November 2011

Mongolia: Growing source of fluorspar

T. Dorjbal Commercial Director, Mongolrostsvetmet LLC

Content

Mongolia fluorspar properties and reserve

Fluorspar processing capacities of Mongolia

Fluorspar export of Mongolia

Main consumers of Mongolian fluorspar

Potential new projects

Government policy towards fluorspar mining and

processing

Fluorspar properties and reserves

Number of mining licenses

Number of exploration licenses

Mining license’s area (hectare)

Number of entities dealing with

fluorspar mining

139 OVER 700 11681 120

There are 139 fluorspar deposits and more than 700 fluorite occurrences in Mongolia . Approved ore reserves -57,5 Mt.

Fluorspar properties and reserves

5 fluorspar mineralization districts in south-eastern Mongolia.

No

Fluorspar mineralization districts

Estimated ore resources (million t)

CaF2 content (million t)

1 Bor-Undur fluorspar district 24.0 8.5

2 Khar Airag fluorspar district 9.6 3.9

3 Berkh fluorspar district 8.1 4.1

4 Dornod fluorspar district 4.9 1.8

5 Urgen fluorspar district 4.1 1.8

Other zones 6.8 2.4

Total 57.5 22.4

Fluorspar deposits and occurrences in Mongolia

Fluorspar processing plants in Mongolia (ascending by capacity)

No Name of processing plants Annual production capacity

Product type

1 Bor-Undur plant, Mongolrostsvetmet LLC, commissioned in 1981

130,000 t, whole year operation

FF-95, FF-97 Acid grade filter cake (dry and wet)

2 Kevin invest LLC, commissioned in 2009

25,000 t (25,000 t expansion capacity in progress), seasonal operation

97% Acid grade filter cake (wet)

3 Yantai Uul LLC, commissioned in 2008

20,000 t, seasonal operation

97% Acid grade filter cake (dry)

4 MIMC, commissioned in 2009 20,000 t, seasonal operation

95-97% Acid grade filter cake (wet)

Fluorspar processing plants in Mongolia (ascending by capacity)

No Name of processing plants Annual production capacity

Product type

5 North wind LLC, commissioned in 2008

•20,000 t, seasonal operation

•95-97% Acid grade filter cake (wet)

6 Chuluut international LLC, pilot test under progres

•20,000 t, seasonal operation

•95% Acid grade filter cake (dry and wet)

7 Boston International LLC), under construction

Not defined, /up to 15000 t, seasonal operation/

95% filter cake

8 Resource Min Kom LLC, under construction

Not defined, /up to 15000 t, seasonal operation/

95% filter cake

Fluorspar export 2009-2010

Product type

2009 2010

Tonnage

(000 t)

Share in total

tonnage (%)

Tonnage

(000 t)

Share in total

tonnage (%)

35-70% CaF2

lump 19.4 6.2 % 24. 6 5.9 %

75% CaF2

lump 86.8 27.6 % 92.4 22.8 %

80-92% CaF2

lump 92.9 29.6 % 101.0 25.1 %

95% acid grade 73.5 23.4 % 139.4 34.4 %

97% acid grade 41.4 13.2 % 47.6 11.8

Total 314.0 404.9

Leading fluorspar exporters of Mongolia (as of 2010)

Exporters Tonnage

(000 t) Share in total export (%)

1 Mongolrostsvetmet 163,4 40,3 %

of which: CaF2-75% (metgrade) 23.4

CaF2-95% (acid grade) 127.1

CaF2-97% (acid grade) 13.2 wet (12,0 dry)

2 Amintsetseg 18,8 4,6 %

of which: CaF2-75% (metgrade) 2,6

CaF2 80-92% (metgrade) 16.2

3 Kevin Invest 17,4 4,3 %

of which: CaF2-95% (acid grade) 1,6

CaF2-97% (acid grade) 15.8

4 Adil Och 14,4 3,6 %

of which: CaF2-65% 12,8

CaF2-75% (metgrade) 1,3

CaF2-85% (metgrade) 0,3

Leading fluorspar exporters of Mongolia (as of 2010) (cont’d)

Exporters Tonnage

(000 t) Share in total export (%)

5 Mongolczechmetal 13,8 3,4 %

of which: CaF2-75% (metspar) 9,5

CaF2 85-92% (metspar) 4,3

6 Bujgar ord 13,5 3,3 %

of which: CaF2-65% 2,5

CaF2-75% (metspar) 8,4

CaF2-85% (metspar) 2,6

7 Mongolrudprom 12,3 3,0 %

of which: CaF2 35-65% 2,7

CaF2-75% (metspar) 8,2

CaF2 85-92% (metspar) 1,4

8 Naimgan ord CaF2-75% 11,8 2,9 %

Leading fluorspar exporters of Mongolia (as of 2010) (cont’d)

Exporters Tonnage

(000 t) Share in total export (%)

9 North wind 10,7 2,7 %

of which: CaF2-75% (metspar) 0,1

CaF2 85-92% (metspar) 2.9

CaF2 96-97% (acidspar) 7,7

10 Yantai uul 10,7 2,6 %

of which: CaF2-95% (acid spar) 9,0

CaF2-97% (acid spar) 1.7

Others (35 companies) 118,1 29.2 %

of which: CaF2 35-70% 6,0

CaF2-75% (metspar) 47.9

CaF2 85-92% (metspar) 73.9

CaF2-95% (acid spar) 1.0

Fluorspar export of Mongolia in I half year of 2011

Product type Number of

exporters

Tonnage

(000 t)

Share in total

tonnage (%)

35-70% CaF2

lump 6

16 796 9%

75% CaF2 lump 19 41 362 21%

80-92% CaF2

lump 32

62 641 32%

95% acid grade 6 64 531 33%

97% acid grade 4 9 581 5%

SUM 44 194 912

Fluorspar export of Mongolia in I half year of 2011 by countries

№ Countries (type of fluorspar products) Tonnage (t) Share on total export

volume (%)

1 Russia – 4 137 650 70,6%

Of which: Acidspar 95%-97% 62 884 32,3%

Metspar 80%-92% 25 771 13,2%

Metspar 75% 32 388 16,6%

Fluorspar ore 35%-65% 16 608 8,5%

2 China – 4 49 538 25,4%

Of which: Acidspar 95%-97% 10 591 5,4%

Metspar 80%-92% 33 917 17,4%

Metspar 75% 4 906 2,5%

Fluorspar ore ФК-50 125 0,1%

Fluorspar export of Mongolia in I half year of 2011 by countries

№ Countries (type of

fluorspar products)

Tonnage (t)

Share on total

export volume

(%)

3 Ukraine – 4 5713 2,9% 955,2

Of which: Acidspar

95%-97%

375,0

455

0,2%

170,7

Metspar 80%-

92%

155,0

1 255

0,6%

194,6

Metspar 75%

138,1

3 938

2,0%

544,0

Fluorspar ore

ФК-45

87,8

64

0,03%

5,6

Fluorspar export of Mongolia in I half year of 2011 by countries

(cont’d)

№ Countries (type of fluorspar products) Tonnage (t)

4 South Korea (Metspar 85%) 864

5 Hungary (Metspar 85%) 260

6 Turkmenistan (Metspar 85%) 200

7 Moldova (Metspar 85%) 195

8 Kyrgyzstan (Metspar 75%) 130

9 Thailand (Acidspar 95%) 120

10 Japan (Metspar 98%) 114

11 Azerbaijan (Metspar 92%) 64

12 Germany (Acidspar 97%) 63

ИТОГО 194 912

Significant Russian consumers of Mongolian fluorspar products 2010

№ Companies Product type (application) Tonnage

(000 t)

1 RUSAL Acid grade

(Aluminum industry) 85.6

2 Halopolymer

Acid grade

(Chemical and polymer

industry)

35.6

3 Angarsky Electrolysis

chemical plant

Acid grade

(Chemical industry) 5.2

4 Siberean chemical plant Acid grade

(Chemical industry) 4.1

5 OAO Seversteel Metallurgical grade

(Metallurgical industry) 13.9

Significant Russian consumers of Mongolian fluorspar products 2010

№ Companies Product type

(application)

Tonnage

(000 t)

6 OAO Novolipetsky

metallurgical plant

Metallurgical grade

(Metallurgical industry) 11.6

7 ОАО Magnitogorksky

metallurgical plant

Metallurgical grade

(Metallurgical industry) 9.0

8 ОАО Chelyabinsky

metallurgical plant

Metallurgical grade

(Metallurgical industry) 7.7

9 ОАО Ural Steel Metallurgical grade

(Metallurgical industry) 6.6

Two potential new projects

• Dzuun tsagaan del fluorspar deposit

4.4 million tons of fluorspar ores in category C1+C2

underground ore body. /Former Soviet Union standard /

Fluorspar ore grading is 29.10% with an average CaCO3 content of 7.39%.

Mining license

Mineral resources of fluorspar deposit were approved by the

Council of Mineral Resources under the Ministry of Mineral

Resources and Energy of Mongolia.

Feasibility study prepared by Mongolian Mining Institute

Two new projects

• Ujgen fluorspar deposit

Mining operation since 1981. Still in operation Ore reserve 4.0 million tons of fluorspar ores in category

C1+C2 by former Soviet Union Standard Fluorspar ore grading is 35-36% with an average CaCO3

content of 13% in some ore bodies.

Possibilities to increase ore reserve by conducting additional geological exploration work

Feasibility study of “Urgun” mine -prepared

Environmental assessment report - carried out.

Government policy

• No export tax

• Royalty: 5 % of sales revenue.

• Income tax:

– 10% up to 3 billion tugrik equal to 3 million USD

25% exceeding from 3.0 mln. revenue

• Social insurance - 10%

• Mining License fee -15 $/per ha