mongolian mining projects report 2015

MONGOLIAN MINING PROJECTS

REPORT 2015

AUSTRADE DISCLAIMER

This report has been prepared as a general overview. It is not intended to provide an exhaustive coverage of the topic. The information is made available on the understanding that the Australian Trade Commission (Austrade) is not providing professional advice. Therefore, while all care has been taken in the preparation of this report, Austrade does not accept responsibility for any losses suffered by persons relying on the information contained in this report or arising from any error or omission in the report. Any person relying on this information does so entirely at his or her own discretion and Austrade strongly recommends that the reader obtain independent professional advice prior to acting on this information.

Commonwealth Copyright

©Commonwealth of Australia 2015

Published: November 2015

MONGOLIAN MINING PROJECTS REPORT 2015

This report is a guide for Australian mining equipment,

technology and services (METS) exporters considering doing

business in Mongolia.

Mongolia has world-class deposits of copper, gold, coal and

iron ore, and presents many present and future opportunities

for Australian METS organisations involved in the mining value

chain.

To assist Australian companies in accessing these

opportunities the Australian Trade Commission (Austrade) has

prepared this report. It examines market challenges, the mining

landscape, mining infrastructure issues, mining business and

investment opportunities, and profiles some operating mines

planned mines, and exploration projects.

We hope this publication will help you in undertaking your

research into the Mongolian market. Should you need further

information, please contact Austrade on +976 70 133 001 or at

[email protected].

Brendan Coyne

Consul General and Trade Commissioner

Australian Consulate-General, Mongolia

CONTENTSSECTION 1: ABOUT MONGOLIA

1.1. COUNTRY PROFILE 7

Map of Mongolia 7

Economic Overview 7

Political System 8

Legal Framework 8

Investment Law 9

Taxation 9

Market Challenges 10

Business Culture 11

Setting up in Mongolia 12

SECTION 2: MINING EXPLORATION AND PRODUCTION

2.1. MINING LANDSCAPE 13

Introduction 13

Minerals Law 13

Exploration and Mining Licences 14

2.2. GEOLOGICAL EXPLORATION WORK 15

Geology 15

Geological Map and General Exploration Work 15

Mineral Resources Reserves 16

Gold 16

Copper 17

Iron Ore 18

Coal 18

2.3. MINING PRODUCTION 19

Production 19

Exports 20

Processing and Concentration 21

Coal Mining and Processing 21

2.4. MINING INFRASTRUCTURE ISSUES 22

2.5. MINING BUSINESS AND INVESTMENT OPPORTUNITIES 23

2.6. KEY MINING AND INWARDS INVESTMENT AUTHORITIES 24 The Ministry of Mining 24

The Mineral Resources Authority of Mongolia 25

Invest Mongolia Agency 26

Copyright © 2015, Oyu Tolgoi

SECTION 3: MINES AND EXPLORATION PROJECTS

3.1. OPERATING MINES 27

1. Erdenet Mine Copper and Molybdenum 28

2. Oyu Tolgoi Mine Copper and Gold 29

3. Baganuur Mine Thermal Coal 30

4. Baruun Noyon Uul Mine Coking Coal 31

5. Khushuut Mine Coking and Thermal Coal 32

6. Naryn Sukhait Mine Coking Coal 33

7. Ovoot Tolgoi Mine Coking Coal 34

8. Shivee Ovoo Mine Thermal Coal 35

9. Tavan Tolgoi Mine Coking Coal 36

10. Ukhaa Khudag Mine Coking Coal 37

11. Ulaan Ovoo Mine Thermal Coal 38

12. Bargilt Mine Iron Ore 39

13. Bayangol Mine Iron Ore 40

14. Tumurtein Gol Mine Iron Ore 41

15. Tumurtei Mine Iron Ore 42

16. Bayan Airag Mine Gold and Silver 43

17. Bor-Undur Mine Fluorspar 44

3.2. PLANNED MINES 46

1. Gatsuurt Mine Gold 47

2. Ovoot Mine Coking Coal 48

3. Oyu Tolgoi Underground Mine Copper and Gold 49

4. Tsagaan Suvarga Mine Copper and Molybdenum 50

3.3 EXPLORATION PROJECTS 51

1. Cogegobi (Areva) Uranium 52

2. Haranga Resources Iron Ore 53

3. Kincora Copper Copper-Gold 54

4. Xanadu Mines Copper-Gold 55

SECTION 4:

LINKS AND RESOURCES 56

Government Ministries 56

Relevant Government Agencies and Authorities 56

Industry Associations 56

News and Media 56

REFERENCES 57

ABOUT THE AUSTRALIAN TRADE COMMISSION 58

6 > Mongolian Mining Projects Report 2015 ABOUT MONGOLIA > 7

MAP OF MONGOLIAMap 1: Mongolia

Source: Mongolian Mining Projects Report 2011

SECTION 1

1.1. COUNTRY PROFILE Mongolia is a landlocked country bordered by Russia to the

north and China to the east, south and west. With an area of

more than 1.5 million square kilometres (the world’s 19th largest

country) and a population of approximately three million people,

Mongolia has one of the lowest population densities in the

world.

The landscape has several distinct geographical features,

including forest mountain ranges to the north, desert and low

mountain areas to the south, high mountain ranges to the west

and vast plains to the east. The climate is continental with hot

summers and very cold winters.

Mongolia’s population is relatively homogenous in terms of

ethnicity, language and religion. Its population is also relatively

young with more than 60 per cent below the age of 30.

Approximately 60 per cent of Mongolia’s population lives in

Ulaanbaatar (the capital city), Darkhan (an industrial centre in

the north, near the Russian border) and Erdenet (a city around a

large copper mine). The remainder of the population comprises

mainly nomadic livestock herders.

Mongolia has had a significant impact on world history. The

Hun, Turk and Mongol empires originated from this region, with

the latter controlling most of Asia and parts of Europe in the

12th and 13th centuries.

Economic overview

Mongolia’s GDP in 2014 was just over US$12 billion.1 The mining

sector is integral to the Mongolian economy, which accounts for

18 per cent of GDP, 68 per cent of industrial output and 81 per

cent of export earnings.2 Agriculture is a big contributor to the

economy and accounts for 30 per cent of GDP, 35 per cent of

the labour force and 7 per cent of export income.3

From 2011 to 2013, Mongolia’s economy weathered many

shocks to become one of the fastest growing economies in the

world. Mongolia achieved GDP growth of 17.5 per cent in 2011,

12.3 per cent in 2012 and 11.6 per cent in 2013.4 This success

was largely based on the investment in and development of

the US$6 billion Oyu Tolgoi copper-gold project and increased

earnings from mineral exports.

ABOUT MONGOLIA > 7

Economic growth decelerated in 2014, with GDP growth

slowing to 7.8 per cent and foreign direct investment (FDI)

dropping by 80.7 per cent. Growth is forecast to be sharply

lower in 2015 and 2016. Statistics released in August 2015

show economic growth increased by 3 per cent for the first six

months of 2015 relative to the same period in 2014. A major

policy challenge is to implement prudent macroeconomic

management that retains sufficient scope for productive

investment and social protection.5

Political system

In 1990, with the collapse of the USSR, Mongolia transitioned to

a democracy and a free market economy.

The Mongolian Constitution was formed in 1992 and enshrines

the concepts of democracy, freedom of speech, judicial

independence and importantly, a market economy founded on

a system of civil law.

The politics of Mongolia takes place in a framework of a semi-

presidential representative democratic republic, and of a multi-

party system. Executive power is exercised by the Government.

Legislative power is vested in both the Government and

Parliament. The Judiciary is independent of the executive and

the legislature.

Members of the State Great Hural (parliament) and the

President are both elected for fixed four-year terms (on different

electoral cycles). The Prime Minister is nominated by, and

serves on behalf of, the majority party in the Parliament. The

Cabinet is appointed by the Prime Minister, subject to State

Great Hural’s approval. The President is the Commander-in-

Chief and holds the power to veto legislation, although this can

be overridden by a two-thirds majority in Parliament.

There are two major political parties: the Mongolian People’s

Party (MPP), which evolved from the communist single-party

government, and the Democratic Party (DP), which grew out of

Mongolia’s 1990 democracy movement. The next election is

expected to be held in June 2016.

Legal framework

The Mongolian legal system is based on the Roman-German

(continental) legal system. The principal legal act is the

Constitution. The provisions of the Constitution, the laws

corresponding to it, other regulatory acts, international treaties

and other commitments of Mongolia, as well as regulatory

resolutions of Constitutional Court and the Supreme Court,

comprise the functioning law in Mongolia.

The Constitution empowered a Judicial General Council (JGC) to

select all judges and protect their rights. The Supreme Court is

the highest judicial body and judges are nominated by the JGC,

confirmed by the Parliament and appointed by the President.

The Supreme Court is constitutionally empowered to examine

all lower court decisions (excluding specialised court rulings on

appeal) and provide official interpretations on all laws except the

Constitution.

Specialised civil, criminal, and administrative courts exist at all

levels and are not subject to Supreme Court supervision. Local

authorities and district and city governors, ensure that these

courts abide by presidential decrees and Parliament decisions.

At the apex of the judicial system is the Constitutional Court

of Mongolia, which consists of nine members, including a

chairman, appointed for six-year terms, whose jurisdiction

extends solely over the interpretation of the Constitution.

Economic and business activities in Mongolia are regulated by

a variety of laws, including the Civil Code (2002), Company Law

(2007) and Law on Investment (2013).



Market challenges

There are some important market challenges in Mongolia that

need to be considered in any market entry strategy.

Perceptions of foreign investment

Mongolians are more familiar with Russia and Eastern Europe

than Western nations, as many have either lived or studied

in these countries and are more likely to speak Russian than

English. This is largely due to Mongolia having been a socialist

republic and a command economy until 1990. However, the

educated younger generation is more favourable to the West,

particularly the increasing number of young Mongolians who

have studied abroad.

Economic nationalism

Mongolia experienced a renewed sense of nationalism and

independence from 1990 and this is evident at all levels of the

political economy. This sense of national pride is an influential

factor at all levels of decision-making in government and the

commercial sector. Politicians have a tendency to use this

to their electoral advantage and practice popular politics

with economic issues. They are also conscious that their

electoral success is dependent on a constituency that is highly

nationalistic, and the importance of this is compounded by the

relatively high value for every vote in a country of three million

people.

Politicisation of process

From a mining perspective, it is often Parliament not professional

civil servants trained and qualified in specialised areas that

determines what deposits are strategic. There are, however, a

number of highly qualified and experienced advisers to the Prime

Minister, President and Cabinet, covering areas such as foreign

investment, mining legislation, royalties and taxation, and foreign

affairs.

Bureaucracy

Mongolia inherited the Soviet system of bureaucracy that

presided over a planned, command economy. During this

era, the state bureaucracy managed the economy, and this

legacy has largely continued despite the change to a free

market economy. The degree of government intervention

in the economy is high by Australian standards, and this is

compounded by the overlapping of authorities and a lack of

cooperation or coordination between departments in many

areas. The bureaucratic process can be fluid, as government

departments can unexpectedly change their requirements and

procedures, for example, indefinitely calling a moratorium on all

new exploration and mining licence applications.

Investment Law

Mongolia’s parliament passed a new Investment Law, which

came into effect on 1 November 2013, replacing the Law of

Mongolia on Foreign Investment (1993) and Law of Mongolia

on the Regulation of Foreign Investment in Business Entities

Operating in Sectors of Strategic Importance (2012).

The Investment Law eliminates the previous restrictions on

private foreign investment, reduces governmental approval

requirements for foreign state investment, introduces a simpler

and more open investment process, establishes a new,

dedicated agency to assist with the process and provides an

array of investment incentives.

The Investment Law stipulates that a foreign entity must either

be incorporated as a business entity with foreign investment

(BEFI) or as a representative office in order to conduct any

activity in Mongolia. A BEFI is defined as an entity that is

incorporated in Mongolia and of which at least 25 per cent

of the equity is held by a foreign investor(s) whose minimum

contribution to the entity is US$100,000, per investor.6

A representative office is defined as an entity that is established

in Mongolia solely to operate as a representative office of a

parent foreign entity. Such an office does not have the power to

earn revenue from business activities in Mongolia.

Taxation

There are four principal tax laws affecting companies in the

mining sector: 7

› General Law of Taxation – contains general provisions

relating to tax but does not impose taxation. This also

includes provisions regarding the administration of taxation,

including the rights and duties of both taxpayers and

administrators, and tax audit protocols.

› Minerals Law of Mongolia – contains provisions specific to

the prospecting, exploration and mining of minerals, and also

imposes royalties on mining licence holders.

› Corporate Income Tax Law – the provisions within this law

apply to all companies; there is no separate corporate tax

law for mining companies.

› VAT Law of Mongolia – an indirect tax relevant to all

companies, with no separate section for miners.

ABOUT MONGOLIA > 9

Continuity of governance

Politics in Mongolia revolves around a four-year electoral

cycle (the next parliamentary election is expected to be held

in June 2016). At the end of this cycle, and depending on the

outcome of the election, there may be a change in personnel

at all levels of government, including ministers, department

heads, provincial governors and their support staff. This has

implications for the continuity of governance; officials are often

replaced when they have just become proficient in their roles,

and there is then a delay before new officials learn the role.

Lack of skilled labour

There is a lack of skilled labour in Mongolia and exploration

and mining companies often have difficulty finding labour to

support their operations, including drilling, blasting, loading,

haulage, processing, mine administration and IT support. Most

companies invest in their own in-house training programs and

infrastructure to support their operations, due to the limitations

of vocational training and educational institutions in Mongolia.

However, progress has been made in recent years, such

as the Polytechnic College in South Gobi province, which

has received support from Oyu Tolgoi. Oyu Tolgoi has also

constructed a Mining School of Excellence in Nalaikh and

upgraded and expanded Technical Vocational Education and

Training (TVET) centres in the cities of Dalanzadgad, Choir and

Darkhan.

Technical skills shortage

Mongolia has a shortage of technical skills, especially

in modern methods of mine management, mechanical

engineering, process engineering, geology, hydrology and

geophysics. The majority of available labour has tertiary

qualifications based on the Russian curriculum and tends to

have limited experience with equipment and processes outside

Mongolia, Russia or Eastern Europe.

Environmental concerns

Although 40 per cent of Mongolians reside in the capital,

the country is predominantly rural and there is still a strong

connection to the land and concerns over mining companies’

intentions regarding the environment. Mining projects in the

past have left some environmental damage and modern

mining legislation and licence conditions place considerable

importance on environmental management.

Corruption

The potential investor needs to be aware of complaints of

corruption from foreign operators and investors in Mongolia.

There have been claims of misconduct in mining licence

applications and tender processes with foreign licence

applicants often being informed that a local licence has

already been granted for a property they are applying for, or an

unexpected decision has been made to put the property out to

tender.


Australian companies are advised to spend time investigating

the market, obtain professional advice where appropriate and

thoroughly investigate the issues in entering the market and

establishing business relationships. Australian firms wishing

to operate in Mongolia should commit to the highest level of

corporate behaviour and familiarise themselves with Australia’s

law and penalties pertaining to bribery of foreign officials.

Bribery of foreign public officials is a crime. Australian

individuals and companies can be prosecuted in Australia for

bribing foreign officials when overseas. For further information

on the regulations governing bribery of foreign public officials,

please visit: www.austrade.gov.au/Export/About-Exporting/

Legal-issues/Bribery-of-foreign-public-officials.

Business culture

Mongolians are proud, independent, self-confident and loyal

in disposition. It is preferable to have someone introduce you

to the person you wish to meet, but if this is not possible, then

write a formal letter or email in English in advance of your

planned visit.

Mongolians expect to be greeted formally, with a handshake

and direct eye contact. Mongolians typically use only their

first name. Always provide your business card as part of the

greeting process.

Informal conversation is generally expected before getting

down to business. Mongolian executives often enjoy being

invited out for lunch or dinner to get to know overseas contacts

in a more informal atmosphere. The giving of small inexpensive

gifts is customary at the conclusion of an agreement.

The peak summer holiday months of July and August are difficult

times in which to arrange meetings. Most businesses have at least

one person who can speak English and translate.

Setting up in Mongolia

Austrade looks forward to providing initial and ongoing support

and advice; however you will probably require a reputable third

party provider to accomplish the mechanics of setting up in

Mongolia.

According to the World Bank, Mongolia stands at 42 in the

ranking of 189 economies on the ease of starting a business.8

The incorporation of a new business entity with foreign

investment (BEFI) in Mongolia takes place at the General

Authority for State Registration of Mongolia. To register a new

BEFI, the estimated time of preparing registration documents,

obtaining a company name, opening a bank account and

translation of documents is approximately 2-3 weeks.9

More information related to the registration of a company in

Mongolia is provided on the website of the State Office in

Mongolia: www.burtgel.gov.mn.

ABOUT MONGOLIA > 11


12 > Mongolian Mining Projects Report 2015 MINING EXPLORATION AND PRODUCTION > 13


SECTION 22.1. MINING LANDSCAPE

Introduction

Mongolia is rich in mineral resources and has some of the

world’s major mineral deposits including gold, copper, uranium

and coal.

The Mongolian mining industry consists of placer, sedimentary

and hard rock, mineralised zones and ore-bearing veins forms

of mining. The types of mines that occur in Mongolia include

open cut, underground, riverbank panning and washing.

Mongolia’s mineral wealth first began to be explored and

exploited by Russia after 1920, and later by Mongolians

themselves. Geological data gathered since the 1920s and

exploration to date has proven vast mineral reserves, but only

30 per cent10 of Mongolia is covered by general exploration

work and geological mapping is at a scale of 1:50,000.

Small-scale mining activities are usually placer with some hard

rock operations. There are a number of illegal mining operations

in this category that are largely unregulated by the central

government, but usually have the sanction of the provincial

governments (aimags).

The majority of mines are medium-sized deposits. They are

predominately legal operations that have obtained exploration

and mining licences from the central government and have

formal permits from the provincial authorities.

There are a small number of large-scale mines that are either

Mongolian joint ventures with foreign companies or wholly

foreign-owned. These mines have the relevant licences and

permits and account for a large proportion of GDP, exports and

employment in Mongolia. Some of these deposits have been

designated as ‘strategic mineral reserves’ by the Mongolian

Goverment and have special conditions attached to the

licences.

Mining companies can operate in Mongolia by applying for and

periodically renewing their exploration and mining licences with

the Mineral Resources Authority of Mongolia.

Up until the 1970s, there was limited mining due to poor

infrastructure, capital and technical capability. During the 1970s

many significant mineral deposits were brought into production

through joint ventures with Russian or eastern bloc countries.

However, since 1990, the mining industry in Mongolia has

expanded dramatically, particularly after the introduction of

the Minerals Law of Mongolia of 1996, which saw an influx of

foreign exploration companies.

The mining sector is integral to the Mongolian economy,

accounting for 18 per cent of GDP, 68 per cent of industrial

output, 81 per cent of export earnings11 and employing more

than 40,000 people.

The recent slump in commodity prices has adversely affected

the Mongolian mining sector with export earnings falling and

unemployment growing. However, the importance of the mining

sector to the economy is likely to continue and contribute to an

even higher proportion of the country’s GDP in the future.

Minerals Law

On 1 July 2014, the Mongolian Parliament passed the Law

on the Amendments to the Minerals Law. Set out below is an

overview of the changes to the Minerals Law (2006).

Exploration licences

The moratorium on the issuance of new exploration licences

has been repealed and the maximum period for an exploration

licence has been extended from nine to 12 years.

Newly issued exploration licences will be immediately

transferable, opening the door to a reactivated secondary

market and, importantly for junior exploration companies, there

is no restriction on the use of these licences as security for

capital raising.

Mining licences

Mining licence holders are now obliged to:

› supply products that have been mined, processed or semi-

processed in preference to processing facilities operating in

Mongolia at market price

› employ an employee to act as a liaison with the Mineral

Resources Authority of Mongolia regarding environmental

rehabilitation and mine closure.

The amendments specifically address the overlapping

obligations of licence holders with obligations under the

Petroleum Law with regard to coal bed methane. They are

obliged to notify the Petroleum Authority of Mongolia if

methane is discovered during coal mining and are permitted to

produce coal bed methane in accordance with the Petroleum

Law.

MINING EXPLORATION AND PRODUCTION > 13

Source: MRAM Information Circular 2015, MRAM

Revocation of licences

Where a licence is revoked it must be reissued by tender

except where the revocation is because the licence holder

has failed to pay licence fees on time (or spend the minimum

expenditure).

Preference for suppliers and customers

Mining licence holders must preferentially:

› procure goods and services and hire subcontractors from

business entities which are registered, and paying taxes, in

Mongolia

› supply products that have been semi-developed,

concentrated or mined from the mining licence site to

processing facilities operating in Mongolia at prevailing

market prices.12

Other related laws

Relevant laws for the prospecting, exploration and mining of

minerals in Mongolia include:

› Law on Investment

› Law on Petroleum

› Law on Protection of Mineral Resources

› Mining and exploration in the forests and buffer zones of

protected areas with riverhead and water resources

› Land Law of Mongolia

› General Taxation Law

› Law on Water

› Law on Economic Entity and Organisation Income Tax

› Law on Customs Tariff and Customs Duty.

Exploration and mining licences

In January 2015, the Mineral Resources Authority of Mongolia

(MRAM) resumed the licensing process for exploration and

mining licences, after licences that had been previously issued

had been revoked regarding environmental and transparency

concerns. The new areas opened for exploration activities

are shown in Map 2. Exploration licenses will be granted for

31 million hectares of land (20 per cent of the total area of

Mongolia) of which 20.9 million hectares will be issued through

an application process and 10.1 million hectares will be issued

through a competitive tender.

Map 2: Granted licences in Mongolia


Before the issuing of licences resumed at the end of 2014,

there were 11 million hectares of land licensed for exploration

and mining.

As shown in Figure 1, this was approximately 3.7 million

hectares less than the year before. Of this 11 million hectares,

mining licences covered 1.1 million hectares and exploration

licences covered 9.9 million hectares.

Figure 1: Area of valid licences in million hectares from

2006 to 2014

0

10

2006 2007 2008 2009 2010 2011 2012 2013 2014

20

30

40

50

60

70

59.3

39.5

26.0

22.920.2

14.7

11.0

49.4

42.1

Million hectares

Source: Monthly mining industry statistics, Jan 2015, MRAM

Figure 2 shows that 2,736 valid licenses for mineral resources

had been registered in Mongolia, composed of 1,391 mining

licences and 1,345 exploration licences.

Figure 2: Number of valid licences from 2006 to 2014

Sources: Monthly mining industry statistics, Jan 2015, MRAM

Geology and mining industry booklet, first half of 2014, MRAM

0

1000

2000

3000

4000

5000

6000 5357

4315

1042 1020 1091 1085 1158 1198 1237

1301 1391

3416

41113659

2979

25722303

1717

1345

4463

5202

4744

4137

37703540

30182736

2006 2007 2008 2009 2010 2011 2012 2013 2014

MiningExplorationTotal

Tungsten2%

Gold34%

ContructionRaw Material

21%

Source: Monthly mining industry statistics, Jan 2015, MRAM

Looking at the nature of business ownership, at the end of

2014, 1,557 businesses owned the 2,736 licenses referred to in

Figure 2. The dynamics of the ownership, licence holders and

areas are shown in Table 1.

Table 1: Ownerships of valid licences by investments at the

end of 2014

Source: Computerised mining cadastre system, 2014, MRAM

Figure 3: The structure of mining licences by types of

minerals at the end of 2014

Other9%

Iron5%

Flourspar11%

Coal18%

Legal entity Ownership LicenceArea

(million ha)

Total 1,557 100% 2,736 100% 11 100%

Foreign 100 per cent 270 17.3% 536 19.6% 3.1 28.1%

Foreign and Mongolian JV 117 7.5% 240 8.8% 1.2 10.9%

Mongolian 1,170 75% 1,960 71.6% 6.7 61%


Most mining licences in Mongolia have been issued for gold,

various construction materials and coal.

2.2 GEOLOGICAL EXPLORATION WORK

Geology

Within Mongolia, there are formations and sediments belonging to all different ages with Archean to Quaternary being identified. The

area is structurally divided into Precambrian microcontinent massifs, Paleozoic (Hercynian and Caledonian) fold belts that developed

in the oceanic stage and structural basins, which were formed in the continental stage. 13

Geological mapping and general exploration work

Concerning geological mapping as of 1 January 2013, 30 per cent of Mongolia was covered via the 1:50,000 scale. According to the

Government Action Plan to be implemented in 2012-16, 40 per cent of Mongolia should be covered in such detailed scale by 2016. As

it stands with regards to the 1:200,000 scale, having fully incorporated all types of relevant geological and mining information into an

integrated digital system, the state’s geological complex map covers 81.6 per cent or 1,276,176 square km of Mongolia. Four new projects

are being implemented over an area of 287,924.4 square km and by 2016 it is intended that the entire territory of Mongolia will be covered

via such scale.

Concerning geological and exploration activities undertaken by exploration licence holders, in 2014 149.1 billion MNT (approx.

A$99.4 million) was spent by private organisations on geological exploration work. This represented a decrease of 174.8 billion MNT

(approx. A$116.5 million) or 53.9 per cent compared to 2012 and 153.4 billion MNT (approx. A$102 million) or 50.7 per cent compared

to 2011.14 Independent research released in August 2015 shows that this trend in the decline of exploration in Mongolia is steadily

continuing.15

Mineral resources reserves

As of 1 January 2010, there were 1,130 mineral deposits and 7,668 mineral occurrences with 80 different commodities discovered and

recorded in Mongolia. The four largest types, and mentioned here in greater detail, are gold, copper, iron ore and coal.

Map 3: Distribution map of mineral deposits and occurrences in Mongolia


Source: Geology department, MRAM, April 2015

Gold

There are ten major gold bearing areas in Mongolia, with the main recoverable reserves being mineralised zones and placer deposits.

As of 2014, there are 117 primary and 664 gold placer deposits with proven reserves, and 1,763 occurrences had been identified. The

deposits contain 3,290 tonnes of reserves.

Copper

Mongolia is rich in porphyry copper deposits. Copper-molybdenum (Cu-Mo) mineralisation mainly occurs in three types, including

copper (Cu) porphyries deposits, copper-nickel (Cu-Ni) magmatic segregations, and strata bound (Cu) deposits. There are 57 copper

deposits and around 1,180 copper occurrences which hold 60.7 million tonnes of reserves.

Map 4: Gold deposits occurrences in Mongolia

Map 5: Copper deposits occurrences in Mongolia



Scale 1:2,500,000

Scale 1:2,500,000

Iron ore

Seventy-one iron ore deposits with proven reserves and 500 occurrences have been defined countrywide. The proven iron ore

reserves of Mongolia are calculated to be 1.65 billion tonnes.

Coal

Coal occurs within units of intercalated sandstone, siltstone, and conglomerates. There are 160 coal deposits and 270 occurrences over

15 coal basins and three coalfields in Mongolia. As of the first half of 2013, the geological estimation of coal reserves had reached 173.3

billion tonnes (category P) and the reserves determined through more detailed exploration accounted for 26.8 billon tonnes. This places

Mongolia in the top 10 countries for coal reserves.

Map 6: Iron ore deposits occurrences in Mongolia

Map 7: Coal deposits occurrences in Mongolia



Scale 1:2,500,000

Scale 1:2,500,000

2.3. MINING PRODUCTION

Production

In 2014, total production of the mining sector reached 6,388.9 billion MNT (approx. A$4.2 billion) as shown in Table 2. This represented a 22

per cent increase from 2013 and a 66 per cent increase from 2012. The sector’s contribution to the overall economy is illustrated in Figure

4. In 2014, the mining sector generated 17.6 per cent of GDP and 68.7 per cent of total industrial output.16

Production (billion MNT) 2010 2011 2012 2013 2014

Gross domestic product 9,756.6 13,173.8 16,688.4 19,118.0 21,844.3

Mining sector 2,102.2 2,536.2 2,742.8 2,965.6 3,845.38

Industrial production 4,987.0 6,185.6 5,723.6 7,651.7 9,299.6

Mining production 3,097.0 3,752.3 3,839.7 5,217.4 6,388.9

Table 2: Production of the mining and extractive industry in billion MNT, 2010-14

Figure 4: Share of the mining sector in the GDP and total industrial production in Mongolia, 2010-14

Source: National Statistical Office of Mongolia, www.1212.mn

0

10

20

30

40

50

60

70

2010

21.5%

62.1%

2011

19.3%

60.7%

The contribution of mining

to Mongolia`s GDP

The contribution of the

mining sector to Mongolia`s

industrial production

2012

16.4%

67.1%

2013

15.5%

68.2%

2014

17.6%

68.7%


Table 3 shows that with regards to the production of major commodities, in 2014 iron ore production increased by 70.7 per cent,

copper concentrate production increased by 35 per cent and gold production by 29.2 per cent. On the other hand, coal production

decreased by 26.7 per cent.

Table 3: Production of main commodities of mining and extractive industry, 2010-14

Exports

In 2014, total mineral exports increased by 38 per cent or US$1273.1 million (approx. A$1743.9 million) compared to 2013. As shown

in Table 4, this was largely as a result of the exports of copper concentrate production increasing by 179 per cent owing to the

expansion of the Oyu Tolgoi mine. On the other hand, exports of coking coal, iron ore and crude oil decreased by approximately

37 per cent, 34 per cent and 33 per cent respectively.

Table 4: Export of main mineral products by countries, 2013-14

Main commodities Unit 2010 2011 2012 2013 2014

Copper concentrate with 35 per cent copper content thous.t 357.10 347.40 347.60 533.30 712.00

Molybdenum concentrate with 47 per cent copper content t 4,677.10 4,163.10 4,050.20 3,869.20 4,254.00

Gold kg 6,037.10 5,702.60 5,995.00 8,904.40 11,503.80

Flour Spar concentrate thous.t 140.70 116.40 157.20 76.40 374.90

Iron ore thous.t 3,203.20 5,678.30 7,561.40 6,011.20 10,260.50

Zinc concentrate thous.t 112.60 104.70 119.10 104.10 93.20

Coal thous.t 25,253 32,994 31,139.1 33,340.5 24,449.3

Main commodities by countries Measurement unit2013 2014

Volume Value Volume Value

Iron ore thous.t, thous.USD 6,724 654,333 6,324 446,364

Republic of China thous.t, thous.USD 6,724 654,333 6,324 446,364

Copper concentrate thous.t, thous.USD 650 948,901 1,378 2,573,622

Japan thous.t, thous.USD 4.7 12,892

Republic of China thous.t, thous.USD 650 948,901 1,373 2,560,7230

Zinc ores and concentrate thous.t, thous.USD 131 119,085 100 113,167

Republic of China thous.t, thous.USD 131 119,085 100 113,167

Molybdenum ore and concentrate t, thous.USD 3,879 28,649 4,030 35,677

Republic of Korea t, thous.USD 1,177 9,049 682 7,863

Republic of China t, thous.USD 2,132 15,556 3,170 26,360

Mexico t, thous.USD 211 1,683

Hong Kong t, thous.USD 322 2,114

Russian Federation t, thous.USD 35 247 142 1,025

United States of America t, thous.USD 36 429

Gold, unwrought or in semi-manufactured forms t, thous.USD 7,558 309,826 10,041 405,244

Canada t, thous.USD 3,562 134,072

United Kingdom t, thous.USD 3,997 175,755 9,387 379,966

France t, thous.USD 0.3 10

Switzerland t, thous.USD 654 25,268

Coal thous.t, thous.USD 18,188 1,115,982 19,481 848,597

Republic of China thous.t, thous.USD 18,188 1,115,943 19,461 847,173

Russian Federation thous.t, thous.USD 0.6 39 20 1,424

Source: Monthly mining industry statistics by MRAM, Dec 2014 and Jan 2015

Sources: Monthly mining industry statistics, MRAM, Jan 2015 Geology and mining industry booklet, first half of 2014, MRAM


Processing and concentration

One-hundred and five plants operate throughout Mongolia processing minerals other than coal, with 20 plants conducting mineral

processing that do not require a special licence. Of those plants:

› 15 are involved in primary gold mines, eight of which have started operations

› 36 processing plants are involved in iron ore and 13 of them are processing in a wet environment. The remaining plants process iron ore

through the dry magnetic separation method

› 20 mixed metal plants operate in Mongolia. Six of these plants are for lead-zinc, four are for copper-molybdenum, five are for copper-

gold and five are for other commodities

› Out of 18 fluorspar plants, nine processing plants do not possess special licences

› One silver, one zinc and one molybdenum processing plant are in operation

› There are 11 tungsten and tin processing plants.17

Coal mining and processing

Coal is currently Mongolia’s most important commodity and Tavan Tolgoi has the one of the largest untapped coal reserves in the world.

As of February 2015, 160 economic entities own 244 special licences for coal mining. In 41 coalfields covering 198 special permits for coal

mining, 53 open pit mines are being used, which are made up of one state-owned, two majority state-owned, three local

government-owned and 47 privately owned coal mines.18

Figure 5: Coal mining and processing statistics, 2009-14. Thousand tonnes

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2009 2010 2011 2012 2013 2014

Production

Sales

Export

13,326

13,196

7,551

25,253

25,296

18,241

32,994

30,584

22,526

31,139

26,001

20,470

33,341

25,821

18,188

24,449

27,305

19,513


Sources: Monthly mining industry statistics, MRAM, Jan 2015. Geology and mining industry booklet, first half of 2014, MRAM

2.4. MINING INFRASTRUCTURE ISSUES There are a range of infrastructure issues to be considered

before investing in mining in Mongolia.

Climate

The extreme climate of Mongolia impacts the quality of road,

rail and air transport in the mining sector. Mongolia is effectively

frozen for six months of the year (October to March), with

temperatures regularly descending below -40ºC. At the other

end of the spectrum (April to September), summer temperatures

in the Gobi Desert can reach over 50ºC. The summer is also a

relatively wet season and can bring sudden river flooding and

impassable roads. This makes for a challenging operational

environment, where some areas frequently cannot be accessed

for long periods of time and a lack of preparation can have serious

consequences. The most reliable form of transport for heavy

haulage is rail, although this is not without its challenges.

Transport hubs and shipping

Mongolia is a landlocked country and there are issues

getting people and freight in and out of the country. There

are essentially three main transport hubs: Chinggis Khaan

International Airport in Ulaanbaatar, Sukhbaatar Railway Station

at the Mongolian-Russian border, and Zamyn Uud Railway

Station on the Mongolian-Chinese border. Sea freight to

Mongolia passes through either Tianjin in China (1,344 km from

Ulaanbaatar) or Nakhodka (4,037 km from Ulaanbaatar), both of

which have a bonded warehouse for Mongolian freight. From

these ports the bulk of the freight is sent by rail, the remainder

by road.

Roads

Mongolia’s roads connect only a tiny fraction of the country,

making travel within the country often lengthy and hazardous.

All roads are subject to major surface damage due to the severe

seasonal changes that include flooding, snow drifts and ice.

These poor road conditions affect driving ability, and are often

compounded by a disregard for road rules.

Railways

The Mongolian rail network comprises 1,815 km of broad gauge

track, of which 1,110km is the Trans-Mongolian line that runs

north-south and links Russia to China. Another

239 km represents a separate Eastern Mongolian network

that connects with the Russian network. The balance of 477

km consists of spur lines of these two main lines, one of which

connects the Erdenet Mine to the Trans-Mongolian line.

The railroad and rolling stock are jointly owned and operated

by a Mongolian-Russian joint venture. The diesel locomotives

and rolling stock are Russian, which together with the track

are generally reliable. A considerable amount of freight runs

through Mongolia from Russia to China and vice versa,

including timber, oil, coal, copper–molybdenum, iron ore,

manufactured goods and consumer products.

Rail projects in Mongolia have been heavily influenced by geo-

politics. The Mongolian rail track gauge is the same as Russian

broad gauge, while China uses narrow gauge. Consequently

all rail stock requires a change of gauge at the Chinese border,

causing freight delays.

Aviation

All airports in Mongolia experience frequent closures due to

extreme weather conditions, including strong winds, sand

or snow storms, or visibility problems caused by excessive

air pollution. Air charter services using turboprop aircraft are

available out of Ulaanbaatar to service exploration and mining

projects, and the quality of the planes and pilots is good with

most having Russian training and qualifications.

Airfreight to Mongolia is expensive and costs can be as high as

US$30 per kilogram depending on the route and carrier. The

main carriers are Mongolian Airlines (MIAT), Air China, Aeroflot,

Turkish Airlines and Korean Air. All have wide-bodied aircrafts.

These carriers have regular services to Beijing, Seoul, Osaka,

Tokyo, Irkutsk, Moscow, Berlin and Frankfurt.

Communications

The telecommunications network covers all 21 provincial

centres (aimags) and most of the districts (soums) of Mongolia.

Domestic and International calls can be made from anywhere in

these areas via fixed land lines. There are four mobile operators

providing services using GSM, CDMA and 3G technologies.

These mobile networks cover all aimag and soum centres.

Calling outside of mobile and fixed line networks is possible

using satellite telephones. Broadband Internet is available in all

aimags and some soum centres, but it can be a challenge to

access the Internet in remote parts of Mongolia.

Power

Electricity is generated by five coal-fired power stations, but can

be unreliable with blackouts in the capital and other centres.

Power is 220-240W. Finding reliable power outside these

centres or away from the main transport arteries is problematic,

as the distribution infrastructure is poor by world standards and

the network suffers from a lack of maintenance.


Water

Mongolia is an arid country; the northern and western regions

may enjoy 250-400mm of annual rainfall and surface flows

occur, but mean annual rainfall in the southern Gobi Desert is

limited to 70mm. Under these conditions groundwater presents

the best, and in some instances only, water source.

Several projects and mines under development have established

water security from groundwater sources, following significant

investment and time in exploration and testing, as is demanded

under local regulations and to meet international standards.

Some sources lie more than 50 km from the project centre.

2.5. MINING BUSINESS AND INVESTMENT OPPORTUNITIES

There are a number of opportunities for Australian companies

in the Mongolian mining sector. Australian goods and services

have a good reputation in the Mongolian market, and there is

strong brand awareness across all segments of the market.

Equipment and consumables supply

Opportunities exist for Australian suppliers to supply larger

Mongolian, foreign-owned and joint-ventured projects at the

higher end of the market, as these companies have higher

operational standards and are quality conscious. Small, mid-sized

local operators tend to be more price sensitive and purchase a

greater volume of their equipment and consumables from China,

although there is a growing appreciation for quality versus cost

in this segment of the market. To take full advantage of these

opportunities it is critical to establish a market presence.

Technical services

There are opportunities for technical services in the Mongolian

mining sector, particularly in the fields of engineering, geology,

hydrology, geophysics, mine software, technical training and

environmental management. Foreign miners currently employ

the majority of these services, but there are successful examples

of Australian companies working with Mongolian miners and the

Mongolian Government.

Vocational training

With regards to large scale mining projects and the agreements

between mining companies and the government, a ratio of

Mongolian worker to foreigners has been stipulated, which

has created demand for skilled workers. Mongolia’s vocational

training sector is adapting to meet the needs of modern mining,

but the present system is still based on theoretical learning.

Opportunities exist for the provision of education for trades,

followed by mine safety and operations. Opportunities also exist

to partner with local TVET institutions, government and mining

companies that require skilled labour. Key areas that require

development are: curriculum development, teacher training and

management of facilities, staff and students.

Higher education

Opportunities exist for foreign universities with a strong mining

focus to partner with local institutions to help raise the standard

of learning and better equip graduates to meet the needs of a

modern mining sector. A common remark from foreign mining

companies is that Mongolian graduates would benefit from a

bridging year at institutions in countries such as Australia, to raise

them to the standards acceptable to modern mining companies.

Direct investment

Mongolia has some of the most significant mineral deposits

in the world. Only 30 per cent of the country has been fully

geologically surveyed, and of this more than 6,000 significant

deposits of 80 different minerals have been discovered. This

situation alone makes Mongolia one of the more attractive

countries for green field exploration and mining.

Non-mining opportunities

As the mining sector lifts the wealth and development of

Mongolia, increasing demands will be placed on other sectors

to meet the needs of these projects and an advancing economy.

Large mine sites in the South Gobi region and the equally

prospective reserves in the northern region, require a vast range

of supporting infrastructure and services. Examples include

mine-to-market rail design, construction and operations, urban

planning, and health and medical infrastructure and services.


2.6. KEY MINING AND INWARDS INVESTMENT AUTHORITIES

Ministry of Mining

The Ministry of Mining develops and implements mining sector-related legislation, policy and strategy, as well as providing information,

recommendations and support to the Minister and Government in all relevant matters. Furthermore, the Ministry provides oversight and

analysis on sector policy, planning, coordination and policy implementation. It also conducts outcome assessments and ensures effective

use of budget and investments as well as coordination within the sector.

Ministry of Mining organisational chart

Address: Government Building 12, United Nations Street 5/2, Ulaanbaatar, Mongolia

Phone: +976 51 263 506

Fax: +976 11 318 169

Website: www.mram.gov.mn

Email: [email protected]

[email protected]

Minister

Deputy Minister

State Secretary

Department of State

Administration

Department of Policy

Implementation and Regulation

Department of Monitoring, Evaluation and Internal Audit

Department of Oil Policy and Coordination

Department of Strategic Policy

and Planning

Minister’s Office

Inte

rnat

iona

l C

oop

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ion

Div

isio

n

Min

ing

Div

isio

n

Econ

omic

and

Fin

ance

D

ivis

ion

Geo

logy

Pol

icy

Div

isio

n

Mineral Resources Authority

Petroleum Authority


Mineral Resources Authority of Mongolia

The Mineral Resources Authority of Mongolia (MRAM) is an implementing agency of the Government of Mongolia. Its purpose is to

support the administration of the mineral resources in formulating development of policy, to provide required information and create a

favourable environment to increase investment in the mining sector. MRAM also provides services related to exploration and mining

licenses in order to implement the governing Minerals Law.

The MRAM works in concert with other government agencies on environmental matters related to mining.

MRAM organisational chart

Address: Government Building 12, Barilgachdyn Talbai 3, Chingeltei District, Ulaanbaatar, Mongolia

Phone: +976 51 263 926

Fax: +976 11 310 370



General Director

Deputy Director

Inte

rnat

iona

l C

oop

erat

ion

Div

isio

n

Inte

rnat

iona

l C

oop

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ion

Div

isio

n

Administration and

Management Division

Legislation Division

Geological Division

MiningDivision

Coal Division

Monitoring and Statistics

Division

Concil of Director


Invest Mongolia Agency

Invest Mongolia Agency (IMA) was established in 2013 with a wide program to promote and facilitate business investment in

Mongolia. IMA aims to create a business-friendly environment for investors and to assist both foreign and domestic investors in

planning their investments and guiding them through the process.

General Director

Project Assessing Concil

Promotion Consulting Division

Investment Policy,Assessment

Division

Administration Human Resources

Division

Concession, Public-Private

Partnership Division

Address: 8th floor, Government Building 11, Sambuu Street 11, Ulaanbaatar, Mongolia

Phone: +976 11 326 040, +976 11 320 706

Fax: +976 11 318 169



[email protected]

26 > Mongolian Mining Projects Report 2015 MINES AND EXPLORATION PROJECTS > 27

Invest Mongolia Agency organisational chart

SECTION 3

3.1. OPERATING MINES

Copper

1. Erdenet Mine Copper and Molybdenum

2. Oyu Tolgoi Mine Copper and Gold

Coal

3. Baganuur Mine Thermal Coal

4. Baruun Noyon Uul Mine Coking Coal

5. Khushuut Mine Coking and Thermal Coal

6. Naryn Sukhait Mine Coking Coal

7. Ovoot Tolgoi Mine Coking Coal

8. Shivee Ovoo Mine Thermal Coal

9. Tavan Tolgoi Mine Coking Coal

10. Ukhaa Khudag Mine Coking Coal

11. Ulaan Ovoo Mine Thermal Coal

Iron Ore

12. Bargilt Mine Iron Ore

13. Bayangol Mine Iron Ore

14. Tumurtein Gol Mine Iron Ore

15. Tumurtei Mine Iron Ore

Gold

16. Bayan Airag Mine Gold and Silver

Fluorspar

17. Bor–Undur Mine Fluorspar

MINES AND EXPLORATION PROJECTS > 27


Operating Mine 1

Name of mine Erdenet Mine

Mineral mined Copper (Cu) and Molybdenum (Mo)

Location Bayan-Undur Soum, Orkhon Province, 400 km northwest of Ulaanbaatar

OwnershipErdenet Mining Corporation is 51 per cent owned by the Mongolian Government and 49 per cent owned by the Russian Government

Operator of mine Erdenet Mining Corporation LLC (EMC)

Web address www.erdenetmc.mn

Production commenced 1978

Mining operation (mining equipment)

Conventional shovel-truck open pit mining

Excavators: LIEBHERR-994B, EKG-10, EKG-15,

Haulage: BelAZ-75130, BelAZ-75473 and BelAZ-7648

Loaders: Komatsu WA800 and WA-600, LIEBHERR L-581

Drills: SBSH250

Grader: CAT 16H

Dozer: Komatsu D275A; 824G, WD500

Mineral reserves and ore grade Estimated reserves: 1.5 billion tonnes

Production capacity

Mining: 28.9 million tonnes of ore per year

Processing: Over 530 thousand tonnes of copper concentrate and 3,000 tonnes of molybdenum concentrate per year. The mine has a Solvent Extraction Electro Winning Plant capable of producing 3,000 tonnes Cu cathode annually. In July 2015, Erdenet announced it increased processing capacity by 6 million tonnes annually, and its processing capacity will reach 32 million tonnes of ore per year

Total number of employees Approximately 6,000

Infrastructure Erdenet is connected by railway to the East-Siberian railway network and to the Chinese railway network. It is also connected by a paved road to the provinces of Bulgan, Darkhan and Ulaanbaatar. The infrastructure surrounding Erdenet is well developed

Production for 2014 29.4 million tonnes of ore

Contact

Name: Mr D. ChuluunbatPosition: Chief of Ulaanbaatar Representative Office Address: Peace Avenue 14, Ulaanbaatar, MongoliaEmail: [email protected]: + 976 11 320 561Mobile: + 976 99 114 903


Operating Mine 2

Name of mine Oyu Tolgoi Mine (open pit)

Mineral mined Copper (Cu) and Gold (Au)

LocationKhanbogd Soum of South Gobi Province, approximately 550 km south of Ulaanbaatar, 80 km north of the Mongolia-China border

Ownership34 per cent is owned by the Government of Mongolia, while the other 66 per cent is held by Turquoise Hill Resources -51 per cent of which is owned by Rio Tinto

Operator of mine Oyu Tolgoi LLC

Web address www.ot.mn




Excavators: Bucyrus 495HR and Bucyrus 340

Haulage: Komatsu 930E

Loaders: Komatsu WA 1200

Drills: Atlas Copco PV351 and Sandvik DR580

Grader: CAT 16M

Dozer: Komatsu DT375 and DT475

Mineral reserves and ore gradeMeasured and indicated at CuEq 0.37 per cent, Cu 14,616,714klbs; Au-7,674koz; Measured and indicated at CuEq 0.22 per cent, Cu 772,148klbs; Au-821koz

Production capacity

Mining: 76.9 million tonnes material mined in 2014

Processing: 100,000 tonnes of ore per day. In July 2015 it was announced that Turquoise Hill expects Oyu Tolgoi to produce 175,000 to 195,000 tonnes of copper and 600,000 to 700,000 ounces of gold in concentrates in 2015

Total number of employees 6,939 as at 31 January 2015

Infrastructure

There is limited public infrastructure. All major infrastructure for operation was developed in the construction phase (2010-13). This includes: paved roads from the mine to the Chinese border, water pipelines, power lines to the Chinese grid, a central heating plant and an international standard airport

Production for 2014 148,400 tonnes of copper and 589,000 ounces of mined gold

Contact

Name: Mr Greg Courts

Position: Procurement Leader

Address: Monnis Tower, Chinggis Avenue 15, Ulaanbaatar, Mongolia


Telephone: +976 11 331 880

Fax: +976 11 331 890


Operating Mine 3

Name of mine Baganuur Mine

Mineral mined Thermal coal

Location Baganuur District, 120 km east of Ulaanbaatar

Ownership Mongolian Government owns 75 per cent and 25 per cent is privately owned

Operator of mine Baganuur JSC

Web address www.baganuurmine.mn



Excavators: ESH20/90, ESH15/90,ESH10/70, ESH13/50, EKG10, EKG8Dump trucks: BelAZ-7555, CAT 777, KOMATSU-HD405Drills: Sandvik D45KS, Russian SBR A-160

Mineral reserves and ore grade 600 million tonnes of B type brown coal

Production capacity

Mining: 4 million tonnes of coal per year

Processing: N/A

Total number of employees 1,117 as at 31 Dec 2014

Infrastructure Connected by paved road and railroad to Ulaanbaatar. Fully supplied with electric power, water and heating

Production for 2014 3.6 million tonnes of thermal coal

Contact

Name: Mr G. Erdenebaatar

Position: Chief Engineer

Address: Baganuur LLC, Baganuur District, Ulaanbaatar 12150, Mongolia


Telephone: + 976 70 210 114

Mobile: + 976 99 020 918

Fax: + 976 70 213 130


Operating Mine 4

Name of mine Baruun Noyon Uul (BNU) Mine

Mineral mined Coking coal

Location Noyon soum, Southgobi Province, 850 km from Ulaanbaatar

Ownership Guildford Coal Limited, Australia

Operator of mine Terra Energy owns and operates BNU

Web address www.guildfordcoal.com.au; www.terraenergy.mn



Excavators: CAT320, CAT 390 and CAT6030 Haulage: CAT777D and CAT773E Drill: Sandvik Dozer: CAT D9 Grader: CAT M988

Mineral reserves and ore grade JORC resources for BNU consist of 15.26 Mt measured, 8.77 Mt indicated and 3.04 Mt inferred

Production capacity

Mining: 1.5 million tonnes of coal per year

Processing: None, feasibility study is in process

Total number of employees 311 (including contractors)

Infrastructure The project is located in a region where infrastructure is developing. However, mining activities are increasing and will be the key to the region’s economic and infrastructural development

Production for 2014Shipping to China started in August 2014. 23,000 tonnes of coal has been shipped to the buyer. In April 2015, BNU shipped 93,400 tonnes of coal to China

Contact

Name: Ms L. Nomin-Erdene

Position: Deputy Administration Manager

Address: Sunroad Building 6th Floor, Sukhbaatar District,

9-1 Narnii Zam, Ulaanbaatar, Mongolia


Telephone: + 976 75 750 915

Mobile: + 976 99 017 861


Operating Mine 5

Name of mine Khushuut Mine

Mineral mined Coking coal and thermal coal

LocationDarvi soum of Khovd Province, 1500 km west-southwest of Ulaanbaatar and 310 km northeast of the Yarant border crossing between Mongolia and China

Ownership Mongolia Energy Corporation Limited

Operator of mine MoEnCo LLC

Web address www.moenco.mn



Open cut mine with conventional shovel and truck fleet operated by contractor miners: Monnis Mining Equipment LLC (Mongolia) and Shin Jiang Lu Di Van LLC (China)

Mineral reserves and ore grade 141 million tonnes of coal

Production capacity


Processing: 1 million tonnes per year

Total number of employees Approximately 1,000

Infrastructure 311 km heavy-duty road from the pit to the Mongolia-China border

Production for 2014 100,000 tonnes

Contact

Name: Ms Indraa Khurts

Position: Procurement Manager

Address: 3th Floor, Tushig Centre, Seoul Street, Sukhbaatar District,

Ulaanbaatar 14250, Mongolia


Telephone: + 976 77 110 567

Fax: + 976 77 110 510


Operating Mine 6

Name of mine Naryn Sukhait Mine


LocationGurvan Tes Soum of South Gobi Province, 849 km southwest of Ulaanbaatar and 56 km north of the Mongolia-China border

Ownership Mongolyn Alt (MAK) Corporation

Operator of mine Mongolyn Alt LLC

Web address www.mak.mn



Excavators: Bucyrus RH 170 and Bucyrus RH 120

Haulage: BelAZ 75306 and BelAZ 75131

Drills: Sandvik D75, D45KS

Mineral reserves and ore grade 229 million tonnes of semi-soft metallurgical coal resources

Production capacity


Processing: N/A

Total number of employees 350-450

Infrastructure 96 km of power transmission line was completed between Ceke and the Mongolia-China border in 2007. 55 km of paved road was also commissioned between the Shivee Khuren borders to Naryn Sukhait in 2010

Production for 2014 4 million tonnes

Contact

Name: Mr B. Alterdene

Position: Senior officer

Address: Peace Avenue 14, Ulaanbaatar, Mongolia


Telephone: + 976 75 759 700

Mobile: + 976 99 206 089

Fax: + 976 70 107 481


Operating Mine 7

Name of mine Ovoot Tolgoi Mine


LocationWithin the administrative units of Gurvantes and Noyon Soums in the Umnugobi Aimag (South Gobi Province). The mine is located approximately 40 km from the Shivee Khuren-Ceke border crossing at the Mongolia-China border

Ownership SouthGobi Resources Ltd

Operator of mine SouthGobi Sands LLC

Web address www.southgobi.com



Conventional open-cut mine Hydraulic excavators: 2 units Liebherr 996 and 3 units Liebherr R9250Haul trucks: 22 units MT4400AC (218 tonne capacity) and 2 units Terex TR100 (91 tonne capacity)

Mineral reserves and ore gradeMeasured and Indicated: 193 Mt coal

Inferred: 24 Mt coal

Production capacity


Processing: N/A

Total number of employees Approximately 350

Infrastructure Connected to China by paved highway

Production for 2014 1.6 million tonnes of coal per year

Contact

Address: 8th Floor, Monnis Building, Orgil Stadium 22, 15th Khoroo,

Khan-Uul District, Ulaanbaatar 17011, Mongolia


Telephone: +976 70 070 710

Fax: +976 70 070 720


Operating Mine 8

Name of mine Shivee Ovoo Mine


Location Gobi Soum, Gobi Sumber Province, 260 km south east of Ulaanbaatar

Ownership 90 per cent owned by the Government of Mongolia and 10 per cent by other shareholders

Operator of mine Shivee-Ovoo JSC

Web address www.shivee-ovoo.mn



Excavators: ESH25/90, ESH 11/70, EKG5A

Dump trucks: 16 units BelAZ-7555, CAT 777, KOMATSU-HD405

Drill: 2 units Sandvik D45KS, Russian SBR A-160

Other: Dozers, graders etc.

Mineral reserves and ore grade 646.5 million tonnes of B-2 type brown coal

Production capacity


Processing: N/A

Total number of employees 510 as at 31 Dec 2014

Infrastructure Connected by paved road and railroad with Ulaanbaatar. Fully supplied with electric power, water and heating

Production for 2014 2 million tonnes of thermal coal

Contact

Name: Mr Enkhbayar

Position: Head of Procurement Department

Address: Shivee Ovoo soum, Gobi Sumber Province, Mongolia

Telephone: +976 70 546 464

Fax: +976 70 546 464


[email protected]


Operating Mine 9

Name of mine Tavan Tolgoi Mine


LocationTsogttsetsii Soum, South Gobi Province, 540 km south of Ulaanbaatar, and 270 km north of the Mongolia-China border

OwnershipErdenes Tavan Tolgoi LLC -100 per cent owned by Mongolian Government through Erdenes Mongolia LLC

Operator of mine Erdenes Tavan Tolgoi LLC and Mongol Uurkhaichid consortium of Khishig Arvin Industrial, Mera and Mongolian National Operator LLC

Web address www.erdenestt.mn

Production commenced East Tsankhi section started in 2011

West Tsankhi section started in 2013


Conventional shovel-truck operationExcavators: Liebherr R 9350Haulage: Terex MT4400

Mineral reserves and ore grade A reserve of 6 billion tonnes coal, of which 1.4 billion is coking coal and 4.6 billion is thermal coal

Production capacity

Mining: The scale of production will reach full capacity in 2016 with production of 20 million tonnes per year

Processing: a technical and economic feasibility study for the coal enrichment plant with capacity of 20 million tonnes was approved by the Ministry of Mining, Mongolia

Total number of employeesErdenes Tavan Tolgoi JSC employs 129 people at the head office in Ulaanbaatar and 439 at the mine site

Infrastructure

Water supply: water will be sourced from Balgasyn Ulaan Nuur, located 70 km north-west of Tavan Tolgoi

Road: coal is transported to customers by road

Railway: 217 km heavy haulage railway linking the Tavan Tolgoi mine to Mongolian-China border is under construction

Production for 2014 5.7 million tonnes of coal was exported

Contact

Name: Mr P. Gereltsansar

Position: Head of Foreign Relation and Public Relation Division

Address: Finance Center, Jigjidjav Street 8, Chingiltei District,

Ulaanbaatar, Mongolia


Telephone: + 976 70 118 585

Fax: + 976 70 119 595


Operating Mine 10

Name of mine Ukhaa Khudag Mine


LocationTsogttsetsii Soum, South Gobi Province, 560 km south of Ulaanbaatar, and 240 km north of the Mongolia-China border

Ownership Mongolian Mining Corporation

Operator of mine Energy Resources LLC and Thiess Australia

Web address www.energyresources.mn



Excavators: Liebherr 996, Liebherr 9250, Hitachi 3600, Hitachi 1200

Dump trucks: CAT 793, CAT 785, CAT 777

Drills: Sandvik D45KS, Atlas Copco DP, Cat MD6290

Mineral reserves and ore grade

Coal reserve as at 31 Dec 2012

Coking coal: 236 million tonnes

Thermal coal: 80 million tonnes

Total: 316 million tonnes

Production capacity

Mining: 15 million tonnes per year

Processing: 15 million tonnes of coal per year


Infrastructure

18 MW power plant, 15 mln tonnes processing plant, a water supply system is in operation at the mine and there are 245 km of industrial purpose paved roads to the Mongolia-China border

Social infrastructure facilities for the mine employees and local residences including an apartment complex, school and kindergarten and a modern miners camp with various in-house service facilities

Production for 2014 4.6 million tonnes

Contact

Name: Ms B. Bayarmaa

Position: Vice President, Procurement & Contract Management

Address: 16th floor, Central Tower, Sukhbaatar District,

Ulaanbaatar 14200, Mongolia


Telephone: + 976 70 122 279

Fax: + 976 11 322 279


Operating Mine 11

Name of mine Ulaan Ovoo Mine


Location 120 km west of Sukhbaatar province and 5 km north of Tushig soum centre

Ownership Redhill Mongolia LLC, a subsidiary of Prophecy Development Corp

Operator of mine Redhill Mongolia LLC

Web address www.prophecydev.com



Excavators: 4 Dump trucks: 6 Others: dozers, graders, loaders


Over 200 million tonnes of measured and indicated reserves.

Type: thermal coal

Rank: subbituminous A

Production capacity


Processing: 800 tonnes of coal per day

Total number of employees 59 as at 31 Dec 2014

Infrastructure Haul road to railroad siding, railroad siding 125 km, water, phone, internet

Production for 2014 95,000 tonnes of coal

Contact

Name: Mr Christopher M Kravits

Position: General Mining Manager

Address: 8th floor, Monnis Tower, Chinggis Avenue, Ulaanbaatar 14240,

Mongolia


Telephone: + 976 11 331 669

Fax: + 976 11 312 721


Operating Mine 12

Name of mine Bargilt Mine

Mineral mined Iron ore

Location Bor Undur Soum, Khentii Province, 320 km southeast of Ulaanbaatar

OwnershipMongolrostsvetmet Mining Corporation LLC is owned by Mongolian Government and Russian Government by 51 and 49 per cent respectively

Operator of mine Bor Undur Mine (MonRos)

Web address www.mongolros.mn



Open pit mining

Excavator: EKG 5A

Haulage: BelAZ

Drill: SbSh-250

Dozer: Caterpillar

Mineral reserves and ore gradeReserves: 45 million tonnes

Grade: 34.8 per cent iron ore

Production capacity


Processing: wet and dry magnetic separation, 450,000 tonnes of iron ore concentrate

Total number of employees 100

Infrastructure The Bor Undur mine has transport, railway, administration and maintenance infrastructure

Production for 2014 442,000 tonnes iron ore concentrate

Contact

Name: Mr N. Enkhbaatar

Position: Head of Export and Procurement Department

Address: Mongolrostsvetmet, Bayanzurkh Distruct, Ulaanbaatar, Mongolia


Telephone: + 976 11 458 072

Mobile: + 976 99 117 827

Fax: + 976 11 458 380


Operating Mine 13

Name of mine Bayangol Mine


Location Yeruu Soum, Selenge Province, which is 340 km north of Ulaanbaatar

Ownership Dorniin Gobi LLC and Lung Ming Investment Holdings

Operator of mine Boldtumur Yeroo Gol Co. Ltd

Web address www.bteg.mn



Open cut mine

Excavators: WEK 12,CAT 385C and VOLVO EC700B

Dump trucks: TEREX 100 and TEREX 50

Loader: VOLVO L350F

Drills: CDM30, ROC L8, SWDE 200 and SWDB 200

Dozer: SD 22

Mineral reserves and ore gradeA total definite reserve is 120 million tonnes of iron ore but potential to reach 150 million tonnes

Grade: 43-45 Fe

Production capacity


Processing: dry and wet magnetic separation


Infrastructure The mine site is provided with improved road access, high voltage power lines and a railway spur

Production for 2014 4.9 million tonnes of iron ore

Contact

Name: Mr M. Sukhbaatar

Position: Vice Director

Address: Baruun Selbe-20, Chingeltei District, Ulaanbaatar, Mongolia


Telephone: + 976 11 330 053

Mobile: + 976 99 112 363

Fax: + 976 11 330 053


Operating Mine 14

Name of mine Tumurtein Gol Mine


Location Khuder Soum, Selenge Province, 381 km north of Ulaanbaatar

Ownership Erdes Holdings LLC

Operator of mine Erdes Group LLC

Web address www.erdes.mn



Excavators: CAT-3455, CAT-375 and Hyundai-500

Dump trucks: BelAZ and Terex TR-50

Drills: Titon-500

Grader: CAT-D9

Mineral reserves and ore gradeReserves estimated: 16.4 million tonnes

Grade: 48.37 per cent iron ore

Production capacity


Processing: two processing lines of dry magnetic separation with capacity 120-150 tonnes per hour

Total number of employees 150-200

Infrastructure Connected to Dulaankhaan railway station by improved road and a high voltage transmission line to the national power grid

Production for 2014 900,000 tonnes of iron ore

Contact

Name: Mr L. Natsagdorj

Position: Director of Manufacturing

Address: New Century Plaza, 6th Floor, Chinggis Avenue,

Ulaanbaatar, Mongolia


Telephone: + 976 11 331 107

Mobile: + 976 99 114 731

Fax: + 976 11 331 102


Operating Mine 15

Name of mine Tumurtei Mine


LocationKhuder soum of Selenge Province, 130 km north-east from Darkhan-Uul Province, approximately 560 km north of Ulaanbaatar

Ownership State-owned Darkhan Metallurgical Plant Co. Ltd

Operator of mine Darkhan Metallurgical Plant Co. Ltd

Web address www.dmp.mn



Excavators: Hitachi EX-2600B, EX-1200

Loaders: Luigong

Haulage: BelAZ-75131, Howo-A60 trucks

Drills: Sandvik D550, Sunward SWD-165

Grader: CAT16M

Dozers: CATD10 and CATD9R


Indicated Resource: 57 million tonnes

Inferred Resource: 100.6 million tonnes

Probable Reserve: 71.6 million tonnes

Total: 229.2 million tonnes

Production capacity

Mining: up to 3 million tonnes per year

Processing: 3 million tonnes of iron ore per year

Total number of employees 278

Infrastructure

36.7 km of railway from Khandgait station of BTEG LLC to Tumurtei mine is under construction. A 16 MW substation was built at the Eruu soum and connected a 49.7 km of 110/6 KV power transmission line from the Eruu substation to the Tumurtei mine. There is also a terminal for loading iron concentrate at the Khandgait station, which was built in 2014

Production for 2014 941,000 tonnes

Contact

Name: Mr. K. Enkhchuluun

Position: Deputy Director of Development Strategy

Address: Darkhan Metallurgical Plant, Industrial Area, Darkhan City, Mongolia


Telephone: + 976 70 374 203

Mobile: + 976 99 990 861


Operating Mine 16

Name of mine Bayan Airag

Mineral mined Gold

LocationDurvuljin soum of Zavkhan aimag, in the North-Western part of Mongolia, approximately 1,200 km west of Ulaanbaatar

Ownership Bayan Airag Exploration LLC

Operator of mine Bayan Airag Exploration LLC

Web address www.bayanairag.com




Excavators: CAT-390D; CAT-320D; CAT-345D

Haulage: САТ-773E

Drills: Atlas Copco RockT-35

Grader: CAT160K

Dozer: CAT-D8R and CAT-D8N

Mineral reserves and ore gradeEstimated reserves: 5 million tonnes of ore

Grade: 2.2 grams of gold per tonne

Production capacity 980,000 tonnes of ore for around 50,000 ounces of gold per year

Total number of employees Approximately 380 as at 31 Mar 2015

Infrastructure

Processing plant Heap leach pad 12km Borefield/water supply system 3.6MW Diesel station and overhead power lineReagent storage, liquor tank, ponds, workshop, laboratory Camp with capacity for 400 people

Production for 2014 Mining: 550,000 tonnes of ore

Contact

Name: Bill Colvin

Position: CEO


Name: Enkhtuvshin Yura

Position: Managing Director


Address: 7th Floor, Central Tower, Great Chinggis Khaan’s Square 2,

Sukhbaatar District, Ulaanbaatar 14210, Mongolia

Telephone: + 976 77 116 100


Operating Mine 17

Name of mine Bor-Undur Mine

Mineral mined Fluorspar (CaF2)

Location Bor Undur Soum, Khentii Province, 320 km southeast of Ulaanbaatar

OwnershipMongolrostsvetmet Mining Corporation LLC is 51 per cent owned by the Mongolian Government and 49 per cent owned by the Russian Government

Operator of mine Bor Undur Mine (MonRos)

Web address www.mongolros.mn



Underground mining by shrinkage stopping

Mineral reserves and ore gradeReserves: 15 million tonnes of fluorspar

Grade: average 31 per cent CaF2

Production capacity

Mining: 500,000-600,000 tonnes of CaF2 ore per year

Processing: 120,000-140,000 tonnes of CaF2 acid grade concentrate

Total number of employees 1,100

Infrastructure Bor Undur mine has transport, railway, administration and maintenance infrastructure

Production for 2014 47,000 tonnes of fluorspar concentrate

Contact

Name: Mr N. Enkhbaatar

Position: Head of Export and Procurement Department

Address: Mongolrostsvetmet, Bayanzurkh Distruct, Ulaanbaatar, Mongolia


Telephone: + 976 11 458 072

Mobile: + 976 99 117 827

Fax: + 976 11 458 380


3.2. PLANNED MINES

1. Gatsuurt Mine Gold

2. Ovoot Mine Coking Coal

3. Oyu Tolgoi Underground Mine Copper and Gold

4. Tsagaan Suvarga Mine Copper and Molybdenum



Planned Mine 1

Name of mine Gatsuurt Mine

Mineral mined Gold

Location Mandal Soum, Selenge Province, 90 km north of Ulaanbaatar

OwnershipCenterra Gold Inc is a North American gold mining and exploration company. It owns 100 per cent of Gatsuurt exploration property

Operator of mine Centerra Gold Mongolia LLC

Web address www.centerragold.com

Development

Site preparation is complete, awaiting approval to commence mining. Centerra reported on 18 June 2015 the Mongolian Parliament rejected and returned to the Mongolian Government for further assessment a proposal that the Mongolian state interest in Gatsuurt be either a 34 per cent ownership or a special royalty. This took place after the project was designated as a mineral deposit of strategic importance by the Mongolian Parliament in January 2015


Mining is planned using conventional open pit methods with standard North American equipment. The primary excavator for operation is a 12m3 hydraulic excavator in a backhoe configuration. This machine will load a fleet of 95-tonne haul trucks. Blasthole drilling will be carried out using a 45,000 lb drill, drilling 152 mm diameter holes


On 31 December 2013, probable reserves for the Central and Main Zones combined were estimated at 1.6 million ounces of contained gold. Measured and indicated resources were estimated at 398,000 ounces of contained gold and inferred resources were estimated at 440,000 ounces of contained gold. Estimated reserves: 17.1 million tonnes, Ore grade: average 2.9 gm/tonne

Production capacity

Mining: 35,000 tonnes per day (ore and waste) sulphide ore

Processing: 4,800 tonnes per day

Infrastructure Development covers two sites: Gatsuurt mine and modification in and around the Boroo mill. Infrastructure will comprise of new facilities at Gastuurt and expanded facilities at Centerra’s Boroo Gold Mine

Contact

Address: 12th Floor, Bodi Tower, Sukhbaatar Square, Ulaanbaatar, Mongolia

Contact: Media Relations Officer


Telephone: + 976 11 317 798

Fax: + 976 11 316 100


Planned Mine 2

Name of mine Ovoot Mine

Mineral mined Coking Coal

Location North-western Mongolia

Ownership Aspire Mining Limited

Web address www.aspiremininglimited.com

Comment

Aspire is the owner of the Ovoot Coking Coal Project, the second largest coking coal project by reserves in Mongolia. Ovoot has reported reserves as of July 2013 of 255Mt by JORC (2012) standards. Plans for the mine consist of initially producing 5 Mtpa, increasing to produce up to 10 Mtpa of high quality coking coal over a 21 year life of mine. Aspire was granted a mining licence in August 2012 and received approval for its Mongolian Feasibility Study by MRAM in 2013.

In August 2015, a resolution was passed by the Cabinet of the Government of Mongolia authorising the Government’s Investment Agency to execute a concession agreement with Aspire’s subsidiary Northern Railway LLC to build and operate the Erdenet to Ovoot railway. The concession is for an operational period of 30 years with 100 per cent of the railway to be transferred to the Mongolian Government after 30 years. This concession presents Ovoot with a transport path to markets including China and Russia.

Under the concession, Northern Railways will need to satisfy a number of conditions to commence construction of the railway within 18 months. These conditions include: completion of the rail bankable feasibility study; execution of an EPC contract; all licences, permits and approvals have been granted by the Government of Mongolia; financing agreements have been executed; and all contracts required for commencement of construction have been executed. In September 2015, Aspire mentioned that preliminary findings from a scoping study indicate that there are no technical obstacles to building a efficient high-capacity rail connection from Ovoot through to the Russian city Kyzyl.

Contact

Name: Mr Matt Crompton

Position: Infrastructure Manager


Address: Altai Tower, 3rd Floor, Room 302, Chinggis Ave-8, 1st Khoroo,

Sukhbaatar District, Ulaanbaatar Mongolia

Telephone: +976 70 116 828


Planned Mine 3

Name of mine Oyu Tolgoi Underground Mine

Mineral mined Copper and Gold

LocationKhanbogd Soum of South Gobi Province, approximately 550 km south of Ulaanbaatar city and 80 km north of the Mongolia-China border

Ownership34 per cent of OT LLC is owned by the Government of Mongolia, while the other 66 per cent is held by Turquoise Hill Resources -51 per cent of which is owned by Rio Tinto

Operator of mine Oyu Tolgoi LLC

Web address www.ot.mn

Comment

Oyu Tolgoi was discovered in 2001 and consists of a series of deposits containing copper, gold, silver and molybdenum. The Oyu Tolgoi deposits stretch over 12 km and contain an estimated measured and indicated mineral resource of 46.8 billion pounds of contained copper and 25.3 million ounces of contained gold, and an estimated inferred mineral resource of 51.5 billion pounds of contained copper and 36 million ounces of contained gold.

The open cut mine is already producing significant and increasing amounts of copper concentrate but the majority of the value of the deposit particularly with regards to copper and gold (estimated by some to be 80 per cent) lies underground. Development of the underground mine had taken place but was suspended in 2013. In May 2015, the development of the underground mine took moved forward with the signing of the Oyu Tolgoi Underground Mine Development and Financing Plan by the Government of Mongolia, Turquoise Hill Resources and Rio Tinto.

In September 2015, the Mongolian Minerals Council approved the revised schedules for the 2015 Oyu Tolgoi Feasibility Study. These revised schedules on the underground project were submitted to the Mongolian Minerals Council on 27 August. The next step before a final decision is made on the project by Oyu Tolgoi’s stakeholders is to complete project financing, which is expected to be finalised before the end of 2015.

Contact

Name: Mr Greg Courts

Position: Procurement Leader

Address: Monnis Tower, Chinggis Avenue 15, Ulaanbaatar, Mongolia


Telephone: +976 11 331 880


Planned Mine 4

Name of mine Tsagaan Suvarga Mine

Mineral mined Copper and Molybdenum

Location Mandakh Soum, Dornogovi Province, 560 km from Ulaanbaatar

Ownership Mongolyn Alt (MAK) Corporation LLC

Operator of mine Mongolyn Alt

Web address www.mak.mn

Development Overburden started in 2012, the total project period is 17-20 years


Excavators: Bucyrus RH 170, RH 120

Haulage: BelAZ 75306

Drill: Atlas Copco DML

Other: Caterpillar graders and bulldozers

Mineral reserves and ore gradeTotal proven reserves are 250 million tonnes of primary sulphide ores equivalent to 1.6 million tonnes of copper and 66,000 tonnes of molybdenum

Production capacity

Mining: The production capacity of the open pit is 14.6 million tonnes per annum ore and 14.4 million tonnes per annum of overburden removal

Processing: The processing plant will have a capacity of 14.6 million tonnes per annum sulphide ore, and produce 316,000 tonnes per annum copper concentrate and 4,400 tonnes per annum of molybdenum concentrate

Infrastructure 220 km from Sainshand railway, 160 km from Oyu Tolgoi power line

Contact

Name: Mr. B. AlterdenePosition: Senior officerAddress: MAK LLC, Peace Avenue 14, Ulaanbaatar, MongoliaEmail: [email protected]: + 976 75 759 700


3.3 MAJOR EXPLORATION PROJECTS

1. Cogegobi (Areva): Uranium

2. Haranga Resources: Iron Ore

3. Kincora Copper: Copper-Gold

4. Xanadu Mines: Copper-Gold



Exploration Project 1

Company Areva Mongol via its exploration subsidiary Cogegobi

Web address www.mongolia.areva.com

Exploration projectsCogegobi is carrying out geological and exploration work in the Dornogobi and Sukhbaatar provinces, in south-eastern Mongolia. The most advanced projects are the discovery of the Zoovch Ovoo and Dulaan Uul deposits

Comments

AREVA has been in Mongolia since 1997 and is now represented by AREVA Mongol, which is co-owned by AREVA (66 per cent) and Mitsubishi Corporation (34 per cent). Areva Mongol’s exploration operations are conducted by Cogegobi, which holds 22 exploration licences covering more than 6,000 square km in the sedimentary basin of the Gobi desert. There are:

• 9 licences in the Sainshand basin• 13 licences in the Dariganga and Erdenetsagan regions.

Cogegobi first discovered the Dulaan Uul uranium deposit with 6,270 tonnes of resources in 2011, and then the Zoovch Ovoo deposit with an estimated 54,390 tonnes of resources. It was officially registered in 2013 as a strategic deposit by the Mineral Resources Professional Council of Mongolia and feasibility studies of Dulaan Uul and Zoovch Ovoo were approved by the Council in February 2015.

In October 2013, Areva Mongol and Mongolia’s state-owned Mon-Atom signed an agreement to establish a joint venture strategic partnership called Areva Mines LLC. In doing so, 34 per cent of the shares of the joint venture were transferred to Mon-Atom.

Areva Mines will mine uranium from the Dulaan Uul and Zoovch Ovoo deposits and produce it via in-situ recovery (ISR) technology.

Contact

Name: Sarnai Galindiv

Position: Corporate Affairs Director

Address: ICC-International Commercial Center, Jamyangun Street 9,

Sukhbaatar district, 1r khoroo, Ulaanbaatar City, Mongolia

Telephone: + 976 11 320 698 - ext 104




CompanyHaranga Resources Limited (Haranga) is an ASX-listed company, focused on iron ore exploration and development

Web address www.haranga.com

Project name Selenge iron ore project

Location

The project is located in the large industrial region of Darkhan-Selenge, where key infrastructure such as railway, electricity and water supply are well developed. The main trans-Mongolian railway, which provides direct access to to China and Russia, is connected by local sub-rail spurs

Comments

As a result of extensive exploration work, the iron ore-banded Magnetite System (known as BMS) was discovered in Selenge which formed three clustered deposits, namely Bayantsogt, Dundbulag and Undur Ukhaa.

The combined total resource is 254 million tonnes of iron ore at an average in-situ grade of 17.2 per cent (for 44 Mt of contained iron metal) based on a 12.5 per cent iron ore cut-off grade, of which 99.7 per cent is in the measured and indicated categories.

The company is working on infrastructure, engineering and technical solutions for a mine and processing plant. The water and electricity supply can be provided within 15 km from the mine and a scoping study to connect the Selenge project to Shariin Gol railway within only 45 km distance is underway.

In June 2015, Haranga announced that its 80 per cent owned subsidiary Haranga Khuder LLC, which holds the mineral exploration licences and pre-mining operations agreement for its Selenge iron ore project in Mongolia, had been granted a mining licence by the MRAM, covering 3,480 hectares. The mining licence is valid for 30 years.

Contact

Street address: Level 1, 330 Churchill Avenue, Subiaco WA 6008, Australia

Postal address: PO Box 540, Subiaco WA 6904, Australia

Telephone: + 61 8 9200 4415

Fax: + 61 8 9200 4469




CompanyKincora Copper Limited is a mining exploration and development company, based in Vancouver, Canada and listed on the TSX-venture exchange

Web address www.kincoracopper.com

Exploration projects Bronze Fox copper-gold project

LocationThe Bronze Fox copper-gold deposit is located in southeast Mongolia, 200 km from the Chinese border, approximately 140 km northeast of the Oyu Tolgoi project

Comments

There are three types of potential mineralisation hosted in the Bronze Fox project area. They are porphyry style of copper-gold-molybdenum (Cu-Au-Mo), structural controlled hydrothermal Au, and shear zone Au.

Current exploration work is mainly concentrated on porphyry Cu-Au-Mo targets and structural controlled hydrothermal Au, noting that approximately a third of the historic drill holes have returned internals of at least 1g/t Au.

The structural controlled Au mineralisation occurs along structure zones in Sophie North and Buchanan Heights prospects, all associated with breccia and also strong silicification, argillic, sericitic, and chloritisation alterations, sometimes with copper mineralisation (up to 1.86 per cent Cu). Shear zone gold potential appears in the Happy Geo zone, indicated by high-grade gold rock chip samples (up to 91g/t Au), soil gold anomalies (up to 1-2.5g/t Au), and large zones of argillic and sericitic alteration with trace sulphides, where further exploration work is warranted.

SWIR study results from early 2014 and ongoing mapping activities indicate that there is also possibility of a concealed porphyry and/or gold mineral system in the Happy Geo area.

In August 2015, Kincora provided an update on its exploration activities and mentioned that it will focus on surface exploration including infill mapping and geochemistry around the Bronze Fox and Tourmaline Hill Intrusive Complexes. A key objective will be refining discrete magnetic anomaly highs around the Bronze Fox Intrusive Complex.

Contact

Address: Khasvuu Building, Suite 301, 3rd floor, Transporters Street,

Peace Avenue, Sukhbaatar District, Ulaanbaatar 14210, Mongolia

Telephone: +976 70 100 095

Fax: +976 70 100 097


[email protected]



CompanyXanadu Mines Limited is an ASX-listed company and maintains an active exploration and business development program

Web address www.xanadumines.com

Project Kharmagtai porphyry copper-gold exploration project

Location Kharmagtai is located in Omnogovi Province, approximately 420 km southeast of Ulaanbaatar

Comments

Kharmagtai is within the South Gobi porphyry copper province which hosts most of the known porphyry deposits in the South Gobi region of Mongolia, including the Oyu Tolgoi copper-gold operations (120 km south), the Tsagaan Suvarga porphyry copper-molybdenum development (170 km east) and Xanadu’s Oyut Ulaan porphyry copper-gold exploration project (260 km northeast).

Kharmagtai consists of multiple co-genetic gold-rich porphyry copper centres and tourmaline breccia pipes occurring within the Lower Carboniferous Kharmagtai Igneous Complex. Extensive exploration has to-date, identified significant shallow high-grade porphyry copper-gold mineralisation within the Altan Tolgoi, Tsagaan Sudal and Zesen Uul prospects, which are located within a 700 metre radius of each other.

A majority of the strongly mineralised porphyry complex lies under unexplored shallow post-mineral sediments. Porphyry mineralisation at Kharmagati is associated with widespread magnetite alteration and all the main prospects are associated with broad magnetic highs. A regional magnetic survey outlined numerous distinct circular magnetic anomalies in the vicinity of the Altan Tolgoi, Tsagaan Sudal and Zesen Uul prospects.

Xanadu reported in July 2015 that thirteen diamond holes had been completed for approximately 5205m in the drill program at Kharmagtai. Results indicated potential for a large scale mineralised breccia system alongside the established mineral resource. In September 2015, it mentioned that recent drilling has extended the longest continuous zone of mineralisation to date and reaffirmed the belief in the potential for the mineral system to host a large scale high grade copper-gold deposit.

Contact

Name: Mr Andrew Stewart

Position: Chief Executive Officer

Address: 2nd Khoroo, AOS Street, Military Town, Bayanzurkh District, Ulaanbaatar

Telephone: + 976 70 120 211

Fax: + 976 70 130 211


[email protected]


SECTION 4LINKS AND RESOURCES

Government ministries

Ministry of Mining www.mm.gov.mn

Ministry of Environment and Tourism www.mne.mn

Ministry of Foreign Affairs www.mfa.gov.mn

Ministry of Defence www.mod.gov.mn

Ministry of Finance www.mof.gov.mn

Ministry of Justice www.moj.gov.mn

Ministry of Energy www.energy.gov.mn

Ministry of Industry www.mi.gov.mn

Ministry of Construction and Urban Development www.mcud.gov.mn

Ministry of Education, Culture and Science www.meds.gov.mn

Ministry of Labor www.mol.gov.mn

Ministry of Human Development and Social Protection www.khun.gov.mn

Ministry of Road and Transportation www.mrt.gov.mn

Ministry of Food and Agriculture www.mofa.gov.mn

Ministry of Health and Sport www.moh.mn

Government agencies and authorities

Embassy of Mongolia in Australia www.mongolianembassy.org.au

Invest Mongolia Agency www.investmongolia.com

Customs General Administration www.ecustoms.mn

Financial Regulatory Commission www.frc.mn

General Authority for State Registration www.burtgel.gov.mn

General Department of Taxation www.mta.mn

Mongolian Immigration Agency www.immigration.gov.mn

Industry associations

AustCham – Australia Mongolia Chamber of Commerce www.austchammongolia.com

Business Council of Mongolia www.bcmongolia.org

Mongolian National Chamber of Commerce and Industry www.mongolchamber.mn

Mongolian National Mining Association www.miningmongolia.mn

News and media

Business Council of Mongolia www.bcmongolia.org

Info Mongolia www.infomongolia.com

GoGo News http://mongolia.gogo.mn

News MN http://english.news.mn

M.A.D Mongolia Newswire http://mad-intelligence.com

UB POST http://ubpost.mongolnews.mn

Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade.

The information provided is a guide only.

56 > Mongolian Mining Projects Report 2015 > 57

REFERENCES

1. World Bank Data on Mongolia, www.worldbank.org/country/mongolia

2. Monthly Mining Industry Statistics, Dec 2014 and Jan 2015, Mineral Resources Authority of Mongolia (MRAM)

3. National Statistical Office of Mongolia, www.1212.mn

4. National Statistical Office of Mongolia, www.1212.mn

5. Mongolia Outlook 2015, Asia Development Bank

6. Invest Mongolia Guide 2015, Invest Mongolia Agency

7. Mongolia Mining and Tax Guide 2012/13, Ernst and Young Mongolia

8. Ease of Doing Business in Mongolia 2015 report, World Bank Group

9. Invest Mongolia Guide 2015, Invest Mongolia Agency

10. Geology and Mining Industry Booklet, June 2014, MRAM

11. Monthly Mining Industry Statistics, Dec 2014 and Jan 2015, MRAM

12. High Level Overview of the Amendments to the Minerals Law (2014) by Minter Ellison LLP

13. Industrial minerals and selected rare metals in Mongolia 2011, MRAM

14. MRAM Information Circular 2015, MRAM

15. Exploration Special Report, 29 Sept 2015, Independent Mongolian metals & Mining Research

16. Mongolia Statistical Yearbook 2014, National Statistical Office of Mongolia

17. Geology and Mining Industry Booklet, June 2014, MRAM

18. MRAM Information Circular 2015, MRAM

19. For regulations governing bribery of foreign public officials: www.austrade.gov.au/Export/About-Exporting/Legal-issues/Bribery-of-

foreign-public-officials

In addition to using the above references, Austrade held interviews with Mongolian mining authorities and a number of mining project

developers, and undertook extensive desk research.

> 57


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58 > MongoliaЦn Mining Projects Report 2015

mongolian mining projects report 2015

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