This document discusses plans for the Shivee Ovoo intermodal terminal project in Mongolia. It begins with background on Mongolia's mining-driven economic growth and potential as a coal exporter. It then discusses the current lack of transportation infrastructure and established supply chains as problems. The proposed solution is to construct an intermodal terminal to facilitate coal, mineral and goods transportation for mines. Analysis of demand, location, design concepts, costs, financing, and projected profits are provided. The terminal aims to capture 10% of Mongolia's planned increased coal exports and meet demand from new industries. Risk analysis suggests the investment would be financially feasible.

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2. MINING DRIVEN
ECONOMIC UPSURGE

3. “SHIVEE OVOO
INTERMODAL TERMINAL”
PROJECT
Mongolia 2012
INVESTMENT SUMMIT
HONG KONG
31 October, 2012

4. Content
Mining –driven economic growth of Mongolia
Shivee Ovoo intermodal terminal and its function
Target market and demand
Conceptual design
Economic and financial analysis
Investment and financing

5. Mining - Driven Economic Growth
• The average GDP growth 2008-2010 - 9.5 % per annum.
• Mongolia is rich in mineral resources and mining is the driving force behind the
Mongolian economic expansion.
• Mining comprises 20% of the GDP
• GDP growth is expected to remain very high in coming few years supported by
high mineral prices, new mining projects, structural reforms and fiscal
spending.
• The projections on GDP growth suggest that Mongolia will be the fastest
growing economy worldwide over the coming 5 years, for the average annual
real GDP growth over the coming 5 years will be at least 13%.
(According to the Frontier securities LLC http://www.frontier.mn)

6. Global Overview of Coal Trade

7. Current Situation
• RESOURCES: AVAILABLE
• INVESTMENT: INCREASING
• DEMAND: EXISTING
CAN MONGOLIA BE LEADING COAL SUPPLIER
China
Japan, South Korea
India, Taiwan
Germany, Turkey
What are the target market?

8. Mongolian coal production plan& potential
Mongolia has a policy to increase coal export
The Southern Mongolia rich with coal
2010 2011 2012 2013 2014 2015 2020 2025
Export 16635 25000 30000 33000 40000 50000 65000 75000
Domestic consumption 7344 7634 8340 9635 13355 14580 16857 19010
Total production 23979 32634 38340 42635 53355 64580 81857 94010
2010 2011 2012 2013 2014 2015 2020 2025
Export 16635 25000 30000 33000 40000 50000 65000 75000
Domestic consumption 7344 7634 8340 9635 13355 14580 16857 19010
Total production 23979 32634 38340 42635 53355 64580 81857 94010

9. Facing Problem
o UNDERDEVELOPED INFRASTRUCTURE
Mongolia has a potential to be one of the leading coal
exporters in the world. But the transport and logistics link
between coal and mineral suppliers and buyers is still weak,
particularly for buyers from Japan, Korea, India and also
China.
o TRANSPORTATION ARRANGEMENTS
Mining development creates demand for logistics facility and
supply chain management in the region. But there is no well
established supply chain of certain goods for mines.

10. Expectation
• China will be the major importer of Mongolian coal and its share will be 90 percent, at
maximum
• Mongolia will continue its policy to diversify its export market and will export at least
10 percent of the coal export to other countries: Japan, Korea, India, Germany and etc.,
• Mining companies will prefer to have established supply chain as well as externalize
the costs/ outsource logistics and transshipment facilities
• External/outsourced terminal will open an equal access to all mining companies and
will give an opportunity to share some risks between mining companies and terminal
operators
• New industrial, urban and infrastructure development will create new demand for
cement, road asphalt, equipment and machineries and their spare part. But this demand
is not sustainable but be consistent with investment plan set by GoM and private
companies

11. Solution
CONSTRUCT INTERMODAL TERMINAL

12. SHIVEE OVOO INTERMODAL TERMINAL
Project addresses the problems of underdeveloped infrastructure and absence of
supply chain of specific goods for mines and targets to meet a part of the
demand
It is a demand driven project aiming at constructing needed to facilitate the coal and
mineral trade and transportation and offer supply chain solution for the mining
companies as well as new industries with needed inputs.
The facility will serve as
• Multimodal terminal of coal and other mineral transshipment
• Logistics center of chemicals, dangerous goods and heavy equipment and &
parts for mining sites South Gobi and factories to be built in Sain Shand
Industrial Park.

13. Supply chain analysis
Coal (example)
The industry analysis is briefly presented in the Part one. It is the major potential for
the terminal. The terminal will be targeting onto the supply chains:
Origin : TT, Shivee Ovoo,
Destination: Japan, Korea, India, Taiwan and Germany
China is not excluded, but geographical proxy suggests that the terminal will focus on
importers in North-Eastern part of Inner Mongolia.
Domestic distribution
Supply chain analysis:
• Potential supply chain
• Cost is disadvantage but barrier set by China will be the push factor
• The coal price fluctuation unlikely encourage mining companies to invest into rail to
export to the above market but they most probably will prefer to use external
intermodal terminal.
• Flexibility and service level of road and rail

14. Target Market & Demand
Coal and mineral transshipment Chemicals, lubricants & dangerous goods
Warehousing and distribution

15. Demand Estimation
2014 2015 2016 2017 2020 2025
FREIGHT
truck-rail
Coal 500 1200 1500 2000 2500 3000
Othermineral 5 10 18 20 25 30
Cement 20 160 250 400 400 400
rail-truck
Dangerousgoods* 2 4 4 4 10 15
Chemicalsandlubricant* 20 40 40 40 50 75
Roadasphalt* 50 300 500 800 1000 1000
Cement/import 70 270 400 800 300 300
Heavyequipment&parts* TBD
2014 2015 2016 2017 2020 2025
FREIGHT
truck-rail
Coal 500 1200 1500 2000 2500 3000
Othermineral 5 10 18 20 25 30
Cement 20 160 250 400 400 400
rail-truck
Dangerousgoods* 2 4 4 4 10 15
Chemicalsandlubricant* 20 40 40 40 50 75
Roadasphalt* 50 300 500 800 1000 1000
Cement/import 70 270 400 800 300 300
Heavyequipment&parts* TBD
Source: PSI, MonEx, 2012
* Dangerous good include the standby reserve + supply from warehouse
** Assumed that infrastructure development will began as included in the Government Action Plan
Coal: 90 percent of the export will go to China, 10 percent of the export will go other countries and 1/3 of which will be
processed at the Shivee Ovoo intermodal terminal

16. Traffic Distribution& Capacity Required
Coal /to terminal by truck/ Coal /From terminal by rail/
Total tonns # Truck Per month Per day
2014 550000 9167 764 35
2015 1265000 21083 1757 80
2016 1523500 25392 2116 96
2017 2035000 33917 2826 128
2020 2546500 42442 3537 161
2025 3045350 50756 4230 192
Total tonns # Truck Per month Per day
2014 550000 9167 764 35
2015 1265000 21083 1757 80
2016 1523500 25392 2116 96
2017 2035000 33917 2826 128
2020 2546500 42442 3537 161
2025 3045350 50756 4230 192
Tonns Train unit per train # Wagons per train
2014 550000 1 30
2015 1000000 1 45
2016 1500000 2 40
2017 2000000 2 50
2020 2500000 3 50
2025 3000000 3 50
Tonns Train unit per train # Wagons per train
2014 550000 1 30
2015 1000000 1 45
2016 1500000 2 40
2017 2000000 2 50
2020 2500000 3 50
2025 3000000 3 50
Source PSI and MonEx, 2012
Source PSI and MonEx, 2012
Dimension M2
Coal yard 400X30 Concrete Open 12000
Mineral yard 50X30 Concrete Open 3000
Special warehouse/Dangerouse goods 50X24 1200
Special warehouse/Chemicals 100X24 2400
Standard warehouses 150X24 12000
Garage & truck maintanence 100X12 Brick Warm 2400
Admistrative & laboratory building 30x45 Brick 2-3 store 6750
Local heating 12x12 Brick 1 store 144
As required
As required
As required
TypesDimension M2
Coal yard 400X30 Concrete Open 12000
Mineral yard 50X30 Concrete Open 3000
Special warehouse/Dangerouse goods 50X24 1200
Special warehouse/Chemicals 100X24 2400
Standard warehouses 150X24 12000
Garage & truck maintanence 100X12 Brick Warm 2400
Admistrative & laboratory building 30x45 Brick 2-3 store 6750
Local heating 12x12 Brick 1 store 144
As required
As required
As required
Types
Capacity required
Source PSI and MonEx, 2012

17. Location & Connectivity
Location
Cadastrial map
Connectivity
From To Direction Distance
Choir railway Ulaanbaatar city Rail 240
Station Tavan Tolgoi Gravel road 471
Ouy Tolgoi Gravel road 495
Tsaidam lake, coal mine Gravel road 120
Shivee ovoo, coal mine Rail 25
Zamiin Uud Rail …
From To Direction Distance
Choir railway Ulaanbaatar city Rail 240
Station Tavan Tolgoi Gravel road 471
Ouy Tolgoi Gravel road 495
Tsaidam lake, coal mine Gravel road 120
Shivee ovoo, coal mine Rail 25
Zamiin Uud Rail …
1.2 km railway- an access rail to the new
terminal is needed and included in the
investment needs estimation

18. Conceptual Design

19. Economic & Financial Analysis
Total Investment: USD 5,776,845.04
IRR: Before local tax paid- 16%
For details: see the Pre-feasibility study report
Source PSI and MonEx, 2012
Types of investment

20. Investment & Financing /USD/
Source PSI and MonEx, 2012
Items First year Second year Total Percentage
Current asset 0.00 120,000.00 120,000.00 2.08%
Fixed asset
Land value 30,000.00 0.00 30,000.00 0.52%
Building 1,980,200.00 0.00 1,980,200.00 34.28%
Interest rate (14.4) 228,119.04 0.00 228,119.04 3.95%
Infrastructure 1,677,526.00 0.00 1,677,526.00 29.04%
Equipment 0.00 1,796,000.00 1,796,000.00 31.09%
Total fixed asset 3,915,845.04 1,796,000.00 5,711,845.04 98.87%
Total intangible asset 25,000.00 40,000.00 65,000.00 1.13%
Total fixed investment 3,940,845.04 1,836,000.00 5,776,845.04 100.00%
Financing
Equity 788,169.01 367,200.00 1,155,369.01 20%
Long term loan 3,152,676.03 1,468,800.00 4,621,476.03 80%
Total financing 3,940,845.04 1,836,000.00 5,776,845.04 100%

21. Financing & Return
• Debt/Equity: 80 %/20 %
• Interest rate used: 14.4% per annum, 1.2 % per months
• Loan: 6 years, loan payment starts after
capitalization
• Tax rate: CIT and PIT
• Infrastructure investment: USD 1,677,526.00
• Equipment investment: USD 1,796,000.00
• Building and other investment: USD 1,980,200.00
• Land value: USD 30.000.00 (to be paid to the
province development fund)
• Intangible assets: USD 65,000.00 (Project team expenses
during the planning and construction period)
• Current assets: USD 120,000.00 reserved for financing local plan, and
etc.,

22. Profit &Loss Estimation
Source PSI and MonEx, 2012
2013 2014 2015 2016 2017 2020 2025
Revenue
Freight processing 351,985.0 2,436,500.0 3,425,320.0 4,088,860.0 6,125,700.0 5,794,180.0
Storing 250,646.7 514,500.0 655,106.7 740,953.3 963,566.7 551,726.7
Rent 139,555.0 270,110.0 335,515.0 372,270.0 467,275.0 285,285.0
Total revenue 742,186.7 3,221,110.0 4,415,941.7 5,202,083.3 7,556,541.7 6,631,191.7
Expenses
Salary 20,418.8 92,565.0 119,790.0 131,769.0 175,384.5 282,458.6
Operational cost 37,440.0 149,760.0 172,224.0 206,668.8 314,317.4 632,204.6
Utility cost 8,120.0 32,480.0 34,916.0 37,534.7 46,629.2 66,942.3
Interest and loan payment 228,119.4 1,435,738.5 1,324,823.1 1,213,907.7 1,102,992.3
Maintanence cost 4,492.8 17,971.2 20,666.9 24,800.3 37,718.1 75,864.6
Depreciation 0.0 58,800.0 58,800.0 58,800.0 58,800.0 58,800.0
Unallocated 4,083.8 18,513.0 23,958.0 26,353.8 35,076.9 56,491.7
Total expenses 1,510,293.8 1,694,912.3 1,644,262.6 1,588,918.8 667,926.2 1,172,761.7
Profit before tax -3,940,845.4 -6,544,952.6 -5,018,754.9 -2,247,075.8 1,366,088.7 6,888,615.5 5,458,430.0

23. Risk Analysis
Tested 6 cases & outcomes suggested the investment to be financially feasible side notes:
• Impact of new (private) railway: marginal
– New railway to be built is under concession agreement, thus it will be a private railway. It will
be cost cutting factor, there are potential factors for delay:
• According to the 49 agreement between Russia and Mongolia, two countries have to
make a joint decision on construction and use of new railways. It is a potential reason for
delay and still uncertain
• When mining company has its own railway: the investment cost (railway, rolling stock
and etc.,) as well as other costs (maintenance, technical services ). It is potential reason of
terminal competitiveness in terms of cost/ tariff
• Impact of coal price and demand fluctuation:
– Price fluctuation is subject to economic crisis/ demand.
– Demand fluctuation is caused by the economic crisis. But crisis does not stay forever
• Impacts of political and administrative decision
– China likely to ban the transportation of Mongolian coal through its territory, due to it’s
internal demand
– Negotiation between Russia and Mongolia likely to delay due administrative and other
reasons.
– Tested

24. Next Step
Confirm the contractual agreements with importers &
mining companies/demand
Finalize bankable FS
Form project team
Have construction and local plan ready
Fund-raising and so for the related actvities
Start construction
Serve the market

25. Thanks for your attention
D.ENKHBAT , CEO of MonEx LLC
T: 976-11 319304,319305, 330190
Fax: 976-11-318125
Mobile:9911 5550
E-mail : enkhbat@monex.mn
Web: webmail.monex.mn