Guinea to repay in full $25m mining loan from Palladino

Guinea’s parastatal mining company Soguipami will repay a $25 million loan made by British Virgin Island-registered investment firm Palladino, finance minister Kerfalla Yansane said on Friday June 22.

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The loan was taken by Yansane and mining minister Lamina Fofana on behalf of Soguipami in September 2011, in a bid to manage the government’s 15% stake in all mining operations in the country.

“Guinea’s rapid economic restructuring programme has considerably improved our credit rating and will soon enable Guinea to raise financing on international markets,” Yansane said.

“From a commercial perspective, it makes sense to repay a loan whose conditions we no longer deem favourable,” he added.

Yansane said the terms of the loan offered by Palladino were considered to be favourable when the agreement was signed in light of Guinea’s “weak fiscal position”.

The move comes a week after Fofana refuted claims that the $25-million deal could gift billions of dollars of mining assets to Palladino.

A story published by The Sunday Times on June 3 claimed that the terms of the loan included a default clause that would allow Palladino to convert the debt into a 30% stake in Soguipami, threatening Guinean assets held by BHP Billiton, Vale and Rio Tinto.

“This is false,” Fofana told Metal Bulletin in an interview in London on Friday June 15.

Soguipami acts as national “holding company” for a number of commodity organisations, which manage the country’s stake in its iron ore, bauxite, alumina, diamond and gold resources.

The Guinean government said it was in the process of establishing a fund to procure international legal and financial advisory services for contract negotiation.