1 VALE EVACUATES 200 PEOPLE FROM TOWN NEAR ITS MAR AZUL MINE WWW.MINING.COM PUBLISHED:2019/02/17      2 TOOTH PLAQUE SHOWS DRINKING MILK GOES BACK 3,000 YEARS IN MONGOLIA WWW.SCIENCENEWS.ORG  PUBLISHED:2019/02/17      3 INCREASING NUMBER OF CHINA-EUROPE FREIGHT TRAINS SUPPORTS MONGOLIA'S ECONOMY: OFFICIAL WWW.XINHUANET.COM PUBLISHED:2019/02/17      4 TAX REVENUE INCREASES BY 33.7 PERCENT WWW.MONTSAME.MN PUBLISHED:2019/02/17      5 COPPER MINER'S $10B BET COMES TO LIFE IN PANAMA JUNGLE WWW.MINING.COM PUBLISHED:2019/02/15      6 TRADE UNIONS REQUEST PM TO FOCUS ON INTEREST RATE CUT WWW.ZGM.MN PUBLISHED:2019/02/15      7 MONGOLIA’S HOURLY WAGE TO REACH USD 1 WWW.NEWS.MN PUBLISHED:2019/02/15      8 US NARCOTICS BY POST TO MONGOLIA! THREE ARRESTED WWW.NEWS.MN PUBLISHED:2019/02/15      9 WRITER D.URIANKHAI NOMINATED FOR THE NOBEL PRIZE WWW.MONTSAME.MN PUBLISHED:2019/02/15      10 MONGOLIA-CHINA-RUSSIA ECONOMIC CORRIDOR BENEFITS ALL SIDES: OFFICIAL WWW.XINHUANET.COM PUBLISHED:2019/02/15      “ОЮУ ТОЛГОЙ” КОМПАНИ 570 ТОННЫ ДААЦТАЙ CAT БРЭНДИЙН ГИДРАВЛИК ЭСКВАТОРООР ХҮЧЭЭ СЭЛБЭЛЭЭ WWW.GOGO.MN  НИЙТЭЛСЭН:2019/02/15     ӨРХИЙН САРЫН ДУНДАЖ ОРЛОГО 78,000 ТӨГРӨГӨӨР ӨССӨН Ч ЗАРЛАГА ДАВСАН ХЭВЭЭР БАЙНА WWW.IKON.MN НИЙТЭЛСЭН:2019/02/15     АВСТРАЛИЙН ЭЛЧИН САЙД ДЭВИД МЭТЬЮ ВОСЭН ИТГЭМЖЛЭХ ЖУУХ БИЧГЭЭ ӨРГӨН БАРИВ WWW.MONTSAME.MN НИЙТЭЛСЭН:2019/02/15     2018 ОНД МОНГОЛ УЛСЫН ЭДИЙН ЗАСАГ 6.9 ХУВИАР ӨСЛӨӨ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2019/02/15     МХБ: II/15-НЫ БАЙДЛААР 8 КОМПАНИ ХЭХ-ЫН ТОВОО ГАРГААД БАЙНА WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2019/02/15     2017 ОНД 1.9 ТЭРБУМ ТӨГРӨГИЙН АЛДАГДАЛТАЙ АЖИЛЛАСАН “УЛААНБААТАР БҮК” 2018 ОНД 566 САЯ ТӨГРӨГИЙН АШИГТАЙ АЖИЛЛАВ WWW.BLOOMBERGTV.MN НИЙТЭЛСЭН:2019/02/15     ОРХОН ТҮҮХИЙ НҮҮРСНЭЭС ТАТГАЛЗСАН АНХНЫ АЙМАГ БОЛНО WWW.UNUUDUR.MN НИЙТЭЛСЭН:2019/02/15     АТГ-ААС НЭР БҮХИЙ 6 ШҮҮГЧИЙГ ШАЛГАЖ ЭХЭЛЖЭЭ WWW.EAGLE.MN НИЙТЭЛСЭН:2019/02/15     МОНГОЛ УЛС ДЭЛХИЙН 77 ОРОНД БАРАА ЭКСПОРТОЛСНООС ХЯТАДАД 93%-ИЙГ НЬ НИЙЛҮҮЛЖЭЭ WWW.IKON.MN  НИЙТЭЛСЭН:2019/02/14     АВТО МАШИНЫ ИМПОРТ 2018 ОНД 30% ӨСӨЖ, 86,296-Д ХҮРЧЭЭ WWW.IKON.MN  НИЙТЭЛСЭН:2019/02/14    

Events

Name organizer Where
“Doing business with Mongolia”, “UK Investors show” бизнес хөтөлбөр March 27-April 02. 2019 ЛОНДОН ХОТ, ИХ БРИТАНИ Mongolian Business Database London UK
SYMPOSIUM ON GLOBAL MARKETS Nationalism and Protectionism: The United States in the International Arena June 17-18, 2019 The Center for American and International Law Plano, Texas, USA The Center for American and International Law (CAILAW) Plano Texas June 17-18 2019
"Open to Export" ICC WTO International business award ICC WTO London

NEWS

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Resource update shows Xanadu has its foot on a monster in Mongolia www.stockhead.com.au

Xanadu Mines has confirmed its Kharmagtai project in Mongolia’s South Gobi Desert as one of the largest undeveloped copper and gold assets in the world with the release of a new resource estimate.

And there’s more to come, with the company describing the resource update announced last Wednesday as an “interim” step ahead of delivering a larger global resource update for the project.

Following the interim update, indicated and inferred resources at Kharmagtai now stand at 598 million tonnes containing 1.9 million tonnes of copper and 4.3 million ounces of gold (2.6 million tonnes of copper equivalent metal or ).

Within the broader resource is a shallow, higher grade core of 54 million tonnes grading 0.86% copper equivalent, 61% of which is in the higher-confidence “indicated” category.

The new resource represents a 400% increase in contained copper and a 249% increased in contained gold compared to the maiden Kharmagtai resource published by the company in March 2015 and will serve as the basis for a scoping study on a shallow, high grade starter pit development, the results of which are expected this quarter.

“We are extremely delighted with the new results, particularly the substantial increase in the open pit, shallow resource base at Kharmagtai,” Xanadu managing director Andrew Stewart said.

“With a 400% increase in contained copper, we are confident that the upcoming scoping study will show a financially robust starter project that will pave the way for Kharmagtai to develop into another high-quality Mongolian mining operation.”

The global resource update will include the Zaraa discovery made earlier this year, which has been labelled by Xanadu as a potential game changer.

Zaraa, where mineralisation has been intersected to a depth of 1,200 metres and remains open, is expected to have a significant positive impact on the overall scale and grade of the Kharmagtai resource.

“To go from discovery to a maiden mineral resource estimate at Zaraa in a short space of time will not only validate the exploration methodology used by Xanadu but highlight the speed at which projects can be advanced in Mongolia,” Stewart said.

There are multiple other shallow drill targets within the Kharmagtai leases that will be assessed systematically by Xanadu with a view to discovering additional porphyry deposits to add to the project’s growing resource base.

Based on contained copper equivalent metal, Kharmagtai is currently just over one-third the size of Solgold’s Cascabel project in Ecuador, which has attracted corporate interest from BHP and Newcrest Mining.

The mineralisation at Kharmagtai starts at surface and appears amenable to open pit mining, whereas Cascabel will need to be mined from underground.

Xanadu shares closed at 12c on Friday, capitalising the company at $77.8 million.

 

Xanadu Mines is a Stockhead advertiser.

This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice. If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a disclosure document, a Product Disclosure Statement or an offer document (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.

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Millions in funding announced for renewable energy project in Mongolia www.cnbc.com

The Asian Development Bank (ADB) and Mongolian government have signed loan and grant agreements relating to renewable energy and the improvement of tax administration and public investment management. The total cost for both the projects amounts to $85.6 million.

In an announcement Friday, the ADB said that the renewable energy loan would help Mongolia develop a 41-megawatt distributed renewable energy system that uses solar photovoltaic and wind power. It will also use advanced battery storage technology and energy management systems. Photovoltaic refers to a way of directly converting light from the sun into electricity.

The ADB said the project would supply clean electricity to around 260,000 people living in “remote and less-developed towns in western Mongolia.” It added that, at the moment, these communities were reliant on expensive and “high-polluting carbon-intensive electricity.”

The ADB’s funding of $40 million is being backed by grant co-financing, with $14.6 million coming from the Strategic Climate Fund under the Scaling Up Renewable Energy Program in Low-Income Countries.

A further $6 million will come from the Japan Fund for the Joint Crediting Mechanism, which is a single-donor trust fund set up in 2014. It is supported by the Japanese government and managed by the ADB. The Mongolian government is making a contribution of $5.6 million.

“These projects will support the government’s efforts to raise the share of renewable energy, decrease carbon dioxide emissions, and improve public financial resource mobilization and management,” Yolanda Fernandez Lommen, the ADB’s country director for Mongolia, said in a statement Friday.

Headquartered in the Philippines, the ADB was set up in 1966. Its operations in 2017 amounted to $32.2 billion, with $11.9 billion in co-financing.

In November 2017, the ADB approved a $44.76 million grant to finance the construction of a 20-megawatt on-grid solar photovoltaic plant in Afghanistan.

At the time, the ADB said the new facility would boost renewable energy generation and supply in the country, producing at least 43,000 megawatt hours of solar power.

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Draft resolution of Mongolia’s international security and nuclear-weapon-free status approved www.montsame.mn

Ulaanbaatar /MONTSAME/ On November 1, the First Committee (Disarmament and International Security) of the United Nations General Assembly approved a draft resolution of Mongolia’s international security and nuclear-weapon-free status.

In 1992, Mongolia declared its territory a nuclear-weapon-free zone, received support from the General Assembly. Since 1998, the resolution has been approved biannually.

The General Assembly called on other UN Member States to continue to cooperate with Mongolia in taking the measures necessary to consolidate and strengthen Mongolia’s independence, sovereignty and territorial integrity, the inviolability of its borders, its independent foreign policy, its economic security and its ecological balance, as well as its nuclear-weapon-free status.

Mongolia’s nuclear-weapon-free status has a great significance for actions of the international organization in disarmament and non-proliferation of nuclear weapons.

In 2017, the 25th Anniversary of Mongolia’s nuclear-weapon-free status was marked and Secretary-General António Guterres sent a congratulatory message in which he noted that Mongolia’s nuclear-weapon-free status is 'unique'. He also highlighted that the UN highly appreciates the achievement of the Mongolian Government and its people towards nuclear-weapon disarmament and the non-proliferation of weapons.

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Turquoise Hill announces financial results and review of operations for the third quarter of 2018 www.turquoisehill.com

Turquoise Hill Resources today announced its financial results for the quarter ended September 30, 2018. All figures are
in U.S. dollars unless otherwise stated.
“During the third quarter, we delivered strong operational results in the open-pit mine, continued to progress underground
construction while achieving industry-leading safety performance,” said Ulf Quellmann, Chief Executive Officer. “The high
quality of our mining assets, as well as the strength of our management team, were instrumental in our ability to
successfully deliver such results. We are focused on demonstrating the value of Turquoise Hill to our shareholders and
the broader market.
“In our open-pit mine, we generated increases of nearly 150% in gold production and nearly 7% in copper production
resulting in lower unit production costs compared with the third quarter of 2017. The higher volumes, which offset the
impact of lower copper and gold prices, allowed us to maintain stable revenue in the third quarter of 2018 compared with
a year earlier.
“Underground, we continued to move forward with the construction of critical infrastructure to transform Oyu Tolgoi into a
true Tier One asset with the potential to operate for approximately 100 years. Underground development will deliver one
of the largest copper mines globally, with cash costs at the bottom of the cost curve.”
HIGHLIGHTS
 Oyu Tolgoi achieved a strong All Injury Frequency Rate of 0.19 per 200,000 hours worked for the nine months ended
September 30, 2018.
 Copper production of 39,400 tonnes during Q3’18 increased 6.8% versus Q3’17 as higher grades and recoveries were
partially offset by lower throughput.
 Gold production of 77,000 ounces during Q3’18 increased 148.4% over Q3’17 due to higher grades and recoveries.
 Mill throughput in Q3’18 decreased 9.1% over Q3’17 due to increased processing of harder Phase 4 ore as well as a
planned maintenance shutdown during the quarter.
 Revenue of $246.5 million in Q3’18 maintained at Q3’17 levels by virtue of higher gold sales volumes offsetting lower
copper and gold prices.
 For Q3’18, Oyu Tolgoi’s cost of sales was generally lower than in Q3’17 at $2.28 per pound of copper sold (down 6.2%
from $2.43: Q3’17), C1 cash costs of $1.65 per pound of copper produced (down 9.8% from $1.83: Q3’17) and all-in
sustaining costs of $2.29 per pound of copper produced (down 17.0% from $2.76: Q3’17)1

Total operating cash costs2 of $196.4 million in Q3’18 increased 21.3% over Q3’17 mainly due to increased open-pit
and concentrator costs resulting from higher maintenance costs, higher input costs as well as lower capitalization of
production phase stripping costs.
 Turquoise Hill has updated its guidance for 2018 operating cash costs2
from approximately $700 million to approximately
$800 million due to higher freight and royalty costs associated with increased sales revenue, a reduction to deferred
stripping costs capitalized as well as higher input prices, maintenance and power study costs.
 Turquoise Hill has also updated its guidance for 2018 open-pit capital expenditure from approximately $150 million to
approximately $120 million due to lower capitalized deferred stripping and deferral of projects from 2018 into 2019.
 During Q3’18, underground lateral development progressed 3.0 equivalent kilometres for a cumulative total of 15.7
equivalent kilometres since project restart.
 Pre-sinking activities for Shafts 3 and 4 progressed during Q3’18, including a box cut, and sinking for both shafts is
expected to commence mid-2019.
 Underground expansion capital for the nine months ended September 30, 2018 was $866.5 million, resulting in total
project spend since January 1, 2016 of $1.9 billion.

FINANCIAL RESULTS
Income in Q3’18 was $15.2 million compared with $47.7 million in Q3’17. The decrease is primarily due to $86.0 million
of additional deferred tax assets recognized in Q3’17 compared to Q3’18, partially offset by a reduction to finance costs in
Q3’18 compared to Q3’17, due to increased amounts capitalized to property, plant and equipment. Cash generated from
operating activities in Q3’18 was $76.2 million compared to $109.1 million in Q3’17. This decrease was due primarily to
the impact of higher vendor payments in Q3’18 compared to Q3’17 as a result of higher operating cash costs incurred in
Q2’18 compared to Q2’17. Capital expenditure on property, plant and equipment was $328.8 million on a cash basis in
Q3’18 compared with $234.0 million in Q3’17, attributed principally to underground ($304.8 million) with the remainder
related to open-pit capital activities.
Turquoise Hill’s cash and cash equivalents at September 30, 2018 were approximately $1.5 billion.
OYU TOLGOI
The Oyu Tolgoi mine is approximately 550 kilometres south of Ulaanbaatar, Mongolia’s capital city, and 80 kilometres
north of the Mongolia-China border. Mineralization on the property consists of porphyry-style copper, gold, silver and
molybdenum contained in a linear structural trend (the Oyu Tolgoi Trend) of deposits throughout this trend. They include,
from south to north, the Heruga Deposit, the Oyut deposit and the Hugo Dummett deposits (Hugo South, Hugo North and
Hugo North Extension).
The Oyu Tolgoi mine was initially developed as an open-pit operation. The copper concentrator plant, with related facilities
and necessary infrastructure, was originally designed to process approximately 100,000 tonnes of ore per day from the
Oyut open pit. However, since 2014, the concentrator has improved operating practices and gained experience, which has
helped achieve a consistent throughput of over 105,000 tonnes per day. Concentrator throughput for 2018 with harder ore
is now expected to be 38 million to 39 million tonnes compared to previous expectations of approximately 40 million tonnes.
In August 2013, development of the underground mine was suspended pending resolution of matters with the Government
of Mongolia. Following signing of the Oyu Tolgoi Underground Mine Development and Financing Plan (Underground Plan)
in May 2015 and the signing of a $4.4 billion project finance facility in December 2015, Oyu Tolgoi received formal notice
to proceed approval by the boards of Turquoise Hill, Rio Tinto and Oyu Tolgoi LLC in May 2016, which was the final
requirement for the re-start of underground development. Underground construction recommenced in May 2016.

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Fingers in the till? Mongolian Minister resigns www.news.mn

B.Batzorig, Food, Agriculture and Light Industry Minister of Mongolia announced his resignation on Wednesday because of financial irregularities. The resignation was demanded by the ruling Mongolian People’s Party Group in parliament.

Recently, reports have been made public about how some members of parliament and their relatives obtained loans with low interest rates from a special fund for developing small and medium-sized enterprises. The fund is directly linked to Batzorig’s ministry. Batzorig’s wife is, allegedly, among those who obtained loans from the fund.

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Deaths of four Mongolian journalists are suspicious www.news.mn

‘In recent years, a total of four Mongolian journalists have died, furthermore, their deaths are suspicious’ said Kh.Naranjargal, head of the Globe International NGO at a press conference. The Press Council of Mongolia has been conducting a survey on regulations for ensuring journalists’ safety and implementing these regulations in cooperation with the Mongolian Bar Association and Globe International.

Journalists said that their safety is not ‘fully ensured’ in the survey which is currently 30 percent completed. In addition, one in every three journalists said they had felt pressured or threatened because of their articles. Nearly 300 journalists are participating in the survey, the conclusions of which will be announced on World Press Freedom Day (3 May).

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Mongolia’s gold purchases increase by 34 percent www.news.mn

The Central Bank of Mongolia (Mongol Bank) purchased 3.4 tonnes of gold from legal entities and individuals in October; an increase of 34 percent on the same month in 2017. Furthermore, the total gold purchase reached 17.7 percent in the first ten months of 2018; an increased of three percent on last year. As of mid-October, the Central Bank of Mongolia was purchasing gram a of gold for MNT 99,911.55.

The bank is aiming to increase gold purchases to 22 tonnes in 2018 and, thereby, raise the foreign currency reserve to USD 700 million from gold purchases. The bank has opened two laboratories in Darkhan-Uul and Bayankhongor provinces for testing precious metals in an effort to increase the country’s gold reserves. Two more laboratories are expected to open in 2019.

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IMF: Authorities should improve public financial management www.zgm.mn

The International Monetary Fund (IMF) has announced the completion of the fifth review of the Extended Fund Facility (EFF) and recommended Mongolia to further improve public financial management as Parliament is currently discussing the pre-election year budget. This enables Mongolia to draw 26.2088 million Special Drawing Rights (SDR) equivalent of about USD 36.22 million, bringing total disbursements under the arrangement to SDR 157.2 million (about USD 217.33 million). The fund highlighted, “The combination of strong policy implementation and a supportive external environment has helped the authorities meet all end-September 2018 quantitative targets under the program, with significant over-performance on fiscal targets. Progress has also been made on structural reforms, albeit with some delays.” Following the Executive Board’s discussion of the review, Mr. Mitsuhiro Furusawa, Acting Chair and Deputy Managing Director, said, "The fiscal accounts have posted a primary surplus, reflecting both a sharp increase in revenues and continued expenditure restraint.

Meanwhile, past over-performance allowed the authorities to meet key reserve targets, despite a recent rise in balance of payments pressures. In the financial sector, the focus remains the follow-up to the Asset Quality Review (AQR). Select banks are in the process of booking the results of the AQR and subsequent on-site inspections. They are also now raising the needed capital to address identified shortfalls by the end-December 2018 deadline. The Bank of Mongolia will remain focused on ensuring financial sector stability throughout the process.” On the down side, the IMF noted that Mongolia remains vulnerable to external and domestic shocks, failing to withstand the progresses. The fund suggested that it is crucial to take advantage of the still favorable economic environment to further bolster fiscal and external buffers, strengthen the banking sector, and improve the investment climate. “In addition, the authorities should continue efforts to protect social spending, strengthen tax administration, and improve public financial management. A dedicated implementation of the authorities’ reform program is key to build resilience against shocks and ensure sustainable, inclusive growth,” remarked Mr. Mitsuhiro.

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Ruling party sends 2019 Monetary Policy Guidelines for final discussion www.zgm.mn

Parliament’s plenary session began with a protest of the Democratic Party (DP) faction yesterday. The DP members hung up banners, declaring not to attend plenary sessions and standing committee meetings until the MPs involved in SME Development Fund scandal are ousted and left the session. Without the DP faction, the remaining Parliament members held the first discussion on 2019 Monetary Policy Guidelines, during which the Governor of Bank of Mongolia (BoM) Bayartsaikhan Nadmid informed that the bank has injected USD 720 million into the foreign exchange (FX) market so far this year and is planning USD 1 billion currency intervention before the end of 2018. This is expected to reduce the weakening MNT rate at about 5 percent fluctuation. “The Law on Currency Regulation, which is currently under discussion by the Parliament, includes an article that states transactions of Oyu Tolgoi and other private entities that has stability agreement with the Government shall be made through BoM accounts. The approval of the bill will help grow FX reserves,” addressed Mr. Bayartsaikhan.

The Parliament members further touched upon eight percent mortgage loan program, highlighting that the mortgage loan repayments currently stand at 98 percent from total outstanding loans. The related standing committee noted the low accessibility of mortgage loan in 2017-2018 and suggested to increase the program financing in 2019. In turn, the Governor of the BoM Bayartsaikhan noted the difficulty for the BoM to independently settle the mortgage loan issue and reminded that the International Monetary Fund suggested to transfer the management of mortgage program to the Government starting from January 2019. He also highlighted that the BoM is currently making an effort in further reducing commercial bank lending rate, which was recently lowered from 21 percent to 17.8. Additionally, the BoM is operating under MNT 3 trillion deficit and Mr. Bayartsaikhan informed that the only measure of maintaining the balance is to issue Government securities and bonds; however, considering the current situation, he announced that the BoM will repay its debt from operational revenue.

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Investment opportunities presented to Australian investors www.montsame.mn

Ulaanbaatar /MONTSAME/. Delegates lead by the Minister of Mining and Heavy Industry D.Sumiyabazar and MP A.Undraa are currently participating in the International Mining and Resources Conference (IMARC-2018), which is taking place in Melbourne, Australia. Minister D.Sumiyabazar hold a meeting with Australian investors today.

During the meeting, he gave information about the better environment that is currently forming in the mining and heavy industry sector of Mongolia. Noting that the preparation for trading of up to 30 percent of shares of Erdenes Tavan Tolgoi JSC on both domestic and international stock exchanges is currently underway, he called on the investors to partner in making the project into a global large-scale project.

Aside from the Australian investors, Ambassador of Mongolia to Australia B.Chuluunkhuu, Ambassador of Australia to Mongolia John Langtry and CEO of Oyu Tolgoi Armando Torres attended the meeting.

Minister D.Sumiyabazar stated that he’s currently working on founding a joint public and private international investors’ consultation committee at the Ministry of Mining and Heavy Industry.

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