Application,
Conditions and procedure for the tender performance of the right to use subsoil resources to
develop the Kutessay-II rare-earth elements deposit, and the Kalesay beryllium deposit, and criterion
on successful tenderer determination.
I. Reasons and objectives of the tender
1.
The tender for the right to use subsoil resources of the Kutessay-II rare earth element deposit and the
Kalesay beryllium deposit is held to determine the successful tenderer, who can offer the most favorable
conditions to the Kyrgyz Republic in the development of the Kutessay-II rare earth elements deposit and the
Kalesay beryllium deposit.
2.
The right to use subsoil resources for development the Kutessay-II rare earth elements deposit and the
Kalesay beryllium deposit is offered to the tenderer for the period of 20 years, with subsequent extension the
right to use up to mineral resources depletion, under the successful implementation of all license conditions by
the tenderer, within following rectangular coordinate system’s corners, mentioned below :
Points No
1
2
X
4749100
4749100
Y
13590980
13593200
Points No
3
4
X
4747290
4747290
Y
13593200
13590980
Size of the area is 401.0 ha
II.
General information about the Kutessay-II and the Kalesay deposits
1.
Kutessay-II rare earth elements deposit
3. Kutessay-II deposit was discovered in 1943 during the study of exposure of biotite hornblendes with poor
polymetallic mineralization. Exploratory activities, which identified, the commercial scales of polymethalic
mineralization, were started in 1944.The same year, was found ferrithorite in the ores of the Kutessay-II
dposits and detected its high radioactivity. Explorations were performed under supervision of N.D.
Tikhomirov and were completed in 1951.
According to the result of exploration activities, calculations of the deposits were carried out two times. The
first calculation completed as of January 1, 1947 by the All-Soviet Union Reserves Commission (by S.A.
Denisov., N.D. Tikhomirov) and was not approved, due to insufficient knowledge of the mineralization of
thorium. The second calculation of deposits was conducted as of January 1, 1951 (by N.D. Tikhomirov and P.I.
Braiko) was performed after completion of explorations. The reserves were calculated in two versions: in the
lead and thorium contours. In addition to the lead, the following associated components were reported in the
lead contour: zinc, silver, tin, molybdenum, copper, thorium and rare-earth components. The thorium contour
included the calculation of thorium, lead and rare earth components.
For the reasons of ambiguous commercial significance of thorium and rare-earth components usage in the
industrial production during the describing years, they were classified as the non-commercial reserves.
From 1951 to 1953, no explorations were conducted at the Kutessay-II deposit.
In order to perform mining of polymetallic ore deposits, in 1953 the Akyuz Mining Plant Administration
worked the mine adit at the horizon of 2353m with a series of crosscuts and horizontal drill holes. The North
chamber of ore with rich polymetallic and rare-earth mineralization was discovered, as the result of these
activities. The holes drilled from the horizon, identified by expansion of rare-earth mineralization for 200 m
down the area (Fig. number Geo-12).
In 1956, in connection with the increasing demand of rare-earth raw materials, Multicorporate Enterprise
"Sredaztsvetmetrazvedka" organized Kutessay’s geological survey crew, with task to perform complete resampling for rare-earths, collection of process samples and performance of technological testing for ore
preparation characteristics, reserve calculation and determination of overall prospects for the rare-earths of the
entire Aktyuz ore field. In 1959 at the Kutessay-II geological explorations were completed and their results
were reported as of January 1, 1951, along with the calculation of deposits , the report had been reviewed by
The State Reserves Committee of the USSR (by N.I. Doroshenko, and others).
4.
Kutessay-II deposit has been developed from 1958. During the first two years the extraction of ore
was carried out by underground methods and in 1960 the open-pit-mining method has been used. Until 1966,
pillar mining deposit works were carried out within the lead contour with storage of rare-earth ore to the
special dumps. Since 1966 it was classified as rare-earth-polymetallic with ore extraction of sesquioxides of
rare-earth (including yttrium oxide), lead, molybdenum, silver and bismuth. The concentrates produced in the
Aktyz mineral processing plant were sent to the following consumers:
a rare earth concentrate was sent to chemical and metallurgical department of the Kyrgyz Mining and
Metallurgical Plant (Orlovka village);
lead concentrate - to Chimkent lead plant;
molybdenum middlings - to Balkhash Metallurgical Plant.
For the period of Kutessay – II deposit development (from 1960 to 1991) the following changes were observed
in the balance of approved reserves:
5454,4 thous. tons of rare earth ore and 221 09,5 tons of rare earths; lead ore deposits of B category of
Central ore body were completely attenuated via processing;
deposits of zirconium and associated hafnium, due to the low level of extraction were transferred to
off-balance reserve category by the decision of Central Commission for Nonferrous Metallurgy Reserves of
the USSR (Minutes dated November 11, 1969 № 274);
deposits of niobium and tantalum, as a result of their non-confirmation during development in 19601964 were written off the balance sheet by the decision of the State Reserves Committee of the USSR
(Minutes dated May 23, 1964 № 4323);
due to low contents, defined during the operational exploration, deposits of copper and tin were
removed from the field balance by the decision of the State Reserves Committee of the USSR (Minutes dated
May 16, 1969, № 5686);
ore deposits of the "brecciated shale rocks" type in the amount of 1885 thous. tons and 4874 tons of
rare earths were considered as complex ore and transferred to off-balance sheet by the decision of the SRC
MNFM USSR (Minutes dated 30 March 1984 No.2213);
in connection with non-confirmation of rare earths reserves at deep levels, mainly due to decrease of
content, they were written off the balance sheet in the amount of 145 thous. tons of ore and 3,300 tons of rare
earths by the decision of the SRC MNFM USSR (Minutes dated March 30, 1984 № 2313).
The table below shows the movement of deposits of Kutessay-II throughout its operation from 1960 to
1991, with consideration of the repayment, write-off and transfer to off-balance by form 5-гр.
Table
Deposits movement of Kutessay –II field (1960-1991)
Deposits
category
1
Deposits
approved
by SRC in
1959,
No2678
Balance deposits movement of the
period 1960-1991
Residue deposits
Balance
Offbalance
Worked-out Rereserves
calculated
(transferred
to noncommercial)
Written
Balance
off as
nonconfirmed
Offbalance
2
3
4
5
6
7
8
159.0
1.5
10264.0
42,0
10423.0
43.5
1978.0
3.10
4815.0
6.0
6795.0
9,10
1739.0
7.3
4382.8
24.2
as of 01/01/1992
1. Amount of rare earths ore,thous.tn.
∑ TR201
B
5794.0
1206
26.70
1.01
С1
12113.0
3702
47.10
3.21
в+с1
17907.0
4908
73,80
4.23
C2
3642.0
1471
14,2
1,70
2. Zirconium oxide ore,thous.tn.
Zr01 thous.tn.
B
5794.0
1191.0
32.0
4.2
С1
4076.0
1258.0
24.4
4.4
4718.0
19.9
736.0
2.2
5454.0
22 Л
772.0
2.0
1113.0
2.79
1885,0
4.87
145.0
3.3
-
45.132
24.9
951.2
4.6
548.0
3.1
3124.8
19.8
7.32.8
4.0
-
-
в+с1
5664.4
29.5
3672.8
22.9
732.8
4,0
-
6121.8
31.5
-
757.8
11.0
-
3647.8
165.5
-
21549.0
7326.0
-
-
-
21549.0
2586.0
-
-
-
21549.0
6325.0
-
-
9870.0
56.4
2449.0
8.6
ore,thous.tn.
Hf02 thous. tn.
C2
9870.0
5464.4
395.0
218.6
4. Niobium pentoxide ore,thous.tn.
Nb2O5 tn.
C2
21549.0
7326.0
5. Tantalic pentoxide ore,thous.tn.
Ta2O5 tn.
C2
21549.0
2586.0
6. Thorium ore,thous.tn.
Th tn.
C2
21549.0
6325.0
145.0
3,3
-
3. Hafnium oxide
7. Lead, Zink
B
1455.0
39.0
7.0
428.0
9.5
2.0
С1
B-С1
8.
С1
9.
С1
10.
С1
11.
С1
ore,thous.tn.
Pb thous. tn.
Zn thous.tn.
1455.0
39.0
7.0
100.0
1.9
0.3
1883.0
48.5
9.0
Molybdenum ore,thous.tn.
Mo tn.
1883.0
833.0
Silver ore,thous. tn.
Ag . tn.
1883.0
16.5
Copper ore,thous.tn.
Cu . tn.
1883.0
1.10
Stannum ore,thous.tn.
Sn tn.
1883.0
1193.0
1555.0
40.9
1 7.3
-
-
-
-
328.00
7.6
1.7
-
328.00
7.6
1.7
1555.0
758,0
328.0
75.0
1555.0
16.3
328.0
0.20
-
1883.0
1.10
1883.0
1193.0
The balance sheet reserves of B + C1 + C2 categories is consists of: ore - 20.2 million tons, the rare earths
amount – 51,5 thous. tons, molybdenum – 2,4 thous. tons, bismuth – 2,3 thous. tons, lead - 21, 3 thous. tons.
The average content of total rare earths amount in the ore is 0.25%, molybdenum - 0.012% bismuth - 0.012%
lead - 0.12%. Extraction of lead, silver and bismuth into the lead concentrate is about 87 - 90%, 80% and 80%
respectively, molybdenum in the molybdenum product - 36 - 40%. Extraction of the rare earths is up to 65%.
2. Kalesai beryllium deposit
5. Kalesai deposit is located on the territory of the Kemin region of the Chui oblast at a distance of 43 km from
the town of Kemin, in the vicinity of the rare earth pit of Kutessay-II deposit. The deposit is explored in details
and prepared for industrial development. The absolute altitude is 2400-2700 m.
6. All necessary questions (geological, mineralogical, mining, technological, etc.) were resolved in the process
of exploration. The deposit is represented by zones of feldspar-fluorite veins among amphibole shales of the
Upper Proterozoic period. Ore zones are linear stockworks, located within 450 meters from each other.
The southern zone belongs to the south wing of the Aktyuz anticline and has a north-east outstretch. It extends
to 1600 m in length, 500 m to depth, the average thickness of it is 80 m, it drops to the south under the angle of
70-90 °. At a depth of 100 m the area is explored on two horizons by the drift way at 50 meters, at a depth of
100-300 m – by drift ways at every 100 m.
The north zone has a outstretch of 800 m length, downward - 180 m, the average thickness is 65 m, the down
dip is steep to the northwest. The zone is explored on two horizons by galleries in every 120 m. It is possible
that the industrial contour continues further for more 300-400 m to the west. Mineralization is developed
mainly near granophyric stock in the area of the diagonal faults. The ore stockwork has a length of 200 m on
the surface and 120 m at a depth, the down dip length is 180 m, the average thickness is 65 m.
Beryllium mineralization is confined to the feldspathic veins and contacts with their host rocks. The length
reaches few dozens of meters, thickness is up to 10 -20 cm. Ore veins fill shear cracks associated with steep
fractures of the northeast outstretch and have sharp slope angles. Saturation of mineralized zones with veins is
uneven. Industrial mineralization is observed on the areas of thickening. The veins are straight and wavy,
sometimes they are branching, changing the outstretch and downdip directions.
7. The site borders with the industrial mineralization are determined only by the sampling results. Within the
ore zones the areas of industrial ores at different levels have a length from 20 to 600 m, thickness - from 1 to
54 m. 61% of the total reserves of the deposit or 87% of the mining stocks are concentrated within the main
area of the South zone.
The mineral composition of veins: orthoclase, fluorite, albite; may be found quartz, apatite, cassiterite, pyrite,
wolframite, tourmaline, hematite, arsenopyrite, galena, scheelite. Beryllium minerals are conceived by
phenacite, bavenite, beryl, genthelvite, milarite, gel-bertrandite. In terms of mineral composition, the ore
belongs to fenactive type. 78.9% of beryllium is concentrated in phenacite. Its content in other minerals does
not exceed a total of 20.8% (in the concrete beryllium was not extracted out of them). Share of feldspar is
8.2%, chlorite and actinolite is 9.4 %.
There are no associated components except for lead, which is extracted during flotation in the sulfide
concentrate. The average content of lead in industrial ores is 0.24%.
8. The ore of the Northern zone according to its the mineral and chemical composition is close to the ore of the
Southern zone. The main difference is more subtle impregnation of beryllium containing minerals. Along with
free grains, a significant portion of phenacite is in the finest splices with rock-forming minerals. Increase of
solubility is defined for part of beryllium containing minerals in a weak acid solution (5% HCl and H2SO4).
The nature of this part of the minerals has not been established. Improved solubility refers to the mineral forms
of BeO, closely associated with minerals with high magnetic susceptibility. 20 - 25% of BeO passes to the
solution of the initial content of the ore.
9. Developed deposits amount up to 9245 thous. tons of ore, and 11701 tons of beryllium oxide at an average
grade of 0.127%, of which 79% of deposits are concentrated in the South zone. Almost all of the reserves of
the South zone may be developed by open way.
Reserves of beryllium oxide registered in the balance documentation of the Kyrgyz Republic as of January,
2014
Reserves:
Ore – thousand tons
Beryllium oxide
Total deposits of the
Kalesay
Including South zone
North zone
Content of BeO%
Deposits category
C1
C2
0.127
8035/10170
1210/1531
0.128
0.121
6033/7740
2002/2430
1210/1531
-
Period of work of
mineral processing
plant on its annual
production capacity in
300 thousand tons of
ore
28,8 years at Ci+50%
С2
SRC 1971 No62303
The increase in deposits is possible through exploration of the eastern flank of the South ore zone, as well as
the exploration of North and South zones at depth.
10. The hydrogeological conditions of deposit development are favorable. Rocks are subtly watered. Drinking
and industrial water supply may be provided by surface waters
The daily water consumption of the river Kichi-Kemin is 25920 m3.
11. The processing technology of beryllium ores of the South Zone has been developed during the semi-works
cycle on the sample weighing 2000 tons of ore containing 0.083% of BeO. At the beginning of the
technological chain the photoneutron separation was performed. The separation product yield was 73.3% from
the original ore, the beryllium oxide content in the product was 0.104%, BeO extraction reached 91.5%. The
concentrate of lumpy photoneutron separation together with the fine ore was subjected to flotation, the froth
flotation product was additionally treated by magnetic separation. This resulted in the following products:
- high-quality beryllium concentrate (yield - 0.44%, BeO content - 8.35% at the extraction of beryllium oxide
of 44% of the original ore);
- semi-product of chemical redistribution (yield - 1.53%, BeO content - 0.5% with recovery of beryllium oxide
of 9% of the original ore);
- lead concentrate (yield - 0.23%, lead content - 44.5%).
12. Beryllium hydroxide with the recovery of 93% was obtained from the concentrate with content of
beryllium oxide amounting to 8.23%, as a result of the fluoride caking and subsequent water leaching of the
cake. Launder recirculation containing beryllium oxide of 0.8% was tested by the fluoride and sulphate
scheme. Extract to the aqueous solution at the leaching was 89%, under the acid it was95-97%. Recovery in
solution was 89%, in the hydroxide from solution it was 99.2% from the concentrate containing 1.6% of
beryllium oxide.
III. Main Requirements for Tenderers
13. The following persons are allowed to participate in the tender:
- Legal persons registered in the Kyrgyz Republic;
- Legal persons registered in a foreign country (hereinafter referred to as “the foreign legal persons”);
- Natural persons, i.e. citizens of the Kyrgyz Republic, and also foreign citizens.
14. To be allowed to participate in the tender, the persons indicated in Clause 13 of the present Terms and
Conditions shall meet the following requirements:

To have at least a 5-year (five-year) of work experience in the deposit development, including their
work experience in other countries;
 To have a scientific and methodological knowledge and skills of standards in the extraction and
processing of mineral resources;
 To have their own funds and/or to be able to attract additional financing required for maintaining the
development of rare earth elements at Kutessay-II and Kalesay deposits of beryllium;
 The indicated persons shall observe international standards, within their activities, and standards of the
Kyrgyz Republic in the industrial safety, ecological safety, and rational use of subsoil resources.
15. Tenderers are authorized to submit additional information and documents regarding their experience
level, production, financial and other capabilities necessary for obtaining a right to use the subsoil in order to
develop Kutessay-II, a rare-earth elements deposit, and Kalesay, a beryllium deposit.
IV. Main conditions of subsoil use
16. The main conditions with regard to the subsoil use by a person recognized as a winner of the
tender and received a license to use the subsoil in order to develop Kutessay-II and Kalesay (hereinafter
referred to as “the license”) are to fulfil a series of obligations, including:
1) To pay for the right to use the subsurface a price indicated in a corresponding tender application,
but not less than 10,000,000 (ten million) US dollars (hereinafter referred to as “the price for the right to use
the subsoil”);
2) To prepare and negotiate, not later than 1 (one) year from the date of the license issue, with
authorized governmental bodies about a technical development project regarding Kutessay-II, a rare earth
element deposit, and Kalesay, a beryllium deposit, including favorable expert opinions about the industrial,
ecological safety and resources protection, and also to obtain permitting documents in order to build
infrastructural and other facilities necessary for the development. A design period may be extended by the
Licensing Commission (or its successor) according to Part 14, Article 30 of the Law of the Kyrgyz Republic
“On the Subsurface”;
3) To start building a production complex including a beneficiation plant and a metallurgical plant
and/or metallurgical workshops before obtaining rare earth oxides and metals (hereinafter referred to as “the
production complex”) not later than 3 (three) months from the date of negotiation with such authorized
governmental bodies about the technical development project. In case of any failure to meet a building start
date, a licensee agrees to pay a fine of 20,000 (twenty thousand) US dollars (60% to the republican budget,
30% to the Chuy Region Development Foundation and 10% to the Kemin District Development Foundation)
for every full month of the failure to meet the building start date, except for the force-majeure circumstances
provided for by the Law of the Kyrgyz Republic “On the Subsoil”. However, if the building of the production
complex starts in wintertime and in case of any impossibility to conduct construction works, due to the
weather conditions, the building start date postpones.
4) To commission the production complex within a scheduled period not exceeding 2 (two) years from
the date of negotiation with such authorized governmental bodies about the technical development project. In
case of any failure to meet a commissioning date, a licensee agrees to pay a fine of 20,000 (twenty thousand)
US dollars (60% to the republican budget, 30% to the Chuy Region Development Foundation and 10% to the
Kemin District Development Foundation) for every full month of the failure to meet the commissioning date,
except for the force-majeure circumstances provided for by the Law of the Kyrgyz Republic “On the Subsoil”.
5) To ensure that the production complex reaches its planned capacity provided for by the technical
project, but not less than 50% of the planned capacity, not later than 6 (six) months from the commissioning
date. In case of any failure to meet a 50% planned capacity date, a licensee agrees to pay a fine of 20,000
(twenty thousand) US dollars (60% to the republican budget, 30% to the Chuy Region Development
Foundation and 10% to the Kemin District Development Foundation) for every full month of the failure to
meet the 50% planned capacity date, except for the force-majeure circumstances provided for by the Law of
the Kyrgyz Republic “On the Subsoil”.
6) To ensure that the technical development project includes geological exploration works in order to
convert prospective and outbalance reserves to balance reserves, industrial and ecological safety precautions,
rational use of subsoil resources, disturbed soil recultivation programs, mining property elimination and
preservation programs, description of the licensee’s other actions necessary for the most rational and effective
use of resources and meeting the international standards and the legislation of the Kyrgyz Republic.
7) To make investments, including by means of attracting financing from bank and financial
institutions according to the project, not including the price for the right to use the subsoil indicated in Clause
22 of the present Conditions, a bonus and a payment for distain the license for the first 3 (three) years from the
date of the license issue;
8) To follow provisions of technical projects approved by authorized governmental bodies and to meet
the requirements of the legislation of the Kyrgyz Republic, including the requirements regarding resources
rational use, environmental protection and industrial safety;
9) To observe the requirements of the legislation of the Kyrgyz Republic on granting the pre-emption
right to buy refined precious metals to the Government of the Kyrgyz Republic and the National Bank of the
Kyrgyz Republic;
10) To prepare and submit, not later than 2 (two) months from the date of the license receipt, a social
package (hereinafter referred to as “the Agreement”) including programs of social and economic development
of the local community and territories, investment programs of development of the local infrastructure,
organization of work places for the population residing in the area of works, maximum use of local manpower
resources in the deposit development, organization of professional training courses for the population for the
purposes of conducting the works associated with the deposit development, assistance in resolving other
problems associated with the Social and Economic Chuy Region Development Program to local government
bodies for further consideration and approval.
An annual amount of investments in the local community development from the moment of
production start-up is the matter of discussion between the local community and an investor;
11) To attract foreign specialists for the period of construction of the production complex and before
the commissioning (not more than 30%), and after the commissioning (not more than 10% of the licensee’s
total staff, with contractors and subcontractors taken into account;
12) To reimburse (a) all sums adjudged against the Kyrgyz Republic by effective court judgments or
arbitration awards in relation to a previous deposit licensee’s and/or its founder’s, and/or other beneficiary’s,
and/or other interested person’s requirements (hereinafter referred to as “the Rightholder”) resulting from or
concerning the withdrawal of any rights associated with the deposits of the Rightholder’s, including but not
limited to the awards within the limits of the international arbitration proceedings conducted in accordance
with the UNCITRAL Arbitration Rules with regard to the case Stans Energy Corp and Kutesay Mining LLC
in Kyrgyz Republic (hereinafter referred to as “the Proceedings with the Previous Rightholders”) and (b)
expenses of the Kyrgyz Republic in connection with the Proceedings with the Previous Rightholders;
13) To purchase all goods (goods and materials, agricultural products), works and services in the
territory of the Kyrgyz Republic necessary for ensuring the licensee’s activities, except for purchasing those
goods, works and services which are not produced, performed and rendered in the Kyrgyz Republic, and are
more expensive than in other countries. However, to purchase, under equal conditions, mainly those goods,
works and services which are produced on the territory of Chui Region.
17. The terms and conditions on granting the right to use the subsoil, including the abovementioned
main conditions, are guaranteed in a license agreement to the license issued to a winner of the tender. A failure
to fulfill the abovementioned conditions with regard to the resources use is a basis for applying the liabilities
provided by the legislation of the Kyrgyz Republic.
18. By submitting its tender application, a tenderer acknowledges the abovementioned main conditions
of subsoil use and agrees to include them in the license agreement issued to a winner of the tender.
V. Amounts, Procedure and Terms of Payment of Fees, Guarantee Fee, Price and Other Payments
19. Payment for a Brief Geological Information Package:
1) The commission’s working body provides every applicant with a brief geological information
package according to appendix 4 to the present Conditions. In order to participate in the tender, applicants
shall acquire the indicated package by way of purchasing it in an amount of 2,032,470 (two million thirty two
thousand four hundred seventy) soms;
2) In case of necessity, an applicant has the right to acquire additional geological information in
accordance with the Law of the Kyrgyz Republic “On the Subsoil” and the Regulations on the Procedures and
Terms for Granting the Use of Geological Information Resources approved by the Decree of the Government
of the Kyrgyz Republic dated March 17, 2014, No. 144;
3) Payment for a brief geological information package is included in the final price for the right to use
the subsurface and is not returned, regardless of the results of examination of documents and/or the tender
results;
4) After determination of a tenderer, tenderer receives a full geological information package of
3,928,756 (three million nine hundred twenty eight thousand seven hundred fifty six) soms (with the cost of a
brief geological information package taken into account). The cost of this package is included in the final price
for the right to use the subsurface;
5) The indicated payments are transferred to a special account of the State Agency for Geology and
Mineral Resources under the Government of the Kyrgyz Republic (hereinafter referred to as “the State Geo
Agency”), i.e. the tendering commission’s working body, and remain in its possession. The geological
information is issued to an applicant immediately after it pays a full price for it.
20. Tender Fee
1) In order to participate in the tender, participants shall pay a tender fee of 1,000 000 (one million)
soms or its equivalent in US dollars at an exchange rate of the National Bank of the Kyrgyz Republic, as of a
payment day (hereinafter referred to as “the tender fee”). The tender fee is not included in the final price for
the right to use the subsoil and is not returned, regardless of the results of examination of documents and/or the
tender results. The indicated funds are transferred to the special account of the tendering commission’s
working body indicated in Clause 23 of the present Terms and Conditions, and remain in its possession.
21. Tenderer’s Guarantee Fee
Tenderers shall pay a guarantee fee of 300,000 (three hundred thousand) US dollars. In case of a
winner’s further payment of the price for the right to use the subsurface, as provided for by Clause 22 of the
present Conditions, the guarantee fee is included in the price for the right to use the subsoil. The guarantee fee
will not be returned to a winner of the tender, if tenderer refuses to sign a license agreement, has fully or
partially paid the price for the right to use the subsoil within the period provided for by Clause 22 of the
present Conditions, money are to be transferred to the republican budget.
22. Price for the Right to Use the Subsurface
1) The price for the right to use the subsoil may not be less than 10,000,000 (ten million) US dollars.
The price includes a bonus amount (subsurface tax) and a price for a full package of geological information on
the subsoil. The total amount less the bonus and the price for a full package is distributed in accordance with
the Regulations of the Procedure and Conditions of the Tender for the Right to Use the Subsoil approved by
the Decree of the Government of the Kyrgyz Republic dated December 14, 2012, No. 834. The price for the
right to use the subsurface is a one-time and nonreturnable payment;
2) A winner shall pay a offered price for the right to use the subsoil within 30 (thirty) working days
from the date of publication of the tendering commission’s decision on the winner on the official websites of
the Government of the Kyrgyz Republic and the State Agency.
23. Payment Details
The payment for a brief geological information package, tender fee, guarantee fee, as well as the price
for the right to use the subsurface, with indication of their corresponding purpose, shall be transferred to the
State Agency’s current t account according to the following details:
Recipient: Oktyabrsky Treasury’s Regional Office, Bishkek
Bank: Oktyabrsky branch of RSK Bank OAO
BIC: 129053
Current account: 1290534132810077
Client account: 4402032100002327
Purpose of the payment: [to the State Agency’s client account for a brief geological information
package]/[the tender fee to the State Agency’s client account]/[the guarantee fee to the State Agency’s
personal account]/[the price for the right to use the subsurface to the State Agency’s client account].
24. A tenderer shall pay license payments, taxes, non-tax payments and other mandatory payments,
charges and fees in accordance with the legislation of the Kyrgyz Republic.
VI. Tender stages and Documents Submitted by tenderers
25. The tender goes in two stages. During the first stage the Commission carries out acceptance and
evaluation of documents submitted by tenderers for compliance of such documents with the requirements
established by the present Conditions for the purpose of admittance or rejection to admit those documents to
the second phase. During the second stage the Commission carries out acceptance and evaluation of
documents submitted by tenderers and admitted to the second phase of the tender for compliance of those
documents with the requirements established by the present Conditions, and the Bid Commission determines
the successful tenderer pursuant to the established criteria.
26. First stage.
At the first stage of the tender shall within 45 calendar days from the moment announcement about the
tender is published by the official press media submit to the State Geological Agency situated at the address:
Kyrgyz Republic, Bishkek, Erkindik Boulevard, 2, Office 217, the following documents in 2 (two) copies:
1) An application to name of the Chairman of the Commission, in form described in Appendix 1 to
the present Conditions;
2) a copy of the document (and the original copy for verification purposes) confirming payment for a
package of brief geological information;
3) a copy of the document (and the original copy for verification purposes) confirming payment of a
fee for participation in the Bidding;
4) a copy of the document (and the original copy for verification purposes) confirming payment of
the bid guarantee.
Sealed envelopes with Bids shall also contain the following documents:
a) for legal entities registered (re-registered) in the Kyrgyz Republic – notarized copies of the State
Registration Certificate and copies of the Charter and Shareholder’s Agreement affixed with the
company seal;
b) for foreign legal entities – copies of constituent documents and the Registration Certificate, extract
from the State Register legalized or endorsed with Apostille, or other document certifying that the
legal entity carries out its activity pursuant to the laws of its country. Constituent documents and
the Registration Certificate submitted by foreign legal entities in a foreign language shall be
submitted with a notarized translation of such documents into the state or official language. The
term of validity of the extract from the State Register or other document certifying that the legal
entity carries out its activity pursuant to the laws of its country shall not exceed 6 (six) months
from the day of issue of such documents.
Note:
Legalisation of documents is not required:
- for member countries of the Convention Abolishing the Requirement of Legalization for
Foreign Public Documents dated October 5, 1961 (The Hague Convention), except for
member countries which raised objections against joining of the Kyrgyz Republic to the
Hague Convention, and
-
for member countries of the Convention on Legal Assistance and Legal Relations in Civil,
Family and Criminal Cases (The Chisinau Convention);
c) for individuals – a copy of the passport and State Registration Certificate confirming registration
of an individual as the sole proprietor. Foreign individuals shall additionally submit a notarized
translation of their passports into the state or official language;
d) information and documents disclosing persons who are owners and/or beneficiaries of Bidders, in
form described in Appendix 2 to the present Conditions;
e) documents confirming authorities of the director of the legal entity or authorized representative of
the legal entity;
f) Commitment Letter in form described in Appendix 3 to the present Conditions which states that:
- the successful tenderer shall agree to compensate to the Kyrgyz Republic (a) all sums
adjudged against the Kyrgyz Republic which become effective by decisions of any court or
arbitration by request of the Right holder arising from or related to withdrawal from the Right
holder of any rights related to deposits including without limitation any decisions taken as part
of Legal Proceedings with previous right holders and (b) expenses of the Kyrgyz Republic
related to Legal Proceedings with previous right holders;
- the successful tenderer shall not independently determine persons who protect the interests of
the Kyrgyz Republic and the Government of the Kyrgyz Republic;
- the successful tenderer shall make payments to representatives of the Kyrgyz Republic and the
Government of the Kyrgyz Republic determined by the Government of the Kyrgyz Republic;
- the successful tenderer shall agree to pay all fines stipulated by the present Conditions;
- the successful tenderer shall agree that the price suggested by it for the right to use the
underground resources of the object of the Bidding is the irrevocable payment;
- the successful tenderer shall agree to reimburse the harm done to the environment in the result
of its activity and take measures to restore the affected state of the environment in case such
harm is done in the result of ecological crime.
27. The tenderer shall submit in one envelope documents containing the full name and address of the
Bidder, information confirming participation in the Bidding during the first phase, and the complete list of
submitted documents. The documents shall be bound and divided with dividers. All pages in the envelope
shall be numbered. The documents shall be submitted in the state and/or official language. In case the
documents are submitted in the foreign language a notarized translation of these documents into the state or
official language shall be attached. The Tender Commission shall consider documents submitted in the state or
official languages. Amendments and supplements to the documents submitted by the Bidders shall not be
accepted after the term for acceptance of the documents expires. Documents submitted by the Bidders shall
not be returned and shall be kept at the State Geological Agency.
28. Opening of the envelops with documents shall be carried out by the Bid Committee on the next
business day after the term established for acceptance of documents expires and shall be recorded in a Protocol
which specifies names of the Bidders and number of pages of documents submitted by such tenderers. The
Tender Commission shall within 5 (five) business days after the envelopes are opened consider the documents
submitted by the tenderers and take a decision about admittance or rejection to admit the tenderers to the
second phase of the Bidding. The tenderers shall be admitted to the second phase of the Tender provided that
the documents submitted by them comply with the requirements established by the present Conditions. In case
any questions arise related to the requirements to the list, type and form of the documents submitted the
Tender Commission shall be entitled to provide additional explanations published in form of a Protocol.
29. The decision of the Tender Commission on admittance or rejection to admit the tenderers to the
second phase of the Tender shall be published on the official websites of the Government of the Kyrgyz
Republic and State Geological Agency, and other official press media.
30. The second phase.
The tenderers admitted to the second phase of the Tender shall within 15 (fifteen) calendar days from
the moment the decision on admittance is taken submit to the State Geological Agency situated at the address:
Kyrgyz Republic, Bishkek, Erkindik Boulevard, 2, Office 217, in a sealed envelope the following documents:
1) program of development of the deposit of rare-earth elements named Kutessai-II and beryllium deposit
named Kalesai which shall include proposals on:
- technical and economic calculations related to capital investments, maintenance costs and
profitability of the project;
- meeting deadlines related to construction and commissioning of a production complex, stages
of work completion;
- completeness of extraction of mineral resources from subsoil and maximum extraction of
mineral resources during processing of ore;
- reclaiming of damaged soil;
- preliminary assessment of impact of development of the deposit on the environment and
necessary nature protection measures;
- plan of measures on liquidation and conservation of mining and other property which will be
used for development of the deposit of rare-earth elements named Kutessai-II and beryllium
deposit named Kalesai;
- calculation of required investments;
- calculation of payments of tax and non-tax revenues to the republican and local budgets in the
result of activity of the production complex;
other additional information and documents at the discretion of a Bidder;
2) proposals and a complex of measures on application of modern technologies of exploration of deposits
of mineral resources, mining and processing of mineral resources, provision of industrial and
ecological safety, protection and rational use of underground resources;
3) information and documents confirming experience in geological survey and development of deposits
during a period not less than 5 (five) latest years;
4) confirmation of availability of own funds and/or opportunity to attract additional financial resources
for initial capital investments including copies of accounting records for 3 (three) latest years, bank
certificates, loan agreements, documents stating that the tenderers have no debts on taxes, and other
similar documents;
5) proposals on Benefit Package, including the program of social and economic development of local
community and territories, program of investments into development of local infrastructure, creation
of work places for population residing in the region where the work will be performed, maximum
application of local labor resources during development of deposits, arrangement of professional
training for population for the purpose of attraction of local people to performance of the work related
to development of deposits, assistance in solving other issues related to the program of social and
economic development of Chui Region;
6) proposal of a price for the right to use the underground resources of the object of the Bidding which
should not be less than the minimum cost stated in Clause 22 of the present Conditions;
7) any additional information and documents confirming the level of qualification, production, financial
and other capabilities of the tenderer necessary for development of the deposit of rare earth elements
named Kutessai-II and beryllium deposit named Kalesai.
31. A tenderer admitted to the second phase of the Tender shall submit in one envelope documents
containing the full name and address of such tenderer, information about submission of documents for
participation in the second phase of the Bidding, and the complete list of submitted documents. The documents
shall be bound and divided with dividers. All pages in the envelope shall be numbered. The documents shall
be submitted in the state and/or official language. In case the documents are submitted in the foreign language
a notarized translation of these documents into the state or official language shall be attached. Amendments
and supplements to the documents submitted by the Bidders shall not be accepted after the term for acceptance
of the documents expires. Documents submitted by Bidders shall not be returned and shall be kept at the State
Geological Agency.
32. Opening of the envelops with documents shall be carried out by the Tender Commission on the
next business day after the term established for acceptance of documents expires and shall be recorded in a
Protocol which specifies names and addresses of the tenderers and number of pages of documents submitted
by such Bidders, and the proposed price for the right of use of the underground resources of the object of the
Tender. Tenderers shall be entitled to be present during the process of opening of the envelopes.
33. The Protocol of the Tender Commission on opening of the envelopes shall be published on the
official websites of the Government of the Kyrgyz Republic and State Geological Agency.
VII. Criteria for determination of successful tenderer
34. The Tender Commission e shall within 5 (five) business days from the moment of opening of the
envelopes consider proposals of the tenderers, prepare a Protocol on results of voting on results of the second
phase of the Tender, and based on this Protocol make a decision on the successful Bidder. When considering
the documents submitted by the tenderer the Tender Commission shall be entitled to invite an authorize
representative of the tenderer for provision of additional explanations related to the submitted documents.
35. The successful tenderer shall be determined by assessment of submitted documents and
information. Assessment of the documents shall be carried out by the Tender Commission using a score
system based on the following criteria:
No.
1
2
3
4
5
6
Criteria
Quality of submitted program on development of the deposit of rare earth
elements named Kutessai-II and beryllium deposit named Kalesai,
including its compliance with the requirements established by the present
Conditions.
Proposal on application of modern technologies of exploration of deposits
of mineral resources, mining and processing of mineral resources.
Provision of industrial safety, ecological safety, protection and rational use
of underground resources (including completeness of extraction)
Financial possibilities for development of the deposit of rare earth elements
named Kutessai-II and beryllium deposit named Kalesai
Quality of provided benefits package including the program of social and
economic development of local community and territory, program of
investments into development of local infrastructure, creation of work
places for population residing in the area where the work is performed,
maximum application of local labor resources during development of the
deposit, arrangement of professional training of population for the purpose
of attracting local people to performance of the work related to
development of the deposit, assistance in solution of other issues related to
the program of social and economic development of Chui Region
Exceeding of the minimum price for the right to use the underground
resources of the object of the Bidding
7
Terms of construction and commissioning of the production complex and
infrastructure (depending on terms)
8
Non-repayable transfer to the Kyrgyz Republic of a share in the authorized
capital of the legal entity – the future licensee.
Scores
Up to 5 scores
Up to 5 scores
Up to 5 scores
Up to 5 scores
Up to 10 scores
1 score for each subsequent USD 1
million exceeding the price for the right
to use the object of the Bidding
Within a year – 10 scores
Up to 18 months – 8 scores
Up to 24 months – 6 scores
In case this obligation is accepted the
requirement of Sub-Clause 4 of Clause
16 of the present Conditions shall come
into legal force from the date of expiry
of the term established for putting the
production complex into industrial
operation.
1 score for each 5 per cent
Note: In case a legal entity with 100% state property is a tenderer, scores on Criterion 8 shall be
determined based on the agreement on joint activity with the foreign investor.
36. For each Bidder the Bid Committee shall prepare a protocol of calculation of scores which
includes scores received by the Bidder on each criterion and the total number of scores received by the Bidder.
37. Based on the analysis of all proposals of the Bidders and determination of scores on the established
criteria the Tender Commission shall prepare a Protocol on results of voting on results of the second phase of
the Tender, and based on this Protocol the Committee shall make a decision on the successful Bidder.
38. The successful tenderer is a tenderer which receives the maximum number of scores. If two or
more Bidders receive the same number of scores the Chairman of the Commission shall make a decision to
conduct an open vote. The voting shall be conducted on each Bidder separately. Each member of the Tender
Commission shall have the right to vote for one tenderer only. The successful tenderer shall be the tenderer
which receives the maximum number of votes. In case two or more Bidders receive the same number of votes
additional voting shall be conducted on such Bidders, until the winner is determined. Members of the
Commission shall not be entitled to abstain from participation in voting. In any voting if votes of members of
the Commission are distributed evenly between the tenderers, vote of the Chairman of the Tender Commission
shall be decisive.
39. The decision of the Tender Commission shall be drawn up in writing, signed by all members of the
Tender Commission and the successful tenderer, and announced at a meeting of the Commission with invited
tenderers and representatives of the media. Decision of the Tender Commission on determination of the
successful tenderer shall be published in the official press media and on the official websites of the
Government of the Kyrgyz Republic and State Geological Agency.
40. Protocols of the Tender Commission shall be considered legal if they are signed by majority of the
members of the Committee.
41. The Protocol of the Tender Commission shall be used as the basis for issue to the successful
Bidder of a license for the right to use the underground resources for the purpose of development of the
deposit of rare earth elements named Kutessai-II and beryllium deposit Kalesai. License agreements to
licenses shall include conditions established for the Bidding.
42. In case a foreign tenderer is selected as the successful tenderer licenses shall be issued to a
subsidiary company established and registered by the successful tenderer – a foreign legal entity – in the
territory of the Kyrgyz Republic at the location of the deposit of rare earth elements named Kutessai-II and
beryllium deposit named Kalesai. The subsidiary company established by the foreign legal entity shall be
registered not later than one month after the day the foreign legal entity is announced as the successful
tenderer. The subsidiary company shall be 100% the property of the foreign legal entity – the successful
tenderer, except for cases when a share in the legal entity – the licensee - is transferred to the Kyrgyz Republic
on the non-repayable basis.
43. Licenses shall be issued to the successful tenderer within 5 (five) business days after payment of
the price for the right to use the underground resources of the object of the Bidding proposed by the Bidder is
made. In case a foreign legal entity is determined as the successful tenderer issue of licenses shall be carried
out within 5 (five) business days after:
(a) payment of the price for the right to use the underground resources of the object of the Bidding
proposed by the tenderer is made;
(b) submission of the original or notarized copy of a Certificate of Registration of a subsidiary
company of the foreign legal entity, whichever date is later.
44. In case the successful tenderer refuses to sign the Protocol on results of the Tender or if it fails to
pay the price proposed by it for the right to use the underground resources of the object of the Tender within
the established term the successful tenderer shall lose its right for obtaining the license, and the tenderer which
receives majority of votes after the original successful tenderer compared to other tenderers or the tenderer
which receives majority of votes during the additional voting shall be determined the successful Bidder, unless
the Tender Commission makes another decision.
VIII. Tender Cancellation and Invalidity
45. Before the Tender Commission makes a decision on determination of the successful tenderer,
Tender can be cancelled by a decision of the Government of the Kyrgyz Republic only in case of force
majeure. In case bidding is cancelled the bid guarantee in the amount of USD 300,000 (three hundred
thousand) shall be returned.
46. If no tenders are submitted for participation in the Tender or if only one tenderer is submitted, or if
documents submitted by all tenderers fail to comply with the main conditions and requirements to the
tenderers bidding shall be considered invalid based on a decision of the Tender Commission, recorded in the
Protocol and published in the official press media and on the official websites of the Government of the
Kyrgyz Republic and State Geological Agency.
47. Tender can be recognized as invalid and results of the bidding can be cancelled by court at a suit of
a concerned party, in case the tender has been carried out in breach of the present Conditions and rules for
carrying out of tender established by the laws of the Kyrgyz Republic. In case the Bidding is recognized as
invalid the price proposed and paid by the successful tenderer for the right to use the underground resources of
the object of the tender shall be returned.
48. A tenderer shall be entitled to withdraw its bid before the Tender Commission makes a decision on
determination of the successful tenderer. If this happens payment for the package of brief geological
information in the amount of 2,032,470 (two million thirty two thousand four hundred seventy) soms, fee for
participation in the tender in the amount of 1,000,000 (one million) soms, and bid guarantee in the amount of
USD 300,000 (three hundred thousand) shall not be returned.
For inquiries, call (+996 312) 30-03-71, 30-02-46.
This information is available on the official website of the State Geological Agency: www.geology.kg
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