Mongolian side will own 34% in the Oyu Tolgoi final deal

Right at the moment, an unscheduled Cabinet Meeting is being held to discuss the Oyu Tolgoi and Tavan Tolgoi investment agreements. Minister D.Zorigt informed us about the recent developments and outcomes of the meeting.

Q: What is the situation now?
D.Zorigt: The issue is not yet concluded. It was presented to the Cabinet Members and now we are expecting comments and conclusions. Q: On what points has our government reached common consent with investors?
D.Zorigt: It is not yet finalized. It will be discussed next week. We have the intention of presenting the draft agreement to the special session of the State Great Khural.

Q: What are the main changes from the draft agreements of 2007.
D.Zorigt: It is hard to say, we are working on to develop the draft agreement as much as it was in year 2007. Because, the situation is not in favor for mining industry. Investment size has changed. On the other hand, railway, water issue must be solved in the level of policy, therefore it is prepared to be presented for the special session of the State Great Khural.

Q: There is hearsay that Mongolia reached common consent of exploiting Tavan Tolgoi with Chinese side.
D.Zorigt: Nothing is reached yet. No deal is concluded. We are closely examining the proposals of interested companies and consortium. Also we are consulting with our consultants. We recruited two banks as our adviser in this issue. They are attending to the meeting of deal making with investors. We will explore more in details at the second level of negotiation.

Q: Did you reach agreement on 34% ownership.
D.Zorigt: We reached agreement on direct ownership of 34%. In addition this issue, the investors’ expectation on our acquisition exercise was changed. Their thought that the Mongolian side would purchase, but now they have clear understanding that the position of the Mongolian side is to replace our investment with refund of dividend distribution. To say again, the financial and economy environment changed enormously, therefore, economy factors in our draft have changed accordingly.

Q: How about the pre-payment issues?
D.Zorigt: We need complex approach in the issues, such as whether to impose 68% windfall tax or not. At the first instance, we made negotiation with over ten companies. It is hard to say anything about it, as the first level of negotiation is concluded.

Q: When to propose this issue to the State Great Khural?
D.Zorigt: First week of the next month will be the last week of discussion. I think that Oyu Tolgoi draft agreement would be discussed by the special session of the State Great Khural. But Tavan Tolgoi draft agreement will be proposed to the spring session of the State Great Khural.

Cabinet meeting is underway now. We will come again with more details.

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