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ASX is on Holiday on Monday, January 3, 2011. Trading Resumes on Tuesday
Close: Mongolia Related ASX Listed Companies, December 31, 2010
ASX Recent Announcements of Interest
- Aspire Mining Ltd (ASX:AKM) - Becoming a substantial holder from SouthGobi Resources at 19.9%, December 31
Hong Kong’s Mongolian IPO Outlook
December 30 (WSJ) Hong Kong attracted its first Mongolian stock listing in 2010. Could a bigger, state-backed company be coming in the new year?
Only a few days ago, Mongolia’s government formed a holding vehicle for its stake in the massive Tavan Tolgoi coal deposit located near the southern border with China. That company, Erdenes-Tavan Tolgoi Co., will develop roughly half of the deposit located in the east Tsankhi area of the Gobi desert using contract miners. It will also negotiate with foreign investors on investing in and developing the west Tsankhi region while maintaining ownership of the entire deposit.
Tavan Tolgoi contains about 6.4 billion metric tons of coal reserves, making it the second-largest known coal deposit by reserves globally, according to Raw Materials Group of Stockholm.
Hong Kong’s stock exchange is considered a natural listing venue for Erdenes-Tavan Tolgoi because of its liquidity and attraction for investors with an interest in China plays. China is Mongolia’s biggest trading partner, and the region’s most voracious consumer of its iron ore, coal and other mineral resources.
How big could it be? A person familiar with the matter cites one investment bank’s estimate that the IPO could raise between $2.4 billion and $3 billion for 30% of the company, given the size of the reserves, the stage of development and a comparable valuation for Mongolia Mining Corp., a privately-held Mongolian miner that listed in Hong Kong in October. That would have made Erdenes-Tavan Tolgoi the third or fourth-largest listing on the Hong Kong stock exchange in 2010.
The Ulaanbaatar government is likely keen to push forward with a listing to raise money, and bankers are no doubt eager to earn the fees. The problem is, there’s a lot that needs to be done first. To start with, there’s the appointment of a contract miner to operate the mine. And it will take roughly $200 million to $300 million just in start-up costs to get the mine up and running, excluding the infrastructure. In Mongolia, that’s not small change. The government would probably need to raise those funds through an international bond issue. In April, Prime Minister Sukhbaatar Batbold said Mongolia would raise up to $1 billion in a sovereign bond offering this quarter but it hasn’t happened so far.
That could easily push a stock listing off into the first half of 2012 or beyond. Ulaanbaatar will be hoping global enthusiasm for China and frontier markets like Mongolia hasn’t run its course by then.
Mongolia Opens Coal Tract to Investors
December 29 (WSJ) Instead, the government is now giving strategic investors a chance to invest in and develop roughly half the deposit, in the western Tsankhi area. The government itself will spearhead the deposit's development in eastern Tsankhi using contract miners. It remains unclear when the project could begin production.
"It's a big change in the development strategy," a person involved in setting up the new arrangements said. The investors have until Jan. 17 to submit their proposals.
Under a contract-mining arrangement, the government is responsible for financing development of the deposit, including the cost of any related infrastructure such as roads, and retains the lion's share of earnings from selling the extracted coal. Contract-mining companies typically work for fixed fees.
In the new arrangement, strategic investors would front the cost of developing the coal deposits, sell the yield and pay a cut of their profits to the government. By bringing in investors to help develop the mine, the government would reduce the amount of money it needs to fork out up front, a major consideration given Mongolia's limited financial resources.
The land-locked nation of 2.7 million people has stirred interest among foreign investors and mining companies because of its vast, mostly undeveloped reserves of coal, iron ore, copper, gold and other minerals.
China's voracious appetite for commodities gives neighboring Mongolia a ready-made, nearby market for its exports, though other countries in the region also are eager to gain access to its natural resources. Coking coal, such as that found at Tavan Tolgoi, is a big draw because it is used in making steel.
On Monday, a consortium of four Japanese trading houses said they planned to bid to develop the Tavan Tolgoi deposits, spokesmen for the group said. The consortium includes Itochu Corp., Sumitomo Corp., Sojitz Corp. and Marubeni Corp. It wasn't clear if they planned to ask a mining company to join their bid. The four Japanese companies are considering inviting South Korean and Russian companies to join their effort, the spokesmen said. Anglo-Australian mining companies Rio Tinto and BHP Billiton declined to comment.
Meanwhile, state-run Korea Resources Corp. said it is leading a consortium of 10 South Korean companies, including Posco and Korea Electric Power Corp. in a bid. A spokesman for steelmaker Posco said the Korean group expects to join forces with the Japanese consortium. The power company deferred comment to Korea Resources.
China's Shenhua Group and Peabody Energy Corp. of the U.S. have shown interest in developing Tavan Tolgoi and are considered likely bidders now that Mongolia has changed its strategy. Shenhua couldn't be reached for comment. A spokeswoman for Peabody said, "We look forward to continuing to engage in the process to develop Tavan Tolgoi as the project evolves."
The government set a Jan. 27 deadline for expressions of interest from contract-mining companies that can help it develop the eastern Tsankhi deposits. The government hopes to extract 15 million tons of coal a year through contract mining, according to the person involved in the new arrangements.
The government said it would place a priority on choosing a contract-mining partner that has a "positive impact" on Mongolia's ability to list shares of the holding company for the Tavan Tolgoi project, Erdenes-Tavan Tolgoi Co.
The government intends to sell 30% of the company on an international exchange and has mentioned Hong Kong as a possible venue. Another 20% of the company would be sold on Mongolia's exchange, while the government would retain the rest. While preparations for the initial public offering are underway, it was unclear whether the offering could take place next year, the person involved in the arrangements said. Another person familiar with the process said the government will have trouble conducting the offering until the project is further along.
December 31 (The Dong-A Ilbo) Mongolia, the birthplace of Genghis Khan, has abundant mineral resources in its vast grasslands and deserts. The natural resources-rich country has large deposits of coal, copper, gold, uranium, molybdenum and tungsten. As of 2007, mineral production accounted for 33 percent of the country’s GDP and 78 percent of exports. With the importance of natural resources increasing, other countries are paying attention to the world’s 10th-largest producer of natural resources. Japan, which had difficulty due to China’s ban on exports of rare earth materials, is focusing on the development of the materials in Mongolia.
Korea Coal Corp. has bought half of Nuurst Khotgor mine in Mongolia. The open-pit coal mine is assumed to have 190 million tons of coal. A Korean consortium of eight state-run and private companies such as Korea Electric Power Corp. and POSCO will join hands with Russia’s state-run rail corporation to bid for the world’s largest soft coal mine in Tavan Tolgoi next month. The volume of coal reserves in six fields whose exploration is complete is an estimated 6 billion tons. The reserves up for bidding are believed to hold 1.2 billion tons. Fierce competition is expected from China and the U.S. in the bid.
Mongolia chooses Russia as partner because of its need to balance China
December 31 (news.mn) The plan to construct 1,100 km of railroad to connect Dalanzadgad, capital of the southernmost Omnogovi province to Choibalsan in Dornod province in northeastern Mongolia, is an entirely mixed political puzzle, writes Munkh-Ochir Dorjjugder in The Jamestown Foundation. Southern Mongolia is home to massive deposits of copper, gold and coking coal, conveniently located only 80 kilometers from its border with China, which is the largest consumer of these commodities. Northeastern Mongolia possesses large reserves of uranium and oil, which are still being estimated, but are strategically located close to both China and Russia.
Mongolia, Australia top 2010's strongest currencies
The Australian dollar was the world's best performing currency in 2010 - after Mongolia's.
December 31 (ABC News) The dollar, which was worth around 90 US cents this time last year, is now buying almost $US1.02 - a rise in value of around 13 per cent.
But CommSec says the Mongolian tugrik has posted the biggest rise, climbing around 15 per cent.
Like Australia, Mongolia is rich in resources and trades closely with China.
A strong recovery in commodity prices and relatively high interest rates in both nations have boosted their currencies.
The euro and the British pound have been among the year's worst performers, as the European Union still struggles to deal with its debt issues.
Japan to help Mongolia develop lithium projects
December 31 (news.mn) Japan and Mongolia will be jointly developing lithium projects starting in 2011, according to the Nikkei. The Japanese newspaper reported recently that the Mongolian Government, the Japan Oil Gas Metals National Corporation (JAGMEC) and the National Institute of Advanced Industrial Science and Technology of Japan will cooperate to develop lithium from the salty lakes of Mongolia.
Rare earths hold new promise for Mongolia
December 30 (news.mn) China controlling nearly 95% of rare earth minerals production globally and the possibility of demand exceeding supply in the short to medium term provides a strong incentive for Japanese, U.S. and European investment in Mongolian rare earth mining and the associated export infrastructure links, says a research note prepared by Eurasia Capital.
The U.S. Geological Survey stated in 2009 that Mongolia is the second biggest holder of REO (rare earth oxides) reserves in the world after China. The survey estimated that Mongolia has 31 million tons of REO reserves, or 16.77% of the world total, which the World Bank estimated to be worth of over USD10 billion.
However, Mongolian geologists and specialists argue that this is an underestimation and further exploration and study are needed. Mongolia possesses more than 5 major REE deposits, 71 occurrences and 246 mineralizations, and of these, the Lugiin Gol, Mushgia Khudag, Khotgor and Khalzan Buregtei deposits hold the most promise at a combined 6.6mn tons of estimated REO reserves.
REEs in Mongolia are still in the early stages of exploration and final reserves for any one deposit have yet to be estimated. REO Co Ltd, a Mongolian company, spent USD3.6 million exploring the Lugiin Gol deposit from 2005-2009, the most invested in any Mongolian REE deposit to date. Developing Mongolia"s most promising REE mines (Mushgia Khudag and Khalzan Buregtei) from exploration to oxide production will require more than USD500 million each, assuming all mines use joint REO processing facilities, costing upwards of USD300 million.
COAL RESERVE MIGHT INCREASE
December 28, Ulaanbaatar, Mongolia, /MONTSAME/ As of today, Mongolia is being ranked in first ten in the world by reserve of coal. The proved size of the coal reserve is 162.3 billion tons. The size might increase and will be detected by advanced research.
Coal has become the biggest export of Mongolia. It used to be the main resource of energy before. According to statistics, 7.5 billion tons coal is used worldwide a year. Some 40 per cent of them is used for producing energy, 93 per cent of energy resource is produced from coal in Mongolia. Moreover, the export of coal has reached here 28 per cent in the mineral resources export. The coal export is followed by copper concentrate (27 per cent).
Coal mines in Mongolia are extracting some 20 million tons a year today, but are able to extract 43 million tons. The Mongolian coal is exported to China. In future, Mongolia wants to export it to other countries through territories of the neighbors.
STANDING COMMITTEE BACKS MATTER OF RECEIVING LOAN (from IDA)
December 28, Ulaanbaatar, Mongolia, /MONTSAME/ The meeting of the parliamentary Standing committee on security and foreign policy discussed Tuesday a financial agreement on finance and payment for developmental policy, established between the government of Mongolia and the International Development Association (IDA). Accordingly, Mongolia will receive a loan of USD 12 million.
The Standing committee has argued over the loan's purpose. Head of the Standing committee Z.Enkhbold underlined that he cannot accept an opinion to exploit USD 30 million from the loan for training and seminars only. "The majority of the loan should be transferred into the section of technical-economic justification," Z.Enkhbold has said.
"We should back this agreement because credit term is good. We can exploit the loan for anything," a Minister of Finance S.Bayartsogt has stressed. He has said that "our side has consulted with the IDA on possibility of changing the consumption purposes", adding the government will introduce the updated purposes of the loan to the IDA.
The meeting resulted in the Standing committee's decision to back the matter on receiving the loan by declining a size of part of the loan for training and seminar
Mongolia to join Asian-African disaster warning system
December 31 (Xinhua) Mongolia has joined the Regional Integrated Multi-hazard Early Warning System for Africa and Asia (RIMES) to boost protection against natural disasters, according to a press release issued in Ulan Bator on December 30. The statement said Natural Environment and Tourism Vice-Minister Jargalsaikhan Choijantsan had signed an agreement with RIMES in Bangkok, Thailand.
The organisation is a regional body for the generation and application of early warning information.
Choijantsan is leading a Mongolian delegation to Thailand.
Mongolia, a landlocked country in central east Asia and an active earthquake zone, frequently suffers mild earth tremors. In 1957, a strong earthquake hit the Gobi-Altay region in southern Mongolia, killing at least 1,200 people and also injuring many others.
MERITUS MINERALS LTD. ANNOUNCES STOCK OPTION GRANT
Mogi: MER closed the year at C$0.19 in Toronto.
Dec. 30, 2010 (TheNewswire.ca) -- Vancouver, B.C.: Meritus Minerals Ltd. (OOTC:MERMF) (TSXV:MER) (MML)(TSX-V - MER)(the ‘Company") is pleased to announce that, subject to regulatory approval, it has granted 1,550,000 stock options to directors, officers and consultants of the Company. These options will be exercisable at $0.18 for a period of five (5) years from the date of granting.
NUMBER OF INT'L AIRPORTS TO INCREASE
December 31, Ulaanbaatar, Mongolia, /MONTSAME/ In accordance with a decision of the cabinet, the airports in Choibalsan (Dornod aimag), Khovd (Khovd aimag), Dalanzadgad (Omnogobi province) and Moron (Khovsgol aimag) will become international airports for passenger and freight.
The airports in Dalanzadgad and Moron will start working with this status from May of 2012. As the government expects, international flights will be done from Ulaanbaatar through these aimags, and the air relations will be expanded with the neighbor countries' cities, which is evencually will boost the regional trade and economic collaboration.
DRAFT LAW ON DEVELOPMENT BANK BACKED
December 31, Ulaanbaatar, Mongolia, /MONTSAME/ The cabinet has discussed a draft law on the Development Bank (DB), and decided to submit it to the State Great Khural, reflecting opinions pf the Ministers.
An investment from the government to be made for the industrial sector through the DB will stand at 16.7 billion by the end of 2010. It is expected that it is possible to increase the economic growth by one per cent in every investment of MNT 100 billion in case of making investments through the bank to the mining and its infrastructure sectors. The government will issue credit guarantee for the DB, and the bank will directly finance effective projects.
To be financed through the DB, the infrastructure and heavy industry are to have a great importance in intensifying the country's development, boosting the processing industry, refining upon the forms of the Gross Domestic Product.
Capital of the state-owned DB consists of the state budget and dividends of the state-belonging shares owned by jurudical persons on strategically important mineral deposits.
"NEW GREAT CONSTRUCTION" PROGRAM TO BE INTENSIFIED
December 31, Ulaanbaatar, Mongolia, /MONTSAME/ The cabinet on Wednesday discussed and then approved an activity plan for implementing the "New great construction" middle-term targeted program.
In accordance with the plan, great works are ahead. The Premier S.Batbold has ordered the Ministers to finish a preparation for the works by March of 2011 and control over the monthly meetings of a related working group.
In a scope of the "New great construction" program, the cabinet has put some goals--to increase constructions for urban development and planning, infrastructure, to support education, rural development and industry, and to ease a migration within the country. The cabinet also wants to prepare national specialists, engineering and technical workers, and to attract the Mongolian specialists who are working abroad, to realize the projects of new construction. Moreover, the cabinet will support supply of apartments, attract investments to engineering and infrastructure, and will create an opportunity to ensure the equal participation of private sector.
The metallurgical factory in Darkhan city will be renovated so as to make it produce 500 thousand tons of steel a year, and a technology will be introduced for smelting and sorting iron.
The city's Mayor and governors of aimags have been tasked with determining locations for apartment micro-districts, roads, bridges, engineering lines and other constructions reflected in the program. With aims to introduce the latest progressive techniques and technologies and to create national enterprisers having professional and skilled staffers, comprehensive support will be rendered to domestic entities in the great construction.
RULE ON HUMAN DEVELOPMENT FUND ALTERED
December 31, Ulaanbaatar, Mongolia, /MONTSAME/ The cabinet meeting held Wednesday altered some clauses of the rule on disbursing capital of the Human Development Fund (HDF).
Financing of the benefits to be delivered in cash will be transferred to the HDF account of the aimags and districts' social welfare organizations; financing of the benefits for tuition fees--to the state account for education; benefits for health insurance --to account of the health insurance funds in aimags and districts.
In addition to it, the cabinet decided to create additional staffs in the state administrative organization for social welfare and in social welfare services in the city, districts and aimags with an aim to reduce load on delivering the HDF benefits.
Roads, bridge to be built in Ulaanbaatar with MCC funds
December 31 (news.mn) The Ulaanbaatar Mayor’s Office recently signed a Memorandum of Understanding (MoU) with the Millennium Challenge Account Mongolia (MCAM) on a highway project that includes a 3.4-km road from the Uliastai intersection to the Bayanzurkh checkpoint, a 20.9-km road to the Nalaikh district and a new bridge over the Tuul river. The city office will be responsible for engineering, geological and hydrological studies, geodetic measurements, environment impact assessments, and detailed design drawings. MCC funding will be used to provide technical assistance to improve road maintenance.
The MCAM is already implementing the following road projects:
- Construction of an all-weather road from Choir to Sainshand,
- Repairing and improving the Bayanzurkh bridge,
- Construction of a new bridge near the existing Bayanzurkh bridge,
- Repairing and improving the road from Ulaanbaatar to Nalaikh, and
- Technical assistance activities.
Asia Foundation launches environment program in mining
December 31, (news.mn) The Asia Foundation has launched a new environment program called “Engaging Stakeholders for Environmental Conservation” (ESEC).
This three-year program will engage stakeholders and citizens to directly address the development of Mongolia’s mineral sector and key challenges the country is facing in protecting its natural resources from the adverse effects of industrialization and climate change.
An event to launch the program was attended by representatives from the President’s Office, several Ministries, the Embassy of the Netherlands, and Ms. Meloney C. Lindberg, Country Representative of The Foundation.
The program aims to advance responsible mining with the help of key government partners, including the Ministries of Nature, Environment and Tourism, of Mineral Resources and Energy, and of Education, Culture and Science. ESEC will also continue to support the Responsible Mining Initiative for Sustainable Development, and the Mongolian Nature Protection Civil Movements Coalition.
'Hospitality' taken to new levels / Vet helps set up medical centers for Mongolians with hepatitis
December 31 (Yomiuri Shimbun) Nobuyuki Nozawa has been fascinated by Mongolia since he was a child--particularly its people's nomadic lifestyles--but not even he could have foreseen he would end up helping combat viral hepatitis in Ulan Bator.
The 55-year-old veterinarian has helped establish two facilities there to detect and treat viral hepatitis, with the most recent, the Interferon Alpha Hospital, opening earlier this month.
Nozawa and many others contributed money to establish the Happy Veritas medical center which opened two years ago.
Happy Veritas has since tested about 13,000 people for hepatitis; of those, about 70 percent tested positive for either the B or C strains.
It soon became apparent a hospital was also needed to treat hepatitis patients, and Nozawa invested 100,000 dollars (about 8.2 million yen) to help open Interferon Alpha Hospital in the same building as Happy Veritas.
The hospital, which opened on Dec. 16, has 10 staff and 12 beds. Amarsanaa is its president.
<Mogi & Friends Fund A/C>
Mogi & Friends ends the year with 108%
Mogi & Friends Fund is a tiny fund of A$21.8K I created with a few friends to put my own (and a few friends’) money where my mouth (just mine) is.
Since the Fund was launched in late September with just $6K, we’ve more than tripled the fund’s initial capital, invested in 3 stocks so far, and has ended the year with over double the return.
The fund owes a great deal to the tremendously successful Haranga Resources. The fund thanks everyone behind Haranga for the chance to invest in the company.
Happy New Year to all our fund investors. 2011 will be an even more successful year.
· I personally and through my “Mogi & Friends Fund” hold 75,000 HAR shares in aggregate.
· Jason Peterson, CPS Securities Director, holds shares (approx. 6,500,000) and options (1,000,000) in HAR.
· CPS holds 500,000 options in HAR for corporate advice provided to HAR – Jason Peterson is a 33% shareholder in CPS.
· CPS and CPSI directors and employees hold shares in HAR and may buy and sell these shares as and when they see fit.
· Jason Peterson is a non-executive director of HAR but not involved in the day to day running of HAR.
· CPS has received an IPO management fee of $250,000 and a 5% fee for any funds placed to its clients under the prospectus.
· HAR has paid for Jason Peterson’s travel and accommodation expenses to and in Mongolia – this must be disclosed as a soft dollar commission.
· Please refer to the prospectus for further disclosures.
"Mogi" Munkhdul Badral
CPS International LLC
Suite 906, Central Tower
Sukhbaatar District, Ulaanbaatar
CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSL License Holder. To trade ASX and international stocks, feel free to contact me at firstname.lastname@example.org or +976-99996779.