Mongolia has significant untapped mineral resources and will likely undergo rapid economic growth and transformation over the coming decade. It has a small population and is just beginning to explore and develop world-class mining assets like Tavan Tolgoi and Oyu Tolgoi, which will drive export-led growth. Mongolia has a functioning democracy and market economy but is still transitioning from Russian and Chinese influence, making it an attractive emerging market for investors. Direct investment carries higher risk but also higher potential returns, while public securities markets provide more transparency and lower risk exposure to Mongolia's growth.

1. Understanding Mongolia’s Current Situation
What Investors Need to Know
December 2011
Eric Zurrin
Director General
eric.zurrin@resource-cap.com
+976 9999 3356
www.resource-cap.com

2. Summary
1 Political, cultural and economic background of Mongolia
Mongolia – the “Sleeping Giant” between China and Russia2
1
Success Factors for Investors3
Access Points for Investors4

3. Mongolia – A Very Simple Story
Mongolia is all about
resources and
underexploration
Mongolia will
undergo
transformational
change over the
coming decade
Driven by emerging market global demand for resources
Truly undiscovered mining frontier
World class assets - Tavan Tolgoi and Oyu Tolgoi
Significant potential
- 6,000 mining deposits over 80 minerals
- 75% of Mongolia mapped at only 200,000:1
- only 17% of Mongolia under exploration, 0.3% under mining license
2
coming decade
- only 17% of Mongolia under exploration, 0.3% under mining license
Parallels from Emerging Market growth
GDP
pre-expansion
GDP
post-expansion Multiple Years
CAGR
(%)
Brunei Darussalam 1970: $179m 2008: $15bn 81x 38 12
UAE 1973: $2.8bn 2008: $262bn 94x 35 14
Qatar 1995: $7bn 2008: $102bn 15x 13 23
Mongolia 2008: $4.8bn 2025: $60bn 13x 17 16

4. Political and Cultural Background
Functioning
democracy, greater
transparency and a
more desirable place
to do business than
its neighbours and
regional competitors
Characteristic Implication for Investors
1 Parliamentary Republic
(democracy)
Rule of Law
Small and young population
2
3
Progressive, but slow
Enforceable contracts
Export-led growth, labour
3
Small and young population
(Mild) religion
Nomadic
3
4
5
Export-led growth, labour
shortage
Stability
Entrepreneurial, competitive

5. Economic Background
Mix of favourable
economic
characteristics to
attract capital and
enable significant
potential investment
returns
Characteristics Implications for Investors
1 Market economy
Small economy, low base
Free floating currency
2
3
Active local participation
Significant upside potential
No capital controls
4
Free floating currency
Land-locked
Nascent but developing
domestic capital markets
3
4
5
No capital controls
Chinese/Russian influence
Initial transition to
internalizing access to
capital

6. The “Sleeping Giant” between China and Russia
Former Russian satellite
“Red Hero”
China’s 4,000 kilometre border
50% discount
A single customer
The struggle between Russian occupation over much of the 20th Century and China as the
only customer
Background
Price Taker
5
A single customer
China
Coal, iron ore, oil
Border control
Russia
Erdenet Copper,
uranium, Russian Rail
Fuel shortage
Mongolia
Price Taker
Balancing
Interests
Allocation of
Capital
?

7. Foreign Direct Investment on China’s Doorstep
Development capex
Financing in
place
Oyu Tolgoi US$6.2 billion
Tavan Tolgoi US$4.6 billion
MMC US$576 million from 2010–2013
China’s dominance as the buyer of Mongolian resources has resulted in foreign capital
fuelling Mongolia’s Growth Engine in the southern third of the country
Eruu Gol
(Iron Mining International)
Ulaanbaatar
Ovoot Coking Coal
(Aspire Mining)
Russia
bound??
Capex??
6
MMC US$576 million from 2010–2013
South Gobi US$290 million from 2011–2013
MonEnCo ~US$400 million from 2010-2013
Gobi Coal ~US$400 million from 2011–2013
Altain Khuder ~US$300 million from 2010–2013
Source: Public information, annual reports
Tavan Tolgoi
(Erdenes MGL)
Ukhaa Khudag
(MMC)
Ovoot Tolgoi
(SouthGobi)
Oyu Tolgoi
(Ivanhoe Mines)
China bound
Altain
Khuder
Note: Selected top producing / near to producing assets
$13 billion of
development
capex
Shinejinst
(Gobi Coal &
Energy)
MonEnCo

8. Success Factors for Investors
Structuring a
transaction that
allows comfort to both
the buyer and seller
greatly assists in a
successful outcome
Local presence /
strong partnership
+
+
+ MCS
Qinghua MAK
Kerry Group
Structuring Mechanics
Valuation Approach
Fundamental
Valuation
Management
Ability+
Bridging the “Expectation Gap”
- ie: QGX / MMC trade sale
7

9. Access Points for Investors into Mongolia
A balance between risk, active management and potential returns for investors seeking
Mongolian exposure
Direct private equity
investments
MSE (Mongolia)
Liquidity Fund
Firebird Mongolia
Mongolia Opportunities
InternationalDomestic
• Direct Exposure
• Active Analysis
• Higher Risk (and return)
• More Transparency
• Better Governance/DD
• Lower Risk
Mongolia Stock
Exchange
TSX, ASX,
HKSE, AIM
Mongolia Opportunities
Fund
8