CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSL License Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
Mongolian Mining Increases Price Range of H.K. IPO
Sept. 27 (Bloomberg) -- Mongolian Mining Corp., the country’s biggest privately owned coking coal producer, boosted the amount it’s seeking from an initial share sale in Hong Kong as demand for stock rises in a market trading at the highest level in more than eight months.
The company and its shareholders are targeting as much as HK$5.44 billion ($701 million) from the sale of 719.4 million shares at HK$6.48 to HK$7.56 apiece, according to terms for the sale. The amount is 3 percent above the maximum HK$5.28 billion sought under the previous price range.
Mongolian Mining’s IPO will be the biggest on record by a company from the landlocked nation in central Asia, according to data compiled by Bloomberg going back to 1999. The stock being sold represents about 20 percent of the company, according to initial terms for the transaction, which would give Mongolian Mining an estimated market capitalization of $3.5 billion.
“Receptions should be positive for such stocks as coking coal is scarce compared with thermal coal,” said Lawrence Lau, an analyst of Bank of China (Hong Kong) Ltd. “The market sentiment has improved with people taking on more risk.”
Mongolian Mining is selling shares in Hong Kong where the Hang Seng Index has surged 9.1 percent from a six-week low on Aug. 31 amid rising confidence in the global economy. The gauge gained 1.1 percent as of 2:41 p.m. today, set to close at the highest level since Jan. 11.
Citigroup Inc. and JPMorgan Chase & Co. are managing Mongolian Mining’s IPO. The shares are being priced at 11.6 times to 13.6 times the company’s forecast 2011 profit and 7.6 to 8.9 times its estimated 2012 earnings, according to the term sheet obtained today.
Mongolian Mining is based in the Tavan Tolgoi area, south of Ulaanbaatar and about 240 kilometers (149 miles) from the border with China. Tavan Tolgoi holds about 6 billion metric tons of coal in the deserts of southern Mongolia, making it one of the world’s largest unexploited reserves of the fuel.
Previously, Mongolian Mining and its investors planned to sell shares at HK$6.29 to HK$7.34 apiece, according to last week’s term sheet.
Link to previously sent related Reuters article
Miner unearths potential
(Mogi: Interview with Odjargal (OJ), Chairman of MCS and Battsengel, CEO of MMC (ER))
September 27 (TheStandard.com.hk) Mongolian Mining Corp, which is seeking a Hong Kong listing, aims to boost its profit margin by expanding production and completing infrastructure projects.
The firm, which owns the largest private coking coal mine in Mongolia, is likely to be the first firm based there to float shares in Hong Kong.
It is investing about US$1.3 billion (HK$10.14 billion) to raise production capacity four-fold to 15 million tonnes by the end of 2013.
It is expected to produce 3.8 million tonnes of coking coal this year and seven million tonnes next year.
MMC's key asset is the UHG mine deposit in South Gobi. The mine in the Tavan Tolgoi coal formation had an estimated 286 million tonnes of reserves at the end of May.
"Production started last year and we have already made a profit," chairman Odjargal Jambaljamts told The Standard.
MMC's profit in the year to December 31 was US$10.27 million, while in the four months to April it was US$5.01 million.
The mine produced 1.8 million tonnes of coking coal last year.
But the profit margin fell to 35.8 percent as of April 30 from 42.3 percent last year, as seasonal factors led to a drop in first-quarter sales.
"We expect margin to improve on capacity expansion and higher prices for washed coking coal," Jambaljamts said.
It will start delivering washed coking coal in the first quarter next year. Unwashed coking coal is sold at a discount of about 35 percent to washed coking coal.
The weighted average selling price of MMCs coking coal is US$76.64 per tonne. MMC also plans to expand into other metals including coal, iron ore and other metals.
"We will focus on expansion by acquisitions in Mongolia first. The country is very rich in resources. We are looking to buy the best assets near China," the chairman said.
The firm plans to sell 719.4 million shares priced between HK$6.29 and HK$7.34 in the Hong Kong bourse to raise up to HK$5.28 billion.
Half the proceeds will be invested in mining infrastructure, including roads and railways, power plants and water supply facilities.
Forty percent of the proceeds will be earmarked for acquisitions.
MMC exports all its coking coal to mainland steel makers including Baosteel Group Corp and Jiangsu Shagang Group, as well as coal seller Winsway Coking Coal which is also aiming to raise funds in Hong Kong.
"We have established a customer base for long-term agreement of five to 10 years," Jambaljamts said.
Buyers have agreed to purchase the coal produced until 2012, but the price will be set according to the market benchmark during delivery.
"The demand is there and we are able to meet this demand," said chief executive Battsengel Gotov.
"The market price always depends on demand and supply. In the next five to 10 years we will see steel production continue to grow in China. So we are optimistic about the price outlook."
As for competition in Mongolia, Gotov said MMCs strength is the location of its mine.
"We are very close to China, next to the world's biggest coking coal consumer."
"We will consider tapping Japan, Korea and India in the future, but China will be the most important market," he added.
Miners in Mongolian land rush
KELL Nielsen has looked at between 80 and 100 mineral projects in the past eight weeks. That's how it is in Mongolia these days.
September 27 (The Australian) Nielsen, who heads Voyager Resources (VOR), knows the race is on between mining companies to lock up ground in Mongolia, which might be best described as the Next Big Thing in the resources world.
Voyager is not a stock that has commanded all that much interest -- or support, for that matter, with its last sale at just 1.4c.
But its first pass drilling at the Daltiin Ovor project turned up some interesting intersections, including 3m at 50.59 grams/tonne gold, 4 per cent copper and 31.3g/t silver, starting just 6m below surface. Nielsen is planning to do more testing of the high-grade areas, but using a diamond drill rather than a reverse circulation one. The latter is fine for resource statements under ASX rules, but the Mongolians require diamond drilling results when applications are made for licences.
But back to those 80-plus projects. Voyager is casting its net widely, excluding only ferrous metals and coal. Its focus so far has been copper-gold, but it is looking at base metals projects, too. And especially tin, with that metal now coming on to many investor radar screens.
Last year, Nielsen thought he would have a two-year window for picking up projects in Mongolia, but the land rush has just picked up significantly in recent months. He'll be looking to bed down deals as soon as possible.
And we hear there's mounting excitement at Aspire Mining (AKM) regarding the present drilling at its Ovoot coking coal project as the company gets near its initial JORC resource statement. It has to be big, mainly to justify building a railway line of about 500km to the remote location -- although the economics of that would be helped if other large deposits en route, including magnetite and phosphate, were also to be developed.
By the way, for those who still think of Mongolia as a basket case, the International Monetary Fund reported this month that the country had witnessed a dramatic turnaround in the past 18 months. In early 2009, growth had been stalling, international reserves were rapidly being depleted, there was insufficient financing to meet the spending needs of the government, and the banking system was under pressure. The economy was on the verge of collapse.
But look at Mongolia now, with growth for 2010 expected to come in at 8 per cent and, as the IMF summed it up, "international reserves are at an all-time high, public finances are on a sound footing, and the banking system has been strengthened".
…
(CPS Securities was Lead Manager and Underwriter in Voyager’s past fundraisings. VOR shares closed 4c or 28.57% today at A$0.018c today)
Petro Matad Breaks All-Time High Once More
September 27 (Mogi) Petro Matad (AIM:MATD) shares hit 192.78 pences today during early trading, an all-time high. Share trading at 188.4p, 18:19 Ulaanbaatar time.
Link to stock chart
Mongolia's new model (interview with PM Batbold)
September 26 (Financial Post) Ulaanbaatar, Mongolia -- Outside Mongolia’s Government Palace, a massive statue of Genghis Khan looms over the city’s central square. It is a symbol of the days in the 13th and 14th centuries when the Mongol Empire conquered its neighbours and became one of the most powerful in the history of the world.
Inside the palace today, Prime Minister Sukhbaatar Batbold is dealing with a much more modest but equally imposing challenge: raising the standard of living for his tiny population of three million people.
Unlike many of his predecessors, he is turning to the capital markets, and partners that include Canada, to do it.
In a wide-ranging interview in his office, Mr. Batbold talked about the need to introduce more tools of a market economy to his country, including a truly international stock exchange. He also sees Canada, which is the second-biggest investor in Mongolia after China, as a crucial player in the country’s development.
“I think Canada is a good example, and could even be a model for Mongolia. There are a lot of natural similarities between our two countries,” he said, pointing out that both are cold, sparsely populated and have extremely powerful neighbours on their borders.
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Mongolia has done almost everything possible to open its doors to outside investment in recent years, but Mr. Batbold is aware that a lot more needs to be done.
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Mongolia has had a stock exchange since 1991, and while it lists many domestic companies, liquidity is extremely poor.
The stock exchange is open for less than two hours a day and it does not have the standards needed to attract any international companies.
“It doesn’t really operate as a capital market,” Mr. Batbold said.
By the end of the year, he hopes to open a proper international exchange managed by a leading global player. (While the choice has not been made, the London Stock Exchange Group PLC is the frontrunner.)
…
Mr. Batbold wants foreign players with Mongolian business interests to list as well, but that could be tougher: They remain wary of the lack of international standards and the general lack of demand from the Mongolian market.
But as least one Canadian company is eager to take the plunge.
SouthGobi Resources Ltd., the coal-mining spinoff of Vancouver-based Ivanhoe Mines Ltd., hopes to be the first international company with a Mongolian listing. It has already hired an armada of lawyers to help the government deal with the impediments to foreign listings, from the proper defining of a security to putting in limitations on directors’ liabilities.
“The government says it wants [foreign companies] to list on the Mongolian stock exchange. Everyone else says ‘that’s stupid, there’s no rules for foreign companies, blah blah blah,’ ” said Alex Molyneux, SouthGobi’s chief executive.
“But we want to list there because we want the Mongolian public to participate in this creation of value. And it’s much easier for them if they have a market at home for the stock.”
While it may seem far-fetched to investors today, Mr. Molyneux envisions a day when Mongolia is a source of capital along the lines of Dubai, with a powerful sovereign wealth fund and massive resource-related revenue as it realizes the wealth from its mineral deposits.
He wants to get in early.
“Maybe we can only do US$10-million [on the Mongolian exchange] at first. So what? In Kazakhstan, the stock market increased 1,000% in size in the space of about six years. It’s going to happen in Mongolia,” he said.
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“We see that Canada has made great success in many areas, and we think it’s interesting to learn from the Canadian experience. Free trade, technology transfer, mining, agriculture and infrastructure, are all very important,” he said.
“We need to make a more sophisticated institutionalized society here, so we need to learn from your experience.”
Winsway Says IPO Proceeds Expected to Be HK$3.65 Bln
Sept. 26 (Bloomberg) -- Winsway Coking Coal Holdings Ltd., the supplier of the steel-making fuel from Mongolia to China, said net proceeds from its initial public offering in Hong Kong may be about HK$3.65 billion ($470 million).
The company will initially offer 990 million shares at between HK$3.25 and HK$4.50 apiece, Winsway said in a statement today. Trading in the stock is expected to start on Oct. 11, it said.
China, the world’s biggest steelmaking nation, last year increased imports of coking coal fivefold to a record as the government closed unsafe mines. Winsway plans to spend about 72 percent of the proceeds of the share sale on rail links and other infrastructure to improve the transport of coking coal from Mongolia to China.
Winsway exported about 3.3 million tons of coal into China last year from Mongolia out of total coal exports of about 6 million tons, according to the company’s share sale prospectus. China imported a total of about 34.4 million tons of coking coal last year, the document said.
Net income will be at least 764 million yuan ($114 million) for the year ending Dec. 31, up from 454 million yuan last year, the company said in the share-sale document.
The coal supplier is looking to buy mining assets in Mongolia as part of its joint venture with the U.S. coal producer Peabody Energy Corp., the prospectus said.
Winsway’s customers include more than 60 of China’s largest steel and coke producers, including Hebei Iron & Steel Co., according to the statement.
Mongolian Mining Corp., another coking coal supplier, is also organizing an IPO in Hong Kong and plans to raise as much as HK$5.28 billion.
A Good Moment to Open a Mongolian Bourse
September 26 (Reuters Breaking News on NYT) The Mongol conqueror Genghis Khan may have been globalization’s most ardent early supporter. But Mongolia has taken its time embracing international capital markets. Now this “mortar economy” (the country is wedged between Russia and China, two of the BRIC countries) may be set for rapid growth.
Mongolia is on the verge of opening a new national stock exchange. The market will finally plug the landlocked nation into the grid of global finance, facilitating privatizations, investment and the flow of capital to would-be entrepreneurs among its three million people.
And the money almost certainly will flow. Renaissance Capital reckons Mongolia’s economy, while small at around $6 billion, will be the world’s fastest growing over the next five years, increasing to $23 billion by 2013. Handling that growth will be a big challenge.
Luckily for Mongolia, it doesn’t, for example, have to reinvent the wheel with its bourse. The London Stock Exchange is the front-runner among four contenders to run the new Ulan Bator exchange. In theory, that will allow the nation to vault overnight from markets not so different from the Naran Tuul bazaar right to electronic trading.
That should help the government start its privatization program. It is committed to handing a tenth of all proceeds to its citizenry, almost a third of which is still nomadic. Developing a modern exchange means Mongolians can receive tradeable securities in state companies with market prices. That should avoid the missteps of Eastern European nations that handed out vouchers without obvious value that were quickly accumulated by today’s oligarchs. There are also plenty of case studies that may help Mongolia manage cash inflows and their potential impact on its currency, the tugrug, and its economy.
Perhaps more by luck than judgment, Mongolia’s tardy return to the global scene may also be well timed. It is estimated to have the world’s second-biggest reserves of copper and uranium, and the 11th biggest stock of coal.
Put it all together, and some eight centuries after its last big international venture, Mongolia stands to benefit from the convergence of three booms: in China, in commodities and in emerging markets.
STOCK EXCHANGE WEEKLY REVIEW
September 27, Ulaanbaatar, Mongolia, /MONTSAME/ Five stock trades were held at Mongolia's Stock Exchange (MSE) during the week from September 20 to September 24. In overall, 696.7 million shares of 42 JSCs were sold totaling 320.7 million MNT trade.
Index top-20 was 12055.15 points decreasing by 1407.39 units, or 10.4%, against the week earlier. The total market capitalization was set at MNT 77.8 billion decreasing by MNT 108.7 billion%.
Shares of "Tushig Uul" JSC (31.6%), "Chandmani tal" (14.9%) and "Monnab" (14.7%) were increased, but, "Sharyn gol" (24.5%), "Tavan tolgoi" (17.8%), and "Talkh chikher" (13.5%) JSCs were decreased at the MSE. A total of 42 shares were sold. Of them, rate of 11 shares were increased, rate of 23 shares were decreased, and rate of eight shares were stable.
Shares of "Hermes center" JSC (261.5 thousand units), "Remikon" (154.7 thousand units) and "Khokh gan" (145.1 thousand units) JSCs were actively traded in terms of trading volume, but in terms of trading value "Tavan tolgoi" (MNT 70.5 million), "Sharyn gol" (MNT 62.5 million) and "APU" (MNT 33.0 million).
Exchange Rates
Link to Mongol Bank FX site
Australia
| Close: Mongolia Related ASX Listed Companies, September 27, 2010 | ||||||||
| 0.875 | -0.025 | 0.870 | 0.875 | 0.900 | 0.900 | 0.875 | 206,559 | |
| 0.018 | 0.004 | 0.017 | 0.018 | 0.017 | 0.018 | 0.017 | 21,231,608 | |
| 0.190 | 0.000 | 0.190 | 0.195 | 0.190 | 0.190 | 0.190 | 10,525 | |
| 0.140 | 0.005 | 0.135 | 0.140 | 0.135 | 0.140 | 0.130 | 1,379,539 | |
| 0.165 | 0.000 | 0.160 | 0.170 | 0.165 | 0.165 | 0.165 | 43,000 | |
| 34.170 | 1.350 | 34.110 | 34.170 | 33.030 | 34.270 | 33.020 | 1,189,644 | |
| 77.150 | 1.550 | 77.100 | 77.150 | 76.880 | 77.180 | 76.800 | 2,724,157 | |
| 39.660 | 0.620 | 39.660 | 39.670 | 39.560 | 39.760 | 39.500 | 13,449,066 | |
An * next to the security code indicates there has been an announcement today relating to that security. Click on the * to view the list of today's announcements.
Source: asx.com.au
Shares jump to five-month high
September 27 (AAP) Close, Australian stocks rallied today, touching a five-month high as banks surged and and miners raced ahead on higher metal prices.
At the close of trade, the benchmark S&P/ASX200 Index was 73.4 points higher, or 1.6 per cent, at 4675.3, while the broader All Ordinaries Index had risen 70.6 points, or 1.5 per cent, to 4722.1.
All sectors posted gains apart from telecommunications and gold. Financials jumped 1.9 per cent and materials gained 1.4 per cent.
need2know:
- Asian shares rise on US recovery hopes
- The dollar hovers just below 96 US cents
- Gold trades little changed at $US1298
- Oil inches up towards $US77
- Dow futures are up 194 points at 10,800
The resources-heavy local market moved in tandem with Asian markets, which rose to their highest levels in more than two years, but it received an additional boost from copper hitting five-month highs and gold notching up a record $US1300 per ounce.
Markets were buoyed by renewed optimism on the US economy, with Wall Street notching up a fourth straight week of gains.
The good news lifted the dollar, which hit a fresh two-year high of 96.24 US cents this morning.
CMC Markets market analyst David Taylor said recent data on orders for durable goods in the United States had been encouraging.
‘‘The manufacturing sector has been the monkey on the back of the US for quite some time now,’’ Mr Taylor said. ‘‘The market is now getting the view that the US is not heading into a double-dip recession, which is being priced into the market.
‘‘We benefit from that because we’re reliant upon China, and that’s dependent upon US growth, too.
…
In the resources sector, global miner BHP Billiton found 62 cents at $39.66, and Rio Tinto advanced $1.55 to $77.15.
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The top-traded stock by volume was gold and copper explorer Zambezi Resources, with 54.2 million shares worth $979,480 changing hands. Zambezi Resources was down 1.2 cents at 1.8 cents.
Preliminary national turnover was 2.2 billion shares worth $5.03 billion, with 715 stocks up, 363 down and 364 unchanged.
Global
Asian Stocks Rise to Five-Month High on U.S. Capital Goods Data
Sept. 27 (Bloomberg) -- Asian stocks gained, driving the MSCI Asia Pacific Index to a five-month high, as a bigger-than- estimated increase in U.S. capital-goods orders bolstered optimism exports to the world’s largest economy will rise.
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The MSCI Asia Pacific Index climbed 1.2 percent to 127.04 as of 5:20 p.m. in Tokyo, set to close at the highest level since April 27, as the U.S. capital-goods report fueled expectations a global economic recovery will strengthen. The gauge has climbed 9 percent this month, putting it on course for its biggest monthly advance since May 2009 and the steepest quarterly gain in a year.
“Rising capital investments in the U.S. is a positive sign that shows companies expect demand to increase in the next few months,” said Ng Soo Nam, Singapore-based chief investment officer at Nikko Asset Management Co., which has $123 billion in assets globally. “The stock rally may continue given that valuations are fair, but we have to watch whether the improvements in economic data are sustainable.”
Japan’s Nikkei 225 Stock Average climbed 1.4 percent. The government is considering a stimulus package worth as much as 4.6 trillion yen ($54.6 billion), a government official said.
Capital Goods
China’s Shanghai Composite Index and Australia’s S&P/ASX 200 Index rose at least 1.4 percent today. Hong Kong’s Hang Seng Index increased 1 percent, while South Korea’s Kospi index advanced 0.8 percent.
Futures on the Standard & Poor’s 500 Index were little changed. The index surged 2.1 percent on Sept. 24 to the highest level since May 13 following the capital-goods report and better-than-estimated earnings at Nike Inc.
Orders for U.S. capital equipment rebounded 4.1 percent in August from a 5.3 percent decline in July, figures from the Commerce Department showed on Sept. 24 in Washington. The median forecasts of 11 economists surveyed by Bloomberg was for an increase of 3 percent.
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Metals Prices
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Material producers accounted for 13 percent of the MSCI Asia Pacific Index’s advance. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum climbed 0.7 percent on Sept. 24 to its highest level since April.
Korea Zinc, which also produces precious metals, climbed 5.4 percent to 300,000 won in Seoul, as silver reached a 30-year high and gold traded close to a record.
BHP Billiton Ltd., the world’s largest mining company, rose 1.6 percent to A$39.66 and Equinox Minerals Ltd., which owns Africa’s biggest copper mine, jumped 5.7 percent to A$5.71 in Sydney.
Cnooc Ltd., China’s largest offshore oil producer, advanced 2.1 percent to HK$14.86 as crude-oil futures rose 1.7 percent to $76.49 a barrel in New York on Sept. 24, the biggest increase in two weeks. Mitsubishi Corp., Japan’s largest commodities trader, gained 3.2 percent to 1,977 yen in Tokyo.
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Global Growth
The MSCI Asia Pacific Index tumbled as much as 16 percent from this year’s high on April 15 to its 2010 low on May 25 amid concern Europe’s debt crisis and Chinese steps to curb property- price inflation will derail global growth. The gauge has since climbed 17 percent, including a 13 percent rally since June 30 that has put the index on course for its biggest quarterly advance in a year.
Stocks have rallied as U.S. and Chinese economic reports buoyed confidence in the global economy, while Japanese intervention to weaken the yen boosted the outlook for companies reliant on overseas revenue. Government figures today showed a deeper slowdown than forecast in Japan’s exports,
The stimulus package that Japan is considering will be funded by tax revenue and left over funds from the 2009 budget, a government official said on condition of anonymity.
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"Mogi" Munkhdul Badral
Executive Director
CPS International
Email: mogi@cpsinternational.mn
Mobile: +976-99996779
CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSL License Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
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