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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SECURITIES LAW IS SUBMITTED BY GOVERNMENT TO PARLIAMENT
April 4 (Dale Choi, Frontier Securities) According to Government of Mongolia on April 4,2012 (http://open-government.mn/read-1383-.html.) Cabinet Meeting today has discussed and supported updated version of Law on Securities Market and decided to submit it to Parliament reflecting opinions of the Members of the Cabinet.
The bill has been prepared to in order to
· Comply securities market to direction of development
· Clearly regulate activities of securities market participants, make their activities transparent
· Protect interest of public and investors
· Improve effects of state regulation, supervision and inspection
During Cabinet Meeting Prime Minister of Mongolia S.Batbold has stressed and reminded
· It is important to establish new economic mentality, attitude and culture and establish fundamental condition of having minimum mistakes from the beginning
Market capitalization is growing every year and as of February 2011 was 3.21 trillion MNT( today, April 4,2012 MSE market cap is 1.96 trillion MNT- Frontier Securities)
Currently there are 88 brokerage and dealing companies.
MSE MARKET CAP( Chart from MSE, Legend – vertical axis, trillions of MNT, horizontal axis , dates of 2011)
Frontier Securities conclusion:
Approval of Securities Market Law will be one of High level milestones in the development of MSE and Mongolian capital markets in general and that also include:
· Market education and performance of trained market participants
· Performance of technology roll out and MSE organization
· Performance of SGF and investor protection after move to T+3 and international risk management
· Impact on corporate governance and transparency after development of new listing rules
· TT listing in 2012
· Remote access for international brokers after introduction of membership rules
· Approval of SECURITIES MARKET LAW Submitted to the Ministry of Justice on September 01, 2011
· Custody services and enablement of set-up of custodians
· Reduction of fees will make the market more attractive to international brokers, support the local brokers and help create increase liquidity
· Successful target by MSE of state privatizations, New Domestics, Repatriations, New Licenses, Developing companies and Foreign Listings
IVN closed -7.61% to US$14.56, -7.88% to C$14.37 on Tuesday
TD Securities Downgrades Ivanhoe Mines (IVN) to Reduce on Asset Sale and New Technical Report
April 3 (StreetInsider.com) TD Securities downgraded Ivanhoe Mines (TSX:IVN, NYSE:IVN) from Hold to Reduce with a price target of C$12.50, down from C$19.00, after the company quietly filed a technical report entitled Oyu Tolgoi Project – IDOP Technical Report on SEDAR during the evening of Friday, March 30. On April 1, the company announced that SouthGobi Resources (57.6%) had received notice that the Aluminum Corporation of China (CHALCO) intends to make a proportional tender offer for up to 60% of that company.
"We view the potential offer for SouthGobi as positive, but the revised estimates for the Oyu Tolgoi project were overwhelmingly negative," the analyst comments. "After making the adjustments discussed below for higher opex and capex estimates, and a delay in production from the higher-grade underground mine, our 10%NAVPS estimate declined to $11.69 from $14.31."
BMO downgrades Ivanhoe Mines
April 4 (The Windsor Star) Ivanhoe Mines Ltd., owner of $6-billion Oyu Tolgoi copper and gold mine, has been downgraded by BMO Capital Markets on concern about rising development costs.
Vancouver-based Ivanhoe's 513-page development and operations plan technical report, published on its website, includes forecasts of higher mining and processing costs at Oyu Tolgoi in Mongolia, a delay in underground development and lower projected ore grades, Tony Robson, a Toronto-based analyst at BMO, said Tuesday in a note.
Robson downgraded Ivanhoe to hold, from buy, and reduced his estimate for Ivanhoe's net present value to $18.17 a share, from $24.78.
The change in recommendation also reflects Robson's assessment of Ivanhoe's agreement to sell its 58-per-cent stake in coal producer SouthGobi Resources Ltd. to Aluminum Corp. of China Ltd., which was announced by the companies on Monday.
Rio Tinto takes $450m hit on Ivanhoe Mines
April 5 (The Australian) RIO Tinto has had more than $C460 million ($448m) wiped off the value of its investment in Canadian subsidiary Ivanhoe Mines (TSX:IVN, NYSE:IVN) after a company report showed a potential $US1.3 billion ($1.25bn) blowout in the capital cost of the Oyu Tolgoi mine and a one-third rise in expected operating costs.
Despite Rio having a 51 per cent stake in Ivanhoe, the technical report on the giant Oyu Tolgoi copper and gold mine in Mongolia was released to the market without a review or sign-off from Rio or the Rio-appointed Oyu Tolgoi board and does not represent Rio's views on the project.
But this did not prevent the market slicing $C1.23, or 8 per cent, off the value of Ivanhoe's shares, sending them on their biggest one-day drop since November to a six-month low of $C14.37 and giving Ivanhoe a market value of $C$10.65bn. The 2012 project technical report, commissioned and released by Ivanhoe, shows that the first phase of Oyu Tolgoi is expected to cost $US6.2bn, which is in line with previous Ivanhoe indications.
But the second phase, which is still to be approved, is now forecast to cost $US5.1bn, bringing total development costs to $US11.3bn.
In September, Rio Tinto said it expected development costs to total $US10bn.
The study, by Adelaide-based analysts working for AMC Consultants, says expected cash operating costs at the mine after gold byproduct credits have risen from US62c per pound of copper in a 2010 study to US81c.
At Oyu Tolgoi, Rio is managing construction but does not have a direct stake in the mine, which is 66 per cent owned by Ivanhoe and 34 per cent by Mongolia.
Rio has boosted its stake in Ivanhoe (whose major shareholder after Rio is its chief executive, Canadian billionaire Robert Friedland) to 51 per cent by providing funding to build the project.
"The technical report represents a view of the project by Ivanhoe and the independent qualified persons (at AMC) and is not necessarily the view of the Rio Tinto appointed management of Oyu Tolgoi or Rio Tinto," AMC says in the report.
Rio would not comment on the report yesterday.
The slide in the Ivanhoe share price coincided with downgrades of the stock by Canadian analysts.
BMO Capital Markets reportedly cut Ivanhoe from an outperform rating to market perform, while TD Securities reportedly downgraded the stock from hold to reduce. The net present value of the project has risen from $US4.5bn in the 2010 technical report to $US11.4bn in the latest report.
However, the rise is due to an increase in metal price assumptions, and analysts would already have included these in their models.
The long-term copper price assumption has risen 43 per cent, from $US2 a pound to $US2.85 a pound, while gold price assumptions have jumped by a similar percentage, from $US850 an ounce to $1200 an ounce.
Related: Canadian miner fuels fears on Rio project – BusinessDay, April 5
Aluminum Corporation Of China, Coking Coal, The Gobi Desert, And An Investment Dust-Up (Corrected Version)
April 4 (Jon Springer via Seeking Alpha) The Aluminum Corporation of China's (ACH) recent tender for up to 60% of SouthGobi Resources (SGQRF.PK) has knock-on effects throughout the Gobi Desert in the Mongolian mining complex, and the country of Mongolia. It is not possible to know how this will play out, but it is possible to know there is a lot to consider.
Aluminum Corporation of China, also known as Chalco (and sometimes referred to by its 100% Chinese state-owned parent company's name Chinalco), recently announced an agreement related to Ivanhoe Mines (IVN) and SouthGobi Resources to purchase up to 60% of SouthGobi Resources (also known by its Mongolian subsidiary name: SouthGobi Sands) shares at CAD$8.48. This announcement happened April 1, 2012 (in Canada) before the markets opened in Asia on Monday, April 2, 2012. The tender was made for a 28% premium over Friday's SouthGobi closing share value.
The Basics, Price Action In Related Stocks
At the end of the day Monday, closing prices for SouthGobi Resources were:
· in Hong Kong (1878.HK) = $60.50 (tender should be about $66)
· U.S. = $7.65 (tender should be about $8.55)
· Toronto (SGQ.TO) = $7.52 (vs. tender of $8.48)
· Frankfurt (HOX.F) = EUR5.80 (Frankfurt's volume is small, but most among German listings; tender should be about EUR6.45)
…
MSE Daily Update: MONGOLIA STOCKS EDGE UP
05 April 2012 (BDSec) – The BDS index inched 0.13% higher to 4,506.42 points while the MSE Top 20 index edged down 0.23% to close at 20,490.60 points today on a transaction value of MNT390.8 million (or $299,005). Gainers outnumbered losers 18 to 13, while 7 remained unchanged.
Hermes (HRM) was the most active stock on the MSE during Thursday’s session, accounting 43% of the total transaction value. Hermes posted MNT398 million or MNT5.07 per share in 2011 and decided to distribute a dividend of MNT4.19 per share.
Baganuur (BAN) rebounded 6.06% to close at MNT7,000 after falling for 4 consecutive trading days.
Olloo (OLL) gave up 8.97%, Eermel (EER) slumped 6.64%, Telecom Mongolia (MCH) tumbled 3.92%, and Khukh Gan (HGN) closed 3.61% lower.
Local News in Brief
China has increased its maximum investment for qualified foreign institutional investors (QFII) to US$80 billion from US$30 billion. RMB-qualified foreign institutional investors (RQFII) will also be allowed to pump an extra 50 billion yuan (US$7.95 billion) of local currency into the country, up from 20 billion yuan (US$3.2 billion), said the China Securities Regulatory Commission in a statement released on its website Tuesday.
The spring session of parliament opened today. This is the last session of the parliament which elected in 2008.
The Mongolian Fur and Cashmere Union, the Ministry of Food, Agriculture and Light Industry, and Agricultural Marketing and Brand Development project from the Asian Development Bank will release the Mongolian trademark Tansag Shirkhegt (“Mongolian Luxurious Texture”) to the world market.
The Spring session opens
April 5 (news.mn) The spring session of parliament opened today. This is a last session of the parliament which elected in 2008.
D.Demberel, Speaker to emphasized that MPs have to work hard in short time. The Speaker also noticed that the parliament took many important decisions towards development country and citizens life. “An important thing is to distribute equally social wealth” said D.Demberel.
The spring session scheduled to discuss 11 items, first in agenda will be discussion of package law on Protection of Environment.
The law on Donors, law on Innovation are scheduled next. Also the spring session will discuss Policy document on Culture and current situation of economy, finance and budget.
Main item is to announce date of parliamentary election. By the new law on Parliamentary election election to be held in end of June on Wednesday. By the previous law elections dated on Sunday’s.
LIST OF AUTOROAD AND FLYOVER CONSTRUCTION APPROVED (and funded by DBM)
Ulaanbaatar, Mongolia, April 4 /MONTSAME/ The cabinet meeting on Wednesday approved a list of autoroad and bridge construction works to be done by direct contracts within the "New great construction" programme.
It has planned to intensify the construction of autoroads and bridges and to quickly start a new construction. The works will be financed through the Development Bank of Mongolia (DBM), the money will be placed in the state budget as expense of the DBM's activity. The amount of money will be equal to one per cent of expense of every contracted construction work.
According to the list, by the year 2013 must be completed paved roads of 127 km between Tsakhiur and Tosontsengel, 45 km in Ondorkhaan-Monkhkhaan-Baruun-Urt direction, 104 km between Ulaanbaatar and Mandalgobi, and 25 km paved road will be run this year in Ulaanbaatar.
In accordance with the programme, a total of 5,572 km speedways between the capital city and aimags' centers, 990 km speedway in Altanbulag--Ulaanbaatar--Zamyn-Uud direction and a 212 paved road in the city will be run. Flyovers will be constructed on seven spots, and 350 km roads will be repaired.
GENERAL PLAN APPROVED TO DEVELOP BORDER CHECKPOINTS
Ulaanbaatar, Mongolia, April 5 /MONTSAME/ The cabinet meeting on Wednesday tasked Ministers, heads of associated agencies and aimag authorities with drawing up and approving a general plan on developing the Shiveekhuren and Gashuunsukhait border checkpoints.
The plan has main an objective to realize the governmental goal to ensure a promptness of services when freight is passing the border checkpoints, to equip the checkposts with the latest facilities up to the internationally-recognized standards.
Other intentions are to expand the autoroads' network for transporting coal and mineral resources, to construct inspection laboratory, customs control center, terminals and logistic and transport services buildings. Moreover, the border checkpoints will have radioactive substances examination and sterilization facilities and an X-ray equipment.
ACTION PLAN APPROVED FOR "E-GOVERNANCE" PROGRAM
Ulaanbaatar, Mongolia, April 4 /MONTSAME/ The cabinet approved on Wednesday an action plan for realizing the "E-governance" program.
The money needed will go to the annual budget and the basic guidelines of socio-economic development from investments of the private sector, loans and assistance from international banks and financial organizations.
The "E-governance" program has been worked out after an experience was studied of 15 countries such as USA, Germany, the Republic of Korea, Malaysia, New Zealand, Japan and India.
It is considered that an approval of the law on E-signature has prompted a creation of a legal environment for developing the E-governance and bills on ensuring IT security in technological environment. As expected, the "E-governance" program will help Mongolia make the all-level works transparent and services quicker.
The "E-governance" program will be implemented until 2016, its implementation process and results will be introduced to the cabinet every first quarter of a year.
As of today, about 21 thousand km high-speed fibre optic cable is connected to 161 soums and settlements, and other places await their connection as well.
CABINET MEETING IN BRIEF
Ulaanbaatar, Mongolia, April 4 /MONTSAME/ At its regular meeting on Wednesday, the cabinet discussed draft amendments to the law on regulating conflicts of common and private interests in public service and preventing them, on combating corruption, on Criminal procedure.
The cabinet considered as necessity to make decisions about altering these laws after inspecting their realization results. A draft amendment to the criminal procedure was backed.
- The cabinet obliged the Committee of State Properties and the UB Mayor and governors of aimags to maintain the rule on concession tender and rules on standard documents of preliminary and competitive examinations and on evaluating proposals.
- A head of the Cabinet Secretariat of Government Ch.Khurelbaatar said that the cabinet took measures last year to implement 293 clauses of 139 decisions. Of them, 89 clauses or 30.4 per cent have been realized so far. Implementation of cabinet decisions stood at 82.8 per cent.
- A right was given to D.Khayankhyarvaa, the Finance Minister, to sign a credit agreement to be established between Mongolia's Ministry of Finance and China's Export-Import Bank for a project on purchasing small tractors for agricultural works.
- The Finance Minister introduced to the cabinet activities of the Development Bank of Mongolia for 2011 and its business plan for 2012-2015.
- The cabinet decided to allot MNT 100 million from the reserved fund for approving a developmental program on making Darkhan a model city. The money will be spent for socio-economic calculations, regional plan for industry, training and scientific works, infrastructure research, and for the program.
- Under-protection zones of historical importance in Tov and Arkhangai aimags have been expanded to 133.6 hectares in accordance with the cabinet decision. Construction works and other activities are forbidden on these zones.
- Pursuant to the cabinet decision, in the list of historical and cultural values has been added 10 manuscripts and sutras, kept in the National Library, also Hun Empire-related ten findings, craft works and pieces of needlework. Now the listed are 748 values.
- The cabinet discussed results of official visit of Pany Yathotou, a Chairwoman of the Lao National Assembly paid to Mongolia on February 25-29, 2012. A matter on the results will be submitted to the National Security Council.
XacLeasing named Philipp Marxen as new CEO
Ulaanbaatar, Mongolia (XacLeasing) – The Board of Directors of XacLeasing LLC has selected Philipp Marxen as the new Chief Executive Officer (CEO) of XacLeasing.
Philipp has previously worked with TenGer Financial Group, XacLeasing’s holding company as investment officer. In this position, besides facilitating new investments of the group, he had the opportunity to assist XacLeasing on its strong growth path. Moreover, Philipp has international experience in consulting, entrepreneurship and finance. He graduated from Goethe University Frankfurt with an M.A. in Sinology and a M.Sc. in Business (Finance).
Due to this strong background, his knowledge of XacLeasing and enthusiasm for Mongolia’s emerging leasing market, he was the unanimous choice of the Board who expects has leasing to fully reap benefits of the challenging market conditions.
XacLeasing is well positioned in Mongolia’s leasing industry as the best-known independent brand. The company managed to grow its net lease portfolio from about MNT 1.7 billion end of 2009 to MNT 5 billion in 2010 and MNT 14.8 billion in 2011. The company broadened its operations and had 16 staff at the end of 2011. Profits grew in parallel and the foundation for further – more accelerated growth is laid.
Mr. Jargalsaikhan Dambadarja, the former CEO announced his resignation on February 28, 2012; he will now focus entirely on his diverse roles in media and the civil society. XacLeasing’s Board and team wish him all the best for these tasks and thank him for his support.
Passengers be fill border documents by online
April 5 (news.mn) The General Authority for Border Protection announced yesterday that document checking will switch to online.
According to the General Authority for Border Protection’s official 5000-8000 passengers pass through Border check point declaring documents filled by hand. Every day 8-10 officers working at Border check points.
Beginning from April 15, 2012 passengers will fill documents online.
“New rule make easier our work and save a time” said General Authority for Border Protection’s official.
State Registration Office has new regulation
April 5 (news.mn) State Registration Office decided to transfer some duty to district. “Number of people who need our service is increasing every day. Right now we serving around 1300 people per day. We have increased number of servant as possible. But still couldn’t fill all customers” said spokesman of State Regictration Office.
Therefore State Registration Office decided to serve certain district citizens in their district’s branch. For example, Bayangol, Bayanzurkh and Songinokhairkhan district’s citizens can apply for their district’s Registration Branch.
“We hope new regulation will decrease our work by 60 percent” said spokesman.
Motor Sich to upgrade Mi-8 helicopters at Orsha Plant for Belarus, Mongolia
April 4 (Kiyv Post) The Zaporizhia-based open joint-stock company Motor Sich will conduct in 2012 the modernization of Mi-8 helicopters at the Orsha Aircraft Overhaul Plant (Vitebsk region, Belarus), a controlling stake in which it has recently bought, one of the company's top managers told Interfax-Ukraine.
"The portfolio of orders of the Orsha Aircraft Overhaul Plant for 2012 includes contracts for the modernization of 19 helicopters. The customers are Belarus and Mongolia," the agency's interlocutor said.
Seven helicopters will be upgraded for Mongolia, twelve for Belarus, he said.
In January 2012 Belarusian President Alexander Lukashenko approved the sale of a 99.2% stake in Orsha Aircraft Overhaul Plant to Belarusian closed joint-stock company Investment and Innovation Systems (Vitebsk region, Belarus) and Motor Sich.
According to the president resolution, Investment and Innovation Systems will hold 1.488 million shares in the plant and Motor Sich – 2.232 million shares.
Earlier Motor Sich said that it planned to buy a 57% stake in Orsha aircraft overhaul plant to place orders for the upgrade of Mi-8 helicopters at the plant. The value of the stake was assessed at $1.1 million.
Motor Sich expects to receive orders for the modernization of over a hundred helicopters.
The new owners are in 2012-2016 to invest at least $12 million in the reconstruction of the production facilities of the plant.
Motor Sich is one of the world's largest manufacturers of aircraft engines and industrial gas turbine plants. It supplies its products to 106 countries.
According to tentative data, Motor Sich saw UAH 1.34 billion in net profit in 2011, which was 9% up on 2010.
Can Prince Michael patch things up with Mongolia?
April 4 (London Evening Standard) Move over Prince Andrew, aka British trade ambassador Air Miles Andy. Prince Michael of Kent has been invited by the President of Mongolia to visit his country this month. But could it be a royal visit too far?
The trip is the work of former Labour MP John Grogan, who chairs the Mongolian British Chamber of Commerce. Only a year ago the British Government was accused of luring a senior member of the Mongolian security services to the UK so that he could be arrested under a European warrant for the alleged kidnapping of a Mongolian dissident in Le Havre.
Bat Khurts, head of Mongolia’s National Security Council, thought he was coming to Britain for high-level government talks about sharing intelligence on Muslim fundamentalists. When he arrived he was arrested at Heathrow and held at Wandsworth prison for extradition to Germany on kidnapping charges, where it was thought he would stand trial.
When, after nearly a year, Germany received Khurts, they withdrew the charges and released him almost immediately, thus securing preferential trade terms because they blamed the Brits for the affair.
Prince Michael’s visit is designed to patch things up.
Misc
Travelogue: Mongolia (Photo Album)
April 4 (Reuters) A look at the big skies and broad steppes of Mongolia.
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"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
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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.
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