Mongolia Weekly: 22 October 2010 - Eurasia Capital

Mongolia WeeklyOctober 18-22, 2010Politics and Economy• Mongolia Completes IMF Stand-By Arrangement• Mongolia to Settle Debt to Russia• Erdenes Tavan Tolgoi LLC Formally Established• Tavan Tolgoi IPO in 2011• Development Bank Board Approved• HDF to Ease Credit Pressure on Herders• Exploration License Ban to Expire Soon• 400,000t of Wheat Harvested in 2010• MNT Again Breaks 1,300 Level Against US$Financial Markets• MSE Top-20 Index Declines 1.8%Industry Focus• Four Companies Have Permissions to Build Oil Refinery in MongoliaCorporate News• Hunnu Coal to Raise AU$40mn• SouthGobi to Supply Coal to Winsway Resources• SouthGobi Resources Sales and Operations Update• Ivanhoe Mines to Launch Strategic Rights Offering• Ivanhoe Mines Announces Robert Friedland Assumes CEO Role• SharynGol JSC Appoints New CFO• Mongolian Mining Corporation Exercises Over-Allotment Option• Ludowici to Supply Equipment for Coal Processing Plant at UHG Mine• Manas Started Seismic Operation on its Mongolian Assets• Commercial Banks Join Unified Card Clearing System• WorleyParsons Opens Branch in MongoliaMSE TOP-20 Index15,50013,50011,5009,5007,5005,5004-JanSource: MSE4-Feb4-Mar4-Apr4-May4-Jun4-JulTop-20 Trading Volume (MNTmn)4-Aug4-Sep4-OctTop-20 index4,0003,5003,0002,5002,0001,5001,000500-MNTmnSelected Worldwide IndicesIndexClosepricePerformancew-o-wy-t-dMSE TOP 20 12,973.46 -1.82% 109.6%MonBiz Hong Kong 108.39 6.68% -19.1%MonBiz Mongolia 1,509.66 -0.93% 43.8%Dow Jones 11,132.56 0.63% 6.8%FTSE 100 5,741.37 0.67% 6.1%Nikkei 9,426.71 -0.77% -10.6%MSCI EM Asia 450.97 -1.10% 12.3%Hang Seng 23,517.54 -1.01% 7.5%Shanghai 3,378.66 1.53% -5.5%KASE 1,545.59 -2.20% -12.6%RTS 1,614.85 2.08% 11.8%Top Movers on MSEBest performersClose PerformanceStockprice,w-o-w y-t-dMNTSuu 10,000 44.93% 156.4%Olloo 178 31.85% 137.3%Hotel Mongolia 517 20.23% -14.1%Remicon 78 16.42% 4.0%Nekheesgui Edlel 400 14.29% 60.0%Worst performersAlmaas 425 -15.00% -38.4%Mon-It Buligaar 4,500 -10.00% 109.3%Tavilga 602 -7.38% -36.6%Auto Impex 661 -6.90% 32.2%Aduunchuluun 3,750 -6.25% 668.4%Major CommoditiesCommodityLast pricePerformancew-o-wy-t-dCopper, $/t 8,318.00 -0.75% 13.3%Gold, $/oz 1,328.45 -2.92% 21.1%Coal 1 , $/t 115.93 1.9% 3.5%Iron ore 2 , $/t 183.22 -0.11% 45.5%Uranium, $/lb 48.50 1.04% 9.0%Crude (WTI), $/bbl 81.16 -0.11% 2.3%MNT vs Major CurrenciesNameRate 3 ,MNTMNT app.(-) ordep.(+)w-o-wy-t-dUS$ 1,295.36 -1.18% -10.2%Euro 1,809.36 -2.21% -12.7%Japanese Yen 15.97 -1.18% 2.0%Chinese Yuan 194.91 -1.06% -7.8%Russian Rouble 42.18 -3.83% -11.6%Source: Bloomberg, MSE, Eurasia Capital1 Qinhuangdao, Steam Coal2China Import Price Qingdao Port3 Central bank rate

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Economic Event CalendarIndicator name Reported period Release date ActualresultPreviousresultCPI, m-o-m, % Oct 2010 Nov 09, 2010 -- -0.7Industrial output y-o-y, % Jan-Oct 2010 Nov 09, 2010 -- -10.4Money Supply (M2), MNTbn Oct 2010 Nov 09, 2010 -- 3,851.7Money Reserve (M1), MNTbn Oct 2010 Nov 09, 2010 -- 959.1External trade turnover, US$mnExports, US$mnImports, US$mnBalance, US$mnBudget, MNTbnRevenue, MNTbnExpenditure, MNTbnBalance, MNTbnJan-Oct 2010 Nov 09, 2010 --------Jan-Oct 2010 Nov 09, 2010------3,192.11,487.01,705.2-218.21,519.61,855.6-336.0Unemployment rate, % 3Q2010 Nov 09, 2010 -- 9.0Real GDP y-o-y, % 3Q2010 Oct 9, 2010 6.3 5.0Source: Bank of Mongolia, National Statistics Office of MongoliaInternational IPO CalendarCompany name IPO size Stock Exchange Type YearMongolian Mining Corp. US$651mn HKEx Coal Oct 13, 2010Winsway Coking Coal US$472mn HKEx Coal logistics Oct 11, 2010Iron Mining Int’l US$1bn HKEx Iron ore 4Q2010Gobi Coal and Energy - HKEx Coal 1Q2011Source: Company dataPolitics and EconomyMongolia Completes IMF Stand-By ArrangementOn October 15, Minister of Finance Bayartsogt, Governor of Mongolbank Purevdorj and IMF’s missionchief for Mongolia Steven Barnett made the joint statement on successful completion of Mongolia’s SBA(Stand-By Arrangement).The Mongolian Government requested an SBA with the IMF to overcome economic and financial crisis inMongolia and IMF approved an 18-month SBA on April 1, 2009.The program had four main components: (i) allowing the exchange rate to adjust flexibly to marketconditions while rebuilding international reseves; (ii) restoring health to public finances; (iii) bolsteringconfidence in the banking system; and (iv) protecting the poor during the period of economicadjustment. The SBA was approved for an amount of SDR153.3mn (approx. US$242mn).Total disbursements under the arrangement remain an equivalent to SDR122.64mn (approx.US$194mn). While the completion of the final two reviews under Mongolia’s SBA enables the2

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)disbursement of an amount equivalent to SDR30.66mn (approx. US$48mn), the Mongolian authoritiesdecided against drawing this amount.The joint statement notes that the Government of Mongolia’s determined policy implementation withinthe guidelines by the IMF-supported SBA and it led the country to a remarkable economic turnaroundwith the economic growth expected to exceed 7% in 2010. Under the program, macroeconomicperformance improved enormously, i.e. international reserves reached all-time high, confidence in localcurrency restored, foreign exchange market stabilized, inflation declined, budget deficit decreased andofficial external arrears were all resolved.The Government has also made some significant structural reforms under the program, including FiscalStability Law, revised Central Bank Law, and revised Banking Law.Mongolia to Settle Debt to RussiaMongolia is to pay Russia US$3mn as the final settlement of debt acquired during socialist period,news.mn reported on October 18. The news source quotes Mongolian Minister of Finance S. Bayartsogtthat between 1949 and 1991 Mongolia had borrowed from the Soviet Union MNT9.6bn and the intereston it was MNT2.2bn; the total to be repaid stood at MNT11.8bn.In 2003, Russia agreed to deduct from the total the Erdenet Factory funding and the interest on it, thusreducing the total debt to MNT11.4bn. Then, Russia agreed to write off 97.8% of the total debt.It has now been agreed between the Ministries of Finance of Russia and Mongolia, that Mongolia is tore-pay US$3mn, pending approval of both Governments. The Mongolian Government has recentlyapproved the settlement, news.mn reported.Erdenes Tavan Tolgoi LLC Formally EstablishedThe Government decision on October 20 formally established Erdenes Tavan Tolgoi as a subsidiary ofErdenes MGL, Montsame Agency reports today. Erdenes Tavan Tolgoi LLC will hold exploration andmining licences for Tavan Tolgoi coal deposit and manage the deposit. The Government plans to IPO30% of the Company in domestic and international markets, offer 10% to Mongolian businessenterprises at nominal value and to distribute non-voting 10% of the Company’s shares to Mongoliancitizens. Currently, the Government is in the process of selecting competitively Chief Executive Officerfor the Company. In regard of Tavan Tolgoi project, the Company will exercise the following rights:• Hold both exploration and exploitation licenses of Tavan Tolgoi strategic coal deposit andmanage the deposit• Represent the state and accumulate profits allocated to the state• Raise funding for the establishment of mining and processing plants on the deposit, andnecessary infrastructure• Draft and make feasibility study for the mine• Organize work for allocating shares to citizens and companiesIn our view, formal establishment of Erdenes Tavan Tolgoi moves closer long awaited IPO of world’slargest undeveloped coking coal deposit.3

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Tavan Tolgoi IPO in 2011In an interview published by business-mongolia.com on October 20, L. Enebish, General Director ofErdenes MGL LLC says that Erdenes Tavan Tolgoi LLC IPO is expected in late 2011. Newly establishedErdenes Tavan Tolgoi LLC is a license holder for the 6.4bn tonnes coal deposit. The Government plans toIPO 30% of the company in domestic and international markets. This share offering is expected to createthe largest Mongolian corporation. Recent IPO of neighboring Mongolia Mining Corporation (MMC)raised US$651mn, creating a public company valued at US$3.2bn. Erdenes Tavan Tolgoi LLC reported tohold coal resources ten times larger than MMC.L. Enebish also says that three companies were shortlisted from nine initial bidders for Tavan Tolgoimining contract based on their experience, technology, human resources and financial capacity. Thesecompanies are Leighton Asia and McMahon Holding from Australia and BBM Operta from Germany.We view Tavan Tolgoi IPO as positive development for the Mongolian mining sector as a whole andgreat opportunity for the investors to participate in a giant coking coal mining project in the immediacyof incredible Chinese growth story.We consider Leighton Asia to be in strong position for Tavan Tolgoi mining contract. The companyalready has mining contracts with Mongolia Energy Corp., Prophecy Resources and more importantlywith Mongolia Mining Corporation, whose UHG mine is located in the same mining area as the TavanTolgoi project.Development Bank Board ApprovedThe State Property Committee of Mongolia (SPC) approved the Board of Directors for DevelopmentBank on its meeting on October 14. Mr. Khashchuluun, the Director of National Development andInnovation Committee was appointed as the Director of the Board. Current Board Members of theDevelopment Bank are:• B. Darinchuluun – Department Head of Government Secretariat• J. Ganbat – Department Head of Ministry of Finance• Ch. Khashchuluun – Director of National Development and Innovation Committee• Kh. Volodya – Department Head of State Property Committee• B. Enebish – Executive Director of Erdenes MGL LLC• D. Enkhjargal – Mongolbank representative in London• Peter Morrow – Member of Board of Directors of Newcom Group• L. Bolormaa – Executive Director of BFAS LLC• S. Meyanatan – Former Representative Director of World Bank in MongoliaThe Bank was established to finance big industrial, infrastructure and mining projects with commercialbanks or provide loan guarantees for the projects. It aims to attract mid- and long-term financing for thedevelopment of projects from domestic and overseas sources and international financial institutions.HDF to Ease Credit Pressure on HerdersBusiness-mongolia.com reported on October 18 that the Government is drafting a law to ease the creditpressure on herders by using the Human Development Fund. The herders have around MNT57bn ofdebts borrowed from Khan, Xac and Savings banks.4

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Exploration License Ban to Expire SoonThe National Security Council order temporarily suspending issuance of new exploration licences willexpire on December 01, news.mn reported on October 18. The order was issued in April, 2010 to restrictlicence hoarding for speculative purposes. Neglect of exploration reporting, licence speculation andpossible corruption were cited to be the reasons for the order. Prior to the National Security Councilorder, 24.7% of the total territory of Mongolia was under exploration and mining licences. The MineralResources Authority of Mongolia (MRAM) has cancelled inactive licences since the order. The areaunder licences decreased to 16.9% as of October 05, business-mongolia.com reports today.According to MRAM issuance of exploration licences will resume unless Parliament extends the term ofsuspension. Today, business-mongolia.com quotes the Head of MRAM D. Batkhuyag saying that MRAMsupports extension of ban on exploration licence issuance.In our view, the ban may affect negatively rapid growth of the mining sector if it stays for a prolongedperiod of time. Subsequently, prolonged suspension is likely to hit Government revenues from themining sector.400,000t of Wheat Harvested in 2010According to the Minister of Food, Agriculture and Light Industry T. Badamjunai, Mongolia has harvested400,000t of wheat so far this year. At the Cabinet meeting on October 20, the Minister reported thatMongolia harvested 1mnt of wheat in 2008-2010. The harvest beats the Ministry September estimatesof 330,000t. Wheat harvested in 2010 has already exceeded 2009 total. The country harvested 209,800tin 2008 and 388,100t in 2009. Mongolia imported 114,700t of wheat and 105,700t of flour in 2009.Dosbergen Musaevdosbergen.musaev@eurasiac.comBatbayar Bat-Erdenebatbayar.bat-erdene@eurasiac.comMNT Again Breaks 1,300 Level Against US$On October 21, MNT broke 1,300-level against US$ hitting our target for the year again. Last time itbroke the level on August 26 forcing Bank of Mongolia to intervene aggressively into currency market.The Central Bank bought about US$160mn from commercial banks during August. The market remainedstable consolidating its position in September, with Bank of Mongolia buying US$17.9mn. Upsidepressure on togrog has intensified in October, forcing the central bank to buy US$114.5mn over the lasttwo weeks.The commercial banks are again on US$ selling side offering US$101.15mn last week. On Tuesday, Bankof Mongolia bought US$33mn at weighted average of MNT1,302.46/US$ and on Thursday auction thecentral bank bought US$50.35mn at weighted average of MNT1,297.00/US$. Nevertheless, the officialMNT vs US$ rate appreciated 1.18% w-o-w.In the inter-bank market, US$ buy rate stood at MNT1,288.07 and sell rate at MNT1,300.71 on Friday,with a spread of 1,264bps which was 121bps wider than the spread on the previous Friday. US$ interbanksell and buy rates depreciated 1.01% and 1.11% w-o-w against MNT, respectively.5

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)In alternative market, US$ sell and buy rates depreciated 1.07% and 1.22% w-o-w against MNT,respectively, and traded between a buy rate of MNT1,294 to a sell rate of MNT1,298 on Friday.The national currency is benefiting from multimillion US$ investments into the Mongolian economy androbust recovery in exports. Net international reserves of Bank of Mongolia reached US$1.6bn thismonth. Exports surged 56.6% y-o-y to US$2bn in 9M2010 helped by an increase in internationalcommodity prices.We maintain our bullish view on the Mongolian currency. MNT may slow its advance, as the centralbank builds up its international reserves. Nevertheless, the single currency is likely to continue itsappreciation in 4Q2010 on influx of foreign investments and improving fundamentals. Due to seasonalinfluences, historically the Mongolian economy tends to experience larger inflows of investments in thesecond half of the year.MNT/US$ Performance (Central Bank rate)1,4801,4601,4401,4201,4001,3801,3601,3401,3201,3001,280Exports. International reserves (US$mn)2,5002,0001,5001,00050002,025.601,460Net international Reserves, US$mnExports YTD, US$mnSource: BloombergSource: Bank of MongoliaDosbergen Musaevdosbergen.musaev@eurasiac.comRentsendorj Yondonrentsendorj.yondon@eurasiac.com6

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Financial MarketsMSE Top-20 Index Declines 1.8%MSE Top-20 Index declined 1.8% w-o-wlast week. The Index declined four days ina row loosing 2.91% before retracing1.12% on Friday. Trading volume fell 36%w-o-w to MNT537.5mn.Equities of 36 companies were tradedwith 12 companies gaining, 16 companiesdeclining and 8 remaining unchanged.The most actively traded stocks wereBDSec (MNT162mn), Khukh Gan(MNT158mn), HBOil (MNT54mn), SharynGol (MNT53mn), and Gobi (MNT23mn).MSE TOP-20 Index15,50013,50011,5009,5007,5005,5004-Jan4-Feb4-Mar4-Apr4-May4-Jun4-Jul4-AugTop-20 Trading Volume (MNTmn)Source: MSE4-Sep4-Oct4,0003,5003,0002,5002,0001,5001,000500-Top-20 indexMNTmnThe best performers were Suu (+44.93%), Olloo (+31.85%), Hotel Mongolia (+20.23%), Remicon(+16.42%) and Nekheesgui Edlel (+14.29%), and the worst performers were Almaas (-15.00%), Mon-ItBuligaar (-10.00%), Tavilga (-7.38%), Auto Impex (-6.90%) and Aduunchuluun (-6.25%).Rentsendorj Yondonrentsendorj.yondon@eurasiac.com7

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Industry FocusFour Companies Have Permissions to Build Oil Refinery in MongoliaIn an interview published on the UB Post newspaper website on October 21, Petroleum Authority ofMongolia Chairman D. Amarsaihan said that 10 companies expressed an interest to build oil refineries inMongolia so far. The Minerals and Energy Ministry issued special licence to build a refinery to fourcompanies. The biggest 44,000bpd capacity refinery will be built for an estimated cost of US$600mn inDarhan City by Mongol Seku Company. Besides, US$35-40mn smaller capacity refineries will also beconstructed in regional centres. The main requirements for obtaining a special licence to build a refinerywere to produce products meeting quality standards of Mongolia, technological expertise andenvironmental protection, according to D. Amarsaihan.Petroleum Authority of Mongolia expects consumption in the country to grow from 850,000t of oilproducts to 1.5mnt by 2015. Currently, all oil products for domestic needs are imported from Russia.In our view, Mongolia may become self-sufficient in oil products in the future. The country producedand exported about 2mn barrels of crude oil in 2009. The output grew 41.1% to 1.63mn barrels in9M2010. With proved crude oil reserves of 119mnt, Mongolia has sufficient reserves for at least 30years. Moreover, the country has potential for further discoveries. Due to lack of refining capacity,Mongolia imports all its oil products from Russia and exports almost all of its crude production to China.Therefore, the Government of Mongolia considers building refining capacity as a priority for the country.Batbayar Bat-Erdenebatbayar.bat-erdene@eurasi ac.comCorporate NewsMININGHunnu Coal to Raise AU$40mnOn October 19, Hunnu Coal announced that it israising AU$40mn from institutional andsophisticated investors to accelerate explorationand development of the Company’s coal assetsin Mongolia. Earlier, on October 15, at theHunnu Coal’s Directors behest AustralianSecurities Exchange (ASX) has placed thesecurities of Hunnu Coal in pre-open up until acapital raising announcement was released tothe market.AU$1.41.210.80.60.40.20Share Price PerformanceAccording to the Company, it has secured strongcommitments from subscribers to participate inSource: Bloomberg8

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)the placement. The Company is expected to issue 50 million shares at the issue price of 80 cents. Theplacement is expected to be issued in two tranches: the first tranche of 24 million shares on October 27,2010 and the second tranche of 26 million shares subject to shareholders’ approval.The proceeds are expected to be used to continue the drilling programs at the Tsant Uul Coking Coal andthe Unst Khudag Thermal Coal projects. It will also be used to estimate JORC resources at both UnstKhudag and Tsant Uul projects and for the acquisition of additional coking coal projects.Use of Funds*AU$mnDrilling Programs & JORC calculations 20Development and Infrastructure Spending 10Acquisitions 5Working Capital 3Expenses of the Placement and the Offer 2Total 40Source: Company data*assuming shareholder approval of the second tranche of placement sharesSouthGobi to Supply Coal to Winsway ResourcesWinsway Coking Coal Holdings announced on October 19 that its directly owned subsidiary WinswayResources Holdings Private Ltd (Winsway Singapore) had entered into two coal supply agreements withSouthGobi Sands LLC effective from October 15, 2010. In the framework of the agreement, WinswaySingapore will purchase 1,200,000 tonnes of semi-soft coking coal to be delivered within the last quarterof 2010, of which up to 200,000 tonnes are going to be used by ECCW (Tangshan) Jiahua Coking &Chemical Co., Ltd or such other end-users as agreed by SouthGobi. According to the announcement,both companies are at the stage of on-going discussion about potential long-term cooperation.SouthGobi Resources Sales and Operations UpdateOn October 19, SouthGobi Resources (TSX: SGQ, HK: 1878) provided update on sales and operations.SouthGobi significantly revised its 2H2010 sales figures to 1.5 million tonnes even though the Companyhad previously indicated the sales wouldn’t be substantially different from 1H2010 number which was875,000 tonnes. According to the Company, it will stockpile the higher-sulphur coal until appropriateprocessing is in place or blending opportunities arise. During 3Q2010 the Company has conducted a trialscreening of the stockpiled sunset pit #8/9/10 seam coal and established salability of that coal. By theend of October this year the Company expects to have four operating screen to increase screeningcapacity.Even though sales were less than 200,000 tonnes in 3Q2010 because of low availability of #5 seam semisoftcoking coal and the limited screening capacity for the #8/9/10 coal, SouthGobi is raising its guidancefor 2H2010 due to the following factors:• Relatively more semi-soft coking coal is available from #5 compared to 2Q20109

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)• Increased screening capacity is enabling customers to buy more coal from #8/9/10 seam coalSouthGobi has set new records for its daily shipping rate in October and sold more than 400,000 tonnesfor the month to date. Additionally, the Company provided more detailed information regarding thecoal supply agreement with Winsway Resources. As such, Winsway Resources will buy the Company’sentire outstanding inventory of sunset pit #8/9/10 seam coal and a proportion of additional sunset pit#8/9/10 seam coal to be mined for the rest of the 4Q2010 in the amount of 1 million tonnes. We ratethis news as positive for the Company and are currently updating our financial model. Target price isunder review.SouthGobi has also informed that it has received five Terex MT4400 (218 tonne) haul trucks for the thirdfleet in the second quarter which have already been commissioned. The second Liebherr 996 hydraulicshovel has also been commissioned.The Company has also informed that Gavin May, COO, is going to leave the Company from November 30this year to pursue other business opportunities. Previous General Manager at Ovoot Tolgoi Curt Churchhas been appointed Vice President, Mining Operations. Mr. Church has an experience to have worked asthe General Manager at Ovoot Tolgoi more than two years and overseen mine development andexpansion. Mr. Church has overall 16-year experience in mineral resources industry and worked morethan six years in the Mongolian mining sector.Ivanhoe Mines to Launch Strategic Rights OfferingIvanhoe Mines announced on October 18 that it has launched strategic, conditional rights offering whichis open to all shareholders on dilution-free, equal participation basis. Through rights offering Ivanhoeplans to raise between approximately US$800mn to US$1bn. According to the Ivanhoe, the goal of theoffering is to ensure that the Company remains in a strong financial position to start production at theOyu Tolgoi mine ahead of schedule in 2012 and reinforce the Company’s independence to pursuestrategic alternatives to protect and enhance shareholder value. Ivanhoe Mines has submitted apreliminary prospectus for the offering to securities regulations in Canada and the United States. Fulldetails of the offering, including pricing, are expected to be disclosed in the subsequent filing of a finalprospectus. Mr. Friedland, who holds 18.3% in Ivanhoe Mines is expected to participate in the offeringto maintain his ownership stake. In the press release, the Company has also informed that it isdiscussing a separate debt-financing package with a group of international financial institutions. TheDebt-financing package is expected to be closed in the first half of 2011.The proposed multi-billion dollar package is being considered by a core lending group such as EuropeanBank for Reconstruction and Development, the International Finance Corporation, Export DevelopmentCanada, BNP Paribas and Standard Chartered.Rio Tinto which holds 34.9% stake in Ivanhoe Mines will be fully entitled to exercise its rights in theoffering, however, it can’t exercise its right of first offer to acquire shares according to its 2006 five-yearplacementagreement with Ivanhoe Mines.10

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Ivanhoe Mines Announces Robert Friedland Assumes CEO RoleOn October 18, David Huberman, Lead Independent Director of the Ivanhoe Mines Board of Directorsannounced that Executive Chairman Robert Friedland will re-assume the duties and title of CEO as a partof a series of organizational changes that also will see the establishment of Office of the Chairman. Inthe light of organizational change, President John Macken is relinquished as CEO, however he willcontinue to lead the ongoing construction on Oyu Tolgoi copper-gold mining complex and be a memberof Ivanhoe Mines-Rio Tinto joint Oyu Tolgoi Technical Committee.SharynGol JSC Appoints New CFOSharynGol JSC announced on October 18 that it has appointed Mr. David Dring as Chief Financial Officer(CFO) of the Company. According to SharynGol, the new CFO has over 10 years of experience inaccounting, stock broking and compliance. He is currently a director of Triton Coal Pte Ltd, which hasacquired 53% of SharynGol in early September, and expected to start his term of office on November 1this year. According to the Company, as at October 18, 2010, Mr. Dring held 4,284 ordinary shares inSharyn Gol JSC.Mongolian Mining Corporation Exercises Over-Allotment OptionOn October 18, Mongolian Mining Corporation (975:HK) announced that Over-Allotment Optionmentioned in the Prospectus was exercised by the Joint Global Coordinators on the behalf of theInternational Underwriters. Pursuant to the Over-allotment Option, Citi has the right, at any time fromthe Listing Date to November 4, 2010, being the 30th day after the last date of lodging applicationsunder the Hong Kong Public Offering, to require the Selling Shareholders to sell up to an aggregate of107,914,000 additional Shares, representing 15% of the initial Offer Shares, at the Offer Price, to coverover-allocations in the International Placing. The Over-allotment Shares will be issued and allotted bythe Company at HK$7.02 per Share (excluding brokerage of 1 %, SFC transaction levy of 0.003% andHong Kong Stock Exchange trading fee of 0.005%). According to the Prospectus, the Selling Shareholdersare MCS Mining Group Ltd and EBRD which were holding before the exercise of Over-Allotment Option45.3% and 3.2% in Mongolian Mining Corporation, respectively. The share prices jumped 14.34% toHK$9.65 on October 19.Listing of and dealings in such Over-Allotment shares are expected commence on the Main Board ofHKEx at 9:30 a.m. on October 21, 2010.The Shareholding Structure of the Company Pre- and Post-Over-Allotment SharesShareholders Pre-over-allotment shareholding Post-over-allotment shareholdingNumber of shares Approximate % Number of shares Approximate %MCS Mining Group1,629,669,000 45.3% 1,629,669,000 44.0%LimitedPetrovis Resources423,000,000 11.8% 423,000,000 11.4%Inc.Shunkhlai Mining 183,000,000 5.1% 183,000,000 4.9%EBRD 114,029,000 3.2% 114,029,000 3.1%Kerry Mining Limited 300,000,000 8.3% 300,000,000 8.1%Ancora InvestmentsNo. 2 Limited228,000,000 6.3% 228,000,000 6.2%11

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Other Public719,424,500 20.0% 827,338,500 22.3%ShareholdersTotal 3,597,122,500 100% 3,705,036,500 100%Source: Company dataThe additional net proceeds from Over-Allotment exercise are estimated to be HK$738.6mn andplanned to be used by the Company for the same purposes on a pro-rata basis as determined in theFuture Plans and Use of Proceeds of the Prospectus.Ludowici to Supply Equipment for Coal Processing Plant at UHG MineLudowici Limited (ASX:LDW) announced on October 19 that it has been chosen by Energy Resources, asubsidiary of Mongolian Mining Corporation to supply mineral processing equipment to the secondstage of its new coal preparation plant at the Ukhaa Khudag coal mine in Mongolia. The value of thesecond supply contract is more than US$2.5mn. The equipment for the second stage of the plant isexpected to be delivered at the end of 2010 and beginning of 2011. According to the Company, it hasalready supplied the equipment for the first stage of coal washing plant.Ludowici Limited was established in 1858 and it is specialized in mining industry designing,manufacturing and marketing mineral processing equipments including vibrating screens, coalcentrifuges, and an extensive range of wear resistant products and others.Akmal Aminovakmal.aminov@eurasiac.comBatbayar Bat-Erdenebatbayar.bat-erdene@eurasiac.comOIL&GASManas Started Seismic Operation on its Mongolian AssetsOn October 18, Bloomberg reported that Manas Petroleum Corporation announced the start of seismicoperations on Blocks XIII and XIV in Mongolia and expects its completion by Nov 2010. The seismicoperations include 300 km of 2D seismic survey in accordance with the terms of the Production SharingContract.Manas Petroleum’s Mongolian subsidiary, Gobi Energy Partners LLC, is the operator of the project. Asearlier announced, Gobi Energy Partners LLC signed an agreement for seismic works with the Chinesecompany DQE International Tamsag (Mongol) LLC on August 31, 2010.The purpose of the vibro-seismic survey is to brush up the existing geological data and boost chances ofsuccess of exploratory wells intended to be drilled. The first well is going to be drilled in 2011. In ourview, Manas could follow the success of Petro Matad in Mongolia, who today announced start of drillingoperations in Davsan Tolgoi-3 (DT-3) exploration well. Petro Matad has recently completed drilling ofDT-2 exploration well, preliminary analysis of which has indicated the presence of significanthydrocarbons12

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)BANKINGCommercial Banks Join Unified Card Clearing SystemCentral Bank reported on October 18 that Golomt Bank and several other banks as XacBank, State Bank,Capitron Bank, that use Golomt Bank’s clearing system joined the Interbank Unified Card ClearingSystem from October 18.On June 16, the Interbank Unified Card Clearing System was launched after the Bank of Mongolia, KhanBank and Trade and Development Bank (TDB) unified their operations following one month of testingperiod. Later, Capital Bank, UB City Bank who all previously used card clearing system of TDB also joinedthe system. Beforehand, there were three separate card payment systems of Khan Bank, Golomt Bankand TDB. Other banks were using card systems of these banks under contract agreements.We believe the unified card clearing system will be positive for the development for the banking sectorin Mongolia. The unified system is expected to lower transaction costs and provide better access forcustomers. It will also increase the liquidity in the banking system and offer effective cost solutions forATM operations.INFRASTRUCTUREWorleyParsons Opens Branch in MongoliaOn October 18, Unuudur newspaper reported that WorleyParsons opened full service branch,WorleyParsons Mongolia LLC, which will provide professional services in mining, energy, andinfrastructure sectors in Mongolia. Previously, MMREC LLC, a company engaged in project developmentand trade, has been working as a representative of the company in Mongolia.WorleyParsons works on Oyu-Tolgoi project through its office in Beijing, and has completed industrialstudies on Mongolian bigger 15 deposits by World Bank commission. It is an international provider ofprofessional services to the energy, resource, and complex process industries based in Australia. As oftoday, the company has 137 branches around the globe and 30,000 employees.Batbayar Bat-Erdenebatbayar.bat-erdene@eurasiac.comRentsendorj Yondonrentsendorj.yondon@eurasiac.com13

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Economic PerformancePopulation and income2003 2004 2005 2006 2007 2008 2009 2010ePopulation, mn 2.50 2.53 2.56 2.59 2.63 2.68 2.74 2.79GDP per capita, US$ 581.7 720.1 905.3 1223.8 1502.9 1939.7 1560.2 2026.6National accountsNominal GDP, MNTbn 1660 2152 2780 3715 4599.5 6020 6056 7500Nominal GDP, US$bn 1.4 1.8 2.3 3.2 3.9 5.1 4.0 5.5Nominal GDP at PPP, US$bn 5.4 6.1 6.7 7.5 8.5 9.4 9.4 10.1Real GDP growth, YoY, % 7.0 10.6 7.2 8.6 10.2 8.9 -1.6 7.2Monetary indicators and inflationM2 growth, YoY, % 49.6 20.4 34.6 34.8 56.3 -5.5 26.9CPI, YoY, % 4.7 11 9.2 4.8 14.1 22.1 4.2 7.5Exchange rate, MNT/US$, annualaverageGross foreign reserves, US$mn,eopGovernment finance1168 1209 1221 1165 1170 1166 1438- 208 333 718 1001 657 822 1200Revenue, % of GDP - 33.1 30.1 36.6 40.9 35.4 32.9 40.2Expenditure, % of GDP - 35.0 27.5 28.5 38.0 40.2 38.3 44.2Budget balance, % of GDP -4.2 -2.1 3.2 3.9 2.2 -5.0 -5.4 -4.0Balance of paymentsExports, US$mn 615.9 872 1069 1545 1952 2539 1903Imports, US$mn 801 1021 1224 1516 2170 3616 2131Exports, YoY, % 17.5 41.2 22.4 44.9 22.5 30.3 -24.9Imports, YoY, % 16.0 27.5 16.0 25.4 36.1 66.6 -34.3Trade balance, US$mn -185.1 -149 -155 30 -218 -1077 -229FDI, US$mn 131.5 92.9 182.3 367 500 709 801Source: National Statistics Office of Mongolia, the Bank of Mongolia, the IMF, the World Bank, Eurasia Capital14

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)MSE and Mongolia focused International Mining Company StocksPerformance SummaryMSE TOP-20 Performance (October 18-22, 2010)Daily TurnoverPrice Performance Market CapCode Name(Avg 52Wk)Close 52 Wk high 52 Wk low w-o-w y-t-d (MNTmn) (US$'000) MNT US$458 Tavan Tolgoi 485,000 670,000 101,000 -3.00% 259.26% 255,426.22 197,185.51 7,520,546 5,806460 Shivee Ovoo 13,020 14,900 2,390 -3.56% 294.55% 174,716.70 134,878.87 2,854,053 2,203396 Baganuur 6,298 7,500 2,800 -0.82% 79.94% 132,096.52 101,976.69 2,315,610 1,78890 APU 1,670 2,000 600 -1.76% 165.08% 124,060.46 95,772.96 9,674,055 7,468209 Mongolian Telecom 3,350 4,000 2,058 -4.26% 46.29% 86,665.42 66,904.51 920,129 710309 Shariin Gol 11,000 13,500 1,696 0.00% 548.58% 79,545.28 61,407.85 26,900,498 20,767354 Gobi 5,360 7,700 3,850 -1.65% 32.35% 41,814.03 32,279.85 13,959,717 10,777532 Khukh gan 172 185 100 10.97% 44.54% 17,426.62 13,453.11 16,331,630 12,608484 State Department Store 430 620 350 -3.37% 13.16% 15,827.38 12,218.51 2,323,856 1,794521 Genco Tour Bureau 94 123 88 3.30% -1.05% 10,340.00 7,982.34 3,863,097 2,98213 Bayangol Hotel 22,000 29,990 17,000 -4.35% 22.22% 9,307.43 7,185.21 1,078,209 8323 UB Hotel 26,510 30,475 19,000 0.00% 35.95% 8,888.72 6,861.97 6,007,013 4,637444 Mogoin Gol 9,000 11,367 1,970 0.01% 356.85% 7,466.60 5,764.11 1,118,426 863208 Makh Impex 1,400 2,080 1,000 3.63% 21.74% 5,321.01 4,107.75 463,121 358191 Eermel 1,500 1,650 1,151 0.00% 15.38% 5,218.98 4,028.98 382,091 29571 Darkhan Nekhii 3,000 3,900 1,900 0.00% 42.86% 3,316.44 2,560.24 104,867 8122 Talkh Chikher 3,002 3,350 1,800 0.07% 50.10% 3,073.16 2,372.43 181,785 140492 Berkh Uul 150 150 150 0.00% 0.00% 2,859.31 2,207.35 960,448 741450 Zoos Goyol 710 1,080 501 1.43% 27.93% 2,666.01 2,058.12 222,287 172531 Nako Tulsh 229 310 180 0.00% 15.66% 2,519.00 1,944.63 2,630,583 2,031Source: MSE, Eurasia CapitalPerformance of MSE Stocks Traded (October 18-22, 2010)Daily TurnoverPrice Performance Market CapCode Name(Avg 52Wk)Close 52 Wk high 52 Wk low w-o-w y-t-d (MNTmn) (US$'000) MNT US$522 BDSec 2,400 2,700 1,600 -4.00% 50.00% 26,400.00 20,380.43 4,900,759 3,783532 Khukh gan 172 185 100 10.97% 44.54% 17,426.62 13,453.11 16,331,630 12,608525 HB Oil 173 241 160 -0.57% -13.50% 1,211.00 934.88 1,351,312 1,043309 Shariin Gol 11,000 13,500 1,696 0.00% 548.58% 79,545.28 61,407.85 26,900,498 20,767354 Gobi 5,360 7,700 3,850 -1.65% 32.35% 41,814.03 32,279.85 13,959,717 10,777458 Tavan Tolgoi 485,000 670,000 101,000 -3.00% 259.26% 255,426.22 197,185.51 7,520,546 5,80690 APU 1,670 2,000 600 -1.76% 165.08% 124,060.46 95,772.96 9,674,055 7,468528 Hermes 45 75 37 -4.26% -40.00% 3,534.44 2,728.53 1,423,712 1,099209 Mongolian Telecom 3,350 4,000 2,058 -4.26% 46.29% 86,665.42 66,904.51 920,129 710530 Remicon 78 80 39 16.42% 4.00% 6,172.78 4,765.30 339,801 262396 Baganuur 6,298 7,500 2,800 -0.82% 79.94% 132,096.52 101,976.69 2,315,610 1,788521 Genco Tour Bureau 94 123 88 3.30% -1.05% 10,340.00 7,982.34 3,863,097 2,98238 Mon-It Buligaar 4,500 7,480 2,000 -10.00% 109.30% 1,800.95 1,390.31 54,202 42484 State Department Store 430 620 350 -3.37% 13.16% 15,827.38 12,218.51 2,323,856 1,79413 Bayangol Hotel 22,000 29,990 17,000 -4.35% 22.22% 9,307.43 7,185.21 1,078,209 832460 Shivee Ovoo 13,020 14,900 2,390 -3.56% 294.55% 174,716.70 134,878.87 2,854,053 2,20322 Talkh Chikher 3,002 3,350 1,800 0.07% 50.10% 3,073.16 2,372.43 181,785 140524 Mongolia Development Resources 1,200 1,220 750 3.45% 21.21% 16,500.00 12,737.77 12,857,673 9,926208 Makh Impex 1,400 2,080 1,000 3.63% 21.74% 5,321.01 4,107.75 463,121 358135 Suu 10,000 10,000 2,800 44.93% 156.41% 3,440.00 2,655.63 13,147 10527 Olloo 178 178 58 31.85% 137.33% 1,726.69 1,332.98 555,282 429461 Aduunchuluun 3,750 4,613 450 -6.25% 668.44% 11,817.39 9,122.86 90,203 7015

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)517 Hotel Mongolia 517 650 350 20.23% -14.12% 5,170.00 3,991.17 388,083 300333 Almaas 425 750 425 -15.00% -38.41% 218.94 169.02 2,027 2191 Eermel 1,500 1,650 1,151 0.00% 15.38% 5,218.98 4,028.98 382,091 29567 Nekheesgui Edlel 400 400 250 14.29% 60.00% 515.41 397.89 2,251 271 Darkhan Nekhii 3,000 3,900 1,900 0.00% 42.86% 3,316.44 2,560.24 104,867 8125 Moninjbar 110 125 94 0.00% 12.24% 1,745.62 1,347.59 236,621 183444 Mogoin Gol 9,000 11,367 1,970 0.01% 356.85% 7,466.60 5,764.11 1,118,426 863263 Guril Tejeel Bulga 550 550 400 0.00% 37.50% 313.96 242.38 3,385 32 Mongol Savkhi 520 640 401 0.00% 15.56% 1,287.18 993.68 35,270 27452 Auto Impex 661 710 450 -6.90% 32.20% 1,529.08 1,180.43 22,852 18450 Zoos Goyol 710 1,080 501 1.43% 27.93% 2,666.01 2,058.12 222,287 17223 MONNOOS 1,350 1,350 1,100 0.00% 12.50% 473.68 365.68 3,983 3316 Mongol Shir 350 410 300 0.00% 1.45% 96.38 74.40 2,437 241 Tavilga 602 960 602 -7.38% -36.63% 73.90 57.05 6,701 5Source: MSE, Eurasia CapitalFundamental Valuation of MSE Listed Companies (October 22, 2010)Company NameMarket capProfitabilityPriceP/E P/B Debt/EquityGross(MNT) (US$'000) (MNTmn) ROA ROENet MarginMarginTavan Tolgoi 485,000 197,185.5 255,426.2 5.97 4.83 0.11 103.2% 116.2% 58.2% 44.8%Shivee Ovoo 13,020 134,878.9 174,716.7 - - -5.07 -9.0% 36.6% 7.8% -42.9%Baganuur 6,298 101,976.7 132,096.5 - - -5.53 -13.0% 51.2% 10.6% -18.4%APU 1,670 95,773.0 124,060.5 15.37 3.87 1.24 13.5% 30.8% 22.8% 9.3%Mongolian Telecom 3,350 66,904.5 86,665.4 16.29 2.59 0.24 12.8% 15.9% 22.1% 16.9%Shariin Gol 11,000 61,407.9 79,545.3 361.70 55.44 5.65 2.2% 16.6% 10.9% 2.5%Gobi 5,360 32,279.9 41,814.0 27.84 1.73 0.41 4.6% 6.5% 27.1% 7.4%BDSec 2,400 20,380.4 26,400.0 - 5.46 0.01 -8.7% -9.4% NA NAKhukh Gan 172 13,453.1 17,426.6 - 1.80 0.18 -3.9% -4.3% - -Mongolia Development Resources 1,200 12,737.8 16,500.0 33.84 0.58 0.00 1.7% 1.7% - -State Department Store 430 12,218.5 15,827.4 347.41 3.24 0.54 0.6% 0.9% 100.3% 5.9%Aduunchuluun 3,750 9,122.9 11,817.4 28.84 5.54 0.48 14.5% 20.8% 33.4% 14.2%Genco Tour Bureau 94 7,982.3 10,340.0 55.52 1.24 0.41 1.7% 2.4% 62.2% 20.3%Remicon 78 7,686.0 9,956.1 - 1.83 0.03 -14.1% -14.7% 43.5% -94.7%Bayangol Hotel 22,000 7,185.2 9,307.4 3.82 0.56 0.29 12.0% 15.7% 60.4% 44.6%Ulaanbaatar Hotel 26,510 6,862.0 8,888.7 10.57 1.72 0.13 15.4% 17.6% 82.3% 23.5%Mogoin Gol 9,000 5,764.1 7,466.6 - 3.30 0.40 0.2% 0.3% 24.4% 1.1%Makh Impex 1,400 4,107.7 5,321.0 - - - -4.0% 1942.7% -32.4% -26.9%Eermel 1,500 4,029.0 5,219.0 10.65 0.37 1.03 1.8% 3.8% 100.0% 1228.2%Hotel Mongolia 517 3,991.2 5,170.0 - 1.63 0.64 -5.3% -8.6% 65.5% -34.9%Mongol Securities 140 3,242.3 4,200.0 - 5.75 0.03 -0.2% -0.2% - -Hermes 45 2,728.5 3,534.4 49.50 0.45 0.03 0.9% 0.9% 100.0% 10.7%Suu 10,000 2,655.6 3,440.0 5.87 0.96 1.08 7.8% 16.4% 16.3% 5.3%Darkhan Nekhii 3,000 2,560.2 3,316.4 4.25 0.94 0.51 14.6% 22.1% 31.9% 19.9%Material Impex 2,423 2,559.3 3,315.2 23.35 3.37 3.95 2.6% 16.0% 10.5% 1.9%Talkh Chikher 3,002 2,372.4 3,073.2 3.44 2.41 7.86 7.9% 70.2% 17.0% 5.6%Takhi Co 2,500 2,296.6 2,975.0 15.15 3.36 0.18 18.7% 22.2% 99.9% 29.2%Berkh Uul 150 2,207.3 2,859.3 - 3.32 1.42 -5.6% -13.5% 12.8% -16.6%Atar Urguu 16,000 2,150.9 2,786.2 3.46 0.57 0.09 16.5% 18.0% 26.2% 10.4%UB Book 2,300 2,003.3 2,595.0 - 2.90 2.25 -3.7% -10.7% 34.4% -9.1%Naco Fuel 229 1,944.6 2,519.0 - 2.66 0.40 -2.0% -2.4% - -Tumriin Zavod 27,000 1,549.1 2,006.6 - 172.80 7.62 -1.0% -8.3% 100.0% -4.6%Mon It Buligaar 4,500 1,390.3 1,801.0 -2.65 0.29 0.64 -6.6% -10.8% -10.5% -75.5%Moninjbar 110 1,347.6 1,745.6 138.52 1.05 0.94 0.4% 0.8% 21.8% 0.8%Olloo 178 1,333.0 1,726.7 - 1.79 0.01 -3.3% -3.3% 21.0% -18.2%Ulaanbatar Khivs 3,880 1,212.6 1,570.7 - 0.33 0.20 -0.6% -0.7% 12.6% -2.1%16

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Auto Impex 661 1,180.4 1,529.1 25.00 -0.65 -2.17 2.9% -2.1% -14.8% 312.1%Mongol Savkhi 520 993.7 1,287.2 294.82 0.81 0.02 0.3% 0.3% 100.0% 1.9%Gutal 750 937.2 1,214.0 4.62 0.26 0.02 4.6% 4.8% 24.3% 86.2%HBOil 173 934.9 1,211.0 - 1.54 0.73 -8.8% -14.7% 27.1% -2329.0%Niislel Urguu 2,600 874.9 1,133.3 - - - -1.4% 136.6% 13.3% -4.6%Sor 700 481.7 624.0 - 0.62 0.01 -7.7% -7.8% - -Darkhan Selenge Electricity Distribution 53 424.9 550.4 0.58 0.02 0.44 2.9% 4.2% 23.1% 4.0%Nekheesgui Edlel 400 397.9 515.4 - 0.35 0.02 -5.2% -5.5% -2.3% -25.1%Mongol Shevro 550 390.7 506.2 23.06 0.41 0.90 0.9% 1.8% 35.3% 2.9%Sonsgolon Barmat 256 381.2 493.8 - 1.95 3.82 -3.5% -16.9% 49.5% -19.2%Tulga 3,680 373.9 484.4 15.89 0.66 0.03 4.1% 4.2% 87.6% 22.2%Mongol Nekhmel 1,000 366.0 474.2 342.56 1.77 2.70 0.2% 0.5% 32.6% 0.7%Erdenet Khuns 1,030 313.5 406.1 - 0.18 0.81 -2.4% -4.4% 3.9% -40.5%Khaniin Material 530 267.2 346.1 4.61 0.60 1.56 5.1% 13.0% 40.1% 3.3%Darkhan Hotel 3,500 241.7 313.1 - 0.39 0.33 -4.0% -5.3% -19.3% -35.7%Gazar Suljmel 3,960 199.8 258.8 1.53 0.62 1.06 19.5% 40.3% 30.4% 12.5%Mongol Keramic 650 160.0 207.3 1.00 0.14 0.44 9.5% 13.7% 71.8% 25.7%Gan Khiits 780 146.0 189.1 - 0.22 5.49 -2.0% -9.8% 15.2% -3.5%Darkhan Khuns 500 145.8 188.9 3.95 0.45 0.68 6.7% 11.3% 22.7% 5.7%Dornod Auto Zam 2,244 129.8 168.1 13.92 0.93 0.59 4.2% 6.7% 2.2% 1.9%Tegsh 1,050 127.1 164.7 - 1.70 0.02 -4.7% -4.8% - -Source: MSE, Eurasia CapitalInternational Listed Companies Performance (October 18-22, 2010)Name Ticker CurrencyClosePriceMktCap Price PerformanceDaily Volume(52Wk)US$mn 52 wk high 52 wk low w-o-w y-t-d US$mnIVANHOE MINES LTD IVN US USD 23.45 12,438.79 26.14 10.37 -4.17% 60.51% 31.63MONGOLIAN MINING CORP 975 HK HKD 9.00 4,295.03 9.72 7.02 9.76% - 62.67CENTERRA GOLD INC CG CN CAD 17.62 4,043.43 19.77 7.81 -2.87% 63.15% 10.88MONGOLIA ENERGY CO LTD 276 HK HKD 3.26 2,562.90 5.79 2.54 -2.69% -18.09% 9.33SOUTHGOBI RESOURCES LTD 1878 HK HKD 89.75 2,127.12 130.00 74.00 19.03% - 1.99WINSWAY COKING COAL HOLDINGS 1733 HK HKD 3.76 1,834.22 3.84 3.35 2.17% - 48.34EAST ASIA MINERALS CORP EAS CN CAD 6.68 470.47 8.73 1.70 -8.87% 43.97% 2.30PETRO MATAD LTD MATD LN GBp 142.00 399.09 199.00 13.00 -1.39% 667.57% 0.34ENTREE GOLD INC ETG CN CAD 2.72 300.95 3.59 1.84 -6.85% 6.67% 0.32ORIGO PARTNERS PLC OPP LN GBp 35.50 168.28 35.50 15.00 10.94% 129.03% 0.08NORTH ASIA RESOURCES HOLDING 61 HK HKD 1.49 157.95 3.01 1.18 2.05% -37.66% 0.70HUNNU COAL LTD HUN AU AUD 0.99 156.32 1.28 0.20 2.06% - 0.81MONGOLIA INVESTMENT GROUP LT 402 HK HKD 0.17 147.14 0.90 0.13 2.98% -72.10% 0.91CENTRAL ASIA METALS PLC CAML LN GBp 92.50 125.01 104.50 92.25 -4.15% - 0.04SOLARTECH INTERNATIONAL HOLD 1166 HK HKD 0.05 116.09 0.32 0.02 -9.09% -67.74% 2.97PROPHECY RESOURCE CORP PCY CN CAD 0.77 80.22 0.99 0.33 16.67% 96.78% 0.23ASPIRE MINING LTD AKM AU AUD 0.19 79.25 0.22 0.03 -2.56% 239.29% 0.12BESTWAY INTL HOLDINGS LTD 718 HK HKD 0.16 55.02 0.56 0.15 0.63% -60.00% 0.18ASIA COAL LTD 835 HK HKD 0.24 52.23 0.46 0.18 -13.21% -27.46% 0.18Source: Bloomberg, Eurasia CapitalEnkhbayar Davaatserenenkhbayar.davaatseren@eurasiac.comSherzod Rakhimovsherzod.rakhimov@eurasiac.com17

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Property PriceResidential property prices in Ulaanbaatar130012001100US$/sqm1000900800700600500Jan-06Apr-06Jul-06Oct-06Jan-07Apr-07Jul-07Oct-07Jan-08Apr-08Jul-08Oct-08Jan-09Apr-09Jul-09Oct-09Jan-10Apr-10Jul-10Source: Eurasia CapitalM&A Deal SummaryTargetCompany (TC)BuyerBuyerCountryTCListingTC SectorTCReservesStake,%Deal TermsAnnounceDateSWFs dealsIron Mining China Investment Corp. CHN N/A Iron ore N/A N/A US$700mn 29.10.10Iron MiningSouthGobiResourcesSouthGobiResourcesTemasek Holdings/Hopu InvestmentManagementSG/CHNChina Investment Corp. CHN N/A Coal 122.3mntnChina Investment Corp., CHN/SG N/A Coal 122.3mnTemasek HoldingstnN/A Iron ore N/A N/A US$300mn 01.04.08N/A US$500mn 26.10.10N/AUS$50mneach in HKIPORecent EBRD dealsEnergyResourcesEBRD Int-l N/A Coal N/A N/A US$180mnloanAPU EBRD Int-l MSE Food &BeveragesPetro Matad EBRD Int-l AIM Oil & Gas 638mnbblsresourcesLeightonMongoliaN/A N/A US$25mnconvertibleloan17 US$6mnconvertibleEBRD Int-l N/A Mining N/A N/A US$35mnloanPrivate Equity dealsNorth AsiaResourcesGroupGreen Global Resources CHN HKSE Iron ore 148.9mntn iron,180,000 tncopper*First DeanHoldings LtdKiu Hung EnergyHoldings Ltd29.01.1019.02.1022.01.1018.12.0910.11.09100 US$227mn 16.12.09CHN HKSE Coal N/A 100 US$180mn 17.03.1018

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)Gobi Coal andEnergyOvoot CokingCoal ProjectTroyMongolian AltResourcesArgalant Gold-Copper ProjectPanAsianPetroleumWinswayCoking CoalErdenesThermal CoalProjectIkh ShijirErdene LLC/Sun ProgressTsant Uul CoalProjectPolo-PeabodyJVOther dealsOrigo Partners Plc UK N/A Coal 320mn tnresources21.3 US$15mn 27.11.09Windy Knob Resources AUS N/A Coal N/A 100 US$3.5mn 26.11.09+ SharesMeritus Minerals CAN N/A Gold N/A 100 US$0.5mn + 20.01.10SharesVoyager Resources AUS N/A Gold,CopperN/A 100 US$50,000+ Shares19.01.10Sunwing Energy Ltd CAN N/A Oil, gas N/A 100 All Shares 18.11.09Hopu Investment/ twoChinese firmsCHN N/A Coal N/A 20 US$110mn 02.04.10Hunnu Coal AUS ASX Coal 140-80 N/A 11.03.10180mn tnSolartech InternationalHoldingsCHN HKSE Gopper,gold, silver1.44mn tncopper, 4tn gold,196 tnsilverN/A US$192mn 04.05.10Hunnu Coal AUS ASX Coal 50-100mntn90 N/A 26.05.10Winsway Coking Coal CHN N/A Uranium, N/A 50 US$25mn 26.05.10HoldingsCoalWesternProspectorCNNC CHN Delisted Uranium 20mn lbs(9,525 tn)Red Hill Energy Prophecy Resource Corp CAN TSX Coal 1.5bn tnresources69 US$18.5mn 15.04.09100 MergerAll SharesSMG Oil & Gas BKM Management AUS ASX Oil, gas N/A 100 All Shares,A$0.01/shareofferedSource: Bloomberg, Eurasia Capital21.01.1010.03.1019

Mongolia Weekly (October 18-22, 2010)October 25, 2010 (Monday)ContactsResearchSardor Koshnazarov Head of Research, Oil & Gas sardor.koshnazarov@eurasiac.comDosbergen Musaev Analyst, Strategy dosbergen.musaev@eurasiac.comAkmal Aminov Analyst, Metals & Mining akmal.aminov@eurasiac.comBatbayar Bat-Erdene Analyst, Metals & Mining batbayar.bat-erdene@eurasiac.comRentsendorj Yondon Analyst, Mongolia Equities rentsendorj.yondon@eurasiac.comZultsetseg Chuluunbat Analyst, Mongolia zultsetseg.chunluunbat@eurasiac.comBahadir Uskenbaev Analyst, Kazakhstan bahadir.uskenbaev@eurasiac.comSales and TradingDima Orazimbetov Director dima.orazimbetov@eurasiac.comZhyldyz Sadyralieva Associate zhyldyz.sadyralieva@eurasiac.comSherzod Rakhimov Analyst sherzod.rakhimov@eurasiac.comBolor Ulziisaikhan Broker bolor.ulziisaikhan@eurasiac.comEnkhbayar Davaatseren Trader enkhbayar.davaatseren@eurasiac.comAddresses:HONG KONG33/F One International Finance Centre1 Harbour View Street, Central,Hong KongTel.:+852 2824 8716Fax: +852 2166 8999MONGOLIASuite 71, 7 th Floor, Grand Office CenterJamiyangun Street 12, 1 st Khoroo,UlaanbaatarTel: +976 7013 0078Fax: +976 7013 0078UZBEKISTAN11A, Almazar StreetTashkent 100003Tel: +998 71 1403538Fax: +998 71 1403533CHINA11 th Floor, North Tower, Beijing Kerry CentreNo.1 Guang Hua Road, Chao Yang District,Beijing 100020,Tel.: +86 (0) 10 6599 7912Fax: +86 (0) 10 6599 9100KAZAKHSTAN6/F, Forum Business Center202 Dostyk AvenueAlmaty, 050060Tel +7 727 295 4514RUSSIAMoscow Enbankment TowerBlock C, 18 Krasnopresnenskaya NaberezhnayaMoscow 123317Tel: +7 495 967 7676Fax: +7 495 967 7600Eurasia Capital is a Hong Kong-based pan-regional investment bank with focus on Mongolia, China, Russia and Central Asia.The Firm offeradvisory, capital raising, sales & trading and research services to its international and regional clients including government agencies, macompanies, sovereign wealth funds, private equity groups and global portfolio investors.DISCLAIMERThis Mongolia Weekly is made for information purposes only, and does not constitute an offer, solicitation of an offer to purchase, hold, sell, invest or make any other financialdecision. In making decisions, investors may rely on their own examinations of the parties and risks involved. Information contained in this Weekly is obtained from the sourcesbelieved to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors such information provided 'as is" without warranty of any kind andEurasia Capital Ltd., in particular, make no representation or warranty, express or implied, as to accuracy, timeliness, completeness, merchantability or fitness for any particularpurpose of any such information. Under no circumstances, Eurasia Capital Ltd. have any liability to any person or entity (-ies) for (a) any loss or damage in whole or in part caused by,resulting from, or relating to, any error (negligible or otherwise) or other circumstances or contingency within or outside the control of any of their directors, managements, officers,employees, or agents in connection with compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special,consequential, compensatory or incidental damages whatsoever (including without limitation, loss profits) even if Eurasia Capital Ltd. is advised in advance of the possibility of suchdamages, resulting from the use of or inability to use, any such information.©2010 Eurasia Capital Ltd. All rights reserved.20