Attachment_5 _Workout_Action_Plan.pdf

Attachment #5

ACTION PLAN

Date: January 7, 2016

To: Mary Ryan Bequai, MD/PMD

Barbara Day, AGC/LA

Through: Alice Burke, AGC/LA

Yvonne Durazzo, MD/RM

From: Jeffrey Constantz, MD/Asset Management

Daniel Horrigan, AGC/LA

Subject: EASTERN GOLD LLC

Rating: Doubtful-Recoverable

PROJECT SUMMARY

Project ........................... EASTERN GOLD LLC Country ......................... Mongolia Project Description........ Gold Mining Sponsor Loan Number ................ 438 2009 524 IG Loan Agreement Date ... April 20, 2010 Loan Maturity Date December 15, 2016 Outstanding Loan Amt .. $10,000,000 Interest Rate .................. OPIC Cost of Funds + 3.5% OPIC Guaranty Fee Scheduled Amortization Semi-annual payments starting December 15, 2012; last payment

December 15, 2016 Payment Status .............. Past due Collateral ....................... Pledge of Interests; assignment of mining leases; lien on equipment.

Sponsor Support ............ $6MM completion support Bucky Goldminer(net worth does not support the completion guaranty).

Other Support ................ None Loan Status.................... Non-Accrual Reserve .......................... 90%

1. Action Memo Purpose

As a part of a recovery, this action memo seeks clearance to sign the attached Loan Assignment and Assumption Agreement enabling the transfer of OPIC’s loan documents to Finance and Development of Mining NBFI, a limited liability company nonbanking financial institution organized and existing under the laws of Mongolia, in exchange for a one-time payment of $8 million by immediate wire transfer.

While there has been interest expressed by one other potential investor, that investor’s proposal includes delayed repayment, conditioned upon achieving mining operations and requires that OPIC make an additional loan. Given the complexities of the project to date, these terms are unacceptable.

The sale of OPIC’s loan for cash would provide the most expeditious exit to this long standing, troubled project. The sale for an immediate full payment of cash would be unconditional and without warranty or indemnity of any kind from OPIC. The buyer has conducted its due diligence and has indicated its readiness to proceed. (Please see previous action memo authorizing the exercise of remedies and most recent SAG report for project background)

2. Project Background

In April 2010, OPIC approved a 6-year $10,000,000 investment guarantee to the Mongolian company, a wholly owned subsidiary of Eastern Mining Company, LLC (“Eastern”) through its subsidiary Eastern Mining AG, to develop and operate the Big Bend placer gold mine located in north central Mongolia.

The project company ran out of money before it became operational. The Sponsor claims that this is the result of the time delay caused by sorting out the impact of the newly enacted environmental “River Law” which has created uncertainty as to the value of the mining licenses associated with this project, requiring, as it does, greater set-backs from rivers. In reality, there has been very little progress toward becoming operational as Buckey Goldminer, the Sponsor, is essentially a one man show trying to hold his investment together. We understand that the Sponsor is insolvent, has lost his house to foreclosure and cannot pay his office rent. He reportedly mortgaged everything to invest in this gold mine.

The project also appears to have been underfunded from the start and the River Law has simply made it more difficult to raise the necessary additional funds as would-be investors have become skittish. Compounding the delay has been Mongolian parliamentary elections and the need to have a functioning government in place to fully understand how the River Law is likely to be implemented and its likely impact on this project.

There are lingering questions about how much of the original mining resource is still available to be mined based upon the new setbacks set forth in the River Law. This is an issue our note purchaser will have to contend with as they attempt to realize on their investment.

The recommendation to declare a default under the financing agreement and pursue Buckey Goldminer on his completion obligation was meant as a first step toward liquidating OPIC’s collateral.

By initiating the previous collection proceedings in the face of continued payment defaults, the project team hoped to encourage the current Sponsor to be receptive to any and all reasonable offers to buy the project since he lacked the capital to move the project forward on his own. The sponsor has not shown any receptivity to sell out and pay OPIC off which is why selling the OPIC note appears to be the only viable path to recovery for

OPIC.

Financial Discussion

The project is not operational and therefore has not produced the normal profit and loss statements. After visiting the site and not seeing much by way of hard assets, the monitoring officer asked for a sources and uses statement to show where the $23 million ($10 million OPIC/$13 million Mr. Goldminer) had been invested.

Sponsor Goldminer admitted that he had sold a valuable bulldozer in violation of the OPIC loan agreement.

The sources and uses statement provided shows a suspiciously large level of personnel/overhead spending of close to $4 million, with approximately $13 million spent for hard assets. The sponsor has been seeking $16 million in additional equipment financing and $6 million of additional equity with which to operate, unsuccessfully.

2. Recent Updates

There have been reports that Sponsor Goldminer is attempting to form a JV with a Chinese company to put the concession into operation. After repeated requests, Sponsor Goldminer has not shared with OPIC what his plans are, nor has he formally presented a request to bring in a new partner or submit to the customary CRDD process. The concern is that Sponsor Goldminer will act in his own best interest without consulting OPIC and that an immediate sale of our loan is the only way to prevent further dissipation of OPIC’s collateral and potential for recovery.

3. Analysis of Workout Options

Option 1) Accelerate and foreclose. Without an active buyer for the collateral, foreclosing in Mongolia would represent a costly and potentially fruitless exercise; Option 2) Wait for a full price offer. Although many discussions have been had, no other credible offers have been received and the opportunity has been “advertised” with the help of the US Embassy in Mongolia; Option 3) Sell the OPIC Loan to Finance and Development of Mining NBFI. This is the best option at present.

4. Recommendation and Action Requested

That clearance be granted to execute the attached Loan Assignment and Assumption Agreement.

Approved: ____________________________________________ ____________ Mary Ryan Bequai, MD/PMD Date

Clearance: ____________________________________________ ____________ Barbara Day, AGC/LA Date cc: Mildred Callear, VP&CFO/DFPM Kimberly Heimert, VP&GC/LA Stephanie Kaufman, MD/Budget

Ove Westerhiem

Action Plan