Concordia University Montreal June 1, 2005

1. Concordia University Montreal June 1, 2005 Mining and Human Rights in Guatemala

2. Table of Contents • IFC and the World Bank Group • Background on the Marlin Gold Project • Why IFC Supported the Marlin Project • What the Company Has Done • Government’s Approach to Mining • World Bank Group Action Plan

3. The World Bank Group – Four Institutions • International Bank for Reconstruction and Development International Development Association • Lending and support for Governments • International Finance Corporation • Lending and investments for private sector projects • Multilateral Guarantee Insurance Association • Political risk guarantees for private sector projects • International Center for the Settlement of Investment Disputes

4. International Finance Corporation • Part of the World Bank Group. Set up in 1956: 50 years old next year. • Net Worth of over $6 Billion • Mission: Promote Sustainable Private Sector Investment in Developing Countries to Reduce Poverty and Improve People’s Lives • Operates commercially - profitable every year since 1956 • AAA Rating allows IFC to offer competitive financing to its clients • Syndicates finance (B loans) and mobilises co-finance from commercial banks, other financial institutions • Provides loans, equity, quasi-equity and technical assistance • Strong focus on poverty reduction and sustainability on all projects

5. Joint World Bank-IFC Global Mining Group World Bank Global Mining Group • World Bank Mining Policy Division • Works with Governments to facilitate • Investor-friendly economy • Reformation and modernization of mining Sector • Privatization of state-owned assets • Community relations & equitable rent sharing • IFC Mining Investment Division • Works with Private Companies to ensure • Sound economic fundamentals • Sufficient funding and financial strength • Environmental rigor • Sensitivity to the community

6. MOZAL I & II Al MOZAMBIQUE US$ 145 Million 1997 & 2001 SADIOLA Au MALI US$ 39.8 million 1995 KOLWEZI Cu & Co DRC Board Approval 2005 KOMI Al RUSSIA US$ 75 million 2004 ZERAVSHAN Au TAJIKISTAN US$ 7.5 million 1997 MARLIN Au GUATEMALA US$ 45 million 2004 Some IFC mining deals in Frontier Countries

7. The Land

8. Background • 1954-1996: Protracted, bitter civil war. • 1996: -- Peace Accords. Government program to encourage investment: including reduction of mining royalty on gross revenues from 6% to 1% (on low side but reasonable compared to other countries; must look at entire tax package including income tax). -- ILO 169 ratified by Guatemala (effective in 1997). • 1998: Marlin deposit discovered. • 1999: Previous owner initiated discussions with communities and local governments. Land acquisition started. • 2000: Initial exploratory drilling started. • 2002: Glamis Gold acquires Montana. • 2003: Extensive consultations.

9. Background (continued) • Aug 2003: Local disclosure of ESIA by Company. • Sept 2003: IFC starts appraisal. • Jan. 2004: President Berger elected. • March 24, 2004: IFC discloses ESIA. • June 3, 2004: IFC Board approval. IFC loan for $45 million. • December 3- 4, 2004: Government holds Mining Conference to promote stakeholder dialogue. Sponsored by WBG, Canadian government and local NGOs. • 2004-2005: Various Bank / IFC missions meet with government, Catholic Church and local communities.

10. Why IFC Supported the Marlin Project • Mining with sustainable development can be a key to poverty reduction, but all risks and issues must be evaluated. • Glamis and Montana had demonstrated their commitment to sustainable development (including social and environmental issues). • Impressive consultation and community development work already had been done. • Employment generation, including opportunities for local suppliers in one of poorest regions of Guatemala. • Opportunities for additional community development programs. • Revenues to Government and benefit sharing with local municipality.

11. What Company Has Done • Up to 1,500 construction jobs (870 local indigenous; $2.4 million in salaries in 2004). • 400 operational jobs; estimated 80% local indigenous people. • Company spent $1.5 million on non-project related local improvements. • Company has established community development foundation (contribution of $400,000 per year) to benefit municipalities. • Provision of health services to local communities. • Trained 250 people in vocational skills. • Local reforestation program (with support from IFC trust funds). • Company voluntarily will pay “royalty” of 0.1% (about $100K per year) to Sipacapa. • Company renews their community engagement and communications strategies.

12. Consultations • IFC reviewed and was satisfied with extensive local consultation and that there was local community support in the communities affected. • Land acquisition used willing buyer / seller process, i.e., free, prior and informed consent of all local land owners. • ILO 169 provides flexibility as to mechanisms for consultation. • IFC confirmed with new Berger government its support of project and its satisfaction with consultation process supervised by prior administration.

13. Government’s Approach to Mining • Policy • Promote mining investments that are technically and financially viable and socially and environmentally responsible • Link mining operations to local development • Strengthen the rule of law • Modernize the legal framework: • More specific environmental regulations and procedures • Consultation processes and ILO Convention 169 • Streamline cadastral procedures • Distribution of fiscal revenues: royalties • Strengthen the institutions • Mining Cadastre • Information and transparency

14. Government’s Approach to Mining (cont.) • Develop its capacity as a facilitator of Civil Society – Private Sector – Government Partnerships • Promote dialogue and information (“foros mineros”) • Build capacity of local governments to manage revenues • Build capacity of communities to participate in local development planning • Independent and participatory monitoring Government MEM and other Ministries Civil Society NGOs, Local Communities Private Sector

15. Government’s Approach to Mining (cont.) • Government is more sensitive to mining concerns, taking a more proactive approach: • Government has formed high level commission to address mining issues at the national level (participants include government, Catholic church, local universities and an NGO). • Government is undertaking national and regional forums to discuss responsible mining with stakeholders. • Positive response to working with Bank on mining regulatory and institutional reform. • Government is trying to set up a national and local mediation mechanism for mining.

16. WBG Action Plan • Help the Company and Glamis to address key stakeholder concerns. • Assist the Company with its plans to establish an independent community-based monitoring of project’s impacts. • Work with the Company to : • Bolster the Sierra Madre Foundation • Target investments in communities • Building partnerships and relationships

17. WBG Action Plan (cont.) • Provide SME linkages support. • Provide technical assistance to municipalities if requested. • Support the government’s mediation and conflict resolution process. • Provide technical assistance to improve mining code and regualtions.

18. The Mining Company The Government The Community Sharing of Benefits Desired outcome: Sustainable Mining Providing Benefits to all Stakeholders Profitable long run investment Income and economicgrowth Employment, income, improved social services, infrastructure, spin-off businesses

19. END OF PRESENTATION