Таван толгой төслийн Ажлын хэсэг

Erdenes MGL LLC

March 2011

DEVELOPMENT OF

MONGOLIA'S WORLD-CLASS MINING:

OT AND TT PROJECTS

ABOUT ERDENES MGL

• Established in 2007

• Represents government interests in development of strategically important deposits

• Participates in the Government Working Group’s work and in preparing investment

agreements and contracts and conducting studies of deposits in collaboration with

international advisers/consultants

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OYU TOLGOI LLC

34 %Mongolia’s

Government

“Erdenes MGL”

66%Rio Tinto

Ivanhoe Mines

World-class copper-gold deposit

Investment Agreement concluded on October 6, 2009.

Agreement effective since March 31, 2010.

OYU TOLGOI PROJECT OVERVIEW

Oyu Tolgoi Project:

• First largest mining project in Mongolia since 1990

• Starting point of Mongolian’s mining development

• Intensive construction work of the project has commenced

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OYU TOLGOI PROJECT

There are total 45 million tons of copper, 1800

tons of gold and 6450 million tons of ore

reserve contained at Oyu Tolgoi (OT) based

on a 0.3 equivalent to each metal.

According to the Implementation Plan, Oyu

Tolgoi LLC will extract a maximum of 56

million tons, and a minimum of 26 million tons

of ore per year.

Planning to built concentrator by 2012.

• Phase I - 35 million tons per year for the

five-years.

• Phase II - Oyu Tolgoi LLC will transport

minerals by railway and will advance the

concentrator’s production capacity to 58

million tons of ore.

Ouy Tolgoi progress

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TAVAN TOLGOI COKING COAL DEPOSIT

Tavan Tolgoi is one of the largest coking coal deposits in the world

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TAVAN TOLGOI DEPOSIT OVERVIEW

• Total over 6.0 billion tons of coal, out of which:

• 1.4 billion tons of coking coal

• 4.6 billion tons of thermal coal

Reserves*

• Gobi Region in southern part of Mongolia

• 540 km south of Ulaanbaatar, capital city

• 270 km from the Chinese border

Location

• All infrastructures (electricity supply, railroads, roads, water, supply etc.) need to be developed

Infrastructure

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*- Conversion of coal resource into JORC standard increases coal resource, in particular,

coking coal

COAL MINING BLOCKS

West Tsankhi Block

East Tsankhi block1204 M tons*

65 % coking coal

1078 M tons*

78 % coking coal

Eastern Coalfield

Borteeg

Coalfield

South-western

Coalfield

Resource estimated by JORC code

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Bor tolgoi

Measured

Indicated

Inferred

* In-Situ Coal Resources at 200m Depth Limit

392.9 M tons

1203 M tons*

48 % coking coal

765 M tons*

62,5 % coking coal

As Norwest’s preliminarily estimated TT In-Situ coal resources according to the JORC code, there are 7.5 billion tons of

thermal and coking coal within 300m depth range limit .

Norwest’s preliminary resource estimate

ERDENES-TT MINE (EARTERN TSANKHI)

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Tavan Tolgoi Project

Bid Coal BlockErdenes-TT Mine

15 Mtpy ROM

Bidding of the Contract Miner for Tavan Tolgoi Coal Deposit (Eastern Tsankhi)

Bidders submitted their proposals

Final stage of the selection process is going on

PARLIAMENTARY RESOLUTION NO.39

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1) To ensure that a state-owned company conducts mining operations at the Tavan Tolgoi coal deposit, and subsidiary

Erdenes Tavan Tolgoi is established in compliance with corresponding laws and undivided mining licenses for the deposit –

transferred to it and investment agreement – entered into with it, and operator, corporate entity, – allowed to conduct

mining operations for a specific period;

2) To take the following measures to allow Mongolian citizens and national corporate entities to own and sell up to 50

percent of the shares of Erdenes Tavan Tolgoi company, mining licensee of the Tavan Tolgoi coal deposit, on domestic and

international stock changes, according to corresponding laws at different phases:

a) To allow all Mongolian citizens to own 10 percent of the shares free of charge in the first place in equal

amounts;

b) To sell 10 percent of the shares to national corporate entities, that are registered with state registration

on or before June 30, 2010, that conduct operations, and that have paid taxes in equal amounts and at

nominal price;

c) To sell up to 30 percent of the shares on international and domestic stock exchanges and raise

necessary investment;

A working group consisted of representatives from corresponding 9 institutions such as the State Property

Committee, General Taxation Authority, and General Agency for State Registration, mandated to do

preparation and organization of offerings for citizens and national corporate entities, is in operation.

STRATEGIC INVESTORS SELECTION

Prequalification of the Company/Consortium to Invest and Cooperate in the

Tavan Tolgoi Coal Deposit (Western Tsankhi)

Announcement of the open prequalification, December 8, 2010

Bid submission deadline January 31, 2011

Evaluate bid proposal, create shortlist

Currently, Government’s Working group are holding negotiations with shortlisted

company/consortium

• Coal Work Contract with Erdenes Tavan Tolgoi JSC

• Peabody Energy, USA;

• Consortium of Shenhua Energy, PRC, and Mitsui Co Ltd, Japan;

• Consortium of Russia’s Railway, Japanese Consortium, and Korean Consortium;

• Vale (former CVRD), Brazil;

• Xstrata Coal, Australia;

• ArcelorMittal Limited, Luxembuorg.

Shortlisted bidders

CONSULTANTS

Companies to provide consulting services on IPO execution of part of the shares of

Erdenes Tavan Tolgoi on stock exchanges

• International investment banks:

- Goldman Sachs, USA

- Deutsche Bank, Germany

- BNP Paribas, France

- Macquarie, Australia

1-2 additional banks

• International Audit Firm/Consultant

• Legal Consultant

• Technical and Resource’s Consultant

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Preparation* Erdenes-TT Details

Resource (reserve) Report in accordance to

JORC standard

6 billion tons resource. Convert to International

JORC standard

Contract miner (operator) Tender is in process

Coal quality Coal quality study has been done on Tavan

Tolgoi coal deposit

Sale of production Initial stage

Production level Mine box-cut has been started on site and

uncovered the coal seam

Financing In stage of preliminary discussion

Road Utilization of the currently constructed road

Build new road

Railway Resolution on State Policy on Railway

Transportation

Power plant Research, Feasibility study

Wash plant Research, Feasibility study

Water supply Research, Feasibility study

*Preparation work can be done and commenced within 1 year by Erdenes-TT

ERDENES-TT: IPO

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Tavan Tolgoi Project

CHPP AND WATER SUPPLY

Construction of the Coal Handling and Processing Plant

Coal processing plant:

• Three 900 ton/hour modules

• 15 Mtpy capacity

Coal handling and blending

• 5000 ton/hour

• Refuse handling

• Loadout conveyer facilities

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Production:

• At least 7 million tons of clean coking coal

• 4 million tons of thermal coal

• 1 million tons of middling

Tavan Tolgoi Project

Dalanzadgad

Sainshand

Zuunbayan

Tavan Tolgoi

Оюу толгой

Gashuun

sukhait

Zamiin-Uud

Khangi

Balgasiin Ulaan

Nuur

Balgasiin Ulaan Nuur underground water

deposit:

• 70 km from Tavan Tolgoi deposit

• Resources of 465 l/sec

• Additional water exploration in

the region

Construction of the integrated water supply system to support mine operations

POWER SUPPLY AND SITE DEVELOPMENT

Up to 600 MW installed capacity power plant:

• Mine operations

• Coal Handling & Processing Plant

• Camp and local miners’ town

• Water supply system

• Support infrastructures

• Other local users

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Tavan Tolgoi Project

Construction of the mine camp and

development of the town

Miners town development:

• Permanent resident housing

• Support in town infrastructure development

• Medical center, daycare, schools and other social

support facilities

Mine camp:

• 600 miners accommodation

• Office, warehouse and support

• Workshops

MASTER PLAN

Bid Coal Block(WesternTsankhi)

Eastern Tsankhi

Eastern

coalfieldBor teeg coalfield

Ukhaa khudag coalfield

Tsogttsetsii Town

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Erdenes-TT Mine

Tavan Tolgoi Project

MONGOLIAN RAILWAY DEVELOPMENT STRATEGY

• Construction of new railway to connect with Trans Mongolian railway

• TT-Sainshand, Sainshand-Choibalsan

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Tavan Tolgoi Project

ASIA PACIFIC MARKET

Marketing of the Tavan Tolgoi coal

Unit 37, Diplomat Bldg. 95

khoroo 5, Chingeltei district

Ulaanbaatar, Mongolia

Tel: (976) 7011-0735

Fax: (976) 7011-0725

www.erdenesmgl.mn

Erdenes MGL LLC