Mongolian Mining Investment Environment

Ulaanbaatar, 2013

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Хайгуулын лиценз (гa) Ашиглалтын лиценз (гa)

“Long Named Law”

Prohibition of issuing exploration license

FIL ( Law on Regulating Foreign

Investment Into Strategic Sectors)

44% of the

territory

13.6% of the

territory

5% of the

territory

2006 –Minerals Law

Oyu Tolgoi Investment Agreement

Mineral Resource Licensed Fields in Mongolia (2015 Outlook)

5,913 licenses in 2005, 70 mil hectare (40%) 636 licenses in 2013, 21 mil hectare (13%). 1,200 exploitation licenses on 0.8 mil hectare of land, 0.5% of the territory. If no exploration license is issued next 2 years, it will be 7% by 2014 and 5% by 2015. 2

Licensed Field Map (as of 2012 )

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Mongolia’s Foreign Investment Directly Depending on Oyu Tolgoi Project

( MNT as Trillion) 2009 2010 2011 2012 2013

GDP 6,591 8,415 11,088 14,185 17,649

Changes (nominal) 1,824 2,673 3,097 3,464

Budget Income 1,994 3,123 4,228 5,530 7,088

Changes (nominal) 1,129 1,105 1,302 1,558

Foreign Investment 798 2,152 6,191 5,177 ?

Changes (nominal) 1,354 4,039 (1,014) ?

Oyu Tolgoi Investment 0 1,092 3,809 3,286 830

Өөрчлөлт (номинал) 1,092 2,717 (523) (2,456)

Оюу толгойн эзлэх хувь 51% 62% 63%

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US$

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Mongolia’s Foreign Investment Directly Depending on Oyu Tolgoi Project

OTIA^^ signed

^-Mineral law; ^^- Oyu Tolgoi Investment Agreement; ^^^- Strategy Entities Foreign investment law

Amended ML^

OT Project Development Expenditure

SEFIL

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Share Financing Is More Suitable for High-Risk Exploration Phase

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Acquisition Exploration

Exploration Resource & Reserve

Estimattion

Mine Planning Mine Operation

Ore Processising

Investment Risk

Prospectors

Senior explores

Majors

Claim Holder

Junior explorer

Share Financing Loan financing Share/Convertible

bond

Mongolian Mining Companies Shares Fall is 60-70% on global stock exchanges. Attracting investment, in this case, is very

difficult.

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Investors operated at a loss are not interested anymore in investing in shares

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MICC Index, who reached its peak $26 billion, fell by 67% reaching $8 billion

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Mongolia issued $ 1.5 billion bond and plans to issue $ 3.5 billion in the future. However, there’s a high risk that unstable policy

would increase the level of the bond interest

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Mongolia issued $ 1.5 billion and plans to issue $ 3.5 billion in the future.

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