S. Korea’s CU convenience stores to open in Mongolia www.m.pulsenews.co.kr

BGF Retail Co., operator of South Korea’s largest convenience store chain CU, said on Tuesday that it struck a master franchise deal with Mongolian retailer Central Express to advance into the East Asian country where the consumer market has been rapidly developing amid growing young population.

Moody's upgrades local currency deposit ratings of Golomt Bank and Trade and Development www.moodys.com

Hong Kong, April 16, 2018 -- Moody's Investors Service today upgraded the long-term local currency deposit ratings of Golomt Bank LLC and Trade and Development Bank of Mongolia LLC (TDBM) to B3 from Caa1.

Moody's has also upgraded each bank's baseline credit assessment (BCA) and adjusted BCA to b3 from caa1.

Moody's has also upgraded each bank's Counterparty Risk Assessment to B2(cr) from B3(cr).

Moody's has also newly assigned a local currency and foreign currency issuer rating of B3 to Golomt Bank.

For both banks, outlook on all ratings is stable.

Today's rating actions conclude the review for upgrade placed on the two banks on 19 January 2018.

A list of affected ratings can be found at the end of this press release.

RATINGS RATIONALE

The upgrade of Golomt Bank and TDBM's ratings reflect our view that their capitalization will remain at levels consistent with a BCA of b3 upon the completion of the Asset Quality Review (AQR).

According to the International Monetary Fund and the Bank of Mongolia, the AQR found a relatively modest capital shortfall in the banking system -- about 1.9% of GDP at the end of 2017 -- and a system-wide capital adequacy ratio of 13.7% at the end of 2017.

While bank-level information was not made public, Moody's believes the two banks' capitalization will remain sufficiently stable to merit the upgrade of their BCAs to b3 from caa1, given the better-than-expected AQR results, and Golomt Bank's reported CET1 ratio of 9.45% and TDBM's CET1 ratio of 14.02% at the end of 2017.

While we expect loan growth to remain strong in 2018, Moody's believes that the banks will have plans in place -- including any capital raisings, if necessary -- to ensure adequate capitalization is maintained by the end of December, according to the schedule laid out by the Bank of Mongolia.

We also believe that the banks will benefit from improving liquidity in Mongolia and the implementation of wide-ranging policy reforms targeted at improving economic fundamentals. For example, amendments to the Central Bank law, Banking law and deposit insurance law have been completed. Growth also remains strong in Mongolia, which will be supportive of bank asset quality. Mongolia reported real GDP growth of 5.1% in 2017.

WHAT COULD CHANGE THE RATINGS UP

The BCAs of Golomt Bank and Trade and Development Bank of Mongolia are at the same level as the Mongolian sovereign rating, and as such a positive rating action is unlikely in the absence of upward pressure on the sovereign rating.

WHAT COULD CHANGE THE RATINGS DOWN

For Golomt Bank and TDBM, factors that could result in a downgrade include (1) a downgrade of Mongolia's sovereign rating; or (2) a downgrade of the banks' BCAs. The banks' BCAs could be downgraded if: (1) asset quality deteriorates significantly, for example, with problem loans/gross loans exceeding 9.0% for a sustained period; (2) tangible common equity ratio falls below 8%; or (3) profitability deteriorates significantly, leading to annual net losses on a sustained basis.

The principal methodology used in these ratings was Banks published in September 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

Golomt Bank LLC is headquartered in Ulaanbaatar. It reported total assets of MNT5,205.3 billion (USD 2,144.6 million) as of 31 December 2017. Trade and Development Bank of Mongolia LLC is headquartered in Ulaanbaatar. It reported total assets of MNT6,874.9 billion (USD 2,832.5 million) as of 31 December 2017.

List of affected ratings

Issuer: Golomt Bank LLC

- BCA and adjusted BCA upgraded to b3 from caa1

- Long-term Counterparty Risk Assessment upgraded to B2(cr) from B3(cr)

- Short-term Counterparty Risk Assessment of NP(cr) affirmed

- Local Currency Long-term Deposit Rating upgraded to B3 from Caa1; outlook changed to stable from ratings under review

- Foreign Currency Long-term Deposit Rating of Caa1 affirmed, outlook maintained at stable

- Local Currency and Foreign Currency issuer rating of B3 assigned; outlook stable

Issuer: Trade and Development Bank of Mongolia LLC

- Baseline Credit Assessment (BCA) and adjusted BCA upgraded to b3 from caa1

- Long-term Counterparty Risk Assessment upgraded to B2(cr) from B3(cr)

- Short-term Counterparty Risk Assessment affirmed at NP(cr)

- Local Currency Long-term Deposit Rating upgraded to B3 from Caa1, outlook changed to stable from ratings under review

- Foreign Currency Long-term Deposit Rating affirmed at Caa1, outlook maintained at stable

- LC/FC Short-term Deposit Rating, affirmed at NP

- LC/FC Long-term Issuer Rating upgraded to B3 from Caa1, outlook changed to stable from ratings under review

- LC/FC Short-term Issuer Rating, affirmed at NP

- Backed FC Senior Unsecured upgraded to B3 from Caa1, outlook changed to stable from ratings under review

- FC Senior Unsecured MTN upgraded to (P)B3 from (P)Caa1

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

The first name below is the lead rating analyst for this Credit Rating and the last name below is the person primarily responsible for approving this Credit Rating.

Sophia Lee
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350

Canadian Embassy and Centerra Gold Mongolia to sponsor Mongolian hockey players www.montsame.mn

Ulaanbaatar/MONTSAME/ On April 16, Rodney Chanin, General Manager of Centerra Gold, and Steve Basadur, Senior Trade Commissioner at the Embassy of Canada to Mongolia, received representatives of Mongolian hockey team that won a gold medal at Asian Challenge Cup-2018.

China's first quarter growth beats expectations at 6.8% www.bbc.com

China's economy grew 6.8% between January to March according to official data, slightly beating forecasts for the period.

Mongolia launches communication app for disabled people www.xinhuanet.com

ULAN BATOR, April 16 (Xinhua) -- A Mongolian non-governmental organization (NGO) announced Monday that it launched a special-purpose mobile portal, "Bird 1.0," for communication of disabled people in Mongolia for the first time.

Petro Matad announces an update on its planned 2018 Mongolia drilling programme www.steelguru.com

Petro Matad, the AIM quoted Mongolian oil explorer, announced an operational update for its planned 2018 exploration drilling programme:

North Korea increases diplomatic efforts with China, Russia, and Mongolia ahead of spring summits www.hani.co.kr

Pyongyang appears to be increasing its diplomatic efforts with friendly nations ahead of its summit with Seoul and Washington. Analysts see North Korea as attempting to firm up its own position and expand the playing field for dialogue by establishing even closer ties with friendly nations such as China, Russia, and Mongolia.
The Rodong Sinmun, the newspaper of the Workers’ Party of Korea, printed a front-page article and photograph on Apr. 15 on leader Kim Jong-un’s meeting the day before with Chinese Communist Party International Liaison Department director Song Tao, who was visiting North Korea with a group of Chinese artists. According to the piece, Kim “expressed satisfaction with the recent development of relations between the two parties and countries [North Korea and China], announcing plans to continue strengthening party relations with exchanges of high-level delegations between the two sides and actively promoting cooperation and associations among various areas and fields to actively carry on and develop the traditional friendly relations between North Korea and China to a new stage of development to meet new historical demands.”
The message was read as an expression of Pyongyang’s commitment to maintaining and developing relations with Beijing after their first steps toward recovery with a surprise China visit by Kim and North Korea-China summit last month.
In terms of the subject of Kim and Song’s meeting, the newspaper reported that “in-depth opinions were sincerely exchanged on the international situation and serious issues of common interest to the Workers’ Party and Chinese Communist Party.” The “serious issues of common interest” and “in-depth opinions on the international situation” reported by the newspaper are seen as very likely to include matters related to an inter-Korean summit scheduled for Apr. 27 and North Korea-US summit expected in May or early June.
“You get the sense that [North Korea] is trying to broaden the scope [of talks] because it feels overwhelmed negotiating one-on-one with the US at the upcoming summit,” said Institute for National Security Strategy senior research fellow Cho Sung-ryul.
“Because issues such as implementation and guarantees [on the outcome of agreements] become uncertain when it’s reaching agreements one-on-one with the US, it appears to be responding to the talks with Washington by bringing China into it and visiting Russia and countries and Europe to broaden the overall playing field,” Cho suggested.
Indeed, North Korean Foreign Minister Ri Yong-ho visited Russia on Apr. 9 and met with Russian counterpart Sergey Lavrov on Apr. 10 in Moscow. On Apr. 4, Foreign Ministry director general for European affairs Kim Son-gyong met with senior European Union (EU) officials in Brussels to exchange opinions on denuclearization of the Korean Peninsula and other issues. North Korea’s Korean Central News Agency (KCNA) reported on Apr. 14 that Supreme People’s Assembly Presidium president Kim Yong-nam had met and talked to a Mongolian People’s Party delegation visiting North Korea.

The second page of the Apr. 15 issue of the Rodong Shinmun
North Korean press reports also suggested efforts at “First Lady diplomacy,” with Kim’s wife Ri Sol-ju attending various external events. KCNA reported on Apr. 15 that Ri viewed a performance of the ballet “Giselle” the day before by Chinese dancers at Pyongyang’s Mansudae Art Theatre with officials from the Workers’ Party and North Korean government. It is seen as unusual for North Korean media to report separately on Ri’s attendance at a major event with party and government officials without Kim accompanying her.
“Ri Sol-ju is playing the role of First Lady in a normal state,” Cho Sung-ryul said, noting that Ri had “also had a separate conversation with Chinese President Xi Jinping’s wife Peng Liyuan during the previous North Korea-China summit.”
“It looks like she is involved in ‘First Lady diplomacy,’ meeting with the wives of other countries’ leaders and attending separate events,” he said.
By Noh Ji-won, staff reporter

PM: Political decision will be made to improve Tavantolgoi deposit utilization www.montsame.mn

Ulaanbaatar/MONTSAME/ Prime Minister U.Khurelsukh and government members worked at Tavantolgoi coal mine in Umnugobi aimag and met authorities of ‘Erdenes Tavantolgoi’ JSC, ‘Energy Resource’ LLC and local-owned ‘Tavantolgoi’ Company.

During his working trip, the PM stated the Government would make a political decision on improving utilization of Tavantolgoi deposit very soon and make it considered at the parliament and discuss matters regarding TT railway, auto road and power plant at the Cabinet Meeting.

At the meeting, G.Battsengel, CEO of Energy Resource LLC, proposed to increase border checkpoints, through which coal could be transported. According to him, Energy Resource LLC is extracting in Ukhaa Khudag and Baruun Naran sections of Tavantolgoi deposit. Total production reserve is 509 million tons. The company built the first coal concentrating plant in Umnugobi aimag in 2011 and it is currently capable of concentrating 15 million tons of coal per year. So far, it has concentrated approximately 40 million tons of coal and presently exports its concentrated coal only. In addition, the company constructed and now operates 18MW Power Station.

“It needs to consider accurately if it is riight to have a sole export gateway in the country. Present slow circulation of coal transportation at border checkpoint triggers increased cost of the supply, selling a ton of coal at around USD60. Last year, a sales income rose by 4-fold, reaching USD476 million. The company exported 4.4 million tons of concentrated coal, but utilizes just half of its full industrial capacity. If trucks jam at Gashuunsukhait border checkpoint is resolved and coal transportation resumes running normal, the company is able to double its operation. There are ready buyers, even beyond the border,” said G.Battsengel.

Afterwards, a report on state-owned ‘Erdenes Tavantolgoi (ETT)’ JSC was introduced by its acting director B.Gankhuyag. He highlighted that the company earned MNT80.1 trillion thanks to its active and efficient operations, and now has no external and internal debts. By doing so, the ETT has come into a start of the 1st stage to develop the deposit and implement a strategically important project. Preliminarily, it is possible to raise USD1 billion from investors in the international markets and/or within the project. Thanks to its accomplishments in 2017, a value of the deposit can be reached USD8 billion.

To start the 1st stage of its development, the ETT needs to intensify modernization of facilities and implementation of other projects and introduce advanced international technologies. Due to indispensable needs to concentrate coal, the ETT plans to commence a project of concentration plant and cooperation with Energy Resource LLC and plants abroad to produce concentrate.

A feasibility study was tentatively approved to establish a coal concentration plant with USD330 million and it aims at putting a plant with capacity of concentrating 1-5 million tons of coal into operation in 2018-2020.

Moreover, B.Gankhuyag said, “With its four licenses, the ETT JSC is valued at USD5 billion. Thus, it is entirely possible to raise USD1 billion by making IPO. Two weeks ago, the ETT registered 1072 shares of 2,511,000 shareholders on the balance of the ETT. In this regard, the company schedules to host a meeting of the shareholders on April 27 to modify its rules.”

Following the reports, the Prime Minister and Ministers of Road and Transport Development and Mining and Heavy Industry provided some resolutions and assignments. For instance, Minister of Road and Transport Development J.Bat-Erdene made a decision to stop disorderly issuance of ‘C’ permission of coal transportation to cross the border and issue the permission in case the extractor made a direct contract with a buyer.

Minister of Mining and Heavy Industry D.Sumiyabazar instructed the ETT to execute logistical works itself, recruit skilled personnel and bring Gashuunsukhait auto road project into a direct management of the ETT.

In the end, the PM assigned the authorities of coal companies to pay attention on health, safety and social issues of drivers who transport coal.

M.Unurzul

Mongolia to cooperate with IFC in green building evaluation www.montsame.mn

Ulaanbaatar /MONTSAME/ The Ministry of Construction and Urban Development, Ministry of Environment and Tourism, Energy Regulatory Commission signed a memorandum of cooperation with the International Financial Corporation (IFC) on green building evaluation system implementation in Mongolia on April 13.

Chinese giant recommits to Aspire coal rail plan www.thewest.com.au

Aspire Mining’s ambitious plan for a Mongolian railway line to unlock value in the globally significant Ovoot coking coal deposit in that country has taken another step forward, with the company entering a new memorandum of understanding with its giant Chinese engineering partner.

In an update to the ASX, Aspire said it had signed a new MOU with China Gezhouba Group International Engineering Co (CGGC) as part of an official program of 35 new infrastructure agreements between Mongolia and China.

The program was the centrepiece of the first official visit to China by Mongolia’s recently elected Prime Minister.

Under the new MOU, Aspire and CGGC agree they will continue to work together to finalise a feasibility study on a 550km-long railway running east from Ovoot to the railway hub town of Erdenet.

CGGC, who is 40% 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 finalise the study.

Rather fortuitously, Aspire’s railway plan has been caught up in bigger ambitions by China and Mongolia 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.

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 company added that the new MOU between Aspire and CGGC recognised that both parties were interested in attracting investment by the Russian and Mongolian governments.

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.

Aspire reiterated that Mongolia’s central rail authority Ulaanbataar JSC had confirmed its forward planning estimates included capacity demand from Northern Railways for production from Ovoot.

As part of the new 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.

With China and Mongolia already urging them on and Russia peering over the wall, Aspire has no shortage of potential heavyweight backers for a project that could transform the company into a world-class player in coking coal.