ANNUAL REPORT of Tau-Ken Samruk JSC’s Board of ... -...

ANNUAL REPORT

of Tau-Ken Samruk JSC’s Board of Directors

for 2015

Astana, 2016

Approved by

The Resolution of the Board of

Tau-Ken Samruk JSC

№ 02/16

dated March 31, 2016

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CONTENT

INTRODUCTION

1. ORGANIZATION OF THE BOARD OF DIRECTOS

1.1. Members of the Board

1.2. Eligibility criteria

1.3. Independence criteria of the Board of the Directors

1.4. Directors’ emolument

1.5. Competence development

1.6. Delineation of the scope of responsibilities between the Board of Directors and

Executive Board

2. ACTIVITY OF THE BOARD IN 2015

2.1. Contribution of the Independent Directors

2.2. Frequency of meetings and attendance by each director

2.3. Information about issues considered in 2015

2.4. Information about performance of the Annual Action Plan of the Board of Directors

2.5. Evaluation of the Board

2.6. Information about Corporate Governance represented by the Board

2.7. Information about Internal Control System

3. ACTIVITY OF THE BOARD AUDIT COMMITTEE IN 2015

3.1. Members of the Board Audit Committee

3.2. The role of the Board Audit Committee



4. ACTIVITY OF THE BOARD NOMINATIONS AND REMUNERATION

COMMITTEE for 2015

4.1. Members of the Board Nominations and Remuneration Committee

4.2. The role of the Board Nominations and Remuneration Committee



5. ACTIVITY OF THE BOARD STRATEGIC PLANNING AND

INVESTMENTS COMMITTEE for 2015

5.1. Members of the Board Strategic Planning and Investments Committee

5.2. The role of the Board Strategic Planning and Investments Committee


5.4. Information about the issues considered in 2015

CONCLUSION

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INTRODUCTION

The present Annual Report of the Board of Tau-Ken Samruk JSC about activities

in 2015 (hereinafter – the Report) is prepared with due consideration of recommendations

and best practices applicable to the Corporate Governance in Kazakhstani and international

companies, in accordance with the corporate management practices, Charter and Tau-Ken

Samruk Regulation of the Board of the Directors (hereinafter – the Company).

Regulation of the Board of the Directors was elaborated and approved in 2009

targeted to realize the principles of the effective management by the Board (the order by

Samruk-Kazyna JSC №62-p dated December 14, 2009); amended Regulation of the Board

of the Directors approved by the resolution of the Sole Shareholder (protocol № 69/13) on

December 27, 2013 is to determine the status, order of the Board establishment and its

activities and members as well as the order of cooperation with the other bodies of the

Company, the rights, obligations and responsibilities of the Board and the order of election

and early termination of powers.

In addition to these documents, the relationships between the member of the Board

and the Company are governed by the three-year period contract.

The report consists of five main sections.

The first section "Organization of the Board of Directors" provides for the

information on the structure of the Board of Directors, criteria of election and determining

the independence of the Board, remuneration policy for the Directors, responsibilities of

the Board and Management.

The second section "Activities of the Board in 2015" presents information on the

activities of the independent Directors, frequency of meetings and attendance by each

Director, performance of the Annual Work Plan of the Board, the issues reviewed during

the reporting period, evaluation of the Board of Directors and information of the Board of

Directors on Corporate Governance.

The third, fourth, fifth sections provide for information on the structure of the acting

Committees, their roles (functions), frequency of meetings and attendance by each

Director, as well as information about issues reviewed in 2015.

Generally, the content and structure of the Report is presented in such a way as to

provide the interested users with the most accurate, complete and clear information on the

activities of the Board of Directors of the Company in 2015.

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1. ORGANIZATION OF THE BOARD OF THE DIRECTORS

1.1. MEMEBERS OF THE BOARD

The Board of Directors shall be elected by the Sole Shareholder pursuant to Joint-

Stock Companies Act (pp.5,p.1,art.36).

According to p.4 of the Regulation of the Board of the Directors, the number of the

Board members shall be determined by the Sole Shareholder and shall be no less than five,

of whom no less than one third shall be independent directors.

The term of powers shall be determined by the Sole Shareholder (however, it should

be no more than three years, otherwise it is subject to a special consideration with due

regard to the quality of the Board renewal) and terminated by the date the Sole Shareholder

takes the decision about electing the new members of the Board.

In 2015, based on the resolution of the Sole Shareholder dated January 29, 2015

(Protocol №04/15) the following members of Tau-Ken Samruk JSC Board were elected:

Name Position

Bektemiriv Kuanysh Abdugaliyevich

Chairperson of the Board for Tau-Ken Samruk JSC, Chief Assets Officer for Samruk-Kazyna JSC

Arslanova Zarina Fuatovna Member of Tau-Ken Samruk JSC Board, Independent Director

Argingazin Arman Anuarbekovich

Member of Tau-Ken Samruk JSC Board, Independent Director

Turmagambetov Mazhit Abdykalikovich

Member of Tau-Ken Samruk JSC Board, Chief Executive Officer for Tau-Ken Samruk JSC

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Chairman of the Board:

Bektemirov Kuanysh Abdugaliyevich

Representtive of the Sole Shareholder.

The date of the first election to the Board, the date of election

for the current membership in the Board: Resolution of

Samruk-Kazyna JSC Board dated January 31, 2012, protocol

№08/12, Resolution of Samruk-Kazyna JSC Board dated

January 29, 2015, protocol №04/15.

Citizenship: the Republic of Kazakhstan

Date of birth: May 24, 1970

Education: In 1993 graduated from the Kazakh State

University named after Al-Farabi with a degree in Physics, in

2004 graduated from the Kazakh National Academy of

Management with the degree in Electrical Engineering.

Work experience: Since 1993 to 1999 worked in Atameken

Financial and Investment Coropration in Almaty, Altyn-Bidai JSC in Tekeli (Almaty

region), Vostok-Service LLC in Taldykorgan.

Has a great managerial experience in the field of Municipal Infrastructure and Power

Industry.

Since 1999 held managerial positions in Taldykorganteplo-Kommunenergo SOPE,

Talgykorganservice SOCS, Astanaenergoservice JSC, Power Economy and Municipal

Infrastructure of the South Kazakhstan Region Department SI, Kazgidromet RSE and

Astanaenergocontract LLC.

Awarded by the Certificate of appreciation by the Minister of Energy "For the Contribution

into development of RK electric power industry", awarded by the badge "Honorable RK

power engineer", awarded by anniversary medal "10 years of Astana".

Work and Board membership for the other companies: Chief Assets Officer for Samruk-

Kazyna JSC, Chairman of the Board for Samruk-Energo JSC, Chairman of the Board for

KEGOC JSC, Board member for Kazatomprom NAC JSC.

Share participation in the Company: no.

Share participation in the Companies of the Suppliers and Competitors, quantity and share

of interest in the affiliated companies: no.

Turmagambetov Mazhit Abdykalikovich

Chief Executive Officer, Chairman of the Board of Directors

Scope of responsibility within the Company: Corporate

Governance of Tau-Ken Samruk JSC.


for the current membership in the Board: Resolution of

Samruk-Kazyna JSC Board dated January 31, 2012, protocol

№08/12, Resolution of Samruk-Kazyna JSC Board dated

January 29, 2015, protocol №04/15.

Citizenship: The Republic of Kazakhstan

Date of birth: February 1, 1961 года

Education: Graduated from the Moscow Higher Technical

School named after N.E. Bauman (1984) with the degree in mechanical engineering.

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Work experience: Since 1984 – supervisor, deputy workshop head of the engineering plant

named after S.M. Kirov, Almaty. Since 1989 – deputy director of Damis SE.

Since 1991 – Deputy Chief of Administration of Kazakh Central Real Estate Board. Since

1992 – General Director of Damis 93. Since 1996 – Deputy General Director of

Yuvelirnaya Corporatsiya Almaz JV.

Since 1997 – Deputy Director of the Industrial Department in the RK Ministry of Economy

and Trade. Since 1998 – Deputy Chairman, Chairman of the Committee on State Control

over production and turnover of alcohol products MF RK, ME&T RK, MPR RK.

Since 2001 – Vice-Minister of the Ministry of Natural Resources and Environmental

Protection RK. Since 2003 – Deputy Chief Executive Officer of Innovational Fund JSC.

Since 2004 – Chief Executive Officer of AstanaEnergoSbyt JSC. Since 2006 – managerial

positions in commercial entrepreneurships. Since 2008 – Director of Maximum Regional

Investment Center LLC (South-Kazakhstan region). Since 2008 – Deputy Head of South-

Kazakhstan region. Since March 2009 – Vice-Minister of RK Environmental Protection.

Since January 2012 up to present – Chief Executive Officer of Tau-Ken Samruk National

Mining Company JSC.

Awarded by medals: "10 years of the Constitution of Kazakhstan" (2005), "10 years of

Astana" (2008), "20 years of Kazakhstan Independence" (2011), "Kurmet" (2014).

Work and Board membership in the other companies: Board member of Kazatomprom

NAC JSC, Kazzinc LLC.




Argingazin Arman Anuarbekovich Independent Director

Status: Independent Director


for the current membership in the Board: Resolution of Samruk-

Kazyna JSC Board dated April 18, 2011, protocol №15/11,

Resolution of Samruk-Kazyna JSC Board dated January 29,

2015, protocol №04/15.


Date of birth: December 1, 1978

Education: Graduated from the Boston University of USA in

2000 with the degree of Bachelor in Businee Administration. In

2002-2010 took training courses in the Academy of ABN AMRO as a career-broadening

program.

Work experience: Started his working career in 2000 as a financial analyst in Khalyk

Saving Bank of Kazakhstan. Besides, had been working as a credit officer in HSBC

Kazakhstan for a long period, from 2004 to 2006 had different capacities in ABN AMRO

Bank Kazakhstan, among them Head of Mining Industry and Metals Department as well

as the Director of Astana Branch.

In 2012 was assigned as a Managing Director of UBS in Kazakhstan.

A.A. Argingazin has more than 10-year experience in the field of cooperation with the

mining companies, took part in London Stock Exchange initial public offering of ENRC

plc.

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Work and Board membership in the other companies: no




Arslanova Zarina Fuatovna Independent director

Status: Independent director


for the current membership in the Board: Resolution of Samruk-

Kazyna JSC Board dated August 7, 2012, protocol №33/12,

Resolution of Samruk-Kazyna JSC Board dated January 29,

2015, protocol №04/15.


Date of birth: December 22, 1960

Education: In 1983 graduated from the Kazakh State University

named after S.M.Kirov with the degree in Economics, is a Ph.D

in Economics. Has a perfect command of the English language.

Took extended education in financial analysis at the University of Kentucky (1992),

studied project analysis and risk management in the financial and banking sector, banking

and investments, business planning and restructuring of enterprises, business

administration during post-privatization restructuring, banking credit policy and project

financing in the Economic Development Institute of the World Bank (1992 – 1996),

Corporate Governance: the role of the government and private sector in the United Vienna

Institute (1996), productivity and decision making in Asian productivity organization in

Tokyo (1998), Corporate Governance in the Support Centre of Private Entrepreneurship of

USA Chamber of Commerce and Industry (1999).

Work experience: During the last 18 years held different managerial positions in private

companies. A founder and Head of the University of International Business (1992-2002),

president of IBS Consulting (2002-2005), vice-president for Academic Affairs at KBTU

(2005-2007), president of AXIS Corporation LLC (2007-2009). Since 2009, she is a

managing partner of RKF Astana LLC.

Due to a strong background, provides consulting support to the private companies and state

bodies on the following issues: corporate finance, ISFR, financial accounting, project

management, strategic management, investment projects analysis, implementation of Mid-

Term Strategic Plan system, budgeting, Corporate Governance, ERP systems.

Work and Board membership in the other companies: Independent Director of

Kazatomprom NAC JSC, International University of Informational Technologies JSC.




1.2. New Board members, independent directors and committee members

eligibility criteria

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Pursuant to the approved Policy of Eligibility Criteria, the Board of Directors shall

form a list of candidates to the Board based on the proposals from the Nominations and

Remuneration Committee and the Sole Shareholder and forward it to the Sole Shareholder

together with the background description, assessments and relevant recommendations.

Candidates to the Board shall have a relevant work experience, knowledge,

qualifications, excellent achievements in business and (or) sectoral environment required

to perform obligations and effective Board operation in the best interests of the Sole

Shareholder and the Company.

The Board members shall be elected by the resolution of the Sole Shareholder for

the period of no more than three years. Chairman of the Board shall be elected out of the

Board members by poll.

In accordance with Provision 8 of the Regulation of the Board of Directors, the

candidate is not eligible if s-/he:

1) has an outstanding or unreleased in accordance with the law conviction;

2) earlier was a Chairperson of the Board, Chief Executive Officer, Deputy Chief

Executive Officer, Chief Accountant of another legal entity less than one year prior to the

resolution about enforced liquidation or enforced redemption of shares or temporary

closing of the other legal entity declared a bankrupt in accordance with the established

procedure. The present requirement shall be effective within five years after the date of the

resolution on enforced liquidation or enforced redemption of shares or temporary closing

of the other legal entity declared a bankrupt in accordance with the established procedure.

Determination of the number of members, power terms for the members and experts

of the Committees fall under the scope of the Board competence as per the internal rules.

Members and Experts of the Committees shall have a relevant education and necessary

qualifications to perform their functions.

1.3. Independence criteria of the Board of the Directors

For the best practices of the Corporate Governance, the Board members have to

include independent directors providing for a guarantee of unprejudiced decisions in the

best interests of the Company.

Pursuant to the requirements of the Joint-Stock Companies Act (p.5, art.54) and in

accordance with the best world practices of the Corporate Governance, independent

directors shall be elected to the Board and their number should be no less than one third of

the total number of the Board members.

In accordance with article 1, sub-point 20 of the Joint-Stock Companies Act an

independent director is defined as a member of the Board, who is not and has not been

affiliated with the present joint-stock company for three years prior to being elected to the

Board (except for a case of being an independent director of the present joint-stock

company), is not affiliated with the affiliated persons of the present joint-stock company;

is not a subordinate to the corporate executives of the present joint-stock company or

organizations affiliated with the present joint-stock company and has not been a

subordinate to them for the last three years prior to being elected to the Board; is not a

public employee; is not and has not been an auditor of the present joint-stock company for

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the last three years prior to being elected to the Board; does not participate in the audit of

the present joint-stock company as an auditor of the audit company and did not participate

in such auditing for the last three years prior to being elected to the Board.

1.4. Directors’ emoluments

According to point 52, sub-point 9) of the Charter the Board remuneration rate and

conditions are powers reserved for the Sole Shareholder.

Remuneration to the Independent Directors is subject to the payment based on

Samruk-Kazyna JSC Regulation on Emoluments and Remunerations to the Independent

Directors approved by Samruk-Kazyna JSC Board Resolution №55/09 dated May 22, 2009

with amendments dated May 24, 2012 (protocol №23/12).

The following types of remuneration are subject to be paid to the Independent

directors:

1) direct remuneration;

2) extra remuneration for participation in presentia meetings of the Board

Committees.

The amount of the annual direct and extra remuneration to the Independent Directors

shall be determined by the Resolution of the Sole Shareholder on the individual basis.

Pursuant to the Resolution of Samruk-Kazyna JSC Board dated January 29, 2015,

protocol №04/15, main forms of remuneration are as follows:

- the annual direct remuneration for the Board membership is 3,400,000 (three

million four hundred thousand) tenge after dedicating tax and other compulsory payments

(subject to the payment every six months proportional to the period of work within the

relevant six months of a calendar year, during the month following the remuneration report

period);

- extra remuneration for participation in participation in each presentia meeting of

the Board Committees is 200,000 (two hundred thousand) tenge (subject to the payment

during the month following the date of meeting in presentia);

- expenses reimbursement (transport, accommodation, daily allowances, telephone

communication all over the Republic of Kazakhstan, scanning, photocopying, fax, printing,

documents typing, access to the internet all over the Republic of Kazakhstan) coming from

the attendance of the Board meetings held at the locations far from the permanent residence

of the Independent Directors (within the normal limits of business trips reimbursements

allowed to the Chief Executive Officer of the Company in accordance with the internal

rules of the Company).

The Board members of the Company shall not be paid other remunerations and

bonuses as well as the upper limits of remuneration are not provided, furthermore,

remuneration in the form of Tau-Ken Samruk JSC shares is not stipulated.

Therewith, in case of participating in less than half of all the held Board meetings

in presentia and absentia during the report period, remuneration to the Independent

Directors is not liable to payment, except for their absence by the reason of illness, vacation

leave or business trip.

Remuneration shall not be paid to those Board members, who are legally imposed

limitations in terms of receiving payments from the corporate bodies and those ones who

concurrently are the representatives of the Sole Shareholder and Chief Executive Officers.

1.5. Competence development

10

In accordance with the Policy on the Board competence development and experts

outsourcing, an Independent Director has right to develop his competence out of the funds

of the Company.

To pursue qualification development of the Independent Directors, the Company

forwarded applications for their participation in IoD Chartered Director international

certification program for independent directors sponsored by Samruk-Kazyna Corporate

University in partnership with The Institute of Directors, London, Great Britain. The

program comprises 3 stages: I stage – Certificate in Company Direction, II stage –The

Diploma in Company Direction, III stage – Chartered Director Interview. By the decision

of Samruk-Kazyna Corporate University realization of the program was planned for 2016.

1.6. Delineation of the scope of responsibilities between the Board of Directors

and Executive Board Delineation of responsibilities between the Board and Executive Board is governed

by the Charter of the Company, responsibility of the Board is also set forth in the Regulation

of the Board of Directors.

The Board of Directors is an administrative body governing the Company’s activities,

except for the issues that fall under the scope of the Sole Shareholder competence and

Executive Board of the Company. Board resolutions shall be issued in accordance with the

Legislation, Charter and Company’s Corporate Governance Code as well as the internal

documents of the Company.

The Board of the Directors has no power to regulate the issues that fall under the

scope of the Executive Board competence as well as make decisions inconsistent with the

resolutions of the Sole Shareholder.

The Board of the Directors shall:

monitor and manage potential conflicts of interests on the level of corporate

executives, including irregular use of the Company’s property and abusive practice with

transactions, where there is an interest;

monitor the effectiveness of Corporate Governance practices and enhancing

Corporate Governance in the Company.

The Board members are responsible for the harm caused by their acts or omissions as

well as for the consequences of their decisions. If a Board member voted against the decision

or did not participate in the vote that entailed losses, he shall be released from the

responsibility. Chairman of the Board of Directors is responsible for an appropriate dialogue

with the Sole Shareholder.

Members of the Executive Board, except the Chief Executive Officer, cannot be

elected (assigned) to the Board of Directors. Chief Executive Officer cannot be elected

(assigned) as a Chairman of the Board.

Executive Board is a Collegial Executive Body managing operation of the Company,

making decisions on all the issues of the Company’s activities (that do not fall under the

competence of the Sole Shareholder and the Board of Directors) and is responsible before

the Sole Shareholder and the Board of Directors to the extent of assigned duties.

Executive Board shall ensure timely delivery to the Board of Directors information

about activities of the Company, including the confidential one.

Scope of the Executive Board competence is delineated by the Charter of the

Company.

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2. ACIVITY OF THE BOARD IN 2015

2.1. Contribution of the Independent Directors

As of the date of the present Report, Independent Directors Arman Anuarbekovich

Argyngazin and Zarina Fuatovna Arslanova completely comply with the criteria

provisioned by the Act of the Republic of Kazakhstan about Joint Stock Companies and

the Company’s Charter.

Based on the world practice the Independent Directors are supposed to contribute

into elaboration of the Company’s strategy, assessment of the Executive Board,

enhancement of internal control and the Company’s risk assessment. Therewith,

implementation of Corporate Governance by the Independent Directors into the Board

work as well as their recommendations to the operating Board Committees considerably

contributes to the activities of the Company and decision making by the Board of Directors.

Independent Directors of the Company are the members of all the Board

Committees of the Company, including:

1) the Board Nominations and Remuneration Committee of the Company chaired

by Arman Anuarbekovich Argyngazin;

2) the Board Audit Committee and Strategic Planning and Investments Committee

of the Company chaired by Zarina Fuatovna Arslanova.

2.2 Frequency of meetings and attendance by each director

In 2015 the number of meetings held by the Board was 14, including 2 meetings in

absentia (12 meetings in presentia/2 meetings in absentia).

Participation of the Board members in Tau-Ken Samruk JSC Board meetings

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ATTENDANCE OF TAU-KEN SAMRUK JSC BOARD MEETINGS STATISTICS FOR 2015.

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Meeting of the Board of Directors are hold on the regular basis in accordance with

the Board annual working plan as well as when there is a need.

Generally, during 2015 the Board of Directors took decisions on 153 issues, among

them 1 issue had 1 "abstain" pursuant to Article 71 of Joint-Stock Companies Act and 1

issue had "con", voting on the remaining issues was unanimous. Issues considered during

the reporting period included budget review, investment projects, assessment of the

Executive Board members, Executive Board and Internal Audit Service reporting,

members alteration in the Committees and Executive Board of the Company.

Details of the most essential issues considered at the meetings of the Board during the

reporting year are provided below.

In February, the Board elected a Chairman and re-elected experts of the Committees,

appointed a Corporate Secretary and made amendments into the Plan of Development for

2015-2019.

In March, the Board of Directors approved Innovative and Technological Strategy

for 2014-2022, considered transactions, where Tau-Ken Samruk is an interested party, as

well as the report on investment program performance for 2014 and report on the Sole

Shareholder’s anticipations action plan performance for 2014.

In April, the Board pre-approved annual Financial Statement of Tau-Ken Samruk

JSC for 2014, reviewed the Annual Audit Plan of the Internal Audit Service for 2015 as

well as the Annual Report of the Board of Directors for 2014, approved the organizational

structure of Tau-Ken Samruk JSC, considered a number of quarterly reports. In addition,

in April the Board preliminarily approved the issue about 100% share in Severny Katpar

acquisition by Tau-Ken Samruk JSC, preliminarily approved the Annual Report of Tau-

Ken Samruk JSC for 2014, assessed the activities of the Board members in terms of

achieving key performance indicators in 2014, re-elected the Board members of Tau-Ken

Samruk JSC.

In May, the Board approved an independent geological exploration of gold-bearing

deposit at South Moiynty Project in Karaganda region as well as Business Plan and Select

Phase of Investment Memorandum, made amendments to the Charter of Tau-Ken Project

JV LLC, approved Risks Register and Risks Map for 2015 along with acquisition of 100%

share in Severny Katpar LLC.

In July, the Board approved the amendments to the Policy on outsourcing of audit

services, independent implementation of the 1-st stage of polymetallic ores mining and

processing at Alaigyr project in Karaganda region, transaction, in which Tau-Ken Samruk

is an interested party, independent implementation of geological exploration of gold at

Shokpar and Gagarinskoye investment project in Zhambyl region as well as Business plan

and Investment memorandum about Tau-Ken Samruk equity share offering (disposition).

Therewith, in July Internal Audit Service and its Head activity were assessed,

amendments were made in Tau-Ken Altyn LLC and Tau-Ken Temir LLC Charter, the

Report on Transparency and Efficiency of Information Disclosure by Tau-Ken Samruk

for the first six months of 2015 was considered.

In August, Tau-Ken Samruk Sustainability Plan for 2015-2019 was considered as it

pertains to the H1 of 2015, Tau-Ken Samruk Environmental Policy and Health and Safety

Policy were approved as amended, retaining capacity of Tau-Ken Samruk for 2015 was

approved, secession from Black iron ore exploration project on Zhaksylyk site in Akmola

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region by means of alienation of 100% share of Tau-Ken Samruk participation in TKS-

Zhaksylyk LLC.

In September, decision was made to list (dispose) the authorized shares of Tau-Ken

Samruk, Sustainability Plan for 2015-2019 was amended, General Director of Severny

Katpar LLC was appointed and Charter of Severny Katpar LLC was approved as amended,

as well as the issue on approval of additional limit in Eurasian Bank JSC was considered.

In November, The Board of Directors approved Tau-Ken Samruk Sustainability

Plan for 2016-2020, considered the issued about designation of the audit company to audit

Tau-Ken Samruk consolidated and individual financial statements for 2016,2017,2018 as

well as the cost of its services, acquisition of silicon production complex in Karaganda

region, information about the Sole Shareholder expectations for 2015 was considered, Tau-

Ken Samruk Risks Register and Risks Map for 2016 was approved.

In December, decision was made to list (dispose) Tau-Ken Samruk authorized

shares, Action Plan of the Board of Directors 2016 as well as Tau-Ken Samruk Risk

Appetite for 2016 was approved, the Board of Directors considered Annual Audit Plan of

Tau-Ken Samruk Internal Audit Service for 2016.

Among the issues considered at the meetings of the Board of Directors, the following

documents were forwarded to consideration and approval by the Sole Shareholder as

related to the scope of his competence:

1. Tau-Ken Samruk Annual Report 2014 (resolution of Samruk-Kazyna JSC Board

dated 25.09.2015, protocol № 37/15.

2. Annual Financial Statement 2014 (Resolution of Samruk-Kazyna JSC Board

dated 26.07. 15, protocol №28/15.)

Further information about resolutions of the Board passed in 2015 is available at

www.tks.kz.

2.4. Information about performance of the Annual Action Plan of the Board of

Directors

Action Plan of the Board of Directors for 2015 was approved by the Board

resolution dated December 19, 2014, protocol № 13/14, in which 62 points were provided.

Therewith, Action Plan of the Board of the Directors was appropriately amended by the

Board resolution №08/15 dated August 27, 2015 due to approval of Corporate Governance

Code by Samruk-Kazyna NWF JSC (resolution of RK Government №239 dated April 15,

2015).

Amended Action Plan of the Board of Directors for 2015 included 56 points that

fall under the scope of its competence.

However, during the activity of the Company and the Board the following issues

were not considered:

1. The approval of Tau-Ken Samruk key risk indicators for 2015.

2. Key performance indicators for Internal Audit Service and its Head in 2016.

3. Mid-term program to improve Tau-Ken Samruk Corporate Governance system.

4. Realization of Tau-Ken Samruk Personnel Policy.

5. Key performance indicators for the activities of Tau-Ken Samruk Executive

Board members.

6. Tau-Ken Samruk Corporate Accounting Policy.

http://www.tks.kz/

14

Consequently, for point 1 elaboration and approval of Key Risk Indicators are

provided in accordance with p.113 (IAS recommendation №5.1.1) of Action Plan on

Corporate Risks Management Enhancement (hereinafter – CRM Plan) for 2013-2015.

Nevertheless, in view of amendments and updating CRM Plan, new CRM Plan 2015-2017

was approved by the Board resolution dated 27.05.2015 (protocol №05/15) providing for

the Key Risks Indicators approval was postponed for March 2016.

As for point 2, Key Performance Indicators for Internal Audit Service and its Head

for 2016 were elaborated and submitted for approval in January 2016 (Protocol №01/16

dated 28.01.2016). This is due to the fact that Tau-Ken Samruk Risks Map and Risks

Register for 2016 were approved in the end of November 2015, and, consequently, risk-

oriented Annual Audit Plan 2016 (hereinafter - AAP) was elaborated and approved by the

Board in December, 2015 (protocol №14/15).

As for point 3, Mid-Term Program to improve Tau-Ken Samruk Corporate

Governance system for 2016-2018 (hereinafter – the Program) was approved by the

resolution of the Board dated December 24, 2015 (Protocol №94-15) and taken into

consideration in January, 2016 (Protocol №01/16 dated January 28, 2016). This is due to

the fact that Samruk-Kazyna JSC prolonged its presentation of Corporate Governance

Code Variance Analysis (Gap-analysis) results from August 2015 to 2-3 quarter of

2016.

As for point 4, in order to provide full reporting information on implementation of

Tau-Ken Samruk Personnel Policy after completion of the reporting period, the issue

thereof was included into the Action Plan of the Board for January 2016.

As for point 5, consideration of the issue about Key Performance Indicators for the

activities of Tau-Ken Samruk Executive Board members was included into the Action Plan

of the Board 2016. Therefore, the Board of Directors considered Draft of Key Performance

Indicators for the activities of Tau-Ken Samruk Executive Board members in January 2016

(Protocol №01/16 dated January 28, 2016).

As for point 6, consideration of Tau-Ken Samruk Corporate Accounting Policy was

included into the Action Plan of Tau-Ken Samruk Board 2016 (deadline of consideration

is May 26, 2016).

It should be noted that totally the Board of Directors considered 153 issues, out of

them 103 issues were over and above the plan.

2.5. Evaluation of the Board

The Company approved the Regulation on the Board Evaluation (protocol №3/11

dated 19.09.2011).

Thus, in 2015 based on implementation of new Code of Corporate Governance by

Samruk-Kazyna JSC (hereinafter – the Code) the Company was examined for current

compliance/non-compliance to the requirements of the new Code of Corporate

Governance, including performance of the Board and Executive Board. In April 2015, the

above Gap Analysis was considered within the meeting of the Board of the Directors.

According to the results of the analysis, the current operation practice of Tau-Ken Samruk

JSC 77% corresponds to the requirements of the Code. In order to upgrade its efficiency,

in 2015 the Company drew up a Mid-Term Program of Corporate Governance

Enhancement within Tau-Ken Samruk Group (hereinafter – the Program) approved by the

15

resolution of the Executive Board for 2016-2018 (Protocol №94-15 dated 24.12.15). The

above Program provides for amendments into Internal Documents of the Company

regarding activity and performance of the Board of Directors.

2.6. Information about Corporate Governance represented by the Board of

Directors

Main activities of the Board of the Directors for 2015 in the field of Corporate

Governance:

Consideration of the Report on Evaluation of the Effective Corporate Risks

Management.

Approval of the Action Plan 2015-2017 on Corporate Risks Management

Enhancement.

Quarterly consideration of Reports on the Action Plan 2015-2017 on Corporate

Risks Management Enhancement.

Consideration of the Gap Analysis based on the new Corporate Governance

Code.

Consideration of Tau-Ken Samruk Report on Corporate Governance Code

integrity for 2014.

Re-election of the Board Committees experts.

Approval of the Board Action Plan 2016.

Alongside with the above measures, in order to adhere to the transparency and

information disclosure principles, information about sustainability and activities of the

Company, statutory acts and information about members of the Board are available at the

corporate website www.tks.kz.

2.7. Information about Internal Control System

The Company approved a Regulation on Internal Control as amended (protocol

№05/14 dated 29.04.2014). The Regulation determines the concepts and targets of the

internal control, organization of internal control system and its functioning principles as

well as internal control procedures for the Company’s activities.

Based on recommendations of Internal Audit Service provided in 2015 as well as

for the purposes of internal control enhancement, in May 2015, the Company elaborated

and approved by the Board resolution an Action Plan on Internal Control Enhancement for

2015-2017 (hereinafter – the Plan). Based on the approved Plan, the Board of Directors

quarterly considered the Action Plan Reports on the Internal Control Enhancement for

2015-2017.

3.ACTIVITY OF THE BOARD AUDIT COMMITTEE IN 2015

3.1.Members of the Board Audit Committee

Pursuant to the Regulation on the Audit Committee approved by the Board

resolution dated 14.12.2010 (Protocol №10/10) with the amendments dated October 31,

2013 (protocol № 11/13), the Audit Committee shall consist of minimum two members,

16

including the Independent Director (-s). Chairperson of the Audit Committee shall be

elected out of the Independent Directors. According to the resolution of the Board №04/13 dated 25.04.2013 the Committee

consists of the following members:

Z.F. Arslanova – chairperson of the Audit Committee, an Independent Director;

A.A. Argyngazin – member of Audit Committee, an Independent Director.

Senior Expert of the Electric Power and Mining Assets Administration of Samruk-

Kazyna JSC Bauyrzhan Alpysbayevich Ainabekov was elected as an expert of the

Committee by resolution №07/14 dated May 28, 2014.

Power of B.A. Ainabekov was terminated by the Board resolution №01/15 dated

February 26, 2015, A.B. Sagadibekov was elected as an expert of the Audit Committee.

Thus, currently the Committee consists of the following members:

Z.F. Arslanova – chairperosn of the Audit Committee, an Independent Director;

A.A. Argyngazin – member of Audit Committee, an Independent Director;

A.B. Sagadibekov – Audit Committee expert.

3.2. The role of the Board Audit Committee

In accordance with the Regulations on the Board Audit Committee, the Committee

aims at assisting the Board of Directors on the matters of financial reporting, internal

control and risk management, external and internal audit, compliance, and other matters on

behalf of the Board of Directors.

Status, composition, functioning, powers and functions of the audit Committee, the

procedure for convening and holding of meetings, execution of decisions, as well as the

rights and responsibilities of members of the Committee are governed by Regulation on

the Audit Committee.

The Audit Committee reports to the Board of Directors of the Company and acts

within the authority granted by the Board of Directors of the Company.


In 2015, the Audit Committee held 10 meetings in presentia. The Audit Committee

had reviewed about 61 issues within its competence and provided appropriate

recommendations to the Board of Directors of the Company.

Personal participation of the Audit Committee members in the meetings during 2015

is as follows:

№ Date of the Audit Committee meeting A.A.Argyngazin Z.F.Arslanova A.B.Sagadibekov*

1. February 26, 2015

Was not an expert of the Committee

2. April 1, 2015

3. April 22, 2015 -

4. May 27, 2015 -

17

5. July 02, 2015 -

6. July 23, 2015 ₋

7. August 26, 2015 ₋

8. September 14, 2015

9. November 25, 2015 ₋

10. December 24, 2015 -

100% 100% 22%

*A.B.Sagadibekov was elected as a member of Audit Committee by the Board resolution dated February 26, 2015, №01/15


In 2015, the Audit Committee held 10 meetings in presentia. The Audit Committee

had reviewed about 61 issues.

During 2015, the Audit Committee made recommendations to the Board of

Directors of the Company, including on the following issues:

1. Consideration and approval of the Report on the implementation of the Action

Plan 2014-2015 for enhancement of Tau-Ken Samruk internal control system

based on the results of 2014.


Plan 2013-2015 for the enhancement of the Corporate Risks Management

System based on the results of 2014.

3. Preliminary approval of Tau-Ken Samruk Risks Report for the 4th quarter of

2014.

4. Preliminary approval of the additional limit in Capital Bank Kazakhstan JSC.

5. Consideration of the Report on Evaluation of Corporate Risks Management

System.

6. Consideration of the Report on the Internal Audit Service activity for 2014.

7. Consideration of the Report on the Board Audit Committee activity for 2014.

8. Approval of the annual separate and consolidated financial statement of Tau-

Ken Samruk JSC for 2014.

9. Preliminary evaluation of the Internal Audit Service and its Head activity for

2014.

10. Consideration of the Annual Audit Plan of Tau-Ken Samruk Internal Audit

Service for 2015.

11. Consideration of the Key Performance Indicators for Tau-Ken Samruk Internal

Audit Service and its Head for 2015.

12. Preliminary approval of Tau-Ken Samruk Risks Report for the 4th quarter of

2014.

13. Consideration and approval of the Report on implementation of the Action Plan

2014-2015 for enhancement of Tau-Ken Samruk internal control for the 1st

quarter of 2015.

14. Preliminary approval of additional limits in the agency banks.

18

15. Consideration of the letter about the results of consolidated financial statement

2014 within the meeting with the external auditor addressed to Tau-Ken Samruk

Management.

16. Consideration of the Report on Security of tau-Ken Samruk Informational for

2014.

17. Consideration of the Report regarding analysis of the hotline call dated

19.02.2015.

18. Preliminary approval of the additional limit in Bank of Astana JSC.


Plan 2013-2015 for the Corporate Risk Management enhancement, for the 1st

quarter of 2015.

20. Some issues on the personnel of Tau-Ken Samruk Internal Audit Service.

21. Consideration of the Gap Analysis on the new Corporate Governance Code.

22. Consideration of the Report on the Internal Audit Service activity for the 1st

quarter of 2015.

23. Consideration of Job Description for the employees of the Internal Audit

Service.

24. Consideration of the Individual Development Plans for the Internal Audit

Service employees.

25. Consideration and approval of the Draft Action Plan 2015-2017 on Corporate

Risk Management enhancement.

26. Consideration and approval of the Draft Action Plan 2015-2017 on the Internal

Control enhancement.

27. Preliminary approval of Risks Report for the 1st quarter of 2015.

28. Preliminary approval of Risk Register and Risk Map 2015.

29. Consideration of candidacy for the vacant position of the Head of the Internal

Audit Service.

30. Consideration of the amended Policy on outsourcing of the audit services.

31. Preliminary approval of the additional limits for the banks-counterparties.

32. Consideration of the Audit Report on Analysis and Evaluation of Alaigyr

Investment Project in Karaganda Region. Evaluation of internal control and risks

management efficiency during implementation of the investment project.

33. Consideration of the Report on Internal Audit Service activity for the 2nd quarter

of 2015.

34. Preliminary evaluation of Internal Audit Service and its Head activity as well as

the issue about bonus awarding to IAS based on their performance in the 2nd

quarter of 2015.


Plan 2015-2017 for Corporate Risk Management enhancement for the 2nd quarter

of 2015.

36. Preliminary approval of Risks Report for the 2nd quarter of 2015.

37. Preliminary approval of Tau-Ken Samruk’s retaining capacity for 2015.

38. Consideration and approval of the Report on the Action Plan 2015-2017 for the

Internal Control enhancement for the 2nd quarter of 2015.

39. Consideration and approval of the Draft Action Plan on the Critical (Key) Risks

Management for H2 of 2015.

19

40. Consideration of candidates for the vacant position of the Head of the Internal

Audit Service.

41. Consideration of the Annual Audit Plan 2015 of the Internal Audit Service with

due regard to amendments.

42. Consideration of the Report of handling the application submitted by EMH

Consulting and trading, Mannheim, Germany on 01.07.2015.

43. Preliminary approval of the changed additional limit Eurasian Bank JSC.

44. Consideration of the Report on Internal Audit Service activity for the 3rd quarter

of 2015.

45. Preliminary evaluation of the Internal Audit Service and its Head activity, as

well as the issue about bonus awarding to IAS based on their performance for

the 3rd quarter of 2015.

46. Consideration of Guarantee and Enhancement Program for Tau-Ken Samruk

Internal Audit Service.

47. Consideration of the Report of handling the application submitted by EMH

Consulting and trading, Mannheim, Germany on 01.07.2015.

48. Consideration and approval of the Report on the Action Plan 2015-2017 for the

Internal Control enhancement for the 3rd quarter of 2015.


Plan 2015-2017 for Corporate Risk Management enhancement for the 3rd quarter

of 2015.

50. Preliminary approval of Risks Report for the 3rd quarter of 2015.

51. Approval of Tau-Ken Samruk Mining Company JSC Rules on Risks

Management (Corporate standard) amended.

52. Approval of Tau-Ken Samruk Mining Company JSC Draft Rules on Investment

Risk Evaluation and Management.

53. Preliminary approval of Tau-Ken Samruk Risk Register and Risk Map 2016.

54. Overview of separate interim and consolidated financial statement for H1 of

2015 during the meeting with the external audit.

55. Designation of the audit company to audit consolidated and separate financial

statement of Tau-Ken Samruk for 2016, 2017, 2018 as well as the amount of

audit costs.

56. Approval of the changed additional limits in the banks-counterparties.

57. Consideration of the Report on the Internal Audit Service activity for the 3rd

quarter of 2015.

58. Preliminary approval of the Internal Audit Service and its Head activity for the

3rd quarter of 2015.

59. Approval of Tau-Ken Samruk Risk Appetite for 2016.

60. Approval of the Work Plan of Tau-Ken Samruk Board for 2016.

61. Consideration of the Annual Audit Plan 2016 of Tau-Ken Samruk Internal Audit

Service.

4. ACTIVITY OF THE BOARD NOMINATION AND REMUNERATIONS

COMMITTEE for 2015

4.1. Members of the Board Nominations and Remuneration Committee

20

The Company’s Board Nominations Committee and Remuneration Committee were

united into The Nominations and Remuneration Committee by the Board resolution dated

20.07.2011 (protocol №2/11).

In accordance with points 11 - 15 of the Regulations on the Board Nominations and

Remuneration Committee approved by the Board resolution dated April 11, 2012 (protocol

No. 6/12) with the amendments dated 28.03.13 (protocol No.03/13), the Committee shall

consist of at least three Directors, no less than two thirds of whom must be Independent

Directors. Committee members shall be elected by the majority votes of the Board

members. Chairman of the Board cannot be a member of the Committee. If necessary, the

Committee may include experts with the necessary professional knowledge to work in the

Committee. The terms of Committee members coincide with their terms of office as

Directors, but may be reviewed annually by the Board of Directors. The Committee

Chairman is elected by the Board of Directors from among Independent Directors.

In accordance with the decision of the Board of Directors of the Company No. 11/14

dated November 4, 2014, the Nominations and Remuneration Committee of Tau-Ken

Samruk Board consists of:

1) Arman Anuarbekovich Argyngazin – Independent Director, Chairman of the

Board Nominations and Remuneration Committee;

2) Zarina Fuatovna Arslanova – Independent Director, member of the Board

Nominations and Remuneration Committee;

3) Bauyrzhan Alpysbayevich Ainabekov – Senior Expert of the Mining and Electric

Power Assets of Samruk-Kazyna JSC, Expert of the Board Nominations and Remuneration

Committee.

Power of B.A. Ainabekov was terminated by the Board resolution №01/15 dated

February 26, 2015, A.B. Sagadibekov was elected as an expert of the Board Nominations

and Remuneration Committee.

Thus, currently the Committee consists of:

1) Arman Anuarbekovich Argyngazin – Independent Director, Chairman of the

Board Nominations and Remuneration Committee;

2) Zarina Fuatovna Arslanova – Independent Director, member of the Board

Nominations and Remuneration Committee;

3) Almaz Boranbaiuly Sagadibekov – Senior Expert of the Mining and Electric

Power Assets of Samruk-Kazyna JSC, Committee Expert.

4.2.The role of the Nominations and Remuneration Committee

The Committee is an Advisory body of the Company's Board of Directors on the

matters relating to personnel and motivation policy, appointments and remunerations

falling under the competence of the Board of Directors of the Company as well as control

over execution of such decisions taken by the Board of Directors of the Company.

The Committee was established to review and make recommendations to the

Board of Directors in terms of involving qualified management of the Company, including

the Board of Directors, Management Board and other positions in the Company that fall

under the scope of the Board of Directors competence as well as remunerations to the

members of the Board of Directors, Board members, and other employees of the Company

appointed by the Board of Directors of the Company.

Status, composition, schedule, competence and functions of the Committee, the

procedure for convening and holding of meetings, execution of decisions, as well as the

21

rights and responsibilities of the Committee members are determined in the Regulation on

the Board Nominations and Remuneration Committee.

4.3.Frequency of meetings and attendance by each director

Meetings of the Committee during the reporting period were held in a full body.

During the reporting period, the Board Nominations and Remuneration Committee held 8

meetings, where 24 issues were considered and recommendations on them were

provided.

Personal participation of the Board Nominations and Remuneration Committee

members in 2015 is as follows:


1.

February 26, 2015

Was not an expert of the Committee

2. April 01, 2015

3. April 22, 2015 -

4. July 02, 2015 ₋

5. July 23, 2015

₋

6. August 26, 2015 ₋

7. November 25, 2015 ₋

8. December 24, 2015 ₋

100% 100% 14%

*A.B.Sagadibekov was elected as a member of Audit Committee by the Board resolution dated February 26, 2015, №01/15


The Board Nominations and Remuneration Committee considered 24 issues and

gave recommendations on them, including:

1. Consideration of the Report on the Personnel Policy 2014-2022 implementation for

2014.

2. Appointment of the Corporate Secretary of Tau-Ken Samruk.

3. Consideration of the Activity Report of Tau-Ken Samruk Corporate Secretary for

2014.

4. Consideration of the Activity Report of the Board Nominations and Remuneration

Committee for 2014.

5. Approval of eligibility criteria for the position of Tau-Ken Samruk Chief Executive

Officer.

22

6. Consideration of M.A.Turmagambetov candidacy for the position of Tau-Ken

Samruk CEO.

7. Consideration of the Report about Corporate Secretary activity for the 1 quarter of

2015.

8. Re-election of Tau-Ken Samruk Executive Board members.

9. Executive Board members activity evaluation for 2014 based on performance.

10. Tau-Ken Samruk Managing Directors – Executive Board members activity

evaluation based on their performance in 2014.

11. Candidacy consideration for the vacant position of the Head of the Internal Audit

Service.

12. Consideration of the Report about Tau-Ken Samruk Corporate Secretary activity for

the 2nd quarter of 2015.

13. Preliminary evaluation of Tau-Ken Samruk Internal Audit Service and its Head

activity as well as consideration of the issue on bonus awarding to IAS employees

based on their performance in the 2nd quarter 2015.

14. Consideration of the Regulation on Remuneration, Bonus Awarding and Social

Payments to the Corporate Secretary of Tau-Ken Samruk.

15. Tau-Ken Samruk Executive Board members’ activity evaluation based on their

performance in H1 of 2015.

16. Approval of the Key Performance Indicators 2015 as amended for Tau-Ken Samruk

Executive Board.

17. Consideration of the candidacy for the vacant position of the Head of Tau-Ken

Samruk Internal Audit Service.

18. Preliminary evaluation of Tau-Ken Samruk Internal Audit Service and its Head

activity as well as consideration of the proposal about bonus awarding to IAS based

on their performance in the 3rd quarter of 2015.

19. Tau-Ken Samruk Executive Board members’ activity evaluation based on their

performance for the 9-month period of 2015.

20. Consideration of the Report about Tau-Ken Samruk Corporate Secretary activity for

the 3rd quarter of 2015. 21. Preliminary evaluation of Tau-Ken Samruk Internal Audit Service and its Head

activity for the 3rd quarter of 2015.

22. Approval of Tau-Ken Samruk Mining Company JSC Board Nominations and

Remuneration Committee Work Plan for 2016.

23. Рассмотрение Отчета о деятельности Корпоративного секретаря АО «Тау-Кен

Самрук» за 4 квартал 2015 года.

24. О вынесении на рассмотрение членов Совета директоров АО «Тау-Кен

Самрук» вопроса «Об утверждении оценок должностей (грейдов) членов

Правления АО «Тау-Кен Самрук».

5. ACTIVITY OF THE BOARD STRATEGIC PLANNING AND INVESTMENTS

COMMITTEE for 2015

5.1. Members of Strategic Planning and Investments Committee

Pursuant to point 63 sub-point 10) of the Company’s Charter approved by the Sole

Shareholder resolution dated January 29, 2013 (protocol №03/13), formation of the Board

23

Committees, approval of regulations on their activity as well as election of the Board

Committees members fall under the scope of the Company’s Board sole competence.

Pursuant to paragraph 7 of the Regulation on the Board Strategic Planning and

Investments Committee approved by the Board resolution dated 16.07.2014г (protocol

№09/14), members of the Committee shall be elected from among the Board members of

Tau-Ken Samruk. Committee members shall be elected by the majority votes of the Board

members. Chairman of the Board cannot be a member of the Committee. If necessary, the

Committee may include experts with the necessary professional knowledge to work in the

Committee. The terms of Committee members coincide with their terms of office as

Directors, but may be reviewed annually by the Board of Directors. The Committee

Chairman is elected by the Board of Directors from among the Independent Directors.

In accordance with the decision of the Board of Directors of the Company dated

May 28, 2014 (Protocol №07/14), November 4, 2014 (Protocol №11/14), February 26,

2015 (Protocol №01/15) the Committee consists of:

1) Zarina Fuatovna Arslanova – Independent Director, Chairperson of the Board

Strategic Planning and Investments Committee;

2) Аргингазин Арман Ануарбекович – Independent Director, Member of the

Board Strategic Planning and Investments Committee;

3) Alexey Yuryevich Repin – Deputy General Director on Samruk-Kazyna JSC

Assets Management, Committee Expert.

5.2. The role of the Strategic Planning and Investments Committee

The Committee is an Advisory body of the Board of Directors of the Company,

which is established for the purpose to develop and submit to the Board of Directors

recommendations on the issues relating to the strategic development of the Company,

including strategic goals and objectives of the Company as well as the implementation of

investment activities and other matters within the competence of the Committee.

Status, composition, schedule, competence and functions of the Committee, the

procedure for convening and holding of meetings, execution of decisions as well as the

rights and responsibilities of the Committee members are determined by the Regulations

on the Strategic Planning and Investments Committee


During the reporting period, the Strategic Planning and Investments Committee held

10 meetings in presentia, where 31 issues were considered and recommendations on them

were given.

Personal participation of the members of the Committee in the meetings held during

the reporting period is as follows:


1.

February 26, 2015

Was not an Expert of the Committee

24

2. April 1, 2015

3. April 22, 2015

4. May 27, 2015 -

5. July 02, 2015 -

6. July 23, 2015

7. August 27, 2015 -

8. September 14, 2015 -

9. November 11, 2015 -

10. December 24, 2015 -

100% 100% 33%


During 2015 the Committee gave recommendations to the Board on the following

issues:

Early termination of the Contract on exploration of titanium-magnetite ores at

Zapadny Sayak Deposit dated 31.07.2012, №4132-ТПИ.

Assignment of rights for subsoil use under the contract on exploration of gold ore

at Progress deposit in Karaganda region of the Republic of Kazakhstan to the

Charter Capital of Tau-Ken Progress LLC.

Consideration of the Draft Innovational and Technological Strategy of Tau-Ken

Samruk 2014-2022.

Consideration of the Report on Tau-Ken Samruk Strategic Planning and

Investments Committee activities for 2014.

Approval of withdrawal from the project Exploration of non-ferrous metals (except

for bauxite) in Kostanay region by alienation of subsoil use rights.

Consideration of the Report on Implementation of Tau-Ken Samruk Investment

Program for 12 months of 2014.

Consideration of the Road Map 2015-2016 to the implementation of Tau-Ken

Samruk Mining Company Sustainability Strategy 2013-2022.

Acquisition of 100% share of interest in Severny Katpar LLC by Tau-Ken Samruk

JSC.

Approval of an independent implementation of Gold Geological Exploration Project

at Progress Deposit in Karaganda Region and financing related costs, and approval

25

of the Business plan and Investment Memorandum on the Selection Stage of the

project.

Consideration of the Report on the Implementation of Tau-Ken Samruk National

Mining Company Sustainability Strategy for 2014.


Program for the 1st quarter of 2015.

Acquisition of 100% share of participation in Severny Katpar by Tau-Ken Samruk

JSC.

Approval of an independent implementation of Gold Ore Exploration Project in

South Mountainski Deposit in Karaganda Region and financing related costs, as

well as approval of the Business plan and Investment Memorandum on the Select

Stage for this project.

Approval of the Business Plan for Copper, Lead, Barite Exploration Project in

Tuyuk-Temirlik deposit in Almaty region.

Approval of the independent implementation of the 1st stage of Mining and

Processing Polymetallic Ore Project at Alaigyr deposit in Karaganda region.

Approval of an independent implementation of Gold Exploration Investment

Project at Shokpar and Gagarinskoye deposit in Zhambyl region as well as approval

of the Business Plan and Investment Memorandum for this project.

Approval of additional financing of exploration and evaluation stage of Copper,

Lead, Barite Exploration Project at Tuyuk-Temirlik deposit in Almaty region.

Independent implementation of Severny Katpar project and financing costs of the

preparatory period.

Withdrawal from further implementation of Titanium-Magnetite Ores Exploration

Project at Zapadny Sayak deposit in Karaganda region.

Approval of withdrawal from Exploration and Extraction of Gold, Copper at

Eshkeolmes deposit in Akmola region by alienation of 50% share of interest in Tau

Gold Copper JSC owned by Tau-Ken Samruk.

Approval of withdrawal from Exploration of Manganese Ore at Zhaksylyk in

Akmolinskaya region by alienation of 100% share of interest in TKS-Zhaksylyk

LLC owned by Tau-Ken Samruk JSC.

Consideration of the Report on Implementation of Construction of Refinery in

Astana city for 2014.

Consideration of the Report on Implementation of tau-Ken Samruk Investment

Program for H1 of 2015.

Waiving the implementation of certain gold and copper projects in Zhambyl and

Karaganda regions.

Monitoring of Construction of the Refinery in Astana city for 2014.

Approval of the investment project and the investment proposal – Acquisition of a

Property Complex on Silicon Production in Karaganda region.


Program for the 9-month period of 2015.

Approval of the Board Strategic Planning and Investments Committee Work Plan

for 2016.

Declaration of Tau-Ken Samruk Investment Policy null and void.

26

CONCLUSION

Thus, in 2015 the Board of Directors fully achieved targets and objectives as well

as fulfilled its functional responsibilities provisioned in the Code of the Corporate

Governance of the Company, Regulation on the Company’s Board, and the Work Plan of

the Board of Directors for 2015.

The Board of Directors is expressing its gratitude to the Management and Staff of

Samruk-Kazyna NWF JSC as well as to the Executive Board and Staff of Tau-Ken

Sammruk JSC, Head of Internal Audit Service, Corporate Secretary and Personnel of

Corporate Secretary Service for the high level of interrelation with the Company’s Board

of Directors.

Chairman of the Board is expressing his gratitude to the Board members for their

contribution and assistance in organization of work of the Board.

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