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Close: Mongolia Related ASX Listed Companies, February 24, 2010
Bankers pitch for Mongolian dollar bond
A debut Mongolian sovereign bond is back on the agenda as the country looks to raise funds for capital investment projects.
February 24 (FinanceAsia) Senior bank officials have been feverishly pitching for Mongolia's inaugural dollar bond issue in recent weeks. As bankers have visited Ulan Bator, the capital city of Mongolia, to pitch for the IPO of state-owned coal mining company Erdenes Tavan Tolgoi, they have also been working to bring a bond deal back to the table.
A sovereign bond out of Mongolia has long been rumoured, but the country has not been successful in bringing it to market. Part of the reason for that, say analysts, is that there is simply no urgency to raise funds.
"A Mongolian sovereign bond has been on the agenda for several years. But it hasn't come to market because there has been no urgency. Mongolia doesn't really need commercial external borrowings. It still has [access to] sufficient multi-lateral and bilateral concessionary lending at low rates and with long maturities. Another reason why it has not come to market is changes in government, which tends to delay an initiative like this, when there are no compelling economic reasons," said Agost Benard, a Singapore-based credit analyst at Standard & Poor's covering Mongolia.
"The main reason why they want to tap the market now is to raise funds for capital investment projects for which concessional funding is not available, as well as to establish a benchmark to [help] Mongolian companies access the capital markets. The bond proceeds may potentially be used for the construction of downstream processing facilities for minerals. This is part of the vision to add value to the basic mineral commodity before exporting it," he added.
Mongolia is rated BB- by Standard & Poor's. It is rated B1 by Moody's and B by Fitch.
In June last year, Batbayar Balgan, the director general at the Financial & Economic Policy Department in Mongolia's finance ministry, told participants at a FinanceAsia conference that discussions were underway to issue its maiden dollar bond. The size talked about at that time was up to $1.2 billion, but since then the expectations have been for a less ambitious deal size.
Bankers are not expecting a debut bond from Mongolia to launch until late this year. If it materialises, it would offer investors a chance to diversify their Asian sovereign bond portfolio and it would be expected to attract interest from US investors.
"A bond from Mongolia will be driven by US emerging market funds. It could fly as investors want to diversify their holdings, but it really depends on the rate and sentiment at that time," said one Hong Kong-based investor.
A successful deal would offer a reference point for Mongolian companies planning to issue dollar bonds. So far, the only dollar bonds out of Mongolia are from the Trade and Development Bank of Mongolia, which has tapped the dollar market three times.
Of late, Mongolia has stepped up its efforts to raise its profile internationally. The Mongolian prime minister, Sukhbaatar Batbold, was in Singapore late last week to drum up support for foreign direct investment in Mongolia and to foster political ties.
Capital raising through DRs (e.g. Mongolian companies) will continue to grow, J.P. Morgan says
China and India will continue to dominate DR issuance from Asia, but issuers from new markets like Vietnam and Mongolia are also likely to emerge, the bank says in a report.
February 23 (FinanceAsia) As quarterly earnings continue to impress and company guidance reveals strong growth prospects this year, capital raising through depositary receipts (DRs) can be expected to grow at a steady pace, J.P. Morgan says in a report due to be released today. And, as in the past few years, Asia-Pacific is expected to be the most active region for such capital-raising with China and India dominating the new issuance.
Mongolia, meanwhile, is sitting on a vast quantity of currently untapped mineral wealth, and with global demand for mineral commodities growing quickly, its medium- to long-term economic future is promising, J.P. Morgan argues. To fund the development of these resources, Mongolian companies are expected to turn to the international capital markets, but rather than look all the way to the US or Europe, they are expected to make use of the possibility to list DRs in Hong Kong, which will allow them to access Hong Kong retail investors, as well as international institutions.
"Much of Mongolia's economic focus is on China, and as a result, Hong Kong will likely benefit in the coming years as a destination for Mongolian enterprises seeking to better align their growth strategy with China. As such, it follows that Hong Kong's HDR platform will benefit from this alignment," said Tse.
Mongolia shortlists 4 banks for massive coal IPO
February 24 (Reuters) - Mongolia took a step closer to the initial public offering of the world's largest untapped coking coal deposit on Thursday, shortlisting four global banks to manage the country's biggest ever share sale.
Mining Minister Dashdorj Zorigt told Reuters the sale of shares in state-owned company Erdenes-Tavan Tolgoi would happen no later than first half of 2012. BNP Paribas (BNPP.PA), Deutsche Bank (DBKGn.DE), Goldman Sachs (GS.N) and Macquarie Group (MQG.AX) have been shortlised to manage the IPO, Erdenes-Tavan Tolgoi said.
The size of the IPO is still unclear with bankers estimating it will be in the range of $1.5-$5 billion.
The share sale has attracted huge interest from global banks to win the coveted mandate, with some 150 bankers converging on the frozen capital of Ulan Bator earlier this month to pitch for the deal.
"I think it shows the project is quite competitive and that Mongolia as a mining destination is becoming more and more attractive," said Zorigt, when asked about the intense interest from banks.
The Mongolian government plans to distribute shares in the company free to all citizens and another chunk to Mongolian corporations, officials, bankers and analysts working on the transaction say.
15 MILLION ADDITIONAL TONNES
Tavan Tolgoi is the world's largest untapped deposit of coking coal, used by steelmakers, with estimated reserves of 6 billion tons.
Mongolia sits on vast quantities of untapped mineral deposits, which analysts say could help it become one of the world's fastest growing economies in the next decade.
Erdenes, the state-owned company in charge of the eastern block of Tavan Tolgoi, plans to keep 50 percent of the project, and will distribute 10 percent of shares to local people, 10 percent to local enterprises and 30 percent in the form of the IPO.
The separate western section is subject to contract bids and 15 global companies having bid for the right to mine the coal, Zorigt said.
No timeframe was given for making a decision on the western section development but Zorigt said willingness to invest in infrastructure would be a crucial point.
The government said earlier this week it will hold a tender in April to construct a 1,000 km (620 mile) railway line connecting Tavan Tolgoi to Russia's east coast to avoid a reliance on selling to China, the world's biggest consumer, which is just 250 km away.
Resource-rich Mongolia lingered in isolation for 70 years as a Soviet satellite state, serving as a sleepy buffer zone between its giant neighbors, Russia and China.
Now the democratic government, in power since the early 1990s, is trying to pull its 3 million citizens out of poverty by exploiting its largely untapped mineral wealth.
Prime Minister Sukhbaatar Batbold has said development of the mine could boost the economy by 15 percent by 2015 and double per capita income.
The first phase of Tavan Tolgoi will add 15 million tons of coal per year to Mongolia's total production, eventually rising to 30 million tons, said Zorigt.
The country, expected by some analysts to be one of the fastest growing economies of the next decade, is poised to overtake Australia to become China's largest coking coal supplier this year.
It exported 16.6 million tons of coal to China in 2010, up nearly three-fold from the preceding year and just 2.5 million tons in 2005.
"It will take Mongolia to the next level as a coal producer," said Zorigt. "We will become one of the price setting producers in the region."
Mongolia Picks Four Banks for Coal IPO – WSJ, February 24
Hot coal puts risky Mongolia back on the map
February 22 (Reuters Breakingviews) HONG KONG — For a land of nomadic herdsmen, Mongolia is surprisingly savvy at finance. The Central Asian state is about to hire banks to float a stake in its giant Tavan Tolgoi coal field. With coal prices high, the government in Ulan Bator should be able to pay off its debts and cash in without selling a stake to the mega-miners, as is customary. Investors, meanwhile, will have to weigh some unusual risks.
At some 6 billion tonnes, Tavan Tolgoi is one of the world's largest high-quality untapped coal beds. China, the world's hungriest consumer, is just 250 km (160 miles) away by land. At the mooted valuation of $15 billion, the mine is worth around 1.5 times Mongolia's 2009 GDP. Raising a third of that amount would pay off Mongolia's external debts twice over.
Miners like Rio Tinto, Xstrata and BHP Billiton would love a piece of Tavan Tolgoi, but they are unlikely to get the chance. Rather than sell a big stake to a strategic partner, as is customary, Ulan Bator plans to float 30 percent of Erdenes, the coal field's holding company, in Hong Kong or London some time in 2012. Miners may be allowed in only as contractors or licencees, not owners.
With spot coking coal prices some 50 percent higher than a year ago, the timing looks wise. Mongolia would diversify its risks, too, by ensuring miners don't get a big equity stake to use as a bully pulpit. Australia learned that lesson when it decided to crank up mining taxes in 2010. The likes of Rio Tinto simply put billions of dollars of investment on ice until the terms had been watered down.
For the miners, getting frozen out is probably a disappointment they can live with. Politicians make risky partners, especially if their priorities aren't profits but national finances, which in Mongolia's case are generally thin. Add in persistent corruption, export delays and terrible infrastructure, and Mongolia comes with sizable risks. BHP gave back the right to mine Tavan Tolgoi in the nineties, when prices were lower.
The risk is that Ulan Bator sees institutional investors as an easier sell. If commodity prices stay red hot, they might well be. Would-be shareholders should then consider whether a "Mongolia discount" might be in order.
Mongolia PM: any Chinalco role in Oyu Tolgoi would need govt nod
CANBERRA Feb 23 (Reuters) - Mongolian Prime Minister Sukhbaatar Batbold said that if Chinese state-owned Chinalco wanted to take a stake in the giant Oyu Tolgoi copper project, its role would have to be approved by the Mongolian government.
Batbold said Chinese investment in Mongolia had been welcome, but he said any change to the Oyu Tolgoi partnership agreement between Mongolia, Rio Tinto and Ivanhoe Mines would have to go through government approval procedures.
Mongolia PM: Oyu Tolgoi changes need govt approval, Marketwatch, February 23
Miner Ivanplats Plans IPO (, Ivanhoe assessing future options, i.e. auctioning OT)
February 24 (WSJ) Ivanhoe Nickel & Platinum Ltd., the mining company known as Ivanplats, plans to go public this year in an offering that could raise between $750 million and $1 billion, people familiar with the matter said.
In recent weeks, Ivanplats has been interviewing various banks for the initial public offering of stock, which could value the company at more than $5 billion, although the current valuation could change based on copper prices, political stability and the development of actual mines, these people said. Robert Friedland, the chief executive of Ivanhoe Mines Ltd., is a controlling shareholder of Ivanplats, with a stake of about 30%. Institutional investors own the rest of Ivanplats. Ivanhoe, which owns 8% of Ivanplats, is also considering its own sale or breakup.
The potential public offering of Ivanplats comes as Mr. Friedland's other company, Ivanhoe, assesses its future options with the help of Citigroup, the people familiar with the matter said.
One plan would involve spinning off all its assets, except for a stake in Mongolia's Oyu Tolgoi mine, to shareholders, followed by an auction for the Mongolian asset, they said. Ivanhoe owns 66% of Oyu Tolgoi, one of the world's largest untapped gold and copper mines; the Mongolian government owns the rest. In this scenario, Ivanhoe's assets in Kazakhstan, Australia, Indonesia and the Philippines would become a separate company led by Mr. Friedland, these people said.
Another plan would involve Ivanhoe selling its stakes, except for Oyu Tolgoi, to individual buyers and then running an auction for the remainder of the company. Its Kazakhstan gold mine and Ivanhoe Australia are valued upward of $1 billion each.
A third option is to run an auction for the entire company, although that could be difficult to do given that Anglo-Australian miner Rio Tinto owns 42.1% of Ivanhoe and has the right to raise its stake to 49%. Mr. Friedland owns 15.5% of Ivanhoe.
In 2006, Mr. Friedland was lauded in the mining industry for securing Rio as a partner to develop the Oyu Tolgoi mine. But the project's future had been up in the air amid a dispute between Ivanhoe and Rio over Ivanhoe's desire to raise equity to fund the project. After the two sides settled their spat in December, Ivanhoe on Jan. 27 said that it had raised almost $1.2 billion in a rights offering. The funding will help finance construction of the gold and copper mines in southern Mongolia. While Rio doesn't have a direct stake in Oyu Tolgoi, it effectively has operating control of it because of its position in Ivanhoe.
The talks about the future of Ivanhoe and its Mongolian mines are still under way and a final decision has yet to be made, the people familiar with the matter said. That could happen over the next few months, and before January 2012, when a standstill agreement between Rio and Ivanhoe ends.
Friedland's Ivanplats looking at IPO –source – Reuters, February 23
Khan Resources Says Govt. Of Mongolia Appoints Arbitrator For Intl. Arbitration
February 22 (RTTNews) - Khan Resources Inc. (KRI.TO) said that the Government of Mongolia appointed its arbitrator for the international arbitration proceeding commenced in January, 2011. The two appointed arbitrators would now select a third arbitrator to preside over the arbitration tribunal. The procedure is expected to take upwards of 30 to 45 days.
As announced on January 10, 2011, Khan formally commenced an international arbitration action against the Government of Mongolia for its expropriatory and unlawful treatment of Khan in relation to the Dornod uranium deposit located in northeastern Mongolia. The claim seeks over $200 million in compensation for losses and damages.
Voyager Resources Half Year Financial Report, December 31, 2010
February 24 – Voyager Resources Ltd. (ASX:VOR)
Centerra Gold Reports 2010 Results; Fourth Quarter Earnings $153 million or $0.65 per share
TORONTO, ONTARIO--(Marketwire - Feb. 24, 2011) - Centerra Gold Inc. (TSX:CG)
To view the 2010 Management's Discussion and Analysis and the Audited Financial Statements and Notes for the year-ended December 31, 2010, please visit the following link:
Centerra Gold Inc. (TSX:CG) today reported fourth quarter 2010 net earnings of $153.1 million or $0.65 per common share based on revenues of $323.3 million, compared to net earnings of $140.0 million or $0.60 per common share on revenues of $323.9 million in the same quarter of 2009.
Centerra's consolidated gold production for the fourth quarter of 2010 totalled 249,866 ounces at a total cash cost of $311 per ounce compared to 296,048 ounces at a total cash cost of $276 per ounce in the corresponding quarter of 2009. During the fourth quarter 2010, production was lower at both Boroo and Kumtor compared to the fourth quarter of 2009.
2010 Fourth Quarter Highlights
· Proven and probable mineral reserves increased to 8.2 million contained ounces of gold as a result of reserve increases at Kumtor and Gatsuurt.
· Kumtor's open pit mine life extended to 2021.
· Fourth quarter revenue increased 180% over the third quarter to $323 million.
· Cash provided by operations of $137 million or $0.58 per share in the fourth quarter.
· Entered into a $150 million three-year revolving credit facility with the European Bank for Reconstruction and Development.
North Asia Resources (00061) sees further loss in 2H10
February 23 (ETNet) North Asia Resources (00061) said it expects to record a further loss for the second half of the financial year ended 31 December 2010 as compared to the first half.
Such expected loss is mainly attributable to an impairment on the goodwill from acquisition in the previous year, as a result of the decrease in the business enterprise value of a subsidiary of North Asia Resources, which was caused by the prolonged production schedule due to the additional time needed to obtain necessary approval of water use from the local government for the required scale of production.
The audited consolidated final results of the Group for the year ended 31 December 2010 are expected to be announced before the end of March 2011. (HL)
Link to NAR press release, February 22
AVIAREPS appointed by MIAT Mongolian Airlines
February 22 (ftnnews.com) AVIAREPS announced its appointment by MIAT Mongolian Airlines to manage the airline's sales, marketing and ticketing activities in ten European markets.
With immediate effect, the world's leading airline and tourism management company will act as General Sales Agent (GSA) in Germany, Switzerland, Austria, the Netherlands, Belgium, Scandinavia, United Kingdom, France, Italy and Spain.
MIAT is famous for its friendly Asian hospitality and is the only airline to offer a direct flight from Central Europe to Ulan Bator (Mongolia). European passengers can currently avail of the airline's two weekly flights every Thursday and Sunday from Berlin-Tegel (Germany), connecting via Moscow to Ulan Bator. During the high season in July and August 2011, the Mongolian national carrier will further increase its service offer to four flights per week on this route.
Due to an existing interline agreement with Lufthansa, European MIAT passengers benefit from a convenient check through option for their baggage on connecting flights from/to Berlin-Tegel. Furthermore, MIAT provides numerous onward connections via Ulan Bator to 6th freedom destinations such as Beijing (China), Tokyo-Narita (Japan) and Incheon International Airport (South Korea).
Founded in 1956, MIAT operates from its base Chinggis Khaan International Airport and serves a total of six international destinations in Europe and Asia. The airlines' fleet exclusively consists of aircraft from the leading plane manufacturer Boeing, where it operates B737-800 New Generation aircraft.
Mongolia seeks Australian support for mining boom
February 23 (ABC News) Mongolia may yet become the world's biggest mining country.
At the forefront of a potential economic boom is a development of the massive gold and copper mine of Oyu Tolgoi, in the country's south-east.
Mongolia's attempt to develop its vast mineral wealth of uranium, gold, coal and copper featured in discussions in Canberra today between Prime Minister Julia Gillard and her Mongolian counterpart, Sukhbaatar Batbold.
Ms Gillard officially welcomed Mr Batbold at Parliament House and four bilateral agreements were signed in areas of education, training, cabinet processes and scientific transfer.
"This is a remarkable day in the history of Australian diplomacy. The first visit by a Mongolian prime minister in the history of our Commonwealth," Ms Gillard said.
Ms Gillard remarked on Mongolia's strong prospects for the future.
"Your country has some of the world's richest mineral deposits and we know that Mongolia seeks partners in foreign investment and technical expertise to help realise that potential. Australia has such expertise and we offer it as friends," she said.
Austrade will open a permanent office in Ulan Bator to support the growing number of Australian companies operating there. Australia is also boosting aid to Mongolia.
Mr Batbold discussed their joint contributions to the ISAF force in Afghanistan and other regional security issues with key Cabinet members.
Australia And Mongolia Agree To Foster Scientific Exchange
February 23 (Voxy.co.nz) In a ceremony attended by Prime Minister Julia Gillard, a formal agreement was signed today for greater understanding and sharing of ideas between scientists in Australia and Mongolia.
The President of the Australian Academy of Science, Suzanne Cory and the President of the Mongolian Academy of Sciences, Batbold Enkhtuvshin, met at Parliament House in Canberra to sign the Memorandum of Understanding between the two Academies.
The Australian and Mongolian Academies first established a relationship through their work on the InterAcademy Panel, the global network through which senior scientists share knowledge to increase scientific understanding of critical global issues.
'The MoU formalises scientific linkages between our countries and in doing so will help Australian and Mongolian scientists connect with one another,' Professor Cory said.
'It allows us to strengthen ties with Mongolian scientists by exchanging ideas and reviewing collaborative opportunities in scientific fields of common interests, such as geology, water resources and agriculture.'
The Mongolian Academy of Sciences joins 18 other international science organisations which have formal relationships with the Australian Academy of Science.
'Increasingly, scientific progress and break-throughs are brought about by collaborative international research,' Professor Cory said.
'Agreements such as these also help the Australian Academy of Science to provide broad based advice to the Federal Government.'
Mongolia: A speculator's fantasy
It's boom time in Mongolia, which had a record $1.4 billion in foreign direct investment in 2010, thanks to its copper, gold, and coal -- and neighbor China's insatiable hunger for the commodities.
February 23 (CNN Fortune) Ever heard of the tugrik? It's the official currency of Mongolia -- the land of Genghis Khan where, over the past few years, foreign investors have flocked to the sparsely population country in search of riches.
It was also the world's best-performing tender in 2010.
Mongolia's vast minerals deposits, particularly copper, gold and coal, have helped drive unprecedented demand for the tugrik. The currency finished the year 15% higher against the U.S. dollar, outperforming the world's currencies and coming close only to the South African rand, which appreciated 14%, and the Australian dollar that rose by 13%.
"When I came to Mongolia seven years ago they had just discovered all these deposits -- the buzz was that Mongolia was literally sitting on a gold mine," says Christopher de Gruben, who in 2004 founded Make A Difference Corporation Services, a Mongolia-based firm that specializes in renovating dated Soviet Union-style homes and corporate relocation home searches. Like many investors, Gruben is hopeful, if not simply in awe, by the country's vast mining potential and "the boom about to happen."
Indeed, the tugrik has fast become the best thing no one's ever heard of. Most major Wall Street banks don't follow the tugrik, and few economists or analysts track the landlocked country bordered by Russia to the North and China to the South. Not that it would have been easy. Some parts of the country still operate under an informal barter system, paying for everything from food to clothing with livestock and the like. It was only in 2009 that the Parliament of Mongolia closed a loophole allowing the use of any currency for local transactions. Now the tugrik must be used for most domestic transactions.
But it's hard not to wonder if Mongolia can really be called a new frontier or merely a temporary bright spot ripe for get-rich quick investors. "People are getting rich very quickly," Gruben says, pointing to the Louis Vuitton (LVMHF) store that opened in Mongolia's capital Ulaanbaatar in 2009 as evidence. "There's this whole race about who has the fastest car and who has the most money here."
Mongolia might certainly be a new frontier, if not just for its vast minerals but also its central location near resource-hungry China. The way it will grow, however, will be something to watch for. And almost certainly something to question.
MONGOLIA'S FIRST APPLE STORE OPENS IN CENTRAL ULAANBAATAR
MONGOLIA'S NOMADS PERFECTLY SUITED TO PUT APPLE'S CLAIM OF "CREATING TRULY NOMADIC PRODUCTS" TO THE TEST.
February 23 (M.A.D.) While most of the "Apple fan boys" in the world jitter with the anticipation of the upcoming and improved line of MacBook Pro's, Mongolia's Apple aficionados have other reasons to celebrate.
An official Apple store has, at long last, opened its doors in what is known as the world's coldest capital: Ulaanbaatar.
The Bodi Electronics Apple Retail Store will officially open its doors on the 1st of March 2011, but has been open for business since the 21st of February. M.A.D. Corporate Services was its first customers, purchasing one of the new Mac minis as well as a 27inch Cinema Display. It carries the full range of Apple products but does not currently stock iPads as they prefer to wait for the rumoured update. iPhones are also off the wish-list as there are currently no carrier arrangements in Mongolia.
<Mogi & Friends Fund A/C>
Mogi & Friends Fund is a tiny fund of A$20.8K I created in late September with a few friends to put my own (and a few friends') money where my mouth (just mine) is.
· I personally and through my "Mogi & Friends Fund" hold 75,000 HAR shares in aggregate.
· Jason Peterson, CPS Securities Director, holds shares (approx. 6,500,000) and options (1,000,000) in HAR.
· CPS holds 500,000 options in HAR for corporate advice provided to HAR – Jason Peterson is a 33% shareholder in CPS.
· CPS and CPSI directors and employees hold shares in HAR and may buy and sell these shares as and when they see fit.
· CPS has received an IPO management fee of $250,000 and a 5% fee for any funds placed to its clients under the prospectus.
· HAR has paid for Jason Peterson's travel and accommodation expenses to and in Mongolia – this must be disclosed as a soft dollar commission.
· Please refer to the prospectus for further disclosures.
"Mogi" Munkhdul Badral
CPS International LLC
P Please consider the environment before printing a copy of this email.
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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 email@example.com or +976-99996779.