MINERAL RESOURCE ASSET DEPOSIT DEVELOPMENT

Report
Corporate Strategic Vision
Strictly Confidential
FORWARD-LOOKING STATEMENTS
This presentation includes certain “forward-looking statements.” All statements, other than statements of
historical fact, are forward-looking statements that involve various risks and uncertainties. There can be no
assurances that such statements will prove accurate, and actual results and future events could differ materially
from those anticipated in such statements. Such information contained herein represents management’s best
judgment as of the date hereof based on information currently available. The company does not assume the
obligation to update any forward-looking statement.
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NOTICE TO RECIPIENT
This presentation has been prepared for, and is being distributed to a limited number of knowledgeable
investors in connection with a proposed financing, Corporate financing source ( or the “Company”). The
recipient acknowledges that the information contained herein is confidential and proprietary to the Company,
and that it may not be disclosed without prior written consent to third parties other than the recipient’s agents,
employees and representatives who require such material for the purpose of evaluating this proposal and a
related financing decision. The material and information presented herein may be subject to change or
modification without notification. The recipient acknowledges that this document is not intended to be solely
relied upon as a basis for any financing and related decisions. Additional information will be provided upon
request
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Corporate mineral assets resources and location
Mineral resource assets development stage
Mineral resource strategic assets development
Mineral resource assets quality and economic financial aspects
Asset project development plan medium and short term
Mineral assets investment program
Management
Regulation and license
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More than 240 mineral assets have
been evaluated since 2005
throughout Mongolia
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62 various mineral assets retained
including 18 various mineral
deposits
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Ongoing exploration and drilling
on 46 licensed fields
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5 high grade thermal & coking coal - 607.4 million tonnes of proven resource and targeting 2.5-3 billion
tonnes
2 large tonnage thermal coal - 3.8 billion tonnes
1 gold - 459.42 kg proven reserve targeting 6 tone
2 molybdenum - 58238.94 tonnes of proven reserve targeting 800.000 tones, and minor Cu 67,585.1t, Re 9 t
1 lithium, strontium, potash - 1,420,000.0 T net metal Li and Strontium 408,000.0 T net metal, Potash
sulphate 22,0 MT. Potential lithium carbonate tonnage could exceed 10MT.
1 Rare earth elements - 37,3 MT oxide of proven reserve targeting 6 Mt over group of licenses, plus
unexplored Fe over 2.2kmx300m area, co-product of P2O5, by product of strontium.
1 Fluorite - 475,000,0 T of proven resource with potential of 1.1 Mt resource
1 Limestone - 544,877.0 T of proven resource with potential of 300.0 MT resource
1 Cu- Fe Under resource evaluation
1 Cu-Mo Under resource evaluation
2 Pb-Zn Under resource evaluation
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Erdenetsogt – 2400 Mt
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Eruult – 1400 Mt
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Khotgor – 3000 Mt
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Dalan – 33 Mt
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Nalaikh – 24 Mt
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3000
2500
2000
DOMINATED RESOURCE AND RESERVE OF KEY
COMMODITIES
MMC’s technical report estimates that the project’s lithium concentration
stands between 1.600 and 2.500 ppm
1500
Lithium
concentrat
e estimate
1000
500
Lithium
Potassium
Strontium
Gold
Coking coal
Thermal coal
Molybdenum
REE
1420.0 Mt net met
22 Mt
408000 net metal
6 Tone
3000 Mt
3800 Mt
800 .000 T
5.9 Mt
Data source explored and drilling
TMOB, Mongolia
Atacama, Chile
Zhabuy e, China
Jiezhe, China
East Taijinair, China
Longmucuo, China
Vida, Argentina
Hombre Muerto, Argentina
Olaroz, Argentina
Diablillos, Argentina
Cauchari, Argentina
Uy uni, Bolivia
Rincon, Argentina
Silv er Peak, USA
West Taijinair, China
0
Lithium Strontium deposit, Rare earth
elements deposit ranking are evaluated
and estimated as world class deposits
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Nalaikh underground coal mine located
45 km from Ulaanbaatar
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High quality thermal coal 6400 kcgl/kg
over
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Infrastructure highly developed in
Nalaikh district
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Life of mine 16 years
Saleable mine reserve 16.1 Mt
Reserve 23.4 Mt
Capex $34 M USD
Opex $26 USD per tone
Sales price $45 USD per tone
Employee 210
NPV 210 M USD
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Drilling exploration
Pre feasibility study
Feasibility study
Environmental analysis and action plan
Underground mine planning design
engineering full completed
Local coal selected market analysis
report
Electric power line, water supply are
ready
Infrastructure
rail way are under
discussion
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Nalaikh underground coal
license MV-000221
Mining
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Underground
equipment
Famur group Poland
supplier
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Expected commissioning date 3 quarter
of 2014
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Khotgor deposit includes MV-012474
and XV-016830 licenses
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574 Mt proven resource on MV012474 license
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Khotgor(947Ha) coal deposit lies
approximately 1500km west from
capital city Ulaanbaatar , 80 km SW
from provincial center Ulaangom city,
and 55km NE from Bokhmoron Soum
of Uvs province
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Additional exploration programme
commenced to identify further coal
resources on neighbor XV-016830
exploration license area targeting 2.5-3
billion tonnes
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Dalan deposit MV-014492 Mining
license, 271.73 (Ha) and group of
neibourgh licenses, Tsagaan Us XV008596, Alag tolgoi MV-013132, Ariin
khudag MV-09517.
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The Dalan deposit area is located in
Dalanjargalan
Soum,
Dornogobi
Aimag, approximately 285 km
southeast of Ulaanbaatar, Mongolia.
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The major asset associated with the
Dalan Project is a thermal coal deposit
with resources of 33.4 million tonnes
with a nominal calorific value of 4,800
kcal/kg and an average stripping ratio
of 2.15 BCM per tonne of coal.
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Erdenetsogt MV-017078 coal deposit is
located 430km SE of Ulaanbaatar, 85km
NNE of the provincial Center
Sainshand. The Chinese border is 230
km by rail from Sainshand to ZamiinUud border crossing.
Coal resource is estimated in
accordance with JORC standard by
Norwest.
Estimated resource of 2.4 billion tonnes
Low mining strip ratio 1: 0.17
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Moisture War, % - 39.4
Moisture Wad, % - 25.81
Ash (Adry) - 17.3
Volatiles (Vdaf) - 44.4
Sulphur (Std) - 1.3-2.2
Calorific Value (Qr) Kcal/kg 2943
Calorific Value (Qd) Kcal/kg 4881
Calorific Value (Qdaf) Kcal/kg 6332
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Eroolt deposit includes a group of licenses
including Tsagaan Zalaat (1098.09Ha),
Eroolt
(15318.31Ha),
and
Nuurst
Hudag(4123Ha).
Eroolt project is located 640km SE of
Ulaanbaatar, 90km east of provincial
center Baruun Urt and 25km from Asgat
Soum, Sukhbaatar aimag. The properties
lie approximately 180 km northwest of
check border with China.
The dip angle of the coal seam is 0 to 5
degree and the coal seam has stable
distribution. The coal is suitable for
opencast mining.
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The coal characteristics are as follows:
Total moisture (Wp) - 22.2%, Inherent
moisture (Wa) - 9.12%, Ash (Aa) –
12.98%, Volatile matter (Vr) - 41.36%,
Sulfur (Sc) – 0.71%, low Caloric value
(Qar) – 2180 ~5115 kcal/kg to the average
of 4023 kcal/kg, high Caloric value (Qgr)
– 3512~6886 kcal/kg to the average of
5410 kcal/kg. Caloric value of this area is
average of low Caloric value (Qar) is
about 4023 kcal/kg.
Estimated coal resource is 1,4 billion
tonnes.
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Zost Mo deposit is located in
Tosontsengel
soum,
Zavkhan
province.
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Mo – 25,538.94 T of proven resource
0.04% cut off grade. Minor Cu –
67,585.1 T, Re – 9.0 T.
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The deposit covers 2 licenses Zost
uul XV-04251, and Ovor zost XV07410.
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Early government resource estimation
is 650,000.0 Tone
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The Tsagaan Chuluut deposit includes
MV-012193 and XV-06747 licenses.
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The Tsagaan chuluut deposit is located
in the territory of Umnudelger, and
Ulziyt soums of Khentiy aimag, 327km
to east from capital city Ulaanbaatar.
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Mo reserve of Tsagaan Chuluut deposit
is bieng calculated as proven and
probable reserve at 0.044 cutoff grade
contain 32.7thousand tone of Mo in
77.6Mt ore. Detailed exploration work
should be extended another 1500m to
west and possible to increase the
reserve 60 up to 80 thousand tone to
bring the total reserve 150thousand
tone.
The deposit consists of economic
mineral association Mo-Re-Li.
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Mine development and design
Lithium processing plant design
engineering
Scoping study
Environmental analysis and action plan
Infrastructure analysis and action plan
Bankable feasibility study
Metal refining pilot study
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Financial and economic model
Lithium selected target market analysis
and action plan
Mine processing plant engineering
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Khukh Del is world class
underdeveloped
brine
lithium,
potash and strontium deposit
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Deposits
contain
following
elements:
lithium potassium,
strontium, cesium and boron.
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Magnetic and radiometric survey
Electric and magnetic survey
Gravity surveying and implementation
Topographic and geodetic survey
Full drilling and interpretation
Detailed geological mapping
Sectional interpretation and polygonal resource
estimation
Mineralogical
petrologic
and
geochemical
investigation
Metallurgical recovery tests
Laboratory Germany, Russia and Mongolia 6400
samples assayed
Mineral reserve estimate report JORC
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STATEMENT OF MINERAL RESOURCE
Area
Category
Enkh area
Delgerekh area
inferred
inferred
indicated
inferred
subtotal
Indicated
inferred
Total
Chuluut area
All
Quantity
Mtonnes
Li2CO3
ppm
30.68
157.07
78.84
6.78
85.62
78.84
194.52
273.36
Li ppm
7.752
7.725
8.326
7.734
8.279
8.325
7.729
7.899
K2SO4 %
1.456
1.451
1.564
1.453
1.555
1.564
1.452
1.484
K %
6.08
9.05
8.03
7.13
7.96
8
8.5
8.4
Li2CO3
2.73
4.06
3.6
3.2
3.57
3.59
3.81
3.75
KT Li Metal Kt
237.8
1213.4
656.4
52.4
708.9
656.4
1503.6
2160.1
44.7
228
123.3
9.9
133.2
123.3
282.5
405.8
K2SO4 Mt
K Metal Mt
1.9
14.2
6.3
0.5
6.8
6.3
16.6
22.9
Mineral resource estimate by MMC JORC
In addition to the JORC mineral
estimate, a resource estimation
according to Mongolian standard has
also been conducted and can be
reviewed below.
Category
A
B
A+B
Category
A+B+C
P1
Quanty (Mt)
23.5
98.8
122.3
156.4
278.8
639.2
Li Metal (Kt)
37.7
151.3
189
246.5
435.5
984.5
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K Metal (Mt)
0.8
4.1
5
6.3
11.3
26.2
0.8
6.4
2.8
0.2
3.1
2.8
7.4
10.3
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The Mushgia khudag deposit includes
group of licenses MV-014937 Bayan
Tomortei XV-012396 Mushgia Khudag
XV-07812 Mushgia Ukhaa XV-015277
Khurmen tolgoi.
The deposit is located 500km SW from
capital city Ulaanbaatar and 32km SW
from Mandal Ovoo sum.
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In 1983-1984, Russian geological expedition provided first
drilling program (with 2800m drilling on 20 bore holes) and
estimated over million tonnes of REO in total resources.
In 1989-1991, Mongolian geological research team completed
exploration work on Central, Khuren Khad and Tumurtei ore
zones at Mushgia Khudag (total 8025m drilling on 41 bore holes)
and estimated 0.4 million tonnes of REO oxide in total.
USGS evaluated its resource as 5,9 Mt REO.
Unexplored Fe over 2.2kmx300m area
As results of 2007-2009 exploration works we have determined
origin of the deposit, complexity of the geological setting,
exploration drilling grid density and estimated rare earth 14.4
million tonnes of ore or 194.4 thousand tonnes of rare earth
oxides by B category, and probable resources of 1.2 million
tonnes of ore or 37.3 thousand tonnes of oxides by C category in
compliance mineral evaluation and estimation methods of
Mongolia.
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Mineral Resource and reserves are potential
Mineral resource and reserve ore are high grade
Mineral resource assets location is near main markets and infrastructure
Mineral resource each assets are very attractive for investors, customers
and partners
Mineral resource assets are Economically very profitable and highest
indicative NPV and long life mine cycle
Reserve should potential increase medium term
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Erdemmanlai - CEO
Ganotgo - Director of Geology and
Mining Department
Unurjargal - Project manager
International relation
Purevdorj - Project manager
Mining engineer
Ser od - Project manager Geologist
Lhkagva - Project financial manager
Baatar - Project mining engineer
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Mckinsey & co - Mining consulting
MMC Minarko - Reserve estimate mine
planning
Dassault systems - Mining software
Famur group - Poland underground mining
equipment manufacturer
DHMS - Germany underground mining
equipment manufacturer
Takraf group- Germany mining equipment
manufacturer
Mongolian Minerals Corporation – Canada
Yu Jin Investment - Singapore
Kunming Coal Design and Research
Institute - China
Strictly Confidential
Low cost producer with substantial high grade and
growing Reserve and Resource
Continuous ramp up supported by well
established operations and Integrated
infrastructure
Earning quality upside cost
reduction and revenue
enhancement
Expanding customer base
and strong strategic
relationship with customers
Strategically located to
tap into Strong Demand
from China
Experienced Management
Team Partnered with
Institutions
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2012
• Exploration
• Drilling
• Reserve and
resource evaluation
and estimate
2013
• Reserve estimation
• Feasibility study
• Project
implementation
• Mining license
obtain
• Coal selected target
market analysis
expanding customer
base
• Mine planning and
design
2015
2014
• Nalaikh
underground coal
mine
commissioning
• Eruult coal mine
commission end of
2014
• Main assets and
deposits
infrastructure study
• Rare earth element
mine
commissioning
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• Lithium mine
commissioning
• Zinc and lead mine
commissioning
• Iron ore mine
commissioning
• Copper –Fe mine
commissioning
Rapid Production Growth
leading fully integrated Mongolian mineral resource producer
Closest coal and minerals exporter supply to in China’s eastern province
Asset quality (ROM ore high grade)
Low-cost producer – positioned on the of the global cash cost curve
 Planned railway or asphalt road and paved road 1-3 years
 Reserves & Resources Overview Rapid Planned Production Growth
 Mining
 Processing
 Transportation
 Sales & Marketing
Open pit operation (one large open pit and 1 underground mining should be
construction and commissioning in 2014)
Owns all mining equipment from world renowned suppliers (including Caterpillar
Takraf Atlas Copco Famur and DHMS)
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Corporate Income Tax
10% net profit tax
 No Export Restrictions
No restrictions on minerals exports / no domestic market obligations
 Royalties
2.5% - 5%
 Mining Licenses
Mineral Resources Authority under the Ministry of Mining (pursuant to the new structure of the
Government of Mongolia)
 Regulatory Authority
Initial term of 30 years, can be extended for two additional 20-year periods.
Only entities registered in Mongolia are allowed to own mining licenses.
100% foreign ownership is permitted, subject to governmental approval required under the Law on the
Regulation of Foreign Investment in Entities Operating in Strategic Sectors (2012).
 VAT
Exported finished mineral products are subject to zero rate VAT
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Additional information
Types of licenses
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The Minerals Law of Mongolia
contains two types of licenses, as
follows:
An Exploration License, which
entitles the license holder to
carry out mineral prospecting in
the license area;
A Mining License, which
entitles the license holder to
conduct
prospecting
and
exploration work in the license
area;
Exploration License
Mining License
License Term
Up to 3 years
Up to 30 years
2
Extension
May be extended
twice, up to 3
years each time
Subject to
feasibility report, up to 20
years each time
3
License Area
25 - 400,000 ha
25 - 400,000 ha
4
Number of licenses
permitted to be held
by
each legal entity
Unlimited
Unlimited
1
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License application process
• An applicant for a
mining license shall
submit an application
set forth in Articles
24.1 and 24.2 of this
law
to
the
Government agency.
Request for license
Registering and
processing of
application
• Government agency
shall
carry
out
registering
and
clarifying application.
• Within twenty (20)
business days, agency
shall make decision.
• If the applicant who
has received a mining
license
approval
notice, applicant shall
pay the first year’s
license fee within 3
business days.
Payment of the
license fee
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Receiving license
• Within 7 business
days, an applicant
shall receive license.
License Fee
Prospecting license
 Annual license fees begin at US $0.10
per hectare in the first year and
gradually increase to a maximum rate of
US $1.50 per hectare in the seventh
through ninth years.
 License holders are required to spend
certain minimum amounts of funds on
exploration activities beginning in the
second year of a license.
License Fee
Exploration license
• Annual license fees are US $5 per hectare
for coal and common mineral deposits and
US $15 per hectare for gold, copper, zinc,
and iron.
• A 2.5% minerals royalty is imposed on
coal and common mineral resources
whereas the royalty on gold, copper, zinc,
and iron is 5%.
• A mining license holder investing US $50
million in the first 5 years of the project is
entitled to enter into an Investment
Agreement with the Government which
can stabilize rates of corporate income tax,
customs duty, VAT and minerals royalties.
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Relevant laws of Mongolia
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Constitution of Mongolia
Minerals law of Mongolia
Law of Mongolia on Implementation of the
Minerals Law
Prohibiting minerals exploration and mining in
protected zones of sources of rivers those originate
streams of rivers, drainage basins and forest areas.
Law on Licensing
The Law on Subsoil
Law on Land
Law on Land Fees
Law of Mongolia on Water
Water, Air and Environmental Control Law
Water and Minerals Water Usage Payment Law
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Environmental Protection Law of Mongolia
Environmental Impact Evaluation Law of Mongolia
Law on Sanitation
Law of Control on Explosives and Accessories and
Explosives Circulation
Chemical Toxic and Dangerous Substance Law
Domestic and Industrial Waste Law of Mongolia
Law of Mongolia on Foreign Investment
Auto Road Law
Business Entity Income Tax Law of Mongolia
Geodesy and Design Law
Law on Labor of Mongolia
Law on Social insurance
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