ETT to introduce risk management standard for zero-accident www.montsame.mn

Ulaanbaatar /MONTSAME/ Erdenes Tavan Tolgoi JSC reports that the company intends to implement a program to achieve the goal of zero-accident rate by introducing ISO 31000 risk management standard. The program will be launched by a ‘Start’ signal on April 23 in its mine and all contractor companies will join it.

Xanadu Mines discovers new copper porphyry centre at Kharmagtai project in Mongolia www.proactiveinvestors.com.au

Xanadu Mines Ltd (ASX:XAM) has discovered a new copper porphyry centre at its Kharmagtai Copper-Gold Project in Mongolia’s South Gobi region which hosts the large Oyu Tolgoi project.

A hole targeting a buried porphyry system has encountered some 600 metres of porphyry-style mineralisation at the target, which has been named Zaraa.

This hole is at a depth of 1,200 metres and remains in mineralisation with visible copper-bearing sulphides.

The top 770 metres of the hole returned 316 metres at 0.32% copper and 0.27 g/t gold from 458 metres.

Within this intersection were 217 metres from 557 metres at 0.4% copper and 0.33 g/t gold, and 108 metres from 645 metres at 0.47% copper and 0.42 g/t gold.

Executive director and chief executive officer Andrew Stewart said “We have started 2018 with very strong exploration results.

“Significant high-grade extensions have been added to the existing resources and our ever-improving understanding of the undercover geology at Kharmagtai has resulted in several new discoveries.

19 large-scale porphyry targets
“We have now tested eight of the 19 large-scale porphyry targets recently identified and five have produced significant intervals of porphyry alteration and mineralisation.

“Zaraa represents the latest target tested and we are extremely excited by the first diamond drill results.

“It is a new porphyry centre and early indications are the system has the grade and scale to represent a significant new discovery.”

Zaraa near Sandstorm target
Zaraa is 500 metres south of the Sandstorm target and 1 kilometre west of Golden Eagle.

Final results from the Zaraa drilling are expected in the next couple of weeks.

The company believes the hole indicates the system is increasing in size and grade towards the southwest.

Three follow-up holes are planned to test this new system along strike, targeting higher grades and broader widths in addition to expanding shallow high-grade mineralisation.

Ground magnetic data and location of reported drilling at Kharmagtai.

Broad zones of tourmaline breccia
At Sandstorm, drilling has returned a broad zone of sulphide-bearing tourmaline breccia mineralisation.

This is about 1.2km along strike from the mineralised breccia system at Stockwork Hill.

One hole intersected more than 100 metres of tourmaline breccia which is interpreted to be the strike extension of Stockwork Hill.

Assay results are expected in early May with follow-up drilling underway.

Epithermal gold intersections
At the Zephyr target, multiple high-grade epithermal gold intersections were returned while drilling porphyry targets.

Results include 2 metres at 4.4 g/t gold from 238 metres and 8.5 metres at 3.4 g/t from 297.5 metres, including 2 metres at 10.7 g/t from 300 metres.

Xanadu’s drilling at White Hill West target continues to expand the system with the best result being 785.9 metres at 0.21% copper and 0.12 g/t gold from 2 metres.

A reverse circulation program is underway to establish whether White Hill West links with the White Hill target 2 kilometres away.

Four rigs drilling
Stewart said: “Our strategy is clear: the best way to add tonnes and grade to the existing resources is by discovering additional high-grade deposits within the Kharmagtai licence area.

“With four rigs drilling around the clock we are delivering on this strategy and the discovery of Zaraa reinforces the amazing exploration potential of the Kharmagtai porphyry district.”

Drilling will start in early May at the Red Mountain project east of Kharmagtai targeting large-scale porphyries and epithermal gold.

The Need for a Sovereign Wealth Fund www.gogo.mn

The Ministry of Mining and Heavy Industry held a press conference titled “Transparent Mining” in order to give a briefing on the 1st Quarter report for the mining sector. As of the first quarter of 2018, mining accounted for 448.2 billion MNT in revenue in the state budget. 262 thousand tons of petroleum have been extracted as of April 11, with 53.3 billion MNT in revenue.

Trade boost: China to help Mongolia to expand border crossing www.news.mn

Mongolia is to expand the Zamyn Uud and Gashuun Sukhait border crossings with CHY 148 million of non-refundable assistance from the Chinese Government. The agreement was signed during a visit of Mongolian Prime Minister U.Khurelsukh to China.

Turquoise Hill announces first quarter 2018 production www.turquoisehill.com

Turquoise Hill Resources today announced first quarter 2018 production for Oyu Tolgoi.
Jeff Tygesen, Chief Executive Officer of Turquoise Hill, said, “Oyu Tolgoi’s first quarter production was in line with
expectations. Planned concentrator maintenance occurred in January reducing mill throughput for the quarter; however
the impact was partially offset by increases in recovery, particularly for gold. With the initial processing of ore from Phase
4A, we are starting to see increased gold grades, recovery and production compared to last year.”
Material mined decreased 20.0% over Q4’17 due to winter weather effects in January as well as dig-unit maintenance
work during the quarter. Mill throughput decreased 11.8% over Q4’17 due to the January planned maintenance. Copper
production in Q1’18 decreased 14.3% over Q4’17 mainly due to lower throughput and slightly lower grades. Gold
production increased 20.0% over Q4’17 due to higher gold grades from Phase 4A and an increase in recovery.
Oyu Tolgoi is expected to produce 125,000 to 155,000 tonnes of copper and 240,000 to 280,000 ounces of gold in concentrates for 2018.
Please review the full report on the website

Mining update: Investors eye Xanadu Mines www.ubinfo.mn

Xanadu Mines has recently reported that it determined the finding of a gold grain from samples taken at Kharmagtai Copper-Gold Project area that is located in Umnugobi aimag. 12 samples taken from Kharmagtai Deposit sent for additional analysis for determining the location of the gold.

Ongoing test work shows that gold should report to a copper concentrate as free gold inclusion. Xanadu’s chief executive officer Dr Andrew Stewart said, “These above average results, as expected, show that gold occurs as coarse grains in association with principle copper sulphides. While further testing is required as the project advances, we see no significant hurdles to producing a high-quality concentrate via standard processing pathways from the Kharmagtai project. These results allow us to focus on the drilling underway which is expanding the resource and targeting near-surface porphyry copper-gold deposits within this largely under-explored porphyry copper-gold district.”

ASPIRE MINING
ASX-listed Aspire Mining signed a new memorandum of understanding (MoU) with China Gezhouba Group International Engineering Co (CGGC) as part of an official program of 35 new infrastructure agreements between Mongolia and People’s Republic of China during the recent official visit of Mongolian Prime Minister Khurelsukh Ukhnaa to PRC (PRC). Under the MoU, the parties agree that they will continue to work together to finalise a feasibility study on a 550 km-long railway running east from Ovoot to the railway hub town of Erdenet. The company is developing a coking coal deposit at Ovoot.

CGGC, who is 40 percent owned by the Chinese state, last month delivered a draft feasibility study that found it would be financially viable to construct the railway line. A target date of next month has been set to finalize the study.

Mongolia and PRC have an ambition to build a Northern Rail Corridor as part of China’s Belt and Road Initiative to develop trade throughout Eurasia.

“This has helped Aspire pick up heavyweight partners such as CGGC on a railway line east from Ovoot and attract interest from Russia in building a line westwards to the Russian border,” the West Australian, an Australian media outlet noted.

The West Australian reported that Russian rail design group Mosgiprotrans last month signed a deal with Aspire to study the feasibility of running a rail line west from Ovoot to the town of Arts Suuri on the Mongolian-Russian border and then on to the Russian city of Kyzyl.

While the Russian government has yet to declare support for the project, Aspire noted in its latest update that the Russian Ministry for Rail had asked to review the Ovoot to Erdenet proposal.

“The new MoU also confirmed CGGC’s interest in funding pre-development activities for the project, subject to a guarantee the Trans-Mongolian railway, which runs through Erdenet, will have capacity to take Aspire’s coking coal north to markets in Russia and south to the steel mills of China,” The West Australia reported.

As part of the MoU, Northern Railways has committed to enter into a lump sum turnkey EPC contract with CGGC by the end of November 2018. Aspire reported the EPC contract would be subject to funding for the project, which, if available, could allow construction to begin in the Mongolian spring of 2019.

ERDENE RESOURCE DEVELOPMENT CORP
TSX-listed Erdene Resource Development Corp (ERD) has recently announced the commencement of its 2018 Drill Program at its Bayan Khundii Gold Project. According to an official statement issued by ERD’s President and CEO Peter Akerley, it will initially focus on the new North Midfield Zone where late 2017 drilling returned the highest grade gold zone at Bayan Khundii since discovery. In addition, ERD plans to conduct drill testing at the neighbouring Altan Arrow, Khundii North and Ulaan projects later in the second quarter of this year.”

Oyunbayar.N

Largest underground chamber excavated in OT mine www.montsame.mn

An excavation work to create 12 800 cubic meter chamber or room in Oyu Tolgoi underground mine was completed in seven months of period, performed by 15 people. It laid a foundation to install ‘PC-1’ primary crusher in the underground mine.

Mongolia’s coal exports to China increase www.news.mn

Following the official visit of Mongolian Prime Minister U.Khurelsukh to China, the problems with coal exports have been successfully resolved.

Local Level Agreements in Mongolia: A Need for Government Leadership and Policy Clarity www.resourcegovernance.org

Before any mineral exploration and mining can take place in Mongolia, the country’s 2006 Minerals Law requires that the host local government and license holders sign a “local level agreement” (LLA). LLAs typically include commitments and obligations that help enhance environmental protection, local content and infrastructure investments.

And yet the implementation of the law has been inconsistent, and local governments and mining companies alike have pled for clarification around LLAs’ objectives and scopes. With this in mind, the Natural Resource Governance Institute (NRGI) and the Open Society Forum (OSF) have worked together to improve the legal frameworks for LLAs as well as improve practices on the ground. We do this in various ways: establishing the independent monitoring of LLAs via civil society organizations; presenting research-informed policy recommendations; and facilitating regional capacity building workshops for all relevant actors.

There is now growing momentum to define the core objectives and principles of LLAs. But in order to attain true clarity around this issue, the national government itself must do a better job of facilitating a national dialogue. Below, I outline the main reasons why this is necessary, and suggest how the government can take the lead in improving LLAs.

Government-issued model agreement has caused more confusion

Mongolia’s national government showed a commitment to improving the uptake of LLAs when it issued a model for LLAs in 2016­­, called the “Model Agreement on Protecting the Environment, Developing Infrastructure related to Mine Operation and Plant Construction, and Creating Jobs.” Unfortunately, this five-page document did not provide much help to either local governments or mining companies—at best, it has been used as a reference, but most actors ignore it entirely because of its narrow scope and ambiguity about the model’s legal power. In fact, participants in regional workshops have said that the model has led to more confusion than clarity.

For it to become useful, the Ministry of Mining and Heavy Industry (MMHI) should revise the model agreement and define it as a hybrid document that consists of a) a mandatory framework that defines the core elements of an LLA and b) a non-binding guidance document for potential agreement processes and content that local governments and mining companies can adjust to their respective contexts and needs.

Mining-affected communities are marginalized in the current subnational revenue sharing system

In 2015, the national government took an important step when it increased the share of mining revenues for host areas: the budget law was amended to transfer 30 percent of royalty payments of non-mega-projects and 50 percent of license fees to host provinces and districts. However, that 30 percent figure was reduced to 10 percent by the end of 2016. Worse, in 2017 the revenue-sharing scheme was suspended entirely until 2020. LLAs are perceived by local governments and communities as the main mechanism through which they gain benefits from resource projects, and such unpredictable shifts in the revenues to which they are entitled creates both confusion and frustration. To remedy this, the national government––especially the Ministry of Finance and the MMHI­­––should urgently foster clarity around its sub-national revenue sharing policy and which financial flows should be included in LLAs.
State-owned enterprises (SOEs) should play by the same rules as private companies

All license holders should obey the LLAs requirement in the Minerals Law. However, EITI Mongolia reports show that SOEs do not establish LLAs in Mongolia. (The Erdenet Mining Corporation was the only SOE to establish an LLA, for three years beginning in 2013.) The lack of transparency and accountability of SOEs needs to be remedied if the overall governance of the country`s extractive sector is to improve. Local governments and mining-affected communities are increasingly frustrated by the weak performance of SOEs on environmental and social obligations—making these enterprises comply with the LLAs requirement can help improve their relations with local communities, as well as increase their contributions to local sustainable development.

Both the national government and donor-support civil society should adopt a collaborative and scaled-up approach

Mongolia’s civil society organizations (with support from donor organizations) are most concerned about ensuring consistent and effective implementation of the legal mandate around LLAs. They have developed toolkits and sourcebooks, provided capacity building, and directly engaged in agreement-making on this subject. But the impact of these sporadic efforts has largely been localized and subject to the changing winds of local political dynamics. The national government must take the lead in helping to consolidate these efforts into a larger, national push that can make a real difference.

The way forward for LLAs

Despite the inconsistent implementation of the LLA requirement in the Minerals Law, local governments and mining companies have established at least 100 LLAs in the past decade, and there are examples of good and bad practice. The lessons learned from these LLAs can help improve the existing regulatory framework and agreement-making on the ground. The government can reaffirm its commitment to promoting LLAs by leading a national dialogue on the core principles of legal and policy frameworks for LLAs in Mongolia, collaborating with donor organizations, and facilitating multi-stakeholder deliberation.

Byambajav Dalaibuyan is a JSPS Research Associate at Tohoku University and an Honorary Research Fellow at the Sustainable Minerals Institute, University of Queensland. He has been collaborating with NRGI and OSF to improve the legal frameworks for LLAs and practices on the ground. This post represents his own views and not those of NRGI.

Mongolia exports 1.85 mln barrels of crude oil in Q1 www.xinhuanet.com

ULAN BATOR, April 17 (Xinhua) -- Mongolia exported 1.85 million barrels or 251,000 tons of crude oil in the first quarter of this year, the country's Ministry of Mining and Heavy Industry said Tuesday.