Dukat Silver Project Summary Of Project Information (SPI)       Project Name:    Russia:  Dukat Silver (Dukat)      Region:Europe II   Sector:   Project No:009346   Projected Board Date:May 6, 1999   Company Name:ZAO Serebro Dukat (ZAO Dukat)   Technical Partner and/or Major Shareholders    	Pan American Silver Corp. (Canada) is a silver mining company listed on the Toronto Stock Exchange (TSE) and NASDAQ. Pan American was established in 1994 and it owns the operating Quiruvilca silver mine in Peru, two silver mines under development (La Colorada in Mexico and Dukat in Russia), and several exploration projects in South America. Pan American estimates its total mineral resources at 760 million oz. (23,700 tonnes) of silver, including its 70% share of Dukat mineral resources.  As of September 30, 1998, Pan American reported assets of US$75 million, net worth of US$65 million, and no debt.  The local partner in Dukat is Geometall, a Russian company majority owned by Western Pinnacle Mining Limited, a Canadian junior mining company.    Project Cost Including proposed IFC investment    	Total capital cost is estimated at US$105 million (based on a 1998 feasibility study prepared by Kilborn Engineering of Canada). The IFC investment would amount to US$31.4 million consisting of: (1) Equity investments in ZAO Dukat and Pan American totaling US$13.9 million; and (2) Loans of about US$ 17.5 million in ZAO Dukat comprising (a) a senior loan of US$15.0 million; and (b) a Standby Over-run Loan Facility of about US$2.5 million.    Location of project and Description of site    	The Dukat silver mine is in the Magadan Region of Far East Russia located 600 km northeast of the city of Magadan.     Description of Company and Purpose of Project    	The US$105 million project is to reopen and modernize the Dukat mine.  It includes further development of an existing underground mine, construction of a primary crushing circuit, upgrade of an existing flotation plant, and construction of associated infrastructure facilities and access roads.  Based on proven and probable reserves of 10.6 million tones, the mine will produce 238 million oz. (7,400 tones) of silver and 0.5 million oz. (16 tones) of gold over an initial 15-year mine life with further upside potential.  The mine was privatized and purchased by ZAO Dukat through an open international tender in 1997.  ZAO Dukat is a Russian company majority owned by Pan American.    Environmental Category and Issues    	This is a category A project according to IFCs environmental and social review procedure because it will likely have significant adverse environmental impacts that are sensitive, diverse, or unprecedented.  ZAO Serebro Dukat (SD), a subsidiary of Pan American Silver Corp. (PA) has prepared a comprehensive Environmental Impact Assessment (EIA) in English, which addresses several key environmental and social issues associated with the projects implementation, construction, and operation.  The EIA includes a detailed Environmental Action Plan (EAP) which will be updated and expanded during the development of the project.  Public consultation and disclosure (PCD) were carried out in accordance with Russian and World Bank group requirements.  A separate Russian version of the EIA (the OVOS) was prepared in accordance with local and national regulations.  The Russian version was also disclosed in country and is currently being reviewed for final approval by the authorities.  The results of these consultations as well as the OVOS recommendations have been incorporated into the EIA and appended reports (EAP, PCD) which were released to the InfoShop and in Russia on March 5, 1999.    Based on a review of the information supplied in the EIA and related documents, IFCs Environment Division concludes that the project is consistent with applicable Russian standards and World Bank Group policies and guidelines. More details are provided below.   Environment, Health and Safety    Key environmental issues include: air and dust emissions, water resources and water quality, habitat and ecology, tailings impoundment, dam stability and sedimentation ponds, solid and liquid waste management, handling and storage of hazardous materials, noise and visual impacts, rehabilitation of old facilities, and reclamation and closure.  Health and safety issues include underground safety, employees training, occupational health and safety, general housekeeping and fire prevention.    When Pan American was involved in the privatization process of the Dukat Mine in 1996, they commissioned an independent environmental audit of the mine and related facilities. According to the Mining License signed in 1998, the company, SD, assumes no liability for existing impacts for the facilities not to be used in the project.  The EIA includes a detailed review of the environmental conditions of the existing facilities, a new baseline study on ecology, wildlife, surface water and ground water, soil and hydrobiology, and a discussion on impacts from previous mining operations, impacts during construction and potential impacts when underground mining and milling and processing (including tailings disposal) will take place.  An analysis of alternatives is complete.  The EAP presents a set of mitigation measures, a risk assessment, detailed monitoring activities, and various management plans (staffing and training, occupational health and safety, underground safety, emergency response, waste, reclamation and closure).  Detailed implementation schedules and cost estimates were developed with clear benchmarks to meet and achieve.    To comply with IFC requirements and Russian regulations, the EAP will be updated as needed.  It will include any required additional mitigation measures, a revised version of plans for monitoring, assessing and preventing impacts, and all necessary modifications of the schedules and estimates.  Full public disclosure will take place along the same lines as taken for the EIA and OVOS. It is anticipated that the first EAP revision will be published in December 1999.    SD has agreed to prepare a detailed mine reclamation and closure plan and to set aside financial provisions over the life of the mine to implement it.  SD also has agreed to adopt and implement an Environmental Management System (EMS) which will assist mine and mill management to meet both current and future environmental issues. As a prospective new shareholder in PA, IFC also carried out a review of its environmental practice and management.  As a priority component of its corporate policy, PA appears to operate its properties in an environmentally responsible manner.  Environmental and safety issues are integrated into all aspects and stages of their business activities.  As part of the EAP, the company has agreed to implement a formal corporate EMS and to provide IFC with an independent environmental and social audit of their various operations worldwide.    Social Aspects     The two main population centers in the projects impact area are the mining settlements of Dukat and Omsukchan with a combined population of 8,875. Approximately, five percent of the population living in these towns are officially recognized as indigenous peoples. As primarily mining towns, Dukat and Omsukchan have been seriously affected by the cessation of operations of the Dukat mine in 1997. Unofficial estimates put rates of unemployment and underemployment at close to 100%.    According to the EIA, the social impacts of this project will be mainly positive in terms of employment created by the start up of mining operations and the generation of tax revenue for the local municipality which will lead to much needed improvements in infrastructure and service provision. In addition, the Company is required to contribute USD 3 million toward the establishment of a Charitable Foundation to be managed in partnership with government administrations at the Omsukchan raion and Magadan oblast levels for the benefit of local communities.    In order to ensure greater transparency, representation and accountability in the Foundations operations, IFC has requested the sponsor to prepare a Management Plan which should be agreed upon by all parties prior to Board approval. A detailed Implementation Plan for Foundation programs will follow in direct consultation with local communities prior to first disbursement. The sponsor has made a corporate commitment to ensure that benefits will also be targeted to the indigenous population. Five percent of jobs will be reserved for them, in line with their representation in the population, and training will be provided by the Company where necessary. In addition, Foundation funds will be allocated to special programs targeted to the needs of the indigenous population. The Implementation Plan for the Foundation will include a separate component to be designed in direct consultation with the local indigenous community and their representatives and with the assistance of a specialist consultant.    According to the EIA, other social safeguard policies such as involuntary resettlement, forced labor and impacts on cultural property have been assessed and found not to be issues for this project.    The  is  from the InfoShop.       Host country location of environmental documents:    International Finance Corporation   Ulitsa Pushechnaya,2   Moscow, Russia 103012   Telephone 7-095-913-7054    ZAO Serebro Dukat   13/1 Proletarskaya Street   Magadan, Russia   Telephone: 7-(413)229-9323      Date SPI sent to InfoShop:April 5, 1999   This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporations Board of Directors.  It is provided for the purpose of enhancing the transparency of IFCs activities and should not be construed as presuming the outcome of IFC Board consideration.    For Additional Information contact:  Corporate Relations Unit -   telephone: (202) 473-7711   facsimile: (202) 974-4384  Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).