PREFERRED BIDDER FOR CURRENT MINERAL TENDERS

6 December 2012

 

The Government of the Islamic Republic of Afghanistan, through the Ministry of Mines of Afghanistan (the “Ministry”), is pleased to announce that on 26 November 2012, preferred bidders were selected to undertake the exploration and subsequent exploitation of three of the four current mineral tenders.

The selection of the preferred bidder for each of Badakhshan, Balkhab and Shaida follows an extensive process since launch in December 2011, which has been supported by transaction advisers and transparency advisers to the Ministry.  The preferred bidder for Zarkashan will be announced shortly.

Summary of preferred bidders announced for current mineral tenders:

Project

Preferred Bidder

Province

Mineral Type

Deposit Type

Exploration Licence Area(s)

Balkhab

Afghan Gold and Minerals Company (AGMC)

Sar-I-Pul and Balkh

Copper

VMS

210 km2 and 247km2

Shaida

Afghan Minerals Group (AMG)

Herat

Copper

Porphyry

250km2

Badakhshan

Turkish-Afghan Mining Company (TAMC)

Badakhshan

Gold

Quartz-vein

4 x 250km2

 

 

Commenting on today’s announcement, His Excellency Wahidullah Shahrani, Minister of Mines, said:

“We are very pleased to announce that following a competitive tender process, we have chosen Afghan Gold and Minerals Company, Afghan Minerals Group, and Turkish-Afghan Mining Company as preferred bidders to explore and begin to develop the Balkhab, Shaida and Badakhshan projects respectively.

“We welcome the preferred bidders to the resources sector of Afghanistan.  We look forward to finalizing mining agreements with them. They will then deliver their work program at each project and use the experience they have gained in other regions to make meaningful contributions to the development of our resources sector.  We expect this in turn will help create long term prosperity for the people of Afghanistan.”

The tender process for each Project is expected to culminate in the granting of an exploration license and, subject to the satisfaction of certain conditions, will lead to the granting of the requisite exploitation license.  Canaccord Genuity, SRK Consulting and Mayer Brown are acting as transaction advisers. The Marx Group is acting as transparency advisers.  The tenders were designed as transparent, standards-based, competitive bidding processes to result in the selection of the best qualified bidder for each Project.

Further information on the tender processes is available on the Ministry of Mines’website (www.mom.gov.af or www.afghanmineraltenders.com).  These include more detailed information on each Project and on infrastructure which is in proximity to the Projects.

 

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Notes to Editors

Preferred bidders and reserve bidders were selected for the three current mineral tenders.  Reserve bidders are as follows:

Project

Reserve Bidder

Balkhab

Silk Road Mining

Shaida

Silk Road Mining

Badakhshan

CAPG Ltd.


About the preferred bidders:

 

AGMC

Afghan Gold and Minerals Company (AGMC) is an Afghan company, registered in Kabul.  It has established a comprehensive operating base in Afghanistan over the last 18 months with a full range of mining capabilities and services, including the establishment of a drilling company and a laboratory services company, both of which are fully operational today.  It is 51% owned by Afghan Krystal (owned by an Afghan businessman) and 49% owned by Afghan Gold Holdings (Guernsey).  Shareholders in Afghan Gold Holdings, created by the investment company CENTAR, include several prominent global business leaders (such as the ex-CEO of BHP Billiton, the largest mining company in the world), several global mining funds and Kulczyk Investments of Poland.

AGMC's technical management team hold in excess of 150 years of relevant experience and are actively engaged in resource exploration across Afghanistan and within the QaraZaghan gold licence in particular are proactively developing an indigenous Afghan mining capability.

 

AMG

AMG has four shareholders: (i) Supreme Group B.V. (67%) – a major provider of logistics, supply chain and associated service solutions in the world’s most remote and challenging regions, with more than 8,500 employees worldwide and group turnover of US$6 billion in 2011; (ii) UB Investments LLC, , owned by the Khwaja family (11%) - represents multiple businesses including leading brands such as Black & Decker, Dewalt, D-Link, Ricoh, Sharp, Sony, Hyundai Automobiles and Fed Ex, owns production and storage facilities in Afghanistan and has more than 1,000 employees in Afghanistan; (iii) Marco Polo Holdings Ltd,  owned by the Gulzar family (11%) - holds distributorships of several brand names including Kraft, Unilever, Johnson & Johnson, Philip Morris, and Toyota in Afghanistan. He also invested in a Coca-Cola bottling plant in Afghanistan; and (iv) SAK Group FZCO, owned by Mr Haji ObaidullahSaderKhail (11%) - trades in basic food commodities and also fuel and transportation solutions.

AMG's technical team includes Ken Haddow and David Cliff, both ex-Rio Tinto executives, and AMG have contracted Kazakhstan Minerals Company (KMC) to design and undertake their exploration and development programmes.  KMC is an exploration contractor with operations throughout Russia and CIS states.  KMC holds a strategic partnership with Iskander and together have a large number of drill rigs at their disposal.

 

TAMC

TAMC is a Kabul registered, Turkish-led Limited Liability Corporation (Afghanistan AISA Licence 1-11885). TAMC exists as a partnership between EtiGümüs (51%) and Afghan Gold and Minerals Company (49%).  EtiGümüs is a Gold, Silver and Copper mining company with 10,000 employees (204 geologists and 241 mining engineers).  EtiGümüs is 71% owned by Yildlizlar SSS Holdings of Turkey, an industrial conglomerate which is the largest mining company in Turkey and the 16th largest silver producer in the world (World Silver Survey 2011).  It has 65 mines in operation.  AGMC operates the QaraZaghan project in Baghlan Province, Afghanistan. 

 

Balkhab

Balkhab is located in the Sar-I-Pul and Balkh Provinces in north central Afghanistan, approximately 130 km south-southwest of Mazar-i-Sharif (population c. 300,000), the capital of Balkh province.  There is evidence of mineral extraction activities at Balkhab going back almost 3,000 years, likely to have been through mining of copper via surface and underground workings. 

Exploration was conducted during 1966-1972, consisting of mapping, trench and surface grab sampling and analysis.  Recent work on the Balkhab copper prospect was initiated by the AGS, at the request of villagers in the region.  A reconnaissance sampling mission was carried out in 2008 by the Ministry of Mines.

Road access to the site is from Mazar-i-Sharif, and the area has the potential to benefit from the proposed rail link connecting Afghanistan to Pakistan.  The Chaman-Kandahar-Logar province line is proposed to pass about 150km from the Project.  The closest power source identified is at Mazar-i-Sharif which is connected to the North East Power System main isolated grid.  The main water source for the project is the significant stream, Rode Balkhab, which bisects the licence area.

 

Shaida

Shaida is situated in the western region of Afghanistan in the Adraskan District of the Herat province, 65km SSW of the city of Herat (population c. 398,000) and 50km SSW of Gozareh (population c. 125,000).  It is anticipated that Gozareh will act as the logistics city for Shaida. 

Shaida’smineralisation has been described as a possible porphyry copper deposit.  During the Soviet exploration in 1971 to 1972, several continuous drilled intervals of mineralisation were identified, with copper grades between 0.10 to 0.80% in drilled intervals ranging from 0.80 to 17.95m.  Cross sections of drilling at the Shaida prospect show layered quartz plagioclase porphyry, quartz keratophyre and aleuropelites (siltstone or mudstone) interbedded with volcanic layers. 

Additional work was carried out by USGS in 2005 including airborne surveys, hyperspectral surveys and analysis, and the compilation of prior data into a GIS database.  The USGS reports that in the larger USGS defined Dusar-Shaida Area of Interest, there has been some mining.  However, there is no known historic production from the Shaidalicence area.

Herat Airport (which will become an international airport in 2012) is close to Gozareh and there is also a railroad terminus station planned at Gozareh as part of the Afghanistan Railway Development Scheme.

 

Badakhshan

Badakshan is situated in mountainous terrain in northern Afghanistan in Badakhshan Province, the location benefits from three international borders: Tajikistan to its north, China to its east, and Pakistan to the south.  Badakshan is located 360km north of Kabul and about 50km north of the provincial capital city Fayzabad (population: c. 50,000 people). 

Detailed work was conducted by the joint Soviet/Afghan reconnaissance geological programme in the region in the 1960’s.  The work was primarily carried out on the VekaDur and Rishab gold prospects, including trench and adit sampling.  VekaDur is the largest and most studied of the known gold-bearing quartz veins systems in the region.  Many of the main drainages for the regions were sampled for placer gold by means of panned concentrates performed in the field. Several mapped areas show alluvial deposits that were trenched, and samples for which panned concentrates were developed and the gold content noted.  Russian C1 + C2 Reserves for both VekaDur and other quartz veins occurrences, define 38.7Koz at 4.8g/t Au based on trench and adit sampling.

It is understood that the national grid will be expanded to Fayzabad in the future.  There is an ample supply of water from the regional watersheds on the project area.