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The Ministry of Mines of Afghanistan Quarterly Newsle-er

IN THIS ISSUE: •  Update of mineral tenders currently in progress (p.2)

•  Tender for West Afghan Tajik Oil Basin announced in March 2012 (p.3)

•  Amu Darya Oil Basin contract awarded in December 2011 (p.4)

•  ‘NaJonal Mining Policy of Afghanistan’ is ready; major updates to Mining and Hydrocarbon Law being prepared (p.8)

An insight on Afghanistan’s progress and opportuniJes in the minerals and hydrocarbon sectors

UPCOMING EVENTS Ministry of Mines of Afghanistan to par>cipate in the Africa Down Under Conference, Australia

The Ministry of Mines will be a2ending the Africa Down Under Conference at the Pan Pacific Perth (formerly Sheraton Hotel) and Novotel Perth Langley, from 29 August to 31 August 2012. The Ministry of Mines will have a separate session dedicated to Afghanistan’s mineral exploraOon potenOal and current investment opportuniOes. There will also be an opportunity for mining companies to meet with Afghanistan’s delegaOon, ask quesOons and get further informaOon. To arrange a meeOng with Ministry of Mines delegaOon please contact: [email protected] InformaOon about the conference can be found at: www.africadownunderconference.com Annual Investment Mee>ng Dubai The Ministry of Mines of Afghanistan will be a2ending this unique event from 1 May – 3 May 2012 that brings together the world’s leading insOtuOonal investors, private financiers, high profile government officials and assets owners. InformaOon about the event can be found at www.aimcongress.com

MOM Quarterly Newsle-er Issue 1 April 2012 1

Issue 1: April 2012

MOM Quarterly Newsle-er April 2012

MINERAL TENDERS IN PROGRESS


The Government of Afghanistan announced tenders for gold, copper and iron ore projects in London and New York City during 2010 and 2011. IniOal exploraOon of these deposits was conducted by the USSR, with more recent work undertaken by the Afghanistan Geological Society and US Geological Society. For the four gold and copper tenders launched in December 2011, over 30 expressions of interest were received from internaOonal bidders. The qualified bidders will be announced this month (April 2012) with site visits being conducted in May 2012. The Ministry of Mines anOcipates finalizing these tenders by the end of 2012. 1. Badakhshan Gold Status: Pre Qualifica<on -‐ The Badakhshan Gold tender covers a total area of 1,000km2 split into four licence blocks. Conceptual exploraOon target types include: first, low-‐sulphide quartz veins – mesothermal gold-‐bearing quartz veins, and second Archean style lode gold occurrences – greenstone-‐hosted (shear zone-‐hosted) gold in metamorphic host rocks. 2. Shaida Copper Status: Pre Qualifica<on -‐ The Shaida Copper tender covers a total area of 250km2. The two licences are within the Fara Rud plutonic belt which consists of Cretaceous and Oligocene granite, granodiorite and syenite intruded into older sedimentary and volcanic rocks. 3. Zarkashan Copper/Gold Status: Pre Qualifica<on -‐ The Zarkashan Copper/Gold tender covers a total area of 484km2. The Zarkashan intrusive consists of quartz monzonite, granodiorite and quartz syenite. MineralizaOon is associated with skarn alteraOon at the contact between the Zarkashan intrusive and the Triassic and Cretaceous limestone. 4. Balkhab Copper Status: Pre Qualifica<on -‐ The Balkhab Copper tender covers a total area of 457km2 split into two licence blocks. Contains deformed Middle to Late Paleozoic sedimentary and volcanic rocks that are exposed in the central parts of an eroded canyon of the Balkh River. The Paleozoic rocks are overlain unconformably by near-‐horizontal Mesozoic sedimentary rocks 5. Hajigak Iron Ore Status: Bidder Nego<a<ons -‐ The Soviets esOmated the Hajigak Iron Ore deposit to contain resources of 1.8 billion tonnes with a grade of approximately 62% Fe, predominately in the Russian P2 classificaOon. The Hajigak tender will finalized by mid 2012. For more informaOon also see: h2p://www.mom.gov.af/en/page/1382

For more informa>on please visit the Ministry’s tender website at hXp://www.afghanmineraltenders.com/

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CURRENT TENDERS Tender for West Afghan Tajik Oil Basin announced in March 2012 The Ministry of Mines announced a public tender for exploraOon, development and producOon of hydrocarbons in 6 blocks at the APPEX conference in London in March 2012. These blocks are Ahmadabad 1,855km2, Balkh 1,861km2, Mazar-‐I-‐Sharif 2,715km2, Shamar 2,143km2, Sanduqli 2583km2 and Mohammed Jan Dagar 3603km2 in the Afghan-‐Tajik basin. Interested companies should submit their expression of interest by 30 June 2012. The blocks are located in Northern Afghanistan in the region surrounding the city of Mazar-‐I-‐Sharif, where 2D-‐Seismic data gathering is being conducted to improve the quality of available data to bidders. For more informaOon please visit our website at:

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hXp://www.afghantajiktender.com/

Afghan-‐Tajik Phase I Tender Blocks



On 26 December 2011 the Ministry of Mines signed an exploraOon and producOon-‐sharing agreement with a joint venture comprising the China NaOonal Petroleum Company InternaOonal and Watan Group (CNPCIW) for oil and gas exploraOon, development and producOon from the Zamarudsay, Bazarkhami and Kashkari blocks (totalling 3,549km2 ) in the Amu Darya basin in Northern Afghanistan. Over the next several years, the CNPCIN will be commencing producOon from exisOng wells and bringing new wells online to eventually produce a minimum of 5 million barrels of oil per year from 2018.

First Oil & Gas Produc>on-‐Sharing Agreement Signed With Chinese Joint Venture Company

The producOon-‐sharing agreement provides for 4.5 years of exploraOon (with two possible extensions of 2 years each) followed by 25 years of producOon (with the potenOal to extend for a further 10 years). Details of the contract can be seen under “Abstract of EPSC at : h2p://mom.gov.af/en/page/1384 The Amu Darya Petroleum Authority (ADPA) was recently established to supervise implementaOon of the producOon-‐sharing agreement. The main goals of this department are to ensure proper environmental protecOon, financial safeguarding and social development over the life of the contract. By 2018, the agreement is anOcipated to generate approximately US $250 million in tax and producOon-‐sharing revenues for the Government of Afghanistan.

Insert Amu Darya Basin Map

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NEWS



EXPLORATION ROUND UP It is well-‐known that Afghanistan is home to numerous high-‐grade coal deposits. What is less known is the extent of these deposits and the volume and quality of coal available. From October 2011 to February 2012, the AGS, with the support of USAID, conducted an in-‐depth geological survey of the Dar-‐i-‐Suf coal fields in Samangan. The work consisted of surface and underground geological mapping, total surface trenching of 600m and underground channel sampling in the Dan-‐i-‐Tor and Shabashak areas. One hundred standard samples were taken and the analysis of these is due to be completed in July 2012. Although the geological data collected during the field season is sOll being compiled and analysed, the Ministry of Mines are confident that coal resources in the Dar-‐i-‐Suf area are far more extensive than previously reported, and numerous coal seams are amenable to modern, industrial mining techniques. There is also strong geological evidence that indicates that the Dan-‐i-‐Tor coal measures extend much further in all direcOons, but parOcularly to the south, than earlier surveys suggest. It is hoped that core drilling, using the new AGS drill rigs, will take place during 2012 to confirm surface studies. For further informaOon about coal resources of Afghanistan please see: h2p://afghanistan.cr.usgs.gov/coal

The coal seams can be grouped into at least three disOnct formaOons daOng in age from the Middle to Upper Jurassic. The above map shows the surface exposure of the sedimentary formaOons with the red arrows indicaOng extension of the coal measures under younger Cretaceous and TerOary cover.

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NATIONAL AND REGIONAL RESOURCE CORRIDORS PROGRAM T h e N a > o n a l a n d R e g i o n a l R e s o u r c e Corridors Program aims to connect Afghanistan to the Central Asian and Middle Eastern regions through the coordinated development of roads and railways along with e x p l o r a O o n a n d development of the country’s energy and mineral resources. The US $3 million program is being financed by the internaOonal community, including the Asian De ve l opmen t B an k , USAID, European Union, World Bank, India and Japan.

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Hairatan-‐Mazar Railway is the first railway project in Afghanistan. In the first phase of the project 106km of railway line has been constructed along with staOons and other related faciliOes which are now ready for use.

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GOLD DEPOSIT AND POTENTIAL IN AFGHANISTAN Afghanistan has the potenOal for many types of gold mineralizaOon, such as: Alluvial, skarn, placer, vein hosted and porphyry. Gold has been mined for centuries in many areas including Takhar province in the north, Ghazni, Zabul, Kandahar provinces in the south-‐west and Baghlan province in the northeast of the country. There are a number of deposits, some of which have been contracted and awarded, some are currently being tendered.

Qara-‐Zaghan Gold explora>on and exploita>on project: This gold mine is located in Qara Zaghan village in Dushi District, Baghlan Province. An area of 1,257 hectares has been leased to a joint venture comprising Afghan Krystal Natural Resources (AKNR) and Central Asian Resources (CENTAR) which will invest up to US $50m, including US $12m for exploraOon and US $38 million for exploraOon and exploitaOon over 10 years. JP Morgan Cazenove has provided the investment fund for this venture. Iden>fied gold deposits with poten>al for tender for early stage explora>on: Kundalyan: copper gold deposit in Zabul province, which is localized along a 400-‐m long , 1.5km wide inlier within a fault zone that consist of altered limestone, chert and skarn. There are 13 ore bodies along the Kundalayan fault zone and the category C1+C2 reserve in the Soviet classificaOon system are 13,600 tons of contained copper and 1.1 ton of gold at grades of 1.07% Cu and 0.9g/t Au. Katawas: located In Ghazni & PakOka provinces, this is a conceptual target based on geologic and remote-‐sensing data and evidence of hydrothermal alteraOon and could be an ideal junior company grass-‐roots project. Ahonkashan: located in Badghis province, there are six mineralized zones of 700m to 2,500m long and up to 75m wide and could be ideal for junior or mid-‐Oer company grass-‐roots project.

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BUSINESS PROFILES FOR EXPLORATION SERVICES The AGS has recently acquired five new Chinese manufactured, hydraulic, diamond core drill rigs. The two larger HYDX-‐4 track mounted rigs are capable of drilling in excess of 500m (NQ size, 47.6mm core diameter) under ideal condiOons, while the three smaller HYDX-‐2 rigs can be disassembled rapidly with parts weighing less than 100kg and then and quickly transported and reassembled. The drill manufacturer provided training on the operaOon of the rigs to AGS staff during February 2012.

Both rig types are ideal for Afghanistan condiOons as they require small crews (4-‐6 staff) and are easy to operate, maintain and transport. These modern, wire-‐line drill rigs will greatly increase the capacity of the AGS to conduct mineral exploraOon and resource evaluaOon. The high quality geological data sets that AGS can now acquire with these rigs will increase the rate that new mineral prospects can be put up for tender and lower the risk for mining companies when making investment decisions.

Na>onal Mining Policy for Afghanistan The Ministry of Mines has successfully prepared its NaOonal Mining Policy in order to create a reliable and comprehensive framework. In addiOon, sector policies for different minerals and hydrocarbons have been prepared to guarantee a secure base for the mining sector. The Cabinet is expected to approve all the policies at the end of May, 2012. The Ministry of Mines is currently working on amendments to the Mining and Hydrocarbon Law to ensure an investor-‐friendly private sector for mining companies and internaOonal investors.

LEGAL FRAMEWORK OF THE AFGHAN MINING SECTOR

Contact Details: Office of the Deputy Minister of Policy and Promo>on Mr. Najibullah Amirzai E: [email protected] T: +93 (0) 202 104 370 Investment Promo>on Directorate E: [email protected] T: +93 (0) 752 0764 83

Cadaster Directorate E: [email protected] T: +93 (0) 079 327 1565 Afghan Geological Survey E: [email protected] T: +93 (0) 797 227 212

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