Mongolia Business and Mongolian Daily Business News

Nuclear Energy Law implementation and enforcement is not satisfactory. The Cabinet Meeting discussed the enforcement and implementation of the Nuclear Energy Law of Mongolia, during the irregular meeting of Cabinet Ministers. Uranium license holding foreign companies raised notable fund from the foreign capital market. According to the Nuclear Energy Law, if uranium deposit license holder transfers its 5 or more percent of total share, it shall seek approval from the Nuclear Energy Authority.

“…the Government decides to advertise the related laws to the public in order to raise awareness. Because it is important that the mining companies to know that if any uranium license holding companies try to transfer its equity of 5 or more percent, they should seek approval from the Nuclear Energy Authority…” it said in its report.

The Mineral Wealth Council of Mongolia held meeting on “Toson Uul – XIX” oil field in Tamsag basin of Dornod aimag and approved its reserve.

“Upon this approval experimental oil production is converted into official and Mongolia has become oil producing country.” said Mr. D.Amarsaikhan, Head of the Oil Authority of Mongolia. “The proven reserve of the field is 199,2 million ton”, he said. Read the rest of this entry »

A working group established by the Security and Foreign Policy Standing Committee of SGK has concluded its examination on Mardai group deposits. MP Z.Enkhbold, Chairman of the Committee, held press conference.

Q: Was illegal issuance of licenses revealed during the examination?

MP Z.Enkhbold: Uranium deposits located in the territory of Bayandun, Gurvanzagal and Dashbalbar soums of Dornodn aimag were explored between 1971-1974 and “Uranium exploitation Agreement in the Mongolian territory” was made between the Government of Mongolia and Soviet Union in December 23 1981. It mined 510.6 thousand tons of ore between 1988 – 1995.

But MRA issued mining and exploration licenses to “Emeelt Mines”, “Western Prospector Mongolia”, “Adamas Mining” companies in the previously mined areas, breaching provision 2.3 of article 17 and provision 1.4 of article 19 of the Mineral Law of Mongolia. It is illegal to issue exploration license in the previously mined areas. After Agreement of Concession was annulled in late 1989 and early 1990, all uranium properties returned to Mongolia. I would like to quote two examples to give you how big scale of work were underwent in the above – mentioned areas; over 40 kilometers of railway to transport small carriers was laid and three horizontal shafts were built. After the Agreement with Russia was annulled, all reports, findings, locations of ore, electrical supply lines and over 130 kilometers long railway was transferred to the Mongolian side free. Over 14 licenses were issued to 4 companies in the previously mined areas. It is much similar to issue an exploration license in the mining area of Erdenet copper and molybdenum mine and then to raise fund at the Canadian Stock Exchange. Read the rest of this entry »

photo courtesy of gogo.mn

Q: Feasibility study of OT deposit was rejected by the Mineral Wealth Council of Mongolia. What was the main reason of rejection?

Minister D.Zorigt: Professionals and experts made comments during the hearing and meeting of the Mineral Wealth Council of Mongolia. Also they put several questions from investors. Upon receipt of the response the approval will be discussed. Working group met with investors regarding the above-mentioned questions on February 5 2010. Investors’ side promised to give detailed explanation on the questions .

Q: It said that total capital investment size increased in the feasibility study by $1 billion. What is your opinion?

Minister D.Zorigt: Initial investment size hasn’t increased. It’s all investment is made according to the investment agreement.

Q: Upon signature of the agreement, the Government will receive $250 million as pre-paid loan. When the second funding will be made? Read the rest of this entry »

Mongolian dream

THE eyebrow-raiser on Friday was the debut of Hunnu Coal (HUN), whose 20c shares shot to 41c on debut, then settled to close at 33.5c. Who would have thought that coal exploration in Mongolia could have got investor pulses racing so quickly?

This has concentrated minds at the so far unlisted Xanadu Mines, which has some advanced coal projects in Mongolia. The Sydney company had been planning to float in Hong Kong, but that exchange has yet to bed down its new resource company rules, so it looks as if Xanadu might strike on the ASX while the iron’s hot.

Friday also saw the settlement by Windy Knob Resources (WKR) on its Ovoot coal project in Mongolia. Sadly for those who had become attached to probably the most colourful company name on the ASX, WKR will trade as Aspire Mining (AKM) from tomorrow. Read the rest of this entry »

You can access the full report on www.eurasiac.com

Tavan Tolgoi:  At the Crossroad

Government to retain 100% percent of Tavan Talgoi.  The Prime Minister Batbold has confirmed today the Mongolian government’s preference to retain 100% ownership of the massive Tavan Tavan coking coal project and use a “mining contractor” model.  Therefore, the international tender for equity stake in Tavan Tolgoi is now in doubt. While the equity sale option has not been entirely ruled out, the Government intends to hire a mining contractor to develop and operate Tavan Tolgoi deposit.

Tavan Tolgoi is among the world’s largest undeveloped coking coal deposits. The deposit with appr. 5.1bn tonnes in total resources is located about 200km to the north of China, the world’s largest coal consumer. Proximity to China, unique geology and economics of the deposit provide strong fundamentals to the project and raise optimism about its success. Production cost is highly competitive at US$9-US$10/ton of raw coal and US$15/ton for final product, and transportation cost in Mongolia at US$0.02/ton-km. Read the rest of this entry »

Eurasia Capital is initiating coverage of Tethys Petroleum with a BUY rating, 12-month target price C$2.00 per share. You can access the full report on www.eurasiac.com

Tethys Petroleum Limited

Attractive portfolio: Tethys Petroleum Limited (TPL), a Toronto listed company, offers unique exposure to large-scale oil and gas resources in Central Asia. TPL has five exploration and production projects in the vast hydrocarbon basins of Kazakhstan, Tajikistan and Uzbekistan where several global major oil and gas companies are currently operating. TPL believes that the contract areas have significant exploration and production potential and it may create more value by applying modern methods and technologies in its operations. In our view, TPL will expand its portfolio to more exploration and production projects in the near future, in particular in Uzbekistan. Read the rest of this entry »

Last Friday, the General Session of the State Great Khural was held and MPs P.Altangerel, S.Byambatsogt, D.Gankhuyag, G.Zandashatar set questions on Tavan Tolgoi from the Prime Minister. Tavan Tolgoi was explored by the budget and its reserve was registered to the Mineral Wealth Council. MPs wanted to receive more detailed information on this issue. But MPs were frustrated with absence of Prime Minister and Minister for Mineral Resources and Energy.

On behalf of the Prime Minister, Mr. Ch.Khurelbaatar, Minister for Cabinet Secretariat, answered to the questions.

Brief background:

Tavan Tolgoi deposit ahs reserve of 6.42 billion tons of coal, 1.8 billion of cocking coal. The deposit was in mining operation in 1967 and mined 9.8 million tons only. Energy Resource and Tavan Tolgoi Companies are mining coal, two companies of Tavan Tolgoi area license holding companies, excluding Erdenes MGL and Daitsukui LLC. The export price is set in accordance with the average price of coal at Shaanxi Province of People’s Republic of China. Read the rest of this entry »

Eurasia Capital produced a research note on SouthGobi Energy Resources, the company which in our view has successfully become the “New Star in Mongolia”.  You can access the report on www.eurasiac.com

Alisher Ali Djumanov, CEO of Eurasia Capital gave interview with Bloomberg in which he discussed investment opportunities in Mongolia, sovereign wealth funds as well as SouthGobi, Ivahnoe Mines and Rusal in Bloomberg program “Commodities IPOs in Hong Kong”.  The video of this interview is available at www.eurasiac.com.

SouthGobi to raise up to US$500mn from HK listing and global share offering.  SouthGobi Energy Resources (SGQ) announced on 21 January 2010 that it has priced its share offering on the Hong Kong Stock Exchange (HKEx) at C$17 or HK$ 126.04 per share, the top end of the indicative price range. The shares have been significantly oversubscribed on the back of strong investor demand. 27mn shares are set to be sold to investors, with 90% of shares to be listed on HKEx and remaining to be sold in Canada.  If the over-allotment option of 4mn additional shares is excised, the Company will be able to raise up to C$527mn or US$500m in gross proceeds.  The shares will start trading on HKEx on 29 January 2010. Read the rest of this entry »

photo courtesy of gogo.mn

Prime Minister S.Batbold made press conference on “Principles of privatizing the state properties”. Prime Minister was accompanied by Mr. D.Sugar, Chairman of the State Property Committee, MSE Director R.Sodkhuu and other officials when sharing his view towards people’s savings at banks and issuing shares.

Prime Minister stated that “Government’s intention of privatization of the state property in 2010 – 2012 and the state’s support in increasing private companies’ involvement in the privatization” and informed that the plan is presented to the State Great Khural.

Priority is to raise fund for the state owned companies through listing them at the foreign capital markets based on the mineral resources and deposits in Mongolia. According to the Prime Minister, foreign mining companies, operating in Mongolia, managed to raise $15 billion at the international capital market. If the Mongolian companies start operation with its own fund, it will unlock our opportunity to become competent at the foreign markets and relieve Mongolia from short term loan with higher rate. Read the rest of this entry »