The regulation of exploration and development of gold deposits consists of the following sections:

1. General information on exploring and developing gold deposits.
2. Establishing mining rights.
3. The procedure for granting rights to Exploration, Production and combined Exploration and Production of gold deposits.
4. The terms of investment tenders for mining rights (Exploration, Production and Combined Exploration and Production).
5. Tenders for mining rights.

1. General information on exploring and developing gold deposits

In accordance with the law of Kazakhstan, exploration of gold deposits is understood as operations for finding and appraising gold deposits. Production of gold ore is understood as operations for lifting up minerals onto the surface, including those contained in production-induced mineral deposits owned by the state, and temporary storage of minerals. Gold ore means ore (raw material) containing gold. Gold deposit means an underground section with natural concentration of gold.

In accordance with the Constitution of Kazakhstan gold deposits are the property of the state. Unless otherwise stipulated in a contract, gold ore is the property of the mining contractor. The ownership rights (disposal, operating control) are determined by the contract which entitles the mining contractor to dispose of gold ore in any manner not prohibited by law.

Operations for exploring and developing gold deposits are covered by mining rights which may be executed on the basis of temporary commercial land use.

2. Establishment of mining rights

Mining rights are established by way of:

1. Granting mining rights

Granting mining rights means direct transfer of the rights from the state to a legal entity. Mining rights for exploration, production and combined exploration and production may be granted by making a contract to that effect.

Mining rights for state geological exploration of gold deposits are granted by an administrative decree issued by the state body controlling the use and protection of mineral resources in accordance with the law of Kazakhstan on state procurement, and funded from the national budget.

These rights may be granted to several contractors (common ownership). The rights and obligations of such joint contractors to each other and to the authorized body are determined by the contract. The joint contractors bear joint responsibility.

2. Transfer of mining rights

Transfer of mining rights means transfer of the rights from a mining contractor to another legal entity on a commercial or free basis. Mining rights may be pledged, subject to approval by the authorized state body.

3. Transfer of mining rights through the universal legal succession procedure

In the event that the contracto's entity is reorganized, its mining rights shall pass to its successor(s) in accordance with the civil law of Kazakhstan.

3. Procedure for granting rights to exploration, production and combined exploration and production of gold deposits

The Government of Kazakhstan annually approves a list of contract areas (blocks) in gold deposits to be put out to tender at an open and closed bidding of investment programmes, except blocks granted to the National Companies.

The rights to Exploration, Production and combined Exploration and Production in contract areas are granted based on the results of a bidding following the procedure determined by the Government.

The state body controlling the use and protection of mineral resources must prepare a geological and mine allotment for the blocks put out to tender within 45 days from the date when a decision is made by the Government and a mine allotment project is submitted for the blocks.

Persons wishing to participate in a bidding of investment programmes and win mining rights must submit an application to the authorized body.

An application must contain:

1. the applicant's name, location, citizenship (for legal entities);
2. information about the CEOs or owners of the applicant's entity and persons who will represent the applicant;
3. information about the technical, managerial, organizational and financial capabilities of the applicant.

Procedure and timeframe for evaluating applications

Applications are accepted after the applicant pays a participation fee. The applicant must be officially notified by the authorized body of the acceptance of his application within one month from receipt. The applications are evaluated in the course of the bidding.

After the receipt of an application the authorized body must provide the applicant, for consideration, a package of geological information for the block. The package must contain any geological, mining, technical and technology information necessary for the applicant to develop a working programme and a feasibility study for Exploration and/or Production.

4. Terms of a bidding of investment programmes for mining rights to Exploration, Production or combined Exploration and Production

A bidding for mining rights to Exploration and Production or combined Exploration and Development may be open or closed.

The terms of an open bidding must be publicized and those of a closed bidding communicated to all the potential participants.

Persons wishing to participate in a bidding are entitled to receive information related to the bidding procedure.

A notification of the bidding must contain:

• date, venue and deadline for applications;
• main terms of the bidding;
• location and description of gold deposits (blocks) put out to tender.

The notification must state the minimum amount of a signature bonus, the price of the geological information package, discovery bonus and a participation fee established by the authorised body.

5. Tender for mining rights

The applicant must prepare a tender within the timeframe determined by the terms of the bidding and discharge the obligations of Clause 2, Article 41-2 of the Decree On Mineral Resources and Mining. A winner is selected by a tender board approved by the Government.

The results of the bidding must be publicized in official newspapers.

2. A tender must contain:

1. Information about the previous activities of the applicant, including a list of countries where he operated in the recent 5 years, and a bank's reference about his financial standing.
2. The applicants intentions in relation to Exploration, including a work programme and budget.
3. The applicants intentions in relation to environmental protection, including reclamation of soil in the contract area.
4. Sources of funding for Exploration (the applicant's own or borrowed capital).
5. Terms of obtaining geological information.
6. The applicants intentions in relation to co-operation with the National Companies (shareholding) in executing the mining rights.
7. A plan of development of the deposits, including the expected quantity of minerals to be mined.
8. The expected dates of commencing Production and achieving its economic and technical peaks.
9. Alculation of Production costs and income from the sale of minerals.
10. The expected tax revenue of Kazakhstan and capital investments in the development of production and social infrastructure in the contract area.