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First phase of Salkhit Wind Farm commissioned
NEWSLETTER
Mongolia is
scheduled to start
operations at its
first wind farm this
month, a $122
million project
that’s the biggest
power plant in 30
years and part of
a government
effort to cap
pollution cloaking
the capital city.
June2013
The State Commission held an event to accept the completion of the first phase of the 50MW Salkhit wind
farm in Ministry of Energy on Monday June 17th. The wind farm, part of Mongolia’s first wind power project
in Sergelen sum of Tuv aimag, is currently under construction.
The State Commission approved a 110/35 kw sub-station, 110 kw explicit transmission facility, 35 kw
transmission facility building, 15 wind turbine generators and a 110 kw electricity transmission line from the
wind farm.
The State Commission was formed under a regulation permitting the start-up, duration and commissioning
for construction enacted by Government resolution 151. The State Commission reviewed the quality, legal
acts and documents of Salkhit wind farm as requested by the project developer Clean Energy LLC. The
decision was reached to approve it as a Hydro Power Station based on Articles of the law on construction
with 100 percent approvals from the commission members.
It has also been approved to simultaneously do testing and connecting of the second phase of Salkhit wind
farm to the network as the State Commission agreed with the National Network of Power Transmission LLC
Monthly Highlights

2. 2
and the National Dispatching Center.
The opening ceremony for the “Salkhit” 50 megawatt (MW) wind farm developed by Clean Energy, a
subsidiary of Newcom group, will happen on June 20th.
Mongolian first WIND FARM PROJECT
A $122 million project that’s the biggest power plant in 30 years and part of a government effort to cap
pollution cloaking the capital city.
The 50-megawatt facility developed by Clean Energy LLC using 31 turbines from General Electric Co.
(GE) is located on a wind-raked ridge about 45 miles (72 kilometers) southwest of Ulaanbaatar. Sengee
Enkh-Amgalan, the company’s chief executive officer, plans to officially start the plant on June 20.
Mongolia is seeking alternatives to fossil fuels such as coal that power its industry and mines. The
government has set a target to get 20 percent to 25 percent of its energy from renewables by 2020, up from
less than 2 percent currently. Coal supplies about 80 percent of the nation’s energy.
“In order to meet the 20 percent goal, the government really has to support these kinds of enterprises,” said
Enkh-Amgalan, adding that he expects the government will subsidize the costs of wind power in order to
make it affordable.
Smog from burning coal has choked the capital in recent months, causing the World Health Organization to
name Ulaanbaatar the second-worst city for air quality behind Ahvaz in western Iran. Residents use coal to
heat homes when winter temperatures plunge to minus 30 Fahrenheit. According to the Enkh-Amgalan, The
biggest challenge so far has been dealing with Mongolia’s lack of infrastructure. A similar project
in China would cost 30 percent less said Enkh-Amgalan, due to the vast distances and lack of roads in
Mongolia, where most highways are little more than vague jeep tracks across the desert.
Purchase Agreements
Clean Energy says the wind park will save 122,000 tons of coal, 1.6 million tons of water and will eliminate
180,000 tons of carbon dioxide emissions each year.
The government agreed to a power purchase agreement with Clean Energy, which will receive 9.5 cents a
kilowatt-hour for power from the wind for the lifetime of the project. The company expects to recoup its
investment in 14 years.
Enkh-Amgalan says the power station can produce 140 million to 160 million kilowatt-hours per year, which
gives the plant revenue of $15 million per year.
“We expect that by the end of next year tariff prices will be liberalized. We’re not sure how it will be, but
there is a certain commitment from the government that the tariffs will increase. This process is happening
but slowly.”
Turbines at the plant will last about 20 years, said Enkh-Amgalan, after which time the current 1.6-
megawatt turbines may need to be replaced. By then, he expects turbines may generate as much as 7
megawatts each, which would triple the output.
Source:
Original Article by Bloomberg
Photo by EBRD
MONTHLYHIGHLIGHTSJUNE2013

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MONTHLYHIGHLIGHTSJUNE2013
Mineral-rich Mongolia’s export income dropped in the first five months of this year as a result of falling coal
prices paid by China, the nation’s largest trading partner.
Mongolia’s exports fell 3.3 percent to $1.64 billion in the first five months of this year from the same period
last year, the National Statistics Office said in a release on its website on June 12nd. The value of coal
shipments declined 44 percent to $448.6 million, while volumes dropped 14 percent to 6.33 million tons,
according to the statement.
In April, the World Bank cut a forecast for 2013 Mongolian economic growth to 13 percent from 16 percent,
citing declines in exports and foreign investment. Economic growth in China, which bought 87 percent of
Mongolian exports in five months through May, slowed to 7.7 percent in the first quarter from 7.9 percent in
the last three months of 2012.
Imports were $2.47 billion in the period, down 6.8 percent from the same period a year earlier, leaving a
trade deficit of $824.7 million, according to the statistics bureau.
The value of gold shipments more than tripled to $126.2 million in the first five months from $38.9 million a
year ago, according to the agency. Three tons of gold was exported compared with 0.9 tons a year earlier,
the statistics office said.
Mongolia exported 1.79 million barrels of oil during the first five months of the year, up from 1.26 million
barrels a year earlier, the statistics office said. The value of the exports rose 33 percent to $169.5 million
this year.
Exports of iron ore were 2.32 million tons during the first five months of the year, falling from 2.39 million
tons in the same period last year, the statistics office said. The value of the shipments rose 56 percent to
$262.4 million from $168.2 million a year ago, according to the agency.
Source: Bloomberg
Mongolian Export Revenue Drops 3.3% as Coal
Price Decline

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MONTHLYHIGHLIGHTSJUNE2013
Xanadu Mines (ASX: XAM) will pay less upfront for the acquisition of the Oyut Ulaan copper-gold porphyry
project in Mongolia, in return for a modest cash payment, some shares and issuance of performance share
options.
Drilling by Xanadu has also intersected thick zones of gold-rich porphyry copper mineralisation from results
released today.
The porphyry copper project covers a large district of around 40 square kilometres) comprising numerous
mineralised porphyry centres.
The agreement struck with Temujin Mining Corp replaces an earlier agreement in May 2012 and its initial
implementation which was delayed by changes in Mongolia’s foreign investment law.
The Mongolian Parliament recently approved amendments to the law allowing the acquisition to proceed.
The consideration for a 90% interest in the project located in the South Gobi region is now a payment of
US$600,000, the issue of 5,000,000 Xanadu shares and the issue of performance share options once a
JORC resource of 900,000 tonnes of contained copper equivalent is achieved at the project.
The Oyut Ulaan mining license has been granted and Xanadu has earned a 25% interest.
The completion of the transaction is conditional upon approval by Xanadu’s shareholders and the
Government of Mongolia.
Drilling results
Reconnaissance drilling from four drill holes at the Oyut Ulaan project has intersected thick zones of gold-
rich porphyry copper mineralisation from a 10 hole program which would provide significant
encouragement given the widths and grades at surface.
Impressively, the results included 132.0 metres at 1.07% CuEq. from surface and 170.5 metres at 0.76%
CuEq. from surface.
Source: Proactive Investors Australia
Xanadu Mines to acquire Oyut Ulaan copper-gold
porphyry project
Mongolia signs up Tony Blair as government advisor
The former Prime Minister Tony Blair signed the contract with the country’s leaders during a visit to the
capital Ulaanbaatar in March.
It’s been reported the former leader, who’s famous for ending the conflict in Northern Ireland, will be a key
negotiator in disputes between the government and mining giant Rio Tinto. But both Blair’s office and Rio
Tinto deny that’s the case. It’s more likely Mr Blair will be advising current leader Tsakhiagiin Elbegdorj in the
lead up to presidential elections later this month.
Mr Blair’s deal comes in the midst of Mongolia’s mining boom and although it’s not clear exactly how much
his consultancy firm will be paid, it’s safe to assume it’s not an insignificant figure.
A similar deal with the government of Kazakhstan is believed to be worth £13m.

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MONTHLYHIGHLIGHTSJUNE2013
Also filling Mr Blair’s consultancy portfolio are deals with Columbia and Brazil. The Albanian Opposition
Leader Edi Rama has also publicly indicated he’d like Mr Blair’s advice if he becomes Prime Minister. Mr Blair
has said he’d be happy to help.
Source: Voice of Russia
Darkhan Refinery Project will be accomplished by 2015
The Darkhan Petroleum refinery project, the country's first, will be funded by loans from Japanese Banks
and financial institutions. It already broke ground in 2011 and expected to start operations by 2015.
The refinery will be constructed in Darkhan-Uul province with a capacity to process 2 million tons of crude
oil per year.
Japan's Toyo Engineering Corporation in cooperation with the local companies will build the refinery using
the latest technologies. According to officials, it was estimated that if in selling oil products by 6-8%
cheaper compared to current unit price, after 4 years the first investment would be able to be repaid.
Minister of Mining, D.Gankhuyag said they have started meeting with the stakeholders to discuss the
state's plan to secure a 51 percent share in the project. The Mongolian government will own at least 51
percent of the pending Darkhan Petroleum refinery. The government decided to own no less than 51
percent of the project during a cabinet meeting last May 11.
Source: Bid Ocean Asia Pte Ltd
Mongolia revises its Anti-Money Laundering Law
On 31 May 2013, the Parliament of Mongolia approved a revised version of the Law of Mongolia on
Combatting Money Laundering and Terrorism Financing ("Revised Law"). The law comes into force on the
date of its adoption and aims to strengthen the existing regime.
We set out below a summary of the key features of the Revised Law.
INTRODUCTION
Mongolia adopted its first comprehensive law on combatting money laundering and the financing of
terrorism ("AML/CFT") on 8 July 2006 ("Old Law"), which imposed obligations on certain financial
institutions to have their customers verified with "know your customer" ("KYC") procedures and to report
certain transactions. Further, it created the Financial Intelligence Unit ("FIU") at the Bank of Mongolia,
which was mandated to collect and analyze information received from reporting entities and monitor
implementation of the AML/CFT legislation.
Although enacted several years ago with the intention of providing a comprehensive regulatory regime for
AML/CFT, the Old Law was considered by many to have shortcomings. Specifically, the Financial Action
Task Force ("FATF"), an intergovernmental organization in charge of setting standards and promoting

6. 6
LEGISLATIONJUNE2013 effective implementation of AML/CFT policies across the globe, identified Mongolia as a relatively high-risk
jurisdiction with strategic AML/CFT deficiencies.
The Revised Law introduces a number of changes to strengthen the existing regime and to overcome the
shortcomings identified by the FATF. It broadens the scope of the law by way of making more institutions
subject to reporting obligations and extends the range of reportable transactions. Further, following
standard international KYC practice, it requires reporting entities to identify their customers' ultimate
beneficial owners. It further imposes obligations to strictly monitor transactions made by politically-exposed
persons ("PEPs"). The law aims to reinforce the authority of the FIU in preventing and combatting money
laundering and terrorism financing.
KEY FEATURES
New Concepts
The Revised Law introduces new concepts including PEPs, "ultimate (beneficial) owner", and "shell banks".
Further it expands the definition of money laundering, so that obtaining or holding of assets known to be
illegally obtained will be deemed money laundering.
The concept of PEPs is defined by reference to a list of high ranking public officials set out in the Law of
Mongolia on the Conflict of Interests (please see our previous alert from September 2012).
For the purpose of imposing obligations on financial institutions that are subject to reporting obligations
under the Revised Law ("Reporting Entities") to verify the beneficial owners of their customers, the Revised
Law introduces a definition of "ultimate owner". "Ultimate owner" is defined as "an individual who indirectly
manages or controls the activities and actions of a customer or who is an original founder of the legal
entity(y) (ies) that own a customer".
To see full article: Business Council of Mongolia
Source: Hogan Lovells
Government of Mongolia resolved to register 7 mine
deposits into the list of Strategic Importance
Cabinet of the Government decided to submit some new amendments to the Appendix of the
Parliamentary Resolutions N0. 27 dated from Feb 6, 2010 through the plenary session of the State Great
Khural (Parliament) on “Registering some mine deposits into the list of Strategic Importance.”
The main emphasize of the resolution was to add 7 more specific mineral deposits as strategic mineral
deposits and to account and re-establish strategic mineral deposits and their borders with much more
detailed measurements and care. In addition, to including the neighboring area of such deposits as a
reserve part of the same strategic mineral deposit and it is important to maximize the usage of such
deposits into highest possible outcome.
Since 2007, team of specialist tasked to re-evaluate the 25 known mineral deposits which have been
registered and accounted for their reservoir and quality, have been researching their reservoir, quality,
condition of the infrastructure, market value and demand, and their possible contribution to the

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MONTHLYHIGHLIGHTSJUNE2013
Mongolian Strategic Foreign Investment Law - Update
Further to Hogan Lovells’ recent alert dated 15 April, the Parliament of Mongolia approved an amendment
("the Amendment") to the Law of Mongolia on the Regulation of Foreign Investment in Business Entities
Operating in Sectors of Strategic Importance (the "SFI Law") on 19 April 2013.
The approved text of the Amendment is as originally described in our 15 April alert. The Amendment is
stated to be effective from 19 April 2013.
The Amendment recasts Article 4.7 of the SFI Law by stipulating Parliament as the approval authority only
in those transactions where a non-Mongolian state-owned enterprise acquires more than 49% of the issued
shares of a Mongolian company. The Amendment removes investments by foreign private investors from
the scope of Parliamentary approval and deletes the MNT 100 billion threshold in its entirety.
The changes do not mean that foreign private investors are free from a formal approval process since
acquisitions falling within the scope of the SFI Law will nevertheless have to be approved by the Cabinet, or
the Ministry of Economic Development under the SFI Law's draft implementing regulations. Some comfort
is provided insofar as the approval process for foreign private investment is removed from the purview of a
government organization that is not always in session and has to consider other matters of national
importance.
On a separate but related note, various officials including the Deputy Minister of Economic Development
and the Governor of the Bank of Mongolia, have recently indicated that the Mongolian government intends
to submit a new investment law (a draft of which has been prepared) for Parliamentary approval this
summer. The new law would aim to provide greater stability for foreign investments in Mongolia. In addition,
government officials also have suggested that sections of the amended SFI Law might be "merged into" the
new investment law. We will of course monitor developments and update our clients as any events unfold.
Source: Hogan Lovells
development of their respective area and thus given recommendation to the government of Mongolia to
increase their status to strategic mineral deposit.
Following 7 deposits are added to the list:
1. Khushuut ( Darvi Sum, Khovd Aimag, coal)
2. Tsaidamnuur (Bayan Sum, Tuv Aimag, coal)
3. Gatsuurt (Mandal Sum, Selenge Aimag, gold)
4. Khalzanburgedei (Myangad Sum, Khovd Aimag, rare element)
5. Lugiin Gol (Khatanbulag Sum, Dornogovi Aimag, rare element)
6. Mushgia Khudag (Mandal-Ovoo Sum, Umnugovi Aimag, rare element)
7. Khotgor (Khankhongor and Tsogt-Ovoo Sums, Umnugovi Aimag, rare element)
Source: Info Mongolia

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MONTHLYHIGHLIGHTSJUNE2013
Mongolia Stock Exchange: New Securities Law
explained
The Securities Markets Law was finally approved on May 24, after years in the State Khural, Mongolia’s
parliament. English translations are as-yet unavailable.
Regardless, market participants are excited about the new law’s potential impact. It introduces several new
concepts to Mongolia’s capital markets, including dual-listing provisions which will allow for the triple-
listing of state-owned coal miner ETT. It also brings local disclosure and financial statement reporting
requirements in line with other emerging markets.
Mongolia Stock Exchange (MSE) deputy chief executive officer and chief regulatory officer, Saruul
Ganbaatar, said the new law makes the rules of the games much more transparent and easier to
understand.
“The previous law was mostly prohibitive in terms of activities to be carried out in the securities market,
whereas the new one introduces more flexibility, which is a necessity for the market to grow,” he said.
The Business Council of Mongolia executive director, Jim Dwyer, believed the law was a critical component
for companies to tap the capital markets.
Noting the abysmal initial public offering (IPO) volumes in Mongolia in the past two to three years, he
believed the country’s equity market had not been working, despite the London Stock Exchange’s good
work in setting up a new platform.
THE MAIN CHANGES EXPLAINED
Ganbaatar said that the new version of the law includes definitions for financial instruments, such as
depositary receipts, options and futures, which have become standard financial terms in most advanced
and emerging economies.
These sophisticated financial instruments are becoming essential for further development of financial
markets, he said.
However, drafting of the necessary regulations pertaining to, inter alia, depositary receipts, custodian
banks, and dual listings still need to be finalised before the law becomes effective.
To see full article: Business Council of Mongolia
Source: Ashley Lee

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MONTHLYCONCLUSIONJUNE2013
Value Y-o-y changes M-o-m changes Period
Birth Rate 32,208 +7.7% - May 2013
Consumer price
index
+9.7% +0.3% May 2013
M2 money supply MNT 7,908.9 billion +17.5% +9.9% May 2013
M1 money supply MNT 831.0 billion +6.1% +9.4% May 2013
Loans outstanding MNT 8226.4 billion +34.4% +32% May 2013
Securities
transaction
MNT 11.4 billion +39.4% - May 2013
Foreign trade
turnover balance
USD824.7 million -13.1% - May 2013
Industrial sector
gross product
MNT872 billion +1.9% - May 2013
Statistic Indicators
Top-20 Index - Mongolian Stock Exchange (million MNT)Top-20 Index - Mongolian Stock Exchange (million MNT)
Average 13,619.2
HIghest 13,921.26
Lowest 13,188.46
Closing 13,835.84
The nation’s consumer prices rose 9.7 percent in May from a year earlier and gained 0.3 percent from April,
the NSO reported. The number of registered unemployed fell to 40,500, the statistics office said, a 30 percent
decrease from the same period last year.
Source: NSO
Source: MSE

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MONTHLYCONCLUSIONJUNE2013
Monthly Conclusion
The hot topic for this month is the 6th Presidential elections of Mongolia. Typically this represents a rubicon
moment for the business sector, ending uncertainty over the direction of the nation at least until the
legislative elections in 2016.
With several burning political and economic issues still up in the air, such
as the initiation of exports and fate of the next stage of the Oyu Tolgoi project, the future of Mongolia’s now
shaky foreign direct investment climate and even social housing, Mongolia’s new President is expected to
bring new political impetus to bear on all such matters. On 26th of June Mongolia will again go to the polls
and elect a new President, as well as again demonstrating to the world that this is a nation with a robust
democratic future.
Concerns continue to be raised over declines in coal prices. A 44% drop off in the value of coal shipments
over the first five months of 2013 were a significant contributing factor which saw the World Bank correct its
2013 forecast for Mongolia from 16% to 13%. Drop-off in foreign investment was the second significant
factor cited for the correction. Enthusiasm of investors, which reached a peak around 2011, has been
significantly dampened by the actions of the Government. An unpopular Foreign Investment Law, passed in
2012. Despite this draft law being amended in early 2013 to ease conditions for most investments the law,
coupled with recent legislation that curtailed operations in the gold mining sector, as well as continued
wrangling over the future of the Oyu Tolgoi project, have resulted in flight of investors. Although a good deal
of the 17% drop-off in FDI in 2012 could be accounted for based upon the coming to a close of the first
large-scale cycle of investment in national level mining projects, investor sentiment remains bearish.
Mongolia remains a favorable investment location, with seemingly fantastic investment opportunities.
Nevertheless, when a poor infrastructure and previously boom-bust driven economy is coupled with a
policy risk environment that has proven to be capricious at best, the overall risks may continue to prove too
much for many prospective investors to stomach.
So is there light at the end of the tunnel. Perhaps yes. Completion of a landmark large infrastructure project
such as the Sulkhait Wind Farm continues to generate renewed confidence and investors can look upon
this as a model for management of infrastructure and industrial projects such as those to which funds
raised by the Chinggis Bond have been apportioned. Fears have been raised over slow deployment of the
1.5 billion USD raised in 2012 with this dollar denominated bond. However, as of May this year, around 1.15
billion had been allocated, with road projects taking by far the largest share of the funds (570 billion had
been earmarked for investment in in road infrastructure projects alone). Sectors such as agriculture,
cashmere production, railways, construction materials and housing all received significant earmarked
investment also. Concerns do remain over the Government's ability to meet its repayment commitments,
although good management and transparent operations in landmark projects funded by this money will
enable the Government to go to the markets again in future to refinance and continue to raise funds for
significant forthcoming projects.

11. 11
On a local level, the Ulaanbaatar real estate sector, which saw a drop in liquidity in the residential sub-
sector over the past year, seems to be recovering well. Reports indicate that transaction volumes are on the
rise again. As summer continues, construction has been reinitiated on significant commercial projects
across the city centre, with over 210,000 square meters of retail supply expected to come online in the
upper end of the market between now and 2018 a known office supply pipeline in the upper end of the
market of 44% of current supply for the same period (among the highest in the world). Growth is expected
to be driven during this period by upscaling domestic firms in the finance, mining supply and service sector,
whilst international financial organizations will be set to gain more of a foothold in the CBD of Ulaanbaatar
as the economy recovers and the banking system continues to evolve.
Source: Nova Asia Partners
Article by Alex Skinner

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Upcoming Events
Ulan Bator/Mongolia – After its remarkable success last year the capital goods trade fair “Future Mongolia”
will once again be held in the Mongolian capital of Ulan Bator from 19 to 22 June. The organiser expects
approximately 120 exhibitors from various nations. Participating last time were also such “top dogs” in the
sector as Caterpillar, Hyundai, Siemens and ThyssenKrupp.
Click here to see official website.
Three parties have nominated candidates for the presidency.The incumbent, Tsakhia Elbegdorj has been
renominated by the Democratic Party and is also endorsed by the Civil Will-Green Party and the Mongolian
National Democratic Party. The opposition Mongolian People’s Party has nominated Badmaanyambuu Bat-
Erdene, a former wrestling champion.The Mongolian People’s Revolutionary Party has nominated Natsag
Udval, current Minister of Health and reportedly the first woman to seek the office.
6th Presidential Election of Mongolia

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Mongolian National Festival “Naadam”
The biggest festival (Naadam of the Country) is held in the Mongolian capital Ulaanbaatar during the
National Holiday from July 11 – 13, in the National Sports Stadium. Naadam begins with an elaborate
introduction ceremony featuring dancers, athletes, horse riders, and musicians. After the ceremony, the
competitions begin.
Naadam is the most widely watched festival among Mongols, and is believed to have existed for centuries
in one fashion or another. Naadam has its origin in the activities, such as military parades and sporting
competitions such as archery, horse riding and wrestling, that followed the celebration of various occasions,
including weddings or spiritual gatherings. It later served as a way to train soldiers for battle. Now it formally
commemorates the 1921 revolution when Mongolia declared itself a free country.
Chinggis Khan's nine yak tails, representing the nine tribes of the Mongols, are still ceremonially transported
from Sukhbaatar Square to the Stadium to open the Naadam festivities. At these opening and closing
ceremonies there are impressive parades of mounted cavalry, athletes and monks.
For more information about Naadam 2013: Info Mongolia
Nova Asia Partners
Tel: (976)-11-311103
(976) - 99901609
Fax: 976)-11-311103
E-mail: contact@csm.mn
Website: www.nova.mn