Investigation Cycle

To complete a pre-agreed transaction, our company needs to conduct a comprehensive audit and assessment of the field. A comprehensive analysis and assessment of the enterprise will be carried out by specialists of our company, and an audit company will be invited as an independent third party to evaluate the project. The time frame for the audit can range from several months to one year.

Our working procedure is based on 3 basic principles of collection: equal rights and obligations of the parties; equal risks and benefits; mutual trust of the parties. The parties, on the basis of the above principles and trust, all decisions on the conduct of the company's audit working procedures and their changes are made jointly.

Zhaojin Company sends an official letter with a list of preliminary necessary documents for conducting a comprehensive audit, and the other party provides all the necessary documents for this request; "Zhaojin", in turn, conducts an analysis and preliminary study of the materials received, after which it determines the interest in promoting a particular project, draws up a work program and the main purpose of the audit. During the preliminary analysis and study of materials, the parties conduct joint negotiations to resolve and consult current issues.

Preliminary audit of the company on the ground. Familiarization with the activities of the enterprise and consulting activities on current issues that have arisen. Negotiating the structure of the deal.

Usually, the process of conducting an on-site audit takes about 1 month.

As part of a preliminary audit, Zhaojin also conducts an on-site audit of finance, tax reports, legal issues, field development technology, product sales, environmental protection and other areas of reporting related to the company's activities for a preliminary assessment of the project. This on-site audit process takes 1 to 3 months.

If during the audit on the first step of the procedure "Preliminary study and analysis of project materials" a complete understanding of the project was achieved, then the above two audit procedures can be combined into one.

The parties must approve the internal agreement on the audit (Term Sheet), which specifies all the necessary conditions and requirements for this work process. Usually, when approving an internal agreement, Zhaojin indicates the stages of the transaction, the estimated cost, the cycle and time of the audit, the rights and obligations of the parties when concluding a transaction, etc. As part of a preliminary or final comprehensive audit, our company may involve an audit company as a third independent parties to evaluate the project, and banks for joint cooperation and investment.

Since the time of the "final due diligence" is influenced by many factors, in particular the work related to mining consulting, usually the time of the "final due diligence" lasts from 3 to 6 months.

The procedure for agreeing the structure of the transaction, approving the assessed value, obtaining approval from the head structure of Zhaojin and the government department for control of external investments, signing by the Parties an agreement on the purchase of SPA shares （Share Purchase Agreement） and the SHA (Shareholders Agreement).

During the period of the transaction and registration of approvals, the Parties also work together on the procedures for checking the antimonopoly service of the FAS RF.

Consideration time the approval of the Chinese Foreign Investment Control Department and the inspection procedure of the Federal Antimonopoly Service (FAS) of Russia can be carried out simultaneously, and it usually takes about 3 months.

Transfer procedure and settlement of the transaction.

For projects for which there is a preliminary analysis and are not controlled by the management of external investments, the time of the "final audit" of the enterprise can be adjusted in the opposite direction to speed up investment decisions. That is: after the completion of the "final audit" on financial, tax reporting and legal issues, SPA and SHA agreements can be signed, and the "final audit" on the mining and technical part of the project can be completed before the "final project assessment". The settlement of the transaction, therefore, will take place after the final price has been approved.

If the process of the transaction is carried out in this way, then the parties should approach the agreement with greater care in order to avoid the risks of the transaction. In turn, Zhaojin promises to try to avoid possible points of risk in the agreement that would otherwise contradict the original intentions of joint investments in the development of mineral deposits.