- Sept 29 (Reuters) - AIM-listed Polo Resources Ltd on Monday said it had found coal at its Val exploration project in Mongolia, the second significant discovery at its South Gobi licence areas.
The natural resources investment and mining company said early drilling at the project showed the presence of multi-layered coal seams.
Mongolia now seems on the way to enabling new mining legislation with the formation of a new Cabinet including a Ministry responsible for Mines and Energy.
RENO, NV -
Mongolian Parliament Wednesday approved the structure of its new coalition government with 15 ministries and 11 ministers including the new created position of Minister of Mining and Energy.
The new institution will be charged with overseeing mining, including minerals and petroleum, as well as fuel and energy, the UB Post reported Thursday. It replaces the Ministry of Industry and Trade.
Prime Minister Sanj Bayer said the country is recognizing the vast potential wealth available to Mongolia through development of the mining industry, Chinese state news agency Xinhua reported Thursday.
The Ministry of Foreign Affairs will be replaced by the new created Ministry of External Relations, which will deal with the economy as well as foreign affairs. The structure of the new coalition government will include a Ministry of Finance, Ministry of Justice and Home Affairs, Ministry of External Relations, Ministry of Health, Ministry of Defense, Ministry of Education, Culture and Science, Ministry of Nature and Tourism, Ministry of Infrastructure and Urban Development, Ministry of Social Welfare and Labor, Ministry of Defense, Ministry of Food, Agriculture and Light Industry, and the Cabinet Secretariat Office.
Earlier this month, the leaders of Mongolia's two main political parties signed an agreement to share power until the parliamentary election of 2012, the UB Post reported. Under the agreement the coalition government will aim to create 60,000 new jobs, as well as promote child birth to increase the population of Mongolia.
The UB Post reported that the government plans to "redefine its minerals policy, revise the mining law, promote ecologically friend mines, and to push strategically significant mineral deposits into production." Among the nation's significant deposits is the massive Oyu Tolgoi copper and gold mine.
"The government also plans to distribute mining revenue made from strategic deposits with a minimum of [the Mongolian Tugrik] Tgr1.5 million (US$1,034) awarded to each eligible citizen in the country," the Post reported.
The government also plans to promote and operate major projects including an oil refinery, coal-to-liquid fuel conversion, natural gas production, as well as nuclear energy for use by mining.
At a recent conference last week hosted by Euromoney Magazine, Randolph Koppa, Mongolia Trade and Development Bank CEO, said the nation's economy has done well without new sources of mining. However, he warned that if Mongolia hopes to tap major new sources of revenue it will have to begin exploiting its large recently discovered copper and gold deposits.
Koppa also noted that for the last three annual Euromoney conferences, "we have been on the brink of having the mining agreement." He said that government ownership questions and debate over new mining laws have stalled the development of new projects, according to the UB Post.
Khan Bank CEO Peter Morrow told conference attendees that the high level of optimism exists that the new coalition government will work. He anticipated that mining law amendments will be enacted, "they'll approve some of these big projects and things will get going."
The UB Post reported that "certain governmental elements favor 51% state ownership of new mining projects and high taxes. ...Some fear that Mongolia may have already missed a golden opportunity to take full advantage of its mining industry. Some commodity prices have decreased lately, and when, or if, the agreements pass, it will take time before mining projects progress to the point where resource extraction begins."
During the conference, Dr. Graeme Hancock, senior mining specialist for the World Bank's Oil, Gas and Mining Policy Division, suggested that the next few months are critical for Mongolia. "The decision the government makes will shape the form of the economy for the future. They're big decisions, but they do need to be made."
In a presentation earlier this year, Hancock said, the Mongolian mining sector has the potential to significantly contribute to the nation's economic growth, but its development will depend on the government's ability to establish and maintain the following:
· A clear mining policy,
· A competitive, stable and predictable fiscal regime for mining,
· A stable and transparent legal and regulatory framework to manage mining development, protect the environment and ensure good corporation governance,
· Policies and procedures to attract and retain world class investors who have the resources, management and technology to locate and exploit mineral deposits in a sustainable way,
· Efficient mining sector institutions and strong administrative capacity for oversight,
· Appropriate policy responses to and transparent management of expected increases in mineral revenues ... and ensure lasting benefits.
Hancock said Mongolian officials also have to better manage risks. "Mongolia's revised legal, regulatory and fiscal policies were formulated during a period of high commodity prices and strong international competition for mineral resources. The question now arises whether these policies are realistic and sustainable in the longer-term.
"There is an urgent need for Mongolia to conclude an investment agreement for Oyu Tolgoi, sending a strong signal to investors that government has realistic expectations, and is supportive of mineral development. A key element to attract and sustain investment and growth will be to re-establish and maintain the legislative and institutional stability, which was instrumental in spurring investment in Mongolia's mineral sector over the past few years," he advised.
Hancock also suggested that the Mongolian government improve its tax regime and adopt a model investment agreement for all new mining investments.
Mongolian government has the right to charge franchise tax on oil and gas output from the block. After covering its cost, the consortium should share the production with the local government. According to related benchmark, the Mongolian government will gain a bigger share.
Table 1 -
-----------------------------------------------------------------
Width Cu Mo Additional
From To (m) (%) (%) metres
-----------------------------------------------------------------
ZMD-24 119 350 231 0.082 0.065
-----------------------------------------------------------------
Extended 119 492 373 0.068 0.064 142
-----------------------------------------------------------------
Including 181 215 34 0.121 0.101
-----------------------------------------------------------------
Including 227 251 24 0.124 0.101
-----------------------------------------------------------------
Including 356 376 20 0.073 0.124
-----------------------------------------------------------------
ZMD-39 40 350 310 0.047 0.053
-----------------------------------------------------------------
Extended 40 450 410 0.046 0.057 100
-----------------------------------------------------------------
Including 92 112 20 0.062 0.18
-----------------------------------------------------------------
Including 242 270 28 0.063 0.103
-----------------------------------------------------------------
Including 310 346 36 0.065 0.112
-----------------------------------------------------------------
Including 360 406 46 0.052 0.105
-----------------------------------------------------------------
ZMD-57 146 350 204 0.069 0.056
-----------------------------------------------------------------
Extended 146 545 399 0.075 0.055 195
-----------------------------------------------------------------
Including 194 214 20 0.091 0.104
-----------------------------------------------------------------
Including 274 288 14 0.084 0.104
-----------------------------------------------------------------
ZMD-59 64 102 38 0.035 0.040
-----------------------------------------------------------------
And 128 350 222 0.055 0.041
-----------------------------------------------------------------
Extended 128 550 422 0.056 0.042 200
-----------------------------------------------------------------
ZMD-70 292 350 58 0.065 0.050
-----------------------------------------------------------------
Extended 292 450 158 0.057 0.042 100
-----------------------------------------------------------------
ZMD-72 212 350 138 0.103 0.060
-----------------------------------------------------------------
Extended 212 450 238 0.089 0.047 100
-----------------------------------------------------------------
Including 234 260 26 0.112 0.104
-----------------------------------------------------------------
ZMD-79 22 350 328 0.067 0.058
-----------------------------------------------------------------
Extended 22 450 428 0.066 0.060 100
-----------------------------------------------------------------
Including 212 278 66 0.101 0.103
-----------------------------------------------------------------
Including 338 350 12 0.097 0.243
-----------------------------------------------------------------
Extended 338 408 70 0.073 0.110
-----------------------------------------------------------------
Sept. 12 (Bloomberg) -- Mongolia's stock exchange is studying plans to offer derivative products within two to three years to boost trading at Asia's smallest bourse.
Margin trading, where investors take out loans to buy shares, will also be introduced, Tsendmaa Tsedev, head of the listing and surveillance department at Mongolian Stock Exchange, said in an interview in Ulan Bator yesterday. The bourse is working with the Korean Exchange to improve its trading systems, she said.
``The infrastructure of the stock market is under- developed,'' Tsedev said. ``We want to upgrade our trading process to international standards.''
The value of Mongolia's stock market jumped fivefold in 2007 to $612 million as burgeoning economic growth fueled by mineral exports to China, the country's biggest market, lured investors. Mongolian first-quarter growth of 12.5 percent was the fastest since 2002, according to the Asian Development Bank.
Trading still lags behind Asia in spite of the stock market's growth. An average of MNT245.6 million ($213,472) in shares changed hands on the Mongolian bourse each day last year, the exchange's 2007 fact book shows. That compares with Vietnam's 989 billion dong ($60 million) and Hong Kong's HK$92.1 billion ($11.8 billion). The Mongolia Stock Exchange is open for trading for an hour, between 11 a.m. and noon, from Monday to Friday.
Mongolia's exchange has 36 member brokerages approved for trading, a total that has increased by 10 in the past two years, Tsedev said. Indonesia, southeast Asia's third-largest stock market, has 122, while Thailand has 40. Hong Kong, Asia's third- largest market, has 448 firms approved to trade.
Online Trading
The Mongolian exchange has set up an information center for the public to boost participation from individual investors, Tsedev said.
The first stage of the system upgrade that the bourse is working on with the Korea Exchange is expected to be completed in September 2009, Tsedev said.
Margin trading will be allowed in coming months, a change from the current system where investors have to deposit money in order to trade, she said. The bourse will also introduce online trading as part of the reform, Tsedev said.
Four companies debuted on the Mongolian Stock Exchange this year, with two more applying for initial public offerings, Tsedev said. If the two IPOs proceed, that will make the number of initial share sales this year higher than last year's five, according to the exchange's fact book 2007.
New Centerra Gold President and CEO Steve Lang said his company and the Kyrgyz government may delay a September 29th international arbitration hearing concerning issues stemming from the taxation of the Kumtor gold mine in Kyrgyzstan.
In a presentation to the Denver Gold Group Tuesday, Lang also stressed that top Mongolian officials, including the prime minister, have stressed to Centerra that "mining law reform would be their top priority" with both major Mongolian political parties "very supportive of mining law reform."
Despite the disagreements between the mining company and the government over taxation and other issues, Lang stressed that the "Kyrgyz have been very, very careful not to interrupt the operations and the production at the mine. That's continued through the very worst of it."
The "worst" has included the cancellation by a court of exploration licenses, the expiration of a new deal would have doubled government ownership in the mine after Parliament failed to ratify the agreement, and substantial proposed increases in taxes. However, Lang noted that the arbitration has not impacted the immediate operation of Kumtor.
When asked by an analyst as to what "leverage" Centerra holds over the Kyrgyz government, Lang responded that a valid agreement between the two parties, along with a desire by the republic to attract another western investment, could be viewed as substantial leverage in the current of discussions and negotiations.
Lang explained that Kumtor is one of the largest businesses in the Kyrgyz Republic with the mining operation spending over $770 million since 1992 for a medical clinic, school repairs, a water system and growth capital. He also noted that Centerra has enjoyed "a track record of good relations with the government in resolving issues."
Centerra officials have held several formal meetings with the government working group and a technical committee examining the operation and taxation of Kumtor. Lang called the meetings "very professional." Meanwhile, discussions among the groups are nearly continuous, he added.
Centerra is moving ahead with plans for underground production at Kumtor.
Meanwhile, the company is also improving and expanding facilities at the Boroo gold mine in Mongolia, as well as developing the Gatsuurt project.
Lang has hired new executives to prepare the company for its growth in the Kyrgyz Republic and Mongolia, including a vice president for business development, and the appointment of a regional exploration officer in Beijing to explore projects in China. In his presentation Lang highlighted the exploration potential in Central Asia, which he called "one of the least explored areas" of the world.
The company is also getting involved in a Russian prospect in the Tyva Republic near the border with Mongolia, as well as a joint venture project in Nevada.
