B. Zagal, Vice President and Director of Investment Banking Division, Golomt Bank of Mongolia

1. 1
MONGOLIA – INVEST IN OPPORUNITY
Speaker:
Mr. Zagal
Vice President &
Director of Investment Banking
Co-speaker:
Mr. Amgalan
Project Finance Manager
Corporate Banking Division

2. 2
Presentation outline
1. Mongolian economy Growth
2. Banking system Stability
3. Tax & legal background Attractive
4. Resources World class
5. Investment opportunity High return
6. Economic growth Exponential

3. 3
Mongolian economy
• GDP 2010 H1 Growth = 5%
• GDP 2009 – MNT 6 trln = $4.2 bln
• 2010 H1 exports – $1.3 bln
• 2010 H1 imports – $1.4 bln
• Inflation since Jan 2009 – 11.7%
• GDP 2009 – MNT 6 trln = $4.2 bln
• Total 2009 exports to China =
$1.41 bln = 74% of MGL exports =
0.14% of China’s imports
• Total 2009 imports from China =
$0.532 bln = 39% of non-oil
imports

4. 4
Banking system
• 14 banks
• BoM revised and clarified
deposit guarantee law
• 1$ = 1,315 MNT (Oct 8th)
• Growth correlation of 2
times of nominal GDP
• BoM accounts 2 banks
into Banking system
numbers

5. 5
Tax & legal background
• Taxes and royalties
– Corporate tax law 10%, 25%
– VAT of 10%
– Royalty of 2.5%, 5%
– Loss-carry forward period 4 to 8
years
No
Name of Strategically
Important Deposit
Location (Province,
County)
Reserve Amount
1 Tavan Tolgoi Umnugobi, Tsogtsetsii 4.3 bln tons, coal
2 Nariin Suhait Umnugobi, Gurvantes 90.79 mln tons, coal
3 Baganuur , Baganuur 512.8 mln tons, coal
4 Shivee Ovoo Gobisumber, Shiveegobi 564 mln tons, coal
5 Mardai Dornod, Bayandun 1104 tons, uranium
6 Dornod Dornod, Dashbalbar 58933 tons, uranium
7 Gurvanbileg Dornod, Bayandun 16073 tons, uranium
8 Tumurtei Selenge, Huder 229.3 mln tons, iron ore
9 Oyu Tolgoi Umnugobi, Khanbogd 16.39 mln tons, copper; 623.3 tons, gold
10 Tsagaan Suvarga Dornogobi, Mandakh
1.28 mln tons, copper; 43.6 thousand tons
molybdenum
11 Erdenet Orkhon, Erdenet 3.2 mln tons, copper; 90 thousand tons, molybdenum
12 Burenkhaan Khuvsgul, Alag-Erdene 40.5 mln tons of phosphorit
13 Boroo Selenge, Bayangol 22 tons of gold
14 Tumurtein Ovoo Sukhbaatar, Sukhbaatar 820 thousand tons of zinc
15 Asgat Bayan-Ulgii, Nogoonnuur 2247 tons of silver
• Minerals legislation
– Three main bodies of law 2006 minerals
law of Mongolia
• Mongolia ranked at 60 out of 181 economies
of the world in terms of ease of doing
business

6. 6
2009 events
• Oyu Tolgoi agreement
– Valuation of deposits: $362.4 bln
– 66% Ivanhoe Mines, 34% Mongolia Government
– 30-40 year mine life
– 450,000 tons of copper per year
– 330,000 ounces of gold per year
• China Investment Corporation (CIC) and Temasek Holdings Pte. Ltd
• Mitsubishi Corporation and AREVA to cooperate on uranium projects
• Government’s 26 projects
– State policy on high technology industrial sector approved
– Smelter complex
– Direction to develop industrialization in rural areas
• Nuclear Energy Law

7. 7
Bodi International LLC
• Cooperation agreement with Oyu Tolgoi
• Parent company of Golomt Bank of Mongolia
– Conglomerate with 26 subsidiary companies
– Finance, construction, property development
• Corporate governance

8. 8
Rare earth elements
• Investment opportunity
• China produces 97% of the world’s REE production and has 48% of the
world’s discovered reserves
• China announced on July that REE elements will be cut 40% by 2012
• Demand has risen rapidly averaging 8% pa from 2003 to 2008
• Chinese plan to extend installation of wind electrical generating capacity
from 13GW last year to 300GW by 2020

9. 9
Exponential Growth
• V-shaped recovery
• OT capital expenditures will raise
GDP growth to average of around
7 percent between 2010 and
2012
– GDP growth is forecasted to
average around 6 percent in
the long-term (2015-2029)

10. 10
Local Currency rate
• Investment opportunity
• Appreciated 17.3% in the past 18 months
• Stabilization or further appreciation expected due to inflow of
USD
C entral B ank's US D-MNT rate
1,260
1,310
1,360
1,410
1,460
1,510
1,560
9-J an-09 10-Mar-09 9-May-09 8-J ul-09 6-S ep-09 5-Nov-09 4-J an-10 5-Mar-10 4-May-10 3-J ul-10 1-S ep-10
Source: Central Bank

11. 11
MNT deposit rate
• Annual deposit rates :
USD MNT ( Retail)
• 1 month 5.4 9.6
• 3 month 7.2 12
• 1 year 8.4 15.6 ( going to decrease)
• Wholesale - Negotiable rates offered by Golomt bank:
• 1 M 5.4
• 2 M 6.0
• 3 M 7.2
• 6 M 7.8
• 1 Y 8.4
• 2 Y 9.6
Source: Central Bank

12. 12
Investment opportunities - infrastructure
• Railroad
– Underdevelopment of
road network
– 1,815 km 4,000 km
– 950 bln needed
• Electricity
– Power plants are from
the Soviet era
– Electricity demand will
exceed supply from
2012
• Water demand
estimates southern
Mongolia
– 50,000 m3/day
350,000 m3/day

13. 13
2010 current events
• Tighter/stronger banking regulations
• Fiscal stability law
• Development Bank to be established and
resolution on Sept 2nd to announce tender
on management
• Government bond in discussion
• South Korea’s Mine Reclamation
Corporation (MIRECO)
• Japanese talks on REE projects
• MPRP to MPP (81% of members support)
• Outotec cooperates with National
Development Corporation of Mongolia to
develop Mongolian mineral deposits
• Gobi Coal Energy and Iron Mining
International IPO, Others are coming
• Parliamentary elections 2012
• Presidential elections 2013
• Start of Oyu Tolgoi 2013
• Mongolian Mining Cooperation at fully
capacity
• Mongolian Stock Exchange to be
privatized
• Tavan Tolgoi
2011 – 2013 events

14. 14
Human resource and training
• Lack of technical expertise
• 60 percent during the construction period and any
expansion periods
– 5,000 required
• 10 years of the commencement of production no fewer
than 70% of its employed engineers shall be Mongolian
– 2,000 required
• SCARCITY TRAINING OPPORTUNITY

15. 15
Conclusion/Investment opportunity
• Address to HK Investors:
• Involvement in Big state projects like infrastructure (concession Law, PPP)
• Involvement Direct Mining related ( Financial + Technical expertise)
• ( pre-exploration, exploration, Junior, Operating, Medium, Bigger)
• All supply chain business result from Mining :
• Catering, water supply, plants (processing, power, electric)
• HR
• Study all disadvantages in Mongolia, participate to change, benefit from the early
participation
• Capital market to expand (big deposits are to issue local shares by Law)
• CO-operate with prudent Local Banks ( Local client database, Local connection, Local
experience) to develop new business opportunities

16. 16
Contact details
Mr. Zagal Jack B Mr. Amgalan B
Vice President & Director Corporate Manager
Investment Banking Division Project Finance Department
zagald@golomtbank.com Corporate Banking Division
amgalan@golomtbank.com
http://www.golomtbank.com/ HKpresentation.html
WWW.BODI.mn