Location of Domuyo
Background
Legal framework for the tender
Geographical & Legal property registration of mining petition details
Promotional or incentive regimes
Legal, financial, technical and organizational competence required to bid for the tender
Terms of reference to draw up exploration work plans
Terms of reference for the economic proposal for the exploration period
Requirements for the feasibility study
Location of Domuyo
The area where the mine lies is some 1,760 km from the City of Buenos Aires and 560 km from the capital city of the Province of Neuquén. It is some 35 km from the district of Varvarco and its average altitude is 2,300 meters above sea level.
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Background
Discovery of Endogenous Steam at the “MAITENA” and “MARIA VICTORIA” mines.
1982 — First exploratory stage
The first surveys were carried out in the area in 1982, following the agreement signed between the Governments of Japan and Argentina, according to the information provided in the JICA report.
Exploration activity began that same year, involving the study of LANDSAT imaging covering an area of 15,000 km2 and aerial photographs covering an area of 5,000 km2 in the north of the Province of Neuquén, in addition to field surveys and the compilation and analysis of existing written material on the area.
The results of this preliminary work meant that the surface area under study could be reduced to a more specific geothermal target area of 200 km2 for research in a second phase.
1982-1983 — Second exploratory stage
The second phase of exploration took place from 1982 to 1983, beginning with topographical surveys, including geological, petrologic, geochemical, hydrological and differential studies as well as gravimetrical surveys.
The temperature of the ground was taken at a depth of one meter while the hot springs and steam fissures were researched in addition to the analysis of the surrounding rock and soil properties.
The results of the research produced the geological profile of the area, with information on the caloric flow of the structures and the circulation mechanisms of the geothermal fluids. This meant that geological models could be drawn up, with cross-sections of the caloric flow structures, the generation and circulation of the geothermal fluids and the structure of the geothermal reservoir.
1983-1984 — Third exploratory stage
Field work took place from 1983 to 1984, mostly focusing on electric and seismic studies as well as the measurement of caloric flows in twelve 100 meter-deep wells and the study of isotopes and rock properties.
Drilling began on a well planned to reach 400 meters in depth, but poor weather conditions meant that it could not be finished and drilling only reached 80 meters.
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Legal framework for the tender
The current tender is regulated by the administrative, mining and environmental legislation in force in the Province of Neuquén.
The order of hierarchic priority in the afore-mentioned legislation which regulates this call for tender and the ensuing contractual relationship is the following:
a) The Argentine Constitution.
b) Applicable international treaties.
c) The Argentine Mining Code and amending and/or complementary legislation
d) The Constitution of the Province of Neuquén.
e) Provincial Law No. 902 (Code of Mining Procedures).
f) Provincial Law No. 1875 regulatory standards and modifications.
g) Provincial Decree No. 587/89
h) Provincial Decree No. 3699/97 on the mining environment.
i) Provincial Decree No. 2010/09
Public references offered as background include mining files from the Mining Registry of First Instance of the Province of Neuquén.
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Geographical & Legal property registration of mining petition details
Ownership of the ADI-NQN under the procedures in question
1.- Details of the mining records: processed by the Agency at the Mining Authorities of First Instance of the Province of Neuquén:
Mining files processed by ADI-NQN S.E.P before the Mining Authorities of First Instance of the Province of Neuquén:
a) File No. 294/08, entitled "NEUQUÉN INVESTMENT AND PROMOTION AGENCY – PROVINCIAL STATE CORPORATION UNDER REQUEST FOR SEARCH". Legal status: Permit granted.
b) File No. 790/10 "NEUQUÉN INVESTMENT AND PROMOTION AGENCY – PROVINCIAL STATE CORPORATION UNDER MANIFESTATION OF DISCOVERY OF ENDOGENOUS STEAM AT THE "MAITENA" MINE. Legal status: Recorded.
c) File No. 791/10 "NEUQUÉN INVESTMENT AND PROMOTION AGENCY – PROVINCIAL STATE CORPORATION UNDER MANIFESTATION OF DISCOVERY OF ENDOGENOUS STEAM AT THE "MARIA VICTORIA" MINE. Legal status: Recorded.
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Promotional or incentive regimes
The successful bidder for the exploration/exploitation contract may make a request to the competent bodies to receive the promotional benefits and incentives foreseen in the national and provincial legislation in force.
a) Resolution No. 59/2005 of the Argentine Mining Department; (in spanish)
b) National Law No. 26.190; (in spanish)
c) Provincial Law No. 2.596; (in spanish)
Provincial Law No. 378; (in spanish)
Provincial Law No. 2672. (in spanish)
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Legal, financial, technical and organizational competence required to bid for the tender
Those wishing to submit bids for this call for tender must comply with the requirement to demonstrate their experience and the legal, financial, technical and organizational capabilities required to carry out the work and make the investments proposed.
Prospective bidders must therefore provide proof of:
a) Legal competence permitting them to sign a contract
b) Experience in the field of mining exploration and exploitation.
c) Organization, availability of qualified personnel, machinery, equipment and the administrative, financial and technical capabilities required to fulfill their investment commitments as indicated in the proposed work plan.
d) Financial capabilities, as evidenced by data provided by the self-same bidders and information supplied by banks, contracting parties, suppliers and clients of renown from the local or international market.
If the bid involves a contract between a business partnership agreement, each business must be constituted and organized as a legal entity or company with the appropriate binding legal capabilities to comply with the requirements of the call for tender.
Foreign companies or groups of companies including foreign companies must provide the appropriate legal and fiscal documentation from the country or countries where they are based and where their capabilities to operate commercially are certified as of the date of the presentation of the bid.
In this case, all the documentation presented must be translated into Spanish. The documents issued by foreign authorities must be legalized by the appropriate consular authorities with the corresponding seal, or the pertinent authentication documentation according to Argentine legislation and the international agreements in force with the country of origin.
In the case of a contract between a business partnership agreement, the degree of participation of each company involved shall be indicated and one of same will be appointed the leader of the consortium.
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Terms of reference to draw up exploration work plans
The work plan for exploration may not be for a period of less than two (2) years nor over four (4) years from the date of the award of the contract. The work plan must provide details on the timetable for the work to be carried out as well as the investments to be made. The plan should also include the following tasks in the mining areas as a bare minimum:
a) Survey and study of all the existing background information.
b) Procurement and study of state-of-the-art satellite imaging of the area.
c) Survey of the state of the access roads and definition of the work required to secure these and lay them, as well as define the most appropriate logistics for this task.
d) Environmental Impact Studies according to the requirements stipulated in the Mining Code and current environmental legislation.
e) Taking samples from previously-tested areas for the purposes of comparison with earlier surveys.
f) Chemical analysis and classification of the samples.
g) Definition, location and drilling of shallow wells to measure temperature. The different locations and methodologies employed will be in accordance with international safety and environmental protection standards, taking into account the technical standards indicated in Article 10 of these documents as-and-when relevant.
h) Evaluation of new geophysical exploration procedures to be applied in the mining area.
i) Formulation of a conceptual model of the geothermal reservoir.
j) Drilling of at least one deep exploration well. This well must be drilled according to international safety and environmental protection standards, complying with the technical specifications detailed in Annex V of the present call for tender as-and-when relevant.
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Terms of reference for the economic proposal for the exploration period
The economic proposal must of necessity foresee the obligation to pay the Agency for the rights to use its mining properties in cash, net of any expenses, costs, taxes or deductions, in US dollar bills within the period of exploration proposed.
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Requirements for the feasibility study
The feasibility study must take into account the following features:
a) The physicochemical characteristics of the resources discovered and their conditions for exploitation.
b) The conceptual model of the geothermal field to be exploited.
c) The number of wells to be drilled, both for production and reinjection, and their main characteristics.
d) The availability of geothermal resources required to guarantee their sustainable exploitation with a view to generating electrical energy on a commercial scale.
e) Comply with current environmental and mining legislation in the Province of Neuquén and the technical standards detailed in these terms of reference.
f) The electrical energy produced must be transported to the points of access to the provincial or national electricity grid where it may be commercialized on the wholesale electricity market.
g) The technical, economic and financial viability of the enterprise proposed.
h) The monthly payment of a sum of money to the Agency in return for the right to use its mining properties in cash, net of any expenses, costs, taxes or deductions, of no less than 5% of the total of the energy sales and power invoiced in the month immediately preceding the month of production.
i) Details of the investments proposed and the organizational structure necessary to carry out the exploitation and other subsequent operations involved in this task.
j) The detail of the investments to be made in safety and environmental protection.
Provision of all the necessary background information to support the performance of tests and studies required to prove the technical feasibility of exploiting the field.
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