"Approved"

Order of the State Agency for Geology and Mineral Resources

under the Government of the Kyrgyz Republic

No. ____ dated _____ February 2016

Terms of auction for granting the right on use of earth’s interior for performance of geological prospecting for alluvial gold in the Aksay area.

The auction organizer in accordance with the Government Decree # 834 of the Kyrgyz Republic dated December 14, 2012: The State Agency on Geology and Mineral Resources under the Government of the Kyrgyz Republic is the authorized state body.

1. The subject of the auction and General information about the object's subsurface resources.

1.1. Subject of auction: Mines-and-carriers use with the purpose of geologic exploration for alluvial gold in the Aksay area in accordance with the Law of the Kyrgyz Republic "About Subsurface Resources Use".

The object of the subsurface resources, right to use, which is offered for auction: Aksay area

1.2. Auction form: Open. 1.3. Geographical location of the object with subsurface resources:

«Акsay» area is located at At-Bashy region of Naryn oblast, in Aksay valley, in the basin of the left tributaries of Aksay river.

The geographic coordinates of the corner points of the plot: К – 43 – 117

The coordinates of the corner points of the plot offered for auction.

1.5. The size of the licensed area: 400 50′–41000′ of northern latitude and 76001′–76027′ of eastern longitude.

№ X Y1 4530000 135860002 4540000 136040003 4540000 136220004 4530000 136220005 4528000 136040006 4516000 13586000

S = 432.0 кm2 or 43200.0 hectare

2. Geological characteristics of the licensed plot

The remote and mountainous area of the Deposit is poorly mastered. Absolute altitudes of the area are 3100-3300 m. The railway can be reached in 310 meters, the river and road is nearby. There are small municipalities are located in that area. There is a Power transmission line support in 20-30 km.

"Aksay" area was opened in 1961 within geological survey of scale 1:200 000. There were single channels, 25 small prospect holes and heavy mineral concentrate sampling was conducted, the geological map with scale 1:10 000 was compiled in the same year. In 1968 the facility conducted a search operations with a total of 587м3 channels, 132.9 m of boreholes, and the washing of the samples was carried out. It has remained poorly investigated since no more other activities have been conducted in the field.

"Aksai" area was formed within the high-mountain erosive-accumulative intermountain Aksay basin. Some occurrences of the field are localized in the transverse (to the river Aksai) down cutting of valleys. Auriferous drifts are represented by alluvial, proluvial and fluvioglacial boulder-pebble deposits with sandy-loamy filler QIV. The main stream gold potential is concentrated in the floodplain and riverbed sediments. Inconsistent ripples, inclusion of gold-bearing sands tend to placer bedding rock. The latter is represented by red conglomerates and clays of the Kyrgyz Suite Р3–N1 and gray conglomerates with interbeds of brown clay of Naryn Suite N2.

In addition to modern alluvium the enhanced field of gold is found in the middle Quaternary water-glacial rudaceously sorted boulders and pebbles mixed with clayey and gravelly material with the capacity of 30-40 m. They occupy a large area on the left Bank of the Aksay river.

"Aksai" area is located on the square 28х6 km and consists of 8 gold bearing streams. The length of their productive part is 8-10 km, the width of the valleys is 0.2-1.5 km. Mostly the West (Mustabas river) and the Eastern streams (Tuzashu) are full of gold.

The distribution of gold in the Sands is uneven, the typical content varies from tens of mg/ м3 to 158 mg/ м3, the maximum contents 1.5-2.0 g/ м3 and 9 g/ м3 at 0.2 m of depth.

Rock bed sources of gold yet to be revealed. They may be conglomerates Р3–N1, N2 and pebbles QII. It should be noted that throughout the Aksay valley gold-enriched areas of modern alluvium occur only in those streams that are opened by the lower horizons of sediment QII. There are scheelite and cassiterite from ore minerals besides gold in placer deposits. Non-metallic minerals are represented by zircon, sphene, and quartz. There was found gold: yellow, native, platy, wire, cloddy gold particles in the form of pellets. The gold fineness is 950. The size of the gold particles in the proportion from 1 mm to 3 mm.

It is developed permanent frozen ground in the Aksay depression with depths of 1.2-4.0 m. Over-permafrost ground water reservoir-aquifer with a capacity of 0.1-1.0 m contains bicarbonate water with a salinity 230 mg/L.

Technological properties of gold are not analyzed yet. Expected resources of gold in the area were provided with the following evaluation.

Area Category Volume of top soils t.m3 Volume of sands, t.m3

Content of Au mg/m3 Gold, kg

Aksay Р2 11560 15500 91 1410

3. Basic requirements for the subsoil use object.

3.1. Basic requirements for subsoil use object are specified in accordance with the legislation of the Kyrgyz Republic related to the subsoil use and should be included in the subsoil license. Detailed requirements are specified at registration of license in the licensed attachment.

3.2. The main requirements for the use of the licensed area are:

- Conclusion of a licensed attachment for the drafting of work designed to mining of licensed area;

- During the design the adjustment on the licensed area with the entering of the reserves on the state balance;

- submission, within the time specified in the licensed attachment period, of the operations plan designed to mining of licensed area, passed examination in respect of industrial, environmental safety and subsoil protection, as well as Certificate for temporary use of plot for subsoil use;

- Submission of semiannual information on progress of conditions of the licensed attachment until July 15 of this year;

- Submission of annual report till January 31 of the new year, in the prescribed form, approved by the authorized state body for the implementation of the state policy on subsoil use and on electronic media;

- Submission of program (plan) for the development of mining work until January 31 of the new year;

- Performance of all required types of mining operations in strict accordance with the project, which has been examined in the industrial, environmental safety and protection of mineral resources;

- Development of the Action Plan to ensure the requirements of industrial safety at work, including the prevention of accidents and their consequences localization with required justifications and calculations as at the site and as a result of accidents at other facilities in the area of location of the object. In developing these measures should be considered hazards (landslides, avalanche danger, etc.), risk factors, conditions for the occurrence of accidents and their scenario, the number and placement of production staff;

- Provide a report on the results of exploration work with graphic materials and the results of laboratory research;

- Technical and biological reclamation of disturbed soils in accordance with the design decisions which are passed examination for industrial, environmental safety and subsoil protection, and according to legislation of the Kyrgyz Republic.

In case of default by the auction winner in the future the main requirements for the use of subsoil object, then to it will be penalized at a rate of 0.1% per day of the paid value of the object subsoil by the subsoil user for each day of delay in the fulfillment of the commitments.

4. Time and place of the bidding: Auction will be held on April 13, 2016 in the building of At-Bashy district state administration of Naryn region.

Registration for the bidding starts from 11-00 to 11-50 hours. Start of the bidding in 12-00 hours.

5. Deadline: Bids would be submitted from February 24, 2016 to April 08, 2016 inclusively, daily on working days from 9-00 hours to 15-00 hours by Licensing Department of the State Agency for Geology and Mineral Resources under the Government of the Kyrgyz Republic, office No. 221.

6. Place and time for familiarization with the terms and conditions of the bidding:

Licensing Department of the State Agency for Geology and Mineral Resources under the Government of the Kyrgyz Republic, office No.217, every day from 9:00 to 18:00 hours.

7. To participate in the bidding the bidder personally or by the authorized representative is submitting bid to the auctioneer till 15-00 hours April 08, 2016, inclusively, in duplicate, in the form prescribed by the auctioneer and posted on the official website of the auctioneer: www.geology.kg.

Filing by mail is not allowed.

Auction participation application form for subsoil use of objects should be filled by a computer approach in state and/or official languages, printed by electronic printers.

Bid should be attached by the following documents:- Copies of the founding documents and the certificate of incorporation;- A copy of the certificate of state registration of the citizen as an individual entrepreneur;- A copy of the appointment of the executive body of the organization;- Power of attorney to the representative, executed in accordance with the legislation of the

Kyrgyz Republic, where a person would act by his representative;- document evidencing of payment of the guarantee fee;- A document confirming payment for tender fee;- A foreign entity additionally submits legalized extract from the state register or other

certificate that it is a valid legal entity under the laws of their country;- companies registered in the Kyrgyz Republic, including subsidiaries of foreign

companies registered in the Kyrgyz Republic, additionally submits a certificate of tax service on the absence of overdue tax debts.

Bid submission is considered as consent of the bidder with all the terms of the bidding.Certificates and documents executed by the bidder, signed by an authorized person and

stamped by bidder.Copies of the documents should be submitted duly certified.Constituent and other documents submitted by the foreign entity should be apostilled and

submitted their notarized translation into the state and/or official languages.All the above mentioned documents should be delivered to the auctioneer along with the

bid.Application materials received after the bid submission deadline would not be registered

and returned to the bidder.

8. The successful bidder, who signed the minutes of the bidding results, pays all established under legislation payments to the budget of the Kyrgyz Republic.

9. The auction fee in amount of 10,000 (ten thousand) soms paid by the bidder to the special account of the auctioneer:

State Agency for Geology and Mineral Resources under the Government of the Kyrgyz Republic

Beneficiary: Oktyabr DBT (District Branch of Treasury)Beneficiary`s Bank: Oktyabr branch of OJSC RSK Bank in Bishkek citySettlement/account 1290534132810077BIC (MFO) 129053TIN 03010199610110OKPO 05804223STS: 004 Pervomay districtPayment code: 14238900 in the bankPurpose of payment: to the State Geology Agency for tender fee or for the guarantee fee to

#Personal/account 4402032100002327 (point the guarantee fee or auction fee).

Tender fee is not subject to return, except in case of cancellation of the bidding, or when the bidder withdraws its bid prior to the start of bidding, or would not be allowed to participate in the bidding. In case of return of the tender fee, it is payable to the bidder within 30 banking days.

10. Guarantee fee in the amount of at10,000 (ten thousand) US dollars, paid by the bidder in the national currency at the exchange rate of the National Bank of the date of transfer or guarantee fee to the special account of the auctioneer specified in paragraph 9 of this document.

Guarantee fee is refunded to the bidder/participant within 30 banking days from the date of signing of the final minutes of the meeting of the tender committee.

A bidder, who refused to sign the minutes of the tender as a successful bidder, is eliminated from the number of bidders. Contributed by him guarantee fee is not refundable.

11. The starting price of the auction subject is 100,000 (one hundred thousand) US dollars.

12. Bid increment is set at10,000 (ten thousand US dollars), the maximum increment- 100 000 (one hundred thousand) U.S. dollars.

13. The bidding is acknowledged as void in following cases:

1) In the absence of bids or if only one bid is submitted;2) To participate in the bidding admitted only one bidder or no one is admitted;3) To participate in the bidding, only one registered bidder or nobody is registered;4) Bidders offered a price not higher than the starting price.14. The successful bidder is the bidder who offered the highest price for the lot. On the day

of the bidding, the successful bidder signs the minutes. Refusal of the successful bidder to confirm its results the same day (i.e. refusal to sign the minutes) or non-payment of his proposed price for subsoil use within five banking days after the signing of the minutes on bidding is deemed to be a waiver of subsoil license of object, the guarantee fee is not refundable.