RISK FACTORS
"Steppe's Common Shares must be considered highly speculative due to the nature of Steppe's business and the present stage of its development. Steppe's activities are subject to risks normally encountered in the mineral exploration and mining business. Steppe is also subject to the following specific risks:
Steppe is a development stage company with a limited operating history and no pre-tax profit. There is little likelihood that Steppe will realize any profits in the short term. Investors cannot expect to receive a dividend on their investment in the foreseeable future. Any profitability in the future from Steppe's business will be dependent upon locating an economic deposit of minerals, which itself is subject to numerous risk factors. Steppe will require additional financing to carry out its business plan and if financing is unavailable for any reason, Steppe will become unable to acquire and retain its mineral properties and carry out its business plan.
Any exploration operations carried on by Steppe will be subject to government legislation, policies and controls relating to prospecting, development, production, environmental protection, mining taxes and labour standards. In addition, the profitability of any mining prospect is affected by the market for metals which is influenced by many factors including changing production costs, the supply and demand for precious metals, the rate of inflation, the inventory of precious metal producing corporations, the political environment and changes in international investment patterns.
Steppe's property interests are located in Kazakhstan, a new independent Republic arising from the former Soviet Union, and are subject to that jurisdiction's laws and regulations. Investors should assess the political risks of investing in a foreign developing country. The risks may include but are not limited to: political upheaval, terrorism, military repression, extreme fluctuations in the currency exchange rates and high rates of inflation. Any changes in regulations or shifts in political attitudes are beyond the control of Steppe and may adversely affect its business. Operations may be affected in varying degrees by such factors as government regulations (or changes thereto) with respect to the restrictions on production, export controls, income taxes, expropriation of property, environmental legislation, land use, water use, land claims of local people and mine safety and foreign investment and ownership. The effect of these factors cannot be accurately predicted at this time.
The Kazakh mining industry is subject to government controls and regulations which may vary from time to time. As the mining industry is highly competitive, Steppe will be required to compete in the future directly with other corporations that may have greater resources.
Mineral resources in the Republic of Kazakhstan are the property of the state. The right to explore for and extract mineral resources in the Republic of Kazakhstan are granted by the government of the Republic of Kazakhstan by means of a license and an agreement. Licences address such subjects as the identification of the licensed area, the scope of work to be undertaken by the resource user and the time period for exploration and extraction. Agreements address such subjects as the economic aspects of the relationship between the government of the Republic of Kazakhstan and the resource user, including royalty and/or bonus terms, tax issues and related matters. Such agreements are negotiated on a project-by-project basis. Although Steppe has certain licenses and agreements with the Republic of Kazakhstan, there is no assurance such agreements can be enforced against the Republic of Kazakhstan, or that any required subsequent agreements will be entered into on terms and conditions acceptable to Steppe, or at all.
Existing and possible future environmental legislation, regulations and actions could cause significant expense, capital expenditures, restrictions and delays in the activities of Steppe, the extent of which cannot be predicted and which may well be beyond the capacity of Steppe to fund. Steppe's right to exploit the mining properties is subject to various reporting requirements and to obtaining certain government approvals and there is no assurance that such approval, including environment approval, will be obtained without inordinate delay or at all.
The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines. Unusual or unexpected formations, formation pressures, fire, power outages, labour disruptions, floodings, explosions, cave-ins, land slides and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs. Steppe has relied and may continue to rely upon consultants and others for operating expertise. The economics of developing mineral properties is affected by many factors including the cost of operations, variations of the grade of ore mined and fluctuations in the price of minerals produced. Depending on the price of minerals produced, Steppe may determine that it is impractical to commence or continue commercial production.
Steppe does not presently have sufficient financial resources to undertake by itself the exploration and development of all of its planned exploration and development programs. The development of Steppe's properties may therefore depend upon Steppe's ability to obtain financing through the joint venturing of projects, private placement financing, public financing or other means. There is no assurance that Steppe will be successful in obtaining the required financing. The status of Kazakhstan as a developing country will make it more difficult for Steppe to obtain production financing for its projects from senior international lenders.
The mining industry in general is intensely competitive and there is no assurance that, even if commercial quantities of ore are discovered, a profitable market may exist for the sale of minerals produced by Steppe. Factors beyond the control of Steppe may affect the marketability of any substances discovered. Mineral prices, in particular gold prices, have fluctuated widely, in recent years. The marketability of minerals is also affected by numerous other factors beyond the control of Steppe. These other factors include government regulations relating to price, royalties, allowable production and importing and exporting of minerals.
Steppe may become subject to liability for associated hazards of mineral exploration against which it cannot insure or against which it may elect not to insure because of high premium costs or other reasons. Payment of such liabilities would reduce funds available for acquisition of mineral prospects or exploration and development and would have a material adverse effect on the financial position of Steppe.
Steppe competes with other mining companies for the acquisition of mineral claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees.
Steppe's operations in Kazakhstan make it subject to foreign currency fluctuations and such fluctuations may materially affect Steppe's financial position and results."
I guess delisting wasn't consider a risk factor or was it? |
