This document discusses how governments can be involved in the mining industry through exploration initiatives based on best practices from Australia and Canada. It recommends that governments undertake airborne geophysical surveys to collect geological data and make it publicly available online in order to stimulate private sector mineral exploration investment. Studies show government investment in geological data returns $3-9 for every $1 spent through increased industry exploration spending and mineral discoveries. Reinvesting returns from taxes and royalties into further exploration initiatives and local community development provides ongoing economic and social benefits. Clear mining laws, government facilitating private industry, and public-private cooperation are key to successful government exploration programs.

1. HOW CAN GOVERNMENT
BE INVOLVED IN THE
MINING INDUSTRY ?
“YOU REAP WHAT YOU SOW”
“YU TARINA TUUNIIGEE HURAAJ AVNA”

2. CONTENTS
1. Current Investment Situation
2. Worlds Best Practise – Government Exploration
Initiatives
3. Getting it Right ! – Benefits, Bonuses and the Bottom
Line
4. Recipe for Rapid Turnaround in Mongolian Mineral
Investment

3. CURRENT INVESTMENT SITUATION

4. INVESTORS HAVE LONG MEMORIES
 The 2006 Windfall Profits Tax,
 2009 Uranium Legislation,
 2009 Law with the Long Name,
 The claw-back of licences and the Strategic Deposits List
 2010 Moratorium on issuing new exploration licences,
 2011 the draft and re-drafted Mining Law,
 2011 back-flips on the TT mining contract
 The TT triple and dual IPO’s
 2012 SEFIL
 Flips and Back-Flips since the 2009 OT Investment Agreement

5. KEYWORDS:
 STABILITY - ТОГТВОРТОЙ БАЙДАЛ
 TRUST - ИТГЭЛ
 SINCERITY - ШУДАРГА
 RISK - ЭРСДЭЛ
 INITIATIVE - САНААЧЛАГА
 CONFIDENCE - ИТГЭЛТЭЙ

6. WORLDS BEST PRACTISE –
GOVERNMENT EXPLORATION
INITIATIVES

7. SOUTH AUSTRALIA = 984,000 sq. km

8. MONGOLIA SOUTH AUSTRALIA – SIZE COMPARISON

9. S. AUSTRALIA EXPLORATION INITIATIVE – AIRBORNE GEOPHYSICS SURVEYS

10. SAEI - CO-OPERATION WITH PRIVATE SECTOR
Companies participated in three ways:
 By arranging ‘infill’ flying over any area held under
an exploration licence which fell within an SAEI
survey zone
 By adding areas to those already being flown under
the program
 By contributing to the cost of the survey and data
processing

11. ALL DATA AVAILABLE ON THE WEB (FREE)

12. 1989 – 1997 COMPANY EXPLORATION EXPENDITURE

13. FALLING COMMODITY PRICES AFTER SAEI

14. RETURNS TO THE STATE
 ROYALTIES : >10 New Discoveries in Gold, Copper,
Diamonds, Iron, Uranium and Heavy Mineral Sands
 EMPLOYMENT: 600,000m of Company Funded Drilling
 LICENCE RENTS: area rose from 5% to 70% in targeted areas
 ENVIRONMENT : Improved Groundwater Models

15. 1.5M ounce (45 tonne) Challenger Au deposit

16. 700Mt Carrapateena Cu – Au Deposit

17. 1989 TO 2012 – MORE GOVERNMENT INITIATIVE

18. CURRENT AUSTRALIAN AND CANADIAN INITIATIVES
Program Period Amount ($M) Funded By
AUSTRALIA
Western Australia EIS Exploration Incentive Scheme 2009 - 2014 80 Mineral Royalties
Queensland FRP Future Resources Program 2013 - 2016 30 Mineral Revenue
New South Wales NFEI New Frontiers 2000-2014 40 Licence Rents
South Australia PACE Program of Accelerated Exploration 2004 - 2014 38 Mineral Revenue
Northern Territory CORE Creating Opportunities for Res. Exploration 2013 - 2014 4 Mineral Revenue
CANADA GEM Geo-Mapping For Energy and Minerals 2013 - 2020 100 Fed. Government

19. MORE RETURNS TO THE STATE
 Increasing Mineral Discovery Rates
 Unlocking full economic, mineral and energy
potential
 Generating New Government Revenues
 Leveraging Private Sector Investment
 Direct and Indirect Employment
 Adding knowledge to allow informed decisions on
Land Use

20. BENEFITS, BONUSES AND THE
BOTTOM LINE

21. THE VALUE PROPOSITION
 2003 Australian study found for every $1 spent by
Government, between $3 and $9 is spent by industry
on exploration alone
 1999 Canadian study found that every $1m spent by
Government stimulated $5m of industry investment,
and discovered resources valued at $125m
 Between 2008 and 2012 a Canadian Study found that
eight GEM projects generated $500m of private sector
exploration expenditure and mineral discoveries with a
potential value of $12 billion.

22. THE ECONOMIC RETURN OF BASE METAL AND GOLD DEPOSITS DISCOVERED IN
NEWFOUNDLAND OVER A 40 YEAR PERIOD

23. BIGGEST BANG FOR THE BUCK
What provides the greatest rate of return?
Direct Cash assistance to exploration companies
Support for Mine Development
Production Assistance
End Of Mine Life assistance
GEOLOGICAL DATABASE DEVELOPMENT √

25. RE-INVESTING THE RETURNS
 In both Canada and Australia, Governments re-invest the
returns from tax, royalties and rents to:
 Fund future exploration initiatives
 Fund development projects in local aimags and soums
from where the royalties were derived - schools,
hospitals, infrastructure
 Fund enforcement of tightened Environmental Laws and
ensure compliance
 “Royalties for Regions” policy introduced in Western
Australia where up to $1 bn is returned to the sub-
provinces annually.

26. CLOSING – RECIPE FOR RAPID
TURNAROUND IN MINERAL INVESTMENT

27. KEY INGREDIENTS TO SUCCESSFUL INITIATIVES
 Clear, Transparent and Fair Mineral Licencing and
Investment Laws
 A role for Government as Facilitator not as Shareholder
 A willingness by Government to engage with Industry
and Geoscience Professionals
 Adequate Government funding of Exploration Initiatives
 A Free, Publicly accessible internet based Geographic
Information System built from all available geo-scientific
data
 Targeted Re-Investment of returns