All data are collected in the Fiscal Year of 2008-2009.

Guinea / Energy, Mining, Resources

Global Alumina was founded in 1999 by gaining first-mover advantage in the development of a domestic alumina refining industry in the Republic of Guinea. Global Alumina and its joint venture partners are developing a 3.6 million metric tons per annum nominal capacity alumina refinery located in the bauxite-rich region of the Republic of Guinea. The project's bauxite mining concession covers 690 sq km of the Boké bauxite belt, one of the world's most prolific bauxite regions.

Global Alumina’s first project is the development, now jointly with BHP Billiton, Dubai Aluminum Ltd. and Mubadala, of a 3.3 million metric tons-per-year capacity alumina refinery in the Sangaredi region of Guinea, along with the requisite energy, water, transportation and social infrastructure. The project is designed for significant expansion to 4.8 million metric tons and the joint venture company has approved funding for the site selection and permitting of a second like-sized refinery in the southern half of its concession area.

The mining concession contains 19 bauxite-bearing plateaus distributed throughout the property. The bauxite occurs at or close to the surface on the flat, elevated areas of the concession, usually above 200 meters elevation. While originally designed with two processing lines, the refinery is now expected to have an annual design capacity of 3.3 million metric tons with annual production reaching a nominal steady state capacity of 3.6 million metric tons within five years. Eventually, as the operating staff gains experience, the refinery’s capacity will reach 3.95 million metric tons through its life. The refinery will not only operate 24 hours per day, 365 days per year, but also provide storage capacity sufficient for all consumables and for alumina. Additional bulk storage facilities will be provided at the port, based on maximum anticipated ship cargo capacities and the consumption rate of the refinery.

The energy requirements of the refinery are expected to be met by a steam and electricity cogeneration plant designed on circulating fluidized bed boiler technology to be built concurrent with the construction of the refinery. The refinery and associated town will require initially approximately 90 megawatts of electricity and 700 tons per hour of process steam. The project will ultimately consist of a coal-fired cogeneration power plant capable of producing approximately 150 megawatts of electricity and supplying all of the steam required by the refinery. Coal for the power plant is likely to be sourced from South Africa.

The refinery's water supply is expected to be served by a new reservoir and related delivery system to be built concurrently with the refinery. The reservoir will be created by a 30-meter high dam with associated spillway and outlet works, to be built using 350,000 cubic meters of laterite material available near the site. The reservoir will store five million cubic meters of water, enough to supply the annual water requirements of the refinery and the contemplated future expansions.

The alumina refinery will require an expansion of the existing port of Kamsar and a dedicated alumina operations terminal and jetty separate from the existing CBG bauxite operations terminal and jetty. The expanded facilities will accommodate the importation of coal, limestone, heavy fuel oil, diesel oil, sulfuric acid, caustic soda and other supplies necessary to operate the refinery and export of the alumina produced. The new Guinea Alumina port terminal and jetty are being constructed to the south of the existing CBG terminal and jetty.

The existing railway is standard, western gauge track and extends approximately 130 kilometers from CBG's mining operations in Sangarédi passing through Guinea Alumina’s concession area and on to the port of Kamsar. Guinea Alumina plans to build a 14 kilometer spur from the main line to its refinery, and an extension in the area of its port terminal site to serve its operational requirements.

The alumina refinery project is located in Boke in town and port located in western Guinea, 80 km from Sangarédi where bauxite is mined.

The agreement with government grants the Company exclusive rights to build and operate an alumina refinery. The Basic Agreement grants the right to produce and market alumina and to export alumina from Guinea without any restriction The Basic Agreement also grants priority rights to access and improve existing state-owned port, rail and road facilities as well as land required for implementation of the project.

The project is expected to create over 10,000 construction jobs and 1,500 permanent mining and refinery operations’ jobs.

Financial and operating results for the three and six month periods ended June 30, 2009 is as follows: In the first six months of 2009, the Company contributed capital to the Project joint venture totaling US$28 million to fund its one-third share of construction and development costs; As of June 30, 2009, the joint venture company, Guinea Alumina Corporation, Ltd. ("Guinea Alumina"), had capitalized into construction in progress approximately US$577.6 million, of which US$17.2 million relates to second quarter 2009; The joint venture approved a cumulative work plan and budget of US$15.8 million from July 2009 through September 2009; As at June 30, 2009 the Company had unrestricted cash of US$22.7 million and escrowed cash of US$62.0 million for funding future Project capital calls and certain indemnities and warranties given to the joint venture.; For the three and six months ended June 30, 2009, respectively, the Company reported net losses of US$2,241,949 (US$0.01 per share) and 3,615,827 (US$0.02 per share), compared with net losses of US$1,861,516 (US$0.01 per share) and US$3,340,879 (US$0.02 per share) for the same periods in 2008; Interest income for the quarter was US$196,408.

Assuming the development plan for the Project has not been approved and the joint venture continues spending at the current rate, the Company's funds in escrow will be sufficient to meet its one-third share of Project equity requirements and unrestricted funds will be sufficient to enable it to meet its corporate operating expense requirements, in each case, through June 2012.

Guinea Alumina’s investment of over US$5 billion will represent the largest single private investment in Guinea and sub-Saharan Africa to date. The Project is one of the most advanced, new projects proposed in Guinea, and ranks as the largest and most significant greenfield alumina project yet to be developed.

“To become the preferred low-cost alumina supplier to the independent aluminum industry by gaining first-mover advantage in the development of a domestic alumina refining industry in the Republic of Guinea”

“Global Alumina’s long-term goal is to capture a significant share of the growing demand for alumina through alumina refinery operations in Guinea. Guinea Alumina’s first 3.3 million metric tons-per-year refinery is designed to accommodate a 50 percent physical expansion, and a gradual increase over 20 years of up to 15 percent additional output through operations improvements. Guinea Alumina has the prospect of building another like-sized refinery within its current concession and has approved funding for preliminary second refinery site studies.

Guinea Alumina’s refinery operations are designed to position the company as one of the lowest-cost producers in the industry, with internal estimates of cash costs at US$134 per metric ton versus an industry average of US$230 per ton and highest quartile averaging over US$320 per ton in 2008 dollars; very low delivered bauxite cost per metric ton of alumina produced due to the abundance of high quality bauxite in very close proximity to the refinery, and its low costs of extraction and delivery; maximum refining efficiencies through the use of current, state-of-the-art technologies, and economies of scale employed in the design of its world-class refinery.

Guinea Alumina is leveraging its equity investment through significant participation of the international development lending community. Through the active and ongoing engagement of government officials, local citizens, and a wide variety of non-governmental organizations, Guinea Alumina will continue to build on its reservoir of good will intended to protect its interests and its image in Guinea. ‘

Guinea Alumina’s Basic Agreement was unanimously ratified by Guinea’s National Assembly and published as law by Presidential decree in 2005. The agreement is a renewable, 75-year comprehensive investment and concession agreement that grants the Company exclusive rights to build and operate an alumina refinery within its 690 square kilometer mining concession area within the Prefecture of Boke in the country’s northwest quadrant. Guinea Alumina is permitted to transfer currency freely and retain off-shore, foreign currency accounts. Guinea Alumina has agreed to use-to the extent practicable-services, products and raw materials from Guinean sources and to employ as a matter of priority Guinean nationals or residents for its unskilled labor requirements.

Guinea Alumina will be subject to a bauxite mining royalty starting with the first fiscal year following the start-up of commercial alumina production equal to five percent of the CBG "free on board" value of bauxite. The Government of Guinea has agreed to facilitate all steps and procedures and provide all reasonable assistance necessary for implementation of the project. Guinea Alumina will enjoy an advantageous Guinean tax policy, including exemption until commencement of alumina production from all Guinean taxes except employee withholding taxes. Payment of fixed annual tax payments of US$5 million, US$8 million and US$12.5 million for each of three successive five-year periods will be followed by reversion to the statutory income tax rate, currently 35 percent. However, as part of its support for Guinea, GAC is paying an advance for its bauxite royalties totaling US$7 million during the realisation phase. This will be offset against actual royalties when production starts.

In addition to the foregoing guarantees and assurances, the Government of Guinea has guaranteed that it will not expropriate or nationalize all or part of the assets of the project. The Government of Guinea has also agreed not to restrict the employment of expatriate personnel, the free choice of manufacturers and direct subcontractors, the free movement in Guinea of equipment, goods and expatriate personnel, the free importation of foodstuffs, spares, materials, consumables and other goods necessary for the project and the importation of satellite equipment in compliance with applicable regulations.

In September 2009 Global Alumina Corporation announced that the joint venture board of directors approved additional Project funding of US$14.1 million for the months of October through December 2009, of which Global Alumina will be responsible for its one-third share. From inception through September 30, 2009, the joint venture board had approved cumulative Project funding of US$617.5 million of which US$593.9 million has been funded to date.

Global Alumina has approximately US$69.5 million in cash, US$56.0 million of which is in escrow available for Project development and US$13.5 million of which is unrestricted and available for general corporate purposes. The Company also has a US$33.3 million subscription receivable due to the Company on the completion of the Project debt financing.