Multinational investment banks are after Erdenes Tavan-Tolgoi

The world’s top investment banks furnished their proposal to get involved in the IPO of Erdenes Tavan Tolgoi prior to closing of the tender announced by the government, due on 31 January 2011. Below is the list of investment banks submitted their proposal to the tender:


Bank of China
Jefferies and Company
Standard Chartered bank
Barclays Bank
ING
Bank of America - Merrill Lynch
Morgan Stanley
UBS
HSBC
Credit Suisse
Macquarie
BNP Paribas
CITI
JP Morgan
Goldman Sachs
Deutsche Bank

Mr. Enebish B, CEO of “Erdenes Tavan Tolgoi” LLC said, “The world’s giants are interested in. A Lot will depend upon us” and continued about current situation of Tavan Tolgoi deposit that “ company has been pursuing to mine 1-2 million tons of coal this year, 5-6 million tons in next year, then 15 million tons of coal after 4-5 years. Also highlighted that, “Erdenes Tavan Tolgoi” LLC is planned to export raw coal during first 2 years until coal washing plant built according to their approved business plan.

Source: BDSec

Work on Oyutolgoi ahead of schedule, Ivanhoe reports

Ivanhoe Mines has reported a narrower third-quarter loss and said full-scale construction at the Oyu Tolgoi copper and gold mine is progressing ahead of schedule. For the quarter, the company posted a loss of USD24.9 million versus a net loss of USD69.8 million a year ago. The Vancouver-based company reported quarterly revenue of USD6.6 million, mainly from its Ovoot Tolgoi coal mine in southern Mongolia. It expects to begin initial production of copper and gold at Oyu Tolgoi in late 2012. The company said discussions with a group of international financial institutions on a separate debt financing package are progressing and are expected to close in the first half of 2011.

Mongolia- Russia-China Border Railway Commission holds annual meeting

The Mongolia- Russia-China Border Railway Commission meeting began in Ulaanbaatar on Monday. This annual conference has been held since 1956 with the three countries playing host by turn. The Russian team was led by the A.I. Chernikh, Chief of the Transportation Center of the Sibir Railway, and the Chinese team by Ma Tsyan Fei, Deputy Chief of Chinese Railway Transportation.

Briefing media, Chernikh said that they had exchanged views on how to improve services, and reviewed implementation of the decisions reached at last year’s meeting in Khuhhot. Freight and passenger train transportation would be thoroughly discussed. 1.5 million tons of freight has passed through Mongolia-Russia borders so far this year. The Russian Railway has been reformed and the private sector is now very active.

D.Jigjidnyamaa of the Ulaanbaatar Railway added that the conference was focusing on technical issues and also discussing revision of border crossing and customs procedures. He said increased freight rates have had no effect on the volume transported but the work load relating to freight transfer in Zamiin-Uud and Ereen has to be eased.

“Discover Mongolia 2010”

“Discover Mongolia 2010” on September 8-10

 The Organizing Committee of Discover Mongolia has announced that the 8th annual International Mining Investors Forum will be held in Ulaanbaatar on September 8-10. “Mongolia is an exciting frontier in minerals industry where world class deposits are being discovered. Among them are the massive Oyu Tolgoi copper-gold deposit and Tavan Tolgoi- the world’s largest undeveloped coking coal deposit and many others” said Mr. Ankhbayar Gurdorj, Chairman of the Organizing Committee.

Mongolia welcomes investment in minerals business, and “Discover Mongolia” International Mining Investors Forum remains a resourceful base to launch and expand businesses, establish new contacts, learn of the latest developments and make deals.

In 2009, the 7th “Discover Mongolia” Forum was organized by the Mongolian National Mining Association alone, but this year, the founding members have decided to help in the efforts of the MNMA to add more value to the Forum and reinvigorate the business and entrepreneurial spirit among the participating investors by boosting the quality, content and scope of the Forum events.

Push to draw Chinalco into Oyu Tolgoi project

The governments of China and Mongolia are discussing a potential labour agreement which, if finalised, will transfer 2500 Chinese to work for the copper-gold mining project Oyu Tolgoi in Mongolia, the 21st Century Business Herald reported yesterday.

A person involved in the talks, who was not named, said the earliest a decision about whether Chinalco could participate in the development of the Oyu Tolgoi project may come next month.

If the government labour agreement is signed, the person said in the report that the chance for Chinalco to take part in the project would be higher.

Chinalco is now an indirect participant of the mine because it has roughly 9 per cent stake in Rio Tinto, which has a 22.4 per cent stake in Ivanhoe, the operator of Oyu Tolgoi project — the largest under-developed gold-copper mine in the world.

Rio has an option to increase its stake in Ivanhoe to 46.6 per cent eventually. Ivanhoe Mines has increased the expected production from the $US4.6 billion ($5.1bn) Oyu Tolgoi copper and gold mine in Mongolia.

 

It puts average annual output from the South Gobi desert mine at 540,000 tonnes of copper and 670,000 ounces of gold over a 27-year life, with first production in 2013.

 

Ivanhoe executive chairman Robert Friedland has said the company expects these results will continue to improve to where Oyu Tolgoi will rank alongside Grasberg and Escondida.

 

Ivanhoe has appointed Citi to review its options, including debt or equity raisings, sale of subsidiaries, project financing or other corporate transactions.

   

Source: business-mongolia

SouthGobi to repurchase 2.5 million common shares

The Board of Directors of SouthGobi Resources has authorized a share repurchase program to purchase up to 2.5 million common shares of the company on each or either of the Toronto Stock Exchange and the Hong Kong Stock Exchange, in aggregate representing approximately up to 5 million common shares or 2.7% of the current outstanding common shares of the company. The share repurchase program will commence on June 15. The Board decided on the repurchase program “as the current market price may not reflect the underlying value of SouthGobi"s common shares”. The program is not expected to impact on SouthGobi"s growth plans.

Mongolia and China sign documents

The sides have inked some documents after the negotiations between Mongolia and the People's Republic of China. Firstly, the officials of the sides signed a Mongolia-China inter-governmental treaty on the Mongolia-China boundary regime and an inter-governmental agreement on the economic and technical cooperation.

 The countries also inked governmental exchange of notes on founding a street named after Beijing with money of a non-refundable aid rendered from China's government and inter-governmental protocols "On resuming and altering the agreement of mutual recognition of educational certificates and academic degrees", "On implementing the Mongolia-China inter-governmental agreement on cooperation in customs and mutual assistance, established September 7 of 1993" and an inter-governmental protocol on exchanging information between the General Customs Offices of Mongolia and the PRC.

 

Special loan agreements were inked between the countries for a sub-project of buying a locomotive in frames of the project on improving infrastructure of the railways' rolling stock to be financed with a soft loan of USD 300 million from the Chinese government, and for improving an infrastructure of Zamyn-Uud soum with this soft loan from China.

 

The bilateral final document is a mutual understanding memorandum between Mongolia's Nuclear Energy Agency and the PRC's National Nuclear Corporation on cooperation in the spheres of radioactive minerals and nuclear energy.

 

Source: Montsame

Mongolbank made request from the Government to refund “Anod” shareholders

Last week, Standing Committee on Economy held meeting and discussed three issues. First, to discuss the draft law on prohibiting issuance of exploration licenses, initiated by the President of Mongolia; MPs of Standing Committee voted for the draft laws to be discussed by the State Great Khural.  Second, Mongolbank and the Financial Regulatory Committee made a statement and proposed to the Standing Committee to refund Anod shareholders’ money 5.2 billion MNT. MPs of the Standing Committee reviewed the statement and suggested to made decision independently or to propose officially to the State Great Khural.  The last issue was on accredit of US$200 million by a former President of Mongolbank, MP O.Chuluunbat. Due to this non-secure accredit Mongolia would suffer notable loss. According to Mr. L.Purevdorj, President of Mongolbank, the legal sues are being held at two courts, one is in favour to the Mongolian side.   Source: business-mongolia

Mongolian mining companies to attend event at London Stock Exchange

The London Stock Exchange will hold a Mongolian Mining Companies’ Day on June 8. Northernsec is behind the event and its Director, B.Ulziibayar, gives more information on the planned day.

Why is such an event being organized?

We felt our domestic mining companies must be able to access investment and financing from foreign sources. Their needs for large amounts for long periods cannot be met from inside the country. The event will help bring them and investors together. 

How many companies have expressed interest?

We already have 20 confirmed registrations. 

How is the preparation work going?

Registration is being done in our company’s office in Ulaanbaatar. The London Stock Exchange is also active. The Ministry of Minerals and Energy, the Mineral Resources Authority and the foreign investment office have offered help and cooperation. 

What do companies have to do to participate?

There are no selection requirements as such. Companies which need visas should send their details of their company and project to info@northern-securities.com before May 21. Companies which don’t need visas can register in June, too. Interested companies can get further information from dialing 310-262.

Who first had the idea and how did the London Stock Exchange receive your proposal?

Last October we successfully organized a workshop in Ulaanbaatar on new ways of raising capital, in cooperation with the London Stock Exchange and the New York Mellon Bank. So the exchange already knew of the problems and the possibilities and favorably considered our proposal to organize a special day. We expect several international financial organizations to attend the event. They include J.P.Morgan, ING Bank, Citibank, Credit Suisse, Deutsche Bank, Bank of New York, Morgan Stanley and Nomura.

Northensec works as broker, dealer and underwriter and is a member of  the Mongolian Stock Exchange. It was established in 2007 and is offering new financial services in Mongolian stock market. It also facilitates Mongolian customers to trade on international stock market.

Source: http://www.news.mn

Itochu targets Mongolian coal to expand trade

Itochu Corp., Japan’s fourth-largest trading company, has invested in Winsway Coking Coal Holdings Ltd. to secure coal from Mongolia, stepping up competition with China and Russia for the steelmaking ingredient as prices jump, says a report by Bloomberg.

Itochu joined a group led by Hopu Investment Management Co., the $2.5 billion fund run by Goldman Sachs Group Inc. partner Fang Fenglei, in investing in Winsway with the purchase of $10 million of convertible debt last month, Ken Tezuka, manager of the company’s coking coal section, said in an interview in Tokyo. Winsway, based in the British Virgin Islands, transports coal from Mongolia to China.

China Shenhua Energy Co. and Russia’s government-run ARMZ Uranium Holding are seeking access to coal and energy assets in Mongolia, the home of some of the largest undeveloped mineral resources in the world. Itochu wants to add Mongolian assets to its operations in Australia, Indonesia and North America as prices climbed to a near record this year.

“The current levels enable Mongolian coal to sufficiently compete against coal produced in other regions,” Tezuka said May 14. “Mongolian coal wasn’t viable to export when prices were around $30 and $40” a metric ton.

Winsway has expanded sales recently by investing in trucks to carry coal from mines in Mongolia, including one close to the $2 billion Tavan Tolgoi coal deposit, Tezuka said.

Mongolia’s coal exports to China may climb to about 12 million tons this year from 8.5 million tons in 2009, Alexander Molyneux, the chief executive officer of SouthGobi Energy Resources Ltd., said last month.

China bought about 4 million tons of coal in total from Mongolia in 2008 out of national production of 10 million tons, according to a March 18 statement released by Japan’s Ministry of Economy, Trade and Industry.

Mongolia will develop its biggest untapped uranium field in a venture with Russia. State-owned KOO MonAtom will hold at least 51 percent in a venture with ARMZ Uranium and possible partners from Japan or China, Bayarbayasgalan Tudevbazar, nuclear materials chief of Mongolia’s Nuclear Energy Agency, said last month.

SouthGobi halts plan to build rail link to China border

SouthGobi Resources has halted its plans to build a rail link between its pit in southern Mongolia and the Chinese border because of uncertainty over government policy. Instead, it will concentrate on upgrading a road link in the deserts to the border.

CEO Alexander Molyneux said the Mongolian government is reviewing the nation’s entire railways policy, and “given the question marks over the policy, we decided to suspend work on the rail link”. SouthGobi had earmarked $150 million to develop rail and road links near its Ovoot Tolgoi mine.

Source: http://www.news.mn

Stock exchange to be restructured under contract

The Government yesterday approved draft proposals on selecting a management team to restructure the operating procedures of the Mongolian Stock Exchange (MSE). They have been forwarded to the State Property Committee for beginning the tender process of selection.

The bidders have to be a legal entity or a consortium of such entities. Members of the administrative team must have experience of working in the securities and capital market, especially in countries that have made the transition to a market economy in the recent past and that still do not have a comprehensive securities market environment in place.

A bidder will have to submit a detailed 3-year business plan to cover four principal areas: Facilitating a sustainable securities market; facilitating efficient operation of the securities market; establishment of a fair market; and protecting investors’ interest.

The State Property Committee has been asked to complete the competitive selection process within 3 months. There will be no dilution of state ownership, and the management team will run the MSE on the basis of an administrative contract.

Cash Minerals to buy uranium properties in Mongolia

Cash Minerals Ltd has entered into a Heads of Agreement with East Asia Minerals Corporation to purchase a 100% interest in EAM Exploration LLC, a wholly owned subsidiary of East Asia that owns a portfolio of very prospective uranium properties inMongolia.

The project portfolio includes seven properties, Ulaan Nuur, Ingenii, Enger Ar, Sevsul Bulag, Hutul, Unegt and Bukht Uul, totaling approximately 155,500ha. Three of the properties, Ingenii, Ulaan Nuur, and Enger Ar have historic Soviet uranium resources totaling approximately 25 million pounds of uranium. Drilling by East Asia in 2006 and 2007 confirmed the presence and grades of historical uranium intersections. Mineralization is open and there is good potential to expand the mineralized zones and delineate resources which are likely to be amenable to In-Situ-Recovery.

Cash Minerals will pay to East Asia US$2,000,000 in cash upon signature of the Definitive Agreement and issue East Asia that number of common shares equal in value to US$1,000,000 to be determined upon the date of entering into the Agreement. The company will grant a 1.5% Net Smelter Royalty to East Asia on all properties; a previously existing 1.5% NSR applies to the Enger Ar property.

Mongolia to decide soon on uranium JV with Russia

The Government of Mongolia could soon decide on establishing a joint venture with Russia to develop a Mongolian uranium deposit, the head of the Russian civilian nuclear power corporation, Rosatom, said on Tuesday. At a meeting with Russian Prime Minister Vladimir Putin in the Black Sea resort of Sochi, Sergei Kiriyenko said that Russia had signed an intergovernmental deal on the uranium joint venture early in 2009 but the project stalled due to the change of government in Mongolia. 

"Already after the election, we signed an agreement with the new government and in January signed a specific protocol. The government of Mongolia has made a decision on the Dornod-uranium deposit. This deposit is in the ownership of the government of Mongolia," Kiriyenko said. He added that Russia had transferred all the constituent documents on the joint venture to the Mongolian side and the secretary of the Mongolian Security Council has confirmed to Rosatom that a final decision on contributing the deposit to the joint venture would be made soon.

Kiriyenko said work on the deposit could be launched quickly as the deposit was located 300 km (186 miles) from Russia"s neighboring Chita Region where a mining enterprise was situated and whose specialists and equipment could be used in the uranium deposit development.

Rosatom increased production of uranium by 25% in 2009 and has set the task of increasing uranium output by at least 11% in 2010, Kiriyenko said.

Finance Minister explains proposed graduated royalty rates

The Government yesterday decided that a bill to amend the Law on Mineral Resources should be submitted to Parliament for approval. The draft proposes graduated royalty rates to replace the 68 percent windfall tax. Minister for Finance S.Bayartsogt explained the provisions in the draft to media and then answered questions.

The draft was prepared after considering suggestions from the Mongolian National Mining Association and entrepreneurs and companies operating in the mining sector. Not all of these were accepted.

What does the Government want?
The Finance Ministry studied many types of taxes and then formulated the present draft. There will be a basic five percent royalty fees on every mineral commodity. This will be raised by one percent, up to a maximum of 5%, as commodity prices increase. When a ton of copper ore costs USD 5,000 or less, the royalty payable will be the basic 5 percent. When the price reaches USD 6,000, the royalty will become six percent. Rising gradually, the royalty will be 10% when prices exceed USD9,000.

As for gold, the basic rate will apply until price per ounce is below USD 900. It becomes six percent when the price reaches USD1,000, seven percent at USD1,100, eight percent at USD1,200 and 10 percent if the price exceeds USD1,200.

For zinc it will be 5 percent for below USD 2,000, 6 percent at USD2,500, 7 percent at USD 3,000, 8 percent at USD 3,500 and so on.

Royalty on molybdenum will be 6 percent when the price per ton is USD40,000, 7 percent when USD45,000, 8 percent when USD50,000, 9 percent when USD55,000, and 10 percent when it crosses USD 55,000.

Coal will be in two groups - raw and processed. In the case of the first, royalty will be 5 percent when the price is USD 25 per ton, six percent when USD35 per ton, 7 percent when USD 45, 8 percent when USD 55, 9 percent when USD65 and 10 percent if the prices exceeds USD65 per ton. As for coked coal, it will be 5 percent for price below USD100 per ton, 6 percent for USD130, 7 percent for USD160, 8 percent for USD190, 9 percent for USD210 and 10 percent if the price is above USD 210.

He said the royalty graduation will not affect the Oyutolgoi mine.

Source: http://www.news.mn/

Mongolian companies unite to work at Tavantolgoi

Some 700 Mongolian companies have come together to stake their claim to work in Tavantolgoi in the face of the Government’s perceived lack of support to domestic enterprises. Their union is called “Mongol 999+”. The leadership is still tentative about their course of action but believes that support from more companies would mean more openness and fairness.

They do not use the word “consortium” for their union. Every company must pay MNT 1 million to join 999+. The plan is to use the total money collected as capital for a company where all members will have shares.

The whole thing is full of risks. A great deal of money is involved and there is no clear thinking on future plans. What will happen if they are not chosen to work in the project? The authorities are certainly not happy.

Our politicians talk about revolution, but it seems the business sector is showing the way.

D.Zorigt: Draft Tavantolgoi project to be submitted to Security Council next week

Minister for Minerals and Energy D.Zorigt answers questions on the situation regarding Tavantolgoi.

What was the decision of the Government?
The Government decided to submit the draft to the National Security Council. The mine will be owned by the state fully. Operator and marketing company will be selected. It will also be responsible for production and investments. Furthermore, the participation of domestic companies will be ensured. There is a special reference in the contract to support the value added production. The documents will be presented to National Security Council next week. It will decide how to settle the problem. The Government will discuss it again before submitting to the Parliament.
What about the company selection?
Mongolian and foreign companies will participate according to the selection procedures. They must have technical and mining experience, and use environmentally friendly technology. We will also study whether accidents happened in the history of the company operation. Their treatment towards the environment and the company’s history will be studied. More detailed information will be given when the Parliament begins discussing it.
What about the advance payment?
It will be more than Oyutolgoi’s advance payment. We will work on this. But it is too early to give a certain figure because the negotiations have not started.

Mongolia trades with 103 countries

Total expenditure and net lending of the General Government budget reached MNT 664.0 billion reflecting an increase of MNT 223.2 billion and 50.6 per cent, against the previous year.

This was mainly due to increase of MNT 82.6 billion or 46.1 per cent in subsidies and transfers. Spending of MNT 41.4 billion on capital expenditure as of the first quarter of 2010 was higher by MNT 13.6 billion or 49.2 per cent over the same period of the previous year. Increase in capital expenditure was due to an increase of MNT 17.1 billion or 72.5 per cent in domestic investment of internal sources.

As of the first quarter of this year, Mongolia traded with 103 countries from all over the world and total external trade turnover reached USD 1076.2 million, of which exports made up USD 499.0 million and import did USD 577.2 million. External trade balance in the first quarter of 2010 showed a deficit of USD 78.2 million and increased by USD 6.7 million or 9.3 per cent, against the previous year.

Against the previous year, total external trade turnover increased by USD 360.0 million or 50.3 per cent, of which exports by USD 176.7 million or 54.8 per cent, imports by USD 183.3 million or 46.6 per cent respectively. Compared with the same period of the previous year, total export increased due to increase of 4.9 times in value of zinc concentrate; and of 3.0 times in value of iron ores; and of 1.9 times in value of flour spare ores and concentrate, and of 5.0 times and 5.6 times in value of coal and crude petroleum oils, respectively.

 

Source:Montsame

Parliament spring session opens

Mongolia's national revenue has increased three times in the past five years. Mongolian economy is possible to increase this year more than eight percent than planned despite a bad situation in the country's agricultural sector, Parliamentary Speaker D.Demberel said at his remark at an opening of the spring session of parliament on Monday.


Prices of our mineral resources tend to rise from the previous year. A preparation for possessing strategically important new mineral deposits and putting them into economic circulation are principally completed on government level," he added.

"About MNT 500 billion is budgeted for investments and other actions in 2010. In addition, MNT 30.1 billion will be spent on development of small- and medium-sized enterprises, 20.6 billion on supporting employment and 9.5 billion on implementing 'Mongolian Livestock' program," Mr Demberel stated.

The Speaker urged to help herders who have been suffering from unexpected natural calamity. He underlined the importance of immediate support from the state and government in eliminating losses caused to the animal husbandry.

"Parliament plans to discuss 28 package issues this spring session. In total, some 100 bills and resolutions are expected to be discussed by parliament", he said.

Source: Montsame

Hong Kong-listed firm buys stake in Mongolian coal property

Kiu Hung Energy Holdings, formerly known as Kiu Hung International Holdings, intends to acquire a 19.99% stake in First Dean Holding, a coal firm based in Mongolia, for HKD1.4 billion.


The Hong Kong-listed firm will pay HKD3.58 million in cash and will pay another HKD209.2 million by issuing 523 million new shares at a price 33.3% more than its closing price before shares were suspended from trading. The new shares will account for 10% of the enlarged capital. The remaining HKD1.22 billion will be paid by issuing two batches of convertible bonds.

Source: news agency