Annual minimum expenditures for exploration operations in license obligation performance reports
In this article, we address the issue of calculating obligations in License obligation performance reports (LKU Report) and possible approaches to avoid disputes with the competent authority (Regulator).
Soon, subsoil users will be submitting periodic reports under licenses for exploration of solid minerals (License). These reports must present the results for the previous calendar year (1 January – 31 December), with the LKU Report being one of the required submissions. The Regulator uses these documents to verify compliance with License conditions.
If the Regulator identifies violations, it sends a requirement to remedy them. In the case of annual minimum expenditures for exploration operations (AME), the consequences can be even more serious—the Regulator has the right to revoke the License if AME obligations are not met.
The Republic of Kazakhstan’s Subsoil Code and the Licenses require subsoil users to invest a specified amount annually. The AME amount depends on the current year of the License and the number of blocks obtained.
The amount is expressed in monthly calculation indices (MCI), and since the MCI is revised annually (from 1 January), the actual amounts may vary in different years.
