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. Follow CPSI NewsWire on Twitter, Facebook
276 trading 82-83c at time of writing
MEC: PLACING OF NEW SHARES UNDER GENERAL MANDATE (raising HK$120M at HK$0.80)
Placing Agent: Haitong International Securities Company Limited
February 28, Mongolia Energy Corporation Limited (HK:276) --
On 28 February 2012 (after trading hours), the Company and the Placing Agent entered into the Placing Agreement pursuant to which the Company appointed the Placing Agent to act as its agent to procure the Placees to subscribe for up to 150,000,000 Placing Shares at the Placing Price of HK$0.80 per Placing Share on a best-efforts basis.
Assuming the maximum number of 150,000,000 Placing Shares are successfully placed, the Placing Shares represent (i) approximately 2.27% of the existing issued share capital of the Company; and (ii) approximately 2.22% of the issued share capital of the Company as enlarged by the issue of the Placing Shares (assuming that there will be no other change in the issued share capital of the Company between the date of this announcement and completion of the Placing Agreement save for the issue of such Placing Shares).
Assuming the maximum number of 150,000,000 Placing Shares are successfully placed, the maximum gross proceeds of the Placing will be approximately HK$120 million and the maximum net proceeds of the Placing will be approximately HK$117.3 million (after deducting the placing commission, professional fees and other related costs and expenses payable by the Company in connection with the Placing). The net proceeds from the Placing are intended to be used for development of the Khushuut coking coal project and general working capital purposes of the Group.
Subject to the fulfillment of the conditions set out in sub-paragraph headed "Conditions" below, Completion will take place on or before 30 March 2012 (or such later date as the Placing Agent and the Company may agree in writing).
VOR trading +4.69% to 6.7c at time of writing
Voyager: Investor Presentation, February 2012
February 29, Voyager Resources Limited (ASX:VOR) --
NOVA closed +1.59% to 8p
Nova: Replacement re Issue of Shares and Total Voting Rights
February 28, Nova Resources Limited (NOVA:LON) --
The following amendment has been made to the 'Issue of Shares and Total Voting Rights' announcement released on 27 February 2012 at 07.00 under RNS Number 1054Y.
Following Admission, the Company will have 105,981,954 Ordinary Shares in issue, not 82,410,526 as previously stated. All other details remain unchanged.
The full amended announcement is shown below.
Issue of Shares
The Company is pleased to announce that it has raised £210,000 by way of a subscription for shares at an issue price of £0.095 each with various investors (the "Subscription"). The Subscription comprises 2,210,526 new ordinary shares of par value £0.01 each ("Ordinary Shares") in the capital of the Company and represents 2.76% of the enlarged share capital of the Company at Admission (the "Subscription Shares").
The proceeds of the Subscription will be used for working capital and to execute Nova's investing policy.
Application will be made to the London Stock Exchange for the Subscription Shares to be admitted to trading on AIM and it is expected that admission will be effective and trading will commence at 8:00 am on 5 March 2012 ("Admission").
1733 trading -0.455% at time of writing to HK$2.19
Winsway Seeks More Mines as It Concludes Grand Cache Purchase
February 28 (Bloomberg) Winsway Coking Coal Holdings Ltd. (1733), which processes and transports coal to China from Mongolia, is seeking mines in Australia, Canada and Russia as it concludes the purchase of Canadian miner Grande Cache Coal Corp. (GCE)
S&P lowers Winsway rating to 'B+'; outlook stable
Feb 28 (S&P) --
- We expect China-based Winsway to complete its acquisition of GCC now that its shareholders have approved the transaction in an extraordinary general meeting on Feb. 28, 2012.
- Winsway's entry into the upstream coal mining business will increase earnings volatility, in our opinion.
- We are lowering the long-term corporate credit rating on Winsway to 'B+' from 'BB-'. We are also lowering our issue rating on the company's notes to 'B+' from 'BB-'. At the same time, we are removing all the ratings from CreditWatch, where they were placed with negative implications.
- The stable outlook reflects our expectation that Winsway's Mongolian coking coal import business will remain satisfactory.
On Feb. 28, 2012, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on China-based Winsway Coking Coal Holdings Ltd. to 'B+' from 'BB-'. The outlook on the rating is stable. We also lowered the issue rating on the company's outstanding senior unsecured notes to 'B+' from 'BB-'. At the same time, we lowered our Greater China scale credit ratings on Winsway and the notes to 'cnBB' from 'cnBB+'. We removed all the ratings from CreditWatch, where they had been placed with negative implications on Nov. 2, 2011.
We lowered the rating on Winsway because we expect the company's business risk profile to weaken after it completes the acquisition of Canadian coal miner Grand Cache Corp. (GCC). Following the acquisition, Winsway's profitability is likely to become more volatile due to fluctuating coking coal prices and the risks associated with coal mining operations. GCC's less competitive cost structure compounds the effects of such risks on Winsway's profitability.
We expect Winsway's exposure to coal price volatility to be high after the acquisition, especially if prices trend downward. In our opinion, the acquisition deviates from the company's previous strategy, which emphasized asset-light trading operations with limited inventory and low sensitivity to volatility in coal prices.
A sharp decline in the demand for coking coal and average selling prices (ASP) could significantly weaken Winsway's profitability over the next few quarters. GCC anticipates that its ASP of coking coal will be between US$205 and USS$215 per ton for the quarter ending March 31, 2012. Given global economic woes and softening steel markets, the downward trend in ASP is likely to persist for the next few quarters.
In our view, Winsway's lack of experience in operating coal mines and its upstream investment in GCC significantly increases its exposure to mine-operating risk. Also, we view Winsway's acquisition of a majority stake in GCC as an indication of its aggressive investment appetite. The company intends to leverage the Canadian experience of its partner Marubeni Corp. (BBB/Stable/--), and retain GCC's management team to mitigate such risk. Standard & Poor's acknowledges there is limited execution risk at GCC's mine because the mine is already in operation and in a ramp up stage.
Although Winsway's debt leverage will increase after the acquisition, we believe the company can maintain good financial strength for a 'B+'-rated company. We expect that Winsway's Mongolian coking coal import business will continue to perform satisfactorily in the next 12 months. We forecast the company's ratio of adjusted debt to EBITDA at 3x-3.5x, and the ratio of funds from operations to adjusted debt at or slightly more than 20% in the next 12 months. However, the volatility from the coal mining business and an uncertain global economy could weaken Winsway's cash flow.
We expect the structural subordination risk associated with Winsway's outstanding senior unsecured notes to heighten temporarily following the drawdown of US$400 million in financing loans related to the acquisition. Nevertheless, the risk will lessen over time because the loans will be amortized six months after the drawdown. We project that the ratio of priority debt to total assets will be at or slightly more than 15% after the drawdown of acquisition-related loans. The ratio will decline to less than 15% in the next nine to 12 months.
The rating on Winsway reflects the company's short operating history and its limited record of consistent financial management. Other weaknesses include Winsway's exposure to material supply risks and transportation bottlenecks associated with coal imports from Mongolia. The good growth potential for imported coking coal in China, the company's good competitive position in its core coal import business from Mongolia due to its first-mover advantage, and its growing distribution capability counterbalance the above weaknesses.
MOU closed 4.17% to 5c today on low volume
Modun: Half-Year Report
February 29, Modun Resources Limited (ASX:MOU) --
SHG closed flat at ₮11,100 today
Sharyn Gol declares no dividend to fund new open pit mining
February 28 (MSE) Sharyn Gol JSC (SHG:MO) --
Link to article (in Mongolian)
APU closed +1.92% to ₮4,350 today
APU declares ₮60 dividend at AGM
February 28 (MSE) -- MSE listed "APU" JSC's (APU:MO) board of directors meeting had held on Feb 17, 2012 and decided to distribute dividend of 60 /sixty/ tugrik per share to shareholders through 2011 operational profit.
RMC closed flat at ₮192 today
Remicon declares ₮5 dividend at AGM
February 28 (MSE) -- MSE listed "Remicon" JSC's (RMC:MO) board of directors meeting had held on Feb 13, 2012 and following issues were discussed and decided:
· Distribute dividend of 5 tugriks per share to shareholders through 2011 operational profit,
· To set up a temporary committee of Board compensation and promotion according to new company law amendment,
· To set up a temporary subcommittee of redevelopment of firm charter according to new company law amendment.
Монголын эдийн засгийн форум хэлэлцүүлэг: Баялгийн орлогын зохистой удирдлага, эдийн засгийн төрөлжилт
February 29 (MEF) Монголын эдийн засгийн чуулганыг угтан зохион байгуулж байгаа цуврал хэлэлцүүлэг 2 сарын 29 -нд буюу өнөөдөр 16:00 цагт Баялгийн орлогын зохистой удирдлага, эдийн засгийн төрөлжилт сэдвээр Хууль зүйн үндэсний хүрээлэнд зохион байгуулагдана.
Хэлэлцүүлэг дээр Н.Дорждарь (Нээлттэй нийгэм форум), Stephen Kreppel (MҮХАҮТ), Г.Рагчаасүрэн (ИБУИНВУ-ын Велфаст хотын Хатан Хааны Их Сургууль) Сангийн яам, ҮХШХ -ноос тус тус танилцуулга хийж, илтгэл тавина.
Таныг хэлэлцүүлэгт хүрэлцэн ирж, идэвхитэй оролцохыг урьж байна.
MNT closed at ₮1,333.14 on Tuesday, up ₮4.52 from Monday
Mongol Bank sold $40m@₮1,329.62 and RMB40M on Tuesday
February 28 (Mongol Bank) --
Link to release (Mongolian)
World Bank: Mongolia Quarterly Economic Update - February 2012
February 28 (World Bank) --
· GDP growth accelerated to an unprecedented 17.3 percent in 2011 from 6.4 percent in 2010 and the unemployment rate fell from 13 percent in 2010 to 9 percent in 2011.
· However, real wages for unskilled workers in the urban informal sector are starting to fall as the inflation rate reached 11.1 percent yoy in December.
· Sharply rising government spending is the root cause of overheating: government spending rose by 56 percent in 2011 and is budgeted to rise by a further 32 percent this year, fueled by sharply rising resource revenues. This pro-cyclical fiscal policy could result in another "boom-and-bust" cycle Mongolia experienced before, particularly as the global economy could face a substantial slowdown in growth due to the continuing European sovereign debt crisis, and which could result in a sharp drop in mineral prices and subsequently government revenues.
· Government spending in 2011 was almost double that in 2009 in real terms, and mainly reflects pre-election year pressures, efforts to make good on earlier political promises for large cash transfers and large increases in capital expenditures.
· Because of high revenues, the government budget deficit is still modest: the 2011 deficit amounted to 3.6 percent. However, the structural deficit (based on long run commodity prices as defined under the Fiscal Stability Law) is much higher at 5.8 percent.
· On the monetary front, the Bank of Mongolia (BoM) took significant action to curb inflation and lending growth in 2011. But with inflation still high, the real policy interest rate negative and bank lending expanding at a staggering pace (73 percent yoy), more tightening is needed.
· Liquidity risks are also rising and a large amount of non-performing-loans (NPLs) remains on the loan books. Given the easy convertibility between dollar and local currency accounts the banking system remains vulnerable to capital flight, if macro-prudential action is not taken to strengthen it.
The Exchange Rate and Balance of Payments
· The Togrog (Mongolian currency) depreciated by 11 percent during 2011, reflecting high domestic inflation and declining commodity prices towards the end of last year, factors that similarly impacted the currencies of other emerging mineral-rich economies.
· Going forward, continued exchange rate flexibility will reduce the risks of speculative bets on the currency, provide a cushion in case of an adverse external shock, and allow the economy to regain competitiveness through the nominal exchange rate movements rather than painful domestic price, wage and employment cuts.
· The trade deficit reached record levels (US$ 1.7 bn in December 2011) as imports of mining-related equipment and fuel imports have surged. But exports also grew strongly, reaching US$ 4.8 bn in December from US$ 2.9 bn a year ago supported almost entirely by coal shipments to China.
· The current account deficit widened to 35 percent of GDP from 14 percent in 2010, but was fully funded by record FDI (foreign direct investment) inflows of US$ 5.3 bn or almost 62 percent of GDP on a four-quarter rolling sum basis.
Major Legislative Reforms
· The Integrated Budget Law (IBL) was passed in December 2011: this organic budget law contains measures to support fiscal sustainability and the successful implementation of the Fiscal Stability Law (FSL). It also strengthens the public investment framework by requiring feasibility studies and alignment with national priorities for projects to be included in the Public Investment Program and the budget.
· The Social Welfare Law was passed in early January, 2012. This mandates the provision of a targeted poverty benefit replacing the existing system of universal cash transfers. This represents a major step towards setting up a fiscally sustainable social protection system while supporting Mongolia's poor- it is expected to reach about 130,000 poorest households, or one-fifth of all households in Mongolia.
· To ensure macroeconomic stability and to prevent a hard landing for the economy in case of an adverse external shock, Mongolia needs to adhere strictly to prudent fiscal policies as set out in the FSL and IBL and tightening both fiscal and monetary policy to reduce inflation, take macro-prudential action to reduce systemic risks in the banking sector and maintain a flexible exchange rate that will act as the first buffer in any external shock materializes.
· These are uncertain times for Mongolia. The economy faces growing headwinds from the global economic environment, while the looming elections increase domestic uncertainty. Until a substantial amount of savings has accumulated in the stabilization fund, Mongolia remains strongly exposed to volatility in commodity prices. With global economic prospects diminishing, and with any potential stimulus package from China unlikely to be focused on infrastructure as during the last global financial crisis in 2008-09, extra caution is warranted.
· "Be prepared" sums up the appropriate policy advice at this point in time.Mongolia's policy-makers realized the importance of "being prepared" when they passed the landmark FSL in June 2010. It is now critical to adhere to the principles contained in this law, in order to ensure that the country's vast coal and copper resources are converted into sustainable growth that improves the welfare of all current and future Mongolian citizens.
NEW DATE for the launch of The Report: Mongolia 2012
MONGOLIA: OXFORD BUSINESS GROUP GEARS UP FOR LANDMARK LAUNCH
February 28 -- Oxford Business Group (OBG) is delighted to announce the publication of its first-time report on Mongolia's economic activity and investment opportunities.
To mark this important occasion, OBG invites you to join its team for the launch of The Report: Mongolia 2012 which takes place at the Blue Sky Hotel and Tower in Ulaanbaatar on March 1 at 11:15am.
The Group's landmark report will be launched in the presence of a number of high-profile dignitaries and guests, including the Prime Minister of Mongolia Sukhbaataryn Batbold who will make a key-note speech at the event.
The Report: Mongolia 2012 puts the spotlight on the balancing act Mongolia is setting out to achieve by driving forward major mining developments, led by the Tavan Tolgoi and Oyu Tolgoi projects, while also taking steps to diversifying its fast-growing economy.
It explores the investment opportunities that can be found across the sectors of Mongolia's economy, which experts are forecasting should experience double-digit growth each year until the end of this decade.
The milestone publication charts the government's bid to introduce key reforms as it looks to attract investment and boost private sector participation for its mining projects and infrastructure development by enhancing its business-friendly environment.
The Report: Mongolia 2012 considers the country's plans to create a niche for itself as a value-added processing hub. It also looks in detail at the country's bid to expand its tourism industry by tapping the facilities, events and marketing segment. In addition there is in-depth analysis of how Mongolia can use its geographical position between Russia and China to extend its reach across the region and build international relations.
The report contains contributions from Mongolia's President Ts. Elbegdorj and the Prime Minister, together with a detailed, sector-by-sector guide for investors. It provides a wide range of interviews with leading political, economic and business representatives, including Minister for Foreign Affairs and Trade G. Zandanshatar, the Vice-Minister of Finance and Founder of the Mongolia Economic Forum Ch. Ganhuyag, the Chairman of the Foreign Investment and Foreign Trade Agency B. Ganzorig and Executive Director of the Business Council of Mongolia Jim Dwyer.
The Report: Mongolia 2012 has been produced in partnership with the Foreign Investment and Foreign Trade Agency (FIFTA), the Business Council of Mongolia, MICC, Ernst & Young and Hogan Lovells law firm.
Mongolian University World Rankings, January 2012
Since 2004, the Ranking Web (or Webometrics Ranking) is published twice a year (data is collected during the first weeks of January and July for being public at the end of both months), covering more than 20,000 Higher Education Institutions worldwide.
We intend to motivate both institutions and scholars to have a web presence that reflect accurately their activities. If the web performance of an institution is below the expected position according to their academic excellence, university authorities should reconsider their web policy, promoting substantial increases of the volume and quality of their electronic publications. If you need further clarification regarding the motivations of the Ranking or the methodology, please read theFAQ.
For about seven decades, the country employed (endured?) the economic policies of the Soviet Union, its patron and closest partner. The fall of the Iron Curtain left a vacuum now being filled by a thriving, peaceful democracy, but shaking off the legacy of a planned economy has proven tough.
These factors show that while chucking the old system brought a clean slate, Mongolia's economic story is still being written, said John Karlsen, CEO of Newcom Mining Services, an arm of Mongolian conglomerate Newcom Group.
It's a "methodological battlefield," Mr. Karlsen told GlobalAtlanta in an interview last year at the top of the Central Tower, a gleaming glass building on the main square that has become emblematic of the country's directional shift.
"They didn't really have a 20th-century format, so they're just figuring it out as they go," which makes doing business in Mongolia exciting, but not without a "reasonable appetite for ambiguity," he said.
At the time of the interview, Mr. Karlsen was CEO of Wagner Asia, the Mongolian arm of a Denver-based vehicle and heavy-equipment distributor. Wagner went to Mongolia 16 years ago to serve a large gold mining firm. It's now the authorized dealer for Caterpillar, Land Rover and other brands. In the north, it has even sold a few tractors for Atlanta-based AGCO Corp., though nearly all of its revenues come from mining and construction.
Jim Dwyer, executive director of the Business Council of Mongolia, a nonprofit advocacy group with about 200 member companies and organizations, said despite their bent toward heavy regulation, Mongolian officials are keen to look abroad for help fueling and managing their growth.
Ready to help, service providers like accounting firm PricewaterhouseCoopers LLP are flocking to Mongolia. The tiny Mongolian Stock Exchange is managing its breakneck growth by learning from the London Stock Exchange. Mining firms from Canada and Australia have embarked on projects worth as much as the entire Mongolian economic output of a few years ago.
In building its Mongolian bottling plant, Atlanta-based Coca-Cola Co. partnered with MCS Group, which started as an energy consultancy but has diversified in cashmere, real estate, fashion, restaurants, and of course, beverages - not only Coke, but vodka too.
Newcom Group - which manages a leading telecom company and an airline - in November signed a deal to purchase wind turbines from General Electric Co., whose energy unit is based in Atlanta. The $100 million wind farm will be located about 40 miles from Ulaanbaatar. GE called it a "strategic move" into the country.
He cautioned that growth could be limited by the ability of small and medium-sized Mongolian firms to train workers. For example, Chinese workers built the Central Tower because Mongolians didn't have the construction expertise, he said.
At Oyu Tolgoi and Tavan Tolgoi, two huge mines in the South Gobi province, foreign giants are pouring millions of dollars into training Mongolians who will make up the workforce. But it can't stop there, Mr. Dwyer said.
Mr. Dwyer and other business leaders agree that infrastructure is another major hurdle to continued growth. At rush hour, it seems that everyone in Ulaanbaatar is cramming Peace Avenue, the main east-west thoroughfare. Traffic jams make it easy to forget that there are only a handful of paved roads converging in the capital. There are also few rail spurs. At the very least, Mongolia has to upgrade its rail infrastructure to export the minerals that are fueling growth - and congestion - in the first place.
Gateway matches building technologies with the unique construction needs of developing countries. In Mongolia, it has introduced ThermoBlock, a polystyrene form that can be stacked around steel bars and filled with concrete to create insulated walls. Houses using the product can be built quickly, an advantage given Mongolia's limited building season. Each house would cost about $10,000.
Thanks to outdated building codes, an industry resistant to change and cumbersome bureaucracy, it took a year of wrangling to get the technology approved. But persistence paid off. In December, less than a month after receiving the government go-ahead, Gateway built the first Thermoblock house.
"To come over here as a European, American or Australian and think you're going to do it your way, you're not going to get anywhere," Mr. Saffer said. "You need a different set of skills to deal with the risks of working in the developing world."
February 29 (St. Petersburg Times) Mongolia is a country of extremes. From the climate to the economy to the landscape — it is dramatic and unpredictable. Ulaanbaatar, the capital city, is even labeled "the coldest capital on earth."
There are few concrete studies on the future demography of the country, but many current expats believe the number of foreign residents could rise significantly in the next five years, with some predicting the figures will reach as many as 50,000 by 2017.
There are many factors that draw adventurous souls to Mongolia, a country rich in culture and history, sandwiched between two geographic giants — Russia and China — but one of the main attractions lies in the prospects of the country's rapidly developing economy, more specifically in mining.
Skilled workforces of foreign engineers, miners and mine managers are needed to run multiple massive projects such as the "Oyu Tolgoi" or "Turquoise Hill" mine in the south of the Gobi Desert, which is the largest mining project to have been undertaken in Mongolia's history.
Foreign banks are setting up offices in the city center, high-end luxury brands such as Louis Vuitton and Armani have stores on the main avenue and up-market Western-style restaurants are popping up all over the city.
However, as well as foreigners who work in the banking, retail and mining industries, there are many who reside in Mongolia to teach English at schools and universities, to work in environmental research companies or to volunteer with organizations such as the Australian Youth Ambassadors for Development (AYAD), the British Volunteer Service Overseas (VSO) and the American Peace Corp.
Despite the new-found wealth, Mongolia is still one of the poorest countries in Asia; one third of the population lives below the poverty line and there are many social problems, particularly with rising unemployment levels among city dwellers.
The Hummers are juxtaposed with old Ladas, and the swanky hotels and shopping malls with crumbling and decaying buildings. Poverty and the divide between rich and poor is unmistakable, with foreign aid and volunteers being heavily relied upon in sectors such as employment, education and health.
Retail therapy can be enjoyed at the State Department Store, while a variety of international films (shown in both English and Mongolian) can be seen at one of the mammoth cinema complexes. As in practically any capital city, there are ice-skating rinks, bowling alleys, and a number of excellent theaters, museums, art galleries and old monasteries to visit.
But the real entertainment lies beyond the city. Mongolia is renowned for its breathtaking natural beauty, and when it all gets too much in the busy metropolis, weary city-dwellers can head to the vast steppes of the countryside, stay in a traditional nomad yurt, or ger, and marvel at the clear skies and abundant wildlife.
The expat community is tight-knit. Everyone knows each other and newcomers are welcomed into the fold. Group outings, cinema trips, excursions to the countryside and the weekly trivia night at Hennessey's Pub are not to be missed.
While there are inevitably also those expats who have negative comments — common complaints concern pollution and the crushing volume of traffic in the city center — there seems to be something about the place that draws people in, and most expats positively preach about it, from the cheap cost of living (a survey compiled by ECA International found UB to be the least expensive city in Asia for expats) to the vibrant nightlife, and of course the endless list of activities that can be pursued outside of the city, from wolf hunting to ice-fishing to hiking to skiing to horse riding: The possibilities are endless.
What exactly is the special something about the place that elicits such enthusiasm among visitors? Perhaps it's that despite the heavily polluted city air, the sun is always shining. Maybe it's the Mongolian dry sense of humor or tremendous hospitality, or even the aroma of freshly steamed mutton dumplings, called buuz.
For a country that was relatively cut-off from the world for most of the 20th century, Mongolia is enjoying a new era of prosperity and it seems that is could see many more foreigners relocating to the aptly named "land of blue skies."
SOME countries make you selfish. They provide such an unforgettable experience for visitors that you want to preserve it even though the march of progress offers improved comfort and economic prosperity to the locals.
February 27 (news.com.au) Mongolia is changing rapidly, for better or for worse, driven by the mining boom that's under way in the desolate Gobi desert, and in the capital Ulaanbaatar it's glaringly obvious.
The growing social divide between Ulaanbaatar (or UB as everyone seems to call it) and pretty much everywhere else is already obvious. The ugly Soviet-style apartment blocks now rub shoulders with gleaming glass and steel structures that sprout up rapidly during the summer months while the weather is good and construction is relatively uninterrupted.
Brand-new stretch Hummers and four-wheel-drives share traffic jams with ancient trucks, many with Russian writing and held together by rust and ingenuity. Roads become one-way or no-way overnight. Modest houses sprout ever more glamorous extensions.
But move outside the rapidly sprawling city limits and you enter a world where time is standing still for many of the country's three million inhabitants. Out here, the number of livestock is not only a mark of your wealth but also provides most of the family's food and alcohol.
Few metalled roads exist except around UB and on major routes, and sometimes not even then. Most travel involves a bone-bruising battering along deeply rutted trails that wet weather has churned into the pastures like eccentric 10-lane highways.
Even in the wildest, most remote parts of the country, gers, which for centuries have been the traditional home of the nomadic Mongols, can be spotted, like giant white mushrooms nestling in the grass. Despite having changed little over the centuries, they are remarkably practical.
The walls are padded with varying layers of felt for warmth and the whole structure is then covered with waterproof canvas skin. Inside, they are fitted out with beds, washing facilities, wooden chests and, in the centre, a highly efficient wood-burning stove. Increasingly, they also have TVs serviced by satellite dishes and solar panels on the roof.
There is a tradition that travellers can ask for shelter at any ger and won't be refused, but tourists generally stay in the special ger camps complete with modern brick toilet blocks and showers with varying reliability of hot water.
All the ger camps we stayed at were located in areas so beautiful it took your breath away hot springs that left a pall of steam hanging over the valley, low hills of softly waving grass that stretched to infinity, craggy hills and a lakeside so blue it was hard to see where water ended and sky began.
An evening ritual emerged of sitting on the ger steps, local beer or vodka in hand, watching the sun set over vast rolling grasslands that stretched to a horizon far, far away. Airag, fermented mares' milk, is something of an acquired taste but something you are very likely to be offered by the hospitable Mongolians, particularly in the most remote areas.
In the winter, Mongolia is as frigid and inhospitable as the imagination expects. Temperatures plummet and families settle in for what can be weeks of isolation. In the brief summer months it is transformed with hot, incredibly sunny days, although the evenings can still be chilly enough to light the fire.
Many of the hillsides are covered in carpets of wild flowers and the country is rich in bird life from the magnificent golden eagle, often kept by Mongolians to hunt foxes, to cranes, osprey, wagtails and pippets as well as more than 400 other varieties.
The naadam in Ulaanbaatar is the country's largest and the place where most tourists head. But if you want to get a real feel for the country and its people, seek out one of the smaller naadams where you can still mingle closely with the locals.
The most scenic way is by sleeper train from China or Russia. We went from Beijing and the scenery was awesome. Take plenty of supplies as the choice in the restaurant car is pretty limited. At the border the train changes its bogeys, providing a spectacle all its own. Otherwise there are links from Russia, Korea and China to Ulaanbaatar's Chinggis Khan Airport.