Tuesday, September 13, 2011

[CPSI NewsWire: Banpu Values Hunnu 9 Times IPO Price in Friendly Takeover Bid]

CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, WA based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.

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Close: Mongolia Related ASX Listed Companies, September 12, 2011



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HUN closed at A$1.725 after trade resumed in final minutes of trading hours

Banpu Agrees to Acquire Hunnu Coal in A$477 Million Deal

(Updates with closing share price in fifth paragraph.)

Sept. 12 (Bloomberg) -- Banpu Plc, Thailand’s biggest coal producer, agreed to buy the shares it doesn’t already own in Hunnu Coal Ltd. (ASX:HUN), valuing the Australian explorer seeking to develop mines in Mongolia at A$477 million ($493 million).

Banpu, which owns about 12 percent of Hunnu Coal, is offering A$1.80 cash for each share, the Bangkok-based company said today in a statement. That’s 30 percent more than the Sept. 8 close of the Perth-based company, whose board today unanimously recommended the bid.

Buying Hunnu will give Banpu full control of a company that owns 11 coking and thermal coal projects in Mongolia, home to one of the world’s largest unexploited reserves of the fuel. Banpu, which last year agreed to buy Australia’s Centennial Coal Co., has said Mongolia’s coal industry has great potential because of its closeness to markets including China.

This bid by Banpu takes a lot of pressure off Hunnu’s management and it’s not surprising that they recommended this bid because it basically removes any pressure on them to finance these projects,” said Matthew Whittall, a Hong Kong-based analyst at Renaissance Capital Ltd. “They have large resources that are close to China.”

Hunnu Coal climbed 25 percent to A$1.725 at the 4:10 p.m. Sydney time close on the Australian stock exchange, its biggest gain since February last year. The shares were halted on Sept. 9. Banpu fell 1.3 percent to 626 baht at 12:36 p.m. in Bangkok.

Steel Mills

Mongolia’s coal production doubled last year to 25 million metric tons to become the nation’s top export earner, as demand gained in China and India, the world’s fastest growing major economies. Prices of coking coal, used by steel mills, and thermal coal, used by power stations, reached records this year.

Banpu’s offer is 51 percent higher than Hunnu’s 20-day share price average, while 19 similar-sized Australian coal acquisitions in the past five years have an average premium of 60 percent, according to data compiled by Bloomberg.

Banpu’s share offer for Hunnu is at a significant premium to recent trading levels and has regard to the strong prospects of Hunnu’s coking and thermal coal deposits,” Banpu Chief Executive Officer Chanin Vongkusolkit said in a statement.

There were $20.15 billion of takeover bids for coal-mining companies valued at $100 million or more in the first nine months of this year, compared with $7.06 billion a year earlier, according to data compiled by Bloomberg.

Citigroup Inc. in July raised its 2013 estimates for hard coking coal by 30 percent and thermal coal by 36 percent, citing limited new supplies of coking coal and more use of thermal coal for electricity and increased Chinese and Indian imports.

Banpu wants to acquire Hunnu because it “is an advanced exploration company with two advanced projects and the valuation is relatively cheap,” said Renaissance Capital’s Whittall.

Banpu, which agreed in March to pay A$45 million to become the largest shareholder in Hunnu Coal, is being advised by JPMorgan Chase & Co. and Allen & Overy.

Link to article

Link to HUN release

Link to Banpu release

Related articles on Reuters, FT (Blog), FT Tilt, PerthNow, Dow Jones, AAP


OPP closed flat at 36.25p

Origo launches Mongolia Fund

September 12, Origo Partners Plc (LON:OPP) --

Origo Partners Plc ("Origo") is pleased to announce the formation of a new fund which will invest in Mongolia, the fastest growing economy in the world in the first half of this year, with growth of 14.1 per cent year on year. 

The MSE (Mongolian Stock Exchange) Liquidity Fund ("The Fund") will, for the first time ever, provide investors with direct exposure through one product to: 

·         The Mongolian Stock Exchange ("MSE") via investments in primarily the top ten traded companies listed on the MSE - the MSE was the World's best performing equity market in 2010 with an increase of 174 per cent1;

·         High interest savings deposit rates on offer at Mongolian commercial banks of up to 15 per cent; and

·         100 per cent exposure to the Mongolian Tugrik, the second best performing currency against the USD in 2010, with a 13 per cent increase with further appreciation expected due to significant mining investment in the country. 

The performance of the Mongolian economy has been primarily driven by the development of the country's vast and largely untapped reserves of bulk commodities and base metals comprising coal, iron ore, copper, gold and uranium. Moreover, it is expected that the MSE will move to electronic trading for international investors later this year resulting in further increased capital flows into the country.  

The fund will be managed by Origo Asset Management Ltd, a subsidiary of Origo Partners Plc, with day to day activities carried out by Luke Leslie, Head of Mongolia and Mining Investments at Origo, and Eric Zurrin, CEO of ResCap, who both have a successful track record in investing in and advising Mongolian companies.

Administered by Apex Funds, the Fund will be open ended, have a minimum subscription threshold of $10,000 and is expected to begin trading in October 2011.  

Commenting on today's announcement, Luke Leslie and Eric Zurrin, Managers of the Fund said:

"By capitalising on the significant growth opportunities in Mongolia and utilising 100 per cent exposure to the Mongolian Tugrik, the MSE Liquidity Fund will provide investors with exposure to diversified and liquid assets and operations in the world's most resource rich and fastest growing economy."

Chris Rynning, the CEO of Origo, added:

"Mongolia is set to continue profiting from its world class natural resource assets, and we are confident that the Fund will give investors attractive exposure to Mongolia in a way which has been previously unavailable."

Link to release


Announcement made after trading hours. MUB unchanged with 0 volume


September 12, Mongolian Resources Corporation Limited (ASX:MUB) --

Drilling commenced  on August 12th, 2011 at both the Blue Eyes and Sujigtei Projects.  An initial 16 holes program for 4500m of  diamond drilling is expected to be completed over the next two quarters. The drilling is designed to confirm the high grade potential and status of previous mining work at the existing Blue Eyes and Sujigtei mine workings areas and in particular to examine the depth extents of the Sujigtei Mineralization.

The first hole at Sujigtei is designed to replicate the mineralization intersected by Centerra who drilled 12 holes within the Sujigtei License Area in 1997 that included 3 holes in the vicinity of the mine.

These 3 holes recorded two high grade mineralization intercepts as follows

Main Sujigtei Vein  1.6m @ 114.5 g/t Au at   47.9m depth

Hidden Vein          10.0m @     8.3 g/t Au at 132.0m depth.

Our first target is to explore the extent of this high grade mineralization on the main vein with a 100 x 100 m drill pattern to 300m depth. This should also outline the potential of any open cut resources in the vicinity of the mine.

Link to release



GTSO Ships Mongolian Rare Earth Core Samples to South Korea

SAN JOSE, Calif., Sep 12, 2011 (BUSINESS WIRE) -- Green Technology Solutions Inc. (otcqb:GTSO) announced today that 46 Mongolian rare earth core samples sent to South Korea for mineral analysis have been received by Korea Resources Corp. (KORES).

The core samples were recovered last month from the Avdrant mining site in Mongolia's Tuv province by a team led by Senior Ph.D. Geologist T.S. Bilgee of the Mongolian University Geological Sciences Department. The KORES laboratory will analyze the samples' mineral content to confirm the presence of economically recoverable rare earths.

"We're tremendously excited to send our first batch of rare earth core samples to South Korea," said GTSO CEO John Shearer. "Now that KORES has received the samples, we're confident that a positive analysis confirming the value of this project will be forthcoming. With the quality of our ore confirmed, we'll move forward with mining operations on the property."

Rare earth minerals are critical to the manufacture of technologies including computers, smartphones, magnets, batteries, wind turbines and solar panels. GTSO has agreements in place for the evaluation and development of mineral assets on more than 17,000 acres in Mongolia that the company believes hold the potential for significant commercial production of rare earth minerals.

"The increasing number of applications for rare earths combined with tightening Chinese export policies continues to drive up the value of the minerals," Shearer said. "We have received many inquiries into the availability of Mongolian rare earth ore, and preparations are underway to begin production at the first of our mining sites there."

Link to release


Rio warns Mongolia: don't become greedy

THE head of Rio Tinto in Mongolia has issued a stern warning to the local politicians agitating for a greater share of revenue from the country's emerging mining industry, saying that Mongolia's economic transformation could stall on the back of any further legislative uncertainty.

September 11 (The Australian) A group of 20 members of Mongolia's parliament has been petitioning for another revision of the country's minerals regime.

During the Discover Mongolia forum in Ulan Bator, Cameron McRae, Rio Tinto's country director and chief executive of the $US7 billion ($6.6bn) Oyu Tolgoi copper-gold deposit, said the Oyu Tolgoi investment agreement secured with the government in 2009 had demonstrated that Mongolia was open for business.

"If even a few voices call for Mongolia's commitments to be broken and agreements to be changed, there is a risk that this will undermine investor confidences," Mr McRae said.

"These few will have to answer to the many Mongolians whose jobs will be on the line, and the local businesses whose prospects will be jeopardised. We are confident that Mongolia will not let this happen; that stability and the rule of law will prevail; that Mongolia's long-awaited economic promise will become a reality."

The regulation and taxation of the mining industry are a major political issue in Mongolia, where the economy is growing at about 17 per cent a year because of the expanding mining industry.

The construction of Oyu Tolgoi and the looming development of the Tavan Tolgoi coal deposit, which is expected to become the world's largest coking coal mine, are leading a surge in new investments in Mongolia.

The ever increasing importance of the mining industry in Mongolia has fed political debate about the best ways in which the country can benefit from the industry.

At least four major revisions to the tax regime on miners have been implemented in the past 12 years.

The most recent investment agreement replaced a short-lived windfall profits tax regime that would have seen the government take 68 per cent of profits during times of high commodity prices.

Investment in the Mongolian resources sector slowed significantly while the windfall profit tax was in place.

Mr McRae noted that the Mongolian government would receive more than $US220 million in taxes from Oyu Tolgoi this year alone, with the government to receive $US700m in tax revenues and payments from the project before it entered production.

Almost 14,000 employees and contractors are working on the project -- and more than 60 per cent of those workers are Mongolian.

"Oyu Tolgoi's investors needed (the investment agreement) to have the confidence to invest such mammoth sums and to pursue the mining industry's largest ever project financing," Mr McRae said.

"As a result, Mongolia is now perfectly positioned to launch a series of world-class projects and is seeing concrete growth in the economy; from foreign direct investment to job creation."

Oyu Tolgoi will produce at its peak 467,000 tonnes of copper, 330,000 ounces of gold and 2.9 million ounces of silver a year, making it one of the top five copper mines in the world and one of the biggest gold mines. asdf

Link to article


SouthGobi Makes A Logical Target For Teck Resources

September 11 (Seeking Alpha Blog) Coal sector M&A activity has picked up this year, with no end in sight. Rio Tinto (RIO) made a proactive acquisition when it bought an emerging coking coal player in Mozambique and it recently tendered for the 25% of shares of Australia's Coal & Allied Industries that it doesn't already own. Anglo American (AAUKF.PK) and BHP (BHP) are both reportedly looking at Walter Energy (WLT), (stock up 21% on Sept. 7th). Alpha Natural Resources (ANR) acquired Massey Energy, Arch Coal (ACI) acquired Intl. Coal. Vale and Tata Steel have great emerging coal market exposure in Mozambique. Glencore (GLCNF.PK) is stalking a south African coal producer named Optimium Coal. Peabody Energy (BTU) and Mittal (MT) are buying Macarthur coal. Peabody also won a coveted spot on Mongolia's Tavan Tologi development team. Please see my thoughts on Tavan Tolgoi here and here.

One company that has been noticeably absent from this game is Teck Resources (TCK). To be fair, Teck is already the second largest producer of premium hard coking coal in the world. But, Teck will not remain # 2 if the M&A dance continues without them. Alpha Natural Resources is catching up to Teck, and a combined Anglo American and Walter Energy would be a competitive threat. Teck has all of its coal assets in one Canadian basket, so the company would greatly benefit from some diversification. 

The emerging coking coal exporting countries of Mozambique and Mongolia will increasingly be key drivers of supply. As was stated in the opening paragraph, some companies have already set down roots in these two frontier countries. However, Teck remains 100% exposed to Canada. Don't get me wrong, their Canadian coal operations are very good, but having all of one's eggs in one basket is risky. Seeing as there are already two dominant emerging coking coal players in Mozambique, Rio Tinto and Vale (VALE), Teck would have a hard time establishing a foothold in that country. However, in Mongolia one of the two dominant coal producers is a prime takeout candidate for a company like Teck. That company is named SouthGobi Resources (SGQRF.PK). 

In part due to my copious comments and analysis on SA, I have recently been retained by SouthGobi Resources as a consultant. In my frequent talks with CEO Alex Molynuex, I continue to believe that the Company is a prime takeout target. Alex said on his 1st quarter earnings conference call, and again in an interview that I conducted with him, that 57% shareholder Ivanhoe Mines (IVN) is speaking with interested parties

SouthGobi Resources, the Canadian-listed Mongolian coal producer, announced this week that it is producing coal at an annual rate of 5.3mm metric tonnes and that production continues to ramp up. In CY 2012, SGQ will mine and sell approximately 7mm tonnes of coal, most of it coking coal. This level of production makes SGQ one of the two dominant coal producers in Mongolia. Here is my instablog on SGQ's press release.

While much has been written about Mongolia's massive Tavan Tolgoi coking coal deposit, market participants appear largely unaware that SGQ's production profile will dwarf that of the 3 recently announced winning mining groups. For example, Tavan Tolgoi is expected to be producing 15mm metric tonnes of coal, about 2/3 of it coking coal, by 2016. Of that amount, Peabody Energy will control 3.6mm tonnes with its respective 24% stake in the project.

By 2016, SouthGobi will be producing 12mm-13mm tonnes of coking coal, including 3mm tonnes of premium hard coking coal. As such, SGQ will remain one of the top two producers in Mongolia for many years to come. As a dominant producer in a frontier country that many global miners, steel companies and commodity traders like Glencore (GLCNF.PK) want to get access to, SGQ is a prime takeout candidate. To put SouthGobi's production in perspective, within 5 years it will be exporting roughly half of what Teck currently produces. Combined, Teck and SGQ would be producing greater than 40mm tonnes of coking coal, keeping Teck comfortably in second place behind the BHP-Mitsubishi Alliance.

I believe that within 6-12 months, SGQ will be taken out. The reason for my conviction is twofold. First, like Mongolia, Mozambique is an emerging coking coal exporting country with two dominant coking coal companies. There, Rio Tinto just acquired one of the two dominant players, Riversdale Mining, for a hefty 8.5x 2014 EV/EBITDA multiple. The other major player in Mozambique is global mining giant Vale. Second, the company is known to be for sale. Interested parties are already talking to 57% majority owner Ivanhoe Mines. Teck should take a close look at SouthGobi. If they don't acquire it, a competitor will, leaving few options for Teck to gain access to Mongolia.

Just as many miners are interested in getting into Mozambique, many are also interested in getting a foothold in Mongolia. In fact, Mongolia's coal exports are already running at greater than 20mm tonnes per year, while Mozambique is only beginning to export coal in 2h 2011. Mozambique is thousands of kms from China, while SouthGobi is just 45km from the Chinese border. Coal from SouthGobi's mines arrive at Chinese steel mills faster and more reliably than coal from, say, Canada, Australia or Africa.

SGQ is in the early stages of substantial organic earnings and production volume growth. Within 3 years, the company will be exporting at a run-rate of 10mm tonnes of coking coal and generating a run-rate of up to $600mm in EBITDA. Compared to the 8.5x multiple of 2014 EBITDA that Rio Tinto just paid for Riversdale Mining, SGQ is trading at less than half of that. Sooner or later, perhaps when the world realizes how slow the ramp up will be at Mongolia's Tavan Tolgoi coking coal deposit, potential suitors will recognize not only how cheap SGQ is, but also its importance as a major strategic asset serving China's every growing needs.

SGQ is the perfect hedge for the global seaborne coking coal markets. If (when) Australia's coking coal mines get inundated by massive flooding, as they have twice in the past 4 years, SouthGobi's proximity to China becomes even more valuable. Strikes, transportation bottlenecks and severe winter weather in Canada and other coking coal exporting countries represent further headwinds for global supply that is mitigated by SGQ's production on China's doorstep.

Finally, SGQ's enterprise value of about $1.6 billion makes it easily digestible. Given the proven ability of the global miners to issue debt with fixed coupons of 4%-5% these days, SGQ is a very cheap option on the continued tightness of the coking coal markets. I think that any of the following companies could be interested in acquiring SGQ; BHP, VALE, Anglo American, Xstrata (XSRAF.PK), Glencore, Noble Group (NOBGF.PK), ArcelorMittal, New World Resources (NWCSF.PK), Banpu (BNPJF.PK), Exxaro (EXXAF.PK), Walter Energy, Fortescue Metals, BTU or Arch Coal (ACI).

Link to article


Dealmaking in frontier markets: Mongolia

Amid sluggish growth and a tough climate for dealmaking in developed markets, investment banks are turning to new territories to do deals with Mongolia one of the fastest-growing frontier markets.

September (Dow Jones) Bankers have been busy in emerging markets so far this year. The total value of M&A transactions in the materials sector alone done in emerging markets this year is $100bn, accounting for 41% of overall materials M&A, according to data from Thomson Reuters.

And although the performance of stocks in the MSCI Frontier Market Index has been broadly in line with that of the MSCI World Index, the potential for growth in far-flung locations continues to be high.

In a five-part series, which we shall run throughout this week, we look at how to successfully handle a transaction in five separate frontier markets where growth is forecast to increase by at least 4% or more this year. Today, we look at Mongolia.

Each country we look at is a constituent of Standard & Poor's Frontier BMI index, with the exception of Mongolia, which is not currently included on any index.

Why Mongolia matters

Perfectly placed between two commodity hungry superpowers, Mongolia is a nation rich in natural resources, including some of the largest coal deposits on the planet.

Although it is not a constituent of any of the major frontier or emerging market indices, Mongolia was earlier this year named in a new list drawn up by analysts at Citigroup.

It listed the country, along with 10 others, as a Global Growth Generator - or 3G for short - where the highest levels of growth in the world will be seen over the next 40 years.

According to the IMF, the Mongolian economy is forecast to grow by 9.8% this year and 7.1% in 2012.

Mongolia is rated more highly than Italy as a destination for doing business, according to a World Bank report, with the land of Genghis Khan coming seven places above the European country at number 73 in the world.

Biggest deals this year

The $950m acquisition of QGX Coal by the Mongolian Mining Corporation is the biggest acquisition in the country so far this year. UBS and Citi advised on the deal.

Anglo-Australian mining giant Rio Tinto recently purchased a C$529.5m stake in Ivanhoe Mines, a Canadian-listed company with significant interest in assets in Mongolia. The two companies are jointly developing the massive Oyu Tolgoi copper and gold project in the country.

The total value of mergers and acquisitions deals announced so far this year is $1.3bn through 31 transactions, according to data provider Dealogic.

What's the outlook?

The country’s massive Erdenes Tavan Tolgoi mining project in the Gobi desert in southern Mongolia recently began exporting coal to China and several new opportunities could arise from the project in future.

Thought to be the biggest untapped source of coking coal in the world, the mine has attracted the attention of several overseas investment banks and mining firms.

Goldman Sachs and Deutsche Bank recently won a mandate to manage an initial public offering of Erdenes Tavan Tolgoi for the Mongolian government. The share sale is due to be launched in the first half of 2012 and is expected to raise anywhere between $1bn and $5bn. The government could still appoint one or two more banks to handle the process.

The outlook for deals is likely to strengthen further still, according to Rupert Hume-Kendall, chairman of global capital markets at Bank of America Merrill Lynch.

He said: “Mongolia's mineral and energy resources sector will continue to open up rapidly to equity and debt capital markets globally. The pace will be quite unusual.”

Who’s already there?

So far, major international investment banks and law firms do not have representative offices or subsidiaries in Mongolia. Instead, bankers fly into the capital Ulan Bator from bases in either London or Hong Kong.

Earlier this year, several international banks flew representatives in to pitch for the Erdenes Tavan Tolgoi IPO, including Morgan Stanley, Macquarie, Citigroup, JP Morgan, Deutsche Bank, Credit Suisse and UBS.

The London Stock Exchange set up a joint venture with the Mongolian Stock Exchange earlier this year in a deal that will see the MSE use the LSE’s MilleniumIT trading technology.

Kh Altai, chief executive of the Mongolian Stock Exchange, recently visited London with a delegation of corporates from the country to discuss listing opportunities and international deals.

He said: “Mongolia itself is changing rapidly. It’s one of the fastest growing economies in the world. We have this extensive mineral wealth, lots of investment for geological extraction.

"As capital market, as a stock exchange, we have to be prepared for that and in order to prepare for that we have joined up with the LSE.”

He added: “Our resources mean there are a lot of things to be done for bankers, lawyers and other global players.”

Deal-making tips and stories from the frontier

Many of Mongolia’s assets are owned by the state, meaning dealmakers have to engage with many different officials, from local mayors to ministers of state.

Mongolia is an incredibly hospitable country, so be prepared to get up close and personal with your hosts. Do your research before you go, find out about the Mongolian culture and what is expected of foreign visitors. Take your time in building relationships with clients and do as much as possible to accommodate their culture when you visit the country.

Be prepared to go to a lot of banquets, where you’ll perhaps eat some strange food. Brendan Spinks, Director in ECM origination CEMEA at HSBC, said: “It’s very important to research the local culture before you go. Not only does it make you feel better by not looking a fool but it gives the client a bit of reassurance that you’re not just there to do one job.”

The temperature can drop to levels well below freezing in Mongolia during the winter, making it hard to pack for a trip, according to Rupert Hume-Kendall.

He said: “Earlier this year I had an unusual excursion. First stop was Ulan Bator with temperatures of -40c. Next was on to Bangkok in the middle of the Thai summer at +35c, both for critical pitches. Try packing for that with a single small bag!”

Link to article



September 12, Ulaanbaatar, Mongolia /MONTSAME/ Five stock trades were held at Mongolia's Stock Exchange from September 5 to September 9.

In overall, 591.5 thousand shares were sold of 41 joint-stock companies totaling MNT 334.5 million.

Index TOP-20 was 19814.13 points decreasing 356.7 units or 1.8% against the week earlier.

The total market capitalization was set at MNT two trillion 31.6 billion decreasing MNT 22.5 billion or 1.1%.

Shares of "Darkhan teever" /51.2%/, "Tav" /32.3%/, and "Khereglee impex" /32.2%/ increased, but shares of "Sharyn gol" /10.7%/, "Silikat" /7.3%/, and "Eermel" /7.1%/ decreased.

23 stocks closed higher, 13 shares declined and five shares remained unchanged.

Shares of "Remikon" /427.9 thousand units/, "Genco tour bureau" /79.6 thousand units/ and "State Department Store" /16.2 thousand units/ were the most actively traded in terms of trading volume and in terms of trading value--"Remikon" (MNT 59.5 million), "APU" (MNT 40.8 million), and "Shivee ovoo" (37.2 million).

Link to article


Social and economic situation of Mongolia (As of the first 8 months of 2011)

September 9 (National Statistics Office) --

I. Social indicators 

In the first 8 months of 2011, 46141 mothers delivered 46347 children (live births) increased by 1583 mothers or 3.6 percent, and 1608 children or 3.6 percent, compared to the same period of previous year. 

In the first 8 months of this year, at national level infant mortality decreased by 114 or 12.8 percent to 778, and child mortality aged 1-5 decreased by 71 or 29.3 percent to 171 compared to the same period of previous year. 

The number of unemployed who had registered at Labour and Welfare Service Divisions in aimags and capital city and were actively looking for job reached 40.4 thousand at the end of August, 2011, reflecting an increase of 792 persons or 2.0 percent compared to the same period of the previous year. Compared to the same period of the previous year, the increase in the number of registered unemployed was mainly due to the increases in Ulaanbaatar city (2111 persons), Ovorkhangai (1204 persons), Khovd (951 persons), Darkhan- Uul (150 persons), Bulgan (107 persons), Bayan-Olgii (100 persons), and Govisumber (64 persons) aimags. 

In the first 8 months of 2011, 557.6 thous.persons were registered as insurer, of which 355.2 thousand or 63.7 percent were those from the establishments, and 202.4 thousand or 36.3 percent from the government budgetary organization. Compared to the same period of previous year, the number of insurers increased by 50.4 thousand or 9.9 percent, the number of insured establishment increased by 46.0 thousand or 14.9 percent, and the number of insured government budgetary organization increased by 4.3 thousand or 2.2 percent... 

In the first 8 months of 2011, social welfare pensions and benefits allocated to 56.2 thous.persons, showing an increase of 478 persons or 0.9 percent, total amount of the allocated fund increased by 5.5 bln.tog or 32.4 percent compared to the same period of the previous year.

In the first 8 months of 2011, 475.8 bln.tog were distributed to 2.6 mln. persons (double counting) from the Human development fund. 

In the first 8 months of 2011, the number of infectious disease cases was 26.0 thousand, down by 493 cases or 4.9 percent compared the same period of the previous year. Particularly, there were 2061 persons or 82.1 percent decrease in by Enterovirus-71, 2316 persons or 67.1 percent in mycoses, 862 persons or 36.0 percent in shigellosis, 618 persons or 18.8 percent in trichomoniasis, 558 persons or 14.2 percent in gonococcal infection, and 161 persons or 5.0 percent in tuberculosis. 

At national level, 12946 crimes were registered in the first 8 months of 2011, reflecting an increase of 68 crimes or 0.5 percent compared to the same period of the previous year. The increase in the number of crimes was mainly due to the increases in crime against the rules of safety of traffic and use of motor vehicles (259), crime against social security (249), crime against children, family and social morality (64), crime against environmental protection rules (38), crime against administrative rules (37), and crime against judicial procedures (17), although there were decreases in crime against the right of ownership (385), crime against human life and health (or physical well-being) (149), crime against population health (31), and crime against economic entity (22) compared to the same period of previous year. 

In the first 8 months 2011, occurred crimes caused 5244 injuries and 826 deaths. The number of injuries up by 685 persons or 14.0 percent and the number of deaths down by 68 persons or 7.6 percent compared to the same period of the previous year. 

II. Macroeconomic indicators 

The national consumer price index in August, 2011 decreased by 0.3 percent compared to the previous month, increased by 5.2 percent from December 2010, and increased by 9.0 percent compared to the same period of the previous year. The decrease in national index compared to the previous month was mainly due to the decreases of 3.3 percent in food and non-alcoholic beverages.

According to the report of the Bank of Mongolia, money supply (broad money or M2) at the end of August 2011, reached to 5911.2 bln.tog, reflecting a decrease of 9.2 bln.tog or 0.2 percent compared to the previous month, and an increase 2253.8 bln. tog or 61.6 percent compared to the same period previous year.

At the end of August 2011, currency issued in circulation reached 705.8 bln.tog, increased by 31.9 bln.tog or 4.7 percent compared to the previous month, and by 238.3 bln.tog or 51.0 percent compared to the same period of previous year. 

Loans outstanding at the end of August 2011, amounted to 4870.8 bln.tog, up by 189.4 bln.tog or 4.0 percent compared to the previous month, and by 1848.8 bln.tog or 61.2 percent compared to the same period of the previous year. 

Principals in arrears at the end of August 2011, reached 67.0 bln.tog reflecting decreases of 4.3 bln.tog or 6.1 percent compared to the previous month, and 18.4 bln.tog or 21.6 percent compared to the same period of the previous year. 

At the end of August 2011, the non-performing loans over the bank system reached 375.9 bln.tog, showing decreases of 6.0 bln.tog or 1.6 percent compared to the previous month, and of 34.6 bln.tog or 8.4 percent compared to the same period of the previous year. 

In August 2011, there were 23 trading days and 23.5 mln.shares valued at 116.4 bln.tog were traded.

In the first 8 months of 2011, total revenue and grants of the General Government Budget amounted to 2757.0 bln.tog and total expenditure and net lending amounted to 2530.0 bln.tog, representing surplus of 227.0 bln.tog in the General Government Budget overall balance. In the same period of previous year, the overall balance was in deficit of 32.9 bln.tog. In the first 8 months of the this year, General Government Budget overall balance surplus was mainly due to the revenue growth pace exceeded the expenditure growth by 15.4 percentage points. 

Current revenue of the General Government Budget amounted to 2705.0 bln. tog and current expenditure reached 1962.1 bln.tog. Thus, the budget current balance was in surplus of 742.9 bln.tog. 

Compared to the same period of the previous year, tax revenue increased by 784.4 bln.tog or 50.3 percent. The increase was mainly due to the increases of 391.8 bln. tog or 75.9 percent in taxes on goods and services, 228.9 bln.tog or 2.3 times in other taxes, 101.3 bln.tog or 86.8 percent in taxes on foreign trade, 81.1 bln.tog or 42.1 percent in social security contribution, and 2.6 bln.tog or 36.1 percent in ownership tax, although there was decreases of 21.3 bln.tog or 3.9 percent in income tax 

Compared to the same period of the previous year, non-tax revenue increased by 183.2 bln.tog or 2 times. The increase was mainly due to the increases of 132.5 bln.tog or 2.8 times in revenues from budget entities, 31.4 bln.tog or 5.6 times in revenues from dividends, 8.0 bln.tog or 40.2 percent in revenues from interest and fines, 5.2 bln. tog or 19.6 percent in revenues from oil petroleum, 3.2 bln.tog or 12.4 percent in other revenues and 2.9 bln.tog or 11.6 percent in revenues from navigation fee. 

In the first 8 months of 2011, total expenditure and net lending of the General Government Budget increased by 724.5 bln.tog or 40.1 percent to 2530.0 bln.tog compared to the same period the previous year. This was mainly due to increases of 394.6 bln.tog or 58.7 percent in subsidies and transfers, 196.7 bln.tog or 29.2 percent in expenditure of goods and services, 149.8 bln.tog or 53.9 percent in capital expenditure, although there was decreases of 8.9 bln.tog or 6.0 percent in lending minus repayments, and 7.6 bln.tog or 22.8 percent in interest payments. 

Spending of 427.7 bln.tog on capital expenditure in the first 8 months of 2011 was higher by 149.8 bln.tog or 53.9 percent compared to the same period of the previous year. The increase in capital expenditure was due to the increases of 118.6 bln.tog or 43.7 percent in capital expenditure of domestic sources and 31.2 bln.tog or 5.7 times in foreign financed capital expenditure. 

In the first 8 months of 2011, Mongolia traded with 117 countries from all over the world and total external trade turnover reached 7080.1 mln.US dollars, of which exports made up 2889.0 mln.US dollars and imports made up 4191.1 mln.US dollars. 

External trade balance showed a deficit of 1302.1 mln.US dollars in the first 8 months of 2011, increased by 1130.5 mln.US dollars or 7.6 times compared to the same period of the previous year. 

External trade balance showed a deficit of 201.4 mln.US dollars in August, 2011, increased by 160.5 mln.US dollars or 4.9 times from 40.9 mln.US dollars deficit in August 2010. 

Total external trade turnover increased by 3321.4 mln.US dollars or 88.4 percent compared to the same period of the previous year, of which imports up by 2225.9 mln.US dollars or 2.1 times, and exports up by 1095.4 mln.US dollars or 61.1 percent. 

III. Economic sector indicators 

On the 1st of September 2011, 17.0 thous.tons of potatoes, 19.4 thous.tons of vegetables were harvested and 432.4 thous.tons of gross hay harvest, 9.2 thous. tons of handmade fodder were produced. Vegetables by 10.1 thous.tons or 2.1 times, while potatoes by 2.4 thous.tons or 16.4 percent, gross hay harvest by 22.2 thous. tons or 5.4 percent, handmade fodder by 199.3 thous.tons or 2.2 percent compared to previous year. 

In the first 8 months of 2011, the total industrial output increased by 104.7 bln.tog or 8.9 percent to 1279.2 bln.tog (at 2005 constant prices) compared to the same period of the previous year. The increase in the industrial output was mainly due to 1.9 percent to 2.1 times increases in mining and quarrying products such as crude oil, coal and iron ore; and 1.2 percent to 9.9 times increases in industrial main products of manufacturing sector such as bread, briquette, combed down, knitted goods, sausages, juice, alcohol, beer, cement, cigarettes, soft drinks, carpet and electrical conductor wire. 

In the first 8 months of 2011, 11763.7 thous.t freight and 2561.8 thous.passengers (double counting) were carried by railway transport. Compared to the same period of the previous year, the number of carried freight rose by 1270.3 thous.t or 12.1 percent and the number of carried passengers rose by 202.8 thous.persons or 8.6 percent. Due to the increases in carried freight and passengers, revenue from railway transport increased by 62.4 bln.tog or 32.7 percent to 253.2 bln.tog in the first 8 months of 2011, compared to the same period of the previous year. 

In the first 8 months of 2011, 1626.0 t. freight and 378.9 thous.passengers(double counting) were carried by air transport. Compared to the same period of the previous year, the number of carried freight increased by 519.5 t or 47.0 percent, the number of carried passengers rose by 118.1 thous. persons or 45.3 percent. Due to the increases in carried freight and passengers, revenue from air transport increased by 28.0 bln.tog or 34.9 percent to 108.1 bln.tog in the first 8 months of 2011, compared to the same period of the previous year. 

According to the report of the Institute of Meteorology and Hydrology, maximum precipitation was registered in Darkhan soum (107.1 mm) of Darkhan-Uul aimag in August, 2011. In the Augustof this year, Zamiin-Uud soum of Dornogovi aimag had the highest air temperature (+38°C), while Khatgal soum of Hovsgol aimag had the lowest air temperature (-5.6°C). Wind speed reached 26 m/sec in Olgii soum of Bayan-Olgii aimag. 

Daily average concentration of nitrogen dioxide exceeded 30 times around West crossroad of Ulaanbaatar city, 28 times around 13th micro district, 4 times around 1st micro district and 2 times around Kharkhorin market, daily average concentration of sulphur dioxide exceeded 1 time around West crossroad, particulate matter less than 10 micrograms exceeded 18 times around West crossroad and 13 times around 32nd Toirog, particulate matter less than 2.5 micrograms exceeded 18 times around 13th micro district and 1 time around West crossroad from the maximum allowable concentration of air quality standard in August, 2011. 

In the first 8 months of 2011, 2295 disasters and accidents occurred. As a result, 151 people died, 165.4 thous.livestock and animals had lost. In the first 8 months of this year, 1942 object fires, 17 accidents related to artisanal mining and rock falls, 40 cases of animal madness disease, 72 river and lake accidents occurred. Estimated damage caused by the disasters and accidents amounted to 3.1 bln.tog.

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<Mogi & Friends Fund A/C>


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.




"Mogi" Munkhdul Badral

Executive Director

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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 or +976-99996779.



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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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