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Close: Mongolia Related ASX Listed Companies, September 14, 2011
S&P/ASX 200 RESOURCES
Tavantolgoi draft proposal rejected
September 14 (news.mn) President Ts.Elbegdorj on Tuesday officially confirmed that the National Security Council (NSC) has rejected a draft proposal to award Tavantolgoi development rights to consortiums from China, Russia, and the United States.
After discussions last week, the NSC decided that the draft does not meet legal requirements. The Government submitted the draft to a working group of the NSC on July 22. It is possible that the Government will revise the draft and resubmit it to the NSC at a later date.
Ivanhoe Energy drilling team mobilized on second planned test well in Mongolia
CALGARY, Sept. 13, 2011 /PRNewswire via COMTEX/ -- David Dyck, President and Chief Operating Officer of Ivanhoe Energy Inc., and Gerald Moench, President of Ivanhoe's wholly-owned subsidiary Sunwing Energy Ltd., announced today that Ivanhoe's drilling team has begun moving the drilling rig to the site of the second exploration well in east-central Mongolia.
"Our drilling program was designed to advance our knowledge of Mongolia's Nyalga Basin, a highly prospective area with numerous potential structures that could be tested by drilling," Mr. Dyck said. "These initial wells are testing two different structures with diverse seismic characteristics."
Mr. Dyck said testing has been completed at the first exploration well, N16-1E-1A, which was drilled to a depth of 2,003 metres. The first well has been plugged and abandoned and the rig disassembled for mobilization.
"While the testing of our first well did not encounter oil shows in the reservoir, it has provided vital information that we are combining with our seismic data to help guide our continuing drilling program."
The second well is on an eight-square-kilometre structure approximately 12 kilometres from the first well. Drilling of the second well is expected to begin by the end of this month toward a target depth of approximately 2,500 metres.
"Mongolia in general, and the Nyalga Basin in particular, is in the early days of oil exploration, requiring a great deal of study to understand its full potential. We remain optimistic that our exploration efforts will enable the discovery of oil resources at our Mongolian project," Mr. Dyck added.
Sunwing Energy Ltd. is party to a Production-Sharing Contract with the Mongolian Government for Block XVI, a 12,679-square-kilometre area that encompasses the Nyalga Basin and is adjacent to the north-south Trans-Mongolian Railway.
Petro Matad updates on licence arrangements; shares up
September 14 (Proactive Investors) Mongolia focused Petro Matad (LON:MATD) has received from the government authority the usual two year extension to its production sharing contract (PSC) on Block XX in the eastern part of the country.
The firm also told investors today that it had received approval from the Petroleum Authority of Mongolia (PAM) to relinquish parts of the original areas of Blocks IV and V in the southwest and central respectively, which have been shown to not be prospective for hydrocarbons.
In a statement, Petro Matad said that all the current conditions of the PSC remained in place during the extension, which will come up for renew again after July 19, 2013.
Minimum work commitments for the two years total US$35,900,000, and no further mandatory relinquishments of area are required, said the firm.
It added: "The company has received approval from PAM to relinquish 25.7 percent and 34 percent. of the original areas of Blocks IV and V respectively, as required by the terms of the PSCs and Mongolian law."
It said that Blocks IV and V are now 28,998.60 sq km and 21,149.72 sq km respectively.
Studies of surface geology, 2D seismic, gravity, and magnetic surveys confirmed that the relinquished areas are non-prospective for hydrocarbons, said the company.
This afternoon shares in the firm were up 2.22 percent - trading at 46 pence.
September 14, Aspire Mining Limited (ASX:AKM) --
Recently Appointed Chief Geologist Receives Mongolian Geologist of the Year Award
Aspire Mining Ltd (ASX: AKM, “Aspire”) is pleased to announce the formal appointment of Mr Barsbold Tserenpuntsag (“Barsaa”) as the Company’s Chief Geologist.
Barsaa, who is credited with the discovery of Aspire’s world-class Ovoot Coking Coal Project (“Ovoot”) in northern Mongolia, was previously contracted by Aspire on a part time basis.
Barsaa will help oversee the current exploration programme at Ovoot and will be responsible for identifying potential for new coking coal discoveries in northern Mongolia.
Earlier this month, by order of Mr Zorigt D., Minister of Mineral Resources and Energy in Mongolia, Barsaa was awarded the Geologist Medal for 2011, in recognition for his outstanding contribution in the development of the Mongolian geological sector.
In 2008, Barsaa planned and executed the initial Ovoot exploration programme that made the initial discovery holes. The programme was conducted by a Mongolian syndicate, the members of which are now significant Aspire shareholders.
Barsaa also had significant involvement in Aspire’s 2010 exploration programme, which culminated in the establishment of Ovoot’s maiden 330.7 million tonne JORC-Compliant Resource.
Barsaa will report to Aspire’s Exploration Manager, Mr Iestyn Broomfield.
Appointment of General Manager, Marketing
Aspire is also pleased to announce the appointment of Mr Scott Southwood to the role of General Manager, Marketing.
A qualified process engineer, Mr Southwood has significant coal industry experience, beginning his career at Kembla Coal & Coke Pty Ltd in Wollongong NSW before moving into coal marketing and logistics roles with Shell and Anglo Coal. For the last eight years, he has been employed by Ensham Coal where he was responsible for coking and thermal coal sales into North Asia.
Scott will be responsible for marketing Ovoot Coking Coal to global markets and working on rail and port capacities.
Scott will be based in the Aspire marketing office in Brisbane, Queensland, and will report to the Managing Director.
Banpu should benefit from Hunnu acquisition
Credit Suisse maintains its "outperform" rating to Banpu Plc, following the Australian dollar acquisition of Mongolia's Hunnu Coal Ltd.
MICC: Banpu to takeover HUN 100% - Hunnu Update
September 13, MICC --
§ Banpu bid at A$1.80: lower than our target price (TP), but highly compelling. For a 100% takeover we had expected a price closer to our TP. However the bid is highly compelling given that 1) it’s an all cash off market offer 2) it represents a 30% premium to HUN’s last closing price of A$1.39/sh (Sep 8, 2011), 53% to one month volume weighted average price (VWAP) of A$ 1.18/sh, and 41% to three month VWAP of A$1.28.
§ Offer is likely to complete. The Board of Directors unanimously recommends that HUN shareholders accept the offer. This is not surprising given the current unstable market conditions. The issues revolving around the US and the EU have hit global markets, and HUN’s price had dropped 26% since its April high of A$1.75. We also believe that an entrance of a competing bidder is unlikely due to “no-talk, no-shop” agreement and Banpu’s 12.2% blocking stake in the company.
§ HUN’s acquisition by a leading strategic player highlights the potential for further M&A in Mongolia. So far there are few major global miners who have set a foothold in Mongolia. Peabody and Shenhua are most likely will grab a piece of Tavan Tolgoi’s bid, now Banpu is offering all-cash to takeout Hunnu Coal. Major miners such as Xstrata, BHP Billiton, Anglo American, Teck Resources and many others are yet to set their presence in Mongolia. Given Mongolia’s mineral wealth and prime location, we expect that these global players may enter the Mongolian mining industry in the near future.
§ Who’s next? The remaining coal players in the Mongolian market include Southgobi Resources, Aspire Mining, Xanadu Mines, and Prophecy Coal. Other potentials include Voyager Resources and Haranga Resources, which are also led by HUN’s Chairman, Matthew Wood. His success at creating a coal company worth $500m in just two years shows Mongolia’s resource potential.
GMM: Annual Financial Statements 2011
September 14, General Mining Corporation Limited (ASX:GMM) --
Mongolia Per Capita GDP to Hit $5,000 by 2012: Govt Minister
September 13 (CNBC) Mongolia’s gross domestic product (GDP) per capita is on target to hit $5,000 by the end of 2012 from $2,470 currently, the country’s Vice Finance Minister, Ganhuyag Chuluun Hutagt told CNBC.
The country's economy grew 14.3 percent in real terms and 29.1 percent in nominal terms (including inflation) in the first half of this year. Mongolia is one of the world’s fastest growing economies and is currently classed as a low-middle income country by the World Bank.
If it were to hit the $5,000 mark next year, Mongolia would overtake Indonesia in terms of per capita GDP and become as rich as China and Thailand.
The country’s growth is being driven by a booming mining sector and its large reserves of coking coal. Speaking on the sidelines of the World Economic Forum meeting in Dalian, China, Hutagt said Mongolia had become the largest coal exporter to China in August, surpassing Australia.
But that rapid growth is coming at a price. Inflation in the country surged by 10.1 percent in July over the previous year, forcing the central bank to raise its policy rate to 11.75 percent on August 29th.
However, Hutagt suggested there would be no slowdown in government spending in the near-term which could help ease inflation. He said government spending was up 50 percent over 2010 but the country was still on track for a budget surplus.
“We had forecast losses this year, but revenues have been much higher than we had projected, we are on target for a surplus,” he said.
The country’s ruling party faces an election, due to be held around June 2012 and it has been spending the country’s newfound wealth on education and social programs.
Hutagt said the government planned to issue its first sovereign debt early next year, despite running a budget surplus, in order to invest in infrastructure projects such as airports and roads.
The big risk for Mongolia, however, remains its dependence on mining exports, especially to China. A crash landing for China’s economy forecasted by hedge fund investors such as Jim Chanos and economist Nouriel Roubini, could set back the country’s ambitious GDP growth targets.
But Hutagt said the country was seeking to diversify its risks by exporting not just coal but also copper, oil and uranium and targeting other export markets such as Russia.
Domestic consortium to invest in industrial complex
September 14 (news.mn) A consortium of ten Mongolian companies says it will help finance the Sainshand industrial complex, which will consist of nine factories, including a coal washing plant, a copper enriching factory, and a crude oil refinery.
The ten companies, including the Bodi Group, Monnis, Magnai Trade, and the Just Group, have created the National Development Corporation and they say they are ready to move forward on the project.
Preliminary estimates say the Sainshand complex will cost USD 11 billion to build. Investors from China, Japan, and South Korea have already expressed an interest in financing the project.
The former adviser to the Minister for Road, Transportation and Urban Development, Ch.Ganbat, who has worked on the Sainshand project since its inception, will serve as the executive director of the National Development Corporation.
MNT 108 billion in bonds sold so far
September 13 (news.mn) Deputy Minister for Food, Agriculture and Light Industry Kh.Zoljargal tells our correspondent that MNT 108 billion in bonds have been sold so far as part of a MNT 300 billion bond issue for economic development.
The bond sale began on August 9. The bonds are being sold on the Mongolian Stock Exchange every Tuesday.
The bond issue was approved by Parliament last July. Of the MNT 300 billion to be raised, MNT 150 billion will go toward developing small-to-medium-sized business enterprises, MNT 100 billion will help support the producers of wool and cashmere products, and MNT 50 billion will go to herders who sell camel and sheep wool to domestic factories.
Kh.Zoljargal says the money that goes to businesses will be in the form of loans through commercial banks which must be repaid.
MONGOLIA AND GERMANY DISCUSS THEIR COOPERATION IN MINING
September 14, Ulaanbaatar, Mongolia /MONTSAME/ The Mongolia-Germany mining and mineral resources cooperation group discussed at its third meeting September 12 an implementation of the protocol, released at its last year's meeting, and exchanged information and ideas on further trends of the mining development in the two countries.
In Berlin the sides have considered the issues concerning the collaboration between the enterprisers, a realization of joint projects, and difficulties arising.
During the meeting, the sides highlighted a progress of a joint coal-processing project of Nariin Sukhait co-realized by Germany's MBE-Coal & Minerals Technology LLC and the Mongolian MAK Company.
Implemented with an investment of the MAK company, the project's technical and economic justification has been worked out by the MBE-Coal & Minerals Technology LLC, and the construction of mining will start in 2012 and put into use a year later.
In addition, they have talked about some projects proposed by a metallurgical factory of Darkhan-Uul aimag and the Energy company located in Sharyn gol, and another project of the Erdenet Mining Construction.
With some 33 representatives from the two sides, the third meeting was co-chaired by B.Batkhuu, a head of the mining and heavy industry policy department of the Ministry of Mineral Resources and Energy, and by Dr. Mager, a head of the energy research, renewable energy and coal department of the Federal Ministry of Economics and Technology.
Germany's mining companies are interested in running business in the Mongolian mining sector, moreover, the Federal Ministry expressed its willingness to establish Mongolia-Germany intergovernmental agreement on cooperation in the raw materials sector.
The working group's next meeting will take place in 2012 in Ulaanbaatar, Mongolia.
MICROCAPITAL BRIEF: responsAbility Invests $2.5m in Microfinance Institution Asian Credit Fund of Kazakhstan, Bank Eskhata of Tajikistan, XacLeasing of Mongolia
September 13 (MicroCapital.org) responsAbility Social Investments AG, a Swiss investment company that manages four microfinance investment vehicles (MIVs), recently reported to MicroCapital that it has made debt investments totaling the equivalent of USD 2.5 million in microfinance institutions Asian Credit Fund LLP of Kazakhstan, Bank Eskhata (Eskhata) of Tajikistan and XacLeasing, a sister company of Mongolian microfinance institution XacBank . The investments have been made through three MIVs: responsAbility Global Microfinance Fund (rAGMF), responsAbility Microfinance Leaders Fund (rAMLF) and responsAbility Mikrofinanz-Fonds.
In Kazakhstan, rAGMF made a local-currency debt investment equivalent to USD 501,000 in ACF, a micro- and small business development finance institution. As of 2010, ACF reported to MIX total assets of USD 4.8 million, a gross loan portfolio of USD 2.6 million, approximately 4,539 borrowers, ROA of -1.75 percent and ROE of -16.4 percent.
In Tajikistan, rAGMF and Mikrofinanz-Fonds made a combined debt investment of USD 1 million in Eskhata, a commercial bank that lends to micro- and small businesses. As of 2010, Eskhata reported to the US nonprofit data provider Microfinance Information Exchange (MIX) total assets of USD 78.3 million, a gross loan portfolio of USD 47.4 million, approximately 9,500 borrowers, return on assets (ROA) of 2.62 percent and return on equity (ROE) of 22.5 percent.
In Mongolia, XacLeasing, which provides equipment leasing services to micro-, small and medium-sized enterprises, borrowed USD 1 million from rAGMF. As of 2010, XacLeasing reported a paid-in capital of MNT 2 billion (USD 1.6 million). TenGer Financial Group is the parent organization of both XacLeasing and XacBank.
As of September 2011, responsAbility reported total assets under management of approximately USD 1 billion.
China, Mongolia vow to further promote ties
BEIJING, Sep. 13 (Xinhua) -- China and Mongolia vowed to further promote bilateral ties as Chinese Vice Premier Li Keqiang met with his Mongolian counterpart Tuesday afternoon.
"China and Mongolia share broad common interests. A neighborly relationship is in the fundamental interests of both countries and their citizens," Li said during his meeting with Mongolian First Deputy Prime Minister Noroviin Altanhuyag in Beijing.
Li proposed four methods for promoting bilateral ties, including maintaining high-level contacts and enhancing strategic mutual trust, strengthening substantial cooperation, increasing communication between the two countries' legislative bodies, political parties, trade unions and women and youth organizations and strengthening multilateral coordination.
Li, who is also a member of the Standing Committee of the Communist Party of China (CPC) Central Committee Political Bureau, also called for closer exchanges and cooperation between the CPC and Mongolian political parties.
He said the CPC will expand its ties with Mongolian political parties by exchanging experience in managing state affairs and party-building.
Altanhuyag, who is also chairman of the Mongolian Democratic Party (MDP), said that frequent high-level exchanges and increased mutual political trust between China and Mongolia have laid a solid foundation for expanding bilateral communication and cooperation.
The MDP hopes to learn from China's experience in creating a more open government and play a positive role in the development of the Mongolia-China strategic partnership, Altanhuyag said.
STATE HEAD BANS CABINET'S WORK ON NUCLEAR WASTE
September 13, Ulaanbaatar, Mongolia /MONTSAME/ President Ts.Elbegdorj banned the cabinet from dealing with nuclear waste issues on Tuesday.
His decree and directives for the cabinet were released the same day prohibiting it from cooperating on behalf of Mongolia with any countries or international organizations, making agreements and contracts, holding talks and creating documents without a decision of the National Security Council (NSC).
Such a ban is based on the Constitution, laws on President and on the National Security Council (NSC).
The directives concern maintaining related laws about prohibiting of keeping nuclear waste, importing it for burying, transporting through territories of Mongolia.
Having received the decree, the PM S.Batbold has signed it.
Why All Roads Lead to Mongolia
Mongolians have long dismissed their country as a pony between two elephants. But a wealth of natural resources could change that.
September 14 (The Diplomat) In the past month, Mongolia has played host to an impressive succession of visiting world leaders, including senior officials from China, the United States, South Korea and Finland. Movers and shakers in government and business from around the world are taking unprecedented interest in Mongolia. Why?
Notes From an Expedition: Across the Mongolian Steppes
September 13 (World Policy Blog) ON THE BANKS OF THE HURH RIVER, Mongolia—To understand the power, the indomitable spirit, the sheer toughness of the Mongolian soul, it’s only necessary to spend four days in remote Hinti Province, up by the frontier with Siberia, one of the most remote corners of our planet. Even today, with the raging winds and snow, the sub-zero temperatures of winter still weeks away, the herders and their families that form the backbone of this nation are preparing for those hard times ahead.
Chinedkhand Tumenbayar and her family expect to break camp in a matter of days to move from their summer on the banks of the Hurh River to their winter shelter. They will knock down and load on a truck the two gers, round felt tents called yurts in neighboring Kazakhstan that have sheltered Mongolian herders for a thousand years or moreand now house three generations of Tumenbayars. Outside, more than 1,000 sheep and goats graze alongside scores of cows and horses. Together, they provide the meat and milk that feed the family. Indeed, a large side of mutton, freshly slaughtered, sits where it’s been thrown casually on one of three sofa-beds where American visitors are welcome inside the ger. Eventually, the mutton will become the meal for several days for the family, together with the milk that is boiling in an immense pot on the stove in the center of the ger as Chinedkhand lifts ladlefulls repeatedly over her head and dumps them back into the pot to prevent the liquid from curdling.
Their lives revolve around the herd, she explains. It provides food—meat and dairy products—as well as substantial revenue from the fur the cashmere goats shed each year, which currently fetches $72 per kilo (nearly $33 a pound). Each goat produces about 11 ounces, or a third of a kilo per year. The fruit of the revenues are all around us. Across the fields beyond their gers are three spanking new tiny log cabins with bright red roofs. Each cost $5,000 to build, and they are planning to rent them out—at $7 a day—to city folk who want some fresh air and to access the pure stream at their doorstep.
For some $300, the family purchased a 15-inch flat panel television that sits proudly between the two sofas, connected to a satellite dish and solar array outside the ger. They can receive 18 channels, including the BBC, and to prove it she switches it on to scenes of Egyptian protestors torching the Israeli embassy in Cairo, half a world away. She doesn’t speak English, but the family does not lack for intellectuals.
Indeed at that moment in swaggers her father, Dambindombin. He’s visiting from Ulaanbaatar and is happy to tell us his life story. Dambindombin is a translator, it seems—from Russian to English. Indeed, he is the Mongolian translator of the entire Harry Potter series, not to mention Jules Verne and some 40 books a year, all translated from Russian editions into Mongolian. Life is better in some ways these days for Dambindombin than under the Soviet regime that ruled the nation during his youth. Still, he has mixed feelings. On the one hand, “during the communist era there was a central plan, a five-year plan and that was great for the country,” he observes. “But if you look at this society nowadays, democratic society, unemployment is so high, people don’t have enough jobs, there is no sense of planning.” On the other hand, after he received his language training in Irkutsk as a young man and returned to Mongolia in the 1970s when the Soviets ruled, he was allowed to translate just one book a year.
Indeed, this nation, even the herders who comprise nearly half the population and have a reputation as a profoundly conservative, independent lot, are profoundly divided. Even inside this ger there are divisions. “Oh we all vote Democratic (party) around here,” Chinedkhand says archly sweeping her hand across the landscape. “Not me,” her sister finally pipes up quietly from the corner, “I voted communist.” Everyone bursts out laughing. Indeed, there are some powerful pockets of support for the MPP [Mongolian People’s Party] as the old line communist party, now restyled as socialists, calls itself.
In another, remote part of Hinti Province, barely 50 miles south of the Siberian border, 72-year-old Tsevelna tells visitors that she has always voted communist—it’s all she knows. She is seated in a tiny shack with a window, without glass and a doorway with no door. Flies buzz in and out through both openings, landing on the food that she bustles to set out for her guests, and with some prompting, offers a running monologue on her life and that of her parents, which is the story of much of rural Mongolia. Before the communists arrived, they had no herds they could call their own. This was a feudal society, and Tsevelna and her neighbors were, effectively, little more than serfs—indentured servants to the wealthy who owned all the cattle. Soviet communism changed that. The vast herds of the wealthy were seized and collectivized. Tsevelna and her family were given salaries to care for the animals. Education became a right, not merely a privilege, and Mongolia developed one of the world’s highest literacy rates.
Much of this changed yet again in 1992 when communism was overthrown. Suddenly, the herders became masters of their own destiny. The herds, their size, where they would live and pasture, became decisions each family would make. Today, Tsevelna’s life, it would seem, has never been better. In all, she has seven sons and four daughters as well as 23 grandchildren. One of her children runs the local hospital in Underhaan, another is a surgeon, and a third graduated from Mongolia National University and runs her own company. There are more than 200 animals in Tsevelna’s herd that are tended, since her husband died earlier this year, by her grandson and his wife, Tuya, who has been doing her best to capture an elusive cell-phone signal as we sit in the cabin.
It is just such herds and their growth that deeply concern a socialist Member of Parliament we happen across in a ger camp where we’ve spent a night. Naranhuu is the MPP parliamentarian from the Middle Gobi where we will be heading next.
“The problem of Mongolia is that half the population is still nomads,” he begins. “Where there is a strength, there is a weakness and the other way around. Because half of our people are nomads, theirs is a very rigid and conservative way of life. It doesn’t allow you to, let’s say, be hungry and at the same time it doesn’t allow you to die. It gives you a certain stability of income but at the same time doesn’t allow you to go forward, to study.”
At the same time, there is vast potential for unpredictable catastrophe, he says. “The main source of living, during the last 20 years of democracy, is cattle, and the number of cattle has doubled, which is a negative. Now, because they are purely in private hands, people want to grow the number. We have so many cattle, when the weather is good, it’s okay. But when the weather turns the other way around, we have a whole new layer of burden. The dzud has cost people everything.” He is referring to a fierce series of winter storms that seem to return at irregular intervals to ravage the countryside and decimate the herds. “Every seven to eight years we have these dzuds for sure. At least half of all cattle die.” And countless herders and their families suffer.
Still, he is deeply proud of his civilization and all that his nation represents—this vast buffer between two of the world’s great powers—Russia and China, both of which have variously ruled and been conquered by Mongolia. “We have existed much longer than any other type of civilization, even China,” Naranhuu smiles proudly.
What is most striking about this nation is the very vastness of this buffer state. As we head back to the capital of Ulaanbaatar, some eight hours distant, much of it over dirt tracks that form the bulk of Mongolia’s road structure, we pass through valley after valley, devoid of all human life, save for the occasional buzzard and scattered stray cattle. Broad, endless stretches of grasslands, valleys and gently rolling hills that as we go over them give way to yet more valleys and more hills. It may be perhaps the largest, emptiest stretch on the planet—this land of the eternal blue sky.
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