CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, Western Australia based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.
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Haranga Resources - Metallurgical results confirm the ability to produce a premium product with drilling recommenced at Selenge
July 2 (Ocean Equities) --
Favourable metallurgy the key to unlocking the resource, and near term cash flow, potential of Selenge
Haranga Resources Ltd ('Haranga' or 'the Company') (ASX:HAR) has announced the results of initial detailed metallurgical testing of its flagship Selenge project (80% interest). Davis Tube Recovery ('DTR') analysis of every single metre of mineralised core drilled confirmed the expectation that the three drill tested targets to date at Selenge have the ability to each produce a premium magnetite concentrate with an average grade of +65% Fe, with favourable impurities (ex sulphur at the Bayantsogt deposit – discussed below) at a coarse grind size and with scope for further optimisation (initial analysis undertaken at 75μm in order to generate a conservative and consistent baseline study) and for higher grade mineralised zones to be treated by dry magnetic separation.
The favourable met analysis will be a key focus area due to the relatively low grade of the maiden resource (with a higher cutoff grade significantly reducing tonnage) and in our view is the key to unlocking the resource scale upside, and near term cash flow potential, of Selenge. These results will be fed into a scoping study to be announced in the next month that we expect will support a low opex, relatively low capex beneficiation process to produce a lump and/or concentrate product. Current mining operations at the neighbouring Eruu Gol mine (Mongolia's largest iron ore mine) have proven magnetite skarn deposits such as Bayantsogt and Dund Bulag at Selenge are amenable to low strip ratio mining and simple beneficiation, generating extremely attractive margins given the inherent transport cost advantage to northern China – indeed the largest individual cost component remains freight costs (not mining or processing).
. . . with an aggressive drilling programme commenced and expected to support a 4-5Mtpa operation
The primary task for Haranga is to now quickly build its resource inventory, currently 32.8Mt @ 24.4% Fe at Bayantsogt (following 10,308 metres completed last year) with an exploration target of 120-250Mt for its Dund Bulag prospect, with the Company's planned 32,000 metre drilling programme now commenced. We expect this programme to last ~6 months and support a total resource in the order of 250-300Mt and an operation of +4-5Mtpa (on par with Eruu Gol).
Selenge is expected to produce a premium product
While DTR results indicate that sulphur at Bayantsogt is relatively high at 1%, such levels currently only attract a ~4.75% discount to the spot price in the northern Chinese market. We expect the likely development scenario of multiple sources of ore (ie mining from the Bayantsogt, Dund Bulag and/or Huiten Gol deposit/prospects) feeding a central plant at Selenge will result in blending to achieve optimal product characteristics (premium Fe levels and favourable impurities) and mining/processing costs.
Well funded and following a proven value creation roadmap
The Company remains comfortably funded (A$17.4m in cash at Mar'12), with an EV of only A$44m and the Lippo Group (a major Asian conglomerate with +A$50b of assets under management) has recently gained board representation (the Company's largest shareholder with a 15.3% interest). The business model Haranga is employing is very similar to its big brother coal company, Hunnu Coal (the target of a successful A$477m cash offer by Banpu Minerals) albeit ~12-18 months behind in terms of exploration/development of its flagship asset. In our view, the upside from an equity investment in Haranga is de-risked by its new big brother cornerstone financial investor (the Lippo Group) and the neighboring Eruu Gol mine, which provides proof of concept, a value creation roadmap and potential for corporate synergies. CIC invested US$700m to take a 35% stake in Eruu Gol in Oct'09 (implied US$2b valuation) at which time it was still a development project with a ~300Mt resource. Other near-term de-risking milestones for Haranga are expected to be a scoping study (due in a month), visibility for the Company's rail solution and submission of a mining right application (the later two expected by year end).
Mogi: this one unusually slipped through my usually good Googling skills
Chalco Shareholders Approve SouthGobi Stake Purchase
June 29 (WSJ) Shareholders of Aluminium Corp. of China Ltd. have approved the company's plan to buy a controlling stake in Mongolia-focused coal miner SouthGobi Resources Ltd. from Canadian miner Ivanhoe Mines Ltd. for more than 920 million U.S.dollars, the Chinese aluminum producer said Friday.
At Chalco's annual general meeting Friday, 99.97% of its shareholders voted for the resolution to offer 65.97 Hong Kong dollars for each of SouthGobi's shares, the company said in a statement. The offer price is more than double SouthGobi's closing price of HK$29.00 Friday.
China's biggest alumina and aluminum producer by output didn't disclose further details. The shareholders' decision comes even as SouthGobi Resources said Tuesday it will stop mining at its flagship Mongolian coal mine by the end of the week because of weak demand and customer uncertainty about its future–the latest setback for the Canadian-owned miner after Chalco announced a plan to buy an up to 60% stake from Canada's Ivanhoe Mines Ltd.
Although Chalco's shareholders approved the planned stake purchase, the Chinese company's bid for SouthGobi Resources could still fall through, because a new Mongolian law on foreign investment that took effect in May limits foreign ownership in strategic industries such as mining to 49%, unless the buyer obtains parliamentary approval.
SouthGobi shares slid 3.5% on Friday in Hong Kong as investors await the results of Mongolia's parliamentary elections. Its shares have lost 29% in the last five sessions.
Manas: Drilling program 2012 in Mongolia
BAAR, Switzerland, July 2, 2012 /PRNewswire/ -- Manas Petroleum Corp. ("Manas") (TSX-V: MNP; OTCBB: MNAP) is pleased to provide this update on the progress of the exploration program in Mongolia, which is focused on drilling two wells in 2012, through its subsidiary Gobi Energy Partners LLC.
Highlights:
· Ranking prospects resulted in drilling Ger Chuluu A 1 as first well
· Secured rig to drill two wells in 2012, commencing drilling in August
The 2011 and 2012 work programs (seismic acquisition, processing, interpretation and passive seismic) allowed the delineation from scratch of seventeen prospects and leads in five different sub-basins. Ranking of prospects resulted in Ger Chuluu and Sainshand A prospects to be drilled in the first phase. Unegt B, which is based on a lesser known petroleum system and therefore not suitable as first well, was chosen as the third prospect. The location of these prospects is shown on the map below:
(Photo: http://photos.prnewswire.com/prnh/20120702/NE34011)
Due to poly-phasic tectonic environment (extension followed by large scale strike-slip and inversion) Ger Chuluu as well as Sainshand A prospects need additional seismic to mitigate structural risk before drilling. No major changes in closure or area are expected. However, trap compartmentalization has to be assessed before drilling as this could influence the drilling location.
Furthermore, both prospects are multi-target and therefore reservoir dipping has to be checked by additional seismic to ensure overlaying in drilling location.
A contract for additional 335km seismic was signed with Sinopec, same contractor as in 2011, in March 2012. The seismic program consists of detailed prospect seismic as outlined for two prospects above and the outstanding seismic in the southeastern part of the blocks (Tsetserleg, see map). Seismic was originally planned to start at the beginning of June 2012but, due to an extended survey outside Mongolia, delivery of the vibrators selected for the seismic in Block XIII and XIV has been delayed. Therefore, commencement of seismic acquisition is now planned for mid-July 2012.
A drilling contract with Shengli Petroleum, an affiliate of Sinopec, was signed in May 2012 and commencement of drilling was scheduled for beginning of July 2012. The rig was mobilized and rig inspection took place. Due to the delay in the seismic acquisition program mentioned above, drilling has been postponed until the week starting August 20, 2012. Drilling depth of Ger Chuluu 1 will be 1,200 meters.
"Drilling in Mongolia by other operators has not been very successful in the recent past and therefore to achieve our targets, we cannot afford to drill our selected prospects without the assurance that we have all evaluation done to minimize the risks by choosing the best drilling locations," said Werner Ladwein, President of Manas Petroleum.
Mogi: another hoax?
Nova Mining Corp Enthusiastic about Reports from Lithium Production Deal in Mongolia
SAN ANTONIO, July 2--(BUSINESS WIRE)--Management of Nova Mining Corp. (OTCBB: NVMN) disclosed today that they have received the reports and government license documents on the third lithium mining property owned by Mongolian National Mining Consultants Limited (MNMC). Management states that the reports are encouraging as were the reports on the first two properties. Nova Mining Corp has contracted with MNMC for the exclusive right to purchase 100% of the lithium produced from three large licensed MNMC mining properties at a discount to market price.
"We are moving forward!" stated Nova Mining President James Dilger. "We have the initial financing commitment to continue our assessment of the MNMC deal, and we will actively pursue the finding and securing of additional lithium assets. It appears Nova Mining Corp has selected a potentially very lucrative point to make bold moves on securing lithium supplies. All of the activity we are seeing leads us to believe that lithium will continue to escalate in price and supplies will become even more valuable."
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MSE CARRIES OUT A SOFT LAUNCH OF ITS NEW SYSTEM
July 2 (MSE) A significant milestone was reached today under the strategic partnership between the London Stock Exchange, the State Property Committee and the Mongolian Stock Exchange. The MSE carried out a soft launch of its new Trading, Clearing Settlement and Depository and Surveillance systems.
The new market regulations which are aligned to international standards require stringent requirements to be met by market participants. We are pleased to announce that five Brokers were able to comply with the new requirements and were present on the Trading Floor today to participate in the launch. Brokers continue to work with their clearing Banks to satisfy the requirements. The soft launch is intended to give Broker Dealers some time to adjust to the new market regulations and to meet the new requirements. We are confident that more and more participants will be added on in the next few days.
MSE EXTENDS ITS TRADING HOURS TO THREE
Ulaanbaatar, Mongolia, July 2 /MONTSAME/ The Mongolian Stock Exchange (MSE) reported on Monday that it has renewed the schedule for stock trade pursuant to an order of the executive director in conjunction with installing and utilizing the Millennium IT system.
By the new schedule, the trade of shares will be held from 10.00 am to 1.00 pm everyday, and it got in force from Monday. Previously, the trade of shares was held on weekdays between 11.00 am and 12.00 pm.
In April of 2011, the MSE signed an agreement on master services with the London Stock Exchange (LSE) on three-year period. According to this agreement, the Millennium IT trading system which is used in over 30 giant stock markets and in trading centers of 25 countries was to be installed. This system has some advantages such as capability of expanding the capacity and demand of information transmitting speed, simplifying manual actions, automatically processing data and freely transmitting them between the systems and foreign information agencies.
MSE WEEKLY REVIEW
Ulaanbaatar, Mongolia, July 2 /MONTSAME/ Four stock trades were held at Mongolia's Stock Exchange on June 25-29. In overall, 2.4 million shares were sold of 52 joint-stock companies totaling MNT 6.9 billion.
Index TOP-20 was 19531.99 points increasing 367.19 units or 1.9% against the week earlier. The increasing of the index was due to rates of Aduunchuluun (35.7%), Baganuur (20.2%), Mongolian telecommunication (12.9%), Shivee ovoo (12.0%), Mogoin gol (11.1%), Sharyn gol (9.5%), Bayangol hotel (5.3%), State Department Store (3.4%) and Berkh uul (2.4%).
The total market capitalization was set at MNT one trillion 895.1 billion increasing MNT 59.5 billion or 3.2%.
Shares of "Aduunchuluun" /35.7%/, "Moninjbar" /30.8%/, and "Ov khanyn material" /30.0%/ increased, but shares of "Tomriin zavod" /21.6%/, "Khereglee impex" /14.7%/, and "Mongolia Development Resources" /9.9%/ decreased.
27 stocks closed higher, 15 shares declined and 10 shares remained unchanged.
"Baganuur" /908.4 thousand units/, "Hai Bi Oil" /453.4 thousand units/ and "Genco tour bureau" /343.4 thousand units/ were the most actively traded in terms of trading volume and in terms of trading value--"Baganuur" (MNT 6.4 billion), "APU" (MNT 72.4 million) and "Hai Bi Oil" (71.1 million).
Mongolia President Sets 2012 Deadline for Picking Coal Partners
July 1 (Bloomberg) Mongolia President Tsakhia Elbegdorj set an end-of-year deadline to select companies to develop part of its biggest coal field, seeking to resolve a year-long battle for the resource between groups from five nations.
Peabody Energy Corp. (BTU) (BTU), OAO Russian Railways, and China's Shenhua Group are among companies affected by stalled talks to develop the West Tsankhi area of the Tavan Tolgoi coal deposit, Elbegdorj said in his Ulan Bator office. Mongolia is due to get a new government by September at the latest and resolving the impasse will be among its top priorities, he said.
"We will push our government to negotiate with the interested parties within this year," Elbegdorj said. "The process continues but it cannot continue indefinitely."
The coal field would become the biggest foreign investment project in Mongolia after Rio Tinto Group's (RIO) $6 billion Oyu Tolgoi copper mine. Picking the companies to develop West Tsankhi is also key to the planned $3 billion public offering of Mongolia's state-run Erdenes TT, which holds the rights to the land and would receive royalty fees from the operation.
Mongolia first announced and then said it would review an accord in July that planned to give Shenhua Group a 40 percent stake in West Tsankhi, with Peabody taking 24 percent and a Russia-Mongolian group the rest. The government didn't say who the Russia-Mongolia group included. Originally, Japanese traders Itochu Corp. (8001) and Sojitz Corp. (2768) and companies from South Korea bid as part of the group led by Russian Railways.
Local Development
Some local politicians called for Mongolia to develop West Tsankhi by itself, Sukhbaatar Batbold, who went to the June 28 elections as prime minister, said in an interview in March.
"Still we hope" that West Tsankhi will be developed by foreign investors, Elbegdorj said.
West Tsankhi contains more than 1 billion metric tons of coal, compared with about 6 billion tons in all of Tavan Tolgoi. About 68 percent is suitable for steelmaking and the rest could be used in power plants, according to Erdenes TT, which started mining the East Tsankhi area last year.
"If this situation can get resolved, the economic benefits to Mongolia are second only to Rio Tinto's Oyu Tolgoi mine," said Jim Dwyer, the head of the Business Council of Mongolia. "Given the complex, United Nations-like cast of governments involved, the talks may not go so quickly."
The Democratic Party, the opposition before last month's parliamentary election, expressed confidence yesterday it would form the next ruling party, even as officials ordered another vote in two districts and early results showed no group won a majority. The General Election Commission hasn't said when it will announce a final tally from the election.
Foreign Restrictions
The future of foreign investment in Mongolia's mining came into question as the country passed a law tightening the rules last month in reaction to the Aluminum Corp. of China Ltd.'s announcement in April that it agreed to take control of local coal miner SouthGobi Resources Ltd. (SGQ)
The takeover sparked a public outcry and sped up the passage of the foreign investment law, which gives the government and parliament the right to review acquisitions of Mongolian companies in the media and communications, mining, and banking fields.
The reaction to the law, passed in May, has been mainly positive and it is unlikely to be changed by the incoming government, Elbegdorj said. It also doesn't seek to attack Chalco, as the aluminum maker is also known, or bar China from investing in Mongolian companies, he said.
"Since the passing of the law, I really don't hear substantial or really big concern to make some changes," Elbegdorj said.
Chalco shareholders approved the agreement to buy as much as 60 percent of SouthGobi.
"We are not closing the door" to Chinese companies, Elbegdorj said. "We are just regulating the issue and clarifying the venue for discussing the issue."
BoM issues ₮30B 28-week 16.25% bills
July 2 (Bank of Mongolia) BoM issues 28 week bills worth MNT 30 billion at a weighted interest rate of 16.65 percent per annum. /For previous auctions click here/
Mongolia Democratic Party Confident Of Victory After Voting
July 2 (Bloomberg) Mongolia's Democrats expressed confidence they will form the next ruling party after elections for parliament, even as officials ordered another vote in two districts and early results showed no group won a majority.
The Democratic Party said it won 36 of 76 seats in the State Great Khural, according to a statement posted on its website yesterday. The election commission, which confirmed that the party won more seats than any other group, ordered new polls in two districts June 30 after winning candidates failed to garner enough ballots.
"The DP is definitely going to be the ruling party," it said in the statement. "The main indicator of a democratic country is free elections. The people gave us their trust. It means that Mongolians want to live and develop as in other countries."
The Democrats and the Mongolian People's Party are grappling for control of a legislature that will have a say over how the country uses the profits from an estimated $1.3 trillion in gold, copper and coal reserves. Mining companies led by Rio Tinto Group (RIO) have invested billions of dollars in the nation of about three million people.
Mongolia's next parliament will need to help reform the judicial system, fight corruption and pass a set of new laws on mining and land use that seek greater protection for the environment among other measures, President Tsakhia Elbegdorj said in a June 29 interview.
Sharing Wealth
One government plan to share Mongolia's wealth is to give each citizen one preferred share of Erdenes MGL, a state holding company that owns more than a dozen of the nation's biggest mineral deposits.
Mongolia doubled state spending in real terms to 6.3 trillion tugriks ($4.7 billion) last year as the government offered cash handouts to the population to meet previous election pledges and added more public sector jobs, the International Monetary Fund said in December. The cash caused food prices to jump 31 percent in April from a year earlier.
The handouts haven't had a lasting impact, said Puruvdorj, a 73-year-old pensioner in Nalaikh, a coal mining town close to Ulan Bator. The number of new bars and karaoke salons has surged in the town, where Mongolia's coal exploration began in the 20th century, he said.
"There are rivers of alcohol, it is flourishing, but there's nothing concrete," Puruvdorj said. "I've lost faith in the government and parliament."
Coalition Talks
Even as the Democratic Party declared victory, the Mongolian People's Party could also seek to team up with other partners. The two could, as in the previous government, join together for a larger coalition, though the Democrats appear reluctant to do that for now, according to Jackson Cox, chief executive of the Ulan Bator-based consultancy Woodmont International.
"While Mongolian election officials are close to resolving the final election results, the process of Mongolia's political leaders to cobble together a coalition so that a new government can be formed is just beginning," Cox said.
The Democrats have several choices to reach the 39-seat threshold, and the MPP "has options of its own to form a formidable bloc in the new parliament," Cox said.
The results from the June 28 vote are preliminary until each election district approves them, the General Election Commission said yesterday. At the moment, the Democrats won 22 seats and the MPP took 19 of the 48 being contested in the direct elections, according to the commission. Twenty-eight seats are awarded via proportional representation.
The Justice Coalition, which includes former President Nambaryn Enkhbayar's party, won four seats and the last three went to independents, he said.
PRELIMINARY ELECTION RESULT OF CITY COUNCIL: DP 26 SEATS, MPP 14, MPRP-MNDP 4, AND CWGP 1
Ulaanbaatar, Mongolia, July 1 /MONTSAME/ At 12.00 am on Sunday, the Election Commission of City (ECC) revealed an official preliminary result of the election of the Citizens' Representative Khural run by the proportional system. The election was held to elect 45 members of the Citizens' Representative Khural of City, 30 of which are elected by the majority system, and 15 members--by the proportional system.
The ECC says that the Democratic Party (DP) won at 20 constituencies, and the Mongolian People's Party (MPP)--at 10 constituencies. 517 thousand and 417 citizens cast their ballots in the election.
The preliminary result show that the Democratic Party (DP) took votes of 35.53%; the Mongolian People's Party (MPP)--26.15%; the "Justice" joint coalition of Mongolian People's Revolutionary Party and National Democratic Party--22.77%; the Civil Will-Green Party--8.02%; the "Third Force" joint coalition of Republican Party and the All-Mongolian Labor Party--2.53%; the Conservative United Party--2%; the Motherland Party--0.52%; the Civil Movement Party--0.91%; the United Party of Patriots--0.46%; and the Mongolian Social Democratic Party--0.21%.
As the proportional results, the DP captured six seats, the MPP--four seats, "Justice"--four seats and the Civil Will-Green Party--one seat. By the overall results, the DP won 26 seats, the MPP--14 seats, the "Justice" coalition--four seats and the Civil Will-Green Party--one seat.
· In the first constituency, D.Baidrag (DP) took the most votes, or 41.39%;
· in the second constituency, B.Tuvshin (DP)--44.02%;
· in the third constituency, Ts.Buyandalai (DP)--36.71%;
· in the fourth constituency, B.Enkh-Amgalan (MPP)--33.85%;
· in the fifth constituency, Ts.Sandag-Ochir (MPP)--45.07%;
· in the sixth constituency, S.Amarsaikhan (MPP)--55.97%;
· in the seventh constituency, G.Ganbayar (MPP)--37.12%;
· in the eighth constituency, Ts.Enkhtsengel (DP)--32.48%;
· in the ninth constituency, S.Unen (DP)--35.46%;
· in the tenth constituency, B.Otgonbayar (DP)--34.05%;
· in the 11th constituency, J.Amarsanaa (DP)--38.15%;
· in the 12th constituency, B.Tomorchuluun (MPP)--33.99%;
· in the 13th constituency, B.Bayarmagnai (MPP)--34.9%;
· in the 14th constituency, D.Badarsan (DP)--36.36%;
· in the 15th constituency, G.Tomorbaatar (MPP)--35.6%;
· in the 16th constituency, S.Ochirbat (DP)--34.38%;
· in the 17th constituency, D.Ganbold (MPP)--32.19%;
· in the 18th constituency, T.Bat-Erdene (DP)--32.45%;
· in 19th constituency, Ts.Baatarkhuu (DP)--31.03%;
· in the 20th constituency, L.Naranbaatar (DP)--31.84%;
· in 21st constituency, L.Narantuya (DP)--37.04%;
· in the 22nd constituency, D.Orosoo (DP)--38.46%;
· in the 23rd constituency, Ts.Odontungalag (DP)--39.38%;
· in 24th constituency, Ts.Altantsetseg (DP)--35.71%;
· in the 25th constituency, D.Avirmed (MPP)--27.99%;
· in the 26th constituency, R.Dagva (MPP)--32.86%;
· in the 27th constituency, L.Saintogs (DP)--29.42%;
· in the 28th constituency, Sh.Odgerel (DP)--30.10%;
· in the 29th constituency, T.Boldbaatar (DP)--33.06%;
· and in the 30th constituency, D.Enkhsaikhan (DP)--32.18%.
OSCE TO DISCUSS MONGOLIAN MEMBERSHIP
Ulaanbaatar, Mongolia, July 2 /MONTSAME/ A regular caucus meeting of Asian partner countries in Organization for Security and Co-operation in Europe /OSCE/ held on June 29.
At the meeting, Eoin O'Leary, a permanent representative of Ireland heading the organization this year has informed about result of his visit to Mongolia at the beginning of June.
He said that he will introduce result of his visit to the Permanent council of OSCE within July for discussing and making decision on issue of Mongolia's membership.
J.Enkhsaikhan, the Ambassador of Mongolia informed the participants about an outcom of training-seminar co-organized by Mongolia and OSCE on April to strengthen diplomatic mission of Afghanistan, as wel as result of Mongolia's parliamentary election took place on June 28.
250 Volunteers Set to Build Blue Sky Build 2012 in Khan-Uul District
June 29 (Habitat for Humanity) Habitat for Humanity Mongolia has started counting down to its second Blue Sky Build. Daily photos posted on its Facebook page have piqued curiosity and drawn creative responses. About 250 international and Mongolian volunteers will be building homes with Habitat families from 2 to 7 July in Khan-Uul district, Ulaanbaatar. New father B. Bayarjargal, 23, is looking forward to moving away from the pollution of the city. "Living in the fresh air is important for my baby. It will help him grow up in a healthy environment," he said. Families will be using less coal in the new houses. Polystyrene blocks provide good insulation against severe winters and a new type of stove cuts back on the amount of coal used. Updates on HFH Mongolia's Facebook page.
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"Mogi" Munkhdul Badral
Senior Client Manager / Executive Director
CPS International LLC
Telephone/Fax: +976-11-321326
Mobile: +976-99996779
Email: mogi@cpsinternational.mn
Website: www.cpsinternational.mn 
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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 advises 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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