REPORT

1. September 2010Mining Journal special publication – Tantalum
PROFILE
1
Silver Mines Ltd
56 Berry Street, North Sydney,
Australia 2060
E-mail: info@silverminesltd.com.au
Website: www.silverminesltd.com.au
Contact: Charles Straw
Tel: + 61 2 9455 0280
Tel: +61 2 9455 0879
Ticker: ASX:SVL
CONTACTS
MongoliaMongoliaMongoliaMongoliaMongolia
AIDD • ALS Global • Altan Rio • Atlas CopcoAIDD • ALS Global • Altan Rio • Atlas CopcoAIDD • ALS Global • Altan Rio • Atlas CopcoAIDD • ALS Global • Altan Rio • Atlas Copco
Chuang’s Consortium InternationalChuang’s Consortium International
JS Redpath • Lehman, Lee & Xu • Major DrillingJS Redpath • Lehman, Lee & Xu • Major DrillingJS Redpath • Lehman, Lee & Xu • Major DrillingJS Redpath • Lehman, Lee & Xu • Major Drilling
Normet • SRK • Traverse ResourcesNormet • SRK • Traverse Resources
Established 1835
A supplement to Mining Journal
01_Mongolia.indd 1 27/09/2012 15:16

3. Mining Journal special publication – MongoliaOctober 2012
MONGOLIA
3
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CONTENTS
Introduction 3
Mining set to go from strength to strength 4
Guildford clears hurdles in Mongolia 6
Entree Gold confirms high-grade gold 6
How Mongolian do mining companies need to be? 8
Coal exports set to boost Mongolia’s global ranking 10
MMC beefs up country’s infrastructure 12
Draig Resources declares promising future for Teeg 13
Probing fresh property prospects 14
SouthGobi to build coal road to China 15
Turquoise Hill, Chalco termination deal 15
Phase-one build of Oyu Tolgoi update 15
Ovoot mining licence granted 18
Central Asia Metals agrees to twin sale 18
Boroo mine approval for heap leaching 18
company profiles:
Altan Rio 8
Chuang’s Consortium International 16-17
Advertisements:
Media
dear Mining Journal readers,
On behalf of the organisers, sponsors, exhibitors and
speakers at the Mongolian Investment Summit 2012
(MIS), welcome to all participants registered here in
Hong Kong and to the worldwide circulation of
readers of the Mining Journal.
The Business Council of Mongolia (BCM) is pleased
to again be a supporting organisation for the third
annual MIS. BCM is a coalition of 250 domestic and
foreign investors, international financial institutions
(IFIs), non-governmental
organisations (NGOs) and
diplomatic missions to
Mongolia, and the leading organ-
isation representing business
stakeholders in Mongolia.
Now is an excellent time to
invest in and allocate resources
to Mongolia. The country is
poised to become one of the
fastest-growing economies in the world over each of
the next five- and 40-year periods. The IMF estimates
gross domestic product (GDP) to increase from
US$8.6 billion in 2011 to US$15.6 billion in 2016.
Mongolia is forecast to be one of the top 10
fastest-growing economies in the world for the next
40 years (2010-50), according to Citi Private Bank’s
2012 Wealth Report, with growth at 6.9% per annum.
The IMF estimates real GDP growth of 17.2% for
2012 and 11.8% for 2013. Mongolia’s GDP grew by
16.7% in Q1, 2012.
Mongolia is estimated to hold US$1.3 trillion in
mineral deposits – including coal, copper, gold, iron
ore and uranium. As of April 30, 2012, coal exports
increased by 51% over the previous year, according to
the World Bank. Mongolia sells over 90% of exports to
China, which are led, at present, by large coal
shipments. Copper and gold will surge in 2013 as
commercial production begins
in the first half of the year from
the open-pit mine at Oyu Tolgoi
(OT). When in full production,
including the underground
operations in 2018, OT will
provide one-third of GDP. The
mining boom is already
providing significant investment
opportunities in its supply chain.
Infrastructure, power, property, financial services and
agriculture are other sectors which could shape the
country.
FDI increased to US$4.4 billion, about half of GDP,
for the latest 12 months to Q1, 2012 versus FDI of
US$5.3 billion in 2011. Government spending leading
up to the June 2012 elections outpaced revenue
growth and increased the fiscal deficit. The forecast is
for the deficit to range from 3.5% to 5% of GDP for
2012.
The political landscape saw a Grand Coalition
government formed as a result of the June elections.
The Democratic Party (DP) won the most seats, but
not enough for an outright majority. Reform efforts
are already under way from the DP-led majority and
from the DP mayor of Ulaanbaatar.
MIS 2012 in Hong Kong is a major event for all
here exploring the latest developments in the
Mongolian business environment with direct input
from key business and government
figures. We are very pleased to
participate with you!
Best regards,
Jim Dwyer, executive director,
Business Council of Mongolia
A message of welcome
Building on the success of Hong Kong’s
second Mongolia Investment Summit in 2011,
the Summit returns in 2012. The third edition
of Mongolia Investment Summit will once again
bring the best of Mongolia’s investment
opportunities to Hong Kong!
www.mongoliainvestmentsummit.com
Mongolia Investment Summit 2012, Hong Kong
“The mining boom is
already providing
significant investment
opportunities in its
supply chain”
AIDD 7, 12
ALS Global 11
Atlas Copco back cover
JS Redpath 5
Lehman, Lee & Xu 4
Major Drilling 2
Normet 9
SRK 4
Traverse Resources
inside back cover
Cover design: Tim Peters
03-15,18_Mongolia.indd 3 28/09/2012 12:13

4. October 2012Mining Journal special publication – Mongolia4
O
nce Rio Tinto’s Oyu Tolgoi comes into
production, Mongolia will become a
major global exporter of copper and
gold and the country is already being
forecast within the industry as one of
the three top locations that will meet the growing
global demand for those commodities.
Certainly copper prices are set to increase as the
supply/demand gap widens and expanding industries
adopt the metal for a wide range of end user
applications.
As reported in Mining Journal in June,
not only is copper used in conventional
electronic and communication
applications but its uses are diversifying
into aquaculture, healthcare, renewable
energy and eco-friendly transport
solutions.
Gold has always been a stalwart com-
modity in a recessionary climate and
this recession is not bucking that trend.
Experts in the industry cite gold as
being at a fantastic price and copper is still performing
well as metal prices are still quite sound.
The country’s top exports of coal, copper and gold
have driven quite extraordinary growth in GDP, and
in 2011 Mongolia was the fastest-grow-
ing economy in the world. Its location
between Russia and China is fortunate
as these countries are the major
consumers of these commodities and
this geography allows significant logistic
efficiencies to be achieved by mines that
are in production.
The picture in Mongolia, in common
with most jurisdictions where mining
plays a strong part in the economic
wealth of the country, tends to have a
mix of large and small organisations operating in the
sector. There is significant presence from mining
giants such as Rio Tinto, but a number of junior
exploration companies are also operating in the
space. Evan Jones, president and CEO of Altan Rio
Minerals Ltd, says: “Really the mining industry is only
just getting started in Mongolia. The mix of large and
small companies that we are seeing enter the market
is largely a function of the diversity of the opportu-
nity. It’s exciting, in a relatively undeveloped country
like Mongolia there are interesting propositions for
many companies.”
Mr Jones adds: “When you are thinking about
where the new deposits are going to be found,
I suspect that most companies prospecting for bulk
Mining in Mongolia set to go
from strength to strength
Lehman, Lee & Xu Mongolia is one of the foremost international law
firms with a presence in Mongolia. The firm is staffed with both
qualified foreign and Mongolian trained attorneys. All are fully
acquainted and experienced with Mongolia’s laws and legal system,
business climate and political affairs. Many of our Mongolian
attorneys are trained overseas and are fluent in English.
With a presence in Mongolia for fifteen years, Lehman, Lee & Xu Mongolia takes
pleasure in providing award winning service to both foreign and domestic
companies, governments and individuals in these areas:
Minerals and Mining • Licensing and Permitting
Corporate and Commercial • Banking and Finance
Taxation • Accounting • Securities
Due Diligence and Legal Compliance • Construction and Infrastructure
Registration and Regulatory Affairs • Real Estate
International Trade & Customs • Labor
Non-Governmental Organizations • Litigation • Immigration
Serving your legal needs
in Mongolia
Please contact us:
Marco Polo Place, Jamiyan Gunii Street-5/3,
Suite 3-4, Sukhbaatar district-1, Ulaanbaatar-14240, Mongolia
Tel: 976-11-327810, 331235 • Fax: 976-11-327829
info@lehmanlaw.mn
www.lehmanlaw.mn
Cradle to cradle
Exploration, feasibility, due diligence, engineering
and operations through to mine closure.
Our global experience gives you expert,
integrated solutions on every phase of your
mining project.
Same team — start to finish.
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>1,000 professionals • >40 offices • 20 countries • 6 continents
“In 2011
Mongolia was
the fastest-
growing
economy in
the world”
Altan Rio is looking for copper and gold out in the west of
the country at its Chandman project Photos:Altan Rio
MONGOLIA
03-15,18_Mongolia.indd 4 28/09/2012 12:13

5. October 2012 Mining Journal special publication – Mongolia 5
MONGOLIA
• Shaft Sinking
• Mine Development
• Contract Mining
• Raiseboring
• Raise Mining
• Underground Construction
• Engineering & Technical Services
• Specialty Services
commodities like coal will be active near either where
there is an existing infrastructure or where the
infrastructure is expected to be built. This is not quite
so important for gold, and, to a lesser extent, copper
– correspondingly, exploration for those metals will
be more dispersed. The exploration business in
Mongolia is still relatively undeveloped so there is lots
of work to be done in the country to discover and
develop more deposits.
“At Altan Rio’s Chandman project, we are looking
for copper and gold out in the west of the country.
We’ve staked a whole mountain range that had not
previously been drilled and we’ve all of the early
indications that it could well host a large copper-gold
deposit. There are lots of areas that haven’t been
previously explored. That is one of the main reasons
that companies go into Mongolia – it’s incredibly
prospective.”
One of the big issues in the recent pre-election
campaigns was corruption, particularly focusing on
mining concessions to foreign companies, and there
has been a lot of debate both in the media and on the
ground on how supportive the newly formed
coalition government will be to foreign-owned or
-backed companies. Mr Jones says: “It is important to
remember that there are two issues here. Obviously,
FDI [foreign direct investment] is welcome but, at the
same time, the government needs to ensure that the
people of Mongolia get a fair share of the wealth. You
have to remember also that this is a relatively new
democracy and, even in a more established
jurisdiction like Australia, this is an issue that can
become politically explosive. We should expect
ongoing debate on this and, as invited guests in the
country, we should be patient with the government
on this issue.”
The Mongolian government has now announced its
policy platform, which is supportive of foreign
investment, accommodating to the mining industry,
and provides a positive foundation for progressive
reform. The ‘Action Plan’ will officially be filed as the
government’s four-year agenda after certain
procedural formalities and publication in the State
Information Digest of Mongolia fairly soon.
The government plans to introduce some new light
“The picture
in Mongolia,
in common
with most
jurisdictions
where mining
plays a strong
part in the
economic
wealth of the
country,
tends to have
a mix of large
and small
organisations
operating in
the sector”
Photo:AltanRio
Sunset in the
exploration field
Pnoto:KincoraCopper
03-15,18_Mongolia.indd 5 28/09/2012 12:14

6. October 2012Mining Journal special publication – Mongolia
MONGOLIA
6
controls in regulating the mining sector, which will
reaffirm the attractiveness of Mongolia as a mining
investment jurisdiction. These include:
• increased emphasis on government-funded
exploration;
• improved transparency in the issuance of new
licences and transfer of existing licences;
• review of strategic deposits;
• regulating investment by foreign state-owned
companies;
• encouraging value-add of raw material complying
with international standards; and
• a review of double taxation treaties.
Importantly, the renegotiation of the Oyu Tolgoi
Investment Agreement (OT IA) is not included in the
action plan after support for the current agreement
was reaffirmed in a recent State Structure Standing
Committee. However, the OT IA will
still be subject to review in line with all
investment agreements. This should
allay concerns that the resource
national electioneering will translate
into government policies that materially
discriminate against foreign-owned or
-backed companies.
Sam Spring, vice president of
corporate development at Kincora
Copper, says: “On a traffic light system,
you could say that the market’s
perception of Mongolia’s sovereign risk in recent
years has moved from red to amber. However,
uncertainty surrounding the election has caused a
shift back towards the red zone for the moment until
parliament approves the new coalition government’s
policy platform/action plan and concerns regarding
the OT stability agreement and policy for foreign
direct investment, processes for government
approval of MA by foreign state-controlled entities,
are addressed. We think approval of the proposed
action plan will address the majority of these
concerns.”
A Federal Cabinet meeting in September
supported and will submit to Parliament a proposal
to issue up to US$5 billion of bonds of Development
Bank of Mongolia (DBM) over the next two years.
The funds are to finance major projects such as rail
and automobile road network, power, Tavan Tolgoi
(TT) mine and Sainshand industrial hub.
Mr Spring says: “This development, a renewed
push towards the domestic and international IPO of
TT, and a number of very liberal and
progressive proposed policy platforms
in our view are likely to support the
same drivers for the shift from red to
amber towards green on the traffic light
system, particularly with the attention
initial production from OT and the IPO
of TT will create.”
There are already signs of investors
starting to come back to support
Mongolia after the election. The Trade
and Development Bank (TDB)
successfully issued senior notes on the Singapore
Stock Exchange worth US$300 million last week,
which provides a real-time precedent and positive
sign for investment appetite for Mongolia in the
capital markets.
• Guildford clears hurdles in Mongolia
Guildford Coal has announced that the pre-mining
agreement has been granted over the North Pit at
its South Gobi project. This represents federal
approval for the North Pit mining licence, which
will be followed by local government ratification.
Guildford is targeting a swift path to production,
anticipating extracting its first coal by late
November. The company expects the North Pit’s
output to be 3.6Mt/y by early 2013 and the first
coal from East Pit to come by the end of 2012.
• Entree Gold confirms high-grade gold
on Argo zone at Shivee West
Entree Gold has completed excavator trenching
and sampling on the near-surface of its Shivee
West project in Mongolia. One of the current
trench samples returned 81.4g/t gold over 3m,
confirming high-grade gold values. The area of
gold mineralisation at Argo has been extended
140m further north from that defined by the
reverse-circulation drilling undertaken in 2011,
and now measures around 400m long by up to
130m wide. It forms part of a larger mineralised
area that includes the Zone III gold target.
The entire area of known gold mineralisation has
now been traced over 700m along strike and
remains open.
Greg Cowe, president and CEO of Entree, said:
“The expansion in size of the near-surface Argo
Zone is extremely encouraging. The presence of
very high-grade gold values, occurring within a
much larger gold system, attests to the potential
of this new discovery. This zone has geological
similarities to some of the volcanic-hosted gold
deposits of Nevada and Mexico. The Argo Zone
will continue to be
a priority focus for
new exploration.
“Our wholly-
owned Shivee
West property is
distinct from our
joint-venture
ground, which
hosts the Hugo
North Extension
and Heruga
deposits. The first
phases of Oyu
Tolgoi mine
development are
advancing on
schedule, including
development of Lift 1 of the Hugo North
Extension deposit. First development production
from the joint-venture ground is expected in
2015.”
Rio Tinto and Ivanhoe Mines are major
shareholders of Entree, holding around 13% and
11% of issued and outstanding shares, respect­
ively. Rio Tinto, through its majority ownership of
Ivanhoe Mines, beneficially owns 23.6%of Entree’s
issued and outstanding shares.
MONGOLIA News: in brief
An Entree Gold geologist
trench mapping on the Shivee
West property
The Sayan-Altaid
Mountains.
Inset: a geologist
at Altan Rio’s
Bumbat Range
Photos:Altan Rio
“In 2011
Mongolia was
the fastest-
growing
economy in
the world”
Dry-coal handling facility at SouthGobi Resources
03-15,18_Mongolia.indd 6 28/09/2012 12:14

7. Mining Journal special publication – MongoliaOctober 2012
MONGOLIA
7
The macro picture could still depress investment in
Mongolia, however, since the number-one challenge
for mining companies globally is securing investment
in one of the toughest economic climates that we
have seen for nearly a century. However, these
moves by the government, coupled with the rich and
mostly unexplored mineral wealth that the country
has to offer, should kick-start foreign investment
flows into the country.
Prospects for the next decade
Regarding the prospects for Mongolia over the next
five to 10 years, Evan Jones believes “it’s going to go
from strength to strength and it will be fantastic for
the Mongolian people”.
He continues: “Right now, there has been a lot of
talk about mining and the prosperity it is going to
bring but many Mongolians have yet to see tangible
benefits. As Oyu Tolgoi comes online, that will have a
large impact on the economy and, as long as mining
legislation continues to be mining-friendly, the
industry will continue to develop new projects.
“There is already a significant amount of
coal produced in Mongolia and I suspect this will
continue to increase. Clearly, there are challenges
to overcome in terms of the infrastructure, although
growing energy demand will continue to drive
demand over time.”
He adds: “Copper and gold production will expand
significantly and imminently. We have district-sized
areas under licence in Western Mongolia and we’ve
been out there for four years already and we’ve
identified a number of highly prospective targets.
We are excited about the prospects for Altan Rio
and Mongolia moving forward.”
Mr Jones is not alone in his optimism. From a
mining giant like Rio Tinto to the smallest of junior
exploration companies, Mongolia is a very exciting
environment in which to operate. The slowdown of
the sector while it adopted a ‘wait and see’ policy
on the new administration should re-invigorate now
a pro mining and foreign direct investment (FDI)
policy platform has been announced.
Importantly, the Oyu Tolgoi agreement does not
look as if it is now going to be renegotiated despite
the political grandstanding reported in the media in
recent weeks. The industry can now breathe a sigh of
relief as the government beds down and the
uncertainty that has dogged recent weeks starts to
dissipate.
http://www.aiddgroup.com/
Founded in Mongolia.
Delivering the highest standard
of drilling services since 2004.
Aerial view of the conveyor at OyuTolgoi Photo: OyuTolgoi
03-15,18_Mongolia.indd 7 28/09/2012 12:14

8. October 2012Mining Journal special publication – Mongolia
MONGOLIA
8
T
he regulatory environment surround-
ing the mining sector in Mongolia is
changing fast. Mining concessions for
foreign companies featured promi-
nently in the run-up
to the election, with many politicians
calling for a more nationalistic
approach to the mining industry.
The June 2012 elections gave
Mongolia’s Democratic Party, led by
Norov Altanhuyag, a small majority
in the parliamentary elections but
not enough to gain complete control. On August 25,
2012, as prime minister, Altanhuyag chaired his first
Cabinet meeting of a coalition government that
includes minority parties such as the Mongolian
People’s Revolutionary Party and the Mongolian
National Democratic Party. This new government is
expected to take a firmer stance on what has been a
relatively unregulated tendering system.
Mining Journal asked James Polson,
chief executive of AIDD Group, one of
Mongolia’s leading mineral drilling
service providers, what he thought the
prospects were for
the mining sector in
Mongolia over the
next five years.
Mr Polson says:
“This is a relatively
young market with
huge potential. As it’s
developing, any change to the regulatory environment
poses challenges to existing operators – there is a
necessary adjustment period and, the more significant
the change, the longer the transition period.”
The government owns 34% of the Oyu Tolgoi
project, but moves by some parliamentarians to
renegotiate Oyu Tolgoi’s Investment Agreement to
increase the State’s share to 50% has sent shock-
waves through the investment
community. This objective aligns with
the new law passed in May 2012 that,
while aimed more at fears of Chinese
government control of deposits,
requires parliament­ary approval for
any foreign investors to take a stake
larger than 49% and greater than
MNT100 billion (Mongolian national
tugriks) (about US$75 million) in
strategic sectors, such as mining.
Mr Polson says: “We will continue
to watch developments, as this will have a big impact
on the mining industry as a whole. In the meantime,
despite a narrowed tender process, there are still
opportunities for well-managed companies with
proven capabilities and consistently high-quality
services.”
Mr Polson says that legal changes in the mining
sector really test a company’s ability to adapt. “AIDD
How Mongolian do companies
in the mining sector need to be?
Mining Journal talked to James Polson about the challenges being
faced by companies operating in Mongolia in the current climate
Norov Altanhuyag, prime minister
of Mongolia
“The government
owns 34% of the
Oyu Tolgoi
project”
Altan Rio strikes gold in Khavchuu drilling
S
ince 2006, Altan Rio Minerals (TSX-V:AMO)
has employed innovative exploration
targeting techniques and leveraged
long-term in-country experience to
explore large-scale gold and copper
projects in Mongolia, one of the world’s most
prospective mineral regions.
The Canada-listed junior exploration company
holds 153,000ha under licence across three project
areas, including a copper-gold porphyry project in
western Mongolia, the Chandman-Yol project and
the recently drilled Khavchuu orogenic gold project
in northern Mongolia.
Drilling is under way at Altan Rio’s flagship
1,400km2
Chandman-Yol copper-gold porphyry
project in western Mongolia where 3,000m (some six
to eight holes) of diamond core are planned. Two
high-priority, never-before-drilled targets identified
through field work completed in 2011 are being
tested. Results can be expected in the coming
months.
Additionally, the discovery of high-grade gold
mineralisation in a Boroo-style geological setting
earlier this year has large tonnage potential and is an
exciting prospect for Altan Rio.
Khavchuu, just 10km west of Centerra Gold’s
Boroo mine and mill complex, is located within the
same geological terrain and has the same geochemi-
cal signature as Boroo (~2Moz resource base),
making it a potential host for Boroo-style gold
deposits. Seven wide-spaced reconnaissance core
holes for 1,902.2m were completed in May.
Results from the inaugural drill programme were
promising: five of the seven holes intersected
significant gold and/or arsenic anomalies, the main
geochemical indicators for orogenic gold deposits in
the Boroo region, over a 4 x 6km area. Significantly,
hole KH-05 intersected high-grade gold (11.49g/t
over 1m) in a structurally complicated area on the
edge of a large Boroo Complex granitoid.
Follow-up exploration to advance the discovery,
including additional soil geochemical surveys and
detailed geophysics, are planned to delineate zones
of higher IP chargeability within the drill confirmed
structures. The next drill programme will further test
zones of known mineralisation and the most
promising geophysical anomalies.
Company profile
www.altanrio.com
CONTACT
Altan Rio Minerals Ltd
Suite 1110 – 1111 West Georgia St.
Vancouver, BC Canada V6E 4M3
Tel: +1 604 639 5899
E-mail: info@altanrio.com
Suite 1110 – 1111 West Georgia St.
Hole KH-02 being drilled
at AMO’s Khavchuu project.
Right: Khavchuu diamond
core from hole KH-02 at
250m quartz vein
03-15,18_Mongolia.indd 8 28/09/2012 12:14

9. Mining Journal special publication – MongoliaOctober 2012
MONGOLIA
9
is a Mongolian business that is run by both Mongo-
lians and expats, so, in that sense, we are at an
advantage when it comes to managing change. Our
local management team and local
technical staff are the benchmark
for skills throughout the market.
We continue to attract top talent
because we believe that our
people are our core – we are
dedicated to training our staff to
an international standard.”
He adds: “In fact, it is not unusual to see our
employees hired to work in markets around the
world, including Canada, Australia, and Africa. While
initially, losing this talent is a loss, we often see these
employees come back to AIDD – which is beneficial
to us and to the market in Mongolia as a whole.”
Mr Polson says that AIDD will continue to focus
on its people so that the company remains strong in
domestic and international mining sectors throughout
the region. In addition to Mongolia, the company
operates in Kazakhstan, where it also offers drill and
blast, dewatering and associated
drilling for mine-related services.
Mining Journal asked Mr Polson
if he felt that AIDD’s business
model was a help or a hindrance
in the current climate. He replies:
“Our distinct offering as a strong
local company with an interna-
tional perspective has positioned us well. Since our
founding in 2004, we have had to adapt our business
to the developing market, but we have been able to
carve out a niche serving both foreign and Mongolian
clients.
“The most significant change we are seeing this
year is increasing demand for mining services rather
than exploration services. We are quite lucky, as,
being a Mongolian company, we are closely aligned
with the local market, which gives us opportunities to
adapt to the changing environment very quickly.
Looking forward, we are hoping to do more work
with state-run projects.”
Future of mining in Mongolia
On the future of mining in Mongolia, Mr Polson’s
outlook is pragmatic. He says: “Based on what we’ve
seen, there is likely to be a strong trend for increased
government involvement in mining projects, which
will influence the tendering process in terms of both
project ownership and the appointment of service
providers.
“Fortunately, we are a Mongolian company with
global reach and experience. This should translate
well to the Mongolian market, where we can offer
international-calibre services and management at a
domestically competitive cost.”
His view is that, for now, the mining service
industry in Mongolia may slow. Nevertheless, he
hopes that international companies will remain part of
the mix, as they bring with them skills and equipment
not yet available in Mongolia.
“In the long term, government regulation in the
mining sector is a good thing. Resource-rich countries
such as Mongolia should be mindful of how to use
their assets most productively, and foreign investment
is playing a critical role in advancing the nation’s
capabilities. If that investment dries up, it could have
significant economic consequences.”
SOLUTIONS FOR TOUGH JOBS
www.normet.com
www.taminternational.com
www.coray.comwww.coray.com
Recent activity at OyuTolgoi: the primary crusher was up and running in August Photos: OyuTolgoi
“For now, the
mining service
industry in Mongolia
may slow”
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10. October 2012Mining Journal special publication – Mongolia
MONGOLIA
10
c
oal provides more than a third of global
energy requirements and generates
42% of the world’s electricity.
According to the World Coal
Organisation, in 2011, coal was the
fastest-growing form of energy outside renewables,
and consumption was at its highest since 1969.
Total coal production grew by over 60% in the
21-year period between 1990 and 2011. The World
Coal Organisation cites the most significant uses of
coal as being in electricity generation, steel
production, cement manufacturing and as a liquid fuel.
Around 6,100Mt of hard coal were used worldwide
last year and 1,000Mt of brown coal and, since the
beginning of the century, global coal consumption has
grown faster than consumption of any other fuel. The
five largest users of coal – China, the US, India, Russia
and Japan – use 77% of the world’s coal.
NEIGhbOurING cuStOMEr
The biggest market for coal is Asia, which accounts
for over 65% of global consumption; China is
responsible for a major part of this consumption. This
is good news for Mongolia because sharing a border
with the largest coal-consuming nation in the world
makes complete economic sense for companies
looking to exploit the massive coal deposits that run
throughout Mongolia’s geology.
Mongolia has proven coal reserves of 12,200Mt of
coal including 2,000Mt of coking coal and 10,100Mt of
thermal coal. Estimates for potential coal reserves in
the country stand at 100,000Mt.
In 2011, China imported 190Mt of coal, which is
unsurprising since, while China has made an effort
to diversify its energy supplies, nearly three-quarters
of energy comes from coal. The diversification
programme was also slowed when the country’s
entire nuclear programme was put on hold after the
Fukishima disaster and this only came back on stream
in 2012. The Chinese government has set a target to
raise non-fossil fuel energy consumption to 11.4% of
the energy mix by 2015 as part of its five-year plan,
leading to predictions that coal’s part of the energy
mix will fall to 59% by 2035.
That said, it is also predicted that coal consump-
tion will actually double over this period – driven by
population growth and economic development.
Coal mining in Mongolia started in the early 1900s
and in 1990, Mongolia exported just under 0.5Mt of
coal and domestic demand consumed 6,600Mt but,
after the transition to democracy, most of the export
markets disappeared and domestic demand decreased
dramatically. In 1995, the World Bank cited 16 coal
mines producing around 5.5Mt/y. Only four of these
mines had significant production:
• the Baganuur mine;
• the Shivee-Oru mine;
• the Sharyn Gol mine; and
• the Aduunchuluum mine in Eastern Mongolia.
The picture is now completely different and there
are a number of companies currently active in
Mongolia that are developing the country’s budding
coal industry, and trade with China is clearly a key
motivator. One of these, the Erdene-Xstrata Coal
Alliance, cites demand from China as
one of its key strategic indicators for
coal exports set to boost
Mongolia’s global ranking
Above and right: SouthGobi Resources’ Shinejinst and Zeegt mines
Truck convoy at the Ulaan Ovoo
coal deposit, owned by
Prophecy Coal
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11. Mining Journal special publication – MongoliaOctober 2012
MONGOLIA
11
involvement in the sector and is setting itself up to be
a major participant in the coal industry of Mongolia.
The company is focusing on 400,000ha in south-west
Mongolia, where they are prospecting for large-
tonnage thermal and metallurgical coal deposits.
In co-operation with Xstrata plc, Erdene is
involved in a comprehensive coal-generative and
-acquisition programme that evaluates numerous
prospective metallurgical and high-quality thermal coal
deposits throughout Mongolia.
In February 2006, Erdene and Xstrata Coal
entered into an agreement in which the former
granted Xstrata Coal certain rights, including a first
option to enter into a joint venture and earn a 75%
interest in any coal opportunity in Mongolia identified
by Erdene by funding all work through completion of
a feasibility study and by maintaining a minimum 5%
equity position in Erdene. All of Erdene’s coal
exploration in Mongolia is being fully funded by
Xstrata and is being carried out in consultation with
Xstrata.
Since 2006, Erdene has visited hundreds of coal
sites throughout Mongolia and, in the process, has
compiled an extensive database on coal deposits,
occurrences, prospective stratigraphy, regional
tectonics and sedimentary basins allowing for a
prioritisation of targets.
In 2008 and 2009, Erdene’s property evaluation
and acquisition programme was designed to identify
and secure access to additional exploration licences in
Mongolia with the potential to host large-tonnage
thermal and metallurgical coal resources.
In 2008, three properties were drill-tested with 13
drill-holes totalling 1,586m. The following year,
Erdene acquired eight new exploration licences,
totalling over 407,000ha, with potential to host
significant coal and metal deposits.
In 2010, Erdene conducted an extensive
exploration programme over one of these licences,
including ground-based geophysics, and nine
drill-holes totalling 2,339m. The remaining licences in
this region will be the focus of future exploration
work together with Erdene’s continuing programme
of project evaluation and acquisition.
“Not only is
Tavan Tolgoi
Mongolia’s
largest coal
mine but it is
also one of
the world’s
largest
coking- and
thermal-coal
deposits”
MINE ActIVItY
tavan tolgoi: coal giant
In addition to exploration, there are a number of
active coal mines in Mongolia. Tavan Tolgoi, the
country’s largest, contains an estimated 6,500Mt of
coal – in real terms, it means that, instead of the mine
having a 30-year life, it could easily still be in
production in the year 12012.
There are, however, literally dozens of coal mines
in Mongolia but there are also barriers to economic
coal production as the infrastructure in Mongolia is
not as well developed as it could be. A number of
mining companies are therefore having to invest in
the infrastructure around their projects and factor in
the cost of building roads and railways to their
investment structures.
Not only is Tavan Tolgoi Mongolia’s largest coal
mine but it is also one of the world’s largest
coking- and thermal-coal deposits: a quarter of the
deposit is high-quality coking coal, which is a key
ingredient for the global steel industry. The mine is
divided into six sections – Tsankhi, Ukhaa Khudag,
Bor tolgoi, Borteeg and southwest and eastern coal
fields. The largest section, Tsankhi, has been divided
into East and West Tsankhi.
The only part of the mine not owned by Erdenes
MGL, a state-owned company, is Ukhaa Khudag. This
is mined by the Mongolian Mining Corporation.
Erdenes Tavan Tolgoi LLC, a subsidiary of Erdenes
MGL, is managing the development of East Tsankhi
and the company is due to float on the Hong Kong,
London and Ulaanbaatar stock markets in 2013.
Mining of West Tsankhi will be contracted to a
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12. October 2012Mining Journal special publication – Mongolia
MONGOLIA
12
consortium of foreign mining companies but it is not
yet clear which companies will make up this
consortium. It is possible that international mining
companies are still waiting for the detail of the new
mining regulations that will give teeth to the new
government’s recently announced ‘Action Plan’.
The Tavan Tolgoi deposit was discovered by a
Russian team in 1945 and exploration through drilling
and feasibility evaluation continued for the next 40
years.
Once Mongolia had transitioned into democracy in
1991, foreign companies were invited to explore the
deposit. BHP Billiton was the first to explore the
deposit but it relinquished the rights in the mid 1990s
owing to financial issues.
In 2006, Energy Resources LLC was granted a
mining licence over the Ukhaa Khudag section. In the
same year, the government amended the Minerals
Law to allow it greater ownership of mines.
In 2007, Bayaar Sanjaa, then prime minister,
proposed to re-nationalise the deposit. Erdenes MGL
LLC was formed as a state-owned company in 2007
and later that year the government renationalised
most of Tavan Tolgoi.
A number of companies – including BHP Billiton
and Peabody Energy – were believed to be interested
in the mine and over the next few years, there were a
number of government announcements concerning
ownership of the mine.
In July 2010, the government announced that it had
decided to sell 30%, keep 40%, give 10% to Mongolian
citizens and 20% to Mongolian companies. However,
in 2011 there were plans for an IPO of 29% to
Erdenes, 10% of the shares to go to Mongolian
citizens and 10% to go to Mongolian companies with
51% under state ownership.
As it currently stands, the West Tsankhi section
– in operation since 1967 – has been exporting coal
to China since mid-2011. A decision is still awaited on
the selection of the companies bidding for the mining
contract.
The East Tsankhi section is fully owned by Erdenes
Tavan Tolgoi, which has a five-year contract with
Mcmahon Holdings and BBM Operta joint venture to
• Mongolian Mining Corporation beefs
up the country’s infrastructure
Mongolian Mining Corporation
announced recently the start of
the long-awaited Ukhaa
Khudag-Gashuun Sukhait railway
project and construction work.
As well as increasing the
efficiency, safety and reliability of
the logistics chain and reducing
the cost of coal transportation, the railway
project should significantly reduce the environ-
mental impacts associated with the road-based
transporation of coal. It will also improve the
value and competitiveness of the company’s coal
and coal products.
Mr Purevbaatar, deputy director of the Railway
Authority of Mongolia, said: “The completion of
the railway project will provide a safe and modern
freight transport system from the Tavan Tolgoi
area in Southern Gobi to the Mongolian-Chinese
border. The project also represents a momentous
step in advancing the economic development of
the Southern Gobi region.”
The railway should generate thousands of jobs
during construction towards the end of 2014 as
well as during the operation of the railway, which
will involve local and international contractors and
suppliers.
MONGOLIA News: in brief Operations
at MAK
Group’s
mines
Activity at
MMC
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13. Mining Journal special publication – MongoliaOctober 2012
MONGOLIA
13
• Draig Resources declares promising
future for Teeg licence
Mongolian coal explorer Draig Resources Ltd said
its Teeg Licence shows “great promise”, after the
company completed logging of final drill-holes
from its Phase I exploration programme.
Draig intercepted coal in 18 holes during Phase I
on Teeg, completed at the end of April. Steeply
dipping coal seam intersections were logged at
shallow depths of less than 175m (open-pit
mineable levels) along a NW-trending strike length.
The collated data showed among the best coal
seams intercepted were those with apparent seam
thicknesses of 86.28m (BT_37), 66.75m (BT_36),
37.80m (BT_01), and 36.12m (BT_38). Holes
BT_24C, BT_37 and BT_38 were twin cored with
results that correlated to coal intersected in the
original hole.
The 6,000m programme took place solely on
Teeg, within Draig’s parcel of Ovorhangay licences
in central-southern Mongolia. Draig has begun
resource modelling to determine the structure of
the licence. Coal quality and petrographic testing
is also continuing at ALS laboratories in Mongolia
and Australia.
Mark Earley, Draig managing director, said: “All
the coal we intercepted was relatively shallow and
definitely at open-pit mineable levels. I think the
Teeg licence shows great promise, based on the
drilling to date.”
Draig owns eight coal exploration licences in
Mongolia – four in the Ovorhangay province and
four in the South Gobi province further south.
Draig said that following its Phase I results it
expected to start Phase II exploration later in the
year, which would involve exploring its South
Gobi licences.
Phase II was likely to include more exploration
at the Teeg licence with some addition explora-
tion also expected on the Nariin Teeg (Ovorhan-
gay province), building on the geophysics survey
completed over the licence in February 2012.
Draig added it had a strong cash position and
was fully funded to undertake further exploration
activities.
MONGOLIA News: in brief
mine the site. The five-year contract is valued at
US$500 million and the mine is expected to reach a
maximum output of 5Mt/y once at full production. In
September it was reported that the mine was on
track to exceed its target of 3Mt of coal in 2012.
Other mines in production
A number of existing coal mines beyond Tavan Tolgoi
are currently in production.
Eldev and Naryn Sukhait
MAK Group has two mines in production – the Eldev
and Naryn Sukhait coal mines. Eldev is in the
Dalanjargalan province of
Dornogovi province near the
Trans-Mongolian railway. The
mine produces 500,000t/y of coal
which it sells to both domestic
and foreign markets. MAK’s other
project is the Naryn Sukhait coal
mine. The open pit started
groundbreaking in December
2007 and exported its first coal in
2008. Coal resources have been
measured at 220Mt and open-pit
production capacity is a minimum
of 3Mt/y and a maximum of
5.8Mt/y.
Ukhaa Khudag
Energy Resources LLC has
contracted mining at the Ukhaa
Khudag mine in the South Gobi desert to Leighton
Asia. The mine is Leighton Asia’s largest, although not
its only, mining project in Mongolia. The mine
contains thick coal seams at shallow depths and the
scope of the work includes pit de-watering, drilling
and blasting, removing overburden, loading and
hauling of coal as well as mine planning and
engineering.
Ovoot Tolgoi
South Gobi Resources has four significant coal
projects in Mongolia. As well as its producing mine,
Ovoot Tolgoi, it has three development projects: the
Soumber deposit, the Zag Suuj deposit and the Ovoot
Tolgoi underground deposit.
In addition, SouthGobi holds seven mineral
exploration licences in Mongolia. Ovoot Tolgoi
produces a direct-shipping semi-soft coking coal, a
medium ash coal and a higher ash/sulphur coal. A
hard coking or metallurgical coal will be produced at
Soumber. The company has built and commissioned a
dry coal-handling facility at Ovoot Tolgoi to remove
ash and enable the blending of coals from different
seams to create higher value products. This facility
has a capacity to process 9Mt/y of run-of-mine coal. It
includes a 300t-capacity dump hopper which will
receive coal to feed a rotary breaker and screens that
will size coal to a maximum of 50mm and reject
oversize ash.
Total proven and probable surface coal reserves at
Ovoot Tolgoi are estimated to be
175.7Mt. Approximately 68% of
the reserves are classified in the
proven reliability or assurance
category, and the remaining 32%
are in the probable category.
Ulaan Ovoo
The Ulaan Ovoo coal deposit,
owned by Prophecy Coal, lies
430km from Ulaanbaatar and only
17km from the Russian border.
Since 2011, the company has
sold and delivered 188,915t of
thermal coal – around 5% to
Russia, 12% to private Mongolian
companies and 83% to Mongolian
government-owned power plants.
This year, Prophecy has entered
into a contract with a local Mongolian direct reduced
iron manufacturing plan to sell them 22,100t of
thermal coal and the buyer has indicated it would like
to increase the supply from Prophecy to 300,000t on
an annual basis.
The company also has contracts to deliver an
additional 228,400t, most of which is going to the
Darhan and Erdenet power plants. In just over a year,
Drill core taken from BTE-001 on theTeeg licence
“Mongolia is going
to have a place in
the top ten
producers of all coal
in the world as well
as improving its
current ranking in
the top ten
producers of coking
coal in the not-too-
distant future”
Transport by rail at Prophecy’s Ulaan
Ovoo coal deposit
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14. October 2012Mining Journal special publication – Mongolia
MONGOLIA
14
E
conomic growth in Mongolia looks set to
reach record highs, with GDP growing at
an annualised 17% in 2011 and analysts’
forecasts predicting annual increases in
the region of 30% in future years.
A booming economy spells good news for the
real-estate sector but
certainly in Mongolia the
property market is
absolutely co-related to the
mining sector, and
uncertainties around the new
government’s position on
foreign investment is causing
concern for a number of the
foreign companies present in
the region.
Mining Journal asked Jacky
Cheung, a business manager
with Chuang’s Consortium
International Ltd, a Hong
Kong-based property
development company with
significant interests in
Mongolia, how reliant he felt the Mongolian property
market is on foreign investment.
He says: “To a certain extent, the real-estate
sector relies heavily on foreign investment. While
local people actually own a lot of land, in reality they
don’t have enough money to develop this land
without a pretty healthy injection of capital. At the
moment, there are a number of developments on
hold because of funding issues but there is a really
quite significant demand for grade-A hotels, offices
and residential developments.”
He adds that some money seems to be coming
from Korea and China in the form of venture funds,
but believes that the current lack of movement in the
market is due to uncertainty over how the
nationalistic manifesto of the recently elected
government is going to pan out.
He says: “The market is still fairly quiet as people
are waiting to see just how stable Norovyn
Altan­khuyag’s coalition government really is. The facts
are that, without foreign money, it is going to be
difficult for the construction sector to really take off
but right now the Mongolian government seems to be
trying to restrain foreign investments in the country
so things need to get a lot more fluid before we start
to see real movement.”
One of the issues is that,
despite the lack of funding,
there are a huge number of
potential opportunities for
property developers at the
moment. Ulaanbaatar is one
of the world’s fastest-grow-
ing cities with a population of
over 1.2 million people and
while the majority of
Mongolian nationals still
inhabit the ger districts, living
as their ancestors did in
nomadic tents made from
wood and felt, there is very
much a growing urban
middle class who are
spearheading local demand for residential develop-
ments.
Mr Cheung says: “Ulaanbaatar is a bit of an odd
one. Political pressure means that it’s not enough for
foreign companies to just fly in; they have to show
that they are invested in local people and the local
economy and this emphasis on office relocation is
Jacky Cheung talks to Mining Journal about key trends
in investment in the real-estate market in Mongolia
Probing fresh
property prospects
“The thing to remember
about expatriates is that
they are looking for a
great location coupled
with easy living options.
Right now there are no
international standard-
serviced apartments and
this looks to us like a real
gap in the market”
Above and top: Ulaanbataar
Ulaan Ovoo has become the largest independent
supplier of coal to Mongolian power plants.
The company has invested over US$52 million in
Ulaan Ovoo since 2010, paying for road and bridge
building, the mining fleet, the mining camp, pre-strip-
ping and other infrastructure and community
involvement. Ulaan Ovoo coal-mining operations have
recently been suspended for a time because the
current stock of coal – at 187,000t – is sufficient to
meet contractual supply obligations through to the
end of the year.
The Ulaan Ovoo project contains 209Mt of
measured and indicated coal resources. Surrounding
the deposit are other prospective coal-bearing basins
similar in size to Ulaan Ovoo.
Prophecy has obtained four transferable licences
covering these basins. In June 2011, the company
became entitled to acquire 100% ownership of the
4,773ha Ilch Khujirt property, which is 17km
north-east of Ulaan Ovoo, and has begun exploratory
drilling to better evaluate the coal resource potential
of the licences and the Ilch Khujirt property.
Shivee Ovoo
The Shivee Ovoo mine is producing about 1.2Mt/y of
coal. It has a rated production capacity of 2Mt/y. The
construction of the proposed 3,600MW mine-mouth
Shivee-Ovoo power station would require around
20Mt/y of coal.
This would mean that Shivee Ovoo would need to
fast-track its expanded mine construction to ensure
production at full capacity by 2015.
The Baganuur mine is also under full production
capacity – standing at a maximum of 4Mt/y of coal.
However, in addition to the mines currently in
production, a number of projects are also at varying
stages of development.
Bright future for coal
The abundance of coal stemming from Mongolia is
already eating into Australia’s export market and,
while prices around the world are currently
decreasing, the efficiencies that Mongolian producers
are able to obtain by virtue of their geographical
location ensure that there are still massive returns to
be made.
The new government, while strengthening state
regulation and control in the mining sector, is
expected to limit state participation in a bid to
stimulate entrepreneurship and foreign investment.
Although the detail is still to be revealed, it seems
likely that the special policy for thermal and coking
coal is absolutely designed to ensure Mongolia’s
dominance in that export market and it is clear that
Mongolia is going to have a place in the top ten
producers of all coal in the world as well as improving
its current ranking in the top ten producers of coking
coal in the not-too-distant future.
SouthGobi Resources: Zeegt coal
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15. Mining Journal special publication – MongoliaOctober 2012
MONGOLIA
15
• SouthGobi to build coal road to China
Construction started in June on a new paved coal
highway between the Ovoot Tolgoi Complex to
the Shivee Khuren Border Crossing. The State
Property Committee of Mongolia awarded the
tender to consortium partners NTB LLC and
SouthGobi Sands LLC, a wholly owned subsidiary
of South Gobi Resources in 2011. The consortium
have now concluded a 15-year build, operate and
transfer agreement under the Mongolian Law on
Concessions. The highway will have an intended
carrying capacity on completion in excess of
20Mt/y of coal. Alexander Molyneux, president
and CEO of SouthGobi, said: “The new paved
coal highway will significantly increase the safety of
coal transportation.”
• Turquoise Hill, Chalco termination deal
In September Turquoise Hill Resources
announced the termination of the lock-up
agreement entered into with Aluminium
Corporation of China Ltd (Chalco) on April 1,
2012. Pursuant to this, Turquoise Hill agreed to
tender its shares in SouthGobi Resources Ltd into
a proportional takeover offer to be made by
Chalco for up to 60% but not less than 56% of the
shares in SouthGobi. After careful consideration,
both Turquoise Hill and Chalco have concluded
that the proposed transaction has minimal
prospect of obtaining the necessary regulatory
approvals within an acceptable timeframe. As a
result, Turquoise Hill and Chalco have agreed to
terminate the lock-up agreement, including
Chalco’s obligation to make a proportional offer.
• Phase-one build of Oyu Tolgoi update
Overall construction of the Oyu Tolgoi Project’s
first phase of development reached 90%
completion by the end of June 2012 and had
advanced to 94% completion at the end of July.
Total capital invested in the construction of the
first phase of the Oyu Tolgoi Project was around
US$5.2 billion.
The scope of the work for the phase one
project is to bring the initial, 100,000t/d
concentrator into production, with the required
infrastructure and operational team to begin
commercial production in the first half of 2013.
The phase one project also includes underground
lateral development until June 2012 and the
completion of Shaft 2, which are essential to the
continued development of the high-value
underground mine at the Oyu Tolgoi Project.
Long-term sales contracts have been signed for
75% of the Oyu Tolgoi Project’s concentrate
production for the first three years. Including
renewals, 50% of concentrate production is
contracted for ten years.
MONGOLIA News: in brief
driving a real shortage in quality office buildings.
While some people would say there is current
oversupply in office accommodation, as there are a
number of 10- or even 16-floor office buildings
available in Ulaanbaatar, we’re finding that there is not
enough high-end office space to meet demand.
“The other issue is that there are a lot of
expatriates in the city right now and it looks as if it is
a trend that is here to stay. The thing to remember
about expatriates is that they are looking for a great
location coupled with easy living options.
“Right now there are no international standard-
serviced apartments and this looks to us like a real
gap in the market as the sorts of people who are
interested in serviced apartments tend to not be too
concerned about cost as long as they are getting the
right quality of accommodation.
“This is an area that Chuang’s Consortium
International Ltd are absolutely looking into as we
believe this could be an very interesting investment
route for us.”
Sources of FDI
Mining Journal asked Mr Cheung if he thought that
there was one country in particular that he expected
to see significant foreign direct investment coming
from. He says: “Really it is a case of the usual
suspects. China is an obvious answer. The two
countries are pretty closely linked and fairly
interdependent in a lot of ways.
“Historically, China has been a major source of
foreign direct investment for Mongolia and the
strength of its economy means that certainly it still
has the cash to invest in the country.”
The micro picture in Mongolia certainly looks
attractive to investors, it is extremely rich in mineral
resources and there is a young and growing
population about to enter the workforce as well as a
re-patriot trend with skilled workers returning home,
Graphic:Chuang’sConsortiumInternational
Graphic:Chuang’sConsortiumInternational
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16. Company profile
Chuang’s rides success as demand fo
C
huang’s Consortium International Ltd, listed
on the Hong Kong Stock Exchange, is the
investment holding company for the group
which has major property investments
located in the People’s Republic of China,
Hong Kong,Taiwan,Vietnam, Malaysia as well as
Mongolia.The principal activities of the group are
reported as being property investment and develop-
ment, industrial investments, finance and securities
investment and trading.
From its modest beginnings in Hong Kong, Chuang’s
has gone from strength to strength and, having
successfully exported its business model into the
People’s Republic of China, entered the Mongolian
market in 2010.
Despite the economic downturn, Chuang’s
Consortium International is seeing revenues and profits
increase substantially. Its most recent annual report
cites figures of an increase of about 4.8 times over that
of the last corresponding year for sales and an increase
of about 5.6 times over that of the last corresponding
year for gross profit.
Jacky Cheung, the business manager responsible for
the company’s Mongolian property portfolio, says:“I
think the key thing that makes Chuang’s successful is the
high-end spec of its developments; Chuang’s build your
home from our heart and that emotional commitment to
delighting our customers runs deep through every
development. Obviously, Mongolia is an important
market for us and, as we can see its potential, so can our
competitors – and right now, there are a lot of people
coming into this market.We have got a great track record
but our real differentiator is that not only do we build
developments – but we build them quickly, with all the
details absolutely spot on. Our customers get a luxury,
high-end spec product that is on budget and on time.“
Quick delivery is seen by the Chuang’s Consortium
International as one of the key ingredients of its success.
The company’s ability to deliver increased shareholder
value is firmly attributed in the 2012 Chairman’s
statement to timely completion of developments and,
in the last financial year, shareholders’funds increased
by 15.7% and final dividend per share increased by 10%.
These figures make fairly impressive reading in a year
when we are looking at maybe the toughest market for
the property sector this century.
Chuang’s has two flagship developments in
Mongolia: one under construction and one at planning
stage.These are the International Finance Centre (IFC)
and the Edelweiss Residence, both in Ulaanbaatar.
International Finance Centre
The IFC is being built in the central business district of
Ulaanbaatar and is 100%-owned by the Group.
Chuang’s plan to develop an office building with gross
floor area of over 45,000sq m.The project is fairly far
advanced as the concept design has successfully gone
through the approval process and detailed building
plans have been developed. Foundation works have
already started. A marketing and promotional strategy
has been approved and marketing for the project has
started. A significant number of enquiries and positive
feedback have already been received from the market.
The Edelweiss Residence
The Edelweiss Residence is in a different phase of
development as it is still in planning stage.The site is
near the city centre in the Sukhbaatar district, which is
convenient for most of the foreign embassies based in
Ulaanbaatar, and Chuang’s originally intended to
develop an apartment complex aimed at the influx of
cash-rich expatriates.
Mr Cheung says:“Expatriates are a key market for us
as currently there is a real shortage of the type of
high-end housing this type of executive is looking for in
Ulaanbaatar. However, we are starting to find that it’s not
just high-end housing these people are looking for; they
are also finding it pretty tough to find the sort of office
accommodation that meets their needs.”
As a result, Chuang’s Consortium International is now
conducting market analysis to identify whether it would
increase its return on investment by changing the
function of the complex to being solely office space.
The other option under consideration is a live/work
complex that combines luxury serviced apartments
with high-end office accommodation.
Chuang’s also boasts a number of developments
around the region. It is particularly strong in Hong Kong
and the People’s Republic of China and in April 2011 the
company acquired Chuang’sTower in Hong Kong from
Chuang’s China as a strategic move that enabled the
company to strengthen its property investment
portfolio and release substantial cashflow to Chuang’s
China that could be focused on the property business in
the People’s Republic of China.
Key investments in Hong Kong include:
• Chuang’s London Plaza inTsim ShaTsui;
• Chuang’sTower in Central;
• Chuang’s Hom Plaza in Hunghom; and
• House A, 37 Island Road.
Chuang’s property development business started in Hong Kong over 40 years ago
and now has a presence across all the major investment hubs in Asia
Greenview
Garden,
HCMC
37 Island Road, Hong Kong
The IFC is being built in the central
business district of Ulaanbaatar and is
100%-owned by the Group
2pp_Chuang_company_profile_Mongolia.indd 22 27/09/2012 14:34

17. Chuang’s China has focused very much in the past
year on improving liquidity. It has disposed of a series of
property projects in Hong Kong, Changsha, and
Huizhou.The Group is entering 2013 in a very healthy
financial position and is
focusing on replenishing its
land reserve looking for
property in Southern China.
Internationally, Chuang’s
Consortium International is
holding a grade-A office tower
in the city centre of Kuala
Lumpur for investment and is
looking at two developments
inVietnam, in Ho Chi Minh City
and Long An Province, as well
as a residential complex in
Taiwan.
However, its Mongolian
portfolio is a key building block in the Group’s global
investment plans.
Increased demand from the giants
Jacky Cheung says:“The mining sector in Mongolia is
growing very quickly and this is playing out into two
key markets that we can see.The obvious one is the
multinational mining giants like RioTinto coming into
the market, increasing the demand for high-quality
office space in central Ulaanbaatar as well as
accommodation for executives and even their families.
“The reality is there is a definite shortage of the type
of high-end accommodation that these executives are
used to.We are also seeing a demand in this sector for
serviced apartments.With global mining companies, it
is quite a clear pattern that they tend to send their
people all over the world, executives will often have
pretty much a round-the-world trip where they go to
Mongolia, Kazakhstan,West Africa, South America,
Canada and Australia and stay for a few days or up to
three to four weeks in each location.
“A few weeks is really too long to stay in a hotel but
not long enough to make it worthwhile to set yourself
up in an apartment when you will be off again by the
end of the month. So, what we are seeing is a clear
growth in the demand for the serviced apartments
where you have the benefit of apartment living with the
facilities of hotel accommodation thrown in.
Local demand
“The other key market that we are seeing is the local
demand from Mongolian nationals increasing.There is a
real pressure on international mining companies not only
to employ local people but to demonstrate and deliver
economic benefits that have a real legacy to Mongolia.
“While the country is massively rich in mineral
deposits, successive governments have been very
concerned to ensure that the involvement of foreign
mining companies does not just asset-strip the country.
What this means in real terms is that Mongolians are
being trained, employed and
paid very well by mining
companies and this is having a
knock-on effect in GDP.
Consumer spending is up and
we are starting to see
increased demand from
Mongolian nationals for
high-end accommodation on
a par with the sort of housing
that their foreign colleagues
are living in back in theWest.”
Chuang’s Consortium
International’s robust plans
are based on a real confidence
in the long-term future of the mining sector.They are
clear that, once the mining sector begins to grow again,
the property sector will follow suit. However, while
mining is one of the most significant industry segments
in Mongolia and, therefore, likely to have the biggest
impact on GDP, Chuang’s is confident that there are a
number of economic indicators that show that
Mongolia’s economy is on the up.
Mr Cheung concludes:“There are a huge number of
opportunities in this region. As a Group, we are looking
at developing opportunities in Hong Kong, the People’s
Republic of China and a number of other countries as
well as Mongolia, but it is absolutely clear that Mongolia
is key to our development as all the signs show that its
economic growth is set to continue – and the bottom
line is, as a country’s economy grows, so does the
demand for high-quality property, and this is a need that
Chuang’s Consortium International is uniquely fitted to
meet.”
Company profile
www.chuangs-consortium.com
d for high-end property climbs
“Mongolia is key to
our development as all
the signs show that its
economic growth is set
to continue – and as a
country’s economy grows,
so does the demand for
high-quality property”
CONTACT
Chuang’s Consortium International Ltd
Hong Kong office:
25/F, Alexandra House, 18 Chater Road,
Central, Hong Kong
Tel: (852) 2522 2013 Fax: (852) 2810 6213
E-mail: chuangs@chuangs.com.hk
Mongolia office:
3/F, Eastern Section,
New Century Plaza,
Chinggis Khaan Avenue-15,
Sukhbaatar District-1, 14251
Ulaanbaatar, Mongolia
Contact: jackycheung@chuangs-china.com
Chuang’s New City,
Dongguan, PRC
Chuang’s
Lodge,
Taipei
Artist’s impression of the
Edelweiss Residence. The site
is near the city centre in the
Sukhbaatar district, which
is convenient for most of the
foreign embassies based in
Ulaanbaatar
Central Plaza,
Kuala Lumpur
2pp_Chuang_company_profile_Mongolia.indd 23 27/09/2012 14:34

18. October 2012Mining Journal special publication – Mongolia
MONGOLIA
18
Mongolian National Chamber of Industry and Trade
MNCCI Building, Mahatma Gandhi Street, Khan-Uul District, Ulaanbaatar, Mongolia
E-mail: chamber@mongolchamber.mn Website: www.mongolchamber.mn
Tel: +976 11 327176 Fax: +976 11 324620
Mineral Resources Authority of Mongolia
Government Building 12, Barilgachdyn Talbai 3, Chingeltei District, Ulaanbaatar 211238, Mongolia
E-mail: cooperation@mram.gov.mn Tel: +51-263678
Ministry of Mineral Resources and Energy of Mongolia
Government Building 2, United Nation’s Street 5/2, Ulaanbaatar 210646, Mongolia
Tel: +976 11 260631 Fax: +976 11 318169
Mongolian National Mining Association
‘Geosan’ Company Building, Ikh Surguuliin Gudamj 8,
Baga Toiruu, Sukhbaatar District, Ulaanbaatar Mongolia
Postal address: P.O.B-910, Ulaanbaatar-210646
Tel: +976 11 314877, +976 11 331770 Fax: +976 11 330032
Website: www.miningmongolia.mn
Petroleum Authority Of Mongolia
Implementation Agency of the Government of Mongolia
18072, Uildverchin Street, Ulaanbaatar, Mongolia
Website: www.pam.gov.mn
Tel: +976 11 631467 Fax: +976 11 631239
Contacts
bringing with them a huge amount of intellectual
capital.
These trends will ramp up the economically active
percentage of the population and, unlike many other
countries in the world, the vibrant mining sector
means that there are plenty of jobs for skilled
workers. This, coupled with the quite significant
investment in the infrastructure of the country, makes
it, on paper at least, a fairly good investment
prospect.
Mr Cheung says: “The
micro picture is certainly
promising and if you are, as
we are, in this for the long
term, Mongolia is definitely
a space to watch.” He adds:
“That said, it is important
to consider that, as well as
the strong co-relationship
between the mining sector
and the real-estate market,
you also have to consider
that the real-estate market is absolutely dependent
on macro-economic factors. The market is so
dependent on foreign investment so, if the economic
crisis worsens in Europe, it could be a tragedy for the
market right now. That said, long-term, the prospects
for Mongolia are very good.
“It is not really possible to avoid short-term
shocks like the global banking crisis or even political
instability but we’re taking the long view and Chuang’s
Consortium International believe absolutely that
Mongolia’s property market will deliver massive
return on investment for developers with the funds
to take advantage of the opportunities.”
Mr Cheung is clearly quite upbeat about Mongolia’s
prospects. It is clear that Chuang’s Consortium
International Ltd believes
that the challenges facing
the market are short-term
ones and that the region
has massive long-term
potential.
So the message from a
developer on the ground in
Ulaanbaatar is encouraging
and shows that, while there
is no denying that there are
challenges – particularly for
foreign companies right
now – these are more business hurdles or milestones.
The region has massive potential and for
companies that do their research properly and
partner with the right Mongolian companies, there
are some extremely lucrative opportunities still to be
exploited.
“The region has massive
potential and for
companies that do their
research properly…, there
are some extremely
lucrative opportunities still
to be exploited”
Graphic:Chuang’sConsortiumInternational
e
g
• Ovoot mining licence granted
Mongolian coking-coal explorer and developer
Aspire Mining Ltd announced that it has received
from the Mongolian Resource Authority a mining
licence covering a total area of 5,758ha for the
Ovoot coking-coal project. This licence area
covers both the planned open pit and the
potential underground mining area north-east of
the open pit. The mining licence will last 30 years
with an option to extend for two additional
20-year periods. In June, the company announced
that the prefeasibility study for the project
confirmed that the Ovoot Project was technically
and commercially feasible based on an open-pit
probable coal reserve of 178Mt. Aspire Mining has
received ministerial approval for the alignment of
a sealed road from the Ovoot Project to the
regional capital of Moron. This would support
project development, construction and initial coal
haulage. Managing director David Paull said:
“Ovoot is one of the most important new
coking-coal projects in Mongolia and has the
potential to significantly enhance economic
development in Northern Mongolia. Achieving a
mining licence is an important step along the path
of financing mine development and associated
road and rail infrastructure.”
• Central Asia Metals agrees to twin sale
Central Asia Metals announced it has signed a
heads of terms agreement with Mongolian
Resource Co for the sale of two of its Mongolian
projects – Ereen and Handgait. The company has
entered into an exclusive agreement with
Mongolian Resource Co for the sale, which
includes site infrastructure. Mongolian Resource
Co will acquire Central Asia Metals Mongolia BV,
which owns 85% of Ereen and 80% of Handgait.
The acquisition is subject to documentation,
satisfactory due diligence and Mongolian Resource
Co securing financing for the acquisitions.
• Boroo mine approval for heap leaching
Centerra Gold Inc has announced that the Boroo
mine (above) has received regulatory approval for
its mine plan for the heap-leach facility and now
has all required permits to resume heap-leach
operations. Boroo expects to resume the
heap-leach operation following re-commissioning
and estimates that production from the heap
leach will add about 2,000oz/mth of gold from
December. The company has also received a
mining licence for the Altan Tsagaan Ovoo project
in Eastern Mongolia. Ian Atkinson, president and
CEO of Centerra Gold, said: “We are pleased we
have been able to move forward with these
permits. Progress on these milestones underlines
our continued confidence in the future of our
Mongolian projects.”
MONGOLIA News: in brief
03-15,18_Mongolia.indd 18 28/09/2012 12:18

19. Traverse Resources LLC is a joint-venture partnership bringing together the skills and
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www.traverseresources.mn
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20. Atlas Copco.indd 1 20/09/2012 10:08