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Thursday, February 6, 2014

[Mongolia grows 11.7% in 2013, S&P lowers MMC, search begins for MSE CEO, and foot-and-mouth outbreak in Sukhbaatar]

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Thursday, February 6, 2014

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Headlines in Italic are ones modified by Cover Mongolia from original

 

Overseas Market

S&P: Mongolian Mining Corp. Rating Lowered To 'CCC+' On Delay In Liquidity Improvement Initiatives, Remains On Watch Negative

·         MMC's proposed disposal of assets is taking longer than we originally anticipated.

·         The risk of a further delay in the execution of the Mongolia-based coal producer's liquidity improvement initiatives has increased, in our view.

·         We are lowering our long-term corporate credit rating on MMC and our long-term issue rating on the company's senior unsecured notes to 'CCC+' from 'B-'. We are keeping all the ratings on CreditWatch, where they were placed with negative implications on Aug. 30, 2013.

·         The CreditWatch placement reflects a one-in-two likelihood of a further rating cut in the next six weeks, barring any improvement in the company's liquidity.

SINGAPORE (Standard & Poor's) Feb. 3, 2014--Standard & Poor's Ratings Services said today that it had lowered its long-term corporate credit rating on Mongolia-based coal producer Mongolian Mining Corp. (MMC) to 'CCC+' from 'B-'.

At the same time, we lowered our long-term issue rating on MMC's senior unsecured notes to 'CCC+' from 'B-'. We are keeping all the ratings on CreditWatch, where they were placed with negative implications on Aug. 30, 2013.

"We lowered the rating on MMC because the improvement in the company's liquidity is likely to be delayed more than we anticipated," said Standard & Poor's credit analyst Xavier Jean. We expected MMC to bolster its liquidity with proceeds from asset sales, but the company is taking significantly longer than we had anticipated in closing the transactions and receiving the funds.

"We believe that the delay in asset sales indicates increased risks in MMC's ability to refinance its amortizing bank loans and settle its US$105 million in promissory notes to a shareholder in a timely manner," said Mr. Jean.

Our cash flow projections indicate that MMC's liquidity position will only start to stabilize upon execution of all three refinancing initiatives: asset sales, refinancing of amortizing bank loans, and settlement of the promissory notes. While the potential receipt of the proceeds from asset sales by March 2014 would enhance MMC's cash position in the near-term, we do not expect such proceeds to have a lasting effect on the company's liquidity. We project that the asset-sale proceeds, along with MMC's cash balance that we estimate at US$70 million-US$80 million, will only marginally cover our estimate of the company's US$150 million in interest, debt maturities, and promissory notes due by the end of March 2014. The cumulative effect of the sale of assets and the refinancing of MMC's amortizing bank loans with a back-ended amortizing bank loan would also be mostly temporary. In that scenario, we expect MMC's cash balances to be sufficient for just three to four quarters, given the current industry conditions and our base-case assumption of the company's marginally negative monthly cash flow. As a result, the timely settlement of the promissory notes becomes crucial for a sustainable liquidity improvement.

We acknowledge that MMC could take some further working capital management measures and limit its capital spending to the minimum. But these measures will most likely be insufficient to bridge the company's short-term financing requirements. The tight liquidity buffer is despite our expectation that MMC's operating performance will stabilize in 2014 following cost cutting and a moderate improvement in wash yields, which would partly offset subdued price realizations.

"We kept the ratings on CreditWatch because we believe any material delay will jeopardize the company's refinancing efforts and put further pressure on its liquidity position," said Mr. Jean. "We could lower the rating by at least one notch within the next six weeks if MMC does not address its liquidity situation."

We could affirm the ratings and resolve the CreditWatch if MMC receives proceeds from asset sales, and makes tangible progress toward refinancing amortizing bank loans and settling the promissory notes. To the extent the latter two initiatives are not completed, we would need to assess whether MMC has sufficient liquidity to meet its debt obligations due on or before the end of June 2014.

Link to release

 

Kincora De-Risks Bulk Tonnage Exploration Targets

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 5, 2014) - Kincora Copper Limited (the "Company", "Kincora") (TSX VENTURE:KCC) is pleased to provide an overview on our internal interpretations of last years exploration programme at our flagship Bronze Fox license having integrated them with previous geology and geophysical results. This follows the recent receipt of positive findings from three independent consultants, further reinforcing an independent groups' technical review late 2012, advancing and refining multiple bulk tonnage copper porphyry targets.

Key findings include:

·         Favourable regional setting within the same tectonic and intra-oceanic arc as Oyu Tolgoi and Tsagaan Suvarga copper deposits

·         Geochemical footprint matching other major globally significant porphyry deposits, many of which are major mines

·         Fertile signatures for economic porphyry deposits confirmed at many proposed drilling targets and various zones within the known 40km2mineralized area at Bronze Fox

·         Previous results coincident with lower priority Induced Polarization (IP) chargeability anomalies supporting IP being an effective exploration tool

·         Multiple large-scale copper porphyry targets with favourable geology and geophysics drill ready supporting the possibility of bulk tonnage ore mineralization in "finger type" porphyries similar to Oyu Tolgoi or Northparkes in New South Wales

·         Happy Geo prospect has emerged as an attractive, earlier stage, at or near surface follow up exploration target, plus the potential for porphyry targets at depth

Commenting on today's announcement, Sam Spring, President and CEO of Kincora, said:

"Internally we are very pleased because drilling in late 2012 was extremely encouraging with localized higher grade, for example over 4% copper in our last hole, and broad lower grade intersections, including at least 800m @ +0.40% CuEq, with 37m @ +1% CuEq, in an earlier hole. Our 2013 field season deployed some of the same wide ranging and detailed exploration techniques used at Oyu Tolgoi to significantly increase the confidence in high priority, and large scale targets that demonstrated exceptional corresponding prospectivity. Last years' activities, independent consultants analysis and discussions with various industry groups have assisted to "explain" previous results, convincingly prove a fertility signature for copper porphyries and in de-risking multiple drill ready targets.

Considering the size of the anomalies and advance stage of target areas, two key attractions and relatively unique characteristics of Bronze Fox, successful proof of concept activities in 2014 could provide visibility of significant copper-gold resource potential of Oyu Tolgoi or finger style copper porphyries. While earlier stage, the Happy Geo prospect has too emerged as an attractive exploration target, reinforcing that Bronze Fox continues to look better as more activities are undertaken. Kincora is persisting with additional measures to add shareholder value and is encouraged by initial, and further proposed, reform to the Mongolian mineral sectors legislative environment, amongst other efforts to provide additional advantages to the private sector."

Link to release

 

Mongolia Growth Group Ltd. Announces Resignation of Chief Financial Officer

THUNDER BAY, CANADA, February 4, 2014 /FSC/ Mongolia Growth Group Ltd. (YAK – TSXV), ("MGG") or ("the Company") announces that its long-time CFO, Matthew Aiken, has tendered his resignation effective February 28th, 2014.  Mr. Aiken is leaving to pursue other endeavors.

Mr. Aiken has been with the Company since May 2011 and during his tenure, was instrumental in forming and training MGG's accounting department along with implementing the controls and systems necessary for the next phase of the Company's growth. Upon Mr. Aiken's departure, the Board of Directors ("the Board") plans to appoint the Company's controller, Talha Siddiqui, as the interim CFO. Mr. Siddiqui has served as the Company's controller since joining MGG in June 2013.  Prior to this, Mr. Siddiqui, a qualified ACCA accountant, spent over 6 years at KPMG.  Mr. Siddiqui has over 7 years of experience in audit and accounting more specifically in preparing IFRS based financial statements, reviewing systems, tax planning and evaluating internal controls.

"Working at Mongolia Growth Group has been the experience of a life time and I have enjoyed it thoroughly," said Matthew Aiken, departing CFO of MGG. "I am so proud of what we have created over these past three years and am going to miss the many friends and associates that I have worked with during my time with the company.  However, I have decided to take my career in a different direction and am looking forward to my future endeavors. I am confident in the bright future of both Mongolia and MGG, and expect a seamless transition of my duties once a replacement CFO has been identified."

"As a result of Matthew's efforts, Mongolia Growth Group now has one of the most professional accounting departments in Mongolia, complete with the internal controls, internal audit and compliance functions that our company needs," said Harris Kupperman, Chairman and CEO of MGG. "I want to thank Matthew for his three years of dedication to MGG and wish him the best in his future career."

Following Mr. Aiken's resignation, the Board of Directors of MGG began a strategic review of the Company's direction and its present staffing. The Board has hired Robert Half Canada Inc. to begin a search for a new permanent CFO for the Company. The Board has also determined that due to the changing direction of MGG, to that of a focused institutional commercial real estate investment and development business, the company will be relocating its head office to Toronto, Ontario, in order to be closer to the capital markets of Canada and a larger pool of skilled property professionals. As part of this process, the company will be looking at  hiring additional real estate professionals to help direct the business going forward.

Link to release

 

Wolf Petroleum Investor Presentation: Hunting for Mongolia's Multi-Billion Barrel Oil

February 4, Wolf Petroleum Ltd. (ASX:WOF) --

By Bataa Tumur-Ochir, CEO/Director At NAPE International,  Houston, Texas, USA / February 2014

Link to preso

 

Petro Matad presenting at the North American Prospect Expo ("NAPE") and changes MacQuarie from Joint-Broker to Adviser

February 5 -- Petro Matad (LON:MATD) is pleased to announce that the Company will this week be attending and participating in the 2014 Winter NAPE Expo, being held in Houston, Texas.  Justin Tully, a Geologist with Petro Matad, will be presenting an update on the Company's portfolio of exploration assets in Mongolia, outlining the work undertaken to-date on the acreage and the opportunity that the assets present. 

Interpretation of the seismic data acquired in November 2013 is on-going. Once the in-house interpretation is complete it will be subject to peer review with the objective of identifying, subject to funding, potential drill targets for 2014. 

Petro Matad also announces that it has agreed a change to the terms of its engagements with Macquarie Capital (Europe) Limited ("Macquarie").  Macquarie will continue to be engaged as the Company's financial adviser with respect to securing a farm-out(s) but will no longer be engaged as the Company's joint broker.

Link to release

 

Erdene Resource Investor Presentation, February 2014: Driving Mongolia Metals Exploration

Erdene Resource Development Corp. Ltd. (TSX:ERD) --

Link to preso

 

Prophecy Coal Appoints New Corporate Secretary and Grants Stock Options

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb. 4, 2014) - Prophecy Coal Corp. ("Prophecy" or the "Company") (TSX:PCY)(OTCQX:PRPCF)(FRANKFURT:1P2) is pleased to announce the appointment of Tony S.K. Wong as Corporate Secretary and General Counsel effective February 3, 2014. Mr. Wong is a lawyer who has practiced law throughout Canada for over 12 years. Mr. Wong replaces Pat Purdy as Prophecy's Corporate Secretary. The Board of Directors thanks Ms. Purdy for her service to the Company, and wishes her well in her future endeavours.

The Company also announces that it has granted, in aggregate, 5,800,000 stock options ("Options") to certain employees, directors, officers and other Company personnel. The Options have been granted pursuant to the terms of the Company's Stock Option Plan, which was approved by shareholders at the Company's annual general and special meeting of shareholders that was held on July 30, 2013.

250,000 Options are exercisable at $0.08 for a term of five years expiring on January 8, 2014. 5,550,000 Options are exercisable at $0.105 for a term of five years expiring on January 27, 2019. Each Option vests at 12.5% per quarter for the first two years following the date of Grant and is subject to the approval of the Toronto Stock Exchange.

Link to release

 

Centerra Gold, 2013 Year-End Reserve and Resource Update

TORONTO, ONTARIO--(Marketwired - Feb. 5, 2014) - Centerra Gold Inc. (TSX:CG) today issued its 2013 year-end estimates for reserves and resources and a fourth quarter 2013 exploration update. The estimates of reserves and resources are based on the Company's 2013 exploration programs and, with respect to the Kumtor project, on the KS-13 open pit mine plan (announced November 7, 2012). The Company has used a gold price of $1,300 per ounce as the basis for its estimates, compared to gold price of $1,350 used for 2012 year-end estimates.

Highlights:

·         At Centerra's 100% owned Öksüt project in Turkey, 2013 in-fill drilling on the Keltepe deposit (formerly the Ortaçam North deposit) has increased the indicated resources to 1.1 million contained ounces of gold, an increase of 406,000 ounces of contained gold. The smaller Guneytepe deposit (formerly the Ortaçam deposit) is estimated to have 134,000 ounces of contained gold in the inferred resource category. For both deposits, the identified resources are oxide or transition ore that would be amenable to heap leach processing.

·         At the Gatsuurt project in Mongolia, gold mineral reserves in the probable category have increased by 114,000 contained ounces as a result of an updated block model and a re-design of the open pit.

Ian Atkinson, President and CEO of Centerra Gold said: "In 2013 at the Öksüt project we successfully converted the majority of the inferred resources to indicated resources and through our in-fill drilling during the year we continued to expand the resource, which now totals 1.1 million contained ounces of gold in the indicated category with an average grade of 1.2 g/t. The Company expects to complete a preliminary economic assessment in the first quarter of 2014 and if such assessment is positive, we expect to commence a feasibility study later in the year. Centerra's reserves and resources are estimated to be 15.7 million contained ounces of gold, which does not include the 3.7 million contained ounces of gold in the inferred category."

Year-end Reserves and Resources

Reserves

During 2013, Centerra's proven and probable gold reserves decreased by 53,000 contained ounces, after accounting for processing in 2013 of 912,000 contained ounces, and reserves now total 10.2 million ounces of contained gold, compared to 11.1 million ounces as of December 31, 2012. The reserve decrease is a result of a negative production reconciliation from the Kumtor mine which is partially offset by a positive reconciliation of the Boroo stockpile grades and an increase in reserves at the Gatsuurt project. All 2013 year-end reserves were estimated using a gold price of $1,300 per ounce compared to $1,350 per ounce at December 31, 2012. The change in gold price had no impact on the reserves and resources.

At the Boroo mine, in Mongolia, proven and probable reserves total 49,000 contained ounces of gold after accounting for approximately 146,000 contained ounces being processed in the mill and or loaded on the heap leach pad in 2013. The remaining reserves are entirely within existing ore stockpiles. The Boroo operation will continue to feed the mill from ore stockpiles to the end of 2014 and operate and recover gold from the heap leach pad into 2015. At the Gatsuurt project, proven and probable reserves have increased by 114,000 contained ounces of gold as a result of an updated block model and an expanded pit design and now total more than 1.6 million contained ounces of gold.

Resources

As of December 31, 2013, Centerra's measured and indicated resources are estimated to total 5.5 million ounces of contained gold and have increased by 378,000 contained ounces of gold compared to the December 31, 2012 estimate. This is a result of the conversion of inferred resources and the expansion of indicated resources on the Öksüt project which is offset by the conversion of some resources to reserves at the Gatsuurt project.

The updated resource estimate for the 100% owned Öksüt project in Turkey has an indicated resource of 1.1 million ounces of contained gold and an inferred resource of 134,000 ounces of contained gold.

As of December 31, 2013, Centerra's inferred resources decreased by 394,000 contained ounces of gold over the December 31, 2012 estimate to total 3.7 million ounces of contained gold. The conversion of Öksüt and Gatsuurt inferred resources into the indicated resource category account for this decrease.

The 2013 year-end resource estimates for Boroo, ATO and Ulaan Bulag properties in Mongolia and the Kara Beldyr property in Russia are unchanged from 2012 year-end estimates.

Link to release

 

Xanadu Mines to acquire advanced copper-gold project in Mongolia

February 3 (Proactive Investors) Xanadu Mines (ASX: XAM) and its joint venture company Mongol Metals have agreed to acquire a 90% interest in the Kharmagtai advanced porphyry copper-gold exploration project in Mongolia for US$14 million from Turquoise Hill Resources.

Previous exploration exploration had identified significant shallow high-grade porphyry copper-gold mineralisation, including 245 metres (from 3m) grading 0.75% copper & 2.48g/t gold.

But this wasn't isolated by any means and the project looks to have scale and offer promise.

Xanadu will be funded into the deal with a US$4.0 million, 3-year loan agreement with the Noble Group and US$4.0 million equity in Mongol Metals from its joint venture partner as initial consideration.

The acquisition is subject to by approval by Xanadu's shareholders. 

So there is some form about the Kharmagtai project, located within the South Gobi porphyry copper province which hosts most of the known porphyry deposits in the South Gobi region of Mongolia, including the giant Oyu Tolgoi copper-gold operation.

Mongol Metals will pay initial consideration of US$4 million with deferred consideration of US$10 million to be paid over 18 months.

Xanadu has committed to spending around US$900,000 up to completion (about US$700,000 to date including US$250,000 of an initial US$500,000 deposit) to earn a circa 18% interest in Mongol Metals.

The company has the right to earn at least 85% of the Mongol Metals joint venture company through funding exploration and acquisition costs.

It had in early January completed the acquisition of Oyut Ulaan for US$600,000 and 5 million Xanadu shares.

This is value accretive for Xanadu given the geological setting and previous exploration results.

Link to article

Link to revised XAM release

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Local Market

MSE News for February 5: Top 20 +3.01%, Turnover 30.5 Million

Ulaanbaatar, February 5 (MONTSAME) At the Stock Exchange trades held Wednesday, a total of 43 thousand and 095 shares of 25 JSCs were traded costing MNT 30 million 500 thousand and 643.00.

"Remikon" /36 thousand and 685 units/, "Tavantolgoi"  /1,450 units/, "Hai Bi Oil"  /1,060 units/, "Mongolia development" /1,006 units/ and "Khasu mandal" /995 units/ were the most actively traded in terms of trading volume, in terms of trading value--"Tavantolgoi" (MNT eight million 646 thousand and 540), "Remikon" (MNT five million 627 thousand and 805), "Darkhan nekhii" (MNT four million 437 thousand and 500), "Gazar suljmel" (MNT three million and 498 thousand) and "Khasu mandal" (MNT three million 137 thousand and 235).

The total market capitalization was set at MNT one trillion 680 billion 986 million 336 thousand and 650. The Index of Top-20 JSCs was 16,608.49, increasing by MNT 485.29 or 3.01% against the previous day.

Link to article

 

MSE News for February 4: Top 20 -0.03%, Turnover 6.4 Million

Ulaanbaatar, February 4 (MONTSAME) At the Stock Exchange trades held Tuesday, a total of 10 thousand and 102 shares of 18 JSCs were traded costing MNT six million 387 thousand and 615.44.

"Selenge Dulaankhaan" /3,748 units/, "Remikon"  /2,819 units/, "Hai Bi Oil"  /2,433 units/, "Baganuur" /553 units/ and "Khokh gan" /110 units/ were the most actively traded in terms of trading volume, in terms of trading value--"Baganuur" (MNT two million 405 thousand and 550), "Selenge Dulaankhaan" (MNT 866 thousand and 837), "Hai Bi Oil" (MNT 778 thousand and 560), "Bayangol hotel" (MNT 540 thousand) and "Mon-it buligaar" (MNT 525 thousand).

The total market capitalization was set at MNT one trillion 640 billion 582 million 785 thousand and 059. The Index of Top-20 JSCs was 16,123.20, decreasing by MNT 5.45 or 0.03% against the previous day.

Link to article

 

MSE News for February 3: Top 20 +0.73%, Turnover 4.6 Million

Ulaanbaatar, February 3 (MONTSAME) At the Stock Exchange trades held Monday, a total of 4,154 shares of 16 JSCs were traded costing MNT four million 583 thousand and 165.96.

"Genco tour bureau" /2,839 units/, "Tavantolgoi"  /498 units/, "Hai Bi Oil"  /445 units/, "Agrotechimpex" /253 units/ and "Bishrelt industrial" /30 units/ were the most actively traded in terms of trading volume, in terms of trading value--"Tavantolgoi" (MNT two million 641 thousand and 050), "Bayangol hotel" (MNT 585 thousand), "Agrotechimpex" (MNT 581 thousand and 900), "Genco tour bureau" (MNT 268 thousand and 875) and "Bishrelt industrial" (MNT 155 thousand and 850).

The total market capitalization was set at MNT one trillion 637 billion 728 million 168 thousand and 087. The Index of Top-20 JSCs was 16,128.65, increasing by MNT 116.69 or 0.73% against the previous day.

Link to article

 

Mogi: Official vacancy notice for MSE CEO from SPC.

ТӨРИЙН ӨМЧИЙН ХОРООНООС "МХБ" ТӨХК-ИЙН ГҮЙЦЭТГЭХ ЗАХИРЛЫГ СОНГОН ШАЛГАРУУЛАХААР ЗАРЛАЛАА

2-р сарын 4 (МХБ) --

НЭР ДЭВШИГЧДЭД ТАВИГДАХ ЕРӨНХИЙ ШААРДЛАГА:  

·         Хөрөнгийн биржийн үндсэн үйл ажиллагааны чиглэлээр болон санхүү, эдийн засаг, бизнесийн удирдлага, магистраас доошгүй зэрэгтэй

·         Мэргэжлээрээ 8-аас доошгүй жил ажилласан, үүнээс 4-өөс доошгүй жил нь хөрөнгийн зах зээлд мэргэжлийн үйл ажиллагаа эрхэлдэг хуулийн этгээдэд эрх бүхий албан тушаал хашсан байх

·         Монголын хөрөнгийн бирж ТӨХК-ийн зорилтот түвшинг ханган биелүүлэх, үйл ажиллагааг нь цааш хөгжүүлэх хөтөлбөрөө боловсруулсан, түүнийгээ хамгаалан, биелүүлж чадаагүйн төлөө хариуцлага хүлээхэд бэлэн гэдгээ бичгээр илэрхийлсэн байх

·         Зээл, батлан даалт, баталгааны гэрээгээр хүлээсэн хугацаа хэтэрсэн аливаа өргүй байх

·         Эрх бүхий албан тушаалтнаар нь ажиллаж байсан хуулийн этгээд дампуурсан, төлбөрийн чадваргүй болсон нь тухайн этгээдээс аливаа хэлбэрээр шалтгаалаагүйг нь нотолсон байх

·         Тодорхой албан тушаал эрхлэх буюу тодорхой үйл ажиллагаа явуулах эрхийг нь шүүхийн шийдвэрээр хассан эрүүгийн гэмт хэрэгт ял холбогдож шийтгүүлж байгаагүй байх

·         Хөрөнгийн зах зээлд мэргэжлийн үйл ажиллагаа эрхэлдэг байгууллагад эрх бүхий албан тушаалтнаар ажиллаж байх үедээ захиргааны хариуцлага хүлээсэн бол үүнээс хойш 3 жил өнгөрсөн байх

·         Англи хэлний ярианы болон бичгийн гүнзгий мэдлэгтэй

·         Компьютерын өргөн хэрэглээний программ дээр чөлөөтэй ажилладаг

·         Олон улсын хөрөнгийн зах зээлд ажилласан туршлагатай, баг бүрдүүлж тодорхой амжилт гаргасан, өндөр ёс зүйтэй, компанийн засаглалын сургалтад хамрагдсан бол давуу тал болно. 

БҮРДҮҮЛЭХ МАТЕРИАЛ:

·         Монголын хөрөнгийн бирж ТӨХК-ийг удирдах үйл ажиллагааны хөтөлбөр

·         Шалгаруулалтад оролцохыг хүссэн өргөдөл

·         Тухайн нэр дэвшигчийн биеийн байцаалт /Төрийн албан хаагчийн анкет/

·         Оршин суугаа засаг захиргааны нэгжийн тодорхойлолт

·         Цахим үнэмлэхний нотариатаар баталгаажуулсан хуулбар

·         Мэргэжлийн байдлыг тодорхойлсон баримт бичгийн нотариатаар баталгаажуулсан хуулбар /Диплом, үнэмлэх, сертификат гэх мэт/

·         Нийгмийн даатгалын дэвтрийн нотариатаар баталгаажуулсан хуулбар

·         Өмнө нь болон одоо ажиллаж байгаа албан байгууллагын тодорхойлолт

·         Эрх бүхий албан тушаалтнаар нь ажиллаж байсан хуулийн этгээд дампуурсан, төлбөрийн чадваргүй болсон нь тухайн этгээдээс аливаа хэлбэрээр шалтгаалсан эсэх тухай шүүхийн лавлагаа

·         Хугацаа хэтэрсэн зээлийн үлдэгдэл байгаа эсэх талаарх холбогдох байгууллагын лавлагаа

·         Гүйцэтгэх захиралд тавигдах шаардлагыг хангаж байгаатай холбогдох бусад баримт бичиг. 

МАТЕРИАЛ ХҮЛЭЭН АВАХ ХУГАЦАА:

2014 оны 03 дугаар сарын 04-ний өдрийн 17.00 цаг хүртэл.

Эх сурвалж

 

MIBG LLC AND RESOURCE INVESTMENT CAPITAL LIMITED COMPLETE MERGER OF SECURITIES DIVISIONS

ULAANBAATAR, MONGOLIA (February 4, 2014) – MIBG LLC and Resource Investment Capital Limited (ResCap) today announced receipt of final regulatory approvals and completion of all closing conditions referenced in the joint January 7th press release.

The merged securities dealer will fall under the banner of MIBG LLC and will serve existing clients from both companies through one cohesive platform. Institutional and retail clients will benefit from the most advanced securities trading platform on the Mongolian Stock Exchange and from enhanced research and deal sourcing capabilities.

MIBG LLC and ResCap will also be working together to facilitate corporate financing transactions in Mongolia through their respective advisory businesses. This partnership brings together the two leading financial advisors covering Mongolia having collectively completed 20 advisory and financing mandates since 2010.

MIBG's Managing Director Chris MacDougall commented on the closing, "The completion of this merger has strengthened MIBG's position as the leading financial advisor based in Mongolia." MacDougall added, "As demonstrated by the professional conduct of the Financial Regulatory Committee, the Central Clearing House and our Settlement Bank we believe that Mongolia is ready for a more qualified level of financial services. We are excited to be at the heart of these developments and look forward to serving our clients through the most professional platform available in the country."

Clients with accounts at MIBG and ResCap can expect to be contacted within the next week by their account representative. There will not be any interruptions to client orders as trading will remain active throughout the entire transition period. For more information please contact the representatives from both parties using the details provided below.

MIBG's senior management team includes Bilguun Ankhbayar as Chief Executive Officer and Chris MacDougall as Managing Director. Eric Zurrin will become an Advisor to MIBG under the terms of the formal Cooperation Agreement between MIBG LLC and Resource Investment Capital Limited.

Link to release

 

Mongolia pins hopes on new laws to breathe life into stock market

Jacopo Dettoni in Ulaanbaatar, February 6, 2014 (bne) Trading rooms at the Mongolian Stock Exchange (MSE) appeared empty in the early afternoon of a December day in Ulaanbaatar. Most of the employees had left earlier to get ready for the corporate year-end party scheduled for the same evening. Above the empty desks, the quotes of Mongolian stocks scrolled by on the ticker. Only a handful of shares got actually traded in the morning session – as always. 

"Liquidity is just not there," Altai Khangai, the MSE's chief executive, told bne in an interview a few days before tendering his resignation. "Although Mongolia has been on the radar screen of international investors for quite some time, they weren't able to enter the market due to lack of custodians, proper market legislation and infrastructure." 

Only a couple of years ago, the MSE was tipped to become the next big story in emerging markets, with its stock market predicted to reach a market capitalisation of $45bn piggybacking the development of the country's booming mining sector. 

The reality was somewhat different. The MSE still ranks among the world's smallest and illiquid stock exchanges. After peaking in February 2011, the blue-chip index has lost over 50% and total market capitalisation has fallen below $1bn. Only a few dozen of the 262 listed companies actually trade and daily volumes struggle to reach $150,000. Major international investors are nowhere to be seen. 

With deeply reformed market legislation taking effect on January 1, the MSE has reached a turning point. The reform is expected to make up for most of the inconsistencies that have weighed down the exchange over the last years. The year has not started with a bang, as volumes were light as usual in the first trading sessions of 2014. And the resignation of Altai and his deputy, Saruul Ganbaatar, raised a few eyebrows and has thrown the institution into a delicate transition phase. 

But local investors are still looking forward with renewed optimism, and the main Top 20 Index has steadily risen from the 52-week low hit on May 6, increasing more than 20% to stand at around 16,000 by end-January. 

Liquidity is the key 

The local brokerage Mongolian Investment Banking Group (MIBG) believes that "2014 is going to be the most exciting time in Mongolian equities" since 2009-2010, when the domestic exchange grew by more than 130%. 

It bases this prediction on the new rules, introduced through a wide set of amendments to the 2002 Securities Market Law, that make it easier for international investors to get exposure to Mongolian equities, in a clear push to increase liquidity on the exchange. 

"Today, the Mongolian capital market doesn't offer custodian banking services. That's the most important thing in attracting international capital. With the revised securities law, also custodians will be coming into place," Altai said. 

Custodian banks are responsible for the safe keeping of assets. Global investors generally rely on custodians to administer their local holdings according to domestic regulations. As the new law opens the way for custody services, local financial institutions are expected to introduce them in the second half of 2014, paving the way for capital from international investors to flow in, boosting liquidity and hopefully the prices of undervalued assets. "If foreign custodians are in place in 2014, the MSE Top 20 could easily double to in excess of 30,000, from its current level of 15,500," Nick Cousyin of the local broker BDSec says. 

The revised market law also widens the range of tradable securities to include, among others, derivatives and warrants; allows dual-listing of the many foreign-listed companies whose assets are mostly located in Mongolia; improves disclosure practices, which today go unnoticed; and sets up harsher fines for those who do not comply. 

The reform, combined with the new London Stock Exchange's Millennium Exchange electronic trading platform that was introduced in 2012, might gain the MSE a place in the FTSE Frontier 50 index together with countries such as Argentina, Qatar and Vietnam. The exchange has been in the candidate watch-list since 2012 and "with the change of that law, hopefully we will be there," Altai said. 

Provided the MSE eventually pulls it off, featuring in the FTSE Frontier 50 index would act as an additional catalyst for investment, as the index is a global reference for funds tracking frontier markets. 

Going with the cycle 

Beyond regulation and infrastructure, the fortunes of Mongolian shares appear strictly tied to Mongolia's economic cycle as a whole. "The MSE is a reflection of investor appetite for the sovereign story," MIBG's managing director, Chris MacDougall, says. "The country has taken a beating over the last 18 months. Poor legislative decisions, political posturing and negative commodities outlooks have weighed down on the economy. The MSE has also felt the pressure." 

Mongolia has certainly not lived up to its expectations with the consequences of that felt across the board. Investments worth $6.6bn in the expansion of Rio Tinto's copper-gold Oyu Tolgoi (OT) mine, the country's largest mining development and a barometer of local business sentiment, still hang in the balance, as the government has locked horns with the British-Australian mining powerhouse over project finance details. 

On a broader level, investors have been generally spooked by the authorities' continuous twists over regulations and licences, which further hurt investor sentiment toward the country. As a result, foreign direct investment was down 48% in the first three quarters of 2013. 

So far, the government has managed to make up for flagging investor interest through an expansionary fiscal policy and loose monetary policy, and forecasts put economic growth for 2013 at around 12%. But that has proved to be little help for the MSE. "As long as this general attitude towards foreign investment changes, I don't see much increase in trading volumes," Mongolia Investment Corporation (MICC)'s president, Achit-Erdene Darambazar, says. "Investors' view is not as positive as it was a few years ago and also quotations of Mongolian companies trading abroad are not doing well." 

The shares of Rio Tinto-controlled Turquoise Hill Resources, which is developing the OT project, lost 80% over the last two years on the Toronto Stock Exhange. In the same period, its subsidiary SouthGobi Resources, which owns and operates the Ovoot Tolgoi coal project, fell by 86%. 

Mongolia is now at a crossroad. With the OT expansion still hanging in the balance and business sentiment deteriorating, economists are divided over the future of the resource-rich economy. The International Monetary Fund forecasts Mongolia will grow 9.6% this year, with a further slowdown to come in 2015 and 2016, when growth is expected at 5.8% and 3.8%, respectively. On the other hand, the Economist Intelligence Unit sees Mongolia posting 15.3% growth in 2014. 

Given the country's tiny $10bn economy, it is clear that things can change on a dime in a matter of weeks. Should OT issue be fixed and the new, friendlier foreign investment law approved in October bear fruit, investment will flow in again, to the benefit of the MSE. Otherwise, even the improved market architecture will prove of little relief for Mongolian stocks. 

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Economy

Mongolian Economy Grew 11.7% in 2013: Statistics Office

By Michael Kohn

Feb. 4 (Bloomberg) -- Mongolia's gross domestic product grew 11.7% y/y in 2013, according to a statement from the National Statistics Office distributed today.

* Data is preliminary reading

* Mining and quarrying rose 21% y/y in 2013

* Agriculture, forestry and fishing was 2nd-largest sector by value, up 14% y/y

* Construction sector grew 67% y/y, highest increase among sectors surveyed

* Data compiled by production approach at 2005 constant prices

* NOTE: Annual growth was 12.4% in 2012, 11.3% in 1h 2013, according to previously reported data:

(Bloomberg First Word)

Link to NSO

 

BoM MNT Rates: February 5 Close

 

2/5

2/4

2/3

1/30

1/29

USD

1,728.95

1,726.32

1,722.89

1,723.22

1,721.85

EUR

2,335.81

2,333.38

2,322.97

2,351.51

2,352.56

CNY

285.26

284.83

284.26

284.48

284.43

GBP

2,820.78

2,810.97

2,824.42

2,852.10

2,853.79

RUB

49.54

48.75

48.90

48.92

49.70

January MNT Chart:

 

Link to rates

 

8% Mortgage Program Update: ₮482.3 Billion Refinanced, ₮836.7 Billion Newly Issued for 31,739 Citizens

February 3 (Cover Mongolia) As of February 3, 482.3 billion (₮482.5 billion as of January 29) existing mortgages of 17,102 citizens (17,086 as of January 29) were refinanced at 8% out of 844.3 billion (844.1 billion as of January 29) worth requests.

Also, 836.7 billion (₮827.2 billion as of January 29) new mortgages of 14,637 citizens (14,451 citizens as of January 29) were issued at new rates out of 910 billion (₮901.4 billion as of January 29) worth requests.

Link to release (in Mongolian)

 

BoM issues 217 billion 1-week bills, total outstanding -7.7% to 939.2 billion

February 3 (Bank of Mongolia) BoM issues 1 week bills worth MNT 217 billion at a weighted interest rate of 10.5 percent per annum /For previous auctions click here/

Link to release

 

BoM FX Auction: Refuses USD, CNY Bids, Accepts $42.3 Million MNT Swap Offers

February 4 (Bank of Mongolia) On the Foreign Exchange Auction held on February 4th, 2014 the BOM has received from local commercial banks bid offer of USD and CNY. The BOM has not accepted the offer.

On February 4th, 2014, The BOM has received MNT Swap and Forward agreement offer in equivalent to 42.3 million USD and USD Swap agreement offer of 10 million USD from local commercial banks and accepted the MNT Swap agreement offer.

Link to release

 

GoM Treasury Auction: Announced ₮40 Billion 12-Week Bills Sold at 9.9% with 41 Billion Bids

February 5 (Bank of Mongolia) Regular auction for 12 weeks maturity Government Treasury bill was announced at face value of 40.0 billion MNT and each unit was worth 1 million MNT. Face value of 40.0 billion /out of 41.0 billion bid/ Government Treasury bill was sold to the banks at discounted price and with weighted average yield of 9.90%.

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WEF: Scenarios for Mongolia

January 23 (World Economic Forum) ---

Charting a course for the country, from developing mineral wealth to long-term sustainable and diversified growth, is a key task facing Mongolia's leaders. On this course, they need to explore and make three strategic decisions related to managing the mining industry and the wealth that it is expected to create, approaching the challenge of diversifying the economy, and building long-term trade and investment relations. The best inroads to these decisions are not straightforward and must take into account uncertain future contexts. Possible future contexts are explored in three scenarios intended to help Mongolia's leaders to prepare and make the most of whichever future arises.

Link to video

Link to Scenarios for Mongolia page

 

Can Mongolia Keep Going?

By J. Berkshire Miller 

February 4 (The National Interest) Is the Mongolian economy poised for a comeback, or will it continue to cool down from the recent years of soaring profits?

According to the latest economic update report from the World Bank, Mongolia's real gross domestic product (GDP) growth is expected to continue to descend in 2014 but remain in double-digit growth at just over 10 percent. Those are growth numbers that most countries can only dream of, and they will likely keep Mongolia amongst the top ten fastest-growing economies in the world. Moreover, Ulaanbaatar's growth will still be larger than any other country in Asia with the possible exceptions of Turkmenistan and Afghanistan. The country also benefits from leadership stability–in a transparent manner–with last year's reelection of President Tsakhiagiin Elbegdorj.

But, while Mongolia remains a successful model in many ways for its abilities to reform politically and economically, there are still some questions on its ability to sustain its economic success and court foreign direct investment. For example, FDI inflows, as a percentage of GDP, have plummeted over the past three years from nearly 60 percent to less than 20 percent. Moreover, Mongolia's fiscal deficit has nearly tripled and inflation has been volatile. All of this has impacted Mongolia's bottom line, as its exports have consistently fallen for three consecutive years.

What is behind the economic decline in Ulaanbaatar? One of the simplest–and partly accurate–explanations is the continued uncertainty in the global economy which has also served to cool down the minerals market, which Mongolia relies on heavily. But this does not complete the story or fully explain why FDI has fallen off a cliff since 2011. Due to Mongolia's dependence on its minerals industry, its ability to attract foreign investment has ebbed and flowed along with the status of its key investment projects. Most notable of these is the multi-billion dollar development of the Oyu Tolgoi cooper-gold mine led by Australian mining company Rio Tinto. While some point to snags in Mongolia's strict mining investment laws as the culprit for curtailed growth, Mongolian authorities have alternative explanations. In a wide-ranging interview with the Diplomat last year, the head of Mongolia's new Investment Agency (Mogi: correct name Invest Mongolia Agency) remarked that the real reason for the drop in FDI was because the Oyu Tolgoi project finished its phase one after 2012. In other words, the FDI was artificially inflated during 2011-12 due to the Rio Tinto project.

But there are other reasons for this dip besides the gap between Oyu Tolgoi's phase one and two. One significant factor was the imposition of a strict investment law in 2012 that handcuffed foreign investors and focused too much power in the hands of Ulaanbaatar rather than the private sector in Mongolia. Another troubling sign has been the long delay of an initial public offering (IPO) for its lucrative coal mine in Tavan Tolgoi, which is supposed to open at nearly $3 billion USD. Tavan Tolgoi is believed to contain the world's largest undeveloped coking-coal deposit. The mine is situated in Mongolia's southern Gobi desert, which has made it an appealing location for Chinese investors. But there have been repeated delays in awarding contracts and Ulaanbaatar has wavered several times during the bidding process due to protests from other foreign investors that the process was rigged in favor of a Chinese-Russian-American consortium. The lagging international market for coal has also been responsible for delays on Tavan Tolgoi.

After FDI plummeted following the investment law's approval, the Mongolian government quickly backtracked and introduced more investment friendly securities legislation. The new investment law, which was passed last November, introduces new protections for foreign investment in Mongolia and also provides tax incentives. The government also passed a new securities law on January 1, which adds transparency to the Mongolian market and hopefully will help the Mongolian Stock Exchange to work more seamlessly with other foreign exchanges.

Adding to this good news is the fact that Elbegdorj is a savvy leader and is well equipped to leverage his power to minimize Mongolia's exposure to economic risks in the coming years. Earlier this month, the Mongolian leader announced a new initiative called "From a Big Government to a Smart Government" which is focused on taking several efforts to improve the efficiency and effectiveness of governance in Ulaanbaatar. According to Elbegdorj's office, the new decree "reflected the country's priority to restrict government's business activities and operations in order to transmit the state into an economical and efficient regime by correcting the present situation of a state which is mixed up all economic activities." More specifically, the reforms focus on centralizing most of the government's implementing and regulatory agencies through the privatization of the central Khangarid Palace, a tall building located in the heart of the Mongolian capital. (Mogi: well, it's all good on paper but there's only so much a president can do without executive powers, something which most foreign media, experts fail to point out)

Streamlining the bureaucracy is an important step not only for economic savings, but also because it will help to ensure coherent and coordinated decision-making. Indeed, Elbegdorj himself has been vehement that Mongolia needs to rid its economy of corruption. He once remarked that "corruption makes Mongolia look awful, ugly." Elbegdorj's renewed mandate and personal background (having studied in the Soviet Union and being influenced by Mikhail Gorbachev's famous polices of glasnost and peristroika) will continue to push Mongolia towards balancing openness to foreign investors along with the protection of Mongolian interests.

The domestic context alone however will not be enough to keep Mongolia's economy churning. The global commodities market needs to recover and Mongolia will also need to adapt to the gradual changes happening with its neighbour–and largest market–to the south, China. As Beijing continues to direct its economy more toward domestic consumption and less on foreign investments, there will be implications for Ulaanbaatar. All of these factors will contribute to the sense that Mongolia needs to become even more dynamic and nimble in order to account for these economic trends.

J. Berkshire Miller is a fellow on Japan for the Pacific Forum CSIS.

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Mongolia Year in Review 2013

February 3 (Oxford Business Group) After hopes of a mining-based boom in Mongolia last year were dented by global commodity price shocks and declining Chinese demand, the government is focusing on improving the investment climate in a bid to generate a turnaround.

In January 2014, ratings agency Moody's placed negative outlooks on three Mongolian banks, citing concerns over a "deteriorating operating environment", bad loans and slower economic growth.

The warning came three months after the IMF revised its 2013 growth forecast for the country from 14% to 11.8%, blaming ongoing uncertainty and weakness in the global economy.

Commodity price fall-out

With mining and resource extraction accounting for a third of Mongolia's GDP and around 90% of exports, falling demand for coal from China last year weighed significantly on the country's economic performance.

GDP growth was expected to remain in double digits until 2020 after reaching 17% in 2011, largely due to revenues generated by the Oyu Tolgoi, Rio Tinto's massive gold-copper mine, and the Tavan Tolgoi coking coal mine.

However, a decline in commodity prices and China's weakened industrial output took their toll on Mongolia's economy in the first few months of 2013, with figures released in May by the National Statistical Office showing first quarter GDP growth of 7.2%, down from 16.7% for the same period in 2012.

International investor confidence was further eroded by wrangling over an underground expansion planned for Oyu Tolgoi, worth around $6bn. While talks between the Anglo-Australian miner and Mongolian officials on revising the 2009 deal initially raised hopes of a national mining boom, they remained at deadlock for much of 2013.

Expansionary stance examined

The government's response to the slowdown in the first half of the year combined expansionary fiscal and monetary policies. Using proceeds from a $1.5bn bond sale in late 2012, the government invested heavily in infrastructure, including the construction of roads linking six provinces to Ulaanbaatar. Thanks in large part to the increase in state spending, GDP growth accelerated in the second quarter, reaching 14.3%.

The Bank of Mongolia lowered its policy rate multiple times between January and June, eventually reaching 10.5%, down from 13.25% at the end of 2012. The central bank also introduced a new state-backed home loan scheme in mid-June, which fixed mortgage interest rates at 8%, compared to the 15% average previously charged.

Credit growth, which had been sluggish, picked up rapidly. According to an early 2014 report from ratings agency Moody's, between January and November 2013, loans ballooned by 55%, compared to growth of 23% the prior year, with much of the lending to the construction sector.

While the government's policies seem to have been effective, the World Bank cautioned Mongolia in November that rising inflation and a rise in the current account balance might lead to a "harsh economic adjustment process in the medium term". The IMF made similar remarks in the conclusion statement to its latest Article IV consultation, published in December, noting that the "continuation of expansionary fiscal and monetary policies could threaten stability".

Structural changes welcomed

Other measures aimed at improving Mongolia's investment climate generated a more favourable response.

In October, the parliament passed a new law replacing the Strategic Entities Foreign Investment Law, which was hastily enacted in 2012 with the aim of blocking the acquisition of a large mining firm by a state-owned Chinese corporation. While the prior legislation achieved its objective, it also deterred other overseas investors, helping depress Mongolia's FDI levels. Foreign investment was down by an annualised 47% for the first eight months of 2013 to $1.8bn, as overseas companies delayed new projects.

The new law, which went into effect on November 1, brought two important changes. First, foreign investors will no longer be required to obtain state approval before pursuing opportunities in the mining, banking and telecommunications sectors, although majority state-owned enterprises will still need government approval to invest in these areas.

Second, the legislation introduced tax stabilisation certificates that ensure stable tax treatment for a defined period of time, ranging from five to 22 years, depending on the industry. The new rules will apply to value added tax (VAT), corporate income tax, mining royalties and Customs duties. Under the law, local and foreign investors will be charged the same rates. This has eliminated a great amount of uncertainty and will likely spur FDI.

The administration also launched a campaign mapping out its plans to modernise government operations, which it hopes will provide a confidence boost both at home and abroad.

The initiative, entitled "From Big Government to Smart Government", will prepare the groundwork for far-reaching reforms, led by the separation of business and state, a new process for issuing licences and permits, and increasing public officials' accountability. Meanwhile, a securities markets law, which came into effect on January 1, will target institutional investors.

With the Oyu Tolgoi project seen as crucial to the country's recovery, reports in recent weeks that the government's dispute with Rio Tinto could soon be resolved signalled good news for Mongolia. Erdenes Oyu Tolgoi director Da. Ganbold, told local media that only "a few critical issues remain".

Mongolia is keen to persuade international investors to look beyond the current political and macroeconomic challenges weighing on its performance. Ensuring Oyu Tolgoi realises its considerable potential and signalling an intention to work towards a more prudent fiscal framework could be instrumental in helping the country achieve its aim.

Follow Oxford Business Group on FacebookGoogle+ and Twitter for all the latest Economic News Updates. Or register to receive updates via email.

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Mongolia's Investment Law Changes – Article for the Mongolian National Chamber of Commerce and Industry

February 4 (Amy Wilson-Chapman) I wrote a article for Invest Pro Mongolia, a publication for foreign investors in Mongolia, produced by the Mongolian National Chamber of Commerce and Industry. I asked for their permission to print that here. A full copy of the magazine can be found here.

*******************

Mongolia's Investment Law Changes

The dawning of a new year ushered in a new, important chapter in Mongolia's free-market development with a host of new, clearer, regulations for foreign investors. It could be one of Mongolia's most important years since it was decreed a democracy, but commentators are warning the new laws will mean nothing if the government does not lead by example.

Late last year the Mongolian Government shook up its investment laws in a move that MIBG managing director Chris MacDougall said removed «foreigner» from the country's investment vocabulary.

«This in itself is the most forward looking development in foreign investment legislation in Mongolia's free-market history,» he said. «We now have a market that treats private foreign and domestic capital as one and the same. This is possible through the Government's realization that foreign capital is needed to uncover the country's vast mineral wealth.»

Mr MacDougall said the new investment law, investment fund law and securities law all provided the foundation foreign investors needed to «regain confidence» in Mongolia – something that had all but disappeared.

He said the key element restricting investment now was trust with investors keen to ensure the new laws had longevity.

«The new (investment) law has been positively received by both investors and corporates alike,» he said.

«Seen as the most positive legislative development since rescinding the Windfall Profits Tax in 2009, the expectations are very high.»

Hogan Lovells Ulaanbaatar-based partner Michael Aldrich is just one of many who echoed that sentiment, but warned low hanging-fruit, such as tax incentives, were «only as good as the will of the state to respect them.»

«New and old investors will be waiting and watching whether the state will keep its promises,» he said.

The new investment law treats domestic and foreign companies equally with its purpose, according to a translated version, «to encourage investment… [and] stabilize the tax environment». 

The change comes after Mongolia's reputation – as the darling emerging economy of the globe – took a beating when foreign ownership restrictions were rushed through parliament 18 months ago.

Though the aim was to block Chinese state-owned Aluminum Corp of China – Chalco – from gaining a controlling stake in SouthGobi Resources it had a wealth of unwanted effects leaving foreign investors uncertain about the investment climate.

Under the new law any state-owned organisation, where a government entity owns at least a 33 per cent stake, must still apply directly to the government for approval.

In a bid to stop erratic, hurried policy making in the future, the new law comes with a clause that two­ thirds of parliament must vote to repeal any section of the law. However, Hogan Lovells did suggest that this provision may raise constitutional issues as it seeks to bind future parliament» in a briefing note. Furthermore, foreign investors can apply for tax stabilization certificates that are valid for up to 18 years in some sectors, provided certain requirements are met.

Another change has been the development of Invest Mongolia with Sereeter Javkhlanbaatar, former director of the Ministry of Economic Development's foreign investment regulations and registration department, taking the top job.

Though Invest Mongolia's key role was to «increase FDI (foreign direct investment), which is one of the key drivers of the economy» through a variety of mechanisms, Mr Javkhlanbaatar stressed that attracting foreign investment must be a whole-of-government approach.

«It is actually every one's mission in the country, particularly state institutions whose decisions and actions affect the business environment or investors approach.

«Furthermore, since investment covers each socio-economic area, everyone should speak 'one language' and understand right frequency,» he said.

The new director was confident that the new legislation would raise the profile of Mongolia as a sound, competitive place to do business.

«Due to more liberalization and reducing bureaucracy, our position has improved,» he said.

Despite flip-flopping regulation, Mongolia remained one of the fastest growing economies in the world during the first-half of 2013 expanding by 11.5 percent, according to the International Monetary Fund.

However, foreign investment was down 43 per cent, annually, according to the Ministry of Economic Development.

The county is tipped to round out 2013 at about 12 per cent, driven largely by the start of production at the country's biggest mine- Oyu Tolgoi (OT), according to the IMF.

However, 2014 could be the first year of single-digit growth since 2010 with the IMF predicting a GDP growth rate of 9.6 per cent.

Though the slowing global economy and China's cooling demand are partially to blame, the decision by OT to delay development at its underground mine – resulting in 1700 workers being laid off – has also plagued the country.

The ongoing debate between the government and international mining giant Rio Tinto, the biggest private shareholder in OT, has led to many negative international headlines and, some argue, a loss of confidence.

Australian mining analyst Gavin Wendt said the outcome of the discussions were «hugely important» with people across the globe eagerly awaiting the decision.

«The Mongolian government has a tricky balancing act between extracting the best possible deal it can in the spirit of the original agreement, but at the same time ensuring that Rio Tinto is comfortable with its investment and most importantly of all continues to invest.

«The government naturally wants revenues as quickly as it can,but Oyu Tolgoi is a massive project that requires huge investment up-front before cash can be given off.

«Both parties need to be appreciate each others' perspectives on this and work together.»

Mr Wendt said the new investment law would not only give companies clarity about the rules for doing business, but would also boost confidence that the government was looking to address the situation.

«I believe Australian companies will return to Mongolia in increasing numbers, although it will take time,» he said.

Munkhdul Badral Bontoi, Cover Mongolia founder, said the changes helped investors to regain confidence in Mongolia despite the disagreement.

«Although the delayed Oyu Tolgoi underground development is still in the back of every one's mind, the general mood at the fourth Mongolia Investment Summit in Hong Kong (in November) focused on the upward growth trend returning to Mongolia

Mr MacDougall said much of the negative sentiment; «driven by politicking and poor legislation» had come to an end.

«With the new investment law, investment fund law and the new securities law all providing the foundation that foreign investors needed to regain confidence in the economic prospects for the year ahead

However, Mr Aldrich said Mongolia's reputation had suffered over the past two years and the negative impression would be hard shake with the changes no «magic-bullet».

«The state must be active and aggressive in cutting through old Soviet style bureaucratic obstructionism,» he said.

«Further, while the state must perform its role as a regulatory supervisor, it also needs to exercise this function impartially and aware of its own limitation in terms of conducting business.»

Mr Aldrich said the commitment of the government would, in the end, decide the impact of the laws on Mongolia's business environment

«The enactment of the law signals a willingness of the state to recognize and correct past mistakes, but businesses will be looking to actual 'on-the-ground' improvements. A traditional Mongolian proverb holds that: 'A dead tree produces no shoots, Empty words,– no benefit.'»

Mr MacDougall said the seasonality of work in Mongolia would also define when a pick-up in investment would happen. However, he too said the government had an active role to play in encouraging investors back.

«The government could help to expedite the process by issuing new exploration licenses and bringing further participation into the market

«The purpose of this Law is to protect the legal rights and interests of investors in the territory of Mongolia, to establish a common legislative guarantee for investment, to encourage investment, to stabilize the tax environment, to determine the rights and obligations of investors and the competences of a government body related to investment and to regulate other relations pertaining to investment.»

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Politics

U.S. Senators Urge Mongolia to Lift Travel Ban on Detained Kapla

By Michael Kohn and Christopher Donville

February 4 (Bloomberg) Two U.S. senators have asked Mongolia to allow U.S. businessman Justin Kapla, who is a witness in a corruption investigation, to exit the country.

Minnesota senators Amy Klobuchar and Al Franken requested Mongolia allow Kapla to return to the U.S. on "humanitarian" grounds to spend time with his ailing stepfather, according to copies of the letters that Kapla sent to Bloomberg News. The letters were confirmed by Erik Wadkins, a press assistant in Klobuchar's office in Washington, D.C., and Michael Dale-Stein, deputy press secretary in Franken's Washington, D.C. office.

Kapla has been blocked from leaving Mongolia since October 2012 when investigators designated him a witness in a criminal case against D. Batkhuyag, the former chairman of Mongolia's Mineral Resource Authority. At the time, Kapla was president of SouthGobi Sands, a coal miner whose Hong Kong-listed parent SouthGobi Resources Ltd. is majority owned by Rio Tinto Group.

Batkhuyag was jailed last February for six 1/2 years for illegally issuing more than 100 mining licenses, according to Mongolian news agency news.mn. His sentence was later reduced to four years, the outlet reported. The anti-corruption agency's probe found he had reissued four suspended SouthGobi permits and transfered another license to a company run by associates, according to News.mn and UB Post newspaper reports.

Government Audit

Kapla, no longer employed by SouthGobi Sands, was later accused of money laundering and tax evasion by Mongolia's anti-corruption authority, although no charges were formally made, he said in an e-mail on Jan 28. Shirchin Sukhbaatar, the director of the consular department of the Ministry of Foreign Affairs, was not immediately available to comment when contacted by Bloomberg News today. Both letters were addressed to Sukhbaatar.

A native of Elk River, Minnesota, Kapla met with authorities on Jan. 29 to review the government's audit of SouthGobi's accounts. He received a seven-page summary of the audit, which showed ongoing differences between the two sides, he said. SouthGobi Resources has received the forensics expert report from the investigator and is reviewing it, said Bertrand Troiano, SouthGobi's chief financial officer, who is based in Hong Kong.

Travel Bans

"The ban is still in effect - that is the only leverage they have on SouthGobi," Kapla said on Jan. 30 in an interview by phone from Ulaanbaatar. "Everyone thought that it was going to change and we were all very disappointed in this latest result."

Mongolia imposes travel bans on foreigners designated a witness or suspect in a criminal case. Australian lawyer Sarah Armstrong was held for two months in late 2012 in connection with the SouthGobi case.

Two former colleagues at SouthGobi, Hilarium Cajucom and Cristobal David, both Philippine nationals, have also been banned from exiting the country in connection with the investigation.

SouthGobi Resources is also listed in Toronto.

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Business

Credit Suisse Seeks 'Minegolia' Exit as Bank Deal Sours

February 5 (Bloomberg) Mongolia sits atop so much mineral wealth -- an estimated $1.3 trillion in gold, copper, coal and iron ore -- that it's sometimes called "Minegolia." It's among the world's fastest-growing economies.

Even so, some of its bigger foreign investors want out.

The recent turmoil at Golomt Bank LLC, one of Mongolia's biggest lenders, illuminates some of the reasons.

Credit Suisse Group AG and Abu Dhabi's sovereign wealth fund invested in Golomt in the past half decade, seeking a share of the country's promised bounty. Those hopes have soured amid allegations that one of Golomt's owners arranged loans he didn't report, hid defaults for years and, as the bank's board called for probes, oversaw the destruction of financial records, according to documents reviewed by Bloomberg News.

Both investors, claiming breach of contract, started arbitration efforts in recent months for repayment of loans, just as Mongolia's leaders flew into Hong Kong and New York to drum up new investment.

Credit Suisse and Abu Dhabi extended a combined $35 million in convertible loans to Golomt starting in 2007. The agreements, reviewed by Bloomberg News, required the bank to provide prompt audited financial statements. Within five years of each deal, each investor was to gain Golomt shares as part of an initial public stock offering.

Come 2012, no IPO had occurred. Instead, that year the foreign investors, some members of the bank's board and its chief executive officer learned the bank had missed payments on off-the-books debts to a Japanese trading company as far back as 2008, according to two people with knowledge of the bank and to documents reviewed by Bloomberg News.

Deleted Files

Golomt failed to produce a 2012 audit in the first three months of last year as required in the loan deals.

Starting in late 2012, three companies examined the bank's books, according to communications from the firms to Golomt's board -- with one declining to sign off on the audit and two others alleging that some of the bank's managers had deleted financial records.

In one probe commissioned by the bank's board, PricewaterhouseCoopers LLP wrote that managers inside the bank deleted more than 6,800 files as well as records from the Swift interbank cash transfer system from August 2007 to May 2008.

"These individuals are still active within the bank," PwC wrote in an Aug. 12, 2013, report.

'Past Issues'

Golomt vice president Bolormaa Luvsandorj said the bank stood by an audit of its 2012 results done late last year, which said the bank had resolved the Japanese company's complaints.

"These are past issues," Bolormaa wrote in a Jan 28. e-mail, adding that in 2013 the bank reported strong liquidity and "an extremely prudent loan-to-assets ratio of 57.1 percent."

Golomt lawyer Bayaraa Battuvshin said in two January e-mails that any account of troubles at the bank was likely to be one-sided and that Golomt was unable to comment further because of an ongoing criminal investigation against a former employee.

Mongol Bank, the country's central bank and financial regulator, investigated Golomt several times, according to its chief, Zoljargal Naidansuren. The results are confidential, he said. "The bank is safe and sound," he said in a Jan. 29 interview in Mongolia's capital, Ulaanbaatar.

Investor Wariness

Credit Suisse spokeswoman Josephine Lee said the bank wouldn't comment on issues connected with Golomt. Mark Cutis, a representative of the Abu Dhabi fund, said by e-mail he isn't permitted to speak on the matter.

The details of events at Golomt are based on interviews with people with knowledge of its operations as well as auditors' reports and letters; loan agreements; communications among foreign investors, executives and board members; and investors' requests for arbitration.

They illustrate the growing wariness of some foreign investors despite Mongolia's economic promise. With a population of 3 million people in an area about three times the size of France, Mongolia ranked among the world's three fastest-growing economies in both 2011 and 2012, with gross domestic product expanding by as much as 17.5 percent.

Yet foreign direct investment, after cresting in 2011 and 2012, fell by almost half in 2013. In the last five years, four of Mongolia's top 10 banks have folded or merged to avoid bankruptcy.

Mongolia Cheerleader

The latest was Savings Bank, which defaulted on about $100 million of loans in July and sparked a London court case by South Africa's Standard Bank Group Ltd. alleging fraud. Savings Bank officials couldn't be reached for comment. Mongolian officials barred one of Standard Bank's consultants, who was in the country for debt talks, from leaving the country for a month late last year.

"I've been coming here for nine years. I've been a real cheerleader for Mongolia," the banker, Chris Bradley, said in a telephone interview in December before returning to his home in Australia. "Now I feel embarrassed."

Golomt -- a word that in Mongolian shamanism refers to a place where heaven and earth meet and in common usage describes a welcoming hearth -- was founded in 1995, part of a holding company formed by Bold Luvsanvandan, who is now Mongolia's foreign minister.

Bold and his siblings got their start in business as Mongolia emerged from seven decades of Soviet oversight, raising about $6.5 million from abroad as startup funds, said Bold's brother, Boldkhuyag Luvsanvandan. Bold brought in two friends from his student days as partners. Each took a 33 percent stake in the company, now known as Bodi International LLC, which controlled Golomt.

Investigating Defaults

After Bold won a seat in parliament in 1996, he handed daily management of Bodi International to his brother, Boldkhuyag, and to co-founder Bayasgalan Danzandorj, according to bank documents.

Golomt's troubles, according to several of the documents, began with $65 million in letters of credit the bank issued starting in 2007 to guarantee payments to a Japanese trading company for third-party transactions. Bayasgalan, as CEO, oversaw the committee that signed off on the deals, according to a report dated March 2013 by FSI Capital, a Dubai-based private equity and advisory firm that the bank's board commissioned to investigate defaults that began emerging in 2012.

Golomt defaulted on several of those letters starting in 2008, FSI wrote. "All subsequent defaults were not reported to any management or board committee," it said. Bayasgalan, by then the bank's chairman, and other top officers had engineered the deletion of letters of credit from the bank's records, FSI reported, a finding later echoed by PwC.

No Default

Bayasgalan declined several requests for an interview sent through an assistant, who asked not to be identified. Golomt vice president Bolormaa, responding to written questions directed to Bayasgalan, said the issue with the Japanese loans had been resolved and that the bank hadn't defaulted. Bolormaa didn't address questions about record-deletion.

Bold and his brother haven't been accused of wrongdoing. Bold didn't respond to e-mails seeking comment. Boldkhuyag said his brother, as a government official, is unable to comment.

The third partner, parliamentarian Zorigt Munkhchuluun, said in an e-mail that he couldn't comment on Golomt because of his political position.

Chinggis Khaan

Golomt is a cornerstone of Mongolia's financial life. Its green neo-Classical headquarters sits between the Mongolian Stock Exchange and City Hall on Ulaanbaatar's Chinggis Khaan Square. The bank's 1,600 employees work in more than 80 branches in cities and towns across Mongolia's steppes and deserts.

By the mid-2000s, the founding partners sought an international banker to lead Golomt's expansion and woo foreign investors. In 2007, they hired John Finigan -- a U.K. national and trial attorney with almost four decades in banking -- as chief executive officer. Finigan had served as CEO of Middle Eastern lenders from the Qatar National Bank Group to the National Bank of Oman.

By the end of 2007, Credit Suisse extended a $10 million convertible loan to Golomt at nominal interest rates, premised on the bank selling shares to the public inside the facility's five-year term, according to letters between the banks.

Credit Suisse expected a 20 percent internal rate of return once the loan was converted to shares, said a person with knowledge of the deal.

The Abu Dhabi Investment Council, the emirate's sovereign wealth fund, came in with a $25 million loan on similar terms in June 2010, according to its correspondence with Golomt.

Swiss-Mo Investment

Golomt attracted others. In 2011, Swiss-Mo Investment AG, a fund controlled by U.K.-based Swiss multimillionaire Urs Schwarzenbach, paid $20 million for a 10.7 percent stake, according to a Nov. 9, 2011, Moody's report. In 2012, trading company Trafigura Beheer BV bought 5 percent of the bank. Together, those two investors also loaned about $55 million to parent company Bodi, according to loan documents.

Golomt's assets reached 2.5 trillion tugrik ($1.5 billion) by the end of 2012, an almost fourfold increase from 2007, according to the bank's website. Its annual return on equity was as high as 26.6 percent in 2010, according to the website.

Then came the default allegations.

On July 9, 2012, Tokyo-based Itochu Corp. filed a claim in Ulaanbaatar alleging that Golomt hadn't paid it on 18 letters of credit to the value of 3.42 billion yen -- worth $43 million on that day. The claim was equal to more than 30 percent of Golomt's capital as of Dec. 31, 2011.

'Dubious Nature'

It wasn't until October 2012 that Finigan, several board members, the bank's auditors and the overseas investors became aware of the Itochu court case, according to two people with knowledge of the discussions.

The subsequent probe by Dubai-based FSI found Golomt had acted as an agent in 2007 and 2008 for a Mongolian gold miner to purchase equipment (Mogi: Altan Dornod). Itochu, Japan's third-largest trading house, helped arrange the deal, with Golomt issuing letters of credit to Itochu.

FSI said Bayasgalan, who became Golomt's chairman after Finigan's arrival, had authorized the credit, calling it an "unusual transaction of dubious nature."

When asked to comment, Itochu spokesman Katsuhiko Hoshikawa referred to reports on his company's website that cited an internal investigation into a Mongolian corporate matter that didn't name the entities involved.

The trading house found that an Itochu sales manager and staff in the Ulaanbaatar Itochu office had colluded with Mongolian parties to carry out "financial assistance" to boost the cash flow of an unnamed company under the disguise of sales transactions, according to a Jan. 28, 2009, report on Itochu's website. People working for Itochu in Mongolia forged transportation documents to record the sales, Itochu said.

Records Removed

An Itochu staff member in Ulaanbaatar told Golomt that Itochu would guarantee the letters of credit, FSI said. It said the commitments were removed from bank records before the end of 2008, with Golomt's credit committee assuming the deal carried no risk for the Mongolian lender.

According to the final report on Itochu's site, the firm had to correct annual trading revenue for at least five years and write off at least 4.3 billion yen in costs associated with the Mongolian transactions. Itochu contacted Golomt and the gold mining company to collect on the debt, FSI said.

Bayasgalan led Golomt's talks with Itochu and the gold company over unpaid credit in 2009 and 2010 without notifying management or the board, FSI said. After three years of intermittent debt negotiations, Itochu sued.

Empty Seat

When Finigan revealed the Itochu court case to the board at an Oct. 9, 2012, meeting, Bayasgalan protested and denied the existence of letters of credit between Itochu and Golomt, according to two people with knowledge of the board.

Finigan began debt-settlement talks with Itochu and reported the matter to the central bank, these people said. Mongol Bank governor Zoljargal asked Finigan and Golomt to delay disclosure of unpaid loans, as Mongolia was about to sell its first international debt via U.S. dollar bonds, the people said.

Zoljargal, who became bank chief in September 2012 after serving as a deputy central banker, said in the interview that the central bank knew of the Itochu suit at the time it was filed but declined to discuss it, citing the confidentiality of the bank's investigations. He declined to comment on whether he sought to delay any disclosures.

At Golomt's board meeting in December 2012, foreign investors voted to oust Bayasgalan as chairman. He was replaced by Bold's brother. The empty board seat went to Bayasgalan's wife. After the meeting, Finigan departed for family reasons, the bank said in a Dec. 14 statement.

Wrongful Dismissal

Finigan is suing the bank in London for wrongful dismissal, according to two people with knowledge of the suit. Golomt has filed a criminal defamation case against Finigan in Mongolia, according to bank lawyer Bayaraa.

As the new board turned to wrapping up the 2012 financial year, it enlisted auditors Ernst & Young and then PricewaterhouseCoopers, who uncovered other problems.

In early 2012, Golomt extended debt guarantees to a budget airline, now known as Hunnu Air, PwC said in an August report to the board. Golomt acted as guarantor for the airline's lease of two airplanes, E&Y and PwC said in their reports. The guarantee was made without board members' knowledge, according to e-mails between members, reviewed by Bloomberg News.

Bayasgalan owned a controlling stake of the airline at the time, said a person with knowledge of Hunnu's operations.

'Devastating Development'

The guarantees, which the bank didn't report among its liabilities, would have pushed Golomt's credit exposure to Hunnu above the 20 percent capital limit to a related party as outlined by Mongolian law, according to the auditors' report. The auditors noted transactions of a similar nature with other companies.

Hunnu said by e-mail that it couldn't comment on transactions with Golomt. Bolormaa, responding to questions addressed to Bayasgalan, didn't address the airline issue.

Peter Markey, managing partner of Ernst & Young Mongolia Audit LLC, confirmed by e-mail that his firm had been asked to audit Golomt's results but declined to comment further, citing client confidentiality.

In March 2013, Ernst & Young Mongolia declined to sign off on Golomt's 2012 results, citing a lack of "appropriate audit evidence" and hidden liabilities regarding related companies. The uncovering of the debts meant that Golomt misrepresented its off-balance sheet exposure since 2008, the report said.

"This is a devastating development which can potentially lead to a dire outcome for the bank," Cutis, Abu Dhabi's representative on the Golomt board, wrote to the board and central banker Zoljargal on April 15. Citing "grave concerns" about bank management, Cutis resigned from Golomt's board.

Work Obstructed

In a June 28 report to Golomt's board, PwC said it found evidence that bank files and e-mails had been deleted. In August, it asked for board support to delve deeper, saying some Golomt managers were obstructing their work. That month, Golomt's board terminated PwC's services.

Matthew Pottle, a partner at PwC's Ulaanbaatar office, said he couldn't comment on client projects.

By September 2013, Golomt had yet to produce 2012 financial results audited by a top-four global accounting firm, a violation of the terms of both the Credit Suisse and Abu Dhabi loans, according to terms of those deals.

Arbitration Request

On Oct. 4, Credit Suisse said it was seeking arbitration to recoup from Golomt its $10 million loan with interest. Golomt owes the Swiss bank more than $22 million in all for failing to execute an initial share sale in the agreed time, according a Sept. 11 letter to Bodi and Golomt from Credit Suisse.

Bodi International has paid Credit Suisse $10.05 million, which covers the loan, according to David Norman & Co, Bodi's Hong Kong-based legal counsel. Credit Suisse said that money is part payment on the failure to do the IPO, according to its letters.

In November, the Abu Dhabi Investment Council also alleged breach of contract, notifying Golomt in a Nov. 11 letter that it is seeking $36.2 million in total from Golomt, including compensation for the lack of an IPO.

Golomt lawyer Bayaraa said the Abu Dhabi dispute is nothing more than "the result of a disagreement regarding the meaning and effect of certain terms which appear in the bank's loan agreement" with the Abu Dhabi fund.

Seeking $90 Million

Loans by Swiss-Mo and Trafigura to Bodi are also in default, according to loan documents and three people with knowledge of the situation.

Trafigura spokeswoman Victoria Dix said the company doesn't have any comment on Golomt. Swiss-Mo's vice president Gerhard Harnischberg said the fund doesn't comment on its investments.

In all, the foreign parties seek about $90 million from Golomt and Bodi, said the two people with knowledge of the bank's board. That's six times Golomt's 2012 post-tax profit.

Golomt delivered its 2012 audit on Nov. 8, when a Mongolian franchise of London-based BDO International Ltd. signed off on accounts provided by Golomt management. BDO's audit noted that Golomt had paid Itochu $1.2 million to settle the claim against it.

BDO didn't have access to the bank's financial status at the start of 2012, its report said, so it couldn't vouch for the "fair presentation" of Golomt's profit.

Altansukh Dalanbayar, the CEO of Ulaanbaatar-based BDO Audit LLC, said in a Jan. 22 interview that BDO had been "unable to access" previous auditors' working papers.

Dividing Bodi

In November, Moody's Investors Service and Standard & Poor's both stopped assessing Golomt's credit, citing lack of data.

The next month, Bodi's three founding families divided up the business, Boldkhuyag said, with Bold's family taking Bodi's insurance company, a high-rise tower in Ulaanbaatar and a financial institution called Sar Shine International.

Bayasgalan and Zorigt, the parliamentarian, retain Bodi International and the companies that fall under it, including Golomt, Boldkhuyag said. The asset division hasn't been officially announced.

The split came the same month that Mongolia sold nearly $300 million in yen-denominated Development Bank of Mongolia LLC bonds. In a Nov. 20 interview in Hong Kong, where Zoljargal had traveled for a roadshow to pitch the bonds, the central banker said Mongol Bank was satisfied with the results of Golomt's 2012 audit.

"The audit was questioned by the board. Now the issue is resolved at the board level," he said. "I think everything is going to settle down. It's not that there's something wrong with the bank itself."

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Ard Credit to Raise 600 Million in Private Bond Placement

January 30 -- Ard Credit Non-bank Financial LLC (Ard), subsidiary of Ard Financial Group (Ard Holdings) is pleased to announce a successful registration of its first private bond placement with the Financial Regulatory Committee of Mongolia. Ard is to raise MNT 600 million from insurance companies, banks and other institutional investors. This will enable Ard to expand its micro-lending activities using innovative distribution channels.

Ard is a microfinance institution operating in Ulaanbaatar, Mongolia. Ard has been incorporated in 2011 and is a subsidiary of Ard Financial Group, investment holding company. In the first half of 2013, Ard has attracted a group of experienced investors who specialize in microfinance and turn-around management, restructured its operations and developed its new business plan. With this new capital injection, experienced management team and innovative expansion strategy, Ard is in a favorable position to scale its operations and position itself as a leader in the market.

Ard Holdings operates primarily in the financial services industry through investments in leading industry players in Mongolia. By capitalizing on the expertise and the network of its founders it will engage in cross-border expansion as well.

Ard Holdings' subsidiaries are Ard Daatgal, the nation's 4th general insurance provider, Ard Credit, non-bank financial company, Monet Capital, one of the leading brokerage firms with an investment banking arm, and other strategic holdings in various companies.

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EIT Acquires Ard Daatgal, Ard Credit from InterGroup to Form Ard Holdings in Largest Merger in Mongolia's Financial Services Industry

January 31 (Ard Financial Group) Board of Directors of the newly founded Ard Holdings is pleased to announce a successful acquisition of Ard Daatgal and Ard Credit from InterGroup by EIT LLC or Equity Investment Trust (formerly known as Employee Investment Trust). This merger was structured as a combination of cash and stock transfers between EIT and InterGroup making the latter the single largest shareholder in the holding company.

This M&A is considered to be the largest to date in the financial services industry in Mongolia, producing a company with net asset value close to MNT 30 billion.

Ard Holdings will operate primarily in the financial services industry through investments in leading industry players in Mongolia. By capitalizing on the expertise of its founders it also will engage in cross-border investments.

Ard Holdings' subsidiaries are Ard Daatgal, the nation's 3rd general insurance provider, Ard Credit non-bank financial company, which is pioneering into internet based microlending, Monet Capital, one of the leading brokerage firms with investment banking, and the Institute of Engineering and Technology, a leading vocational training center in Mongolia. Ard Holdings is also a shareholder in XacBank, XacLeasing, TianRong MCC and TenGer Insurance through its minority stake in TenGer Financial Group.

InterGroup is a diversified holding company with operations in financial services, pharmaceutics, logistics and transportation, road construction, and building materials production.

EIT was originally founded to enable employee share ownership in XacBank. Gradually it expanded into various industries. It underwent a consolidation process then and is currently focusing on the financial services industry. It is owned by over 370 shareholders, including top Mongolian corporations.

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All lawyers of Mongolia to swear oath at nationwide ceremony

February 5 (news.mn) All lawyers, of the lawyers association, practicing in Mongolia are to swear an oath by the order of the President of Mongolia in a grand nationwide ceremony on February 12th. This is the anniversary of the day that the Constitutional law was enacted across the country. 

According to the order, the place and date for the lawyers' oath taking ceremony have been scheduled. Lawyers in Ulaanbaatar City and provinces will swear their oaths at the same time on the same day, between 11:40 am and 12:40 pm on Wednesday February 12th Wednesday. Practicing lawyers in Ulaanbaatar City will take part in the oath swearing ceremony in the Grand Hall of the Government House while local layers will take their oath in their respective local inter-sum court houses. 

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Mongolia to Create Pig Farms in Provinces

MONGOLIA, February 5 (The Pig Site) - Pig-raising farms will be created in Darkhan-Uul and Orkhon aimags in this year.

According to a report from the Ministry of Industry and Agriculture, the farm in Darkhan-Uul aimag will have four farms consisted of 80 sows each, and the Orkhon aimag - three farms with 80 sows each.

Furthermore, such farms will be created in Selenge, Bulgan, Khentii and Dornod aimags in 2015 and 2016 within a plan of the Ministry.

As of the 2013, the city had two farms with 320 sows each, and Tov province - one farm with 320 sows.

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Ulaanbaatar

Construction Work at CHP5 to Start in June, says Energy Minister M.Sonompil

February 4 (infomongolia.com) The regular and the first "Development Hour" meeting of the Year of Horse was held yesterday (February 03) at 03:00 pm, where authorities of the Ministry of Energy led by Minister M.Sonompil introduced the tasks to implement in 2014.

The year of 2013 was announced as the "Year of Cost-Effective Energy", so the 2014 will be focused on development, says Minister and in the frameworks, new energy source of 173 MW will be constructed with fund of 147.7 billion MNT (Tugrug) from State Budget, 50 million USD from Chinggis Bond and 180 million USD from Development Bank of Mongolia. Moreover, in the frames of new development program, a job of 93 billion MNT will be also done in 2014.

Also, the Ministry plans to accomplish the "Amgalan" Thermal Power Plant (Mogi: it's only a thermal plant, won't produce electricity) project with capacity of 300 Gcal/hour (348 MW), to expand the Thermal Power Plant III by 100 Gcal/hour (116 MW) and Thermal Power Plant IV by 180 Gcal/hour (209 MW), making a total of 588 Gcal/hour (683 MW) within this year.

As of regional energy supply improvement and its reliable operation, expansion works will be done at Choibalsan Thermal Power Plant, preparation works for construction of a 220 MW Hydro Power Plant at Eg River, Telmen Thermal Power Plant with capacity of 100 MW and as part of the development of the Tuul Songino water supply and wastewater treatment complex in Ulaanbaatar, the construction of a 50-100MW Pumped Storage Plant will be also started.

Apart of this, restructuring works will be done in 8 Aimags including Arkhangai, Bayankhongor, Dundgovi, Uvurkhangai, Khentii, Tuv, Zavkhan and Govi-Altai, and 24 billion MNT or 3 billion is budgeted for each Aimag to start the project.

In the scope of improvement the heat supply in Ulaanbaatar, the Thermal Power Plant IV is scheduled to be expanded by 100 MW preliminary that allows 40 thousand households or new 500 housings to connect with heating.

Moreover, the Government resolved to build the fifth source of Combined Heat and Power (Thermal Power Plant V) in the capital city, the document of cooperation with Contractor Company had been already established and construction works for TPP V will be started in June of 2014.

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Social, Environmental and Other

Foot-and-mouth disease breaks out in Sukhbaatar province

ULAN BATOR, Feb. 4 (Xinhua) -- An outbreak of highly infectious foot-and-mouth disease (FMD) in Sukhbaatar province in eastern Mongolia has been confirmed by the Mongolian State Central Veterinary Laboratory, local media reported.

Currently, 86 head of cattle of 15 herder families were infected with FMD and 82 of them were culled. Symptoms of FMD were observed in three sites, head of the district's veterinary department said.

Despite the efforts of the national emergency management authority and the provincial administration to contain the outbreak of FMD, the disease continues to spread in the country.

Mongolian officials are conducting testing and vaccination of livestock in nearby counties. Disinfection stations were set up on key traffic routes in the district.

All traffic to Sukhbaatar province has been blocked and only vaccinated students going to the capital city for studies are permitted to leave the province.

This was not the first outbreak of FMD in Sukhbaatar. Despite vaccination measures, the disease breaks out in the province every year.

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Swine flu infects 4 in Bayan-Ulgii province

ULAN BATOR, Feb. 3 (Xinhua) -- Mongolian health officials confirmed that four people have been infected with the H1N1 virus, also known as swine flu, in a remote western province, local media reported.

Nine people with suspected symptoms of the flu were discovered by a hospital in Bayan-Ulgii province, and four of them have tested positive for H1N1, said the report.

The confirmed cases involved two women and two infants.

The National Emergency Management Authority has decided to impose a week-long quarantine in the provincial capital, where schools will be closed and no public events are allowed to be held during this period.

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U.S. Non-Profit Research House Rand Corp. to Assist in Drafting Mongolia's Labor Policy

February 4 (infomongolia.com) In the scope of studying Mongolia's labor sector policy and formulating a long-term policy to adhere, the Ministry of Labor of Mongolia and the U.S. RAND Corporation have established an agreement of partnership in Ulaanbaatar on February 04, 2014.

The document was signed by Minister Ya.Sanjmyatav and Vice President, International at the RAND Corporation Charles P. Ries that aims to analyze the obstacle in the sector facing and find solutions to overcome.

RAND Corporation (Research and Development) founded in 1948 is an independent nonprofit organization to offer research and analysis to government agencies, foundations and private sectors on health, education, international relations, environment, security and public affairs.

The RAND has been helping to improve policy of the United States and other countries for over last 60 years through research and analysis, besides has an experience of partnership of over 20 years with developing countries such as China and Qatar.

The RAND Research Project for Mongolia will be coordinated by Professor at Harvard University, Howard J. Shatz and Louay Constant, Professor at University of Kentucky along with other 5 experts from the United States.

On behalf of Mongolian side, the Labor Research Institute affiliate the Ministry is responsible to co-implement the agreement and 5 experts from the Institute will be also included in the research group.

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Mogi: very nice maps explaining the World

40 more maps that explain the world: 3. When the Mongols took over the known world

January 13 (The Washington Post) --

The Mongol conquests are difficult to fathom. Although their most important technology was the horse, they conquered much of the known world from China to Europe, a series of wars that killed tens of millions of people, then a substantial chunk of the world's population. The Mongols also established what may well have been the largest empire in history until the British surpassed them six long centuries later. It's difficult to understate how much we still feel their impact today; the country we know of today as Iraq has never fully recovered from the 1258 sacking of Baghdad, which until then had been a center of global wealth and knowledge.

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The 1911 Revolution and the Frontier: The "Political Game" and "State-Building:" Outer Mongolia during the 1911 Revolution

By Feng Jianyong

February 3 (The Asia-Pacific Journal: Japan Focus) Editors' introduction by Joseph W. Esherick and C.X. George Wei. Frontier studies have long been a sensitive area for historical research in the PRC, largely because of the demands for increasing autonomy in Tibet and Xinjiang—movements that are regarded as "separatist" by the authorities. This sensitivity makes the study of the 1911 Revolution on the frontier particularly difficult, because it was precisely in 1911 that independence movements manifested themselves in Tibet and Mongolia. Both of these regions had been incorporated into the Qing empire, whose emperors acted as patrons of the Tibetan Buddhism revered by Tibetans and Mongols alike. In Mongolia, the Qing court confirmed the status of Mongols nobles, and intermarried with the families of Mongol princes. But the 1911 Revolution created a secular republic, which made these religious and feudal ties difficult to maintain. More importantly, the revolution was launched with an overtly Han nationalist agenda to "expel the northern barbarians, restore China" that left little political space for the political aspirations of other nationalities. As a result, both Tibet and Outer Mongolia declared independence after the Wuchang Uprising.

Here, Feng Jianyong explores the impact of the 1911 Revolution on Mongolia. He uses a three-cornered chess-match (boyi) metaphor to analyze the competition for influence in the region between the Chinese central government, Outer Mongolia, and the Russian empire. Feng's analysis is notable for the attention it gives to the national aspirations of Mongol elites, rejecting prior research that has regarded the Mongols as little more than unwitting tools of meddling Russian imperialists. While it is true that after the Russian Revolution, the Soviet Union became a sponsor of Mongolia's independence, Feng notes that in the period after 1911, Czarist Russia only supported Mongolian autonomy under a loose and ill-defined Chinese suzerainty. By taking seriously the political goals of Mongol princes and lamas, he is able to explore the links between the state-building process in the early Republic of China and in Outer Mongolia.

The year 1911 represents a significant milestone in the history of China. Under the banner of "expel the northern barbarians" (quzhu dalu), the Revolution of 1911 overthrew the traditional monarchy that had governed China for nearly two thousand years and established the Republic of China as a nation-state. Stimulated by this event, the nobles and lamas of Outer Mongolia launched an independence movement, announcing a separation from China and setting up the state of Great Mongolia. The independence of Outer Mongolia, an episode that challenged the construction of a unified Chinese nation-state, demonstrates the crisis of national identity in China's frontier regions. Because of the threat to China's frontiers and the involvement of the Russian government, past scholarship has often been founded on a kind of nationalist resentment. However, the construction of the Republic of China as a nation-state required the recognition of the new republican government by nationalities at home and abroad, to guarantee the legitimacy of the new government. Therefore, the former strategy of "establishing a state excluding the Manchus" was significantly outdated. The process of state-formation in Great Mongolia brought the issue of national identity among the frontier region's nationalities onto the political agenda.

Many scholars have published important studies of the government's frontier policy in the early years of the Republic of China from the perspective of modern nationalism and the construction of the nation-state.1 Other scholars have explored the impact on national identity of events in the frontier region.2 Obviously, much previous research was from a macroscopic perspective, focusing on the relationship between the central government and the frontier nationalities. This approach is insufficient to explain the origin and formation of national identity in the frontier regions, the reasons for Mongolia's break from China, or the impact of the central government's efforts to reunify the country.

Based on the above considerations, this chapter focuses on the issue of Outer Mongolia during the 1911 Revolution, from the perspective of the political history of the frontier region, and the "political game" involving Russia, the central government of China (both the Nanjing Provisional Government and the Beijing Government), and Outer Mongolia. It particularly addresses the following two issues.

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Munkhdul Badral Bontoi

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Email: mogi@covermongolia.mn

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