CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSL License Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-9999-6779.
Mongolian Mining Plans $700M IPO, Term Sheet Says
Sept. 1 (Bloomberg) -- Mongolian Mining Corp. is selling about $700 million of stock in an initial public offering, the first by a Mongolian company in Hong Kong, according to a term sheet sent to investors by the sale’s arrangers.
Mongolian Mining, formerly known as Energy Resources, plans to price its shares on Sept. 24 and start trading on Oct. 5, the term sheet said. Citigroup Inc. and JPMorgan Chase & Co. are managing the IPO.
New shares account for 75 percent of the initial sale, which represents 20 percent of the company’s enlarged share capital, according to the term sheet. After the listing, the company may exercise an option to sell additional shares equal to 15 percent of the offering.
Proceeds of the sale will be used to develop mines, fund transport infrastructure projects and acquire companies with mining rights, according to the term sheet. The underwriters will receive investors’ orders from Sept. 20 to Sept. 24.
Controlling shareholders will be prohibited from selling stock in the 12 months following the IPO, while other major shareholders are subject to a lockup period of six months, the term sheet said.
No companies based in Mongolia are currently listed in Hong Kong, according to data compiled by Bloomberg. The IPO would come after Moscow-based United Co. Rusal in January became the first Russian company to go public in the territory.
Mongolia plans to privatize state-owned assets in initial share sales in local and international stock markets such as Hong Kong, Dulam Sugar, chairman of the Government of Mongolia’s State Property Committee, said on June 15.
Link to related article on Reuters
“Erdenes Tavantolgoi” will begin coal export from November
“Erdenes Tavantolgoi” has assembled its field team and making drilling to open a pit and to reverify. The company, which is a subsidiary of State-owned “Erdenes MGL”, already began its soil removal work and begin mining in November after removing 12-16 meters of soil according to B. Enebish its General Director.
“Erdenes Tavantolgoi” is working with aim of exporting 1 million tonnes of coal in first year. At the same time Open International Tender announcement for Tavan tolgoi mine operator selection has been announced through media and its results will be finally announced by October 5 this year, according to Press Office of the Government.
Mongolia Weighs Wind for China
September 1 (WSJ) Mongolia, one day, hopes to export more than just coal to neighboring China.
At a recent cabinet meeting, Prime Minister Sukhbaatar Batbold outlined plans to ramp up the country’s investments in alternative energy and to export wind power to China — enough to equal 40 million tons of coal.
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But mining, and the burning of coal, exacts an environmental toll that could lead to financial hassles. “While Mongolia has a lot of coal, it is a matter of time before coal-based power plants will become subject to carbon penalties,” said B. Bold, chief executive of Newcom Group, an investment group in the process of bulding a wind-power-generation plant in Mongolia.
The Mongolian government would like to use proceeds from the country’s large mining projects to subsidize solar, wind and other renewable energy projects. It would also show preference to mining projects that demonstrate efficient water use, government officials said.
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Increased water use in the country has caused many rivers and lakes to dry up, causing water shortages and wreaking havoc on local ecosystems. Autumn winds carry dust from the Gobi to Beijing and other Chinese cities every year, a problem that won’t improve if more and more Mongolian land changes into desert.
ADB provides $750,000 grant for Microinsurance development in China & Mongolia
Microfinance Focus, Sep 1, 2010: The Asian Development Bank (ADB) is providing a two-year $750,000 grant from the ADB-administered Regional Cooperation and Integration Fund to examine market supply and demand for microinsurance in People’s Republic of China and Mongolia. The grant will address policy, regulatory and institutional barriers in the region’s Microinsurance sector.
ADB will work with the Access to Insurance Initiative (A2II), a global program launched in 2009 with the International Association of Insurance Supervisors (IAIS) – the international standard setting body for insurance regulation and supervision. The Initiative seeks to link development agencies and industry supervisors to promote expanded insurance services to the poor worldwide.
A Memorandum of Agreement has been signed under which the German development agency and secretariat of the initiative, GTZ, will provide co-financing of about $178,000 and will engage in and support work agreed with ADB and A2II. The ADB, A2II, and GTZ teams will work with the Chinese Insurance Regulatory Commission and Mongolia Financial Regulatory Commission.
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Choice of company to restructure stock exchange on September 15
September 1 (news.mn) The State Property Committee is yet to announce its choice of the company to restructure and privatize the Mongolian Stock Exchange, following the tender announcement two weeks ago. Unconfirmed reports say five of the 10 applicants are now in the running for the final selection.
They include KOSPI from South Korea, the Nasdaq-Mosdaq consortium, the London Stock Exchange, and the Deutsche Borse Group from Germany. The first two are believed to be the front runners but one has to wait until September 15 for the final announcement.
Whoever is chosen will have its plate full to develop the small Mongolian capital market into a world class player, ready to cater to demands on its resources as mining takes off. At present share transaction accounts for 2-3% of the GDP, and 4-5% of total investment. The international norm for both is 50%.
Handing over the job of developing a country’s stock market to foreign institutions has not always been successful. Mongolia has the added problem that its laws and regulations are often outdated and out of sync with present-day practices. The Ministries of Finance, Justice and Internal Affairs and the Financial Regulatory Authority will have to work harder on this aspect so that the country’s choice can work without hindrance.
STOCK EXCHANGE NEWS
August 31, Ulaanbaatar, Mongolia, /MONTSAME/ At the Stock Exchange trade on Tuesday, a total of 86.2 thousand shares of 21 JSCs were traded costing MNT 28.6 million. Of them, rate of 11 shares were increased, rate of seven shares was decreased, and rate of three shares were stable. The total market capitalization was set at MNT 1,021.5 billion , increasing by MNT 34 billion or 3.4% against the previous day.
The Index of top-20 was 12298.52 units increasing 354.35 units or 3 per cent against the previous day. Rate of share of the "Shivee ovoo" JSC increased by 2.9%, the "Tavan tolgoi"--by 15% and the "Hermes center"--by 4.17%, the "Baganuur"--by 5.25%, the "Nako tulsh"--by 3.57%, the "Makh impex"--by 3.7%, the "Genco tour bureau"--by 4.4%, the "Gobi"--by 0.09% and the "State Department Store"--by 2.13%. Shares of "Hermes center" JSC (61.7 thousand units) were actively traded in terms of trading volume.
Work on Asgat deposit will begin when money is found
September 1 (news.mn) State Secretary of the Ministry of Mineral Resources and Energy Khurelbaatar has said that work on the Asgat silver deposit can begin if investment issues are resolved. Over 50% of the total territory of Bayan-Ulgii province is covered by exploration licenses, but this large and strategic deposit still lies idle even though a feasibility study was made as early as 1976. The issue was discussed by the 2004-2008 Parliament but no decision was taken, as many MPs were wary about Russian interests. At present, a working group is assessing the possibilities of beginning work.
Khurelbaatar made the comment when he was in Bayan-Ulgii, also known as the homeland of the Kazakh people, with Prime Minister S.Batbold on his tour of the countryside. Apart from this assurance, the Prime Minister also announced some projects for the western province. A 65-km paved road toward Ulgii-Khashaat will be built, the Ulgii airport will have a sturdier runway costing MNT11.1 billion, and MNT1.7 billion will be spent on a sports complex. Batbold told the local people that better and stronger economic ties with Russia and Kazakhstan will be beneficial for them.
21 mining sector analysts attend seminar sponsored by USAID
September 1 (news.mn) Altogether 21 Mongolian financial analysts participated in a seminar last month on Economic and Financial Analysis of Mining Developments and Fiscal Regimes sponsored by USAID/Mongolia’s Economic Policy Reform and Competitiveness (EPRC) project.
Facilitated by Dr. Robert Conrad, Associate Professor from Duke University, the seminar aimed to strengthen the skills of analysts to build the most beneficial financial and economic models for mineral projects in Mongolia.
The participants received hands-on experience of analyzing and modeling various exploration and mineral extraction investment agreements, in addition to discussing how to manage the revenue that will accrue from the government’s participation in these.
The participants included analysts from the Ministry of Mineral Resources and Energy, the Ministry of Finance, MON-ATOM LLC, Erdenes-MGL, the Parliament Research Center, the National Development and Innovation Committee, and the Parliament Research Center. Professionals skilled in the analysis, negotiation, and implementation of investment agreements and mineral revenue management will be increasingly in demand as Mongolia moves forward with several large mining projects.
Mining output up year on year
September 1 (news.mn) The National Statistical Office has reported that coal extraction in the first seven months of 2010 was 83% more than in the same period last year. Extraction of crude oil and gas increased by 64.8%, whereas that of other minerals rose by 24.2%. Altogether 84.5% of all Mongolian export was to China and most of it was unprocessed minerals.
What’s up with Ivanhoe Energy? (IVAN)
Ivanhoe Energy (NASDAQ: IVAN) $1.58
Market Cap ─ $527million
August 31 (Benzinga) Over the last few weeks I've had an extraordinary number of contacts from individual investors and institutions regarding Ivanhoe Energy (IVAN) - wondering, "What’s up?"
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MACQUARIE RESEARCH > Ivanhoe is story largely driven by catalysts. The company continues to evaluate joint ventures to access heavy oil resources globally, while also progressing with financing agreements with international companies to help funds its initiatives. Success on this front would be upside to our current estimates. With exploration in Ecuador and Asia a free option, we recommend the story for investors looking for exposure to international exploration. We reiterate our Outperform rating. Monday, 17 May, 2010
UBS started coverage of Ivanhoe Energy Inc with a "buy" rating, citing the efficacy of the Canadian heavy oil producer's proprietary cracking technology.UBS analyst George Toriola who set a C$3.80 price target on Ivanhoe stock, said the company's Heavy to Light (HTL) technology promises about twice the capital efficiency, over other cracking methodologies.”The technology is central to the company's near-term strategy, with its performance remaining a key (but low) risk into the future.”
Notes from the last annual meeting:
Ivanhoe Energy CEO, Robert Friedland, said that they have one of the best oil fields (the size of Kuwait) in all of Mongolia. The drilling in Mongolia will commence in Q4 2010. The wells would be about 1500 feet deep which he called “child's play.” Mr. Friedland said that the Russians were drilling holes blind there in the middle of the last century without any meaningful seismic measurements or data and were hitting oil 50% of the time!
N. ALTANKHUYAG LEAVES FOR CHINA
Ulaanbaatar, Mongolia, /MONTSAME/ The First Deputy Premier of Mongolia N. Altankhuyag left Wednesday for China to attend the annual Jilin Northeast Asia Investment and Trade Expo.
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EXCHANGE RATES
Ulaanbaatar, Mongolia, /MONTSAME/ Official currency exchange rates as of September 1 set by the Bank of Mongolia:
USD U.S. Dollar 1,304.56
EUR Euro 1,651.51
JPY Japanese Yen 15.49
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(Mogi: MNT went as high as 1299.69MNT per USD on August 27)
Russia
Russia reduces railway tariffs for iron ore exporters
September 1 (SteelOrbis) As of August 31, 2010, Russia's Federal Tariff Service has reduced the tariffs for railway transportation of iron ore for export by 24 percent, thus stimulating the growth of Russian iron ore exports.
The 24 percent discount is applied to export transportation of iron ore from a number of Russian railway stations through transit Russian railway stations Zabaikalsk and Naushki. The discount in question could be set for railway shipments of iron ore per exporter of not less than one million mt.
The new tariff of Ruble 1,500 (about $49) per mt will be effective up to December 31, 2010 inclusive.
Accordingly, the decision to reduce the tariff for transportations of iron ore exports is due to the growth of iron ore prices in the world market, as well as to the increase of sea transportation of this raw material.
The introduction of the new tariff only to certain of Russia's east Siberian railway frontier stations is due to the fact that since mid-August there has been increasing demand for iron ore in most countries of the Far East, while the Zabaikalsk and Naushki stations are the main points of connection for the steel arteries of Russia, China and Mongolia.
Australia
Local economic strength spurs shares
September 1 (AAP) Close. Local shares put on a stunning performance today, rising more than 2 per cent, as investors shifted their focus from a wobbly US economy to yet more signs of a remarkably robust local economy.
At the close, the benchmark S&P/ASX200 index was up 91.5 points, or 2.1 per cent, at 4495.7, while the broader All Ordinaries index added 88 points, or 2 per cent, to 4526.8.
All sectors posted gains, with materials jumping 2.5 per cent and financials up 2.2 per cent.
need2know:
- Asian shares rebound on China's PMI data
- The dollar jumps above 90 US cents
- Gold slips to $US1245
- Oil rebounds half a per cent to top $US72
- Dow futures are 57 points higher at 10,063
A run of very positive economic figures in the last few days cemented by today's better than expected GDP print, have confirmed that the economic recovery is very much on track in Australia despite the mid-cycle consolidation globally, CMC Markets institutional equities dealer David Barrett-Lennard said.
Gross domestic product grew 1.2 per cent in the June quarter for an annual rate of 3.3 per cent. Economists’ forecasts had centred on a quarterly rise of around 0.9 per cent for an annual rate of 2.7 per cent..
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In addition, China's purchasing manufacturing index (PMI) read came in ahead of expectations. Both sets of data teamed up to push the Australian market ahead of its regional peers.
"The relative strength suggests that our market was benefiting from allocation back into Australian equities by overseas investors," he said.
BHP Billiton closed up 86 cents, or 2.3 per cent, at $37.91, while Rio Tinto was $2.15 higher, or 3.1 per cent up, at $72.24.
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Preliminary national turnover reached 1.98 billion shares worth $5.67 billion, with 720 stocks up, 364 up, and 332 unchanged.
Global
Asian Stocks Climb on China Manufacturing, Australian GDP Data
Sept. 1 (Bloomberg) -- Asian stocks rose, driving up the MSCI Asia Pacific Index by the most in almost six weeks, after China’s manufacturing and Australia’s gross domestic product grew faster than economists estimated.
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The MSCI Asia Pacific Index gained 1.5 percent, the most since July 23, to 118.26 as of 7:15 p.m. in Tokyo. The gauge slumped 2.2 percent last month, the most since May’s 9.8 percent slide, as concerns grew the stronger yen will hurt Japan’s export-led recovery and on mounting signs the U.S. economy is faltering.
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Japan’s Nikkei 225 Stock Average advanced 1.2 percent as the yen erased gains against the dollar following the Chinese manufacturing data. Hong Kong’s Hang Seng Index gained 0.4 percent. China’s Shanghai Composite Index dropped 0.6 percent on speculation regulators will introduce policies aimed at curbing soaring house prices.
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Futures on the Standard & Poor’s 500 Index jumped 1.1 percent. The index yesterday advanced less than 0.1 percent, reversing a 0.8 percent loss, as regulators approved a Chinese investment in Morgan Stanley and gains in home prices and consumer confidence tempered concern the economy is faltering.
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China’s Purchasing Managers’ Index rose to 51.7 from 51.2, the Federation of Logistics and Purchasing said on its website today. The reading was more than the median 51.5 forecast in a Bloomberg News survey of 17 economists.
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The yen was recently at 84.03 per dollar from 84.20 in New York yesterday. Japan’s currency rose to 83.83 earlier, near the 83.60 level that was touched on Aug. 24, which was the strongest level since June 1995.
Stock futures rise as economy concerns ease
September 1 (Reuters) - Stock index futures rose on Wednesday as new signs of growth in China and Australia eased concerns about the global economy and investors awaited data on the labor market and housing.
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"There was a rebound in the manufacturing index in China, and in a market as oversold as this one, any good news is going to have a more magnified effect on stocks," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.
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S&P 500 futures rose 11.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures climbed 75 points, and Nasdaq 100 futures gained 22.75 points.
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Initial Offering Fees Reach Record Low in Hong Kong
Sept. 1 (Bloomberg) -- Hong Kong bankers are charging the lowest fees on record to arrange initial public offerings as firms vie for deals in a market where IPOs are raising more than in the U.S. and U.K. combined.
Initial sales by 37 companies in Hong Kong have paid average fees of 2.2 percent in 2010, the lowest level since Bloomberg began tracking the data in 1999. While companies going public raised $18.7 billion, 64 percent more than American IPOs, banks earned about 43 percent less underwriting in the territory, the data show.
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Visa Inc. of San Francisco paid JPMorgan, Goldman Sachs and six other companies fees of 2.8 percent to arrange its $19.7 billion initial sale in March 2008, the biggest U.S. IPO.
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‘Only One Area’
Hong Kong’s Hang Seng Index has rallied 81 percent since the end of the bear market in global stocks on March 9, 2009. That’s more than the 57 percent gain in the MSCI World Index of 24 developed countries and the 55 percent rise in the Standard & Poor’s 500 Index, the benchmark gauge for U.S. equities, data compiled by Bloomberg show.
“If there’s only one area that has deals, bankers from all over the world will be looking at that one spot,” said Greg Lesko, the head of emerging-market equity at Deltec Asset Management in New York, which oversees $800 million. “It’s going to be hypercompetitive. It means they’ll make less money, I don’t think there’s any doubt.”
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"Mogi" Munkhdul Badral
Executive Director
CPS International
Email: mogi@cpsinternational.mn
Mobile: +976-99996779
CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSL License Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-9999-6779.
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