Comprehensive enhancement of mining and metallurgic industry in Kazakhstan

RISK MANAGEMENT AND INTERNAL CONTROL

RISK MANAGEMENT AND INTERNAL CONTORL

Risk management system

Risk Management is an integral part of Tau-Ken Samruk JSC (hereinafter – the Company) activities and is aimed at identification, assessment and monitoring of all significant risks and taking measures to reduce the level of risks that may adversely affect the value and reputation of the Company and its subsidiaries.

In its operational activities, the Company encounters various risks, which in varying degree affect the achievement of the planned indicators, targets, decision-making effectiveness and the Company’s entire performance. Thus, the Company realizes the importance of risk management as a key component of the corporate governance system aimed at timely identification and taking measures to mitigate the risks that may negatively affect its financial and business activities and reputation.

The Company’s risk management procedure is carried out in accordance with the internal Risk Management Documentation approved by the Company’s Board of Directors. Risk Management Policy defines the risk management structure, main components of the risk management process, ensures a systematic and consistent approach to risk management process in the Company and its subsidiaries.

Key risk factors

Key factors affecting the exposure of the Company’s Group to risks:

·Low exploration or underexploration of the deposit;

·Low quality and insufficient analysis of geological exploration data;

·Drawbacks in designing;

·Natural disasters;

·Low quality of raw materials;

·High degree of currency rate volatility caused by transition to the floating exchange rate, etc.

Internal control system

Internal control is determined as the process realized by the representatives of the internal control system aimed to achieve goals in three key areas:

·Operational activities;

·Preparation of financial statement;

·Compliance with the regulatory and legislation requirements.

The Company’s internal control system is an integral part of the Company’s corporate governance system and covers all management levels, all internal processes and operations.

The Company’s internal control organization enables urgent respond to risks, control of the main and auxiliary business processes and daily operations alongside immediate awareness of the relevant management about any significant gaps and areas for improvement. Reliable and efficient functioning of the internal control system requires the involvement and continuous interaction of the Company’s officers and employees at all levels.

The Company’s internal control activity is carried out in accordance with the Company’s Internal Control Regulation that defines the concept, goals and objectives of the internal control system, principles of its functioning, key areas and key components of the internal control system, internal control of the Company’s activities, the competence and responsibilities of the internal control representatives in charge of the Company’s internal control procedures and its evaluation.

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