Jon Springer's Instablog

Mongolia Weekly Update Archives 09: December 12, 2012 To March 13, 2012

Mon, 25 Mar 2013 16:48:58 -0400

Archives have name of poster & date at the top of each, and the date & time stamp at the bottom of each post. These are prior posts from the dates indicated. To search the posts for particular data or companies use control-F on PCs and command-F on Macs.

For current news posts, links to other Mongolia-related pages, and current author disclosures, please go to Mongolia Weekly Update.

Jon Springer Comments (3891)
A friend of mine just wrote:
"get acquainted with this... draft minerals law."
Specifically
Articles 13-16
Article 66
Article 90
12 Dec 2012, 08:06 AMReplyDelete CommentLike2
KingFox Comments (22)
Jon,
Where can I find these Articles?
NY Times piece on the current situation. A summary of the recent state of affairs.
http://nyti.ms/VA2y29
12 Dec 2012, 09:00 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
1) Said it before & I'll say it again, if you want the best news feed in Mongolia, when running nobody beat Mogi's service which has the links in Cover Mongolia.
Facebook: http://on.fb.me/SyFsKt
Twitter: http://bit.ly/1198PYS
E-mail to receive the news feed via e-mail: covermongolia@gmail.com
2) The President's Office is asking for comments on the draft via delgermaa@president.mn. (I'm not kidding)
3) I posted a link to the draft here (http://bit.ly/TaU9Up). It is not the cleanest view, but copying and pasting 91 pages isn't a clean process. Sorry, I received it as a PDF document and haven't found a web link yet, so best I can do... so far.
12 Dec 2012, 10:18 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Article 13
Taking areas into state reserve
Areas wherein the reconnaissance, prospecting, explorationand assessment of minerals resources were conducted with the fund from state budget may be taken into state reserve for a certain time period upon the decision of Central State Administration.
Areas with certain concentration of mineral resources wherein the reconnaissance, prospecting, exploration works were conducted with the finance from private funds may be taken into state reserve upon the decision of the Government for a certain time period after real expenses for above works have been reimbursed.
It shall be prohibited to accept an application or organize competitive tender selection procedures for granting licenses of the areathat has been taken into state reserve.
If the time period of being reserved in state reservation has expired and the time period has not been extended or authorized Government administrationhas decided to exclude the area from state reserve, the area shall be granted for license only through a competitive tender selection process.
12 Dec 2012, 10:39 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Article 14...
Taking deposits into state reserve
The Government may take all or part of a deposit for a certain time period into state reserve if the deposit was explored and its resources were determined with state budget funding.
If the deposit which had been initially explored and resources has been determined by state budget funding was undergone additional licensed exploration as a result of which its mineral reserves were determined with increased amount, the Government shall reimburse the real expenses to the license holder upon taking the deposit into the state reserve.
State Great Khural may issue a decision and take deposits into state reserves that had been explored and the mineral reserves of which had been determined by finance of private fundsupon reimbursement of real expenses of the license holder.
If the time period of being reserved in state reservation has ceased and the period was not extended or authorized Government administration has decided to exclude the deposit from the state reserve, the license for that deposit holding shall be granted only through a competitive tender selection process.
12 Dec 2012, 10:40 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Article 15
Taking land granted by license for state or local special use
Land granted by the license for conducting prospecting, exploration or processing may be taken for state or local special use as specified in Law on Land.
If local self-governing authority has made a proposal to take the land granted by license for the local special use the local Governor shall submit the proposal to the Government.
If the Government deems the proposal defined in 15.2 of this law as feasible, it shall issue a decision to take all or part of the land granted by the license for local special use.
The State Great Hural shall issue a decision to take a land granted by the license for state special use upon proposal made by the Government.
If a special purpose territory overlaps entirely or in part with a territory covered by a valid license, prohibiting further prospecting, exploration, mining and processing activities in the overlapping area the Government shall make a decision to compensate the license holder along with the decision specified in 15.3 and 15.4 of this law. The reimbursement shall be paid to the license holder within 3 (three) months from the date of the issuance of decision.
The license holder shall cease its work on the area from the date on which the decision had been made to take the land for state or local special use in accordance with 15.3 and 15.4 of this law.
The duration of time for setting the landaside for special use shall not be less than five (5) years.
The State Administrationshall make a public notice within 10 working days after expiry of the duration of time for setting the land aside for special use.
The State Administrative Authority shall record into the license registry the decisions to take the land granted by the license for state or local special use and to compensate the license holder.
12 Dec 2012, 10:42 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Article 16
Authority of the State Great Hural
The State Great Hural shall exercise the following authority in minerals affairs:
16.1.1 to exclude a deposit from the list of the strategic importance;
16.1.2 to issue a decision to take a deposit explored and determined by private funding into state reserve and in connection with this, to pay the reimbursement to the license holder;
16.1.3 to issue a decision to take a land granted by license for a state special use;
16.2. Clause 16.1 of this law shall not serve the grounds for restricting, in any way, the authority of the State Great Huralenshrined by the Constitution of Mongolia and other laws.
12 Dec 2012, 10:43 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Article 66
Entitlement to hold a license
66.1 A tax paying legal entity that has been established and has been operating in conformity with the legislation of Mongolia shall be entitled to hold prospecting, exploration and processing licenses on areas outside the national border zone.
66.1.1 A share holding company shall be entitled to hold a mining license when it has been founded by a citizen of Mongolia, and not less than 75% of its share capital and in case of foreign invested company, not less than 34% of share amount is owned by a Mongolian citizen, and when it has been established and has been operating in conformity with the legislation of Mongolia and when it has been paying tax in Mongolia.
66.1.2 A share holding company shall be entitled to hold a license to mine at deposits that have been explored and the reserves have been determined by state budget financing when it has been founded by a citizen of Mongolia and not less than 75% of its share capital and in case of foreign invested company not less than 51% of capital share is owned by a citizen of Mongolia and when it has been established and has been operating in conformity with the legislation of Mongolia and when it has been paying tax.
66.1.3 A share holding company shall be entitled to hold license for prospecting, exploration, mining and processing in the areas outside the national border zone when it has been founded by a citizen of Mongolia and not less than 75% of its share capital and in case of foreign invested company not less than 51% of capital share is owned by a citizen of Mongolia and when it has been established and has been operating in conformity with the legislation of Mongolia and when it has been paying tax .
12 Dec 2012, 10:44 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Article 90
Minimum expenditure for exploration
90.1 The exploraion license holder shall have specified exploration work to be done each year expenditures no less than the following for each hectare of area granted by the exploration license:
90.1.1 150 000 MNT per hectare each year for the first 3 years;
90.1.2 300 000MNT per hectare each year for the fourth and fifth years;
12 Dec 2012, 10:46 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
President of Mongolia's home page http://bit.ly/129z6H2
12 Dec 2012, 10:47 PMReplyDelete CommentLike0
Mogi Comments (13)
Thanks Jon for thumbs up
11 Mar, 05:44 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
OTHER NEWS
1) Khan Resources (KHRIF.PK) legal case against the government of Mongolia is proceeding along. "The action has now progressed to the quantum and damages phase. On December 7, 2012, Khan submitted to the Tribunal seven volumes of documentation in support of its claim. Khan's claim for damages totals US$326 million, including interest from the July 2009 date of the expropriation of the Dornod deposit by the Government of Mongolia." http://mwne.ws/Tb31cO
2) Mongolia Energy Corporation (MOEAF.PK) is trying to avoid the government of Mongolia declaring one of it's mines as "strategic" but the gov't process continueshttp://bit.ly/VYj5mG
3) Moody's not worried about Mongolian bonds (?) http://on.ft.com/Tb2Zl6
4) Dale Choi's blog has a major analysis of whether the government coalition will really break up or not (he says not) http://bit.ly/VYj2Y3
5) November National Statistics Office bulletin http://bit.ly/Tb31tc
6) The EBRD (european bank of reconstruction & development) has given Mongolia's 4th largest bank, Xax, a $46 million loan. You can cross Xac bank off your list of banks to worry about going under. http://bit.ly/VYj5mJ
7) President Elbegdorj warns gov't officials to watch what they say after bond success http://bit.ly/Tb2ZBu
8) Seeking Alpha's Roger Nussbaum also takes issue with Mongolia's bond issuehttp://seekingalpha.co... as I have as well http://seekingalpha.co...
9) MCS Brothers Further Increase Short Positions in Mongolian Mining Corporation (MOGLF.PK) December 5 (Mogi) On November 27, according exchange filings, Od and Odjargal Jambaljamts increased their short positions from 17.93% to 22.58% and 18.27% to 22.92% of total shares respectively.
Od http://bit.ly/VYj5mN
Odjargal http://bit.ly/Tb2ZBy
12 Dec 2012, 11:09 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Looking at the MCS filings again. Both brothers just added significantly to their short positions in (MOGLF.PK). Not exactly bullish.
13 Dec 2012, 09:37 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Jon what do you think are the chances of Khan Resources getting any money from the GOM?Given that other countries take no notice of these rulings do you think Mongolia will?
This is interesting in regard to the Sarah Armstrong case where she filed a similar case against the GOM. Who will enforce any of these rulings?
14 Dec 2012, 02:55 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
RE: Khan Resources
I honestly don't know how it plays out dulleyefarmer. I think - particularly with all the new mining laws and resource nationalism talk - it is an important litmus test. The uranium law of 2009 seems to be a model for the laws the government is trying to now put on the rest of the mining sector. From both the court decisions in the Khan Resources case, and Mongolia's reaction to them, the mining investment community will learn a lot.
Enforcement can come in many forms. First, let's see what the rulings are.
Khan Resources is another case where there's not much to say until there's a decision. For readers reading about this for the first time, you can read my article about uranium (http://seekingalpha.co...), skip down to the header "One Pure Play, Many Problems" and read the next few sections all about the Khan Resources story.
For the record:
1) I've been in touch with Khan Resources management. They can't say anything beyond what's on their website while legal action is pending.
2) I tried to get in touch with people at MonAtom and in the mineral authority about this case when I was in Mongolia last February, and they would not meet with me.
14 Dec 2012, 06:51 AMReplyDelete CommentLike2
Guest Investor Comments (4)
I've read the November statistical bulletin and found an interesting factoid.
" In the first 11 months of 2012, occurred crimes caused 7628 injuries and 852 deaths. "
This translates into murder rate per 100,000 over 32, which is impossibly high (I hope only small portion of these deaths is due to intentional homicide)
Still, Mongolia appears to be very far from being a safe country and probably has much higher crime rate than the United States.
PS. My condolences to all Americans on terrible tragedy in Connecticut
16 Dec 2012, 07:00 AMReplyDelete CommentLike4
Jon Springer Comments (3891)
RE: "Looking at the MCS filings... Both brothers just added significantly to their short positions in (MOGLF.PK). Not exactly bullish."
Checked with the company, I'm in the wrong. "MCS Holding has a loan from Standard Bank (which has been renewed around end of November), and part of the security package is MMC shares." Those "short shares" are shares pledged for the loan.
17 Dec 2012, 08:56 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
New news source available:
Mongolian Investment Banking Group free newsletter (new, and free). Sign up on their website here: http://bit.ly/T1v8er (no spaces in the "word" you type for "word verification")
13 Dec 2012, 06:39 AMReplyDelete CommentLike1
ChrisRMac Comments (4)
Thanks Jon.. for those that don't know me I'm working on the corp fin side of MIBG. The firm has been around since '08, under new mgmt since April '12, exploration and mining focused. The team consists of a seasoned geo, Mongolian and Chinese macro analysts, and equity analysts mainly focused on juniors active in country.
We're currently handling the Mongolian book for Erdene Resources' PP and have several projects underway. Feel free to get in touch.
13 Dec 2012, 09:30 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Welcome Chris!
13 Dec 2012, 09:54 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
Some excerpts from the new MIBG newsletter:
Mining - Review Of The Draft Minerals Law
Overview
...In looking at the development of the industry we feel that this draft presents a relatively natural progression from the previous Minerals Law of '97 which was clearly mandated to attract foreign capital and expertise into the market.
This draft has significantly expanded on the previous law and has both elaborated on and clarified several key areas of concern including licensing, entitlements, capital commitments, local and national Government authority, and the participation in and identification of strategic deposits. Overall, we feel that the provisions of this legislation will promote the exploration sector from its current stalemate through the availability of new licenses and an increase in the annual capital commitments for license holders. Through increasing exploration activities we believe that the Government is looking to expand on the number of discoveries which in turn will increase international participation and the attractiveness of the market to foreign investors.
Speculation about the implementation of this new law and the anticipated push back from the markets is already creating a perceived divide between the Government and the private sector. That said, we feel that this is a natural reaction to the introduction of new legislation which will result in a positive conclusion for both the industry and the Mongolian people. We would also like to remind readers that this is the first 'draft' of the legislation and to date the Government appears open to meaningful dialogue.
Commentary
Increasing Number of Licenses: The transition between Exploration and Mining licenses has now been changed to include two additional steps which are Prospecting and Processing. The added licenses involve the initial and final stages of the mining cycle and will add to the regulatory and filling processes of the industry. The activities associated with these two areas are outlined under Articles 23 and 26 of the draft legislation respectively.
While some may see this change as an increase in Government bureaucracy we believe that it presents an opportunity for greater oversight where licenses are considered to be inactive. This will allow for committed Juniors to take up interesting licenses and progress development at a greater pace.
In regards to Processing licenses we are attempting to clarify the license granting process. Currently there are no provisions for those entities holding and complying with the conditions of a Mining license to be granted a "privileged right" to obtaining a Processing license which we believe will be a sticking point for companies and investors. That said, the separation of processing activities into its own classification does reflect continued commentary from senior officials looking to increase the value adding activities of the mining sector. For this reason we believe that there will be further expansion of this area in the future which may involve specific legislation governing activities further down the processing ladder.
Strategic Deposits Will Not Increase: Parliamentary Resolution 27 from 2007 stated that the number of strategic deposits in Mongolia would include 15 deposits as listed in appendix 1 of the same resolution. These strategic deposits will be governed by a Deposit Development Agreement (DDA) which will be established between the Government and the license holders in order to manage the mining, processing, and sales processes of these deposits. Under this legislation the Government will obtain a certain percentage of the shares of the legal entity which holds the licenses for mining and processing the deposit. The shares will be obtained free of charge and the number is to be determined through the DDA. Additionally, it is worth noting that the Governments ownership in strategic deposits will not be capped, whereas the Mineral Law of '97 stated that the Government may own up to a 51% stake in strategic deposits if they had been explored with state funds.
Mongolian Involvement Promoted: Article 66.1 of the draft (Entitlement to hold a license) distinguishes between the two types of entities that are able to hold licenses. These include a company founded by a citizen of Mongolia and foreign invested companies. In the case of a company founded by a citizen of Mongolia not less than 75% of its share capital can be owned by Mongolian citizen and in the case of foreign invested companies not less than 34% of its share amount shall be owned by a Mongolian citizen.
To date, this has been a center of controversy for foreign parties assessing the draft. We too have questions regarding the specifics of this article and are looking to clarify whether ownership in the asset or the entity is being discussed. However, we do feel that an increasing Mongolian shareholder base could only benefit the objectives of exploration and mining companies in the country. This practice, while not previously legislated, is common place for many international companies currently active in the market and is often used as a selling point in marketing activities. This particular aspect will also require clarity specifically looking at those companies currently active in Mongolia and whether there will be a grandfathering clause or if they will have a specific window of time in which they will be expected to meet the new requirements.
The Role of Local Government Defined: Perhaps one of the most positive changes from an industry perspective is the defined role of Local Governments, comparable to provincial and county governing bodies. Under current legislation the Local Governments are able to adopt resolutions to take control of land under special purpose territory without state approval. In the past this has caused a great deal of uncertainty for many Juniors especially in those regions where political instability is apparent in the times leading up to elections.
The proposed draft differs in that it provides local governments with the opportunity to propose special purpose territories but requires that the state central agency takes such proposals under consideration through an approval process.
Article 20 provides further insight into the role of Local Government's authority stating that they may prohibit exploration and mining activities on certain parts of their land for maintaining historical, cultural, and environmental reasons. However, executives and investors will be comforted to know that this can only take place on that land which has not been licensed already. Article 20 of the draft also prohibits Local Government from making demands of license holders such as investments that are not specific in local development agreements, donations and assistance outside of humanitarian purposes, and funding of political activities.
Dramatic Increase in Minimum Expenditures: Current legislation states that the minimum expenditure on a per hectare basis during the 9 year Exploration Stage can range from 700 - 2,100 MNT depending on the number of years that the holder has been working on the license. In contrast to current legislation the draft divides the Exploration Stage into the Prospecting and Exploration licenses which can be obtained for 4 and 5 years respectively. During the Prospecting Stage the minimum expenditure is to be 5,000 - 10,000 MNT per hectare which is due to increase during the Exploration Stage to a minimum expenditure of 150,000 - 300,000 MNT. Initially, we believe that this will decrease the size of license areas that companies apply for which could have a positive impact on the local environment and could lead to better relations with local communities.
Additionally, increasing minimum expenditures will help advance exploration projects on a more timely basis and will promote investment into viable projects rather than flooding the market with more speculative opportunities. While this will likely make it difficult for green field projects to access needed capital we believe that the concentration of investment on more advanced licenses will lead to a faster turnover from exploration to mining. In turn, this could generate a revival in the Mongolian growth story through a greater number of attractive deposits being developed.
Legal - Rumored Update To Foreign Investment Legislation
Mongolia's Foreign Investment Legislation governing investment into business entities operating in sectors of strategic importance looks to be going through a positive change. Mongolia's daily media outlets have been reporting that an inside source has provided details regarding specific changes to the law. MIBG does not have direct access to the source and we have been unable to confirm the details. However, we have noticed a changing sentiment from Government officials who acknowledge that the law was rushed and requires further attention.
The specific details mentioned by the inside source include a change to the minimum investment threshold of 100 Billion MNT (approximately 70 Million USD) being significantly increased with one media outlet stating that this could climb upwards of 800 Million USD. The source has also stated that the Government of Mongolia will likely decrease the 45 day approval process to make the implementation of the legislation less damaging to foreign investment prospects.
We expect that the Government will confirm or refute the statements within the week and hope that this is a sign of further action which looks to soften the blow that negative sentiment tied to the legislation has delivered.
17 Dec 2012, 06:25 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
The Minister of Mining has said Strategic Deposits WILL increase and they have recently added a Mongolia Energy Corporation mine to the list to show he/they will. This is opposite to MIBG analysis. Chris, what say you?
(article 66.1 as discussed also leans toward making more mines strategic)
[As a reminder to readers, The President's Office is asking for comments on the draft via delgermaa@president.mn ]
17 Dec 2012, 06:29 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
Mongolian Investment Summit in London, April 16 - 18, 2013
This will be done by same people who put on the event in Hong Kong but it is Beacon's first year doing this conference in London http://tinyurl.com/az6...
13 Dec 2012, 10:50 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
I've been sending out an e-mail to everyone who "follow"s me, but realize that does not include all of you, so here is the info from it.
To get updates on whenever I and other authors you follow publish articles, please read item #3. I also want to let you know about easier ways to find my work (#1), my most recent articles (#2), and how to find other authors writing about the markets I most often write about so you can compare notes (#4).
1) I have created a directory to find all my articles and blogs by your area of interest. I don't think it is necessary yet, but I wanted to get out ahead of a potential problem, and make sure it is always easy for you to find work by me you want to go back to for your reference. The directory is here: tinyurl.com/bzgr5e2
2) My most recent articles include:
- An interview with the Central Bank of Sri Lanka as I initiate coverage of this country I recently visited: tinyurl.com/csw2fu6
- Why Target Frontier & Emerging Markets? tinyurl.com/b2n6sj4
- What The Yield? An article questioning low yields in emerging markets debt. tinyurl.com/bcg3c7
3) I recently became aware of a great service Seeking Alpha supplies but does not advertise. Readers can get an e-mail once per day that lists all newly published articles of all the authors they follow in a single e-mail. If you are interested in getting these updates, here is how you do it.
- a - Go to your profile page on Seeking Alpha
- b - Click on "edit profile" anywhere in your profile
- c - On the left side of the screen, click on "email alerts"
- d - Scroll all the way down, and check the box for "author alerts"
- e - Then you'll be notified by Seeking Alpha once per day of new articles by all authors you follow (in a single e-mail)
If you have trouble with this, e-mail support@seekingalpha.com.
4) If you're interested in other authors writing about frontier markets, I have made a list of other authors that write about this area which I will revise regularly with reader input: tinyurl.com/cgola2e
16 Dec 2012, 08:51 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Archives 8 of comments on this blog: http://bit.ly/VJmTCG
(for new followers: I periodically archive blog comments to maintain a record of them but help this page load faster)
16 Dec 2012, 09:16 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Banking (see rumor comments at bottom from me)
(English courtesy of Mogi's Cover Mongolia news service)
Golomt Bank Appoints G. Ganbold as CEO
December 13 (Mogi) news.mn reported first what read to be a press release from Golomt (it said congrats to Ganbold on behalf of Golomt employees) on the morning of 13 December that the Board of Directors on 12 December relieved John P. Finnigan as CEO and appointed Executive Vice President, Retail Banking G. Ganbold as the new CEO. That identical press release was finally posted on their website by noon 14 December
News mn link (in Mongolian): http://bit.ly/RyNrek
Golomt bank link (in Mongolian) http://bit.ly/XwNJ1O
***
Rumors about this change have been wide ranging. I have been chasing down the various rumors which range from "everything is fine" to "something's wrong" at Golomt. Basically, I can't confirm anything yet.
Thus, my gut is that:
1) Golomt is fine
2) People are nervous and gossip spreads fast in Ulaanbaatar. I am not going to list the rumors, because I can't validate any of them; and know the local community's propensity for stories and gossip.
16 Dec 2012, 10:49 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
I should add I am getting a pretty good volume of negative gossip on Golomt's situation (and got another right after I posted the prior message), but I have no verifiable facts that anything bad is going on at Golomt.
16 Dec 2012, 11:15 PMReplyDelete CommentLike1
dulleyefarmer Comments (163)
Boldhuyag must have learnt his banking method when he was a Diplomat working in the Mongolian Swiss Embassy.He was previously married to Sarantuya one of Mongolia/Yakutias greatest singers.
18 Dec 2012, 01:33 PMReplyDelete CommentLike1
dulleyefarmer Comments (163)
Golomt Bank is part of the Bodi Group two brothers Boldhuyag and Bold Luvsandanzan.
http://bit.ly/TbyBss
21 Dec 2012, 05:33 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Bold Luvsandanzan was listed in 2011 as Mongolia's 8th richest man and is in gov't as well http://bit.ly/R8Eo2e
21 Dec 2012, 06:31 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
Weather service warning a dzud could be in store this winter in Mongolia
http://bit.ly/UBda1e
What's a dzud - a severe winter that kills off a significant amount of livestock, happens once every 8 years on average in Mongolia, but more often lately.
Dzud on wikipedia: http://bit.ly/tr3G3D
16 Dec 2012, 10:55 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Audio interview with Harris Kupperman, CEO of Mongolia Growth Group (MNGGF.PK) by Ian Cassel (http://bit.ly/R1Xirt) on MicroCapClub:http://bit.ly/Trc8WS
17 Dec 2012, 10:07 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
I have sold my position in Voyager Resources (VOYRF.PK) for a tax loss that offsets capital gains. I think Kincora or Voyager are the most likely candidates to find the "next OT" but I am slowly exiting speculative mining positions in Mongolia. I have better things to do with my investments than gamble on the exploration results of companies that need to raise far more capital for far more work.
17 Dec 2012, 09:33 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Recent Jargal interviews (interview is in English after introduction in Mongolian:
- Olive Dekam from the EBRD http://bit.ly/TXzxxY or http://bit.ly/U6lGb8
- Richard Ranken from the IFC http://bit.ly/TXzv9k or http://bit.ly/U6lGba
These are two of the biggest investors in Mongolia... and I'm noting them here because I want to go back and watch them when I have time.
18 Dec 2012, 08:58 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
A Mongolian blogger just attacked some recent reader comments (by Distressed Debt Trader and HGrossman). He also attacked me for not censoring their comments. I understand his complaints against the readers and am publishing a link to them here for the purpose of dialogue. I am not getting into the business of censoring dialogue and people's opinions.
Also, I have e-mailed this blogger before personally and he has not responded to my requests to get in touch. He also did not contact me about this post as even a courtesy, but I stumbled upon it by hazard. I will not engage a silent wall in discussion.
Here are his comments. There is a lot of foul language.
http://bit.ly/ZfVBLU
18 Dec 2012, 10:23 AMReplyDelete CommentLike2
Guest Investor Comments (4)
Distressed Debt Trader appears to be an overseas Chinese with nationalistic prejudices against Mongolia.
There are tens of thousands of similar Mongol-Chinese flame wars raging all over the Internet.
I'd suggest we better keep Mongolia Weekly Update out of this.
19 Dec 2012, 11:59 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
I agree with GI. It is hard to get Mongolians to participate in discussions like Jon's and they are made welcome. The only thing that enrages Mongolians is people like DDT writing insensitive chinglish prejudices and threats. l find myself agreeing with most of Sodon's comments especially his historical views.
His German education has given him a good world view. As far as Jon keeping MWU "clean and professional" Sodon could also do that.lt is easy to take cheap shots and inflame prejudices.
20 Dec 2012, 03:13 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
dulleyefarmer,
do you know who runs the Sodon site? I have tried to get in touch with him in the past without success
GI & DEF... no arguments from me... just thought I should share what had occurred here. I think Sodon's more meaningful points (about history, national sovreignty, etc) might have had more power without the foul language... but we need not discuss it further here. It is what it is.
20 Dec 2012, 06:01 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
Article from News.mn showing land being confiscated for having invalid titles (someone who speaks Mongolian please correct my interpretation if incorrect). Article is in Mongolian but you can scroll down for pictures of the property, all in fairly central UB http://bit.ly/YhqwWH
18 Dec 2012, 03:00 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
I'm told in Udriin Sonin local newspaper in Mongolian...
Headline: Southgobi Sands did MNT 6 trillion worth money laundering
Story:
MNT 6 trillion transferred into Southgobi Sand's account from Hong Kong. There wasn't any clear use of this large amount of money and it wasn't written on financials. The facts reveal that much of this money was transferred into Monnis Group's account.
18 Dec 2012, 10:12 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
same newspaper, different article
"Foreign investment is stuck"
N.Algaa, the head of Mongolian Mining Association says: Mongolia taking deposits as strategic will not result in positive outcome. Mongolia doesn't do well in business until it strengthens its governance.
18 Dec 2012, 10:14 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://bloom.bg/T7Fw4I
Very interesting Jon is there a link to the story? Would love to find out more details about who put the money in and who got it. Wonder if there is any connection to Prophecy?
19 Dec 2012, 01:26 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
There's no link between Prophecy and SouthGobi.
Both Prophecy and SouthGobi (as well as Oyu Tolgoi) have offices in Monnis Tower.
19 Dec 2012, 02:10 PMReplyDelete CommentLike1
dulleyefarmer Comments (163)
There is a link from Prophecy to the Monnis Group as Prophecy put Chuluunbaatar the President of Monnis on to their board.
Can the Rio executives get any lower? Firstly they gave Sarah Armstrong executive authority in Mongolia, got her to lodge the ICC dispute case and then do a dodgy transaction with Monnis, these guys are beneath contempt, They knew there would be more trouble and from the safety of Hong Kong they kept putting her in more danger. Now they disappear and won't comment on the case.
If they directed Sarah to pay this money to Monnis and she did it then this could be a serious escalation of this case,
21 Dec 2012, 04:51 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
dulleyefarmer,
All "word on the street" info is that the case against SouthGobi is going to escalate in some manner. I don't know any more than that, beyond the article linked below that I published.
21 Dec 2012, 06:38 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
New article by me Mongolia No Bottom Calling Zonehttp://bit.ly/TzRBQ6
19 Dec 2012, 04:08 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
ALERT, article:
Will New SouthGobi Troubles Wreak Havoc On Turquoise Hill?
http://bit.ly/ZnKPTI
This is a trading alert for holders of Turquoise Hill and SouthGobi Resources
21 Dec 2012, 06:32 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
To David Lokhav, Dennis Dortaj,Molyneux,Tromans and McRae hope you are having a great Christmas at home with your families while Sarah Armstrong has been hung out to dry in UB.
24 Dec 2012, 01:04 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
She's been released: http://yhoo.it/U69JQ6
Article on it I submitted pending.
24 Dec 2012, 03:35 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
ALERT, brokerage:
If you have ever thought about opening a brokerage account in Mongolia
OR
You have a brokerage account in Mongolia you need to update your paper work for
Do so soon. Planned regulatory changes include making foreigners go to their closest Mongolian Embassy to get paper work notarized.
21 Dec 2012, 06:34 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Oyu Tolgoi Concentrator to be commissioned in a week
http://bit.ly/R9Gpem
21 Dec 2012, 06:17 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Does this concentrator have power to run it? How is the power situation going from Inner Mongolia?If OT starts actually exporting anything how are they going to get the vast amounts of fuel required and how are they going to transport anything efficiently out of Mongolia?
22 Dec 2012, 12:46 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
If they got all that done at the same time, they wouldn't be able to make as many PR releases about each step that gets done one at a time ;-)
22 Dec 2012, 02:59 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
Some news items of note from the Cover Mongolia wire service
1) Going to be watching the Beren Group IPO on the Mongolian Stock Exchange closely http://bit.ly/TeVr17 they're looking to raise about US$93 million (130 billion Mongolian Tugrik) in an IPO. As it stands, with lack of FDI in Mongolia, curious where that money will come from.
2) Mongolia sovereign bond first explained http://bit.ly/WDB3ey
"a sovereign offering from a country rescued by the IMF five times in the last 22 years caught some by surprise. The offering, rated B+ by Moody's, was launched on November 28 and was 10 times oversubscribed."
3) Chinggis Bond on the March (from Mongolian Economy) http://bit.ly/TeVr19
4) A member of the MPP in parliament has switched to the DP http://bit.ly/WDB1DA
5) A thesis on Mongolian Democracy at University of British Columbia in Vancouver (an institution with strong Mongolian studies programs) http://bit.ly/TeVrhr
6) I'm not alone in my recent emerging market bond coverage. "Mongolia bond sets off EM bond bubble concerns" in EuroMoney http://bit.ly/UBbaWK
7) Mongolian national team moves up in World Football ranking (er, soccer for the American) ... up 7 places to 179... long way to go to make the World Cup, but thinking about what I will do if Mongolia makes the World Cup some dayhttp://bit.ly/TeVrht
22 Dec 2012, 06:19 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Somehow I missed:
8) MPRP decided to stay in coalition gov't (either they didn't have enough negotiating leverage to get anything; or we don't know yet what they got)http://bit.ly/UR7alM
9) L. Boldkhuyag appointed Chairman of Golomt Bank http://bit.ly/Zr1x4G
10) Beef O'Brady's opening restaurants in Mongolia http://bit.ly/UR7alQ (Beef O'Brady's before McDonald's? the wonders never cease...)
22 Dec 2012, 12:52 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Capitalist Exploits is selling a package of materials about Mongolia for $497. Buy it through this link and I get a commission. Or, just read what I write for free (because if you haven't figured it out by now, I like investing but I'm not the biggest or best on capitalism).
http://bit.ly/WECObl
22 Dec 2012, 12:37 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
For those who want to hear a harder pitch for this product, here's the pitch from Agora Financial's Chris Mayer:
"my friends at Capitalist Exploits held a conference in Mongolia shortly after I was there. They had the whole thing recorded and professionally edited. And they have a ton of goodies to go along with it.
I think the package they have put together is easily the best and most comprehensive look at Mongolia in the market today, done by people who are actually there trying to make money. Take a look at this:
13 interviews, over 3 hours of exclusive video content:
- Altai Khangai - CEO of the Mongolian Stock Exchange
- Harris Kupperman - CEO of Mongolia Growth Group
- Lee Cashell - CEO of Asia Pacific Investment Partners
- Oscar Mendoza - country manager for Prophecy Coal
- Eric Zurrin - CEO of ResCap
- Jim Dwyer - director of the Mongolia Business Council
- Nick Cousyn - COO of BDSec
- Travis Hamilton - managing director of Khan Investment Management
- Roy Dongen - CEO of Ganymedes Consulting (doing the first solar project in Mongolia)
- Chris Melville - partner at Hogan Lovells
- Bilguun Ankhbayar - CEO of Discover Mongolia
- Chris de Gruben - CEO of M.A.D.
- Ganzorig Ulziibayar - president of Mandal Insurance (an MGG company)
Over $1,400 in "freebies," including:
- M.A.D. Real Estate Report ($1,200 value) [Ed. note: I have this 450-page book and can vouch for its usefulness]
- Oxford Business Group Mongolia Country Report ($170 value)
- Mongolian Properties Guidebook
- ResCap Country 101 Report
- ResCap MSE account opening forms
- ResCap Macro Research
- BDSec Mongolia Portfolio Strategy (Research)
- BDSec The Heavy Hand of Government Lightens Up (Research)
- BDSec Account opening forms
Essays on Mongolia -- A compilation of thoughts from country experts: Chris de Gruben, Doug Clayton [of Leopard Capital], Eric Zurrin, Oscar Mendoza, John Polomny, Jon Springer and Harris Kupperman.
Plus: a copy of Capitalist Exploits' Mongolia Report with bonus materials and copies of all the Power Point presentations.
It is really an astounding compilation, a must-have for investors interested in Mongolia. I highly recommend it to you. You can click HERE to find out how you can gain access to these materials.
Note: Capitalist Exploits recently signed an agreement with Agora (my publisher) that says that proceeds from the sale of these materials will be split between them. You should know, too, that I initiated the process that led to this agreement because I believed the material is valuable and wanted to make it available to my readers.
I think the Capitalist Exploits guys do good work, and I've gotten to know them a bit better since hanging out with them in Fiji. We'll surely hear more from them in 2013."
23 Dec 2012, 03:20 AMReplyDelete CommentLike2
Joseph Harned Comments (40)
Jon: What have you heard regarding Wolf Petroleum?
23 Dec 2012, 12:10 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Hi Joseph,
I have honestly been overly focused on more macro issues effecting the markets. When a junior mining exec said to me at the Mongolia Investment Summit in Hong Kong in October 2012, "We've been lined up and shot against the wall along with all the other Mongolia juniors..." I kind of felt that summed up the current situation with juniors. Of course, that means there are opportunities in the junior miners for those who seek out volatility for opportunity.
My main generic concerns with junior miners right now:
- needing to raise more money for future exploration and diluting share value to do it
- that if they actually find a great resource, all the laws on the books now seem to indicate the government is going to take a big chunk of their find (34% or 51% depending on the history of the resource location)
- they're all having a hard time raising money in the current investment climate and/or some are just holding off
Specifically about Garrison Capital (which is involved with Wolf Petroleum):
- Matthew Wood (man in charge at Garrison) was one of the least worried people about the current investment climate at the Mongolia Investment Summit
- Garrison's model works well in the current climate... pick a good exploration site, prove it up, sell it for a heap and retain interest (best example being their sale of Hunnu Coal to Banpu)
If you have more specific questions, please let me know what they are and I will run down the answers for you.
Lastly, you're on this list Joseph (http://tinyurl.com/cgo...) and I hope you'll respond to the parenthetical comment :-)
23 Dec 2012, 12:35 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://1.usa.gov/12J32Jf
The Number 2 "Hospital" is where former president Enkhbayar is serving out his so called prison time of 2.5 years. A luxury set up for high ranking officials a far cry from the unheated barbaric conditions that other Mongolian citizens have to endure.If you defaulted on a mortage and went to loan sharks you would get 8 years in Gandshudag the real prison eating horse intestines.
23 Dec 2012, 02:22 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Similar things happen in many places. U.S. country club prisons often have tennis and golf. Here's a piece in the L.A. Times making fun of another article saying life in country club prisons was/is getting harderhttp://lat.ms/12yNoBg
23 Dec 2012, 05:14 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
17 Dec, 2012 19:51:04
Sri Lanka and Mongolia forex debt ratios high: Fitch Report
Dec 17, 2012 (LBO) - Foreign currency denominated debt is expected to fall as a ratio of current receipts in except for Sri Lanka and Mongolia, where it will remain high, Fitch Ratings said in a report which tracked 12 emerging Asian nations.
"At the regional level, FC-denominated debt is projected to decline as a ratio of current external receipts," Fitch Ratings said in a report.
"However it is projected to remain above 100 percent for Sri Lanka and to remain above the end-2011 level for Mongolia.
"This factor is likely to weigh on these sovereigns' ratings."
Sri Lanka has a 'BB-' rating from Fitch.
rest of article: http://bit.ly/V3K2zK
23 Dec 2012, 05:10 PMReplyDelete CommentLike2
Mogi Comments (13)
- Enkhbayar moved from hospital back to prison: http://bit.ly/V5pO8U
- Sarah freed and flying back: http://bit.ly/RejT43
- Wolf tanked on debut day, down to 11.5c from 20c listing price, 2nd day up slightly to 12.5c: http://bit.ly/V5pNSg
24 Dec 2012, 05:03 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
Thanks Mogi !
(that answers quite a few questions from above)
Follow Mogi's Cover Mongolia updates -
Facebook: http://on.fb.me/SyFsKt
Twitter: http://bit.ly/1198PYS
E-mail to receive the news feed via e-mail: covermongolia@gmail.com
24 Dec 2012, 05:41 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
That is great news that Sarah is on a plane. This matter is far from over and has been referred to the Prosecutors office. I like this comment from Joggle posted in the last archive.
'Let me remind you that foreign investors are not angels. As for the South Gobi Sands case, it has been discovered by the police that the company has evaded some $125 million dollars and 4 of its 15 licenses were renewed despite the fact there were clear legal grounds for revocation. The Company also had a secret contract with the Mongolian People's Party. So, it is ridiculous to view Sara Armonstrong as a innocent witness, as a lawyer she would have known the legal consequences and risks of taking the slippery slopes. All directors have managed to escape as soon as they suspected that the new Government would investigate the company's affairs. The Mongolian police has asked Interpol to look for those directors. The bottom line is the SGS case creates a poor image of Rio Tinto as a reliable and honest investor."
Enkhbayar back in prison ,would that be the luxury section of Gandshudag a separate building within the prison and run as a luxury hotel?
24 Dec 2012, 01:51 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
dulleyefarmer, or anyone,
Have you heard any news on another person from SouthGobi being detained? (see links)
http://bit.ly/TShjzq
http://bit.ly/VfMRRD
24 Dec 2012, 02:07 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Turquoise Hill (TRQ) and SouthGobi (SGQRF.PK) should bounce up today. Trading alert on news cycle reversal as previously mentioned.http://bit.ly/TkQ1Fl
Keep in mind that the OT IA is still under renegotiation pressure until gov't announces that it reaffirms the OT IA. (Reaffirmation of OT IA would bolster TRQ price further.)
24 Dec 2012, 07:42 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Items of interest:
1) Mongolia offers to give Russia up to 49% stake in new rail projectshttp://bit.ly/Vtj8jQ (this will be better than the old railways lines that are 50/50 owned with Russians which creates a situation where all decisions must be joint... though I wonder what happened to the idea of IPO-ing the new railways....)
2) The location for Power Plant 5 has been selected http://bit.ly/ToYrvl (it has been selected before, but the new government wanted to move it)
3) New 12-week notes from the Central Bank of Mongolia are paying out at an annualized rate of 14.31%. http://bit.ly/Vtj8jR (remind me again why 5.125% for 10 years in USD was a good deal?)
4) Foreign workers now subject to medical exams http://bit.ly/ToYrvs
5) Mongolia's Midas Touch Loses Some Of It's Shine (a report in Hong Kong's South China Morning Post that seems to rehash comments from October's Mongolia Investment Summit in Hong Kong) http://bit.ly/Vtj8jV
25 Dec 2012, 02:30 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
The Railway situation is really getting confusing. Depending on who you read the Russians have a majority interest in the existing railway not equal that is why they blocked the Millenium Challenge attempt to control the railway via their $183 million proposal. This was blocked by the Russians as they refused an audit as required by the MCA/MCC
.Energy Resources the consortium of 14 Mongolian companies who owned TT until it was siezed by the GOM in 2007 was given a sweetener ie. the branch line from TT to the main line.Jon has referred to Energy Resources"also known as MMC.The MCS brothers recently significantly increased their positions in MMC. This is getting really confusing.
As far as foreign workers getting medical exams this sounds like another earner for SOS Medica the private clinic that charges $190 USD to see a foreign doctor .SOS had a large shareholder in the former Health Minister Gundalai who made it so that Mongolians leaving the country had to pay up to 10 months pay to get "official "medical tests.Gundalai at one stage had a reported 500,000 shares which he later sold there is also involvement with the Bodi Group?
25 Dec 2012, 03:32 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Interesting body language with Sarah on our local news.She didn't look very happy and didn't appreciate the camera.She made it home on Christmas day that is good news.
25 Dec 2012, 03:48 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
TRQ bullish article coming (yes, another one). Why?
Must read: http://bit.ly/YjOWdq
Also: http://bit.ly/ZD1IKd
And: http://bit.ly/YjOYBV
27 Dec 2012, 06:51 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Despite....
MP Ganbaatar urging people not to attend commissionig: http://bit.ly/12QVcNP
And Prohibition of New Exploration Licenses to be Extended: http://bit.ly/TBgyhL
27 Dec 2012, 06:55 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
My new article on getting bullish TRQ http://bit.ly/RjQAgx
27 Dec 2012, 07:44 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
More news of the last few days:
1) Gov't changes to SEFIL so far focused on the investment caps and hasn't gotten to other issues yet http://bit.ly/WXJ91Q
2) New airport has Japanese financing http://bit.ly/Vjd3aQ
3) Wolf Petroleum Chairman (Matthew Wood) purchase more shares on public market after decline http://bit.ly/WXJaTp
4) 2012 Mongolia Mining Awards http://bit.ly/Vjd0Mk (I'll do a stand-up comedy routine someday about Mongolia's mining awards for a very amused audience of 3 people who will get all the jokes... tickets will be cheap...)
5) The Australian welcomes Sarah Armstrong home (an article) http://bit.ly/WXJaTr
6) New CEO of Erdenes Oyu Tolgoi is former parliamentarian that wanted renegotiation. http://bit.ly/Vjd12H
*****
From Mogi:
"Oyu Tolgoi" LLC is composed of 9 Members of the Board of Directors.
1. Galsan BATSUKH, Chairman of the Board of Directors
2. Natsag BAGABANDI, former President of Mongolia
3. Chuluun GANBOLD, Chairman of the Board of Directors of XacBank and TenGer Financial Group
4. Puntsag TSAGAAN, Chief of Staff for the Office of the President of Mongolia
5. Andrew Harding, Rio Tinto's Chief Executive
6. Cameron McRae, President and Chief Executive Officer of Oyu Tolgoi and Rio Tinto's Country Director for Mongolia since December 2010
7. Peter Nicholls, Vice President, Commercial for Oyu Tolgoi since June 2011
8. Kay Priestly, Chief Executive Officer of Turquoise Hill Resources since May 2012
9. Chris Bateman, Chief Financial Officer of Turquoise Hill Resources since May 2012
"Erdenes Oyu Tolgoi" LLC's Members of the Board of Directors are:
1. Kh.Kherlen, Director of State Property Management, Privatization
2. Ya.Dolgorjav, Executive Director of "Erdenes MGL" LLC
3. G.Temuulen, Deputy Director of "Erdenes MGL" LLC
4. Ch.Tsogtbaatar, Deputy Director of Heavy Industry Policy Department, Ministry of Mineral Resources and Energy
5. Ts.Tsolmon, Director of Legal Policy Department, Ministry of Justice and Home Affairs
6. N.Rinchindorj, Director of Legal Policy Department, State Property Committee
28 Dec 2012, 01:48 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://bit.ly/V9NqKE
Same story older post on the Airport.This is a joke building it in a beautiful National Park for Japanese to visit the Casino? The high speed road sounds interesting, no doubt straight to Japan Town in Zaisan, you will probably be able to go 20 kph instead of 10.
This is sad getting in debt to Japan the most recent invader of Mongolia after the creation of Manchukuo in Mongolian territory .
If it was Chinese it would never happen.
28 Dec 2012, 06:48 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Dumb question time.
If Erdenes Oyu Tolgoi LLC has a right to appoint 3 Directors how come there are 4 Mongolian Directors? Does the majority share holder appoint the Chairman?
7 Jan, 03:27 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Because 1 was appointed by another appointing party? (I don't know... and not sure how it makes a difference.)
7 Jan, 04:51 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
New Year's Eve news.
1) Parliament extends ban on new [exploration] license issuance
http://bit.ly/VsSKru
http://bit.ly/UytEd7
2) Mongolia to [partially] revise controversial investment law [but not fix it]
http://bit.ly/VsSMjd
"Mongolian Mining Minister D. Gankhuyag has told local media that the government will revise the law by raising the amount of investment that needs governmental approval."
(that simply was not the only issue with the law; it is a vague law which opens up all kinds of issues; this is a superficial maneuver that fails to appropriately revise the law to improve the FDI outlook, period)
3) OT commissioning ceremony speeches http://bit.ly/UytG4K
4) Livestock numbers increase 11.3% in 2013 to 40.4 million
Ulaanbaatar, December 28 /MONTSAME/ The National Statistics Office has released a preliminary result of the livestock census.
By the end of this year, the number of livestock reached 40.4 million heads livestock, reflecting an increase of 4,097.1 thousand or 11.3 per cent against the previous year.
(link to site, because Montsame can't figure out how to set up links to articles:http://bit.ly/VsSMje)
5) Why Is Russia Favored By Mongolia And North Korea? (by one of Julian Dierkes students at University of British Columbia) http://bit.ly/VsSMje
6) Small power : Mongolia's democratization and foreign policy objectives (a thesis by one of Julian Dierkes students at University of British Columbia)
http://bit.ly/TeVrhr
7) Mongolian year in review by Julian Dierkes, professor at University of British Columbia who does good work about Mongolia (and goes there frequently; and has many Mongolian students; and was an observer at the last election)http://bit.ly/UytG4Q
8) The dinosaur saga continues for those interested
http://nbcnews.to/VsSMjl
http://bit.ly/UytEdg
A very happy, healthy, meaningful 2013 to all of you and your families,
Jon
31 Dec 2012, 01:12 AMReplyDelete CommentLike6
dulleyefarmer Comments (163)
Having read Julian Dierkes year in review it raises some questions for me.It appears that the forthcoming presidential election will be his 4th as an observer and while he writes with an open mind there is no mention of the the Asia Foundation and its involvement as not only manipulators of aid and Mongolian politics but its extremely poor record as electoral observers in Mongolia.Is his position honory or is he part of the TAF team? Anyone involved as an observer in Mongolia should feel shame at the type of statements from former TAF head Infante after the 2008 "election". I will be interested to read any comments after the presidential election.
Julian also quotes the Sant Maral group who were employed by TAF to concoct anti corruption surveys when the MCA/MCC tried to gain control of the railway.
Lets not forget TAF was created by the CIA in 1951 as the Committee for Free Asia.
9 Jan, 04:08 AMReplyDelete CommentLike3
EBennett Comments (8)
When the MCA/MCC tried to gain control of the railway? What on earth are you talking about? You have the wrong end of the stick here.
They tried to support construction of the UB bypass (to be owned by the Mongolian government) - which is a vitally important project that has been delayed for years - but the Russians scuttled the plan because they want to own half of the entirety of the Trans-Mongolian, including any portions like the UB bypass.
At the moment the MCA/MCC are paying for construction of the road to China from UB. Thats a pretty big deal and an indication of their good intentions.
MCC is wrapping up shortly by law and does not own anything whatsoever in Mongolia. MCA is a Mongolian government agency.
9 Jan, 09:10 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Firstly MCA is not a Mongolian government agency. The MCC was set up in Mongolia to facilitate the funds real or imagined from MCA. MCA was set up by Bush and it was always seriously underfunded and many countries complained that they never saw a cent. Mongolia was to get $285 million USD of which $183 million was to be spent on the railway to "alleviate poverty" $31 million was to be spent on "consultants" such as Breakthrough and other expats on the gravy train, $23 million was to be spent on the Cadastre office to ensure that Mongolia keeps getting carved up and made available for sale.
"but the Russians scuttled the plan because they want to own half of the entirety of the Trans-Mongolian, including any portions like the UB bypass" The Russians don't want to own half they already are the majority owner depending on who you listen to. They refused to be audited as an MCC requirement and they didn't want the American money in spite of the minority owners GOM begging them.
How much has the MCC actually spent in Mongolia so far and how much has gone to the consultants?If they are wrapping up soon will they produce a detailed report on money spent?
Do you really think that the Americans would give the bulk of this money without strings attached just because they are such great guys?
Regarding the road it wasn't in their original proposal and I guess they had to do something as their centerpiece project didn't happen.
10 Jan, 03:54 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://bit.ly/13klmsJ
For EB we were previously discussing Professor Chimid and his role in writing the new cut and paste constitution of Mongolia , seems you didn't know who he was.
10 Jan, 03:58 AMReplyDelete CommentLike1
IsaiahU Comments (4)
DEF, I work for a Mongolian company that partners with MCA-Mongolia to carry out a project here. The Millennium Challenge Corporation is the US government agency that signs Compacts with the governments of qualifying countries to engage in bilateral aid. MCC works with the government to select projects, etc. (they have a lot of say in this) and requires that each partner government establish a special purpose legal entity to manage the implementation of the selected projects (called Millennium Challenge Accounts).
It's always a fair criticism of development agencies as to how much money is actually invested in the country as opposed to paid to consultants to implement projects. Waste abounds--just like with all not for profit entities (including governments!). Furthermore, bilateral aid is generally tied to the interests of the donor country--this is an accepted fact. However, I don't see what the underlying American agenda is by building a railroad or a road. What's the master plan here? Maybe it's just to have a friendly face (who will back us up in conflicts such as Afgahnistan/Iraq) in an area where Russia and China don't like us too much?
A last word on investment through MCA-M--my project has only Mongolian project participants (Breakthrough does not do the PR--carried out by another Mongolian firm). Direct investment in Mongolian producers and consumers (excluding project management, PR, etc., which are Mongolian as well) by my back of the envelope calculation is above 90% of the total amount spent on the project (ballpark of $50 million).
10 Jan, 06:51 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
"Country-led implementation: MCC administers the Millennium Challenge Account (MCA). When a country is awarded a compact, it sets up its own local MCA accountable entity to manage and oversee all aspects of implementation. Monitoring of funds is rigorous and transparent, often through independent fiscal agents."
This quote in wikipedia is my understanding of the process the MCA (singular) not Accounts was the dream of George Bush.My memory of events was that MCC Mongolia was set up in Mongolia to facilitate the money from MCA ie. the original singular account created by Bush.A lot of expats like Breakthrough are theoretically Mongolian companies. In their case they paid their money and set it up in March 2008 while Bill was still in office at his not for profit TAF.I don't believe that 90% of any money goes to Mongolians, "Mongolian "companies perhaps with foreign partners. This is similar to the claim that 90% of OT workers are Mongolian, they have a stated aim of 90% but the reality is 10% or less.
I would be interested in your project and your assessment of how the compact went. Was all the 285 million spent? EB says the MCC will wind up soon perhaps you could give us some insights into how it finished.I would consider the centerpiece project ie. the railway to be a major failure, poorly conceived and implemented, the road project was a stop gap measure.
What is the American agenda? perhaps you have your own insights. Some say it is to take NATO to the Russian border, the original Third Neighbor Policy 2005 called for 4 Military Bases in Mongolia.The US is concerned about the movement of nuclear material and set up 3 detection stations 2 on borders and one in Chinggis Khan Airport. The American aid juggernaut provides lucrative incomes and career prospects for some and blatant cover for intelligence organizations
10 Jan, 09:32 PMReplyDelete CommentLike1
EBennett Comments (8)
DullEyeFarmer -
As Isaiah points out above, you are wrong about the structure. The MCC is a US government agency and the MCA was set up by the Mongolian government.
I know the Russians already own half of the current UBTZ. The Mongolian government is exceedingly fed up with the Russian ownership stake in the most important piece of infrastructure in this country after Power Plant #4. The Russians haven't been willing to make the necessary investments in expanding the railway line either which is now dragging on Mongolian economic growth (the RR is at capacity).
So, when America offered to pay for a significant portion of the RR it suddenly made it feasible for the Mongolian government (who were extremely cash strapped) to finance the bypass on their own and have 100% ownership of that extremely strategic section (and to get it done faster). The Russians didn't like the sound of that, and essentially blocked it (according to my understanding) by refusing to allow the bypass to connect with their current railroad.
Of course, Mongolia needs Russia for many things (starting with oil), and ultimately backed down from pissing the Russians off on this point.
Also, your point about corruption is valid, though it applies to both the Mongolian and Russian governments in this case. The road program has a different structure and its not currently a problem there.
What strings do you think were attached to a free railroad? This was simply a diplomatic effort designed to strengthen the American presence in Mongolia - something Mongolia would be much better off for. At the moment the 3rd neighbor policy has completely failed and you could use stronger relations with the USA.
I second Isaiah's point about the inefficiency of development projects. The money spent was not your money though and if America wants to spend American money paying Americans living in UB you should be happy as doing so boosts the local economy more than if MCC hadn't come here.
Also, lets not forget something important - in 2013 a road will be completed between UB and China. Previously, there was no road between this country's largest city and its largest trade partner. That road was paid for primarily by the USA and it is one of the highest quality roads in this country.
I'm not expecting anybody to thank the USA, but don't spit in our face and claim that there is some elaborate conspiracy here.
10 Jan, 09:58 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Calm down EB you must have too much coal in your boiler? No one is spitting in anyones face. I understand you are sensitive to American policy failures in Mongolia but such metaphors aren't necessary.
12 Jan, 02:16 PMReplyDelete CommentLike1
mccorj Comments (7)
Jon, your coverage was great this year. I know you got some grief for being impartial and had to suffer a few less than positive comments but in the great picture, we need you to be impartial since we all have different backgrounds and interpret differently.
The Mongolian issue is huge, new to most of us, and has a million moving parts and only a very few can have any clarity since we don't have the thousands of years of local history.
I, for one, look forward to every comment from you and your audience.
Thank you, Happy new year. Have a successful future.
31 Dec 2012, 11:00 AMReplyDelete CommentLike4
Jon Springer Comments (3891)
Thanks mccorj. That's a very nice note to end the year on... 7 hours away here in Czech Republic... technically already a new year in Mongolia... though it really isn't a new year until Tsagaan Sar.
31 Dec 2012, 11:09 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Some interesting news from my friend "Fiscal Cliff" apparently Enkhbayar's sister N.Enkhtuya was listed on the Interpol wanted website a few months ago but the MPRP Junior Justice Minister wrote to Interpol telling them to remove her from the wanted list.This lead to a letter from the DP to try and counter this action.
Re the SGS Sarah Armstrong case Fiscal Cliff says that Monnis is owned by Enkhbayar and that the money transfered from Hong Kong will go into his pockets.Rio will shut down this story and I don't think there will be any teary television tell all stories.
http://bit.ly/VfsQsi
Monnis group
This document leaves your head spinning trying to follow the TT and Energy Resources trail
http://bit.ly/U0UBJ0
http://bit.ly/VfsQsk
http://bit.ly/U0UDRb
Monnis President questioned over SGS corruption
http://bit.ly/VfsSjJ
MCS has a new partner maybe Enkhbayar is off the menu at the moment. Kuok and his Kerry Company are now involved. According to Fiscal Cliff he was involved in getting Hong Kong and mainland China to kiss and make up and wants Mongolia to be part of China.Good luck with that one.
Jon do you know anything about the new Bank that the GOM set up after the collapse of the Zoos Bank to handle its money?
Thank you Jon for all your work during the year, I certainly appreciate it and it will be fascinating to see wehat happens in Mongolia this year.
31 Dec 2012, 04:31 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
Hi DEF,
You mean "State Bank", the handler of old Zoos and Anod assets, so to speak? It's on the list of six banks I've been talking to people about regularly (TDB, Khan, Golomt, Xac, Savings, State).
That 'Cliff guy sure does get around.
Sending you a message about a bizarre project I'm stumped on.
1 Jan, 03:08 AMReplyDelete CommentLike1
dulleyefarmer Comments (163)
Yes Fiscal Cliff is a bit of a loose cannon he went through a messy divorce and has been living beyond his means going cap in hand to his bankers every year like Oliver Twist to ask for more.
This came from a banking insider that the GOM set up a new bank within the last year.Anod reportedly collapsed due to Mongol Gazar but there wasn't really a good reason why Zoos went, FC says they were pushed by GOM.I will ask him as soon as he surfaces after the New Years celebrations.Do you know a good lawyer?
1 Jan, 03:35 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
My best friend is a lawyer and even he'll tell you the term "good lawyer" is an oxymoron - LOL. What kind of lawyer and for where? Send me message... not really blog conversation... or is it?
1 Jan, 03:50 AMReplyDelete CommentLike1
dulleyefarmer Comments (163)
Seems this Bank is called the Toriin Bank
http://www.statebank.mn
It is new and set up by the GOM why probably because Enkhbayar had so much control of the other Banks.
Q. What is black and tan and looks good on a lawyer ?
A. A Doberman
1 Jan, 04:06 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
This story about a the alleged murder of Terril Atienza a Filipino maid in November last year in UB casts another shadow on Mongolian big business and the Erel group.
http://bit.ly/133myAD
http://bit.ly/U8d4DE
English media reports that she was employed by Sergelen Davaakhuu the son of a former Prime Minister of Mongolia. A quick check would reveal that there was no such PM and that S. Davaakhuu is a woman married to B. Erdenebat the former Motherland Party MP and owner of the Erel group. She is also the honory Consul for Austria in Mongolia.
http://bit.ly/133mBw0
There are lots of do nothing consuls in UB that were created by business and political contacts. Australia created one during the visit of Downer to Mongolia. They want the title but are usually uncontactable and do next to nothing.
http://bit.ly/U8d4DK)
B.Erdenebat and the Motherland Party
http://bit.ly/133mBw2)
Sponsor of Hurd one of Mongolia's great bands
Erel Bank
http://bit.ly/U8d4U4
http://bit.ly/133mBw4
2 Jan, 02:33 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
2 /12 minute video about the plight of Mongolia's poor I want to post as an example of almost-factless journalism http://bit.ly/WdRMii
This "reporter" says Mongolia's mines may create a widening wealth gap. No discussion of current per capita GDP. No discussion of rise in per capita GDP. No discussion that the mines have not really started to produce on scale yet. No discussion that OT by itself will add about 33% to annual GDP by 2020. No questions about what the government can do with revenues from mining boom to help everyone benefit. No comparison with Chile or Norway - other per capita resource rich countries that have dealt with similar challenges.
What's the #$%@*^! point of reports like this?
No consideration of the human toll or human opportunity while feigning concern.
2 Jan, 03:33 AMReplyDelete CommentLike5
dulleyefarmer Comments (163)
Stephen went to Mongolia to report on Sarah Armstrong but no one except Mc Rae would speak to him including the Mongolian Mining Minister. He filmed enough to produce the "Big Dig" for ABC and now this little piece from his filming in October. It's hard to produce anything interesting when no one will talk to you. Personally I think all ABC Asian correspondents are a big disapointment. Luckily it was too cold for him to wear that stupid suit he usually wears.
2 Jan, 05:00 AMReplyDelete CommentLike4
Jon Springer Comments (3891)
Thanks for the inside scoop on what happened with that dulleyefarmer. Funny how a story about Sarah Armstrong turns into a "Mongolia's plight" story. It ain't easy finding people to talk about some things...
2 Jan, 12:09 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
It seems that the South Gobi Sands debacle is far from over. Seems they off loaded some of their licenses to a third party is there any information yet on who got them?
http://bit.ly/WeLqzs
Due to the reaction it would have to be Chinese?
2 Jan, 02:44 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
... or someone in jail... perhaps?
Just guessing. No clue. Probably should wait for more details rather than speculate.
(On the other hand... they may be in the process of sweeping the whole investigation under the carpet... but to save face have to say the investigation is "ongoing"...)
(what did I say about not speculating? ... okay... that was the last speculation from me... until the next...)
2 Jan, 02:53 PMReplyDelete CommentLike1
dulleyefarmer Comments (163)
http://bit.ly/Rtu3xX
Sodon has written a new post about you Jon. Not nearly as much "Aussie punctuation " as before.
2 Jan, 02:55 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
My prior response to this has been deleted.
I am not responding to anything from this blogger further. I am not censoring him or her, but I will not address any further comments by him or her either.
Comments of this sort add nothing to dialogue.
2 Jan, 03:40 PMReplyDelete CommentLike5
dulleyefarmer Comments (163)
Sodon can censor you but you don't censor him?It seems his main problem was with ex pat Chinese bloggers there are plenty of blogs for him to engage them on.His personal comments show that he has difficulty in controlling himself and this adds nothing to rational debate.
His mother is Mongolia but yours is fair game?Well handled Jon.
2 Jan, 04:03 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
1) 2012 harvest data: Mongolia can now fully meet its domestic wheat and potato needs http://bit.ly/10RZ1nC
2) Al-Jazeera's 101 East is going to be covering the mining development at Oyu Tolgoi and if it is good or not for the population http://aje.me/VDdGfB
3 Jan, 03:35 AMReplyDelete CommentLike3
H. T. Love Comments (12582)
Jon: Al-Jazeera is buying the Current cable channel to expand reach into broader markets. It'll be interesting to see what (new?) resources they will provide.
HardToLove
3 Jan, 11:19 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
It will be interesting HTL. Al-Jazeera English has been top notch for world news... but I see them sliding as they get more advertisements... starting to feel like we need a new global news station launched each year for the sake of good coverage.
3 Jan, 12:39 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://bit.ly/136uwZN
Al Jazeera's story the Big Dig has the same title as Stephen Mc Donel's story for ABC.
"Rio Tinto is also exempt from a windfall profits tax." The tax was removed so how can Rio be exempt from something that doesn't exist anymore? Another light weight poorly researched article.
Regarding Mongolia's agricultural production a lot of the good work is being done by Australians particularly in the Dornod aimag.
3 Jan, 02:00 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/VxZS9i
Jon I could see you driving this ,the first Mongolian car a vision from Jenko Battulga.It looks a bit low to the ground for Mongolian roads and would definitely need roof racks.
3 Jan, 02:07 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
Funny. I don't have the $$$ for that car, let alone $$$ to spend on an impractical car.
I prefer when they spell the company name in English as Genco (rather than Jenko), because then it is the same as the company name from the Godfather movies.
That car looks like its for people that can afford the Ulysses Nardin Chinggis watch. http://bit.ly/TN9uer
Funny to me. Chinggis Khan was practical and did a lot to level the playing field for people (after conquering them), but he keeps getting associated with over-priced nonsense.
A car named for Chinggis Khan should be a car that can win the Mongol Rallyhttp://bit.ly/UMgomq
4 Jan, 07:01 AMReplyDelete CommentLike2
haiguike Comments (466)
Exactly. Too many Mongolians dwell on past glory. The man has been dead for 800 years. What Mongolia needs is a Lew Kuan Yew type of leader to be their next Chinggis Khaan and rule with an iron fist for decades to come. Until then, the biggest roadblocks for Mongolia's progress and economic prosperity will be Mongolian politics and their own people. Lew Kuan Yew theorized that democracy cannot work for developing countries in Asia. We will find out if Mongolia becomes an exception. So far, no other Asian country has.
When Singapore experienced an economic crisis during the SARS breakout, the government offered welfare to struggling citizens for the very first time in the history of its rule. Guess how many eligible citizens accepted the handouts? About 2%.
4 Jan, 12:17 PMReplyDelete CommentLike5
dulleyefarmer Comments (163)
Robert Kuok could be that Lee Kuan Yew figure he is a contemporary of his with a very similar style. As an extremely powerful business figure it will be interesting to see how his Kerry Group goes in Mongolia. His new alliance with MCS and others seems to have stitched up the rail, fuel and supply side of running TT. The operators of the mine might come and go but they will be running the show. These days you don't need to conquer a country to control it?
A benevolent dictator is certainly a very efficient style of government. The English fought against democracy as long as they could, the rising power of the House of Commons is only a recent phenomenon. Lee Kuan Yew once apparently commented that Australia had the chance to become the New Hong Kong but by implementing anti Asian policies chose European peasants instead.
As a person of Mongolian descent I get very annoyed to see the over commercialisation of Chinggis Khan. He was banned during Russian times and many knew nothing about him but now he is a rallying point for hyper nationalism. The new "made in China" Chinggis statue in Sukhbataar Square has become a sacred place for initiation into the services and other positions. The same Mongolians who knew nothing about him dived on the chance to take Chinggis Khan's clan name Borjigin or Bao in China.
http://bit.ly/138Dm9e
Some more amusing clan names
http://bit.ly/ULxkIT
4 Jan, 03:12 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://aje.me/UnmENI
"MONGOLIA CORRUPTION:
•The elections on June 28 will be the seventh since Mongolia ended 70 years of communist rule in 1990. Voters will choose between the ruling Mongolia People's Party and the opposition Democratic Party. Voter turnout is expected to be more than 80 per cent.
•But its democracy is threatened by high levels of corruption. Mongolia ranked 120 out of 183 countries on the Transparency International's 2011 corruption perceptions index.
•Nambaryn Enkhbayar, the former Mongolian president, was arrested in April over suspected corruption but was later released following international pressure. He left the ruling MPP to form his own party, and was barred from running in this election."
These comments in Al Jazeera are ridiculous. If they want to learn about voter turnout I would suggest this excellent article posted by Brian White on Julian Dierkes website.
http://bit.ly/TzYLW7
A huge proportion of UB residents can't vote because they don't have an ID card either old type or new electronic ones. Our own MWU spin doctor Guest Investor commented on the extremely low voter turnout for the recent Council elections somewhere around 20%?
Transparency International wouldn't know a fraction of what goes on in Mongolia and their access to information in Mongolia would make their index look ridiculous.
Since when was Enkhbayar released due to International pressure? He is currently in "jail "albeit the luxury end for 2.5 years. He didn't leave the MPP he was kicked out by the Nyamdorj and Khurelsukh factions then took legal action to grab the vacant MPRP name.
Al Jazeera seems to be dropping its standards dramatically.
3 Jan, 09:49 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
Note to journalists:
Reporters in general would do well to fact check themselves with Professor Dierkes and his students before inserting their feet in their mouths. For an academic institution outside of Mongolia that can make authoritative comments, University of British Columbia should be the go-to university at this point.
4 Jan, 06:52 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Correction voter turnout in the recent Council elections was around 50% not 20% as l incorrectly stated.
6 Jan, 04:48 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Mongolia Growth Group (MNGGF.PK) is uplistinghttp://bit.ly/13a4K6E (expect a bullish article from me shortly)
5 Jan, 10:27 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
Their real estate assets are very small.
5 Jan, 02:22 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Compared to what?
;
And what matters is if the value of their holdings goes up enough to be good reason for the price of the underlying shares to go up.
5 Jan, 08:24 PMReplyDelete CommentLike1
dulleyefarmer Comments (163)
21 residential units and an assortment of commercial property is nothing in UB.An acquaintance has been an advisor to the PM Terbishdagva since his time as Agriculture Minister he had a modest salary in 2006 of $200 pm.He built 276 appartments in Han Uul district and was so successful that they decided to build another 500. Obviously he is very good at saving.
Mongolia Growth Group seems to be appealing to a small overpriced Ex pat market.You are right that it doesn't matter as long as the share price goes up.
5 Jan, 09:54 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
a) That's an understatement of MGG's holdings. Also, while MGG has a few residential units, they have no real interest in holding them. You can see that residential property is almost irrelevant to their portfolio in their current corporate presentation and property report here: http://bit.ly/Zs54yC
b) You're comparing a developer (someone who builds a property and sells it off) to a property owner (someone who buys property, holds it, and rents it out).
c) As a vehicle to invest in Mongolia's economic growth story, MGG may or may not work. However, for someone who wants to:
- invest in a publicly traded company
- meeting international accounting standards
- traded outside of Mongolia
- that is not wrapped up in the hit or miss world of mining
- but instead will grow as the mining industry grows Mongolia's GDP
- Then, there is no other option for investing in Mongolia's economic story and trying to capture returns in line with Mongolia's economic growth.
(If you included companies publicly traded in Mongolia, you could perhaps make a case for investing in Remicon or BDSec as well following those other guidelines. If you drop the requirement of international accounting standards as well, then you have a good selection of options on the MSE.)
6 Jan, 06:51 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
Disclaimer: I am long quite a number of MSE listed stocks (and some MGG too).
The basic problem of investing in Mongolia, real estate or else, is a problem of chicken and egg, what you CAN versus what you WANT.
Politics aside, for whoever wants to see the Mongolian glass (of vodka) half empty, there are many reasons to do so.
For instance, when thinking about buying MSE listed shares, one could complain about:
• Liquidity,
• Market capitalization,
• Free float,
• Financial information,
• Corporate governance,
• Pending Securities Market Law,
• Lack of foreign custodian banks,
• ….
• ...and so on!
..and therefore decide to invest in this market ONLY when it will be possible to tick those boxes.
Looking at the absolute level is a way to think about it, like going for AAA bonds where the best case is already priced in.
Now looking at how things are really moving gives a different picture. THERE IS information for whoever wants to spend the time and look around. The MSE website (as well as MSCH&CD) has room for improvement but there is already quite a lot there. Many MSE listed companies, big, small or tiny, post their numbers, and some are very good (no need to be fluent Mongolian to decode)!
A quick visit to them (if possible off peak months) helps understand how the business is going behind the numbers. It's not foolproof but it is a good start.
More than a year ago it was not so easy, so it's improving a lot and looking at those small things, it should be improving further.
Now questions would-be investors can ask themselves are the following:
• Once all the boxes in the list are ticked (may be 2-3 years):
o At WHAT KIND OF MULTIPLES will those stocks be trading?
o What would be then the EARNINGS
 (some 2011/2010 YoY earnings growths numbers I found were quite nice) ?
Those buying now, or over the last year, may not look for a simple 100 or 200 % upside and sell.
From discussions with people talking about investing on MSE, I think they overlook one simple technical issue:
• They ALL assume that once the lights are turning green they can board fast the MSE train!
There is serious overconfidence here. Do they just know HOW LONG it takes to build exposure there?
Anybody that has been trading on MSE, outside the mines and the most visible names, for some time knows it is an illusion! Quite a number of people got grey hair doing just this. Patience is needed.
Better start early, as early as possible, and buy what's available steadily (not focusing on 2-3 names) over weeks, months,…and of course forget concepts like mark-to-market, open-ended fund, margin trading,….
The Nasdaq in 1998-1999 was a good template of what may be happening.
• Creation of some Mongolian funds investing only or mainly on MSE listed stocks,
• Index (calculation needs modifications) driven up attracting attention,
• Other fund managers under pressure from clients to launch their own funds,
• Cash raised HAS to be invested thanks to benchmarking (not wise for manager to wait for stocks to be cheaper),
• Investments fuels further the momentum which triggers more interest from the general public asking for investment vehicles to gain exposure to MSE listed stocks…
How long can a fund manager afford to stay on the side?
Probably as long as his peers are not moving either …but once the most aggressive (or under pressure) start moving then…..I let you imagine the picture.
Luckily for the moment, the politics and the macro picture supported the wait-&-see attitude but for how long?
Back to the initial point, gaining exposure in Mongolia is probably not about being very focused but start grabbing what's available around through different vehicle then with more information coming and a better understanding then fine tuning. For what I know about real estate in UB, that's the same story too.
Will see what happens in 2013 on MSE. 
7 Jan, 05:23 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
Been doing a little digging re the story on the SGS" money laundering" it seems the South Gobi structure has made a few previous "private placements" to Monnis.Fiscal Cliff told me that the founder of Monnis was very worried when Enkhbayar was arrested. Is it possible to see the current shareholder list of Monnis or would parts of it be covered by the Secrets Act?
Your post Jon
"Story:
MNT 6 trillion transferred into Southgobi Sand's account from Hong Kong. There wasn't any clear use of this large amount of money and it wasn't written on financials. The facts reveal that much of this money was transferred into Monnis Group's account.
18 Dec 2012, 10:12 PM"
http://bit.ly/UOGILz
Part of the report...
"In April 2008, the Company closed the first tranche of a private placement with Monnis International Inc. in
which the Company issued 1,000,000 Common Shares at a price of $12.45 per share, for total gross proceeds
of Cdn$12,450,000. The Company closed the second tranche of the private placement and issued a further
1,000,000 Common Shares at Cdn$12.45 per share for total gross proceeds of SGQ Coal
Investment Pte.
Ltd.
6 Jan, 03:47 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Okay. So, what is the goal of this investigation?
There were a lot of changes in SouthGobi management in 2012, and chances are *IF* there was any wrongdoing, the personnel involved have long since exited Mongolia and will not be returning.
Thus I ask - what is the goal? - because, for example, if the goal is for SouthGobi to have better practices, that's already achieved.
Is there still an agenda being carried out? or is the government saying the investigation is "ongoing" to cover up the fact that it is being dropped?
I don't know the answers. I'm just guessing. Like, I just guess the government is done building its case against Enkhbayar after his sentence was recently reduced from 4 years to 2 1/2. And, my guess is that in general the anti-corruption investigations are making more efforts to show foreign wrongdoing than local wrongdoing, and will only show local wrongdoing for the purpose of highlighting foreign wrongdoing and/or recalibrating politics. However, all guess work on my part.
6 Jan, 06:34 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Personnel come and go but the activities of the company remain fact.This investigation seems far from over. The complete silence from anyone concerned is damning in itself.
I have stated previously that several Mongolian legal figures spent a lot of time investigating Enkhbayar's reach into Mongolian businesses.Some of the most prominent were from his own party MPP at the time.
Monnis got a lot of money and for what reason? How many other payments were there?
I think the goal would be to expose the truth about possible corruption between Monnis,Enkhbayar and South Gobi.Its not good enough to just say that certain personnel have moved on.Molyneaux "moved on " to Celsius coal an Australian company, and the two mystery executives supposedly wanted by Interpol moved on very quickly when they found out the Mongolian authorities were investigating them.
Rio and South Gobi don't need better practises they know exactly what they are doing ,are you suggesting they are naive and on a learning curve?
The investigation won't be dropped the information extracted from Sarah Armstrong will be of great value to the IAAC.
I personally think it is hypocritical for many of Mongolias large companies eg. MCS to have clear Chinese partners but when license holders do deals with the Chinese they get punished.I also think that the IAAC will be looking to build its case against Enkhbayar and keep him out of the Ikh Hural and out of the protection of the State Secrets Act.
6 Jan, 02:39 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Okay.
To be clear, RIO only got 51% control of Turquoise Hill/Ivanhoe last year (and TRQ/IVN in turn is a majority stakeholder in SouthGobi). Let's not put actions prior to Rio Tinto's vested control in these companies on them. Whatever happened before Rio Tinto took control are not Rio Tinto's actions or indicative in any way of how they do business.
Since Rio Tinto took 51% ownership of Turquoise Hill, there have been significant management changes at both Turquoise Hill and SouthGobi.
***
As for Chinese partners. I don't think the issue is hypocrisy. The issue is stupidity. I think SouthGobi *could* have been sold to the Chinese firm that Turquoise Hill attempted to sell it to. However, all parties involved made a major error in:
1) trying to do this in an election year 2 months prior to elections; while candidates were looking for populist issues to latch on to;
2) insufficiently consulting with enough members of the government on what protocols to follow to do this deal (which resulted in a number of people in the government finding out about the deal by seeing it in the newspaper rather than being informed in advance).
***
Corruption issues. If there is a genuine serious effort to reduce corruption, I'd like an announcement from the gov't that says: from this date, XX/XX/20XX, if you or your company are engaged in XYZ activities, you will be prosecuted and charged for corruption; the next 90 days are a period for you to bring yourself and your company into compliance and consult with gov't officials on any actions you are unsure about on whether or not they are corrupt.
Why? Because its fair. Because it acknowledges the rules were different and the rules are changing. Because it levels the playing field and gives people an opportunity to self-police. Because it eliminates the sense that the government is cherry-picking corruption cases in a manner that from a distance seems to be arbitrary enforcement.
6 Jan, 03:26 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
These companies are not strangers they all deal with each other regularly. Rio did gain control after the poison pill failure. The point is the activities of the three South Gobi companies.
"Whatever happened before Rio Tinto took control are not Rio Tinto's actions or indicative in any way of how they do business." This is exactly how they do business, if it isn't let's see a statement from the company explaining the situation.
'gives people an opportunity to self-police" Come on Jon this is the problem with these big companies and Mongolian business men they self police too much. The GIA and Criminal Police could also cherry pick cases so why don't they? The IAAC is DP controlled and the other 3 investigative units aren't lets see them balance the situation.
6 Jan, 03:51 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
1) Law firm Hogan Lovells reviews the new Mineral Law draft:http://bit.ly/Uua5QE
2) Prime Minister speak about purpose of $1.5 billion infrastructure bondhttp://bit.ly/RAGiJ1
3) OT Chairman: Mongolia earns more than the investors in the form of taxes, royalties and other fees despite only owning 34 percent of Oyu Tolgoi (interview with Mongolia Chairman of Oyu Tolgoi LLC): http://bit.ly/Uua8vW
4) Some mining companies losing swath of licenses due to legal enforcement (mainly of the law protecting rivers and forests)
a) Asia Resources: http://bit.ly/RAGiJ4
b) Bestway http://bit.ly/Uua5QI
5) Haranga raised A$6 million http://bit.ly/RAGkR9
6 Jan, 08:34 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Mongolia expected to be 2nd fastest growing economy by GDP in 2013 (as per The Economist): http://econ.st/116tdvi
6 Jan, 08:39 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
New article about Mongolia Growth Group - MNGGF.PK.I tried to ask the CEO the questions I felt came most frequently from potential investors that I could get him to answer. If there are questions I missed, let me know, and I'll try to get them addressed if possible. http://bit.ly/13e3aBR
8 Jan, 10:29 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Mongolia Growth Group uplisting is official. They are ringing the opening bell tomorrow. http://bit.ly/U1rguN
8 Jan, 01:34 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
MY MISTAKE. They ring the opening bell January 23.
8 Jan, 02:07 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Business Council of Mongolia [BCM] comes out with statements on Mineral Drafts Law
Mongolia Minerals Law Threatens Coal Project, Group Says (Bloomberg; Michael Kohn; please click) http://bloom.bg/ZGBPrY
BCM cover letter http://bit.ly/WNbBh6
BCM detailed analysis http://bit.ly/ZGBPs1
9 Jan, 08:02 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
Other news:
1) MAK, SouthGobi, Shenhua-MAK Attends New Shivee Khuren/Ceke Border Gate Opening (quite relevant for SouthGobi - SGQRF.PK - holders) http://bit.ly/VSuUpw
2) Rio Tinto hits rivers of trouble in Mongolia's mines (a long tale of things problematic; Mog notes: "gets some numbers wrong, but speaks a point I was saying all along as well, how could Rio be this naïve in the SouthGobi/Chalco fiasco. Interesting point where it says it was a deliberate test on China's part to test our China phobia levels.") http://bit.ly/Vf3mhA
3) Mongolia's evolving foreign investment regime (by Julian Dierkes)http://bit.ly/VSuUpA
4) Mining Sector to Lead Economic Growth in 2013 http://bit.ly/Vf3mxT
5) Mongolia Climbs 12 Spots in World Bank's Ease Doing Business 2013 Reporthttp://bit.ly/VSuUFQ~/media/giawb/doing%20...
6a) Government to regulate website comments http://bit.ly/Vf3my4
6b) Mongolian News Websites Association oppose internet regulationhttp://bit.ly/VSuUFV
7) New land privatization bill drafted http://bit.ly/Vf3jCq
9 Jan, 08:13 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Point 2 For a friend of Stephen Mc Donel Michael Sainsbury writes a good article. He has been reading MWU. Keep up the good work Jon.
9 Jan, 02:27 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
This attempt to regulate comments is disturbing "to establish a system with the purpose of making comment areas on web sites run smoothly and properly". This follows after our MWU saga with the UB Post deleting your article and comments blaming the server and then replacing it with a delayed censoring type.
Sites such as Caak and secret.mn have become very popular and effective and trying to censor them is draconian.
MWU is one site that they won't be able to censor, it shows that this blog and many others are now shining light into dark places and the GOM doesn't like it.
Interesting timing with the presidential election coming up.
"In the statement it says the Government of Mongolia, which is highly believed to be a country of mature Democracy, is regressing democracy by 22 years." I couldn't agree more with this comment from the Mongolian News Websites Association.
9 Jan, 02:18 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Further to this censorship. Last friday/saturday? Caak's news service was shut down it is unclear if it is going through the same "improvements" as the UB Post did. Jon both of us posted comments on the new UB Post server and what happened? My comments were not in any way rude and I'm sure yours weren't either so why weren't they posted?
Apparently Saikhanbileg a DP supporter says there is too much bad language etc. on Mongolian blogs. I wonder if he has ever been on You Tube?
9 Jan, 04:55 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://paparatsi.mn/lkp
More info on Saikhanbileg, a former DP MP now has a GOM job to deal with Mongolian media. He is the focus of the Mongolian News Websites Association displeasure.
10 Jan, 03:19 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
New update, saving the tastiest news for last edition (see #11).
1) Aspire Mining has a link up with Noble Group (Mogi notes Aspire - listed as ASPXF in the US and AKM where it trades primarily in Australia - is up 88% in two days on the news)
http://bit.ly/11mukao
http://bloom.bg/VTKHVH
2) Uh-oh? Executive Diretor of Erdenes Tavan Tolgoi stresses to parliament that the company is in financial trouble and needs an infusion of US$200 million.http://bit.ly/11mun62
3) For MSE investors, new securites market law is coming (related research note linked at bottom of article) http://bit.ly/VTKJwE
4) Oyu Tolgoi looking to raise $4 billion in capital for more work http://bit.ly/11mun64
5) FT's Beyond Brics puts out a negative article on Mongolia
http://on.ft.com/VTKKRe
6) S&P says Golomt Bank is fine http://reut.rs/11munmk
7) Justice. Jail sentences for former employees of failed bank Anod, and Mongolia's Central Bank http://bit.ly/VTKJwK
8) New railway director http://bit.ly/11munmq
9) Special Parliament Committee On Mining Development To Be Established (Mogi: "To have a dedicated committee to discuss such issues as the minerals law, Tavan Tolgoi, and to include Khushuut in the strategic deposit list") http://bit.ly/11munmq
10) Odd announcement. President of Mongolia to make closed door statement to parliament on a National Security matter on January 11. http://bit.ly/11munmu
11) Fast food is coming to Mongolia! Tavan Bogd group bring KFC to Mongolia soon (if memory serves correct, KFC was the first food to enter China as well)http://bit.ly/VTKKRq
11 Jan, 09:02 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
3) Behind all the stated good intentions, the headlines, the drumbeating and the high expectations raised, we may soon see if this extra time (I saw a first draft in mid 2011) has been put at good use, because, as always, the devil is the details, (the small unglamorous detail that makes things impractical and derails the best plans), and for what I saw, a bit of work was needed.
For instance what happens in respect of the 5% "influential shareholders" during a "takeover" has far reaching (I think unexpected) consequences.
The MSE, Mongolian financial market at large and GOM do badly need this (while some may not realize how critical it is for them), a down to earth efficient piece of legislation to create a stable FUNCTIONAL REALISTIC framework and that does not have to be relooked within a year delaying further developments like ETT IPO, capital raising for Mongolian companies, foreign custodians to setup in UB and alike.
So now, at this critical time, fingers crossed, hoping for the best, trusting MOJ has done it well.
Along the same line, I hope the tax situation of foreign investors on MSE is clarified! It is still unclear to me:
•If and how, foreign investors pay capital gain taxes on MSE listed stocks,
•How the dividends from MSE listed stocks are taxed (did not see any withholding taxes).
Elsewhere, the standard is no capital gain tax but withholding tax on dividends, an efficient practical way to secure predictable ongoing income streams for governments.
That is a high priority item on the GOM to-do-list and it'd better be clarified long before the day ETT, or MIAT, go for a MSE listing, otherwise foreign investors may focus on the foreign listed securities, not the MSE ones, leaving MSE in the cold.
11 Jan, 10:33 PMReplyDelete CommentLike4
Khanland Comment (1)
11) The food here in UB is good enough. KFC and McDonalds pale in comparison to some of the top restaurants here. Most locals prefer Asian food and are very health conscious. They also prefer restaurants where waiters give you a menu in a nice relaxed atmosphere, where you don't have to line up or sit in a crowded place surrounded by strangers. Mongolians are very finicky when it comes to service. The Korean, Chinese and Japanese restaurants here have very good service and are very clean. The Indian and Thai restaurants have slow service. The City Burger in the State Department Store is somewhat dirty, noisy and doesn't have that great food. The burgers are sometimes very low quality.
13 Jan, 06:19 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
Khanland,
Welcome and thanks for the comment. I don't disagree. Up until now I've been able to say there's no McDonald's, Starbucks, etc... now there will be KFC.
It is however a sign of Mongolia's economic status that fast food chains now view Mongolia as economically viable.
13 Jan, 07:34 PMReplyDelete CommentLike2
haiguike Comments (466)
Khanland, KFC and McDonald's are marketed differently in Asia than it is in the U.S. or Europe. KFC and McDonald's are marketed as classy and trendy.
Sure, the quality of the food pales in comparison compared to the "top" restaurants, but that's not the market KFC is going after. There is a new generation of younger kids that will rush into the KFCs and McDonald's. As soon as StarBucks comes in, more than half of the current coffee shops will go out of business.
13 Jan, 10:58 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
As a traveller and researcher in remote parts of China and Inner Mongolia KFC has been there for years and no other western franchises. i spent lot of time in remote areas with no foreigners but some cities still had KFC.
14 Jan, 03:06 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://1.usa.gov/TRMjRF
This is a damning Audit of MCC's performance in Mongolia. I see points 3,4 and 5 add up to approximately what was going to be spent on the original centerpiece project of the compact ie. the railway. it seems a consistent poor performance across most of the projects.I'm sure the payment of $31 million for "consultants' went smoothly perhaps the only part of the compact that did.
12 Jan, 02:36 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
These are the three projects created by the MCC/MCA-M to replace the railway. I also note that an extra $10 million has been taken from the $185 million allocated to the railway and added to "administration " costs bumping it up to $43 million.
The first two seem very large amounts for such vacuous projects and at the time of the audit $121 million had been accounted.
"3. A $48 million Vocational Education Project to prepare more Mongolians to qualify for more
demanding and financially rewarding market-oriented jobs.
4. A $47 million Energy and Environment Project (added through the amendment) to increase
the adoption of energy-efficient products and homes, and to support the development of
renewable energy.
5. An $80 million North-South Road Project (added through the amendment) to construct a
176-kilometer road between the towns of Choir and Sainshand, to construct and rehabilitate
bridges and a road near Ulaanbataar, and to provide technical assistance to the
Government of Mongolia to help improve road maintenance."
This isn't a road from UB to China it is a partial road of which very little work has been done according to the audit.
13 Jan, 02:00 PMReplyDelete CommentLike2
IsaiahU Comments (4)
I continue to not understand your criticisms of MCA/MCC DEF. Are you critiquing the MCC/MCA model in general as being inefficient? The development community of being inefficient? In both you are probably correct--especially when compared with the private sector--but I don't see how there is any net negative to Mongolia from the MCC compact and it has been a clear positive. Things have been done that would otherwise not have been done at this point in time. Could these projects have been implemented more efficiently? Yes, especially if through the private sector. I think this is a development community/US aid policy discussion not a Mongolia-specific discussion...
14 Jan, 03:23 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
I wouldn't call it inefficient I would call it an incompetent and self serving gravy train.A large part of the compact is run through private sector consultants and contractors .What conclusions do you make of the audit? You seem to think that if anything is done no matter how badly it is a "clear positive". According to the audit they will be lucky to achieve any of their goals. This is a "Mongolia specific discussion' but if you like we can discuss USAID and some of the people involved in Mongolia starting with Randall Tobias?
A lot of Mongolians think that projects like this are manipulating aid and fueling corruption.If some good infrastructure is achieved that that is good but at the moment it is way behind schedule.The MCA/MCC has always been severely underfunded my suspicion is that the total money won't be spent except the $43 million for consultants/administra...
14 Jan, 01:52 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
Current share of Mongolia Stock Exchange trading volume
1) BDSec 90.79%
2) Monet Capital 1.1%
3) National Securities .89%
4) ResCap .65%
5) Eurasia .54%
Every other broker had less than 1/2 of 1% of volume.
There's BDSec and over 70 brokerages fighting for their scraps. (I had heard a high of 78 total brokerages, but list shows 73 currently.) Consolidation is needed.
13 Jan, 09:48 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://bit.ly/Y3HvvY
An interesting almost comical sideline Steven Siegel has been included in the greatest 100 living Mongolians! He claims to have had a photo of one of his family members in a Del so that apparently makes him Mongolian.
He is now married to a Mongolian dancer and he is being interviewed by one of her friends. I think the first comment says it all.
13 Jan, 01:29 PMReplyDelete CommentLike4
haiguike Comments (466)
He also supposedly taught Anderson Silva, the world's current top MMA fighter, how to do a simple front kick to the chin. I'm absolutely amused and amazed at how Seagull continues to get publicity.
13 Jan, 11:04 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/100biWY
In this one Siegal claims to have Russian Grandparents no mention of Mongolia. He seems to have a skunk sleeping on his head someone should poke it with a stick to see if it moves. Anderson Silva is a magnificent fluid master of his craft, the thought of Siegal teaching him anything is laughable. The only thing he could teach him is not to become like him.
14 Jan, 02:51 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
1) Coal Mongolia is Feb 21 and 22 this year. Register to go herehttp://coalmongolia.mn
2) Mongolia to build first oil refinery by 2015 http://bit.ly/V6dESR
3) More pieces on the new minerals law threatening Mongolia's future and its mining investments, sigh.
a) The Australian http://bit.ly/UZKnFI
b) The UB Post http://bit.ly/V6dESS
4) More on Erdenes Tavan Tolgoi's troubles, sigh. http://bit.ly/UZKoJB
5) KFC coming to Mongolia hits Bloomberg http://bloom.bg/V6dDy8
6) WOW announcement of the week. The Mongolian government has hired a PR firm.
article: http://bit.ly/UZKnFK
firm details: http://bit.ly/V6dDy9
7) Mongolian government bans export of Saker falcons (http://bit.ly/UZKnFL) but no mention of if the bird sanctuary on land they gave the Kuwaitis south of Ulaanbaatar will be restricted from relocating birds from elsewhere in the wild of the country to the sanctuary. (Or as Mogi put it: "the original cabinet press release stated it's banning "commercial export" of falcons, so guess we can still "gift" them to sheikhs, phew.")
8) For those with a sense of humor, a new Dinosaur Museum is being launched in the location of the former Lenin Museum http://bit.ly/V6dDya
14 Jan, 04:44 PMReplyDelete CommentLike3
haiguike Comments (466)
1) Looking forward to it. We will be at booth #32. Don't forget about Finance Mongolia from February 22nd to 24th. We have the biggest booth there at #41.
http://bit.ly/Vdr4d9
15 Jan, 01:07 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
The Infante's will be devastated that the GOM took it's PR business elsewhere.
If you open an account at Khan bank you might get a free family bucket of KFC!
The Arabs used to fly in to Mongolia in their private jets and load up with hunting birds. I really hope they will put a stop to this.The Tsaagan Shonkor or white falcon is the totem of Chinggis Khan and the Borjigon clan selling them and other hunting birds is sacrilegious .
Erdenes TT seems to be heading for disaster the Mongolian people will be cheated again.
15 Jan, 01:15 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
1) Finance Mongolia smartly piggy backing on Coal Mongolia... Finance Mongolia starts the day after Coal Mongolia concludes. That could work out well.
3) More negative yadda yadda
Frik Els at Mining.com http://bit.ly/W54lO1
15 Jan, 07:22 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Three weeks now since Sarah Armstrong returned home and not a word from anyone to clarify the situation on South Gobi Sands. Rio has completely shut down this story.
16 Jan, 04:59 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
New book out on Mongolia by MWU reader Antoine Marie (in French)
http://bit.ly/W6nFuY
16 Jan, 07:21 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
2013 Mongolia Investment Climate Statement by the U.S. State Dept http://1.usa.gov/V4wd6g
16 Jan, 07:31 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
Leo Liu with an article that has a number of interesting charts and figures on Mongolia http://bit.ly/URcGEy
(Leo works for Prophecy Coal's investor relations dept but does not discuss Prophecy in the article)
16 Jan, 05:37 PMReplyDelete CommentLike2
MSE.Investor Comments (93)
The name is Bond, Chinggis Bond
http://bit.ly/X9YVjO
It took almost 3 months for somebody to be able to link Chinggis Bond and James Bond!
Congratulations to Brian White!
:)
No further comment
:)
16 Jan, 08:56 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Excellent. Thanks for the link. Kudos to Mr. White.
16 Jan, 10:31 PMReplyDelete CommentLike1
dulleyefarmer Comments (163)
Great article following his article posted in Julian Dierkes website on voter turnouts. Perception and analogies are much more interesting than data.
17 Jan, 05:21 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://bit.ly/WKVaBL
Seems Australia's ex PM and Foreign Minister Kevin Rudd has been lobbying President Elbegdorj about Enkhbayar. This would seem to be a job for the current PM Julia Gillard and Senator Carr the Foreign Affairs Minister.
17 Jan, 01:44 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
Rio Tinto CEO steps down on $14 billion write down (mainly about Mozambique): http://bit.ly/10hwIyM
RIO down 1% and TRQ down almost 5% on the news.
$14 billion write down nothing to sneeze at... don't see how it impacts TRQ... unless you count the fact that Mongolia and Mozambique both start with letter M as problematic...
17 Jan, 01:45 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Mongolia will probably be next years write down.
18 Jan, 04:33 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
1) Erdenes Tavan Tolgoi seeking loan a $400 to $500 million from government (you mean right after the government picked up $1.5 billion for infrastructure bonds, the biggest state-run coal company is looking for a handout? yup) http://bloom.bg/VsFDcG
2) Erdenes Tavan Tolgoi coal exports halted due to unpaid bills http://bit.ly/13JsChP
3) Mongolia's growth moderates to 12.3% (this is slow growth for the country)http://bloom.bg/VsFENN
4) National Securities Office December bulletin web.nso.mn/download_da...
5) LionGold exits Mongolia like a kitten saying mining laws made them go away liongoldcorp.listedcom...
6) UPI puts out its piece worrying about Mongolia's mining laws http://bit.ly/13JsChS
7) Dale Choi put out a long notice on his worries about the mining law too. His stuff is too long to reprint and there is no hyperlink. Subscribe to Dale's update on the news links page.
8) U.S. Embassy in Mongolia year in review http://1.usa.gov/VsFENQ
9) Enkhbayar moved to a different prison http://bit.ly/13JsAXj
10) Trial for former chairman of Mineral Resources Authority postponedhttp://bit.ly/VsFDcV
11) Heritage foundation ranks Mongolia #74 on its Index of Economic Freedomhttp://herit.ag/13JsAXm
12) Julian Dierkes in the UB Post, Foreign Investment to Mongolia: Restrictions and Comparisons with Canada http://bit.ly/VsFF4q
13) Wall Street Journal tells the social issues side of Mongolia "Country Faces Pollution, Traffic and Other Ills As It Reaps Riches From Mining:http://on.wsj.com/13JsBdG
14) The New York Times tells the social issues side of Mongolia:http://nyti.ms/VsFG8u
(must be the right time of year for social issue coverage in Mongolia)
15) Jargalsaikhan writes about Civil Liberty in the UB Post (timely work! based on recent laws) http://bit.ly/13JsBdH
17 Jan, 06:04 PMReplyDelete CommentLike3
haiguike Comments (466)
Great stuff. Thanks, Jon! All the recent negative news is making me really apprehensive about Mongolia. Maybe I should have considered on Kazakhstan, or better yet, Canada! Canada approved two bids by state-owned companies for companies in the Canadian oil sector! Mongolia was supposed to be this wild wild west, laissez-faire country advertised by western businessmen. Now we are seeing that Canada is more capitalist than Mongolia.
18 Jan, 01:31 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Point 10. No mention who SGS off loaded license/s to? Seems Bathuyag will be made a scapegoat, there must be some interesting deals going on now between Rio and the DP.
A bit more detail including the names of the mystery SGS executives who fled the country.
http://bit.ly/10F53Jm
18 Jan, 02:51 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://paparatsi.mn/lrt
Bathuyag has been sentenced to 6.5 years prison.
31 Jan, 05:18 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
Here's the promo again for Capitalist Exploits Mongolia package. Please buy it at this link if you're interested (http://tinyurl.com/akd...) and Mogi will get a portion of the profit. Thanks.
CapitalistExploits.at Announces the Release of Mongolia: Boots on the Ground
A comprehensive collection of video interviews, special reports and country research targets equity and real estate investors
Ulaanbaatar, Mongolia - January 2 - CapitalistExploits.at, an online resource dedicated to frontier markets investing has just released a comprehensive collection of video interviews, special reports, proprietary essays and country research on investing in Mongolia.
The package, aptly named: Mongolia: Boots on the Ground is available for purchase as a digital download containing over 3 hours of video with 13 CEO's, investment bankers, real estate professionals and entrepreneurs focused on Mongolia.
For more information and to purchase the package please visit here.
The package includes over $1,500 in bonus content, including the R2 Research Mongolia Real Estate Report 2012, the Oxford Business Group Mongolia country report and Resource Investment Capital's Mongolia 101 report.
Video interviews were conducted with the following:
Christopher DeGruben, CEO of M.A.D. Investment Services
Harris Kupperman, CEO of Mongolia Growth Group (OTC:MNGGF)
Oscar Mendoza, Country Director for Prophecy Coal (OTC:PRPCF) and Founder and Managing partner at Mongolia Asset Management
Lee Cashell, CEO of APIP Group
Bilguun Ankhbayar, CEO Discover Mongolia
Eric Zurrin, Director General Resource Investment Capital
Nick Cousyn, COO of BDSec brokerage
Jim Dwyer, Director Business Council Mongolia
Altai Khangai, CEO Mongolia Stock Exchange
Chris Melville, Partner Hogan Lovells
Ganzorig Ulziibayar, President Mandal Insurance and the MFA
Roy Dongen, Founder Ganymedes Consulting
Travis Hamilton, Managing Director Khan Asset Management
Transcripts and corporate presentations from each are also included, as is a series of essays from some of the top frontier markets investors operating in Mongolia.
The Mongolia: Boots on the Ground package is ideal for investors looking to allocate capital into Mongolia's equity or real estate markets now.
Chris Tell, co-founder of CapitalistExploits.at commented, "We're proud to be bringing this product to investors looking to deploy their capital into one of, if not the fastest-growing economies on the planet. We spent months on the ground meeting with CEO's, bankers, attorneys and local business owners researching and putting this package together."
He added, "We held an exclusive Meet Up in Ulaanbaatar this past July that was attended by 25 investors from around the world, all focused on Mongolia. This package was inspired from that gathering and it therefore offers the best opportunity we know of to gain unique insights and understanding of Mongolia without actually putting your 'boots on the ground'."
CapitalistExploits.at is offering the product for sale on their website at the following link here and also through a network of global affiliates.
For information on offering the Mongolia: Boots on the Ground package to your clients you may contact Capex Ltd. at the link below.
About CapitalistExploits.at
Our Mission: Educate and enlighten capitalists around the world to the exciting opportunities available in Frontier Markets by bringing our collective thoughts to the table, and by collaborating with our global networks and the Capitalist Exploits community.
We're a couple of globe-trotting capitalists looking for unique and profitable investment opportunities in exotic and Frontier Markets, typically in the private equity space. We'll share them with you, not because we're philanthropists (God no!), but because, well… Our objective is to create value in the world by enabling opportunity, not by charity.
17 Jan, 06:06 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
Quite a few parallels were made between Mozambique and Mongolia, there are a lot of big claims mixed with good observations in some of these Peter Epstein quotes. Mongolian coal is already running at 20mm per year? A year is a long time in mining
http://seekingalpha.co...
"M&A is alive and well in Australia as the deal comes on the heels of Rio Tinto's takeout of Riversdale Mining. I strongly believe that both of these deals are good deals for the respective acquirers, despite the possible appearance of paying a high earnings multiple. Riversdale Mining's assets are in Mozambique. The mines are not yet in production, but will be any month now. Riversdale got taken out at an 8.5x EBITDA multiple of 6/30/14 consensus estimates. I think Rio got a good deal because Riversdale is one of the two key players in Mozambique and Rio will be able to advance the mining project and necessary infrastructure build out faster and more efficiently than Riversdale could have."
"I believe this M&A activity is just the beginning of a large wave that will engulf the sector over the next 2-3 years. I think there's a greater than 50% chance that this wave of M&A will takeout SouthGobi Resources in the next 6-12 months. Assuming that SGQ were to be taken out at an 8.5x 6/30/2014 multiple, that implies a takeout price of approximately CAD$18 per share, vs. the current price of CAD$ 10.95 per share."
http://seekingalpha.co...
http://seekingalpha.co...
"To reiterate my view from the article that I wrote a few weeks ago, assuming that Peabody controls 24% of 15mm tonnes of production in 5 to 7 years, that's only 3.6mm tonnes per year, with only two thirds of it coking coal! SouthGobi will be doing 3x-4x that amount. Mongolia has only 2 coal producers of any size, SouthGobi Resources and Mongolian Mining. Fast forward 5 years and these two will still be the dominant coking coal producers in Mongolia, the country that everyone is watching and waiting for great things to happen. What on earth is Peabody thinking? They will spend the next 5 to 7 years running in place and burning cap-ex dollars for 3.6mm tonnes of production, when instead they could control 3x-4x that amount by acquiring SouthGobi outright. Peabody could probably takeout SGQ, at a 6.5x 2014 EV/EBITDA multiple by issuing $1.25b of stock and $1.25 billion of low cost debt. As a kicker, Peabody would pick up a 19.6% interest in Aspire Mining, which has as much blue-sky potential as any coal producer in all of Mongolia. Aspire is something that Peabody could sink its teeth into and turn into a world class coking coal asset. A 6.5x multiple is not that high compared to the 8x multiples being paid for Macarthur Coal and Riversdale Mining. Peabody has a choice, they can be stuck in a quagmire of epic proportions, or they can control their own destiny by acquiring Canadian-listed SouthGobi at a price that they can comfortably afford."
 http://seekingalpha.co...
"Just as many miners are interested in getting into Mozambique, many are also interested in getting a foothold in Mongolia. In fact, Mongolia's coal exports are already running at greater than 20mm tonnes per year, while Mozambique is beginning to export coal in 2h 2011. Mozambique is thousands of kms from China, while SGQ is just 45km from the Chinese boarder. Coal from SouthGobi's mines arrives at Chinese steel mills faster and more reliably than coal from Canada, Australia or Africa. SGQ is in the early stages of substantial organic earnings and production volume growth. Within 3 years, the company will be exporting at a run-rate of 10mm tonnes of coking coal and generating a run-rate of up to $600mm in EBITDA. Compared to the 8.5x multiple that Rio Tinto just paid for Riversdale Mining, SGQ is trading at less than half that multiple. Sooner or later, perhaps when the world sees how painfully slow the ramp up will be at Tavan Tolgoi, global miners and steel companies will recognize not only how cheap SGQ is, but also its importance as a major strategic coking coal producer serving China's every growing needs."
http://reut.rs/10dtJTx
20 Jan, 01:54 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
1) Erdenes Tavan Tolgoi
a) Mongolia's Erdenes TT Halts Coal Exports to Biggest Buyer China (Bloomberg/ Michael Kohn - so glad to see Michael Kohn become a regular at Bloomberg!)
http://bloom.bg/XrGojO
b)
Mongolia stops coking coal exports to China in pricing scrap (Mining/ Frik Els)
http://bit.ly/10LfB9K
2) Mongolia Defends Draft Mining Law Branded as Bad for Investment (Bloomberg/ Michael Kohn) http://bloom.bg/XrGrfs
3) Minerals exports fell 9.1% in 2012 http://bit.ly/10LfB9M
4) China disappointed with Mongolia's legal environment http://bit.ly/XrGojT
5) The Name is Bond, Chinggis Bond (previously posted, but if you didn't read it, you should) http://bit.ly/X9YVjO
6) Mongolia Jumps to Higher Category in Freedom House Political Rights (Julian Dierkes) http://bit.ly/XrGrfu
7) U.S media brings glitz to increasingly urbane Mongolia http://bit.ly/10LfB9P
8) Speaker Enkhbold initiates discussion on adding Mongolian to Google Translatehttp://bit.ly/XrGrfy (send this link to Google and tell them to get on it !!!)
9) Draft anti-corruption law announced (Mogi: "this law would require high ranking officials' spouses of foreign nationality to take up Mongolian citizenship. This might affect Culture Minister Oyungerel, her husband if not I'm mistaken is American")http://bit.ly/10LfDOX
10) Former MP given suspended sentence for abusing officers during Enkhbayar's arrest http://bit.ly/XrGrfA
11) Mogi posted this interesting interview with Rolling Stone's Matt Taibbi from 2007. Matt used to live, work (at Montsame news agency), and play (basketball), in Mongolia. Interesting read indeed. http://bit.ly/10LfB9T
(Here's Matt Taibbi last week on Colbert Report, he was quite good -http://tinyurl.com/byb...)
21 Jan, 01:49 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
The draft anti corruption law has no chance of being adopted there are too many "high ranking officials" who already have large assets outside Mongolia.Oyungerel's husband is American but in spite of once working for TAF is a great guy and credit to Mongolia and America.Former leader of the MPRP Tsendenbal was married to a Russian l wonder if this draft would also target Russians?After the Russians left Mongolia all State owned companies were theoretically owned by the shareholders, the Mongolian people .What happened to them ? Usually dumped into holding companies and ended up in the hands of the new Mongolian Oligarchs this is what will happen to ETT.
21 Jan, 06:03 AMReplyDelete CommentLike3
H. T. Love Comments (12582)
I love a good wit: "Where would you get your drugs?" was a killer line.
Thanks Jon!
HardToLove
21 Jan, 06:07 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
For those wondering... that line about "Where would you get your drugs" is in the Colbert Report linked interview of Matt Taibbi.http://tinyurl.com/byb...
21 Jan, 08:01 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Point 6.
"The Freedom House in the World Report draws on expert opinions in evaluating countries, rather than surveys or other indices."
This is subjective and inaccurate, putting Mongolia into a category of countries who have free and fair elections is absurd. This is how Transparency international cooks up its corruption index. Anyone who can come to that conclusion after being an electoral observer in the last 4 elections does not have an expert opinion but a biased one. Seems like Julian has been given the nod for another job at the forthcoming Presidential elections.
21 Jan, 01:47 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Point 1a.
"Erdenes TT supplies coal to Chalco at $53 a metric ton, less than the $61 it costs to move it to the Tsagaan Khaad border station, he said."
My math as never that good but isn't this idiotic? Maybe ETT could get tax concessions as a charity. As Jon points out they are asking for a handout immediately after the bond issue and are struggling to even buy the fuel required for handling. What kind of board would approve such a deal?
22 Jan, 01:42 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
RE: Point 1a.
My belief is that after the Presidential election, there will have to be some moves made to smooth over relations with the Chinese to get better compensation for Mongolia's natural resources.
Low balling from the Chinese and/or the Chinese simply not honoring off-take agreements (which happened in the fall for a period of time) push Mongolia's financial plumbing to the brink of a serious crisis quite easily.
I understand the historic tension between the two countries, but this is the economic and geographic reality at this time.
22 Jan, 03:29 PMReplyDelete CommentLike4
MSE.Investor Comments (93)
On 2),
I am wondering if somebody in GOM is doing a very simple down to earth cold blooded analysis of ALL the potential sources of capital for Mongolia NOW sorting out:
• US$ short term debt,
• MNT government bills,
• US$ long term debt.
• MNT long dated bonds,
• Equity from overseas listing,
• MSE listed equity,
• Private equity from local investors,
• Private equity from third neighbor countries,
• Private equity from China or Russia,
• …did I miss any ?
Evaluating seriously:
• Technical feasibility,
• Relevant sizes,
• $ cost, interest rate or upside shared,
• Collateral and enforceability of the agreement by investors,
• National interest,
• How related to macro parameters (worldwide stock markets, interest rates, exchange rate, price of commodities) those sources are,
• How perception dependent those sources of capital are,
• ….
That may be enlightening for many suddenly discovering the room for flexibility.
Some years from now, when mines, local or foreign controlled, are up and running, cash flows from taxes and royalties should be very substantial for GOM and that capital inflow will be less critical, but for that to happen a bit of capital is needed NOW. Otherwise there may be little to tax.
Just wondering.
22 Jan, 11:47 PMReplyDelete CommentLike5
IsaiahU Comments (4)
I was under the impression that the price of $53 per metric ton for TT coal to Chalco was based on the terms of the pre-purchase agreement that was signed (and the proceeds of which promptly went to the Human Development Fund). Is this correct?
23 Jan, 03:33 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
4/4/2012 Jon wrote.
"In July 2011, Chinalco and Erdenes Tavantolgoi signed an agreement for Chinalco to purchase coal from the eastern Tsankhi area of Tavantolgoi. Chinalco made an advance payment of USD 250 million to the Mongolian government. On August 4, 2011, the company began taking delivery of the coal.
The Government used the advance payment to pay for the MNT 21,000 monthly allowance that each citizen receives. Under the terms of the agreement, Chinalco is to pay USD 70 per ton of coal from Tavantolgoi for five years."
What interests me most with TT and ETT is that after the GOM seized TT in 2007 from the consortium of Mongolian companies which included MCS there was virtually no complaining. They seemed to have done a deal for the Mongolian companies and now Robert Kuok and his Kerry group to control the new railway and toll road along with oil and other supply needs. Why has $70 turned into $53 and why are the Mongolian people subsidizing coal exports to China?
23 Jan, 04:57 AMReplyDelete CommentLike4
MSE.Investor Comments (93)
Is the price for coal fixed or linked to an index ?
if linked to an index, what was $70 could be now $53 and may turn into $80 later.
23 Jan, 05:12 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Perhaps our FX friend Haiguike could help us out. i don't know these exchange rates and their history. If ETT had to pay transport costs then they have increased ,the end result is that ETT is in an unsustainable position and won't last the 5 years of this agreement.
23 Jan, 05:30 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://bit.ly/YnPap6
Seems both exchange rates for USD and CNY have remained stable but I am no expert in this area.
23 Jan, 01:30 PMReplyDelete CommentLike2
MSE.Investor Comments (93)
I am not talking FX exchange rate!
I am talking of a price (say in US$) for coal linked to a worldwide benchmark, therefore following fluctuations of world markets.
Don't know what the coal price benchmarks worldwide are but I would not be surprised this to be the case (like loans may be floating rates linked to US$ LIBOR 6m for instance)
23 Jan, 09:19 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
I think the devil is in the details of the agreement.
Was it a fixed US$ price or a floating US$ price linked to a benchmark and adjusted every 12-6-3 months?
Is there any commitment for any party to BUY/SELL a firm quantity or is there some option?
http://reut.rs/UmdFzC
The agreement was signed on july 27, 2011.
Then it says this agreement would expire in 1-1/2. After which it would be market price.
But in this presentation it is about a "5 years offtake agreement with Chalco"
Investment Potential in Mongolian Coal 2012.pdf - Frontier Securities
http://bit.ly/WVRiOd?...
http://bit.ly/UmdFzE
http://bit.ly/WVRhd9
http://bit.ly/UmdIeF page 39
23 Jan, 09:48 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
Thank you MSE. Investor I readily admit this isn't an area of my expertise but I am very surprised there isn't more analysis and discussion of what is going on
"After the deal expires, Chalco would then have to pay market price for the coal, Erdenes TT said."
There is no mention of how much coal will be sent to Chalco in this 5 year deal. 30% will be on sold by Chalco to Korean and Japanese companies no doubt at a handsome profit. Perhaps this explains why Enebish has now resigned "for health reasons". I can't believe that such an important deal for the Mongolian people has so little detail and now they are paying to send the coal to China.They must have bribed them to get such a stupid deal.
24 Jan, 12:09 AMReplyDelete CommentLike3
haiguike Comments (466)
Coal contract prices are linked to the CAPP spot prices, which are obtained from brokers in the over-the-counter market for coal. Thermal coal spot price is currently at $56.5 per standard ton. Coal had a sharp spike in the first half of 2008 to $140 USD/ST and subsequently bottomed out to around $45 USD/ST in 2009.
Perhaps the Chinese are upset with the Mongolian government and are playing hardball. Politics comes first in China too and China has more than enough leverage to set the prices when Mongolia has no alternative buyers. I recently read that the Chinese government is no longer intervening and fixing prices for coal sellers, but that may be just for the domestic market.
One other factor I can think of is how the MNT (tugrik) depreciated from around 1300 USD/MNT to 1400 USD/MNT since April 2012. The RMB has steadily appreciated from 6.395 USD/CNY to 6.220 USD/CNY since July 2012. There is strong resistance at the 1400 level for USD/MNT. I think I am about ready to jump in and swap all of my CNY and USD to MNT for the juicy interest rate and upside for appreciation.
24 Jan, 12:39 AMReplyDelete CommentLike4
MSE.Investor Comments (93)
Then that may well be the explanation for what is happening now.
So I assume CAPP was much higher during summer 2011.
24 Jan, 01:18 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
If ETT got cold feet with Chalco, then that may not be too bad for MMC I assume :)
PS: I am long MMC
24 Jan, 03:18 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
http://bit.ly/113EAoa
ok so for ETT coal is going to China or...China.
But will Shenhua be so keen entering into a 10-15 years "contract" with the Mongolian Government that may be called into questions few years from now ?
28 Jan, 02:24 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
Which story was wrong?
Originally the deal was $70 for 5 years without any specific amount to be delivered, then dropping to market price, now they are blaming the drop in market price.
"Ambassador Sukhbaatar stated that Chalco has forced the Mongolian Government to make an unacceptable suggestion during a hard time of financial difficulties". They think they can sign a deal then change it any time that it suits?
"The Chinese giant Shenhua Energy has not made a statement to media while Chalco urged Erdenes TT LLC to honor the terms of the $250 million supply agreement, particularly the secret terms via email". So much for transparency. The recent large increases in MMC by the MCS brothers and their Chinese partner is no coincidence.
28 Jan, 05:02 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
http://bit.ly/Waka9N;
"recent large increase in MMC" ?
That's what has been disclosed in the last months.
I am not exactly sure those are market purchases
(did not see any impact of that kind).
It needs serious analysis as decoding disclosures in Hong Kong is not exactly straightforward....so much for transparency!!
Since April 1, 2003...JUST EVERYTHING has to be disclosed BUT the result is that I don't the Hong Kong end user is enlightened :).
So the mroe is not always the better.
What is disclosed is probably either:
* some changes of ownership between holding companies
* or, more likely, some call options that expired
* or some chanegs in options contracts that show an increase (thanks to disclosure rules) while nothing changes in substance,
* or combination of all the above
...especially as this is more or less TWO YEARS post IPO :)
Going through the details of the prospectus and the disclosure could shed some lights and confirm some monetization package, but it is tedious and I have not done this kind of forensic exercise for a while.
If MCS (the same applies to other mines too) wants to take advantage of the current low price to increase SERIOUSLY its stake, there are creative solutions to achieve that.
Btw, I just hope GOM has put a bit of money aside to setup its SWF asap because there are opportunities now and it's the perfect time to start building such a strategic portfolio, while not always needed to pay full price for this.
May be Mongolia can copy asap the examples of:
* Khazanah
* Temasek (at its beginning!)
to support its local champions (not only mines!!!!).
I don't think other SWF examples have any relevance for Mongolia for the coming years.
28 Jan, 05:31 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
I can only clarify for you that the "short positions" held by management in Mongolian Mining Corporation are actually shares pledged toward bank loan or loans. I'm not sure of the protocol of how these share return to the owners with loan payments.
28 Jan, 07:38 AMReplyDelete CommentLike1
MSE.Investor Comments (93)
Yes but that could have been packaged as a "Prepaid forward" so that lenders getting options on the way up can cover the credit risk on the way down. That's a classic.
Corporate finance equity derivatives 101.
Because call options are given by the borrower (de facto like an exchangeable bond) it is disclosed as a negative interest in shares.
Anyway, this november 2012 disclosure is likely a TWO years prepaid forward financing that is expired.
So it's unlikey that MCS has decided to increase its stake through on market purchase.
28 Jan, 08:26 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
9) Draft anti-corruption law announced (Mogi: "this law would require high ranking officials' spouses of foreign nationality to take up Mongolian citizenship. This might affect Culture Minister Oyungerel, her husband if not I'm mistaken is American")http://bit.ly/10LfDOX
The rest is better.
"According to the draft law, state high-ranking officials, their spouses and children would not be permitted to have accounts in foreign banks, they would be restricted from investing in foreign companies, they would not be permitted to buy shares in foreign companies,…"
While I don't know what is exactly the paycheck of "high ranking officials", in a young country seriously in need of capital and expertise, at the beginning of an impressive economic boom, I am wondering if that is such a good idea.
Capital is circling around Mongolia and will eventually find its way in.
Expertise is a more critical issue and the pool of expertise in Mongolia is clearly small (because of a small young population) .
Now, for somebody (that may have some wealth from his entrepreneurial life before) that could bring valuable expertise to a GOM linked entity, the total return trade off is brutal:
• Becoming a high ranking official with a somewhere limited paycheck and very serious limitation in term of protecting his capital?
• Staying on the private sector to ride the commodity boom and make more $.
While not knowing the numbers, the solution to this dilemma sounds pretty obvious to me and that may not help GOM to cope with its unusual unbelievable to-do-list and the country and its citizens at large.
By the way, that is not so different from what is happening in investment banks now.
Financial markets and the world at large may need those with expertise that wisely protected their capital to stay and run financial institutions (to bring them under control) but they may not be interested to do it for no or little pay and many more constraints, and could just walk away and enjoy life.
On the face of it, these restrictions to avoid corruption are a good idea, but for now, there may be very negative unexpected consequences.
Short term versus long term impact as often.
I think on many situations and cases, Mongolia HAS TO ACCEPT TO GO FOR TEMPORARY FIXES for now, while going back to the drawing board for fine tuning with accumulated experience in 3-5 years.
Nobody would expect such a young country to come up NOW with the perfect optimum solution.
However it may be wise to write on the piece of legislation / rule….
"Temporary, to be fine tuned later"
so that expectations are set accordingly…which is plain and simple what the OT discussion is about.
21 Jan, 05:00 AMReplyDelete CommentLike5
Jon Springer Comments (3891)
M.A.D. Investment Solutions has a new welcome kit for people relocating (or considering relocating) to Mongolia. It really is quite good and comprehensive. For a copy, e-mail Christopher de Gruben at: degruben@mad-mongolia.com
23 Jan, 04:22 AMReplyDelete CommentLike4
haiguike Comments (466)
This is for the expats or large companies who don't mind paying more for the entire package. In Mongolia, we have expat prices and Mongolian prices.
24 Jan, 12:47 AMReplyDelete CommentLike2
Jon Springer Comments (3891)
FYI... their 2013 Real Estate Report (coming in at well over 600 pages) will be free...
The guys at M.A.D. do provide a ton of service and data free. I believe the welcome kit report is free as well, as much of the information in it can also be found on their website with some navigation.
This is about data exchange, not price points (although I think they provide very good service to their clients for what they do; and most of their competitors would agree with that).
24 Jan, 07:35 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
Off topic. Myanmar. For those interested, Oliver Belfitt-Nash, formerly of Monet Capital in Mongolia, is relocating to Myanmar. He will be doing an investing news blog service via e-mail on Myanmar. To subscribe, e-mail him at olibn333@yahoo.com
23 Jan, 04:30 AMReplyDelete CommentLike3
Valley Boy Comments (2012)
U.S. trade with Mongolia keeps booming.
http://1.usa.gov/V7qsmM
23 Jan, 01:06 PMReplyDelete CommentLike2
Valley Boy Comments (2012)
Canada's government is on top of their trading efforts with Mongolia, too.
http://bit.ly/WLQ4GR
23 Jan, 01:10 PMReplyDelete CommentLike2
haiguike Comments (466)
It looks more like U.S. exports to Mongolia keeps booming while Mongolia still exports almost nothing to the U.S.. Mongolia loves to consume; the exports to China must pick up quickly for Mongolia to have any cash reserves and overall balance in trade.
24 Jan, 12:54 AMReplyDelete CommentLike2
MSE.Investor Comments (93)
"Mongolia loves to consume"
Ok so not such a bad idea to buy just everythign listed on MSE...other than the mines :)
24 Jan, 01:15 AMReplyDelete CommentLike4
Jon Springer Comments (3891)
Chink in the Chinggis Bond number one. From Thursday's Unuudur (in Mongolian) page 4. ETT will owe Chalco U.S. $50 million in termination fees to get out from under a high interest loan from Chalco. They will pay the U.S. $50 million with money from the Chinggis Bond as the the Chinggis Bond is at a lower interest rate.
***
In same story: according to the Prime Minister, the decision to use "wide track" for rail gauge has been made for infrastructure down there. (I assume this means they've moronically chosen to use Russian gauge which is wider than Chinese gauge.... it only costs $1 to $2 per ton to change rail cars at the border out of their pockets... which makes sense when over 85% of natural resources get exported to China.)
***
following projects to also be financed by Chinggis Bond: 1300 kilometer paved road connecting 6 aimags, power plant at ETT, and railway connecting ETT to Gashuun Sukhait
***
(1) This story needs confirmation as it has only appeared in one Mongolian newspaper; (2) This is via a translation sent to me and I did not read the original text; if someone can confirm what they said (the translation I received jumbled price quotes in MNT and USD).
24 Jan, 07:47 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
The Chinggis bond is looking a bit light on with some big ticket items like GOM having to pay Khan Resources $326 million and the possible Chalco termination fee of $50 million.. This doesn't include any possible action by SGS. The 3 big projects mentioned have little chance of being completed . I thought the ETT railway was a private license why would the GOM be paying for it? I think ETT will end up in the hands of MMC.Look at the positioning of the big players such as the MCS brothers and Kerry.
25 Jan, 11:13 PMReplyDelete CommentLike6
Jon Springer Comments (3891)
I have seen no story that the Khan Resources case is settled. I thought it was still pending, but I also am busy working on a few other stories.
ETT seems to be in dire trouble. However, it feels like the mechanics of the situation are being moved toward something (no idea what).
25 Jan, 11:24 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://bit.ly/W5ZwHM
The rail agreement from the MMC website. There is no agreement for GOM to fund it. If the GOM builds a power station and contributes to a private 19 year rail agreement then there is some serious corruption going on. If MMC swallows up ETT they will have some nice infrastructure funded by the Chinggis bond.
26 Jan, 03:26 AMReplyDelete CommentLike4
MSE.Investor Comments (93)
Sounds like GOM is going in this direction, believing all the badly needed infrastructure could be funded by debt, in order to avoid giving substantial/any equity to foreigners.
The success of the Chinggis bonds may have blindfolded some into an interesting very risky bet. Another example of dangerous linearization. Will see what the credit spread will look like for the next issuance at the mercy of hot money. :)
Interesting learning experience anyway.
Sourcing capital is one aspect, but if foreigners have no or little expectations for equity in those projects, then the costs charged for supplies and expertise may be slightly different, i.e. arm's length with no equity upside in the long run, maximizing short term up front margins, cash on delivery.
26 Jan, 06:52 AMReplyDelete CommentLike5
MSE.Investor Comments (93)
While Kerry has some interests with MCS,
what the other Hong Kong tycoons could do would be more significant.
The day Cheung Kong moves,
then it would be a day for major celebrations in UB.
MCS / ETT:
to be fair that is something that may be happening at some point. MMC is already a listed company so a TAKE-OVER of ETT by MMC paid in a combination of cash and MMC shares could make sense for GOM and MCS.
That would probably bring good synergies.
That would not prevent ETT to be listed afterwards.
28 Jan, 06:03 AMReplyDelete CommentLike4
MSE.Investor Comments (93)
and if MMC was to take-over ETT, then it would make sense to extend it to TTL as well in order to increase syneries further !!!
28 Jan, 06:07 AMReplyDelete CommentLike4
Jon Springer Comments (3891)
Competent management taking over ETT and paying off the government for the rights would be a blessing and victory for all parties. The gov't should retain 34% as a strategic asset and move to the background in my opinion.
They had the chance to bring in good management of the property a year and a half ago for ETT with the consortium bidding process, and they botched it. Further mismanagement of the property is becoming too expensive for the Mongolian people.
TTL isn't worth the headache, its an asset that is winding down.
28 Jan, 07:43 AMReplyDelete CommentLike2
MSE.Investor Comments (93)
TTL:
When looking at the map where it is,
what it does
and who owns it,
that would simplify many things to have it merged with the rest, enabling the merged entity to be listed in Hong Kong... AND MSE.
28 Jan, 08:15 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
From Wednesday's Zuunii Medee (also translated)
Anti-Corruption Agency will open branches in 21 aimag (21 provinces)... parliamentary discussion was held about UN Anti-Corruption Convention... parliament discussed opening 21 branches in every aimag with permission to investigate money laundering, misuse of funds, and election law violations.
We'll have to see how this initiative is used...
24 Jan, 07:52 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
As mentioned recently, KFC is coming to Mongolia. A related video (33 seconds): http://bit.ly/WX11UF
24 Jan, 05:49 PMReplyDelete CommentLike4
doubleguns Comments (6301)
O Gee reaches farther than I expected. I did not see that coming. Those tiny URLs hide things very well.
Thanks for the great laugh this morning Jon.
As you can see I am way behind on my readings.
29 Jan, 09:35 AMReplyDelete CommentLike1
Jon Springer Comments (3891)
I dozed off for a few hours while working. I woke up and there's two big news items.
1) ETT's COO Graeme Hancock has resigned http://bloom.bg/WyhGyn
2) CHALCO is threatening to sue Mongolia over breaching their contract with ETThttp://reut.rs/Wcj7Go
For me, Graeme Hancock leaving ETT is an event that will make me think about lowering my exposure to Mongolia investments.
Other news will be caught up on later.
29 Jan, 12:57 AMReplyDelete CommentLike4
MSE.Investor Comments (93)
On ETT and Graeme Hancock:
When I started investing in Mongolia I read quite a number of books on Mongolia and Chinggis Khan in order to, learning from its past, understands how this country works.
One of the reasons behind the successes of Chinggis Khan and his army was his adaptability.
How could horsemen conquer such a large area with castles and fortresses all over?
Simple: They adapted! They enlisted foreign engineers to build catapults and siege warfare machines of all kind. And the transfer of technology from foreigners did not stop at siege warfare machines but encompassed many other aspects of Chinggis Khan's legacy.
http://bit.ly/TUpC1M
May be I read the wrong books.
29 Jan, 09:47 PMReplyDelete CommentLike5
Jon Springer Comments (3891)
I don't think the loss of Graeme Hancock can be overestimated.
Other news of the week may get more attention, but his departure worries me most. ETT is in trouble, and that means the government's finances are in trouble, and some of the banks are in trouble (again).
29 Jan, 10:04 PMReplyDelete CommentLike4
MSE.Investor Comments (93)
http://bit.ly/11cCWRb
29 Jan, 10:11 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
Need to find other articles with the same data when quoting from some Mongolian outlets. I once had to retract an article and republish because I used what turned out to be shaky information from News.mn
That said, that sounds right. Making the responsible person in the room "the fall guy" isn't the best plan I ever heard of.
29 Jan, 10:15 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
http://bloom.bg/WuaCG0
29 Jan, 10:32 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
That Bloomberg story states that to cut costs, ETT unloaded its skilled foreign-born executives. http://bloom.bg/WuaCG0
The only Mongolian executives skilled enough to run a coal mining operation of this scale are at MCS/MMC and MAK.
(MCS is the parent company of Mongolian Mining Corporation. MAK is privately held Mongolyn Alt.)
29 Jan, 10:40 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
The Chalco deal was signed on 27th July 2011 and the election that brought in the new government was on 28 June 2012. It is unfair to blame the change of Government for this debacle.At the moment 5 months after coal began being trucked to China it is not feasible to move it unless the price rises above the $61 transport costs. Depending on which story you read the price was supposed to be fixed at $70 for 1.5 years.
There are many factors for the success of Chinggis Khan he came from hard and humble origins and promoted men based on talent and not rank.He had a strict code of conduct the great Yasa if you broke it you died. He was tolerant of other religions and very interested in science. He was respected and ruled with extreme violence.
I see Jenko aka the Godfather Battulga has been traveling with the woman who bought us the Mongolian top 100 list and the unforgettable Steven Siegal interview. They have been looking at Malaysia and Singapore (ironically the few countries that Mongolians don't need a visa) to see what makes a successful country and how that can help Mongolia. He says Mongolia needs another powerful leader, I wonder who he has in mind.
1 Feb, 03:01 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
Agreed.
I wrote "one of the reasons" on purpose.
Of course that's is certainly not the only one and not the main one for sure, but that helped during his move westward.
:)
1 Feb, 09:26 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
The whole fiasco with Chalco was started by Chalco trying to buy SouthGobi two months before the elections. Issues with ETT, etc, are ancillary developments.
I blame the Chinese/Chalco executives for ill-conceived timing of the purchase. I blame SouthGobi executives for the stupidity to try to do the deal right before the election. I blame Turquoise Hill and Rio Tinto executives for the stupidity to try to do the deal right before the election.
I blame the government for not correcting rushed ill-conceived laws (e.g. SEFIL) to block the deal more than six months after the election, but I absolutely do not blame the government for blocking the deal, that was a must. This kind of deal can't go through right before an election in a populist based democracy, and was abhorrently heinously stupid of the executives involved on all sides to try to such a deal at that time.
2 Feb, 09:39 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://bloom.bg/H9vZr6
Depending on who you read the fiasco was started by Ivanhoe offering Chalco their shares and Chalco agreeing to their offer. I agree incredibly stupid timing
2 Feb, 03:18 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
If you own TRQ or SGRQF, you should read:
SouthGobi Executive Under Exit Ban
http://bit.ly/119ZAtg
29 Jan, 09:46 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
This is not surprising considering what has been going on with SGS. It will be interesting to see what the US does now it involves one of their citizens.The Australians weren't allowed to be present during Sarah Armstrong's interviews and were ineffective and usually ignored.
The article is extremely biased mentioning the "abuse of the exit visa system" the GOM can do whatever it likes with its own system and unfortunately for Justin he couldn't pack his bags as quickly as the other 2 executives who fled the country.
The article makes no mention of what SGS/SGR actually did but instead talks about his family and how he can't visit them. This story was never going to go away in spite of the big players trying to shut it down. It seems the GOM may have it's big "Resource Nationalism" case to sway public opinion prior to the Presidential elections. No one came out to comment after Sarah Armstrong was allowed to leave, l wonder who will help Justin?
29 Jan, 02:14 PMReplyDelete CommentLike3
Jon Springer Comments (3891)
Just because it was not public knowledge before does not mean the U.S. was not engaged in the situation before. It is the U.S. State Department that confirmed the situation.
Bias? I can't report undisclosed information. He has had an exit ban for 3 months. He has not been charged. I am unaware if he has or has not been questioned.
His wife is from Mongolia. What need is there for an exit ban anyway?
I don't know what SGS/SGR did, or did not do.
There indeed has been no follow up after Sarah Armstrong's exit ban lifted. I would ask the Australian media for a follow-up, and an effort at an interview with her. However, my guess is she cannot comment.
Indefinite detention and exit bans (the "abuse of the exit visa system") is known and documented. It happens in many countries. It is what it is.
29 Jan, 04:12 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Justin staying in Mongolia did seem strange when the others fled or were prevented from leaving. The State Department has been ineffective during the last 3 months and now have clarified the situation. I'm sure Justin and his family would prefer to be able to travel freely instead of spending the winter in UB.
We know some of what SGS/SGR did the other details will be very interesting when they emerge probably during the election campaign.
As far as an Australian media follow up I'm not aware of anything yet.
http://bit.ly/WykYEU
We could go through these media organizations and see who has written anything after their taxpayer funded holiday to Australia?
l'm sure Sarah could comment if she wants to but I think you are right that there are pressures not to.
30 Jan, 01:48 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
Mongolia's State of the Macro
http://bit.ly/WzKLtf
29 Jan, 06:30 PMReplyDelete CommentLike6
Jon Springer Comments (3891)
I recommend readers read this, the first of two parts, by M.A.D. Mongolia. They have been candid and forthright about the current situation in Mongolia. Thanks for beating me to posting that link MSE.Investor.
29 Jan, 06:36 PMReplyDelete CommentLike5
dulleyefarmer Comments (163)
A bunch of Real Estate Agents telling the GOM what it should do?
30 Jan, 01:58 PMReplyDelete CommentLike0
Jon Springer Comments (3891)
How dare Real Estate Agents be better informed and more candid than most people in the country! What a bunch of jerks to care about the country where they live and work!
The common people of your country are being thrown into ruin by the elite every day, and you want to be ticked off about who points it out?
Grow up.
30 Jan, 07:14 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
What they are saying is nothing new and not particularly interesting.
30 Jan, 11:17 PMReplyDelete CommentLike2
KingFox Comments (22)
A very interesting article, that as an outsider, seems to be just common sense. It at least holds out some hope that people on the ground in Mongolia share similar views as outside investors, i.e. mine.
I think the "leaked" report that Rio is considering halting construction at OT is piggy backing on the China threat of legal action, with the goal of adding more pressure on the GOM. The question however might be is it too late for Mongolia's third neighbour policy ? Maybe that would be an end game for China, then they will have total control one way or another.
As someone mentioned maybe having a Chinese investment in TRQ would be the easiest way for Rio to ensure compliance to the contract agreement.
30 Jan, 12:22 PMReplyDelete CommentLike6
dulleyefarmer Comments (163)
" At the moment the 3rd neighbor policy has completely failed and you could use stronger relations with the USA." EBennett 10/1 2013
30 Jan, 01:54 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
There's an easy way to do that.
30 Jan, 07:14 PMReplyDelete CommentLike1
Jon Springer Comments (3891)
Relevant headline regarding Rio's threat to not continue with OT project here http://bit.ly/Vw4gIp
I am sure there will be more articles about this... a tidal wave's worth.
Duck for cover if you own TRQ
Predicted this move here back on November 19, 2012 -http://bit.ly/T6JRmZ - but what do I know?
30 Jan, 01:48 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://yhoo.it/UENdkG
Rio has been getting the big stick out in Australia as well.
30 Jan, 11:28 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/WDTD18
A MIAT executive and his wife have been jailed for some creative accounting. He offered to give information on 20 corrupt politicians if they spared his wife..... they didn't The IAAC has been very busy following a recent blitz on the tax department.
31 Jan, 02:38 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
I first heard about this about 8 hours ago. I'm curious about the party affiliation of the corrupt politicians he wants to name. Seems to me like it *might* be a pathway to a DP super-majority.
This is a guess, not a fact.
31 Jan, 03:05 PMReplyDelete CommentLike1
dulleyefarmer Comments (163)
It could also be the IAAC doing their job unlike the other investigative units in Mongolia.If there were free and fair elections in Mongolia there would be a DP super majority. This is also a guess.
1 Feb, 05:13 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
A good day in the middle of a rough week:
Turquoise Hill Resources Press Release
January 31, 2013
VANCOUVER, CANADA - Turquoise Hill Resources today announced that Oyu Tolgoi has produced its first copper-gold concentrate. This comes following the processing of first ore through the concentrator in early January 2013.
Kay Priestly, Chief Executive Officer of Turquoise Hill, said, "Oyu Tolgoi continues to progressively ramp-up the mine and the production of first concentrate is another important milestone. We are making good progress on our timetable leading to the start of commercial operations."
With the achievement of first concentrate, commencement of commercial production at Oyu Tolgoi is expected within three to five months.
http://bit.ly/ThHWQF
31 Jan, 05:26 PMReplyDelete CommentLike2
H. T. Love Comments (12582)
We're doomed! CNBC just had a fast mention that Mongolia was projected to have GDP growth of 50% next year, IIRC.
I forget "according to who" - I'll have to go digging and see if they have it on their site yet.
HardToLove
1 Feb, 03:17 PMReplyDelete CommentLike2
Jon Springer Comments (3891)
Thanks HTL. I look forward to the link.
Gov't will never report it that high, but as Turquoise Hill ramps up Oyu Tolgoi production... it is in the crazy realm of possible. 2011 GDP was $8.5 billion. OT is going to generate billions, and also requires billions more of investment to block cave the underground mine. OT by itself is predicted to add at 1/3 to GDP by 2020.
My question is why CNBC is reporting it now. Slow news day, or someone they know have a few too many infrastructure bonds that aren't going to get spent much on infrastructure, or what?
2 Feb, 09:43 AMReplyDelete CommentLike2
H. T. Love Comments (12582)
Did a serach and was surprised to see they had also picked up the detention reported by AP with the credit to you at the bottom.
http://bit.ly/WHFZtM
They have quite a few related to stuff you've been talking about.
http://bit.ly/WFh50Z
Unfortunately, I saw nothing that looked like it would lead to the brief mention of Mongolia's growth. I went to the videos of the shows slightly before the time of my post and didn't find anything that looked like it would be there.
Sorry,
HardToLove
2 Feb, 09:57 AMReplyDelete CommentLike3
FocalPoint Analytics Comments (4960)
It's great to see Jon get recognition for a scoop provided by a professional journalist.
2 Feb, 10:52 AMReplyDelete CommentLike3
Jon Springer Comments (3891)
Thanks HTL & FPA.
2 Feb, 12:12 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://bit.ly/14H1n95
The story is a slightly rehashed copy of this one but nice of him to recognize your work Jon.It is interesting why the US gagged this story for so long.It seems some of our former regular contributors are communicating with you privately and not willing to go on the record?
2 Feb, 03:01 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/11QrNRw
A bit more detail on the Justin Kapla/ SGS saga
5 Feb, 01:37 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
Been, and am, quite sick for about a week now.
DEF, where is Bat Khurts in all this? And, for those uninitiated, if you care to give a brief summary of Mr. Khurts, that might be enlightening to some.
6 Feb, 07:34 PMReplyDelete CommentLike3
EBennett Comments (8)
DullEyeFarmer,
What do you think is going on in the government right now (this, MIAT investigations, etc.)? Is this a purge or an honest attempt to route out corruption?
Why is Bat Khurts the head of the IACA if not so he could do Elbegdorj's will and eliminate political enemies?
I feel like you must have a conspiracy theory on this and I would like to hear what it is.
6 Feb, 09:44 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
EB Khurts isn't the head of the IAAC he is Deputy. The first head was B.Dangaasuren who was found dead in the bathroom of Colonel Dorjpalums brothers house in Sydney
http://bit.ly/Xmq71b
His replacement was Colonel Ch.Sangarachaa former head of the GIA and Director of Gandshudag prison where he now resides after being sentenced to 2.4 years prison for failing to do his job. The current head is Altanhuyag.
Of course the current purge is politically motivated.
Are you trying to cheapen my comments by labeling me a "conspiracy theorist" that is a cheap shot. I understand you must be frustrated at the poor performance of American policy in Mongolia and in particular the MCA/MCC audit failure.
Khurts was a former spy chief who implemented the request to kidnap E.Damarin in France and return him to Mongolia drugged and in a wheelchair . He was offered a deal to plead guilty to the murder of Zorig and he would spend only a short time in jail. This was a pre election stunt and Damarin was innocent.Khurts was lured to UK where he was arrested and sent to Germany to face questioning regarding the kidnap and transportation of Damarin through Germany. Miraculously he was released one week prior to Merkels visit to Mongolia to sign a rare minerals deal with GOM.Khurts and Elbegdorj reportedly flew back to UB on the same plane. He was hung out to dry by the MPRP/MPP and did a deal with the DP and was installed as Deputy of the IAAC playing the traditional 2IC hitman role. He has taken a shine to his new role being involved in the arrest of Enkhbayar and the SGS case along with many others.
Traditionally it was the MPRP who used the investigative authorities for their purposes but now there is a credible alternative created as an American requirement for the MCA/MCC funds to be available for Mongolia.
7 Feb, 01:51 AMReplyDelete CommentLike6
dulleyefarmer Comments (163)
http://bit.ly/VDZkPr
Further developments in the MIAT corruption case.
23 Feb, 01:50 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
I think this targeting of D.Sugar has a lot to do with him being a member of the Constitutional Court. GOM seems to be having a clean out much like what Elbegdorj did with the appointment of 3 new Supreme Court Judges late last year. Perhaps they are planning a constitutional crisis?
26 Feb, 01:57 PMReplyDelete CommentLike1
MSE.Investor Comments (93)
http://bit.ly/X4HQtN
Something's up at OT (Dale Choi's blog)
(more on his FCB page)
2 Feb, 09:23 PMReplyDelete CommentLike5
Jon Springer Comments (3891)
... yes, as Dale says in his blog, "it happened all around the world. Saudi Arabia, Venezuela"...
but even Zimbabwe and Congo know that you don't mess with the mining company until *after* all of the major capital investment is done...
AND THAT is what differentiates the Mongolian government as stupider than other resource nationalists
2 Feb, 09:40 PMReplyDelete CommentLike5
MSE.Investor Comments (93)
http://bit.ly/X4LunE
Nicely put.
Sad but I think GOM may get some sense of the problem it is facing when it tries to issue Chinggis Bond II in few months from now.
My reading:
1) Extremely unlikely to even place US$1bn at the same credit spread to US treasuries.
2) Very likely to have to pay an extra +50bps to find US$2bn of demand.
(=> will they dare paying that, de facto acknowledging a dire funding situation or go gambling for worst?)
Then compiling the numbers GOM may really understand the extend of the capital raising problem it is facing, likely too late.
2 Feb, 09:45 PMReplyDelete CommentLike5
dulleyefarmer Comments (163)
I seem to remember reading a linked story stating that GOM can't issue more bonds is this true?
3 Feb, 02:54 AMReplyDelete CommentLike5
MSE.Investor Comments (93)
don't know
if there local restrictions (parliament) or legal convenents of that kind, but if there were some and I was an investor, I would not rely too much on this.
For instance DBM could issue under a MOF guarantee, which would have de facto a similar sovereign status.
May be GOM trying bilateral loans
(I think I read something about US$3.5bn).
Anyway, whatever is issued next may not be a exactly a walk in the park.
3 Feb, 03:51 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://seekingalpha.co...
Re issuing more bonds this comment was interesting that Jon posted recently,not the article but the comment from Marpy.
5 Feb, 01:28 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
I still find it hard to believe some of these claims. At the moment nothing is moving from ETT and a lot of articles seem to be quoting GOM figures. This link from your post on 29/1 is more realistic.
http://reut.rs/Wcj7Go
"Li said Chalco imported 2.37 million tonnes of coal from Tavan Tolgoi in 2012, less than the original plan for 3 to 4 million tonnes."
This I don't believe.
http://reut.rs/n1GcKg
"There are 5,000 trucks per day on the road linking the southern Gobi region to the Chinese border right now and that number is going to grow and cause congestion," Erdenepurev said."
"Total coal exports are expected to jump 50 percent from a year ago to 25 million tonnes this year and rise further to between 30-35 million tonnes in 2012,"
http://bit.ly/X79feB
3 Feb, 01:46 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/11cCWRb
Another previous post from Jon but it claims ETT excavated 2.7 million tonnes of coal. There is a big difference between excavating coal and loading and delivering it.
5 Feb, 01:47 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
ETT is a mystery to me.
One issue for me, which I'll get into when I can stay healthy long enough to write an article and focus, is that, to me, ETT's mismanagement is proving that the Mongolian gov't should not be in charge of any mines in the country. They can own the mines 100% for all I care, but they need business people to manage it, whether they want to use MCS, MAK, or foreigners, is, again, their choice. But the government needs to get out of the business of managing these mines unless their sole intent is to damage the future of the country (avoiding getting into other various claims about government "interests" in these mines... it doesn't matter...)
6 Feb, 07:39 PMReplyDelete CommentLike2
MSE.Investor Comments (93)
http://bit.ly/XhXCzJ
Interesting list, with interesting dilemma.
Now foreign firms interested in being involved in some ways in Tavan Tolgoi can use that as a RFP template.
Anyway, I just hope that DP understands that the clock is ticking.
In 2016 Mongolian voters may focus on tangible and visible results affecting their daily lives, no more promises about the future, and that building infrastructure takes times, once the funds are available and decisions are made.
3 Feb, 09:26 PMReplyDelete CommentLike4
Jon Springer Comments (3891)
RFP?
The gov't of Mongolia outsourced the West Tsankhi part of ETT management in 2011, for 2 months or so, before panicking and voiding their own agreement. Bad decisions. Bad execution. Need to get out of their own way to let the country develop, *if* they even want that.
6 Feb, 07:41 PMReplyDelete CommentLike1
MSE.Investor Comments (93)
RFP = Request For Proposal
That's a thorough process with written submission, short list, then interviews by a committee (with some independent members) to award a mandate (typical for investment banking mandate from sovereign).
When as an investment banker, you are "invited" to bid for a government RFP, before starting your pitchbook, you have first to evaluate if you have some "fair" chance of going into something decent or if it may turn into an embarrassing joke.
That's where the attitude of the government before and the perceptions it created come into play, and at some point it may lead banks to go for "minimum service" RFP (i.e. you bid to loose, minimizing your waste of time as you cannot refuse to submit a proposal).
Then the government is left with low balling B&S proposals from cowboy style players facing no tangible competition (in one case, we got a phone call after the deadline asking us to improve our proposal…as they needed a nice name shortlisted to give credibility to part II)
All senior investment bankers have horror stories on RFPs.
Anyway, the point for Mongolia and GOM is to make sure it retains enough credibility so that professional long term players are still motivated to allocate a bit of time for Mongolia, so that it is not left with short term grab-and-run cowboys with hot money.
6 Feb, 09:28 PMReplyDelete CommentLike5
HKTrader888 Comments (8)
"Rio Tinto says it remains on track to start production by the middle of the year at its giant copper-gold mine in Mongolia, playing down reports that it might temporarily halt construction."
http://on.ft.com/Y87RY8
5 Feb, 12:49 PMReplyDelete CommentLike5
Jon Springer Comments (3891)
Yup. Earlier comments that they would stop funding development were "rumors"? Spread by who???
As a friend in Mongolia once told me, "No one here says anything without a reason to make you think something..."
6 Feb, 07:43 PMReplyDelete CommentLike2
HKTrader888 Comments (8)
SouthGobi Sands case might go to Prosecutors Office
"A case involving the controversial licenses of SouthGobi Sands, a foreign Mining company, might be delivered to the Ulaanbaatar Prosecutor`s Office as the investigation is in final stage according to a source close to the matter."
http://bit.ly/11QrNRw
6 Feb, 09:55 AMReplyDelete CommentLike5
dulleyefarmer Comments (163)
I posted this link on 5th Feb.There was a suggestion months ago after the IAAC had supposedly finished with Sarah Armstrong that the case would be handed over to the Prosecutor's office. I think they will prosecute and try to do some kind of deal to drop the International arbitration case lodged by Sarah Armstrong. The timing with the Presidential election coming up will help the GOM as there is no sympathy for any of the SGS executives from the Mongolian public.
The GOM will probably re sell the licenses in question.
In Australia "Resource Nationalism ' is marketed as buying back the farm which was the catch cry of the Whitlam Government but now popular again as we see huge chunks of our prime land/infrastructure/mi... and businesses go under the control of foreign state owned entities. If Mongolia shows any Resource Nationalism it is seen as a disease that must be stamped out.
6 Feb, 01:45 PMReplyDelete CommentLike6
dulleyefarmer Comments (163)
The Prosecutors office used to be highly corrupt but l'm not sure how they will handle a case like this now. General B. Tserenbaltav the former Deputy and head of the Mongolia Police Force and great friend of Enkhbayar has been moved to head of Customs.The Prosecutors office allegedly used to be the centre of the false documents business in UB. There will need to be some bipartisan work to get this case running.
7 Feb, 02:46 PMReplyDelete CommentLike4
KingFox Comments (22)
http://bit.ly/Xol3rj
A decent overview of the current Rio / GOM dance currently ongoing. I suspect this will be going on until the Presidential election. Is there any information on the candidates running for this position ? and do we know the exact date of the election.
Cheers,
KF
6 Feb, 12:22 PMReplyDelete CommentLike5
Jon Springer Comments (3891)
Thanks to all for keeping the blog going while I'm under the haze of I-don't-know-what (guesses so far have been appendicitis, hernia, and kidney stone... kidney stone currently has a slight edge over an undiagnosed as yet mystery illness)
6 Feb, 07:45 PMReplyDelete CommentLike2
Valley Boy Comments (2012)
Best wishes for a recovery, Jon; please take good care.
6 Feb, 08:40 PMReplyDelete CommentLike2
HKTrader888 Comments (8)
Wish you a very speedy recovery! Very few things are more valuable than health, so please get some rest and allow us to help you update your blog with the latest news from Mongolia :)
7 Feb, 01:14 AMReplyDelete CommentLike6
KingFox Comments (22)
Looks like Rio is "considering" re-opening a Papua New Guinea copper/gold mine after walking away from it due to political problems 25 years ago....... seems the new government there might be open to a fresh start...... GOM please take note. That's the beauty of the business, politicians will come and go, the resource isn't going anywhere, and RIO may have time on there side. Not so great for investors however.
7 Feb, 08:54 AMReplyDelete CommentLike6
Jon Springer Comments (3891)
Some Ph.D. American apologist for the Mongolian government (Ann Altman) writes "At least some news outlets in the West are beginning to get the point..." regarding this article: http://bloom.bg/WR80Cy
Maybe I'm just tired of feeling cruddy, but my responses to here on LinkedIn so far are (http://linkd.in/VGjiGd):
- "What is the point? Mongolia government wants all foreign investors to leave?"
- "Or perhaps the point is that if the government did not mismanage resources, fail to execute infrastructure development on a regular basis, and constantly do things that help the elite and hurt the general populace, maybe the people would be better off?"
- "The DP and MPP have been hand in hand for 20 years, and the elite of both have benefitted while the people have not. The people have migrated to UB because the infrastructure of the nation collapsed, not because of opportunity. The government's wasteful allocation of funds with things such as handouts while failing to invest in infrastructure, health, and education, has led the country to this moment."
7 Feb, 10:13 AMReplyDelete CommentLike5
Jon Springer Comments (3891)
Ongoing.
She said:
"Here is essential reading for all those interested in corruption in Mongolia (note that it was published in May before the elections that brought the present government to power): http://bit.ly/XqCjvS "
I said:
"What is THE POINT? This use of the IAAC is selective. It is not weeding out corruption, it is being used for corruption and power to consolidate power for one group of corrupt people over another.
In New York City, where YOU live, there is corruption every day. So what? To get a painting contract done on one of the bridges to the city, people I knew had to pay off the government, pay off the mob, and pay off the unions, and THEN, they could get their work done and make their money. That's how business got done for them. If there are parameters everyone knows for how business is done, then that's how business is done, and retroactively saying that some of the people who engaged in these practices were corrupt while others try to white wash their own histories is bunch of horsefeathers. Those pursuing these corruption cases should be aware, they're likely to end up like Robespierre.
If the government was serious about changing corruption, a date would have been set from which forth laws would be enforced evenhandedly and objectively upon all. However, that is not how this witch hunt against corruption is being used."
7 Feb, 10:28 AMReplyDelete CommentLike6
dulleyefarmer Comments (163)
I like the linked story and also some of your comments Jon. that as usual leaves me feeling confused.Nice to see Jack Weatherford coming out with some politically charged comments.It is much safer to write about history.Jack is concerned about foreigners owning property in Mongolia but l note he has a very nice Chinese built penthouse next to the State Department Store.
I hope your health in improving Jon, good to see you back on deck
7 Feb, 02:40 PMReplyDelete CommentLike6
MSE.Investor Comments (93)
Hi Jon,
Totally agree with YOUR comments.
It's like those foreigners saying that traditions and lifestyle in Mongolia should be protected, having in mind that when they go on holidays there, they want to see people living in traditional gers by -50C, …with no electricity, running water,…
I am pretty much sure that while trying to preserve some traditions, Mongolians would prefer more comfortable leaving conditions and so on.
But that's the usual. Some just don't want to observe, think, analyze, but just jump to half-baked general conclusions, ignoring the specifics.
Also there is a linearization bias always assuming that going from A to B can be done simply with a list of actions, ignoring mutual dependence, time, non-linearity and therefore unintended consequences.
In the case of Mongolia all those are even more critical and what is also badly needed is people experts in down-to-earth Project Management able to conduct a project based on the specifics of the place without overlooking major issues on the critical path, just assuming everything will go for the best.
Obviously some aspects may have been overlooked when LSE was picked to help MSE.
Has anybody heard if the Securities Market Law has been approved by the parliament before the end of the Winter session?
7 Feb, 07:16 PMReplyDelete CommentLike6
dulleyefarmer Comments (163)
This is an astonishing article by B.Ganbat. It confirms many of the issues I have been raising in great detail. I'm sure the $11 million USD that Ulaan took in 2005 was the gift by George Bush during his visit .Receiving this money was later denied although it was reported in the English media at the time.
I hope all the Enkhbayar apologists will read this article.Nice to see that Ganbat aims at both sides of politics.
9 Feb, 02:56 PMReplyDelete CommentLike3
KingFox Comments (22)
etg.to (egi) was up 17% today on decent vol on both sides of the border. I can't find out why, anyone with any ideas ? We actually hit 200 day ma for the first time in almost two years.
8 Feb, 06:04 PMReplyDelete CommentLike4
Valley Boy Comments (2012)
Thanks for the heads up, KingFox. No ideas.
I like the fact that their Nevada copper deposits are estimated to be larger than those in Mongolia. That gives the company a diversity that might turn out to be an advantage one of these years.
9 Feb, 11:57 AMReplyDelete CommentLike3
Valley Boy Comments (2012)
This article mentions how Sandstorm Gold SAND relates to Entree Gold ETG.to in a couple of ways.
http://seekingalpha.co...
20 Feb, 12:08 AMReplyDelete CommentLike1
dulleyefarmer Comments (163)
This quote from Dr.Ganbat is relevant in explaining why SGR/SGS paid around $25 million USD to Monnis in private placements.My relevant post was Jan.6.
" Friedland, whose understanding of Mongolia was limited to an oppressed country in post-communist Central Asia, calculated that he could solve everything by simply buying or bribing a single dictator, Enkhbayar. That is how a decade-long business partnership between Friedland and Enkhbayar began. They chose Chuluunbaatar, Director of Monnis Company, as their main mediator, and in return for his services, Monnis's business partner,Germany's Liebherr Mining Equipment,grew and prospered in the Mongolian market. Japan's Kamatsu, which was EMC's main supplier at the time, despite having superior and cost efficient merchandise, was pushed out of the Mongolian market by pricey and less sturdyLiebherr products. Again Enkhbayarprofited greatly from this deal. Because EMC is not registered internationally, all business conducted there was shrouded in secrecy and out of sight. Enkhbayar, alone, was fully in control of those affairs."
11 Feb, 01:40 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://paparatsi.mn/luw
2 Mongolians have been arrested in USA in regard to the murder of Zorig. I smell a deal for Justin Kapla?
5 FBI agents raided a house during the Tsaagan Sar night and arrested 2 Mongolians one who had been in the US 14 years and the other 13 years. It is 14 years since the murder of Zorig.
GOM apparently made the request. There were 20 agents and 10 cars outside the house.
It seems the alleged murderers fled to the USA and one has worked in the building industry ever since.
There was another Mongolian kidnapped in the US by the GIA at the time of the Enkhbat Damarin kidnap. He was imprisoned for 1 year until he was found to be innocent.
12 Feb, 08:38 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/12zTtdG
It's getting more interesting with the General Police Department claiming the story is false.
13 Feb, 03:09 PMReplyDelete CommentLike5
dulleyefarmer Comments (163)
http://bit.ly/YrPi1i
There is a $500,000 USD reward approved by the GOM for solving this case.
13 Feb, 03:16 PMReplyDelete CommentLike5
dulleyefarmer Comments (163)
http://bit.ly/YizI7t
The Police were hacked on 15th Feb.
18 Feb, 01:29 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
http://bit.ly/YyTJtC
Update on the Police hacking incident.
6 Mar, 01:38 PMReplyDelete CommentLike2
KingFox Comments (22)
TRQ sells 50% of its Altynalmas Gold Ltd holding for $300 million. Looks like they are continuing to sell assets to focus on OT.
13 Feb, 09:37 AMReplyDelete CommentLike4
MSE.Investor Comments (93)
I think RIO is trying to ring fence / isolate OT from the rest so that TRQ's only asset is OT to have more flexibility with GOM, not keeping to many eggs in one basket.
On top, that should help source internal capital as raising debt for TRQ may be more challenging thanks to the OT sword hanging above.
So the next step in term of TRQ's assets may be South Gobi.
Will RIO make a general offer DIRECTLY on South Gobi opening some kind of open bidding later?
Certainly not simple on any count but they could try this.
In theory, if TRQ sells South Gobi to RIO, there is NO CHANGE of ultimate controlling shareholder, so GOM would not have a say.
Of course it's a related transaction and an Independant Financial Advisor would have a say but taking into account the current situation, nobody could ask RIO to pay a lot...and again it would put GOM under the spotlight.
Then it may be easier to sort it out.
Just my few cents.
Disclaimer: I hold some TRQ and South Gobi.
13 Feb, 10:27 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
SGS has a few problems to sort out yet. Who did they off load some of their licenses to and the International arbitration matter. The Sarah Armstrong/Justin Kapla saga is far from over. There is some interesting diplomacy going on but for a bottom feeder there might be some bargains to be had?
How is Jon's health? he seems to have disappeared, Hope you are OK Jon.
13 Feb, 02:15 PMReplyDelete CommentLike4
HKTrader888 Comments (8)
They did not offload SOME of their licenses. Only one licence (5261X) was ALLEGEDLY improperly transferred to a third party.
For the latest update on the ongoing investigation from SouthGobi:http://bit.ly/VTzQzY
Note that despite the ongoing investigation by the IAAC, South Gobi just secured Pre-mining Agreement approval from MRAM for License 9443X covering an area which complements SouthGobi's existing mining license of the Soumber Deposit which contains high premium coking coal.
It's not all that miserable in Mongolia as media headlines want us to believe.
14 Feb, 02:56 AMReplyDelete CommentLike4
HKTrader888 Comments (8)
While I agree with MSE that RIO taking over Southgobi would probably not face much resistance from the GOM, I am highly skeptical a low-ball bid from RIO would be approved.
1) The reason could be but, imo, less likely to be the Hong Kong IPO in JAN 2012 when about 15% of the company was sold at a sky high HKD 126.04 (~ USD 16.2) to a bunch of retail and institutional investors to raise HKD 3.6B (~ $460M).
2) Rio Tinto owns 51% of TRQ (assuming they haven't been taking advantage of the ongoing political drama in Mongolia to scoop additional shares over the past few months). It would take some convincing if RIO was to present a low offer to the 49% remaining shareholder of TRQ, including institutional investors like Temasek, Janus Capital, Fidelity, Goldman.
3) Back in 2010, CIC converted half of their convertible debenture ($250m of $500m) into ~21.5m shares of SouthGobi at ~HKD 90. If it was Chalco (or any other China SOE) throwing a low-ball offer at South Gobi, then CIC would probably not object, but they probably would not welcome a low ball offer of $25-30 from RIO.
14 Feb, 02:59 AMReplyDelete CommentLike4
MSE.Investor Comments (93)
2) The solution here is a derivative trick that can be used in M&A where there is a problem of valuation of an asset pre-merger.
It's a kind of "right of first refusal" to existing shareholders, capping therefore the value of the asset difficult to value.
Case study is CGIP-Cap Gemini (France) in may 2001 when CGIP was merging with Marine Wendel its holding company.
The block of Cap Gemini held by CGIP was a valuation headache. CGIP gave to its shareholders a call warrants on Cap Gemini shares (not essential in the merger) , therefore capping the valuation, removing headache.
Here RIO could implement the following idea:
* TRQ gives FREE OF CHARGE to ALL ITS shareholders pro-rata a call warrant (to be listed in HK and Toronto) on its South Gobi shares for a 3-6 months duration struck at the price at which it intends to sell the South Gobi shares to RIO.
* RIO gives to TRQ a put option (not to be listed) on the balance of South Gobi shares that may not be exercised under the call warrants.
* the TRQ shareholders can either exercise the warrants to buy the shares, or sell the warrants in the market or just let them expire and RIO will buy them from TRQ at the same price.
Derivative ideas can be very handy to solve M&A puzzles (or others) but few M&A experts dare.
Of course, there are many applications in capital markets, outside M&A.
When an underlying instrument is very volatile, a price guarantee given could become extremely valuable when extended creating a real win-win givign more time to time and to management to perform
but that implies that those in charge dare thinking outside the box, or dealing with those that do, instead of staying in usual muddy tracks.
Anyway, I am day dreaming
as nobody would dare going along that line but I think it's elegant.
14 Feb, 03:47 AMReplyDelete CommentLike5
dulleyefarmer Comments (163)
http://bit.ly/XFOFV3
This nasdaq article was the source claiming the IAAC was still investigating the SGS licenses (plural) being moved to third parties.
I wouldn't believe anything said by the Asia Foundation they have zero credibility along with Sant Maral. They can try to manipulate corruption figures as much as they like. They are a pretend aid organization founded by the CIA in 1951.
14 Feb, 01:52 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
In their statement they made no mention of the $25 million transfered to Monnis in the so called money laundering. There is a good book in Australia written by Don Watson an ex Prime Ministerial speech writer called "weasel words" this statement reminded me of it.
A statement from Alex Molyneaux would also be interesting?
14 Feb, 07:37 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://bit.ly/YYW3d8
TT IPO on hold
13 Feb, 11:31 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
Honestly I am not even sure it would ever go for an IPO under its current form.
Getting everything in motion, recapitalizing ETT, finding a new buyer (and ways to ship coal to this buyer), then establishing track record to obtain a decent IPO price may take a long time, likely several years.
And there is also the possibility that GOM may believe (until it tries to go for Chinggis bond II ) it can fund everything thanks to sovereign US$ bonds and therefore abandon the idea of selling any equity in ETT for at least 4 years to get it fully valued.
Now for Mongolians that were waiting for the free ETT listed shares or their cash equivalent that may be a serious disappointment.
Of course that is also a big disappointment for MSE (and local brokers) where an ETT IPO was a very important factor to increase the market capitalization, turnover and profitability to pay for upgrade costs.
14 Feb, 02:28 AMReplyDelete CommentLike5
MSE.Investor Comments (93)
about perceptions
http://bit.ly/XB74yk
14 Feb, 04:21 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
http://bloom.bg/XB7c0S
Some delays may be ?
14 Feb, 04:23 AMReplyDelete CommentLike4
HKTrader888 Comments (8)
Agreed.
In fact, it's not just about buying time for ETT to establish a decent operational track record, it's also about giving ample time for the Mongolia Gov to re-establish a more consistent image/reputation in the eyes of the global investor community. After all, ETT is a state-owned company and GOM intends to keep it that away even after the planned IPO.
14 Feb, 04:50 AMReplyDelete CommentLike6
mccorj Comments (7)
Loving this input from MSE and HKT. Clever. back office thinking. It's a saga of the RIO-TRQ-CHALCO-GOM which could be the history in the making of the foundation of GDP bursting open in MN.
Thx
15 Feb, 08:31 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Yes that is what makes Jon's blog good. These guys bring an expertise that l certainly don't have. I have an old book detailing all Mongolian State owned companies at the time of the Russian departure it is interesting to follow them how the people owned them in theory but most ended up in the hands of the Oligarchs via holding companies and corruption. I wonder if Mongolia will keep applying "the old way" with ETT or will they try something new? It certainly is a turning point. I personally think that they will screw all foreigners for as long as possible we will see more Russian activity.There is only one country that Mongolia considers it's brother and that is Russia.
15 Feb, 05:33 PMReplyDelete CommentLike4
Valley Boy Comments (2012)
I follow what you mean, dulleyefarmer. After all, the Mongols are closely related to the Buryats next door to the north of them. I good movie I've watched depicting the region is simply called "Dauriya" after the name of the area.
http://bit.ly/YlAe6J
15 Feb, 09:29 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
I posted relevant info on Buriats on 27 August 2012. As a person of Mongolian descent l get annoyed at the UB "Russian Mongols" claiming they are the chosen 600,000 to create the new republic of true Mongols.
17 Feb, 03:45 AMReplyDelete CommentLike3
Valley Boy Comments (2012)
This looks like a comprehensive resource for Americans of Mongol and related ancestry. Additional related links about the Buryats, Kalmyks, Tuvans, Inner Mongolians and Hazaras are included.
http://bit.ly/W41PHY
I seem to recollect reading an article in the paper from several years ago that sounded cool about the Tuvan singers.
http://bit.ly/VpouS3
17 Feb, 04:39 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://bit.ly/YAUno4
Huun Huur Tu are the best Mongolian throat singers in my opinion. I have most of their CD's. Of course they are treated like all other Tuvans ie. Mongolian cattle and horse thieves by the"real" Mongols of the most recent Republic.
18 Feb, 03:06 AMReplyDelete CommentLike3
Valley Boy Comments (2012)
This got me curious about any cooperative efforts being made by Mongolians and the other cultures related to Mongolia.
http://kharakorum.org
It hit the news recently that Mongolia is now making some cooperative arrangement with the Turkic speaking countries. Perhaps that is primarily because of Mongolia's links to Kazakhstan in the Altai region.
http://bit.ly/Yu3bxh
http://bit.ly/XYIn2O
http://bit.ly/Yu3bxm
http://bit.ly/XYIn2X
18 Feb, 03:28 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
Mongolia was ruled by the Turks in the 9th Century? I was once told by a leading History Professor in UB that the Turks were never in "Mongolia" and they went to Tuva and thats what makes Tuvans different. I asked him how he could explain his Turkic Altaic language and all the Turkic stones dotted all over his country.
Mongolia will make cooperative agreements with anyone who will give them money.
19 Feb, 03:33 AMReplyDelete CommentLike5
Valley Boy Comments (2012)
It's good news when Mongolia comes ahead financially in any cooperative arrangement with other countries so long as the national interests of both countries are accepted and respected. I'll surmise that, when all is said and done over time in the years ahead, the Mongols will be regarded as shrewd business negotiators.
19 Feb, 01:07 PMReplyDelete CommentLike4
KingFox Comments (22)
Entree funding, should be interesting to see if RIO decides to maintain it's ~23% share of the company, looks like they have 10 days to make a decision.
15 Feb, 01:25 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/1324toP
It seems the Prosecutors office is following the IAAC and doing some corruption investigations.It was a fair criticism to say the IAAC was cherry picking cases but it is good to see anpther of Mongolia's 4 investigative authorities running cases like these.
19 Feb, 01:50 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/1325RI1
"Last year year 238 declarations of office holders were checked. From them 104 office-holders were charged, 41 received warnings and 45 had their wage cut. Also four people were demoted and 12 office-holders were fired."
This is around .5% of the statements received by the IAAC that actually get checked!
19 Feb, 02:02 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/ZqXAwu
It seems that Crown Agents and JICS Japan International Cooperation System have done a very poor job in Mongolia. I can't wait to read their final report which shoud be out soon. these are some of the organizations on the gravy train and delivering an extremely poor result to the people of Mongolia.
Hope you are OK Jon?
20 Feb, 05:38 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/YEG6Ik
Graeme Hancock reemerges in a new role for Anglo American.
21 Feb, 01:38 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/YnNJDc
There is a rumor that the purchase of these two new MIAT planes is being funded by the rapidly disappearing Chinggis Bond 1. I wonder if the bond buyers were aware of this?
24 Feb, 06:27 AMReplyDelete CommentLike6
MSE.Investor Comments (93)
To be fair, the earlier Chinggis Bond II goes out, the earlier some will get some clues if what they heavily rely on ...is a real option or a fairy tale.
Then they will know.
But everybody else will also know how many "arrows" GOM is left with.
Unlikely they try it before the presidential elections.
25 Feb, 08:19 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
I think Jon was calling it a fairy tale very early. GOM seems to run like a slush fund. If they played it well they could have had many bond issues, many arrows is now looking like one arrow. Has anyone heard about Jon's health?
25 Feb, 09:14 PMReplyDelete CommentLike5
H. T. Love Comments (12582)
Dulleyefarmer: I PM'd with him yesterday morning. He's still on the mend. His first issue caused some secondary ones, extending his healing time. He's hoping that's the end of it, but it'll take time to know.
HardToLove
26 Feb, 06:18 AMReplyDelete CommentLike2
Valley Boy Comments (2012)
The Australian government has a webpage describing its contribution to Mongolia's progress.
http://bit.ly/YUnxyD
Their section on research publications is probably the most useful source to gain some business ideas.
http://bit.ly/VJYcdm
26 Feb, 01:55 AMReplyDelete CommentLike3
Valley Boy Comments (2012)
The American government has recently re- checked its database of Mongolian mines and mineral processing plants.
http://bit.ly/Yya4zR
To view the sites mentioned in the table in the previous link on a map, its easiest to use Google Maps at this next link by navigating through the records one at a time by clicking on the next record 1095, 1096, 1097 and so on.
http://bit.ly/YUujV3
26 Feb, 03:05 AMReplyDelete CommentLike3
KingFox Comments (22)
GOM and Rio back and forth heating up ahead of tomorrow's meeting. Rio get's its bank account's back, Entree gets the rug pulled out from under it. Any chance we get get this Presidential election out of the way earlier ? Looks like it will be a roller coaster ride into the summer, when hopefully the kids will learn to play nicely in the sandbox. Wondering if anyone knows what the process is for choosing candidates for this earth shattering event ?
http://bloom.bg/V5mgs3
http://bloom.bg/XY8YMF
26 Feb, 11:01 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
Thanks for the update on Jon HTL. VB I have been compiling a history of Australia's taxpayer's wasting $63 million plus in Mongolia since 1995.I was thinking of posting some of it but wondered if it was off topic? Maybe not.
26 Feb, 01:50 PMReplyDelete CommentLike4
Valley Boy Comments (2012)
Foreign aid sometimes seems to be a waste of money. It depends on the nature of the aid, whether or not the aid goes to a critical infrastructure project that will actually assist the targeted economy, for instance, or if it just goes to line someone's back pockets.
Lots of time aid will result in trade. It looks like Australia's assistance has resulted in increased exports of mining equipment, civil engineering equipment and other machinery to Mongolia, for example. It's an indicator that suggests that Mongolia is a bit more prosperous than before.
http://bit.ly/soiTbq
http://bit.ly/13ltxYe
http://bit.ly/ZyxeoD
26 Feb, 04:09 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
In Australia's case most of this money has gone on the highly corrupted MASP program and its "contractors". I don't see how $63 million of wasted taxpayers dollars can be balanced by "increased exports of mining equipment" by private companies going about their business in Mongolia.
27 Feb, 01:44 PMReplyDelete CommentLike5
Valley Boy Comments (2012)
It sounds like an interesting topic to delve into, dulleyefarmer.
27 Feb, 01:48 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
OK there is no point nowadays reading the news from GOM, it goes from bad to worst, and if that is supposed to be for the benefits of Mongolian citizens, I honestly have doubts! Voters will decide by themselves. (and I have NO pro-mine bias).
MEANWHILE, Mongolian MSE listed companies are not doing so badly; in fact, I think they do VERY WELL.
February is not even gone, but already a very large number of MSE listed entities have already posted their 2012 financials on the MSE website!!!
http://bit.ly/13ULMzB
1)To be fair, that's A LOT (84 as of feb. 27) for such a small market! How many developed markets have this % of public filing ? Not many for sure.
2)It's not only big companies, but across the board including tiny companies that are doing their best to upgrade while this certainly a very costly exercise for them.
3)Finally, looking at the numbers (I DID for all!!), EPS as well as earnings growth (and Book Value) are quite nice…while I would still assume that many of those numbers are likely understated.
I did not visit all but I visited a good number over a year (they do exist, not only on paper!) and that's not exactly a surprise.
The good news about most of those is that reading the financial statements and understanding their business is not rocket science, PhD in accounting probably not needed.
You can always adjust by +/-50%, just in case, but what you see does not look bad.
Anyway in the gloomy picture at GOM level, in the real business word (forget the mines for a minute) it's working.
Now if GOM and MPs are thinking about the common good of their constituents and stakeholders in taking actions …or NOT taking actions, may be they should have some discussions with people running or simply working in those firms!
They are voters and if GOM wants Mongolia to be successful and relatively independent from foreigners, it's better pay NOW a very serious attention to those that could be the LOCAL Mongolian engine.
By the way, I was once told that Mongolia was an example in term of privatization distributing shares of privatized companies.
Then may be GOM should remember this because the shareholders of those companies are Mongolian VOTERS, foreigners holding a small % of those companies. It should REALLY pay attention to modernizing MSE, fixing, not talking about, everything that should be so that Mongolians don't get caught on the wrong foot once this market is opening up to foreigners.
For instance, what's up about this fairy tale of the Securities Market Law?
Any hope to get it seriously corrected, voted and implemented before 2020 or 2030?
GOM OWES that to those companies, among others, that are doing their job upgrading, without any public PR stunt, just betting on Mongolia and Mongolian people!!
27 Feb, 03:33 AMReplyDelete CommentLike5
KingFox Comments (22)
I particularly like the last paragraph ..... at least for ETG "investors"... I use the term very loosely!
http://bit.ly/Va1t6s
27 Feb, 01:25 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
http://bit.ly/Y4UWc3
Kind of contrast with what I heard in Hong Kong at a conference on Oct 31, 2012.
Better late than never.
V, II & I in that order.
27 Feb, 09:31 PMReplyDelete CommentLike5
dulleyefarmer Comments (163)
Another great article from Jargalsaikhan.
"Our national debt has become twice as big as it was before the negotiations were made with Russia to "fully settle" the debt. And, the Russian debt was the biggest debt Mongolia had ever had. The government today has found a "clever" way to make up its deficits by acquiring foreign loans to implement projects."
I was wondering about the spirally debt and thought that it must already be approaching the old Russian debt levels. The Chinggis bond has become the new cash cow. The Russian debt ended in a murky mix of promises and theft by the then MPRP l wonder where the Chinggis bond will end?
28 Feb, 01:36 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/XJ8lEw
"Oyu Tolgoi and Tavan Tolgoi began at about the same time. But Oyu Tolgoi is now powered up and has begun production, whereas Tavan Tolgoi is essentially in a bankrupt state; and where is that famous Thermal Power Plant No. 5?"
Interesting admission from P. Tsaagan OT board member. he was Professor Chimid's assistant in drafting or should l say cut and pasting Mongolia's new constitution. He was also sent by the Asia Foundation to study in the US.
28 Feb, 01:57 PMReplyDelete CommentLike4
MSE.Investor Comments (93)
http://bit.ly/XJ8lEw
"Mongolians should also be rid of their "complaining old woman" behavior. We should resolve our issues and move on without embarrassing Mongolia in front of the world. I think our investors would agree."
That is an impressive statement from a senior Mongolian official!!
Cannot agree more.
28 Feb, 10:09 PMReplyDelete CommentLike5
MSE.Investor Comments (93)
The comparison between OT and ETT is striking and should push some at GOM to think seriously about their ability to run a project of that kind on their own!!
28 Feb, 09:55 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
This is the strategy in which all of Mongolia's State owned companies ended up in the hands of Oligarchs.As posted before by Jon the MCS brothers increased their shares in MMC by 17%and 20%? respectively joining their Chinese partner Robert Kuok and his Kerry group.Some kind of deal must have been done to deliver ETT to MMC, lets wait and see.
Lots of the shares have already been cheated from the Mongolian people in the form of reduced sum buy outs seemingly paid for by the Chalco advance that now will attract a $50 million USD penalty if the GOM is proved to have breached it's agreement.MMC is a long term bet but anything else I wouldn't bother.
Genco Battulga was complaining recently that MCS get all the good contracts and no one ever challenges them or writes anything bad.
1 Mar, 02:52 PMReplyDelete CommentLike4
MSE.Investor Comments (93)
http://bit.ly/Z4Hx2S
That is a smart statement from OT/RIO.
28 Feb, 09:59 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Another sideline to the issuing of shares in ETT to the Mongolian public. GOM has used this as an excuse to fingerprint ex pat Mongolians. This was done in Melbourne by the son of then Ambassador Jambaldorj. Anyone who wanted to claim their shares had to agree to be electronically fingerprinted.
2 Mar, 04:10 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/YK8ZTT
The cupboard is bare looking at these possible candidates for the upcoming Presidential election.
http://bit.ly/XqCjvS
Two of their proposed candidates are the top two candidates for arrest according to "Dr. Ganbat".
Ulaan was the Finance Minister at the time of George Bush's visit to Mongolia. He allegedly pocketed the $11 million given to GOM by Bush.
http://bit.ly/YK8Y29
Enkhbayar's son has pulled out of the MPRP.He was ineligible to serve in Parliament as he avoided his National service but was installed as Deputy of the Mongol Bank .Enkhbayar previously controlled the Mongol Bank with his puppet Chulunbat but now has his son there.
2 Mar, 03:15 PMReplyDelete CommentLike4
MSE.Investor Comments (93)
http://bit.ly/XT1gl0
4 Mar, 11:21 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Its only the small picture.
5 Mar, 03:40 AMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://bit.ly/YNArhd
More Judicial appointments by Elbegdorj. That makes 3 or half of the Supreme Court ,one of the Constitutional Court and now various aimag Judges. Smart moves by the DP along with the decentralizing of the IAAC to 21 aimags.
6 Mar, 01:29 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/ZqBMg4
Interesting power grab attempt by the ETT union head.
6 Mar, 01:33 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
http://bit.ly/YyVUxp
Ts. Munkbayar is still involved in saving Mongolia's rivers and lakes.The herders care about the environment but it seems the Judges don't.
http://bit.ly/P2kZwp
6 Mar, 01:46 PMReplyDelete CommentLike4
Valley Boy Comments (2012)
It looks like an appropriate set of topics were being considered at the economic forum. It will be interesting to see what economic initiatives will be followed up on as a result of the meeting.
http://bit.ly/Yz0coo
6 Mar, 02:00 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Just reading the agenda is making me sleep imagine being there!
6 Mar, 02:13 PMReplyDelete CommentLike4
Valley Boy Comments (2012)
I can relate to that, lol. I can't count how many times I had to force one eye open during long seminars about this and that.
6 Mar, 02:35 PMReplyDelete CommentLike4
MSE.Investor Comments (93)
excellent.
Went to UB quite a number of times attending conferences but prefer to stay home (portfolio in place anyway) for the time being instead of fuming there and may be blowing out a fuse.
Long ideas and words / short common sense and tangible actions :)
6 Mar, 06:33 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
http://bit.ly/13HZZUS
More pre Presidential election activity?
7 Mar, 01:44 PMReplyDelete CommentLike4
Mogi Comments (13)
Don't think it's related to the election.
It's more of what the new head of fair competition and consumer protection agency's doing in my belief. Magnai is his name, came to prominence as one of the protest leaders during the 2008 riot. His ambition is political and his actions reek of 2016 run for parliament. Sticking his head in every part of business these days.
11 Mar, 05:45 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Yes l remember Magnai, he was arrested and imprisoned in Gandshudag after the 2008 election.I met a few people who were planning to run for Parliament but these days they will need a lot more money and backing
11 Mar, 09:30 PMReplyDelete CommentLike1
MSE.Investor Comments (93)
http://bloom.bg/10nLnJz
in theory it's good news,
but after the experience of the last few months, foreign investors may wait for this to translate into tangible actions
(may be another minister will say something different, may be the parliament will not approve this, ....may be this may be that...and even if approved by parliament, one may wonder how it will apply)...
It takes a lot of time to build credibility,
but it is much faster to undermine it.
7 Mar, 09:55 PMReplyDelete CommentLike5
MSE.Investor Comments (93)
http://bit.ly/W9ysHr
Great statement about branding and credibility!
What about some actions, thinking about long term financial effects of political stunts?
Ignoring for a minute, the political ambiance, not exactly foreigner friendly,
for now, it is still a total headache for foreign institutions to open Escrow Accounts to trade on MSE
(I am not even talking of the liquidity),
so is the President serious when he says:
"Finally, he encouraged companies to release public offerings to increase public participation and inclusiveness. "This will benefit the entire nation, not just a select few that form the oligarchy."
after:
* overseas listed mines have seen their prices crashed over last year, thanks, among other, to the attitude towards foreigners,
* the MSE listed mines are not doing much better,
* the turnover on MSE is much lower than before the "upgrade"
* a good number of foreigners who were traded on MSE before july 2, 2013 are still grounded because of the Escrow Account system
* the ETT and MIAT IPOs have been postponned sine die,
it is reasonnable to expect Mongolian entrepreneurs to commit suicide and list their own firms at heavily discounted valuations in an empty market?
Bizarre, really bizarre
8 Mar, 02:00 AMReplyDelete CommentLike4
haiguike Comments (466)
Thank you for your contributions, MSE Investor. You are offering very accurate on the ground information.
I agree with your assessment of the MSE. One of the reasons why it's so illiquid is because it can only thrive in a skyrocketing bull market. The government entities charge 1.7% of the volume per transaction from my understanding. BDSec charges 3% of the volume per transaction, so a round trip costs around 6%. The lowest percentage any brokerage firm offers for the MSE is 2%.
All MSE brokerage firms recently petitioned to ask the government to lower the fees; however, the government responded by increasing the fees by 0.03%. So maybe the president is expecting businesses to not care about profitability and just do it for the "good of the country". Certainly the high fees are not good for the country.
Very good economic forum. However, talk is cheap. The president, the prime minister, and parliament should implement business friendly policies to make these visions come true.
8 Mar, 04:53 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
Many thanks for your kind words.
About the fees, my views slightly differ.
When I opened my first account in UB, my broker was charging 2.5%. Then during my first trip I realized
(fears came true a year after :)
I urgently needed to open "linked accounts"!
The other brokers were charging 2% so I required to pay 2.5% to all of them.
My point was that trading would not be decided based on price but services provided and for a while I was executing through 3 brokers (never got account with BD Sec).
At the end of the day, if I expect a stock to go up x5 or x10 who cares about 0.5% or even 2%.
If I picked a bad one, the loss could be as simple as -100%!
50bps does not make any difference.
And I never pressured a broker on commissions, paying much more attention to service provided....(if I am not happy I pack, that's it!)
...now I have only one (100% local) broker, I trade with since june 2011 and I am delighted!
I do my best to help them getting reading (for the day foreigners do pile in) and I have a very dedicated broker, the whole team is very dedicated, even those that do speak only one word of English.."ok".
They are very good and I am a very happy client.
When FRC increased its cut I was of course not affected but I screamed for them (and even smaller ones that will go under if it goes on like that)!
When the MSE announced it would cut would its commissions, I sms my broker telling them to keep the total at 2.50% and pocket the difference as it would not make any difference for me but they would appreciate.
With this kind of turnover and all those technical issues still not fixed, brokers cannot make money on MSE (not even sure BD Sec does on secondary MSE)
Will the RTO/IPO of Eurofeu and Beren Mining happen??
Also, even to build a small portfolio (I have never been excited by the mines nor APU), it takes a long time (months!!) so the idea of "trading", buying and selling, is unknown to me, especially with the concept of capital tax for foreigners is still ? + ? = ?
So I would never dare selling shares it took me months to grab for some potential short term profits...and long term regrets.
I don't think it's worth it.
For me MSE listed stocks are call options on the GDP of Mongolia.
Will think about selling some in few years from now.
For the moment, I try to grab more based on intel I get (2012 financials are nice) as well as convergence of intel to make better informed decisions.
I monitor regularly the free float on all the shares I hold (many) and the day foreigners do pile in, it may be "interesting".
So I think "trading" is risky business.
That's for the brokers.
On the GOM, I am extremely disappointed.
I am simply wondering if those guys are able to make ANY decisions.
Do they understand that, for the sake of their citizens, they may jeopardize badly their future.
it's scary.
And of course on the MSE side, it's the same.
Anyway, I am in Hong Kong and I have positionned my portfolios for the next 5-10 years,
so delays are a bit inconvenient but it's nothing in comparison to what may be happening to Mongolians on the ground if GOM does not get serious asap.
I am sad for my friends, Mongolians and foreigners, on the ground.
8 Mar, 06:04 AMReplyDelete CommentLike4
dulleyefarmer Comments (163)
A very amusing article the only brand they have now is a red hot one on their backside saying "dodgy".
The Presidential quote is a classic calling on private companies to release offerings for the public. So many of Mongolia's companies were owned by all the public untill they were cheated from them and now the President wants them to buy into them again?
8 Mar, 05:00 PMReplyDelete CommentLike4
MSE.Investor Comments (93)
$ Maths for Mongolia
There is a simple $ maths exercise I am wondering if many at GOM have done.
It just boils down finance 101 and DCF valuations, not exactly rocket science.
Attending several Mongolia conferences I remember Randolph Koppa, president of TDB, flagging in his excellent presentations the $ needs for infrastructure build-up from 2010 to 2015.
It was estimated to $45-68bn, out of which $12-18bn was supposed to be domestically funded and more or less already $20bn already raised.
Left to go is more or less is probably $30bn.
The number may be accurate or not, the magnitude is likely.
Now how is this impacted by the OT (ETT as well) saga?
1) Delays!!!
In 2011 / early 2012, private equity investors were running to UB, 'Mongolian funds' were created, bankers fighting for mandates...
Now some PEs, funds and brokers now refocus from Mongolia to Myanmar, while others may be stuck in a dilemma between saving $ or staff leaving on their own.
=> Because of the negative perception the OT saga creates, the capital, debt and equity, needed for infrastructure is probably delayed by at least a year!
The impact for Mongolian citizens:
All the infrastructure they need now, as their expectations were raised, will be delayed as there will not be enough capital to finance ALL the numerous priorities!
They may have iPad, new cars and luxury items bought in Central Tower, but they still face power cuts and even more traffic jams!
2) Costs
In 2011 investors running to UB were overlooking political risks.
Probably less now!
In my opinion, the increase in perceived risk premium could be as high as 75-100bp for debt and 1%-5% for equity. Medium term will tell once they try to launch Chinggis Bond II.
=> If the capital needed is an aggressive (I would assume foreign lenders to be more conservative than this!) mix of 20% equity and 80% debt, then the increase cost of capital could reach 2%, which on $30bn would translate into AN EXTRA COST of $600millions PER YEAR!
I don't know how much GOM was expecting to get extra from OT.
If it was expecting a free lunch, the bill could be pretty heavy!
For what I know Mongolians are pretty good at the game of chess, so would they ever trade their queen for a horse? Weird isn't it?
Also lenders have simple concepts like 4Cs or 5Cs,
1.Capacity: Will the client be ABLE to repay the loan?
2.Character: Will the client be WILLING to repay the loan?
3.Collateral: Is it of value?
4.Covenant/conditions: Are the terms and conditions safe, realistic, and enforceable?
5.Capital: Is the cushion of equity enough?
Now is Collateral really enforceable in Mongolia? Has a 'contract' any value when one party is harassing the other to change the terms. So 4) and 3) may be at risk.
Character: does it look like GOM is 'willing' to pay?
If a project has annual inflows of $1 for 10 years, at a discounted rate of 5.125% it would be possible to borrow $7.675 up front on the basis of those cash flows.
If the project is perceived more risky because of risks of political interference both the certainty of the cash flows and the discount rate could be affected negatively.
For instance with a 7.125% discount rate, the present value, i.e. the cash that could be raised today, would be $6.983, lowered by 9.02%, i.e. less money up front going into the Mongolian economy.
If there is uncertainty on the cash flow numbers, or perception of uncertainty, then the present value that could be borrowed would be even lowered as investors/lenders will take even more conservative assumptions!
I think that GOM had in mind the long term good and well-being of Mongolians in chasing OT and RIO,
so that Mongolia would retain more equity upside.
But in trying to achieve this to get more cash up front,
GOM has, I think, badly affected its risk premium
•reducing the total amount of capital, debt and equity, it could raise now,
•as well as delaying this inflow,
•and making it more costly to borrow against those cash flows,
so net net Mongolians may be losing there.
Just hope they will do the $ maths themselves very quickly and act accordingly before those experiments become extremely costly for Mongolians and end up having to beg again to supra-nationals, IMF and alike!
8 Mar, 03:03 AMReplyDelete CommentLike5
MSE.Investor Comments (93)
http://bit.ly/12z1CF7
that is REALLY a cute one :)
8 Mar, 03:34 AMReplyDelete CommentLike1
dulleyefarmer Comments (163)
http://bit.ly/13LtSnD
Quite an impressive list of signatories. OT hasn't started production yet and there are 5 major environmental concerns including arsenic levels in ground wells.Interesting that the US are so environmentally conscious or is there more to their decision?
As far as Elbegdorj being confident about his position, l think he will easily win the Presidential election. As pointed out in previous posts there is no credible opponent. Khurelsukh sold his seat to MAK and the MPRP two contenders are next in line for arrest according to "Dr. Ganbat".
8 Mar, 03:07 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
http://bit.ly/16dgl7y
there may be incertainties in Mongolia
but at least some are pretty confident about their position on Nov. 28, 2013.
Aren't Mongolians supposed to vote by then ?
8 Mar, 03:39 AMReplyDelete CommentLike3
KingFox Comments (22)
ahhh, ya gotta love the politics of it all.... well not really....
four months to go before the real negotiations get underway.
8 Mar, 03:06 PMReplyDelete CommentLike2
MSE.Investor Comments (93)
Until recently, Mongolians had limited opportunities to face other cultures and now that the commodities lead boom expose them to foreigners of different kinds, there may be some surprises on both sides.
For instance, the 5 Cultural Dimensions of Geert Hofstede can be handy to understand why in the multinational multicultural environment some go on well together while for others it may be an accident waiting to happen.
http://bit.ly/Xz6y8L
(the findings are quite remarkable).
Mongolia is not the list of countries on this website but somebody else provided some insight on what the 5 Hofstede Cultural Dimensions may be for Mongolia.
http://bit.ly/YkeJBr
May be it could be useful for Mongolians and GOM to have a look at those to understand better what type of partners
(or enemy, Sun Tzu http://bit.ly/Xz6y8M "It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles" )
they are dealing with.
My two cents.
9 Mar, 08:13 PMReplyDelete CommentLike2
Valley Boy Comments (2012)
Going to the movies, participating in cultural exchange programs and university learning and teaching help with international business each in their separate ways. The consuls help in their ways, too; one of them is the husband of a senator.
http://imdb.to/16iifUl
http://bit.ly/Y36Ykp
http://preview.tinyurl...
http://bit.ly/16iifUn
9 Mar, 11:45 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Its amazing what rubbish will get you a Phd. these days especially if you are a Mongolian on a foreign scholarship program.In Australia it is said that no one fails in the MASP program l have sat through some unbelievable presentations by Mongolian students groomed and sent back to UB supposedly to be Australia friendly.
10 Mar, 04:40 AMReplyDelete CommentLike2
haiguike Comments (466)
MBAs are even worse these days. There are a lot of repats with MBAs that are expecting high salaries doing little amounts of office work. MBAs are all about the prestige and network. All the repats coming back to UB with a 3rd or 4th tier MBA will be very disappointed in today's job market.
10 Mar, 05:57 AMReplyDelete CommentLike2
MSE.Investor Comments (93)
Never been a fan of MBA programs (got one as a by stander) but this stuff from Hofstede seriously impressed me. One of the very few things I remember as relevant.
The rest ... :) no comment!
Perfect to send firms into a wall like Just-In-Time.
10 Mar, 07:00 AMReplyDelete CommentLike1
dulleyefarmer Comments (163)
http://bit.ly/16iifUn
VB I didn't realize that the US had 8 honory Consuls to Mongolia! I'm surprised they haven't given one to Steven Siegal.
http://bit.ly/XqCjvS
"Dr. Ganbat" goes into great detail in explaining the HC bestowed to Richard Blum husband of Senator Dianne Feinstein by Enkhbayar.
They really need to tighten up this bestowing of titles to unworthy recipients.This follows after the alleged murder of a Filipino maid by the family of the Honory Consul of Austria in Mongolia.
The US situation is very messy and one of their former Ambassadors to Mongolia was apparently very indiscreet with a former "Miss Mongolia".
10 Mar, 03:46 PMReplyDelete CommentLike4
Valley Boy Comments (2012)
I agree the situations can be messy when it is a bit hard to tell what the right course of diplomatic action might be taken from afar. Maybe it helps to browse through the news from both ends, California and Mongolia. It sounds like an interesting topic to explore.......
http://bit.ly/Y2ZUHF
http://preview.tinyurl...
http://bit.ly/Y9SVMa
10 Mar, 04:50 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
The trouble with Diplomats and NGO's in Mongolia is that if they were good at their job they wouldn't be in Mongolia they would have a better posting.Lots that I met were hopeless, naive, party boys, self serving or old and about to retire.
There seems to be no news about Justin Kapla other than American biased stories and blogs?
10 Mar, 08:13 PMReplyDelete CommentLike4
haiguike Comments (466)
I concur. Most of the individuals I have met from NPOs seem rather lost.
11 Mar, 12:05 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
Long theory, short common sense :)
10 Mar, 07:00 AMReplyDelete CommentLike1
MSE.Investor Comments (93)
http://bit.ly/13OwyAo
bingo, making clear what GOM is doing now, i.e. trading pennies now writing off $ later!
10 Mar, 10:56 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
GOM putting their start up 34% liability on credit to THR seems like a smart tactic if they don't intend to pay it back?
Maybe this will be the payback for Enkhbayar selling the license to Friedland for $50 million without consultation.
11 Mar, 02:11 AMReplyDelete CommentLike2
Mogi Comments (13)
didn't TRQ buy OT from BHP directly?
11 Mar, 05:44 PMReplyDelete CommentLike2
dulleyefarmer Comments (163)
There are differences depending on who you read " Dr Ganbat" has his version and others have theirs.l seem to recall that the $50 million figure involved in the so called Russian debt repayment was allegedly issued in Ivanhoe bonds. I also recall in Mongolia at the time English media reporting that OT had been sold for $500 million.There are different types of licenses these two quotes refer to exploration and exploitation licenses.
http://bit.ly/XqCjvS
"On December 25, 2003, Friedland received a long-distance call from Mongolia. It was Christmas, a holiday for almost half of world's population. On the other end of the line was Prime Minister Enkhbayar, who was asking for a spare USD50 million by the next day, to pay Mongolia's debt to the former USSR before the New Year. Because it is a holiday, no bank transaction was available, Friedland said. However, as a businessman with an eye for a bargain, he was ready to provide the USD50 million within the next 24 hours in exchange for an exploitation license for OyuTolgoi."
http://bit.ly/Zh038M
"Ivanhoe agreed in 2000 to pay USD 5 million to acquire the exploration license for Oyu Tolgoi from BHP Billiton (then known as Broken Hill Proprietary). Ivanhoe paid USD 37 million to buy out BHP's remaining royalty from the mine in 2003"
11 Mar, 09:27 PMReplyDelete CommentLike4
dulleyefarmer Comments (163)
There is a lot of detail on the three types of licenses and the responsibilities of the holders in the Draft Minerals Law. l'm not sure what the situation was in 2000-2003
12 Mar, 03:47 PMReplyDelete CommentLike2
MSE.Investor Comments (93)
Not so long ago a senior Mongolian official said:
http://bit.ly/XJ8lEw
"Mongolians should also be rid of their "complaining old woman" behavior. We should resolve our issues and move on without embarrassing Mongolia in front of the world. I think our investors would agree."
http://bit.ly/W9ysHr
"Finally, he encouraged companies to release public offerings to increase public participation and inclusiveness. "This will benefit the entire nation, not just a select few that form the oligarchy."
I would encourage the two to talk, brainstorm a little bit and then give some marching orders to MSE.
On MSE there are many stocks "trading" well below Book Value, really below.
I even spotted a case where a stock trades at 0.004 x Book Value and 0.03 x Earnings.
It even trades at 10% of its cash bank account.
Last years financials are on the MSE website!
Why is that happening there?
There are buyers for sure, or at least people trying to buy.
Once in a while, somebody that has not read the financials may be selling 10 or 20 shares but that's not daily, not weekly, not even monthly.
And after you have read the financials, WHY would you sell at THAT PRICE, while it is a decent assumption it could trade one day at x100 or x200 that current price.
The problem is an old trading rule from MSE that nobody wanted to fix during the "upgrade".
Daily variations for share prices on MSE are +/-15% of the previous CLOSE. That is fair.
But how is the CLOSE defined? That is THE problem!
The CLOSE is the LAST TRADED price (subject to an averaging …if there are several trades during the day).
If a stock is massively bid at the daily limit (+15%) but there is not a single stock sold (very common for now on MSE), the stock does not trade, and the CLOSE is unchanged…and that can go on for days, weeks or MONTHS!!
Imagine that:
•The FAIR VALUE (whatever it comes from, DCF, Peer Valuation, NAV) of a stock is MNT 1000 (communicated to MSE and posted on the MSE website),
•The last price traded is MNT 100,
•Its market capitalization is only MNT100,000,000 but its business is promising,
•The stock did not trade for the last 6 months,
•There are people ready to buy say 1000 shares at MNT 900,
•There are people ready to sell say 1000 shares at MNT 900,
•No other order of any kind for weeks.
Questions: How can the buyer and the seller trade shares at MNT 900?
How could the share price trade from MNT 100 to MNT 900 with the 15% limit on LAST PRICE TRADED?
It can stay like that for ever until an uninformed retail investor makes the mistake to sell 1 stock at MNT 100...to see the stock bid at MNT 115 the next day. 
I seen one solution and while this is the consequence of that INAPROPRIATE definition of the CLOSE, for such a market in development, this solution could be seen by many as "market manipulation" which I would of course not recommend..
The seller just could input the following sell orders (I ignored the rounding error on trading prices):
•Sell 1 share at MNT 115,
•Sell 1 share at MNT 132,
•Sell 1 share at MNT 151,
•Sell 1 share at MNT 173,
•Sell 1 share at MNT 198,
•Sell 1 share at MNT 227,
•Sell 1 share at MNT 261,
•Sell 1 share at MNT 300,
•Sell 1 share at MNT 345,
•Sell 1 share at MNT 396,
•Sell 1 share at MNT 455,
•Sell 1 share at MNT 523,
•Sell 1 share at MNT 601,
•Sell 1 share at MNT 691,
•Sell 1 share at MNT 794,
•Sell the balance at MNT 900.
And the buyer would have to lift all those offers day after day while staying within the 15% limit on LAST TRADED PRICE.
In short it would take 16 days to deal with the constraints imposed by MSE,
and be ready to be blamed by FRC for market manipulation,
to get a trade to happen close to fair value between 2 parties on a stock where nobody else was showing any interest.
The seller had to sell 15 shares below its target price in order to sell the rest at 900.
This definition of the CLOSE has to be modified because that situation is rather usual on MSE.
Furthermore, back to my example, it means there are quite a number of stocks trading well below fair value but there is nothing those JSCs could do.
They post on MSE website their financials for everybody to read and understand but the MSE trading rules PREVENT their share price to converge toward something closer to fair value.
What else can they do? Nothing!
This means that their market capitalizations will remain much smaller than they should be, which does not help them to raise equity through rights issues without facing serious dilution risk.
THAT MEANS ALSO THAT THE WHOLE MSE MARKET CAPITALIZATION IS UNDERVALUED
because of the that rule which does not help Mongolia to make headlines for positive reasons!
So instead of:
"Finally, he encouraged companies to release public offerings to increase public participation and inclusiveness. "This will benefit the entire nation, not just a select few that form the oligarchy."
some may ACT and tell MSE to dust their rules.
Just my two cents
but I am not a shareholder of MSE, not even Mongolian.
11 Mar, 02:53 AMReplyDelete CommentLike3
MSE.Investor Comments (93)
http://bit.ly/ZfetWR
Never believed I would ever agree so much with a report from World Bank !!!
11 Mar, 10:20 AMReplyDelete CommentLike3
KingFox Comments (22)
Looks like Rio is playing hardball with Guinea, some good sound bytes in the article that I'm sure will resonate with GOM and OT. Should also allow Rio to focus on OT and allocate their resources appropriately.
http://reut.rs/Y6J9YU
I'm a little more curious what the end game is for the US, abstaining (and not voting no, which I believe is an important point) from the World Bank et al., on OT financing.
Yeahhhh, the US is "concerned" and "keenly interested" in environmental issues and Mongolia's nomadic peoples..... right.....
Maybe, hopefully, just a friendly little nudge to GOM on behalf of Peabody, and nothing against Rio..... and its project.
11 Mar, 07:48 PMReplyDelete CommentLike3
Valley Boy Comments (2012)
Here's a quick followup on that train of thought about the holdups.
http://bit.ly/WdE1G7
14 Mar, 02:02 AMReplyDelete CommentLike1
MSE.Investor Comments (93)
agreed.
Yes sure, the US has always been very supportive of environmental issues and US firms would much more likely be mindful of this :)
Good way to start the day with a smile.
11 Mar, 07:58 PMReplyDelete CommentLike1
dulleyefarmer Comments (163)
l remember when Barsbold was the Environment Minister. A fair bit of money came from the US for environmental programs which was pocketed by Barsbold.
I find it strange that Mongolians love their country so much but there is rubbish strewn from on end of the country to the other.
I think a re read of the Keith Harmon Snow article on Ts.Munkbayar is required reading for the US concern about the Mongolian environment.
11 Mar, 09:36 PMReplyDelete CommentLike2
MSE.Investor Comments (93)
http://bit.ly/13ULMzB
A bit of positive out of UB and MSE, once in a while.
There are already 119 MSE listed companies that have posted their 2012 financials on the MSE website!
This is a MAJOR change in comparison to 2011 or 2010!!!
Of course it's in Mongolian, but the good news is that those are very simple (not a 500 pages bible) and it is quite easy to decode the Equity and capital and the Net profit.
Just have a look at the Equity page and decode from here.
To find the number of shares outstanding, unfortunately, during the MSE upgrade, this information has gone missing or is somewhere I have not found it yet.
For number of shares outstanding and free float, check the website of MSCH&CD and look for the Entitlement Report where you will find in that order:
Name,
Code,
Symbol,
number of shares issued,
number of shares held by the government,
number of shares held by holders above 5% as well as number of holders,
number of shares held by holders below 5% (i.e. free float) as well as number of holders (steadily shrinking).
in short, for whoever, non-Mongolian speaker, wants to find there is a lot of information to find.
12 Mar, 12:25 AMReplyDelete CommentLike2
haiguike Comments (466)
How are the companies doing overall?
12 Mar, 12:28 AMReplyDelete CommentLike1
MSE.Investor Comments (93)
Have a look by yourself (have of course removed names and symbols) for those I follow:
I have not included the mines (I am not very interested in) nor APU.
It shows:
PER and Price to Book (based on thursday feb 28, 2013 share prices) as well as Earning Growth 2011 to 2012 and 2010 to 2011 (for stocks that have published their 2012).
starting with those still in the red:
Earning Growth
PER PB 2012/201 2011/2010
(543.025) 3.053 67% -137%
(209.117) 2.027 16%
(141.510) 2.374 16% 89%
(132.530) 1.413
(115.841) 49.529 93% -81665%
(42.636) 0.931
(38.577) 2.301 -143% 76%
(32.312) 17.905 35%
(15.078) 2.922 10% -8%
(14.411) 2.635
(12.730) 2.658 26%
(12.114) 0.472 17%
(11.290) 2.987 -98%
(1.567) 0.179 15%
(0.971) 0.835
(0.956) 0.153 -17299%
(0.354) 0.042 -314% -13987%
Earning Growth
PER PB 2012/2011 2011/2010
0.031 0.004 -62%
0.254 0.242
3.752 2.150 88% 58%
4.221 0.631 10%
4.659 0.500 -6%
4.963 3.016 460% 73%
5.631 1.396 48% 339%
7.133 1.014 208%
13.072 8.279 2256%
14.176 1.911 453% -200%
14.666 3.138 -1% 83%
15.098 0.806 20%
18.041 7.643 426% 32%
18.229 0.973 11% 131%
21.556 2.406 17%
24.204 7.459 21% 297%
28.997 4.430 3% 75%
32.161 1.415 132%
33.117 4.792 - 2%
37.876 1.049 -6% 126%
45.128 1.463 4066% 101%
45.861 0.457 46%
50.420 5.541 1962% 87%
67.462 0.727 -64%
73.261 1.507
120.193 2.454 1 25%
141.263 2.530 -60% 548%
144.172 2.002 158% 1033%
170.325 0.748 136% 75%
188.061 17.662 362%
413.293 2.626 -94%
589.012 1.654 216%
ok all this is a bit volatile but for a young market and young companies, especially tiny ones doing their best to provide in a timely manner that is an achievment!!
12 Mar, 12:51 AMReplyDelete CommentLike3
KingFox Comments (22)
Looks like work on the Power Plant is progressing, ahead of talks between RIO and GOM towards the end of the month.
http://buswk.co/XtitXQ
It is a little ironic with this recent dust up on "environmental" issues that they are talking about building coal generated power plants. Has to be one of the dirtiest power generation sources around.
13 Mar, 10:07 AMReplyDelete CommentLike2
Mogi Comments (13)
Well, the coal alternatives are a bit too expensive still, especially for Mongolia to handle the growing demand on time.
Wouldn't characterize it as ironic though. I think the systemic need for power outweighs the environmental & health risks in the short term. But at least we are experimenting with green energy, like the Salkhit wind farm.
14 Mar, 02:19 AMReplyDelete CommentLike2
Valley Boy Comments (2012)
Another wind farm sounds interesting, too. It ought to help energize the developments nearby along the main trade route connecting into China.
http://bit.ly/Z16fiH
14 Mar, 03:10 AMReplyDelete CommentLike2
dulleyefarmer Comments (163)
Mongolia does have some good quality coal but unfortunately for UB it forms a brown blanket suffocating the city during winter. One particularly bad day l drove out of the city and noticed a 5 degree temperature drop as he air quality improved.
http://bit.ly/Z0hw2S
Here is a recent environmental story concerning the alternative to coal.
Interesting to note the involvement of Areva. Chirac was a big sumo fan and came to Mongolia twice to meet Davagdorj the Mongolian born Sumo champion. He expressed interest in Mongolia's uranium and Enkhbayar was subsequently invited to France where he big noted himself and offered lucrative deals to Areva. On his return to Mongolia he was rebuked by the Ikh Hural.
The recent Khan resources case has the suggestion that licenses are being cancelled and ending up in the control of Rosatom .
13 Mar, 03:20 PMReplyDelete CommentLike3
dulleyefarmer Comments (163)
Still concerned about Jon's health? It's been 4-5 weeks now hope your recovery is on track Jon.
13 Mar, 03:23 PMReplyDelete CommentLike3
MSE.Investor Comments (93)
Agreed. Just hope you recover soon.
13 Mar, 07:20 PMReplyDelete CommentLike3

Central & West Africa Blog

Tue, 12 Feb 2013 12:37:52 -0500

This blog is nascent. I don't know when I'll travel to Central or West Africa.

Having started two other Africa blogs, it made sense to complete the coverage.

Middle East & North Africa

East & Sub-Sahara Africa

I don't know much investing about these regions.

Who does?

Jan Schalkwijk (Africa)

Ryan Hoover (Africa)

Investing Africa (Ryan Hoover's off-site blog) (free)

Mutale Mubanga (Africa; based in Zambia)

��Frontier And Emerging Markets, Data Beyond Scope Of My Other Blogs

Mon, 21 Jan 2013 15:04:13 -0500

This is some place to post links about things related to frontier and emerging markets that don't fit into my current list of blogs on countries and/or regions listed here:

Jon Springer's Library Hub Of Everything I Have Done On Seeking Alpha, So Far

List of ways to invest in frontier & emerging markets (excluding investing in the local markets, individual stocks, private equity, and hedge funds):

Frontier And Emerging Market ETFs, ETNs And Closed-End Funds

List of authors covering frontier markets on Seeking Alpha and off-site:

Frontier Markets Authors

��Hans Rosling: Videos Making Global Development Visual

Mon, 21 Jan 2013 11:53:23 -0500

I find these videos make a great case for why frontier markets matter this century, and are where I am spending time learning and developing my investing knowledge are all TED talks.

Mr. Rosling's bio is here.

Mr. Rosling's website full of global statistics is Gapminder.org.

Videos

The magic washing machine (9 minutes)
Stats that reshape your worldview (20 minutes)
Global population growth, box by box (10 minutes)
Religions and babies (13 minutes)
Let my dataset change your mindset (20 minutes)
Asia's rise -- how and when (16 minutes)
New insights on poverty (19 minutes)
The good news of the decade? (16 minutes)

Quotes by Hans Rosling

"Health cannot be bought at the supermarket. You have to invest in health. You have to get kids into schooling. You have to train health staff. You have to educate the population."
Watch this talk »
"I have shown that Swedish top students know statistically significantly less about the world than the chimpanzees."
Watch this talk »
"My experience from 20 years of Africa is that the seemingly impossible is possible."
Watch this talk »
"I have a neighbor who knows 200 types of wine. … I only know two types of wine - red and white. But my neighbor only knows two types of countries - industrialized and developing. And I know 200."
Watch this talk »
"Eighteen fifty-eight was a year of great technological advancement in the West. That was the year when Queen Victoria was able, for the first time, to communicate with President Buchanan, through the Transatlantic Telegraphic Cable. And they were the first to 'Twitter' transatlantically."
Watch this talk »
"What I'm really worried about is war. Will the former rich countries really accept a completely changed world economy, and a shift of power away from where it has been the last 50 to 100 to 150 years, back to Asia?"
Watch this talk »
"Avoid war, because that always pushes human beings backward."
Watch this talk »
"If your economy grows [by] 4 percent, you ought to reduce child mortality 4 percent."
Watch this talk »
"Half of the energy is used by one seventh of the world's population."
Watch this talk »
"If you have democracy, people will vote for washing machines. They love them!"
Watch this talk »
"There are two billion fellow human beings who live on less than $2 a day."
Watch this talk »
"The number of children is not growing any longer in the world. We are still debating peak oil, but we have definitely reached peak child."
Watch this talk »
"You don't have to get rich to have [fewer] children. It has happened across the world."
Watch this talk »
"Religion has very little to do with the number of babies per woman. All the religions in the world are fully [able] to maintain their values and adapt to this new world."
Watch this talk »

Select News Clips From Sri Lanka In December 2012

Thu, 17 Jan 2013 08:51:52 -0500

Economic News

Sri Lanka's prosperity has increased 4.1 percent in 2011 improving on two earlier years, according to an index which tracks well-being, economic infrastructure and the business climate, the Central Bank said.
The Sri Lanka Prosperity Index has risen 4.1 percent to 60.6 point in 2011 showing a steady increase from 2009 when it was 56.5, the Central Bank said.

---

Sri Lanka's rupee currency gained 0.63 percent to hit a seven-month high on Thursday led by exporter dollar conversion and remittances ahead of holidays, while stocks ended firmer on falling interest rates.

Corporate Governance News

The Government is to amend the Administrative Regulations [AR] and Financial Regulations [FR] in line with modern needs.
The present public sector AR was introduced in 1968 and FR was introduced in 1962...
The Government has already started to compile a set of new AR and FR, which are much simpler, and they are expected to enhance the productivity of the public sector.
The new AR and FR are to be introduced within three months.

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Sri Lanka's financial regulators will monitor banks connected to conglomerates closely in the future as firms and the financial sector becomes bigger in the future, Central Bank Governor Nivard Cabraal said.
"I know many of you are not only looking at the banking sector but you have other businesses as well," Cabraal told directors of banks in a forum called by the Central Bank Wednesday.
"In good times if the other sectors are doing well it can supplement your bank. It will give the necessary impetus to the bank as well. And he bank can also provide support to the other sectors
"But in difficult times you need to concentrate on ensuring that conglomerate risks are also taken care of."
Cabraal said an inter-regulatory committee made up of the Central Bank, the Securities and Exchange Commission, the Insurance Board and the Stock Exchange will be looking more closely at conglomerate risk.

Central Bank News

The Central Bank has revised the island nation's 2012 economic growth target to 6.5% on Wednesday from an earlier 6.8% due to its tight monetary and fiscal policies, the bank's Deputy Governor said...
Sri Lanka implemented sweeping policy measures to avert a balance-of-payments crisis in 2012 by raising key policy rates twice since February and floating the rupee currency.
The Central Bank also kept a lid on credit growth while the government raised fuel and electricity prices as part of an effort to contain the fiscal deficit...
The Central Bank last week surprised markets by cutting key policy rates for the first time in nearly two years... to boost economic growth.
"We wanted to take some policy measures in advance to ensure growth," Weerasinghe said. "In 2013, we will have 7.5% growth..."...
Inflation has risen due to a supply shortage mainly in foods, and notched three-month high of 9.5% year-on-year in November... still below the 42-month high of 9.8% struck in July due to an extended drought that hit the farm sector during the preceding months.
"Right now what I see is there is some space for us to ease monetary policy. There is no question about it," he said...

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Sri Lanka should be careful to have suitable policies to allow economic growth to take off after reaching a target of 4,000 US dollar per person income in 2016, a senior central banker has said.
Assistant Governor C P J Siriwardene told a forum of bankers that Sri Lanka was aiming to reach the '$4K' target as quickly as possible in order to go beyond the 'magic number'...
Siriwardene said the United States was the first country to reach a 4,000 US dollar per capita income threshold in 1967...
Siriwardene said from 2000 to 2011, 40 countries reached the 4,000 dollar threshold with Maldives and Thailand among the Asian countries.

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Sri Lanka has cut its main policy rate at which money injected to banks by 25 basis points to 9.50 percent to boost loans and the Central Bank said a credit ceiling would expire by the end of this month.
Authorities imposed a credit ceiling of 18 percent for banks for 2012 after Sri Lanka's monetary system ran into a balance of payments crisis largely due to excessive bank credit taken by state entities to manipulate energy prices.
"The growth of credit obtained by the private sector from commercial banks continued to decelerate, reaching 23.5 per cent (y-o-y), by October, from a high of over 35 per cent prior to March 2012," the Central Bank said.
"This growth is expected to decelerate further to around 19 per cent by end 2012."...
"However, as per current projections, inflation is expected to moderate towards the second quarter of 2013 and stabilise thereafter benefiting from the strong demand management policies introduced at the beginning of this year," the Central Bank said.

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Sri Lanka has decided not to sell a sovereign bond in 2013, Central Bank Governor Nivard Cabraal said, urging commercial banks to tap the international capital market more.

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Sri Lanka's 2013 monetary policies will be weighted more towards loosening after the success of tightening in turning around a trade deficit this year, Central Bank Governor Ajith Nivard Cabraal said...

Tourism News

A Chinese investor has come forward to build Sri Lanka's first township development project on a reclaimed land in the sea. The project would be built next to the ongoing Colombo South Harbour Development Project and a total of 575 acres would be filled. Dr. Priyath Wickrama, Chairman Sri Lanka Ports Authority said that the unique feature of this investment would be that Sri Lanka would not have to pay a 'single cent' for this. He said that currently there is a delay in obtaining sand clearance permits and when this is overcome the project would get underway next year. He said that the investor would be offered 57.5 acres... The total project is valued to be over US $ 950 million...
A mini-golf course, a Formula One race track, a small yacht marina and areas for water sports will be created. "Events like night races, musical shows and other similar events could be held here which would attract additional tourist arrivals to the country and generate more revenue," he said. Dr. Wickrama said that Sri Lanka being an island nation, maritime activities play a vital role in her socio economic status...

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Tourist arrivals for the first 11 months of this year increased 16.5 percent to 883,353 from 758,458 a year earlier, while arrivals in the month of November increased 20.1 percent to 109,202 from 90,889 the previous year, data released by Tourism Development Authority showed.
The arrival figure for November is the highest on record for any given month. Last Tuesday, the country also welcomed its 950,000th visitor.

How you can invest in Sri Lanka

Currently iShares Frontier Markets has two Sri Lankan holdings.

Outside of Sri Lanka, there are two publicly traded companies.

John Keells, the largest single conglomerate in Sri Lanka, trades in Luxembourg as well as in Sri Lanka.
Virtusa (VRTU) is a Sri Lankan based information technology firm that trades on the NASDAQ.

Interested investors can also refer to my instablogs linked from my Sri Lanka Investing Blog home page:

investing with investment funds similar to mutual funds and ETFs in Sri Lanka
investing with a stock brokerage in Sri Lanka
investing in bank deposits and income in Sri Lanka

There are notes on currency risk as well as other things to consider in each of these blogs.

Sri Lanka's Brokerages: Investing In The Colombo Stock Exchange

Fri, 11 Jan 2013 15:11:09 -0500

I believe investing in the Colombo Stock Exchange [CSE] will be a good long term investment going forward and will write about investing in Sri Lanka in separate articles. You can find links to all the brokerages that trade on the CSE on two lists, one of trading members and the other of members of the CSE. As an investor, there is no difference for you between brokerages on one list and the other.

Brokerage fees for trades less than 50 million Sri Lankan Rupees have standardized commission rates at all brokerages of 1.12%. Thus, the only way for brokerages to differentiate themselves is on service.

After some quick notes on how to open account on the CSE, I will provide some details about the six brokerages I met with during my two week visit to Sri Lanka in October 2012. The brokerages I met with were a function of scheduling and are listed alphabetically.

Notes On Opening An Account To Invest With A Brokerage

You will need to fill out some paperwork and open some accounts to start investing with a Sri Lanka brokerage. The brokerage you choose to open your account with should help guide you through this process and provide you with paper work. You will need:

A Securities Investment Account [SIA] with a bank in Sri Lanka. This is a specific type of account for foreigners that allows your investment dollars to flow freely in and out of Sri Lanka.
Central Depository System [CDS] paper work that will link your SIA account to your CDS account with your brokerage company.
A copy of your passport.
A copy of a bill that shows you are domiciled at your home address.
To send funds to your SIA at the bank; maintain a minimum amount in the bank account (5000 Sri Lankan rupees, or about $40 currently); and transfer funds from your bank account into your brokerage account(s).

Notes On Banking Risks

For a list of banks rated by Sri Lanka's local Fitch Ratings, please consult this list. On it, you will find all banks rated from AAA to B, so that you may feel comfortable with the bank you choose to use for your SIA.

Notes On Choosing A Broker, Or More Than One

My notes on some brokers are longer than others. Those I met with in a more social setting than in a formal business setting have less detailed notes (First Guardian and S C Securities). With fees regulated, readers should talk to different brokerages, ask them to send you sample research reports, and get a feel for which broker they are most comfortable with by having a dialogue with several brokers first, perhaps even a few off the CSE website which I did not meet with.

For those interested in investing a large amount of capital, there is also a type of brokerage account called a "custodial account" with which the account holder has access to trade with all brokerages (higher fees may apply).

Asia Securities

I met with Mr. Sabri Marikar [CEO], Mr. Niyaz Aboobucker [Director] and Mr. Balakrishnan Nirmalan [Manager Research] at Asia Securiites. Asia Securities is a wholly owned subsidiary of Asia Capital, a publicly traded company on the CSE. Mr. Marikar had to leave our meeting early for another engagement and most of my conversation was with Mr. Niyaz Aboobucker.

Asia Securities has been a brokerage since 1900. It has many experienced brokers with more than 15 years of experience. High net worth individuals and institutional accounts are handled by directors. Daily and weekly research is available on the company website. Additionally, if you would like to receive these reports via e-mail, you may simply ask for them with no account opening required.

Select notes from my first meeting with Asia Securities 18 October 2012

During the bull run of 2009 and 2010, lunch was typically after 4pm
During the bull run companies with negative book value were going up every day; hotel companies with no land or hotels went up; speculation was wild
Index peaked at 8,714, then to about 4,800, and as of our meeting in October had rebounded to about 5,600
Sri Lanka's SEC has gotten stock market manipulation under control
Regulated 25% free float for all companies is probably a few years away; currently there are many companies with much less than this, some of which Asia Securities deems to have too small a free float and is thus "not in our universe"
If an investor requests a special report on a company, Asia Securities will get the report done
Investment portfolios are tailored to clients; look at whether clients want value vs. growth; discuss with clients their appetite for risk
Communication with foreign investors is done by e-mail and phone
Mr. Nirmalan pointed out that the market usually slows down toward the end of the year; and that before the budget is passed in November (annually), investors become cautious
Infrastructure development currently occurring in Sri Lanka is net positive for markets
Price of oil impacts currency; Sri Lanka imports most of its oil which is also used for power generation
India and China dominate big projects in Sri Lanka

For more information, e-mail niyaz@asiacapital.lk or sabri@asiacapital.lk.

Capital Trust Securities

I met with Mr. Tushan Wickramasinghe [CEO] and Mr. Charitha Gunasekere [Manager Research] at Capital Trust Securities.

Of the brokerages I visited, Capital Trust had by far the busiest office. The entry level was crowded with customers. A visit to their website will let you know that Capital Trust Holdings is a large group with 14 subsidiaries relating to everything relevant about the capital markets (scroll to bottom of home page for list). If you have specific investing needs, Capital Trust's network has the skills and contacts to help meet your needs.

Select notes from my first meeting with Capital Trust Securities 17 October 2012

In Sri Lanka, most energy is hydro power and crude oil; plant biofuel and coal are new.
Exports mainly go to U.S., Europe, Middle East
No currency peg for Sri Lankan Rupee since 2011
Cairn Lanka thinks it will find oil, as well as gas (Cairn Lanka is part of Cairn India in which Cairn Energy has a 10% stake; Cairn Lanka is in exploration stages off the coast of Sri Lanka currently; other owners of maritime licenses off the coast of Sri Lanka are waiting to see what Cairn Lanka finds before exploring themselves)
14 February 2011 all time high for market's All Shares Index of 7,811
Market started reviving at end of July 2012
In 2011 government reduced corporate taxation from 35% to 28%
In 2011 government reduced VAT on financial services by banks from 20% to 12%
There used to be a mentality that the opposition UNP was the only business friendly party, but the ruling Freedom Party has changed and is now viewed as friendly to business as well
The Freedom Party is expected to win the next election as well (parliamentary elections by August 2015; presidential election in 2016)
Turnover, a term many brokers use, is the volume of daily trades
Rusi Captain, of the Captain family that owns Sri Lanka's largest stand-alone conglomerate, John Keells, has a 20% stake in Capital Trust

If you're interested in margin trading, according to company materials:

The company is the only Margin Provider to introduce Margin Trading facilities to small retail clients with portfolios ranging from Rs. 0.5 million to Rs 50 million. It offers a quick service by maximizing the turnaround time of offering a margin facility whilst delivering a consistently high standard of customer care. Currently Capital TRUST Credit serves more than 2,200 active clients. The company also co-ordinates with over ten Margin Trading Providers to provide margin trading facilities for clients with portfolios of Rs. 2 million to Rs. 1 billion.

For more information, e-mail charitha@capitaltrust.lk or tushan@capitaltrust.lk.

First Guardian Equities

I met with Mr. Rohan Goonewardene [CEO] at First Guardian Equities.

Mr. Gooewardene said FGE is a boutique brokerage in terms of number of clients, but not in terms of transaction volume. Clients of FGE want to know specific details on parts of companies. The research delivered is primarily provided by talking with clients.

Top 20 companies of CSE represents 60% of CSE market cap. These are the primary companies liquid enough to support large investments.

For more information, e-mail rohan@firstguardianequities.com.

Heraymila Securities

I met with Mr. Ravi Abeysuriya CFA, CEO and Director at Heraymila Securities. Heraymila Investments Limited is the holding company for the Al Mashal family's offshore investments. One of the larger family offices in Saudi Arabia," the parent company has investments in 33 countries.

Previously, Mr. Abeysuriya was the founding managing director of Fitch Ratings Sri Lanka, the first Sri Lanka based office of an international ratings agency; and AMBA research, a pioneer global investment research outsourcing company. He has also served two terms as a member of the Securities Exchange Commission of Sri Lanka.

Select notes from my first meeting with Heraymila Securities 19 October 2012

Brokerage is a boutique operation without a branch network
They have the largest research department in Sri Lanka (7 sales people, 5 research people on staff)
Heraymila differentiates itself with high quality research from a buy-side perspective
The family office that founded Heraymila came to Sri Lanka in 2005, averaged about a 33% return through their exit in the latter part of 2010, and have now established a growth fund for Sri Lanka
They bought the brokerage to bring in professionalism and high quality research to Sri Lanka
Heraymila is the first fully foreign owned brokerage house to set up an office in post-war Sri Lanka
Heraymila accurately predicted in November 2010 that the market was fully priced and poised for a major correction in published research reports
Investment advice is provided by qualified and experienced advisors who are bound by the CFA Institute Code of Ethics and Standards of Professional Conduct
Heraymila believes in being "wealth catalysts" to client by giving astute and honest advice to chart the course for their financial future
Places client's interests first, and will tell client both when to invest and when to sell
In 2010, the stock market in Sri Lanka was driven by speculative stocks largely by spreading false rumor to gullible retail investors
Now that investors have realized their folly, there is a huge opportunity for the stock market in Sri Lanka to perform with sustained close to double digit economic growth
Success in several spheres have made Sri Lanka a rising start of the Asian region
Sri Lanka will be a maritime, aviation, energy, knowledge, and commercial hub for the region and a gateway to India, an economy with a $1.3 trillion GDP and a marketplace of over 1 billion people
What drives GDP is diverse: US$6 billion per year come into Sri Lanka from remittances by Sri Lankans working abroad (and this number is growing at about 10% per year; the capital sector is another $4 - $5 billion; infrastructure is a growing sector; tourism is a growing sector
The country should be able to maintain GDP growth of 6% to 7%
Cairn Lanka drilling offshore shows clearly that there are gas deposits but does not show oil yet (although India has found oil in the same basin); gas findings are commercially viable and extraction should commence in 2 years
The government has given good concessions for solar, wind and hydropower
Sri Lanka has largest pool of British qualified accountants outside of the United Kingdom (CIMA & ACCA); and Sri Lanka is becoming a destination for Financial Accounting Outsourcing [FAO]
Developing road network will create more sustainable and stable rural life and will increase household income
Risks to Sri Lanka economy: price of oil going up (before the Iranian embargo, 60% - 70% of Sri Lanka's oil came from Iran); policy consistency; policy consistency with relations to western countries
Things the government needs to build upon: governance, maintaining a system of checks and balances in government; creating better checks on bribery and corruption (definitively a work in progress with SEC, Central Bank, and corporate magazines all showing signs of taking a more active role - parenthetical author opinion)
The stage is set for sustained progress toward a US$100 billion economy and a US$4,000+ per capita income by 2016

For more information, e-mail ravi.abeysuriya@heraymila.com.

S C Securities

I met with Mr. Harsha Fernando [CEO] at S C Securities. S C Securities is the exclusive executing broker for JP Morgan in Sri Lanka. If you have specific investing needs, Mr. Fernando has the skills and contacts to help meet your needs.

S C Securities provides daily research notes on market action, why market action unfolded the way it did, and what it means looking forward. Weekly reports provide research, chart, graphs, news, and in-depth analysis of select companies. Weekly close with the investing philosophy message:

'Never invest in a business you cannot understand.'

'Always invest for the long term.'

For more information, e-mail ceo@sampathsecurities.lk.

SoftLogic Stockbrokers

I met with Mr. Dihan Dedigama [CEO], Mr. Dimantha Mathew [Senior Analyst] and Ms. Akeela Imthinam Rasheed [Senior Analyst] at SoftLogic Stockbrokers. At Softlogic, I additionally met with Dilshan Wirasekara of SoftLogic Capital with whom you can invest in fixed income products. By chance, this was the only brokerage that also introduced me to someone from the fixed income side.

SoftLogic is a relatively new brokerage house. However its parent company has a good track record.

Commencing operations in 1991 as a software development company with only twelve employees and an annual turnover of over US $ 25,000, Softlogic is today a highly diversified group of companies with over 4,800 employees in Sri Lanka, Pakistan and Australia.

SoftLogic issues both daily and weekly reports that are thorough, informative, have plenty of charts and graphs, provide relevant news about Sri Lanka, and offer research insights. They additionally have screening reports available (for example on dividend paying stocks or value-priced stocks).

(For my readers who invest in Mongolia and subscribe to Mogi's news feed, SoftLogic Daily and Weekly reports are the closest thing I've found in Sri Lanka among brokers.)

Select notes from my first meeting with SoftLogic 16 October 2012

Fully automated electronic trading on CSE since 1993
After 2 changes at SEC in 7 months, there is building confidence in the SEC leadership and regulations
Market trading at 11x March 2013 earning or 10x FY2014 earnings
Region P/E is typically 13 to 15
Banking sector has been highest growth sector in country
Consumer demand in Sri Lanka is rising fast
Large construction phase in country through 2014 or 2015
Tourism companies are currently trading at reasonable levels
As results improve, premium hotels will improve the most
Per capita income has doubled in the last 5 years and should reach $4,000 by 2016; per capita consumption is increasing with per capita income
60% to 70% of port business is currently transshipments to/from India, Pakistan and Bangladesh
Sri Lanka has free trade agreements with India and Pakistan
Manufacturing and exports are increasing

Fixed income investing notes from SoftLogic

Bonds issued by the government have had a cap on foreign participation in the bonds since 2007 when foreigner were not allowed to own Sri Lanka's sovereign debt. Since then the cap was raised to 5% in 2008, 10% in 2009, and currently is at 12.5%.

Dilshan indicated incomes investments could be made via an SIA instead of SFIDA, in both sovereign and corporate debt.

There is no cap on foreign participation in corporate debt, but for SoftLogic purposes the corporate bond must have a duration of at least 2 years, be rated, and be traded on the stock exchange. AA rated corporate debt typically gives a 1% to 1.5% premium on current sovereign debt yields. To-date, no corporate debt open to foreigners has defaulted.

Sovereign debt yields as of October 2012 were:

3 month: 11%
6 month: 11.7%
1 year: 12.2%
Bonds of 2 to 20 years: 12.5% to 14%

For more on income investing, please see the separate articles on income investing and UITs.

For more information on SoftLogic's stock brokerage side, e-mail dihan.dedigama@equity.softlogic.lk.

For more information on SoftLogic's fixed income investing, e-mail dilshan@softlogicfinance.lk.

General Notes On Investing In Stocks

CSE investments went up about 100% in 2009 and 2010 on the heels of the end of Sri Lanka's Civil War. However, one should keep in mind the market was down about 50% in the year before, so the first year of this growth got the market back to where it had been two years earlier.

At the end of the two year run, Dulindra Fernando of Ceylon Asset Management thinks P/E ratios were in the mid 20s. As of October 2012, the CSE's P/E ratio was about 12.

(click to enlarge)

Source: Bloomberg, CSE All Shares Index 5 year chart as of December 25, 2012.

Taxation Notes

Deloitte has a tax guide, excerpts of which state:

Dividends - Dividends paid to a resident or nonresident are subject to a 10% withholding tax unless (in the latter case) the rate is reduced under a tax treaty.
Interest - Interest paid to a nonresident is subject to a 15% withholding tax unless the rate is reduced under a tax treaty. Interest paid to a resident by a banking or financial institution is subject to a 10% withholding tax.
Royalties - Royalties paid to a nonresident are subject to a 15% withholding tax unless the rate is reduced under a tax treaty.
Basis - Residents are taxed on worldwide income; nonresidents are taxed only on Sri Lanka-source income.
Taxable income - Taxable income is classified under various "heads": income from a trade, income from employment, income from rentals, dividends, interest and royalties and other income.
Capital gains - There is no capital gains tax in Sri Lanka.
Deductions and allowances - Individuals are granted an allowance of SRL 500,000.
Rates - Progressive up to 24%.
Tax year - Income tax is imposed based on an assessment year, which is a 12-month period from 1 April to 31 March.
Filing and payment - The annual tax return must be furnished before 30 November of the following year of assessment. Taxes are payable on a quarterly basis under a self- assessment regime...
Penalties - Penalties apply for failure to pay tax due in a timely manner or for failure to file a return.

Check if your home country has a tax treaty with Sri Lanka. Lovells, a law firm working with local law firm FJ&G Saram has a report that notes:

The counterparties to these double taxation agreements (the "Contracting States") are Australia, Bangladesh, Belgium, Canada, Czechoslovakia, Denmark, Finland, France, Germany, India, Italy, Japan, Korea, Kuwait, Malaysia, Norway, Pakistan, Philippines, Poland, Romania, Singapore, Sweden, Switzerland, Thailand, the Netherlands, the United Kingdom, the USA, and Yugoslavia.

Ernst & Young's report on Sri Lanka's 2013 Budget notes there is no income tax currently on corporate debt instruments:

The Hon. Minister proposed to exempt from income tax including WHT any interest arising on corporate debt instruments where such instrument is quoted in a licensed Exchange approved by the SEC. It is presumed that the exemption will apply to both individuals and corporate bodies investing in such debt. As a result of this proposal it would be beneficial from a tax point of view to invest in corporate debt instruments as opposed to government debt instruments as the latter investments would attract income tax at the rates of 8% for individuals and 28% for corporate bodies.
With regard to corporate debt instruments where interest will not be exempt interest shall be liable to WHT at the time of issue. Where the instrument is issued at a floating rate the WHT shall be deducted on interest at the beginning of each reviewing period. Where no such deduction has been made upfront deduction will be made at the time of payment of interest payable on or after 1.4.2011.
This proposal will come in to effect from 1st, January 2013
It has also been proposed to grant the same exemption to bonds issues by Municipal Councils.
The current exemption from income tax granted under section 9 (a) to interest arising on loans taken from persons outside Sri Lanka will be extended to cover bonds as well.

Calendar Notes

October through early November will typically see the stock market get tepid. The budget is annually approved in early November and people typically become cautious about the stock market prior to the announcement of the new year's budget.

Be advised that every day with full moon is a national holiday. Furthermore, if the full moon falls on a Tuesday or Thursday, expect the nearest Monday or Friday to have a smaller staff at your brokerage. A list of other holidays may be found here.

A Note On Risks

Any investment in the local currency of a country comes with currency risk (that the value of the local currency you are investing in will go down against your home currency). Dulindra Fernando of Ceylon Asset Management feels that the Sri Lankan Rupee is bottoming out after a 20% depreciation in about a year's time. If correct, this would be the other side of currency risk, that one can make compounded gains through an appreciating currency (assuming one also makes gains on one's investment).

Dilshan Wirasekara from SoftLogic Capital said of the Sri Lanka Rupee in October 2012:

he thought the rupee had more room to appreciate as of October 2012
he noted the government had tried to stabilize the rupee at 109 rupees to the U.S. dollar
the government used reserves to try to stop the rupee's depreciation, then reversed policy and let the rupee float
the rupee dropped to 136 rupees to the U.S. dollar
there is a belief among many people that the unofficial government targets is 125 rupees to the U.S. dollar
for the last 30 years, the average annual depreciation of the Sri Lankan Rupee is 3%, and 2011's depreciation was an anomaly
he also noted that for the safety conscious, Sri Lanka has U.S. dollar denominated bonds that pay about 5.8% to 6%.

(click to enlarge)

Source: Yahoo Finance, U.S. Dollar Sri Lanka Rupee exchange 1 year chart, as of 25 December 2012.

(click to enlarge)

Source: Yahoo Finance, U.S. Dollar Sri Lanka Rupee exchange 5 year chart, as of 25 December 2012.

Readers investing in the CSE should carefully consider currency risks before investing. Markets anywhere in the world can be volatile, and readers are advised to independently study this market and assess the risks for themselves before investing.

Last updated 11 January 2013.

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