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.
CPSI NewsWire-ийн долоо хоног тутмын Монгол хувилбар болох "CPSI NewsWire MN" нийтлэгдэхээр боллоо
4-р сарын 3 (CPSI) "CPSI NewsWire MN" нэртэй долоо хоног тутамд нийтлэгдэх CPSI NewsWire-ийн Монгол хувилбарыг гаргахаар боллоо. Одоохондоо CPSI NewsWire захиалагч бүгдэд хүргэгдэх бөгөөд CPSI NewsWire-ийг тогтмол уншдаг болон гадаад уншигчдаасаа хүлцэл өчье.
CPSI is Launching a Weekly Mongolian Edition of CPSI NewsWire
April 3 (CPSI) CPS International is pleased to announce it is launching a Mongolian language weekly edition of CPSI NewsWire dubbed "CPSI NewsWire MN", summarizing the news from last week.
As it's just a weekly issue, we'll use the current CPSI NewsWire mailing list and we apologize to our non-Mongolian speaking audience.
SGQ closed +13.6% to C$7.52, 1878 closed +18.16% to HK$60.50
Chalco seeks controlling stake in Canada's SouthGobi
The state-owned aluminium producer offers $926 million for up to 60% of the Mongolia-focused coal miner through a tender offer as it steps up its diversification strategy.
April 3 (FinanceAsia) Aluminum Corporation of China (Chalco) announced yesterday that it plans to acquire between 56% and 60% of SouthGobi Resources (TSX:SGQ, HK:1878), a Canadian company with coal mining operations in Mongolia's South Gobi region and listings in Toronto and Hong Kong. The two companies have also signed a cooperation agreement, which will take effect once the acquisition is completed.
A tender offer will be made to all SouthGobi shareholders, but SouthGobi's majority owner, Canadian mineral exploration and development company Ivanhoe Mines, has also agreed to tender its entire 57.6% stake as part of the offer to help Chalco reach its acquisition target. Depending on the level of take-up by other SouthGobi shareholders, Ivanhoe said in a separate statement on Sunday that it could receive up to C$889 million ($898 million) from the sale of all of its shares in the coal miner.
If more than 60% of SouthGobi's shares are tendered, Chalco will accept the shares on a proportional basis, it said. The offer will be made by way of a takeover-bid circular under British Columbia law.
Chalco, which is the largest producer of alumina, primary aluminium and aluminium fabrication products in China, will pay C$8.48 (equivalent to about HK$65.97) per SouthGobi common share. At the time of the announcement, Chalco said it did not own any common shares in SouthGobi, either directly or indirectly.
Based on the offer price, 60% of SouthGobi's outstanding share capital of 181.9 million shares is valued at C$925.28 million ($926 million). Chalco plans to fund the deal from internal funds, external financing via bank borrowings, or a combination of both.
A 57.6% stake would amount to $912 million, which will make this the fifth-largest announced outbound M&A deal by a Chinese company so far this year, according to Dealogic.
The offer price represents a 28% premium over SouthGobi's C$6.62 closing price on the Toronto stock exchange on Friday, and a 32% premium over the volume-weighted average price (VWAP) of C$6.41 during the past 10 trading days, according to the statements.
In Hong Kong trading yesterday, SouthGobi's share price jumped 18.2% to HK$60.50, while Chalco, which is also listed in Shanghai and New York, was down 1.9%.
SouthGobi obtained a dual-listing in Hong Kong in January 2010, but the stock has struggled to perform. In the first four months after listing the share price fell 40%, and while it topped the IPO price briefly about a year ago, yesterday's close puts it 52% below the IPO price of HK$126.04. So, even if the tender is at a premium to the current price, it offers little consolation for investors who came in at the time of the Hong Kong listing – if any of them are still hanging on to their shares.
SouthGobi is a coal production and development company with coal assets strategically located near the border with China – the world's largest consumer of coal. Its flagship coal mine, Ovoot Tolgoi, is selling coal to customers in China, but the company also plans to supply a wide range of coal products to markets in Asia, SouthGobi said in a separate statement flagging Chalco's partial take-over bid.
Chalco's move is in line with its corporate strategy, which is to "expand its business scope to other resources, [including] coal to achieve full integration of coal and aluminium operations". The company said in the statement that it believes it has the necessary expertise to strengthen SouthGobi's operations since its businesses are, to a great extent, dependent on China.
"If the offer is successful, the company intends to operate Ovoot Tolgoi to maximise value for its shareholders, including all the current business plans provided that are economically justifiable," Chalco said. For instance, it added that it plans to assist in providing electricity from China and in securing rail transport capacity to address SouthGobi's logistics issues.
"… [Chalco] will be a long term investor with a strong commitment to investing in the coal sector, and intends to position SouthGobi as the platform to pursue its growth ambitions in the coal sector," Chalco said.
It added that it intends to retain almost all of the SouthGobi management team in their current roles.
Under the cooperation agreement, SouthGobi will have the right to offer up to 100% of its saleable coal to Chalco, and Chalco will have the obligation to purchase the coal at market prices for a period of 24 months. Chalco will also assist SouthGobi in procuring electricity for its operations.
Mongolian businesses, either through a direct connection to the grid power, or through the development of a conveniently located power plant, and will provide support for its coal-haul highway project.
An improvement in SouthGobi's earnings is likely an encouraging factor for a capital tie-up. For the year ending December 31, 2011, SouthGobi posted a pre-tax profit of about $57 million, compared to a pre-tax loss of about $118.9 million in 2010, according to Chalco's statement.
The miner booked about $57.7 million in net income attributable to equity holders in 2011. That contrasts with net comprehensive loss attributable to equity holders of about $88.4 million the previous year.
According to the current timetable, the offer is expected to open on or before July 5 and will remain open for at least 35 days. BNP Paribas is a financial advisor to Chalco.
SouthGobi Gets New 'Big Brother' in Chalco's Takeover, with interview video with CEO – CNBC, April 2
BAAR, Switzerland, April 2, 2012 /PRNewswire/ -- Manas Petroleum Corp. ("Manas") (TSX-V: MNP; OTCBB: MNAP) has filed its annual report on Form 10-K for the year ended December 31, 2011 on EDGAR and on SEDAR. (www.sedar.com or www.sec.gov). The following provides you with a review of some of the highlights:
A 2D seismic contract with Sinopec was signed on 12 July 2011, providing for a firm program consisting of 532 km full fold data and an optional program of up to an additional 1,106 km full fold data. The program consisted of eight phases. A total of 1,311 km full fold data, 615 km in Block XIII and 696 km in Block XIV, was acquired without any incident. On November 25, 2011 we completed the seismic program after having acquired all necessary data to establish a prospect portfolio. We are currently focusing on six areas in an effort to spud the first well by the end of the second quarter of 2012.
Following the issue by Petro Matad of an aggregate of 498,237 ordinary shares of $0.01 each ("Shares") in February and March 2012, the Company advises that the total number of Shares in issue as at the date of this notice is 185,063,521, with each Share carrying the right to one vote.
The above figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest, in the Company.
Gobi reported net income after tax of 1.70 bln tugrigs (MNT), or MNT 430.8 per share in 2011 versus 3.36 bln tugrigs or MNT 218.5 per share in 2010 even though the sales revenue increased by 6.5 bln tugrigs to 35.6 bln tugrigs. The earnings after taxes in the past year were influenced significantly by negative exchange rate impacts, which cost Gobi 1.45 bln tugrigs for 2011.
Today's other big decliners were Shivee Ovoo (6.67%), Baganuur (4.36%), APU (3.37%), and Genco Tour Bureau (3.19%). Tavantolgoi (TTL), which dragged down the market earlier, remained unchanged to close at MNT 10,500.
Aluminum Corp. of China Ltd., the nation's biggest producer of the metal, agreed to buy Ivanhoe Mines Ltd. (IVN)'s stake in SouthGobi Resources Ltd. (1878) to gain control of Mongolian coal production as it expands into other commodities and diversifies revenue.
Remicon is a local concrete producer, offering exposure to the construction boom in Mongolia through both real estate and mining infrastructure developments. The company has aggressive plans to build a cement factory to significantly lower costs, and a relatively large free float of 16%. We believe its technological superiority over other producers and established shareholder base will give it the competitive advantage in bidding for the coming development projects for both private and public sectors.
High cement demand-the current supply of cement and other materials is limited in Mongolia. Cement producers Hutul, Erel, Nalaikh and Central Asia together account for 30% of local cement demand. As such concrete and cement prices are soaring.
Upcoming equity financing-to raise MNT7-8Bn towards increasing concrete production and financing the construction of the cement plant. The raising will be at MNT190-230 per share according to the underwriters.
Dry-method cement plant-more economical production with ability to customize the concrete product depending on the project. This is a significant advantage over Hutul LLC, major competitor with wet cement production
3-р сарын 30 (МТА) Монгол улсын төсөвт 2011 онд хамгийн их татвар төлсөн эхний 100 компанийг танилцуулж байна. Эдгээр 100 компанийн төлсөн татвар 2011 оны улсын төсвийн татварын орлогын 72 хувийг эзэлж байна.
Харин 2011 оны "Шилдэг татвар төлөгч"-ийг Татварын Ерөнхий Газрын "Шилдэг татвар төлөгчийг шалгаруулж, урамшуулах журам"-ийн дагуу татвараа хуулийн хугацаанд төлсөн, татварын хуулийн хэрэгжилтийг хангасан, татварт хугацаа хэтэрсэн өр, төлбөргүй зэрэг бусад хэд хэдэн шалгуур үзүүлэлтээр шалгаруулж, татвар төлөгчдийн өдрүүдээр нийтэд зарладаг болно.
ULAN BATOR, April 2 (by David Stanway, Reuters) - Mongolia sits on vast quantities of untapped mineral wealth, the exploitation of which is likely to turn it into one of the world's fastest growing economies over the next decade.
But political uncertainty ahead of parliamentary elections in June worries investors. One of the parties in Mongolia's shaky coalition government said it would pull out before the vote, and politicians are under constant pressure to be seen to getting a good deal for the country from resources investors.
The priority for Mongolia is the development of its tiny economy, and foreign investors want to know if the government can create a stable legal environment while handling the pressures exerted by impatient citizens as well as its two giant neighbours, Russia and China.
Mongolia wants to launch a $3 billion initial public offering of the Tavan Tolgoi or "Five Hills" coal deposit. State-owned Erdenes Tavan Tolgoi had been planning to list 29 percent of the company in London and Hong Kong by May, but it cannot until Mongolia's parliament passes a securities law.
An initial proposal to hand development rights in the project to China's Shenhua, Peabody of the United States and a Russian-Mongolian consortium was rejected, and the government is trying to devise another deal that will include Japanese and South Korean partners.
It has abandoned its idea of renegotiating the contract for the Oyu Tolgoi copper-gold mine, after earlier saying it wanted to look again at a 2009 deal with Ivanhoe Mines. The project will be taken over by Rio Tinto , which already owns 49 percent of Ivanhoe and, as of mid-January, was cleared to buy more.
- More inward investment. In November, commodities trader Trafigura and private equity investor Origo Partners Plc , formed a joint venture to develop Mongolian coal and iron ore deposits for export, and in February Goldman Sachs bought a 4.8 percent stake in a Mongolian bank.
Mongolia's dependence on mining has alarmed environmentalists and opposition politicians, and the country is already showing classic symptoms of "Dutch disease", including soaring inflation and high interest rates.
The government is trying to bring in structures that will protect it against fluctuating commodity prices, and wants to use the proceeds from mining to pay for infrastructure, health and education, and develop other sectors.
- How it deals with rapid economic change as well as inflation as foreign investment transforms the country's mainly rural economy. The International Monetary Fund warned in November that Mongolia's economic policies are creating inflationary pressures.
Many of Mongolia's 2.7 million citizens are concerned about growing Chinese and Russian influence, and their fears were not allayed by the plan to hand the majority of Tavan Tolgoi's western block to Chinese and Russian interests.
Mongolia's reliance on Russia and China for fuel, power and transportation also poses a major risk to its mining sector. Russia has been known to turn off supply taps, and China is not averse to closing crucial railway links.
Mongolia also depends on Russia's railway network to fulfil plans to deliver coal to Japan and South Korea. Mongolia's plans to build itself a railway network capable of transporting coal to foreign markets is likely to be delayed, officials said in February.
April 2 (UB Post) Mongolia was awarded 'Mining Country of the Year' at the first Asia Mining Awards, held during the 5th Annual Mines and Money Conference in Hong Kong. Mongolia, holding 1170 deposits of more than 80 types of minerals, is attracting the attention of investors from all parts of the world.
This was not always the case. A decade ago, when Mongolians wanted to attract foreign investors to large scale mining projects such as Tavan Tolgoi, nobody displayed interest as the country`s mineral wealth was not well known around the world. There were a lot of people who did not even know about Mongolia and where it is located. In terms of mining, there was nothing but the Erdenet copper mine and many small-scale gold mines. But today the situation is rather different and the mining sector is considered to be the main driving force of the Mongolian economy.
Mining constitutes 30% of Mongolia's GDP and more than 85% of its exports. It is expected to grow even faster when Oyu Tolgoi and Tavan Tolgoi become fully operational. However, Mongolia`s growing reliance on mining has alarmed environmentalists and nationalists.
Although it is true that the land is destroyed by mining operations and environmental restoration remains poor, it is a good thing that the Government has started paying attention to the concept of responsible mining. The number of companies operating in accordance with international standards is increasing.
"However, taming a hyper-growth economy is not an easy task," pointed out Professor Stephane Garelli, Director of the IMD World Competitiveness Center in the preface of the Mongolia in World Competitiveness Report.
The amount of FDI surpassed USD 5.3 billion last year or 62% of GDP, according to the World Bank. We should keep in mind that the massive flow of money does not always bring happiness. Many countries like Nigeria, Zimbabwe have experienced the "resource curse." A large flow of money from the mining sector has caused inflation to increase. The soaring inflation, high interest rates, and lack of human resources indicate that the risk of Dutch Disease already exists in Mongolia. The good news is the country has the opportunity to learn from others` experiences, mistakes and achievements.
As of today, apart from international mining giants such as Vale, Rio Tinto, and Peabody Energy that already operate in Mongolia, we can see foreign investments in infrastructure, financial services, and property.
Without the mining boom, we probably wouldn't see the formation of Bloomberg TV in Mongolia, the opening of international hotel chains such as Ramada, the luxury retailers such as Louis Vuitton, or the investment of Goldman Sachs in Trade & Development Bank.
"It is wrong to assume that foreign investments only bring money. Along with money come know-how, technologies, and culture" says Z.Battushig, Vice-Chairman of the Foreign Investment and Foreign Trade Agency.
The issue is not about whether we need mining or not, but that it is vital to manage mining revenues in the correct way. So, how should Mongolia appropriately distribute the income generated from mineral wealth?
"It would be advisable for Mongolia to redirect some of the revenues earned from the commodity trade into developing other activities such as the clothing and fashion industry, manufacturing, ecotourism, and the like" wrote Garelli.
Investment in infrastructure also should play a key role in diversifying the economy. It is encouraging that the Government is trying to use the proceeds from mining to pay for infrastructure and develop other sectors.
"Infrastructural development becomes the second engine of growth. We have already announced large bids for new power plants. We have new projects in railway construction and social housing," said D.Zorigt, Minister of Mineral Resources and Energy in an interview given to the Oxford Business Group.
-We have imported 1,800 tons of gasoline and it is currently being sold at four of our gas stations. Drivers may purchase this newly imported gasoline in Tasgani Ovoo, the 13th district, the new Trauma and Injury Center, and at the Darki Ekh and Sansar districts' intersection.
This gasoline burns effectively and releases less toxic fumes compared to other gasoline available in Mongolia. It is friendly to the environment. The gasoline we currently use today is of Euro-2 standard.
-SK Energy is one of the five biggest companies in South Korea and is the largest company there in terms of oil products. We are allowed to import gasoline as we see fit. In mid April. 4,000 to 5,000 tons of gasoline will be imported. We are also planning to import Euro-4 standard diesel gasoline. The amount of gasoline we are importing from SK Energy is very small for the company.
Gasoline depletion and unstable prices in the past years gave us all the reasons to find a third source of gasoline for Mongolia. We began talks with South Korea about gasoline importation in July 2011. Russia had internal struggles and had no choice but to make Mongolia a secondary priority. Ministries and the Petroleum Authority supported us. We made the first agreement in February 2012 and the first shipment of gasoline has just arrived. Company officials said that they also had hard times with insufficient energy and gasoline; and support was given from the South Korean Government.
-The monthly import is set at 1,800 tons, but as I said, it can be changed depending on the demand. Imports also depend on the technical capabilities of the Zamiin Uud checkpoint. Right now, it has the capability of importing a maximum of 10,000 tons of gasoline at one time.
The availability of gasoline transportation trains can also affect the amount of gasoline intake. The possibility of transporting gasoline on 40 to 50 trains is not high. The railway administration supported our plan and had 20 trains ready beforehand. With the help of many factors, we were able to import the first of many gasoline imports to Mongolia in such a short time.
-We have completed research and studies into the gasoline we were going to buy. Officials and experts from South Korea came to Mongolia and studied a sample taken from the gasoline we use today, and they said, 'we cannot produce this gasoline in Korea. We used to produce it ten years ago.' They said that they couldn't bring back the old production methods to produce this type of gasoline. In return, I told them that we were not asking them produce a specific type of gasoline just for us. We simply wanted to buy the gasoline that is exported to Japan and Singapore.
-The gasoline will be sold at the price set by the Singapore Stock Exchange with transportation fees added to it. This is the price that other Asian countries buy gasoline at. The price for importing one barrel of this gasoline is USD 144. This product is high quality and we will not complain about it being expensive. It is generally profitable so the price is guaranteed to be very stable.
-This is an emergency source of gasoline. It is not possible to supply all of Mongolia with this gasoline. The amount of gasoline brought into Mongolia from South Korea is limited by the technical ability and efficiency of the Zamiin Uud checkpoint. At full capacity, the checkpoint can only supply Mongolia with 5 to 8% of its annual demand.
March 29 (BBC) The average wage, calculated by the International Labour Organization, is published here for the first time. It's a rough figure based on data from 72 countries, omitting some of the world's poorest nations. All figures are adjusted to reflect variations in the cost of living from one country to another, and as Ruth Alexander of BBC radio's More or Less programme underlines, it's all about wage earners, not the self-employed or people on benefits.
This exhibition, which runs through April 9, was organized by Ministry of Education, Culture and Science and Science Academy of Mongolia in a bid to show Mongolians the precious ancient works of art and let them know better about ancient cultures.
"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
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