CPSI NewsWire brings you market updates on Mongolia, compiled by CPS International, a Mongolian marketing arm of CPS Securities, a Perth, WA based stockbroking and corporate advisory firm, specialising in capital raising for mining and junior stocks.
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HAR rose 10.4% on Friday to 53c, opened at 53.5c today, trading 51c at time of writing; subsequently Monet Capital has upgraded Haranga Target Price to A$1.40
First Mineral Resource for the Selenge Iron Ore Project
March 19, Haranga Resources Limited (ASX:HAR) --
• Maiden Resource and Exploration Target represent major milestones for Haranga Resources Limited.
• An initial JORC Code compliant resource has been defined at Bayantsogt, one of four primary iron ore targets within the Company’s Selenge project area in Mongolia.
• The total inferred resource is 32.8Mt of iron ore at an average grade of 24.4% Fe based on a 15% Fe cutoff grade.
JORC Code (2004) Inferred Resource for Bayantsogt
Cutoff Grade (% Fe) | Tonnes (million) | Average Grade (% Fe) |
15% Cutoff | 32.8 | 24.4% Fe |
25% Cutoff | 11.4 | 32.4% Fe |
• This initial resource is based only on the first pass 35 hole drill program at Bayantsogt in 2011.
• Mineralisation remains open in all directions and at depth and the recently discovered high grade zone remains to be properly tested.
• It is expected that further drilling will expand the resource and upgrade the resource classification.
• An Exploration Target* of 120 to 250Mt of iron ore has been estimated for Dund Bulag, another of the Selenge targets.
• A metallurgical test program is underway, feeding into a Preliminary Scoping Study due mid 2012.
• Mining Licence application process to commence shortly.
…
Guildford Coal to Raise Around $26.5 Million
March 19 (WSJ) Guildford Coal (ASX:GUF) is taking advantage of the feelgood factor in the resources sector by seeking to raise around 25 million Australian dollars (US$26.5 million) through an issue of new equity, a person familiar with the matter told Deal Journal Australia.
The Newcastle-based company, which earlier this year secured a mining license for its flagship South Gobi project in Mongolia and is also advancing coal projects in Queensland state, plans to issue new shares at A$0.70 each. That represents a slight discount to its closing price of A$0.71/share Friday.
Guildford Coal, which has a market value of A$170 million, placed its stock in a trading halt early Monday due to its capital raising plans. It has appointed Sydney-based Foster Stockbroking to lead the issue.
Mining companies with coal projects in Mongolia are attracting interest because of their ability to supply neighboring China, which overtook Japan as the world’s largest importer of coal by volume last year. Successful buyouts of ASX-listed Hunnu Coal and QGX’s coking coal assets last year underscored the region’s potential, especially if projects are located close to rail spurs.
In Mongolia, Guildford Coal owns 70% of Terra Energy, which is expected to produce its first coal from the South Gobi project in the first half of this year. In late January, the company said the South Gobi resource now totals 70.4 million tons of coking coal–chiefly used in steelmaking–up from an earlier estimate of 63.1 million tons.
Terra Energy’s resource is located around 30 miles east of two operating mines, including one owned by Hong Kong-listed SouthGobi Resources, producing a combined 5 million tons of coal annually that is sold to customers in northern China’s Gansu and Shanxi provinces and Inner Mongolia region.
Guildford Coal says a mine with an annual production capacity 1 million-2 million tons of coal could be built at the South Gobi development site.
In addition to the South Gobi project, the company owns the nearby Middle Gobi project in Mongolia, and the Hughenden and White Mountain thermal coal projects in Queensland’s Galilee Basin.
Modun: Investor Presentation, March 2012
March 19, Modun Resources Limited (ASX:MOU) --
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KPMG Forms Alignment to Expand Capabilities in Mongolia
Agreement with NIMM Audit creates country's largest audit, tax and advisory services provider
HONG KONG, March 18, 2012 /PRNewswire/ -- KPMG in Mongolia and NIMM Audit, a leading Mongolian professional services company, have agreed to align as KPMG LLC -- forming a combined team including 50 local audit, tax and advisory professionals along with seconded industry experts from other KPMG member firms that will establish KPMG as the largest service provider of its kind in Mongolia, KPMG International announced today.
The move demonstrates the strategic importance of Mongolia to the KPMG network, strengthening the ability to assist clients in the country's critical growth sectors including energy and natural resources, infrastructure and financial services. Mongolia has gained greater global attention with stock market performance that has led the world over the past decade, rapidly increased foreign direct investment and double-digit GDP growth.
"We are delighted that NIMM is joining the KPMG organization, and we are excited about the opportunities to help clients prosper in the fast-growing Mongolian economy," said Michael Andrew, Chairman, KPMG International. "NIMM brings an extraordinary depth of local knowledge, combined with KPMG's strength across audit, tax and advisory, that's a critical advantage in this rapidly changing market."
Andrew said there are solid growth prospects in Mongolia, largely driven by the vast untapped mineral reserves and need for infrastructure development. "Globally, KPMG has very strong Energy and Natural Resources and Infrastructure practices, with deep experience to support the new Mongolian firm and contribute to these important projects," Andrew said.
KPMG is dedicated to providing world-class services to its clients in Mongolia, who expect the same high standards of risk management and quality control that they find worldwide. To achieve this, the new member firm will be led by a senior KPMG partner, Edward Kim, who has extensive audit, transaction services, risk management and marketing leadership experience with KPMG members firms in Australia and Korea.
Kim will work alongside L. Enkh-Amgalan, managing partner, NIMM Audit, who has more than 25 years of professional experience in Mongolia and serves as the President of the Mongolian Institute of CPAs.
"This is an important time in the Mongolian economy, and we are very proud to have teamed up with KPMG," said Enkh-Amgalan. "Our nation has a bright future, and the joint venture with KPMG will be critical in serving our growing international and Mongolian client base."
DBM Establishes $200M Loan Facility with Ex-Im Bank of China
Ulaanbaatar, Mongolia, March 16 /MONTSAME/ The Development Bank of Mongolia (DBM) has been allowed by the cabinet to establish a loan contract of up to USD 200 million with the Export-Import Bank of China, with an aim to create a financial resource for constructing apartments for state servants.
Related Minister and a leader of the DBM have been obliged to organize the construction of apartments and to give to the cabinet reports on implementation of the contract and construction process. Money equivalent to 15 per cent of the loan will be placed in the annual state budget for the construction.
The loan's term is 15 years, its interest is LIBOR+one percent a year. The payment of loan and its interest will not be made in the first three years after the establishment of contract.
Link to Cabinet press release (Mongolian)
Development Bank of Mongolia prices maiden bond issue
March 18 (The Asset) The Development Bank of Mongolia (DBM) on March 14 priced its inaugural international bond offering amounting to USD580 million, providing investors with further diversification into new asset class.
Mongolia’s only state-owned policy bank priced a Reg S five-year deal at par with a similar coupon and yield of 5.75 percent. The deal ended what had been a long wait for a Mongolian sovereign issue and created a benchmark and a yield curve for future transactions from the country’s banks and corporates. The bonds traded well in the secondary market, commencing trading at 101, before falling to 100.25. They recovered on March 16 and were trading at 100.5 in the afternoon, indicating that pricing was spot-on.
DBM held a roadshow a week before the pricing visiting Hong Kong and Singapore, and out of those investor meetings, it already garnered indication of interest which was enough to cover the entire book. On March 12, Asia time, it went out with a price whisper of mid to high six percent, generating demand of USD3 billion.
Then on March 13, it went out with an initial price guidance of between six percent and 6.25 percent, and when London opened, it revised the guidance to between 5.75 percent and six percent. By that time, the order book has grown to USD6.25 billion from 320 investors. It also got an approval to upsize the offering from USD500 million to USD580 million, an unusual deal size that completed DBM’s USD600 million medium-term note (MTN) programme following a private placement of USD20 million.
“All investors viewed this deal as a sovereign deal, which the market has been waiting for,” says a banker familiar with the transaction. “The government of Mongolia has specifically set up the DBM as a vehicle for offshore borrowings to finance infrastructure projects, such as railways, roads, housing projects and industrial parks.”
Proceeds from the offering will be used largely to finance the construction of a railway connecting the Tavan Tolgoi coal deposits with the existing trans-Mongolian railway at Sainshand – the city where the government wants to build an industrial park. The rest of the amount will fund road construction and other projects.
DBM set up the MTN programme in November 2011, but made it clear that it would wait until the market was better before launching a transaction. The arrangers also recommended not to do a deal immediately and wait until the new year hoping the Greek issue would be resolved and investors were keen to book assets.
“This is a diversification play for all the sovereign and macro funds, and the deal attracted all the big global money managers,” the banker says. “Mongolia’s objective on this deal is two-fold: to secure a pricing inside six percent and to strike a relationship with the top global investment managers and those two objectives were achieved.”
The bonds were well-distributed across the regions, with 36 percent sold in Europe, and 32 percent each in Asia and the US. Fund and asset managers accounted for the bulk of the paper at 85 percent, while the remaining 12 percent was bought by private banks and three percent by other investors.
ING acted as the global coordinator for the transaction, as well as a joint bookrunner along with Deutsche Bank and HSBC.
Closely following DBM’s footsteps in the G3 bond market is Mongolia Mining Corporation, which is continuing its roadshow this week in London and the US, after visiting Asia last week. Bank of America Merrill Lynch, ING and J.P. Morgan are the joint bookrunners for the deal, with Standard Bank and Standard Chartered Bank acting as joint lead managers.
Mongolia to raise policy rate to curb inflation
ULAN BATOR, March 17 (Xinhua) -- Mongolia's central bank would raise its main policy rate to contain rising inflation, local media said Saturday.
The rate will be lifted 0.5 percentage point to 12.75 percent from Monday, Bank of Mongolia (BOM) said in a statement.
The statement cited soaring meat and fuel prices, which surged 29.6 percent and 15.6 percent respectively in first two months of the year.
The nation's CPI soared to 12.5 percent in February and the figure for Ulan Bator is 13.3 percent, according to statistics released by the National Statistical Office.
MILLING ABOUT: Jamie Afnaim moves to Mongolia-focused investment firm Melbury
March 16 (MetalBulletin) Former Ronly ferrous derivatives trader Jamie Afnaim has joined Mongolia-focused investment firm Melbury Capital as a partner.
Afnaim, son of Ronly co-founder Robbie Afnaim, left the London-based commodities trading house, where he worked alongside his father, in October last year, leaving co-founder Nori Bali to take over as Ronly ceo.
Afnaim joined Ronly in 2009 and traded London Metal Exchange steel billet futures alongside other ferrous derivatives products, including iron ore swaps.
Investment firm Melbury Capital focuses on the Mongolian natural resources sector and has offices in London and the Mongolian capital, Ulaanbaatar.
STATE SERVANTS' SALARIES INCREASE
Ulaanbaatar, Mongolia, March 16 /MONTSAME/ At its regular meeting held on Friday, the cabinet approved the salary network of state servants' posts and a minimum size of salaries.
Pursuant to the recent approval of the state clarification, the cabinet decided to add the state servants' salaries by MNT 80.000 from February 1 in the first turn, and by 23 per cent from May 1 of this year in frames of the Trilateral agreement on labor and society.
ALLOWANCE FROM SOCIAL WELFARE FUND INCREASES
Ulaanbaatar, Mongolia, March 16 /MONTSAME/ The cabinet made on Friday a decision to increase the allowances granted from the social welfare fund to MNT 70 thousand from February 1 and to 103 thousand 600 from May 1, 2012.
It means that the allowance per person has increased 2.5 times against the year 2008. In addition, the size of conditional allowance was augmented to MNT 40.000 from February 1, reaching thus MNT 48.000 from May 1, 2012.
For the time being, the allowance size of social welfare fund is some MNT 53,800 which is lower by 50 per cent of the minimum level of livelihood in the country. There are 52 thousand people who are taking this allowance so far.
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"Mogi" Munkhdul Badral
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CPS International is a marketing arm of CPS Securities in Mongolia. CPS Securities is a Perth, Western Australia based AFSLicense Holder. To trade ASX and international stocks, feel free to contact me at mogi@cpsinternational.mn or +976-99996779.
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