Mining due diligence in Central Asia: six documents to verify

Public information on mining rights in Central Asia is limited, and the same document obtained through different channels may not read the same. The first step in verification is therefore not to judge quality but to establish whether the document is genuine and still valid.

Six documents to check

1. The licence and its annexes. Check four things: the expiry date, the boundary coordinates, whether the holder's name in Chinese, English and Russian matches the contracting entity exactly, and whether the licensed minerals cover what you intend to trade. A wrongly registered mineral is the easiest item to overlook and the hardest to remedy.

2. Evidence of encumbrances. Whether the licence is pledged, whether third parties hold priority rights, whether there is pending judicial attachment. This information is rarely in the seller's data room and has to be queried separately.

3. Environmental and rehabilitation obligations. Rehabilitation liabilities from historical mining travel with the licence. The cost can be in the same order of magnitude as the licence's own value.

4. Declared capacity against actual capacity. Declared capacity is a paper figure. Comparing it with the last twelve months of production reports, electricity consumption, explosives drawdown and transport documents shows what is actually produced.

5. Who issued the geological report, and with what credentials. The credibility of a reserve figure depends on the issuer. Soviet-era reserve classifications cannot be converted directly into current international standards (JORC / NI 43-101).

6. External conditions. Grid connection, water, road access rights, rail loading capacity. None of these sit inside the licence file, yet together they decide whether the licence can be converted into cash flow.

Nothing replaces a site visit

Document review eliminates most obvious problems, but two matters must be confirmed on site: how the orebody is actually exposed (outcrops, shafts, stockpiles) and relations with the surrounding communities. The latter cannot be read from any file and is frequently the direct cause of a stalled project.

The order of judgement

Proceed as follows: is the entity real → is title complete → is capacity real → is it economic. If the first two steps fail, there is no point building a valuation model.

This note reflects practical experience and is not investment or legal advice.