01.05.2014 developing strategic mineral assets and infrastructure in mongolia & examining the...

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ACTION PLAN- 2012-2016 GOVERNMENT OF MONGOLIA:

redefinition of strategic mining deposits and implementation of a specific policy for strategic mining deposits including

thermal coal, coking coal, copper, iron ore and earth rare elements

update of strategic mining deposits list and intensify the commercial utilisation of major deposits

issuance of preferred shares of corporation that holds state shares in strategic mining deposits to citizens according to Human

development Fund Law

to gradually decrease the export of raw materials

policy to process exporting goods at internationally accepted standards and increase export of value added products in

trade turnover

STATE POLICY ON MINERAL SECTOR:

• state policy on mineral sector aims to develop a private sector based and transparent mining, create a structure that economically

balanced for short and mid term and ensure national interest

• to broaden a cooperation on geological sector with foreign countries and to support the private entity’s involvement in

exploration projects

• to implement a phased action to change state owned entities into public companies

PARLIAMENT RESOLUTION No.39:

listing of Tavan tolgoi deposit at domestic and foreign stock exchanges

STATE POLICY ON MINERAL SECTOR

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• A holding company in mining sector of Mongolia, 100% owned by the

government

• Holds state shares of mining companies that operate in strategic

mining deposits

• Owns state shares of infrastructure and sub projects in strategic

mining deposits

Erdenes Mongol LLC is :

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Chronology

Mission: to develop its subsidiaries as globally competitive

national enterprises through exercising good governance and

optimal management in order to contribute to the prosperity of

Mongolia.

2007 2009 2010 2011 2013

Establishment of Erdenes MGL

The government of Mongolia owns 34%

of OT share.

Erdenes MGL established Erdenes Tavantolgoi JSC as

one of the subsidiaries.

Erdenes MGL established Erdenes

Oyu tolgoi LLC as one of the subsidiaries.

Mongolia shareholding of Erdenet Plant LLC, licensee of the strategic

mineral deposit, government shareholding of Baganuur JSC, and

Shivee Ovoo JSC, were transferred to Erdenes MGL

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“Erdenes Mongol” LLC – General Operating Structure/Concept

Citizen of Mongolia

(preferred shareholder)

State Great Khural

(Parliament)

Road Energy/Power

plant Railway Water Supply

?%

15 strategically

important deposits

Downstream

Industry

List of Strategically Important

Deposits No. 2

34-100% Mon Element

Investor

?% ?%

Processing

Plant Logistic

Distribute dividends

?%

Issue preferred shares

Dividends, upfront payment,

Income from sale of shares and royalty Human Development Fund

(Ministry of Finance)

Investment

Securities/shares/savings

Government Shareholder and decision making

Approve amount of dividends P

rop

ose

am

ou

nt

of

div

iden

ds

for

app

roval

?%

?%

Mon Coal

Strategy - 1

Strategy - 2

Strategy - 3

Strategy - 4

?%

?%

IPO - ?%

Mon Copper

Mon Iron

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Holding Company and Subsidiaries

Good governance Research and Development

Resource Management

51% 75% 90% 100% 100%

• to make strategic mining deposits available as commercially

feasible

• IPO / listing of the subsidiaries

• Reserve fund establishment

• Certain amount of revenue should be invested back to the mining

sector

• The Board of Directors consists

of the CEOs of both the holding

company and its subsidiaries in

order to discuss general

operation of the group.

Board of Directors

Share holding -

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№ Name Type of deposits

1. Тavan tolgoi Coking coal /7.4 billion.t/

2. Nariin Sukhait Metallurgical coal /417 million.t /

3. Baganuur Thermal coal /600 million.t/

4. Shivee Ovoo Metallurgical coal /2.8 bilion.t/

5. Mardai Uranium

6. Dornod Uranium

7. Gurvan bulag Uranium

8. Tumurtei Iron ore /229.3 million.t/

9. Oyu tolgoi Gold, Copper, molybdenum /6.5

billion.t ore/

10. Tsagaan Suvarga Copper, molybdenum /250.7 ton/

11. Erdenet Copper, molybdenum /5.2 million.t

of copper, 114 million.t of

molybdenum/

12. Buren khaan Phosphorus /192.2 million.t/

13. Boroo Gold /70 ton/

14. Tumurtein ovoo Zinc and lead /7.5 million.t of ore/

15. Asgat Silver /7.3 thousand.t of silver, 227.4

thousand.t of copper,/

Strategic mining deposits of Mongolia

A deposit with size that may have a potential impact on national security,

economical and social development of the country at national and regional levels

or that is producing or has a potential of producing more than 5 percent of total

GDP in a given year.

Definition:

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Ensure the state involvement in infrastructure projects

Ensure reliable operation of production

Increase the value of mining projects

Improve interrelation between infrastructure developments

Increase the government share of dividend

Implement environmentally friendly policies

Introduce advanced equipment and technologies

Sync the company operation with the Government policy

Integrated planning of infrastructure projects

Decrease duplication of activities , costs and risks

Positive effect on addressing the funding of the project

Integrated mining , infrastructure and energy project

Ensure the government involvement in energy resource projects


Increase the efficiency of the government's share of the dividend

Improve interrelation between infrastructure projects

Reduce duplication of investments, costs and risks

Increase the value of the project

Ensure coordination of and interrelation between energy sources

Reliable energy sources

General planning,

investment and

implementation of the

strategic deposits based

infrastructure projects

2. Road

3. Laboratory

4. Water Supply

System

5. Export Port

6. Others

1. Energy

Continuous and reliable export of mining products

Reliable, high quality, timely and comprehensive services

Control over mining product export

Implementation of the legislation and practical results

Sustainable source of incremental revenue

Environment-friendly and no negative impact on the

environment development solutions

Reliable and prompt export of products

Ensure the state involvement in road projects

Reliable and safe transportation of products

Increase the government share of dividend

Improve interrelation between the infrastructure projects

Create market competition

Reduce operating costs and risks

Continuous product transportation

Have an impact on the international market price policy

Integrated reliable, high quality and timely services

Quality control over mining product and exports

Set international ISO and ASTM standards

Determine the correct market prices

Find sustainable source of incremental revenue

Internationally recognized testing

Ensure the state involvement in water supply projects


Research on water resources, its proper use and conservation

No negative impact on the environment and environment-friendly

policies

Water conservation, pollution, proper use and re-use

Water facilities built using advanced equipment and technology

Proper management of rational use of water resources

Ensure the mining project contractor’s involvement in the

railway project

Implement a policy on manufacturing value-added products

Ensure the implementation of the Industrial Park Project

Real opportunity to supply our products on the global market

Interrelation between mining and infrastructure projects

Infrastructure Projects at Strategic Mineral Deposits

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MON-IRON MON-COPPER

Projects

MON-COAL

Erdenes Mongol LLC is carrying out feasibility studies and relevant surveys to implement Mon –Copper, Mon - Iron and Mon –

Coal projects in phases in order to process mining commodities extracted from the major mineral deposits in Mongolia and

produce and export value-added products.

As part of these projects, the processing plants to concentrate commodities extracted from the copper, molybdenum, iron and

coking and thermal coal deposits as well as plants to manufacture final products and the necessary infrastructure will be built.

• Total copper ore production: 1,8 million

tons

• Mon-Copper project: 700 thousand

tons

• To build a copper processing plant at

Erdenet, Oyu tolgoi, or at the

Sainshand Industrial Park -

hydrometallurgical

• Total production: 800 million tons of

iron ore.

• Mon-Iron project: production of 500

thousand.t of processed iron or steel

• Coal handling and preparation plant at

Tavan tolgoi

• Build processing plants for semi-coke,

Coal to Liquid and Coal to Gas plants

at Baganuur and Shivee Ovoo brown

coal deposits.

01.05.2014 developing strategic mineral assets and infrastructure in mongolia & examining the...

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