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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CPSI NewsWire will take a short hiatus during the holidays, July 11-13, but you may expect an occasional NewsAlert.
Close: Mongolia Related ASX Listed Companies, July 8, 2011 | ||||||||
Code | Last | $ +/- | Bid | Offer | Open | High | Low | Volume |
0.061 | 0.000 | 0.061 | 0.062 | 0.064 | 0.066 | 0.060 | 31,894,312 | |
1.370 | 0.010 | 1.370 | 1.385 | 1.360 | 1.425 | 1.360 | 356,809 | |
0.275 | 0.025 | 0.265 | 0.275 | 0.250 | 0.275 | 0.250 | 446,418 | |
0.650 | 0.060 | 0.650 | 0.660 | 0.595 | 0.675 | 0.595 | 3,098,150 | |
0.012 | 0.002 | 0.011 | 0.012 | 0.011 | 0.014 | 0.011 | 24,565,824 | |
0.007 | 0.000 | 0.006 | 0.007 | 0.000 | 0.000 | 0.000 | 0 | |
0.150 | -0.005 | 0.145 | 0.150 | 0.155 | 0.155 | 0.145 | 14,292,086 | |
0.195 | 0.000 | 0.180 | 0.195 | 0.195 | 0.195 | 0.180 | 193,779 | |
1.220 | 0.075 | 1.215 | 1.240 | 1.145 | 1.225 | 1.140 | 1,561,960 | |
0.250 | -0.015 | 0.250 | 0.260 | 0.265 | 0.265 | 0.250 | 94,262 | |
0.400 | -0.080 | 0.350 | 0.450 | 0.400 | 0.400 | 0.400 | 50,000 | |
0.032 | -0.002 | 0.032 | 0.033 | 0.034 | 0.035 | 0.032 | 4,674,511 | |
0.555 | 0.030 | 0.555 | 0.560 | 0.530 | 0.555 | 0.530 | 326,808 | |
21.750 | 0.400 | 21.680 | 21.760 | 21.600 | 21.850 | 21.510 | 1,136,321 | |
84.350 | 0.800 | 84.350 | 84.360 | 84.220 | 84.530 | 84.090 | 2,026,366 | |
44.950 | 0.530 | 44.930 | 44.950 | 44.850 | 45.000 | 44.740 | 7,871,226 | |
Source: asx.com.au
BDI closed up 20% to 12c
BLINA MINERALS ANNOUNCES $663,000 SHARE PLACEMENT
July 8, The Board of Blina Minerals NL (ASX:BDI) is pleased to advise that it has received commitments to subscribe for a total of 73,666,666 ordinary fully paid shares at an issue price of 0.9 cents per share to raise $663,000 before costs.
The placement will be made predominately to sophisticated and professional investors in accordance with section 708 of the Corporations Act. The shares will be issued upon receipt of cleared funds, pursuant to the Company’s existing 15% placement capacity.
The terms of the placement entitle the investors to receive 1 option for every 1 share subscribed for and issued. The options, which will be unlisted, will have an exercise price of 2 cents each and an expiry date of 4 October 2013. The issue of the options is subject to shareholder approval at a meeting to be held as soon as practicable.
The funds raised from the placement will be applied towards the Company’s exploration program and for general working capital purposes.
GUF closed up 6.55%
Significant Mongolian Acquisition for Guildford Coal
July 8. Guildford Coal Limited (ASX:GUF) is pleased to announce that its Mongolian subsidiary Terra Energy LLC has entered into a heads of agreement for the acquisition of a 100% stake in a Mongolian based company that holds mining licences and exploration permits across four potentially significant projects including the Javkhlant Project in the northern Tuv Province, the Deliin Shand and the Mandal Ovoo Project in the South Gobi and the Khuut Project in the Middle Gobi coal bearing basins in Mongolia.
The heads of agreement is subject to due diligence to be conducted by GUF and Terra Energy LLC.
GUF has also elected to exercise its option to increase its stake in Terra Energy LLC from 20% to 70% due to the positive results of exploration to date on the South Gobi coking and thermal coal project and the Middle Gobi thermal coal project.
…
MMC closed up 0.1% to HK$9.74
[I-bank focus] UOBKH rates Mongol Mining (975) "buy" & HK$13
July 7 (ETNet) UOB Kay Hian initiated coverage of Mongolian Mining Corporation (MMC, 00975) with a "buy" rating, and a target price of HK$13.
The research house forecast MMC's production to grow at a CAGR of 45% in 2011-13 on the back of a production ramp-up. Further solid growth beyond 2014 will be supported by the commission of its newly acquired BN coal mine.
With the commission of wet washing facilities (ie three 5-mt coal washing plants by 2012), UOBKH expects to see EBIDTA margin expand from 33% in 2010 to 50% in 2013. (KL)
1878 closed 2.6% to HK$88.45, SGQ closed up 1.77% to C$10.95
[I-bank focus] UOBKH rates SouthGobi (01878) "sell" & HK$61
July 7 (ETNet) UOB Kay Hian initiated coverage of SouthGobi Energy Resources (01878) with a "sell" rating, and a target price of HK$61.
It acknowledged SouthGobi's long-term growth prospects and strong management and shareholders, but noted that its earnings growth should be feeble in the next three years.
UOBKH forecast SouthGobi's raw coal production to grow at a CAGR of 33% in 2011-13 and sales of processed coal to grow at a CAGR of 26% over the same period.
Due to its relatively inferior coal quality compared with MMC's (00975) and a lack of coal processing facilities, the research house thinks SouthGobi can hardly turn around in 2011 and will only be slightly profitable in 2012 and 2013.
It also believes that SouthGobi will remain in negative operating cash flow through to 2012. Thus, to finance its US$1.5b capex in 2011-13, it has to weaken its balance sheet with more borrowings, which will result in a net gearing of 34% in 2012, compared with MMC's net cash position. (KL)
Ogilvy PR forms strategic alliance to enter Mongolia market
July 8 (Campaign Asia) ULAANBAATAR - Ogilvy PR has signed an exclusive strategic alliance with Mongolian firm Breakthrough PR, giving it unique access to a market it says is poised for dramatic growth in the near term.
Scott Kronick, North Asia president for Ogilvy PR, says the arrangement will see Ogilvy leveraging on Breakthrough's local knowledge and expertise for its multinational clients. Breakthrough PR will also have access to Ogilvy's global network, ensuring its local clients are able to have a voice in outside markets, particularly greater China.
He told Campaign the "time is right" to move into Mongolia, which Citigroup has named one of its 'Global growth generators' for its significant growth potential. The decision came after "five or so" Ogilvy North Asia clients, including mining giant Rio Tinto and the Hong Kong Stock Exchange enquired about representation possibilities in Mongolia.
Kronick compares Ulaanbaatar at present to the awakening of China during the 1990s. "There's a high energy level there," he says. "It's not as big a consumer market but it is ripe for special industries (including mining, finance and infrastructure".
"Mongolia is the new fronteir for businesses looking for opportunities for growth," Kronick said. "We have many clients needing communications support in Mongolia and after evaluating the market, Breakthrough PR was the one firm we met that was closest to our culture and values."
Breakthrough PR founder and director Betina Moreira Infante said, "We see increased demand for both domestic and outbound-related communications services in Mongolia. This partnership gives us a larger platform of professionals, techniques and expertise to support firms that are contributing to growth, jobs and prosperity in Mongolia."
Sufficient fuel now in country
July 8 (news.mn) According to information from the Altanbulag border point, 718 wagons, each holding between 60 and 64 tons of fuel, have come this month from Russia. Of them, 64 carried AI-80, 49 AI-92 and 582 diesel. Mongolia needs about 20,000 tons of diesel every month. During spring sowing, the demand increases to 35,000 tons.
Some fuel has come from China also and it would seem Mongolia has sufficient fuel right now.
Spate of resignations from MPRP
July 8 (news.mn) Differences have cropped up among the MPRP leadership soon after it was registered at the State Supreme Court.
Three recently appointed Secretaries yesterday called a press conference to announce they were resigning because the MPRP was veering away from its primary objectives. Yu.Atar, D.Urnukhbayar and S.Molor-Erdene said they would soon reveal some problems that plagued the party.
The Deputy Chief of the party, MP Ts. Shinebayar, recently resigned as scertary general. Of the initial appointments, only the Secretary of Legislation, L. Tsog, is still in his post.
Parties agree to let Parliament resume work
July 8 (news.mn) The Chief of the MPP group in Parliament, U.Enkhtuvshin, has said the he and his counterpart in the DP group have signed an agreement to allow Parliament to carry on its normal work. This means issues like the budget statement, basic trends and Fall session preliminaries would be discussed.
However, Parliament will not be able to decide on the draft election law before Naadam, but the two groups will continue to work on it to reach a consensus.
Mongolia Briefing Launched
Jul. 8 (China Briefing) – Asia Briefing Media, the publishing arm of the professional services firm Dezan Shira & Associates, has launched the new “Mongolia Briefing” title today.
The new brand, which will concentrate on Mongolian business investment, legal and tax news, brings the number of regional titles published by the publishing house to six, alongside China Briefing and related titles for India, Vietnam, Russia, and Emerging Asia.
“Mongolia represents an interesting market for us as it is relatively small, yet almost completely unknown,” said Chris Devonshire-Ellis, principal of Dezan Shira & Associates and founder of the Asia Briefing brand. “With its massive mineral reserves however it is going to be game changer in the way the global markets purchase raw materials, and it is important, with so much at stake, that the legal and tax implications for foreign investors interested in this market are well understood. We hope that Mongolia Briefing will help investors understand both the emerging nature of Mongolia as an investment destination and educate investors as to the legal and tax dynamics of this exciting new player in the global supply chain.”
The new web site includes regular updates on the Mongolian investment climate, in addition to a quarterly magazine discussing in greater detail technical issues of the legal and tax changes taking place in the country. The initial issue is also available on the web site and details the reform occurring in the country.
Dezan Shira & Associates themselves are also getting ready to assist foreign investors in Mongolia with the announcement expected in due course as to the appointment of a representative for the firm to be based in Ulaanbaatar. Enquiries may be made to mongolia@dezshira.com.
Boomtown Mongolia
July 8 (FT) At first glance Ulan Bator hardly looks like a boom town. The city centre is a charmless confusion of Soviet vanity projects, office buildings and dilapidated apartments, while on the edges of town ghettos of gers (yurts) spread up the mountainside. To a casual observer, the only hints of a mining boom might be the abundance of taverns and the Landcruisers that jam the streets.
But outside the town one Friday night, a crowd of investors shimmying around an outdoor bonfire paints a picture that is in some ways more revealing of Mongolia today. Pop hits pulse through the air and vodka flows unrelentingly as people start to dance to the beat of DJ Zola, who spins out of the back of a truck. The party is one of the pitstops on a tour for fund managers and investors from London, New York, Moscow and Zurich who have come to see the opportunities on offer in Mongolia, one of the hottest destinations for resources investment today.
On one side of the fire, Altai Khangai, the 29-year-old acting chief executive officer of the Mongolian stock exchange – one of the best performing in the world last year – warms up his dance moves. Nearby a vodka-soused banker named Sergey invites me on a resources tour of Siberia, complete with promises of slaughtering a castrated ram. Soon a young mining analyst fresh out of Oxford is entertaining guests by taking running leaps over the flames. “We’re the only private equity house with a bonfire,” croons a slightly tipsy host.
Mongolia is one of the world’s last great mining frontiers, a freak of geology with more than $1,000bn in probable mineral deposits. For millennia those resources went undiscovered while herders roamed the steppe and Genghis Khan led his armies to conquer Asia. It wasn’t until the Soviet era that geologists seriously explored Mongolia’s deposits.
Even hardened mining hands tend to start using superlatives when they talk about Mongolia. Ed Rochette, a former senior vice-president with Ivanhoe Mines who spent his career securing mining licences in far-flung corners including Burma, the Democratic Republic of the Congo, Indonesia and Kazakhstan, says it’s unlike anything he has ever seen. “Two years ago I would have 20 projects come to me, and almost no investors. Today I have 20 investors, and almost no properties,” he says, settling into a booth at a dimly lit bar called Casablanca, popular for its burgers and green-miniskirted waitresses. “I’ve been in Mongolia for 10 years, but this story is just beginning.”
Today’s mining rush was touched off in 2009 with the signing of an investment agreement for the Oyu Tolgoi mine – known as “turquoise hill” because of the greenish rock outcrop that indicated copper. The site has $350bn of probable reserves of copper, gold and silver – more than 50 times Mongolia’s GDP. The negotiations dragged on for years, but when the deal was finally concluded the signal was clear: Mongolia was open for business. The following year foreign direct investment swelled to 30 per cent of GDP.
Mongolia’s vast deposits are juxtaposed with an economy that produced just $6.7bn last year – slightly less than Armenia. The country has just three million people, and 11 times as many livestock as humans. But the resources there are set to redefine not only Mongolia, but also global supplies of key commodities. Take thermal coal: Mongolia has 152bn tonnes of probable coal reserves, enough to fuel every power plant in China for the next 50 years.
Ulan Bator is quietly bursting at the seams. High-end properties are sprouting up in the city centre, where a Louis Vuitton and Ermenegildo Zegna look out over the central Sükhbaatar Square. Rents for new 140 sq m flats nearby are going for $2,800 a month. Because of the building boom, the price of cement in Ulan Bator doubles in September, when contractors rush to pour concrete before the winter freeze. Construction workers are in such short supply that even North Koreans can be found on building sites around town.
There’s also a shortage of bankers, creating opportunities for anyone willing to brave the bitter cold and choking winter smog. “In terms of deal-making it is the reverse of what you expect in London or New York, where you have 20 investment banks chasing the same deal,” says Eric Zurrin, director general of Resource Investment Capital (ResCap), a Mongolia-focused investment bank. “In Mongolia there are more opportunities than there are advisers, from an investment banking perspective.” To take advantage of that, Zurrin left his position as a director of metals and mining at UBS in London last year to join ResCap.
Although Ulan Bator has just a million residents and a small handful of daily international flights, working there is no great handicap when it comes to raising capital. “What we’re finding recently is that the capital is coming to you – you don’t have to go very far to find high net worth individuals or global resources funds looking for opportunities or calling you up,” says Zurrin.
. . .
Unlike the gold rushes of the past – with their brawling saloons, boom towns that turn to ruin, and outlaws jousting for turf – in Mongolia it’s private equity houses and global investors who are playing the role of prospector. In the taverns of Ulan Bator, bankers are hunched over their beers discussing who is a spiv and who isn’t. The other popular conversation is who has been beaten up recently – in the literal sense. One banker relates getting robbed at knifepoint in front of his house by a man who jumped out of a manhole cover.
But still the draw is irresistible. For some it’s a chance to make money; for others it’s the thrill of the risk. Talented Mongolian professionals are flocking back as well to be a part of the growth, often abandoning jobs in the City or on Wall Street for better opportunities in Ulan Bator.
Masa Igata, founder and CEO of Frontier Securities, an Ulan Bator-based securities investment advisory firm, says he came to Mongolia after growing weary of Tokyo. “I felt like I was in a hot tub, in an onsen, for many, many years,” says Igata, who left his position as a managing director at Citi in Tokyo in 2004. “I thought I should work in a much more aggressive, stressful, but exciting place.” He visited Mongolia and loved it, but failed to make money on his first investment there because he was swindled by his stockbroker – convincing him of the need to set up an investment advisory service.
Others put it more simply. “We regularly get people coming into our office with a bag of green rocks, saying are you interested in this?” says Ean Alexander, a former Macquarie banker who moved to Mongolia in February as managing director of a Mongolian investment bank, MICC. “I don’t know anywhere else in the world where you would see an opportunity like that.”
Part of the reason Mongolia is so attractive to investors is that it is relatively open to foreign investment, with an open capital account and liberal foreign investment policies, in contrast to neighbouring China. When Mongolia’s economy was redesigned in the 1990s after the split from the Soviet Union, policymakers took their cues from free-market economists as they up-ended the centrally planned economy.
However, the current influx of capital and runaway economic growth pose challenges to the economic and political systems in place. Foreign investment in the mining sector quadrupled between 2006 and 2010, reaching $820m last year. At times capital inflows have nearly destabilised Mongolia’s currency, the tugrik, which was the second-fastest appreciating currency in the world last year relative to the US dollar. Inflationary pressures are building as well and the government is hard-pressed to keep inflation in the single digits.
“Since 2010 the challenge of coping with mining revenue has become critical,” says Chuluundorj Khashchuluun, chairman of the National Development and Innovation Committee. “Revenue from mining has increased so rapidly it has impact on all other sectors.” He prints out a PowerPoint presentation for me that says it all: this year, GDP growth will be a respectable 8.2 per cent, but in two years it will soar to more than 20 per cent.
Although most Mongolians are growing richer – gross domestic product per capita has doubled in the past four years – sectors of the economy such as agriculture and the cashmere industry have been doing poorly. A strong tugrik has made non-mining exports uncompetitive, a phenomenon known as “Dutch disease”. To see those left behind by the growth, one need look no further than the ger districts that ring Ulan Bator and house more than half the city’s population, often without basic sanitation or sewer systems.
And with more money flowing in, the opportunities for corruption grow. Transparency International ranked Mongolia 116th out of 178 countries in terms of corruption perceptions in 2010, putting Mongolia in the bottom 35 per cent in the world. Environmental degradation is also a growing concern as mining activity increases: some herders have been forced off their land by mines sites and others fear losing their water supplies as large mines tap aquifers underground.
These growing social pressures make the question of what to do with mining revenues a crucial issue for politicians. It seems fitting then that I meet Prime Minister Sükhbaatar Batbold at the launch of the newly minted Mongolian Development Bank, which will use mining revenues to extend policy loans to infrastructure projects. Batbold, a former businessman whose name means “hard as steel”, sees the development bank as part of a broader mission: making sure Mongolia avoids the resources curse. “That is the challenge that the government and people of Mongolia are facing,” he says as he settles down in a black leather chair so new it almost squeaks. The role models for Mongolia’s growth are Norway, Canada and Chile, he explains. “The main issue here – why some succeed and some fail – is the issue of governance, of transparency, and of competitiveness.”
To avoid the resources curse, mining revenues are being carefully tracked and channeled. Leading the effort is the Human Development Fund, which is handing out $200 in cash to each citizen this year and will focus on housing, education and healthcare in future. Soon revenues will also be channeled into a fiscal stability fund, a nest egg for use in the event of a crash in commodities prices.
. . .
In keeping with its free-market foundations, Mongolia is also convinced of the power of the public listing process to promote transparency for state-owned resources. “Hopefully all the mineral wealth and assets of Mongolia will be going through the scrutiny of the public offering process, especially if they are strategic,” Batbold explains. “This way people have equal opportunity to participate and to benefit from this development, and things are very clear within the rules, so that not only a few people gain from this wealth.”
That philosophy paves the way for a slew of big public offerings, a prospect that has excited bankers to frenzy. Tavan Tolgoi, as the first state-owned mining resource to go through the public offering process, is a blueprint for the future Batbold envisages – one where every Mongolian is literally a shareholder in the country’s mineral resources. The asset is expected to list early next year, and 10 per cent of the shares have been distributed to each citizen. The privatisations that followed Mongolia’s split from the Soviet Union tried a similar “voucher” system that was largely a failure – some Mongolians remember exchanging their vouchers for bags of flour, unaware of their true value – and officials are determined to avoid similar mistakes.
“The public has high expectations because Tavan Tolgoi is one of the world’s largest deposits,” explains Enebish Baasangombo, executive director of Erdenes MGL, the state-owned company developing Tavan Tolgoi. “We hope that it would be a jumbo IPO,” he says with a soft chuckle. Tavan Tolgoi’s western block is being developed under a separate tender process, one which has left Mongolia’s powerful neighbours jockeying for a role in the development of the deposit.
In February, when Erdenes was selecting banks to advise on the listing, top banks sent high-level representatives to Ulan Bator to deliver their pitch. In the popular Grand Khaan Irish bar, the fierce competition incited a shoving match one evening between two bankers competing for the deal. The offering, which will float 29 per cent of the company on one or two international exchanges, is likely to raise more than $10bn.
The listing of Tavan Tolgoi is also being courted by global stock exchanges. When Erdenes hosted a conference to discuss the IPO, both the London and Hong Kong stock exchanges were invited to give presentations. Hong Kong caught London unprepared with an aggressive hard sell on the benefits of listing in Hong Kong, according to several people in the room. “We were a little too genteel,” a member of the LSE crew tells me with a sigh. “Next time our team is going to come out in force.”
On the back of these listings, Mongolia’s own stock exchange, housed in a pink building on Sükhbaatar Square, is nursing its own ambitions. Today, the exchange is sleepy: the trading day lasts just two hours, and traders are long gone when I arrive for a 3pm interview. With fewer than 40 actively traded companies and no new listings in the past two years, the exchange is so small that traders often carry their orders in on a memory stick. That will soon change, however. In January, the Mongolian Stock Exchange (MSE) partnered with the LSE to revamp its trading system and regulations. I sit down with Altai Khangai, the acting chief executive officer, and Bill Gorman, the LSE-appointed president of the exchange, and they sketch out their plan. According to their calculations, the MSE will see $45bn in listings in the next 10 years through the privatisations of state-owned companies and strategic assets – that’s more than 30 times the total market cap of the exchange today.
“It’s like we are setting up a whole new exchange,” Altai says. Last year the exchange’s Top 20 index grew by an eye-popping 138 per cent, more than doubling, but Altai and Gorman explain that this is partly due to flaws in the way the index is calculated. In September, if all goes according to plan, the exchange will move to a new electronic trading platform that will make it easier to spot improper trades; allow traders to work from their offices; and ultimately allow global integration with other exchanges.
“LSE looks at Mongolia being a cornerstone for the Asian market,” Gorman says. “The potential in Mongolia is extraordinary … One day it will be like Dubai, everyone will be passing through.”
Back at the bonfire, cups of vodka are tossed on to the flames, sending out green and blue flares. Guests begin piling into Land Rovers and I squeeze in next to a young Etonian, former minister Jonathan Aitken’s son, who is seeking his fortune in Ulan Bator along with a few classmates. We all end up at a nightclub called Faces where young urbanites are dancing the night away.
The optimism in Ulan Bator is infectious. But Mongolia is in many ways made vulnerable by its vast resources. Economists warn that the economy could still go into reverse if the price of copper were to drop. And Mongolia is highly dependent on neighbouring Russia and China, who historically have tried to muscle their way into prized mining contracts.
The bankers are just a precursor to the rush of money about to pour in, as Tavan Tolgoi, Oyu Tolgoi and other yet-to-be discovered deposits start to come online and put to trial the economic and political systems in place. Can a young democracy equipped with the best intentions really succeed in transforming itself into the next Norway, or the next Canada? It could be a brutal test.
Deal Puts Peabody on China’s Doorstep
July 7 (MoneyShow) Mongolia has chosen China Shenhua Energy (1088.HK or CSUAY in New York), a Russian-led consortium, and Peabody Energy (BTU) to develop the western portion of its Tavan Tolgoi deposit of coking coal.
Tavan Tolgoi contains an estimated 6.5 billion metric tons of metallurgical coal, and the western block accounts for an estimated 1.2 billion tons of that.
Development rights were divided, with 40% going to China Shenhua, 36% to the Russian consortium, and 24% to Peabody Energy. The projected cost of developing the western block is $7.3 billion.
Winning the right to develop 24% of 1.2 billion metric tons of coal is a big deal. Getting the rights to 24% of 1.2 billion tons of metallurgical coal next door to China is an even bigger deal for Peabody.
The company’s coal current coal production is slanted to thermal coal, the kind burned in power plants, and to US thermal markets at that—84% of 2010 sales went to US electricity generators. This win gives Peabody more exposure to the metallurgical coal market and to China, the world’s biggest market for coal of any sort.
Peabody has been busy at work adding capacity in Australia to put some of its supply closer to big-end markets in China and India. But as of 2010, only 12% of the company’s total production of 211 million metric tons came from that country.
Access to the Tavan Tolgoi deposits will increase the company’s non-US production. (Peabody Energy already operates a coal and mineral joint venture in Mongolia.)
Increases in demand for coking coal, used in steelmaking, are expected to outrun increases in supply in 2010 to 2015. Peabody estimates that seaborne demand will grow by 85 million to 95 million metric tons in that period, but that seaborne supply will increase by just 65 million to 75 million metric tons. That gap should fuel rising prices for metallurgical coal.
Tavan Tolgoi isn’t going to add to Peabody’s revenue or earnings this year or next—but even without that production, Standard & Poor’s is projecting a 24% increase in revenue for 2011, on a 6% increase in production and a 17% increase in price.
Over the last five years, Peabody Energy has traded at an average 8.6 times EBITDA (earnings before interest, taxes, depreciation, and amortization.) The current price values the stock at just 7.2 times estimated 2011 EBITDA.
HAPPY NAADAM to State Property Committee, a service organization of South Gobi Sands Company! But there are few words to say….
July 9 (news.mn) Foreigners mock Mongolians as paupers sitting on gold. Like them we wanted to mobilize our gold and become wealthy, so we started utilizing the Oyutolgoi Mine. But we lost it to the notorious gangster in the world Robert Friedland, the founder of Ivanhoe Mines.
Last year the parliament passed a new Law on Concessions. International open bid competition on highway building concession was announced. The law was new so was the concession bid. Then that Mr. Friedland appeared. When this person who has been ignoring international laws and regulations comes up, the Mongolian law becomes difficult to be fully implemented.
Following the approved Concession Law since March 1st, 2010, a legal environment opened up for wealthy companies to invest in the necessary auto road in Mongolia, recover its cost and get income through road toll and then to transfer the road to the state property of Mongolia after few years.
State Property Committee and the Ministry of Road, Transportation and Urban Development jointly announced the open-bid to grant concession with “Build-Use-Transfer” model to build 57 km long paved road in the direction of Nariinsukhait-Shiveekhuren in Gurvantest soum, Umnugobi Province. In the open bid Mongolian company, Monroad Co., Mongolian-Hong Kong Joint Company Channel Gold Limited, and subsidiary company of Mr. Friedland’s Ivanhoe Mines, South Gobi Sands Company participated. The South Gobi Sands went out from the first selection stage for not meeting the bid requirements and the two other companies were selected for the next stage.
After the selection, there was rumor at People’s Party blaming the State Property Committee for removing Mr. Friedland’s company. The South Gobi Sands was not supposed to be eliminated from the first stage. On the contrary, it was expected to win in the bid according to the prior agreement. After it wins the bid, they were believed to raise fund together with Monnis Company and the raised fund was supposed to be used for the next year’s election campaign of People’s Party. It was plotted by Sü.Batbold, Su.Batbold and Ch.Khurelbaatar.
The second round of the open bid was organized in June and according to the law, Monroad as well as Channel Gold Limited Company arrived at the State Property Committee’s Building to submit their materials. However, the officials from the South Gobi Sands that has been expelled from the first stage suddenly burst through and boldly said “we will participate in the competition and will give our materials. Who is the State Property Committee representative? We will talk to him” and openly acted in the open event. This proves that the rumor of Aurag Deposit of People’s Party is true. Then it was completely confirmed by the next action of the Concession Committee—they received the materials of South Gobi Sands Company. However, their materials were incomplete and there was no way left but to expel the South Gobi Sands again from the competition. Their hope failed. However, the Mongolian boy’s dream was not yet to be accomplished and the selection committee, composed of the officials from the State Property Committee and the Committee of National Development and Innovation, expelled the Mongolian Company, Monroad as well as Channel Gold Limited Company and made the whole bid to grant concession ineffective in order to race South Gobi Sands Company one more time. After that the committee announced a new Limited Bid Competition with 15 day period and sent invitation to Monroad Company and Channel Gold Limited Company as well as to subsidiary company of Mr. Robert Friedland’s Ivanhoe Mines, South Gobi Sands that has been eliminated for two times already.
The deadline to received bid proposal is July 18th, the shortlist release date is August 1st, and date to sign on the concession contract is August 15.
I understand that after Naadam Holiday, a procedure to determine whether Mongolian Company Monroad will get the concession rights according to the law or South Gobi Sands of Robert Friedland with “Green visa” from People’s Party that owns 31 exploration licenses and three exploitation licenses in Umnugobi Province.
There is a Mongolian saying that whatever uttered comes true. I wish all of you from the Director of State Property Committee to the bid committee members to have a happy Naadam. You have been celebrating Naadam without any support from Mr. Robert Friedland and hope you will have nice celebration this year as well.
OYU TOLGOI STARTS CONSTRUCTION ON EDUCATIONAL COMPLEX TO HOUSE MONGOLIA’S LARGEST VOCATIONAL TRAINING PROGRAMME
FIRST VOCATIONAL TRAINING COMPLEX OF ITS KIND TO BE BUILT SINCE 1974
TRAINING PROGRAMME PART OF OYU TOLGOI’S COMMITMENT TO LONG-TERM
DEVELOPMENT OF MONGOLIAN ECONOMY
July 7 (M.A.D.) Nalaikh District, Ulaanbaatar – Minister of Education Otgonbayar, Chairman Galsan Batsukh, and Cameron McRae, president and CEO of Oyu Tolgoi LLC, and numerous national and local officials today broke ground on a new vocational education complex in the Nalaikh district of Ulaanbaatar that will house Mongolia’s largest vocational training program. The complex is the first vocational education facility of its kind to be built in the country in more than 35 years. The training program, which is being developed in partnership with the Ministry of Education, will educate and train thousands of Mongolian students.
The Nalaikh complex is one of three vocational centers Oyu Tolgoi is developing across Mongolia and is part of the company’s commitment to developing, training and employing Mongolian nationals. Some of the first graduates of the training program were on hand to celebrate the opening of the new centre. To fully develop the training program, Oyu Tolgoi is investing 114 billion tugrugs – or approximately 41,000 tugrugs per Mongolian citizen – over a five year period from 2010 to 2015.
During the opening ceremony, Minister of Education Otgonbayar commented, “I am happy to be here today to start the fulfillment of Oyu Tolgoi’s commitment. Our joint efforts will help to achieve goals toward supporting the Government’s policies of providing short-term, quality training to people and providing employment opportunities at large development projects. I believe the new school that we are breaking ground on today will become one of biggest intellectual centres of excellence in terms of construction and in the training of highly-skilled specialists.”
At the ceremony, Cameron McRae, president and CEO of Oyu Tolgoi LLC, spoke about the vocational training program being part of the company’s commitment to the long-term development of the Mongolian economy.
Mr. McRae said “We are proud to invest in this world-class vocational training program, which is the largest of its kind ever established in Mongolia. We are fully committed to developing, training and employing Mongolians and assisting the Government in addressing the skills shortage in the country. The educational centres we are building will help thousands of young Mongolians qualify for good jobs.
“Over a five-year period, the education program will train over 5,000 Mongolian students at centres across the country in 23 disciplines, such as electrical work, plumbing, mechanics and heavy equipment operators. This extensive training program will help us meet our long-term commitment of having a workforce where more than nine out of ten people are Mongolian.
“Mongolia has a very bright future and we are thrilled to help educate and train the next generation of the workforce who will take this great country forward.”
In addition to the construction of the educational buildings, the training program will include equipment and curriculum upgrades at existing centres in Erdenet, Ulaanbaatar, Darkhan and Choir. Oyu Tolgoi has also established a scholarship program for 200 students to study at Mongolian universities, institutes and vocational training colleges and for 30 students to study overseas in mining-related fields.
The vocational training program is part of an agreement reached in July 2010 with the Ministry of Education, Culture and Science and the Ministry of Social Welfare and Labor.
Less polluting stoves from Turkey under MCF project
July 8 (news.mn) MCS LLC is cooperating with the Millennium Challenge Foundation (MCF) to provide new stoves on easy terms to households of Chingeltei district. MCF has selected Selenge Construction LLC to supply stoves that burn 50% less coal and emit less smoke. The stove is produced in Turkey and costs MNT325,000. A household has to pay only MNT74,300, with the rest coming from MCF.
Selenge Construction has sought the help of MCS in distributing the stoves. The Director of Marketing at MCS has said they are making their own studies on how to reduce air pollution. It plans to produce gas from coal. However, this may take time, and until then, the best thing is to use stoves with less smoke.
Mongolia's National Day
July 8 (Remarks by Hillary Rodham Clinton, source: The State Department) On behalf of President Obama and the people of the United States, I congratulate the Mongolian people on your 90th National Day this July 11.
Our two countries are working together to strengthen defense and security cooperation, increase trade, fight the effects of climate change, expand student exchange opportunities and so much more. Mongolia’s example as a thriving democracy continues to inspire other countries in the region and throughout the world.
On this special day, we reaffirm the bonds of friendship and cooperation between our two countries. Whether you celebrate with family or friends, know that the United States is a partner and friend and we are committed to building a better future for all our people.
<Mogi & Friends Fund A/C>
Total +19.1%
Mogi & Friends Fund is a tiny fund of A$23K I created in late September with a few friends to put my own (and a few friends’) money where my mouth (just mine) is.
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Mogi
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"Mogi" Munkhdul Badral
Executive Director
CPS International LLC
Telephone/Fax: +976-11-321326
Mobile: +976-99996779
Email: mogi@cpsinternational.mn
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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 mogi@cpsinternational.mn or +976-99996779.
Disclosure/Disclaimer
CPS Securities, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions mentioned in correspondence from CPS International.
CPS International advise this email contains general information only and does not include advice. In preparing this communication, CPS International did not take into account the investment objectives, financial situation and particular needs of any person. As with any speculative mining company there are significant risks.
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