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.
Follow the news by following @CoverMongolia, liking Cover Mongolia, viewing our Website
Haranga: Independent Techno-Economic Assessment Completed on the Selenge Iron Ore Project
August 21, Haranga Resources Limited (ASX:HAR) --
A techno-economic assessment by ProMet Engineers has concluded that Selenge has the potential to be a robust iron ore project with an excellent rate of return and an NPV9 valuation of around US$1 Billion.
· Initial metallurgical testing on Selenge ore achieved a premium quality magnetite concentrate at a coarse grind.
· ProMet have used these results as primary inputs into their proprietary ORVAL magnetite project modelling software to obtain a range of potential project valuations.
· The model assumes an ore resource at Selenge varying from the lower to the upper end of the current Exploration Targets*.
Summary Results from ORVAL Model
(9% Discount Rate, US$130/t Price for 66% Fe Concentrate)
Resource Scenario | Mine Life | Annual Conc Production | CAPEX (US$M) | NPV (US$M) | IRR (After Tax) |
Lower | 16 years | 2.5 Mtpa | 312 | 636 | 80% |
Base Case | 15 years | 4.0 Mtpa | 407 | 1,094 | 101% |
Upper | 16 years | 5.0 Mtpa | 467 | 1,481 | 109% |
· Further potential valuation upside exists:
Ø Pricing is based on current market; in 2011 the inland Chinese price for this product quality was over US$155/t
Ø Assumes a conservative 45 micron grind to ensure product quality; a coarser grind will lower plant costs
Ø Assumes a standalone wet magnetic separation plant and logistics solution; no shared infrastructure
Ø Earlier production from high grade areas via dry magnetic separation has not been included in the valuation scenarios
Ø Value upside if resource and/or grade better than expected
· The clear priority is to drill and build the resource inventory.
· The Company is progressing swiftly at Selenge with nine drilling rigs now in operation.
…
Winsway (01733) interim turns red to HK$468m; no div
August 21 (ET Net) Winsway Coking Coal (01733) said it booked a loss attributable to equity shareholders of HK$468 million for the six months ended 30 June 2012, as compared to a profit of HK$814 million in the same period last year.
Its basic and diluted loss per share was HK$0.124.
The turnover was HK$6.61 billion, a decrease of 1.34% from a year earlier.
No interim dividend will be distributed.
MMC: Interim Report 2012
August 20, Mongolian Mining Corporation (HK:975) --
…
Management Discussion and Analysis
OVERVIEW
The most significant milestone achieved in the Company's long-term development and sustainable business growth objective during the period under review was the commencement of the construction of Ukhaa Khudag – Gashuun Sukhait railway base infrastructure ("UHG-GS Railway").
In May 2012, the Group has entered into a Build-Operate-Transfer ("BoT") Concession Agreement with Government of Mongolia ("GoM") to build and operate the railway base infrastructure between UHG coking coal mine and Gashuun Sukhait border check point of Mongolia. The UHG-GS Railway is expected to increase efficiency and reliability of the Group's coal transportation operations while bringing further reduction in cost of transportation to the Group. Moreover, the Group believes that the railway will improve safety in coal transportation operations and significantly reduce impact on the environment.
The Group expects that the UHG-GS Railway construction will be completed in the second half of 2014 and is anticipated to be fully operational in 2015. In the meantime, UHG-GS paved road will continue to serve as the Group's primary transportation infrastructure and provide the Group with a reliable coal transportation link to its customers located in China.
In March 2012, the Group successfully issued USD600.0 million Guaranteed Senior Notes, rated B1/B+, due in 2017 ("Senior Notes") bearing an interest at 8.875%, which was the largest ever bond out of Mongolia and the first 144A issuer from Mongolia. At the same time, Moody's Investors Service, Inc. ("Moody's") has assigned a B1 corporate family rating and Standard and Poor's Ratings Services ("S&p") its 'B+' long-term corporate credit rating to the Group with the stable outlook, respectively. This was an important milestone in the development of the Group's capital structure and the proceeds from the Senior Notes are expected to be allocated mainly to the financing of the Group's UHG-GS Railway construction project.
The Group is proud to emphasize that MMC continued with solidifying its position as the leading coking coal miner in Mongolia by the successful implementation of development plans in line with the Group's strategy to expand its coal mining, processing, transportation and logistics operations and to deliver to the market washed coal products under its own brand name.
The Group's coal mining operations have continued to ramp up as scheduled. During the period under review, the Group achieved a ROM coal production at the UHG mine of approximately 3.7 million tonnes, an increase of 48.0% over the 2.5 million tonnes mined there during the corresponding period in 2011.
Meanwhile, in line with the Group's long-term vision to diversify its business portfolio by transforming from single asset based company to multiple assets operations, in February 2012 it has successfully launched the commercial coal mining operations at the BN mine after official permits were received from the relevant Mongolian governmental authorities.
During the period under review, the Group achieved ROM coal production at its BN mine of approximately 0.4 million tonnes (first half of 2011: nil).
The Group believes that the close proximity of UHG and BN mines provides unique opportunity for synergic development by sharing coal handling and processing facilities and increasing the utilization of coal transportation and logistics infrastructure, thus reducing requirements for development capital expenditure. In addition, operational synergies such as joint functional and operational management and marketing platform will be also achieved.
As a part of its development strategy, the Group launched coal handling and preparation plant ("CHPP") operations which enables the Group to produce and sell washed coal products under the MMC's brand name, reduce logistics costs, expand its end-user customer base, and boost its competitiveness in the international market.
To match its coal production expansion, the Group has also been increasing its coal handling and processing capacity. After commissioning the second phase of the CHPP by relevant Mongolian governmental authorities in February 2012, the Group's current coal handling and processing capacity has reached 10 million tonnes on an annual basis.
The Group will continue the planned expansion of its coal processing capacity by completing the third phase of the CHPP. The third phase is slated for completion by end of 2012, thus expanding the Group's total annual processing capacity to 15 million tonnes.
During the period under review, the Group's CHPP processed approximately 3.0 million tonnes of total ROM coal (first half of 2011: 0.2 million tonnes) delivered from UHG and BN mines and produced approximately 2.1 million tonnes of total washed coal products as a combination of washed hard coking coal, washed semi-soft coking coal and middlings.
For the six months ended 30 June 2012, the Group sold approximately 2.4 million tonnes of coal, as a combination of raw coking coal, washed hard coking coal, washed semi-soft coking coal and middlings, representing an increase of 71.4% over the 1.4 million tonnes of coal sold during the corresponding period in 2011.
For the six months ended 30 June 2012, the Group sold approximately 1.3 million tonnes of washed hard coking coal, 0.03 million tonnes of semi-soft coking coal and 0.3 million tonnes of raw coking coal. The ASP for the coking coal products was approximately USD128.5 per tonne, thus representing 34.4% increase over the corresponding period in 2011 (first half of 2011: USD95.6 per tonne).
In the first half of 2012, the Group sold approximately 0.8 million tonnes of its middlings at the ASP of approximately USD37.6 per tonne.
While remaining focused at Chinese market as a primary destination for its coal products and expanding its relations with its Chinese customers, during the period under review as a part of long-term objective to diversify customer base, the Group has successfully delivered initial bulk shipments of approximately 53.3 thousand tonnes of its washed premium hard coking coal via Russian Far East port Nakhodka to the customers at seaborne market, namely Sumitomo Corporation in Japan, Mesco Steel in India and China Steel in Taiwan.
During the period under review, according to the data issued by the National Statistical Office of Mongolia, the Group exported approximately 2.4 million tonnes of coal, or around 23.3% of Mongolia's total coal exports (first half of 2011: 18%).
For the six months ended 30 June 2012, the Group grew its revenue by 71.1% to approximately USD233.0 million from USD136.2 million for the same period in the previous year. The increase was primarily attributable to the increase of total sales volume and higher proportion of washed coal products sales compared to raw coal sales.
During the period under review, the Group increased its EBITDA by 139.6% to approximately USD67.2 million from USD28.1 million for the same period in the previous year. The increase was primarily attributable to the increase of total sales volume and higher ASP achieved for coal sold.
The profit attributable to equity shareholders of the Company for the six months ended 30 June 2012 was approximately USD31.0 million, representing a change of USD11.2 million, or 56.2% as compared to USD19.8 million for the six months ended 30 June 2011.
…
Prophecy Coal Chairman John Lee -- PCY Presentation at CoalTrans Mongolia 2012
August 21 -- John Lee, Chairman and CEO of Prophecy Coal Corp. (TSX:PCY, OTC:PRPCF, Frankfurt:1P2), recently attended CoalTrans Mongolia 2012. The CoalTrans Conference took place in Ulaanbaatar Mongolia on May 23-24. During the conference, Mr. Lee gave a presentation discussing Prophecy Coal's Chandgana power plant project.
DRAIG RESOURCES BOARD CHANGES
August 20 -- Draig Resources Ltd (ASX: DRG) ("Draig" or "the Company") wishes to announce a series of changes to its Board and management structure. The changes will boost the Company's geological and business development capabilities going forward and are aligned with Draig's strategy of acquiring and developing coal assets.
Current Non‐Executive Director Andrew Harrison will become an Executive Director and will lead the business development and commercial efforts of the Company. Mr Harrison has dedicated an increasing level of resources to this area as the Company turns its focus to developing new opportunities in the coal space in Mongolia, Indonesia and other geographies.
Mr. Harrison has significant experience in senior management and board positions in publicly listed companies and has held senior positions in a number of major organisations including Brambles Industries Limited, and has played leading roles in strategy, management, and business development across a number of sectors.
The Company is also pleased to advise it has appointed Colwin Lloyd as a Non‐Executive Director. Mr Lloyd is a geologist with more than 22 years' experience in mining and exploration across a broad range of commodities and geological regions. Mr Lloyd is the Principal Geologist and Director of Geobase Australia Pty Ltd, which provides professional geological services to the international resource industry.
Mr Lloyd will bring key geological experience to the Company for exploration and development of its assets.
Mr Lloyd commenced his geological career as a mine geologist progressing into resource estimation and exploration geoscience. This background provides a practical and unique perspective on the exploration, development and mining of minerals. Through his work with Geobase Australia Pty Ltd, Mr Lloyd has gained valuable international experience in commodities including coal, gold, silver, zinc, copper, uranium, rare earths, nickel, iron ore and tungsten in varying geological environments.
The Company also advises that Jade Styants has resigned as a Non‐Executive Director of the Company, effective immediately. Ms Styants has regretfully resigned due to increased executive work commitments. Ms Styants will continue with the Company in her role as Company Secretary and Chief Financial Officer.
The Company acknowledges the valuable contribution of Ms Styants over her term as a director of the Company Please find attached an Initial Director's Interest Notice for Mr Lloyd and a Final Director's Interest Notice for Ms Styants.
Clearing House: Politicizing Erdenes TT and Transferring Its Investment to HDF Is Wrong
August 20 (UB Post) The following is an interview with the Executive Director of Mongolian Security Clearing Housing and Central Depository, T.Gandulam.
-How many bond accounts of individuals and enterprises are there at the Mongolian Security Clearing Housing and Central Depository? (Mogi: think article means securities by bonds)
-After the government's decision to distribute up to ten percent of Erdenes Tavan Tolgoi LLC stock, the account opening process has been active. More domestic enterprises and individuals are opening bond accounts than foreigners. Last year, more than 120 thousand bond accounts were opened and by the first half of this year, 191 thousand had been created, of which 99 percent are individuals. Bond accounts amounting to 300 from private enterprises have been opened this year. In the last two years, the opening of accounts related to Erdenes Tavan Tolgoi has increased by 4 to 5 times.
-Though individuals were given the option to receive their one million MNT government handout through cash, most have opted to become bond holders. Can we deduce from this that the understanding the public has about bonds and shares has evolved?
-The opinions of people who work for bond markets and other individuals are different. It is important to know what kind of company one is investing to. Erdenes Tavan Tolgoi ranks high in the world as one of the highest deposits [of coal] mine list and is attracting many powerful foreign investors. But I think it is hurtful to the company's operations to politicise the matter by transferring the invested money to the Human Resource Fund (Mogi: Human Development Fund) and handing it out instead of funding the project. In other words, it is better to invest the investments in developing infrastructure, new technology and innovation and expand the operation of the company. The Mongolian people should focus not on how much money they are going to receive but supporting this company that has so much potential so as to help it become a global level competitor. If they do that, the operation of the company will improve, which means exploitation will increase which in turn means it will be more profitable for the shareholders.
-For a set period of time the Erdenes Tavan Tolgoi shares will be locked in, which means there will not be any trading. Is this a good decision?
-I think the freezing of trading is the right decision at the moment because a handful of people could start collecting the shares at a certain price. This will then hinder the work to catch the attention of foreign investors, because the shares could not be marketed on overseas markets hence the decision to freeze all trading until the bonds on foreign and domestic exchanges have been made. It isn't possible to tell at the moment how much value the shares will have a couple of years from now. But it will be worth more if its value increases on foreign and domestic bond exchanges.
-There are rumours that the second market trading will take place January of next year. Is it possible to set a date though Erdenes Tavan Tolgoi hasn't released its IPO?
-There haven't been any official announcements yet. Rumours aren't reliable. It has been estimated that Tavan Tolgoi could become a global-level brand mine but it is hurtful to the company if rumours such as "its value will decrease" or "trading will soon begin" are being spread. From the interview with the Executive Director of Erdenes Tavan Tolgoi, N.Enebish, I understood that they will release IPOs at the end of first season of next year, or during the beginning of the second season.
-People are asking when they will be able to trade their stocks and when will they receive the dividends. They are asking many questions. Isn't the IPO process taking a bit too long?
-The IPO release date is set by the company. Since Erdenes Tavan Tolgoi LLC isn't yet listed at the Mongolian Stock Exchange, their information isn't available. They will be listed at a foreign bond exchange so many factors, such as the legal environment, inflation, the value of copper and gold, and the foreign bond exchange environment will influence the stock price. Companies pay dividends only when they are profiting. A company that isn't profiting will not pay dividends. Both the government and individuals must understand this. At the moment, the Erdenes Tavan Tolgoi LLC is no different from a baby in a blanket. We have to nurture it and teach it how to walk. You can't pressure a baby to get up, walk and pay your debt.
-For the last three years, there has been talk of developing the capital market. It has been a year and a half since the London Stock Exchange has started helping out the management of the Mongolian Stock Exchange. What has changed since then? Is the Mongolian Stock Exchange able to use the opportunities it has?
-We didn't lie asleep for twenty years. Change and progress isn't easily done. Changing the software system alone cannot be looked at as progress. The results of progress can be observed when the legal environment, labour force and the understanding of those who participate in bond trading changes; the whole system must change. The most important thing is the issue of infrastructure. The infrastructure of bond marketing must be clear and secure to the investors. Only then, will the investors be assured of what their money is going into.
The stock market has been developing for two decades in Mongolia and there are good and bad sides. Renewing this whole market is a huge undertaking.
A team from the London Stock Exchange is helping our Exchange to get a boost for the development of our bond trading—which will also state a positive message to foreign investors. The results of the change are still not observable yet. We had many misunderstandings and issues, only on the first stage of the change. There weren't many serious issues, although the number of companies participating in the exchange has decreased and the trade quantity has decreased. This was mainly due to the fact that the cost of operating under the new MIT system is higher; therefore some broker companies have refused to operate altogether. There are 78 companies with the right to trade at the Mongolian Stock Exchange. From this, 22 are currently conducting operations.
Mongolia's new government lineup formed
LAN BATOR, Aug. 20 (Xinhua) -- Mongolia's new coalition government lineup has been officially completed, with parliament approving the last five cabinet members Monday.
The five newest members included D. Terbishdagva, who will serve as deputy prime minister, and four ministers nominated by the Justice Coalition and the Civil Will-Green Party.
The Justice Coalition's Ch. Ulaan, M. Sonompil and N. Udval were appointed finance minister, energy minister and health minister, respectively. Civil Will-Green Party leader S. Oyun is the minister for environment and green development.
Last Friday, Mongolian parliament approved 13 ministers nominated by the Democratic Party, including Minister for Foreign Affairs and Trade L. Bold, Defence Minister D. Bat-Erdene, Justice Minister Kh. Temuujin, Minister for Economic Development N. Batbayar, and Minister for Mining D.Gankhuyag.
The parliament approved Democratic Party's chairman Norov Altanhuyag as prime minister on Aug. 9.
In the parliamentary election on June 28, the Democratic Party won 31 seats in the 76-member parliament, becoming the biggest party in the country's supreme legislature.
However, failing to secure an absolute majority, the party had to form a coalition with Civil Will-Green Party and the Justice Coalition, which is formed by the Mongolian People's Revolutionary Party and the Mongolian National Democratic Party.
The new coalition government has 16 ministries and 19 cabinet members, including Prime Minister, Deputy Prime Minister and head of Cabinet Secretariat.
Mongolia's last government had 11 ministries and 15 cabinet members.
TWO MPP CANDIDATES FROM UVURKHANGAI CLEARED OF WRONGDOINGS BY CITY COURT
August 20 (InfoMongolia) The two candidates, S.Chinzorig and N.Tumurkhuu who been nominated from Mongolian People's Party and received most votes of 2012 Parliament Elections in Uvurkhangai aimag, the 10th Electoral District, had been suspended from receiving their Parliament Members' sovereign power rights by the Khan-Uul District Court of Ulaanbaatar city on the grounds that they had violated the election law. Meantime, the oath taking ceremony was being postponed regarding the Court resolution.
On August 20, the Capital City Court reviewed the candidates' claims and made its final decision putting an end to the controversy of MPP candidates Namkhai TUMURKHUU and Sodnom CHINZORIG. The Capital City Court annulled the primary court's decision and released that two candidates S.Chinzorig and N.Tumurkhuu elected in Uvurkhangai aimag were not to be guilty.
The one of the reasons that MPP members were not attending the Parliament sessions was the Khan-Uul District Court's decision. However, the Capital City Court made its decision; hence the Electoral Committee and General Election Commission of Mongolia are left to decide whether to take an oath taking ceremony for new Parliament member.
Currently, there 71 members of the Parliament out of 76 are in full sovereign power rights, if these two members and two others to be re-voted from the 22nd and 26th electoral districts of Ulaanbaatar city would comprise 75 members. Only one last candidate, who was elected from "Justice" Coalition by its Party List Ts.Oyunbaatar's adjuration is being temporarily postponed under some circumstances.
The candidates that had run in the 22nd electoral district (Bayanzurkh-Nalaikh) and the 26th electoral district (Songinokhairkhan) of the 2012 Parliament Elections did not reach the 28% of votes; hence the re-voting is scheduled in September 2012.
Candidate of the Democratic Party (DP) L.Erkhembayar and candidate of the Mongolian People's Party (MPP) D.Sumiyabazar will run in the re-voting in Songinokhairkhan District, whereas MPP candidate B.Batzorig and MPP candidate D.Arvin will run in the Bayanzurkh-Nalaikh Electoral District accordingly.
UB MAYOR TO START WORK BY BRINGING HEATING TO GER DISTRICTS
August 20 (InfoMongolia) The Governor of the Capital City and Mayor of Ulaanbaatar Erdene BAT-UUL hosted a meeting to receive residents of Khan-Uul district yesterday on August 19, 2012.
At the meeting the Mayor mentioned that his main priority would be to start the work to bring the central engineering pipes to Ger district areas within this year of 2012.
"The pipes would be going through the streets of Ger districts, therefore the residents must be responsible for UB into a clean city with less air pollution needs hard work from both sides the State and the people", said the Mayor further adding "Land issues are one of the biggest challenges facing Ulaanbaatar. Wealthy companies getting land easily, where normal civilians are not given with equal rights to do so. Thus, the Governor Office of the Capital City would take measures to confiscated illegally claimed land pieces."
Moreover, "UB needs to be carefully re-planned. But the planning issue shouldn't be discussed between only some officials; hence we will openly receive civilians' comments and recommendations and will decide what to build in where under consensus and agreement with citizens. We won't deny the fact that under the new planning some families might be obliged to move out of their land yet the Government will do whatever possible to not the leave the family in loss, equal compensations would be offered" noted the Mayor at the end of the meeting.
"If you want to clear air pollution in UB, you must firstly grant everyone with a right to receive discounted electricity rates", voiced the civilians who have attended the meeting. Currently, only families that are living in the areas with most density are provided with discount rate electricity, therefore the citizens are deeming that people, who are living in other areas shall be given with same rights and discounts.
B. Batzaya is re-appointed as the Head of the Mongolian Railway
August 20 (Business-Mongolia.com) Today, B.Batzaya, former Head of the Mongolian Railway, was re-appointed by the State Property Committee. He was previously sacked by Mr. Zayabal, charge de affair of Chairman of the State Property Committee. B.Batzaya sued against this decision and the related court resolved the decision in favour of B.Batzaya. Hence the State Property Committee re-appointed him to the position.
N. ENKHBAYAR HAS BEEN TRANSFERRED INTO HOSPITAL
August 20 (InfoMongolia) "The health condition of the Leader of MPRP, former President N.Enkhbayar who was serving his 4 years' of imprisonment sentence in the 461st prison of Tuv aimag imposed by the Suhkbaatar District Court's desicion, is in bad state. He fell unconscious last Wednesday on August 15, 2012", informed the Press and Media Department of MPRP.
"After his long lasted hunger strike, N.Enkhbayar had to go through intensive health care which he didn't and went straight onto election campaign, thus his body is suffering from extreme tiredness. The court imposed false charge upon him while N.Enkhbayar was in poor health conditions, who was going under treatments and nursing, besides his treatments were stopped causing critical health failures", said the MPRP members to the reporters.
Doctors and physicians appointed from the Ministry of Health were denied of entry to the prison to see him, therefore today in the morning (August 20, 2012) his promoters over 100 people have gathered outside of the 461st prison and demanded to transfer him to hospital. As a result at around 03:00 pm N.Enkhbayar was transferred into State Central Second Hospital.
VICE FOREIGN MINISTER OF CHINA TO VISIT MONGOLIA ON AUGUST 21
August 20 (InfoMongolia) The Vice Foreign Minister of the People's Republic of China Fu Ying is to arrive in Mongolia tomorrow on August 21, 2012.
The Vice Foreign Minister Fu Ying will held negotiations with the Deputy Foreign Minister of Mongolia G.Tenger at the Ministry of Foreign Affairs at 02:20 pm on August 21, 2012. After the meeting the sides would sign on the cooperation agreement between the Foreign Ministries of the two countries.
Her one day visit to Mongolia will be concluded with a meeting with the Minister of Foreign Affairs L.Bold later in the afternoon at 03:45 pm on the same day.
Mongolia's Coal Development Policies Tied to Goal of Reducing Proportion of Chinese Investment
August 21 (The Jamestown Foundation) On August 22-25, 2012, Dai Bingguo, Chinese State Councilor and top national security advisor to President Hu Jintao, will go to Ulaanbaatar to meet newly installed Mongolian government and Parliamentary leaders. This visit may be a reaction to US Secretary of State Hillary Clinton's July 9 trip and the 7th annual Khaan Quest joint exercise of the Mongolian Armed forces in partnership with the Alaska National Guard for the US Army Pacific Command (USARPAC), occurring on August 11-23. However, more likely Dai's timing is governed by a growing crisis in Sino-Mongolian mineral trade and investment.
Propelled by a mining boom particularly in the coal sector, Mongolia now is one of the world's fastest developing economies with a 17-percent growth rate in 2011 that has continued into 2012. China is Mongolia's number one trade partner, accounting for 93 percent of its exports – mainly in minerals. Mongolia has enjoyed soaring Chinese investment of some $3.7 billion and bilateral trade turnover of $3.3 billion in the first six months of 2012 – a full 21-fold increase over the same period in 2011 (www.infomongolia.com, August 15). However, the Mongolian government and people increasingly view the Sino-Mongolian relationship as threatening to their national sovereignty and are searching for a more balanced foreign and economic development policy. As a result, the Mongols have taken a number of controversial steps to curtail Chinese investment in mineral deposits and diversify Mongolia's trade partners, which impact on the overall foreign investment climate.
Dai's visit was announced in Ulaanbaatar by the Chinese Ambassador to Mongolia Wang Xiaolong. He enumerated the official objectives for the discussions to be building trust by jointly determining cooperation initiatives, identifying sectors for collaboration, holding extensive talks on specific mining and industrial development projects, and agreeing on a further strengthening of humanitarian and cultural relations. It is certain that Dai will make a last-ditch effort to influence Mongolian authorities to approve the $926 million bid of China's state-controlled Aluminum Corporation of China (Chalco), which is investing increasingly in coal and iron projects worldwide, to take a 58-percent controlling stake of the Ovoot Tolgoi coal mine, presently owned by SouthGobi Resources Ltd. (www.bloomberg.com, April 2).
SouthGobi's majority stockholder is the Canadian company Ivanhoe Mines, which in early August was renamed Turquoise Hill Resources. Turquoise Hill needs the money from the stock sale to fulfill the contractual terms of its partnership with multinational mining giant Rio Tinto to develop Mongolia's large copper-gold deposit known as Oyu Tolgoi, located 80 kilometers north of the Sino-Mongolian border. Turquoise Hill claims Oyu Tolgoi holds 41 billion pounds of copper and 21 million ounces of gold in measured resources and an equal amount in inferred resources. Rio Tinto, which controls 51 percent of Oyu Tolgoi, expects to invest $6.2 billion to begin commercial production in 2013, with long-term copper contracts signed with Chinese customers (www.steelguru.com, August 17).
When Turquoise Hill announced in April that it would raise funds for its Oyu Tolgoi investment share by selling stock in the Ovoot Tolgoi coal mine to Chalco, the Mongolian Government in response to Parliamentarian criticism across the political spectrum decided to revoke its license for coal production and insisted it must review the legality of the potential sale. A political climate of anti-Chinese sentiment overcame the election season leading up to the June 29 parliamentary elections. Thus, in mid-May, spurred by "resource nationalism" advocated in the name of national security, the Mongolian Parliament passed amendments to the Foreign Investment Law that require a government panel to approve all foreign investment in the mining, finance, media and telecommunications sectors by a state-owned foreign investor or organization regardless of level of ownership. Mongolia also delayed settling the short list of foreign investors in the country's huge 7.5-billion-ton Tavan Tolgoi coking coal-uranium deposit, and the government has increasingly suggested the project could be handled, albeit more slowly, by a Mongolian state-owned enterprise. Furthermore, a Cabinet decision approved by the Parliament in August created a master plan for a Mongolian industrial development complex in the Gobi Desert steppe city of Sainshand to manufacture value-added refined mineral products under the guidance of Bektel Corporation (english.news.mn, August 8).
Chalco originally had given itself until July 4 to complete the Ovoot Tolgoi stock purchase, but has been forced to extend the finalization period twice for negotiations with Mongolian authorities. It is expected that Dai will offer incentives to Mongolia to permit the deal to go forward, but SouthGobi Chief Executive Alex Molyneux was quoted as believing the Mongols had made any Chalco acquisition impossible (Reuters-India, August 14). However, a further card that Dai will carry into his discussions in Ulaanbaatar is that Rio Tinto and Turquoise Hill must conclude a deal to import power from China at least for a few years in order for the big Oyu Tolgoi copper-gold project to begin operations. Although talks have been ongoing for a year, there has been no agreement. The Mongolian government possesses a penchant for spending "advanced tax revenues" from mining operations and has promised to distribute shares and profits from its big state-controlled mineral deposits such as Oyu Tolgoi to its populace. But, together with slowing Chinese coking coal demand, the Mongols' national security fears regarding China will now have to be reconciled with the potential for very real losses in revenue from foreign investors and mineral exports.
UNIVERSITIES PROPOSE INCREASING TUITION BY 25-50% TO NEW MINISTER, POSTPONING START OF ACADEMIC SEASON
August 20 (InfoMongolia) With the close coming of the start of the 2012-2013 Academic Year, the newly appointed Minister for Education and Science Luvsannyam GANTUMUR received the Directors of some universities and institutes on August 19, 2012 and discussed about the current state of education sector of Mongolia.
Directors and representations from state owned National University of Mongolia, Mongolian State University of Education, Mongolian State University of Agriculture, Mongolian University of Science and Technology and Health Sciences University and some other privately owned academic institutions have attended. Directors and other representations have proposed many important matters, which need to be taken care of urgently, to the new Minister L.Gantumur.
For instance, they have requested to promptly give answers to their proposal on increasing the tuitions by 25-50% and provide university and institute teachers with an opportunity to be involved in "100 thousand households" program and protecting domestic education service market from being taken over by Korean and Japanese academic institutions. Moreover, the attendees have submitted a request to postpone the start of the academic year of higher education organization by one month simply due to closing down of 17 roads in different routes and set the date for October 01 instead the regular September 01.
In response, the Minister L Gantimur voiced that he would put all his efforts in paying great importance in financial problems facing some Universities and Institutions of Mongolia no matter of their ranking and public reputation.
FIRST "ULAANBAATAR GROUP" MEETING
August 20 (InfoMongolia) The first meeting of the "Ulaanbaatar Group on Statistics for Economies Based on Natural Resources", that was jointly initiated by Mongolia and Australia and has been discussed and approved by the United Nations Statistical Commission during its 43rd session, is being hosted in Ulaanbaatar on August 20-22, 2012.
Experts from countries, where natural resources and mining sectors make up the most of their economies are attending the meeting upon invitation. The meeting gathers specialists from Australia, Russia, China, Viet Nam, Mexico, India, Kazakhstan, Iran, Azerbdjian, Brazil, Madagascar and Lesotho and representatives from the United Nations Industrial Development Organization (UNIDO) and statistical division of Commonwealth of Independent States.
In recent years, representatives from national statistical agencies have started to call themed meetings to address selected problems in statistical methods and submit their work to UN for approval. Some of these groups have become formally known as "city groups". City Groups bring together experts primarily from national statistical agencies and are named after the capital city of the initiator country.
The main goals of the Ulaanbaatar City Group are to play a leading role in developing methodological and practical guidelines on statistical measurement, making recommendations by establishing best practice in concepts and methods to track mining industry activities, investment in mining and accurately measuring industry contribution to the economy and assessing mining impacts on other social and economic sectors within the framework of the System of National Accounts.
Link to UNSTATS' Ulaanbaatar Group page
Foreign firms dig deep for Mongolia's commodity riches
Growth in the Mongolian stock exchange driven by recent discovery of vast mineral deposits in the country's hinterlands
August 20 (The Guardian) The chief executive of the Mongolian stock exchange sits in a beige office behind an old PC, his BlackBerry ringing incessantly. Although Altai Khangai is only 31, his hair shows traces of gray; he wears a pink-striped shirt and designer glasses. "I think the exchange will bring a fundamental change to Mongolia," he says in between sips of coffee. "It will transform Mongolia."
Located in a former children's cinema on Sukhbator Square in the centre of Ulan Bator, the Mongolian stock exchange (MSE) was opened in 1993 as a way to privatise government-owned assets after almost 70 years of Soviet rule. It originally had 30 brokers and was open for two hours a week.
Times have changed. The MSE recently completed a three-year, $14m (£8.9m) partnership with the London Stock Exchange, (Mogi: not completed yet) and installed a top-of-the-line brokering software system called Millennium IT, considered the best in the world.
It was the world's top performing stock exchange in 2010; last year it was number two, after Venezuela. "Some strange things take place in Mongolia, but things are improving and we're progressing," Altai said.
Driving progress at the MSE is the recent discovery of vast mineral deposits in the Mongolian hinterlands, some of which found their way into the medals awarded at the Olympic Games in London. Last year, Mongolia's economy grew by 17.3%, the fastest rate in Asia and almost double that of China, one – with Russia – of its two vast immediate neighbours.
If you were going to develop a commodity supply source anywhere – even today, when global commodity prices have taken a dip – it would be in this former Soviet satellite right next to China, the most resource-hungry market in the world.
The boom in Mine-golia, as some are now dubbing it, has arrived courtesy of a wave of investment from foreign firms wanting to get their hands on copper, coal and rare earth minerals.
The US group Nova Mining Corporation recently said it planned to build a railway line from Mongolia to the Chinese coast (Mogi: haha, not exactly true, it said its exploring logistics solutions on how they can rail it, not build it) as a way to ship supplies of lithium needed to meet demand from Apple for new iPhones. Lithium is a key ingredient in long-life batteries for phones and electric cars and Nova is close to an exclusive deal to tie up supplies from the Mongolian National Mining consultants.
Other mining projects include the Tavan Tolgoi opencast coal facility in the southern Gobi region. Tavan Tolgoi has estimated reserves of as much as 7.5bn tonnes of coal, including the world's largest untapped deposit of coking coal, which is used to make steel. Output from Tavan and elsewhere is expected to grow from a current level of about 16m tonnes a year to as much as 240m by 2040, according to some estimates.
Also coming online is the Oyu Tolgoi, a vast source of copper and gold in the southern Gobi that sits just 50 miles north of the Chinese border. The mine is ultimately controlled by the London-based mining group Rio Tinto, and is expected to start production in the next few months after $6bn of investment – the largest single investment in Mongolian history.
Problematic Chinese relationship
"Economists estimate that the Mongolian economy will be more than a third larger in 2019 because of Oyu Tolgoi (OT)," said a spokesman at Rio's London head office. "Beyond the mine itself, OT is driving the biggest revolution in infrastructure building ever in the South Gobi, constructing roads, an airport, and power lines that will supply local towns with 24-hour electricity for the first time. We are sponsoring the largest vocational training programme in Mongolia's history, educating 3,300 of Mongolia's future workforce in professions as diverse as accountancy, IT and environmental management."
But all this foreign involvement and a growing relationship with China is not without its problems. Nor is the domestic political situation entirely stable, with the former prime minister (Mogi: well, ex-president, ex-speaker, ex-everything) having been jailed for four years last month for corruption and a new leader, Norov Altankhuyag, from the Democratic party, confirmed in office only nine days ago.
The current government is opposing a near-$1bn bid from Aluminium Corporation of China (Chalco) for SouthGobi Resources, a business with coalmining interests in Mongolia.
Last week Alex Molyneux, the chief executive of SouthGobi, said the government had made the deal "impossible" and he believed the Chinese had dropped their interest, although they have until 4 September to formalise their bid.
An expected stock market flotation by Tavan Tolgoi, expected for both the Mongolian and London stock exchanges (Mogi: and HKEx), was recently put back from this year to early 2013 for reasons many attribute to political interference.
The path of progress has never been a straight line at the local exchange. In the early 1990s, the MSE gave each Mongolian citizen a small packet of pink and blue coupons, which they could use to bid for shares in hitherto state-owned companies. Most Mongolians did not understand the value of equity, however, and a small handful of the urban elite snapped up the coupons for a pittance.
And many of the MSE's current members are a fossilized reminder of its early failures. Only 40 of the 350 companies listed on the exchange are actively trading; daily trading volume rarely exceeds $150,000. The exchange has delivered 17 IPOs in its history.
"The MSE basically lost its credibility a long time ago, which is why it needs to redefine itself," said Nagi Otgonshar, a vice president at Resource Investment Capital, a financial advisory firm in Ulan Bator.
The exchange's American-educated chief regulatory officer, Saruul Ganbaatar, said that the MSE has drafted a new securities law which will make it easier for Mongolian companies to list on the exchange – and for foreigners to invest in them.
Ganbaatar accepts that Mongolian politicians and broking houses have been struggling to learn the ropes of modern capital markets. "When I started last year there were 46 brokerages and now there are over 80," he said. "This brings in a risk that some are not so competent, or not trained as well."
Outside the room, optimism is certainly still high; some analysts say that the combined wealth from the country's 10 biggest mines, if evenly distributed, could make every Mongolian citizen a millionaire.
Ulan Bator has begun to acquire the trappings of a boomtown. Across from the MSE is a gleaming 25-story office tower (Mogi: ehmm, 17-story) with Louis Vuitton and Armani outlets on the lower floors. Beyond, a sprawl of ramshackle Soviet apartment buildings and traditional felt-lined tents stretches into the distance.
Mongolia's mining boom could expose it to the resource curse
The Gobi desert is soon to welcome Rio Tinto's mega-mine, but coping with the sudden influx of investment may be problematic
August 20 (The Guardian) Barely a day goes past without mining or other parts of the extractive industries talking up a "new frontier" for their work: Thursday it must be the Arctic, Friday perhaps Burma, and Saturday could be Mozambique.
But today it is surely Mongolia, a country remembered largely for 13th-century exploits of Ghengis Khan but in 2012 celebrated for a 16.7% first-quarter economic growth rate – more than double that of China.
There is an enormous mining boom going on in this wild region of sparsely populated steppe and semi-desert that could bring great wealth to a country of barely 3m currently impoverished people.
Rio Tinto, the London-based mining group, is but one of the leading corporations hoping to cash in. Rio is about to open what could eventually be the third largest copper mine in the world.
There are also big supplies in the Gobi region of coal, gold and even rare earth minerals, such as lithium on which the mobile phone world relies. And it is all but a stone's throw from resource-hungry China.
What's not to like about this? Well, a sudden burst of wealth on this score is like a national version of winning the lottery in that it can cause enormous upheaval as well as benefits. It can also leave a country dependent on the ups and downs of the volatile commodity markets.
Countries with rudimentary government and civic structures, such as Nigeria, have been almost overwhelmed by oil wealth in the past. It triggered widespread corruption and ultimately autocracy but little improvement in the lives of ordinary people. Charities such as Oxfam have called it the resource curse.
Mongolia is a democratic nation but the former prime minister (Mogi: again, also speaker and lastly president) has just been jailed for corruption and the future direction of the political establishment is somewhat uncertain.
Meanwhile a series of mega-mines has brought new infrastructure to the southern Gobi region but also threats to the traditional lives of some herding communities and potential environmental degradation.
This small country must learn how to deal with powerful foreign multinationals on its own terms. Mine-golia will need to study commodity success stories such as Norway to avoid the pitfalls of Nigeria.
Mongolia Legal Forum: Investment Opportunities and Mitigating Risks
August 20 -- Hogan Lovells is pleased to be working with the Hong Kong International Arbitration Centre on the Mongolia Legal Forum: Investment Opportunities and Mitigating Risks in Ulaanbaatar on 20 September 2012.
Dedicated to both foreign investors and Mongolian companies, the forum will explore ways in which companies can exploit commercial opportunities while also mitigating their risks, including by structuring for treaty protection and providing for international arbitration of commercial disputes.
Michael Aldrich, Managing Partner, Hogan Lovells Ulaanbaatar will be speaking at the conference.
Details of the programme can be found here.
You can register online by clicking here. For further information please visit www.hkiac.org/index.php/en/events.
Misc
Clinical Trial in Mongolia Shows Vitamin D-Fortified Milk Curbs Colds in Kids
August 20 (MedPage Today) Drinking milk fortified with vitamin D decreased winter colds among kids deficient in the vitamin, a clinical trial in Mongolia showed.
Supplementation halved the risk of parent-reported acute respiratory infections (ARI) after adjusting for age, gender, and history of wheezing in the double-blind trial, Carlos A. Camargo, Jr, MD, DrPH, of Massachusetts General Hospital in Boston, and colleagues found.
"Our Mongolian findings suggest that the association between vitamin D status and ARI risk is indeed causal, at least among school-aged children with very low vitamin D status in early winter," the group wrote in the September issue of Pediatrics.
Previous observational studies have suggested that serum levels of 25-hydroxyvitamin D are inversely associated with ARI. Vitamin D deficiency is common in Mongolia due to limited availability of supplements, no fortification in food, and long, cold winters that discourage sun exposure much of the year.
Mongolia lies in line with latitudes that stretch from the state of Washington to Maine in the U.S. and through to Paris, Switzerland, and Germany.
In the U.S., about 20% of 1- to 11-year-olds are vitamin D deficient, rising to about 50% in African-American children.
"Thus, although the Mongolian 25-hydroxyvitamin D results may, at first glance, seem like a finding applicable to only a small segment of the U.S. population, the observed 25-hydroxyvitamin D levels actually are not uncommon in several segments of the U.S. population," Camargo and colleagues noted.
As part of the larger six-arm Blue Sky Study, they studied 744 Mongolian children in 21 third and fourth grade classrooms randomized to daily double-blind intake of regular unfortified milk or milk fortified with vitamin D (300 IU per day) during the winter from late January to mid-March.
Primary results of the study showed that a variety of strategies attempted to improve vitamin D status in the Mongolian school children improved levels but not uniformly above the threshold for deficiency (20 ng/mL). There were no significant adverse events, the authors stated.
In the randomized group comparison, vitamin D fortification raised the average serum 25-hydroxyvitamin D level significantly but only to an average 18.9 ng/mL compared with 7.2 ng/mL in the control group (P<0.001).
Still, that small increase yielded a significant 48% decrease in parent-reported frequency of symptomatic chest infections or colds lasting at least 24 hours over the prior 3 months. The mean was 0.80 acute respiratory infections with supplementation versus 0.45 without (P=0.047).
After adjustment for other factors -- age, gender, and history of wheezing -- the advantage to vitamin D supplementation remained significant with a rate ratio of 0.50 (95% CI 0.28 to 0.88).
While all the children were vitamin D deficient at baseline, those with a serum level above the 7-ng/mL median for the group appeared to get significant benefit similar to those with levels below the median (rate ratios 0.57, 95% CI 0.33 to 0.96, and 0.41, 95% CI 0.20 to 0.82), without significant interaction by baseline level ( P=0.27).
The effect may hinge on raising levels of the endogenous antimicrobial compound cathelicidin in bronchial epithelial cells as shown in laboratory and experimental studies in adults, Camargo and colleagues suggested.
They cautioned that supplementation may have been more optimal to start in fall or even summer to achieve better levels by the time the winter cold and flu season started, and that the 300 IU level of supplementation may not have been most effective either.
The trial had some limitations including the fact that data for the primary outcome came from a single follow-up interview with the child's parent and not several frequent medical evaluations.
The Institute of Medicine now recommends 400 IU vitamin D supplementation for deficient children, but the Canadian recommendations of 1,000 IU per day may be more likely to achieve adequate levels, the group suggested.
The Blue Sky Study was supported by a grant from an anonymous foundation. Additional support for the current analysis came from the Massachusetts General Hospital Center for D-receptor Activation Research. The Tishcon Corporation donated the vitamin D supplements.
The researchers reported no conflicts of interest.
Related:
Vitamin D's impact on infection: Supplement can decrease risk of respiratory infections in children – Harvard Gazette, August 20
Vitamin D supplements cut incidence of the common cold, study says – Los Angeles Times, August 20
Vitamin D supplementation can decrease risk of respiratory infections in children – Pediatrics, August 20
FLORIDA FOSSILS DEALER SEEKS MONGOLIAN DINOSAUR'S NY RETURN
NEW YORK, August 20 (AP) -- A Florida fossils dealer whose dinosaur was seized by the U.S. government so it could be given to the government of Mongolia wants it back.
Lawyers for Eric Prokopi, of Gainesville, Fla., said in court papers filed Monday that he was victim of a media campaign stirred up by academic paleontologists.
The government seized the Tyrannosaurus bataar skeleton, known as Ty, in June. It had sued to obtain the bones, which had been sold at an auction for $1.05 million.
According to the court papers, Prokopi and Dallas-based auction house Heritage Auctions were in negotiations with Mongolia's president to settle the dispute when the U.S. filed a seizure lawsuit to obtain the dinosaur.
The government had no immediate comment on Monday. The auction house has said it wants a "fair and just resolution."
A judge had ordered the U.S. government to seize the dinosaur from a storage facility in New York after the U.S. claimed it had been brought into the country with bogus documents. The U.S. said the documents disguised the dinosaur skeleton, which originated in Mongolia, as reptile bones from Great Britain.
Prokopi has said in a statement that he brought the bones into the country in March 2010 when they were just chunks of rocks and broken bones. He said he turned them into "an impressive skeleton."
According to the court papers, about 25 percent of the dinosaur is made of inorganic, plastic material molded from other fossil specimens while 50 percent is from one bataar specimen and the rest is from other specimens.
The court papers called the effort to return the 70 million-year-old skeleton to Mongolia unprecedented, saying fossils from China, Kazakhstan, Mongolia and Russia have been openly sold on the international market and collected in the United States by people and museums for generations.
Gauging the Impact of Warming On Asia's Life-Giving Monsoons from Mongolia
In Mongolia, U.S. scientists are studying climate clues in ancient tree rings to help answer a crucial question: How will global warming affect Asia's monsoon rains, which supply water for agriculture and drinking to half the world's population?
August 20 (Yale Environment 360) Bouncing along bad roads in a jeep through central Mongolia, with bright blue skies and high clouds overhead, we drive for miles through a treeless landscape, passing only dry grasslands dotted with cattle and white yurts. But as we head north — myself, two U.S. scientists, and one Mongolian forestry expert — we begin to notice Siberian pine and larch growing on the northern slopes of rolling hills, but not the southern slopes, and at some elevations, but not others. In water-scarce Mongolia, as my travel companion Neil Pederson of Columbia University's Lamont-Doherty Earth Observatory explained, the precarious growth of trees is limited by temperature and moisture availability; small variations — northern slopes are slightly cooler and wetter — can make all the difference.
Our destination is a 30-square-kilometer lava field in north central Mongolia, where a volcano oozed magma some 7,000 years ago. The pockmarked black surface looks like a moonscape, with only a few scraggly trees and dry deadwood littering the ground. But this is precisely what has brought Pederson and his colleagues to Mongolia since 1995 — the ability to sample long-lived, slowly decaying trees, some dating back more than 1,300 years. By examining ancient tree rings, Pederson and a research partner at West Virginia University, Amy Hessl, can glean information about historic rainfall patterns, as pines grow more in wet years.
…
---
"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 
P Please consider the environment before printing a copy of this email.
Suite 1213 · Level 12 · 2 Sukhbaatar Square
Sukhbaatar District 8 · Ulaanbaatar 14200 · Mongolia
CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSLicense Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
Disclosure/Disclaimer
CPS Securities, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions mentioned in correspondence from CPS International.
CPS International 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.
No comments:
Post a Comment