Article 1 These Regulations are formulated, in accordance with the Mineral resources Law of the people¡¯s Republic of China, in an effort to strengthen the administration of mineral resources exploration, safeguard the lawful rights and interests of exploration licensees, maintain the exploration order, and promote the wise development of the mining industry.

Article 2 These Regulations shall be observed in exploring for mineral resources within the territory of People¡¯s Republic of China and other sea areas under its jurisdiction.

Article 3 In determining the mineral resources areas for exploration, the State shall adopt a Unified Block Registration System, based on a grid pattern in which the basic unit block is longitude 1¡¯X latitude 1¡¯. The largest area to be explored for each exploration project is as follows: 1)10 basic unit blocks for mineral water; 2)40basic unit blocks for metal, non-metal, and radio-active mineral; 3)200 basic unit blocks for geo-thermal resources, coal, and vapor mineral; and 4) 2500 basic unit blocks for petroleum and gas.

Article 4 Prior to exploring for mineral resources, each exploration project shall be examined, approved, registered, and licensed by the department in charge of geology and mineral resources under the State Council. This includes: 1)Those mineral resources that straddle two or more administrative areas of different provinces, autonomous regions and municipalities directly under the Central Government; 2) Those mineral resources in the territorial sea or other marine areas under China¡¯s jurisdiction; 3) Those mineral resources explored for by foreign investment; and 4) Those mineral resources listed in the Appendix attached to these Regulations. Each project exploring petroleum and /or gas shall be examined and approved by the organization designed by the State Council, and registered and licensed by the department in charge of geology and mineral resources under the State Council. Prior to exploring for mineral resources, each exploration project shall be examined, approved, registered, and licensed by the department under the people¡¯s government of provinces, autonomous regions and municipalities directly under the Central Government. The exploration license shall be recorded with the department in charge of geology and mineral resources under the State Council within 10 days, starting from the date of issuance of such license. This includes: 1)the mineral resources beyond the prescriptions of paragraphs 1 and 2 of this Article; 2)the mineral resources for which the examination and approval is authorized by the department in charge of geology and mineral resources under the State Council. The examination and approval shall be conducted by the department in charge of geology and mineral resources under the people¡¯s government of provinces, autonomous regions and municipalities directly under the Central Government.

Article 5 The exploration investor shall be the exploration rights applicant. If the investor is the State, the exploration unit entrusted by the State shall be the exploration rights applicant.

Article 6 In applying for exploration rights, the applicant shall present the following materials to the licensing authorities: 1) an application form for registration and a drawing or map showing the scope of the blocks for which the applicant is applying; 2) a copy of a certificate validating the qualifications of the exploration unit; 3) an exploration working plan and an exploration contract or documents of proof indicating that the exploration unit and project are entrusted by the State; 4) an implementation proposal for the exploration and relevant appendix; 5) documents of proof showing the source of the funds for the exploration project; and 6) materials otherwise specified by the department in charge of geology and mineral resources under the State Council. If applying for a license to explore for petroleum and /or gas, the applicant shall also present the document of the State Council approving the establishment of a petroleum company or the document permitting the exploration for petroleum and /or gas, and a Legal person Certificate of the exploration unit.

Article 7 In order to receive a license for on-going exploration and operation of petroleum and /or gas, the applicant shall present the following materials to the licensing authorities: 1) an application form for registration and d drawing or map showing the mining area for on-going exploration and operation; 2) a project proposal approved by the department in charge of planning under the State Council; 3) materials of proof showing the necessity of on-going exploration and operation; 4) a mineral reserves report used for the purpose of on-going exploration and operation and approved by the mineral reserves approving agency under the State Council, and 5) a utilization plan for on-going exploration and operation.

Article 8 The licensing authorities shall consider each application on a first come ,first serve basis, and either grant or deny the application within 40 days of receipt. Each applicant shall be notified as to the decision. If these is an application for exploration for petroleum and /or gas, the licensing authorities shall also make public announcement with regard to the application or make application available for public inquiring. The licensing authorities shall give priority to any exploration project listed in the first category of the National geological Exploration Plan. The detailed stipulations shall be formulated by the department in charge of geology and mineral resources under the State Council. If it is necessary for the exploration-rights applicant to amend or to add to the materials provided in Article 6 of these Regulations, the licensing authorities shall notify the exploration-rights applicant that they shall amend or add to the materials within the prescribed time limit. If the exploration project is approved, the exploration-rights applicant shall, within 30 days from the date of the receipt of the notice, pay a fee for the use of the exploration rights (hereafter referred to as the exploration fee) in accordance with the provisions of Article 12 of these Regulations. If the Central Government has already invested in the designated exploration area, the applicant shall be assessed a reimbursement fee for exploration right to be paid in accordance with the provisions of Article 13 of these Regulation. Upon approval, the applicant is obligated to complete the exploration registration procedures and obtain the exploration license before becoming an exploration licensee. If the exploration project is not approved, the licensing authorities shall give an exploration to the applicant at the time of notification.

Article 9 No unit or individual may enter into or carry out exploration or mining activities in areas already licensed to other exploration or mining projects in accordance with law. If a dispute occurs between exploration licensees and mining concessioners, concerning the rights to exploration or mining areas, such a dispute shall be settled through consultation by the parties involved. If the consultation fails, such a dispute shall be adjudicated by the licensing authorities of the higher level concerned.

Article 10 generally an exploration license is valid for no more than 3 years. However, the exploration license for petroleum and /or gas is valid for up 7 years. If these is a need to extend the time for exploration, within 30 days prior to the expiration of the exploration license, the exploration licensee shall file for an extension of the license with the licensing authorities. Extension of the exploration license shall not exceed two years each time. If an exploration licensee fails to apply for an extension within the designated time limit, the exploration license shall be forfeited. Typically, a mining license for on-going exploration and operation for petroleum and/or gas is valid for no more than 15 years. Once the mineral reserves have been verified, the potential concessioner is obligated to apply for the actual mining license. Article 11 within 10 days from the issuance of the exploration license, the licensing authorities shall notify the department responsible for geology and mineral resources under the people¡¯s government at the county level where the proposed exploration project is located. The following information shall be conveyed: 1)the name of the newly registered and licensed exploration project; 2)the name of the exploration licensee; 3)the scope of the blocks; and 4)verification of the exploration license. The licensing authorities shall periodically give public notice announcing the newly licensed exploration areas.

Article 12 The State shall adopt a unified system in which the exploration rights shall be paid for by the licensee with an exploration fee. These exploration fee shall be calculated and paid on an annual basis. The standard for the exploration fee is applicable to all licensees and reads as follows: __100 RMB yuan per square kilometer per year for the first three years; __100 RMB yuan per square kilometer shall be added per year starting from the fourth year. However, the highest amount shall not exceed 500 RBM yuan per square kilometer per year.

Article 13 If anyone applies for exploration rights to any blocks containing mineral deposits discovered by the State, at the State¡¯s expense, the applicant shall pay a reimbursement fee for exploration right based on the State¡¯s prior investment, in addition to the exploration fee. The reimbursement fee for exploration right may be paid in full or in installments in compliance with the state provisions. The reimbursement fee for exploration right will be based on costs incurred by the State as appraised by the organizations designated by the department of geology and mineral resources under the State Council, jointly with the department in charge of state-owned assets under the State Council. The results of the appraisal shall be confirmed by the department in charge of geology and mineral resources under the State Council.

Article 14 The exploration fee and the reimbursement fee for exploration right shall be collected by the licensing authorities and delivered to the State budget administration. The detailed specifications for managing the funds mentioned above shall be formulated by the department in charge of geology and mineral resources under the State Council, jointly with the department in charge of finance under the State Council and the department in charge of planning under the State Council.

Article 15 Under following circumstances, the exploration fee or reimbursement fee for exploration right may be reduced or exempted: 1)minerals whose exploration is encouraged by the State; 2)areas where exploration is encouraged by the State; 3)other situations jointly specified by the department in charge of geology and mineral resources under the State Council and the department in charge of finance under the State Council. If a project falls within these guideline , the licensee may apply for a reduction or exemption of their exploration fee and /or reimbursement fee for exploration right. Such applications shall be examined and approved by the licensing authorities in accordance with the provisions governing reductions and exemptions of the exploration fee and reimbursement fee for exploration right, as formulated by the State Council, jointly with the department in charge of finance under the State Council.

Article 16 Exploration rights may also be obtained through public bidding. The licensing authorities may select bidding blocks, make public invitation for bids, establish and announce the bidding requirements and establish deadlines for the bids, in accordance with the limits of authorities stipulated in Article 4 of these Regulations. However, the bidding blocks available to foreign investors shall be determined by the department in charge of geology and mineral resources under the State Council. The licensing authorities shall organize the evaluation of bids and select the best offer. Upon acceptance of a bid, the successful bidder shall pay the exploration fee and reimbursement fee for exploration right in compliance with the provisions of Articles 12 and 13 of these Regulations, complete the registration procedures, and obtain the exploration license before becoming the exploration licensee, whereupon they shall fulfill the obligations stipulated in the bid documents.

Article 17 The exploration licensee shall , from the date of issue of the exploration license, meet a minimum expenditure for exploration according to the following schedule: 1)2000 RMB yuan per square kilometer for the first year of exploration; 2)5000 RMB yuan per square kilometer for the second year of exploration; and 3)10000 RMB yuan per square kilometer each year thereafter, starting with the third year of exploration. If the exploration licensee¡¯s expenditure for any given year exceeds the minimum stipulated for that year, the surplus may be applied to the expenditure for the following year. If the exploration work is interrupted due to force majeure such as natural disaster or other unforeseen circumstances, the exploration licensee may submit a report requesting that the minimum expenditure be prorated accordingly. This report shall be submitted to the licensing authorities within 30 days from the date on which the exploration work is resumed. The licensing authorities shall give official and written reply to the exploration licensee within 30 days of receipt of the application report.

Article 18 The exploration licensee shall begin work within 6 months of the date of issue of the exploration license. When starting the exploration work, the exploration licensee shall repot to the department responsible for geology and mineral resources under the people¡¯s government at the county level where the exploration project is located. They shall also notify the licensing authorities as to the details of the commencement of their work.

Article 19 Within the term of a valid exploration license, an exploration licensee may apply for permission to mine mineral deposits only of complex type which the State has permitted the exploration licensee to mine . After approval is granted by the licensing authorities, the registration procedures shall be completed.

Article 20 If the exploration licensee needs to conduct experimental mining while exploring for fluid minerals such as petroleum and /or gas, an application for experimental mining shall be presented to the licensing authorities by the exploration licensee. The experimental mining may be conducted for 1 year upon approval. If there is a need to extend the time of experimental mining, an actual mining license shall be obtained.

Article 21 After locating a deposit worth developing, the exploration licensee may, within the term of a valid exploration license, discontinue the expenditure for exploration and be relieved of the obligation to meet a minimum expenditure requirement upon approval by the licensing authorities. At this point, the exploration licensee may apply to reserve the exploration rights to the ore bodies worth developing. This shall be done within 30 days prior to the above rules under the following situations: 1) the need to defer the present development of the deposit found is in the public interest; 2) the present technical support is not available. This reservation period shall not exceed 2 years. If there is a need to exceed this period of reservation, the applicant may apply 2 times for an extension; each extension shall not exceed 2 years. During this period when the minimum exploration requirements have been discontinued and rights to the ore bodies have been reserved, the licensee shall continue to pay the exploration fee according to the provisions of these Regulations. The exploration license shall terminate at the close of the reservation period.

Article 22 Within the term of a valid exploration license, an exploration licensee shall apply to modify the registration with the licensing authorities for the following reasons: 1)to enlarge or reduce the scope of exploration blocks; 2)to alter the target of exploration; 3)to transfer the exploration rights approved in accordance with law; or 4)to change the name and /or address of an exploration licensee.

Article 23 even if the registration for the exploration rights is extended or modified, the exploration fee and the minimum expenditure requirement shall continue as originally set forth.

Article 24 The following situations require further attention from the exploration licensee: 1)the licensee fails to renew the registration or fails to apply to reserve the exploration rights; 2)the licensee applies for mining rights; 3)the licensee rescinds the exploration project for some reason. If the licensee falls into any of the above categories within the period of a valid license, he shall submit to the licensing authorities a report on the completion or termination of the exploration project. Forms for reporting the input of capital and relevant documents of proof shall be submitted to the licensing authorities. After the input of capital has been verified by the licensing authorities, the procedures for terminating the exploration license shall be carried out. If the original holder of a terminated license wishes to reapply to explore for the same block, he shall wait for 90 days before he is entitled to reapply.

Article 25 If the licensing authorities need to investigate the progress of the exploration or any issues concerning the input of exploration capital, the exploration licensee shall report swiftly and accurately with relevant materials. Concealing relevant information or making false declarations shall constitute a violation of these Regulations. The investigation shall not be refused. At the request of the exploration licensee, the licensing authorities shall keep confidential any materials or information deemed sensitive by the exploration licensee, including material submitted for the registration application as well as materials concerning exploration results and the financial report.

Article 26 If anyone violates the provisions set forth in these Regulations, conducts any exploration without first obtaining an exploration license , or conducts exploration beyond the approved limits of the exploration blocks, the department responsible for geology and mineral resources under the people¡¯s government at or above the county level shall be responsible for ordering the concerned parties to stop the illegal activities ,giving warning and may concurrently imposing a fine of up to 100000 RMB yuan.

Article 27 Anyone who violates the provisions set forth in these Regulations by conducting, without approval, any on-going exploration and operation for petroleum and /or gas, mining mineral resources of the complex type, or experimental mining of any mineral resources, shall be ordered to stop the illegal activities; the illegal gains shall be confiscated, and a concurrent fine of up to 100000 RMB yuan may be imposed. These matters shall be handled by the department responsible for geology and mineral resources under the people¡¯s government at or above the county level in accordance with the limits of authorities prescribed by the department in charge of geology and mineral resources under the State Council.

Article 28 Anyone who prints exploration license without authorization, counterfeits exploration license, or infringes in any way upon any existing exploration licenses shall be in violation of the provisions of these Regulations. Any illegal gains shall be confiscated and a concurrent fine of up to 100000 RMB yuan may be imposed by the department responsible for geology and mineral resources under the people¡¯s government at or above the county level. If the case constitutes a crime, the personnel concerned shall be investigated for criminal responsibility according to law. Article 29 the following behaviors shall constitute violation of the provisions of these Regulations: 1)neglecting to put on record or report any circumstances relevant to these Regulations, refusing to accept official examination or supervision, or employing deception or trickery; 2)failing to meet the minimum exploration expenditure requirement; or 3)fails to begin construction on the exploration project within 6 months from the date of issue of the exploration license or halting the work-in-progress for 6 consecutive months without valid reason. These violations shall be ordered to be corrected within a prescribed time limit by the department responsible for geology and mineral resources under the people¡¯s government at or above the county level in accordance with the limits of authorities prescribed by the department in charge of geology and mineral resources under the State Council. If the parties concerned fail to make the necessary corrections within the prescribed time limit, a fine of up to 50000 RMB yuan shall be imposed. Should the licensee become obstreperous, the exploration license shall be revoked by the department that originally issued the license.

Article 30 Any exploration licensee who violates the provisions set forth in these Regulations by failing to comply with the procedures for modifying and/or canceling the registration shall be ordered by the licensing authorities to comply with these procedures within a prescribed time limit. If the procedures have not been completed within the prescribed time limit, the exploration license shall be revoked by the department that originally issued the license.

Article 31 Any licensee who violates the provisions set forth in these Regulations by failing to pay the required fees at the required time shall be ordered by the licensing authorities to pay an overdue fine, in addition to the amount due. The overdue fine shall be paid within a prescribed time limit and shall be calculated at 0.2% per day on the amount in arrears, counting from the date on which the fee becomes overdue. If the fees required have not been paid within the prescribed time limit, the exploration license shall be revoked by the department that originally issued the license.

Article 32 Any licensee who violates the provisions set forth in these Regulations by exploring for petroleum and /or gas shall be given administrative penalty by the department in charge of geology and mineral resources under the State Council in accordance with the relevant stipulations.

Article 33 If an exploration license is revoked, the responsible exploration licensee shall not re-apply for these or any other exploration rights for 6 months from the date on which the exploration license was revoked.

Article 34 Any personnel with licensing authorities who act illegally, or abuse the power for personal gains, or neglect their duties shall be investigated. If the behavior constitutes a crime, they shall be held for criminal responsibility according to law. If the case does not constitute a crime, the personnel concerned shall be given administrative penalties. Article 35 Exploration licenses shall be printed exclusively by the department in charge of geology and mineral resources under the State Council. The form of the application for registration, the application to modify a registration, the application for terminating a registration shall be exclusively formulated by the department in charge of geology and mineral resources under the State Council.

Article 36 Every licensee shall pay a registration fee in compliance with provisions. The standard for collecting these fees and specifications for managing the use of these fees shall be determined by the department in charge of price under the State Council, jointly with the department in charge of geology and mineral resources under the State Council and the department in charge of finance under the State Council.

Article 37 These Regulations shall be applied to any foreign investment in exploring for mineral resources. If there are special stipulations prescribed in other laws or administrative regulations governing foreign investment in exploring for mineral resources, such stipulations shall be given priority.

Article 38 If a Chinese exploration licensee wishes to include a foreign investor in a mineral resources exploration project, the Chinese partner shall be responsible for submitting the materials that describe the cooperative effort, such as the scope of the exploration block, the minerals involved, etc. The original licensing authorities shall review the proposed cooperative project, make any restrictions or suggestions and authorize the cooperative agreement, before any contract between the cooperating parties shall be deemed valid. After the agreement has been validated, the Chinese partner shall put the agreement on file with the original licensing authorities.

Article 39 Any exploration license obtained before the implementation of these Regulations shall be replaced by the new exploration license as exclusively organized by the department in charge of geology and mineral resources under the State Council. The exploration fee and the minimum exploration expenditure shall be rolled back to the first year, and calculated and collected accordingly.

Article 40 Anyone who conducts a regional geological survey, a regional mineral geological survey , or a regional geological survey involving hydro-geology, engineering geology or environmental geology shall notify the licensing authorities as to their whereabouts and nature of their activities. This information shall be kept on file.

Article 41 The revision of the Appendix attached to these Regulations shall be submitted to the State Council by the department in charge of geology and mineral resources under the State Council. After the approval of the revised Appendix is granted by the state Council, the department in charge of geology and mineral resources under the State Council shall be responsible for giving public notice regarding the revision.

Article 42 These Regulations shall be implemented from the date of promulgation and shall replace the following publications, as of that date: the Interim measures on registration for Mineral Exploration promulgated by the State Council on April 29, 1987 and the Interim Measures on Registration for the Exploration and Mining of Petroleum and gas approved by the State Council on 16 December, 1987 and promulgated by the ministry of Petroleum Industry on the same date. Appendix: The List of Minerals That fall under the jurisdiction of the Department in Charge of Geology and Mineral Resources Under the State Council 1.coal 2.petroleum 3.oil shale 4.natural gas 5.carbon dioxide 6.coal-bed methane 7.geothermal resources 8.radioactive minerals 9.gold 10.silver 11.platinum 12.manganese 13.chromium 14.cobalt 15.iron 16.copper 17.lead 18.zinc 19.bauxite 20.nickel 21.tungsten 22.tin 23.antimony 24.molybdenum 25.rare earth 26.phosphate 27.potash 28.sulfur 29.strontium 30.diamond 31.niobium 32.tantalum 33.asbestos 34.mineral water.