BUSINESS COUNCIL of MONGOLIA NewsWire

www.bcmongolia.org info@bcmongolia.org

Issue 233 – August 3, 2012

NEWS HIGHLIGHTS:

Business:

OT getting ready for initial production;

Rio pays USD 935 million to maintain 51 percent stake in Ivanhoe;

Energy Resources opens new wing to UHG processing plant;

U.N. tribunal rules in favor of Khan Resources on Dornod uranium project;

Sharyn Gol ramps up preparations for development of Shaazgait mine;

Draig reports JORC inferred coal resources of 76 million tons;

Sharyn Gol quadruples estimated resources;

Cougar looks to Mongolia for underground coal gasification;

Mongolia Airlines adds Tokyo route;

Cost savings opportunities in Aspire's rail construction ascertained;

Hogan Lovells advises GE on Salkhit wind farm;

Prophecy strengthens team seeking to become energy powerhouse;

Kincora Copper appoints new president and CEO;

Petro Matad’s two non-executive directors buy shares;

Quam gets going in Mongolia while the going is good;

Centerra tumbles to second-quarter loss on abnormal mining costs;

BHP, Rio grapple with falling commodity prices;

Banpu lowers four-year investment plan for Mongolia;

Aspire: Quarterly activities report;

Xanadu: Quarterly activities report;

Voyager: Quarterly activities report;

Haranga: Quarterly activities report;

Cameco reports 52 percent drop in profits due to poor market conditions.

Economy:

18 civil servants to receive scholarships to Japanese universities;

Clock is ticking on land privatization;

Development Bank shoulders debt burden;

Trade grows on MSE with modernization;

Capitalism in city of red hero;

Growing pains in agriculture;

Mongolia draws adventurous lawyers;

Pakistan takes a lesson from Mongolia;

How the sparsely populated land of Chinggis succeeds at the Olympics;

Scheduling change creates snafu for Mongolian fans at Olympics.

Politics:

Enkhbayar sentenced to four years;

Z. Enkhbold vows for a united coalition;

DP head refuses to negotiate MPP grievances;

MPP officials step down;

Government appoints heads at SPC and Bank of Mongolia;

Change at the top;

Witness gives testimony in Enkhbayar trial;

Deadline for cash exchange for TT shares passes;

IAAC makes headway in its offense against corruption;

Citizens' petitions halt new construction projects;

DP plans to open new Government Palace wing to public;

Japan’s MOFA to reorganize information distribution to Mongolia;

Putting a lid on anger over resource boom;

A Mongolian lesson for investing hordes;

Religious freedom in Mongolia.

*Click on titles above to link to articles.

SPONSORS

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BUSINESS

OT GETTING READY FOR INITIAL PRODUCTION

The Oyu Tolgoi copper-gold mine has made its first delivery of ore to the primary crusher from its

open-pit mine as the mine sets to enter initial production.

Initially being developed as an open-pit operation, commercial production is set to begin in the

second quarter of 2013. A copper concentrator, with related facilities and necessary infrastructure

to support an initial concentrator, with related facilities and necessary infrastructure to support an

initial throughput of 100,000 tons a day of ore, has been constructed to process ore scheduled to be

mined from the open pit. Initial production of copper, gold, and silver concentrate is expected in

the third quarter of 2012.

Development also includes an 85,000 ton-per-day underground block-cave mine at the Hugo North

Deposit. The concentrator plant is expected to process 160,000 tons a day of ore when the

underground mine begins first production in 2016.

Source: International Mining

RIO PAYS USD 935 MILLION TO MAINTAIN 51 PERCENT STAKE IN IVANHOE

Rio Tinto PLC said it paid about USD 935 million for 133.6 million shares of Ivanhoe Mines Ltd., or 5

percent of the stock the Canadian miner put up in a shareholder rights offering.

The purchase allows Rio Tinto to maintain its 51 percent ownership stake in Ivanhoe Mines, which is

developing the massive Oyu Tolgoi copper-gold project in Mongolia. Rio Tinto paid USD 7 a share in

the fully subscribed rights offering and now holds more than 510 million shares of Ivanhoe Mines.

The offering is part of a financing plan for developing Oyu Tolgoi. The mine is set for first

production later this year and commercial production in 2013.

Source: Reuters

ENERGY RESOURCES OPENS NEW WING TO UHG PROCESSING PLANT

Energy Resources LLC, the Mongolian subsidiary of Hong Kong-listed Mongolian Mining Corp. (MMC),

opened a second wing of its mineral processing plant at the Ukhaa Khudag coal mine.

The first wing of the plant opened last summer, with the second receiving approval from

government last spring. This new wing will produce 850 tons of processed coal an hour, or 5 million

tons a year. The opening of the new wing will increase production to up to 15 million tons of

process coal.

G. Battsengel, Chief Executive Officer, said that the opening of a third wing would allow Energy

Resources to become an exporter of processed coal.

Total expenses for construction and installation came to USD 91 million.

Source: Zuunii Medee

U.N. TRIBUNAL RULES IN FAVOR OF KHAN RESOURCES ON DORNOD URANIUM PROJECT

The United Nations tribunal has ruled in favor of uranium explorer Khan Resources in a USD 200

million arbitration case against the government of Mongolia, the Toronto Stock Exchange-listed

company said.

Khan Resources alleged that the government in concert with a Russian partner during 2009 took

actions that amounted to the illegal expropriation of the company's mining and exploration permits.

It said this took place after the government initially invited and encouraged the company and its

predecessors to invest millions of dollars, expertise, and resources in the Dornod Aimag uranium

project, in northeastern Mongolia.

In Khan Resources' arbitration filings, the company said the uranium deposit had substantial

resources of uranium and a capacity to produce about three-million tons of yellow cake a year, for

15 years. The established net present value is USD 276 million, which would be derived from USD

2.94 billion in revenue over the life of the mine.

Khan Resources said that just as it was preparing to begin construction in October 2009, the

government and Russia in January made a statement that they intended to exploit the resources,

and by August had formed a Dornod Uranium joint venture (JV). On 14 December 2010, Russian

Prime Minister Vladimir Putin and Mongolian Prime Minister S. Batbold signed an agreement

confirming the JV, which also confirmed the expropriations of Khan's Resources project rights, and a

later notice from the Atomic Energy Agency that its Dornod rights have been invalidated,

retroactively to 8 October 2009. Khan Resource initiated the arbitrations suit in January 2011.

―We are pleased that the Tribunal has validated Khan's initiatives to achieve recourse to damages

suffered by our shareholders. Our treasury is well-funded and we will continue to vigorously pursue

this action to its logical end to receive value for our investments in Mongolia,‖ Khan Resources

Chief Executive Officer Grant Edey said. The firm added that it would immediately start preparing

for the upcoming merits-damages phase of the proceedings.

Source: Mining Weekly

SHARYN GOL RAMPS UP PREPARATIONS FOR DEVELOPMENT OF SHAAZGAIT MINE

Sharyn Gol JSC has received approval for its environmental impact assessment report for the new

open-pit mine at the Shaazgait thermal coal deposit. Following the recent approval of its feasibility

study by the Mineral Resources Authority, Sharyn Gold has now received all government approvals

necessary to launch operations at Shaazgait.

―We are pleased that the development of the new mining area at Shaazgait remains on schedule

and are excited by the prospect of realizing our vision of launching modern commercial operations

before the year-end,‖ said Chairman B. Batmunkh.

Recent coal washability test work, performed by Stewart Laboratory in Ulaanbaatar, indicated that

a product with 6,500 kilocalories per kilogram heat value, less than 10 percent ash and 0.5 percent

sulfur can be produced with high plant yields. Consequently, Sharyn Gol's management is reviewing

strategic options for washing and exporting coal to maximize potential revenue streams in coming

years. Sharyn Gol is in a strong financial position, with a balance of USD 10 million and no debt.

Source: Sharyn Gol JSC

DRAIG REPORTS JORC INFERRED COAL RESOURCES OF 76 MILLION TONS

Coal explorer Draig Resources Ltd. reported a maiden JORC inferred resource of 76 million tons at

its Teeg coal mine, with an additional exploration target of between 25 million and 100 million

tons.

―Defining a 75 million ton coal resource, plus an exploration target for a potential further 25 million

to 100 million tons is an excellent achievement, particularly after only one exploration drilling

campaign on Teeg, and it confirms our expectations about the highly prospective nature of Teeg

and our surrounding licenses,‖ said Managing Director Mark Earley.

The JORC report added that there is ―compelling evidence for a significant deposit of high-grade

coal with metallurgical potential in a coal seam with a true average coal thickness of 24.12 meters.

The 22.2 square kilometer Teeg license is situated in Bayanteeg Soum, Uvurkhangai Aimag and is

one of eight licenses owned by Draig across Uvurkhangai and Umnugobi Aimags.

The JORC resource estimate was determined by geological mapping, trenching, induced

polarization, resistivity surveys, 6,784 meters of drilling, and coal sample analysis. The JORC

reported identified at least four coal target areas for drilling. Draig plans to further explore the

Teeg and nearby Nariin Teeg properties in the future to increase its coal resource in the area.

However, focus now rests at Umnugobi to present a fuller picture of the company's overall coal

portfolio and take advantage of the better climatic conditions.

Source: Draig Resources Ltd.

SHARYN GOL QUADRUPLES ESTIMATED RESOURCES

Sharyn Gol JSC, a coal extractor operating in northern Mongolia, has commissioned Micromine

Consulting Services (MCS) to complete a technical report compliant with JORC standard reporting

guidelines for the Sharyn Gol mine.

Field work was carried out by Triton Coal with direction from MCS. The JORC-compliant estimate

found quadruple the resource inventory at the Sharyn Gol coal project.

Source: International Mining

COUGAR LOOKS TO MONGOLIA FOR UNDERGROUND COAL GASIFICATION

Cougar Energy Ltd. is considering a potential divestment of non-strategic tenements in Australia to

focus on its underground coal gasification (UCG) strategy in Asia.

The company is continuing negotiations with local partners in China, Mongolia, and Indonesia to

gain access to coal leases identified to have UCG development potential. Cougar is continuing its

discussions with the Mongolian government into the use of UCG to develop local coal resources.

In Indonesia, Cougar and is focused on three prospective project areas, while in the process of

selecting a site to start a pilot UCG burn on a coal deposit.

Source: News.mn

MONGOLIA AIRLINES ADDS TOKYO ROUTE

Private Mongolian carrier Mongolian Airlines Group launched services from Ulaanbaatar to Tokyo

Haneda, making the Japanese capital its second international destination following the launch of

Hong Kong services just over a month ago. Thrice-weekly services are now offered on the 3,000-

kilometer route, and will be operated using A319s on a seasonal basis until early September.

Source: Anna Aero

COST SAVINGS OPPORTUNITIES IN ASPIRE'S RAIL CONSTRUCTION ASCERTAINED

An independent review of the rail pre-feasibility study by Northern Railways LLC, Aspire Mining

Ltd.'s Mongolian rail infrastructure subsidiary, shows significant cost savings opportunities.

The review, conducted by Calibre Rail and world leaders in bulk commodity rail design, highlighted

that an alternative direct rail alignment connecting Ovoot to Erdenet (bypassing Murun) could result

in capital expenditure savings of approximately USD 188 million. The review also identified the

potential to significantly reduce operating costs over the life of the project that will be further

explored in a second iteration of the study. Possible changes to some of the operational parameters

originally used in the rail study could lead to an additional availability of approximately 8-million

tons a year for other users to access.

A 57-kilometer spur line from the Ovoot to Erdenet line would be required to connect to Murun if

needed.

Source: Aspire Mining Ltd.

HOGAN LOVELLS ADVISES GE ON SALKHIT WIND FARM

Hogan Lovells has advised General Electric Co. on the financing and equity aspects of a USD 122

million 50-megawatt Salkhit wind farm.

Hogan Lovells' role included drafting and revising Mongolian law-governed transaction documents,

reviewing financing agreements, issuing legal opinions, and advising on applicable legislation and

general matters of Mongolian law.

―We have a long-standing relationship with GE in the USA and across our international network, and

we are pleased to augment this relationship with our capabilities in Mongolia,‖ said the managing

partner of the Ulaanbaatar office, Michael Aldrich. ―We have extensively advised clients on their

energy projects in Asia, establishing a prominent reputation for ourselves as a trusted advisor in the

region.‖

Additionally, Mott MacDonald supported the European Bank for Reconstruction and Development

(EBRD) and FMO as technical advisors to the investors on the scheme under development by

Newcom Group. MacDonald is monitoring construction of the wind farm, which is scheduled to finish

by the end of 2012. The consultancy will continue to provide operations monitoring support for up

to three years following completion.

Newcom, which retains a majority interest in Clean Energy LLC, is developing the wind farm. GE

Pacific Private Limited acquired an equity interest in Clean Energy LLC in March 2012 and debt

financing for the project closed in July 2012.

Source: Hogan Lovells

PROPHECY STRENGTHENS TEAM SEEKING TO BECOME ENERGY POWERHOUSE

Prophecy Coal Corp. has announced the addition of some experienced team members to the

positions of director and advisor, making clear its intent to become a major coal and energy

provider.

Joining Prophecy Coal‘s board is Harald Balista, an entrepreneur with over two decades of

international sales and marketing experience. The firm also announced the appointment of Vice

President Sharma to its advisory board. Sharma has over 40 years of experience in the energy

industry, covering all aspects of power generation.

Maree Roos also joins the advisory board. Roos is an independent energy consultant with an

understanding of the electricity industry gained from involvement in numerous major projects

across Africa, Singapore, Malaysia, Thailand, and now Mongolia. Lynia Lau, a Hong-Kong-based

partner of international law firm Clyde & Co. and its Asian head of energy and resources, has taken

a position as external counsel. Lau specializes in acquisition, development, financing, preparations,

sales and government regulation of large-scale infrastructure projects, including power plant, oil

and gas, refinery, and liquid natural gas.

―Our expert team of staff and advisors has been working to implement the Chandgana mine mouth

power project in Mongolia,‖ said Prophecy Coal's Chairman and Chief Executive Officer, John Lee.

―Chandgana is the most mature and only fully licensed 600 megawatt independent power project in

Mongolia.‖

Lee added that progress has been made to the power purchasing agreement (PPA) and engineering,

procurement, and construction (EPC) as well as development sponsorship and financing. The

company's proposed power plant adjacent to the Chandgana coal deposit has been permitted by the

government and would be the first thermal coal plant in the country in over 20 years.

Prophecy Coal has signed a cooperation agreement with the Energy Authority and plans to have the

plant up and running in four years, when it would provide for about two-thirds of the country's

current energy deficit. The agreement covers the basic rights and obligations of Prophecy Coal as

the seller and National Electricity Transmission Grid Co. (NETG) of Mongolia as the purchaser of

energy.

Source: Proactive Investors

KINCORA COPPER APPOINTS NEW PRESIDENT AND CEO

Kincora Copper Ltd. has appointed John Rickus as president and chief executive officer.

Rickus joins Kincora with over 40 years experience in mining, including 24 years with Rio Tinto PLC.

He has previously served on the board of directors of Palabora Mining and was a member of the

Owners' Council for Minera Escondida in Chile.

Rickus succeeds Igor Kovarsky as president and chief executive, who resigned at the end of July.

The board of directors of the Company wishes to thank Mr. Kovarsky for his contribution to the

Company during his tenure as President, CEO and Director.

Source: Kincora Copper Ltd.

PETRO MATAD’S TWO NON-EXECUTIVE DIRECTORS BUY SHARES

Oil explorer Petro Matad Ltd. revealed that two non-executive directors have bought shares worth

more than EUR 50,000 (USD 61,410) in the company.

Philip Vingoe purchased half a million shares at EUR 0.8 a share for EUR 38,150, while George

Watkins bought 200,000 company shares at the same price for EUR 15,260. In a statement, the

company said that following the transactions, Vingoe is beneficially interested in 500,000 shares of

around 0.2 percent of the firm's capital. Meanwhile Watkins has interest of around 0.11 percent.

Last month the company said it was to review its exploration assets in Mongolia and assess a

technical path forward possibly through partnerships. The company, which recently installed a new

management team, added its plan to revisit the data from last year's troubled drilling campaign at

Davsan Tolgoi to lower the risk for a drilling campaign planned for 2013.

Source: Proactive Investors

QUAM GETS GOING IN MONGOLIA WHILE THE GOING IS GOOD

Simon Potter is a veteran hedge fund seeder who has recently moved to Hong Kong to start a

Mongolia-focused fund and head up Quam Asset Management.

The Mongolia fund is an open-ended vehicle designed to give investors liquid access to longer-term,

very fast commodity driven emerging markets. According to Potter, few investors have taken

Mongolia seriously, but the country has a thriving economy. Quam also provides a variety of services

to investors, including Quamnet, which allows investors to look up locally based securities through a

subscription-based platform.

Potter was drawn to creating the Mongolia fund due to the rapid growth of the Mongolian economy

and vast natural resources within the country itself.

"Really, what we are trying to do is invest conservatively within that market and try and benefit

from the major upswings that you have," said Potter.

He later said trading in Mongolia is a great opportunity to pick up good commodity and local food

and beverage firms as well as pick up some property assets. He compared Mongolia to Dubai 15

years ago, calling it an enormous opportunity.

Source: Opalesque

CENTERRA TUMBLES TO SECOND-QUARTER LOSS ON ABNORMAL MINING COSTS

Centerra Gold Inc., the operator of the Boroo gold mine in Mongolia, says it swung to a loss of USD

54.6 million in its second quarter as it took a hit from what it called "abnormal mining costs" at its

Kumtor operation in the Kyrgyz Republic, as revenues fell 63 percent.

The second quarter loss includes USD 13.5 million in abnormal mining costs and an operating

expense of USD 21 million related to a micro-credit financing program in Kyrgyz Republic in April. It

also booked a charge of USD 7.2 million for a gold metal reconciliation adjustment of the stockpiles

at Kumtor.

Kyrgyz parliament recently backed a motion to review the operating license of the Canadian mining

company developing a major gold mine that accounts for 12 percent of the country's economy. A

state commission is to be set up to assess the environmental damage that deputies say served as a

leading motivation for reviewing the licensing agreement. The motion by Kyrgyzstan‘s parliament

calls for an increase in the government's current 33 percent stake in Centerra Gold.

Centerra has said the Kumtor project, which has been operating since 1997, is in full compliance

with Kyrgyz laws and meets or exceeds Kyrgyz and international environmental, safety and health

standards. The company has also said the project has generated USD 1.9 billion in benefits for

Kyrgyzstan including USD 620 million in taxes.

Source: Winnipeg Free Press

BHP, RIO GRAPPLE WITH FALLING COMMODITY PRICES

BHP Billiton has committed to cuts with expected losses in its upcoming quarterly report, while Rio

Tinto PLC, a major employer in Mongolia and whose Oyu Tolgoi project is expected to comprise 30

percent of the country's economy, is making employment cuts in Australia.

"Against a backdrop of increasing costs and falling commodity prices, we continue to focus on

reducing our overheads, operating costs and non-essential expenditures to ensure our assets are

well positioned on their relative cost curves," Fiona Martin, a BHP Billiton spokeswoman, said. "This

includes reviewing our overhead costs and the sequencing of our major projects."

The comments come amid mounting expectations that BHP Billiton will postpone one or more mega-

projects it has proposed until economic outlooks in Europe and China improve. BHP Billiton is tipped

to report on 22 August about a 22 percent decline in underlying earnings for fiscal 2012 to USD

16,990 billion, based on analyst estimates.

Rival miner and Oyu Tolgoi development leader Rio Tinto said that it is cutting staff in Australia and

closing its Sydney office as it too battles falling commodity prices and threats to demand from

Europe's debt crisis.

"It's just making sure we are building in resilience in our business to deal with what is essentially a

difficult time," said Rio Tinto's Australian manager David Peever, speaking on the layoffs there. "We

are seeing downturns in commodity prices, European circumstances are hovering over us, and we

need to make sure we are very measured in terms of our approach to cost control," he said.

Last month, Rio said it was cutting an unspecified number of jobs at its Clermont coal mine in

Australia as it battles sliding thermal coal prices.

Source: Reuters

BANPU LOWERS FOUR-YEAR INVESTMENT PLAN FOR MONGOLIA

Thailand's top coal miner Banpu Public Co. has suspended up to USD 600 million of its four-year

investment plan and lowered its production target by 10 percent due to softening coal prices. The

suspension will effect delays in the operations of Hunnu Coal Ltd. in Mongolia.

Banpu has also revised down this year's growth forecast from 15 percent to flat growth. Production

revenue will fall to 44 million tons from the original 47 million-ton target, said chief executive

Chanin Vongusolkit. Including coal swap gains of USD 3 a ton, Banpu's average price is estimated at

USD 95, he added.

―Altogether, we're likely to delay until the end of 2015 some USD 500 to USD 600 million of our

planned USD 1.75 billion capital expenditures,‖ said Chanin.

The budget for Mongolia is down by USD 250 million from USD 400 million and delayed because

there is no urgency to mine coal during unfavorable price conditions. Under the previous plan,

Banpu would have produced up to 1 million tons in Mongolia this year.

Chanin said low shale gas prices and coal exports from the United States have caused coal prices to

plummet. Currently, there is a 10 percent surplus, or 80 million tons of seaborne coal trading, that

will take nearly a month to balance out. In the worst case scenario, the price of coal will drop to

about USD 80 for the rest of the year.

By postponing some projects, Banpu's 2015 production target will possibly be reduced to 55 million

tons from 60 million tons. The company produced 42 million tons last year.

Source: Bangkok Post

ASPIRE: QUARTERLY ACTIVITIES REPORT

Aspire Mining Ltd. reported 185 million tons of coking coal at the Ovoot project, making it the

second largest reserve in Mongolia for coking coal and third for general coal resources, in its report

for the quarter ended 30 June.

―...Aspire continues to push ahead with the development of the Ovoot project,‖ said Managing

Director David Paull. He later added, ―While there is poor equity market sentiment at present, the

company is continuing to add materially to the value of the Ovoot project...‖

Highlights of the report include the 185 million-ton inferred coal resources of Ovoot, with 153

million tons of marketable coking coal and a 15-year mine life.

During the quarter, the company received a report from SRK Consulting which looked at why coking

coal is found at Ovoot and where else within the greater Orkhon-Selenge region, more specifically

the Ovoot Basin, coal could be expected to be found. Currently only 25 percent of the 500-square-

kilometer basin has undergone drill testing. The SRK review has reduced exploration risk and looked

at the merits of gravity surveys for the September quarter, bolstering interest in the Hurimt area of

the Ovoot Basin.

In regards to corporate operations, James Benson was appointed the Mongolian-based Ovoot project

director. Aspire Mining received ministerial approval for the alignment of a sealed road from Ovoot

to the Moron Soum for coal transport as well as review of a rail pre-feasibility study to identify

potential cost savings. The company has also entered a memorandum of understanding (MOU) with

the Mongolian subsidiary of Russian Railways JSC to discuss joint development of an Erdenet-Murun-

Ovoot Rail line.

Source: Aspire Mining Ltd.

XANADU: QUARTERLY ACTIVITIES REPORT

Xanadu Mines Ltd. reported continued drilling at the Sharchuluut Uul porphyry project in its report

for the quarter ended 30 June.

Xanadu Mines' exploration team at Sharchuluut Uul had drilled four holes for a total of 3,198 meters

by the date of the reports publishing with assay results expected next month, despite extended

winter conditions. Drilling had shown that the resource may extend east to west of at a strike

length of at least two kilometers and with thickness of up to 400 meters.

―Whilst current global markets are a challenge for some resource companies seeking to continue

active exploration programs, Xanadu is very well positioned with sufficient funds to maintain its key

projects,‖ said the report.

The Oyu Ulaan project, which lies 275 kilometers north of the Oyu Tolgoi copper-gold mine, has

undergone limited exploration work by Xanadu Mines, following exploration in the 1960s by Russians

and again from 2001 to 2009 by Ivanhoe Mines Ltd. Xanadu Mines has completed resource studies

and maiden metallurgical test work to enable an application for a 30-year mining license.

Additionally, the company received drill tender for a 10,000-meter program at Elgen Zost gold

system in the southeast Gobi region of Mongolia and advancement in the application of the Galshar

thermal project.

As for its joint venture (JV) company with Noble Group, Ekhgoviin Chuluu LLC, Xanadu Mines signed

an agreement for 80 percent interest earned in the Khus Coal project and an option agreement for

the Khar Servegen coal project.

Source: Xanadu Mines Ltd.

VOYAGER: QUARTERLY ACTIVITIES REPORT

Voyager Resources Ltd. is now fully funded after releasing an options agreement, said the company

in its report for the quarter ended 30 June.

Voyager resources released 446 million options at an issue price of USD 0.01 each for USD 4.465

million before costs. Additionally, it has begun its application for a mining license at its KM project.

Management changes include the appointment of Joe Burke as Chief Executive Officer.

In regard to exploration activity, its exploration team at the Daltiin Ovor Gold project has

completed a ground magnetic survey and begun a geochemistry program.

Source: Voyager Resources Ltd.

HARANGA: QUARTERLY ACTIVITIES REPORT

Haranga Resources Ltd. called the results from the metallurgical test work from the Selenge Iron

Ore project ―outstanding‖ in its report for the quarter ended 30 June.

Comprehensive testing revealed that the Bayantsogt deposit, and the Dund Bulag and Huiten Gol

prospect, can produce 65 percent iron concentrate on average, with even lower grade ore there

upgradeable to top-quality concentrate that could yield premium pricing. Exploration has thus far

identified four primary exploration targets at Selenge.

The drill program at Selenge for 2012 has begun, which will focus on drilling as much of the area of

known iron mineralization as possible in hopes of boosting resource inventory. The company has

employed seven diamond core rigs, the largest number of drill rigs at a single project in the

country. It is also employing an eight rig on site for drill hole surveying and re-surveying of solder

older holes and a ninth for hydrogeological drilling.

In regard to corporate activity, Marshall Cooper, Chief Operating Officer of Lippo Group, joined the

board of directors. Lippo currently holds 15.3 percent interest in Haranga Resources via its

subsidiary Golden Rain Holdings Ltd.

Source: Haranga Resources Ltd.

CAMECO REPORTS 52 PERCENT DROP IN PROFITS DUE TO POOR MARKET CONDITIONS

Canada's biggest listed uranium producer and an explorer in Mongolia, Cameco, reported sharply

lower earnings during the second quarter ended 30 June, based on lower sales volumes, lower

realized prices and higher costs.

The Toronto-listed company on Friday said net earnings were down by 85 percent to CAD 8 million,

compared with earnings of CAD 55 million or CAD 0.02 a share in the same period a year earlier.

However, on an adjusted basis, which did not include one-off items, the company's profit dropped

by 52 percent to CAD 34 million or CAD 0.09 a share. Revenue fell 8 percent to CAD 391 million.

―Our deliveries in the second quarter were low and we recorded a USD 30 million expense related

to a contract termination, which impacted our results,‖ President and Chief Executive Officer Tim

Gitzel said during an investor telephone conference.

The yellow cake producer was more upbeat about its expected performance during the second half

of the year, and said more than a third of its 2012 deliveries were to take place during the fourth

quarter, and it expected to produce 21.7 million pounds of uranium this year.

He added that growth would come at a time when uranium supply was challenged as a number of

new primary supply projects have been put on hold, and a significant source of secondary supply—

the Russian-U.S. agreement concerning the disposition of highly enriched uranium extracted from

nuclear weapons was coming to an end after 2013.

Source: Mining Weekly

ECONOMY

18 CIVIL SERVANTS TO RECEIVE SCHOLARSHIPS TO JAPANESE UNIVERSITIES

The government has made a deal that allows for the distribution of scholarships to Japanese higher

education institutions for the development of the human resources of government agencies.

The International Communications Center (ICC) of Japan will offer scholarships to 18 civil servants

to study in Japan in law, economics, business administration, education, environmental studies,

education, environment, information and communications technology, and development

engineering.

The ICC has struck similar deals for scholarships with 12 other countries. The program has run in

Mongolia since 2001, allowing for 191 individuals to acquire their Masters degrees at Japanese

universities.

Source: Zuunii Medee

CLOCK IS TICKING ON LAND PRIVATIZATION

The government is adding four new areas to the designated areas where people can settle as part of

its campaign to provide every Mongolian citizen with land.

The program to distribute land to each citizen is set to expire this year, but waning available land

near the city is making it nearly impossible for everyone to get his or her fair share. The

government is adding 100 hectares in 21 subdistricts of the Songinkhairkhan district, 80 hectares in

Biocombinat of the Khaan Uul district, 300 hectares in Nalaikh, and 160 hectares in Bagakhangai.

Each year the Office of Land Privatization decides on the location and size of an area it will open

for privatization that is later approved by the City Government of Ulaanbaatar. The government has

encouraged citizens to act quickly to apply for their 0.7 hectares of land in one of the assigned

districts before the program expires.

Source: Unuudur

DEVELOPMENT BANK SHOULDERS DEBT BURDEN

The Development Bank of Mongolia is reportedly paying interest of USD 95,000 a day because of its

debt offering released earlier this year.

This year the Development Bank sold USD 580 million in five-year state-guaranteed bonds bearing

5.75 interest via Deutsche Bank AG, HSBC Holding PLC, and ING Group.

According to Prime Minister N. Altankhuyag, the excessive debt has become a burden the

government cannot bear. The prime minister posted on Twitter account, "The Development Bank of

Mongolia is working at a loss of MNT 120 million a day. The government cannot find a way to hold on

to its precious funds.‖

Source: Zuunii Medee

TRADE GROWS ON MSE WITH MODERNIZATION

With the modernization of the Mongolian Stock Exchange (MSE) now in effect and a new Securities

Law on the way, foreign companies are growing more interested in listing on the domestic

exchange, said its chief executive. Kh. Altai reported that the number of brokers permitted to

trade on the floor has grown to 19.

―Roughly MNT 700 million worth of stocks have traded since the introduction of the new system,‖

said Altai. ―Further, we've approved new rules for trading and payments that meet international

standards.‖

July's introduction of the Millennium Exchange software, a comprehensive system for stock trading,

payment, accounting, savings, and security, has ushered in a new era of finance in Mongolia, said

Altai. The transition was not without some road bumps, however, as many brokers were suspended

from trading before they could attain the prerequisites for trading on the new system.

Source: Unuudur

CAPITALISM IN CITY OF RED HERO

While government is responsible for directing policies that stimulate investment and fair business

practices, it is up to Mongolia's small business owners, such as those operating throughout the city

center's business district, to realize prosperous futures for themselves.

The largest business can perhaps be found at the offices of Oyu Tolgoi LLC, located in Monnis

Tower. Initial production is set to begin this month with commercial production to begin in 2013,

when the mining operations are set to comprise a third of the country's economy. Revenue from

copper production there will reportedly bring Mongolia USD 720 million a day.

Not far off is the Mongolian Stock Exchange (MSE) where turnover has grown five-fold from USD 400

million to USD 2 billion in ten years. Two weeks ago at the stock exchange was the sale of 67 million

shares to 11 companies, the largest volume of trade since the London Stock Exchange (LSE) Group

installed its Millennium Exchange software in July.

Throughout the area, private taxi drivers work from 9 p.m. to 7 a.m. for MNT 800,000 a month.

Minus costs for spare parts, vehicle maintenance and gasoline, a driver can take home USD 400,000

a month. Meanwhile, street children sell various goods such as gum and books near the new Urgoo

Cinema-2 near the Chinese Embassy.

Up to 6,000 moviegoers visit Urgoo each day to catch the latest foreign or domestic film. Nayra's

coffee house serves between 100 and 150 cups a coffee a day to patrons for MNT 2,500 to MNT

4,500 each. Meanwhile luxury stores such as Louis Vuitton and Burberry operate at Central Tower,

and growing affluence has the fast food icon McDonald's, whose opening is largely seen as a symbol

that a country has climbed up the ladder of development and societal wealth, once again

considering opening in the capital.

Forbes magazine called Mongolia one of the best countries to do business. At the same time, it

reports that 80 percent of the wealth lies in the hands of the country's top government officials.

Many have yet to see the benefit of Mongolia's economic growth and will not wait for government to

hand it over. Instead everyone from the street vendor, the young venture investor, will have to

create their own fortunes in the boomtown.

Source: Unuudur

GROWING PAINS IN AGRICULTURE

Although Mongolia's agriculture sector is feeling the benefits of new management approaches and

seeing intensified production thanks to technological advances, it is still struggling to overcome

issues created by under-investment and a transition from a planned to market economy.

In mid-June T. Badamjunai, the Minister of Food, Agriculture and Light Industry, told the Cabinet

that the livestock industry expects 15 million births this year, a record high, and that the spring

planting of most crops was almost complete. Animal herding provides almost two-thirds of

agricultural production, while the main crops grown are wheat, potatoes, and vegetables. These

saw rise in output of 25 percent (433,400 tons), 14 percent (191,500 tons), and 18 percent (97,200

tons), respectively, in 2011 thanks in part to a crop rehabilitation program from 2008 to 2010.

Measures such as 40 to 50 percent loans for fuels, wheat seeds and fertilizers, along with customs

remittances and tax incentives for small-and medium-sized enterprises (SMEs), aim to produce even

higher yields in 2012, with targets of 490,000 tons of wheat, 200,000 tons of potatoes, and 110,000

tons of other vegetables from 330,000 hectares of arable land.

However, concerns over depleting reserves, inflation, and speculation caused the government to

restrict meat exports from March to July. Other concerns over livestock exports include a fear that

over-dependence on animal husbandry for meat and the nation's cashmere industry are both

contributing toward desertification. The phenomenon has likely worsened due to the move to a

market economy in the early 1990s, which led to larger herd sizes.

The country has launched its first nationwide agricultural census in May, meant to cover all

households, entities, and organizations. This follows a law passed in June 2011 establishing a state-

run commodities exchange to help determine fair market pricing. Technological innovations have

lifted yields to new levels and the next step will be to create viable agriculture industries that

invite foreign investment.

With no shortage of arable land—if grazing is well managed—and a host of other high quality raw

materials at its disposal, Mongolia's agriculture industry should post improved performance.

However, it will need improved organization and regulations to attract investment.

Source: Oxford Business Group

MONGOLIA DRAWS ADVENTUROUS LAWYERS

After the initial fear of making the big move to a location as remote and exotic as Ulaanbaatar

passed, Elisabeth Ellis of Minter Ellison is now reveling in the assignment she began in February—

launching an office here for her Australia-based firm.

"I'd gone to Mongolia in December 2010 and was pretty stunned by all the development," recalled

Ellis. "I got incredibly excited, but it took about a year for me to convince my 175 partners to open

an office here.‖

Ellis is not the only Western lawyer setting up shop in Ulaanbaatar. David Wegner, a Hong Kong-

based partner, has opened an office for Australia's Allens Arthur Robinson. But Michael Alderich, an

American partner at Hogan Lovells, a self proclaimed "regular since 1993", has bragging rights as the

first lawyer to establish a Mongolian outpost on behalf of a major Western firm.

Mongolia is not yet a first-world country, and while Aldrich and Wenger rave about Mongolian

summers, the winters take some getting used to. Aldrich compares Mongolia, as far as development

is concerned, to China in the 1980s, but it differs in a critical way: "Mongolia is the unsung success

story in Asian human rights. I was in Hong Kong in 1989 hearing the depressing news coming out of

Beijing before the 4 June incident in Tiananmen Square. Nine months later, the same situation

arose here in Mongolia. Instead of maintaining their political monopoly on power, the dictators let

go and the country has evolved away from a Soviet-style dictatorship into a democracy.‖

Though its homeland is massive, Ulaanbaatar's business community is more mini. Mining is a huge

industry in both Australia and Mongolia, so it is no surprise to find a sizable group of Australians--

about 300, Ellis estimates--in Ulaanbaatar. That doesn't count the 200 Mongolians who studied in

Australia, she added.

Source: ABA Journal

PAKISTAN TAKES A LESSON FROM MONGOLIA

Pakistan is looking to Mongolia as a model of a country that has mastered the strategy of mining-led

growth.

In Pakistan there has been growing talk regarding its massive and largely untapped mineral

potential. More specifically, Imran Khan, chairman of the Pakistan Tehreek-e-insaf, has hinted at

various rallies and forums that the country's future economic growth could be fueled by a natural

resources boom supported by foreign direct investment (FDI). Pakistan boasts the fifth largest

reserve of coal along with substantial reserves of copper, zinc, lead and aluminum.

The country acknowledges that Mongolia has taken its own vast reserves to transform itself into the

country with the fastest growing economy in the world. While mining in Pakistan accounted for a

meager 2.4 percent of its gross domestic product (GDP) in 2011, in Mongolia mining is almost 16

percent of its GDP. Mongolia, too, has vast deposits of coal, and copper, as well as gold, which has

led an investment boom in mining, driving economic growth to an unprecedented 17 percent last

year.

While China and India are suffering from growth in fatigue and economic overheating, Mongolia

could see the size of its economy double every three or four years.

Source: Dawn Urdu

HOW THE SPARSELY POPULATED LAND OF CHINGGIS SUCCEEDS AT THE OLYMPICS

In London, 29 Mongolians are competing in the 2012 Olympic Games, and the team expects to at

least equal its Beijing four-medal haul of two gold (judo and boxing) and two silver (shooting and

boxing).

Like Jamaica and Australia, Mongolia punches well above its weight at the Olympics. The reasons

for its success are simple. Mongolia is a country where one-third of citizens still roam the steppe

and semi-desert as nomads. It is a harsh life that develops muscle and fortitude.

―When you get up at dawn to milk the camels or grab the cattle by their horns, it builds natural

fitness,‖ said Secretary General J. Otgontsagaan. ―Mongolians, I think we're tougher than anybody

else.‖

The country's athleticism has been further honed by the legacy of a Soviet-style system that

provides ample state funding for promising young athletes. Each summer, Mongolia celebrates

Naadam, a sporting festival of epic proportions. Three so-called ―manly sports‖ are contested

nationwide: wrestling, horse racing, and archery. The whole country stops for days to watch the

games.

Mongolia's Olympic success contrasts with countries like India and Indonesia, which fare poorly when

populations figures are factored into medal counts. A nation of more than 1 billion people, India

only won its first individual Olympic gold in 2008. Even China, when its 51 gold medals in 2008 were

divided by its 1 billion-plus population, ended up ranking 47th out of 55 nations in a tally compiled

by Australian researcher Simon Forsyth. That put the People's Republic between Uzbekistan and

Argentina, not nearly as impressive as the absolute figure in which China topped the gold-medal

charts ahead of the United States.

According to Forsyth's calculations, Mongolia ranks sixth when its gold medal haul is factored

together with its population. Further brightening the country's prospects is the fact that Mongolian

gold, provided by Rio Tinto PLC from the Oyu Tolgoi copper-gold project it operates, has been used

to make the medals for the 2012 Olympics.

Source: Time

SCHEDULING CHANGE CREATES SNAFU FOR MONGOLIAN FANS AT OLYMPICS

Unhappiness with the ticket resale system for the London Games reached the boiling point Monday

afternoon after hundreds of Mongolians, some who had traveled to London from Mongolia, learned

that a schedule change meant they could not see the match of boxer and national hero U. Munkh-

Erdene.

―All these people have bought tickets for no reason,‖ said A. Tuya, a Londoner of Mongolian descent

who had a shouting match with a ticket manager. Officials are telling us to go watch [anyway].

Why? We're here to support a particular athlete from our own country.

A half-hour later, the ticketing manager returned to tell a crowd of 30 angry Mongolians that they

would get their ticket changed after all. A cheer went up from the throng. But that was no

consolation for the 200 or so Mongolians who had taken the advice to enter the arena and watch

some other country's athletes compete.

Source: USA Today

POLITICS

ENKHBAYAR SENTENCED TO FOUR YEARS

Mongolia's third president, N. Enkhbayar, has been sentenced to four years in prison on charges of

graft.

The sentencing was reduced from an original decision by the judge to give the president seven and

a half years in prison. The Sukhbaatar District Court found Enkhbayar guilty of charges that include

the illegal privatization of a hotel and newspaper and the misuse of donated television equipment

to broadcast his own television station.

The three-day trial experienced a number of delays on requests for added time for Enkhbayar's

lawyers to brief themselves on the case and changes to his legal counsel. The trial finally began on

July 31 with a verdict reached yesterday at 22:30.

In addition to his four-year prison sentence, ownership of TV9 television station will be transferred

to the state and he will have to pay 54 million tugiks ($39,987) in damages to the Gandan

monastery, to whom the court said the studio equipment was originally intended. The court,

however dismissed charges regarding 30 million tugriks for unpaid luggage transport fees to MIAT

Mongolian Airlines and a deal regarding steel manufacturing with state-owned Erdenet Mining

Corporation.

The former president's lawyers told press they intend to appeal the decision.

The conviction could spell trouble within the coalition government between the Democratic Party

and Justice Coalition, which Enkhbayar leads himself. While some semblance of a government has

been formed it has yet to be officially installed. Luvsandendev Sumati, director of the Sant Maral

Foundation, a polling agency, reminds that the partnership is a fragile one that could come apart.

―This is a test for the assumed coalition's stance on corruption for this country,‖ said Sumati. ―It's a

test to see if they can come to an agreement.‖

Source: BCM

Z. ENKHBOLD VOWS FOR A UNITED COALITION

Mongolia's newly elected Speaker of the Parliament, Z. Enkhbold, promised to command a strong

coalition amongst Mongolia's opposition parties and would not allow the Mongolian People's Party

(MPP) to hijack control of Parliament.

In response to the MPP's protest over not appointing the MPP‘s General Secretary G. Zandanshatar,

he assured journalists that the appointment process was in line with the law. Enkhbold went further

to say that the Constitutional Court, if drawn to make a decision, would have to approve the

appointment as it followed guidelines for appointment.

―A large controlling government should not allow a minority to dictate the will of Parliament,‖ said

Enkhbold. ―We will have to adjust the current situation.‖

He reminded reporters that in 2004 too, no political party won a majority, and that it would be his

responsibility to organize a united government. The new Speaker promised to maintain a united

government while combating corruption within the ranks of Parliament.

Source: Udriin Sonin

DP HEAD REFUSES TO NEGOTIATE MPP GRIEVANCES

D. Erdenbat, the head of the Democratic Party (DP), has refused to negotiate with the Mongolian

People's Party (MPP) on its grievances.

MPP head O. Enkhtuvshin met with coalition representatives to discuss its three grievances of

appointing a MPP representative as Parliament speaker, resolving the electoral dispute between the

two candidates for the seat to represent Uvurkhangai Aimag, and a hand recount of ballots to

elections for representation of some electoral districts.

Erdenbat said there would be not any discussion on these matters and would only meet as the head

of the grand coalition. The party leader said that only the General Election Committee could order

a hand recount to any election, and the same applies to the Uvurkhangai electoral dispute.

In light of the numerous disputes brought up by the MPP, the DP has established a working group led

by Kh. Temuujin, N. Batbayar, and D. Gankhuyag to act as a medium. Negotiations on the

establishment of a joint government are under way, and the structure of government has already

been decided and will be presented soon, said Erdenbat.

Source: Zuunii Medee

MPP OFFICIALS STEP DOWN

The governing committee of the Mongolian People's Party (MPP) has officially resigned from its post

with the incoming of the new grand coalition between the Democratic Party (DP), Civil Will-Green

Party (CWGP) and Justice Coalition (JC).

The general session of Parliament was suspended due to excessive absence of MPs from the MPP

who abstained due to uncertainty over the winners of the Uvurkhangai electoral district. There is

also debate within the MPP over the party's new general secretary. The three possible candidates

are Minister of Environment and Tourism Tsogtbaatar, former MP Sukhbaatar, who lost his election

campaign at Darkhan-Uul, and former MP and Minister of Foreign Affairs Zandanshatar, who lost his

election at Bayankhongor Aimag.

Source: Business Mongolia

GOVERNMENT APPOINTS HEADS AT SPC AND BANK OF MONGOLIA

Two appointments were made to the heads of government agencies at a government meeting.

Government appointed Ts. Nanzaddorj as head of the State Property Committee (SPC) and J.

Ganbat as Chairman of the Bank of Mongolia's Board of Directors. Nanzaddorj has worked as head of

the Privatization Department of the SPC and Ganbat as head of the Income Department of the

Ministry of Finance (MOF).

Source: News.mn

CHANGE AT THE TOP

The month-long wrangle over the make-up of the new governing coalition is almost over. It was

announced that the Democratic Party (DP) will rule in coalition with two smaller parties that have a

total of 13 seats to replace the Mongolian People's Party (MPP).

Notable among the challenges facing the coalition is how to deal with the rise of resource

nationalism. According to Dale Choi of Origo Partners, a private-equity company, 25 members of

Parliament can be classed as ―resource nationalists,‖ such as former President N. Enkhbayar. The

ex-president, who is on trial for alleged graft and leads the Mongolian People's Revolutionary Party

(MPRP), has not ruled out running for the presidency again in the future, and has been vocal about

changing the country's stake in mining contracts.

According to L. Sumati of the Sant Maral Foundation, a polling agency, Enkhbayar is not a danger to

sitting president, Ts. Elbegdorj in next year's election, ―since the coalition agreement states that

they will have a single candidate representing all three parties—and that is likely to be the

incumbent. He could, however, be a danger to relations with Ivanhoe Mines Ltd. and its largest

stakeholder, Rio Tinto PLC, if his stance on natural resources turns out to be anything other than

political posturing.

The new coalition will also need to find a better way to distribute Mongolia's mining wealth. Many

voters, especially those in the ger districts, believe too much goes to line the pockets of the

powerful at the expense of the population at large. Sumati said this election was one that ―people

actually tried to change the political establishment,‖ fed up with what they saw as parties only

helping those with influence.

The losses of the MPP might be temporary, however, since Mongolian voters could well elect an MPP

candidate in next year's presidential election in order to balance out the influence of the two main

parties. Consequently, the new coalition will be doing all it can in the months ahead to make a case

for retaining the new status quo.

Source: The Economist

WITNESS GIVES TESTIMONY IN ENKHBAYAR TRIAL

A local court heard testimony from a key witness in the trial for former President N. Enkhbayar on

corruption charges this week. The first hearing had been delayed many times before finally

beginning this week on 31 July.

State prosecutors read testimony to Sukhbaatar district court from D. Choijamts, abbot of Gandan

monastery, about the donation of television equipment at the center of one of the charges.

Enkhbayar is charged with illegally using the equipment to set up his own television station, TV9.

The abbot, who did not attend the hearing because he is attending the London Olympics with

President Ts. Elbegdorj, said in his statement he visited Japan at the invitation of Japanese

Buddhist organization Agon Shu, based in Japan's Kyoto, with Enkhbayar in 2000.

"Before the trip, there was discussion with Agon Shu about setting up a TV station under the

monastery. It was my understanding that the TV equipment donated by the Agon Shu was for

Gandan monastery for Mongolian Buddhists," the statement said. "I don't know what Enkhbayar

talked about with the Japanese. Our monastery later received some money for ownership of the TV

station set up by Enkhbayar and the money was spent on building the Mongolian Buddhist temple in

India," he said.

However, S. Narangerel, one of Enkhbayar's defense lawyers, said the donations was a personal one

made to Enkhbayar and Choijamts and that a prominent Mongolian businessman had to pay the

custom taxes and help set up the television station since the monastery could not.

Source: English CRI

DEADLINE FOR CASH EXCHANGE FOR TT SHARES PASSES

This week marked the expiration for citizens to apply for cash in-lieu of 1,024 of their 1,072 shares

of Erdenes-Tavan Tolgoi JSC.

The Labor and Welfare Service Agency announced that it would no longer accept requests for cash

payments for shares beginning on 1 August. Citizens who would still like to exchange their shares

for cash will have to appeal to the human development officer from the Department of Labor and

Welfare Services.

Source: Undesnii Medee

IAAC MAKES HEADWAY IN ITS OFFENSE AGAINST CORRUPTION

The Investigation Division of the Independent Authority Against Corruption (IAAC) reported on its

activities in 2012 in a press conference which closed with an appeal to make 2013 the "Year Against

Corruption".

In the first half of 2012, the IAAC reported on the assets and incomes of 3,116 civil servants and 225

officials. Regulations dictate that anyone nominated for a position in government must release a

preliminary personal interest report that will be reviewed by the IAAC. Of the 564 reports from

officials from 100 organizations, the agency made evaluations to 534 civil servants.

Also this year, the IAAC conducted investigations into 109 criminal cases regarding 434 incidents, a

23 percent increase compared with the same period last year. Bribery, comprising 80 percent of all

incidents, experienced a 12 percent increase from the year before.

The IAAC said it had convicted parties in 22 of its cases, or 20 percent all its investigations, while 15

percent were transferred, 17 percent were combined with other criminal cases and the

investigation into one case was suspended.

E. Amarbat, the head of the Investigation Division of the IAAC, noted that during investigations

lawyers colluded with certain organizations to create complications.

Source: Info Mongolia

CITIZENS' PETITIONS HALT NEW CONSTRUCTION PROJECTS

Chairman of the Ulaanbaatar City Council D. Battulga has ordered the Specialized Inspection Agency

to suspend any new permits for construction. He explained that the suspension is necessary because

the city administration has received numerous claims of illegal construction projects. City

government has made exception, however, for projects it is funding.

Source: Udriin Sonin

DP PLANS TO OPEN NEW GOVERNMENT PALACE WING TO THE PUBLIC

Democratic Party (DP) head and Prime Minister N. Altankhuyag announced in a press conference

that one of the party's first objectives is to open an extension of the Government Palace that would

be open to the public.

The act would be a gesture to demonstrate a new era of transparency from government. Visitors

would be able to pay homage to the nine ceremonial flags and visit a museum of the history of

Mongolia's government.

The project would also include the release of a special phone number citizens could contact and

express their opinions and suggestions.

The estimated sum for renovations is some MNT 370 million.

Source: Zuunii Medee

JAPAN’S MOFA TO REORGANIZE INFORMATION DISTRIBUTION TO MONGOLIA

Japan's Ministry of Foreign Affairs (MOFA) will carry out an organizational overhaul next Wednesday

to strengthen its ability to distribute information to countries such as Mongolia about itself abroad,

Minister Koichiro Gemba said.

The ministry will integrate the department that handles news and information supplied to the

media with another in charge of activities to disseminate information about Japanese culture to

other countries and regions, Gemba said. Separately, the ministry will set up the Second China and

Mongolia Division under the Asian and Oceanic Affairs Bureau. The division will take charge of

economic issues related to China, which has a rapidly growing economy.

Source: News.mn, Yomicuro

PUTTING A LID ON ANGER OVER RESOURCE BOOM

Although Mongolia has the fastest growing economy in the world, anger amongst the populace is

growing nearly just as fast.

The poverty rate increased between 35 to 40 percent from 2008 to 2010. And although Ulaanbaatar

has become a typical Asian boom city, one only has to look to the hills that surround the city to the

ger districts that go without roads or running water and rely on coal-burning stoves for warmth in

winter. These city slums house more than half the population of the capital

Voters warily turned to the business-friendly Democratic Party (DP) in last month's parliamentary

elections. But falling short of a majority, it was forced to join forces with the Justice Coalition. But

there's a catch: The Justice Coalition ran on the platform of reversing policies it believes are too

generous to foreign mining investors.

About a decade ago, when Chinese demand for minerals exploded, Ulaabaatar sought to attract

Western expertise rather than relying on its two giant neighbors. But attracting private foreign

investment into a country with little infrastructure and poor rule of law, Mongolia had to give

Western firms sweetheart deals. Many criticize the terms of the Oyu Tolgoi investment agreement,

which granted Ivanhoe Mines Ltd. 66 percent interest in the project. Critics also charge that foreign

mining companies are paying effectively no taxes.

Before the election, the MPP-led Parliament tried to capitalize on popular anger by passing a bill

that would increase government revenues by restricting foreign ownership of strategic industries to

49 percent, unless Parliament granted exemption. The rest would have gone to state-owned

enterprises.

The DP argued that abrogating already signed contracts would damage Mongolia's international

reputation and risk driving out Western investors, essentially leaving Mongolia at the mercy of the

Chinese. Ultimately, a watered down version passed, but investors‘ anxiety has not been soothed.

The DP hopes the reaction of foreign investors will be mitigated by the knowledge that their plight

would be much worse under another government. It helps that, given the anticipated returns on

investment in the country, even restructured deals will remain lucrative.

Source: World Politics Review

A MONGOLIAN LESSON FOR INVESTING HORDES Frontier investing in countries such as Mongolia promises growth opportunities that developed world

economics just can't offer. The flip side is that investors often have to stomach the messy politics of

emerging nations.

Mongolia has drawn plaudits, investors and the attention of bankers in the past couple of years.

Global mining giant Rio Tinto PLC is heavily invested there and this week spent another USD 1

billion to fund the Oyu Tolgoi copper and gold project. In February, Goldman Sachs took a 4.8

percent stake in one of the country's top three banks. Hillary Clinton, during a visit last month,

lauded the country's burgeoning democracy.

But too much optimism ignores political risk. The canary in Mongolia's coal mine is SouthGobi

Resources Ltd. a Hong Kong-and Toronto-listed coal miner spun out of Canada-based Ivanhoe Mines'

remaining 60 percent stake in the company for USDS 926 million. With an upcoming election to

posture for, the government introduced new foreign ownership legislation that effectively blocked

the Aluminum Corp. of China Ltd.'s (Chalco's) plans.

Landlocked Mongolia needs China for trade, but Chinese power looms too large. State-owned Chalco

extended the deadline for its offer by 30 days last month, and on Thursday said it would extend the

agreement another 30 days. In the meantime, operations at SouthGobi Resources' main mine have

ceased as Mongolia's government stalls on handing out necessary permits and approvals. Its shares

have since fallen by about 50 percent from before the Chalco offer.

Source: Wall Street Journal

RELIGIOUS FREEDOM IN MONGOLIA

While the constitution and other laws and policies protect religious freedom, in practice the

government has enforced these protections selectively.

The government does not demonstrate a trend either improved or deteriorated in the respect and

protection of religious freedom rights, which varied between provinces. The law limits proselytizing

and some religious groups, particularly foreign-run religious organizations, faced bureaucratic

harassment from local governments or were denied registration.

Buddhism is closely linked with the country's cultural traditions, with local scholars claiming that

more than 90 percent of citizens subscribe to some form of the religion, although practices vary

widely. Lamaist Buddhism of the Tibetan variety is the traditional and dominant religion. Ethnic

Kazakhs, most of whom are Muslim, are the largest ethnic minority, constituting approximately 5

percent of the population nationwide and 80 percent of the population of the western province of

Bayan-Ulgii. The Muslim Association estimates there are 120,000 Kazakh Muslims and 30,000 Khoton

Muslims, largely in the province of Uvs. Muslims operate more than 40 mosques and ten Islamic

student centers, and there are an estimated 3,000 students of Islam.

There are reports of societal abuses and discrimination based on religious affiliation, belief, or

practice. The growing influence of Christian religious groups has worried some and in certain cases

has led to the harassment of Christians. Muslim institutions generally fared better as a result of

their deeper historical roots in society.

There is a small but growing number of Christians, with estimates of Christian practitioners to be

more than 4 percent of the population. Of that, an estimated 90 percent are Protestant, and 9

percent are members of the Jesus Christ Church of Latter-Day Saints. Roman Catholics and

members of the Russian Orthodox Church together account for the remaining 1 percent.

Read more…

Some citizens practice shamanism, often in tandem with other religions, but there are no reliable

statistics on their number.

The constitution and laws protect religious freedom and the constitution explicitly recognizes

separation of church and state. Religious groups and non-government organizations (NGOs) must

register with local and provincial authorities, as well as the General Authority of State Registration

to legally operate.

Source: U.S. Department of State

ANNOUNCEMENTS

MINExpo INTERNATIONAL 2012 - Registration is Open and Housing is Filling Up Fast!

MINExpo INTERNATIONAL® is the world's premier mining event. From September 24-26, find every

mining-related product, service and technology at the Las Vegas Convention Center.

If you are in coal, industrial/nonmetallic minerals, precious metals, ferrous/nonferrous metals,

sand, gravel or stone, your company should not miss this once-every-four-years opportunity to be at

MINExpo® 2012.

More than 1600 exhibitors will display all facets of mining — from exploration and surveying, mine

site development, excavating, materials handling and haulage, processing and preparation, drilling

and safety equipment to computer technologies, replacement parts and engineering, construction,

and reclamation services —under one roof.

In addition, there will be 20 education sessions covering safety, bulk materials handling,

exploration, underground and surface mining, maintenance, processing, new mining projects,

markets, environmental issues, coal, and more.

Registration deadline is 5PM Friday, August 3, 2012.

Contact BCM at 70114442 or tugi@bcmongolia.org for registration and more information about the

event.

___________________________________________

DISCOVER MONGOLIA-2012, AUGUST 30-31

The Discover Mongolia conference will be held on August 30-31 in Ulaanbaatar. The conference

venue will again be the Children's Palace. BCM is a supporting organization of Discover Mongolia

2012, and its members will have the opportunity for an early-bird rate for attendance.

Oyu Tolgoi LLC, Mongolia's largest copper and gold mining firm, will be the event's premier sponsor,

in addition to the forum's ―gold sponsors‖: Monnis International Inc., Xanadu Mines Ltd., Aspire

Mining Ltd., Micromine Mongolia LLC, and Mongolian Mining Corp. The conference agenda will

concentrate on recent developments that have taken place in Mongolia's mining and foreign

investment landscape.

For more information, call +976 7014 9762 or email info@discovermongoliaforum.com.

___________________________________________

MONGOLIA INVESTMENT SUMMIT 2012, HONG KONG, OCTOBER 30-31

The Mongolia Investment Summit 2012 will be held from 29 to 30 October at the Four Seasons Hotel

in Hong Kong to once again bring the best of Mongolia's investment opportunities to Asia's leading

investment hub.

Now in its third year, the summit has strongly cemented its position as the largest Mongolian

investment event outside of Ulaanbaatar, providing foreign investors with the most comprehensive

overview of Mongolia's key economic growth sectors all under one roof.

Speakers at the event include Altai Khangai, Chief Executive Officer of the Mongolian Stock

Exchange (MSE), Cameron McRae, President and Chief Executive Officer of Oyu Tolgoi LLC, and

James Passin, Co-founder and Manager of Firebird Mongolia Fund.

BCM is a Supporting Association of the event again this year. For more information, find a brochure

of the event by logging onto the website: mongoliainvestmentsummit.com.

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REGISTER NOW FOR MONGOLIAN MINING DIRECTORY-2013

Mongolian Mining Directory-2013 which provides information database for Mining companies,

investors, suppliers, service companies, government and non government organizations will be

published for the fourth year to commemorate the 90th anniversary of the Mongolian mining

industry. The MMD is distributed free of charge to international and domestic mining companies,

international conferences and exhibition, embassy offices in Mongolia and foreign countries to

investors.

BCM is a Supporting Organization of the MMD and welcomes Mongolian mining industry participants

who are interested in advertising their products and services in Mongolian Mining Directory-2013.

For more information please visit: www.mining.mn, www.mongolianminingdirectory.mn or call

+976-7011 5590.

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REGISTER FOR BCM’S MINING SUPPLY CHAIN DATABASE AT NO COST

The new version of BCM‘s Mining Supply Chain Database is ready for use. Following the initiative of

Oyu Tolgoi LLC, the BCM has maintained the Mining supply chain database since March 2009. It is

honor to introduce you to the new version of the database which is totally upgraded as to its

content and use of information technology opportunities.

We are inviting all Mongolian mining suppliers and buyer companies to join the Mining Supply Chain

Database. Please visit here for registration.

If you have any questions regarding the database, please contact Undral at undral@bcmongolia.org

or 317027.

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POSTINGS ON MONGOLIAN WEBSITE ‘PRESENTATIONS’ AND ‘NEWS’ SECTIONS

The new ‗Presentations‘ section on BCM‘s Mongolian website can be reached via link to

bcm.mn/itgeluud. Several presentations already posted include World Bank‘s Mongolia Quarterly

Economic Update–June 2012; 11 speeches from the 2nd Coaltrans on May 23-24 in UB.

As a key component of BCM‘s Mongolian website ‗News‘ section, articles from the Government‘s

―Open-Government.mn‖ site are regularly posted.

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POSTINGS ON ENGLISH WEBSITE 'PRESENTATIONS', 'MONGOLIA REPORTS' AND ‘MONGOLIAN

BUSINESS NEWS’

On BCM‘s English website, ‗Resource, Presentations‘ section, for your review are 4 presentations

from BCM‘s June 25 monthly meeting; 12 presentations from the 2nd Coaltrans on May 23-24 in UB;

3 speeches from ―Corporate Governance Training for Directors‖ on April 27-28; 12 presentations on

Mongolian entities at Mines and Money Hong Kong 2012 on March 21-23; 11 presentations from Coal

Mongolia 2012 on February 9-10; and speeches from all BCM‘s monthly meetings in 2011-12.

Also on BCM‘s English website, ‗Resource, Mongolia Reports‘ section, please note the Polit

Barometer, June 2012, and the Polit Barometer, April 2012 by Sant Maral Foundation (Mongolian

and English versions); Risk Report for Mongolia 2012 by Mongolia Economic Forum; ―Preliminary

estimates of staggering costs of inefficient trade regulation in Mongolia‖ by Olin McGill, consultant

to USAID BPI; ADB‘s Asian Development Outlook, April 2012; detailed results of BCM‘s NewsWire

survey of March 2012; World Bank‘s Mongolia Quarterly Economic Update, February 2012; Executive

Summary of the Mongolian Real Estate Report 2012 by M.A.D. Investment Solutions; 2011 Mongolia

Investment Climate Statement by Economic and Commercial Section of U.S. Embassy, Ulaanbaatar,

Mongolia; and Transition Report 2011 (Mongolia data) by EBRD and the Economic Research Institute.

We are now posting some news stories and analyses relevant to Mongolia to BCM website's

‗Mongolian Business News‘ as they come, instead of waiting until each Friday to put them all

together in the weekly NewsWire. The NewsWire will, however, continue to be issued on Friday,

and will incorporate items that are already on the home page, so that it presents a consolidated

account of the week‘s events.

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SOCIAL NETWORK WITH BCM

The Business Council of Mongolia (BCM) has expanded its reach to your favorite social networks.

Keep up to date on the latest business deals in Mongolia and how the climate for investment is

improving each day with BCM.

Connect with BCM on Linked-in to join the diverse group of professional contacts creating a better

business environment in Mongolia today.

Add BCM on Facebook at http://www.facebook.com/pages/THE-BUSINESS-COUNCIL-OF-

MONGOLIA/129826330435540 to read the latest announcements and comment on events carried in

the NewsWire with the community.

Hear breaking news and announcements as they happen when you follow BCM on Twitter at

http://twitter.com/#!/bcMongolia.

Of course for news information, interviews, and announcements regarding our organization, visit

the official BCM website at www.bcmongolia.org and www.bcm.mn.

ECONOMIC INDICATORS

INFLATION

Year 2006 6.0% [source: National Statistical Office of Mongolia (NSOM)]

Year 2007 *15.1% [source: NSOM]

Year 2008 *22.1% [source: NSOM]

Year 2009 *4.2% [source: NSOM]

Year 2010 *13.0% [source: NSOM]

Year 2011 *10.2% [source: NSOM]

June 30, 2012 *14.7% [source: NSOM]

*Year-over-year (y-o-y), nationwide

Note: 15.1% y-o-y, Ulaanbaatar city, June 30, 2012

CENTRAL BANK POLICY RATE

December 31, 2008 9.75% [source: IMF]

March 11, 2009 14.00% [source: IMF]

May 12, 2009 12.75% [source: IMF]

June 12, 2009 11.50% [source: IMF]

September 30, 2009 10.00% [source: IMF]

May 12, 2010 11.00% [source: IMF]

April 28, 2011 11.50% [source: IMF]

August 25, 2011 11.75% [source: IMF]

October 25, 2011 12.25% [source: IMF]

March 19, 2012 12.75% [source: Mongol Bank]

April 18, 2012 13.25% [source: Mongol Bank]

CURRENCY RATES – August 2, 2012

Currency Name Currency Rate

U.S. dollar USD 1,341.16

Euro EUR 1,676.25

Japanese yen JPY 16.84

British pound GBP 2,095.43

Hong Kong dollar HKD 172.85

Chinese yuan CNY 210.72

South Korean won KRW 1.16

Russian ruble RUB 40.76

Disclaimer: Except for reporting on BCM‘s activities, all information in the BCM NewsWire is

selected from various news sources. Opinions are those of the respective news sources.