501t.050 1.050 1.050 1.050 1.050 1.050 1.05') AMO0RTIZATIONrCFCoITMAj -0.000 0.000 0.006 0.000 1.050 1.050 30500 1.050 1.030 10300 1050.)) 1.050 SHORTIZRMAMJORTOIZAION 0.000 0.000 0.000 0.000 0.000 0.000 0,000 0.000 0,000 0.000 0.)000 0.00') "-DIVIDEND'PAVMEUdT- 0 'O00000 5222:5 1~'31.

TOTAL APPLICATIONS 6.917 30.740 9.321 4.433 9.397 4.218 5.966 5~.862, 8.092 9. 695.4,520 4383.

NET CASH FLOW.YEAR 0.000 0.000 2. 023 2.579 .052 -1.279 -1.341 -. 134 -. 134 -. 406 -. 359 -1. 001 CASH FLOW It DIVID..YEAR 0.000 0.000 7.244 5.0314. 3.9.37 -. 1399 -. 723 .402 3. 070, 5.382 2.804 2.043

CUMUL. NET CASH- FLOW 0.000 0.000 2.023 4.602 4.654 3.375 2.034 1.900 1.764 1.340 3.001 03.0003 CUMUL. SHORT TERM DEBT 0l.000 0.0Coc 0.0CC' 0.000 0.OC'0 0.000K 0.000 0.000 0.000I 0.000 0.000 0.000 CUMULATIVE DIVIDENDS 0.000 0).000) 5.222 7.4*0 0 19.05 14.096 14.7*4 15.440) 1.3.645 24.232 27.39,7 :30.443

4-23-84 JEAN L.LOYER Attachment 1

ROSEPEL COLD PROJECT.CASE 10

BALANCE SHEET

MILLIONS OF DOLLARS;

* YEAkR 191985 2986 1987 1988 19'c9 1990 1991 1992 1993 1994 1995 1996

OPERATING CASH 0.000 .127 .136 .145 .155 .158 .183 .206 .22CI .235 .227 0.000 . ,RECEIVABLES , 0.000 0.000 .357 .356 .432 .309 .304. .362 *.449 .499 _ _.432. _.346 INVENTORY 0.000 .644 .732 .783 .838 .855 .991 1.111 13188 1.271 1.227 0.000 EXCESS CASH 0.000 0.000 2.023 4.602 4.654 3.375 2.034 1.90- 1.766 1.360 1.001 0.000 CGuRRENT ASSETS 0.000 ;811.3.248 5.886 64.080 4.698 i.5133.S00 3.422' 3;365 2.887 .346

PLANT & EQUIPMENT 6.277.95.467. 37,824 1024..17-f66,,,,19.03t_20.209...2t.2S..22.i48 22.876_23-AZ.._23d73, _ LESS DEPRECIATION 0.000 0.000 -1.708 -3.651 -5.593 -7.541 -9.613 -11.534 -13.530 -15.445 -17.817 -20.03) OTHER ASSETS .640 1.578 3.333 3.333 3.333 3.333 3.333 3.333 3.333 3.333 3.333 3.333 * _ _ LESS AMORTIZATION ,0!Q000 -_Q2_P_ __.3164 _.9827 . 6479.2. 3!16 -2, S;2 "., TOTAL FIXED ASSETS 6.917 17.246 19.134 16.524 13.957 12.490 10.945 9.725 8.912 7.231 5.656 3.439 TOTAL ASSETS 6.917 18.057 22.38i 22.411 20.037 17.188 14.458 13.304 12.440 10.594 8.542 3.784 * LIABILITIES

PAYABLES 0.000 .3S0 .407 .435 .466 .475 .550 .617 .660 .706 .462 0.000 _ _SHORT TERM DEBT . - -,__ Q.OQ0.0.000 0_Q.000_ ...P.00.opq__0..000 Q.O .0 00__ 00_QQ.OOO9.00 LONG TERM DEBT.CURRENT 0.000 0.000 0.000 2.404 2.858 2.942 2.962 2.962 2.962 2.659 2.205 0.000 CURRENT LIABILITIES 0.000 .380 .407 2.839 3.324 3,437 3,513 3.5S0 3.622 3,365 2.887 0.000 1 LONO TERM DE8TtEXP.FIN. 1.820 4.544 5.169 4.865 4.108 3.247 2.385 1.524 .662 .104 0.000 0.000 TERM.LONO DEBT. 1980.. _._Q.403__. -000 0. - '-N7. LO TERM DEBT.COM11IERCIAL 2.548 6.567 8.403 7.353 6.302 5.252 4.202 3.151 2.101 1.050 0.000 0.000 CA LONG TERN DEBT.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

SOCIAL RESERVES ' 0.000 0.000 0O.000 0.000 0.000 0.000 0.0 00° 0.000 0.000 0.000 0.000 0-.00 NET PAID-IN EOUITY 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 RETAINED EARNINGS , , 0.000 0.000 0.000 0.000 0.000 0157 1.898 3.954 5.024 5.655 .2.786 i TOTAL EQUITY 0.000 0.000 0.000 0.000 0.000 0.000 .157 1.898 3.954 5.026 5.656 3.786

TbTAL LIABILITIESt 6.?17 i8.057 22.3S2 22.411 20.037 17.38$ 14.458 13.304 12.440) 10.596 8.542 3.786 DEBT COVERAGE RATIO N.A. N.A. N.A. 5.30$ 3.155 1.784 1.487 1.823 2.498 2.934 2.374 1.459 CURRENT RATIO N.A. 2.133 7.985 2.073 1.929 1.367 1.000. 1.000 1.000 1.000 1.000 N.A. DEBT/EQUITY RATIO N.A. N.A. N.A. N.A. N.A. N.A. 68.709 4.122 1.230 .439 0.000 0.000

6-21-84 JEAN L.LOYER AttachmentIt

ROSEDEL G-OLDoFROJECT.CASE 10 CASH.FLOWIPRATES OF RETURN & NET PRESENT VALUES.

FUNDS IN MILLIONS OF DOLLARS AND IN 1984 REAL TERMS OR INFLATED (CURRENT) TERMS.AS SPECIFIED.

______.. ~~~~CSAHFLOW IN REAL TERMS __ CASHiFLOW IN INFLATED TERMS ___ p ~~AFT'ERTAXES BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITY 2 -4.'465 .660 -6.90 -6.917 -. 000~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~* -9.798 -8.798 -.000 -IC'.073 -10.073 -.000 5 -3.639 3.939 4.263 ____4.702 4.702 . 5,222 __S. 5.32e - s;32& 1.8,5 ~~~~~~~~~~~~~6.9816.981 2.457 6.628 6.628 3.797 9.296 9.296 5.326 2.602 -. 2.602 _ .7~20 .905 __3.O . 1.080. - 2.036 .086 .333.350 3.350 .619 2.644 2.644 .429 4.543 4.543 .736

3.66.3 3.663 1.743 6.734 . 6.734 3:204 -5 4. ~356 4.356 284 8.5i9 8.569557 2.669 2.689 1.504 5.659 5.659 3.165 -- . ~~~~1.683 1.e83 1.3 . .. 4.240 . 4.240 3.043 .L44 .144 .144 .346 .346 .346

REAL IRR AFTER20.062 TAXESX ~~INFLATEDJAR AFTER TAXESa 28.467 ?. REAL IRR AEFTRER TAXES 20.062.... TAE 4. ------REAL IRA ON EQuJITY S INF1iNITE- iNFLATED IRR ON EQUITY aINFINITE REAL 1984 NPV AFTER TAXES S 0. 000?. 20.595 INFLATED 1984 NPV AFTER TAXESS 0.00079 41.334 1. REAL 1984 NPV BEFORE TAXES 0 0.000?. 20.595 INFLATED 3994 N4PV BEFORE TAXES e 0.00?. 42.334 4 REAL 1934 NPV ON EQUITY 0 0.000?. 19.050 INFLATED £984 NPV ON EQUITY a 0.000?. 30. 767 ~

REAL 1984 NPV AFTER TAXES 4i 6.00.b 81__-- Tj. &9 INFLATED 1984 NPV AFTER TAXES e .0? 2.8 REAL 1*94 NPV BEFORE TAXES 0 S.000?. 11.699 tNFLATEO 1984 t4PV BEFORE TAXES 5- 5.000?. 25. 188s REAL 1984 NPV ON EQUITY 0 5.000?. S 13.874 INFLATED 1964 HPV ON4EQUITY 0 5.000?. 21.674 REAL 1*94 NPV AFTER TAXES 0 10.000?. 6.076 INFLATED 1984 NPV AFTER TAXES 0 10.000?. 35.096 REAL 3984 NPV BEFORE TAXES 0 30.000?. 6.078 INFLATED 1984 NPV BEFORE TAXES 0 10.0001. 15.096 REAL t9894 NPV ON EQUITY 6 0).000%. 10.478.6FATD1934 NPV ON EQUITY a 10.000?. 15.872

REAL £984 NPV AFTER TAXES 0 15.000?. 2.434 INFLATED 2984 NMPVAFTER TAXEs e 35.00. 8.403 REAL 1984 NPV BEFORE TAXES3 6 15. 000?% 2.434 .. ''--INFLATED 1984.NPV BEFORE TAXES 0 15.000?. 8.603 REAL 1984 NFV ON EOaUITY 0 15.000?. 8.155 INFLATED 1964 14PVON EQUITY a 15.0C00% 12.024

NOTEs THE SALVAC.E VALUE IN 1197 IS EQUAL TO THE WORKINO CAPITAL ONLY.

6-21-84 JEAN L.LOYER AttachmentIt

ROSEBEL GOLD PRO.JECTICASE 11 PROFIT AND LOSS STATEMENT MIILLIONS OIFDOLLARS YEAR 2985 1984 1987 2 988 1989 2990 2991 2992 19') 1994 2995 2996

TOTAL SHIPMENTS 0.000 0.000 .026 .024 .028 .019 .017 .02$9 .022 .023 .018 .014

_.-INCOME~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-

TOTAL REVENMJES 0.000 0.000 9.932 V9893 12.019 8.606 8.468 10.080 12.482 13.8075 12.002 9.431

TOTAL COSTS 0.000 0.000 4.882 5.223 5.589 5.980 4.200 7.067 7.9129 8.471 9.064 8.753

* .OTHER FIXED COSTS --.- .-... --. . .- GEN. It ADM 0.000 0.000 .239 .208 .206 .221 .234 .253 .272 .290 .320 .332 EXPATS. 0.000 0.000 .490 .363 .323 0.000 0.000 0.000 0.000 0.000 0.000 0.000

* OPERATING PROFIT 0.0C00 0.000 4.321 4.099 5.911 2.405 2.232 2.760 4. *3 5.114 2.627 .546 INTEREST EXPENSE 0.00') 0.000 0.000 1.937 1.507 1.235 1.203 .986 .895 .629 .207 .094 AMORTIZATION 0.000 0.000 .316 .667 .467 .667 .447 .352 0.000 0.000 0.000 0.000 .-DEPRECIATION -- 0. 000 ~0.00fls1.70S -I.. 943-1.943-1.947--2.072-1.-921----1.994 .2.I215 -.2. 172..-.-2.2 14-

NET INCOMiEBEFORE TAXES 0.000 0.000 2.298 -.447 1.795 -1.444 -1;711 -.500 1.392 2.369 .248 -1.764 -

TAXAK3E INCOMIE 0.000 0.000 2.298 0.000 1.795 0.000 0.000 0.000 0.000 .106 .248 0.000 INCOME TAXES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

NET INCOME AFTER TAXES 0.000) 0.000 2.298 -.447 1.795 -1.444 -1.712 -.500 1.392 2.369 .248 -1.744 CUMULATIVE INCOME A.T. 0.000 0.000 2.298 1.851 3.645 2.202 .491 -.010 1.382 3.751 4.000 2.234

4-221-84 JEAN L.L0YER Attachment II

CROSEEI'E.OCILD PROJECT.CASE 15 .SOURCE ANDI APFLICATION CF FUNDS.IIILLZONS OF DOLLARS

YEAR 1985 1986 1987 51988 -1989 -5990 19913 192 1993 19*4 1995 1996 -- SOURCES CF FUNDS

NET INCOME AFTER TAXES 0.000 0.000 2.298 -.447 1.795 -1.444 -J.711 -.$00 1.392 2.369 .240 -1.764 AMORTIZATION 0.000 0.000 .316 .667 .467 .467 .467 .351 0.000 0.000 0.000 0.000 --DEPRECIATION * .0.000 -0.000 -- 1.706 -- 1.943-1t943---l*.947---2,072-1,921-1-.906 -- 2.115---2.172--2.256---- INTEREST EXPENSE 0.000 0.000 0.000 1.937 1.507 1.235 1.103 .986 .895 .629 .207 .094

* CAPITAL CONTRIBUTIONS 0.000 0.000 0.000 --.--- 447---.00 -I.444--1.711----.SOO--o.oo 0.000 -- 0.000-- o.o - LONG TERM LOAN.EKP.FIN. 1.820 2.723 .625 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONG TERM LCOAN. 1RD 2.548 4.018 1.796 0.000 0.000 0.OOo o.000 0.000 0.000 0.00 0.000 0.000 -----LONG TERM LOAN.CO.9SMERCIAL . 2.548 4056 18.796--0.000 ---- 0.000-0.oo-o.ooo---o.ooo----o.ooo----.Ooo0-0o.oo-.-*-o.ooo-----.. LONO TERM LOAN.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 .198 1.830 1.468 .441 1.424 .481 SHORT TERN LOANS 0.000 0.000 0.000 0.000 0.000 0.000 .237 0.000 0.000 0.000 .219 2.195 ' TOTAL SOURCES 4.917 10.760 8.530 4.546 5.S91 3.S49 4.277 5.090 5.951 5.555 4.272 3.223 j.

.-.-_--APPLICATIONS OF FUNDS - . . .-

PLANT EQUIPMNT 6t.277 9.391 2.156 0.00° 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.00 - .. -PREOPERATINO EXPENSES - - .640 .252 0.000 --- 0;000- -- 0000-0.000 ---0.040 -O-.000)--- 0.000 0.000 0.000 - -0.000 INT.DURIZNO CONSTRUCTION 0.000 .686 1.755 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 HORKINO CAPITAL 0.000 .431 .306 .031 .094 -. 084 .0*2 .121 .115 .0'1 -. 079 -.833 --- CAPITAL-IMPROVEMENTS --- - .000 0.000 - 0.000 -0.0400---.042-- -1-47--&. 4f5- --s- 055---- -. 090. 520-.597- O.0O------

INTERESToEXP.PIN. , 0.000 0.000 0.000 .465 .452 .404 .331 .253 .174 .096 .034 .005 INTEREST. ISRO 0.000 0.000 0.000 -. 794 --- r745---w645 ----- 546 - .447 -- .348- 240 --- r,49 ---r5- --- INTEREST.COWIERCIAL 0.000 0.000 0.000 .920 .862 .747 .632 .517 .402 .287 .172 .057 INTEREST.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .022 .215 .340 .234 .239 - SHORT-TERM -INTEREST- -.------000- - 0000. 000-.*-243--s. 552 - --_345- S*5-- 257 '2

AMORTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 .303 .757 .661 .861 .861 .861 .559 .104 4- -AlIORTIZATION.IBRD 0.000 0.000 0.000 - 0.000-1.04S -51045---t,,045--4.045--I.045----045*-S-.045--5.o45-- AMORTIZATIONeCOMMERCIAL 0.000 0.000 0.000 0.000 1.045 1.045 1.045 1.045 1.045 1.045 1.045 1.045 1.3 ANORTIZATZON.rEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .09,9 1.014 1.749 1.055 -- SHORT TERIIAMORT12ATION 0.000 0.000 0.000 - -00-0 -0.000-- 0.000-0.000---- - DIVIDEND PAYMENT 0.000 0.,000 2.298 0.000 1.795 0.000 0.000 0.000 0.0')' 0.000) 0.000 0.000

TOTAL APPLICATIONS 6.917 10.760 6.515 1.968 5.831 -* 5.146 --5.032 --S.34* 3. 15- 5.214 -5.122 -2.505

NET CASH FLOW.YEAR 0.000 0.000 2.023 2.578 .080 -1.297 -1.055 -.25- .801) .341 -.649 .716 CASH FLOW & DIVID..YEAR 0.000 0.000 4.321 2.578 1.874 -1.297 -1.035 -.259 .SOb .-34 -.849 - .718

CUMUL. NET CASH FLOW 0.000 0.000 2.023 4.602 4.681 3.385 2.330 2.071 2.871 3.212 2.363 3.0SI CUMUL. SHORT TERM DEBT 0.000 0.000 0.000 0.000 0.000 0.000 .237 0.000 0.0b 0.000- .291 2.413 CUtULATIVE DIVIDENDS 0.000 0.000 2.29S 2.299 4.09a 4.093 4.093 4.093 4.0'2 4.i)93 4.093 4.093

6-21-84 JEAN L.LOYER AttachmentII

ROSEDEL,GOLD FRO..ECTpCASE 22 OALANCES~HEET MILLION4SO'F DOCLLARS

Y'EAR 2985 1986 3987 298*: 1*99 1990 159 1992 1992 fl 194-)4 2995 2996

_-.ASSETS .- ______

OPERATING CASHi 0.000i .127 .136 .145 .155 .158 .183 .204 .220) .235 .227 0.000 RECEIVABLES 0.000 0.000 .276 .275 -. 334 *-.239 --. 2-35 --. 280 ---- 347 -.. .a3*5.. a -.248 INVENTORY 0.000 .6*4 .732 .783 .838 .855 .991 1.211 1.1*8 1.271 1.227 0.000 EXCESS CASH 0.000 0.000 2.023 4.602 4.68W1 3.3$85 2. ?11 2.071 2.871 3.212 2.363 3.081 CURRENT ASSETS 0.000 .822 3.167 5.805 6.009 4.637 3.740 3.648 4.626 5.104 4.151 3.34S

-PLANT & EQUIPMENT 6.277 15.667 27.824 17.824 _17.8466-19.O1.3 -20.2O3 212.25$ 22.34*. 22.876 23.473--23.473 LESS DEPRECIATION 0.000 0.000 -1.708 -3.651 -5.593 -7.542 -9.613 -11.534 -13.530 -15.445 -17.817 -20.033 OTHER ASSETS .640) 1.57a 3.333 3.333 3.333 3.3:33 .3.333 3.3:3:3 .3.3:33 .3.333 3.3133 3.333 LESS AMORTIZATION 0.000 0.000 -.314. -.982 -1.649 -.2.3146 -2.92' --3.3a33 -3s.3Qs3 -a.3Z33 -,3.;333-- 3.333 TOTAL FIXED ASSETS 4.9L7 17.246 19.134 L6.524 13.957 12.490 10.945 9.725 8.813 7.231 5.456 3.439

TOTAL ASSETS 6.917 18.057 22.302 22.329 19.944 17.127 14.485 13.393 13.444 12.335 9.806 4.787

-.- LIABILITIES.- -~ . .- - - -. - . .

PAYABLES 0.000 .380 .407 .435 .466 .475 .550 .617 .640 .706 .682 0.000 __..SHORTTERM DIEBT.0.000 0.000... 0.000 .0.000 -.O.000...-O.000.-.23Z-O.00O.-0.O0I .0.000 -.-.219--.2.415 LONO TERM DEBT.CL'RRENT 0.000 0.000 0.000 2.394 2. '48 2.952 2.952 3.051 3.966 4.398 3.250 .934

* . CURRENT_LIABlLITlES..___.. .- -- 0.000..---.390_..-.407-2.*A 8 -. 314-.3.427--S.740---3.464---4.62&---. 104-4.-151-43.349

LONG TERM DEBT%EXP.FIN. 1.820 4.544 5.169 4.865 4.108 3.247 2.385 1.524 .662 .104 0.000 0.000 A ...OOTERM DEBT. IBRD 2.548 6.567 -.8.363 --7.317----6-.272--5.227----4r1*I1---3r134---2.'Yfl1 -1.045 000.0- LO TERM DEBT.COMMERCIAL 2.548 4.567 8.363 7.317 4.272 5.227 4.181 3.136 2. 002, 1.045 0.000 0.000 * LONG TERM DEBT.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 .198 1.929 2.5*83 1.275 1.646 1.194 V SCIAL RESEVES 0.000 0.000 0.000 0. (.00 0. 000 0.000 0.000 0.000 0.00') 0.000 0.000 0.000 NET PAID-EN EQUITY 0.000 0.000 0.000 .447 .447 1.891 3.402 4.102 4.102 4. 102 4.102 4.102 RETAINED EARNINGS 0.000 ('.000 0.000 -.447 -.447 "1.891 .-3.602 -4.102 .-2.711 -.342 -.093 -2.857

TOTAL EQUITY *(.aOf 0.000 0.000 0.000) 0.000 0.000 0.000 0.000 I 1.3Z2 3.761 4.009 2.245

TOTAL LIABILITIES 6. 917 J*.057 22.301 22.329, 19.964 37.J27 14.685 13.393 J 3.444 22.335 9.804 6.787

DEBT COVERAGE RATIO N.A. N.A. N.A. 3.992 2.379 1.247 1.000) 1.145 1.706 1.685 1.000 2.000 CURRENT RATIO N.A. 2.233 7.784 2..Co5Ž 2.923 1.353 1.000 1i;ooo 1.O(' 1.000 1.000 1.000 DEBT/EQUITY RATIO N.A. N.A. Ni.A. N.A. N.A. N.A. Ni.A. N'.A. 5. 337 .`4%_3 .411 .532

6-21-84 JEAN L.LC'YER Attachment11 RCOSEIiELGOCLD PROJECT. CASE II CASH FLOWS. RATES OF RETURN & NET PRESENT VALUES.- -- FUNDS IN MILLIONS OF DOLLARS AND IN 1984 REAL TERMS OR INFLATED (CURRENT) TERMS.AS SPECIFIED.

-- CASK-FLOW IN REAL -TERMS ~----~---CASH FLOW-IN--INFLATED --TERMS ----- AFTER TAXES BEFORE TAXES ON EQUITY AFTER TAXES BEFORE TAXES ON EQUITY

-4.465 -6.465 0.1)00 -6.917 -6.917 0.000 -8.798 -8.798 0.000 -10.073 -10.073 0.000 1.318 ------1.538---1.74------1.059----- 1599-- -2;298 3.103 3.103 -.341 4.068 4.060 -.447 4.117 4.117 1.280 3.7739 5.775 1.795 .895 .8.95. - - --. 962 ------.4 .---1.343- -1.444 .533 .83:3 -1.065 .855 .855 -1.711 .924 .92'4 -.291 1.588 1.588 -.500 - 1~~~-.674--- -1.674 ----- 0.00') ------. --- 3.078 ---- 3.078 - -0.000 2.285 2.2*5 0.000 4.495 4.495 0.000 1.003 1.003 0.000 2.110 2.110 0.000 -. 615. . .435 ----- 0.000 ------*13S---1S5 . (.000 .111 .313 -.495 .26* .268 -1.194

REAL IRA AFTER TAXESI 1.904 X INFLATED IRR AFTER TAXES 9.037 K - ~~~REALIRA BEFORE TAXES I 1.904 K ------INFLATED-IRR BEFORE TAXES '-9.037 K REAL IRA ON EQUITY I -.003 K INFLATED JAR ON EQUITY I 6.999 K

------_----REAL-I9a4 NPV AFTER-TAXES-U.--O.000X--a J,.514 INFLATEID.-L9'3-NPY-AFTER-TAXES-O-*-0.O00X--a---9.833 *- --- REAL 1984 NPV BEFORE TAXES 0 0.000K 1.514 INFLATED 3984 NPV BEFORE TAXES 0 0.000K I 9.833 REAL £984 NPV ON EQUITY 6 0.000?. .000 INFLATED 1934 NPV ON EQUITY e 0.000?. 1 -1.203- REAL 1984 NPV AFTER TAXES a 5.000?. -1.906 INFLATED 1984 NPV AFTER TAXES e 5.000K 3.328 REAL 1984 NPV BEFORE TAXES 6 5.000K I -1.906 INFLATED 1934 NPV BEFORE TAXES 0 5.000K 3.328 ..---- REAL 1984.NPV ON4EQUITY.. _-0e .. UO----4 ~~INFLATED-L984-NPV-ON-EQU1T.Y.--0-5.000% ----.--. 242 -

REAL 3954 NPV AFTER TAXES e 10.000?. -3.952 INFLATED 198 NPY AFTER TAXES I 10.000?. -.4318 REAL 3984 NPV BEFORE TAXES 0 30.000KZ -3.952 . ---- INFLATED 1984 HPV BEFIORE TAXES C 10.000?. -.618 REAL 1984 NPV ON ECQUITY 0 10. 000. .602 fINFLATED1984 NPV ON EQUITY e I0.00.ooo .26.3

REAL 19*4 NP'VAFTER TAXES 0 35.000?. -5.177--. - INFLATED 1984 NPV AFTER TAXES 0 15.000K -3.049 REAL 1984 NPV BEFORE TAXES 0 35.000?. -5.177 INFLATED 19134NPV BEFIORE TAXES e 15.000?. 3 -3.049 REAL 3984 NPV ON EQUITY 0 S5.000KDI .4*2 INFLATED 1984 NP-VON EOUITY e 15.000?.Z .523

NOTE% THlE SALVACE VALUJE IN 1997 IS EclUAL TO THIEWORV1N'3 CAPITAL ONLY.

JEAN L.L*IOYER ATTACHHET III

BA1,lti,S VAlUIFE rkCKOLCT.CASEI

rrU,,FIr AM) LOSS SIATEtiLt. NIILR*I1 OF rM.LAAS

YEAR 1985 19a4 1967 1968 - - .19S9- - 1990 1991.-.- 1992-- 1993- 1994 - 1995 -1994

SHIl*ENTS TOTAL SItHPDILJTS . 0.000 0.000.. .830_I.U0.... -1zU0--L.M0--4.Ua.44O4.d4O.--4.440 1.440-__.

18i'4*E '; TOTAL REVENU£ .0. --.-- 0.4000 -27.45S3 - 750 k4. -41.2.4--41 .71--.009- S32.400 - &*.1*§ - 94.339 100.943 -- COMT ..TOTAL COSTS 0.000 0.000 17.138 -33.476 -*9.243-41.990--44,930-4S.075-51.440--65.041 -5U.894-43.014---,

OTHER FIXEO COSTS FIXED . 0.000._. 0.000 _7.9 3 4_4. .- S. ---. Z 10 -4&...&34 1.9 12 743-13-439 14-594

; OPERATIIROPROFIT . 0.000.--0.000 -- 2.377- 13.0014.-1-54 4--&4.04- -- 2043-20.m - 23.333- ; J.. INTERESTEXfPN5E 0.000 0.000 0.000 23.417 21.348 19.418 10.042 14.342 16.039 15.942 15.523 15.257 .. _A.MRTIZATION . . __ .__0.000. _0.000_ 3.7U' WO-lhl 8. a . o,ooLjoo.-o.ooo_2 DEPRECIATION 0.000 0.000 19.740 19.740 19.740 19.740 19.740 9.070 9.870 9.870 9.870 9.870 a.

_NET INCORE BEFORETAXES -0.000 -- 0.000--2*.I3I--37r907-34.48--31.741--29-;.744.W d 5.433r-fid.--L494 .|I TAXAbLEIWOOIE 0.O0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000°.°° 0.000 -.- 1NCWL-TAXES ._ . O.00-0.000 z ) 00000 00 0 0- 0.0000 04) 0 0 00 W

' S. NET INCOMEAFTER TAXES . 0.00 . 0.000 0-21.131 =37.*0L=34.31.74L_3*2 7.74-4_ 5.U2 -,54-1l79 .. ::! Ct.CILATIVE IWOM A. T. 0.000 0.000 -21.131 -39.039 -93.727-125.447-154. 743-167.517-174.36r-179.812-13.a390-185.192 h

6-30-84 JEAN L.LOYER ATTACIMEN III

I'd) 'lUt £'A"*XITE FAkMECT*CASE I

PR(C I tM ID 1.0 ;S; I A rEIENT

MlILLICON' OF DC.Is.AIS

YEAR . £997 -199 .1 .. 2000--.2001--- .2002---2004--200 204-- -

*TOTAL S..HIFI.E..SIIIPIIENIS . .. .4.6._ ... 660. 1.6&...... _.--. _-

. TOTAL REVENES ... .. lOb. 009_ 15.S7QJ 23._t32. L . S 2.f L AJ85.5O1. 51 L__

TTOTALCOSTS . .67.427.. 72.147_.7 LJ..L2a118.27h.15.853423.fa-_2.198.2.6Oz...B&Sc OTIIER FIXED COSTS FIXED . - - ... 15.._1...1&.? A7.alt .3 2 .nt otaa.nt.z2-I-6.ahL..aat...... _. -*

;. Of'ERATINtM PROFIT _ .24.9,6 .24.714-2t5M._ 2.5H ... 01.5.Olb.37..fl.-4O.09m -42.894 45.899

i INTEREST EXPENSE 1.411 17.390 18.470 19.684 20.004 22.057 21.390 24.798 26.29* 27.870 j

DEPRECIATIOl 9.870 9.070 9.870 9.870 9.870 0.000 0.000 0.000 0.000 0.000 a,

: '.-..NET INCO"E BEFOnE.TAXES . _t

TAXAILE INEOHE 0.000 0.000 0.000 0.000 2.05* 12.959 14.077 15.291 14.405 18.029 |i

',,l fi;9+1£ fXt5___-_ b. 0, o. 6.oM d.MoE~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~5,LAnnnnn.g

.NET INCOME AFTER TAxES . -1.315 . :.547 ._-243._.1-107 2.5L_A2.23A4..077f.45.221 .4 .40&. 18.020 .

CL,UCA.ATIVEIW:OMr A. r. -1"4.507-167.054-bO4.011-lS5.704-183.653-170.494-1ao.617-141.32S-124.7-0-106.691

6-30-84 JEAN L.I.I3YER ATTACW4ETIII

t4MIftII- tlAIIt lI('.*.CAa I .441tRCE AND AFLICATICN OF FLVDS.HILLICNS Cc IALLR-S

YFWik 1:95 I9"6 :9/ 19* 1399 1990 3993 1392 1993 1"4 1995 1996 WOtKE jf FCINDSI

NEF hI0CIIE AFTER TAXES 0.0CC 0.000 -21.131 -37.907--34.489--S1.741--29,274-12.774 -- 4.63--s.432--.s4 -- 1.794 ' Al$)ltIIATICAA 0.000 0.000 3.768 0.130 0.130 0.130 8.130 4.362 0.000 0.000 0.000 0.00 i CEPRECIATtN c 000 0.00 19.740 19.740 19.740 19.740 19.740 9.870 9.070 9.S70 9.S70 9.870 H --INTEREST EXPENSE - - - -- 000 0.000 -- 0.000 -- 23.417--21.348-19.4133--1.042-6.3 3.CO--Ia.4Z-5.f-I5.257 -',j

- rCITAL CCNTRwurscS 0.OOts 0.000 21.131 37.907 34.6 31.743 29.274 12.774 4.043 5.432 3.54 1.794 ' L:mO TERn LOAN.EXP.FIN. _ _ 41.690 .64.010 .0.000.- 0.000-0.000--4.000-0.000-0.000.000--.000- 0.000-0.00---. IONWGTERII LC4A.C01ERCIAL 39.310 70.140 21.011 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0 ,0 LONG TERN LOAN.CEFICIT 0.000 0.000 0.000 0.000 1.447 14.792 23.017 46.213 70.243 94.672 119.2e4 123.352 SISI-. TERM LOANS . -- 0.000--0. 000 - 0. 000-.-0.000-20. 259-7. S7l-. 0. 000-0.000-0. 000-0.000-2.30 -23.95---

TOTAL S4UhCES 81.000 137.020 45.319 51.467 71.144 49.959 8.92 78.7*2 96.352 33.484 347.03 172.049 |

AFPFLICATICONSOF FLU'S is

__._FLANT & EOuIFrENT - - 75.800- 323.600---0.000-0.100--0.000---.000-0 .000,tO ,OOO.0-0.000--O.0 PREOPERATINO EXPENSES 5.200 5.564 0.000 0.000 0.000 0.000 0.004 0.000 0.000 0.000 0.000 0.000 INT.CiJRINOCCtSTRLCTION 0.000 0.074 21.611 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 ._..RIRkINO CAPITAL ... .._ .. -.- -- 0.000 -. .7dO .60.8- .. 093.-333-3.405-1r04--3.41-1. 971 -2.109 CAPITAL IMfROVEMENTS 0.000 0.000 9.673 10.350 11.075 11.E50 12.679 13.567 14.513 35.533 14.420 17.78)

__-. INTEREST*EXP.FIN. -_ * _0_ _0.000 0.000..S. U .5. _.A* .z L a7.024as . 0 .. 5a5 L. INtEREST.COMERCIAL 0.000 0.000 0.000 14.4" 33.534 11.731 V.927 9.122 6.317 4.512 2.707 .902 INTEREST.DEFICIT 0.000 0.000 0.000 0.000 0.000 .263 1.765 3.798 7.610 i2.33i3 17.557 22.60 _ O1ARTTERN INTEREST-0.000 --_0.000 _- _

1AIAM0RTlIATION:EXP.F3N. 0.000 0.0o0 0.000 0.000 5.211 13.571 13.571 13.571 13.571 13.571 13.571 13.571 ¢.L...AMORT I ZAT I0 f.COMfiC 8.0o.& & . u .O Cen&IA_.4COO_4-084_48 4jAc&-1..0rs&.o& 4oe uo. r IAMORTIZATION-DEFICIT 0.000 0.000 0.000 o.°°O 0.000 0.003 .834 8.230 36.05 35.631 59.231 82.S57 't w - S-IK)T TERn ANOTIZATIC(N 0.000 0.000 0.000 0.000 0.000 0.000 4.647 4.625 5.332 5.329 0.00 0. 000 _- DIVIDEN PAYENT. .0.000.-. 0 .000-O _.0 00.000-*.00 0. 'I TOTAL AFLFtICATICiS 81.000 137.020 40.376 42.056 55.355 42.65: 49.683 74.351 84.493 104.242 123.323 147.d5 j ," NET CASH FLOSbVEAR 0.000 0.000 4.943 9.429 15.789 7.307 -. 754 4.441 9.4S9 3S.442 23.740 24.363 .' CASH FLC4W& DIVID..VEAAE 0.000 0.000 4.94) 9.429 35.789 7.307 -. 7S4 4.441 9.S59 14.442 23.740 24.383 C*LI. NET CASH FLOW 0.000 0.000 4.943 14.372 30.1b3 87i469 34.734 41.155 50.815 67.257 90.9"6 115.3*) CUt1 . UtmT TEfMI EST 0.0 0 0.00. 0. 0.000 20.259 20.138 21.491 148.O 11.5)4 6.205 8.5* 32.178 .. CUltLATIVE oIVIDENO 0.0 000 0.00 0.000 _._0.0_00.....a 0.000 .0 .00....O _ .OO_-- -

6-30-84 JEAN I..LOVtR ATTACHMENIII

[INIVIS DAUXIT8 IRU.S(7.CASE I .*AsCE ANL' ALICATION OF' FUDS.111tLICW4 OF 1C'tLARS 'Arm 3*? 8*93R 899? 200 2003 202 Ž003 .04 205 2004

SCAJRCES C F tLINIIS ;, NET INCWMIEAFIER TAXES .1.315 -. 547 .243 -. 1.107 -2.01-812.95i 14.077 10.029.. - -- Aht2RAI8ATION 0.000 0.000 0.000 0.000 0.000 o.O0 O.o00 0.000o .000 0.000 ; EiEFRECIAlICW 9.S70 9.S70 9.870 9.070 9.870 0. 00 0.0(0 0. C0C 0.000 0. 000 * -.- EiT E7ENBE.zn ...... - 1.1_730-8641.0d_b82.X_33a2.s_2.27.30 ___4? 1.40.2.SA4.O ... 2.39...2.224. Ž91-fl...... 070_- CAPITAL CCJTRII UTIIES 1.315 .547 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 ' LONO TEFOILOAN.EXP.FN. 0.000 0.000 -- 0.0 .00o -1-o.o-o0. - 0 -_0 00 - L*G4 TFRN LOAN.CIMERCIAL Ot0. 0ob0.000 0.000 0.000 0.000 00 0.000 0.000 0.000 000 LIY1 TERNdLOAN. [EFICIT 130.477 137.405 145.613 153.943 132.749 172.025 181."4 192.209 203.126 214.621 . SHO.@RTTEflI LC'W$ _ .. . 1.722...2.573 __ 1.053_2.01 -2.181_..2.47L2._21_ZI5.4952_3.0. -. 000_ .,

TOTAL StANSCES 150.484 167.239 175.250 164.446 197.454 209y.712 222.047 233.251 249.119 260.520 *AFFLICATIC*S OFFLtHb; ;,

PLANT & EU'IPIIENT .000 .fl 9.Q9 0.QQClQ_Q. . .. PREOFERATIN0 EXPENSES 0.000 0.000 0.000 0.000 0.000 0.000 0;000 0.000 0.000 0.000 INT.DURINO SCfTRtKtIC.18C*e 0.000 0.000 0.000 0.000 0.000 0.000 0.00 0.°000 0.00 0.000° W_WIICtNOCAPITAL 2.257 .2.415 . 2.584 .. 2.744 .. 95E- 3.16 . 3.3i37.3.624.JU7-. s.2S-. C'X CAFPITA IMPROVWEIlTS 19.028 20.360 21.785 23.310 24.942 26.6. 2n.556 30.555 32.494 34.n2

-__1NTEREST.EXP.F.IN. .-- __ -376 -. 0. 000 )inL...ooa.. _ o,s - 0.OWo !.!I INTEREST.CCIERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INTEREST.DEFICIT 26.019 27.609 29.271 30.942 32.714 34.S99 36.580 36.673 40.878 43.202 _ -- sHoRTEFJI INTEREST =-9.9B4=10.419 =10.BOIL-11.334 LIIUS1Qa12442_13.8003..8? 14.ShLl.32 - ADOf2T8ATAtC*.EXP.F8n. 0.340 0.000 0.000 0.0WO 0.000 0.000 0.000 0.0W0 0.000 0.000 I*_I1ZAT I C4i,C;Efi;CIA4Ln. ___. .. U\,L..,.Q- .00-O6 n. 00 n .nnn n. a 000O .1 n.00I n 00 . AHORTIZATIION.1FICIT 107.079 121.319 126.915 132.941 141.50 149.726 185.2"9 167.36? 176.945 187.08 1' - ,SHIORT TERh AIOrIATION 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 10.449 W ['DIVID[ENDPAYIEN. 0.000 -. 0.0.0.006 .OQ0_A...... 0000.0xl fl.OO .0- 0tA..S__t______Oe__ b Ut TOTAL. FFl1ICATIJ(.4 153.135 161.484 149.754 179.424 190.213 201-.4 213.629 226.364 239.80B 250.7)4

NEt CA44 FLCM.YEAA 5.350 5.754 5.494 6.022 7.442 6.074 0.419 0.637 9.311 9.7" CASH1FL41 & DIVID ..YEAA 5.3ZO 5.754 5.496 4.622 7.442 9.074 0.419 0S. 7 9.311 9.7" Ctnt. Ntl CAS4 FLOW 120.730 126.434 131.980 838.402 144.244 154.318 1462.737 171.624 180.935 190.721 CLuSt. SHKIET1tM DEBT 33.905 36.470 37.531 39.550 41.731 44.403 47.117 50.049 53.8S 42.496 C'f.JLATIVEDIVt'CtDES 0.0 0 0.000 0.000 0.000...0.000 -_0.000 0.0000.oa.A.0000.000

4-30 -84 ALANL.I.OYrr ATTACI1IKNTIII

O8L11I1S1AtXtrE fftOJECT.CASE I 1AI.ANCE SlAET

MlLLIN4S OF DLLARS

'YEAR -- -5- * 1905--- 1904 *1987. -- 19B0O -51909 1990 1993 *1992 1993 1994 -1995 -19ib.----6

ASSETS |',

:' OFERATINO CASH 0.000 .445 .952 1.019 1,090 1.164 1.249 1.335 1.429 1.529 1.636 1.750 RECEIVABLES 0.004 0.000 4.683 14.487 15.716 5b.8L6 17.993 19.252 20.600 22.042 23.505 25.234 :'. INlVENTORY ------0.000 -2.670 -- S.713--b11- 541-4. 998----7,4s8- 6.D012- S. 573---. 9, 173 ---t-6 4-10,.fi03- , ;j EXCESS CASH 4.0Q01 0,004 4.943 14.372 30.161 37.469 36.714 41,155 50.815 67.2S7 90.996 115.330 |, -'".__.CURREN4T.ASSETS..

" PLANT & EC?UIPMENT 75.600 197.400 207.073 217.423 228.498 240.347 253.027 7'6.593 231.110 296.642 313.262 331.044 .' C _...LESSDEPRECIATION.. ..--- 0.000. -0.000 - 4o_ ' OTISER ASSETS 5.200 l8.340 40.651 40.451 40.651 40.451 40.451 40.451 40.451 40.451 40.651 40.651 LESS AMORTIZATION 0.000 0.000 -3.760 -11.8*9 -20.02a -29.159 -34.289 -40.651 -40.651 -40.465 -40.,.51 -40.655 I"'. TOTAL FIXED ASSETS 85.000 214.240 224.214 204.494 189.904 173.S80 158.489 358,023562.670 160.332 175.092 182.916 Ls

L..__TOTAL ASSETS ...- _ _.-..9I.0O.259.3S5242.487-242.82t-243.408-236.329-222.-132-227l.79-244.087-268.233-301.1155 33 45. ---- ",

LIABILITIES ____

PAYAPLES 0.000 5.335 2.804 3.056 3.270 3.499 3.744 4.004 4.287 4.587 4.900 S.251 S, ORT TERN DEBT 0.000 0.000) 0.000 0.000 20.259 26.581 21.491 16.046 15.534 6.205 8.589 J2.178 LONG. ERM DEBT .CSTRREU REoT 0.000 0.0OC,-O.. 0000.2tL. .f.S783082 at o.208.0883-65.S59L.84209.112. 536-115.439L---

CURRENTLIABILITIES 0.000 1.335 2.056 24.475 53,500 42.449 43.44:3 69.756 01.417 100.001 124.033 152.0649

TERN.LONG DE5BTEXPFICNT 41.690 108.570 10---70 103.359 8P.760 76.216 62.645 49,074 35.S03 21,931 91360 0.0 " LO TERh DEBT.C801iERCIAL 39.310 149.450 1'31.260 114-053 98.445 82.038 65.630 4S.223 32.015 16.408 0.000 o OD0 :14 ';LONG TER" PEBT i SF IC IT 0-O- 0...... -0000-0.O00 -0-0.0 0.000 -- "-7--15.625-30 413--ff9#727-94.S52-129. 99'3-16. 722-182. 995- _ ',

SOCIAL RESERVES 0.000 0.00') 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 IC '_.._NET_PAID-IN.EOUITY. O.n .. OOC-_132-9.034 93.227425..448-154.743147.517- 14. 38047$.81-503.3fl.15.. RETAINED EARNINOS 0.000 0.000 -21.131 -59.039 -93.727-125. 47-154.743-147.517-174.200-179.812-IS3.398-195.192

TOTAL EQUITY .. ._ 0.000 ..0.000 .0.000...... _0.000.-00.000 ._.000._ 0-0.000 -.-.0.000 . 0.000

TOTAL LIABILITIES 81.000 219.355 242.467 242.687 241.408 234.329 222.132 227.779 244.087 24S.323 301.115 335.065

DEKT COVERAGE RATIO N.A. N.A. N.A. 5.I55 1.000 1.000 1.000 1.060 1.000 1.000 1.000 1.000 CURRENT RATIO N.A. 2.333 6.467 1.467 1.000 1.000 1.000 1,000 1.000 1.000 1.000 1.000 DEST/gCUITY RATIO N.A. N.A. N.A. N.A . N.A. N.A. *N.A. N.A. N.A. 54,A. N.A. ;. A.

a-L30-.. OVE ..EAN l..DOYER ATTACHMENTIII

PAIKISIS IIAIJIITE PROJECTiCASE I BAANCE SaMee?

* ILLSONS OF DOiLLARS 4

.....YEAR . . .997- -. 1996 . 599.-...2O0O--_200O.-.2002 _-2003 . 2004.-..-200)5..200-.-.

ASSETS OPERATINGCMII 5~~~~.0732.004 2.144 2.294 .45 247 .85 308 .56 0.000 if. * RECEIVABLES 27.002 28.692 30.915 33.079 35.S93 37.672 40.523 43.360 46.395 49.643 INVENTORV .. 1...526.1.25.t60S7t1.3..5.4..1.4.s.046..-19.309-.-0.000..-.---.I EXESCA-SH 120.730 126.404 131.980 138.002 146.244 154.310 542.7.37 175.424 560.935 590.721

PLANT & EGUIPhENt 3$0.074 370,434 392.219 415.530 440.472 467.159 495Z.716.526.275 550.964 593.947 V... LEss DEPRECIATION- OTHIERASSETS 40.651 40.451 40.651 40.655 40.435 40.451 40.655 40.451 40.651 40.455 LESS AMORTIZATION -40.451 -40.451 -40.451 -40.4,55 -40.6,55 -40.455 -40.455 -40.651 -40.455 -40.455 ~iOTAt1&d~SEY 192542264 24552800 4302629.757 296.3*4 3286.75 361.564 394.547

__...TOTA. ASSETS.. ... 352.997. 372.049 392.445 A15S.f2.4.41.8O6 .40395522.L.045454490......

LIABILITIES ______PAYAOLES 5.619 6.052 6.433 6.883 7.365 7.985 8.433 9.023 9.654 0.000 SHORT T .tDB 33.905, :36..470 3.53.n 39.550 4.7.31 44.403 47.117 30.069 33.1C5 42.O9S * ...... LONO TER*I.DEBT,CURRENT....12.1.5655534*.4.059340S.54.04445eo0.s74...... J CURRENTLIABILITIES 140.44310..405 177.905 1017.942 198.024 210.579 222.036 236.037 247.657 240.363 __11 -1Ig LGE TERnIDEBTsEXP.FIN. 0.000 0.000 0.000 0.060 0.000 0.000 0.000 0.000 0.000 0.000 LO TERN DEBTaCOWIERCIAL, 0.000 0.000) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONG.-. TER"DSEBT.VEFICZT. _...... 1..92.1554 202.64442434264L3.725.tazoaaa.s...3as.14.....-..., SOILRESERVES 0.000 0.000) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

RETAINEDEARNINOS -184&.507-10l7.064-5'fl.855-1B5.704-16:3.653-170.6?4-154.417-141.225-124.720-104.491 *

TOTAL EQUITY 0.000 0.000 .243 - _1350 . 3.401 ...16.360..30.437.. 45.722..4.2.334 80.343 . TOTAL LIABILITIES 452.99? 372.049 :392.445 415.942 441.196 400.31P 521.252 564.907 615.421 636.950 DEST COVEFcOERA7102.000) 1.00 5.000 5.000 5.000 1.000 5.000 5.000 5.000 5.000 CURRENT RATIO 1.000 1.000 5.000 5.000 5.000 5.000 5.000 5.000 5.000) 5.000 DAEBTIECUITYRATIO N.A. N.A. N.A. N.A. 70.465 15.409 6.005 4.592 4.800 3.9'34

4-3Ci-04 JPAFJL-LOYER ATTACIWNENTIII

ALIAI,UISMoLtXX YE PROJEC-T,CASE:I i#1ASHFLCMWS.RATES OJF RECTURIN & NET PRESENTVALUES.

FUNDS IN MILLIONS OF DOLLARS AND IN 1984 REAL TERIISfOR INFLATED ICUiRRENTITERIISsAS SPECIFIED.

CASH FLOW IN REAL.TERNS CASHlFLOW IN INFLATED TERMS ' AFTER TAXES BEFORETAXES CANEQiUITY AFTERTAXES BEFORETAXES ON EQUJITY

-75.701 -73.701 * 0.000 ------900 0.0- -112.424 -112.424 0.000 -820.944 -128.944 0.000 -1:3.21 -13.215 -37.250 -34.188 -34.388t -21.131 ..0.. 3 ...... S.2(-.-....Z. 959. - 1.526 1.52l -24.732 2.143 2.143 -34.688 1.528 1.528 -21.150 2.292 2.292 -33.741 15.28 1.528 -7.4314 2.4-25 2.625 -12.774 1.5263 1.526 -3.733 2.808 2.80a -6.8363 - -.-. . 5-.528 ----..... 28...... 2 4....---.------*305 -. O 5---542 I ~~~~~~~1.5201.526 -1.704 3.215 3.215 -3.506 1.528 1.520 -. 7P7 3.440 3.440 -3.794 3 5~~~~ ~~.528. 1...28 - --..-- 544.------3608- .605 - 3. 35- -- 1.52Ž3 3.529 -.232 3.939 3.939 -.547 1.52*0 1.520 0.000 4.215 4.215 0.000 3.328 1.528 0.00.0 4.025 4.025 0.000 3.528 1.520 0.000 5.563 5.163 0.000 3.528 1.528 0.000 5.915 5.933 0.000 L 1.32a 3.5283 0.000 6.325 6.325 0.000Ii 10.472 10.472 -66.690 49.643 49.643 -356.t164 1

3 ~~~~~~REALtAR AFTER TAXES a -9.3)5 K INFLATED IRR AFTER TAXES 3 -2.989 7 ' ~~ ... AEAL. IRA ~BEFORE.TAXIS- '-.4.335--K....INFLATED-4RR-BEIIORE-.TAXES-&--2.*89-X REAL IRR ON EQUITY NO SOLUTION4 IWFLATED IRR ON EQUITY a NO SOLUTION

REAL 1924 NAY AFTER TAXIS 6 -5.000K a -123.641 . -INFLATED .1964 IJAY AFTER -TAKES a .-3.000X-3---*--I33.702---- REAL 4*14 WYV BEFORE TAXIS 61-5.000K a -323.843 INFLATED1984 NPV BEFORE TAKES0 -5.000% a 155.702 REAL 3984 NAYVON EOUITY 1 -5.000K a -387.180 INFLATED 3934 NAY ON EQUITY 0 -5.000K -5282.361

REAL 1984 NPY AFTER TAXES *-10.O0OX .i 34.428 INFLATED 3934 NAy AFTER TAXES 1-510.000K3 834.327 RtEAL1914 NAY BEFORE TAXES 1-10J.OOOXa 34.628 INFLATED 3984 NAY BEFORE TAKES 0-80.000K a 634.527 RiEAL 190841IWY ON EQ3UITY 0-10.000K 3 -986.238 INFLATED 1984 IdlYVON EQUITY *1-0.00074i -3922.240 RFAL 0144 NPY AFTER TAKES Ct ').00?.a -164.1271 INFLATED 2984 NPY AFrER TAXES 01 0.0007. -9)4.734 REAL 1984 NAYVBEFORE TAXES 6 0.00(3K& -144.1*71 INFLAlEr1904 HAYVBEFORE TAXES 6 0.000K -94.734 SEAL 1.134NAY (NiEQUJITY a 0.00(3Ka -594.347 INFI.ATEO5964 NAY ON EQUITY a 0.000K a -50.2.238

N0rE. THlESALYAC.E VALUE 1Id 20Cm? IS EQUAL TO lIIEIdOItINO CAPITAL ON4LY.

6-30-84 JEAN L.*LfaW ER ATTACHMENTzir

PROFI T ANiD LO$V~ LTATEMEtNTI.

MI.LLIONS OF DOLLARS

VEAS 595 9*4 *907 1988 *599 1990 1991----1992 1-293 --394 -19953- 1*9916. I

..-.OTL HPMEINS -..- 000.0.000-..3-.440-1.660 ---..460--1L0--..40.lLC.-.4-140I40 I

INCOhME ...TOTALAEVEMtES - .---. 0 ... 0.J4I7.7Q1A310520np44s.sgoaSo.s6%.41l.;41..n.es

,3 COSTSii .TOTAL.COSTS.-*-0.QG"3 0.000 17.I38-S44fl*6-8-P.243.--41.P90--44.930--,48.,075-51.440--55.041--5B.e94--63.on6---

OTHIERFIXED COSTS 5;

OPERATINO.-.--. PROFIT . . 0.000 ..0.000 .- 8.605-. 24.904-.20.791--30.S07..-32.963-35.271-37.74.-40-403S.....43.2s.203a.4.2......

a INTERESTEXPEflE 0.000 0.000 0.000 23.804 21.740 19.046 18.499 16.832 16.101 14.002 13.234 11.463 _.-..AI10RrLZATION. . .-.. ... 0 0 .a2*..ao 9.O.t3O..-... 30aa SAISL t34. A00. 4O.000. 0.O00..-.OOO...... 000 - * DEPRECIATION 0.000 0.000 19.740 19.740 19.740 19.740 19.740 9.870 9.970 op.070 9.670 V9870

- ... NET -INCOIUS0EFORE TAXES . .-.-.. 0.000-- 0.0O.1.0.2.442.2n499.. 344-.4.207--i.- .7491t5.629-20 1 05-24.899- ? :1 TAXA8LIEINCOME 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 15.429 20.105 24.899 INCOhE.TAXES.-- ~. 000_-o.ooo-0.0.ooL.o.OAO..o_..oo0 .o.oo_.1.oo CooO-0.ooo-0..o.oo-o.ooo--o.ooo0

.. ET.NCII FTRTAES - -NCO0ME. .. O00 mIAFTER.74.s0.f-.TAXES-a1.44.....27...1.ng--662..--.a0.2409...... 00 *~CUIWJLATIVE INCOMEA. T. ). 000 0.000) 14.f03 39.669 -60.496 -77.406 -90.012 -86.405 -74.936 -59.2406 239.102 -14.202 1,

6-30-04 -.WAN I.. LOYER( ATTACIUMINTIIIT

IsAIlJJI$SI4AUXIIE Ff(CJECTI,CAS 2 FROPZTAND LOSS SSATEIENT MhLI.IONSCOF [IOLLARS

.YEAR . . 1997 19981 . _.I9---2000..-.. 2001.---2002-..2003.-_2004---2005 -- _2006-

"'.--- TOTAL SHIPMENTS _.3"_ ,Zo L."O- -144 *" ..TTA. . XIP...I , .T_.. , ...... ,,,.,,.. ... _,.46O .,. _.__...... 11..4...... 4 O.. 0--L O4.4 .!0-.S'40-4

, INCOM1E . , -.. -TOTAL REVENL.ES .IA 132.512.IAI.788.151.713-162.333-I73. fZ_l185.855_198.84L-212.284-22R.68L-243.418---- -

COSTS ' C 70_OTALCOSTS ..47.427.._ _4__ _f_ OTIIERFIXED COSTS FIXED _ .15.656.. 16.709 .12.872-12.*3Q.20.A6Lf21 .2022..fl43.25- a76.831.2Z ZO.._.______._'

....OfERATINOPROFIT . 49.449 52.932 .56.637__.6O.02..44.844_.b9.383._74.240-2S.43.-84.997--90.947- INTERESTEXPENSE 10.752 9.455 0.334 6.736 4.070 2.301 0.000 0.000 0.000 0,000 '; '.AMR1AIN...... ANORT..TJ.. -______o0.000._ o.ooo ._O.00..O.00.oo_.o.000...... O00.A.h0oa .0.0a.000.ooo.0C.o -. * DEPRECIATION 9.870 9.B70 9.670 9.070 9.870 0.000 0.000 0.000 0.000 0.000

.....- NET INCOME BEFORE TAXES. .28.847-.33.407O.38.433-43.S14-50O.104__b.001I.-.24A2402t,434-04.Sfl--40.94 - 34

TAXArLE INCOIIE 2.8047 38.407 30.433 43.994 50.104 67.001 74.240 79.436 84.997 90.947

.J4gT INCo41E AFTER TAKES. .3.4Q20.847 Z .30.433..3fA4.f0.10d.44.001..7Z2h072.4S&_.84.SSL 02.Sd- '2 I- CULULATIVE INCOME A.T. 14.644 48.051 06.484 130.478 180.582 247.503 321.823 401.259 414.256 577.203 IL;.

6-30-84 JEAN L.LOYER . . . . _ ...... _ ...... _ ...... _ _ _ _ _ . _ _ . _ _ _ _ _ . -- . .. ATTACIHBENTIII

Ptll! W3II'. 'liIlXI1E PICCs..ICT,CAW 2 .$f.IlRCIE ANI' ArFLICATI4N oF FUNDS.113LLIONS OF IlKLLARS

YEAR 1fi785 139*6 13987 3'R8 1933 1'7R) 13991 1992 1993 19R4 1995 1I6

SCOLIRCES OF FLAI'S-

NET INCOMES AMFER TAXES 0.000 0.000 -14.903 -24. 746 -20.027 -16.909 -13.406 -- 4;207 -1 1.769-5.429-20.105 -- 24.S99- AmorTIZATION 0.000 0.000 3.746 0.130 .3130 S.130 0.130 4.362 0.00 0.000 0.000 0.000 DEPRECIATION ('.000 0.000 19.740 19.740 19.740 19.740 19.740 9.870 9. 870 9.070 9.870 9.070 I' INTCREST EXPENSE. .0.000. .0.000 40.000 -23.804 -- 21.740 .37.84&--I9.499 4.83a- I.40l---l4.083--13.2.4-31.4'

CAPITAL. CONlTRIlTIIoNS 0.000 0.000 14.903 24.7.46 20.827 16.909 13.406 0.000 0.000 0.000 0.000 0.000 LONG TERM LOAN.EXP.FIN. 41.690 66.800 .0.001) -0.0tO. *.0.000.-0.000 _.0.000.--0.000-.-0.000 -. 0.000-0.000 -- 0.000 LONG TERN LOANsC.OtIMERCIAL 39.310 70.140 21.811 0.000 0.000 0.000 O0.000 0.000 0.000 0.000 0.000 0.000 LONG TERM LOAN.DEFICIT 0.O000 0.000 0.000 0.000 1.467 14.792 23.017 44.011 56.370 70.203 79.911 66.431 -'6iliHOht TERN LOANS _.0.000 -. .0.00.. 0.noo ..-.... 00...5...... 0O0.-0. 0O 0.000 0--0.0 L97L

TOTAL SOURCES 031.000 137.020 45.319 51.674 40.8413 60.355 69.387 79.2S2 94.110 130.584 123.119 332.640 '

*,; APPLICATIONi. OF FUND;

. PLANT.. & EUUIPMENT . 75.600 121.600 0 o-.o.0-_.00 .0 .ooO-. 000--0. 000-0.000--C.000---0.000 -- 0.000 PREOPERATINO EXPENSES 5.200 5.564 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.DLtRINO CONSTRUCTION 0.000 8.076 21.811 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WORXINO CAPITAL . 0.000 1.780 10.449 - 9.066----1.547-----l. 771---&.895.--2.027--2.1 --- 2.321 -.-- CAPITAL INPROVEME14TS 0.000 0.000 9.473 10.350 11.075 11.850 12.479 13.547 14.514 15.533 14.620 17.78a ; ., &.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I INTEREST.EXP.FIN.. .. 0.000.0.000 ... 0.O0.- .- 71. 4.Z3L_....692-- 70-.24t.-J.02L...-3. .J6 -- 2.533 -- L.363-- IINTERESToCOHMMRCIAL 0.000 0.000 0.000 14.439 13.536 11.731 9.927 0.122 6.317 4.512 2.707 .902 :INTEREST,DEFICIY 0.000 0.000 0.000 0.000 0.000 .183 1.765 3.790 7.147 10.465 13.583 16.132 :_ fORTTERN INTEREST . -0.0t0 0.000 0.00 - 5.4t-.934 :

AII0RTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 5.211 13.571 13.571 13.571 13.571 13.571 13.571 13.571 j. u. Atl0ORr1ZATIOIJ.CObNiERCIAL _--0.o000- 0.0O0-0.000 0.COOO-- 14.0 1...408&4--Ao40-4.42--404.0--4 4.40*--44.A08-14.408.- el. AMORTIZATION.DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 .834 8.230 18.905 33.514 50.191 63.287 I : SIIORT TERII AMORTIZATION 0.000 0.000 0.000 0.000 0.000 0.000 7.492 5.408 2.110 0.000 0.000 0.000 ia ;.. _ODIVIDEND PAVMENT . -.... 0.000.--.. 0.000-. -O - - -

g TOTAL APPLICATIONS 81.000 J37.020 41.933 44.019 55.980 43.329 71.453 76.109 03.630 94.077 112.344 124.994 l.6

NET CASH PLOI.YEAR 0.000 0.000 3.306 7.654 4.860 5.025 -2.066 3.173 10.472 14.507 10.775 7.644 CASH FLOIJ So DIVID..YEAR 0.000 0.000 3.384, 7.454 4.840 5.025 -2.044 3.173 10.472 14.507 10.775 7.644

CULIUL. NET CASH FLOW 0.000 0.ou) 3.a86 11.040 15.900 20.926 18.660 22.032 32.504 47.012 57.78b 65.430 CUNL. S61C4%T7ERtB ti'U 0.000 0.000) 0.000 0. (K0 9.543 15.410 7.713 2.110 0. 00 0.000 0.000 MM.974 _llTIVE .C.DIVIDENDS .. 0.000 0.00* 0.000 0.000 -0.000 ... 0. 000 .0.000.-0.0_0-_0.000- -0.000 D0. 00._0-000. .

4-30-34 JEA;I L.LOYER ATTACIDIENTIII

DAll SlUS RlIxilE FROJECT.CA$E 2 .S0K'RCEAND AIPPLCAI7141 Cf FURJDS.RILLIOIJSOF roLIAAS YEAP R9fl 19l3 1999 2000 2001 2002 2003 2004 2005 2006 r SCOURCESOF FUNDS

NET tJCCOIEAFTER TAXES 28.847 33.407 3S.433 43.994 .50.104 67.001 74.240..79.436 .84.997-.90.947--.- . AMORTIZATION 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0. 000 DEFPECIATION 9.070 9.870 9.870 9.870 9.870 0.000 0.000 0.000 0.000 0.000 INTERESTEXPENSE . _ _ 10.752__9.655 .6..73tJ.fZ0.2.38lD.000..OO. O_nnOf...... 1 CAPITAL CONTRIUTIONS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LOMN TERM LOAN.EXP.FIN. _ . 0.000 .. 0.000 .0.000 0.000.0.0-0.000--0.000.-O.000.000-.-0.000-.-__O.0 'A LONG TERM LOAN.COtrERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONG0TERM LOANHDEFICIT 53.482 37.040 18.743 0.000 0.000 0.000 0.000 0.000 0.000 0.000 SHORT TERII LOANS. .. .. 025_0.000 _0.000 _- I.965 oono .o 000-- 0000.O00-0.000-0.000 _.OOo__-

TOTAL SOURCES 102.976 B9.971 75.380 62.567 64.844 49.383 74.240 79.436 84.997 90.947 ta C APPLICATIONS OF FUNDS

-inANT J EQUIFMENT . ...S...... 0.00. __.00QO.QOLOCti.tlO_O00.... PREOPERATINO EXPENSES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.DURINO CONSTRfiTI1X4 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WORKINo CAPITAL . . 2.657 .2.643.. 3.042.. 3.255__.3.i83__3.727. 3.988._ 4.267__. 4.566 .. 81 CAPITAL IMIPROVEMIENTS 19.020 20.360 21.765 23.310 24.942 26.614 28.554 30.555 32.694 34.902 lHTERESr.EXP.FlN._ z_.a _.ooA.oo _o.ooo. . o.oao_ o INTEREST.COMM.ERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INtEREST.DEFICIT 15.631 13.561 10.313 6.518 2.565 .555 0.000 0.000 0.000 0.000 n -_-SHORT IERU INTEREST. -.--.-. 5.455.Sa.90_=..978.-.149-2.SOS--4 .84-.0.0L-0.000--0.000-0.000

AHORTIZATION.EXP.FIN. 0.360 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 |j -- _.It£STIZLITIONLCOMtEgIAL . _O.DCI-O.DE0 O.LOOf^ i - rt6h0 04 Q040 A. ijO--a-jLJO---o-o w U -- AIIORTIrATION.DEFICIT 75.057 73.171 59.956 45.261 27.692 9.372 0.000 0.000 0.000 0.000 1i SHORT TEkM AMORTIZATION 0.000 .294 2.465 0.000 3.657 15.550 0.000 0.000 0.000 0.000 4 DIVIDEND PAYMENT ___ .. O_ _0>0'_ -0.001)0.000l1.664.000__.0.000 b1.U6_4.614__4Z.137 L4.B32

TOTAL APPLICATIONS 115.655 106.323 95.583 78.564 64.844 69.383 74.240 79.436 04.997 FO.947

NET CASH FLOiEAR -12.679 -16.352 -20.202 -15.999 0.000 0.000 0.000 0.000 0.000 0.000 CASH FLOW & DIVID.-YEAR -12.879 -16.352 -20.202 -15.998 0.000 51.664 41.696 44.614 47.737 64.052

CIJIPJL. NET Ee;H FLOW 52.552 36.200 15.998 0.000 0.000 0.000 0.000 0.000 0.000 0.000 CL1iuL. SHORT TERM DEBT 20.001 19.707 17.243 59.208 I5.550 0.000 0.000 0.000 0.000 0.000 CULULATIVE DIVIDENDS . 0.000 0.000 0.000 0.000 0.000 11.664 53.360 97.974 145.711 210.564 . -

6-30-84 JEAN L.LOYEA ATTACHMENTIII

I)AIliltS 'linXI iXl: FROJECT.rA$E 2 F AI AlICI. SHEiET

MIlLI IONS Clf DOLLARS

YEAR 1985 2986 1987 -198 -- 19819e--- 1 WO- I 991-- 1992- -1993 -- 1994 -- 1995 - -1994--- , Assers

OPERATING CASII 0.000 .445 .952 1.019 1.090 5.546 1.248 1.335 1.429 1.529 1.636 1.750 RECEIVAbLES 0.000 0.000 8.420 56.019 19.281 20.630 22.075 23.620 25.273 27.042 20.935 30.9415 INVEWTORY * 0.000 2.470 S-713'6r513-6.54-6.998--7v4 -- 6.052--8.B73--9.173--9.B16 10.503---- EXCE$S CAShll 0.000 0.000 3.384 11.040 15.900 20.924 1S.B40 22.032 .32.504 47.012 57.7a6 65.430 .. .CURRENT_ ASSETS .. 000--.3.114. 16.471 36.191-42.81249.721 -49.Z1--55.000--67.780---64.75&-98.173-10.644-4

PLANT L EQUIPMENT 75.600 197.400 207.073 217.423 226.490 240.347 253.027 26S.53 285.110 296.642 313.262 331.046 * LESS DEPRECIATICiN -.-. 0.000 - 0.000 .19.740. 39.460.a89.U0u20.iAO9S-. IS-549.050--07050tI0S.70I138.44052g.310.39. , OTIIER ASSETS 5.200 18.840 40.651 40.451 40.651 40.651 40.451 40.651 40.651 40.65L 40.651 40.651 LESS AMORTIZATIOiN 0.000 0.OO -3.769 -11.890 -20.020 -a.159 -36.209 -40.651 -40.681 -40.651 -40.651 -40.652

TOTAL FIXED ASSETS 91.000 216.240 224.216 206.696 169.900 173.630 1;.6S9 153.023 162.670 168.332 175.032 182.996

. . TOTALASSETS ------. 000 219.355 242.7. 242.087 232.712-223.601-2 .35942133r03f-230.450-253.069--273.256 29.640o I LIABILITIES

j' PAYADLES 0.000 1.335 2.856 3.0:5 3.270 3.499 3.744 4.006 4.2-7 4.587 4.908 5.251 C' SHORT TERM DEBT 0.000 0.000 0.000 0.000 9.363 13.410 7.713 2.110 0.000. 0.000 0.000 19.976 .LOllOTER" DEBT,CtlRRENT ------O.000---.O.000-O,0t0--21.619-29A730.S128.20438b3---3.49S--6O.I7o-.n.268.3.417.

,,! CURRENT LIABILITIES 0.000 1.335 2.856 24.675 42.012 49.721 49.671 55.000 67.780 84.754 90.173 108.644

LONO MERN DET.WEXP.FIN. 41.690 106.570 108.570 103.359 69.706 76.216 62.643 49.074 35.503 21.931 0.360 0.000 10 TERM DEDTCOMNlERCIAL 39.310 109.450 131.260 114.853 93.445 82.033 65.630 49.223 32.1S5 14.40S 0.000 0.000 1. LONO TERN DEBT.DEFICIT .- -- 0.000 0.000-O. .Ot * 647-IS. -0.45 55,20-17,374-98.3115.0106l34-5; fl1 SuCIAL RESERVES 0.000 0.000 0.000 0.000 0.000 0.000 0.00, 0.000 0.000 0.000 0.000 0.000° IA '---NET PAIUrIN EQUITY _ . -.0.000 .O.0.000.- 4 4..904939.410--60.9496-...-404-90.6.4--.O.45.2.90.852-PO.0l2.---90.0.2.-90.6-2 RETAINED EARNINGS 0.000 0.000 -14.903 -39.669 -60.496 -77.406 -90.012 -66.605 -74.836 -59.206 -39.102 -14.202

TOTAL ELUITY 0.(KO 0.000 0.000.O.OOO- .OOO--O.OOO-O.OOO-4.207--55.976.SI..5r710-7650 -

TOTAL LIABILItIES :31.001) 219.?55 242.687 242.,07 232.712 223.601 208.359 213.023 2.30.450 253.0169 273.256 291.640

DEBT COVERAGE RATIO N.A. N.A. N.A. 1.567 1.000 1.000 1.000 1.000 1.039 1.062 1.020 1.000 CUfRRENTRATIO N.A. 2.333 4.467 1.467 1.000 5.000 1.000 1.000 1.000 1.000 1.000 1.000 DEBT/EC,tITY RATIO N.A. N.A. N.A. N-.A. N.A. N.A. N.A. 36.561. 9.162 4.326 2.384 1.39

6-~3-54 jEAtJ L. LO\ER ATTACtNENTIII

BAtHUILIS BiAUiXITEF3RCUEC.T. ASE 2

BALANC:E SIIEEl MILLICONSOF DJOLLARS

YEAR - 1997 1990 1999 2000a 2001 22002 2003 -2004.---2005--. 2(00 -.-- ___ ASSETS OPERATING CAShi 1.873 2.004 2.144 2.294 2.455 2.427 2.611 3.006 8.216 0.000 REC:EIVABLES 33.129 35.447 37.926 40.563 43.424 44.444 49.714 53.196 56.920 40.905 2 -INVENTORY -. 11.238 ..12.025.I.4.1.4.47...1.2..1.4...04.9'3--.0.-____ EXCESSCA$HI 52.552 36.200 15.998 0.000 0.000 0.000 0.000 0.000 0.000 0.000II

.. CURRENTASSETS.... -... .21..57&.4.3-..65-040.4.5.4.32.A202.4.. O9...... * PLANT 4 EouIPipeNr 350.074 370.434 392.219 435.530 440.472 467.859 495. 716 526.271 558.9645994 -... LESS DEPRECIATION .. l517.920-1&7.79O-l77.640-187.530..197.400~197. 400-197.400-197.400-197.400-197.400- -____ OTHER ASSETS 40.451 40.451 40.451 40.451 40.651 40.451 40.651 40.451 40.651 40.651 LESS AhORtTIZATION -40.451 -40.651 -40.451 -40.45£ -40.451 -40.45£ -40.651 -40.451 -40.4,5£ -40.451

TOTAL FIXED AliETS 192. 154 2024421.5 226.000 243.072 269.75'? 296.316 32.0.71 341.564 394.547

*. TOTAL ASSETS .- 290.944 28. 320 283.496 284.644.303.401.334.612-347.708 403.120.,441.012 457.452-..--.- LIABILITIE-S

PAVABLES 5.619 6.012 4.43) 6.863 7.365 7.66£ 8.433 9.023 9.654 0.000 * SNORTTERM DEBr 20.001 19.707 17.243 19.208 15.550 0.000 0.000 0.000 0.000 0.000 s LOGTERMIDEBT.CURRENT ...... 3..178 -59.956..A5.26£..27.622-.L372-0.000-0.000-0.00ooo.0.000..0.000 CUJRRENT LIABILITIE3 98.791 85.676 68.937 53.P03 32.207 7.661 6.433 9.023 9.654 0.000 f

LONG TERMDEBT.EXP.FIN. D.000 0.000 0.000 0.000 0.000 0.000 0.0C00 0.000 0.000 0.000 1 LO TERMOEBT.':OMMERCIAL 0. 000) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONG TERM DEBT.DEFIt.IT 864.64243. 781 -. 37.243--9.372-0.000-0.000 -0.000-..0 0o.000...0.00--0.OoO- .- ;

SOCIAL AESERVES 0.000) 0.000 0.000 0.000 0.000 0.000) 0.000 0.000 0.000 0.000 ,:-.NET.FA~I0-IN Et1UIT.Y ... -- 201220. 8k1 210.0£Lj2 0,6£2 91i.1..1.t.1I.1A.1 " RETAINEDEARNINGS 14.444 46.051 864.404 130.470 160.502 235.919 268.463 303.285 340.545 364.440.

TOTAL EOlUITY 105.456 139.0463 177.296P221.290 271.394 326.731 359.225.394.027. A31.357 .457.452 -

TO)TAL LIABILITIES 290.944 268.320 203.496 284.444 303.66£ 334.412 367.7018 403.320 441.012 457.452

DEBT COVERAOERATIO 8.000 3.000 8.000 1.824 8.979 5.903 N.A. N.A. N.A. N.A. r:URAiENTRATIO 1.000 1.000 1.000 1.049 1.877 8.229 3.22 8.229 8.229 N.A. DEBT/EGtITY RATIO .822 .459 .2J0 .042 0.0DG -'). 000 0.000 0.000 0.000 0.000

.JEAN L.LOVER ATTACIMENTIII

,415 lltl S IAtXITE FRC#'EC T.CAbE 2

CASI5 FLCMS.RATES OF RETLUN & NEr FrESENT VALUES.

FUNDS IN MILLIcNS OF DO(LLARS AND IN 39*4 REAL TERMS OR INFLATED (CtLREIJTI TERnS.AS SPECIFIED.

a.J

oCASM FLOW Itl REAL tEf1MS CAS-HFLOCW IN INFLATED TERMS I'

AFTER TAXES BEFOSRETAXES CI EC1OlY AFTER TAXES BEFORE TAXES ON EQAIITY

-75.701 -75.701 -- -0.00 ------dl.OGO ------O.000 - -112.624 -112.624 0.000 -128.944 -128.944 0.000 I -9.40Ž -9.402 -12.166 -11.517 -11.517 -14.903 S.3105 5.105.--- 4.432 -6.692-- 24-764 11.529 11.529 -14.849 16.170 16.170 -20.827; I I5.529 11.529 -11.267 17.302 17.302 -I4.909 'N; I1.5"2 .11.529 - - .- 8.349-- -.------1-.13---- 58.513 -13.40- 11.529 11.529 0.000 19.809 19.809 0.000 I I1.529 11.529 0.0400 21.196 21.194 0.000 *1., _ It.S2 --.9 _29 .OOb15. _ -22. A MA 2. - - OOO 15.529 I.529 O.CCO 24.247 24.247 0.000 11.52? 11.529 0.000 25.946 25.966 0.000 '. 11.52S_..5. --.- 11.529.----- 0.044 ---a.-.----22.784--- 0,000- 11.529 , I1.529 0.000 29.72S 29.72l 0.000 i 11.529 11.529 0.000 31.809 31,809 0.W0 'I___ ...... _11S22...... _11S29--_---34. 034-44 34- 0,000 11.52P 15.529 0.000 36.419 36.49 0.000 11.529 11.529 3.4S1 36.962 38.968 511.44 :_, . __. 11,529 . . -15.529-.--. --. t.S94.li4.z1.529* 11.529 11.529 11.529 44.414 44.414 44.614 11.529 I1.529 11.529 47.737 47.737 47.737 '______._14,L~~~~~~~~~3a - __ _1...... ola* 14^ La.a'5^^2- 2 4^'- 52.84d 12.84022.d48 60.905 *0.905 60.905 12 __ W .O____

REAL TkR AFTER TAXES a 1.208 Z I$LATED I1 AFTER TAXES a 8.292 X I ' ___ . .. IRM. ..BEFORE.TAXES_I__ _.REAL 1.20X_ _ _ II I...... LATED4IRR-8EE0E..TAXES-'.,-8.2S2-X _ REAL IRR ON EOUNTY I -. 000 XIWLATED IRR ON EQUITY I 7. 000 X

REAL 1984 NPV AFTER TAXES 6 0.0002 S 30.860 ------LATED 1984 NCV AFTER--TAXES 4 -0.000 I - REAL 1934 NRV BEFORE TAXES 6 O.000 I 30.860 INFLATED 1904 NFYVKFORE TAXES £ 0.000% I 409s.82 REAL 1984 NPV ON EQUITY 6 O.0 I -. 001 INFLATED 1934 NPV ON EQUITY a 0.OOO I 150.657

REAL 1984 NFV AFTER lAXES a 5.0002 I -62.049 INFLATED 1934 NFV AFTER TAXES 6 5.0002 I 95.009 REAL 15934 ttFV BEFORE TAXES e 5.000X I -62.049 INFLATED 1984 NPV BEFORE TAXES 6 5.0002 I 93.009 REAL 1984 W5V CIi EOUITY Q 5.0O0O I -28.362 INFLATED 1984 NEV ON EQUITY 0 5.000 1 25.582

fAiE. 1984 NIV AFTER TAXES a Io.oZox I -19.074 INFLATED 1484 RsV AFrER TAXES 8 1 0.0OX a -21.442 liEAL 5194 NFV bEFORE TAXES 6 50.O00 I -99.074 INFLATED 1904 IEV BEFORE TAKES 6 10.000% a -31.442 REAL 1984 wyV ON EcI rY 6 2O.000% 8 -32.tfl INFLATED 5i94 NPV ON EQUITY 4 10.000Z I -20.702

flEult' VIE !.ILVAo&L VWiLLE 114 Z0O7 IS EuAL TO THE NOSINO CAPITAL ONLY.

6-30-04 JEAN I .1.YUtH ATTACHDIENTIII

MiA5VIS bAUII TE fRC&sfECr.CA3E 3

; ; PROFI r AND LCrbS STATEMENT

* DIELLION OF rITCLARS .

YEAR 195 39814 1987 Ig9o -. 1989 1990 .. 99.19--- 3 992 -3993---1994 - 1995--1996.-.-, SHIPMIENTS [1 ..- TOTAL SHIPMENTi ._ - 0.000- .O 0....B30_ cfh.LOa . I &.6-1n- 41.- ,Mo- u.25i

a, ;' . INC@ IE ,. .1 - ;_T07AL REVENUES .. __ .00.0_2.s_s.o_ZsF_.^ 71.97I 7ZZfnoa201_ss119^.3Q COSTS TOTAL COSTS . 0.000 0.000 -- 17.138-36.674_.-39.243--41.990-44.930-416.075 -_1.440 - 55.041-5B.854-63.0OI _Jt- OTHER FIXED COSTS '' FIXEp , . . 0.000 0. 000 4_. 7. APA... OS9_9.7251l0.405s11..134_1.913_ 2.4314.S94__-.

OPERATINGFROFIT 0.000 .0.000 .- 2.377.13.58G _14.530Q15.548. 16.b36- .2.800- 046-20.380-21.806-23.3-33--'

INTEREST EXFENSE 0.000 0.000 0.000 29.041 24.742 24.267 22.440 20.264 19.029 19.449 19.071 18.478 ;.a| AOTIZAEflTION _3.07__ ). .a A.20t.._S..ZL...... Z 6L....t165 . . S O...... fl..0...nO. a.O0O. n..fl00o 'i DEPRECIATIONJ 0.000 0.000 25.530 25.530 25.530 25.530 25.530 12.765 12.765 12.765 12.765 12.765

.. _NIET INCOME BEFORE TXS-*. -000 0 0a23L5 5.sl.54.s4.I.=1a4s0 8.1.4~I205aO 3-8

TAXABLE INtOPIE 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 '"_INE2tIE.tAXES _- __ .00-.0-0...... n-0aD0_O,0_,bxxnn ^ JO-00 .^n4n00e0o.^

." NET INCOME AFTER TAXES .. _ 0.000-.0.000.-27.341.=51.555.*47.504 44.014.-41.12&--20-747-13.540..-12.035.-10.030-8.110

CUUJLATIVE IlCOhE A.T. 0.000 0.000 -27.361 -78.916-126.422-170.43&-2ll.563-232.350-245.Ofl-257.932-267.962-276.072 aC

J-30-4 R_. . -.

.JEAN L.LOYER...... L ATTACIMHENTIII

AP lllD. MiAXI IE IFJ.IECT.CASE 3

PROFIT aIUD LOSS SFATIEMEilt

MILLIONS COFDLLARS

YEAR - 1997 19iS 199* -- 2a - 2001--I 22 2003 - 2004 2005 - 2C0 ------

SN I1PIIENTS l; !

I NC(ImE TOTAL REVENUES _ . 10 s..1 7 a 0..32. 314-141.5789-15a.AS-1 a2.0*3-1a73.430.16.50-190.5771- - -

COSTS 6' TOTSL CCSTS ---. .. - 67.427 .72.147 77.. 1 I2.602.S9.3S4-94.571-301.190V-10.274-115.953-123.963-7. --

OThER FIXED COSTS FIXED. . __ _ 1 01.0-.414 28.70- -

OPERATING PROFIT . - .24.966 26.714 2G.5M--JO.584--4.,25.-35.01&---.447-4o4o.0-2.S--45.S

INTEREST EXPENSE 20.086 21.279 22.58S 24.004 25.60i 27.358 29.864 32.404 35.061 37.967 AMORTIZATION-. . 0.000 -O.000-0,O.000-0.000-0.000-0.O00-0.00--O.0.- DEPRECIATION 12.765 12.74S 12.745 12.745 12.745 0.000 0.000 0.000 0.000 0.000

NET INWOt1EBEFORE TAXES .-- _-2. -.-7..33O 4.760 4r104-U.044 7.65 7.0 7.4847.035 4.932

TAXABLE ICE 0. 000 0.00 s) 0.000 0.000 0.000 0.000 3.437 7.484 7.B35 7.932 j; __llCCtlE..TAIES.. ------0o0-4 b.a O.. ° . ° I- .. 0 ° . ..-

NEf INCCNE AFTER TAXES .Z,SSS. 7.330 .. b71-4t. 84..a.440.651-Z .40..4L.S5..932 - .

CItltATIVE IWNCOEA.T. -3.oS-291.2t3-2VJ.057-304.242-30.02-302.229.a.62a-284.9j-279.09-27a. *48

6-30-84 JEAN L.LOYER ATTACIIE III

,dlIOlIIS iAlXiE FftCLEA.CASE 3 .SOUiCE AND AFFLICATION OF FdC4b.NILLIONS OF 3OLALS

YEAR 1905 1396 3907 190h 1989 Iwo0 3993 199'2 393 19J4 1995 13t4

SAIdCES oF FLINDS

NET IHCC E AFTER TAXES 0.000 0.000 -27.431 -5.555 -47.50" -44.014 -41.126 -20.787--13.546 -12.035--10.030 -b.110 -- -; AhoRTIlATIrN 0.000 0.000 4.200 9.765 9.765 . 9.765 9.765 5.SJ7 0.000 0.000 0.000 0.00O ,, DEPrECIATItN 0.000 0.000 25.530 25.530 25.530 25.53a 25.530 12.745 12.745 12.745 32.745 12.765 1 INTEREST EXPErE E0.000 . . _-D.0000.000_29.841-24 2. 24.24Z_ 22.48 .. 20.264_19.829 9.-.1t071-.lS 78

CAPITAL CONTRIWTIEfNS 0.000 0.000 27.341 53.555 47.50 44.014 41.126 20.707 13.548 12.035 10.030 9.110 LONO TERN LOAN.EIP.FIN. 53.900 .t.515 -0.000 -. 0.0000.0.0Q.OO*G.000._0.000-O.000--.0.000-0.000.-0.000--0.000- Z* LONG IERN LOAN.CONSIC3AL 49.300 90.402 27.7YS 0.000 0.000 0.090 0.000 0.000 0.000 0.000 0.000 0.000 LONG TERNLOAN.tEFICIT 0.000 0.000 0.000 0.000 3.774 20.156 31.304 3.193 91.497 122.906 154.139 159.5S9 ' . SWORT TEt? LW4" . .- _l.-_ 000 .0.QOQ-O0Q...OOOt 02A.jjI.. .. 25&-AS.0.0 0.000.S.0002.721.29.81 '.

TOTAL SOURCES 103.200 174.910 57.S22 4.S33S 09.94n 08.975 09.063 101.780 124.091 155.320 368.795 220.844 . APPILICATIONSOf FUNDS

PLANT & EUIFPlENT .. .000 157.3 - 0.000 0.000.O.OO__.._ 0.000 0.000_.6.000- 0.000--S. 0_O0.0o -000.0- PREOPERATINGEXPENSES 5.290 5.544 0.000 0.000 0.000 0.000 0.000 0.00 0.000 0.000 0.000 0.000 INT.CNIN0 CCeSTRUCTION 0.000 10.274 27.785 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WOAWIN) CAPITAL .. 0.000 .1.780 8.892 .8.09L...... 333...1.40S 1.SO4--I.40.---1.722--3.642-1.971---2.309 CAPITAL I3ROWfIENTS 0.000 0.000 12.510 13.3d 14.323 I5.32S 14.39d 17.544 18.774 20.0" 21.495 22.9f.

INtERESTsEXP.FIN - - .Q0 .WQQ0.Q DO...t.A"3LA'I3_.11L.Z t6& 3 A.5O A.Sa22J *3 ..- '163_ INTEREST.COERCIAL 0.000 0.000 0.000 16.204 37.066 14.790 12.515 10.240 7.964 5.4W 3.413 1.1338 INTERESTMDEFICIT 0.000 0.000 0.000 0.000 0.000 .413 2.520 5.210 10.006 16.1" 22.04 29.64 .. SHORTTERN INTEREST. O 0.000 0 .A A 2.2t12..2237.-3-_, -- .22 471012.4YI -13.B3 An0TIZATIONsEXP.F3N. 0.000 ooo 0.00000 00 6.733 17.552 17.552 17.552 17.552 17.552 17.552 17.52 - AORTIIATICON.COWRIL...... DA0.0....AtEkflL f n an 'nan sn A 'n ~ t8-30484 .820.484-- .-. !4 AWORTIZATION.DEFICIT 0.000 0.000 0.000 0.000 0.000 0 .67 13.945 25.731 47.249 77.345 107.201 SHORTTEkt AUKiRTIZATION 0.000 0.000 0.000 0.000 0.000 0.000 6.406 5.424 .905 4.701 0.000 0.000 * DIVIDEND PAYSMENT 0.000 - .0.000- .0.000. 0.0M00.000 -0O.000 0-.000S-.00O-0.O.000-0OOO-.000.-0.000-.-- TOTAL APFtLCAT1C*.3 103.200 174.91B 49.137 51.317 *9.801 79,234 86.901 95.049 111.1" 133.766 150.119 139.225 I' NET CASHFLCEJ.YEAR 0.000 0.0O 0.335 13.910 20.140 9.740 .4a 6.731 12.092 21.552 30.474 31.418 CAWSH FLOW 3 DIVID.. YEAR 0.000 0.000 8.335 13.018 20.140 9.740 .148 6.731 12.692 21.552 30.474 31.618

CMUON. NET CA:I FLOW 0.000 0.000 0.335 22.15 42."d 52.033 5.932W2.200 71.623 93.374 124.052 155.671 CtleL. fJOCAT TEkll (EbT 0.000 0.000 0.O0 0.000 24.131 33.33j 24.i83 19.557 12.L52 5.953 0.742 3t.557 C"UALAIIVE D3v3tENrr 0.000 0.000 0.04. 0.00t.o.0A.ooo " 9 90-DW. .--. 000 . _0000.000 0.0

.tEAN L.I0VItt ATTACHHEITIII

MOROlIi. :4.W11811 FM.AUT-CASIE 3 .SCfdC AND AFPtICA13CI Of F t'dt.MILLICEU Cf i'CLLARS WAk 3997 13 19S 2000 2001 20)2 Ž0'v 2004 200s 2006 MitUCES tf FIINiS NET IWCcSEAFTER 1A4E1 -7.0S5 -7.330 -6.769 -6.1S4 --5.440---L659-- 7.tO3 -7.4*4 - 7.435 -7.932----- WsRTIlZATII 0o.0oo 0.000 0.000 0.000 0.000 0.000 0.000 0.00 0.00 0.00 IEFAECIAt?5Cv 12.765 12.765 12.745 12.745 82.765 0.000 0.000 o .C 0.000 0.00 0 INtEALST EKIt#4E - . - *4.006. 21.27? *22.58S -24.404-35.aa- - a53 -O.S4-2.404 -JS.04-J7.947- - CAPITAL CeH.RcBUtI3NS 7.3Of 7.230 6.769 4.184 5.440 0.000 0.000 0.000 0.000 0.000 LOW) TERMLOAN.EXP.F3N. - 0.000. -0.000 .. 4.0.0.04.o -- O.oo- 0.000-0.000-0.000- 0.*° LCM lEMA LC*N.CCnIERCIAL 0.000 0.000 0.000 .OOO0 0.000 0.000 O.O00 0.000 0.000 0.000 LWW TERI L0AN.CEFICIT 160.722 177.721 103.432 200.55$ 214.08a 234.131 253.443 275.453 29.004 324.642 USCATTE15 LOAl------2.213-.007 -. I.f-2.2il--2.078,--2.587----_S17--2,37 -4.491 -0000-

rorALS.~~~~~~~~~~~~~~~~~~~~~~~ S@fiRCEs 203.7". 214.771 225.161 23".03 254.5il 271.703 291.748 310.116 346.794 n70.a44 '., AF1.IICATIOwSOF FLOWIS

.. PfAiPEOFRATIOWXPENSES 0.040 0.00 .00.000 0.000.ooo.o.000 0-040 O.00 .0000 0.000. INT.DRINH ONSlCIRTION 0-000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 " -_ RKII3 CAPITAL - * . 2.57-.2.415 .2.5A4_4.7M....flh.. S 3.fll-3.424-3.877..-..26--- CAPITAL IM*POVEMENTS 24.609 26.332 28.175 30.147 22.25* 34.514 36.932 J9.517 42.2)3 45.243

_ - .IHTEAf61.E1P.F3NH ...... 487. _ 0.00- 0.000_0.000 -0.0 0 000 _O.OdO 0.00o.o..o. - --. INTEAEST.COCOERC3AL 0-000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INTEAEST.0FICIT 3,3.63 35.945 37.857 40.061 42.518 45.263 48.937 5'.0fl 57.673 62.402 *_6-S RT TEIM INTEREST* - ... 14.C44.e84-S149-4.047-14.98017.92419.073-20.4O-2.4sa ' -24.JS -

ANI$TIZATION.EXP.FIN. 10-.14 0.000 0.000 0.000 0.000 0.000 '-...... MAT IRATION. CCIflACIM ... -.....0. 000...0.000....0.000....0. 00 0.-0..00SQOO 0.000.O0.000 0.000.... o.coj....fl.,*0.000 0.000 $' AHOTIZATION.DEFICtT 138.537 856.877 164.154 173.221 183.176 194.595 207.223 224.134 243.*22 264.5W %D .'' SHORTTERW AhcE1ZAlTio 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.146 I DIVIDEND PAEN . - .0.000 .0.000 -___. - TODTALAFPLICATI04 196.04 206.903 217.501 230.137 243.fl3 259.434 277.546 299.679 325.043 347.0__ NEt CAtIIFLOW.YEAR 7.482 7.069 7.440 9.402 10.53 12.150 14.242 10.437 21.750 23.250 CASI FLOW& DIVID..YEAR 7.4&2 7.BE9 7.U"0 9.402 10.539 12.150 14.242 13.437 21.750 23.-50 CUt I. NET CAft FlOW 563.152 171.021 170.4* 183.0S2 19.621 210.771 225.013 243.450 245.200 288.451 C* LL. SWAT TERM bEt'T 4Us.749 43.774 44.952 47.813 49.241 51.02* 52.445 56.013 59.910 50.764 CUJLLISTIVEOIVIEttl#Ds 0.000 0.00 Q.000 0.000 0.000 - 0.000 - 0.000 -0.000 - 0.000 -0.00 ---

4-30-34 JEAN l. l BO'Eh ATTACHMENTIII

RAI:lIIS BAIUX1lEPROJECtToCASE 3 BALANCESIIEET i MILL.IONSOF DOLLARS

YEAR .3905 1906t - 97-9.-.98 *. 1909 - 3990 -- -1993 I994--I9951991*-992 .396- - 'I ASSETS

OPERATINW CASH1 0.000 .445 .952 1.019 1.090 1.166 1.248 1.335 1.429 1.529 1.636 1.750 RECEIVABLES 0.000 0.000 6.663 14.667 1.716 16.816 17.993 19."52 20.600 22.A412 23.565 25.236 INVENTORY 0.000.. 2.670. -5.713 ---. 4.113--4.1-4.99-1 0 503-- i EXCESS CASH 0.000 0.O00 8.335 22.153 42.293 52.0433 52.200 5s.932 71.023 93.37b 124.052 155.671

ASSETS.CURREIIT -.- _ . __ 0.QO-.0 ...... 11..21.864 JLSZLLLA3L..zz.01Z....28a1..82...z..32..10z.426-1.1206 59.2O9 193.

PLANT & EWUIPMENT 98.000 255.300 267.010 201.196 295.*19 310.644 327.243 3447809 363.563 383.652 405.146 428.146 * DEPRECIATION.LESS 0.000.0-25.530-O51.060b-76.sto-102.120-r127.& 1z4O 415Js53.1801d45.t45:178.710rll.475. __ OThER ASSETS 5.200 21.038 4a.823 48.823 48.823 4e.823 46.02) 48.023 48.823 48.023 40.923 48.823 LESS AMORTIZATION 0.000 0.000 -4.208 -13.P72 -23.737 -33.501 -43.266 -48.823 -48.823 -48.023 -4:9.23 -48.82.

TOTAL FIXED ASSETS 103.200 276.338 2do.895 264.9d6 244.01S 224.046 205.149 204.374 210.383 217.707 226.436 234.671 a

TOTAL ASSETS . 1103.200 279.452 303.759 30a.959.309.654 301.059 2$4.079-291.905-312.309 343.827 385.523 427.830--- - LIABILITIES PAABE .. ^--.--*...... D-.-.. _--. _-...D---_-. - __ 0.000 1.335 2.656 3.056 3.270 3.499 3.744 4.006 4.2d7 4.57 4.909 5.251 iSIORT TERM DEBT 0.000 0.000 0.000 0.000 24.131 33.3t9 24.903 19.557 12.452 5.951 9.742 30.557 . - LONG.7ER11i&EDT.CURRENT. .. . .__.0.000_4.0. 00..0--.00 afa.f23&4o. .O¶43JAe o...... 5-a7 l 5sb2-45.32-L!r.352-t¶...... -..... CURRENTLIABILITIES 0.000 1.335 2.856 30.480 65.639 77.013 78.929 87.532 102.426 124.120 159.069 193.160 Ii LONO TERM DEBT.EXP.FIN. 53.900 140.435 140.415 133.67B 116.126 90.574 01.022 63.470 45.910 20.364 30.814 0.000 LO TERM [EBTmCOMIERCIAL 49.300 137.702 165.487 144.801 124.115 103.429 82.743 62.058 41.372 20.406 0.000o2 0.000 ... LON0 TERHMIDEBTilEFICIT ... 0.000 ~_0.000._.0.400Ot0.000 J2L.0aao .... dLa4_a.San23.ta4a.4-146.54-215.6224-234.470 A ° SLOCIALRESERYES 0.000 0.000 0.00) 0.000 0.000 0.000 0.000 0.004) 0.000 0.000 0.000 0.000 : _NHETPAID-IN .. E0UITY.- 0..00. 0. 000--0.27.34La0Z@.*LL41242122170.43_214.5&L232.35 L25. 92331S 26 Z9U2.f.073 RETAINED EARNINOS 0.000 0.000 -27.361 -70.916-126.422-170.436-211.563-232.350-245.898-257.932-267.962-276.072 TOTAL EQUITY 0.000 0.000 0.000 0O. 0 0.000-. .000 .°0.O00-.-.-- TOTAI.LIADII.ITIES 103.200 279.452 30d.7J9 308.959 309.654 301.05-?2034.079 2'1i.905 312.809 343.S27 385.525 429.630

DEBT COVERAGE RATIO N.A. N.A. N.A. 1.359 3. . 1.000 1.000 1.000 1.000 CURRENT RATIO N.A. 2.333 7.654 1.443 1.000 1.000 1.000 1.000 1.000 I.00 3100') 1.000 DEBTVECKUITYRATIO N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

6A L30-V4 JEAN I. * lOVYER ATTACIHMENTIII

BAilfllJS IIALIX1I7: RkC'.'ECT.ColSE 3 BALANCE:S1IUI.

IILLLIN C.F L'OLL614

YEAR 19?97 1998 1999 - 2000 2001- 2002 -- 2003- -2004-- -205 06 ASE r-s

OPERATING CAi41 1.873 2.004 2.144 2.294 2.455 2.427 2.811 3.00t 3.216 0.000, RECEIVABLES 27.002 2t.892 30.915 33.079 35.395 37.872 40.523 43.360 46.315 49.643 INVENTORY 11.230 12.025 12.S66--13.767--14.731--15.762--14.665-1.0446-19.3O9--0.O0 -.- EXCESS CASHI 143.152 171.021 17.4021 180.002 129.621 210.771 225.013 243.450 265.200 283.451

. .. CURRENTASSETS - _. - - 203.246 213.942 224.60Z-2i 7.223.-251.202n;.032ss.2a2n.a4t-a34.L2aaat094.

PLANT & EQUIPMENT 452.755 479.087 507.242 537.410 549.464 £04.163 641.115 460.633 722.916 7463.159 ; ... - LESS DEPRECIATION - -214. 240-217.005-229.770-242.535-255.30Ci-255.S00-255.200-255.3050-255. 10&-255.300 OTHER ASSETS 43.823 43.023 48.823 48.82.3 48.023 40.023 4a.823 48.823 4S.S23 4S.323 1 LESS AMORTIZATION -48.823 -40.823 -49.023 -48.023 -48.623 -48.823 -48.623 -48.623 -40.023 -46. 023

TOTAL FIXED ASSETS 248.55 262.002 277.492 294.675 314.36e 346.683 305.15 425333 447.414 512.059

-..-.TOTAL ASSETS .. ... 451.701 476.024 502.099-532.0i9.545.569 615.915 471.02Z.233..19f-801.736 "09-53 ---

LIABILITIES . .. PAYABLES 5.619 6.012 4.433 6.83 7.365 7.861 0.433 9.023 9.654 0.000 SHORT TERN DEBr 40.769 43.776 44.952 47.163 49.241 51.628 52.645 55.016 59.910 50.764 ';_ .LONGN TERM DEBT.CURREWN --- -- 154.077 144.3154.173.221-183.17&-194.595-207.323-224r134-243.S22-244.5S0-2S7r33 ---

CUJhRENT LIABILITIES 203.266 213.942 224.607 237.223 2531.202 267.032 265.212 307.66:3 334.122 338.094

" LONO TERM IDEBT.EXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 i_ LO TEAM DEBT.COMMERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 :n ':_.-.LONOTERM DEOT.DEFICIT 248.535 262.002 277.492-294.874.314.347-341.225.370.554-40243 434.03J-474.-145._ .-.-. * -

SOCIAI. RESERVES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 _NET PAID-2N EBUITY .. 2...23.956.291 . 286-298. 05-304.242.302.882.309.882..309.820t30t.8 88L.301.82 -30t0682..W. RETAINED EARNINGS -203.958-291.28a-298.057-304.242-309.d82-302.223-294.621-286.935-279.099-271,. 4I

TOTAL EQUIlTY 0.000 0.000 0.000 0.000 0.000 7.659._15.262 22.948...30.733.-37 .71

TOTAI. LIABILITIES 451.7St 476.024 502.099 532.098 565.569 615.91$ 671.027 733.196 801.730*5).W)

DEBT WCVERAGE RATIO 1.000 3.000 5.000I.000 I.000 I.000 1.000 1.000 1.000 1.000 CUfRRENT RATIO l.000 5.000 5.000 1..005.000 3.000 2.000 1.000 1.000 8.000 DEbTIEGLIITV RATIO N.A. N.A. N.A. t4.A. Is.A. 44.553 24.200 17.535 14.191 12.247

6-30-84 J'EAN L. LOVER ATTACHMENTIII

fiAt His KiAtIXAI1KFRckJEC:T,CASE 3

* A$Hi FLOWT.IIAn3(1OF1 REFLESN& NET PRESENT VALUE.S. -- ______FUNDPSIN MILLJOIONSOIF DOLLARS AND IN 1984 RLEALTERNiS OR INFLATED ICUJARENTITERNS,AS SPECIFIED.:;

.3 . ~~~~~~~~~CASHFLOWIN REALTERMIS CASHFLOW IN INFLATEDTERMS I AFTER TAXES BEFORE TAXES ,ON EQUITY AFTER TAXES BEFORETAXES ON EQUITYY

* ~~~~~~~-96.449-96.449 0.0 . -143.806 -143.606 0.000 -164.444 -144.644 0.00'> -83.531 -13.531 -22.335 -29.0*4 -19.024 -27.361 I .~~- ., . ~~-6.024 ..r6.024 . -?39.331 ...... --.- 2.8920, ~ a.t..~.--5.5..--- -. 7(,. -.788 -33.871 .- 5.304 -5.804 -47.506 7w ~~-.788 -29.328 -3.183 -3.563 -44.014*9 ....-.. r.783 . .788 ..- 25.411 ..--. 4------Lf~---4.f---~- -788t -.788 -12.098 -5.355 -1.355 -20.787 -.788 -. 788 -7.349 -1.449 -1.44.9 -13.543 p788 -.788 .6Ila . .1.5SL...... =1.55L ...... r2O5 -.788 -. 788 -4.765 -3.660 -1.660 -10.030 -.788 -.788 -3.601 -14746 -1.774 -8.110 -~~~~.. - -~~.788 .. 788 .. -3.272 L..0 .90- -7.8.35.- -- -.7188 -.788 -2.343 -2.03)4 -2.0fl -7.310) -788 -.788 -2.454 -2.175 -2.175 -6.769

-788 -.788 -1.784 -2.490 -2.490) -5.640 . -788 -. 788 0.000 -2.665 -2.665 0.000 a ------713 z-.788.3 -0O0 ...-. 51a.5-- 0.I0-.--- -.?88 -.7881 0.000 -3.051 -3.053 0.000 a ~~~~~~~~~-.788-.733 0.000 -3.245 -3.265 0.0001 10.472 10.472 -500.019 49.643 49.643 -474.143 2

REAL lASt AFTER TAKES1 -14.761 K INFLATED [RR AFTER TAKES i -8.794 1. .... REALJRR ~BEFORE.TAKSS.Lz8.6.761 X-, ______NELOZEDJH1LMBEOSL.TAIE'SI-%.J.Ztl-L.______REAL INStON EQLIRTY aNO SOLUTION INFLATEDIRRt ON EQUITY 3 NO SOLUTION - REAL 1984 NWVAFTER TAXES0 0.000KX -262. 425 . INFLATED.I"4i NAY AFTER-TAXES 8 ..... 000t. a....689& REAL 89*~4W4V AEFCoRETAKES 2 0o.000Ka -242.423 INFLATED1894 NAY BEFORETAXES 8 0.000K -248.944 REAL 89* NFV ON EQtUITY 00.000K a -296.897 INFLATED1984 NAY ON EQUITY a 0. 0002 -7134.027

REAL 3984 ESPYAFTER TAXES 61-10.0002X -233.510 INFLATED1984 IdCYAFTER TAXES 8-10.0002 3 130.574 REAL 5984 PIAYBEFORE TAXES 8-10.000K -2.33.580 INFLATED8984 NAY BEFORE TAXES 4-10.O0X0%a 330.574 REAL 8984 NPY ON EQUITY .-io.oooxa -3537.024 INFLATED 1984 ICYVON EQUITY 8-80.000K 3 -4056.704 REAL 19i14NEW, AFTER TlIXESif-83 .0002 23.19*2 INFLATED8984 NAPYAFTER TAXES81-85.000K 354AI .941& REAI. 1934 75EVttfFfkE TAXI:S4 0-15.00 aPC# 23.5-9Ž INFLATED1?84 NPY BDEFORETAXES 6-15.0002X 1534.943 REAL 1984 PiPYON EQUITY 4-15.60002 --4343.035 INFLATED.1984 NPV ON EQUITY 6-85.000K -28814.102

1HOLtlSTIE:SALVPICE VAIM 11842.uY0 1i. 1(OVALI'D MIL IIUICI;IN CAPI AL OtI'.

4-30-84 .EAIE L.*LOVERc ATTACIHMENTIII

fAl I EIISIFUX lIE FSE f.CA,.E 4 FIIii' r AID LO8 STATEMELNT MILLIONS OF DOLLARS

YEAR IPSO 3906 3907 1 980 -- S989 3990. *31991 --- *199'2- -*-I993- -31994 .- 1995 ---- 996-----

SH IPMEtIITS -TOTAL SiIlPtIENTS - _ 0.000-. 0.000 . .030-...1.4L0-..-1.t.0.-3.0- 0.-I.44O-I66-- O. 40 . -. 64CI-- -

I NCOI E, TOTALREVENU.IES . . .000 -0.000 .-27.02* *-79.224--84.77o -iO;7 0 -97;053--103.044-1i4-1I.04-fl7.214-lS&;zzg-*-

CO$T$5 TOTAL COTS - -. 0.000 -.0.000 -17.13 -30.67-39. 24- 41.*9O-44.930-.46.075-51.440-o55.041-- 5s.094-63.03- OT711RFIXED COSTS EFIXED . .... _-_ O0...0. 000 .- 7.fl8..8.494-4.0S089.9.725-10.405--4*.134-41.9133-12.742-.13.439-.-14.594- '

.OPERATINOPROFIT . .000. -0.000 -. 11.944.-34.054-36.438-38.90-41.717-44.638-47.762-.-51.106 34.8S-8.511L- INTEFEST EXPEIfE 0.000 0.000 0.000 30.120 27.354 24.924 23.171 21.018 20.052 18.454 16.323 14.025 ' .At. RTIZOrtoII . .. - 0.000 -_0.000 4.203&..7JL5 9.245-2.765--.- .SSX 0.0o.-O.OO--o00--0.0'- DEPRECIATION 0.000 0.000 25.330 25.530 2s.530 25.530 25.530 12.765 12.765 12.765 12.765 12.765 ,

-NEt INCOMEBEFORE .TAXES . -- .- --. 0.000 -17. 794--33.a-2. 23-2 .21-3. 1---40.O04.740-.5.49S-34.945-19. fl4-25. 595-31 ,J2 3 ,, TAXABLEINCOME 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 19.884 25.395 31.721 U4 _INi:tME-TAXE@S___4400--- ...... 0 0.01-e00-100_4O^ ...... A j 4e00.000-0.000-40100; I

NNEtINCOME AFTER TAKES. 0--0000-..-- .0.001779431.36&242I3a25.23I.-aI.7485r.9044945.-I9.084.2 .P53I.72l...- W CIJtII.ATIVE INCOhE A.T. 0.000 0.000 -17.794 -49.162 -75.375 -94.606-113.354-106O056 -93.110 -73.226 -47.631 -15.910 1:1

6- 30-04 .. .-...... -- . . . JEAH L. LOVER ATTACIMENTIII

DA HUIS IULIXITE rRo.lCT*CASE 4

PR6FII AND LO$S STA1EnMCNT MILLICINS OF DOLLARS

YEAR 1997 1993 1999 -- 2000 -.- 2001- 2002 _2003 -- - 2004--- 200&------SHIPMtENTS V TOTAL... SIIIFtIENTS . . 1.660 -1.460 .a.440_ .40.__1.440_ .a40-1.440-1.44--.440-&.M0

TOTAL REVENUES . 145.650.335.645 166.ZSS lz.8.J27Jl 2. j.21l_218.S0l2212.1SO.254126.7U22_3_25_2_.2 ZZ1

COSTS ; s _ TOTAL COSTS . 67.427.. 72. 34 .1.14744zS.sa..23s4a.._ _

OTHER FIXED COSTS FIXED .15.613 I6.709 ..17.879_ 19.130. 20.Ab 21. d223.5225.i232.S32.0.2862.S3_ _2_____._

... _OPEnATINO PROFIT.. . _ .62.607 66.989 71.678- .76.6i6--82.0&4.-87.609.93.9546 00.53S3-107.570-l15.100.-

, INTEREST EXPENSE 13.048 11.625 9.B85 7.793 5.370 2.254 0.000 0.000 0.000 0.000 aORTIZATI . -O.O'O0O _.0D.O0 _0,40.oo a.4a._oo.x_oo .onoo_oo.o_. .i DEPRECIATION 12.765. 12.765 12.765 12.765 12-765 0-000 0,000 0.000 0.000 0,000

- -NET.INCOmE DEFORE-TAXES----- 364.774 _42.600-49.028-36.f3a.43.*2L.85. 5s3 6Q400..33-107._iIU l1-- ,'Li TAXABLE INCOME 36.774 42.600 49.020 56.138 63.921 85.555 93.956 100.533 107.570 115.100

5 OEMTSAES i ,0o n0 An nnn 0deF400n nn nn . - onn n nnn

_-NET- INCOME AFTER TAXES . - 36.774 42.600.. 49.028_-6.138-63.S2Ls83.555i3.*5e_100.534 307.570.JLO -n

CnUULATIVE INCOME A.T. 20.864 63.443 112.492 146.629 232.551 310.206 412.061 312.594 620.164 731.263 |;

JEAN L0.L...... 84 R_...... ___ ._ ... ___ ..____ -...... ____._. .... JEAN L.LOYER ATTACHMENTIII

DAI:ItIS IAntXIXE FROJECTJCASE4 .SOURCEANtD ArPLICATIC4 OF FtUN4.MILLIC4IS CF DLLAR.

* YEAR *i'5 1986 19.97 19i lih9 i9'0 I991 1ii2 1I*f 1994 1995 1996 SOURCES OF FL44DS

NET 14COME AFTER TAXES 0.000C 0,00C -17.794 -31.3481-26.213--21,231 -16.748 -5.-29C-14.945--19.684--25.555 31.721 ArORTIZAT*I0I 0.000 0.000 4.2VX3 9.765 9.765 9.765 9.76! 5.557 0.000 0.000 0.000 0.000 DEPRECIATICO* 0.000 0.000 25.530 25.530 25.530 25.530 25.530 12.765 12.765 12.745 12.765 .75 INlTEREST EXPENSE .- .--.._ 00.-- 0.000 -0.000 -30. 23 -1Z.38&--24.fl4 -.23.171- 21.01&-20.052 -11.456--14.23f-14.025

CAPITAL CcC4TRIUtITCI4S 0.000 0.000 17.794 31.368 26.213 21.231 16.748 0.000 0.000 0.000 0.000 0.000 LONO TERM LOAN.EXP.FIN. 53.900- 06.515 -0.000--.0.000-0.0004--0.00 --0.000 -*0.000)- 0.000-- 0.000- 0.000--0.000 ! LCNO TERM LOAN.COVIERCIAL 49.300 68.402 27.765 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONO TERN LOAU,.DEFICZT 0.000 0.000 0.000 0.000 3.774 20.156 .31.306 57.095 73.902 91.574 104.111 07.171 SHORT TERM LOANS 0.000.- 0.00...0.000--_7_.0O l__-. s-n- 0,0000--0.O00-0.000-O.OOO-19.781i TOTAL SOURCES 103.200 174.916 57.522 65.422 74.125 86&.511 69.772 102.533 121.664 142.681 158.794 164.463 ! * APPLICATIOIS OF FUNDS - .1

. .PLANT L EOUIPIIENT . .- _ -. 98.OO0-*52.300o.o.ooo_-o,ooo_0o.ooo -o.ooo_o .ooe -.. o.Oo,o.oo .o.ooo o.ooo -o.0o0 RPEOPERATINO EXPENSES 5.200 5.564 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.D,RING CONSTRICTION 0.000 10.274 27.7*5 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0. 000 _ WORKING CAPITAL - ._....- _0.000.__1,780 -11,284-10.817-.._2.521-2.345- .- I4S2-_1.S94_2.04B 2.509.- 284_ CAPITAL IMfROVEHEIITS 0.000 0.000 12.510 13.3" 14.323 15.325 1*.3S 17.546 *8.774 20.0*9 21.495 22.999 INTEREST.*EXP. _. FIN.__I_ . 00..... 0...... O. O....4L3.~..fl.... L00_.00_.DO2.652 )_-a.66L.....Ot....52...... D_^S02-2 ..... J3.....lk3__' INTEREST.COMISIERCIAL 0.000 0.000 0.000 18.204 17.06.6 14.790 12.515 10.240 7.964 5.689 3.413 1.138 INrEREsT.DEFICIT 0.000 0.000 0.000 0.000 0.000 .415 2.52a 3.210 9.505 13.767 17.762 21.040 ---- SIIORT TERN INTEREST ___ -0.000 ... 0.0o0-40.000-_113.-2.044 - .

AIIORTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 6.733 17.552 17.552 17.552 17.552 17.552 17.552 17.552 a._... AMoRTIZATION.COIEERCIAI A.000-0.000-0.000 -. 0000.-6* 20. 4.6&-Zot0 S&6 'IO .s4-20 AS' 0oAl3&-24O 68-20. 6&.. ANOnTIZATION,DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 1.887 11.965 25.731 44.601 45.899 82.739 SHORTTERM ANORTIZATIOIJ 0.000 0.000 0.000 0.000 0.000 0.000 *0.012 3.825 0.000 0.000 0.000 0,000 1n DtVIDEND PAYMENT .0.. .000 0.000 _0.000_O000004000._ 000-0.-00000..000...... 000......

TOTAL APPLICATICWS 103.200 174.918 51.579 54.331 70.774 60.276 9i.61* *4.640 104.846 123.728 144.462 160.66 NET CAUSFLOW.EAR 0.000 0.000 5.943 11.091 3.351 6.2.34 -1.848 7."3 16.679 16.953 14.332 3.777 CASI FLrCs& D IVI-YEAR.. 0.000 0.000 5.943 11.091 3.351 6.234 -1.648 7.893 86.679 18.953 14.332 3.777 CUML. NET CAStHFLoW 0.000 0.000 5.943 17.035 20.386 26.620 24.772 32.665 49.344 68.297 82.629 66.406 CLIMIL. SHIORT TERh DIEBT 0.000 0.000 0.000 0.000 7.701 13.637 3.825 0.000 0.000 0.000 0.000 18.781 CLULATIVE DIVIDENDS 0.000 . 0.000 0.00 0.000---.0,000 -0.000 *. 0.000-0.000 0.000- -0.000-.-

4-30-04 .JCAH L..LIVEkt ATTACtOETIII

IsAl. I6I ALUXIlE PROIJECT.CASE 4 .SCURCE AND APPLICATIN ('F FUIDS..ILLIC44.; CF ZA.LAA$

YEAR 1997 1996 1999 2000 2001 2002 2003 2004 2005 2006

SOURCES OF FLNDS ; . .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~.

.NET INCOME AFTER TAXES -36.774 42.600 .49.028 .5.138---63.921---83.555 -93.956.310.533-107. S70-15.100.- - ANGRTIZATION 0.000 0.000 0.000 0.000 0.000 0.0)0 0.000 0.000 0.000 0.000 DEPRECIAtIrO 12.765 12.745 12.745 12.745 12.765 0.000 0.000 0.000 0.000 0.000o ooo I INTEREST EXFENSE 06...!! _3.0.1..2 J_.87._ .235 ... 3.3Zah -254 .. 0.OO .000 .... -O.000-|

CAPITAL CONTRIDUTIONS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONO TERM LQANsEXP.FINI. ...0.000_ .- 0.000- 0.000 --. O-0.000 - .OO00- 0.0_O000-O.000- 0.00 0 ...... 0.00 " LONO TERM LOAN.COIrERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONO TERM LOAN.DEFICtr 70.712 49.909 26.692 0.000 0.000 0.000 0.000 0.000 0.000 0.000 SHORT TERIILOANS a 0.oooo O. .o O.oO a. -. 020-0.000- 0 .000-P.OO_0.0000.0000_

TOTAL SOURCES 133.318 11.090a 93.371 70.717 92.064 .87.809 93.954 100.533 107.570-115.100

APPLICATIONS OF FUNDS

PLANT L EOIJIPMEIJT.0 044...Q.000. 4 PREOPERATINO EXPENSES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.tRtINO C014SIRUCTION 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WORKINO CAPITAL .... 2.472 ..3.073 ._3.28_t93.519. . CAPITAL IMPROVEliENTS 24.409 24.332 28.175 30.147 32.25S 34.516 36.932 39.517 42.283 45.243

INTE11EST.EXP.FlN. - ._____ -0-00....- o.'tOO....n ..... 000.... .a2.0.*n ...... ! INIEREST.COIMERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 '" INTEREST.DEFICIT 20.494 17.833 13.721 6.996 3.575 .734 0.000 0.000 0.000 0.000 a1 --.. SHORT TERN INTEREST __ ...... 1 .l54.-.1520--0.000 - 000-0.000.-0.O0O

AMORTIZATIONEXP.FIN. 10.614 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.o00 0.000 AMICfTIZATWQN.COnnERCIAL A.IALo n0 An enn -Ogh nA nn a Ann nnnn n AHOYTIZATION. nEFICIT 97.043 95.641 78.941 40.310 30.301 13.344 0.000 0.000 0.000 0.00 Iin SIORT TERM AMORTIZATION 1.030 1.100 3.713 0.000 2.343 12.667 0.000 0.000 0.000 0.000 '47, DIVIDEND PAYMENT ... 000....0.000-0.0000. 0.0.000 O f t.CIOl-. .4 60.3151 0.350 A

TOTAI. APPLICATIONS 150.237 137.771 124.004 101.769 62.064 87.809 93.956 100.533 107.570 115.100 .

NET CASH FLOW.YEAR -13.910 -20.073 -25.633 -22.902 0.000 0.000 0.000 0.000 0.000 0.000 CASII FLOW IL DIVIDn.YEAR -16.916 -20.-73 -25.633 -22.982 0.000 20. 98 52.713 56.403 60.351 78.350

CLIUL. NET CASH FLOW 69.483 40.415 22.982 0.000 0.000 0.00) 0.000 0.000 0.000 0.000 CLUIL. SHORT TERM DEbT 17.751 16.651 12.930 15.029 12.667 0.000 0.000 0.000 0.000 0.000 CUWULATIVE DIVIDENDS 0.000 .0.000 .0.000.- 0.000 .._ 0.00fl.9fl.Z3.21t_130.La1A90.445.248.t15 -.

6-30-64 J#AN L.LOYER ATTACHMENTIII

1461H.SIitt I 6A'1 IIE FRC.OIECT.CCAt 4 BALANCI:ESIILEI

MILL ION; OF ViCLLARS

YEAR 19k5 19*4 1907 19*0 9899 1990 -19912--*-1992- -- 1993 1994---1995 ---- 194 ASSETS OPERATING CA4il 0.000 .445 .952 1.019 1.090 1.166 1.248 1.333 1.429 1.529 1.636 1.750 RECEIVABLES 0.000 0.000 9.255 19.806 21.192 22.476 24.243 25.962 27.779 29.723 31.604 34.030 INVEUJT0RY 0.001 2. 70 5.713 6.3 3 --4.541 - *..499 -- 7.488-0.012--8.573-9.173 --9.014-10.50----- EXCESSCAShI 0.000 0.000 5.943 17.033 20.334 26.620 24.772 32.465 49.344 49.297 62.429- 6.404 ' I I: -,.CURRENT ASSETS - _ . 0.000 3. 114 21.044..43.972 . 49.209-57.461.-57.722-617.5.750-.125_1O..72b-125.8*4132.6S0

PLANT & EOIJIPMENT 98.000 253.300 267.810 2813196 295.519 310.944 327.243 344.7a9 363.563 383.652 405.14a 42a.146 LESS DEPRECIATION - - 0.000 - 0.000 -25.530 -51.060--74.590-102.120-127.650-140.415-153.-I30-165.945-170.710-191.475---- OTHERASSETS 5.200 21.03e 48.e23 48.823 48.823 4S.823 48.823 43.823 48.823 43.823 43.323 43.823 LE.S; AMORTIZATICIN 0.000 O.000 -4.208 -13.972 -23.737 -33.501 -43.266 -480.23 -48.823 -48.023 -48.823 -48.623 TOTAL FIXED ASSETS 103.200 27i.838 286.9:5 264.986 244.015 224.046 205.149 204.374 210.393 217.707 226.436 236.471 TOTAL ASSETSr103.200 279.452 308.759 30.95P29.293.224..281.507-242.92l-272..348-297.508-324.430-352.-321--349.360---

LIABILITIETS PAYABLES 0.000 1.335 2.8J6 3.054 3.270 3.499 3.744 4.006 4.287 4.587 4.908 5.251 SHORT TERN DEBT 0.000 0.000 0.000 0.000 7.701 23.637 3.625 0.100 0.000 0.000 0.000 10.7*1 .LONG TERMDEBT,CLIRRENT .. 0.000. .0. 000.--.0.000-27. 423-30.238 -40 325.5S.202-43.949.-82.8-34 -120.* 77-L05--- _

CLI'RENI LIABILITIES 0.000 A.335 2.564 30.460 49.209 57.461 57.772 67.975 87.125 108.723 125.684 132.690 jZ LONG TERIIDEDT.EXP.FIN. 53.900 140.415 140.415 133.478 114.126 98.574 01.022 43;470 45.910 28.366 10.824 0.000 10;TERM DEBT.COMMIERCIAL 49.300 137.702 165.407 144.901 124.115 103.429 02.743 62.058 41.372 20.686 0.000 0.000 .. LONG TERN DEST.t.EFICIT *____ _. 0ooo 0.000 -0.000-- 0.000 -3.774-22.042-- -43.384-73.a4B-102.85O-1280527-149.899-129.2-2-7 -

.OCIAL RESERVES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 . .... NET PAID-IN EOUITt.....-...... 000.1279449.162_a5.375 .. .4CiLaa3.354...h13.45413.354413..354133.3541I3.:- RETAINEDEARNIN;S 0.000 0.000 -17.794 -49.162 -75.373 -94.606-113.354-108.056 -93.11') -73.224 -47.631 -15.910 TOTAL EQJlTY 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .5.296.-20.243 .40.126 .45..723.-97.444.---- TOTAL LIABILITIES 103.200 279.452 308.759 303.959 293.224 201.507 242.921 272.348 297.509 326,430 352.321 349.364) D'ErT COVERAOERATIO N.A. N.A. N.A. 1.457 1.000 1.000 2.000 t.042 1.104 3.114 1.047 1.000 CURRENT RATIO N.A. 2.333 7.654 1.448 1.000 1.000 I.000 I.000 1.0008.000 3.000 1.00 DEBT/EOUIrY RATIO N.A. N.A. N.A. N.A. N.A. i.A. N.A. 37.576 9.393 4.425 2.445 1.429

6-30-84 JEAN L. .OVER ATTACHHENTIII

1AI.03'I$ I'AUXI IL IhriAJL1.CASE 4

BALANCE Siii:iE 1

MILLIOCNS CF DOLLARS

YEAR 1997 1998 1999 - 2000 _2001 _-2002 _-2003--_2004 2005- -- 2006 ------

ASSETS OF'ERATINO CASII 1.973 2.004 2.144 2.294 2.455 2.627 2.811 3.008 3.219 0.000 RECEIVABLES 36.412 38.961 41.689 44.607 47.729 51.070 54.645 58.470 62.563 66.943 * INVENTORY . 11.238 .1?.023 .12.8666_13.767_14.73E 15.762b2J1.86L. 18.046-19.309 _-0.000 - EXCESS CASH 69.488 49.615 22.982 0.000 0.000 0.000 0.000 0.000 0.000 0.000

p9. cuRRENT... ASSETS __.319.011 .11L57.8.069A.t6.5-42-L2-S0~ 66.943 .1 PLANT & EQUIPMENT 452.755 479.087 507.262 537.410 569.668 604.103 641.315 660.633 722.916 760.159 .11 *-'. .. LESS DEPFiSCJAT ION ... -204.240-217. 0057229.770r242. 535-255.300=255.300=255.3C0=255.3000-255.300=255.300 OTiHERASSETS 48.823 49.623 46.923 48.623 46.923 40.623 46.623 48.023 4S.S23 46.623 LESS AMORTIZATION -48.823 -49.923 -46.823 -40.023 -46.923 -48.823 -40.823 -48.023 -43.e23 -43.823

TOTAL FIXED ASSETS 248.515 262.082 277.492 294.673 314.368 34a.83 235.815 425.333 467.616 512.J59

._ sTOTAL. ASSETS 367.524.363.667 357.174.355.543.S329.282.48.343..A0. 13504.85352.706 579.602.. - -7.

* LIABILITIES

i PAYABLES 5.619 6.032 6.433 6.693 7.365 7.61 0.433 9.023 9.654 0.000 : SIORT TEfM DEBT 17.751 16.6S1 12.93S 15.029 12.667 0.000 0.000 0.000 0.000 0.000 --- LONG TER41 DEBT.CUFRENT ._. __ 95.6413-78.941--60.310 -3S.301__13.J4&--0.000-0.--.O 000-044.00 -- 0.000- -

CURRENT LIABILITIES 119.011 103.605 79.681 60.214 33.37S 7.91 8.433 9.023 9.654 0.00')

NLWO TERN IEBT.EXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LO TERM DEBT.COMMERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONO .TERN DEBT.DEFICIT 114.297 85.265 .51.647. 13.346-0.000.-0.000 A.00d 8 .&000.00. _0.000 F'0

SOCIAL RESERVES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.0, 0.000 0.000 09 3"_-_NET rAltizN __ 3.)nSi.33.35t313354 111l3:3a1J3.3a.. 113S 354 .I3..njJ.13..32Lj13.31QUTY -4 I RETAINED EARNINOS 20.664 63.463 112.492 166.629 232.551 297.108 336.350 382.460 429.698 466.44S 4 TOTAL EQUITY 134.213 176.817 225.645 281.993 343.904 410.462 451.704.495.834.543.052 579.602..

TOTAL LIABILITIES 367.526 343.607 357.174 355.543 379.283 418.34-3 460.137 504.056 552.706 579.802

DEBT COVERAGE RATIO 3.000 1.000 1.000 1.082 1.679 5.629 N.A. N.A. N.A. N.A. CURRENT RATIO 1.000 1.000 1.000 1.000 1.945 8.614 8.814 6.614 6.014 N.A. DEBT/EQUITY RATIO .952 .402 .229 .047 0.000 0.000 0.000 0.000 0.000 0.000

6- O-84 JEAN L.LOYER ATTAC1HMENTHII

UkAI.HUIE.BAI). LITE Fku.'kCT.CASEf- 4

CA$II FI.OWS,RATE,~ei.OFrEroURl & MET FkLiENT VALuE'S.

FIlNCfl IN ?1IL.LIOIS. OIF KtLARS AND IN 19C4 REAI. TER111.COR INFLATED (CUIRRENT) TERIMS,AS SPECIFIED.

CASHi FLOW EM REAL TERMS CASH FLOW IN IWFLATED TERMS

AFTER TAXES BEFORE TAXES ON ECAIITY AFTER TAXES BEFORE TAXES Cli EQtUITY

-94.449P -96. 4 41 - 0.000 *------10.3.200------103. 200------0.000 -143a.804 -143.604 0.000o -144.444 -144.c.44 0.000 -9.47.3 -9.673 -14.525 -1 S.050 -11.850) -17.794 1 * .515 ...-- 7.515 . 23.V35. .- ___ 14.574 14.576 -18.489 20.442 20.443 -24.213 14.576 14.576 -14.147 21.8:74 21.974 -21.231s. 14.574 .14.576 .. 10.430 . - 14.576 14.576 0.000 25.044 25.044 0.000 14.576 14.574 0. 000 24.797 24. 797 0.000 - 14.576 .-- 14.576 ---...- 0.000 -.- ___ --- 28.4172----- 29.472~- - 0. 00 -____ 14.576 14.574 0.000 20.440 30.680 0.000 14.574 14.576 0.000 32.027 32.8E27 0.000 14.574 . -14.574. .. 0.000 -35.125-.-- 35.125 ---- 000 14.576 14.574 0.000 37.584 37.584 0.000 14.574 14.576 0.000) 40.215 40.215 0.000 .~~~~14.574--*.7 ~...-..0.O000. 43.0)0------3.030 ~0.000.--- 14.576 14.574 0.000 44.042 44.042 0.000 14.574 14.576 4.212 49.245 49.245 20998 - 4.574 . .-*4.574 .- -- 14.574----271--223 14.576, 14.576 14.576 56.403 54.403 56.403 14.576 t14.574 14.576 40.351 60.351 60.3511' 17.48 _____ LZ. LOt.5 1~l2.685- 8.ZL.. * ~~~~~~14.12114.121 14.121 66.943 66.943 66.943

In REAL IRA AFTER TAXES I 1.145 24 INFLATED IRR AFTER TAXES a 8.244 2 1 .~~~~REALSIM BEFORE TAXIES I -I..14.-Z..- LL ---.. .ItJNFLATE0-4RM.EU E -TAXEAES..i.... .246.X. REAL IRAt ON EQUITY a .002 4 INFLATED IRA ON EQUI TY a 7.002 2

REAL. 3984 NPV AFTER TAKES it 0.00024 37.1579 .- INFLATED 1934 NPV AFTER TAXES 0 0.0001 003.9*0- REAlL 11*4 P4V BEFFORE TAXES * O.0002X a 37.179 INFLATEID 3984 InP BEFORE TAXES 0 O.000K a 505.9*8 REAL. 193e4 -fPV ON EQUJITY 4 0.000?. .024 INFLATED 1394 PrPy 0*3 EQUITY 0 0.00024 a 222.404

REAL 1934 NEV AFTER TAXES 0 5.00024 -78.631 INLATrED I984iui,V ATER 'TAXES e 5 .01a *4.6 REAl. l'e84 PIMP BEFORE TAXIES 0 5.00024 I -709.431 INFLATED 1984 WY BEFORE TAXES 0 5.00024 116.944 REAL 1964 NFEVON EOUITY 0 5.000z24 1 -15. 130 INFLATED 1984 NtY ON EOJUITY 0 5.00024 a 31.423

REAL 1'5*4 ?iFV AFTER FAXES;41 10. oOX -3225.057 INFlATIED 1I;G4NPIM AFTER IAXES 0t I0.0001I -40.4041 REAL 39a4 15EV BEFORE TAKES 0 10.00024 a -3215.057 13*141A *E73k41l-V IsEFORL IAXES 0 10.000 13 -40.404 REt'L *984 PIPV ONl EQUI TY 0 10.00024 a -40.834 INFLATED 398 WV OiN EQUITY e I30.0% ayt -25.4*2

fe0TEI TIlL IRLVAC,C VALUE 1II 233(w)*2. EUOUAL I0 U aL UXOld.11AsCAPjITAL I.I1JLY.

6-30-a4 .JEAPIlL.I.INYER ATTACIMENTIII

mAIJIIIS BAUXITE FkOJECT.CASE 5

P*ROFI! Nio L0S STATEMENT

MIILIIONS OF DCtlLARS

VEAR 195 19 1597 -1 -- 19"- -- 1990 1991 -- 1992 1993- I94 -"5 I1996--- -

SHIPMENTS i ..ToTAL.USlIPhENTS ....- . ----° °° -0.000 -0.000- -. 8o .- I.40-1-4604-1. -I.640 -1.M--I.4&0-I.440 - -- 1. "4C1.-I40

'; INCOME, --- TOTAL REVENUES --- - - 000 0.00-- -27;453 -5Or75428642-47.243-7h741 07.0982;-40O4 a168. 94;.3f 100; 94i3

COSTS - TOTAL COSTS o.ooo .0.000-- 19.161 41.004-43.875-46.946-.50.232--53.74B-57.511--61.534 S5.844 -70.453- ---.

OTHER FIXED COSTS ' __.FJXED...... _ _... -- .0.000 _0.000. _.oL2.427_10.1 zL.t.823.41.34-S42..448..13.315t14.252-15.24t. 16.317I17.459__

._.__ OPERATINO FROFIT 0.000 0.000 1.204_.. 4--S.1I5-S.63-4.295-9.94I-I0.43Z 11.382-12.179 13.031--. -

INTEREST EXPENSE 0.000 0.000 0.000 35.280 31.464 20.525 26.348 23.737 23.187 22.941 22.229 21.731 a- :A__ 0 ZATIONI _ - _ ..-..-..-.-- 0- °-0. - 4.3--LL.-L L.-1S -18 I034 6.9S0--O.000--0.000-0.000-0.000 , DEPRECIATION 0.000 0.000 30.S40 30.540 30.540 30.540 30.540 15.270 15.270 15.270 15.270 15.270

- M-NET INCOME BEFORE TAXES. -..0.000 -.- O.000. '34.332.49.49 -41.072-6.1.564.a.U00-a5."1-27.S820-24.02-a2S.320-23.970

INCTAXA IIET E 0.000 0.000 O.OQO 0.0 0.000 0.000 0.000 0.000 0.0n0 0.000 0.000 0.000

_NET INeOOiE AFTER TAXES . .- 0.000. .0.000 =36.332. =4.AL241°-0..4 1.3a6tS8.806 -5.6618=2L620-E24. 82-t25.32f-23.970 a.

CUMUJLATIVE INCOME A. T. 0. 00 0.000 -36.332-105.751-170.823-232.300-295 .I.8-326.049-354. 6"9-3S1. 497-406.81 7-430.787 I.

6-30-04 JEAN L.LOYER ATTAC1HMENTIII

f4UH/J II S lAli Ill S Ito&JE: .I(ASE S

rEc* IST flEs [.0S1 Si ATEBITSI

*MILLION4S Cf iRO.LARS .

YEAR 1997 1998 1999 20- 2005 2002 - - 20 04.-- 2 -_- --

SHIP11ENT;l TDATL EHIPMENTS - 1.60 1.60 I.4 --

*..:

IPCCOIE "2 TO.TAAL&iVE,AwS . _ 100.00? 1J5.5Z0 123.440 132.3I&1_1157t111J842DI3.flLJOS.SULZ52 .. - - ',

COSTS . TOTAL COSTS . 75.385 S0.662 84.300 -12.3508fl.814.-105.731_113.132-121.051-12t.525.136.5l-2

OTIlR FIXED COSTS FIXED 18.601 19.9 9 21.388 22. f5.24.487 -26.20O -29.035-29.9f8 -32.09l-.34.344.--

OFERATINO POFIT 13.943 .14.919 15.944 17.081 .18.277. 19.554 -20.925--22.390-23.937.-25.634 -- -.

INTEREST EXPEM$E 23.364 24.750 26.265 27.90 ".759 31.001 35.742 39.414 43.064 47.141 AIPXlrIJATIO . _. -- _- - Q__O0.4OO04Q. _.9O9.00 9._,S.000.s00t0sO O.O..O..s. DEFRECIATICI 15.270 15.270 15.270 15.270 55.270 0.000 0.000 0.000 0.000 0.000 NET. IWOIIE FEFORETAXES...... :24.4Q25 025. 5ZI. - 2. .I2.264_-Z.8l7Z.02d L2Lat.' *; 1TAXA14EINCOME 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 H - tUKsE_TXES.... - n0.b...AAA Am Ann, Af0 .. nO0.&OA0A An A

NET. INCOME AFTER TAXES . .__ 24. r925-25.100 -r25.57. -r26.09526.752*12. 244_,14.817-aI. 024a9.13Z-2I.50'

CUSULATIVE INCOME A. T. -455.460-480.580-506.150-532. 245-55. 9"-57 1. 242-54.0509-603.002-622.210-643.716

6-30-04 JEAN L.LOYER ATTACIDET III

1I'ASi01h3 tulili38&. 1NCCT.CA$E S .*-tC'.V.F ANrt AFFLICANION CF FtLIN(r.318LL8C*4S OF NoCtLARS

YEARS 1985 IS4 ra7 190 3.X99 IRk 31981 I J33)2 39) 1994 1395 1996

SCiIMCES OF FENnE'S

NET INCOME At lEk TAXES 6.000 0.000 -36.332 -69.419 -65.072 -61.564 -58.£00 -25.661 -27.920 -24.02* -25.320 -23.970* -- Ahr.08IIA1TIat 0.000 0. 00) 4.5a0 83.163 83.303 11.80d3 88.13 6.595 0.000 0.000 0.000 0.000 * DEFRECIATI(IN 0.000 0.000 30.540 30.540 30.540 30.540 30.540 15.270 85.270 15.270 15.270 15.270 I' I INTEREST EXPEN:E 0.000 0.000 0.000 -2L344-2J737f2.187-22.94-22.229-21.78 235.200-I.464-1-23.5257- --

CAPITAL CC44TRI3lITICNS 0.000 0.000 36.332 69.419 e5.072 68.5U4 58.S00 35."4I 27.820 24.629 25.320 23.970 10* TERM LOAN.EIP.FIN. 64.460 103.510 0.000 -- 0.00 -0.000--- O.000 -O.d0-0.000 -O.OC-"---0.0O0 -- 0.0o0- 0.000--- LCONOlERI LC'AI.CCiMhERCCIAL 57.940 104.4188 32.977 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.-000 0.000 LCWG IERM LOAN.CEFICIT 0.000 0.000 0.000 0.000 5.435 24.741 38.394 74.105 109.851 147.152 la4.357 190.934 SHORT TERH LOANS .-- 0.000 .-. 0.000 0.000-.40--34.00--88.74;' - O.OOV-0.000-0.000-0.000--3.98 .04-_ "

* TOTAL SOJRCES 122.400 207.9213 0.104 77.404 112.705 104.777 104.4S5 121.707 140.300 105.362 225.772 263.9a4 e AFFLICATI0LS OF FUNDS.

PLANT & EilUIF'lENT -- 117.200 188.200 -0.000--0.000-0.000--0.000 -0.000--0.000--0.000-0 0.O0 -- 0.000---' FREOFERATIN4 EXPENSES 5.200 5.564 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.1ING CONSTRITIONC 0.000 82.175 32.977 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 '... _.WRKING CAPITAL . - _o0.000 8.990 -9.132 -- 8.122--1.347--1.441--1.542 -I.650 --- 1.7 -- 1.06 -2.022 -2.163 CAPITAL IPPROVEmEtiTS 0.000 0.000 14.965 14.013 17.134 18.333 19.484 20. 22.459 24.031 25.713 27.513

-'__NTEREST.EXP.FIN. 0.00o _ 0.000 0.000-5.11 t7-14.7R5t --- 11. 9.4-7.77& -- 5.--m 23.4471.--.0 INTERESTiCOIIDIERCIAL 0.000 0.000 0.000 21.407 20.144 17.45U 14.772 12.00 9.400 4.715 4.029 1.343 . INTEREST.CEFICIT 0.000 0.000 0.000 0.000 0.000 .598 3.170 6.414 12.219 19.410 27.342 35.440 a. ; - -- _-SHORT-TERtH INTEREST - - 0.000 0.000 0.000 -- 1.324 -3.434-2.979-3.132-44334.211-9.081-1.141-17T162 ,,

"It AtlORTIZATION.EXF.FIN. 0.000 0.000 0.000 0.000 0.050 20.9"6 20.916 20.*9b 20.9-Fl 20.996 20.996 20.996 _ __AMOERfIZATION.C0hIMERCIAL_ O. 000--0.0000.0000-.000--.24.42 .4A814.4Lt4414t24.-41Z-24.A4128 4.4124.4l7-24.417- *-- AMORTIZATION-DEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 2.736 15.000 31.567 57.249 92.970 12a.5oi 1 j SHORT TERII AORlTIZATION 0.0OO 0.400 0.000 0.000 0.000 0.000 9.307 5.55S 7.570 7.187 0.000 0.000 134 _.- .. DIVIDEND PAYMENT . 0.000 0.000 -- 0.000 0.000 .-.00..00-.0.-.000---.000-- .00.0 0. 000_---.O00--0.000--.----.

TOTAL APFtICATIO16 122.40C' 207.928 57.073 59.415 92.419 93.712 104.964 132.435 131.i62 15./10 188.354 225.328 NMT CASH FLOW.YEAR 0.000 0.000 11.031 17.989 30.284 13.065 1.521 9.272 16.347 24.652 37.418 38.663 CASH FLOW & DIVID..YEAR 0.000 0.000 *8.031 17.9" 30.2"4 13.065 1.521 9.272 16.347 26.652 37.418 38.63 CUWJL. HFT CASII FLC4I 0.000 0.000 11.031 2.020 59.306 72.371 73.092 83.164 99.510 126.162 163.530 202.244 CIJKIL. SFWiT TEhM DEIT O.0VO 0.000 0.000 .401 34.403 46.272 36.965 31.407 23.83s 16.451 20.567 56.614 CLNIAATIVE 08VI0U0DS 0.000 0.000 0.000 -0.000 0.000-. 0.000 -- 0.00__0.000 .0-0.O -o.0OO-0.00 -

6-30-04 ,.t:N L.LOYEU4 ATTACHMENTIII

Nd IIIIS 1.AuIL FII.Cl.1EI.CASE 6 .j ¶4L4' A (ilNII 1lUtE114 IC ItU .II33L1(44C ff (t4LAk

YEAA I36 I 1a if) ."? 042Vlt '3 ; 24-1.-. 14 StfXlCES Cf FIl#ira

IlEr ItCOE AFTERh TAXES -24.6*2 -25.I00 -25.571 -26.0ft -24.752 .32.244 -I4.837 -17.024 -39.127 -21.507 AW.tTr Il IAINro. oo o). .>- 0. O 0o. 0Oo. 0-^oo. 00o0 0.000 0o0.o 0040 0.000 tFPEC I AIr IS.2 IS.270 I5.27015.270 5.2 5.270 0.000 Co.000 0.000 Co.00 0.0, INIEREST EIFENiE -23.36 24.750 24.243 27.9204.759.9 .-- 731.801 39.414--43.034--7.141 -- '

CAPITA). CCNTkISUTICJfl 24.692 25.3(C 25.571 24.0*5 24.752 12.244 14.087 17.024 89.327 21.S07 LkWi- TERM LOMI.E3P.FIN. 0.000 0.000 0.000 0.000 0.000- - 0.000-.0.00 -O.00.-0.000 0.0.000 LcNW Tr%il LOAN.CC1ERC3AL 0.000 0.000 0.0o 0.000 0.10001 0.0 0 0.000 0.000 0.0IC 0.0(800 ION.) TER" LAl.CEFICIT 203.835 212.405 225.444 239.910 24. Or" fl.2 l3 314.178 30. 340 304."0 421.402 V. iE.lATTEk4 LtfNN . 3.502 . 4.324 2.224 3.534 .3.4 1 4.I20 -.0.00 _2.592. S.450 - 0.0 --

TOTAL 0WWES 243.953 25.l03 269.463 28.430 304.592 325.224 352.420 392.3U 434.735 440.543 AFFLICATIOH4SCEF FtosL4

FtANrT $ EQUIPMENT0 Q.W0 0.cOQ °.-0) -.00° 0. (K* - °.-000 0.C0 0.000 0.000 °z0.000 PREOFERATINI) EXFENSES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.DiRINM CONESTRUCTION 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.,X0 0.000 0.000 IES&.114 CAPITAL 2.314 2.471 2.450 2.038 a.034 3.244 2.473 3.717 3.977 -11.144 -:APITAL IMfROIMENTS 29.439 31.499 33.704 34.0C4 30.580 41.265' 44.110 47.272 50.583 54.122

INTEFPESrTEXP.FIN. - .52 - 0.000 o0.oo a0o.ooo -. ooo .. o.ooo o.oco.. o00_0 -- 0.000 -o.o INEfEST.CCfl*CICA 0.0O0 0.000 0.000 0.000 0.000 O0.00 0.000 0.000 0.000 0.000 INTIEiT.KEFICIT 40.259 43.022 45.20? 47.911 50.03 54 349 !St.54-) 45.746 72.438 79.613 3S11RT lEfAt INTEFEST 1-- r37.476 -10.272 -19.022 -20050 =21.094 S. 3.00t-4.53. 5 2440-

AWWTzpATIoN.E1XP.1z1. 12.93 0.000 0.000 0.000 0.000 0.000 0.000 O.O00 0.000 0.000. 411r mATtflc.c*rniic IAL _____. o0oa.o. C4 0S. A.Lzo 0.0(tSSC.taa. cm n. -- 4API9ArIATION.DEFICIT 365.754 137.647 196.37t 207.210 219.125 232.731 240.009 272.499 303.088 333.419 ai SIICAT TEAM MOATIZATION 0.000 0.000 0.000 0.000 0.000 0.000 1.483 0.000 0.000 7.574 , DIVICiEND PAYMENT - 0.000.. 0.000 .0.000-.o.0 -0.000 .o-0.000--.0.000-0.001 -. 000--0.000-"

TOTAl. AFFLICt3ricor., 23i.612 244.372 258.994 274.015 2ai.504 W9i.117 332.E67 343.101 400.730 431.312 - NET CA-IN FPLoYEAR 10.241 10.57d 10.469 2.415 14.0 34.109 19.73 29.265 36.004 37.2'13 CA$H FLOW & DIVID YEA .. 10.341 10.578 10.469 12.615 14.086 16.109 19.733 21.245 3.004 37.231

CI"'L. PIET CA-H FLOW 212. 5 222.943 233.432 246.047 2&I.133 276.242 -4%.9Ib 325.240 341.244 390.475 C33Wt. 1KNRT TEAM LEbT £0.J17 64.442 (4.727 70.242 73.725 77.65) 7b.34* 78.9t.1 8".4360. On tC11PiQ.ATIVE DIVIDEPitui 0.000 0.000 0.000 0.0t0 0. 00 0.00) 0.00 0.000 0.000 0.000 . - _-._

4-,'.- Z4 ..'Fl L.tOflER ATTACIMT III

0I841til3. PAUXITE FkO.iECT.CASE S

BALAtNE SHUEr

MILLIONS OF CLLLARS

-VEAR - 965 1986 -.197 1988 -1989 - 1990 1991 1992 1993 1994 I9Pv 1996

iASSETS -- j i' OPERATINO CASH 0.000 .497 1.064 1.139 1.219 1.304 1.395 1.493 1.598 1.709 1.029 1.957 - RECEIVAKES 0.000 0.000 4.043 14.607 1.718 14.614 17.993 17.252 20.400 22.042 23.5-8 25.234 INVENTORY . .0.000D 2.NS 4.387. -4.34 - 7.312-7.024 - S.372 -8.958 --- 9.585 10. m- 10.974 *I,.742--- EXCESS CASH 0.000 0.000 11.031 29.020 59.306 72.37£ 73.*2 8)3.44 99.53S 8264.62 £62.5So 202.244 ;,

Ij'.__..CURREsHT ASSETS. _.- _ _ ___-_.0..-3.432. 5.346 _31.4U0-g3.353 -- 8.315-101.432-112.867-131.293 160.I7O-199.vt8-241.179--- 'i

.PLANT& EOUIPMENT 117.200 305.400 320.345 334.378 353.511 371.844 391.461 412.450 434.909 450.939 464.652 512.841 "S; LESS DEPRECIATION --.-.-. * -- 0.000 0.000 -30.540U-61.000--91.620-122.8160-152.700-167.970-303.240-198.510-213.7f0-229.050 *--- I OTHER ASSETS 5.200 22.91S 55.915 55.915 55.915 55.915 55.S85 55.915 55.915 55.915 55.918 5S.915 " LESS AMORTIZATION 0.000 0.000 -4.588 -15.771 -26.9f4 -38.137 -49.320 -f55.915 -55.915 -55.915 -55.915 -55.915 TOTAL FIXED ASSETS 322.440 328.33. 3413153 315.442 270.653 267.463 245.34 244.490 251.669 260.429 270.872 283.115

._..TOTAL ASSETS ...... -- 122.400 3fl.a28.34.499.367.123.374.404.345.778.247.0fl.357.347-382.941-420.599..470.S40 524.294--..-

LIABILITIES

PAYABLES 0.000 1.492 3.193 3.417 3.454 3.912 4.186 4.479 4.793 5.82S 5.407 5.671 SHORT TERN DEBT 0.000 0.004) 0.000 .401 34.463 46.272 36.965 31.407 23.036 14.651 20.567 5.6144 r! _ LONG TERII DE3T. CURENT . .. .--- .0.000._._0.000 _--0.000-32,47 i-45.413--48..J31-60.5SOI-76.flO-102.462-133. 395-8 73.98l4 -876.693--. :

CUAWiENTLIABILITIES 0.000 1.492 3.193 36.212 83.553 98.315 808.452 112.d67 131.293 160.170 199.940 241.179 i. LONO TERN DEST.EXP.FIN. 64.460 167.970 167.970 159.913 138.916 117.920 96.924 75.928 04.931 33.935 12.939 0.000 A LO TERN DEDT.COMERCIAL 57.940 162.250 195.335 170.910 146.501 122.064 97.667 73.251 48.634 24.417 0.000 0.00 40 10810ObTERN DEBT. DEflCIT?_ __---- o0.0o _..o0.ooo.-0o OO.-0oO°- 5.45--17. 456-50.-764---45.302-8 47.903 -202.077-2S7.938-283.85, *. a'

SOCIAL RESERVES 0.000 0.00) 0.000 0.0W0 0.00) 0.000 0.000 0.000 0.000 0.000 0.000 0.900 A .___NET PAI D:IN EQUI TY _.. __.i. 0O.L..000.3& .33t.±5 .25tLZ.*2.4_232..38t3810&2&. 94 34 . 6L.S81. 840.983017. .a. : RETAINED EARNINS 0.000 0.000 -36. ;332-l05.751-170.623-232.388-291.166-326.849-354.449-381.497-406.817-430.707

TOTAL EWUITY . .. 0.000o.0oO.o 0.000 0.000. .000o_0.000o .o.ooo0.000-0.0.000 .- O.000...0.O00_-.0.o00

TOTAL LIABILITIES 122.400 338.621 344.499. 367.123 374.406 345.778 347.008 357.347 332.941 420.599 470.840 524.294

DEBT COVERAGERATIO N.A. N.A. N.A. 1.000 1.000 1.000 1.000 1.000 1.000 8.000 1.000 1.000 CURRENTRATIO N.A. 2.33) 7.937 1.424 1.000 1.000 1.000 1.000 1.000 8.*000 1.000 1.000 DEDTIEOUITY RATIO N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. IJ.A. N.A. N.A. N.A.

6-30-34 ..JEAN L. LOVER ATTACHMENTIII

[IA)HutS bAUIXITEIriCuJECT.CgASE 5 BALANCESlIEETU

* %'Al 3997 5998 39909 2000 .2005 2002 2003 .. 2004 2005..-2004... --- _ __ . ASSEFS OPiERAT IG CiASH 2.094 2.241 2.397 2.545 2.745 2.937 3.143 3.343 3. 598 0.000 S

RECEIVABLES 27.002 28.092 30.915 33.079 35.395 37.872 40.823 43.360 44.395 40.643 , * INVENTORY 3~~~~~2.54413.444 54.505- 35.592. 16.469.-17.422-.8.855-20.I75--.21.568-.0.000-.-- EXCESS CASHI 252.385 222.963 233.432 246.047 260.133 276.242 295.97. 325.240 361.244 3fl.475 CURRENT ASSET$ . 2!54.045.267.540281.122.227.083.314.2AL-.33I.672 35.V-2.l7A3.2-4.1-

PLANIT& EOUIPtIENT 541.604 573.103 606.007 642.871 681.459 122.748 766.928 814.200 864.781 918.903 . *-LESS DEP'RECRATION . ..-. z244.*320-259. 590r274.860!:290. 130-.305. 400.3O5. 40r305. 400=305.AuC.3lO5,.400=-305.400..-.-..-- OTHEfRASSET'S 55.915 55.915 55.915 55.955551 5 55.915 55.915 55.955 5 5.9.91 55.9135 LESS A?IOATIZDTION4 -55.915 -55.955 -55.915 -55.915 -55.915 -55.915 -55.9*5 -55.915 -55.935 -55.915 T~OTALFIXED'ASSETS1 297.20i4313.53 3.4 5.4136094730 6.2i0.0 559.381 633.503

TOTAL ASSETS .553 .329 585.053 633.076 641.824 690.800 752.021 *20.024.900.937.992.2051061.620.-.. LIABILITIES PAYABLES 6.282 4.722 7.392 7.496 8.235 8.058 9.428 10.088 10.794 0.000 SHOCRTTERN MDBT 60.317 64.442 61.727 70.262 73.725 77.853 76.369 78.961 88.411 80.BN a .-... L0N0t TEPIM ETC W . 196.376.207.210 212..125..232..78-249.009.-272.4299302.088433.4139-347.280.--.

CURRENTLIABILITIES 254.045 267.540 203.1329 207.Of3 334.741 334.672 358.496 392.1337 432.524 448.158 IN 14 8~~~~% *' LONG TERMrEBT.EXP.FIN. 0.000 0.000o. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LO TE,II1DEBTeCOhIERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONIRME DEBTiDEFICIT - . .--...-. -227.28t.313.513 335. 141-352.7Al-37&.o52.As7.si&i61.s27-soa..7ts52.aa80-sa1.fo2a SOCIAL RESERVES O.u00 0.000O 0.000 0.000 j. 000 0.000 0.000 0.000 0.000 0.000 D9IET.EA ID0: IN . VU!IT.- . - S. i80.A80. 580. 506. 555.-532. 216'5.JS223 571.*242L84.OS59.603. 08L4A22. 210.64.1- RETAINIEDEARNINGS -455.400-480.580-506.1550-532.24J-550.99o-571.242-536.059-603.082-622.210-643.73 6

TOTAL EOIUITY 0.000 . .0.000 .0.000 . 0.000 -.. ooo0.000 0.0 0.000 o.ooo-. .0.000 0.000

* TOTAL LIABILITIES 551~.?~9581.053 613.076 649.124 690.800 752.023 1320.024900.937 992.2053065.620 DEBT CODVERAGERATIO 2.000 8.000 1.000 1.000 3.000o 5.00 1.000. 1.0(l0 3.000 3.000 CURRENT RATIO 3.000 1.000 5.000 1.000 3.000 1.000 1.00 3f*.000 3.00') 3.000 DEBT/E'YITY RATIO i.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A.

.JEAlUL. LOWER ATTACHMENTIII

DIUlI IlS 8AIJXI YE fI.'OJECIt CA.E 5 CA;SI FIOUWS,RATESOF NFTRLWN& NET PRESENT VALUES. FUNDSIII MILLIONS OF DOLLARSAND IN 19084REAL TERMSOR INFLATED ICURRENT)TERNS.AS SPECIFIED.

CASIHFLOW IN REAL TERMIS CASHFLOW IN INFLATEDTERIlS AFTER TAXES BEFORETAXES ON EQUITY AFTERTAXES BEFORETAXES ON EQUITY -114.393 -114,393 0. 00*0 -- I22s4*- 0.0-- -17b.979 -170.979 0.00) -195.754 -195.754 0.000 -20.653 -20.653 -29.450 -25.30b -25.301 -36.332 ,'. -12.L26 ._..2..-...-.....a___52.9960 ______-" -7.390 -7.390 -46.396 -10.345 -80.345. -65.072 -7.391) -7.390 -41.0213 -11.091 -11.091 -61.564 -7.390 -7.390 .34.438 - -. - -11.4Z7--11.67-- -5.8 00e-- -. -7.390 -7.390 -20.755 -12.694 -12.693 -35.661 -7.,i9O -7.390 -15.132 -13.58i7 -13.587 -27.020 -7.390 =7.390 .-.. -- -. 13.43-.- -7.390 -7.390 -12.029 -15.556 -15.556 -25.320 -7.390 -7.390 -10.643 -16.645 -16.645 -23.970 ", -7.390 -7.390. --- 10.247------87.080 -87.68'- 24.692--- -7.390 -7.390 -9.734 -19.056 -19.056 -25.100 vp - . ' -7.390 -7.3V0 -9.26* -20.390 -20.390 -25. 571 I' .7.3_ .. -.- ... s7.390 _?...a0.39b _-__- _-3-832--_ -- 21 2.0" -- -7.390 -7.390 -8.449 -2).345 -23.345 -24.752 -7.390 -7.390 -3.623 -24.979 -24.979 -12.244 7.390-. . -s7.3*0....-.-..4-097------67- - 2 _78s4.01,--. -7.390 -7.390 -4.39* -2a.599 -26.59P -17.024 -7.390 -7.390 -4.619 -30.601 -30.601 -19.127 . ! _ ._.__. 9*15 ...... ___=3. *i5 - 5._ -2' L3L .3 - .5' .1 10.472 10.472 -129.416 49.643 49.643 -413.502 I 0 Cy%

REAL IRR AFTER TAXES I NO SOLUTION INFLATED IRR AFTER TAXES I NO SOLUTION .... . _ .. REAL IRR SEFOE. TAXES.1 -NO-SOLUTION INELATED-IAA-3FKRE-TAXES-IN-SOLUT1014- REAL IRR ON EQUITY I NO SOLUTION INFLATED IRR ONEQUITY I NO SOLUTION ;

REAL 1984 NPV AFTER TAXESe 0.000X . -437.731. -. --INFLATED 1984 IJPV.AFTER-TAYES8 -0.00O-a--8-47379------REMI.1984 NfV BEFORETAXES e 0.000x I -437.731 INFLATED1934 NPV BEFORETAXES i 0.000X A -647.379 REAL 15e4 NPV ON EOUITY 0 ('.000o I -474.487 INFLATED 1934 NPV CN EQUITY 0 ('.0002 -1257.21)

REAL 8904 1NPVPOFER TAXESI -t.OOOX * -560).027 INFLATED 1934 NPV AFTER TAXES0 -5.000K I REAL -982.605 189404NPV IEFCRE1AXES 0 -to.GOOX* -580.027 INFLATED 1904 NPV BEFORETAXES 0 -5.000K * -982.805 nEAL 19m4 IIPV ONEQUITY 0 -5.000' I -960.875 INFLATED 1934 NP' ON E6UITY. -5.000W I -3125.539 kFfll. 194 NFPVAFTER TAXESe-10.000K; -870.143 INFLATED 1984 NP?VAFTER TAXES0-80.000K I -8720.5-08 REAL 19S4 NIFPVDEIORE TAXESd-I10.40X a -070.143 INFLATED 1i34 NPV BEFORETAXES 4-10.000% a -1720.904 rsEAI. 1984 NPV'ON EbUITY 0-IO. OCk I *-2424.847 INFLATED 1%84NP? ON EQUITY 0-20.00OX a -9180.463

NOtIIm 1111.: '.I.VAjL VALUI: IN 2007 J1- ECaUALTO rIlL WORI;NO CAPITAL OlLY.

6-:%01-64 J11.AN IL. LOYI.UI ATTACIHMENTIII

BAI HItS DiuXI1E PflOJE1.MCAUE 6 PROFIr AND LOSS STAIEMEIT_

MILLIONS OF 1C4.LARS

YEAR 1985 199'- 1907 Iv8e 5909 - t990 1991- -1992---19P93 --- 994 -- 1995 199- SHIPrEN ri '..... TbTAL.. SUIIPIFINTS . .- - ...... O.OOb -- _0.0000.000 - - .440-1..0.- ,1.$40_1.440--I.4"O -I.60 - .44- I.-I.4.44I.-40---.

Itl:O*IE~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I -_TOTAL AEVENUES - - . 0.000 -0.000 42,824 91.4479 *.042-104.9271.271...120..30.-28.540-I32.531-d47..I&S-1b7.44Z---' COSTS..1 TOTAL C.&STS -0.0 .- 0.000 19.169 41.004--43.075 46.946--50.2E2-53.-749-57.5*1-461.536--65.944 -70.453--

OTtlER F IXED O 3STr ..-. FIKED F X CE .T . 000--. ,0000*..-. 9.497 ,--.161-10.873.- 11.634--32.4 4 8-133.*-S44 5 .2 6 .81S2-1 2. 459- "

. OPERATING PROFiT. . .. 0.00 _. .0.O000 14.360.-40.4.1S-43.315-.44.347-49.591 -53.063 - 56.777--60.752--65.004 -69., 4---- -

INTEREST EXFENSE 0.000 0,000 0.000 35.742 32.451 29.531 27.49S 24.946 23.793 21.02 19.359 16.S27 -. AMORTIZATIOT9. 0O0 DEPRECIATION 0.000 0.000 30.540 30.540 30.540 30.540 30.540 15.270 15.270 15.270 15.270 15.270

NET IZNCO?IEBEFORI TAlES -0- .... 0.000 - .0. 000.20. 714 ... 3.JQ..95.a.4..95.....*9..629-6..231.-I.7. L 3.39030.3757*657

TAXAeLE INCOME 0.000 0.000 0.00b 0.000 0.000 0.000 0.000 0.000 0.000 23.590 30.375 37.657 AI . i__ JAMES.XAKEI 0.000 0 .000 A°°. !. Jj a NET INGOiIE AFTER.-TAES . O.000._O.000 20.9&0a36.983.s30.St.24.fl7. .aP.42?-.25- 57.75-23.90--8.375-3?.57

CliMU-PLATIPJEINCO)ME A. T. 0.000 0.000 -20.940 -57.943 -88. e02-1113.759-133.388-127.137-109. 423 -5.0B33 -S5.458 -17.SI01

.JE;I LOVER ATTACHMENTIII

bsAlltil S. sALIXITg. PROAC1,CASE 6

PIr4F IT ANDt LOflS VTATEMENT

MIL.LIOS CF 1IOLL-ARS

YEAR 1997 . 3998 1999 -.2000.-._2O01._-.20O2-._24203-..-2O04-.-20O 05--..200-.-....-.-_------

'I SIlIPMENTS TOTAL SIIIPMENTS .-.- 60. 1....I.66O. ______

- .TOTAL REVENUES - .. .e.469 180.283-192.903-206.407-20.8S55236.3IL252.Z-270.55t28S.496-302.Z74- --.

Co)$TS ._TOTAL COSTS. 75.35 8.662 96.308_92.350._99. S14-105.731-113.132_210 129.525.338.59_._

OTIHER FIXED COSTS * E..E2.....2924*1...3._. _I___8...... 2t22...f223S...2..2.201-2M...... -22 2... ;

.. OPERATINO PROFIT. 74.423 79.633 S5.207--91.172..S7.54 104.313.111.689.119.50a.122.073a134.024 .

INTEREST EXPENSE 15.403 13.767 11.494 9.20) 4.333 2.644 .034 0.000 0.000 0.000 M'__._ORTIZATION...... -- O.000.0.000.. 0.000...O0O_.00DD_..0.OI.O0O eLn34Dn *. J- DEPRECIATION 15.270 15.270 15.270 15.270 15.270 0.000 0.000 0.000 0.000 0.000

S. _.NET..INCOtIE BEFORE TAKES _ _ 43.670 50.S94.-5.243-66.29t25.85L 01S 233 11.655-4JA.50t4127.373-13&S4..-

-; TAXABLE INCOME 43.670 50.594 50.243 66.499 75.951 101.734 111.455 119.50 127.073 136.824 j.j .;4 INcnnETAXes A. Sno n .n-so...... oAimn an-.o1wdull .

:_ _ _~~~~0s~._ .AO..i _f fl 0. 0. _0 0.000 ... 000 _0 ..00 _ _0 ...... 1 _ .-- .___...... :.3 j CLMA.ATIVE INWOME A.T. 25.e69 74.465 134.709 201.407 277.358 379.093 490.748 610.255 738.12a 874.952 -

1. 6-30-04 * JEAN L .LOYER ATTACHMENTIII

PA IIII1 I'AUXIliE PR(L.IECT.CASE6 .SOLRCEANII APFLICATIONOF FUJDS.3IILLIONS OF DOLLARS

YLAR I 233 1936 1937 19Y3 1A? . 1-R)0 1991 1992 1993 1994 1995 3994

S0&ICES nF FUINDS

NET INCOIf AFTER TAXES - 0.O0 0.000 -20.960 -34.983 -30.859 -24.957 -19.429 - 4 .251 - 17.714--23.590 30.375 37.657 - - AMORTIZATION 0.000 0.000 4.5a8 111.1:3 1131.3 3.5183 11.193 6.595 0.000 0.00 0.000 0.000 tDEPRECIATIoN 0.000 0).O0 30.540 30.540 30.540 30.540 30.540 15.270 15.270 35.270 15.270 15.270 IUITERESTEXPENSE . ------. 0.000 --- 0.000 - 0.000--45. 7 42--32.451- 2,58 3- -- 27.490*-24.9446 -23793 -213862---19. 359 -16..627- CAPITAL CONIRIBUTIONS 0.000 0.000 20.940 36.98) 30.859 24.956 19.629 0.000 0.000 0.000 0. 000 0.000 LONG TERtI LOAN.CXP.FIN. 64.440 103.510 *- 0.000 -O0.00-.-0.000-.0. 000--0.000--O0.000 -- 0.000 *- 0.000-0. 000 -0.000. LCONGTERI1 LOAN.CLSMnEACIAL 57.940 104.418 32.977 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LONO TERh LOANICEFICIT 0.000 0.000 0.000 0.000 5.435 24.741 33.394 49.653 89.012 110.014 124.993 105.030 SNORTTERN LOANS .0.O00-.-.0.000 ..- 0 0.4000 ,j .000-2- 0 - - TOTAL SOURCES 122.400 207.920 60.104 77.465 87.445 102.S59 107.415 122.914 145.769 170.760 l69.999 195.433 APPLICATIONSOF FUNDS PLANr& EOUIPIENT .----.- 117.200 168.200. - 0.000--0.004---0.0004--.0-004-.-0.000 -0.000-0.000-0.000-0.0 *--0.000-----. PREOPERATINWEXPENSES 5.200 5.544 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.DURINO CONSTRUCTION 0.000 12.175 32.977 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 WORKINO CAPITAL -- 0.000 -.3.90 1.32.975 -12. --.. 923---2.057 ---2.203-2.-3S3---2Ž0-R-2.886----3.088 CAPITAL IMPROVEEIMTS 0.000 0.000 14.965 16.013 17.124 10.333 19.614 20.9B9 22.459 24.031 25.713 27.513

INTEREST.EXP.FII._. .. __ 0.000 _...... 000...5..1 714._ S._L3442-L1.55*S.468._-Z75.8_3.999Z__7a000--_ ._2.109._.--'. INTEREST,COPMERCIAL 0.000 0.000 0.000 21.4a7 20.144 17.458 14.772 12.086 9.400 6.715 4.029 1.343 INTEREST.DEFICIT 0.000 0.000 0.000 0.000 0.000 .596 3.170 6.414 11.532 14.610 21.364 25.274 SHORTTERM INTEREST _ . . 0.000 .0.000 -- 0.000-.".. -2.447L.. 23---2..002.-,3.222-4.917--7 .321 -10.035--12.09s - AMORTIZATION.EXP.FIN. 0.000 0.000 0.000 0.000 8.018 20.99h 20.996 20.996 20.996 20."96 20.996 20.994 SHORTIZATION,COMISERCIAL n 0.006o 0.000.-O.O o0-- .0O06-n41. -44.41---24 43-.4.4 41X-24.41-Z-24.A1Z.-24417244i I AMIORTIZATIONeDEFICIT 0.000 0.000 0.000 0.000 0.000 0.000 2.718 35.068 31.567 54.124 79.432 99.514 i. SHfORTERN AMOrITIZATION 0.000 0.000 0.000 0.000 0.000 0.000 33.,81 2.969 0.000 0.000 0.000 0.000 a% DIVIDEND PAVYIENT -.* 0.000--. 0.000 -- 0.°°°--0-000- ---. o.ooo---.ooo--,ooo-O-o o-o.o.-ooo-* TOTAL APPLICATIONS 122.400 207.928 60.917 44.25* 83.932 95.384 109.327 111.741 125.753 148.156 172.603 192.155 1.; NET CASHFLOW.YEAR 0.000 0.000 7.186 13.207 3.663 7.476 -1.712 11.153 20.036 22.632 17.139 3.279 CASHFLC4I & DIVID..YEAR 0.000 0.000 7.188 13.207 3.663 7.474 -1.712 31.I55 20.036 22.612 17.196 3.279

CLJ3'IIJL.NET CAS11FLOW 0.000 0.000 7.38S 0i.395 24.05'? 3l.533 29.833 40.94 4.03'2 83.4124 300.8020104.08 uLtIL. SHORTYERNt DEBT 0.000 0.000 0.000 0.000 8.035 14.651 2.949 0.000 0.000 0.000 0.000 20.649 CL'1LATIVE DIVIDENDS 0.000 0.000 0.000 ... 0.00o...0.00... .0.000..0.o00..)....000-.0.000-.-0.000...... 0.000

6-30-84 ... .JtAN1.,ILbVER :7

ATTACIMENTIII

1'Alitili; DAL'XITE FhcO.'EcT.CASE6 .StrC4E AND AFPLICATIO (OFFUNDS.IIILLIONS OF OLLARS YEAlt 1997 199S 3999 2000 2001 2002 20'3 2004 2005 2006 SCRCES OF FUNDS * NET IN0UIE AFTER TAXES 43.470 .50.594 5B.243 64.699. 75.951 101.734 *18.455 119.5$0 127.S73 136.924-. - *AHORTIZATION 0.000 0.000 0.000 0.000 0.00) 0.000 0.00 0.000 0.000 0.000 DEPRECIATION 15.270 15.270 15.270 15.270 15.270 0.000 0.000 0.000 0.000 0.000 * .... INTEREST EXPENSE 13.76Z ._13.493 F48-11.694 9.20- 1.3- 2 o.ooo..4 .oa oo- CAPITAL CCINTDUTITONS 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 LON) TERSILOAN.EXP.FIN. 0.000 0.000 _0 aoo_ 0O.ooa _o.o oo_.oooo.ao.0ooo.oo.--* - LONGTERil1 LOAN.COHrERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000R) 0.000 LONO)TERNI LOAN.DEFICIT 65.511 60.904 33.398 1.246 0.000 0.000 0.000 0.000 0.000 0.000 It, - UHORT TERM LOANS . 0.000_O0.000-0.000-1.23t 0.000-0.000_0.000.. 0.00--0.000-0.000 - TOTAL SOURCES 159.934 140.537 118.606 93.657 97.S54 104.3S3 111.689 119.508 127.873 336.824 1.: g APPLICATICNSOF FUND:

.fLANT t EAUlPr.ENT .. 000 0.000.D 0.000.0.0000 .0 0.C 0.000.A'a0O.w2.O00. S.0O0 -- 0.-00. - - PREOPERATINOEXPENSES 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INT.DURINO CONSTRUCTION 0.00 0 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .IORKINGCAPITUAL . . 3.304 3.535 37082.._ 4.04Z.d-4.330.-.4.634._ 4.256a..D.305....3.676 -9.325 -. CAPITAL IMPROVEMENTS 29.439 31.499 33.704 36.064 39.5a9 41.289 44.130 47.272 50.581 54.122

.-INTEREST.EXP.FIH.. - SSt0.OO_ 0. o0.oaa..a.noao.oo,OA ooa.ooo0.000o_..... INTEREST,COMMERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 INTEREST.DEFICIT 24.781 21.509 16.642 11.050 4.567 1.021 .034 0.000 0.000 0.000 SHORT TERM INTEREST -9.990- 7.742-m4,940 -=l.347-L 765 - .27-0.000- .0,0 .000--., -0 AMORTIZATION.EXP.FI';. 12.939 0.000 0.000 0.000 0.000 0.000 0.040 0.000 0.00( 0.000 1 FaBORtlZATION.C0D'aRCIAL..O.kOQ..O. ._O oo. X. 00...00-O.hO0.400-0a..0 ow .).O,000-0._0,- '-. AMORTIZAT1011-,tEFICIT 117.506 85.013 95.271 73.207 47.151 17.322 .623 0.000 0.000 0.000 oD - SHORT TERM AM0RTIZATION 1.367 1.493 4.514 0.000 1.351 13.560 0.000 0.000 0.000 0.000 ' DIVIDENID PAYIWNT 0.-0 0.0- 0000- 0.000 . OrZ0400-_24-R29-.61S*.693-61 3-71.416 t2.02S-- I

TOTAL APPLICATIO4S 190.037 145.307 140.947 122.521 97.554 104.383 111.499 119.500 127.b73 134.924

NET CASI FLOW.YEAR -20.102 -24.770 -30.362 -20.644 0.000 0.000 0.000 0.000 0.000 0.000 "I CASH FLOW & DIVID.,YEAR -20.102 -24.770 -30.362 -28.f94 0.000 24.929 63.695 66.931 71.616 92.026

CURIA.. NET CASII FLOW 63.996 59.224 26.864 0.000 0.000 0.000 0.000 0.000 0.000 0.000 CtUltL.ShORT TERn DEBT 19.482 17.909 13.473 14.712 13.540 0.000 0.000 0.000 0.000 0.000 * CU?mLATIVE DIVIDENDS 0.000 0.000 0.000 . 0.000- 0.000_24.92i. 96.024..153r754-225.370-17.38._.....-

4-30-84 .JEAN L.LOYER ATTACIDIENTIII

sA llstlS inUXIrE I'F.:2E:r.CASE 6

BA.AN1.MESIIEEl

MILLLIO(S Cf ((I'LIARS

YEAk 1985 199 13987 I98s 9P09 -199V 19PI- --- 1992 *--1993- ---1994 1995 1996----, ASSET;

OPERATING CASH 0.000 .497 1.044 1.139 1.219 1.304 1.395 1.493 1.598 1.709 18.29 3.957 RECEIVABLES 0.000 0.000 10.706 22.912 24.515 24.232 23.068 30.033 32.135 34.384 34.791 39.367 INVENTORY 0.000 2.965 6.307 6.034---7.312-- 7.824 ---8.372- 8..950- -9 563S-I0.256 .74 11. CASIH 10 - 742 - -- EXCESS 0.000 0.000 7.188 20.395 24.058 31.533 29.d21 40.976 63.032 83.624 100.020 104.090 CUkRENTASSETS. - ... . 0.000 _-.482 25.346. 51.280.-57.105-466.823 - 67.65.;_-81.4L0-104.32t.L2S73.150.414-157.164----' PLANT & EQUIPMENT 117.200 305.400 320.365 336.378 353.511 371.844 391.461 412.450 434.909 458.939 484.652 512.165 LFSS LEPRECIATION - 0.000 0.000 -30.540 -61.080 -91.620-122.160-152.700-167.970-183.240-198.510-283.780-22t0.0 - - -5 OTIIER ASSETS 5.200 22.939 55.915 55.910 55.915 55.915 55.915 55.915 55.915 55.915 55.915 55.915 LESS AIIORTIZATION 0.000 0.000 -4.586 -15.771 -26.954 -38.137 -49.320 -55.915 -55.915 -55.915 -55.915 -55.915 TOTAL FIXED ASSETS 122.400 328.339 341.153 315.442 290.853 267.463 245.356 244.4SO 251.669 260.429 270.872 283.115

TOTAL ASSETS . -. 122.400 331.821 366.499 366.722 347.950 334.356*313.012 425.939 355.9908 390.403 421.286-440.279.-- -- LIABILITIES

PAYABLES 0.000 1.492 3.193 3.417 3.656 3.912 4.186 4.479 4.793 5.128 5.487 5.871 ShORT TERNl JEST 0.000 0.000 0.000 0.000 6.035 14.851 2.969 0.000 0.000 0.000 0.000 20.649 - LONG TERM DEBT.CURRENT- 0. --.0.000 .0.000-.32.474.-45.413-. [email protected] -124S84S-144.922-130.444---, 1 OCURRENTLIA9ILITIES 0.000 1.492 3.193 35.091 57.105 66.893 67.656 81.460 304.329 129.973 15).414 157.164 -4 LOIJO TERNDEEIT.EXP.F3N. 64.460 867.970 167.970 159.913 138.916 117.920 96.924 75M92 54.931 33.935 12.939 0.000 ,a LO TERN DEDT.CQNNERCZAL 57.940 162.35 195.335 170.918 846.501 I22.094 97.467 73.251 48.834 24.417 0.000 0.000 'I LONGTEAN DEDT*DEFICIT- - - - 0.000 0.000.0.000---5.435-2,4SD -- 50.764--S9.05-I23,93g-354.522-sSO.003.56$ -* SIOIAL RESERVES 0.400 0.000 0.000 0.000 0.000 0.000 0.0cc 0.000 0.000 0.000 0.000 0.000 *; ---NET PAIDrIN EOUlTY -. . .. 0i00 _. 0.000 20..- 960 -- 4..9.4.8-.r . i02-113.3 33.3 33.1 1333.3Efiaa ...... 3.. - ': RETAINEDEARNIl;S 0.000 0.000 -20. 940 -57.943 -&a.802-113.759-133.388-127.137-109.423 -S5.833 -5S.458 -17.801 TOTAL EQUITY 0.000 Cl.OO00O0.000 0.000 *.0.000 0.o00 0.400 .. 6.252. .23.965.-47.555 - 7.9a0--8I5.I 7-..-. TOTAL LIABILITIES 122.400 331.821 344.499 366.722 347.flO 334.356 313.012 325.939 355.990 390.403 421.2S6 440.279 DEBT COVERACE RATiO N.A. N,.fl N.A. 1.663 1.000 I.000 I.0O 8.056 1.114 1.121 1.075 1.000 CURRENlTRATIO N.A. 2.333 7.937 1.429 1.000 1.000 1.000 8.000 5' 1.0003.000 t.000 1.000 DEBT/EQUITY RATIO N.A. N.A. N.4, N.A. N.A. N.A. N.A. 38.106 9.501 4.476 2.476 1.449

6- 3'.-44 JEAN L.LOYER ATTACIMENTIII

BAIIPIIS BAUXJITE FROJECT.CASE 6.

BALAICE AHEET MILLIOtS OF DLLARS,

YEAR 1997 1998 1999 2000 2001 2002 2003 2004 2003 2006------*-

ASjE TS

OPERATING CASH 2.094 2.241 2.397 2.545 2.745 2.937 3.143 3.363 3.598 0.000 RECEIVABLES 42.122 45.071 48.224 51.402 55.214 59.079 63.234 67.639 72.374 77.440 INVENTORY . . . . 12.564 .13.444 ..14.38S.- 15.392.. 1&.4&9_.17.622 _.19.55_20.175.-21.50 40.000 EXCES1 CASH 83.996 59.224 28.664 0.000 0.000 0.00o0 0.000 0.000 0. 00 0.000

CURRENT ASSETS I .14O.776-...A 112.-S 23.872 4s.s55e-24.128.-.79.4-5.2120-914IZ-9L.559-.77.440-.4. .40-

PLANr & EOIJIPIENT 541.404 573.103 404.907 442.971 698.459 722.748 764.928 814.200 844.701 910.903 . e -LESS DEPRECIATION _ ,244.320-259.590'274.860-290.130-305.400-305.400-305.400-303.400-305.40)0-305.400 ------OTHER ASSETS 55.985 55.915 55.915 55.915 55.915 55.915 55.985 65.915 56.985 55.985 LESS AMORTIZATION -55.915 -55.985 -55.915 -55.915 -55.915 -55.915 -55.915 -5.9185 -55.985 -55.985

TOTAL FIXED ASSETS 297.234 313.513 331.947 352.741 376.059 487.348 468.526 50s.800 559.301 613.503

! TOTAL ASSETS ..... 430.040 433.494 425.B20.422.2i9.A50.487. 4.98s.546.740 5s.977-4L54.940 490.943 - .

LIABILITIES

- PAYABLES 4.282 4.722 7.192 7.694 8.235 9.888 9.42B 80.08s 10.794 0.000 SHORT TERM DEBT 19.482 87.909 13.473 14.712 13.560 0.000 0.000 0.000 0.000 u.000 .. *LONO TERM DEBT. CURRENT._ _ 115.01 95.271.23.207 _47_ _5_1k7.32 .6230-.000..o000_ ..0.00-_0.00.00.00

ClJRRENT LIADILITIES 140.774 I89.901 93.972 69.55s 31.117 9.434 9.428 10.0fl 10.794 0.000 |

LONO TERH DEBTTEXP.FIN. 0.000 0.000 0.000 0.000 0.000 0.000 0.00-0 0.000 0.000 0.000 LO TERM DEBT.COhMERCIAL 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 .' LONO TESM DEBT*DEEICIT - _ 13S.024.103.45t _3.850 _12.245. .423_.000 -0.000-0.00 0.000-o0.000o-0.000-~. a'

SOCIAL RESERVES 0.000 0.000 0.000 0.000 0.000 0.000. 0.000 0.000 0o000 0.000 ...- NET. PAI D-IN ECLUITY __ 33_30AL. 3S8133..3fl.1a3fl1336tJ23..33a33 a8d_fa3 3333 3SL33.flt.- fRETAINED EARNINGS 25.849 76.445 134.709 201;407 277.35 354.163 403.924 454.501 512.75B 557.554

TOTAL ECiUITY .. 132.237 iO.854.268.027..334.794.410.747.AB7.552 537.312 592.88 446.147 690.943 .. .

TOTAL LIADILITIZS 430.060 433.494 425.B20 422.299 450.487 496.904 546.740 599.977 656.940 690.943 DEB C.EO RATIO -...... -. .. -. _.._... -. ...-.-.. .. _...__---..-..-.- _ ...... _ ...... -. ,_,_.__. DEBT BNWERtAOESRATIO 1.000 1.000 1.000 1.062 1.824 5.227 N.A. N.A. N.A. N.A. CURRENT RATI') 1.000 3.000 1.000 1.000 1.903 8.442 9.039 9.039 ,9.039 N.A. DEIT/ECUITY RATIO .S67 .494 .230 .054 .002 0.000 0.000 0.000 0.000 0.000

.AtEI L.LOVEk ATTAhIMENT III

L¢A 30eIS3 1610iXit:PROIEC T.CASE 4

CASHI ILflIl.RAIES OF fiEflriI se NE& PfiiSENTr VA;lJNi.

FL.H'S IN IIILLI..IJL OF DiLLARS ANtD IN 19S4 REAL TERSI OR INFLATED ICURREIIT) TERIt&.AS SPECIFIED.

CASH FLOW IN REAL lEfi; COASIIFLOW Il INFI.ATED TERM '

AFTER TAIES PEFOfRE TAXES ON ElOUITY AFTER TAXES BEFORE TAXES ON EQOIJTY

-2*4.;w3 -114.393 63.-000- * -- 122.400------132.400------0.000- - -J 7t0. 97i -3 70. 979 0.000 -965.f74 -195.754 0.000 -t1.24; -11.242 -17.129 -I .772 -13.772 -20.960 '*. * 9.I2s … S*. 9.- -- - -2..21945 S. -- ---. 17.2?4 17.f64 -22.002 24.25? 24.259 -30.859 17.296 1 7. 296 -16.630 25.957 25. f7 -24.956 17.29 - 174.26 -12.224 * __._---_..-_7727.774-- 27.774 -9.629.1--- I 7. 2f4 127.:96 0. C00 29.710 29..731 0.000 17.29C6 17. 296 0.000 31. 78 31.793 0.00: .I7. 1c.... 2.2l. -.. 0_000.- -34.024-----.- 0.000 - 17.296 17.29S6 0.000 36.406 36.404 0.000 17.296 17.296 0.000 28. 954 3S.954 0.000 * * . 17.204 . 17.2 - 0.04)0 -1 .- 42.*1- 4.000 ------17.296 17. 2)6 0.000 44.599 44.599 0.000 17.29S 17.'296 0.1300) 47.721 47.721 0.000 F .___ 7....2942.6.-4 - __ )1 ---- -t -- -* --- .041- - - 5.041 - - 4.008 -- 17.296 17.2 % 0.000 54.635 54.635 0.000 17.294 17.294 7.374 5a.460 58.440 24.929 - ... _.. 17.296 - _---1R.294...-- - - *7,21I14..---. --- 62.352- 42.6i52------61.89:S - -:; 17.296 17.296 17.244 64.931 44.931 M.931 j,I 17.296 17. 2 17.296 71.616 71.416 71.614 Ij 16.336 14.a36 16.334 77.440 77.440 77.440

REAL IRM AFTEk TAXES I 1.155 X INFLATED IRR AFTER TAXES A 9.236 X -___.___.. . REAL. IkR BEEEtAOS..TEL...... 2155 -- INFLAUE-nt 3 EFOlE-TAXE3-_8.23z..X_ REAL IRA ON EWITY I .0I 2 INFLATED IRA ON EWUITY a 7.001 Xn

REAL 1984 NPV AFTER TAXES 6 0.0002 a 43.657 -- INFLATED- 1234 NFV AFTER-.. TAES 6 - 0.0002-I - - 597.453 - REAL 1904 tNV BEFORE TAXES 0 0.0002 I 43.437 .INFLATED 1l4 HPV BEFORE TAXES 0 0.000 t 597.653 REAL 1984 Nev wAl EOLI'TY a 0.0AOX a .0110 INIFLATED *4i34 NPV ON EQUITY a 0.0001 a 261.450

REAL 1984 NPV AFTER TAXES a 5. 0 OX I 9.3; 35 IWLATED 1984 NMV AFTER TAKES 6 5.0002 a 137.875 REAL 1934 NfV DEFORE TAXES O 5. 000. * -72.365 INFLATED 1584 NPV BEFORETAXES A 5.0002 I 137.675 REAL 1984 NFV ON FAUITY a 5.O002 I -41.344 IWFLATED 1fl4 NFV ON E1'flY a S.0002 I 37. 172

RlIAL. 29M4 H;V AFPR TAXES Z 20. OOa'X a -14:3. 371 INFlAFTED 1934 NfV AFTER TAXES I IO.OOOX a -48. I2ss REAL I9::4 NtFV rlEFCUE TAXES 0 1o.0002 a -148.371 INFLATED 184 Hf-V EBEFORETAXES A *0.0002 a -46. 135 REAI. 1984 ?MPVON EDUITY 0 IO.OOOX a -48.,)) INFLATED 1934 WV ON EQUITY a I0.000 a -30.145

IIILI l11E SALVAOE VALtE IIN 2007 ME r4UAL TU IlSA *14.11,16 EAFITAL CtL.

4-30-84 .1EAN I .LOVEfk - 174-

II. AGRICULTURE

A. ECONOMICPERFORMANCE

2.01 During the past decade the Suriname economy grew in real terms at around 3.2% p.a. Growth in the agricultural sector was positive at 4.6Z p.a., and its share in GDP increased from 8.3Z to 9.5Z. Meanwhile it has taken on an increasing role in the economy with its share of merchandise exports increasing from 13.9% in 1963 to 18% in 1983.

2.02 The mining sector has always been the major contributor to Suriname's export trade, and although agriculture's share remains small there is an increasing trend which present policy aims to reinforce. The sector's share in total exports increased from 7.1% in 1973 to 10.4% in 1983.

Exports

2.03 Agricultural exports by crop, and export projections to 1995 are shown in Tables 1 and 2 respectively. A number of crops once exported by Suriname have now disappeared from the list of exports, due to declining production. Prior to 1970 exports of sugar to the EEC were around 8,000 tons annually. This amount gradually fell, until 1981, when exports came to a complete stop. The sugar industry has been plagued by high labor costs, artificially low product prices, and the inefficient operation of an old mill. Citrus exports fell from 5,349 tons in 1975 to 902 tons in 1983 due to disease problems and, to a lesser extent, limited transport (cold storage) facilities and poor producer prices. Production of coffee and cocoa also suffered from disease problems.

2.04 Suriaame's agricultural export trade is based on relatively few items: rice, bananas, shrimps, and forestry products. Exports of rice, in which Suriname appears to have a comparative advantage, increased dramatically over the past decade. In 1973 export volume was 44,500 tons, compared to 127,400 tons in 1983. Area under production increased by 50% during the period, and production increased by more than 80 X. Exports are projected (Mission Projections see Table 12) to increase to 209,000 tons in 1990, and further to 290,000 tons in 1995 when 24,000 additional hectares are expected to be planted.

2.05 The volume of shrimp exports has remained almost constant at about 3,500 tons since 1973, and no significant changes in this trend are likely to occur in the near future. Exports are to the United States and Japan. Current developments in the industry are uncertain, and export volumes are likely to remain unchanged.

2.06 In the late 1960s, the forestry sector began to lose its place in the Suriname economy, when both production and exports began to decline. Since 1970 forestry exports have remained below 2% of total exports compared to an estimated 9% in the mid-1960s. Recovery of the sector is likely to be slow. The industry faces major handicaps, in particular the low proportion of usable wood and the high labor costs. - 175 -

2.07 From the standpoint of exports, long run policies must aim at making Suriname's agricultural products more competitive on the world markets. Costs need to be reduced. Aggressive marketing efforts are necessary, which over the long-term are probably best obtained by Government support for private exporters. Increased attention must be paid to quality and reliability of supplies.

Imports

2.08 A comparison of imports for agricultural production and food items, relative to agricultural exports have been made in an earlier World Bank report. The conclusions were that between 1970 and 1979, the agricultural trade balance remained unfavorable, but moved in the country's favor in 1980, and that the trend was likely to continue given the current projected growth in rice exports. Data available for 1981 and 1982 (although somewhat incomplete) suggest that the trend has remained favorable, and based on further projections of increases in rice production and exports, the long-term prospects for a favorable agricultural trade balance seem well-founded.

2.09 One objective of the Government's agricultural policy is to strengthen the position of the major export crops. It is clear, however, that the objective in the short run, is also to reduce agricultural imports in order to ease the critical foreign exchange position. If this can be achieved, the possibility of a favorable agricultural trade balance becomes greater.

Employment

2.10 Table 3 gives employment figures which were provided by the Ministry of Finance and the Plan Bureau. These figures do not include migrant labor, who are important in the production of rice, oil palm, and bananas; therefore the employment picture is at best incomplete. However, the trend indicated by the figures is one of a gradual decline in agricultural employment between 1973 and 1983 with a dramatic fall after 1979. Migration to Holland has been given as one reason for the latter development, and the high cost of agricultural labor as another.

2.11 Discussions in the field confirmed that a large portion of those recorded as being employed in agriculture are in fact only engaged part-time in agriculture and also work elsewhere in the economy. Government's efforts to increase full-time employment in agriculture by increasing farm size is expected to have some positive impact on productivity, but given the capital intensive nature of rice production, the number of incremental jobs created is not likely to increase dramatically. Estimates available indicate that, with the full completion of all the identified agricultural projects being considered for Government funding, about 5,400 full-time jobs are likely to become available, with the prospects of an additional 5,000 man years of temporary employment. But it will probably take about 10 years to fully complete all these projects. - 176 -

Investments

2.12 The public sector is heavily involved in agricultural production. Information on development expenditures shows the amount spent on agriculture averaging about Sf 32 million per annum between 1979 and 1983, with agriculture's share of the total increasing from 20% to 45% during this period. Current plans indicate that this level of public investment will be maintained for some time.

B. MAJOR AGRICULTURAL ACTIVITIES

2.13 Suriname has an estimated 52,000 ha under cultivation, approximately 8,800 ha under permanent crops and about 1800 ha of improved grasslands. The distribution of land by crop is shown in Table 1. rroductlon and value data for the major crops are shown in Table 2 and Table 4 respectively.

Rice

2.14 Food crop operations are dominated by rice which occupies about 50 Z of cultivated land, and almost 85% of the total cropped area. Rice Is produced mainly In the western region of the coastal plains where soil and climatic conditions are ideally suited for this activity. It is the most important export crop; its production is dominated by large public and private farms. Production is highly mechanized with many operations done by air.

2.15 The area devoted to rice production Increased by approximately 15% between 1970 and 1977, and by a much higher amount of 44% between 1977 and 1983. The more dramatic yield increases occurred before 1970 when new varieties were introduced. Since that time average yields have tended to remain steady at around 4.0 tons per ha, although the better managed farms in Nickerie District have yields exceeding five tons per ha, and now farms in Coronie are achieving as much as seven tons per ha in newly poldered land. Yields on many private farms are higher than those being experienced on the government-owned SML-Wageningen, the largest rice farm on which most of the country's rice research is now being carried out. Yields on small farms In the Nickerie District are expected to increase when the Corantijn Canal is completed and water becomes more reliable.

2.16 Although rice production increased over 80% between 1973 and 1982, input costs rose much faster than the real value of output over that period. Government's current plans include the development of the Multi-Purpose Corantijn (MCP) project which Involves, initially, 6,400 ha of new rice polders; some rehabilitation of polders in Nickerie District which will be made possible by completion of the Corantijn Canal; and development of the LOC project (partly rice) in the Eastern Area. The area which will be actually developed and the speed with which this will be done will depend on Government finances, and on the resources which the Agricultural Bank will have available for on-farm development should Government decide to leave this activity to individuals. These projects seem to offer good possibilities for incr sed rice production. Areas which are now suffering from water shortages during the dry season and have low cropping intensities would be guaranteed a reliable source of water. - 177 -

Banana

2.17 Banana is the second most important crop to Suriname's export trade. Cultivation of this crop began around the early part of this century; these early years were full of failures mainly because of disease problems and inadequate research. Most of the early research was carried out on the Prince Bernhard Polder in the Nickerie District by a special unit in the Ministry of Agriculture.

2.18 Commercial banana production began In 1958 when Government planted a 80 ha farm and small farm production began to Increase. The conditions under which Suriname's bananas are grown are the least favorable of all banana producers In the Latin American and Caribbean region. Heavy clay soils and two marked dry seasons each year are unfavorable conditions for the production of this crop; the bananas are Irrigated. Problems Include leat mold, which is controlled by spraying, and nematodes, which are eradicated by a six-month wet fallow every seven years.

2.19 Banana production, unlike rice, is highly labor intensive. Labor requirement is one man for 2 ha, compared with the low requirement of 1 man for 30 ha for rice.

2.20 Suriname Agricultural Industries (SURLAND), the maior producer employs 800 permanent unskilled workers and about 450 casual workers for harvesting on Its two estates of 1600 ha. Roughly 20% of these employees are migrant workers from Guyana and Haiti. Labor costs are a high proportion of productLon costs - 62% in 1982 and 65% in 1983 (see Table 7).

2.21 Banana production increased by 19% between 197U and 1976 and declined between 1977 and 1979 due to low levels of replanting In earlier years. Production picked up again in 1980 and has remained steady except for 1983 when heavy rains caused some losses to the industry. Yields are consistently high, but more so in the Nickerie District than in the Saramacca District, where drought conditions tend to be more severe. Although the Nickerie area is more suitable for banana production, expansion in this area is limited because of transport constraints: entry to the Nickerie Harbor is limited to small boats with limited capacity. Because of this constraint any future expansion will have to take place in both districts rather than in Nickerie which has the greater agro-climatic comparative advantage.

2.22 SURLAND has a contract with United Brands (Fyffes Bananas) at guaranteed minimum price for all its exportable crop, and recetves a premium price for the higher quality produce. The high quality of Suriname's bananas places it in a favorable position in the United Kingdom vis-a-vis those from the Caribbean. A small amount of Suriname' s bananas also enter the Italian market. - 178 -

2.23 It is important for Suriname to maintain its share of the banana export market, therefore supplies r:st be reliable. Exports have fluctuated between 30,000 and 38,000 tons, because of unfavorable weather conditions, and the necessity to take certain areas out of production each year for nematode control. SURLANDplans to bring an incremental 400 ha into production, 100 ha in the district of Nickerie and 300 ha in the district of Saramacca. SURLAND also plans to improve fruit protection which is often neglected during harvesting, due to labor costs. Currently rejection rates are 15% and 5% respectively in Paramaribo and Suriname Districts; improvements in fruit protection is expected to reduce these rates below 52. Both proposals are expected to reduce the fluctuations in exports, a situation which is highly desirable given t'.ebleak outlook for the prices of bananas on the world market. Banana prices are expected to decline as production is returned to normal in the major producing countries where production was affected by adverse weather conditions, and as expansion programs are underway in other Caribbean countries which export to the United Kingdom.

Sugar

2.24 Prior to 1970 Suriname was a net sugar exporter when its duty free EEC quota was 8,000 tons. Following this period, exports steadily declined, and since 1981 no official exports have taken place. Data available show that this development was not accompanied by any major changes in either area planted, area harvested, or yields. The most significant trend has been a loss in the milling ratio.

2.25 Factory operations are well below desirable levels, due to the state of the mills and boilers. In addition to the age and disrepair of the mills, some parts are becoming unsafe for continued operations. One of the reasons those have not been replaced or rehabilitated is the inadequate financial resources of the Marienberg Sugar Company which has consistently been faced with artificially low prices and high wage bills and low production per ha. The Company operates with a deficit which is carried by Government.

2.26 The serious situation of the Company is recognized by Governmnt and three alternatives are being considered. One, complete rehabilitation; two, partial rehabilitation; and, three, a complete phase out of sugar and introduction of rice into the area. The third alternative, although probably the most economic choice, does not appear popular due to the social implications of the closure of a Company which employs 1,500 workers..

Oil Palm

2.27 Commercial scale oil palm production began in Suriname ia 1970; it was started by the Victoria Company on a 1,60n ha estate in the Brokopondo area. Between 1978 and 1979 two further developments took place: Government, through the Victoria Company, established 30 ten ha plots as a smallholder settlement scheme at Brokopondo; and a second estate (now fully planted at 872 ha), was established at Phedra. More recently (in 1982) planting began on a third large estate in Patamacca which currently has 2,848 ha under cultivation witt plans for an additional 2,152 ha which would bring the total area to 5,000 ha. - 179 -

2.28 The full area at Victoria and Brokopondo and 872 ha at Phedra are now producing fruits. Yields at Victoria peaked at 15.4 tons fresh fruit bunches (f.f.b.) per ha in 1979 and has since fluctuated between 12.7 and 14.2 tons per ha. On the smallholder farms and at )hedra yields are close to 10 tons per ha in the fourth production year. This suggests a promising expectation of about 18 tons in the peak 8th or 9th year. Yields at Patamacca are expected to be even higher than those in the Brokopondo area and projections are somewhere between 18 to 20 toLs per ha, which may be optimistic.

2.29 The f.f.b. from Phedra and the Brokopondo smallholders are sold to Victoria for processing. Current prices are, Sf 135 per ton for top quality bunches, Sf 101.25 for second quality, and Sf 67.50 for the lowest quality bunches. Sorting is done at farmgate. In 1983 the Victoria plant processed about 31,000 tons of f.f.b., yielding some 6,600 tons of crude oil. Production of f.f.b. is projected to peak at around 53,000 tons in 1909 when crude oil production would be about 10,500 tons. With the exception of a small quantity of exports, all the crude oil is refined for the domestic market. Some of the by-products are exported and the remainder used in local iadustries.

2.30 The Patamacca processing plant has not yet been installed, but all the other necessary infrastructure is in place for field and plant operations up to 2,848 ha. Since Patamacca is not yet operational, it is possible to make only a speculative assessment of its contribution to the oil palm industry. Yields at Patamacca are expected to be higher than those at Victoria, Phedra and Brokopondo. Plans are that Patamacca will adopt the practices of the Victoria Company, which operates very efficiently and is constantly introducing cost saving technology. Only if yield projections materialize and plant operations are extzemely efficient, can Patamacce be marginally profitable. Patamacca's operations will be extremely sensitive to labor costs, which may be quite high; the wages needed to attract labor to this loaction may be higher than the operations can support.

Citrus

2.31 The citrus industry in Suriname covered an area of about 2000 ha in 1975 and produced some 18,uOO tons of oranges and grapefruits. In 1983 this area stood at 1800 ha and production at 11,000 tons. The decline in the industry can be attributed to disease problems and to some extent, soil deficiencies. Although a considerable amount of research has been done to identify disease resistant varieties which can be produced in Suriname, results have not been successful, and yields continue to fall.

2.32 Citrus is produced mainly in Commewijne on one large Government owned plantation, and several private farms. Government farms are also located near Paramaribo and at Baboenhol. Of the total quantity produced in 1975, about 5000 tons were exported, although this volume has now declined to about 903 tons in 1983. - 180 -

2.33 Traditionally, the export market has been the major market for citrus. TROPICA, a state-owned processing company, buys fruits for juicing. Farmgate prices in real terms have remained almost constant since 1978. Among the factors which have dampened incentives in this industry are disease problems, transportation problems due to the discontinuation of regular services of freight ships with cold storage facilities and low producer prices. Research however, continues, and it is possible that if new varieties are found and transportatior.and export marketing problems are overcome, the industry can be revived to previous levels.

Livestock

2.34 Livestock production in Suriname consists of beef, pork, chicken, milk and eggs. The cattle populatior.has been increasing over recent years and has now re4ched a level of between 45,000 and 50,000 (although the data are probably unreliable). The increase was probably due to an increase in the milk price after a long period without a change. Milk production stands at about 7 to 8 million liters, and well over 50X of this milk is marketed unofficially. The Government owned and subsidized Central Dairy buys fresh milk from producers at 70 cents per liter and, after mixing with powdered imports, sells it at a subsidy to the consumer at 45 cents per liter. (The extent to which this is a consumer zather than a producer subsidy is not entirely clear without further analysis, since imported milk would come in at a lower price than the producer price.)

2.35 A quite successful livestock breeding program has been conducted at Baboenhol where about 1,000 ha of cleared land raise Zebu/Creole cross for sale as both breeding bulls and quality calves for fattening. A second ranch has been established at Tibiti. A major objective is to establish small family farm fattening units at Commewijne, the goal at both Baboenhol and Tibiti is to produce 80 calves per lOOha per year.

2.36 There *isno possibility for Suriname to profitably enter the export market on beef, labor costs and land cl.earingcosts are too high, but expanding production to pursue self-sufficiencyprobably makes sense. There is some import of salted and frozen meat and population is now rising. Whether fattening units at Commewijne will take off remains to be seen. A possible issue in the short-term may be the level of demand- if the current economic crisis becomes severe enough to affect incomes substantially, demand for beef may fall.

2.37 Both pork, chicken and egg production have expanded considerably over the last ten years. The Government is not involved except that pork and chicken prices, as with beef, are controlled. The quite rapid development of chicken production is one indicator of the extent to which private business can develop on its own initiative provided the incentives exist.

Shrimp

2.38 Shrimp production has fluctuated around 3,500 tr.ss annually with a real export value in 1983 of Sf 31 million (gross value less foreign exchange cost of leasing boats). - 181 -

2.39 The major problemwith shrimp fishingis that probablyabout 25% of the potentialcatch (sustainabilityof catch is not an issue since they have an annual cycle)is going to unlicensedoperators who illegallycross into Surinamefishing waters. New legislationis being draftedthat should prevent this and pull in at least a part of this lost catch for Suriname's benefit. Hopefullythis benefitwill be realizedat modest cost since once the new legislationis enactedand is seen to be implementedfirmly, unlicensedboats will probablynot take the risk. The 165 boats currently fishing are more than is needed to exploit the availablecatch but with reduced outsidecompetition they may be able to somewhatimprove the profitability.

2.40 Governmentis at presentnegotiating the purchaseof the major processingcompany, SAIL. While there is always the possibilityof a successfuland well managed state owned fishingoperation, World Bank lending experiencewith these typesof operationshas been almost 100% negative. Among them, even the operationthat is sometimesquoted as the best is not, in fact, makinga profit. It seems that fishingoperations, with their need for responsivemanagement and their difficult working conditionsin a particularlycompetitive environment, are unusually difficult for Governmentsto operate. Locationswhere privateoperators are in businessalongside state owned fishingoperations are particularly revealingin this respect. Thus there is a physicalpotential for an increaseof say 25% in shrimp catch, but a possibilitythat, unless state owned fishingcan performunusually well, the catch or the profitability will fall significantly.

C. PRICING POLICYAND MARKETING

2.41 Currentlythere are a number of policieswhich directlyor indirectlyaffect the growth of Suriname'sagricultural sector. These include pricing policies,and other direct and indirectinterventions in the sector throughgovernment investment in researchand extension,land development,irrigation and credit.

Pricing Policy

Direct Subsidies

2.42 Subsidiesare an importantpart of pricing policies. They ap2ly to improvedseeds, the fuel tax :ormechanical cultivation and post harvest operation,irrigation water chargesand credit. These subsidies have been a parc of the economy for a long time, and were initiatedto boost the earlier projects. Indicationsare that, with the exceptionof irrigationwater charges,the other subsidieswill continue.

2.43 SHL-Wageningen,the government-ownedrice farm, providesimproved seeds throughits multiplicationunit at a price 50% below production costs. It does not supply all farmerswith seeds. The larger commercial farmers produce enough seeds for their demands and market their surpluses to small farmers. The purchaseof improvedseeds seems not to be very sensitiveto the subsidyoffered by SML. - 182 -

2.44 Farmersowning cultivationand post harvestequipment and machinery,and contractorsproviding these servicesare exempt from the general fuel tax. The tax is paid at the time of purchase,and refundsare made when proof of purchaseis presentedto governmentauthorities. The cost of this subsidyis currentlyestimated at Sf 2.0 million,but indicationsare that not all eligible beneficiariesclaim these rebates.

2.45 Subsidiesare providedthrough the concessionallending rates extended through the AgriculturalBank. The Bank does not have a fixed interestrate; rates vary between 6-1/2%to 8% dependingon the size of the operationbeing financedand the expectedreturns from the operation. Subsidycosts do not extend beyond the direct interestrates chargedas occurs in many other countrieswhere high default rates add significantly to the cost of lending. Defaultrates in Surinameare almost non-existent.

2.46 This subsidizedcredit is used for land developmentand purchases of unsubsidizedinputs. They benefitsmall farmerswho are not in a positionto secure creditfrom commercialbanks. There is no record of misallocationof funds. The Bank has been able to cover its costs and thereforehas not been a financialburden on Governmentfor its operations.

2.47 In most irrigationprojects, farmers pay a levy of Sf 17 per ha, a rate which has remainedunadjusted over a long time, and bears no relationshipto costs or farmers'ability to pay. Such a charge is clearly insufficientto cover the cost of operatingthe system. Proposalsfor a revisedsystem of water chargesare being developedfor the new projects. These includean initialfee to cover operatingcosts, and, dependingon returnsto rice production,fees will be adjustedto include at least partial cost recoveryof the main canals.

2.48 Given that new settler farmerswill be able to achievea high croppingintensity and those in adjacentareas will increase theirsthrough reliablewater supplies,it is likely that on these new farms of 16 to 20 ha, incomeswill be sufficientlyhigh to facilitatean adequate level of water charges. These charges are expectedto be administeredby Water Boards,which will have representationfrom a wide range of government agenciesas well as the cooperatives. The fees collectedfrom farmerswill be placed in a specialaccouat and administeredby the Water Boards.

2.49 A new proposalunder considerationis that polder development might be undertakenby cooperativesthrough subsidized credit from the AgriculturalBank. This would reduce Government'sdirect involvementin the irrigatioasector, as cooperativeswould be responsiblefor maintaining the secondaryand tertiarystructures, and Water Boards with local representationwould establishand collectfees.

Indirect Subsidies

2.50 In Surinamedirect subsidiesare not as importantto the agriculturalsector as Governmentsubsidies to a number of its enterprises. The MarienbergSugar Companyis operatingat a loss, due in part to a c_unter-productivepricing policy,much needed rehabilitation, SML-Wageningen,Government's largest enterprise,involved in rice and - 183- livestockproduction, and rice research,is experiencingan operating deficitof about Sf 8.0 millionannually. The cost of researchis roughly Sf 2.0 million annually,which places an extra burden on the enterprise. The Alliancecitrus estate and the Central Dairy are both dependenton governmentsubsidies for their continuedoperation. Governmentsubsidies administeredthrough the Ministryof Agriculturewill exceed Sf 16 million in 1984.

Output Pricing

2.51 Governmentsets the price of sugar, palm oil, beef, milk, paddy and rice. Paddy prices are set broadlyin line with export prices although there are indicationsthat Governmentplans to give increasingattention to productioncosts. Pricingof the remainingcommodities does nor seem to be as systematic. In the absenceof any clear system or objectivein setting these prices, the problemsbeing faced by producersare likely to continue. It seems imperativethat the Governmenttake steps to consider the producerin the pricingof these commodities.

Marketing

2.52 Inputs. Governmentis not directlyinvolved in input marketing. Privateenterprise dominates the importationand supply of production inputs,cultivation and processingequipment. Ownershipof the equipment is for the most part in privatehands, except for those owned by SML, which is currentlyin the processof divestingits mechanicalunit and phasingin the use of private contractors.

2.53 Outputs. The CentralImport Companyof Suriname(CIS) is responsiblefor the purchase and local distributionof palm oil produced by the Victoria Companyand of rice from exporters. These two commoditiesare purchasedat prices controlledby the Government. CIS is also involvedin the import of food items, includingvegetables and meats (potatoes,onions and salted beef). More recentlyit has been involvedin the importationof a wider range of items includingfertilizers, transport equipment, and parts.

2.54 Governmentrequires all rice exportersto sell 25% o.ftheir rice to CIS at fixed prices, which have remainedbelow world market prices. Presumably,since the quantityis based on domesticrequirements, if productionis increasedover the next few years, this percentagewould decrease. The rice requiredby Goveramentis of lower grade and the percentageis fixed annually.

2.55 Paddy produced by small farmersis generallysold to private millerswho are mostly large rice producers. A floor price is set each year, but farmerssometimes receive a lower price based on arrangements with the millers,who frequentlyare a source of inforwLlcredit. SML is also a large rice buyer and operateswithin the price systemset by Government. - 184 -

Export Marketing

2.56 Rice export marketing is the responsibility of several independent exporters, including SML. These exporters have only recently tried to coordinate their marketing efforts with an aim to strengthening their market position in the EEC. Government plans to support this effort by formation of a national rice export organization, the Suriname Rice Marketing Organization (SUREXCO). A final decision has yet to be made regarding the exact function of SUREXCO. The proposed structure and function of SUREXCOneeds to be carefully studied in terms of its effect on future rice marketing prospects. A direct role in marketing would probably be disastrous, a role as - technical support unit might have some merit.

2.57 Banana exports are managed by SURLAND. Annual price contracts are negotiated with United Brands (Fyffes Bananas). Currently no volume quota exists, and SURLAND exports its entire exportable production each year.

D. MAJOR AGRICULTURAL INSTITUTIONS

The Ministry of Agriculture

2.58 The Ministry of Agriculture, Livestock and Fisheries and Forestry (LVV and B) shares responsibility for government activities in the sector with other government departments and institutions. The Ministry employs about 2,100 people.

2.59 The Ministry of Agriculture has prim. _esponsibility for research. Its main research station is in Paramaribo. Research covers all the major crops-rice, oil palm, citrus, coconut, and livestock. Research on oil palm and coconut is carried out in the Brokopondo and Coronie areas where these crops are being produced, and similarly rice research is in Nickerie.

2.60 The Ministry provides extension service through its district branches. The largest branch is in Nickerie, the largest rice growing area. Farmers are, in theory, visited on a regular basis and requests are made for more frequent visits if a need arises. Alternatively, farmers visit their branch office and consult with Ministry officials on any problems they may encounter. Assistance by Ministry staff is also provided to farmers in the purchase of inputs. (The mission was not in the field for long enough to be comfortable making a judgement about the quality of the extension service).

2.61 Rice research is carried out by SML which has been engaged in this activity since the early 1950s. Similar research in the Prince Bernhard polder also has a long history. - 185 -

Agricultural Credit Institutions

2.62 The agricultural sector is overwhelmingly dominated by large and highly mechanized commercial farms but the smaallholder family farms also operate at levels of mechanization comparable to those of the larger farms. Since agricultural production is highly capital intensive there is in addition to demand for seasonal credit a very strong demand for investment credit for the purpose of land development, and the purchase of farm machinery and equipment.

Sources of Institutional Credit

Commercial Banks

2.63 Historically access to institutional credit has not been a serious constraint. Data available on commercial bank lending for agriculture indicate that these institutions have made considerable inroads into lending in the sector. In 1973 agriculture's share of total commercial bank lending was 5.7%, this has risen to 17.5% in 1983. During the same period the actual amount of lending grew at an annual rate of 30% from Sf 8.2 million to Sf 121.4 million (Table 8). The major part of this increase occurred between 1973 and 1979 when the annual rate of growth of lending exceeded 38X compared with 25% between 1979 and 1983.

Agricultural Bank

2.64 Commercial bank leading for agriculture is mainly concerned with large scale enterprises which are able to satisfy the elaborate loan security requirements--300Z collateral. The institutional credit needs of small farmers are met by the Agricultural Bank which was established by the Government of Suriname in April 1972 for the explicit purpose of stimulating agricultural development activities, through the provision of credit to small farmers. The Bank also engages in regular commercial banking activities including savings and current accounts. At the end of 1982 time deposits stood at Sf. 46.0 million and savings deposits at Sf. 10.0 million.

2.65 The Agricultural Credit Bank has well established branches in Nickerie, Coronie, Suriname District, Saramacca and CommewijLe, and current plans include the establishment of a branch in Marowijne. Field staff are well trained in banking and finance as well as agriculture, therefore most loans are backed by technical and managerial advice from these staff who also work closely with Government extension agents. Loan supervision is very efficient both in the field and at headquarters. This is evident in the institution's financial record which shows a very low default rate of about 2%. - 186 -

2.66 The Bank's financialresources are providedby the Government throughthe Ministryof Financeat an Interestrate of 4%. Up to 1982 the major source of these funds was the Dutch DevelopmentAid Funds. Since the suspensionof these Funds,the only remainingsource is a line of credit which was establishedwith the EEC for the purposeof providing medium-sizedloans to farmers. The first loan of Sf. 4.1 mlllionhas alreadybeen disbursedand a second loan in the amount of Sf. 11.0 million was recently approved. The EEC loans are made directlyto the Bank at an interest rate of 1% over 40 years with a grace periodof 10 years.

2.67 Approximately80% of the Bank'slending is for agricultural development,and the remaining20% is in the form of small commerciaL loans. Interestcharged on loans ranges from 6% to 8% for agricultural loans,and is set at 9% (the commercialrate) for commercialloans. The flexibleinterest rate and loan policygoverning agricultural loans makes provisionfor various categoriesof borrowers. Rates are generallyset with respect to farm size, type of activity,and the securityoffered.

2.68 Very small farmersare charged interestat rates between 6% and 7-1/4%,and medium sized farmers 7-1/4%to 8% dependingon the criteria mentionedabove. With respectto small farmerswith limited financial resources 100% financingis sometimesapproved. The AgriculturalBank applies fairly liberal securityrequirements for its loans and judges investmentsfrom the standpointof its capacityto meet repayment obligations rather than ensuring that the project is fully secured.

2.69 During the period 1980 to 1982, the Agricultural Banks annual lendingexceeded Sf. 20 million. The major part of these loans have been for farm establishment,followed by housingand farm buildings,and farm machineryand equipment (see Table 8a). Loans for investmentof this natL.e are usually for 5 years. A grace period may be granted in exceptional circumstances.

2.70 The activitiesof the AgriculturalBank are in close harmony with the Governments'sagricultural development plans. It has supportedrice developmentin Coroniewhere the hectarageunder rice has increased dramaticallyover the past few years; it assistssmall farmersin Nickerie in securingseasonal production inputs; and more recentlyhas been supportingcooperatives. This falls within the generalframework of Government'splans to develop coonerativesin the agriculturalsector. Farmer'sCooperatives

2.71 The cooperativemovement in Surinamehas not been either popular or particularlysuccessful, and until recentlyhas not been seriously supporteddirectly by Government. The AgriculturalBank howeverhas been lendingsuccessfully to small informalcooperatives over the past few years. Loans have been mainly for productioninputs, where the Bank makes the purchaseson behalf of the cooperatives. M4orethan 200 farmersare currentlyInvolved in this program. - 187 -

2.72 Plans for the development of the MCP includes an Important role for cooperatives. Farmers would be required to operate in cooperatives primarily to Improve their position in the marketing of their produce. Purchasing of inputs, water management, drying, storage and marketing would also be carried out by the cooperative.

2.73 Since a cooperative structure on the scale being planned is new to Suriname, it is possible to make only a speculative assessment of its prospective value. On the positive side, government will be relieved from the responsibility of financing on-farm development since this would be done by the Agricultural Bank through credit to cooperatives, seasonal production inputs could be purchased in bulk probably with savings in the form of discounts; and farmers would be in a better position to bargain on prices of dry rather than wet paddy, and would have the additional advantage of proper storage facilities. On the negative side, there is the serious risk that cooperatives, if forced, will become, as elsewhere, simply another public institution requiring subsidies.

E. AGRICULTURAL SECTOR ISSUES

2.74 Projections indicate that agriculture GDP will grow at a useful 5% annually from 1984 to 1990. (See Table 11). However, it is a rate of growth that is being bought at considerable cost, since the major development projects in agriculture have rather poor economic rates of return. The economics of agriculture do not appear particularly promising. Furthermore, because of the high level of mechanization, it is not a cheap means of creating jobs. As an engine of national economic development, therefore, agriculture is being pressed to the front largely by the lack of economically attractive alternatives in other sectors. Nevertheless, there is much that can be done to improve efficiency and this will be the major focu* of this section.

2.75 The relative s-arcity of economic investment opportunities in agriculture arises from two sets of constraints, on the one hand, the more exogenous constraints that are difficult to change and on the other hand, the more endogenous constraints which are more amenable to change.

2.76 The constraints that are difficult to change include the high cost of the labor resource, the lack of any significant competitive edge in terms of the land resource, the small size of the economy, low world prices and the absence of easy international transport links. The constraints that are easier to change, and w':dchi-ill therefore constitute the elements of the main proposals for a strategy, include policy-related constraints, particularly the extent of Government involvement in the sector and in price control, institutional constraints, including both the size of the Ministry of Agriculture and the role of the cooperatives, and finally the investment program itself. - 188 -

Constraints Difficult to Change

2.77 Although the five constraints discussed in this section are those technologies to be used; but these tend to be only competitive with labor intensive technologies where local manufacture makes for low cost machinery. Suriuame has neither the low cost labor nor the low cost machinery advantage. Therefore it can only compete by improving the level of efficiency or by reducing wages. Since current levels of efficiency are by no means low, and since reducing wages is always politically difficult, the room to maneuver is somewhat limited.

2.79 Neither the soils nor the rainfall are significantly better than those of potential competitors. There is certainly plenty of land suitable for agriculture and the climate supports a wide range of crops, but there do not appear to be any unique agro-climatic niches to be exploited.

2.80 The extremely small size of the economy makes the development of exports through an initial large scale local marketing phase impossible. Regional country groupings are obviously one response to this problem, the other is support for insurance and tax deductions to cover private entrepreneurial risks in the early stages of product exporting. However, small size will obviously r;main a serious handicap over the foreseeable future.

2.81 Low world prices for primary commodities has been a serious constraint and terms of trade have deteriorated in recent years. Between 1970 and 1980 rice producers lost 10% of their gross value per ha in real terms, over the same period agricultural wages doubled, manufactured import prices rose 30X, urea prices rose 80% and oil prices 300%.

2.82 Fortunately some agricultural commodity prices are projected to rise somewhat in real terms over the next 5 years, and rice looks particularly promising, with a forecast real increase of 40% between 1984 and 1990. Nevertheless, in the long term the challenge seems likely to remain one of improving efficiency through higher quantities of output per unit of input to simply maintain real net income at current levels.

2.83 Poor international transport links by both air and sea seem likely to remain a serious hardicap for some time. This is partly related to the small size of the economy and, as an economy wide issue, cannot be addressed for agriculture In isolation.

Constraints Easier to Change - The Elements of a Strategy

2.84 The three constraints discussed in this section, in order if importance, policy-related constraints, inutitutional constraints and.the investment program, are those that are easier to change. Tackling them has to be the core of a strategy for agriculture. These constraints are mostly well understood by individuals within Government. It requires the political will to tackle them to improve agricultural production and efficiency. - 189 -

Po:;tcy-relatedConstraints

2.85 Altering policy to achieve a substantial reduction of public sector involvement in agriculture seems likely to lay the best foundation for future production and efficiency in agriculture. It is an issue of efficiency rather than ideology. World Bank experience suggests pessimism about the ability of government-owned production and marketing operations to perform well for the following reasons:

(i) there are few examples worldwide of successful ones (the fisheries have been quoted earlier, there are many others);

(ii) the comparison of SML Wageningen rice production with private rice production seems to indicate that Suriname is not different in this respect;

(iii) Goverments generally find it impossible to abandon unprofitable operations;

(iv) even in countries with quite successful state operations in agriculture (two centrally planned countries in particular) there is currently a strong reform movement towards reduced government involvement, with promising results;

(v) Government has at its disposal incentive mechanisms in the form of taxes and subsidies to encourage the private sector to meet social obligations. It need not, therefore, be a question of whether the private sector will do it, but a question of who will manage most efficiently.

The factors that lead to the poor performance are usually related to the failure of Governments to give employees at all levels adequate incentive to perform. Poor performance is often rewarded with subsidies.

2.86 Under circumstances in which public ownership is a matter of unalterable policy the following approaches have been characteristic of the more successful public operations:

(i) there should be clearly identified goals and objectives for the enterprises;

(ii) there should be ex ante decisions on subsidies (where needed) rather than ex post in order to avoid the subsidisation of poor management;

(iii) the management should be as fully insulated as possible from political interference;

(iv) joint ventures with public equity and private management, or preferably with considerable private equity and smaller public equity, have a better chance; - 190 -

(v) competition by private competitors should be encouraged (i.e. public enterprises should prove themselves in fair competition);

(vi) once the public activity has fully developed it should be sold to private operators.

2.87 There are four key public sector domains which we will discuss. These are: produrtion, marketing, price control and input supply.

i) 2roduction. Government, either directly or through the government-owned companies and foundations, owns about one-third of the land holdings in Suriname and is in control of a much larger proportion of the major export crop activities. The following list includes the major government-owned operations and gives an indication of their financial performane.e.

Commodity Company Financial Performance

Sugar Marienburg Serious losses (about SF 10 million) Bananas SURLAND Marginally profitable Oil Palr Victoria, Phedra Losses Fruit/Meat Processing Tropica/SUCA Losses Milk Processing Central Dairy Losses Rice SML-Wageningen Losses (about Sf 8 milll n) Livestock Breeding Baboenhol Break-even Citrus/Plantain Alliance Losses

2.88 The only activity that appears profitable is bananas but if full costs of development and irrigation _ere included this would probably also show a loss. Some indication of public versus private financial performance in one enterprise can be obtained by comparing the profitability of the SML-Wageningen rice scheme with small family farmers. As indicated above, Wageningen makes a large loss. The situation would be better, but it would probably still make a loss, if the burden of also providing sore social services was removed. Yet, in comparison, family farmers make substantial profits (at least Sf 6,000 per annum on 10 hectares and often this only invilves part-time employment). This is without the advantage of Wagening-n's returns to scale and with all the handicaps of a family farmer's laec.of bargaining power in marketing and the cost of contracting serviees for small scattered plots. This relative inefficiency of Government farming is consistent with experience An most other countries. The solution, for Wageningen, would obviously be to implement the proposal to divest to private farming. Possibilities for privatizing other operations might include selling off the SURLAND banana operation, the fruit activities of Tropica/SUCA, the Central Dairy and Alliance citrus. Sur-It an objective would be longer-term since private entrepreneurs would need to see a more conducive situation before risking capital. Some 'ntermediatepublir/private joint ownership options may be possible. - 191 -

2.89 ii) Marketing. The proposal to establish SUREXCO to provide control over rice exports should be judged against the generally disastrous performance of government controlled export marketing organizations in other countries. Generally, the experience has been that government operatl'c; do not have the means to recruit and retain export marketing experience that matches that of private exporters. Government operations are usually less innovative. Costs of operation are frequently huge in comparison with private exporters, and all these problems far outweigh the cost (perceived but seldom real) of inter-exporter under-cutting, smaller lots (frequently small by choice) and the under-invoicing that occur with an open private exporter arrangement.

2.90 Discussions held in Suriname suggest that the hope is to design a system to get the best of both worlds, to retain the benefits that come from freedom of private exporters and to add the benefits of government control. However, at the core the two are fundamentally irreconcilable. The freedom to follow self-interest in exploring and perhaps, by some definitions exploiting, is both the benefit and the cost of private exporting arrangements. There are no examples of which we are aware of private exporters destroying an industry but there are certainly many examples of government agencies doing so. The risks are high.

2.91 iii) Price control. The floor price system that operates for paddy is, in principle, a sensible cushion for the producer. In practice, it can only work without subsidies and without impossible levels of controls as long as the agreed price level is not far out of line with the export prices being received. Thus, like most controls, it has the potential to work when it is least needed and to fail when it is most needed. For the moment, however, there are more pressing issues to be faced in agriculture unless the price starts to deviate much iurrher from parity levels.

2.92 The price controls on milk, meat, eggs and sugar almost certainly have been largely counterproductive. Incertainty abcut prices and long imposed price freezes have destroyed a great deal of the incentive to invest in production. Given the control on imports consumers have benefited at the expense of producers when, in fact, freeing of prices within an import controlled situation would have increased supply and benefited both producers and consumers in the longer term. With meat, neither have benefited since the slaughterhouses and butchers, whose selling prices have been uncontrolled (and indeed, because of qu'iity dekinition, are almost uncontrollable), have inevitably taken the 'rent' that such controls allow. In an agricultural sector in which there is underutilized land and a considerable level of imports (including meat and milk), there seems little logic in cornsuwr subsidies if they are at the expense of producers.

2.93 iv) Inpucs. At present, importation has not been widely interfered with by Government except in association with the inevitable license tightening due to foreign exchange shortages. However, there seems to be a quite widespread view among Government staff and trading houses that direct Government importing of inputs for agriculture, probably through CIS, Jt.ghtbe developed. Again, the experience with such - 192 - arrangements elsewhere has generally been poor. Inputs are much less homogeneous than they appear, delivery timxing is critical and technical back-up services, especially in a relatively sophisticated agriculture economy like Suriname, are worth a great deal. The chances of Government oper2tions being more efficient are low, while the risks from increasing public sector involvement in this activity are, again, high.

Institutions and Organizations

2.94 There appears to be considerable opportunity to improve the current and future efficiency of the institutions and organizations supporting agriculture and to reduce excessive drain on the budget. The Ministry of Agriculture, the Agricultural Bank, the Foundations (nonprofit-making) and Share Companies (profit-oriented),and the cooperativas are discussed below.

2.95 (i) The Ministry of Agriculture. The size of the Ministry of Agriculture, the coordination of agricultural sector planning and the organization of research are three institutional problems requiring attention.

2.96 The size of the Ministry of Agriculture budget (Sf 45 million for 1984 or Sf 28 million excluding subsidies) and the staff numbers (2,136 in 1984) seem extraordinarily high. The cost excluding subsidies is about 11% of the value of output from the sector, but if one excludes the sectoral production that comes from state-owned enterprises, which are, or ought to be, largely self-sufficient and ought to require little input from Ministry staff, the cost represents about 15% of the value of output. This is very high for an agricultural sector which includes a further substantial proportion of large private farmers who, to a considerable extent, do not require the services of the Ministry.

2.97 To pursue this further, if one excludes from the 2,100 staff the 600 or so in forestry (which itself seems enormous) and assumes that of the remainder there should be the generous ratio of one operational staff member for two support staff, this still leaves a potential of one operational staff member for every 32 holdings (16,000 holdings in the country) or about one for every 100 hectares. It seems unlikely that such a staffing intensity can be profitable. The total coverage farm surveys of every holding in the country rather than the most usual use of samples is one indicator of this excessive staffing.

2.98 Coordination of planning in the agricultural sector between the Plan Bureau and the Ministry of Agriculture seems to leave room for improvement, such as by better utilization of the considerable levels of expertise within the Ministry of Agriculture in the planning process and by clarifying boumdaries of responsibility. Problems of coordination are common between planning and functional Ministries in many countries. Unless addressed they can seriously affect the sector, particularly when investment resources are unusually tight. - 193-

2.99 A further problem related to institutions is the organization of agricultural research. It appears that investment is of the order of 2% of the value of output from the sector. This is a satisfactory level and should probably be maintained since generally research produres very high economic rates of return. However, an increase in effective investment probably could be achieved within the rurrent budget, or even with a lower budget, by cutting down on the number of research stations. Many types of research can and should be carried out on farmers' fields-research station land tends to be atypical and researchers themselves may berome myopic.

2.100 It is questionable whether a country like Suriname needs, or can afford, more than about three major research centers. Research is currently going on in at least ten government owned centers (fruit research is conducted in at least four locations). Such an arrangement usually gives very high overheads and increases the proportion of time that researchers must spend on uncreative management tasks. It would seem sensible to review the necessity of the present number of research locations with a view to possible concentration. Such a review should focus also on relating expenditure on commodity research to the value of output of that commodity (this often reveals surprising anomalies) and on the ratio between directly productive operating and salary costs for research to overheads.

2.101 (ii) The Agricultural Bank. The Agricultural Bank appears to be an efficiently managed operation and plays an important role in the development of the agricultural sector. However, its impact may become seriously affected unless funding levels are at least maintained. The institutions' financial plan for 1984 to 1987 is shown in Table 8. Total requirements for the period is estimated at approximately Sf. 132 million (US$74.0 million), based on the projected rice development of the Multipurpose Corantijn Project (MCP) and smaller projects; livestock development in Suriname District and Brokopondo; horticulture in Suriname District and Commewijne; and fisheries and other enterprises throughout the country.

2.102 Given the resources which will be available, and the projected level of agricultural investments to be stimulated by government-initiated projects, it would clearly be impossible for the Bank to reach the number of farmers collectively or individually, who would be requiring credit. Even with a substantial reduction or slower implementation of Government's planned investment program, -t seems that a financing gap will remain unless additional sources of funds become available.

2.103 There are proposals under consideration to make land development the responsibility of settler farmers. This is a poliry to be encouraged, but one which would lead to pressures on the limited resources of the Agricultural Bank. The Government could, and probably should, encourage commercial banks to extend their loans to medium-sized farmers, and alleviate some of the constraints now facing the Agricultural Bank, but there is likely to remain a need for medium term investment and seasonal loans from the Agricultural Bank. - 194 -

2.104 (iii) The Foundations and Share Companies. The inability of foundations and share companies to reduce staff is a major problem. To the extent that, for political reasons, divesting of a large part of the agriculture public sector is not likely on a large scale in the near future there would be a need to tackle excessive staffing levels in some of these institutions. The approach initiated at Wageningen to encourage staff from the institution to become contractors is an intermediate step towards total divestiture and am imaginative move that might be considered, with variations, for others.

2.105 (iv) Cooperatives. Cooperatives could prove valuable to the success of the agricultural sector. However, there is a need for a cautious and flexible strategy on the establishment of cooperatives. The problems of getting such institutions to work may be underestimated by the Government.

2.106 There is a danger that Government targets for cooperative development may not coincide with the willingness to cooperate by potential members. Uader these circumstances, Governments elsewhere have frequently turned to operating cooperatives ad infinitum as increasingly inefficient subsidized services. There seems some danger that the oil palm cooperative at brokopondo may be going in this direction.

2.107 There are several important issues concerning the development of cooperatives. The first is the amount of flexibility given to individuals in determining their activities and choices within the system; the second is the degree of control assumed by the cooperative management; the third is the level of competition allowed to prevail -inthe system to ensure an incentive for efficiency.

2.108 It has been suggested that cooperatives should be "protected' from being broken up by deserti-igindividuals. But this freedom to go elsewhere for services is essential to both maintain individual commitment to the cooperative and to maintain competitive pressure on it to be efficient.

2.109 There may be some advantage to be gained from a gradual phasing of responsibilities to the cooperatives. This might involve developing group input purchasiag first, followed a year or so later by group marketing, followed by group ownership of processing facilities (a very large step, with much greater financial responsibilities) followed by group water control (another large step involving group sanctions and penalties on voluntary members). Separation of water control from the other activities may be necessary to prevent divisive disputes. But, with respect to water management, there are a range of options, including, forexample, such arrangements as the local irrigation cooperatives in Greece of which all land owners and water users are members. - 195 -

2.110 Exceptional flexibilty and patience in the development of cooperatives will be needed to ensure viable local organizations _n the long term. Obviously continued support from FAO on this issue and a substantial monitoring and evaluation effort in the early years will be important.

The Agricultural Sector Investment Program

2.111 The third major constraint to agricultural performance in the past has been the weakness in the use of economic and employment criteria in the ranking of investment alternatives. This has been due more to the lack of the necessity rather than to the lack of expertise. In the past, donor funds were readily available. Seldom did a cut-off line have to be drawn through the lists of potential projects. The Plan Bureau is now aware that this situation must change and that although non-economic criteria will continue (as they should) to feature in project selection decisions, the economic costs of making them should be clear.

2.112 There are two steps in choosing between investment projects. The first is to choose objectives and decide upon their relative importance. The second is to use these objectives to rank projects.

2.113 There seem to be three major Government objectives: employment, economic performance, and regional decentralization. While the purpose of the first two objectives is obvious, the purpose of regional decentralization is less clear. One purpose is to prevent Paramaribo from becoming an urban slum, however, this does not appear to be happening and provided that the other major area, Nickerie, can continue to grow, there wi-ll be a major counterbalance to Paramaribo. Nevertheless, regional decentralization is one of the three major criteria and thus, in project selection, some form of scoring system would need to be utilized to weight the three objectives.

To give an idea of the ranking that might emerge in the new resources-constrained situation, a review and some updating was undertaken on the most recent (1982) economic analyses of the "big three- p-rojects: MCP, LOC and Pattamacca. The results are given below. - 196 -

lProject iMajor Economic Rate of Missions Updated Cost per IEnterprises Return in Latest Economic Rate of Direct l l Review Documents c/ Return Estimate Job l ~~~~~~~~~~~~~AssumnngSunk Created costs to end 1984. (Sf OO0)b/

HCP Rice s 16Za/g 178 (Multi-Purpose_ Corantijn Canal Project _ _ ILOC jRice, other IBetween 0% and 5% inot calculated 220 (Commewijne) Crops, for components, probably below 5% l Livestock aggregate not l _ _ _ I calculated but probably about 0%

Patamacca P Alternative I d' Oil Palm 4% ZX 206

IPatamacca 7% not calculated 206 Alternative II d/ Oil Palm probably 5% a/ On basis of reaching 6,400 ha by end 1989 and 17,000 ha by 1996. 1I Using Ministry of Agriculture estimates. c/ Patamacca May 1983. MCP and LOC November 1982. d/ Alternative I is 5,000 ha; Alternative II is 2,500 ha.

2.115 The folloving are the main conclusions from this table:

(i) The utilization, through rapid empoldering, of the 30 m3 /second of water that will soon be available from the almost completed Corantijn Canal appears to be the best available investment in agriculture although this would be dependent on the absence of serious marketing problems with rice. This conclusion has wider application to decision making. It implies that Suriname does seem to have some measure of comparative advantage in rice and that rice is likely to be particularly profitable where high capital costs of development can be avoided, in particular, where unused water exists that can be exploited by either empoldering or polder rehabilitation. - 197 -

(ii) the choice between Patamacca and LOC is not clear cut; a purely economic decision would probably halt both projects. the economic returns to LOC could be improved if low return componentswere dropped,however the economicreturns to Patamaccamight also be improved,if the agro-industryoptions and some possiblecost savingswere adopted.1/

(iii) All these major agriculturalinvestments have high costs per job createdand do not appear to compare favorablywith the cost of job creationin light industry. Thus agriculturedoes not appear to be the best sector for the pursuitof employment creation.

2.116 One investmentissue that needs particulardiscussion is the issue of rice marketing. Forecastingworld rice prices even for average qualitiesis difficult. Forecastingfor a particularquality niche in the market is more difficult,particularly siuce there is historicalevidence that Suriname'sexport prices have fluctuatedquite inconsistentlywith (but always above) the average qualitiesof the world market. However, there is reason for confidencethat Surinamewill be able to sell the incrementalquantities expected over the next few years because:

- Surinamerice fetches a premiumover many other rices (Recently it was fetchingabout US$50 per ton over USA cargo rice to the EEC) and generallyquality productssurvive better if marketsget difficult.

- The quantitiesinvolved are small in world terms.

- The EEC import quota expandsat 5% per year.

- "Qualityimprovements- may becomeavailable that could increase effectiveprices including,increased parboiled markets, the possibilityof varietiesand drying techniquesgiving a lower percentageof brokens;

- The EEC levy on packed white rice might, in due course,be relaxed;

- Rice is one of the few commoditiesin which current forecasts suggestsubstantial price increasesover the next 10 years and in which forecastshave recentlybeen raised;and

- Exchangerates in future may be more favorable.

1/ Our analysisalready allowed for a sf 1 million per annum saving from the use of mules rather than tractorsfor transport. - 198 -

2.117 Individually,,some of these arguments can be countered, but in total they give some confidence that while marketing may be a challenge, there is unlikely to be a disaster lying in wait. Nevertheless, it is obviously an issue requiring continued attention.

2.118 For the projects other than the "big three' five points should be considered in developing investment ranking. First, research, in ex post studies, has been found to have high economic rates of return (generally between about 20X and 40%), this finding can possible be stretched to well focused pilot projects provided they have a specific adaptive research objective. Second, continued investigation of agricultural diversification options is probably desirable. Third, prawn culture proposals appear to have the elements needed for success, a high value product with promising markets, some existing processing and marketing expertise, a readily available water resource, a measure of technological sophistication (which less developed potential competitors may not be able to handle) some potential for job creation at reasonable cost (probably below Sf 50,000 per job), and some potential for spatial decentralization of development. Fourth, the coastal fisheries development proposals have a number of the same elements. Fifth, the Agricutural Bank should be given priority support, some of this may substitute for MCP development funding if private empoldering is to be encouraged.

2.119 It should not be Government's task to take the initiative on all development. A major focus should be on creating the environment and the means for individuals, groups and companies to develop both markets and the necessary productive enterprises themselves. The Agricultural Bank is an important engine for this policy. Maintaining the funding of this Bank will therefore be important. The development of most of the new MCP and LOC polders by individual settlers using credit from the Agricultural Bank should be given favorable consideration. This will, among other objectives, ensure cost recovery of development expenditure. It will only work if there is a clear decision at the outset concerning what elements of the irrigation system are Government's responsibility, what rates will be charged and what elements of the system are the farmers' responsibility to his own account. This decision is required very soon since the polder development cost recovery arrangements should start as they mean to continue. Once subsidized land development is established, private interest in borrowing for development will obviously be affected.

F. PROSPECTS AND RECOMMENDATIONS

2.120 The development path for agriculture over the next five years is already partly predetermined by the existing policy environment and investment program. In looking to the future, therefore, focus is more on the longer-term period, 1990 and beyond. During this period forecasts suggest that world market price increases, which are currently recovering from recession-induced levels, may not increase in real terms as much as in the 1985-1990 period. Thus the 5.0% growth rate projected for 1985-1990 would be difficult to sustain. - 199 -

2.121 However, without the recommended action (which will be summarized below) there is a possibility, in the medium to long-term, of growth rates substantially lower than projected. There is a possibility of a damaging impact on marketing through well-meaning but inefficient Government involvement, leading to poorer prices and missed marketing opportunities. Well-meaning Government support for cooperatives may turn into substantial long-term subsidies, in effect, enlarging rather than reducing public sector ownership in agriculture. There is the possibility of increasing price controls that, in the short-term, protect the consumer and hit the producer, but, in the long term, through reduced incentives for production, hit both. Excessive staffing of public sector enterprises may become an impossible burden, eating up what little profitability there is in the agricultural sector, essentially taking both skills and land from potentially efficient private hands and putting them into potentially inefficient public hands.

2.122 With the appropriate action, however, the sector could become leaner and more efficient, with somewhat higher gross output in the medium to long term, say, growing at 5% rather than 4% but with substantially reduced costs. This scenario would come about through maintaining adaptable private marketing channels, increasing cultivated hectarage increasing efficiency of land use as less efficient operations such as SML-Wageningen change to private hands. In this scenario a largely private agricultural sector would benefit from a Government support service that, because it has relieved itself of the burden of farming, can concentrate on much better planning for, and servicing of, the sector. This better servicing would include higher productivity in research and pilot projects, more productive extension contacts and better planning and policy decisions.

Ten-point Plan for Agriculture

2.123 Ten of the major recommendations are briefly summarized below.

2.124 The guiding principle is that there should be an increased concern for the efficiency of resource use. In particular, a greater emphasis on policies and the use of prices and markets to allow individuals to plan for their own development rather than on the prenaration of inflexible government plans that attempt to force the attainment of input and output targets.

2.125 The ten points are:

1. Proposal: Reduce public sector involvement in farming and agro-industry.

Action: i) Hand over SML Wageningen to private farmers. (ii) Free milk pricing and study the possibility of selling off the Central Dairy (retaining government vetting of hygiene). (iii) Sell all Ministry of Agriculture farms that are not absolutely essential for major research activities. (iv) Give serious consideration to converting Marienberg to rice. - 200 -

2. Proposal: Reduce Ministry of Agriculture staff by at least one third.

Action: Offer compensation in land to released staff with Agricultural Bank credit for land development and equipment.

3. Proposal: Rationalize research.

Action: (i) Carry out the proposed plan to have all rice research operating out of one centre. (ii) Reduce the number of research locations.

4. Proposal: Keep Government involvement in marketing to a minimum.

Action: (i) Do not implement the proposal to establish SUREXCO if it means getting involved in exporting. Consider only support services that exporters themselves consider useful. (ii) If necessary focus more closely on alternative means of preventing such abuses as over-invoicing.

S. Proposal: Leave input supply entirely to the private sector.

Action: (i) To the extent possible, spread foreign exchange across reputable suppliers. Consider foreign exchange auctioning. Insist on a minimum level of product servicing from suppliers obtaining foreign exchange.

6. Proposal: Put a large part of the resources available to agriculture into the rapid development of the MCP polders to quickly utilize the MCP water.

Action: i) Take decision on agriculture sector investment program. ii) Ensure the Agricultural Bank can give full support for private empoldering at MCP. iii) Allocate foreign exchange to machinery contractors with MCP development in mind (e.g., use location of contractor and type of equipment as approval criteria).

7. Proposal: Develop cooperatives with caution and flexibility.

Action: i) Continue to utilize outside expertise (e.g. FAO) during the development phase. ii) Do not overload new cooperatives (often composed of prcvlously unorganized individuals) with an impossible burden. iii) Haintain competition from private buyers and input suppliers to ensure that cooperatives maintain competitiveness. (iv) Establish immediately an effective monitoring and evaluation system for cooperatives so that emerging problems are identified and fed directly to senior decision-makers quickly. (v) Encourage more than one cooperative model. - 201 -

8. Proposal. Give a high priority to agro-industry development.

Action: i) Give priority in foreign exchange allocation to such enterprises as technology for parboiled rice equipment. (ii) Carry out, as soon as possible, economic analysis of each of the agro-industrial options associated with palm oil (and evaluate what the economic impact of these would be on the total Patauacca proposal).

9. Proposal. Give a high priority to coastal fisheries development and aqua-culture

Action: i) Take decision on agricultural sector investment program.

10. Proposal. Give the Ministry of Agriculture a greater role in planning.

Action. i) Strengthen the Ministry of Agriculture planning capacity. ii) Give the Ministry of Agriculture full responsibility for preparation of a rolling 3-year agriculture sector plan within guidelines set by the Ministry of Finance and the Plan Bureau. - 202 -

AGRICULTURE

STATISTICAL APPENDIX

TABLE OF CONTENTS

Table

1 Area Planted to Major Crops, 1973-83 2 Production of Major Crops, 1973-83 3 Average Yields of Major Crops, 1973-83 4 Gross Value of Major Crops, 1973-83 5 Volume and Value of Livestock Production, 1973-83 6 Volume and Value of Agricultural Fisheries and Forestry Products, 1973-83 7 Employment in Agriculture, Fisheries and Forestry, 1973-83 8 Agricultural Bank Lending by Sector, 1980-87 8a Agricultural Bank Lending by Sector and Activity, 1983 9 Rice Farm Budget - Mechanized Farming 10 Banana - Production Cost, 1982 and 1983 11 Agriculture Sector GDP Growth Rate Estimate 12 Export Projections for Major Agricultural Commodities, 1983, 1990 and 1995 13 Rice Export Projections, 1983, 1990 and 1995 14 Palm Oil Export, 1983, 1990 and 1995 Table 1: SURINAME- AREAPLANTED TO MAJORCROPS, 1973-83 ('000 tons)

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Rice main season 28.10 28.20 28.60 29.30 29.90 32.50 32.90 35.40 39.90 42.6 43.8 Rice dry season 16.90 16.70 18.90 19.10 19.80 22.70 26.00 29.50 26.6 29.9 30.3 Bananas 12 2.03 2.05 1.79 1.74 1.74 1.69 1.68 1.63 1.94 1.67 1.63 Oil Palm 1.22 1.44 1.65 1.71 1.88 2.03 2.37 2.61 2.33 4.20 4.95 Sugar 2.30 2.30 2.29 2.12 2.19 2.30 2.36 2.39 2.42 2.49 2.50 Citrus2/ 1.84 1.83 2.02 1.98 2.00 1.89 1.90 1.93 2.15 1.77 1.76 Vegetables 0.48 0.40 0.46 0.46 0.49 0.54 0.59 0.72 1.73 .75 .74 Peanuts 0.29 0.32 0.32 0.24 0.28 0.25 0.29 0.21 0.34 0.34 0.33 Coconuts 1.20 1.20 1.11 1.11 1.11 1.00 0.97 1.10 1.34 1.24 1.10 Other food crops3/ 0.67 0.67 0.65 0.58 0.65 0.76 0.90 1.85 1.43 .93 .90 Other cash crops4 / 0.83 0.83 0.82 0.75 0.75 0.42 0.51 0.40 0.66 0.44 0.48

Total Crop Area: 55.86 55.94 58.55 59.09 60.89 66.08 70.47 76.77 81.26 86.40 87.73

Non-riceArea 10.86 11.04 11.05 10.67 11.19 10.88 11.57 12.39 11.81 13.83 14.39

1/ of which 95% SURLAND. 7l 75% oranges; 24% grapefruit. 3/ Mainly legumes, root crops and maize. / iMainly cocoa and coffee.

Source: Ministry of Agriculture. Table 2: SURINAHE - PRODUCTION OF MAJOR CROPS, 1973-83 ('000 tons)

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Rice (dry paddy) 164.10 162.40 174.80 172.50 202.90 223.90 235.80 257.63 265.51 301.13 267.96 Bananas 38.24 40.00 44.19 43.00 31.51 33.06 31.21 39.23 44.70 42.40 36.60 Palm fruit (f.f.b.) - 1.65 3.22 6.65 10.03 14.84 24.75 21.11 24.65 28.17 31.24 Palm oil (raw oil) - 0.13 0.63 1.33 1.87 2.81 4.86 4.09 4.72 5.69 6.55 Palm kernels - 0.03 0.14 0.30 0,42 0.74 0.99 0.85 .88 1.13 1.10 Sugar 8.96 8.54 9.58 8.39 6.37 6.00 9.97 7.00 8.12 7.05 6.05 Citrus fruit 16.56 17.00 18.25 17.36 20.01 8.72 9.62 11.11 11.44 9.37 11.12 Vegetables 3.11 2.02 2.23 2.70 3.17 3.38 3.87 4.65 10.58 5.26 4.58 Peanuts (shelled) 0.34 0.38 0.39 0.29 0.34 0.25 0.29 0.21 0.34 0.34 0.26 Coconuts (million units) 7.60 6.00 5.52 5,50 5.50 5.64 5.70 5.48 6.53 7.18 5.45 Other food crops 2.89 2.14 2.78 1.89 2.54 3.23 3.74 4.02 8.16 3.79 4.00 Other cash crops 0.14 0.14 0.14 0.13 0.15 0.07 0.14 0.11 0.13 0.07 0.16

All Crop Production 241.94 238.78 258.65 253.39 274.78 289.45 306.17 344.38 361.17 383.41 343.83

Rice Production Index N (1973 - 100) 100 99 106 105 124 136 144 157 162 183 164

Other Crops Production Index 100 101 108 104 92 84 90 110 123 106 99

All Crop Production Index 100 99 107 105 114 120 127 138 149 158 142

Note: Citrus conversion 4,500 units per ton. Coconut conversion 1,000 units per ton. Excludes frech fruit bunches (f.f.b.)

Source: Ministry of Agriculture. Table 3t SUKINA1E - AVERAGEYIELDS OF HAJOR CROPS, 1973-83 (tons per ha)

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Rlice(dry paddy) 3.65 3.bb 3.68 3.56 4.08 4.06 4.00 3.97 4.00 4.15 3.65 Bananas 1/ 18.83 19.72 26.73 25.13 18.63 21.56 20.89 26.56 28.53 28.27 25.68 oil Palm fruit (f.f.b.)L/ - - 6.20 6.90 7.50 9.00 15.00 11.70 12.70 11.00 11.40 Sugarcane 2/ 80.50 97.00 99.00 99.00 71.80 69.00 80.00 82.00 68.00 64.00 69.00 Sugar 3/ 3.90 3.70 4.18 3.96 2.91 2.9? 4.10 2.93 3.35 2.83 2.42 Sugar extraction ratio 4/ 5.68 5.83 6.01 5.72 4.69 5.44 6.08 4.78 5.55 5.62 4.70 Citrus frult 9.00 14.96 14.58 16.68 6.98 7.40 7.23 7.15 6.69 7.40 Vegetables 6.48 5.01 5.58 5.87 6.47 6.26 6.56 6.46 6.08 7.15 6.16 Peanuts (shelled) 1.17 1.23 1.20 1.20 1.02 1.02 1.00 1.01 1.00 1.00 0.78 coconuts ('000 units/ha)I/ 7.93 6.25 5.53 5.50 5.50 5.64 5.64 5.40 6.53 7.48 5.40

1/ Yield tons per hectare in bearing. T/ Yield tons per hectare harvested 3/ Yield per ha planted. I/ Sugar production as Z of cane production.

Source: Derived from Tables 1 and 2. go C lJ Table 4: SURINAME - GROSS VALUE OF MAJOR CROPS, 1973-83 (SM. million at current prices)

1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Rice (paddy) 26,6 30,9 36.7. 38,0 52.5 45.7 58.2 63.6 61.9 73.5 65.7 Bananas 1/ 4.9 5.50 9.7 11.0 6.7 7.7 8.6 11.7 15.5 16,1 15.4 Oil Palm - 0,14 0,4 0.9 1.7 2.7 4.7 4.1 6.1 7,4 8.5 Sugar 3.7 3.6 4.1 3.6 2,7 2.9 4.2 4,1 4.9 4.2 3.6 Citrus fruit 3,3 2.6 3.1 3.6 7,3 3.9 4.5 5.4 5.6 5.0 5.7 Vegetables 2.3 2,0 2,5 2.4 3.0 3.3 4.1 6.5 13,6 5.5 5.9 Peanuts 0,7 0.9 1.0 0.9 0.9 0.8 1.0 0.7 1.2 1,2 1.0 Coconuts 1.1 1.0 1.0 0,9 0.9 0.7 0.8 0.8 1.0 1.1 0.8 Other food crops 2 / 1.1 1.0 1.3 1.2 2.6 3.0 3.6 4,6 10.4 4.1 4.1 Other cash crops!/ 0.2 0.2 0.2 0.3 0.5 0.4 0.9 0.7 0.7 0.4 0.9

Tntal Crops 43.9 47.8 60.0 62.8 78.8 71.18 90.67 102.17 120.96 118.50 111.6

Gross Value Indices (1973 - 100)

Rice 100 116 138 143 197 171 219 239 232 276 247 Other crops 100 98 135 143 152 147 187 222 341 260 265 All crops 100 109 137 143 179 162 206 232 275 270 254

I/ Value of expert and local consumption. / Mainly legumes, ront crops and maize. 3H Mainly cocoa and coffee.

Source: Ministry nf Agriculture Table 5: SURINAME - VOLUME AND VALUE OS LIVESTOCKPRODUCTION, 1973-83

1973 1974 1975 1976 1'977 1978 1979 1980 1981 1982 1983

Meat (tons) Beef 1044 929 1045 980 943 1194 1098 1179 1298 1355 1365 Pork 740 827 883 774 811 948 1069 1135 1102 993 1153 Chicken 5412 6141 7330 7600 7500 8000 8360 8400 8400 8600 8600

Total Meat: 7196 7897 9258 9354 9554 10142 10527 10714 10800 10948 11118

Hilk ('000 llters) 11 5664 7280 7560 8100 7830 7790 6892 7106 7200 8300 8700

Eggs (million unLts) 43.5 48.l 60.0 64.0 62.0 45.0 52.5 52.8 53.0 53.5 53.0 "

Gross Value of Heat, 19.8 24,4 32.3 33.6 34.5 40.2 44.3 45.2 51.5 51.6 52.5 Eggs and Milk (8f. million)

Livestock (cattle) 30500 26100 26200 25850 24000 34495 42239 46570 5?230 48347 53112 Population 2/ (head)

(Of WhLch Hilk Cows) (4327) (5133) (5150) (4950) (4990) (6178) (5743) (5922) (14530) (5685) (6243)

/ Includes milk sold to the Central Dairy and milk sold privately. / Up to 1977, only covers smallholders; 1978-80 includes SHL and Government farms.

Source: Ministry of Agriculture. Table 6: SUAINAME - VOLUME AND VALUE OF (AJORAGRICULTURAL FISHERIES AND PORHSTRY EXPOR.TS1973-83

1973 1974 L975 1976 1977 1978 1979 1980 1981 1982 1983

Volume Exported ('000 tons) Nice 44.5 41.3 58.8 57.5 54.7 84.3 103.3 114.9 112.5 130.8 Citrus n.a. 127.4 n.a. 5.3 4.5 1.8 1.0 1.2 0.7 1.3 1.5 Bananas 30.1 0.9 34.6 38.3 37.0 27.3 28.0 27.3 33.2 36.5 37.5 Sugar n.s. n.a. 32.2 - 0.3 3.2 4.3 2.6 0.3 - - - Vegetables,Fruits n.a. n.a. f(.& 0.4 0.5 0.5 0.6 0.6 n.a. n.a. n.a. Value Exported (Sf. million) Rice 20.6 21.4 33.3 27.8 30.9 48.9 68.4 75.3 65.4 70.3 66.1 Citrus 1.0 n.a. 1.0 0.8 0.4 0.4 0.7 0.6 0.8 0.9 n,a. Bananas 3.8 4.6 6.1 7.0 6.0 Sugar 6.7 7.7 10.1 13.0 14.5 13.8 0.2 - - 0.2 2.1 3.6 3.0 Alcohol 0.4 - -- 0.6 n.a. 0.9 0.4 0.1 1.1 0.5 Palm oll 0.5 0.3 - 0.1 - - 0.3 0.7 1.0 1.3 3.1 0.7 0.5 0.8 1.0 Vegetables,Fruits n.a. n.a. 1.2 1.2 1.9 2.9 3.1 3.5 n.a, n.e. n,ao Total AgriculturalExports 26,2 26.0 42.8 38.1 42.4 64.9 86.5 91.1 80.0 86.5 81.0 Shrimp Exports (Sf. million) 19.3 16.4 23.7 47.4 51.6 53.0 29.9 34.2 39.3 36.0 36.3 Forestry Exports (Sf. million) 13.5 14.0 13.3 12.8 12.8 13,5 21.0 18.5 18.5 20.0 11.5 Total Exports (of. million) 367.0 552.0 588.0 618.0 707.0 814.0 917.0 1094.0 1010.0 910.0 776.0 Share of Total Exports (X) Agriculture 7.1 4.7 7.3 6.2 6.0 8.0 9.4 8.3 7.9 9.6 10.4 Shrimp 5.3 3.0 4.0 7.7 7.3 6.5 3.3 3.1 3.9 4.0 4.7 Forestry 3,7 2.5 2.3 2.1 1.8 1.7 2.3 1.7 1.8 2.2 1.5

Source Hliniotryof Agricultureand Central Bank. Table 7; SURINAME- EMPLOYMENTIN AGRICULTURE,FISHERIES AND FORESTRY, 1973-83 (npmberof persons)

1973 1'974 1975 1976 1977 1978 1979 1980 1981 1982 1983

Agricultureand Fisheries 16,000 15,600 15,300 14,700 14,500 14,200 15,000 11,050 11,200 11,200 11,200 Forestryand wood processing 1,9009 00 00 1,800 1,800 1,800 2,500 3,200 3,000 2,900 2,900 2,900 Total employed,all sectors: 45,150 86,250 91,400 93,600 98,400 102,300 103,100 94,440 96,940 97,850 98,760 Agricultureas Z of total 18.8 18.1 16.7 15.7 14.7 13.9 14.5 11.7 11.6 11,4 11.3 Forestryas x of total 2.2 2.2 2.0 1.9 1.8 2.4 3.1 3.2 3.0 3.0 2.9

Notes Figuresdo not includemigrant workers. Source: PlanningBureau and MLnistryof Finance.

0

la Table 8: SURINAME - AGRICULTURAL BANK LENDING BY SECTOR, 1980 - 1987 (Sf. '000)

Actual Estimated Projected Sector 1980 1981 1982 1984 1985 1986 1987

Rice 11,612.9 11,684.3 7,002.1 7,736.2 12,053.0 11,763.2 12,528.5 Mixed Enterprise 3,922.1 2,833.3 2,239.7 1,250.0 1,500.0 1,460.5 1,164.6 Horticulture 461.3 539.9 125.8 5,134.2 4,779.5 2,412.3 3,032.3 Livestock 438.3 1,773.8 911.2 2,161.0 4,099.3 3,771.7 3,726.2 Fisheries 234.5 425.3 269.5 1,945.0 2,512.0 2,166.0 578.0 Forestry - - 27.4 - - - Other 6,488.0 6,657.7 9,557.2 10,000.0 11,000.0 12,000.0 13,000.0

Total 23,157.1 23,914.3 20,132.9 28,226.4 24,943.7 33,573.7 33,029.6

Source: Agricultural Bank Table 8a: SURINAME- AGRICULTURALBANK LENIDNGBY SECTORAND ACTIVITY,1983 (Sf. O00)

-- …------Activity ------… NO. Of Total Business tran- Amount EBtab- Sector sactions of loans lishments Cattle Machinery Housing Purposes Refinancing

Rice 1,141 7,002.1 6,105.4 - 694.7 26.0 112.1 63.9 Mixed Enterprise 359 2,239.7 1,546.0 197.5 123.8 66.8 102.3 203.3 Horticulture 23 125.8 90,3 2.5 - - 7.0 25.9 Livestock 103 911.2 33.2 745.1 5.5 6.0 9.7 111.7 Pisheries 57 269.5 17.9 - 222.6 - 15.5 13.5 Various 1,344 9,574.6 182.0 16.5 522.2 1,994.0 5,980.6 898.2

Total 3,027 20,122.9 7,973.8 961.6 1,568.8 2,092.8 6,227.4 1,316.5

Source: AgriculturalBank - Z12 -

Table 9: SURINAME - RICE FARI4 BUDGET - MECHANIZED FAEMING (1.0 ba)

1. Output Paddy - volume 5,000 kg - price Sf 20/80 kg bag - value Sf 1,250.00

2. Inputs Land preparation /1 Sf 150.00 Ditch preparation /i 20.00 Seeds 90.00 Planting /1 34.50 Pesticides 36.00 Spraying /1 125.00 Fertilizer 126.00 Water management /2 97.00 Combining /1 125.00 Transport 30.00 ilired labor 143.00 Miscellaneous 10.00

Total Costs 986.50

3. det Returns per ha 242.50

Note: /1 Contract service. /2 Equipment operating cost and water charges.

Source: Ministry of Agriculture - 213 -

Table 10: SURINAME - BANANA PRODUCTION COSTS, 1982 AND 1983

Sf. million- 1982 1983

A. Inputs

1. Fertilizer 201,837 227,098 Pesticides 759,564 704,545 Machinery Cost 274,892 260,830 Fuel 191,610 161,355 Plastic Material 529,449 504,238 (for plant protection) _

1,957,366 1,858,066

2. Storage, handling & cleaning 52,441 43,365 trrigation/drainage 41,367 62,098 Other materials 210,892 176,240

304,100 281,703

3. Labor 8,279,058 8,778,432 Land 1/ 172,252 184,474 Management 772,980 821,689 Administration 696,685 625,253 Land tax 27,733 27,733

9,948,708 10,437,581

4. Transport-to-dock 365,236 283,228 Loading, etc. 713,209 632,492

B. Production (tons) 41,458 41,000

C. Export 37,483 32,159

1/ Depreciation on crop and land development costs.

Source: SURLAND - 214 -

Table 11: SUKLINAME- AGRICULTURESECTOR GDP GROWTHRATE ESTIMATE

Mean Annual M4eanAnnual X Volume Z Real Price % of 1984 Change 1984 Change 1984 Weighted Z Commodity Agric. GDP to 1990 to 1990 /4 Growth Rate

Rice 28% +6.3% /1 + 5.5% 3.30 Bananas 6X +2% + OX 0.12 Oil Palm 4Z +11.4% /2 - 0.5% 0.44 Sugar 6Z + 0% + 6.5% 0.39 Citrus 2% + 2% /3 +0 % 0.04 Vegetables 2% + 2% 73 + 0 X 0.04 Other Crops 2% +-Z Th + 0 Z 0.04

Livestock 20% + 2X /3 + 0 x 0.40

Fisheries 30% + 1Z + 0 Z 0.30

Total Agriculture 100% 5.07

/1 From 303,000 tons in 1984 to 413,000 tons in 1990 assumes 75% achievement of the 64,000 ton projected ?ICP increment, 66Z of the 57,000 ton projected increment from the existing area in Nickerie plus 50% of the projected LOC increment. The lower achievement is assumed due to equipment, spares and input shortages.

17 Assumes 66Z achievement of Alternative II 1990 productioa estimate at Patamacca.

/3 Assumes that these commodity volumes approximately keep up with population growth.

/4 Price changes of major export commodities are based on the percentage real increases forecast by World Bank on export prices. Note that this assumption includes the locally consumed proportion (the projections are not considered sufficiently accurate to make it worthwhile separating the two). Price changes of locally consumed commodities and bananas are assumed to be zero in real terms. (This assumption would tend to cancel out the volume assumption i.e. if volume increase went higher price would drop and vice versa).

Note: Agriculture GDP calculations exclude forestry. There seems little reason to expect any significant growth in forestry.

Source: Mission estimates. - 215 -

Table 12: SURIdAME - EXPOIT PROJECTIONS FOR MAJO AGRICULTURALCOMODITIES (1983 Constant US$)

1983 1990 1995 (Actual)

Rice Volume (tons) 21 127,000 209,000 290,000 Value (US$UUO) /2 37,00O 54,000 65,0UO

Oil Palm Volume (toas ffb) /3 34,000 95,00U 119,000 Value (US$000) /4 670 8,700 12,500

Bananas Volume (tons) /5 32,000 48,000 48,000 Value (US$000) 76 8,00 12,000 12,000

Shrimp Volume 17 (tons) 3,400 3,400 3,400 Value //-(US$000) 20,600 20,600 20,600

Forest Products Volume (000 m3) 18 32 38 41 Value (US$000) /T 7,000 9,500 11,300

Total Export Value (US$000) 73,270 104,800 121,400 Percentage Annual Increase 5.2Z 3.0Z (Mean annual x for whole period - 4.3Z)

," Assumes increase of land area from 43,000 ha in 1983 to 67,000 ha in 1995. This increase in land area represents between 50Z and 75X achievement of che various expansion plans.

J2 Prices used are World Bank forecasts for Thai 5Z broken with a 10I reduction from the forecast figure by 1995 to allow for possible marketing difficulties.

,3 Based on Victoria N.V.'s own projections for Victoria/Phedra/Outgrowers plus 66Z achievement of the Alternative II Patamacca estate development.

/4 Based on 1983 prices for edible oil, stearins and fatty acids. If refining capacity is not expaaded these projections would be (very approximately) 1990 USS 6 million, 1995 US$ 8 million.

/5 1983 was a misleading year due to water problems but the 1990 and 1995 figures include some expansion of area fo meet contracts more reliably.

/6 So real price iacreases are assumed.

/7 No quantity increases or real price increases are assumed for shrimp. Legislatioa may reduce competition from unlicensed fishing but problems with the shrimp company SAIL may mean that increased protection will aot be exploited.

/8 A 2Z per annum increase in production is assumed up to 1995. There seems little reason to be optimistic for more. than this for 1990 and 1995.

19 World Bank price forecasts for 1990 and 1995 show no changes from 1983 actuals, a 2% per annum increase in real unit price is assumed due to increased proportion of processed product.

Source: Mission estimates. - 216 -

Table 13: SURINAME - RICE EXPORT PROJECTIONS (1983 constant price)

Actual 1983 1990 1995

Hectares Land 43,000 55,000 67,000 Cropping Inteusity 1.70 1.75 1.80 Planted Hectares 73,000 96,000 121,000 Yields ton/ha/crop 3.65 4.03 4.05 Dry paddy harvested (tons) 268,000 413,000 545,000 Seeds (tons) 10,000 13,000 17,000 Losses (3X) tons 8,000 12,000 15,000

Dry Paddy for Processing (tons) 250,000 388,000 512,000 Milling loss (24Z) (tons) 60,000 93,000 123,000

Cargo Rice Total (tons) 190,000 295,000 389,000

Export Cargo Rice (tons) 98,000 166,000 232,000 Cargo Rice for Polishing (tons) 92,000 129,000 157,000

White Rice (tons) 75,000 105,000 128,000 Domestic Consumption (tons) 46,000 62,000 70,000 Export White Rice (tons) 29,000 43,000 58,000 Bran (18%) (tons) 17,000 23,000 28,000

Cargo Rice Export Price /1 (Sf/ton) - 422 367 White Rice Export Price 77 (sf/ton) - 603 524

Value Total Rice Exports (Sf 000) 66,000 96,000 115,000 (actual)

/1 Assumes cargo rice price is 70% of white rice.

/2 Assumes 100% of World Bank Forecast Prices for Thai 5% broken in 1990 and 90% in 1995 to allow for marketing difficulties and sale of part of incremental production outside preference markets.

Source: Mission estimates. lable 14: SURINAME- PALNOIL EXPUMTPOJEc'rIoNS (1983 constant prices)

1983 1990 1995

Vr^T/Pdt URAOUTGRAMS

Projected Value of Exports Victoria/Phl dra/Outgrowers /1 (SfU00) 1,119 5,603 5,603 PATAIACCA Projected Production of fresh Fruit Bunches from Patamacca (ton) /2 42,206 66,0OU Projected Raw Palm Oil from Patamacca (tons) 8,325 13,660 Projected KernelOil in Palm Oil equivalent (ton) 890 1,650 Free Fatty Acids from Raw Palm Oil (5X) 416 683 Free Fatty Acids from Kernels(IZ) 9 17 Total Free Fatty Acids 425 700

Edible Oil from RP) (63X) 5.245 8,606 EdibleOil from Kernel (991) 881 1,633 Total EdibleOil 6,216 10,239

Stearins (312) 2,581 4,235

Export ValueEdible Oil /1 (SfOO) 9,189 15,358 Export Value Stearins /,- (SfO00) 774 1,271 Export Value Free Fatty Aids /1 (SfO00) 43 70

Total Export Value Patamacca /3 )SfOOU) 10,006 16,699

TOAL SUIlNAME Total SurinameYalm Oil ExportProjection (Sf000) 1,199 15,609 22,302

/I Prices assumed: Raw Palm Oil Sf 410 EdibleOil ex RPO Sf 150U Stearins Sf 300 Free Fatty Acids Sf 100 Theseexport quantities and prices are based on 1983 constant prices and are takenfrom a 1983-1992 cashflowprojection by Victoriad.V., local consuiptionestimstes have been deducted. /2 Assucas66X achievement of the Alternative II proposalfor 5,000hecatres, i.e., 66X by 1990, 662 by 1995. 13 World Bank price forecasts show littlechange between 1983 actuals and 1990 and 1995 forecasts, therefore no price changes have been assumed. /4 If refining is not carried out then the 1990 export figure is likely to be about S10 milion and the 1990 figureabout $14 million.

Source: Kission estimates. - 218 -

III. ENERGY

3.01 About 80 percent 1/ of all energy used is imported (liquefied gas and petroleum products). Of the imported hydrocarbons,80 percent is used directly and 12 percent is converted to electric power. Hydro-electricenergy supplies 78 percent of all electric power used in the country. Tables 1.1 and 1.2 Annex 1 show a summary of energy in use in 1982, derived from a more detailed energy balance prepared by the Ministry of Natural Resources and Energy.

3.02 Of the net energy used in the country, 62 percent is used by the bauxite sector. This single sector consumed 78 percent of all electric energy and 64 percent of the final use of petroleum products. Most of the petroleum products used by the bauxite sector consist of heavy fuel oil, whereas the other sectors used gasoline, kerosene (mainly for air transport) and diesel oil. The fuel oil used by the bauxite industry is burned nearly exclusively in co-generationsteam turbines at a relatively high conversion efficiency of about 0.68 whereas diesel oil used by the Suriname Electricity CorporationEBS is converted at a much lower c-onversionefficiency of 0.36 (which is, nevertheless,a quite good efficiency rate for a diesel plant). Roughly, about 12 percent of all oil imports was used in 1982 for generating electricity,20 percent was used in the transport sector and 68 percent was used to produce (process)heat.

3.03 Energy use by sector over the five year period 1978-1982is shown in Table 1.3 and energy use by fuel type in Table 1.4 of Annex 1. These tables show again that the bauxite sector is the major user of energy in the country. The sector is an exclusive user of fuel oil and by far the largest user of electricity. It is a minor user of other fuels. In terms of final use, energy consumption in 1982 was 1.82 TOE per capita if the bauxite sector is included, but 0.69 TOE if that sector is excluded.

A. ENERGY RESOURCES, IMPORT SUBSTITUTIONAND CONSERVATION

The scope for import substitutionand conservation

3.04 In 1983, Suriname imported energy resources in the form of petroleum products for a value of SF 228 mln (US$ 127 mln). This amounted to about 36 percent of the country's merchandiseexports. Whereas this is not a particular high percentage compared to many other countries, it represents neverthelessa substantial target for import substitution consideringalso that the import of petroleum products is likely to increase gradually if substitutionis not pursued.

3.05 In principle, the country has a number of energy resources or potential energy resources which could replace at least part of the imported petroleum products. These are oil of national origin, solar radiation, wind, wood peat, other biomass and hydroenergy. The possible contributionto substitutionof actual and potential imports by each of these sources will be briefly discussed in subsequent sections.

_ On an output basis - 219 -

3.06 It would, of course, be unrealistic to expect that all imports of petroleum products could be replaced by national energy resources, but it will be necessary to pursue import replacement whenever this is technically possible and economically attractive. Conservation of energy use is an alternative which should receive equal emphasis. There are likely to be many opportunities for reduction of energy consumption where the cost of reducing consumption is lower than the cost of adding capacity to produce the energy. Frequently, each individual opportunity is small, but in total they can add up to a significant economic saving and substitution of energy.

3.07 Energy conservation has not yet received much attention in Suriname and reliable quantitative figures about the scope for energy conservation are not available. Some typical areas where conservation is likely to be profitable are the following: Substitution of solar water heating installations for electric, LPG and diesel fuel installations used to produce low grade hot water in hotels, hospitals, residences and industries (including pre-heating); recovery of exhaust heat from power plants or boiler installations for low grade process heat (drying) and (pre) heating of water; improved insulation of refrigeration and drying plants and air-conditioned buildings; in some cases, replacing of old equipment by new, more energy efficient equipment; checks on proper tuning of truck and car engines and punitive duties on fuel-inefficient vehicles.

3.08 The Government can and should take a lead role in energy conservation. It should develop some technical capability to identify opportunities for energy conservation and then provide assistance in this area to the managers of government owned buildings, facilities and enterprises. By publishing concrete examples of conservation schemes, large and small, with a solid rate of return in the government sector, the Government will encourage the private sector to follow suit. The technical capability built up in the public sector can then be used in an advisory role in the private sector. Subsidies may be considered whenever conservation is considered to be in the national interest but not privately attractive, with due consideration of appropriate economic criteria (import duties are not a cost element from a national point of view).

Oil of national origin

3.09 Occurrences of petroleum in Suriniamehave been reported since 1930. Since 1960 a number of foreign oi; wvmpanies have undertaken exploration activities, both on-shore anr off-shore. On-shore, the Tambaredjo field, about 50 km West of Paramaribo, has been In production by the State Oil Company (SOMS) in 1982. Other fields of potential commercial interest have been identified near Calcutta, 70 km West of Paramaribo and Weg naar Zee, some 8 km North-West of Paramaribo. SOMS also holds a concession on certain off-shore areas.

3.10 As discussed in more detail in Section C a production of some 2 mln barrels of national oil per year would be a reasonable prospect by the end of the 1980,s and a larger production would be possible in the early 1990's. -220 -

3.11 The oil is a heavy oil which can be used directly as substitute for fuel oil imported by or for Suralco (some 1.75 nln barrels per year). It could also replace a fair amount of diesel oil which is currently, rather wastefully, used as boiler fuel in Suriname.

Solar radiation

3.12 With more than 3000 hours of sunshine per year and an average radiation of 6700 W per m 2, solar radiation is potentially a significant energy source in Suriname. However few technologies are currently available to capture this energy at a reasonable cost. Of inediate interest is solar water heating which should be economically quite attractive for users of hot water such as hospitals, hotels, some residences and some industries.

3.13 Photo-voltaic conversion may be considered, on a small scale, in some small interior communities where small diesel plants generate electri- city at a very high cost (cost of diesel oil up to SF 2 or 3 per 1.). It is likely that photo-voltaic conversion will be further developed and that costs will, over the next 10 years or so, decrease significantly from current, still very high, levels. However, in communities where an electric distribution network has been established already and where the supply of firewood is ample and cheap, small and rugged steam engines could be an attractive alternative to either diesel engines or photovoltaic systems.

Wind energy

3.14 Average wind speeds in most of Suriname are quite moderate (5 mi/second)and also irregular. This is unattractive for electric power generation but could find some application in pumping, when regular operation is not a concern. Thus wind energy is unlikely to become a significant source of energy in the country. Since windspeeds are somewhat higher and also more regular off-shore, SOMS believes that wind energy could perhaps be considered as a source of pumping energy if and when off-shore oil, in rather shallow waters and close to the coast, is found to be commercially exploitable. Realization of this, perhaps remote, possibility would require the early initiation of a program of wind measurement in appropriate off-shore locations, followed, at the appropriate time, by pumping trials.

Wood

3.15 Suriname has approximately 14 mln ha of forest of which some 1.5 mlc ha are currently productive in varying degrees of intensity and some other 1.5 mln ha are potentially productive.

3.16 An immediate source of potentially useful energy is wood waste. Some 40,00 m3 of surplus wood waste per year is now available at Bruinzeel, the large, government owned wood processing industry located in Paramaribo. The use of this waste in a co-generation facility has been the subject of various reports and proposals. Some 15 GWh per year of electric energy could be generated from such a facility, for use by Bruinzeel and EBS. - 221 -

3.17 This should be an economically attractive project. It will be desirable to initiate as soon as possible a feasibility and final design study followed by immediate implementation if the study confirms the economic attractiveness of the project.

3.18 According to Williams (see references) some 160,000 m3 of wood waste would be available at about 35 saw mills. For those sawmills which are located near the electric power grid, Williams suggests wood-gasifier generation to make use of the waste. Connection to a power grid would be necessary to support generation during power surges, provide stand-by and absorb surplus power. Williams estimated that the cost of power would be SF 0.16 (1982) per KWh at an average capacity factor of 0.23. The economics of the proposition may be a bit doubtful in many cases since the unit cost estimated by Williams is well above the variable cost of public power generation in Paramaribo and since the surplus power available to EBS would be secondary power, which must be firmed up by EBS. Also, the technical and economic feasibility of wood-gasifier generator sets which are fueled with wood or other biomass of somewhat heterogeneous characteristics is still being tested. Pilot plants are being installed in a number of countries and the Government should arrange to be informed about the results of these pilot projects over the next few years.

3.19 In Paramaribo and Nickerie, where 24 sawmills are located, it may be possible to collect waste which has no opportunii.ycost as firewood, and use it as boiler fuel in drying and other similar installations, replacing diesel oil. In such applications, wood-gasifiers, not connected to a power generator, are a proven technology and are available from Brazil at relatively low prices.

3.20 As noted earlier, cut firewood may be an attractive fuel for electric power generation using small steam engines in small interior communities where diesel oil is very expensive.

3.21 On a somewhat longer term, wood could be a major source of fuel for the purpose of electric power generation, if oil prices increase further and if alternative sources, such as hydro-energy, cannot be developed at a reasonable cost. This would require the production of wood on a large scale from firewood plantations. Little research has been done, apparently, on the feasibility of firewood plantations in Suriname, though some pine has been planted. It would be desirable to initiate a small but well managed program of testing a number of fast growing species from different countries under Surinamese conditions (appropriatevarieties of pines, eucalyptus and lucaeana or ipil-ipil, for example).

Other biomass

3.22 Large scale cultivation of biomass as raw material for the production of ethanol is not an immediate prospect in Suriname. But an immediately available biomass resource is rice husk in the main rice growing areas of Suriname.

3.23 The state owned Wageningen project produces some 27,000 tons of husk per year of which some 20,000 tonnes are already used as fuel in - 222 -

boilers which generate steam and electric power. Additional power is generated from diesel sets.

3.24 Disposal of the surplus husks is a costly nuisance and the Wageningen Foundation proposes to install an additional boiler and a 230 kW extraction turbine to make use of the surplus husk. The proposal by the Foundation (see references) includes modification and expansion of the rice processing facilities and its formulation makes it difficult to separately analyse various components of the proposed work. It would appear, however, that an investment of some SF 3.6 mln could result in a savings of nearly 1.8 mln 1. of diesel oil per year. At a diesel oil cost of SR 0.67 per 1. and additional costs of operation and maintenance of SF 82, 000 per year, net annual benefits would amount to SF 1.1 mln which would imply a high return on investment. The net benefits would still be some SF 0.8 mln per year after deduction of import duties on diesel oil, still a high return on investment.

3.25 Some of the technical details of the proposal have been questioned by others. Such details should be assessed, as soon as possible, in a feasibility and final design study of the various components of the proposal by the Foundation. This study should also assess the desirability of replacing some of the older boilers, turbines and diesel sets with an integrated, new and more efficient set of utility facilities based on the use of rice husk and some rice straw, supplemented by fuel oil or crude oil from SOMS. Finally, if major modifications and/or expansion are found to be desirable, the study should assess the desirability of conversion of the power facilities from 50 Hz to 60 Hz, the standard frequency in the country. At some time in the future, connection of the Wageningen power system to the Nickerie system and, perhaps later, a national power system is likely to be desirable.

3.26 A significant amount of rice husk, in order of magnitude at least equal to the quantity availabie at Wageningen, is available in Nickerie and is scarcely used at this time. Processing of rice in Nickerie is dispersed over a number of facilities and utilization of the husk may be somewhat more difficult to achieve than at Wageningen, but should nevertheless be pursued. SOMS has targeted this market for replacement of diesel oil currently used as boiler fuel by its crude oil, but any such replacement is advantageous to the country only after the available husk is used as much as possible. The easiest way of using this husk is probably as boiler fuel or in gasifiers to produce heat. In some cases, use in co-generation facilities may be justified.

3.27 Another biomass waste material is the waste from palm oil processing. The palm oil plant at the Victoria plantation already uses this waste as fuel. All the available bagasse is also used by the sugar industry.

Peat

3.28 Peat occurs in Suriname in various places, mostly in the Fwampland where recovery would be expensive. Recently, peat deposits of as yet unknown size, but on higher land, were identified near the Kabalebo - 223 -

River in West Suriname, some 150 km south of Nickerie. Prelininary investigations indicate reserves of over 1.5 mln cubic meters in the Coraatijn area. It has been determined that the Kabalebo deposits already are In the primary stage of carbonisation and have a caloric value of between 4,400 and 5,200 kilocalory/kg. It is currently too early to assess the potential for commercial exploitation of these deposits, possibly as a source of fuel for supply of electricity to Nickerie and other West Suriname load centres.

3.29 Other peat deposits have reportedly been identified along the recently constructed Corantijn canal, much closer to Nickerie.

Bydro-electric resources

3.30 Based on global methods of evaluation, Suriname's hydropotential has been estimated to amount to some 3000 MW(installed capacity). This is a very significant potential energy resource, in relation to the country's population. Currently, 189 MW has been developed at the Afobakka site.

3.31 Of the approximate potential of 3000 MW, about 90 percent are located on the two or three border rivers or on tributariesto these rivers. The two major border rivers are the Corantijn along the border with Guyana, which Suriname considers to run completely within its national borders, and the Marowijue, which Suriname recognizes as an international river, along the border with Freuch Guyana. The Coeroeni, a tributary to the Corantijn, marks the border of a contested area of land.

3.32 In accordance with the broad concept of regional developmentwith particular emphasis on bauxite and lumber exploitationin West Suriname a considerableeffort in the late 1970's led to the definition of the Devis Fals (or Kabalebo) project. This project considered Installed capacities varying from 200 to 500 MW to generate from 600 to 3000 GWh per year, on the average. Subsequently,this proposed project was removed from immediate consideration,because of its size, cost and the dimming prospects of early and major developments in West Suriname.

3.33 Currently, the emphasis is on smaller projects which are geared to the more immediate needs of supplying current and near-future power demand in the country. Two smaller projects in an advanced state of preparation are the Jai Kreek diversion, which would bring additionalwater to the existing Arobakka power plant on the Suriname river and the Phedra project on the same river.

3.34 These are projects in the 10 to 15 KW range. Priority for further Iuvestigation is allocated to developmentson the Saramacca River and the Paloemeu River. Official estimates indicate that the potential of the Saramacca area could be as much a 100 MW.

3.35 Concerning mini and micro hydroplants, which could be attractive sources of energy for small interior centres of population, a 40 kW plant is already installed at Poeketi, in Eastern Suriname. The Ministry of Natural Resources and Energy is making preparationsfor the constructionof a 25 KW plant at Mareshallskreek,some 70 km south of Paramaribo. This project, located near the road to Afobakka is intended to be a pilot and demonstrationproject. With an average annual output of 140 MWh, power could be supplied to a nearby village of 700 people, presently supplied by - 224 -

a diesel plant. The investment cost in this plant would be nearly US $10,000 per kW. The Ministry has calculated a unit cost of US $0.29 per KWh when all available power is sold. However currently assured sales are some 100 MWh per year only, rather than the average of 140 MWh which is available. Sales include some 40 MWh to the village and some 60 MWh to a saw mill (for illumintion only). Thi would increase the average unit cost to about US $0.40 per kWh, but this cost could decline if sales increase. The current cost of diesel supply, on the other hand, is estimated to amount of US $0.67 per kWh.

3.36 Some information on hydrologic surveying and prevailing discharge patterns are presented in Annex 2.

3.37 Of concern is the recent deterioration in the quality of hydrologic survey work which has already affected the qualify of data collected. The main problem is the departure of highly qualified personnel and the high turn-over of technical staff in lower echelons. An important reason is the lack of adequate promotion opporutunities within the service and the lack of proper training facilities. An outside consultant to BWKW (E.R. Durrant, see references) confirmed the existence of these problems and made recommendations which would result in improvement. He also recommended a reduction in the number of stations as a means to preserve quality. Bad hydrologic data are possibly worse than no data.

3.38 A decision was made, in 1982, to combine the two existing hydrologic survey organizations. This is a sensible decision but is still not implemented and should be implemented forthwith. Appropriate improvements should then be introduced to assure that the combined service meets proper standards of quality.

3.39 The collection and interpretation of hydrologic data will be of increasing importance in Suriname, not only in support of hydroelectric development. Increasingly, such information will be necessary to support control of salt intrusion, irrigation, drainage, navigation and port development, municipal and industrial water supply, waste disposal and environmental assessment.

B. SECTOR ORGANIZATION

3.40 The Ministry of Natural Resources and Energy is responsible for three important areas: lands, mining, and energy. The top of the organization is currently as follows:

Ministry Directorates: __

Lands I Mining and Energy

Sub-directorates:

Energy Mining General Technical Affairs - 225 -

3.41 The Energy Division (or sub-directorate) has been established recently. Incorporated in the Division are some still relatively independent services such as the organization which is responsible for electric supply in small interior settlements and the remnants of the BWKW. This Bureau was once the main organization responsible for hydro development. This responsibility, and part of its technical staff, has been transferred to the Jai Kreek-Phedra Foundation. The Bureau is still responsible for hydrologic surveys in the interior of the country but it is the intention to transfer this responsibility to the hydrologic-hydraulic division of the Ministry of Public Works, Telecommunications and Construction. The Bureau, as part of the Energy Division, would finally be responsible for micro hydro development only.

3.42 Three independent state organizations report directly to the Minister of Natural Resources and Energy. These are EBS, SOMSand the Jai Kreek-Phedra Foundation.

3.43 EBS is the power company which is directlyresponsible for electric power supply in the Paramaribo area. It also operates a number of district electric power systems in Northern Suriname, though the Government is financially responsible for these systems. The company also distributes (imported) LPG in Suriname.

3.44 SOMS is the State Oil Company which has the exclusive right to explore for and exploit oil and gas deposits in the country.

3.45 The Jai Kreek-Phedra Foundation was given the responsibility to prepare studies and supervise eventual construction of the proposed Jai Kreek and Phedra hydro projects and the proposed additional transmission line between Paramaribo and Paranam.

3.46 The current administrative structure in the energy sector, as briefly outlined in the preceeding paragraphs, is far from ideal. A lack of coordination between illogically structured entities is of particular concern in the electric power sector. For example, the optimum design of a new transmission line and of new hydroelectric facilities requires a thorough and highly technical appreciation of the operations of the existing power systems and of expected changes in these operations. This appreciation is available in the EBS and Suralco, the operator of the largest power system in the country, but not in the Jai Kreek-Phedra Foundation which has been assigned responsibility for the design of these facilities. An effective means to assure intensive coordination between the scarce resources of expertise available in the various entities to overcome the disadvantages of separation apparently does not exist.

3.47 Of urgent concern is that negotiations between the Government of Suriname and Suralco about the integration of the proposed projects in the Suriname power systems are also conducted in an institutional atmosphere which is not conducive to a recognition and discussion of the highly technical issues which will define the optimum operation of the proposed projects in the context of the existing systems and, indeed, of the optimum operation of the EBS and Suralco systems for the benefit of the country as a whole and of both partners in the main power systems. - 226 -

3.48 It is relevant, in this context, to note that EBS operates under a capacity constraint (which is apparently incorrectly interpreted by Suralco as a firm energy constraint) whereas Suralco has, in principle, surplus capacity in its system. An insufficient recognition of these and other important aspects of the power systems in the country may also affect negotiations about a possible renewal of a purchase contract under which EBS bought power from Suralco in 1982 and 1983, generated by Suralco's gas turbine.

3.49 The country can ill afford the current dispersal of its scarce manpower between different authorities, particularly when adequate coordination between various entities appears difficult to achieve. An integration of EBS, the Jai Kreek-Phedra Foundation and the remnants of the Bureau for Hydroelectric Works (BWKW) would appear to be both necessary and urgent. The possible disadvantage of such an integration which places responsibility for the development of hydroprojects, some of which have multipurpose functions, under the electric power company appears to be, at this time, a theoretical disadvantage only in view of the projects which are under immediate consideration. Adequate solutions to this problem have been found in many countries and can be found in Suriname. In the short term, integration of the three entities appears imperative.

3.50 In a recent report prepared for the Ministry of Energy a consultant proposed a more thorough reorganization of the energy sector. He suggests the establishment of an Energy Authority with three operating companies and a planning-research and development division. The three operating companies would cover electric power, oil and gas (gas would be split off from EBS).

3.51 The recently established Energy Division in the Ministry of Natural Resources has important functions in the areas of planning, coordination, policy formulation and filling gaps between the autonomous entities. These gaps currently include subjects such as energy conservation, development of projects which make use of readily available (waste) biomass resources and the study of potentially new resources such as solar energy, peat and potentially new technologies such as gasifiers. To adequately perform all these functions, the Division needs more qualified personnel. In the short term, external technical assistance could be a source of additional expertise and could assist with training of Surinamese personnel.

C. THE OIL AND GAS SUBSECTOR

Introduction

3.52 Nearly all the country's requirements for oil and gas (LPG) are imported by local subsidiaries or agents of some large multinational oil companies. Prices are based on posted prices at Caribbean refineries but margins are subject to Government control and approval. The imported oil products are distributed by the importers but imported LPG is distributed by EBS. Suralco imports a major part of its fuel oil requirements directly but purchases also some oil from the multinationals. - 227 -

3.53 Under Decrees E-8 and E8-B of 1980 and 1981, SOMS has been established and designated as the Government's agent for the exploratiou, development and production of oil and gas of national origin. SOMS may be granted specific concessions which it then may operate directly or operate jointly with one or more partners or contractors on a production sharing or service contract basis, in accordance with guidelines included in the Decrees.

3.54 Currently, SOMS operates directly an on-shore concessiou and holds a concessiou over some 13,800 km2 of off-shore area for which it is seeking a foreign partner.

The State Oil Company

3.55 SOMS, established in 1980, started in 1981, for its own account and with technical support from Geoman, a consulting subsidiary of Gulf Oil Co., exploratory and development drilling in the on-shore Tambaredjo field, some 50 km west of Paramaribo. Production started in 1982 and 3700 barrels of heavy oil had been produced by the end of 1982. Productiou increased to 110,000 barrels in 1983 and in May 1984, a daily production rate of 500 barrels was obtained from 11 producing wells.2/ On the average, wells are some 300 m (1000 ft) deep and produce about 50 barrels a day.

3.56 The crude oil lifted from the Tambaredjo field is a heavy oil of good quality. The crude has a 15.8 API gravity, a sulphur content of 0.7 percent Wt and low metal content.

3.57 By increasing the number of producing wells SOMS expects to increase production to 912,000 barrels or 2500 barrels per day in 1987.

3.58 In late 1984 SOMS expects to start a pilot steam injection project in the Tambaredjo field, also with technical support from Geoman. The expectation is that steam injection would double the production rate from each well and would also result in a significant increase of the ultimate recovery from the field, sufficient to warraat the application of the enhanced recovery technique. Without steam injection, ultimate recovery is currently estimated at some 10-15 percent of original oil in place.

3.59 Thus, with respect to its on-shore operations, SOMS faces important decisions when the results of the pilot steam injection scheme have been fully appraised, probably some time in 1986. If the steam injection scheme does not prove to be economic, SOMS can proceed to develop the Tambaredjo field as istensively as practically feasible from a reserve which was recently estimated at some 200 mln barrels. In addition, further exploratory drilling could be undertaken at other ou-shore fields (Calcutta and Weg naar Zee) to detemine whether these fields can be exploited commercially. Production could well reach 5000 barrels per day (1.8 mln barrels or some 275,000 tonnes per year) by the end of the decade. This type of gradual development, SOMS expects to finance from its own resources (see Annex 3).

2/ Government has advised that by end September 1984 production had reached 1,000 barrels a day from 16 producing wells. - 228 -

3.60 On the other hand, if t;uesteam injection scheme proves to be feasible and attractive, a significantly larger investment, probably requiring outside resources, would likely have to be made in the late 1980's, opening prospects for a production level of some 10,000 barrels per day perhaps in the early or mid 1990's. The size of the investment which would then be desirable in the late 1980's would not be determined exclusively by the immediate requirements if SOMS. For if steam injection on a reasonable scale would be found to be attractive, co-generation is also likely to be attractive. Thus, a possibly significant base load oil-fired electric power component could be introduced in the EBS electric power system.

3.61 SOMS' off-shore concession was the subject of extensive exploration drilling by Gulf from early 1981 to early 1984, under a production sharing engagement. Gulf spent some US $30 mln on this program. Though some oil was discovered in some wells, some 4-5 km off-shore in shallow water (10-12m), Gulf relinquished the concession before it had completed a proper appraisal due to a change in corporate policies. SOMS is currently seeking a new partner to continue work where Gulf stopped and prepared a preliminary prospectus. SONS believes that appraisal of the area where Gulf found indications of oil, can be accomplished for some US $5 mln and that production from off-shore fields of some 5000 barrels per day or more is posrible prospect.

3.62 SOMS has sold its heavy oil as fuel oil to Suralco. Transport is by small inland tanker. SOMS will soon own two small tankers. The price charges in mid 1984 is some US $28 per barrel and the transport cost is about US $1 per barrel. The oil is of good quality and needs no processing except removal of water. SOMS has initiated the production of a mix of its heavy oil with 10 percent diesel oil, aiming at replacement of diesel fuel where this is used as boiler fuel by industries and other small establishments. The objective is diversification of markets as well as higher returns. From a national point of view, replacement of imported diesel oil by the country's own heavy oil is attractive.

3.63 SOMS is, very tentatively, considering the possibility to build a small topping plant when production reaches a level of at least 5000 barrels per day. The heavy crude would yield about 15 percent diesel oil and the rest would be a good quality heavy fuel oil. If production increases to much more than this level, part of the oil will probably have to be exported. A swap against products on a deemed yield basis could also be an option which could be considered.

3.64 It is apparent that SOMS' small senior staff may or will have to make some important decision over the next few years. To prepare for these decisions it would likely be beneficial to SOMS management to arrange for periodic contacts with oil specialists of international agencies who can contribute their world wide knowledge of evolving markets and technologies and their experience with oil and gas operations on a small scale in other third world countries. - 229 -

Gas distribution

3.65 ThroughOGANE, importedLPG is distributedby EBS. In 1983, nearly 24 mln lbs were distributedat an average price of SF 0.64 per lb. Gas is used by the household sector and small commercial establishments for cooking and refrigeration. It's use increased by some 4 percent per year since 1972. D. THE ELECTRICPOWER SUBSECTOR

3.66 The electricpower supply sector consists of a large private supplierSuralco (by far the largestsupplier in the country)a much smaller public sector supply company,EBS, and a number of public and private agencies of firms which generate relatively small quantities of power for internal consumption. The largest of these self generators is probably the Wageningen Foundation, a large state rice farm, with an installedcapacity of about 3.5 MW. The Ministry of Natural Resources and Energy owns and operates a number of small diesel plants in interior communities.

Suralco

3.67 Suralcois owner and operator of the 189 MWAfobakka hydro-electric plant on the Suriname River. Of the average annual productionof 980 GWh, Suralcosells 80 GWh to the Goverrnent at a very low price, related to operatingcosts, which the Governmentin turn re-sellsto EBS at a price which is close to the fuel cost of EBS' diesel sets.

3.68 Suralcoalso operatestwo extractionturbines with a combined capacity of 46.5 MWand a normal maximum output of 370 GWh. These two units also supply Suralco's steam requirements. On stand-by Suralco has a 42 MWgas turbine (48 MW nominal) with heat - recoveryfor steem production and a 47.5 MW extraction/condensationturbine. Under normal conditions, Suralcodoes not use the two stand-byunits since their cost of operation is too high. Suralcocould use another 300 GWh of power, if the hydroplant producesat averagelevel, to run its aluminumplant at fue2 capacity,but it does requiredvery little additionalsteam, since the two extraction turbines an nearly supply all the steam required to keep the alumina plant in full production. Power from the stand-by units is to expensive currently to warrant additional aluminum production.

3.69 In 1982 and 1983 Suralco deliveredabout 90 to 70 GWh respectivelyto EBS from its gas turbineat a price of about SF 0.10 per kWh, below the fuel cost of EBS' diesel sets. Deliverywas discontinued after breakdownof the machine. Suralco,claiming that an overhaulof the machine is necessarywhich would have to be paid by EBS since Suralcodoes not need the machine,has made a new offer of more than SF 0.14 per kWh. Since this is more than EBS's variable diesel cost, the offer has not been accepted. Suralco has made emergency repairswhich make it possibleto keep the machineon active stand-by. - 230 -

EBS

3.70 EBS is a state owned public power corporation, successor of OGEM which was privately owned. Its maiu rtsponsibility is the supply of power in Paramaribo and surrounding areas. By the end of 1983, EBS had an installed capacity of 49.5 MW in Paramaribo, all in the form of diesel generators. EBS also operates power plants in eleven communities in the northern part of Suriuame. About 10 MW was installed 1a the largest of these so-called "districts," Nieuw Nickerie and about 6 MW in the other 10.

3.71 With one exception (an SWD unit of 4.5 built in 1974) the units in the Paramaribo power plant are Mirrlees medium speed units built in Holland with Dutch generators (60 Hz). Four older units, built in the period 1959-1963 have unit capacities of 2 MW (3 units) aud 2.6 MW whereas the other units built in or after 1974, have unit capacities of 5.2 MW. The specific fuel concumption In this plant is about 0.27 1 per kWh generated. The plant can accomodate two more of the larger units. EBS also receives in Paranam 90 GWh of Afobakka energy from Suralco (16 MW peak).

3.72 In Nieuw Nickerie there are four 1 MW Nordberg units build in 1950 and three 2 mw Mirrless units built in the period 1959 - 1961. The specific fuel consumption is about 0.29 1 per kWh generated.

3.73 The units in the other district plants are mostly small Caterpillar units, aLl used when they were installed (years of fabrication vary from 1941 to 1982). Specific fuel consumption is generally in the range of 0.3 -0.45 1 per kWh but in some cases as high as 0.5-0.6 1 per kWh.

3.74 In 1983, EBS sold some 251 GWh in Paramaribo, 15.5 GWh in Nickerie and 26 GWh in the other districts. The average annual rate of growth of electricity sales has been 5.5 percent since 1970.

3.75 In 1983, generation, losses and sale sin the Paramaribo area were as follows:

Genera- Genera- Station use Delivered Distribution Sales tion GWh and line at substa- losses, GWh GWh Source losses, GWh tions, GWh

Diesel, Paramaribo 135.6 5.6 130.0 Hydro, Afobakka 80.8 5.0 75.0 G T, Paranam 70.2 13.0 56.8 285.8 261.8 10.5 251.3

3.76 Total gross losses, iucluding station use of the diesel plant, were rather high at 12 percent of generation. However, this was partly the result of the high line losses (19 percent on the margin) incurred on the - 231 -

GT power purchased from Suralco in Paranam. Without this purchase, overall losses would have been approximately 9 percent which is quite reasonable. The transmission lines between Paranam and Paramaribo, (28 km) over which the hydro energy from Afobakka is also transported, consist currently of 2 circuits of 33 kV. If these lines have to carry much more than 80 GWh per year over an extended period an increase of this transmission capacity is required since losses would be too high (as in 1982 and 1983 when additional thermal energy was purchases from Suralco).

3.77 EBS sells power under a fairly large number of tariff schedules applicable to different consumer groups. The six more comon tariffs applicable in May 1984 in Paramaribo are shown in Annex 4, as well as the number of consumers and the consumption by tariff group in 1982. Tariffs in the districts are slightly higher, reflecting a higher cost of diesel oil of SF 0.02 per 1 (average applied to all districts) which implies an additional SF 0.006 - SF 0.012 per kWH.

3.78 EBS published the applicable tariffs in 1975 or before. The published schedules include a fuel adjustment clause which has been automatically applied since the date the tariffs were published.

3.79 The rather complex tariff structure may have been based on logical assumptions, related to the cost structure of the company, when it was designed. The application of a constant fuel adjustment clause within each schedule, however, has resulted in rates oer kWh which are from approximately 2.5 to 7 times higher than when they were set. This has, probably, played havoc with the the logic of the assumptions behind the schedule. For example, in 1975, the unit rate in the last domestic bloc was 46 percent of the unit rate in the second bloc, whereas this percentage is now 79. Under the large industrial tariff (tariff 39) the lowest unit rate was 74 percent of the highest unit rate when the tariff was published whereas this is now 88 percent. It is generally doubtful that the current cost structure of the company is still adequately reflected in the tariff structure.

3.80 The declining bloc tariff structure had, when originally set, a clear tendency to encourage consumption. The effect is now doubtful in most cases since the marginal rates are only moderately lower than the highest rates and, anyhow, quite high. Nor is it currently wise to encourage consumption. It would be desirable, from an economic and administrative point of view, to simplify the tariff by removal of the declining bloc feature under all schedules. A flat unit tariff may be applied in addition to a minimum charge per month for a first bloc for small consumers and a demand charge for larger consumers. If considered desirable, the government subsidy could be incorporatedin a monthly minimum charge for up to 25 or 50 KWHper month (a so-called lifeline rate). Consideration might even be given to an increasing bloc tariff for domestic and small commercial consumers to discourage large consumption (2 blocs instead of one bloc on top of the flat minimum charge).

3.81 Some tariff schedules could also be amalgamated (for example, tariffs 11, 21 and 31 as well as 22 and 32, probably). - 232 -

3.82 Two tariffs,31 and 39, show a time of day use feature. Given the currentshape of the daily load curve the penalty on use between 18 and 22 hours is likelyto be outdated. The time of peak demand is mid-day rather than eveningcurrently, likely due to increasingair conditioning loads. Thus a peak period from about 08.00 to 22.00 hours may make sense, but the differencesbetween on--peak and, off-peak rates should be increased, in order to have a measurableeffect.

3.83 In view of the current shape of the daily load curve and the relativelysmall number of consumersinvolved, time of day meteringcould perhaps be appliedto many consumersnow coveredunder tariffs22, 23/27, and 32, replacing perhaps demand charges applied under those schedules.

3.84 Since there are also seasonal demand variations, consideration could be given to a seasonally varying tariff. Since it is likely that air conditioningdemand is at least partly responsiblefor the seasonal variation of demand, a seasonally varying tariff could have some effect. Such a tariff variationcould become more desirablestill when more hydro resourcesare added to EBS's generationmix, as is likely in the future. The seasonal variation of supply from hydro resources in Suriname runs counter to the seasonalvariation of demand, requiringa relativelylarge investmentin hydro storageor low capacitythermal plant.

3.85 EBS also appliesa penalty for power factorslower than 0.85 or 0.90 under most tariffs. This penaltywas not adjustedand is still SF 0.005 per kWh. This is too small to have much effect.

3.86 Generally, EBS should undertake an analysis of current and expected average and marginal costs and re-design its tariffs to appropriately reflect its cost structure as well as other objectives such as social objectives, encouragement of energy conservation and financial health of the company. A fuel adjustment clause should be kept to make adjustmentsfor relativelysmall variationsin cost.

3.87 The tariffsand the fuel adjustmentclause were originally designed to permit the Company to earn a 10 percent rate of return after taxes 'nd after deduction of depreciation on the basis of replacement cost, on capital employed, after revaluation of assets. 3.88 According to the agreed method of calculation of this rate of return,EBS has not been able to achieve the target rate of returnin recentyears. For example,EBS calculatesa rate of return,according to the agreed method,of 6.4 percent in 1982. However,according to a number of alternativerate of return criteriashown in Annex 5, EBS, as a publicly owned utility,generates a fair return on capital particularlyif the money losing operationsof the Districtpower systemsare excluded. The balance sheet of the companyis also relativelyhealthy, with a debt-equityratio of 49-51 on the basis zf replacementcost (approximately60-40 on the basis of historiccost).

3.89 Annex 5 also shows that the governmentincurred in 1983, on balance,a cash loss on EBS operationsif income taxes are excluded. If income taxes are included,the Governmentrecovered about SF 4 mln net from EBS operationsin 1982. It should be noted, however,that EBS does not pay duties on importedfuel. - 233 -

Generation expansion options for Paramaribo

3.90 EBS has covered growth of demand by installing more diesel sets. The Jai Kreek-P.dra Foundation is c)hargedwith the responsibility to develop alternative hydro projects as well as a design for an additional transmission line between Paranam and Paramaribo. These projects, developed by consultauts (Heusley-Schmidt) are in an advanced stage of preparation. The follow.lg tentative discussion of the economic merits of these and the Devis Falls project proposals is based on a relatively crude, screening-type analysis presented in more detail in Annex 6. Investment decisions regarding any of these projects should be based on a proper generation expansion planning study as recommended (Section F paragraph).

3.91 The Jai Kreek Project would divert on the average 54 m3 per second from the Jai Kreek into the reservoir of the existing Afobakka plant, adding to its output. A final design study of the project is complete, and tender documents has been prepared. The project would cost some SF 58 mln aud contribute, on the average, some 90 GWh net to the Paramaribo system, according to the studies performed, if the power is trausmitted over the existing transmission lines. Given current estimates of costs and benefits, the project would be very attractive (Annex 6).

3.92 An important reservation regarding the project is that Suralco owDs and operates the Afobakka plant and its reservoir. Thus an agreement with Suralco regarding the use of that plant and its reservoir will be necessary. Such an agreement should be based on a study of the benefits of joint optimization of the Suralco and EBS systems, with and without the Jai Kreek project.

3.93 The diversion of water from the Jai Kreek implies diversion of water from the Tapanahony River aud, ultimately, from the international Marowijne River. The diversion amounts to about 3 percent of the average flow in the Marowijne River.

3.94 Construction of the Jai Kreek project makes it necessary to build an additional transmission line between Parauam aud Paramaribo. A single circuit 161 kV line, on wooden poles, as proposed by EBS and itr consultants, is likely to be adequate and would cost, including a substation, some SF 8-10 lmn. At this cost the line would be economically very attractive if the Jai Kreek project is built, but not if the Jai KL_ek project or an alternative significant generation source near Paranam is not introduced (Annex 6).

3.95 A feasibility study has also been completed of the Phedra project, a low-head hydro plant on the Suriname River; some 60 km downstream of the Afobakka plant. The plant would, based on a tentative design with a 21 MWbulb turbine installatiou, deliver on the average some 79 GWh to the Paramaribo system, if it follows the Jai Kreek project and the new transmission line. The currently estimated cost is SF 92 mln. - 234 -

3.96 Current estimates of costs and benefits suggest that the plant would be economically attractive under those conditions but would likely be a marginal proposition if the Jai Kreek project is not built first. (Annex 6).

3.97 Of concern is that the output of the plant depends on the operation of the Afobakka plant and its reservoir by Suralco and that backwater effects result in a small reduction of the output of the Afobakka plant. Thus an agreement with Suralco, based on a joint study of optimization of the Suralco and EBS systems, is a pre-condition to consideration of the Phedra project.

3.98 Another concern is that the full output of the plant may possibly not be absorbed in the EBS system until the early 1990's at best if growth of demand in the Paramaribo systems will be 2 or 3 percent per year over the next decade, as is considered likely (see Section F). Only in special circumstances can hydro energy supply some 85 to 90 percent of total system demand as would be the case if the total output of the Phedra scheme is to be absorbed in the system by 199v under such low growth scenarios. A detailed system study of the Suralco and EBS systems and agreed operating rules for the Afobakka plant are necessary to determine when a very high percentage of Phedra's output can be absorbed in the Paramaribo system. Some potential surplus hydro-energy could perhaps be transmitted via new transmission lines to some of the currently isolated district systems. This could be attractive in view of the relatively high cost of generation in those systems. Appropriate studies will be required to estimate costs and benefits, case by case.

3.99 Another option to supply Paramaribo is still the Devis Falls (or Kabalebo) project. Variant II of this project was seriously considered for implementation in 1980/81 but the decision at that time was to shelve the project for future consideration.

3.100 At a cut-off discount rate of 10 percent, Variant I of the project with an average net output of 619 GWh per year is found to be unattractive. Variant II, with an average net output of 1305 GWh per year appears to be a marginal project, at this time, which should be considered only under unlikely, favorable conditions.

3.101 The main reasons that Variant II does now appear to be much less attractive than in 1980/81, are the fact that oil prices have not increased and are not expected to increase as fast as was assumed in the 1980/81 studies and that it is now considered unlikely that demand in the Paramaribo system will increase by 6 percent per year as was assumed in the earlier studies. A contributing factor is that the Jai Kreek and Phedra projects are now in an advanced stage of pre'paration and promise to produce power for Paramaribo at a cost which is below the cost of diesel generated power.

3.102 Only Variant III of the project, which includes the so-called Corantijn diversion and would produce an average net output of 3129 GWh per year, would be an attractive proposition if Suralco would be prepared to - 235 - purchasevery large quantitiesof power at a reasonableprice. The conclusionmust be that if the Devis Falls project is to be consideredat all within the next 10 years or so, then it will likely be necessaryto pursue the largest Variantof the project,with an installedcapacity of some 500 MW. Suralcowould initiallyhave to purchasea very large part of the energy and then decreasingquantities, according to the growth of demand in the Paramaribosystem, to make it a worthwhileproposition to undertakemore detailedstudies of the opportunity. The prospectsof the projectswould improveconsiderably if either oil prices increasemuch faster in the future than currentlyexpected or if demand for electric power increasesmuch faster than currentlyexpected. A potentially substantialsource of increaseddemand for electricpower in the country would be major expansionof the aluminummanufacturing facilities.

3.103 A suggestionhas been made to build a 20 MW steam plant, as a base load plant, in conjunctionwith the wood-wasteburning plant to be built at the Bruinzeelfactory. Given the availabilityof woodwaste, however,imported fuel oil or natural crude would supply 90 percentof the fuel required by the plant.

3.104 Preliminarycalculations suggest that such a plant would be a doubtfulproposition if importedfuel oil is to be the main fuel. In relation to large diesel engines,the lower cost of fuel would be more than compensated by a lower efficiency and a higher capital cost. The project under consideration,however, implies the use of local crude.

3.105 At this time, the Jai Kreek and Phedra projectsoffer better prospects. If both these projectsare built, sufticienttime will be available to study (vigorously)the potentialfor other hydro projectsand to determinewhether co-generationwith SOMS at the oil fields can be consideredrealistically as a source of generation. If all these potential alternativesturn out to be not feasibleor unattractive,a steam plant using national crude as a fuel could be consideredagain, for the 1990's.

E. DEMAND PROJECTIONS

3.106 Detailed forecasts of demand are developed in Annex 7. They are based on a growth of GDP between 1983 and 1995 at 2 or 4 percent per year. Summaryresults are shown in Table 1.

3.107 Some of the assumptionswhich affect the projectedpattern of energy use and imports are: TABLE I

Projection of demand for electric energy and petroleum imports

1984 - 1995, US $ of 1983 (conostant prices)

Growth of GDP, 2 percent per year I Growth of GDP, 4 percent per year Year Biomass Electric Imports of Value of Blomass Electric Imports of Value of energy petroleum Imports energy petroleum imports products products

1000 TOE GWh 1000 TOE US $ mln 1000 TOE GWh 1000 TOE US $ mln 1984 39 300 517 127 39 308 528 130 85 39 308 503 125 39 323 521 130 86 45 316 466 tis 45 339 487 124 87 45 323 384 100 45 356 413 108 N 88 46 332 350 93 46 374 388 105 w 89 47 340 309 84 ( 47 393 356 101 90 47 348 236 71 47 412 292 87 91 48 357 245 74 48 433 310 93 92 48 366 251 75 48 455 326 98 93 49 375 258 78 ( 49 477 343 101 94 50 384 263 79 50 501 361 107 95 50 394 270 81 50 526 379 113 - 237 -

- The Jai Kreek project and a new Paranam-Paramaribo transmission line will be operationalin 1987 aud the Phedra projectin 1990.

- SOMS will increaseproduction to 5000 barrels per day by 1990 and productionwill then remain constant.

- The co-generationproject at Bruinzeelusing available woodwastewill be on streamin 1986. In the same year the new facilities at Wageningeu,using availablerice husk will be put into operation. Availablerice husk in the Nickeriearea will be used increasinglyas fuel from 1986 onward.

3.108 The projectionssummarized in Table I are perhapsmore useful as an illustrationof the effect of these assumptionsthan as reliable forecastsof the level of energy consumptionaud imports of petroleum.

3.109 Petroleumimports would significantlydecline between 1984 and 1990 but would then start to increase again. Continuedincrease of oil productionby SOMS would probablynot affect imports significantlybecause of lack of opportunitiesto use the heavy oil in Suriname. But it would most likely result in exports which would then lead to a reductionof net foreignexchange requiredto finance other oil imports.

3.110 Particularlyunder tiLe higher growth scenario,there will also be ample opportunitiesto replacemore diesel oil by additionalhydro-projects or, possibly,by co-generationat the oil fields if the steam injection pilot project proves to be successful.

F. PROJECTIONOF INVESTMENTREQUIREMENTS

The oil and gas subsector

3.111 Investmentsin the gas distributionsector will be minor, as requiredto supporta graduallyexpanding distribution system. Investment projectionsprepared by SOMS through 1987 are includedin Table 3.1 (Annex 3). For explorationand development,SOMS expects to commit funds as follows:

1984 SF 6.3 mln 1985 SF 12.9 mlu 1986 SF 12.5 mla 1987 SF 13.5 mlu

3.112 SOMS expectsto fiuance all but SF 1 mlu in 1984 from internally generatedfunds. The foreignexchange component is high, but nearly all the funds generatedby SOMS can be consideredforeign exchange through import substitution.

3.113 Iavestmentsbeyond 1987 are unpredictable.Two possiblefuture events can modify the level of requiredinvestment funds by an order of magnitude. One of these events is the possiblestart of off-shore development,though SONS expects,at this time, that fundingfor such a venture would be providedby a private foreignpartner. The second - 238 -

possible event is success of the steam injection test to be performed on the on-shore field. If results of this test do lead to a large scale steam injection operation, substantial funds could be required and a good part of these resources would likely have to be contributed form outside the company. At that time the possibility of co-generation,with a significant electric power component, would have to be considered. If found to be attractive, capital requirements would increase accordingly.

The electric power subsector (public sector only)

3.114 A detailed projection of investment requirements in the public power sector currently supplied by EBS is developed ia Annex 8. Excluded are the small power systems operated by the Ministry of Natural Resources and Energy. Some investments are likely required in those systems. The Marechallskreek small hydro project, for example, is estimated to cost some SF 435,000. Excluded from the projections are also investments in the public sector such as the co-generation project at Bruinzeel and the additional biomass burning facilities at Wageningen. The cost of investment in these projects will likely be in the order of SF 10-12 mln. Other biomass burning projects in the Nickerie area would replace diesel oil used as boiler fuel and might not contribute to power generation. Investment in such facilities might well cost some SF 15 mln over a 10 year period (or a shorter period if possible).

3.115 For the systems currently supplied by EBS, a total investment of SF 166.5 mln (1983 prices) is projected over the period 1985 through 1995, under a low growth scenario associated with growth of GDP of 2 percent per year. All but SF 6.5 mln would be spent in the 1980's on the Jai Kreek and Phedra Hydro projects and a new Paranam-Paramaribo transmission line. Some minor expansion of diesel capacity would be required in the districts only, assuming that Suralco will be in a position to deliver an additional 9 MW of firm capacity to EBS once the Jai Kreek project is in service (at some cost, presumably, not included in the estimate).

3.116 Under a higher growth scenario, associated with a growth of GDP of 4 percent per year nearly 26 MW of additional diesel capacity would be required by 1995, requiring au additional outlay of SF 64 mla. Under this scenerio, exploration of sources of generation other than diesel would be necessary.

3.117 The long term marginal cost under these investment schedules is about SF 0.22 per kWh sold under the low growth scenario and SF 0.23 per kWh sold under the high growth scenario. The introduction of the two hydro projects and associates transmission line result in a long term margiual cost saving of approximately SF 0.035 per kWh sold, compared to continued expansion by diesel sets only.3 /

3/ (Note: the long term marginal economic cost is lower than the average financial cost. The reasons are that the cost of Afobakka energy is set at SF 0.5 min per year only that existing diesel plant is not depreciated and that additional diesel plant is assigned a higher marginal capacity factor than the average capacity factor of the existing plant, with due consideration of the average load factor.) - 239 -

3.118 The savings are the result of a significant increase of capital cost compensated by a larger decrease of fuel cost.

G. SUMMARYOF CONCLUSIONSAND RECOMMENDATIONS

3.119 Potentially, Suriname has a variety of indigenous energy resources which can be exploited in order to replace current and future imported petroleum products. Locally produced heavy oil and hydro-electric energy are oost likely to make the largest contribution to inport substitution.

3.120 There is also, in the short term, scope for increaseduse of biomass, in particularof woodwasteat the Bruinzeelwood processingplant and the use of still availablerice husk at the Wageningenscheme. These are likely to be profitableprojects and should be pursued. A fairly large quantity of rice husk is also availablein the Nickeriearea which could replace diesel oil currentlyused as boiler fuel. Such replacementshould be vigorouslypursued wherever and whenever found to be feasible. Both in Nickerie and Paramaribopart of the woodwaste availableat sawmills can perhaps also be used economically.

3.121 Gasifiers,available at low cost from Brazil, could be used to burn aiomassfor the purpose of producingprocess heat for drying or preheatingof water. The technologyof using biomass of heterogeneous characteristicsin gasifier-generatorsets is not yet well established,but the Governmentshould arrange to be informed of further technological developments in this particulararea.

3.122 For isolatedcommunities in the interior which are currently served at high cost by small diesel sets, small hydro plants,where practicaland small rugged, steamplantsin other locationscould be attractivealternatives. Where loads are very small, photovoltaic sets may become economic alternatives in the near future.

3.123 The identificationand study of additionalhydro-electric sites in the 10 - 100 MW range should receivea high priority. The Government should considerarranging for externaltechnical assistance in order to acceleratework in this area and to supplementits own still limited capabilities. In this context,the deteriorationof the country's hydrologicsurvey capabilitiesis a major concern. The decisionto amalgamate the two existingsurvey organizationsshould be inplementedas soon as possible, followed by measures to increase the new organization's capabilitiessuch as improvedpromotion opportunities within the service and in-servicetraining courses.

3.124 Furtherstudy of identifiedpeat resourcesin West Surinameis also desirable. 3.125 Energy conservationshould also be pursued actively. - 240 -

3.126 The State Oil Company's management might arrange for periodic contact with oil development experts in international agencies in order to benefit from the experience accumulated in small oil operations in other third-world countries.

3.127 The separation of responsibilities between EBS, the State Power Company and the Jai Kreek-Phedra Foundation, in charge of designing hydroprojects and a transmission line which may become major elements in the EBS supply system, is undesirable. The Government should consider early amalgamation of the organizations together with the remnants of B.W.K.W., the organization formerly in charge of hydro-electric development.

3.128 The Jai Kreek diversion project and a new Paranam-Paramaribo transmission line are economically attractive projects and the Phedra hydro project is probably also economically attractive. These projects which are in an advanced stage of preparation can replace diesel-generated energy in the Paramaribo system of the order of all such energy currently generated.

3.129 The benefits obtainable from the Jai Kreek and Phedra projects are a function of the method of operation of Suralco's Afobakka plant and its reservoir. Any agreement with Suralco concerning the operation of this plant after the new projects are placed in service, should recognize the need to optimize hydro-electric generation to the maximum benefit of both Suriname and Suralco, considering demand and supply characteristics of both the EBS and Suralco systems. Another factor to be considered is that EBS operates under a capacity constraint whereas Suralco is likely to have surplus capacity (but not surplus energy). There is evidence that current discussions with Suralco do not provide sufficient scope for the consideration of these and other issues which are complex but of considerable significance to the future cost of supply of electric power in Paramaribo.

3.130 EBS generates a modest but fair return on capital employed. The Government contributes to the cost of supplying power through EBS in the form of various subsidies but earns money from its sale of Afobakka energy to EBS. The net balance was negative for the Government in 1982 before income taxes but positive after income taxes.

3.131 The tariff structure applicable to the sale of electric power by EBS was introduced in the early 1970s and is rather complex. It includes a fuel adjustment clause which results in periodic and automatic adjustments to the tariff. Since the accumulated adjustments are large, the original structure has been modified significantly and the current structure is unlikely to reflect basic elements of the current cost of supply.

3.132 The Government should consider obtaining, as early as possible, external technical support to assist with the execution of several studies in the electric power sector. These studies should include:

(a) A technical review of the Jai Kreek diversion project, the Phedra project and the new Parananr-Paramaribo transmission line and a review of the cost estimates of these projects. - 241 -

(b) An analysis, jointly with Suralco, of the EBS and Suralco power systems, with a view to optimize the joint operation of the systems to both parties, subject to appropriate reliability criteria and other relevant considerations.

(c) Optimization, within the joint system, of the contributions by the proposed Jai Kreek and Phedra hydro projects and the proposed new Paranam-Paramaribo transmission line and a definitive economic assessment of these projects.

(d) Preparation of guidelines for the operation of the interconnected EBS and Suralco systems and for the settlement of financial obligations which arise from joint operation of these systems to the maximum benefit of both parties.

(e) A review of the cost structure of EBS' supply system and of its tariff structure.

(f) A review of alternative designs for additional wood waste burning facilities at the Bruinzeel plant and for rice-husk burning facilities at the Wageningen project together with a selection of the most appropriate facilities. Also an assessment of the feasibility and desirability of conversion of the Wageningen power system from 50 Hz to 60 Hz to facilitate future integration of the Wageningen system into a national power system.

(g) A preliminary assessment of likely costs and benefits, based on conceptual designs, of a peat burning steam plant in West Suriname and of a fuel oil burning steam plant in Paramarico (proposed is a 20 MW plant in conjunction with a small wood-waste burning plant at the Bruinzeel site). Also a preliminary assessment of costs and benefits, based on conceptual designs, of integration of some of the small district power systems with the Paramaribo system if the system studies (sub b and c) suggest that early implementation of the Jai Kreek and Phedra projects would make it possible to consider supply to some of these districts.

Early implementation of this package of studies would, among other things, result in the formulation of an appropriate investment plan based on a long-term generation expansion plan which incorporates all current information. Once in place, the generation expansion plan and derived investment plan can be updated periodically when conditions change or new project and other information becomes available.

3.133 The Government may also consider obtaining some technical assistance to augment the capabilities of the Energy Division of the Ministry of Natural Resources and Energy. The Division has important responsibilities in the areas of policy formulation, coordination and project review but also in specific areas which are not covered by existing organizations. Examples of such specific areas are energy conservation, micro hydro and increased use of biomass and wood. - 242 -

ENERGY

ANNEXES

TABLE OF CONTENTS

ANNEX 1 Supply and use of Energy

Tables 1.1 Supply and use of energy, 1982 1.2 Final use of energy by sector, 1982 1.3 Energy consumptin by sector, 1978-1982 1.4 Energy consumption by fuel type, 1978-1982

ANNEX 2 Hydrologic Survey Organization and Prevailing Discharge Patterns

Table 2.1 Average monthly discharges, m3 per second

ANNEX 3 SOMS Financial Data

Table 3.1 Financial projections through 1987

ANNEX 4 Energy Pricing

Tables 4.1 Some current (May 1984) EBS tariffs in Paramaribo 4.2 Consumption by tariff class in 1982 Figure 4.1 Daily demand, 1983 Figure 4.2 Seasonal demand

ANNEX 5 Financial Highlights, EBS, 1982

Tables 5.1 Consolidated Balance Sheet, end 1982 5.2 Income Statement 5.3 Consolidated Statement of Sources and Applications of Funds 5.4 Calculation of return on investment 5.5 Statement of Government revenues and subsidies, through EBS

ANNEX6 Proposed electric power projects for the Paramaribo system - Preliminary economic assessment

6.1 Cost of diesel generation in Paramaribo 6.2 The Jai Kreek diversion project 6.3 The Paranam-Paramaribo transmission line project 6.4 The Phedra hydro project 6.5 The Devis Falls (or Kabalebo) project 6.5.1 Costs and other characteristics 6.5.2 Benefits from delivery to EBS 6.5.3 Benefits from delivery to Suralco 6.5.4 Conclusions - 243 -

ANNEXES

TABLE OF CONTENTS (Cont'd)

Tables 6.1 Main characteristics of the Devis Falls project 6.2 Evaluation of the Devis Falls project

ANNEX 7 Forecast of demand for electricity and oil products

7.1 Historic evidence 7.2 Projection of main elements 7.2.1 Production by SOMS 7.2.2 Diesel oil demand by EBS 7.2.3 The Bauxite sector 7.2.4 Use of biomass at Wageningen and Nickerie 7.2.5 The use of biomass 7.2.6 Import of petroleum products

Tables 7.1 Average annual growth of GDP and energy consumptiorn 7.2 Consumption of major energy commodities in 1982 and 1983 7.3 Production of oil and oil products by SOMS 7.4 Projection of use of diesel oil by EBS 7.5 Projection of the use of biomass, TOE x 1000 7.6 Import of petroleum products

ANNEX 8 Projection of Investment requirements in the public electric power sector

Table 8.1 Projection of investment requirements in the public electric power sector. Major generation and transmission projects only 1984-1995

ANNEX 9 References - 244 -

ANNEX I

Supply and use of energy

Table 1.1

Supply and use of energy, 1982 Thousands of tonnes of oil equivalent (TOE)

use Supply Other Electric Liquid Other Petr. Item Ouantity Flrowood Blomass Charcoal Power Gas Products Total Lossooe-

Firewood 32 30.7 0.1 30.8 1.2 Other blomass 14.5 8.2 2.2 10.4 4.1 Hydro energy 2J 95.9 90.6 90.6 S.3 Llquofled gos 11.3 11.3 11.3 Other Petro loum Products 3/ 560.9 23.7 489.7 513.4 47.5

TOTAL 714.6 30.7 8.2 0.1 116.5 11.3 489.7 656.5 58.1

1/ Losses Include converslon, traneport. distribution and storage losses. 2/ Hydro energy s assessod at 100T efficiency; the eqivaolent amount of oil required to generate this energy 1-- large steam plant would be about 280,000 TOE. 3/ Reduced by 20.000 TOE, see Table 1.4.

Source: Ministry of Natural Resources and Energy. - 245 -

Table 1.2

Final use of energy by aector. 1982 Thousands 0f toenne of oil equivalont (TOE)

Sector Use Residential Category of Commerclal Agriculture Bauxite Other Energy Public Transport Livestock Industry Industry Total

Firewood 30.0 0.4 0.3 30.7 Other blomass 6.8 1.4 8.2 Charcoal 0.1 0.1 Electric power 14.6 2.2 90.7 8.9 116.S Llquefled gas 10.0 0.7 0.6 11.3 Other Petroleum Products 9.3 116.6 17.3 317.6 29.0 489.7

TOTAL 64.1 116.6 26.7 409.0 40.1 656.5

Source: Ministry of Natu-I Resources and Energy. - 246 -

Tebl* 1.3

Energy Consumption by Sector. 1978-1982 Thousands of tonse. of oil *qulmilest (TOE)

Households Industries Commercial Agriculture other thon Tear Public Trrnspert Livestock Bauxite Subtotal Bauxite 1/ Total

1975 55.9 115.2 21.6 38.6 231.3 322.9 554.2

1979 556. 116.5 24.6 39.2 239.2 324.3 553.5

198O 55.4 106.2 24.8 32.0 221.4 324.8 546.2

1SBI 62.2 113.4 27.6 38.6 241.5 468.5 710.3

19S2 64.1 116.6 26.7 40.1 247.S 401.0 656.5

Average rate of growth. percent per year 3.5 0.3 5.4 1.0 3..7 4.3

_/ The figures for 1978-60 are too low-aes Table 1.4.

Sources Ministry of Natural Resources and Energy. - 247 -

Table 1.4

Energy censumptien by fuel typo. 1978-1982 Thousand of tennee of ell equivalent (TOE)

Bomisse Gasoline Diesel Fuel Oil Electrlclty Other Year Beuilte Other Beuxite Other Bauxite Other Bauaxite3 Other Bauxite Other Bauxite Oth.rl/

1971 39.9 1.5 44.5 17.1 99.2 161.7 114.3 20.9 27.1

1379 42.5 1.2 48.0 10.5 96.2 191.2 113.4 22.8 30.2

1980 42.5 1.2 44.1 16.6 62.4 167.4 117.1 22.6 29.8

1931 43.1 1.0 46.2 19.2 99.6 361.5 6.6 23.9 29.0

1912 38 8 1.0 49.3 19.5 102.52/ 297.6 30.7 25.8 30.5

I/ Mainly LPG end aerosene; meet of the kerosene Is used for avlatlon purposec. 2/ The original figure Is 122.8; the sudden Inerease elilecated to the transport sector Is very unlikely and Inconsistent with Import figures reported by the Ministry of Economic Affairs; the figures have been reduced by 20,000 TOE, more or loes In line with Import figures; also reflected In Tables 1.1 through 1.3. 3/ The figures for the yeare 1978-80 are Inconsistent with Import data and dete regarding the output of the Industry. They are far too low.

Sources Ministry of Natural Resources and Energy. - 248 -

ANNEX 2

HydrologicSurvey Organizationand PrevailingDischarge Patterns 1. Surinamehas made quite an effort in the past to collect meteorologicand hydrologicdata. The weather stationsinclude 7 synoptic stations,25 climate stationsand 180 rainfallstations. Hydraulic information is collected by two organizations. The W.L.A. of the Ministry of PublicWorks, Telecommunicationsand Construction,collects data in tidal rivers and operates13 waterlevelstations and 23 flow stations. The B.W.K.W. of the Ministry of National Resources and Energy collects data upstreams, beyond the tidal influence, and operates 35 waterlevel stations and 10 flow stations.

2. Rainfall patterns in Suriname indicate a main rainy season which lasts from April through July and a main dry season which lasts from September through November. This main dry season is followed by a short secondary rainy season in December/January and a short secondary dry season in February/March.

3. The samples of river discharges shown in Table 2.1 suggest that the dischargesfollow the rainfallpattern with a short delay. The secondarydry season in February/Marchis not reflectedin the discharge measurements. The pronounced seasonal flow pattern with high flows in the April through July period and low flows in the October through December period is at variance with the demand for electricity which is high from August through November and lower from February through June. This indicatesa high premium for seasonalstorage in hydroprojects.The figures in Table 2.1 also suggest a very significant year to year variation which would make over-year storage, if it can be obtained at reasonable cost, an important objective.

Table 2.1

Average monthly discharges, m3 per second

J F M A M J J A S 0 N D Year

PokigronStation on SurinameRiver (above existingstorage lake),1952-1982 129 177 219 327 474 483 380 248 123 59 40 77 228 Maximum annual average 378 (1953) Minimum annual average 86 (1964)

Dramhosso station on Saramacca river, 1960-1982 71 73 89 143 211 244 185 120 58 27 16 35 106 Maximum annual average 171 (1971/1976) Minimum annual average 32 (1964) - 249 -

ANNEX 3

SOMS Financial Data

1. By the end of 1982, the Company had invested some SF 7.2 min, most in intangible assets (exploration and development costs). This was financed by about SF 6 mln long term debt and SF 1.2 mln short term debt (net of short term assets). The long term debt consisted of a loan from a consortium of Surinamese banks of SF 3.6 mln, Government loans of SF 1.2 mln, a contribution by Gulf Oil Co. (under its off-shore contract) of SF 0.9 mln and a contribution of SF 0.3 mln from a Surinamese-Dutch Development fund.

2. In 1983, investments were about SF 4 mln, but a small profit of about SF 0.5 a/ mln plus depreciation allowed internal financing of approximately SF 3 mln. The deficit was financed from additional loans.

3. A financial projection prepared by SOMS is attached as Table 3.1. This projection is based on conventional expansion excluding the possible effect and requirements of steam injection. The company would still require an infusion of approximately SF 1 mln in 1984, after payments of nearly SF 2 mln in royalties and ineome taxes. In 1986, loan repayment would start. Projerted cash flows would permit repayment of all loans by 1987, if necessary.

a/ As of June 1984. - 250 -

TABLE3.1

FinancialProjections through 1987

Date March 29, 1984

PROJECTIONOF FUTUREINCOME TAMBAREDJO FIELD IN 1000 SUR. GUILDERS

YEAR 1981 1982 1983 1984 1985 1986 1987

PROD/DAY(BLS) 0 10 301 602 1000 2000 2498 PROD/YEAR(1000BLS) 0 3.7 100 220 365 730 912 CUR. PROD 1OOOBLS) 0 3 113 333 698 1428 2340

INFLATION FACTOR 1 1 1 1.09 1.13 1.18 1.23 OIL PRICE (SF/BL) 45 45 45 49 50 53 55

EXPL. COST 656 135 318 1200 1500 2500 3500 DEVEL. COST 452 5821 3475 5500 7000 10000 10000

DEVEL. COST CUM 452 6273 9748 15248 22248 32248 42248

GROSS REVENUE 0 166 4950 10780 18250 38690 50160 OPERATINGCOST 0 0 2034 3300 6500 10000 13000 NET REVENUE 0 166 2916 7480 11750 28690 37160

NET REV. CUM 0 166 3082 10562 22312 51002 88162

EXPL. CD(Z CARRY/F 656 625 152 0 0 0 0 EEIMB. EXPL. COST 0 166 791 1352 1500 2500 3500 DEVEL. COST CARRY/F 452 6273 8243 13187 18951 27510 35370 REIMB. DEVEL. COST 0 0 1505 2061 3297 4738 6878 NET INCOMEB/TAX 0 0 620 4067 6953 21452 26782 TAX 0 0 279 1830 3128 9653 12051 NET INCOMEA/TAX 0 0 341 2237 3825 11799 14731 REPAY LOANS 0 0 0 0 0 5000 1900 CASH FLOW -1108 -5790 -1156 -1050 122 1537 9709

CASH FLOWCUM -1108 -6898 -8054 -9104 -8982 -7445 2264

THE CALCULATEDRATE OF RETURN - 64.5Z

NOTES 1. EXPLORATIONCOSTS ARE RE'IBURSED IN THE SAMEYEAR FROMNET REVENUEBALANCE IS CARRIED FORWARD.

2. DEVELOPMENTCOSTS ARE REIMBURSEDDURING THE NEXT FOUR YEARS.

3. FOR 1981-1983 ARE ACTUALFIGURES. - 251 -

ANNEX 4

Energy Pricing

1. Current (May 1984) retail prices of some selected energy products in Paramaribo are as follows:

Gasoline, super : SF1 0.93 per 1. (US $16.08 per mLn Btu) Diesel oil : SF1 0.674 per 1. (US $10.25 per mln Btu) L P G : SF1 0.645 per lb. (US $17.87 per mln Btu) Electric power (aver.) : SF1 0.266 per kWh (US $43.32 per mln Btu)

2. The prices of petroleum fuels are not particularly high and reflect a moderate level of duties. The build-up of the diesel oil price is as follows (May 1984):

Posted price, f.o.b., Caribbean refinery : US$34.02 per barrel Freight, insurance, commission, procurement fee : US$2.67 per barrel C.i.f. price, Paramaribo : US$36.69 per barrel or : SF 0.415 per 1. Duties and other official charges : SF 0.158 per 1. Landed price, Paramaribo : SF 0.563 per 1. Storage, handling, wholesale margin : SF 0.088 per 1. Posted wholesale price : SF 0.651 per 1. Retail margin : SF 0.023 per 1. Retail price : SF 0.674 per 1.

3. Prices vary according to the posted price at Caribbean refinery and may vary slightly between retail outlets of the major importers. Currently, diesel oil used in the agricultural sector is subsidized at a rate of SP 0.12 per 1., or about 75 percent of the import duties levied on diesel oil.

4. Liquefied petroleum gas (LPG) is sold by EBS and is sufficiently cheaper than electric power to encourage its use for purposes of cooking and refrigeration by residential and other users.

5. EBS does not pay duties on diesel oil used for power generation and also obtains a discount on wholesale prices. In May 1984, its cost of diesel oil in Paramaribo was SF 0.44 per 1. which is equivalent to a fuel cost of SF 0.12 per kWh generated (US$20.44 per m1n Btu delivered). EBS pays SF 0.45-SF 0.49 per 1. of diesel oil used in small power plants in coastal locations. The Ministry of Natural Resources and Energy which operates small diesel plants in the interior of the country may incur a cost of up to SF 2-SF 3 per 1. of diesel oil.

6. EBS adjusts its tariffs to the price of diesel fuel. The tariffs in small district systems operated by EBS are similar to the tariff charged in Paramaribo but are based on an average cost of diesel fuel of SF 0.46 rather then SF 0.44 in Paramaribo. - 252 -

7. The average tariff charged by EBS in Paramaribo in recent years, reflecting variations in the price of diesel oil (excluding duties) were as follows:

1970 SF 0.175 per kWh 1979 SF 0.211 per kWh 1980 SF 0.275 per kWh 1981 SF 0.285 per kWh 1982 SF 0.288 per kWh 1983 SF 0.266 per kWh

8. Details of tariffs charged to different types of consumer are given in Tables 4.1 and 4.2 below. Fuel oil is imported by Suralco only (Billiton, the other bauxite mining company has recently entered into Joint Ventures with Suralco and has discontinued independent power generation). Suralco purchases a relatively small quantity of fuel oil from the oil companies in Suriname at a price of approximately USS33.00 per barrel. It also purchases some crude oil from the State Oil Company, for about US$28.00 per barrel. Most of the fuel used by Suralco is directly purchased from the refinery in Trinidad and brought to Suriname by the Company's oil tankers. Suralco's average price will be about US$30.00 per barrel (SF 0.34 per 1. or US$4.90 per mln Btu). - 253 -

ANNEX 4

TABLE 4.1

Some Current (4ay 1984) EBS tariffs in Paramaribo

Tariff 11 Domestic consumers

First 25 kWh/month : SF 9.18 per month 26 - 70 kWh/month SF 0.341 per kWh 71 - 250 kWh/month SF 0.311 per kWh > 250 kWh/month SF 0.271 per kWh Fuel adjustment SF 0.211 per kWh, included

Tariff 21 Commercial consumers, less than 25 kVA demand

First 45 kWh/month SF 16.50 per month 46 - 725 kWh/month : SF 0.331 per kWh > 745 kWh/month : SF 0.311 per kWh Fuel adjustment : SF U.211 per kWh, included

Tariff 22 Commercial consumers, more than 25 kVA demand

Per kVA of maximum demand : SF 9.- per kVA per month ((50 times kVA) kWh/month : SF 0.2545 per kWh > (50 times kVA) kWh/montn SF 0.2445 per kWh Fuel adjustment SF 0.1945 per kWh, included

(Large consumers with their own transformers pay SF 0.062 per kWh less).

'tariff31 Industrial consumers, less than 10 kVA demand

Between 18 and 22 hours SF 0.411 per kWh ocher hours: Z 45 kWh per month SF 16.50 per month 46 - 220 kWh per month: SF 0.311 per kWh > 220 kWh per month : SF 0.271 per kWh, included Fuel adjustment SF 0.211 per kWh, included - 254 -

Tariff 32 Industrial consumers, more than 10 kVA demand

Per kVA of maximum demand SF 3.0 per kVA per month 18 -22 hours SF 0.371 per kWh Other hours: < (100 times kVA) kWh per month : SF 0.271 per kWh (100 - 200 times kVA) kWh per month : SF 0.266 per kWh > (200 times kVA) kWh per month : SF 0.261 per kWh Fuel adjustment. : SF 0.1945 per kWh, included

Tariff 39 Special contract, large consumers, more than 50 kVA demand

Per kVA of maximum demand : SF 5 - 10 per kVA per month plus additional SF 2.50 per kVA demand between 18 and 22 hours

07 - 22 hours 22 - 07 hours

50 - 175 kVA demand: SF 0.1637 per kWh SF 0.1487 per kWh 150 - 300 kVA demand: SF 0.1587 per kWh SF 0.1487 per kWh > 250 kVA demand SF 0.1567 per kWh SF 0.1447 per kWh

Fuel Adjustment : SF 0.1Z37 per kWh, included - 255 -

TABLE 4.2

Consumption by tariff class in 1982

Number of Average Cons. Total annual consumers per month, kWh consumption, GWh

Domestic Tariff 11 47,547 148 84.6 Tariffs 50/58 561 216 1.5 Other 9

48,117 86.0

Commercial, Tariff 21 3,874 583 27.1 Tariff 22 94 6,968 7.9 Tariff 23/27 129 5,685 8.8

4,097 43.8

Industrial Tariff 31 535 531 3.4 Tariff 32 198 5,790 13.8 Tariff 39 97 59,794 69.6 830 86.8

Miscellaneous:

Sale to districts 17.9 Street lights 4 5.6 Other 86 1.1

90 24.6

Total 53,134 378 241.2 - 256 -

ANNEX 5

Financial Highlights, EBS, 1982 (from internal documents, not yet approved by the Board)

Table 5.1

SF 1000

Consolidated Balance Sheet, end 1982 (after proposed dividends)

Fixed Assets, incl. Debt and provisions work in progress, long term 58,187 less depreciation 97,382 short term 4,243 Net revaluation 27,916 provisions for retirement & taxes 7,960 Subtotal 125,916 Subtotal 70,391

Current assets less Equity current liabilities 19,422 Share capital 20,000 General reserve 21,434 Revaluation reserve 32,845

Subtotal 74,330

Total assets 144,721 Total liabilities 144,721

Table 5.2

Income Statement

Power Power Gas Paramaribo District Distr. Total

Sales 69,474 13,129 14,122 96,725 Costs: Cost of Sales 51,533 14,835 11,612 77,980 Depreciation 5,290 1,041 1,513 7,844 Interest 2,046 2,226 244 4,555 Miscellaneous -i,148 -30 -21 -1,999 Subtotal 57,721 18,112 13,348 89,180 Gross profit 11,754 -4,983 774 7,544 Government subsidies 4,983 4,983 Income tax 5,992 498 6,490 Net profit 5,762 0 276 6,037 Deprec.iation 5,290 1,041 1,513 7,844 Net cash flow 11,052 1,041 1,789 13,881 - 257 -

Table 5.3

Consolidated Statement of Sources and Applications of Funds

Sources Net profit, after tax 6,037 Depreciation 7,844 Increase long term debt 6,685 Increase short term debt 3,169 Total sources 23,735

Applications Fixed assets 13,038 Increase current assets 7,991 Proposed dividend 1,800 Increased liquid assets, after dividend 906 Total applications 23,735

Table 5.4

Calculation of return on investment

a) Capital employed (SF 1000)

Average of net fixed assets plus working capital on January 1, 1982 and January 1, 1983, taking working capital as current assets less current liabilities.

Total Same, exclusive of District power

At replacement cost 141,138 115,370 At historic cost 115,831 94,974

b) Alternative definitions of return (SF 1000)

Net profit, after tax and subsidy 6,037 6,037 Gross profit, before tax and subsidy 7,545 12,528 Net cash flow, incl. depreciation after tax and subsidy 13,881 12,840 Gross cash flow, incl. depreciation before tax and subsidy 15,389 19,331 Interest 4,555 2,289 - 258 -

c) Alternative rate of return criteria (profit as percentage of capital employed)

Total Same, excl. District Power Replacement Historic Replacement Historic Interest plus: Cost Cost Cost Cost

Net profit, after tax and subsidy 7.5 9.1 4.2 8.8 Gross profit, before tax and subsidy 8.5 10.4 12.9 15.6 Net cash flow, incl. depreciation after tax and subsidy 13.0 15.9 13.1 15.9 Gross cash flow, incl. depreciation before tax and subsidy 14.1 17.2 18.8 22.8

Table 5.5

Statement of Government revenues and subsidies, through EBS SF 100

Gross profit on sale of Afobakka hydroenergy, approximately 11,200

Subsidy on rates: Paramaribo power : 4,281 Distric power : 1,145 Gas distribution 3,188 8,615 Deficit on District power operations : 4,983

Net subsidy, approximately -2,398 Income tax (from Income Statement) 6,4°0

Net cash flow from EBS operations 4,392 - 259 -

ANNEX 6

Proposed electric power projects for the Paramaribo system

Preliminary economic assessment

(Constant prices of 1983)

6.1 Cost of diesel generation in Paramaribo

The benefits of hydro-electric and other projects are usually expressed in terms of avoided cost of other generation. In Paramaribo these avoided costs are, at least at this time and in the near future, costs of diesel generation.

Fuel costs: 0.27 1 per kWh @ SF 0.44 = SF 0.119 per kWh generated in 1983.

Capital costs: A proposed new 5.2 MW generating unit is expected to cost SF 11.1 mln installed with all associated equipment and facilities, or SF 2135 per kW installed. The average capacity factor of the diesel units, corrected for the purchase of thermal power from Suralco, was 0.45 gross (capacity including stand-by). Assuming a 30 year life for these units and a 10 percent (real) rate of interest, the capital cost is equivalent to SF 0.057 per kWh.

If an existing unit is replaced, the net capital credit will be taken as 20 percent of the new unit (cost of unit is half of installed cost; net value obtained is 40 percent of the value of a new unit), or SF 0.011 per kWh.

Lubricants: 4 percent of fuel cost of SF 0.005 per kWh.

Other costs: Cost of operation, maintenance, interim replacement, insurance, direct overhead and administration is assumed to be US $0.02 or SF 0.036 per kWh. Of this, SF 0.006 is assumed to represent variable costs.

Summary Variable cost: SF 0.13 per kWh generated or SF 0.136 per kWh delivered at a substation.

Fixed cost for a new unit: SF 0.087 per kWh generated or SF 0.091 per kWh delivered at substation.

Fixed cost for a surplus existing unit: SF 0.041 per kWh generated or SF 0.043 per kWh delivered at substation.

The Jai Kreek diversion project

Output: According to the project report (see references), the diversion results in an increased firm capacity at Suralco's Afobakka plant of between 8.6 and 10.5 MW and an increase of average energy production varying from 80 to 138 GWh per year. The range of capacity and energy - 260 -

contributions by the diversion is determined by the capacity available at the plant) and the method of operation of the storage lake (3 rule curves were tested). There is a trade-off between firm capacity or energy and average energy. It will be necessary to agree with Suralco on the method of operation which will maximize benefits to Suriname and to Suralco.

Tentatively, consultants have selected an output at Afobakka of 9 MW firm capacity and 121 average GWh per year. According to EBS's consultants Interutil (see references), a loss of about 22 percent of the average Jai Kreek energy will be incurred if the energy is shipped over the existing 33 kV double circuit lines between Paranam aid Paramaribo. A bit of energy will also be lost between Afobakka and Paranam. Thus, the net energy contribution by the project at Paramaribo substation will be approximately 90 GWh.

Benefits: The energy benefit alone will be some 90 CWh @ SF 0.136 per kWh, if it is assumed, as is reasonable, that hydro energy from the Jai Kreek project will replace diesel energy. Thus the annual savings, in 1983 prices, will be SF 12.2 mln. Assuming, that the project would have a useful life of some 40 years (in view of the age of the Afobakka power plant), the present value of 40 years of energy benefit, at a 10 percent discount rate, is SF 119 mln.

Cost: The cost estimate, based on final design, is SF 57.6 mln, including interest during constructioi., engineering, owner's cost and contingencies.

Conclusion: The Jai Kreek project is economically very attractive. The margin of benefits over costs is large enough to provide a cushion against increases of costs or decreases of benefits. This conclusion is based on energy benefits alone.

The Paranam-Paramaribo transmission line project

Output: The construction of a new 16i kV line between Paranam and Paramaribo will reduce losses of energy transmitted to Paramaribo. According to EBS' consultants, Interutil (see references), the reduction of losses on the transfer of 80 GWh of Afobakka energy will be 4.5 GWh per year.

If, however, the Jai Kreek project is built, the reduction of loses will be abut 28.5 GWh per year, on the average.

Benefits: The reduction of losses will, at least, permit the saving of the variable cost of diesel generation. Thus the annual savings, in 1983, prices, would be, at SF 0.136 per kWh, SF 612,000 per year if 80 GWh is transmitted vnier the Afobakka agreement and SF 3.4 mln per year, on the average, if the Jai Kreek project is built.

Assuming a 35 year life of the line , the present value of benefits, in 1983 prices and at a 10 percent discount rate, would be SF 5.9 mln if 80 GWh is transmitted and SF 32.8 mln if the Jai Kreek project is built. - 261 -

Cost: Consultants to the Jai Kreek-Phedra Foundation, Hensley-Schmidt (see references) propose to build a doublt circuit, 161 kV line, on steel or alumlnum towers, at a cost of SF 14.4 mln (excluding substation, including interest during construction, engineering, owners' cost and contingencies).

EBS' consultants Interutil (see references) suggest that one circuit of 161 kV is sufficient. This is correct, since the existing 33 kV lines can, under emergency conditions, transmit 40 MW (information from EBS). They also propose to build the single circuit on wooden poles, since ample, positive experience with such poles exist In Suriname. This appears to be a sound proposition. They, finally, suggest a cost of SF 2 mln, which is likely to be low.

Including a substation (estimated to cost SF 5-6 mln by EBS), a total cost of SF 10 mln for this 28 km line should provide for ample contingencies.

Conclusion: The project is not justified if transmission to Paramaribo is limited to 80 GWh per year under the current Afobakka agreement. However, if the Jai Kreek project is implemented or if a significant amount of power, from whatever source, is transmitted in addition to the basic 80 GWh per year, the transmission line is a very attractive project.

The Phedra hydro project

OUtpUt: The feasibility study (see references) tentatively suggests an Installed capacity at this low-head plant some 60 km downstream of the Afobakka plant on the Suriname River, of 15 MW. This must still be optimized in conjunction with Suralco since Suralco's operation of the Afobakka plant will determine the best method of operation of the proposed downstream plant.

Based on a tentative installation of three 5 MW bulb turbines (Straflo units or Tube units could be considered), the estimated average annual energy production is as follows:

With the Jai Kreek Without the Jai Kreek project project Gross, at Plant 101.2 GWh 91.5 GWh Less reduction of Afobakka 18.4 GWh 18.4 GlIh

due to back-up 82.8 GWh 73.1 GWh

Considering losses (per Interutil report, see references), with one 161 kV circuit in place between Paranam and Paramaribo, the net delivery at Paramaribo substation will be some 79 GWh with the Jai Kreek project and 70 GWh without the Jai Kreek project.

The station is subject to influences from the tides and firm capacity at high tides is estimated at 5 MW. (The reservoir would contain saome100 MWh at a drawdown of 0.3 a which could provide an opportunity for peeking; since nothing is known yet about possible limitations on peaking - 262 -

operation, the possible benefits of such operations will not be conside.:red).

Benefits: The diesel replacement energy benefits are, at SF 0.136 per KWh in 1983 prices, approximately SF 9.5 min per year without the Jai Kreek project and SF 10.7 mln per year with the Jai Kreek project. The project could also replace diesel capacity. Given the relatively low firm capacity, it is reasonale to assume that new diesel sets could be replaced which would have been installed to accomodate growth of demand or to replace old sets. Assuming a marginal 90 percent capacity factor of the diesel engine replaced, the capacity credit of the plant is approximately SF 11.9 mln.

The present value of the energy benefits, assuming a 70 year life, is, at a 10 percent discount rate, SF 95 mln without the Jai Kreek project and SF 107 mln with the Jai Kreek project.

Costs: The current estimate of investment cost is SF 92 mln. This includes engineering, owner's cost, interest during construction, contingencies and also a 161 kV transmision line to Paranam and a river terminal plus transfer station to accomodate the small amount of navigation on the stretch of river where the dam would be built. A lock would cost some SF 16 mla, is unlikely to be necessary or justified and will not be considered.

The cost of operation, maintenance, insurance and interim replacement will be about 1.3 percent of the capital cost per year for an operation of this size but this will be compensated for by simular costs of the diesel capacity replaced at a higher percentage of a lower cost. The remaining difference will be small.

Co:clusion: If the Jai Kreek project has been built first, the present worth of the benefits of SF 118.9 mln (107 mln plus 11.9 mln) shows a sound margin over the cost of SF 92 mln and the project would be justified.

If the Jai Kreek project is not built, the cost of the Paranam-Paramaribo transmision line (section 3 of this Annex) would have to be taken into account. The benefits of SF 106.9 mln would then be only slightly higher than the total cost of SF 102 mln. The project would be marginal, at a discount rate of 10 percent and at the assumed costs and benefits. This implies that if the Jai Kreek project and the transmission line are not built first, the Phedra project would have to be submitted to a very detailed analysis of costs and benefits before a decision to proceed is made.

The conclusion of this rather crude analysis must be qualified by considering the capability of the EFS system to absorb all the hydro energy from the two projects. If either the Jai Kreek or the Phedra project alone is built over the next few years, there should not be a significant problem. However, if both projects are built over the next four five years, as could be possible, the average energy to be delivered at substation from the two hydroplants plus the Afobakka delivery would amount to some 270 GWh, whereas demand of some 6 percent per year, introduction of the Phedra plant may not be possible before the late 1980's whereas this - 263 -

may become the early or mid 1990's if growth of demand is about 2 or 3 percent per year only. A detailedanalysis of EBS's capacityto use the hydro energy will be necessary. This analysis must consider Suralco's operation of the Afobakka plant and its reservoirsince this will be the determiningfactor for the definitionof the distributionover time of the Jai Kreek and the Phedra energy.

It will also be desirable,if absorptioncapability is a problem, to investigatethe desirabilityof incorporatingsome of the districtpower systems in the Paramaribosystem. The cost of the power generationin those districtsis significantlyhigher than in Paramariboand transmission over the relativelyshort distances to some of these districtsystems could well be justified if lower cost hydro energy would be available.

The Devis Falls (or Kabalebo) project

This project, located in West Suriname, was developed in the 19 70's (norconsult et al. - see references)as a possiblesource of electric power to a large scale developmentbased on bauxiteand other activitiesin West Suriname. Three schemes,or projectvariation s of differen size, were considered. The two largest schemeswould either affect or include the CorantijnRiver, the boarder river with Guyana.

In the late 1970's prospects for immediate development of West Suriname's bauxite reserves became rather remote and the schemes were reconsidered as a possible source of supply to EBS' Paramaribo system and the existing bauxite companies. The World Bank appraisedthe medium sized variant of this scheme on this basis in 1981. The Government deciaed not to proceed with the scheme at that time. One of the variants of the scheme could still be considered as a potential source of supply for Paramaribo and Suralco.

Costs and other characteristics The main characteriscicsof the three projectvariants are shown in table 6.1. - 264 -

Table 6.1

Main characteristics of the Devis Falls project (costs in SF of 1983)

Variant Installed Energy delivered Investment 0 and N cost Investment Cost per capacity 1 / GWh2 / cost 3 capitalized 4 / coat per kV kWh (full Installed utililiza= tion 51 mw Firm Average SF mln SF mln SF SF

I 200 519 619 807 81 4035 0.144 II 300 837 1305 974 97 4427 0.082 III 500 2025 3129 1220 122 2440 0.043

01 Per original project reports. Z, Per original project reports less 4.5% allowance for transmission losses for delivery at substation in Paramaribo or Paranam. 3- Original cost estimates in constant prices of 1980 escalated to arrive at constant 1983 prices and interest during construction added at 10% per year, per construction schedule indicated in World Bank report. 4/ The cost of operation and maintenance, including interim replacement and insurance is set at 1% of the capital cost per year (capitalizedat 10% over 70 years). 5/ Annualized cost of investment plus 0 and M @ 10 percent, divided by the average energy delivered. - 265 -

The updated cost of investmenthas been establishedby adjusting the originalcost estimateswith two indicesof cost escalation. For the local cost component,expressed in Surinameseguilders of 1980, the index applied is based on the GDP deflatorapplicable to the constructionsector in Suriname. This impliesan increaseof constructioncost of 12 percent between 1980 and 1983.

The index used to adjust the foreigncomponent of the project cost, expressedin US dollars of 1980, is the MUV index, or the Unit Value Index of ManufacturedExports. The value obtainedin 1983 US Dollars is then convertedto Surinameseguilders by means of the 1983 exchangerate of 1.8.

The MUV index is a weightedprice index, expressedin US dollars, of manufacturedexports from industrialcountries to developedcountries. Its use for a projectwith a substantialconstruction component is not quite appropriate,but a similar index for constructionis not currently available. This use of the index also impliesan implicitassumption that all countriesrepresented in the index would supply equipmentand services to the projectin exact proportionto their share in exportsof manufactures. This is, of course, an unrealisticassumption but is a reasonable compromise since particular suppliers cannot be identified at this time.

The index suggests a decrease of the cost of the foreign component of the project of 9.5 percent between 1980 and 1983. This would appear to be an anomalous result since prices of just about all goods and servicesin the exportingindustrial countries have increasedconsiderably over the period 1980 - 1983. For example,the average GDP deflatorof all industrialcountries increased by 22 percentover this period (IMF, World EconomicOutlook, 1984).

The reasons for the apparently anomalous decrease of the MUV index are that the index is expressed in US dollarsand that the exchange rates of most industrial countries vis a vis the US dollar have decreased more over the 1980 - 1983 period than their internalprice have increased. Thus prices of exportsfrom many industrialcountries, particularly the Europeancountries, were in 1983 significantlyhigher than in 1980 when expressedin their own currenciesbut lower when expressedin US dollars.

Since exchangerates have, in fact changedas they did, the use of the MNV index would indeed be appropriateif orders for a significant part of the equipmentwould have been placedin 1983. But this is not the case and the applicationof the index may in fact not be appropriatefor an economicevaluation of a projectwhich may be built sometimein the future, if the movementof the exchangerates incorporatedin the index over the period 1980-1983have been "abnormal'in the sense that a correctionin the oppositedirection may be expectedover the next few years. This is indeed widely, though perhaps not unanimously expected in international financial circles (see, for example, OECD, EconomicOutlook, July 1984).

An apparentlymost straightforward adjustmentof the foreign componentof the cost of the projectwould consistof applyingthe US index of the cost of hydro projectsto the 1980 cost expressedin US dollars. - 266 -

This would result in a cost increasebetween 1980 and 1983 of about 22 percent. The effect of using this alternativeindex would be a significant increaserather than a decreaseof the projectcost. The unit cost per KWh (at full utilization),shown in Table 6.1 as SF 0.082 for example,would be SF 0.102 if the US index were applied to the foreignexchange component of the project,a differenceof 24 percent. The use of the US index is, however,also not appropriatesince it would reflectan assumptionthat the USA would be the main source of supply of equipmentand servicesto the project. This would be an inappropriatechoice since the USA would, likely, be an expensivesource becauseof 1983 (and current)level of exchange rates.

A satisfactory solution to the problem of updating the 1980 cost estimateswould consistof the preparationof a new estimatefrom original quantitiesapplying expected prices in Surinameseguilders from specific suppliersbased on particularfinancing arrangements. But this is not possibleat this time.

For the purpose of comparingcosts and benefits,which are correctlyexpressed in US dollars (convertedto surinamesguilders) since they consistprimarily of reducedimports of petroleumproducts, the somewhatarbitrary assumption will be made that the relevantcost of constructionwill be the arithmeticaverage of the values obtainedby applyingthe MUV index and the USA index. This gives unit costs per kWh of SF 0.161 for Variant I, SF 0.092 for VariantII and SF 0.048 for Variant III (used in Table 6.2). Benefitsfrom deliveryto EBS

For the currentanalysis, delivery will be restrictedto Paramaribo. It is likely that some of the districtsystems could also be suppliedby the scheme(s),but cost data are not availablefor such connections.

It is assumed,for this analysis,that total demand at substation level will be suppliedfrom the scheme(s). This demand was 261.8 GWh in 1983 and will be assumed to grow by 3 percentor 6 percent per year (somewhathigher than assumedin Chapter 7, under the "benefitof the doubt" rule). Assumingthat the project could come on stream at the beginningof 1990 at the earliest,first year demandwould be 322 GWh (3 percentgrowth) or 394 GWh (6 percent growth). The Afobakkaenergy will not be replaced,so that net demand on the Devis Falls projectswill be 80 GWh less each year.

The projectwould replace,in the early 1990'snot diesel generation,at least primarily,but generationfrom the Jai Kreek and Phedra projects,which would not be built if the Devis Fails project proceeds. Additionalenergy requiredover the 190 GWh deliverablefrom the Jai Kreek and Phedra schemeswill be assessed,for the purpose of this analysis,at the cost of diesel energy, thoughthis may be an unrealistic assumptionsince other hydro schemescan likelybe developedon the Saramaccaand other rivers. - 267 -

The cost of the energy from the Jai Kreek and Phedra schemes, including a new Paranam-Paramaribo transmission line, will be, on the average, SF 0.089 per kWh. The cost of diesel energy will be SF 0.136 per kWh according to section 1 of this annex.

Since all energy required in Paramaribo would be delivered from hydro projects at some distance from the city, some stand-by capacity will be necessary. For the purpose of this analysis, it will be assumed that this will be diesel capacity sufficient to supply 80 percent of the energy demand (20 percent loan shedding under emergency conditions should be acceptable) at a 95 percent capacity factor (5 percent allowance for outage).

For the first 190 GWh, stand-by requirements are the same for delivery by the Devis Falls scheme or Jai Kreek and Phedra combination, and need, therefore, not be considered. The existing diesel capacity of 49.5 MW can provide stand-by capacity for a demand of 515 GWh. Thus, for net demand between 190 and 435 GWh on the Devis Falls project, the capacity credit to the Devis Falls scheme cohsists of the difference between the fixed cost (exclusive of capital cost) of operating the diesels when hydro power is supplied from the Afobakka-Jai Kreek-Phedra combination and the fixed cost (exclusive of capital cost) of keeping the diesels on full operational stand-by when power is supplied from the Devis Falls Scheme. This difference will be small and will be omitted from consideration.

For net demand beyond 435 GWh the capacity credit consists of the differences between the fixed cost of new diesel sets at a 95 percent capacity factor and of operating them at normal capacity factor. This is SF 0.048 at per kWh at substation.

The preceeding assumptions may be summarized as follows:

Up to 190 GWh, Devis Falls energy may be credited with SF 0.089 per kWh in 1983 prices. Between 190 and 435 GWh, the credit is SF 0.136 per kWh and beyond 435 GWh, the credit is SF 0.184 per kWh (SF 0.136 + SF 0.048)

In 1990, the demand for the Devis Falls was assumed to be 242 GWh (3 percent growth) or 314 GWh (6 percent growth). The weighted credit in 1990 for this energy would be SF 0.099 or SF 0.108 respectively.

Benefits from delivery to Suralco

Suralco could, presumably, use all the power which even the largest Devis Falls can produce to produce aluminum. However, this is a speculative proposition, not only with respect to the price which Suralco might pay for energy used to produce aluminum but also with respect to the significant investment which Suralco would have to make for expansion of its aluminum production facilities.

Suralco currently generates all its power and steam requirements from the Afobakka plant and its two extraction turbines. Its gas turbine and extraction/condenser turbine are too expensive to use and are kept on stand-by service only. - 268 -

Since the extractionunits produce both steam and power, Suralco could put these units also on stand-byduty and purchaseenergy from the Devis Falls projectto replace the power outputfrom the turbinesand to produce steam in electricboilers to replace the steam currentlygenerated by the steam turbines. Though, in general,the use of electricenergy as boiler fuel is a ratherunattractive proposition, this would be unavoidable if Suralco is expected to purchase substantial quantities of Devis Falls energy for the purpose of replacing oil used in its existing facilities.

The 1981 report by Norconsult et. al. (see references) provides basic data to estimate Suralco s requirements for different types of energy in its existing facilities. In theory, Suralco could, by operating its two extractionturbines at close to 100 percent capacityfactor, produce sufficientsteam to operateits aluminaplant at full capacity. The power which would then be availablewould, in an averagehydrologic year, be sufficient to produce about 50,000 tons of aluminum, which is approximately 83% of the maximum capacity of the aluminum plant. In practice, Suralco operates its extraction units at lower capacity which results in a lower production of alumina but does not significantly affect availability of power for aluminumproduction.

It will be assumed that Suralco,if power is availablefrom Devis Falls projectat a price equivalentto the cost of fuel requiredto operate its extractionturbines, would purchase sufficientpower to operateits aluminaplant, on the average,at 90 percentof its maximum capacityof 1,445,000tonnes or 1.3 mln tonnes of alumina per year. This would, according to the Norconsult report, require the purchase of 370 GWhplus the energy requiredto produce some 215,000 tonnes of oil equivalentin steam (sincethen, Suralcohas improvedthe efficiencyof the use of steam, which impliesthat aluminaproduction would be somewhathigher). At a 95 percent electricboiler efficiency,the requirementfor steam producion would be some 2620 GWh. Thus the total maximumrequirement by Suralco would be 2990 GWh.

The equivalentinput of residualoil, given the conversion efficienciesquoted in the Norconsultreport, would be 314,000tonnes. Assuming a net cost to Suralco of US $30 per barrel or SF 346 per tonne, the cost of fuel replacedwould be SF 109 mln. Thus the price which Suralcomight be willing to pay for the Devis Falls energy, allowingSF 4 mln. for electricboilers, would be SF 0.035 per kWh.

It will also be assumed that Suralco would be prepared to purchase any amount of energy from Devis Falls, up to 2990 GUh, at the fuel replacement price of SF 0.035 per kWh. (Suralcooffered in 1983 to purchase 630 GWh at a price of SF 0.0334 per kWh. The price would be adjustedto the price of aluminumof US $1611 per tonne in 1980 as reported by Alcoa to the US Securitiesand ExchangeCommission in form 10-K). Given the fact that about 12.5 percent of the fuel used in Suralco'ssteam turbin is used for producing 370 GWh of power and the rest for the production of steam, the averageprice of SF 0.035 par kWh could be split theoretically i a price of about SF 0.045 for the first 370 GWh and a price of about SF 0.0 for the remaining2620 GWh allocatedto the productionof steam.

A final assumptionwill be that Suralco would purchase any energy surplus to EBS requirements over the full life of the project which implies - 269 -

that other bauxite deposits would be mined when reserves in current concession areas are exhausted.

Conclusions

The results of the calculations made with the assumptions enumerated in the preceeding subsections of this annex are summarized in Table 6.2. One additional variation introduced concerns the oil price. The basic calculations were based on a constant oil price on the level of 1983. A variation is based on increasing oil prices. Until 1995, the most recent World Bank projections were used which indicate for 1990 a slightly higher price (2.3 percent) than prevailed in 1983 and an average increase of 4.1 percent per year to 1995. The projection was completed by assuming a further annual increase of 2 percent for 10 years, until the year 2005, when the crude oil price would attain a value of US $46.69 per barrel. Thereafter the price was held constant. - 270 -

Table 6.2 Evaluation of the Devis Falls project (for assumptions see text)

Growth of demand in EBS' Paramaribo system 3 percent per year 6 percent per year

Devis Falls variant I II III I II III Supply at substation, GWh 619 1305 3129 619 1305 3129

Present values over 70 years from 1990

Total demand, GWh 6182 13033 31250 6182 13033 31250 EBS demand, GWh 3546 3730 3755 4936 6374 7452 EBS savings, SF mln oil at constant prices 404 438 445 624 889 1087 oil at increasing prices 495 542 548 774 1140 1415 Suralco demand, GWh 2636 9304 27495 1246 6659 23798 Suralco payments, SF mln oil at constant prices 92 326 962 44 233 833 oil at increasing prices 114 417 1247 50 285 1059 Last year of supply to Suralco (from year 1) 27 50 70 10 22 36

Average weighted revenue per kWh, SF

From EBS, oil at constant prices 0.114 0.118 0.118 0.126 0.139 0.146 Oil at increasing prices 0.140 0.145 0.150 0.157 0.179 0.190 From Suralco, oil at con- stant prices 0.035 0.035 0.035 0.035 0.035 0.035 oil at increasing prices 0.043 0.045 0.045 0.040 0.043 0.045 Total, oil at constant prices 0.080 0.059 0.045 0.108 0.086 0.061 oil at increasing prices 0.098 0.074 0.057 0.133 0.109 0.079

Average cost per kWh, SF Per table 6.1 0.161 0.920 0.480 0.161 0.920 0.048 - 271 -

The results show that Variant I of the Devis Falls project is clearly uneconomic. Variant II would be unattractive at a 3 percent rate of growth of demand and a 10 percent discount rate (an internal rate of return of approximately 9 percent). At a 6 percent rate of growth of demand Variant II is attractive at a 10 percent discount rate and the oil price as recently projected by the World Bank. The internal rate of return would, under these conditions, be about 11 percent. It is, however, very unlikely that growth of demand for electric power will soon return to a level of 6 percent per year or more.

The assumption that the only alternative source of generation to supply Paramaribo is diesel generation after completion of the Jai Kreek and Phedra projects is also likely to be unrealistic. Quite likely, cheaper sources will become available, either from additional hydro projects or from co-generation plants operated jointly with SOMS.

It would appear, therefore, that Variant II is currently a marginal project which could be attractive under, unlikely, favourable conditions only. This assessment is at variance with the assessment made in 1981. The main reasons for this are that the oil price, which determines the benefits, has not increased as was postulated in 1981 and is now expected to increase further at a lower rate than was then postulated and that it is now unlikely that demand in Paramaribo will increase steadily at 6 percent per year as was assumed in 1981. A contributing factor is that the Jai Kreek and Phedra projects now hold promise as potential sources of supply at a cost which is considerably lower than the cost of diesel generation.

Variant III would be an attractive proposition under the scenario of demand growth in Paramaribo of 6 percent per year. If demand in Paramaribo grows at 3 percent; the project would likely also be attractive.

A critical, and favourable, assumption which affects the result of all these calculations, is that Suralco would purchase any power surplus to EBS demand for the life of the project at a price equivalent to the cost of fuel oil used in its co-generation facilities. Under the 3 percent growth of demand scenario, revenue from Suralco would be more than 40 percent of total revenue for Variant II and nearly 70 percent for Variant III. This assumption may well be too optimistic. But the expected revenue from Suralco is also affected by the assumption that much of the power purchased by Suralco would be used as boiler fuel to raise steam. This is not an attractive proposition and has a significant impact on the price of SF 0.035 per kWh (US $0.02 per kWh in 1983 prices) which Suralco is expected to pay. This is 25 - 30 percent only of the price which EBS is estimated to pay on the basis of assumed avoided cost.

The prospects for Variants II and III of the project could be much brighter if Suralco would significantly expand its aluminum manufacturing facilities and would then also be prepared to pay significantly more for power than SF 0.035 per kWh (in 1983 prices). One necessary pre-condition will be a substantial improvement of the long term outlook regarding aluminum markets and prices, over market conditions which are currently projected for this metal. - 272 -

ANNEX7

Forecastof demand for electricityand oil products

7.1 Historicevidence

Average annual growth rates of consumption of main energy commodities and of GDP are shown in Table 7.1.

Table 7.1

Average annual growth of GDP and energy consumption Percent per year

Periods

1973 - 1978 1978 - 1982 1973 - 1982

GDP 7.0 -0.5 3.5 Electricity 7.0 3.1 5.2 Diesel oil, excl. of bauxitesector and EBS 1.1 3.2 2.0 Gasoline 8.1 2.2 5.4 Other oil products,excl. fuel oil 3.2 3.2 3.2 Biomass -0.6 -0.7 -0.7

It is customary to stipulr,te some relationship between growth of energy consumption and growth of GDIP. The use of electricity and gasoline clearly followed the decline in the rate of growth of GDP. As is usual during a period of of sudden decline of economic growth, consumption of these commodities did not immediately react fully to the decline of growth of GDP but kept growing,though at a lower rate. Continuedlow economic growth would increasingly affect consumption of these commodities, however.

Future growth of GDP is expected to be quite modest (see economic chapters in IBRD report). A rate of growth of GDP of 2 percent is considered likely whereas a rate of growth of 4 percent may be possible if favourableconditions (i.e. influx of foreignexchange on a significant scale) are reinstated. For both electricityand gasoline,a lobg term elasticityof 1.25 will be assumed. This impliesthat consumptionof these productswould grow by 2.5 percent (2 X 1.25) if GDP grows by 2 percent per year.

The pattern of growth of diesel oil consumption shown in Table 7.1 is completely at variance with the pattern of growth of GDP. The main reason is probably that diesel oil is to a large extent an input in the production process and that high growth during the period 1973 - 1978 was driven by consumption (government, services) rather than production. For the purpose of making projections, an elasticity of 1 will be assumed. A similar elasticity will be applied to other oi] products. - 273 -

The consumption of biomass will be assumed to remain constant, except for some specific increases of use such as the use of wastewood at the Bruinzeel plant and the use of husk in Wageningen and Nickerie.

Base year consumption of various products is shown in Table 7.2.

Table 7.2

Consumption of major energy commodities in 1982 and 1983

1982 1983 Average import price 1983 US $ Gasoline, tonnes 48,000 330 per tonne Diesel oil, excl. of bauxite sector and EBS, tonnes 101,000 275 per tonne Other Petro. products, TOE 31,000 405 per TOE Biomass, TOE 39,000 Electricity, GWh 280 293

Projection of main elements

Production by SOMS

Table 7.3 shows a production forecast for SOMS. Production of crude is assumed to increase to 5000 barrels a day by 1990 and then remain constant. This could be quite conservative. If both the steam injection on-shroe proves to be feasible and off-shore operations prove to be possible and also attractive, production could well increase to 10,000 barrels per day in the 1990's. Part of this would then probably have to be exported for lack of demand for the heavy oil.

The replacement of diesel is assumed to grow at declining percentages per year until in 1995 some 8 percent of the production is used for this purpose. This would be replacement of diesel oil which is used as boiler fuel. It should be possible, with a determined policy, to move much faster on the replacement of this diesel oil by local production. This would be advantageous to the country.

Diesel oil demand by EBS

In Table 7.4 the demand for electricity is projected at rates of increase of 2.5 and 5 percent per year, corresponding to rates of growth of GDP of 2 and 4 percent. After adjustment for losses, diesel oil use is assumed to be 251 tonnes per GWh of sales for the Paramaribo and District systems combined and 242 tonnes per GWh of sales in Paramaribo.

The Jai Kreek project and a new transmission line between Paranam and Paramaribo are assumed to come in service by 1987 and the Phedra project by 1990. The co-generation project of Burinzeel is assumed to come on steam in 1986 and to produce GWh, equivalent to a reduction of the use - 274 -

use of diesel oil of 36000 tonnes and an increase of the use of biomass of 3675 TOE.

No allowance is made for further purchases from Suralco's gas turbines. Such purchases would imply a shift from diesel oil to residual oil.

Beyond 1990, the increase in demand is assumed to be supplied from diesel sets again. With diligence and some luck, alternative projects should be ready for implementation in the early 19909. These could be hydro projects or, perhaps, co-generation plants at the SOMS oil field(s) if steam injection proves to be feasible.

Under the low growth scenario, implementation of the Jai Kreek and Phedra projects results in a considerable decrease of diesel oil consumption by EBS and the scope for introducng new projects in the early 1990's would be limited. Under this scenario, further detailed studies should also be made, in conjunction with Suralco, to determine whethkr the Phedra project can be introduced in 1990.

Under the high growth scenario, diesel oil consumption by the mid 1990's would return to the level of the mid 1980's and there would be ample scope for new, diesel oil replacing, projects.

The Bauxite sector

For projection purposes, the assumption will be made that the Suralco/Billiton facilities will operate at some 80 percent of maximum capacity. The companies will then use 257,000 tonnes of fuel oil per year at an import cost of US $192 per tonne.

The bauxite companies use about 20,000 tonnes of diesel oil per year, since many years. This consumption will also be assumed to remain constant.

Use of biomass at Wageningen and Nickerie

Use of still available biomass at Wageningen, with an energy content fo 1530 TOE, could result in a decrease of diesel oi consumption of 1500 tonnes. It will be assumed that the necessary coy rsion will take place in 1986. In Nickerie, up to four times this amount of biomass can be used as fuel to replace diesel oil. In this case the assumption will be that this biomass will be used increasingly and that 6000 tonnes of diesel oil will be replaced by the year 1995.

The use of biomass

Table 7.5 shows a projection of the use of biomass.

Import of petroleum products

In Table 7.6 projections are made of oil imports based on the preceding assumptions. - 275 -

Table 7.3

Production of oil and all products by SONS

Year 1994 6S 8C6 7 88 89 90 91 92 93 94 95

Production of crude, berrels x loO00 183 313 534 913 1151 1451 1830 1830 1350 1830 1830 1830

Replaoemnt of Joel ill, barrels x 1000 180 307 522 889 1116 1401 1757 1746 1734 1719 1703 1664

Repiaeownt of diesel oil, barrels x 1000 3 6 12 24 35 S0 73 84 96 111 127 146

Replacemnt of fuel oil, tennoc 23 46 82 129 175 219 275 273 271 265 267 255

Replacemo t of diesel oil. tonnes - I 2 3 5 7 10 11 13 IS 17 20 - 276 -

Table 7.4

Projection of use of diesel ill by EMS

Year 1983 84 8S 86 87 88 89 90 91 92 93 94 95

Sales, CWh (note 1) 293 300 306 316 323 332 340 348 357 366 375 54 394 Sales, GVh (note 2) 293 306 323 339 356 374 393 412 433 455 477 501 526 Nominal use of dlesel oil, toenes x 1000, (notes I, 3) 75 77 79 81 83 85 87 90 92 9S 96 99 Nominal use of diesel oll, townes x 1000, (notes 2, 3) 77 81 85 89 94 98 103 109 114 120 126 132 Lese diesel equivalent Afobakka hydre (note 4) la 18 18 19 19 19 19 19 19 19 19 19 Less diesel equivalent at Brulnzeol (note 5) 4 4 4 4 4 4 4 4 4 4 Less diesel equivalent of Jal Kroek, 1000 tonnes 29 29 29 29 29 29 29 29 29 Lose diesel equlwalent of Phedra, 1000 tonnes 19 19 19 19 19 19 Net use of diesel oil, tonnes x 1000 (notes 1, 6) 57 59 57 29 31 33 16 1S 21 23 25 28 Not use of diesel oll, tonnes x 1000 Cnotes 2, 6) 59 63 63 37 42 46 32 38 43 49 55 61

Note Cl) - growth of demand 2.5 percent per year. Note (2) - growth of demand 1 5 percent per yoer. Note (3) - Nominal vs. basod an the assumption that total demnd Is supplied fre dlesel generators. Note (4) - growth of demand a 75 and 79.5 GWh, 1000 tonnes. Note CS) - 15 CUh produced from wood waste, 1000 tonnes. Note (D) - Net use is nominal use loss all oll replaced by hydro. - 277 -

Table 7.5

Projection of us of bloams, TOE x 1000

Year 1964 85 8b 87 88 89 90 St 92 93 94 95

Ua In 192 39 39 39 39 39 39 39 39 39 39 39 39

BSrlusel 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7 3.7

Weghlangen 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 I.S

NicferIs 0.6 1.2 1.8 2.4 3.0 3.6 4.2 4.8 5.4 6.0 Tet 1 39 39 45 45 46 47 47 45 41 49 50 50 - 278 -

Table 7.6

Import of petroleumproducts, 1000 tonnes and USS min of 1983

Year 84 85 86 87 86 89 90 91 92 93 94 9S

Oasollne a 2.5 percent per year, tonnes 50 52 S3 54 56 57 58 60 61 63 65 66 USS min 17 17 17 le to 19 19 20 20 21 21 22 S percent per year, tonne 53 56 58 61 64 68 71 75 78 82 86 90 USSuin 17 18 19 20 21 22 23 25 26 27 25 30

Diesel Il Low Bauxite tonnos 20 :8 20 20 20 20 20 20 20 20 20 20 Demnd EBS a 2.5 percent per yeor tonnas 57 59 57 29 31 33 16 19 21 23 25 28 Otbhr a 2 percent per year tonnes 105 107 109 112 114 116 118 121 123 126 12 131 Subtotal tonnes 182 186 187 161 165 169 154 160 164 115) 175 179 H I gh Bauxit, tonnee 20 20 20 20 20 20 20 20 20 20 20 20 Doand EBS a 5 percent per year tonna 59 6b 63 37 42 46 32 38 43 49 55 61 Other a 4 poreent per year tonnes 109 114 118 123 128 133 138 144 1SO 155 162 168 Subtotal 188 197 201 180 190 199 190 202 213 224 237 249 Total Blomas, replacemut tonnos 6 6 7 8 8 9 9 10 1 11 SOMS production tonnes 1 2 3 5 7 10 11 13 IS 17 20 Subtotal 1 8 9 12 1S is 20 22 25 25 31 at 2 percent growth of GOP, tonnea 182 185 180 154 153 154 136 140 142 144 145 148 USS In SO 51 50 42 42 42 37 39 39 40 40 41 at 4 percent growth of GOP, tonnes 188 196 193 171 178 184 172 182 191 199 209 218 SS min 52 54 53 47 49 51 47 50 53 55 57 60

Fuel oll, consuptlon, tonnes 275 275 275 275 275 27 275 275 275 275 275 275 SONS production, toenns 28 48 82 139 175 219 275 273 271 269 267 265 iroports, tonnes 247 227 193 136 100 56 0 2 4 6 8 10 US min 47 U 37 26 19 11 0 0 1 1 2 2

Other petroloum products a 2 percent, per yar 1000 TOE 32 33 34 34 35 36 36 37 38 39 39 40 USS mIn 13 13 14 14 14 15 IS 1S 1S 16 16 16 a 4 percent, per year IOOO TOE 34 35 36 38 39 41 42 4 46 48 S0 52 US$mln 14 14 15 IS 16 17 17 18 19 is 20 21

Total Imports, when GOP grows 2 peceent per year 1000 TOE 517 503 466 354 350 30e 236 245 251 258 263 270 US min 12 125 118 100 93 87 71 74 75 78 79 81 Total Import, whwn CDP grows 4 percent per year 1000 TOE 528 521 427 413 358 356 292 31C 326 343 361 379 USS m'a 130 130 124 108 105 101 87 93 98 101 107 113 - 279 -

ANNEX 8

Projection of investment requirements in the public electric power sector

1. The derivation of the order of magnitude of the investment requirements in the public electric power sector, through the year 1995, is shown in Table 8.1. The public electric power sector is defined as the Paramaribo and the district systems served currently by the E.B.S. The projected investment requirements are, however, not necessarily applicable to EBS since its not known, at this time, whether EBS or some other organization would finance the investments in the Jai Kreek and Phedra hydro projects and the proposed new transmission line between Paranam and Paramaribo.

2. The assumptions made in the preparation of Table 8.1 are as follows:

- Energy requirements are as shown in Table 7.4 of Annex 7 for two growth scenarios associated with a growth of GDP of 2 percent and 4 percent per year.

- Peak demand is derived by applying an average load factor (related to sales rather than generation) of 0.55 which is an weighted average for the Paramaribo and district systems. This factor is assumed to remain constant.

- The existing firm capacity is 65 MWconsisting of 54.5 MWin Paramaribo and 10.5 MW in the districts (sum of firm capacities relating to the sum of separate peak demands).

- The Jai Kreek hydro project and the Paranam-Paramaribo transmission line will be placed in service by the end of 1986. The projects will cost SF 58 mln and SF 10 mln respectively, in SF of 1983. A firm capacity of 9 KW will be allocated to the Jai Kreek project. The implied assumption is that Suralco will be in a position to guarantee to EBS an additional 9 MWof firm capacity when the Jai Kreek diversion project is placed in service. This is likely to be the case, though it is possible that EBS would have to pay a fee to Suralco for this service. This would, most likely, be an annual fee which is not included in the investment schedule.

- The transmission line is allocated a firm capacity of 1.2 MW, consisting of a reduction of losses associated with Afobakka power.

- The Phedra project will be built and will be placed in service by the end of 1989, at a cost of SF 92 mln. The project will have a firm capacity of 5 KW.

- The Bru±nzeel co-generation project will not have any firm capacity. - 21O -

- Any remaining capacity deficit will be supplied by new diesel plant at a cost of US$1250 or SF 2250 per kW installed. The marginal capacity factor of this new plant will, for the purpose of determining additional requirements, be assumed to be 0.9. Thus the total investment cost per required additional kW will be SF 2500.

- Once every four years an additional SF 1 mln is budgeted to replace some of the older small generator sets in the districts (100 kW per year).

- The foreign exchange component is 0.75 for all projects except the Jai Kreek project. In this case the foreign exchange component is 0.60.

3. The results shown in Table 8.1 suggest that under the low growth scenario virtually no additional diesel capacity is required. The 1.8 MU shown in the table will be required in the districts and the scheduling will be more frequent, in smaller quantities than shown. Some shifting around of diesel sets between districts and Paramaribo could well be desirable under this scenario, at some cost which is not included in the table. The total investment over an 11 year period from 1985 would amount to SF 166.5 mln of which all but SF 6.5 mln would be invested in the three major projects in the first 5 years of the 11 year period.

4. Under the high growth scenario, an additional SF 64 mln would be invested in diesel capacity. Some of the additional capacity would be required in the 1980s already, but most of it after 1990. As shown in Table 7.4 (Annex 7), diesel generation would also increase rapidly after 1990 under this scenario and it would be necessary to identify more attractive sources of generation for the 1990s under this scenario. - 281 -

Table 8.1

Projection of lnvestmnt requirsmnta In the public electric power sector

Major generationand tranemilsion projects only. 1984-199S

Low growth scenario Capacity requlremnts Teor 84 55 86 87 88 89 9O 91 92 93 94 95 Total Sales, OW?h,per table 7.4 300 308 316 323 332 340 348 357 366 375 3S4 394 (low gowth scenario) Peak load, at load factor of 0.55, MW 2 64 66 67 69 71 72 74 76 78 s0 82 Existing firm capacity M1 65 65 6S 65 65 65 65 65 65 65 65 6S Jai Kr*ek, Kw 9 9 9 9 9 g 9 9 g Transmisalon lint MW 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 Phodra, MW S 5 5 5 S S Deficit, MW I 0.8 Replacemnt diecel, MW 0.4 0.4 inestments SF min (of 1953) Jal Kroek SF mnd 25 33 SP Transmiaalon line SF mnm 5 5 10 Phc*dr SF min 12 35 37 8 92 Diesel plant SF wIn 2.5 1 1 2.0 6.5 Total SF rain 30 52.5 35 38 a 1 2.0 166.5 of wbicht Foreigl exchange SF min 19 33 26 29 6 6.75 1.5 115

Hi gh growth scenario Total SF min 35 54 35 40.5 13 7.5 11 12.5 12.5 9.5 230.5 of which: Foreign exchange SF min Is 34 26 30 10 6 8 9 9 7 158 - 282 -

ANNEX 9

References (Publications and official documents only)

- Subcommittee to Surinamese - Dutch Committee of Experts: "De mobilizatie van het Eigene", een ruimtelijke - physieke hijdrage aan de Integrale Planning, 1975.

- Regerings verklaring en Hoofdlijnen van het Regerings programma 1983-1986, Republiek Suriname, 1 Mei, 1983.

- Stichting voor de Ontwikkeling van Machinale Landbouw in Suriname 'Project Uitbreiding Energie Vooziening Bij the Stichting voor de Ontwikkeling van Machinale Landbouw te Wageningen, Surinane", October 1983.

- Norconsult AS., Electrowatt and the Bureau voor Waterkrachtwerken: -Study of Prospects and Terms for Selling Kabalebo Project Electricity", Vols 1 and 2, March 1981.

- Dr. Robert 0. Williams: "Potential for Wood Gasification in Suriname", December 1982.

- Ninistry of Natural Resources and Energy: "Suriname, Data on Energy Consumption (1978-1982), Energy Balances 1981-1982.

- National Planning Office of Suriname: "Suriname on its Way to a National Energy Supply", June 1983.

- Stichting Planbureau Suriname: "Economic Survey of Suriname", December 1983.

- E.F. Durrant, P. Eng.: 'A Review of Hydrometric Activity in Suriname", May 1982.

- B.V. Interutil: Plan Electriciteits Voorziening voor Paramaribo en Nicuw Nickerie en omgeving als Onderdeel van de Energie voorziening in Suriname op langere Termijn - 1983.

- B.V. Interutil: "Energie producLie uit afval in Suriname", Juli 1981.

- Exploration Consultants Limited: "Suriname, Petroleum Exploration Promotion Project", for the World Bank, 1980.

- Petroconsultants SA: "Annual Review 1983, Surinam," February 1984.

- Ministry of Development, The Oil Commission: "Terms for the Establishment of Hydrocarbon Exploration Contracts in Suriname", 1981.

-Drs. S.E. Jharap: -Bijdrage aan he. Aardoliebeleid in Suriname," 1981. - 283 -

- Drs. S.E. Jharap, StaatsOlie Maatchappij Suriname NV: "Handleiding voor Industrie en Mariene Brandstoffen", Februarie 1984.

- Staat Olie Maatschappij Suriname NV: "Jaarverslag 1981", 29 Juni 1983.

- Staats Olie Maatschappij Suriname NV: "Petroleum Activities in Suriname", May 1984.

- State Oil Company Suriname: "Heavy Oil Production from the Tambaredjo Field Suriname", May 1984.

- EBS, NV Energie Bedrijven Suriname:

Jaarverslag 1979

Jaarverslag 1980

Intern Verslag 1983

Begroting 1984

Financial Verslag over 1983 (provisional)

Algemene bepalingen en tarieven voor electriciteits levering, Januari 1975

- Gouvernementsblad van Suriname: "Landsverordening van 30 November 1971" (establishment of EBS).

- Suriname: 'Overeenkomst ter Bepaling van het Redelijk Rendement", 17 Mei 1972 (Government of Suriname - EBS).

- Republic of Suriname, National Planning Office: "Project Profiles nos. 24322, 25288, 25319, 25320 and 25321" (Extension of the Energy Supply for the Foundation for the Development of Mechanized Farming in Surnaime: Generation of Energy; The High Tension Line; the Jai Kreek Project; The Phedra Project).

- Ministry of Natural Resources and Energy: "Project Dossier - Marchallskreek Micro Hydro Power Project", April 26, 1984.

- The World Bank: "Staff Appraisal Report, Suriname, Kabalebo Hydroelectric Power Project", October 1, 1981 (Draft, Confidential, for Official Use Only).

- Hensley-Schmidc Inc. -Jai Kreek Diversion Project, Sumary Report," March 1983

"Phedra Hydroelectric Study, 2easibility Study," April 12, 1984 - 284 -

'Jai Kreek Diversion Project, Hydrologic Studies and Energy Simulation Studies", April 1983

"Geotechnical Feasibility Evaluation of Jai Kreek and Phedra Projects", January 1983.