Latin Finance - July/August 2010 - 38

panama
Molejon gold mine – often referred to as Petaquilla – which contains an estimated one million ounces of gold. It is owned by Canada’s Petaquilla Minerals and reached commercial production in January 2010. While the mine has become a lightning rod for anti-mining protests, developing the copper concession may be less of a challenge than the 25 billion pound Cerro Colorado copper project. Located in Western Panama in the semi-autonomous Ngobe Bugle indigenous territory, thousands of residents could require relocation for Cerro Colorado. This disruption could energize resistance to the project and require a more delicate hand than the business-first Martinelli administration has so far demonstrated in delicate social issues, say critics. Quijano says indigenous leaders back the project and the government is already preparing a public relations campaign. “We see the only way to get the vulnerable areas of this country out of poverty – the Ngobe Bugle territory above all – is development of mining. We don’t see any other way,” says Quijano. He downplays the environmental concerns of open pit mining in flood prone tropical forests. “These days, with modern mining techniques . . . it’s possible to have responsible mining without any adverse consequences.” The government owns the Cerro Colorado concession and Quijano says a formal bidding process for the concession will be launched by the end of this year after new mining legislation is enacted by a congress dominated by Martinelli’s coalition. Quijano envisions the government keeping a 25% stake, but project development could require financing not currently in government plans. Qujano expects no shortage of bidders. “Why should they worry?” boasts Quijano. “Every day we have one or two groups here that come to try to develop mining. What’s more, we don’t know what to do in order to attend to all of them,” he says, referring to potential bidders who seek appointments with officials. Analysts and the government will be paying close attention to Petaquilla, which ran afoul of Panama’s notoriously lax environmental regulators in earlier stages. “I understand that has been corrected,” says Quijano. “[Officials] are very interested in monitoring what is going on at Petaquilla, they are a little bit worried that if something goes wrong there it could derail their plans to promote production at Cerro Colorado,” says Berkman. “The government looks very committed to moving ahead on this. They seem to be more concerned with the potential for multilateral financing expansion. A further testament to the financial resilience of the ACP – wholly owned by the Panamanian government, but with a higher credit rating – last year the ACP saw only a $40 million dip in revenue, as previously programmed toll increases made up for a drop in trade through the canal. “In a $2 billion company, less than 1% in the middle of the global crisis . . . that’s almost nothing,” says Miguez. To date, the ACP has disbursed $300 million from multilateral lenders – $200 million from JBIC and $100 million from the European Investment Bank – says Miguez. Project expenditures could be near $1 billion by the end of the 2010 financial year, depending on disbursement of advance payment to contractors. Another $600 million of the multilateral loans is scheduled for disbursement in the 2011 financial year, but the ACP is already hoping to leave some credit untapped. The winning bid for the locks contract by a group led by Spain’s Sacyr Vallehermoso with Italy’s Impregilo came in below expectations at $3.1 billion. Under-budget expenditures to date have also helped increase the contingency portion of the $5.25 billion budget to $477 Focus on gold, says Berkman million from a 2006 estimate of $326 million, according to ACP data. outside interest groups to incite opposition “We might not need all the financing, to the mines, rather than problems with so we are not planning at this point in time the local indigenous groups,” she adds. to disperse all the financing,” say Miguez, noting that it is still too early in the locks Canal Expansion: So Far, So Good contract progression to know for certain. Officials at the Panama Canal Authority The ACP in March bought a hedge to (ACP) take great pride in saying the lock interest on $800 million of financing $5.25 billion expansion of the waterway at 4.67% fixed for 18.5 years, says Miguez. between the Atlantic and Pacific oceans The move could further cushion the is under budget and on schedule for 2014 expansion as the original budget was at completion. 6.25% interest. “We continue to see very But the expansion so far has mostly good fundamentals for the project,” says entailed excavating and dredging. The key Miguez. phase of designing and building a new set The ACP will not increase tolls in 2010 of locks that will more than double the and is in the process of defining new capacity of the canal is only expected to be charges expected to take effect in 2011. 3% complete by the end of the ACP’s fiscal The usually annual increases are vital to the year in September. expansion project, but freezing tolls this “They are already digging,” says canal year is not expected to affect expansion. CFO Francisco Miguez, adding that the “We see no reason to second-guess the first year is primarily for design and set-up. project,” says a confident Miguez. “We’re “It’s progressing at a very good clip.” pressing forward with the expansion. While capital markets were reeling in Have no doubt about it, we are moving 2008, endangering financing for other forward. This is a project that is going to be major LatAm infrastructure projects, completed, and it’s going to be completed the ACP easily landed $2.3 billion in well and on time.” LF

38 LatinFinance

July/August 2010



Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010

Latin Finance - July/August 2010
Contents
Equity/Debt Fund Performance
European Investors
Brazil Domestic Buyside
Mexican Domestic Buyside
Mexico Venture Capital
CEMEX CFO Interview
Panama Investment
Canadian Miners
Peru Investor Report
Peru is Making Strides to Develop Gas and Oil
Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - Latin Finance - July/August 2010
Latin Finance - July/August 2010 - Cover2
Latin Finance - July/August 2010 - Contents
Latin Finance - July/August 2010 - 2
Latin Finance - July/August 2010 - 3
Latin Finance - July/August 2010 - 4
Latin Finance - July/August 2010 - 5
Latin Finance - July/August 2010 - 6
Latin Finance - July/August 2010 - 7
Latin Finance - July/August 2010 - 8
Latin Finance - July/August 2010 - 9
Latin Finance - July/August 2010 - Equity/Debt Fund Performance
Latin Finance - July/August 2010 - 11
Latin Finance - July/August 2010 - 12
Latin Finance - July/August 2010 - 13
Latin Finance - July/August 2010 - 14
Latin Finance - July/August 2010 - 15
Latin Finance - July/August 2010 - 16
Latin Finance - July/August 2010 - European Investors
Latin Finance - July/August 2010 - 18
Latin Finance - July/August 2010 - Brazil Domestic Buyside
Latin Finance - July/August 2010 - 20
Latin Finance - July/August 2010 - 21
Latin Finance - July/August 2010 - 22
Latin Finance - July/August 2010 - 23
Latin Finance - July/August 2010 - 24
Latin Finance - July/August 2010 - 25
Latin Finance - July/August 2010 - Mexican Domestic Buyside
Latin Finance - July/August 2010 - 27
Latin Finance - July/August 2010 - 28
Latin Finance - July/August 2010 - Mexico Venture Capital
Latin Finance - July/August 2010 - 30
Latin Finance - July/August 2010 - CEMEX CFO Interview
Latin Finance - July/August 2010 - 32
Latin Finance - July/August 2010 - 33
Latin Finance - July/August 2010 - Panama Investment
Latin Finance - July/August 2010 - 35
Latin Finance - July/August 2010 - 36
Latin Finance - July/August 2010 - 37
Latin Finance - July/August 2010 - 38
Latin Finance - July/August 2010 - Canadian Miners
Latin Finance - July/August 2010 - 40
Latin Finance - July/August 2010 - 41
Latin Finance - July/August 2010 - Peru Investor Report
Latin Finance - July/August 2010 - 43
Latin Finance - July/August 2010 - 44
Latin Finance - July/August 2010 - Peru is Making Strides to Develop Gas and Oil
Latin Finance - July/August 2010 - Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - 47
Latin Finance - July/August 2010 - 48
Latin Finance - July/August 2010 - Cover3
Latin Finance - July/August 2010 - Cover4
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