Modun: MONGOLIAN GOVERNMENT ISSUE ENVIRONMENTAL IMPACT ASSESSMENT FOR THE NUURST PROJECT IN MONGOLIA AS IT CONTINUES TO PROGRESS TOWARDS ITS MINING LICENCE
April 3, Modun Resources Limited (ASX:MOU) --
· The Ministry of Nature has issued a Positive Environmental Impact Assessment for the Nuurst Project
· This is the penultimate milestone towards obtaining a Mining Licence
· Documents for the final stage of approvals have been submitted to the Mineral Resources Authority of Mongolia (MRAM)
· Appointment of Achit- Erdene Darambazar as a Director of Modun Resources Ltd’s wholly-owned in-country subsidiary - Modun Resources LLC Mongolia
Coal explorer Modun Resources Ltd (ASX: MOU) (Modun) is pleased to announce that the Mongolian Ministry of Nature has issued a positive Environmental Impact Assessment for the Nuurst Thermal Coal Project and no issues were identified.
On the strength of this, Modun has submitted all the relevant documentation to MRAM for the final review of its Mining Licence application.
Rick Dalton, the Managing Director of Modun said “the progress towards obtaining the Mining Licence for the Nuurst Project continues. As we enter the final stage of the process, we remain on track to achieve project development and first mining of coal in the next 12-18 months.”
Appointment of Mongolian Director
Modun is also pleased to announce the appointment of Mr Achit-Erdene Darambazar as a director of Modun Resources Ltd’s wholly owned in-country Mongolian subsidiary, Modun Resources LLC Mongolia.
Achit-Erdene Darambazar is the Founder and President of Mongolia International Capital Corporation (MICC), a leading investment banking firm in Mongolia. Achit-Erdene founded MICC in 2005, and it was the first investment banking firm offering corporate finance, stock underwriting, and brokerage services in Mongolia. Achit-Erdene has been an innovator in the Mongolian financial sector and has acted as an advisor to both Government and private sector organisations in many important financial transactions in Mongolia. Achit-Erdene has completed a Master’s degree in International Relations from Columbia University (New York) and a Bachelor’s degree from Middlebury College (Vermont).
Managing Director Rick Dalton said “Achit-Erdene is a welcome addition to Modun’s in-country Mongolian team as we change our focus from exploration to development of the 100% owned Nuurst Coal Project in central Mongolia. Achit-Erdene’s local experience and expertise has been and will continue to be invaluable as we work in conjunction with the Mongolian government and business partners to advance the Nuurst Coal Project and pursue several other local opportunities that are arising as we move towards production.”
Guildford Update: Personnel and Office Changes
April 3 -- Guildford Coal (ASX: GUF) is pleased to announce the appointment of Mr Mark Reynolds to the position of Project Director – North Queensland. Mr Reynolds will start on 1st May 2013 and replaces Mr Mark Turner who resigned in March 2013. Mr Reynolds comes to Guildford from Xstrata with an extensive background in financial, commercial and strategic management. He will have carriage of the further development and commercialisation of Guildford Coal’s Queensland project portfolio. Mr Reynolds will report to the Managing Director, Mr Peter Westerhuis.
Coinciding with the appointment of Mr Reynolds, Guildford Coal is opening a new office in the Townsville CBD. The Townsville office will be an important element in Guildford’s plans to develop its North Queensland resource assets and maintain close links with the community. Mr Reynolds and his development team will be based in Townsville, effective 1st May 2013.
Guildford Coal further advises the resignation of Mr Louis Chait as Director, Company Secretary and Chief Financial Officer, effective 12th April 2013. Mr Chait has accepted a senior position with Glencore. We thank him for his valuable contribution to Guildford and wish him well in his future endeavours. Ms Kristy Bailey, currently Financial Controller, will be appointed to the role of acting CFO whilst a search is undertaken for a new CFO. Ms Bailey will also be appointed to the role of Company Secretary.
Guildford Coal’s Sydney office will also be closed after the resignation of Mr Chait. This follows earlier advice of the closing of the Newcastle Office and establishment of the corporate head office in Brisbane.
Entree Gold Announces Fiscal Year 2012 Results and Reviews Corporate Highlights
VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 2, 2013) - Entrée Gold Inc. (TSX:ETG)(NYSE MKT:EGI)(FRANKFURT:EKA) ("Entrée" or the "Company") has today filed its annual operational and financial results for the year ended December 31, 2012. The Company's Annual Report on Form 40-F has been filed with the SEC, and is available on the Company website at www.entreegold.com. Shareholders can receive a free hard copy of the Company's audited Annual Financial Statements upon request. All dollar figures in this news release are in United States currency unless otherwise noted.
Greg Crowe, President and CEO commented, "The year 2012 was dominated by global economic contractions. In spite of the fact that copper and gold prices remained relatively strong, the junior resource industry was hit particularly hard. One of the major impacts of this contraction was that traditional financing sources for junior resource companies evaporated. Entrée was successful in securing a financing package of approximately $55 million from Sandstorm Gold Ltd. (see news release of February 15, 2013) tied to two of Entrée's main assets in Nevada and Mongolia. The equity private placement component of this financing resulted in Sandstorm becoming one of our largest shareholders. This financing package provides an independent third party endorsement of our assets and has left Entrée in a strong financial position in these challenging economic times.
Entrée also significantly advanced the Ann Mason Project in 2012. This resulted in the completion of a positive Preliminary Economic Assessment on the Ann Mason deposit (see news release of October 24, 2012) and the first resource estimate for the Blue Hill copper oxide and sulphide deposit (see news release of October 29, 2012). The Ann Mason deposit, located in the mining friendly and politically stable jurisdiction of Nevada, returned a base case net present value of $1.1 billion and a mine life of over 24 years at an average annual production rate of 100,000 tonnes per day. Both Ann Mason and Blue Hill have scope for optimization and expansion."
Greg Crowe further noted, "Ongoing issues between Rio Tinto and the Mongolian government, in this Presidential election year in Mongolia, have featured prominently in resource sector news. Entrée, as a joint venture partner on a portion of the Oyu Tolgoi mining complex, has also experienced the negative effects of this uncertainty in Mongolia. In February 2013, the Mineral Resources Authority of Mongolia ("MRAM") temporarily suspended Entrée's ability to sell or transfer the joint venture licenses that host the Hugo North Extension and Heruga deposits. Entrée is in discussions with the Government of Mongolia, as well as Rio Tinto and Oyu Tolgoi LLC ("OTLLC"), regarding this matter."
Highlights for the year ended December 31, 2012 and subsequent developments through March 31, 2013 include:
Lookout Hill Joint Venture
In 2012, development and construction at the Oyu Tolgoi mining complex advanced on schedule, with phase 1 achieving over 99% completion at the end of the year. First ore was mined from OTLLC's Southern Oyu open pit deposits, a Power Purchase Agreement was signed with China in November, the concentrator was commissioned in December and first concentrate was produced in January 2013. OTLLC is on track for first commercial production from the Southern Oyu open pits in mid-2013, subject to the resolution of certain issues between the Government of Mongolia, OTLLC and Rio Tinto.
An updated mining plan based on reserves only ("Reserve Case") and derived from the latest OTLLC technical, production and cost data was released by Turquoise Hill Resources Ltd. in March 2013 ("2013 OTTR"). Entrée today filed a separate technical report dated March 28, 2013 ("LHTR13"), which discusses the impact of the updated mine plan on the Entrée-OTLLC joint venture property.
Highlights of this report include:
· Lift 1 of Hugo North (which includes Hugo North Extension) is the most significant value driver for the entire Oyu Tolgoi mining complex.
o Hugo North Extension ("HNE") hosts the highest valued ore of all the deposits outlined in the Reserve Case, with a net smelter returns ("NSR") value of $95.21/tonne. This has increased almost 20% compared to the NSR value of $79.40/tonne in Entrée's March 2012 technical report ("LHTR12") (news release dated March 30, 2012).
o Hugo North Extension has the highest average grade of all the Oyu Tolgoi deposits at 1.73% copper, 0.62 grams per tonne ("g/t") gold and 3.74 g/t silver.
· Underground shaft development on Hugo North Extension is projected to commence in 2016, with first Lift 1 development production commencing in 2019, ramping up to commercial production in 2023.
· Base case cut-off grade for resources decreased from 0.6% copper equivalent ("CuEq") to 0.37% CuEq (in line with estimated Hugo North Lift 1 mining cut-off costs). At this new base case cut-off, the Heruga deposit has increased in size from 910 million tonnes to over 1.8 billion tonnes. Concurrently, the grade has decreased to 0.38% copper, 0.36 g/t gold and 110 parts per million ("ppm") molybdenum from the LHTR12 reserve case of 0.48% copper, 0.49 g/t gold and 141 ppm molybdenum.
· NPV (at an 8% discount) ("NPV8") for Lift 1 Reserve Case Hugo North Extension is now $110 million after tax.
· NPV8 for Lift 1 Reserve Case Hugo North Extension, using the SEC Industry Guide 7 three year trailing averages is US$150 million after tax.
· A significant portion of the mineralization on the Entrée-OTLLC joint venture property has not been included in the updated mining plan and remains in the mineral resource category, including Hugo North Extension - Lift 2 and the Heruga deposit.
· Scenarios for mining Lift 2 at Hugo North Extension and Heruga at 75,000 tonnes per day are considered, with a decision point in 2015.
· Expansion studies are under consideration, with a feasibility study expected mid-2014. AMC Consultants Pty Ltd ("AMC") noted that further design work could identify opportunities to improve project economics through cost reductions and mine plan optimization. This may result in further positive changes to the joint venture property development schedule that could bring first joint venture property ore forward relative to the current plan.
· Underground lateral development at the Hugo North deposit was, as planned, suspended in February 2012 to enable the upgrading of hoisting equipment at Shaft 1 and restarted during the third quarter of 2012 following the completion of the upgrade. Approximately 1,500 metres of lateral development were achieved from mid-September 2012 to the end of December 2012 after the completion of the shaft changeover.
· Exploration drilling of targets on the joint venture property continued in 2012 with over 16,000 metres drilled on the Entrée-OTLLC joint venture property.
The Company's updated technical report, titled "Technical Report 2013 on the Lookout Hill Property" ("LHTR13"), is available on SEDAR and www.sedar.com. LHTR13 is dated March 28, 2012 and was prepared by AMC Consultants Pty Ltd in Adelaide, Australia.
During 2012, Entrée continued to explore its adjacent 35,173 hectare, 100% owned Shivee West property. The 2012 trenching program on Shivee West expanded the new gold zone ("Argo Zone") for an additional 140 metres further north from the mineralized area defined by 2011 reverse circulation drilling and the Argo Zone now measures approximately 400 metres long by 130 metres wide. The property remains prospective for additional discoveries.
Of significance on the Argo Zone:
· Trench sampling returned 81.4 g/t gold over 3 metres, confirming and expanding 2011 high-grade surface values.
· The combined Zone III and Argo Zones now extend over 600 metres north-south and over widths from 50 to 150 metres.
· Mineralization is hosted in quartz-veined felsic volcanic rocks associated with a 2.5 kilometre long magnetic low.
Other Mongolia Matters
Following the signing of the binding Power Purchase Agreement with China in early November 2012, electrical transmission lines for power to the Oyu Tolgoi mine became operational.
On February 14, 2013, Turquoise Hill announced that the feasibility study for the expansion of operations of Oyu Tolgoi (including Lift 1 of the Entrée-OTLLC Joint Venture's Hugo North Extension deposit) is expected to be completed in the first half of 2014, as Turquoise Hill continues to pursue value engineering and optimization.
On February 27, 2013, notice (the "Notice") was delivered to Entrée by MRAM regarding Entrée's mining licences in Mongolia. The Notice, which is not explicitly concerned with the issuance of the mining licences, further advises that any transfer, sale or lease of the Shivee Tolgoi and Javhlant mining licences is temporarily suspended. The mining licences have not been revoked or cancelled. Entrée is currently working to determine the full implications of the Notice and to resolve the temporary suspension of the transfer, sale or lease of the licences.
On March 25, 2013, Turquoise Hill announced that project financing for the Oyu Tolgoi mining complex continues to progress with the boards of the European Bank of Reconstruction and Development and the International Finance Corporation approving their respective participation in late February. Bids have been received from a number of banks that would allow Turquoise Hill to achieve its project financing target of $3 billion to $4 billion and discussions are ongoing with the lenders to finalize the terms of those offers. Turquoise Hill anticipates the closing of final binding documentation and project financing funding to occur in the first half of 2013.
Unfavourable Decision for Khan in ARMZ Litigation
TORONTO, ONTARIO--(Marketwired - April 2, 2013) - Khan Resources Inc. (CNSX:KRI) ("Khan" or "the Company") announced today that it has received the decision of the Court of Appeal for Ontario in respect of Khan's attempts to effect service of its lawsuit against Atomredmetzoloto JSC ("ARMZ") in which it is seeking damages of $300 million. The Court of Appeal dismissed Khan's appeal and its attempts to validate, substitute or dispense with service of the Statement of Claim.
Khan has been attempting to effect service of the lawsuit on ARMZ since late 2010. After following the necessary procedures in Russia to serve ARMZ, Khan's attempts at service were stymied when the Russian Ministry of Justice refused to effect service. The Ministry of Justice cited Article 13 of the Hague Convention that provides that the State addressed may refuse to effect service "only if it deems that compliance would infringe its sovereignty or security". The Ministry of Justice provided no reason or explanation for why service of Khan's lawsuit would infringe Russian sovereignty or security.
Mr. Grant Edey, President and Chief Executive Officer of Khan commented, "We are disappointed by the outcome of the decision. We find it highly regrettable that ARMZ, a business with substantial interests in Canada, can engage in business with a Canadian company and then be sheltered by its shareholder, the Government of Russia, from being held accountable in a Canadian court for the wrongdoing and the damages inflicted on Khan and its shareholders."
Khan is reviewing the decision and is considering the options available to it.
Mogi: lost in translation, Canadian version.
Mongolia, Rio Tinto both have reasons to settle Turquoise Hill dispute
A cost overrun of a couple of billion bucks at Oyu Tolgoi (Turquoise Hill), Mongolia’s new mega-mine, is no doubt significant even to a big company like Rio Tinto
Vancouver, April 1 (Vancouver Sun) — A cost overrun of a couple of billion bucks at Oyu Tolgoi (Turquoise Hill), Mongolia’s new mega-mine, is no doubt significant even to a big company like Rio Tinto with sales last year topping $50 billion.
But to a “little” country like Mongolia — which may have a land mass about twice the size of B.C., but has barely more than half the number of people and a much smaller fraction of our wealth (Mogi: much smaller fraction than British Columbia?)— it’s a staggeringly large sum. It accounts for fully a fifth of last year’s GDP — in relative Canadian terms, the equivalent of about $350 billion.
Which goes a long way to explain the tension between the company, a two-thirds partner in Vancouver-based Turquoise Hill Resources, which owns the just-opened world’s largest copper mine in remote Mongolia, and the country, which has a 34-per-cent stake.
Mongolia’s parliament signed on in 2009 to borrow a third of the money to fund a $4.2-billion project, says parliamentary president Zandaakhuu Enkhbold, who was in Vancouver last week at the end of a cross-Canada visit.
“If at that time they had told us the cost will be $6.2 billion, then we would have thought twice,” he said in an interview with The Vancouver Sun.
Now that the costs have escalated so steeply, “We want to know how it happened? How much? Spent where?”
The huge proportion of Mongolia’s wealth tied up in this single project also explains why the country is so optimistic and so determined to see the dispute end well, and end soon.
Mongolia and Rio Tinto “are sitting in the same boat,” he said. “Either one can shake the boat if we have a disagreement. But we can’t overturn the boat. We both will die.
“So we need to find common ground, which is the (parliament’s) number-one priority today.”
He said he was confident that agreement would be reached in time to meet a June deadline for the first export of copper from the mine.
“We need the cash flow,” he said bluntly.
The dispute and related issues have coloured both the performance of Turquoise Hill’s stock and the international view of Mongolia as a place to invest in recent months.
The company’s stock is trading in the mid-$6 range, down from a peak of about $28 in early-2010 and about $15 a year ago.
And foreign investment in Mongolia nosedived last year, plunging 17 per cent to $3.9 billion, in response to what was seen as heavy-handed legislation concerning foreign partnerships.
Enkhbold conceded that the law hurt his country’s business reputation, but adds that investors’ fears will be eased now that the legislation has been revised and clarified. The threshold for requiring parliamentary approval for foreign investment has been raised from about $72 million to about $720 million, he said (Mogi: wait, I know the speaker is abroad but doesn’t he know the proposal was to remove it altogether, or was he misquoted?), and it has been made clear that this applies only to investments by state-owned enterprises. (Mogi: No, the old rule will stay in place for SOE investments)
The Turquoise Hill investment is private, and therefore exempt, he said (Mogi: wait, there must’ve been some “lost in translation” going on in Canada. TRQ is exempt because a) the deal was struck way before the law was enacted and b) it’s legally protected by the investment agreement). But it is so large it has made Canada the second-largest foreign investor in the country, behind China.
Enkhbold said mining has come to dominate the country’s economy, and the revenue from it is urgently needed to give the government the means to invest in other sectors — mainly agriculture, tourism and services.
“Mining doesn’t employ a lot of people. It employs a lot of big machines,” he said. “We have very high unemployment, and without diversification of the economy, it will stay high.”
Mongolia to Expand Capacity at Thermal Plant to Power Oyu Tolgoi
April 2 (Bloomberg) Mongolia will increase the size of a planned thermal power plant in the Gobi Desert by 50 percent to meet the needs of its biggest project, the Oyu Tolgoi copper and gold mine.
The Tavan Tolgoi power station will generate 450 megawatts, compared with an earlier capacity of 300 megawatts, Minister of Energy Mishig Sonompil said in a phone interview today. The plan was approved by the government at a meeting on March 30. The generator will run on fuel from the Tavan Tolgoi coking coal deposit, which has 6.4 billion metric tons of reserves.
Mongolia will fund 30 percent of the power station through its $1.5 billion Chinggis Bond fund. The rest will come from private investors and loans. Mongolia will own at least 34 percent of the plant, according to a March 30 statement.
Former Prime Minister Mendsaikhan Enkhsaikhan was appointed head of the power plant, according to a March 19 report from Mongolia’s state-run news agency Montsame.
The Oyu Tolgoi mine, which is at the center of a dispute between Rio Tinto Group (RIO) and the government, is the primary driver of Mongolia’s $10 billion economy and by 2020 is expected to make up one-third of Mongolia’s gross domestic product. Rio controls 66 percent of the $6.6 billion project, located 130 kilometers (81 miles) southeast of Tavan Tolgoi.
MMC Chairman Increases Shares Held in Short
April 3 (Cover Mongolia) Disclosure of Interest Notice released on April 2 revealed that Mongolian Mining Corporation (HK:975) Executive Chairman Odjargal Jambaljamts put more of his shares held in short position, possibly signaling he had put more of his shares as collateral for outstanding MCS loans. He controls 38.44% of MMC through his stake 49.84% stake in MCS, the largest MMC shareholder, and personally through his BVI private holding company Novel Holdings Group Ltd. He now has increased his short shares from 25.17% of total outstanding MMC shares to 25.91%, all from his personal holdings held via Novel. Odjargal’s elder brother Od Jambaljamts, 2nd largest shareholder in MCS with 28.69%, held via his BVI private holding company Trimunkh Limited, also has 25.17% stake in MMC held in short.
Mongolia revving up to build Russia-China highway
April 2 (bne) Mongolia is planning to build its first modern highway. The route will cross the country to link China and Russia, with the Central Asia country hoping to position itself as a transit point for growing trade between the two giants.
The 1,000km Altanbulag-Ulaanbaatar-Zamiin-Uud highway will cost around $3.5bn and will be built under a concession agreement, the Montsame News Agency reports. Mongolia's Chinggis Land Development Group – a consortium involving over a dozen state companies – says it will finance 30% of the construction costs from its own funds. It hopes to find foreign investors to provide the remaining 70%, and claims to have interest from the US and Italy.
It may need to quickly make that interest concrete however, with Chinggis saying it plans to start building the highway in May, with a completion date of 2015. The investors will operate the toll road until 2040, when the asset will be transferred to the state.
The new road will facilitate trade between China and Russia, Chinggis claims, and help develop the towns along its route. While the two giants have struggled to agree on the high profile energy deals that have been expected for decades, general trade is growing – especially as the BRICS turn to one another as developed markets continue to struggle through crisis. Goods turnover in 2013 between the pair is estimated at $80bn, but only 10% of that volume is transported by road, according to news.mn.
At the same time, Mongolia has begun investing into transport infrastructure to open up export routes as it develops its raw materials.
Although exports, mainly of coal, to China, were hit by dropping demand last year, the Mongolia hopes to see them resume steady growth as the effects of the crisis recede. Projects such as the development of the Oyu Tolgoi copper-gold project should also substantially increase the volume of raw materials trade, while Ulaanbaataar is also keen to develop the country's manufacturing and processing sectors.
The Chinggis consortium - managed by the Development Bank of Mongolia (Mogi: wait, DBM manages Chinggis Land Development Group?) - is at the forefront of the push. In March its first investments were announced, as it unveiled plans to invest $400m into road and railway projects.
HDR Acquires Salva Resources
BRISBANE, Australia & OMAHA, Neb.--(BUSINESS WIRE)--HDR has acquired Salva Resources, a global provider of key technical and commercial services for mining exploration and investment. The acquisition includes both Salva Resources’ exploration and mining consultancy and Salva Reports’ commodity analysis group. Salva Resources has more than 200 employees in Australia, India, Indonesia, Mongolia and the United Kingdom. Going forward, Salva Resources will do business as HDR|Salva. Financial terms of the agreement were not disclosed.
“Salva professionals are greatly respected throughout the mining industry, and we couldn’t be more pleased they decided to join HDR. Their talents mesh perfectly with our goals of strengthening our mining/resources practice and global presence,” said Eric L. Keen, HDR Engineering, Inc. president. “Just as importantly, their values and commitment to their clients mirror HDR’s client-driven philosophy.”
Salva Resources’ Managing Director, Lachlan Broadfoot, said, “We are very excited that this acquisition solidifies Salva’s international growth strategy. Collaborating with HDR enables Salva to offer our clients additional services, including turnkey pit-to-port solutions. Moreover, this acquisition recognises Australia being at the forefront of providing world-class mining capabilities.”
Broadfoot joins HDR as the engineering operating company’s mining sector director. Lindsay Crutch joins HDR as HDR|Salva operations director. Both of them will work closely with David Bell, HDR’s managing director in Australia. HDR’s other Australian operations include HDR|DKS, which joined HDR in July 2012.
HDR is a global employee-owned firm providing architecture, engineering, consulting, construction and related services through our various operating companies. Our more than 8,000 professionals are committed to helping clients manage complex projects and make sound decisions. Learn more at www.hdrinc.com.
About SALVA RESOURCES
Salva Resources is a global exploration, mining and commodities consultant. With offices located in Australia, India, Indonesia, the United Kingdom and Mongolia, Salva's international team provides leading technical and commercial advice to the world’s major exploration, mining and investment firms.
Salva Resources' consultancy team performs resource modeling, mine planning, due diligence studies, safety, environmental management and commodity market services. Salva Resources also specialises in the Exploration (Pre-Construction) phase of resource development, providing a 'turn-key' solution to all exploration activities. For more information, visit www.salvaresources.com.
Crucial months ahead for Mongolia investors
March 31 (Proactive Investors) Mongolia values its geologists so much that it has a public holiday dedicated to them.
And nowhere have geologists proved their worth more than at Oyu Tolgoi, the country’s massive copper deposit.
Oyu Tolgoi is Mongolian for Turquoise Hill on account of the green colour that stains the rocks at the site and which first brought geologists to the area.
Turquoise Hill is now also the name of the Rio Tinto subsidiary that is currently locked in the mother of all negotiations (Mogi: mother of all?) with the Mongolian government over how to progress with one of the world’s largest undeveloped copper projects.
There is a lot at stake: Rio has already sunk US$6.6bn into Oyu Tolgoi (OT).
It expects the mine will generate more than US$8bn every year for up to 50 years by producing 425,000 tonnes of copper and 460,000 ounces of gold a year.
In return the Mongolian government has enjoyed an economic boom that has pushed it to the top of the world’s fastest growing economies, with a GDP expanding 18.1%.
OT is expected to contribute close to one third of the country’s GDP in the medium term, while investor sentiment across the board regarding Mongolia depends to a large extent on OT’s success.
Commercial production is slated to begin in June 2013, but it is estimated 80% of the wealth generated from the mine will come from the - as yet - unfunded underground operations in 2020.
However, there are serious questions as to whether OT will get past the June hurdle let alone be in operation in 2020.
These are perilous times for both Rio and the government, which own 66% and 34% interests in the mine respectively.
The Government of Mongolia and the miner are locked in an argument over the implementation of the Oyu Tolgoi Investment Agreement.
Disputed issues range from project development and costs, to the operating budget, project financing, management fees and governance.
Critics say the government is pressing its case particularly strongly in a bid to help plug its 2013 budget deficit.
Either way, resolution is crucial to secure the next round of funding needed to push on with the mine’s development.
This week Turquoise Hill Resources (TSX:TRQ) chief executive Kay Priestly told analysts: “I am optimistic that matters being discussed with the Mongolian government will be resolved. We are all committed to the success of Oyu Tolgoi”.
Kincora’s Bronze Fox copper-gold deposit is approximately 140 kilometres northeast of OT.
“We had an intensive end to the year and had some exciting results, but that has fallen on deaf ears in the market,” he says.
“If the investment agreement isn’t ratified and they don’t get the next fund raising and we don’t see commercial production by June everything else will be caught up in the tidal wave of OT,” he says.
But he is positive, particularly after the Mongolian government raised large sums of money through sovereign bonds recently.
“That money is accruing interest – if their major source of tax revenue doesn’t achieve commercial production then the consequences are going to be dramatic,” Spring warns.
In a note released in mid-March, Resource Investment Capital said: “While Rio Tinto and Turquoise Hill state that real progress has been made in ongoing negotiations with the Government of Mongolia, it is hard to say that the risk profile facing investors has changed much.”
Despite this, the note ends in an upbeat fashion, concluding that “all actors understand what’s at stake and how best to resolve these differences while having to also give something away”.
“The question is: who will blink first?” it muses.
Elsewhere signs are positive, with Investec noting Mongolia was softening its stance towards foreign investment.
“There are reports that Mongolia is looking to soften its restrictive foreign investment legislation,” analysts said in a note.
“Currently all investment in the mining sector above US$70mln requires parliamentary approval.
“It is being suggested that this requirement could be reduced to include only State Owned Enterprises looking to acquire more than 49% of a company.”
In the meantime all Spring and Kincora Copper can do is bide their time, “treading water and saving cash”.
“At least it’s come during the winter period when we aren’t in the field,” he adds philosophically.
The OT sticking points
- Stage 1 capital expenditure vs initial estimates
- Whether the investment agreement complies with Mongolian laws
- Management costs/fees
- The transfer of a special licence which covers 30% of the resource from Entrée Gold
- Does the government’s advisors, Goldman Sachs, have a conflict of interest?
- Are there other breaches of Mongolian laws and regulations?
Mining boom expected in Mongolia
April 2 (BBC) Mongolia has been described as the Saudi Arabia of minerals.
Its mining industry is just taking off and could, one day, transform the entire economy.
So there are high hopes on Mongolia's stock exchange that a boom might be on the way.
Justin Rowlatt reports.
How I wish I had got a piece of the Mongolian economic miracle
The country's economy is heading to be the world’s fastest-growing this year
April 2 (The Independent) Some years ago, I remember reading a “nib” (what we in the trade call a news in brief item) about the Mongolians opening a stock exchange (Mogi: MSE opened in 1992 no?). I did wonder, quite idly, how I might cash in on whatever growth was bound to come out of this economy. If the experience of Eastern Europe, China and, more intermittently, Russia was anything to go by, then the end of state socialism would mean a huge, though socially painful, rebound in economic prospects. And opportunities for adventurous Westerners.
I couldn’t, however, find an investment trust targeting that far away, mysterious land, and, my Mongolian not being up to much and no bank account denominated in tugriks, I soon gave up on the idea.
I wish I hadn’t. The next I heard from the Mongolian stockmarket was a BBC news report over the Easter break, illustrating a piece about the Mongolian economic miracle. It was a dozy sort of place, with the traders biding their time on their smartphones waiting for any orders to turn up. The turnover that day was $10,000 or so. I suspect it will get much busier before long.
Spurred by its vast, hitherto under-exploited mineral reserves, the Mongolians are likely to be the world’s fastest-growing economy this year. Forecasters say growth could top 20 per cent, or about 100 times what we might see in the UK.
Their geography is helpful, of course – next door to China – and much of it is simply a play on their copper reserves. Mongolia looks to be the “new Kazakhstan”, a vast land mass blessed with an impressive natural endowment and, even better, a relatively small population to share it round.
The point, I suppose, is that even the most economically unpromising country or territory can see its GDP rocket if someone finds oil (1970s Scotland), diamonds (1980s Botswana) or just about everything and anything (1990s Kazakhstan). Otherwise, you find extremely rapid growth in places emerging from civil wars or other conflicts, usually where an orderly exploitation of natural resources or agricultural commodities can resume and conditions are merely returning to normal. Next year, this category of double-digit growers will include Rwanda, East Timor, Bhutan and, of course, Iraq.
The challenge is to convert that short term blessing into a long-term success story. The key, if the oil-rich Gulf states and sovereign wealth funds are any guide, is to invest the proceeds in western, established markets, notably real estate. The Mongols should follow their example; if they do we will soon see a new generation of Mongol hordes, this time invading the nicer parts of Kensington.
Russia’s Transneft eyeing Mongolia as alternative crude supply route to China
March 31 (RBTH Asia) Russian oil giant Transneft is eyeing Mongolia as a possible transit shortcut for crude oil supplies to China. The current Kazakhstan route could lose Russia up to $2.6 billion a year in export levy.
Transneft is looking for new efficient ways to transport additional volumes of Russian crude oil to China, company spokesman Igor Demin has told Vedomosti. The agreement to ramp up crude exports was signed by Rosneft CEO Igor Sechin and CNPC President Zhou Jiping on 22 March.
Sechin said the annual volume of crude oil supplies could peak at 31 million tonnes, and that deliveries could take three routes. At present, the East Siberia – Pacific Ocean (ESPO) pipeline processes a total of 36 million tonnes of crude a year, including 20 million tonnes destined for China (15 million tonnes along the Skovorodino-Mohe branch and the remaining part via a branch leading up to the sea port of Kozmino). The Skovorodino-Mohe throughput capacity is set to be expanded by another 15 million tonnes a year in the near future; the Kozmino branch could be similarly boosted to take an extra 15 million tonnes a year. Russian Energy Minister Alexander Novak says Transneft might start supplying 7 million tonnes of crude a year to China via the Atasu-Alashankou pipeline from 2014 under a swap scheme with Kazakhstan.
Demin says the new agreement does not mention the Kazakhstan route. “It does stress the necessity of looking into alternative ways to deliver [crude] to refineries in Western China,” he notes, adding that the Skovorodino-Mohe pipeline remains a priority but that other routes might also crop up.
According to Demin, choosing the Kazakhstan route would rob Russia of the crude export tax: “Kazakhstan so far has been merely talking about the possibility of transferring export tax to the Russian budget as applied to crude swap deals.” With 7 million tonnes at stake, Russia could incur losses in the region of 80 billion roubles (some $2.6 billion), he says. The Russian export tax on crude stood at $420.6 per tonne in March 2013.
DLA Piper counsel Marina Lyakisheva says the export tax is not charged on commodities being sold within the Customs Union (which unites Belarus, Russia and Kazakhstan), but that it has to be paid if the commodity in question is then being re-exported to a third country. “It is largely a matter of trust [between the Union members],” she says.
Transneft will also look at delivering crude to Western China by rail via Mongolia, Demin says. Until 2007, crude oil intended for China would be loaded from the pipeline into railway tanks at Meget railway station in Russia’s Irkutsk Region, he says. Of the overall 7 million tonnes, 2 million would be sent to Daqing in China via the Zabaykalsk- Manzhouli border crossing, while the remaining 5 million tonnes would be channeled via the Naushki station on the Mongolian border.
Mongolia would discount the transit charges owing to the insufficient loading of that route, says Demin.
Infranews news agency Director General Alexei Bezborodov says the Mongolian route from Meget is currently being used to just 20% of its overall capacity, which means Mongolia would be happy to offer a discount.
Demin says another Russian oil giant, Rosneft, once planned to supply crude oil to China via Kazakhstan from its Samotlor field, which is situated much closer to the Kazakhstan border than Meget. On the other hand, the current decline in pipeline loads may cause Transneft to hike transit rates along its pipelines by up to 25%, he notes.
These calculations are only just approximate, Demin warns. Grigory Birg, co-director of the Investcafe research department, believes Transneft could lose about 13 billion roubles annually (in 2012 prices) from transporting crude along its own pipelines.
No deadline has been set for deciding on a possible alternative route, Demin told Vedovosti. He declined to comment on the viability of the Mongolian route.
Representatives of the Energy Ministry were unavailable for comment.
ABA Planning Committee to Meet in Ulaanbaatar, April 11 in preparation for ABA General Meeting in Mongolia, September 12-13
(Asian Bankers Association) The ABA Planning Committee is scheduled to meet on April 11, 2013 in Ulaanbaatar, Mongolia. The meeting will be presided by ABA Chairman Mr. Lorenzo V. Tan, President and CEO of the Rizal Commercial Banking Corporation (RCBC).
Preparations for the 30th ABA General Meeting and Conference to be held on September 12-13, 2013 in Ulaanbaatar, will be the main focus of the gathering. Discussions will cover final dates and venue of the conference, theme and topics, possible line-up of speakers, and other related matters. It also aims to review the progress of activities under the ABA Work Program for 2013-2014, including the area of policy and advocacy.
Members are encouraged to participate in the Planning Committee meeting and provide valuable inputs on how ABA can make this year’s annual gathering productive and meaningful for all members.
Interested parties are requested to contact the ABA Secretariat at email@example.com for more information.
The meeting, to be hosted by the Mongolian Bankers Association (MBA), will be held at The Blue Sky Hotel & Tower in Ulaanbaatar.
Administration of Land Affairs named most corrupted in 2012 Sant Maral survey
April 3 (news.mn) The Sant Maral Foundation completed the Survey on Perception and Knowledge of Corruption, Study of Private Perceptions of Corruption with the support of the Asia Foundation. The Sant Maral Foundation has conducted survey and study since 2006. The survey involved 1350 households in 7 districts in the City and 21 sums in 6 aimags this year.
People interviewed in the survey named the Administration of Land Affairs as the most corrupted sector due to known corruption cases being linked with them. The Administration of Land Affairs has in fact been ranked highest in the survey as the most corrupted agency since 2006.
The Ministry of Mining was ranked the second and tenders followed into third place as considered to be the most corrupted. The State Specialized Agency and political parties were also named in the list. The survey by the Sant Maral Foundation was conducted in 2012. The results of this survey present corruption level at some state agencies such as courts and Customs Office, which were ranked higher in previous surveys, but ranked down this year.
The survey also reveals that corruption frequency is more usual in the education and medical sectors even though the take and give amount is small. The corruption frequency given to doctors and teachers is seen to be 14-48 times during three months prior the data collection had been conducted. The amount of bribes given to teachers and doctors is on average MNT 134,000-423,000.
According to the survey, most police officers, state servants and judges are named as bribe takers. Among them, judges take the highest amount of bribes. Respondents reported that judges take an average of MNT 2,364,000 MNT.
Changi Airport wants to direct Singapore-Ulaanbaatar flights to promote travel
April 3 (news.mn) The President of Singapore Changi International Airport, W.W.Liong and Vice president L.C.Kiat exchanged views with officials from the Ulaanbaatar Tourism Board to develop the flow of tourists between Mongolia and Singapore. The discussion was about promoting mutually beneficial tourism and further developing non-stop flights to Singapore from Ulaanbaatar to attract flows of passengers from Central Asia, the Far East and Siberian region during a visit in Mongolia.
It is estimated almost 8000 citizens from the two countries travel to each other a year. If there is a non-stop flight the number of passengers is projected to increase making a new way for tourists from East Asia and Australia to Mongolia.
One of the largest and well-known international airports, Changi Airport was awarded the best marketing airport in Asia-Pacific region in 2012. Currently 109 airline companies arrange 6,478 flights to 235 cities in 61 countries in one week from the airport.
Changi International Airport, which receives 52 million passengers a year, is to cooperate with the Ulaanbaatar Tourism Board on tourism promotion and marketing.
YOUTH FORUM, Community of Democracies Ulaanbaatar Ministerial, Ulaanbaatar, Mongolia, 27-28 April, 2013
The Youth Forum at the Community of Democracies (CoD) Ulaanbaatar Ministerial will continue the spirit of the Youth Forum from the CoD Vilnius Ministerial held in 2011 providing young people from different countries and regions of the world with their own space to discuss the issues which they face in promoting democratic values, and deliver their voice to the international high-level meeting of policy makers.
The Forum would be aimed at promoting the culture of democracy and strengthening democracy education, youth activism, and intergenerational dialogue, including the fight against corruption and exclusion. It will serve as a platform for sharing ideas and experiences on how youth could effectively foster democratic ideals and integrate them in their civic identity and culture. A particular focus shall be made on ways and means of promoting democracy education with a view of implementing the relevant provisions of the United Nations General Assembly resolution “Education for Democracy” adopted on 28 November 2012.
The Forum will provide another opportunity for new democracies in Asia by inviting representatives of democratic youth movements from Myanmar and Nepal to share with their experiences and concerns with the international community.
It is expected that the Youth Forum will be attended by about a hundred young activists from different corners of the world who are committed to the protection and promotion of human rights and democratic values. (About 30 percent of participants will be Mongolians, 30 percent from other Asian countries, and the remaining 40 will come from other parts of the world.)
The Forum will last for one and half day. On the first day, it will start with the opening of the Forum followed by the session I on the theme of promoting the culture of democracy and democracy education, and the session II in the afternoon to be focused on issues of strengthening youth democracy movements, including the fight against corruption and exclusion. Next morning the sessions’ moderators will submit their conclusions and the Forum’s Chair present the Forum’s draft final statement to the Ministerial meeting.
Theme of the Youth Forum: “STRENGTHENING THE CULTURE OF DEMOCRACY”
For democracy to be sustainable and strong it is essential that the democratic values such as respect for human rights, equality, participation, inclusion and tolerance be developed and become a part of our civic life and personal identity. To achieve this, it is important that a culture of democracy is introduced from an early age through education, fostered through youth activism and sustained through intergenerational, international and intergovernmental dialogues.
In particular, as the UN General Assembly recognized in its resolution A/RES/67/18 “education is key to the strengthening of democratic institutions, the realization of human rights and the achievement of all international development goals, including the Millennium Development Goals, the development of human potential, poverty alleviation and the fostering of greater understanding among peoples.”
Democracy sometimes can be threatened by the social practices which in some cultures can conflict with the human rights and equality principles and lead to the blind resistance to and rejection of democratic values as foreign ideals. Corruption is one of these threats that can be embedded in our culture as a normal practice stealing our future.
For youth to move forward, and by implication, for our countries to advance along the road of democracy and progress, young people should recognize these threats and become active participants in global efforts, especially in the anti-corruption movements, and advocate education for democracy in order to strengthen further the culture of democracy.
Today the youth have various opportunities and tools to be adequately informed, to be dynamic and engaged. Information technology and social media can become a valuable tool at the hands of young generation for creating and fostering the democratic culture. Being informed and raised with the culture of democracy, the youth will learn to be tolerant and indulgent, and ultimately aim to be active democratic citizens in their countries. Development and empowerment of a vibrant youth civil society are essential for any democratic and peaceful process.
Therefore, this Youth Forum will focus on discussing the challenges and opportunities for strengthening the culture of democracy, education for democracy, tolerance and mutual understanding, fostering intergenerational and international dialogues, fighting corruption, sharing best practices and lessons learned, and outlining future activities.
Sampling Mongolia’s Soviet past
March 28 (Lauren Knapp via PopAnth) DJ Munk’s music sounds like nothing I’ve ever heard before. It has the classic tells of a modern DJ: sped up vocals, repeated lines, and computerized drumbeats. But the sample he’s using sounds like some strange blend of traditional Mongolian and rock music. In fact, it is.
DJ Munk is playing at one of the frequent Dund Gol (Dund River) parties, DJ events organized to play underground or unknown (at least in Mongolia) music. He is sampling Mongolia’s first rock band, Soyol Erdene (Cultural Jewel). The band was started by the government in 1971 as a response to the youth’s growing demand for the Beatles and the Rolling Stones. Mongolia was a soviet-style socialist nation at the time. The government didn’t want to open the floodgates of rock and roll, and thought a controlled trickle would put the masses at ease.
So, they rounded up four young traditionally trained musicians, bought rock instruments (electric guitars, bass, drums) from Japan, and told them to get busy.
“The purpose of the band was to produce Mongolian folk songs in a new genre and play them on electric instruments,” founding member Jargalsaikhan “Jaga” Gonchig told me. They sound a bit like Mongolian traditional music meets Jefferson Airplane.
Soyol Erdene was an instant success. It certainly helped to have the full support of the government behind them. But still, they were something totally new and a way for the Mongolian youth to celebrate rock music legally.
Jaga told me most of the songs were either new versions of traditional tunes or originals that were about love and the glories of the state. A 10 members-strong arts council censored their lyrics, even giving them themes for each month.
Jaga recalled the first song he wrote. “The very last verse of this songs says ‘I waited for you until dawn,’” he explained. When he showed it to the Mongolian Arts Council they were not on board. “They criticized it wondering how someone can wait for someone else until dawn while society is so busy and a great country is developing.” In the end, they removed the song from the album.
This was the price Jaga and his band mates played to pioneer the Mongolian rock genre.
As the 1970s gave way to the 1980s, and youth throughout the soviet states were demanding to join their Western counterparts, Mongolians picked up their own hand-made guitars and used rock music to call for a free society.
One member of Soyol Erdene left the band and started his own, subversively named Chinggis (Genghis) Khan – a forbidden figure in Mongolia at the time. He wrote songs hailing the ancient leader and calling for a new Mongolia.
These voices were heard in 1990 when, after months of peaceful protesting, the government agreed to multi-party elections.
Today, the scene is quite different.
Unlike his predecessors, DJ Munk has the world’s musical canon at his fingertips. He moved from his hometown in sparsely populated Western Mongolia to the metropolis of Ulaanbaatar in 2005. It was here that he met Boldoo, a young musician, rapper and music producer who also happens to have the largest record collection in the country.
“After meeting Boldoo, I started listening to Japanese music, jazz music and all other kinds of music,” says Munk.
But what stuck with him was not the foreign stuff, although he likes that too. It was the familiar music of Soyol Erdene.
The combined freedom of expression and access to technology Munk enjoys, allows him to do something never before done in Mongolia. Had personal computers and DJ software been around in the 1970s, it’s almost certain remixing bands like Soyol Erdene would have been frowned upon, if not outright forbidden. He certainly wouldn’t have been able to play them at music parties like Dund Gol, where the emphasis is on the individual and how he or she experiences music.
Munk’s remixes are aural peeks into the history of modern Mongolia. He pays musical tribute to his predecessors who paid tribute to theirs, each artist innovating along the way.
Mogi Munkhdul Badral Bontoi
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