Preferred Bidder for Zarkashan Project

The Government of the Islamic Republic of Afghanistan, through the Ministry of Mines of Afghanistan after the decision by the Inter-Ministerial Commission (IMC), (the “Ministry”), is pleased to announce that on 10 December 2012, the preferred bidder was selected to undertake the exploration and subsequent exploitation of Zarkashan, the final of the four current mineral tenders.

The selection of the preferred bidder for Zarkashan follows the announcement on 6 December 2012 of the preferred bidders for Badakhshan, Balkhab and Shaida mineral tenders.  It is subsequent to an extensive process since launch in December 2011, which has been supported by transaction advisers and transparency advisers to the Ministry.

Summary of preferred bidder for Zarkashan:

Project

Preferred Bidder

Province

Mineral type

Deposit type

Exploration Licence Area(s)

Zarkashan

Sterling Mining/Belhasa International Co. LLC (“Sterling/Belhasa”)

Ghazni

Copper-gold

Skarn

2 x 242km2

 

 

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 Sterling/Belhasa as the preferred bidder to explore and begin to develop the Zarkashan project.

“We welcome Sterling/Belhasa to the resources sector of Afghanistan and look forward to finalizing the mining agreement with them.  They will then deliver their work program at Zarkashan 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.

 

Notes to Editors

Preferred bidders and reserve bidders have now been selected for all four current mineral tenders.  The preferred and reserve bidders are as follows:

Project

Preferred Bidder

Reserve Bidder

Zarkashan

Sterling Mining/Belhasa International Co. LLC

SKA Resources Ltd.

Balkhab

Afghan Gold and Minerals Company

Silk Road Mining & Development

Shaida

Afghan Minerals Group

Silk Road Mining & Development

Badakhshan

Turkish-Afghan Mining Company

CAPG Ltd.

 

About the preferred bidder for Zarkashan:

Sterling/Belhasa

Belhasa International Co. LLC and Sterling Mining have formed a 50%/50% joint consortium (“Sterling/Belhasa”). Belhasa Group is a Dubai based family owned conglomerate, which is active in industrial and education; construction & technology; trading and investments, real estate, autos & travel.  Sterling Mining was established in 2010 with the combination of several highly experienced local business leaders, with an aim to develop Afghan owned mining operations within Afghanistan and provide support to community development and value added programs. Sterling/Belhasa has contracted DRA Mining (Pty) Ltd., DRA Mineral Projects (Pty) Ltd. and Minopex (together “DRA”) to conduct the technical work on the Zarkashan Project, including exploration/exploitation and mine management. DRA is a multi-disciplinary, multi-national organization that specializes in project management in mining, infrastructure and mineral process plant design and construction.

 

About the Zarkashan Project:

Zarkashan is located approximately 225km SSW of Kabul in the Ghazni Province.  Ghazni city (population: c. 141,000) is approximately 93km north of the project area.  The German Geological survey conducted a reconnaissance survey in the mid-1960’s and the Soviets and the Afghanistan Geological Survey (AGS) conducted exploration in the late 1960’s and early 1970’s.

Recently the USGS assessment of the mineral potential in Afghanistan included ongoing compilation of historic German and Soviet mapping, geophysics data, drilling and sampling data, and incorporation into a GIS database.  There are many ancient open pit and underground workings that show that this area has been mined in the past.  The grades obtained by the Soviet and AGS exploration team show that the skarn mineralization has a core of relatively high gold grades with a halo of lower grades.  Recent hyper spectral analysis has also suggested the existence of porphyry mineralization within the wider intrusion.

Road access to the site from Kabul is on Highway A01, which is a paved highway.  Power can potentially be brought in from the nearby grid at Ghazni, or from a dedicated self-supplied source.