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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GUF trading intraday high of +10.6%
Guildford: SOUTH GOBI PROJECT MINING LICENCE GRANTED AND COAL RESOURCE UPGRADE
January 30, Guildford Coal Limited (ASX:GUF) --
HIGHLIGHTS
Ø Key milestone with the granting of the first Mining Licence and a Pre-Utilisation Agreement (Mineral Development Licence) to Guildford's Mongolian subsidiary for the South Gobi Coal Project
Ø Independent Geologists have completed a further review of the South Gobi Project and have upgraded the JORC resource to 70.4Mt (previously 63.1 Mt) of coking coal consisting of 39.7Mt of Indicated (previously 38.2Mt) and 30.7Mt of Inferred Resource (previously 24.9Mt)
Ø The Mining Licence and South Gobi Project coal deposits provide the necessary building blocks for the potential startup of an open cut mining operation in mid 2012
Ø Further results received on quality from South Gobi Project confirms coking coal capability with the trend from semi soft coking (1/3rd Coking Coal classified under Chinese System) in the west to hard coking (Coking Coal classified under Chinese System) in the east of the resource
Ø Scoping Studies for the start-up operation on the South Gobi Project will be completed in early February 2012 with a 2Mtpa Case and a 4Mtpa Case being developed
Ø The South Gobi Project is strategically located approximately 60km from the Chinese border station town of Ceke, gateway to end user markets in China. Discussions with potential offtake partners are well advanced.
Ø Independent geologists have also upgraded the Exploration Targets# for the South Gobi Project to 70Mt - 892Mt of coking coal (previously 0 - 700Mt) and for the Mid Gobi Project to 165Mt - 830Mt of thermal coal (previously 30Mt - 680Mt).
Ø Drilling will continue after the Mongolian winter on the key tenements in the South Gobi Project to further define the JORC resource for the conceptual Central, West and East Pits and to expand the Mid Gobi project mineral resource.
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Credit Suisse Ceasing to be Substantial Holder in Guildford
January 30 (Mogi) By my calculations Credit Suisse disposed 758,738 Guildford Coal Limited (ASX:GUF) shares on January 24 at average price of 83.12.
IVN closed -1.79% to C$17.05, -1.04% to $17.08
Rio may push for shake-up of Ivanhoe Mines
January 27 (Reuters) - Rio Tinto (RIO.L: Quote) (RIO.AX: Quote) has opened the door to a shakeup of the board and senior management of Ivanhoe Mines IVN.TO now that it has taken control of the Canadian miner, which owns two-thirds of the massive Oyu Tolgoi project in Mongolia.
In a filing with the U.S. Securities and Exchange Commission, Rio said it would look to gain more seats on the Ivanhoe board and that it anticipates replacing of some of the management, including senior management.
But Ivanhoe's deputy chairman was quick to highlight a 2010 agreement that he said guarantees more than 50 percent of Ivanhoe's board must remain independent, meaning Rio could not gain a majority on the board. All management appointments are made by the board.
Rio Tinto, which boosted its stake in Ivanhoe to 51 percent earlier this week, also said it may also approach Ivanhoe - alone or with a third party - on the ownership structure of the Oyu Tolgoi copper-gold mine.
Rio said it has no plan for changes to the board or management at this time but said it is reviewing the matter. The SEC filing sheds more light on Rio Tinto's intentions for Ivanhoe.
The Anglo-Australian miner, scarred by the costly takeover of aluminum giant Alcan at the height of the commodities boom, is not expected to try for a full takeover of Ivanhoe.
Instead, analysts say, it will likely seek a friendly deal that would give it control of Oyu Tolgoi but leave behind Ivanhoe's other projects. Oyu Tolgoi, one of the world's biggest mining projects, is due to start producing within 18 months.
The mine is 34 percent owned by the government of Mongolia, with Ivanhoe owning the rest.
In 2010, Rio said that it had held talks with its biggest shareholder, Chinalco, about the possibility of bringing in the Chinese state-owned company as a partner in Oyu Tolgoi, a move that would have to be approved by the Mongolian government.
Chinalco holds a 8.4 percent state in Rio Tinto, according to Thomson Reuters data.
BOARD BUMP
In a statement released on Friday, Ivanhoe's deputy chairman Peter Meredith shot down talk of wholesale changes to Ivanhoe's board or management.
"While the board obviously would take into account the views of its major shareholders, the composition of the Ivanhoe Mines management team is a board responsibility," he added.
Rio currently has seven nominees on the board, including four independents.
Meredith said that the current board and management team remain focused on bringing Oyu Tolgoi into production.
Oyu Tolgoi, which translates to Turquoise Hill, is about 50 miles north of Mongolia's border with copper-hungry China.
Development of the $6 billion project was delayed for years as Ivanhoe hammered out a complicated royalty agreement with Mongolia, finally agreeing to a deal in 2009.
Once at commercial production in 2013, Oyu Tolgoi is expected to produce more than 544,000 tons of copper, 650,000 ounces of gold, and 3 million ounces of silver a year on average over its first 10 years.
Rio now holds 51 percent of Ivanhoe, while founder and chief executive, Robert Freidland, holds a 13.7 percent stake, according to Thomson Reuters data.
The company's shares have slumped 17 percent since Rio Tinto won a fight against Ivanhoe's "poison pill" takeover defense, clearing the way for Rio to gain control of the miner.
Its shares were down 1.79 percent at C$17.06 late on Friday afternoon on the Toronto Stock Exchange.
Link to IVN release: "Ivanhoe Mines Expects to Maintain a Majority of Independent Directors on the Ivanhoe Board"
Related:
Ivanhoe Says Majority of Directors Will Remain Independent – Bloomberg, January 28
Ivanhoe reassures minorities after Rio says to seek changes – miningweekly.com, January 27
Ivanhoe deputy chairman expects board to maintain majority of independents – The Canadian Press, January
Ivanhoe expects board majority to remain independent – Financial Post, January 27
MATD closed -10.96% to 32.5p on Friday
Petro Matad: Directorate Changes (retirement of co-chair Gordon Toll)
January 27, Petro Matad Limited (MATD:LN) --
Petro Matad announces the retirement of its Non-Executive Co-Chair Mr Gordon Toll. Mr Toll is retiring, with immediate effect, from the board to focus on personal matters and other business interests in the mining industry. Dr J Oyungerel was previously Co-Chair with Mr Toll and has now been appointed as Chair of the Board.
Dr Oyungerel said: "I would like to thank Gordon on behalf of the Board and the shareholders for his service to Petro Matad. He was instrumental in the formation of the Company and has served with flair and distinction through its initial formation and in its early years as a public company. We wish him well for the future."
Commenting on his retirement Mr Toll added: "It is with great pride that I leave Petro Matad as an established quoted company with an international shareholder base and a core of solid Mongolian shareholders. I have been involved in the development of resources in Mongolia for over a decade and am in awe of the dynamism that the country has demonstrated. Since the genesis of Petro Matad in 2005, the Company has matched that development with its own rapid rate of growth. I leave the Company in capable hands as it advances its ongoing exploration of Block XX and embarks on a new phase of exploration in the promising frontiers of Blocks IV and V, including their oil shale potential."
XAM opened +1c to 34c
Xanadu Mines: Quarterly Report
January 27, Xanadu Mines Limited (ASX:XAM) --
HIGHLIGHTS
· Initial JORC resource estimate of 170 Mt for the Galshar thermal coal project; the permitting process for the granting of a Mining License at the Galshar Project commenced;
· Acquisition of the Khavtsgait coking coal project;
· Completion of scout drilling at Nuurstei and initial raw and washability coal quality results received;
· Mining license granted for the Khar Tarvaga thermal coal deposit;
· Detailed geophysics program completed at the Sharchuluut porphyry;
· Amgalant and Argalant Uul Copper-Gold Porphyry exploration licenses acquired;
· Xanadu joins Northern Mongolian Rail Alliance Co-operative which aims to construct a railway between Moron and Erdernet in Northern Mongolia;
· A$19.3 million cash on hand at 31 December 2011 to fund exploration and pursue new opportunities.
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GMM no trade at time of writing
GMM: Trading Halt
January 27, General Mining Corporation Limited (ASX:GMM) – General Mining Corporation Limited requests its securities be placed in a trading halt immediately pending an announcement regarding a material transaction.
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Related Party Tender Offer for Mudiks JSC Approved by FRC
January 27 (from MSE website) FRC has approved on January 18, the 60 day tender offer for the remaining 56.1% not owned by related parties Transtsent Capital Management LLC and Japanese citizens Hayata Okomoto (sic), Masaka Okamoto, Emi Okamoto at a minimum price of ₮544.
Link to release (in Mongolian)
2 ADDITIONAL MEMBER COMPANIES RECEIVE LICENSES TO PROVIDE UNDERWRITING SERVICE
January 27 (MSE) In accordance with the resolutions No.19 and 22 passed by FRC on January 18, 2012, "SG Capital" LLC and "United Securities" LLC have been granted permission to carry out underwriting services. Consequentially, now the number of MSE member underwriting companies is 23.
Coal mining statistics released
January 27 (news.mn) The state has released coal mining statistics ahead of next month's "Coal Mongolia 2012" forum for international investors.
Mongolia has coal reserves of 162.3 billion tons. The Mineral Resources Council verified 24 new deposits in 2011.
The executive director of the Mongol Coal Association, T.Naran, says Mongolia exploited 33 million tons of coking coal in 2011, 23 million tons of which were exported to China. The association says there are plans to export coking coal to Japan and South Korea through the Tyanjing port.
S.Altankhuyag, head of the Mineral Resources Authority's Coal Research Department, says Mongolian companies sell coal cheaper than the world market price because the country is landlocked and the infrastructure insufficient. Also, the exported coal is raw. That is why the authority plans to begin processing coal and producing value-added products in the future. Energy Resource has built the first coal-washing factory in Mongolia and a second will open soon, and Erdenes Tavantolgoi will build a coal processing factory.
S.Altankhuyag said the authority has begun researching fuel production from coal under an agreement between the governments of Mongolia and Germany. S.Altankhuyag also said mining companies plan to begin supplying coal for domestic power plants in phases. The Baganuur, Shivee-Ovoo, Aduunchuluun, and Sharyn Gol mining projects have worked at a loss due to supplying coal to power plants.
PROGRAM APPROVED FOR HIGH TECH INDUSTRIES' DEVELOPMENT
Ulaanbaatar, Mongolia, January 27 /MONTSAME/ The National Development and Innovation Committee (NDIC) announced on Thursday it approved a program on developing industry of high technologies.
This program has been worked out together with other state administrative bodies, universities and scientific centers.
It is expected that the program will create legal and regulatory environments to support sustainable development of technological industries of private sector. It also has a great importance in increasing amount of the high-tech industries in total industries contributing to the Gross Domestic Product (GDP) by creating proper structure of financing and investment.
Dy FM: Iran welcomes expansion of ties with Mongolia
Tehran, Jan 29, IRNA - Deputy Foreign Minister Amir Mansoor Borghei on Sunday said Iran welcomes expansion of ties with Mongolia.
He made the remark in a meeting with Mongolian non-resident Ambassador to Tehran Dashdarj Yabahoo.
Yabahoo, for his part, expressed his country's interest in boradening ties with Iran in political, economic and cultural fields.
He submitted a copy of his credentials to Borghei in the absence of Foreign Minister Ali Akbar Salehi who is in Ethiopia to take part in AU summit.
MONGOLIA TO COLLABORATE WITH JAPAN IN ECO-TOURISM
Ulaanbaatar, Mongolia, January 27 /MONTSAME/ A meeting of experts of Mongolia's Ministry of Environment and Tourism and Japan's Ministry of Environment is taking place in Ulaanbaatar.
A delegation led by Mr. Akira Nitta, a head of the external cooperation expert of the Global Environment Bureau, Ministry of the Environment, has arrived here. He is chairing the meeting together with Ts.Damdin, an advisor to Mongolia's Minister of Environment and Tourism.
The gathered are sharing information in scope of a memorandum established by the 6th policy consultative meeting of the two ministries in September of 2011, are determining basic principles of projects to be implemented in near future, discussing issues of implementing model projects of eco-tourism, of usage and trade of asbestos, of natural degradation caused by mining.
The experts also intend to visit some soums of Bulgan and Sukhbaatar aimags to study a possibility of developing the eco-tourism and to share views with the local authorities and people.
This meeting will last until February 2.
Speakers at the MMT Asia Pacific conference (e.g. Mobifinance)
January 29 (Mobile-Financial.com) Some interesting speakers this week at the APAC Mobile Money Summit in Singapore. Have a look at this link for the list - http://www.mobile-money-gateway.com/event/mobile-money-apac-2012/page/mobile-money-apac-speakers. Many of the speakers have been seen and heard at previous events but I would think that the following would have a good story to tell:
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Oyungerel Rentsen from Mobifinance - Mongolia is a mobile money market that I certainly don't know a lot about, but this country of 2.75 million people has 20% of its population living under $1.25 a day, and is also the most sparsely populated country in the world (http://en.wikipedia.org/wiki/Mongolia). I imagine there should be some intriguing insights as to how mobile money is developing in this country - Mobifinance is a standalone company that has been set up by the largest mobile operator in Mongolia, Mobicom. If you speak Mongolian, have a look at their website here -http://mobifinance.mn/mdb
Indian Army to hold 20 war games with friendly nations (e.g. Mongolia)
New Delhi, January 29 (IANS) In its bid to have greater engagement with foreign militaries, Indian Army will this year hold between 15 to 20 bilateral war games with friendly nations like the US, Russia, France and Britain, apart from neighbours Bangladesh, Myanmar and Nepal, officers said Sunday.
The exercises, mostly focusing on counter-insurgency and anti-terrorism manoeuvres, will help in honing the skills of Indian and other friendly troops in different scenarios, and improve their interoperability, as required under United Nation's multinational joint military efforts for world peace.
Among the first exercises this year will be with Singapore at Babina in Uttar Pradesh, close to Jhansi, this March, officers said.
During the India-Singapore exercise, both sides will pit their mechanised forces and tanks in battle with terrorists in an urban scenario. The exercise is likely to be called "Bold Kurukshetra", officers said.
"Indian Army's counter-insurgency skills are much sought after by global powers due to the five-decade experience that we have gained in the northeastern states and Jammu and Kashmir," the officers said.
With the US, the Indian Army's mechanised infantry forces will hold an exercise, "Yudh Abhyas", in Rajasthan this year, when they will both field their tanks and armoured personnel carrier.
Most other exercises are still in the works and the venues and dates will be finalised soon, officers said. The other nations to join the exercises this year will be Mongolia, Bangladesh, Nepal, Australia, and Central Asian nations.
In 2011 too, India had held 16 military exercises with other friendly nations such as Kazakhstan, Uzbekistan, and Mongolia.
In October 2011, India held its first ever army exercise with French Army called "Shakti-2011″ at Chaubatia in Uttarakhand.
Tavan Tolgoi IPO Goes Cold
January 30 (UB Post) For the first time in its history, Mongolia is going to launch a multi-billion dollar initial public offering (IPO) of a country`s strategic coal deposit.
In November, the Government made the decision to list Erdenes Tavan Tolgoi on the Mongolian, London and Hong Kong stock exchanges. However, global media giants such as Reuters, the Financial Times and Wall Street Journal have reported that Mongolia is likely to drop the Hong Kong listing proposal. While experts have warned that Erdenes Tavan Tolgoi will raise much less than expected.
Mongolians citizens, who own 20 percent of the company, are suffering from decision fatigue: Should they hold onto their shares of the company or sell them to the Government now for a 1 million MNT price tag?
Mongolia, which until recently attracted little attention from foreign investors, now appeals to the mining, banking and financial giants of the world thanks to its vast mineral resources. The fact that since April of 2011 Mongolia has been collaborating with four internationally reputable investment banks - Goldman Sachs, Deutsche Bank, BNP Paribas and Macquarie - gives a hope that the Erdenes Tavan Tolgoi IPO will be successful. However, the main hurdle is that the country`s political instability and populist legislation ahead of the elections could negatively affect the overall process.
Mongolian politicians are attempting to acquire large sums of money in a short time, as the elections of 2012 are looming. In order to meet the promises they made to voters, politicians are trying to release the IPO before the elections. Many are worried that it will be a great risk if the IPO is released at a time when investors of Tavan Tolgoi project have yet to be selected and infrastructure issues yet to be resolved.
The questions of underdeveloped infrastructure and uncertainty surrounding Tavan Tolgoi`s investment agreement for its eastern deposit mine are causing doubt among investors.
In order to preserve the value of the deposit, it is better to launch an IPO once mining is put into operation and has started to generate profits, experts warn. But words fall on deaf ears.
"I believe that because it is such a large project, releasing the IPO before the elections will yield much less profit than expected," pointed Masa Igata, CEO of Frontier Securities.
The plan to list Tavan Tolgoi in Hong Kong at the same time as in London and Mongolia was dropped because Hong Kong Stock Exchange isn`t likely to give special dispensation which would allow the Mongolian company to list ahead of the elections, reported the Wall Street Journal.
"Considering the geographic location of Mongolia, we see that it will be quite successful in building assets throughout Asia. The Hong Kong Stock Exchange would play an important role in this," pointed Masa Igata. "Since it is now known that the required papers and technical works are not completed for the Hong Kong, the choice of London Stock Exchange remains."
To launch an IPO in London would be easy, since it has close links with Mongolia. The fact that Mongolia has established a partnership with London Stock Exchange Group to restructure and develop the Mongolian Stock Exchange adds to the sensibility of this move.
However, according to the Wall Street Journal, Erdenes Tavan Tolgoi plans to list in London by issuing global depositary receipts (GDR), which are easier to get approval for but tend to have lower liquidity than primary shares. Getting a primary listing in London is only possible by creating a new company registered in U.K., which can`t be done before the elections. Again, because of a rushed plan to make quick profits, the world class coal deposit may remain undervalued.
Notional shares of Erdenes Tavan Tolgoi had already been distributed to every Mongolian born before 31st of March 2011, making Mongolia a nation of shareholders. Could the fact that Mongolians own 20 percent of the Erdenes Tavan Tolgoi for free negatively affect its IPO? Initially it has been reported that trading will open once the market price of the Erdenes Tavan Tolgoi's shares has been determined on international capital markets. However, politicians changed their minds, deciding to monetize shares distributed to the citizens before the elections.
It has been announced that since February citizens could sell their shares to the government for one million MNT (1000 MNT per share). Doesn't this suggest that the share price is already determined, ahead of the IPO? Handing out one million MNT worth of stock to 2.8 million people means giving away 2.8 trillion MNT or USD two billion worth of stocks. If 20 percent of the company valued at USD 2 billion, the entire price of the company's stock value would naturally be set at USD 10 billion. According to the experts, that kind of expectations will affect the IPO process.
The government is rushing despite its lack of knowledge about how much money needs to be raised exactly. According to the Masa Igata`s estimation, rushing the IPO due to political reasons will take its total value down to 5-6 billion USD and raise between USD 1.5-1.8 billion. On the other hand, if the IPO is postponed until next year, the total value could reach USD 9-10 billion and raise USD 2.7-3 billion.
It's also important to note that the market-value would be determined by investors at the London Stock Exchange. "This is the first time that one of our own strategic mines is going to be valued on the global market, and we should not be rushed on anything," said B.Bold, member of the board of directors of the Mongolian Stock Exchange, in a recent interview with the Mongolian Mining Journal.
The easy steps to a Chinese short-selling fortune (i.e. Winsway)
WANT to make a fortune short selling allegedly shonky Chinese stocks? Then why not follow these easy steps.
January 30 (The Australian) Short sellers have, over the past year, taken to pieces a number of China-based companies. Hong Kong-listed Winsway Coking Coal Coal Holdings, which processes and transports coal from Mongolia to China, is the latest to fall victim to short sellers.
Just before the Chinese New Year break, Winsway was the subject of an anonymous "research" report accusing it of being a "massive fraud".
It spread around the internet in no time. In the space of a couple of hours, the stock had plummeted by about 15 per cent, wiping around $HK1 billion ($121 million) off its value. Looking through the Winsway report, and the other similarly aggressive reports that have triggered slides in other Chinese companies, it's clear a number of steps must be followed when attempting to bring the groups down.
First, come up with a catchy name for your research house. Short selling group Muddy Waters is arguably the godfather of the Chinese take-down, having got the ball rolling last June when it issued a scathing report into China-based, New York-listed timber company Sino-Forest.
The fraud accusations triggered a 93 per cent fall in the value of Sino-Forest, which, despite its protestations, has to date failed to overwhelmingly refute the allegations. The investment fund of billionaire fund manager John Paulson was one of the biggest casualties of the attack, taking a loss on its investment that was originally estimated at $US720m but which Paulson said was only $US107m.
The moniker Muddy Waters is not a homage to the legendary bluesman of the same name but taken from an old Chinese proverb: "Muddy waters make it easy to catch fish." In other words, according to the Muddy Waters website, opacity creates opportunities to make money. "This way of thinking has been part of Chinese culture for centuries, and is institutionalised in the modern (People's Republic of China)".
The attack on Winsway came from a previously unknown group called Jonestown Research, which takes its macabre name from the infamous Jonestown massacre of 1978 in which over 900 cult members simultaneously committed suicide.
Jonestown uses the phrase "Urging Investors Not to Drink the Kool-Aid" as its slogan.
Once you have a clever name, you'll need to find a company to target. That is easy as ratings agency Moody's has done all the work for you. Last year, Moody's released a list of 61 Chinese companies it had "red-flagged" for possible governance or accounting risks. Sino-Forest "only" picked up seven red flags, while Winsway picked up 11.
Next, when preparing your research report, don't beat around the bush. Jonestown, despite its faux protestations that "we do not say 'fraud' lightly", includes the words "fraud", "fraudulent", "fraudulently" or "fraudsters" no fewer than 22 times in the 10-page report, including five times on the first page alone.
In its latest attack, in which it has taken apart Chinese advertising company Focus Media Holding over its decision to purchase a ginseng plantation from one of its employees, Muddy Waters described Focus Media as "the Olympus of China".
In addition, make sure you include some on-the-ground reconnaissance in your research. Showing you've been on the ground easily distinguishes you from the mainstream analysts tucked away in their offices in New York, London and Hong Kong, and offers an example of why you've been able to detect fraud where others have failed.
Establishing your own credentials is completely optional.
Muddy Waters founder Carson Block, a former lawyer, has done nothing to protect his identity.
He has earned himself some fame but also plenty of death threats along the way and says he lives in hiding as a result.
There's no light shed into who is behind Jonestown.
You would think a lack of credentials would prove a hindrance, particularly when Muddy Waters and Jonestown openly disclose that they are actively shorting the companies that they are investigating.
But when it comes to choosing between the credibility of an unknown, unregistered "research house" throwing around fraud allegations at companies they are openly shorting, and a publicly listed and audited company that happens to have operations in China, the market appears more willing to back the former.
Part of the reason for that seems to be the great strike rate among the short sellers. Sino-Forest shares have been suspended since their 90 per cent plummet and its own inquiries haven't conclusively buried all the allegations against it.
It remains to be seen if Jonestown's Winsway accusations are as damaging as Muddy Waters' Sino-Forest accusations have been, and it's important to note that a number of analysts have (tentatively) backed Winsway's version of events.
Until Chinese companies can get their transparency and trustworthiness up to, if not above, the standards expected in the rest of the world, outfits like Jonestown look set to take a few more Chinese scalps.
It won't be a motivation for Jonestown or Muddy Waters, but the short sellers are playing an important role in developing that transparency -- arguably a better job than regulators and auditors that have struggled to identify the inconsistencies unearthed by the short sellers so far.
Asia's Hunger for Iron Ore Boosts Rio Tinto
The Australian mining titan, moving to tighten its hold on key assets, has enjoyed a 20% stock rise in a month, as analysts augur upside of 30% or more. To some, it looks like a better play than rival BHP Billiton.
January 28 (Barron's) For years, Oyu Tolgoi, the world's largest copper-gold-silver mine development project in Mongolia has been a bone of contention between mining entrepreneur Robert Friedland and the giant global miner Rio Tinto Group.
The Mongolian project is 66% owned by Ivanhoe Mines (ticker: IVN), founded by Friedland. The storied entrepreneur brought Rio in as a partner six years ago to help mitigate his huge risks, only to see the Australian giant boost its stake to 49%. After years of bickering, Rio and Friedland hammered out a standstill agreement, freezing Rio's interest at 49% of Ivanhoe. Last week, the agreement expired and Rio (RIO) quickly moved to increase its Ivanhoe stake to 51%, buying another 2% of the shares outstanding for $312 million. "It removes a cloud of uncertainty and is a huge plus for Rio Tinto," says David Lennox, mining-sector analyst at Fat Prophets in Sydney.
Control of Ivanhoe, and through it a tighter grip on key assets like Oyu Tolgoi, is helping Rio Tinto cement its position as one of the world's biggest miners. Insatiable appetite for raw materials like iron ore, aluminum, copper, coal, gold and uranium from China, India and other emerging markets helped drive the stock before the crisis. Last year, concerns about a slowing economy in China, recession in Europe and anemic growth in the U.S. weighed on Rio Tinto stock. "The market was pricing in the expectation of lower commodity prices," notes David Radclyffe of Nomura Securities in Sydney. "Now that there is realization that China is successfully managing a softer landing, there is no reason why resources stocks like Rio should sell at deep discounts," says Fat Prophets' Lennox. Rio stock is up a whopping 20% over the past four weeks, and analysts say it could have another 30% to 40% upside over the next 12 months.
That's a far cry from heady days of 2008 when, in the aftermath of the Lehman Brothers collapse and the advent of the financial crisis, Rio Tinto found itself with $40 billion in debt following an ill-timed $39 billion takeover of Canadian aluminum giant Alcan and a slump in demand for its commodities. As Rio reeled, vultures circled around it. A bid from Chinalco of China to invest 19 billion Australian dollars (US$20.2 billion) in Rio collapsed after Australian regulators refused to rubber-stamp the deal, and the stock plunged further.
Yet Rio hunkered down and pulled off an audacious $15 billion rights issue. From over $40 billion in debt three years ago–most of it short-term–Rio has pared its debt to just under $8 billion. Indeed, it is now yielding so much money that Credit Suisse's Paul McTaggart reckons it could be in a net cash position next year. "Rio remains our favorite mining stock because of its incredibly strong balance sheet," says Hugh Young of Aberdeen Asset Management in Singapore who sees the miner as a classic play on Asia's growth story.
Macquarie Securities mining analyst Lee Bowers likes Rio Tinto because iron ore is his preferred commodity as Chinese crude-steel capacity recovers through 2012. Macquarie estimates that crude-steel production in China could top 730 million tons this year. Unlike its larger, more diversified counterpart BHP Billiton (BHP.Australia), Rio is a much more focused bet. "Rio is more heavily exposed to iron ore, which makes up 70% of its earnings," says Lennox. (For another iron-ore play, see "Shifting Strategy to Meet Shifted Demand.") "What's driving Rio's earnings and will continue to drive its earnings is not just higher commodity prices, but also higher production," he says. "If your bet is that China can continue to grow 7% for the next year or two, Rio will see higher prices and higher volumes, and that can't be bad for the stock."
Credit Suisse's McTaggart, has a Buy and 12-month price target of A$90 on Rio, more than 30% above the current level. The stock trades at just 8.4 times this year's expected earnings, versus a historical norm of 9.6 times forward earnings. The company has bought back nearly $7 billion of its stock over the past year and might produce a positive dividend surprise when the company reports its annual earnings on Feb. 9, the Credit Suisse analyst says. Nomura's Radclyffe also prefers Rio Tinto over BHP Billiton. He has an A$97 target price. Radclyffe believes that supply deficits in iron ore and copper will continue to 2014. That can only be good for stocks like Rio.
Misc
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Table: Mongolia Related Stocks (Source: Bloomberg)
Name | Symbol | $ | Price | Change | +-% | Open | High | Low | Volume | Time | % YTD | % 12 m | |
Indices | ASX 200 | 4,288.37 | 17.03 | 0.40% | 4,277.20 | 4,315.60 | 4,276.70 | 0 | 27-Jan | ||||
Nikkei 225 | 8,841.22 | -8.25 | -0.09% | 8,851.02 | 8,886.02 | 8,810.89 | 0 | 27-Jan | |||||
Hang Seng | 20,501.67 | 62.53 | 0.31% | 20,443.46 | 20,590.80 | 20,384.05 | 0 | 27-Jan | |||||
MSE Top 20 | 20,865.90 | 257.30 | 1.25% | 20,865.90 | 20,865.90 | 20,865.90 | 0 | 27-Jan | |||||
FTSE 100 | 5,733.45 | -61.75 | -1.07% | 5,795.20 | 5,795.20 | 5,728.96 | 771,633 | 27-Jan | |||||
TSX Composite | 12,466.50 | 2.18 | 0.02% | 12,430.32 | 12,528.99 | 12,443.99 | 187,535,951 | 27-Jan | |||||
S&P 500 | 1,316.33 | -2.10 | -0.16% | 1,318.25 | 1,320.06 | 1,311.72 | 0 | 27-Jan | |||||
ASX | Aspire Mining | AUD | 0.38 | -0.025 | -6.17% | 0.41 | 0.415 | 0.375 | 2,076,330 | 27-Jan | 2.70% | -39.20% | |
Blina Minerals | AUD | 0.005 | 0 | 0.00% | 0.005 | 0.005 | 0.005 | 500,000 | 27-Jan | 0.00% | -80.77% | ||
Cougar Energy | AUD | 0.014 | 0 | 0.00% | 0.014 | 0.015 | 0.014 | 775,745 | 27-Jan | -12.50% | -68.89% | ||
Draig Resources | AUD | 0.5 | 0.04 | 8.70% | 0.485 | 0.505 | 0.485 | 430,595 | 27-Jan | -35.90% | |||
FeOre | AUD | 0.28 | 0.02 | 7.69% | 0.28 | 0.28 | 0.28 | 6,500 | 27-Jan | 0.00% | |||
General Mining | AUD | 0.05 | 0 | 0.00% | 0.05 | 0.05 | 0.05 | 0 | 23-Jan | 21.95% | -64.29% | ||
Guildford Coal | AUD | 0.8 | 0 | 0.00% | 0.8 | 0.81 | 0.77 | 615,701 | 27-Jan | 6.67% | 0.63% | ||
Haranga Resources | AUD | 0.33 | 0.02 | 6.45% | 0.3 | 0.33 | 0.295 | 490,283 | 27-Jan | 15.79% | -48.44% | ||
Modun Resources | AUD | 0.043 | 0.002 | 4.88% | 0.042 | 0.043 | 0.042 | 581,782 | 27-Jan | -4.44% | 258.33% | ||
Mongolian Res Corp | AUD | 0.125 | 0 | 0.00% | 0.125 | 0.125 | 0.125 | 400 | 27-Jan | 0.00% | -68.75% | ||
Robe Australia | AUD | 0.017 | 0 | 0.00% | 0.016 | 0.017 | 0.016 | 0 | 25-Jan | 21.43% | 100.00% | ||
Voyager Resources | AUD | 0.071 | -0.002 | -2.74% | 0.074 | 0.074 | 0.071 | 3,297,805 | 27-Jan | 4.41% | -21.43% | ||
Xanadu Mines | AUD | 0.33 | 0 | 0.00% | 0.33 | 0.33 | 0.33 | 25,000 | 27-Jan | -4.35% | -46.77% | ||
MSE A Board | Aduunchuluun | MNT | 4,800 | 44 | 0.93% | 4,800 | 4,800 | 4,750 | 487 | 27-Jan | -20.00% | -79.64% | |
APU | MNT | 4,100 | 0 | 0.00% | 4,099 | 4,100 | 4,000 | 7,132 | 27-Jan | -2.38% | 9.33% | ||
Atar Urguu | MNT | 37,777 | 0 | 0.00% | 37,700 | 37,777 | 37,700 | 0 | 24-Jan | 45.30% | |||
Baganuur | MNT | 9,250 | -250 | -2.63% | 9,500 | 9,500 | 9,000 | 166 | 27-Jan | -29.39% | -49.32% | ||
Mogoin Gol | MNT | 28,000 | 0 | 0.00% | 29,000 | 29,000 | 28,000 | 253 | 27-Jan | -9.68% | 20.03% | ||
BDSec | MNT | 3,300 | 0 | 0.00% | 3,300 | 3,300 | 3,300 | 600 | 27-Jan | -5.71% | 10.00% | ||
Bayangol Hotel | MNT | 36,000 | 100 | 0.28% | 36,000 | 36,000 | 36,000 | 221 | 27-Jan | 0.14% | 30.43% | ||
Bayanteeg | MNT | 31,900 | -99 | -0.31% | 31,900 | 31,900 | 31,900 | 5 | 27-Jan | -11.39% | 148.68% | ||
UB BUK | MNT | 30,000 | 0 | 0.00% | 29,000 | 30,000 | 29,000 | 100 | 27-Jan | -7.69% | 331.34% | ||
Eermel | MNT | 2,701 | 1 | 0.04% | 2,701 | 2,701 | 2,701 | 66 | 27-Jan | -3.54% | -9.97% | ||
Gobi | MNT | 5,199 | 109 | 2.14% | 5,050 | 5,199 | 5,000 | 670 | 27-Jan | 0.95% | -32.48% | ||
Gutal | MNT | 3,300 | -560 | -14.51% | 3,850 | 3,850 | 3,300 | 110 | 27-Jan | 139.13% | |||
Hi B Oil | MNT | 165 | 0 | 0.00% | 165 | 165 | 165 | 0 | 24-Jan | -13.16% | -6.25% | ||
Khukh Gan | MNT | 183 | 0 | 0.00% | 187 | 188 | 183 | 23,020 | 27-Jan | -8.50% | 1.67% | ||
Hermes Centre | MNT | 72 | 4 | 5.88% | 69 | 72 | 69 | 20,000 | 27-Jan | 28.57% | 5.88% | ||
Jenko Tour Bureau | MNT | 93 | -1 | -1.06% | 94 | 94 | 93 | 7,204 | 27-Jan | -1.06% | -7.00% | ||
Telecom Mongolia | MNT | 2,750 | 245 | 9.78% | 2,650 | 2,750 | 2,650 | 1,200 | 27-Jan | 1.85% | -38.90% | ||
Mongolia Dev Res | MNT | 950 | -10 | -1.04% | 950 | 950 | 950 | 2,620 | 27-Jan | -5.94% | -44.12% | ||
Moninjbar | MNT | 140 | 10 | 7.69% | 140 | 140 | 140 | 5,000 | 27-Jan | 7.69% | 6.06% | ||
Mongol Nekhmel | MNT | 4,000 | 0 | 0.00% | 4,000 | 4,000 | 4,000 | 0 | 24-Jan | 21.95% | 178.36% | ||
Hotel Mongolia | MNT | 809 | -1 | -0.12% | 809 | 809 | 809 | 100 | 27-Jan | -10.01% | 34.83% | ||
Darkhan Nekhii | MNT | 6,501 | 1 | 0.02% | 6,500 | 6,501 | 6,500 | 136 | 27-Jan | 4.85% | -17.71% | ||
Nak Tulsh | MNT | 180 | 0 | 0.00% | 180 | 180 | 180 | 0 | 26-Jan | 2.86% | -43.75% | ||
Olloo | MNT | 195 | 0 | 0.00% | 195 | 195 | 194 | 3,070 | 27-Jan | -18.41% | 25.81% | ||
Remikon | MNT | 164 | 0 | 0.00% | 163 | 164 | 163 | 147,000 | 27-Jan | -6.82% | 33.33% | ||
Sharyn Gol | MNT | 10,500 | 400 | 3.96% | 10,100 | 10,500 | 9,880 | 1,368 | 27-Jan | -7.49% | -46.64% | ||
Shivee Ovoo | MNT | 14,200 | 0 | 0.00% | 14,200 | 14,200 | 14,200 | 0 | 26-Jan | -7.19% | -38.26% | ||
Sor | MNT | 3,500 | 395 | 12.72% | 3,400 | 3,500 | 3,400 | 52 | 27-Jan | -8.38% | 122.22% | ||
Suu | MNT | 66,500 | 0 | 0.00% | 66,000 | 66,500 | 66,000 | 0 | 25-Jan | 2.31% | 166.00% | ||
Tav | MNT | 0 | |||||||||||
Talkh Chikher | MNT | 10,550 | -450 | -4.09% | 11,000 | 11,000 | 10,550 | 107 | 27-Jan | 0.48% | 83.48% | ||
Tavantolgoi | MNT | 11,000 | 200 | 1.85% | 10,800 | 11,000 | 10,800 | 1,132 | 27-Jan | 0.00% | 25.71% | ||
State Dept Store | MNT | 500 | 30 | 6.38% | 470 | 500 | 470 | 12,938 | 27-Jan | -13.79% | -3.29% | ||
Ulaanbaatar Hotel | MNT | 50,000 | 2,000 | 4.17% | 50,000 | 50,000 | 50,000 | 30 | 27-Jan | 11.11% | 56.74% | ||
Mongol Savkhi | MNT | 2,250 | 250 | 12.50% | 2,000 | 2,300 | 2,000 | 281 | 27-Jan | -13.03% | 308.35% | ||
Zoos Goyol | MNT | 880 | 50 | 6.02% | 830 | 880 | 830 | 188 | 27-Jan | -6.38% | -2.22% | ||
HKEx | Solartech Int'l | HKD | 0.179 | -0.002 | -1.10% | 0.18 | 0.181 | 0.178 | 2,405,500 | 27-Jan | 1.13% | -75.14% | |
Winsway | HKD | 1.93 | 0.02 | 1.05% | 1.92 | 1.96 | 1.89 | 12,915,000 | 27-Jan | -15.72% | -55.63% | ||
SouthGobi Resources | HKD | 54.3 | 2.8 | 5.44% | 52.85 | 54.5 | 52.85 | 127,000 | 27-Jan | 19.21% | -52.03% | ||
China Gold | HKD | 25.2 | 0.65 | 2.65% | 25.8 | 26.2 | 25.05 | 300,500 | 27-Jan | 38.46% | -35.38% | ||
CNNC Int'l | HKD | 2.34 | -0.03 | -1.27% | 2.36 | 2.36 | 2.29 | 444,000 | 27-Jan | 15.84% | -65.59% | ||
Real Gold Mining | HKD | 8.81 | 0 | 0.00% | 8.81 | 8.81 | 8.81 | 0 | 27-Jan | 0.00% | -23.68% | ||
Mongolia Energy | HKD | 0.71 | -0.03 | -4.05% | 0.73 | 0.74 | 0.71 | 15,100,127 | 27-Jan | 1.43% | -68.86% | ||
Zijin Mining | HKD | 3.58 | 0 | 0.00% | 3.58 | 3.66 | 3.48 | 53,077,204 | 27-Jan | 22.60% | -10.88% | ||
Mongolia Inv Group | HKD | 0.05 | -0.001 | -1.96% | 0.051 | 0.051 | 0.05 | 1,818,000 | 27-Jan | 8.70% | -51.92% | ||
North Asia Resources | HKD | 0.25 | 0.02 | 8.70% | 0.23 | 0.25 | 0.227 | 2,521,800 | 27-Jan | 12.61% | -77.06% | ||
China Daye Non-Fer. | HKD | 0.435 | 0.005 | 1.16% | 0.425 | 0.435 | 0.42 | 1,884,000 | 27-Jan | -5.43% | -26.27% | ||
Bestway Int'l | HKD | 0.054 | 0.002 | 3.85% | 0.052 | 0.054 | 0.048 | 585,000 | 27-Jan | -11.48% | -57.48% | ||
Asia Coal | HKD | 0.099 | 0 | 0.00% | 0.098 | 0.099 | 0.098 | 150,000 | 27-Jan | -5.71% | -59.59% | ||
Mongolian Mining | HKD | 6.4 | -0.08 | -1.23% | 6.5 | 6.51 | 6.3 | 2,496,830 | 27-Jan | 9.59% | -38.10% | ||
SGX | LionGold | SGD | 0.885 | 0 | 0.00% | 0.885 | 0.895 | 0.885 | 8,632,000 | 27-Jan | 1.72% | 24.65% | |
LSE | Central Asia Metals | GBp | 63.5 | 0 | 0.00% | 63.5 | 63.5 | 63.5 | 0 | 27-Jan | 11.65% | -34.70% | |
Petro Matad | GBp | 32.5 | -4 | -10.96% | 36.5 | 36.5 | 32.5 | 730,864 | 27-Jan | 31.31% | -72.46% | ||
Metal-Tech | GBp | 4.25 | 0 | 0.00% | 4.25 | 4.25 | 4.25 | 19,051 | 27-Jan | 13.33% | -66.00% | ||
Nova Resources | GBp | 9 | 0 | 0.00% | 9 | 9 | 8.75 | 368,461 | 27-Jan | 278.95% | |||
Origo Partners | GBp | 31.5 | 0 | 0.00% | 31.5 | 31.5 | 31.5 | 70,919 | 27-Jan | -10.00% | -22.22% | ||
Canada | Aberdeen Int'l | CAD | 0.61 | 0.01 | 1.67% | 0.6 | 0.61 | 0.58 | 209,050 | 27-Jan | -6.15% | -13.04% | |
Altan Rio Minerals | CAD | 0.5 | 0 | 0.00% | 0.5 | 0.5 | 0.5 | 97,284 | 27-Jan | ||||
Blue Zen Mem. Parks | CAD | 0.13 | 0 | 0.00% | 0.13 | 0.13 | 0.13 | 0 | 26-Jan | 160.00% | -77.19% | ||
Centerra Gold | CAD | 19.82 | 0.24 | 1.23% | 19.64 | 20.23 | 19.29 | 326,305 | 27-Jan | 10.11% | 24.96% | ||
China Gold | CAD | 3.29 | -0.07 | -2.08% | 3.24 | 3.39 | 3.23 | 306,688 | 27-Jan | 28.52% | -37.92% | ||
Desert Eagle Res | CAD | 0.45 | 0.2 | 80.00% | 0.275 | 0.45 | 0.275 | 7,750 | 27-Jan | 0.00% | -73.68% | ||
Denison Mines | CAD | 1.83 | 0.02 | 1.10% | 1.8 | 1.85 | 1.78 | 1,161,637 | 27-Jan | 44.09% | -45.86% | ||
East Asia Minerals | CAD | 0.6 | 0.02 | 3.45% | 0.55 | 0.6 | 0.55 | 276,343 | 27-Jan | 27.66% | -90.79% | ||
Erdene Resource | CAD | 0.46 | 0.01 | 2.22% | 0.48 | 0.48 | 0.455 | 47,200 | 27-Jan | 22.67% | -67.38% | ||
Entree Gold | CAD | 1.33 | 0.01 | 0.76% | 1.34 | 1.35 | 1.29 | 37,412 | 27-Jan | 7.26% | -52.84% | ||
Fortress Minerals | CAD | 3.95 | 0 | 0.00% | 3.95 | 3.95 | 3.95 | 0 | 25-Jan | -3.66% | -28.31% | ||
Gulfside Minerals | CAD | 0.07 | -0.01 | -12.50% | 0.075 | 0.075 | 0.07 | 348,000 | 27-Jan | -17.65% | -22.22% | ||
Global Met Coal Corp | CAD | 0.15 | 0.015 | 11.11% | 0.14 | 0.15 | 0.14 | 149,666 | 27-Jan | 20.00% | |||
Ivanhoe Energy | CAD | 1.03 | -0.02 | -1.90% | 1.05 | 1.05 | 1 | 587,207 | 27-Jan | -8.04% | -69.97% | ||
Ivanhoe Mines | CAD | 17.05 | -0.31 | -1.79% | 17.53 | 17.53 | 17.02 | 1,237,846 | 27-Jan | -5.75% | -37.66% | ||
Kincora Copper | CAD | 0.3 | 0 | 0.00% | 0.3 | 0.3 | 0.28 | 0 | 25-Jan | -3.23% | 30.43% | ||
Khan Resources | CAD | 0.21 | 0.015 | 7.69% | 0.19 | 0.21 | 0.19 | 30,276 | 27-Jan | 5.00% | -66.13% | ||
Lucky Strike | CAD | 0.3 | -0.005 | -1.64% | 0.3 | 0.3 | 0.3 | 9,500 | 27-Jan | -15.49% | -59.46% | ||
Meritus Minerals | CAD | 0.035 | -0.01 | -22.22% | 0.035 | 0.045 | 0.035 | 45,000 | 27-Jan | 40.00% | -78.79% | ||
Manas Petroleum | CAD | 0.185 | -0.005 | -2.63% | 0.195 | 0.195 | 0.18 | 230,500 | 27-Jan | 27.59% | |||
Prophecy Coal | CAD | 0.43 | 0 | 0.00% | 0.43 | 0.43 | 0.42 | 457,275 | 27-Jan | 4.88% | -47.09% | ||
Puget Ventures | CAD | 0.49 | 0 | 0.00% | 0 | 17-Sep | |||||||
SouthGobi Resources | CAD | 7.24 | 0.3 | 4.32% | 6.98 | 7.24 | 6.98 | 32,697 | 27-Jan | 20.67% | -48.83% | ||
Solomon Resources | CAD | 0.085 | 0.005 | 6.25% | 0.08 | 0.085 | 0.08 | 51,100 | 27-Jan | 21.43% | -50.00% | ||
Undur Tolgoi Minerals | CAD | 0.22 | 0.02 | 10.00% | 0.22 | 0.22 | 0.22 | 45,000 | 27-Jan | 10.00% | |||
Mongolia Growth Grp | CAD | 4.21 | 0.03 | 0.72% | 4.17 | 4.23 | 4.16 | 19,400 | 27-Jan | 7.95% | |||
US | Denison Mines | USD | 1.83 | 0.02 | 1.10% | 1.81 | 1.84 | 1.77 | 505,209 | 27-Jan | 46.40% | -46.18% | |
Entree Gold | USD | 1.35 | 0 | 0.00% | 1.34 | 1.35 | 1.28 | 108,100 | 27-Jan | 12.50% | -51.96% | ||
Ivanhoe Energy | USD | 1.02 | -0.03 | -2.86% | 1.05 | 1.0529 | 1.01 | 923,312 | 27-Jan | -8.93% | -70.26% | ||
Ivanhoe Mines | USD | 17.08 | -0.18 | -1.04% | 17.44 | 17.5 | 16.99 | 2,215,201 | 27-Jan | -3.61% | -37.32% | ||
Manas Petroleum | USD | 0.18 | 0 | 0.00% | 0.19 | 0.195 | 0.166 | 2,607,672 | 27-Jan | 22.03% | -70.00% | ||
Mongolia Growth Grp | USD | 4.1805 | -0.0585 | -1.38% | 4.169 | 4.192 | 4.1655 | 7,700 | 27-Jan | 8.73% | |||
Blue Wolf MGL | USD | 9.67 | 0 | 0.00% | 9.67 | 9.67 | 9.67 | 300 | 27-Jan | 0.52% | |||
Blue Wolf MGL Unit | USD | 10.31 | 0 | 0.00% | 10.31 | 10.31 | 10.31 | 0 | 19-Jan | 2.59% |
---
"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
Telephone/Fax: +976-11-321326
Mobile: +976-99996779
Email: mogi@cpsinternational.mn
P Please consider the environment before printing a copy of this email.
Suite 1213 · Level 12 · 2 Sukhbaatar Square
Sukhbaatar District 8 · Ulaanbaatar 14200 · Mongolia
CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSLicense 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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