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Gold/Mining/Energy : Steppe Gold (SPE:V) -- Ignore unavailable to you. Want to Upgrade?

To: Robert Dydo who wrote (896)	4/23/1998 10:26:00 AM
From: traacs	Read Replies (2) \| Respond to of 1248

Kazakhstan Investment Summit Scheduled for June 4-5 As the Almaty Herald has previously reported, the Regent Almaty (formerly the Ankara Hotel and Towers) is hosting another large event on June 4-5, which is earmarked to boost the country's investment climate. The "Kazakhstan Investment Summit" is organized by the International Herald Tribune newspaper and is supported by the State Investment Committee of the country. The Investment Summit is expected to become a high level gathering, chaired by His Excellency President Nazarbayev. Both the country's top government officials and the elite of the Kazakhstan's private businesses sector have been invited to take an active part in the work of the summit. The main purpose of the event is to allow international investors to enter into discussion with government, business and financial leaders from Kazakhstan. The summit will cover the following topics- investment prospects in Kazakhstan - economic and political stability in a fast changing country; oil and gas industry- laying the groundwork for future prosperity; sources of finance for investment in Kazakhstan; regional cooperation and economic integration in the CIS? The potential for a market of $55 million; experience of international investors in Kazakhstan, the State Investment Committee - building confidence and attracting investment to achieve Kazakhstan's 2030 plan; investing in infrastructure- new links in transportation, pipelines and communications; indirect investment - capitalizing on capital markets; in- depth discussion sessions: manufacturing, agriculture, food processing, infrastructure, oil and gas, small and medium enterprises, minerals and mining. The conference expects reports from the Kazakhstan's President Nursultan Nazarbayev; Bulat Abilov, President of Butya Co. Ltd., which is one of the largest local companies; Pavel Beklemishev, President of Byelkamyt, oil and gas transportation and storage equipment; Aben Bektasov, Chairman of the National Securities Commission; Jan Chan, Adviser to the Chairman of Dostar Capital Markets, South Korea; Kadyrzhan Damitov, Governor of the National Bank; Marc Faber, Managing Director of Marc Faber Limited, Hong Kong; Ronald Freeman, Co-chairman of Global Investment Banking, Salomon Smith Barney; Oraz Jandosov, the First Deputy Prime Minister and the Chairman of the State Investment Committee and formerly the Chairman of the National Bank; Robert Kaplan, Honorary Consul of Kazakhstan for Canada; John Komarnicki, President and the Chief Executive Officer of Hurricane Hydrocarbons Ltd., Canada, which is one of the most successful oil exploration companies in Kazakhstan; Sergei Kulagin, the Minister of Agriculture; Mehmet Kutman, Chairman and Chief Executive Officer of Global Securities, Turkey; Steven Lewarne, Director of Oil and Gas Practice, Barents Group CIS; Grigori Marchenko, former Chairman of the Kazakhstan's National Securities Committee; Sauat Mynbaev, Minister of Finance; Michael Waxman-lenz, Vice-President of Kazakh Post Privatization Fund; Daniel Yergin, president of Cambridge Energy Research Associates (CERA); Asygat Zhabagin, former Minister of Energy, Industry and Trade. The list of the reporters is subject to confirmation. The above speakers will be joined by industrialists and business leaders from Kazakhstan and worldwide. This is the second Investment Summit held in the country. The first was held last summer and organized by the Stanford Research Institute, USA. Fifty- eight different company's executives, 80 executives and two International Organizations took party in the last years summit

To: Robert Dydo who wrote (896)	4/27/1998 2:55:00 PM
From: John Menzies	Read Replies (1) \| Respond to of 1248

I have been asked via telephone and email a number of very similar questions recently, and because of my hectic schedule have not been able to respond immediately. Therefore, I have decided that I will on a forum such as SI. You will see that questions are indicated via the letter `Q', and conversely answers are indicated with a `A'. I will however only comment on issues that are of public knowledge and have been disseminated through the proper channels. Q: What is the status of the Standard Bank due diligence requirement? A: Ongoing. But for a more detailed answer and probably what you are looking for: Banking due diligence involves looking at the title issues from the ground right up. It involves getting confirmation from every department in government who has some responsibility in regard to the development of the project as to the status of the license etc. It involves some minor renegotiations of the underlying joint venture agreement to allow the financing to happen at a specific level within the structure of the JV- we do not perceive this being in any way a problem and of no material consequence.. It involves confirming our export rights, the taxation situation, the import and export duties position etc. It involves confirmation of our right to export metal and conduct business in the country and confirmation of the registration and good standing of every corporation involved in the joint venture in all various jurisdictions. All pretty standard stuff. Then of course there is the tailor made legal agreements between all the parties and the assignment of certain rights such that the bank has a lien on the cashflows during repayment etc. Technical due diligence involves: a review of the way the data was acquired from soviet days through to the present - satisfaction that the soviet data has been correctly entered into the database and properly evaluated. Drilling methods are reviewed together with assay and sample preparation methodology. Ore reserve methodology is reviewed. The efficiency of the met test work is reviewed not just that the work so done was competently executed but that the samples were collected from the deposit in a manner which is a true reflection of the distribution of grade and ore types. The distribution of other elements is important particularly copper as this can adversely effect the cyanide consumption which can impact profits. We took this into consideration by modeling not only the gold but also the copper- we have a detailed copper block model. We understand the distribution of copper and we do not perceive a problem. Flowsheet is reviewed based upon met testwork results. Capital cost estimates are reviewed in very considerable detail with the checking of any prices which are suspect. We do not perceive that this will be a problem - although I must admit that we did notice that a couple of fire extinguishers were not included in the original CAPEX together with a water tank. Construction concept capacity, to complete within, time, budget and also the overall project schedule are evaluated in considerable detail. As the delay in construction impacts upon operating costs (you have a full operations team waiting around with nowhere to go in the event of a production delay. This is of course very expensive - unless the delay becomes obvious early on in which case it is possible to push out some of the hiring time lines - but this is never the case - any delays almost always seem to happen late in the development.) The EIS is evaluated in detail for methodology and for compliance with the Kazakh standards and with any that the Bank may have. For example the EBRD insists upon World Bank guidelines which are pretty strict -, as do most of the banks. I think some of the USA regulations are more stringent. geotechnical studies will be reviewed as well as the detailed design of the heap leach pad - already completed. To the layman this is a simple thing but a heap leach pad base needs to be carefully engineered to accommodate the large mass of material placed onto of a plastic liner with a low tensile strength. Last thing that anyone needs is fo movement of the heap - down the slope - rupture of the liner and the resulting mess. Radiological, noise and dust studies are evaluated etc. Labour productivity is a real factor on budget/time development in developing countries and we will have to justify labour factors and productivity and also provide considerable backup on any planned in-country construction. Equipment availability for local sub-contractors will have to be verified as to costs and suitability as most of this is in poor condition and will be an area of concern. Potable water resource and process water bore fields will be evaluated for capacity to provide suitable and appropriate supplies. Supplies are critical and the technical due diligence team will look at source, pricing and ability to deliver. We have identified all suppliers and have firm fixed quotes (suitable for re-negotiation) refining will be considered. Equipment servicing arrangements will be reviewed together with other services such as messing. Training will be a major consideration, as in any developing country. The bank will want to know who will be training these individuals and the budgeted costs related. Security aspects are always considered important in a gold mine and will be reviewed in detail. They will look at our management structure and who we plan as the client rep - already identified and will want to know how we plan to employ (and of course costing) for operational staff expatriates. Logistics and transport both internationally and internally will be reviewed as to thoroughness and as to costing. We will have to justify sourcing and pricing on fuel, chemicals including cyanide ( there has been a problem in some countries recently on the transport and use of cyanide for example a LaSource project in Turkey has been constructed but there is a supreme court action against the use of cyanide - but this is commonly used in Kazakhstan and foresee no problems in his regard. Then there is disposal of wastes for waste oil destruction, to camp wastes etc. Finally the team will want to see a rational shut down procedure for the ultimate closure of the mine and be confident that it has been appropriately budgeted. I have no doubt that there is probably more information required. Q: What is the nature of the technical due diligence required (re-sampling, metallurgical testing, confirmatory drilling)? When is it anticipated that the due diligence will be completed? A: It would be most unlikely that any sampling or test work would be required - this would only be undertaken where the team thought that there was a need to do so and I would have thought that this was pretty extreme. Remember that that there has been an open pit which mined 3/4 million tonnes at 6+ g/t gold prior to our involvement, that is a pretty good test of grade distribution and to a lesser extent metallurgy as we do not plan to smelt the ores. The drilling, all four of five phases of it and the underground sampling and the shaft samples and the met test work are all internally consistent - which is also nice. Timeframe: should take about 8-10 weeks but then it is due-diligence. Q: The status of the Kosmurun and Akbastau agreement? A: The company will announce any significant changes to the agreement, if and when any changes are made. Q: The status of the Goldbelt International acquisition? As reported on the March 19th 1998 news release, the `subject too' section indicated that Goldbelt shareholder approval would be needed. I believe that the notice was sent out approximately a week ago for a meeting scheduled for Mid-May. We will be making a comprehensive announcement in regard to the Abyz project and Leninogorsk following the first closure of the deals after shareholder approval. To do so before hand, would be a little silly I would have thought. We have a H.O.A in place, which is reasonably detailed and will finalize a formal agreement after shareholder approval. This announcement would address such matters as expenditure requirements, ore reserves, development concept and exploration potential naturally. Q: Implications of the Goldbelt acquisition for Steppe? A: ABYZ is a major deposit, with excellent and I mean really exceptional grade for a VMS. Previous test work shows this deposit to be good metallurgically, being able to produce both a gold - copper -zinc concentrate on site together with dore from a CIP plant. Result - which indicate the presence of high grade gold 11g/t, 11 % zinc plus high copper and silver and some lead during the early life of the operation are most attractive. Abyz is close to the railway which has previously used to transport lead-zinc concentrate from a nearby mine and is close to the twon of Karagailly. The are no mining operations at Abyz except for the exploration shaft and drives. Exploration potential within the 50 square kilometer license is good with two high order IP targets awaiting drilling. Potential for the presence of sulphides within this area would seem to be high. The company is hoping to drill this area as soon as financing permits. There is a "proven/probable reserve" here of 2 million ounces gold equivalent. Geology is very good and good possibility of finding more. The impact of this deal is simple - The Company is adding to the development potential down the track. Goldbelt previously spent well over a million dollars on this property doing exploration IP and airborne EM over the entire license together with diamond drilling and a pre-feasibility study by an outside engineering firm, this also includes a nice 3D-mine development model as well. Leninogorsk we are keen to evaluate the potential for developing the project on a much more modest scale than the previous development concept - with a smaller capital cost, but treating much higher than the average grade of the entire deposit. Goldbelt announced reserves globally of .6 g/t gold and there are tailings operating, treating less than 0.4-g/t gold. Profitably - well at least they were profitable but might be biting into their hedge at these prices. We believe that there is a real potential here for a central processing plant not just for the tails but also for the hard rock gold deposits which we believe are present in this very well mineralised part of the country. Q: Mizek into production, within 1998? A: The Company as indicated time and time again that it is committed to bring Mizek into production, this view as not changed. I am sure that Mizek is not the first project to be delayed a short period of time, factors include due-diligence, climate and capital raising, of course a higher gold price would not hurt either. If we were on time with the financing we would have been setting gold loans and hedge etc at prices lower than present and probably would not have done so in any event. Q: Some confusion continues to exist over whether or not Steppe has made any commitment to Kazakhstan to bring Mizek into production in 1998. We comply with our Mizek license and agreement to the letter as announced in some detail in the past. Bear in mind that we have completed most of the site earthworks and the building construction is advanced and this has been very well received indeed. It is still our clear intention to proceed with this development - this project is well within our capabilities and is the right size for project finance considering the size of the sponsor and the location in Central Asia. Following, you will find an excerpt of the license agreement: On August 28, 1995 the Joint Venture obtained Complex (exploration and exploitation) License MG No. 442 from the government of the Republic of Kazakhstan whereby the Joint Venture was granted right to explore, develop and process oxides and sulphides from the Mizek deposit and to undertake geological exploration of territory adjoining the deposit for the purpose of further developing discovered commercial ore deposits. The license pertains to both the exploration area of 3,400 square km (excluding to small areas of 3.7 and 3.4 square kilometres respectively); and the Projects mine area of 160 hectares. The term of the license is 25 years, which may be extended by a decision of the Government of the Republic of Kazakhstan from time to time until all the initial Mizek and subsequently discovered reserves are mined, provided that all conditions of the license are met and kept in good standing. The license provides a 5-year term to undertake geological exploration, commencing from the date of grant of the license; and provides for a 20-year term to undertake mining activities, commencing from the date of registration of the license. The license requires that a minimum of US$3.9 million be expended towards exploration of the Mizek deposit, over various stages over 5 years. We clealry comply. We are a couple of years into the exploration phase with plenty of time to exploit the deposit under the explicit terms of the MG442. Q: The status of K&A JV partner? A: As announced we work on this diligently. We are progressing this to our satisfaction in reality. Though discussions with large companies in this market is always slower than one would like - due to the location of the project - there are political as well as technical matters to be considered and of course the base metal markets are in the tank. Just look at the assets of the company and ask yourself, if you see value? As an investor I certainly do! Look at the resource base. Q: Is the company currently in the process of raising finance? A: There have been no announcements and I cannot comment. Companies do not run on air and require funding. Companies associated with Bob and I have been large financial supporter's of the company.

To: Robert Dydo who wrote (896)	4/27/1998 3:08:00 PM
From: John Menzies	Read Replies (1) \| Respond to of 1248

Ther is an error in the previous post - I could have fixed it prior to the post but it worth the comment. I stated that the US Environmental were tougher than the Kazakh ones - Bob Bell informs me that on the whole they are considerably tougher - I recall seeing the emission specs and they were sometimes so low as to be very challenging to achieve. Is probably - while I am at it - worth commenting on the state of play on the governement attitude to foreign investment. This has changed quite dramatically of late - helped along by the impact of a couple of deals including WWW and Kazakhstan Goldfields etc. The governemnet has now placed all the responsibility for forieng investment in the hands of an autonomous body " State Committee on Investments" which is now solely responsible for dealing with investment in the country. This organisation iis headed by the very capable ex head of the Kazakh Central Bank. ( most impressive - did a great job and kept to the economic plan during his stay at the Central Bank) We are hearing from informed sources in Almaty that WWW are likely to receive a considerable payment in regard to the cancelling of their contract to manage a state asset ( as against a mining licence) and negotiations are advanced with resolution inthe short term (hey no promises - consider this as no more than a rumour albeit we believe well informed) Same applies for Kazakhstan Goldfields but we believe that they are not as far down the track. This shows , together with the payment to Placer some time ago, a change in the governemnet attitude to foreign investment ( they are beginning now to understand the needs of the foreign investor more and this is to the advantage of Steppe Gold. This is coming about due to the determination of President Nazaerbaev and also to the replacement of some of the older heads of department and ministry heads with younger people - educated in western economics - for exqmple the new head of the State Committee on Investment" is only mid thirties. Not to say some of the older people are not more than capable - the head of the Ministry is Ecology and Natural Resources is most capable.