October 19 2007

1. BUSINESS COUNCIL of MONGOLIA
NewsWire
Email: Jim@bcmmongolia.org www.bcmmongolia.org
October 19 2007
NEWS HIGHLIGHTS:
Business: Draft investment agreement bubbles from beneath; Khan Bank’s international standing
upgraded; Coal deposits discovered at Ulaan Nuur basin; Hong Kong electronics producer
purchases mining rights; Regional cities connected
Economy: Mongolia to issue bonds on intentional market in 2008; MIK issues residential-backed mortgage
securities; Young adults dominate consumer groups; Half the population use cellphones
Politics: Government checks bank insurance scheme; Anti-Corruption Authority gathers steam; Bank
under investigation for overstepping services; 2008 budget to increase
BUSINESS
The first monthly meeting under the auspices of the newly formed BCM will be held on Monday, October 29,
at 5 PM in the Open Society Forum. Featured presentation will be an "Ambassadors Panel”.
DRAFT INVESTMENT AGREEMENT BUBBLES FROM BENEATH
Former Mongolian Finance Minister and Democratic Party consultant, N. Altankhuyag says the draft
investment agreement on the South Gobi, Oyu Tolgoi copper project is not profitable to the
interests of Mongolian people.
He has suggested a new version where Mongolia invests 34 percent, Ivanhoe Mines invests 66
percent, but the government takes 17 percent free of charge, so Mongolian investment would total
51 percent and Ivanhoe mines ownership, 49 percent
KHAN BANK’S INTERNATIONAL STANDING UPGRADED
Improved financial conditions at Mongolia’s largest bank, Khan Bank, has resulted in an upgrade in
the bank’s international standing by Fitch Ratings.
Fitch changed the bank’s long-term foreign and local currency issuer default ratings (IDRs) to
positive from stable, while affirming them at 'B+'.
This qualifies the bank for increased opportunities to borrow money at more favorable rates
worldwide.
Read more: www.mongolia-web.com
COAL DEPOSITS DISCOVERED AT ULAAN NUUR BASIN
Canadian-based Bluerock Resources Ltd. (TSX VENTURE:BRD) announced deposits of coal have
been discovered at its Ulaan Nuur Basin site during exploratory drilling for known uranium at the
site.
The drilling programs were focused on three separate licenses, the Khavtsal, Khudgiin Us and
Tolgod, all of which are located south of Ulaanbaatar in the Ulaan Nuur Basin.
Read more: www.mongolia-web.com/content/view/1419/2/
HONG KONG ELECTRONICS PRODUCER PURCHASES MINING RIGHTS
Hong Kong-based Karce International Holdings Co. Ltd. has announced it is purchasing mining
rights in Mongolia.
Karce, a manufacturer of electronics products, said it was purchasing Silverway Pacific Ltd., which
indirectly holds mining and exploration licenses for the Khuldiin South Coal Mine, and an
exploration license for Khuldiin North Coal Mine and TN Coal Mine.
Khuldiin Coal Mines are about 150 kilometers north of Ulaanbaatar and TN Coal Mine is 156
kilometers south of the city.
Read more: www.mongolia-web.com/content/view/1416/154/
REGIONAL CITIES CONNECTED
Erdenet Mining Company will invest MNT 330 million in an e-Erdenet project in Erdenet city.
Orkhon province governor and Erdenet Mining Company director, Kh. Narankhuu, established a

2. treaty to implement the project and MNT 20 million would be invested in the project from the
local budget.
ECONOMY
MONGOLIA TO ISSUE BONDS ON INTERNATIONAL MARKET IN 2008
Mongolia plans to issue bonds on the international market next year following International banks
and financial firms advice that the time has come for Mongolia to issue bonds.
The largest foreign financial institutions have been sending suggestions to cooperate with
Mongolia’s security market.
Officials have conducted studies and plan to issue USD 500 million in bonds on the international
market in 2008 for the first time.
Profits from the bonds will be spent on developing the mining sector and implementing the
national ‘40 000 Homes Program’.
Gains from the bonds will be used to reduce the inflation rate to at least 10 percent in line with
commercial banks interest rates of 20 percent in the US Dollar per year, and 30 percent in MNT
per year.
Source: Montsame National Newsagency
MIK ISSUES RESIDENTIAL MORTGAGE-BACKED SECURITIES
The Mongolian Mortgage Corporation (MIK) will issue the first Mongolian Residential Mortgage-
Backed Securities. It will purchase them from a pool of Qualifying Mortgages and issue Residential
Mortgage-Backed Securities of USD 2,479,920 in three equal tranches with maturities of three
years and a coupon rate based on 6-month USD LIBOR plus 560 basis points from Mongolian bank -
XacBank.
This will give investors a yield of approximately 11% at the time of the Securities issue. The
Mongolian International Capital Corporation (MICC) will act as the placement agent for this
transaction.
MIK is Mongolia’s first second-tier mortgage financing institution owned by the Bank of Mongolia
and 10 commercial banks: Anod Bank, Capital Bank, Capitron Bank, Golomt Bank, Mongol Post
Bank, Khan Bank, Trade and Development Bank, Ulaanbaatar City Bank, XacBank, and Zoos Bank.
YOUNG ADULTS DOMINATE CONSUMER GROUPS
Investors looking at the consumer goods market in Mongolian should target citizens in age ranges
from 20 to 24 and 50 to 54. According the Government of Mongolia forecasts these age ranges will
increase dramatically by 2008 while citizens in age groups 5 to 9, 10 to 14 and 15 to 19 will drop.
The population is expected to rise to 2.67 million.
In general, the population of young people is likely to increase by 29 percent and the older
generation will increase by 5.8 percent
Source: Montsame National Newsagency
HALF THE POPULATION USE CELLPHONES
The millionth Mongolian mobile phone user registered in Mongolia October 5 and almost half of
Mongolia’s population, 45.7 percent has a mobile phone. Organizations including Information
Communication Technology Agency and mobile operator companies, Mobicom, Skytel, Unitel and
G-Mobile, awarded their millionth cellular phone with certificates million free units.
Source: The Mongol Messenger
POLITICS
GOVERNMENT CHECKS BANK INSURANCE SCHEME
Cabinet members decided to present a bill to Parliament to protect depositors against a bank’s
failure to deliver its services.
The bill for bank insurance schemes, suggests deposit insurance will be classified into two types:
compulsory and optional.
Citizens would be required to insure amounts equal to MNT1.5 million and the same amount of
foreign currency from the total sum of their savings.
Deposit insurance institutions would be required to have independent reserve funds.

3. ANTI-CORRUPTION AUTHORITY GATHERS STEAM
After months of inertia waiting for the new anti-corruption law to be passed, ACO officers have
been deployed to rural areas to raise awareness of the anti corruption laws; conduct surveys;
inspect income and property reports and to conduct training towards eliminating corruption.
BANK UNDER INVESTIGATION FOR OVERSTEPPING SERVICES
Mongolbank is under a cloud following claims it conducted commercial banking operations, not
allowed by relevant laws.
MP, B. Batbayar, disclosed the information to journalists this week.
It is claimed the bank loaned money to Russian gold mining company ‘Altandornod Mongol’ and
took gold as security; the tax office has asked the bank to pay the company’s outstanding taxes
and the bank is paying USD13.5 million owed to ‘Gerald Metals’ for the Russian Company.
The Bank lost USD 10 million deposited in Russian Bank ‘Credit Trust’ when the latter went
bankrupt and paid USD1.5 million to a court for the Credit Trust.
Source: Montsame National Newsagency
2008 BUDGET TO INCREASE
Parliament will discuss and pass the draft 2008 government budget revenue by December 1, in the
autumn parliament session.
The General Auditor has suggested increasing the budget by MNT127.5 billion; decreasing
expenditure by MNT 81.2 billion and reducing budget deficit by MNT 208.7 billion.
It is planned to increase the total revenue of the general Government budget by 40 percent
reaching MNT 2.4 trillion in 2008. Real economic growth is expected to reach 10.1 percent in 2008,
creating favorable conditions to raise government revenue.
The 2008 total government revenue was estimated from the price of copper as USD 6800 per ton
on the world market.
Source: Montsame National Newsagency
MONGOLIA STOCK EXCHANGE WEEKLY REVIEW
For the week ended October 12, 2007, trading activity on the Mongolian Stock Exchange (MSE)
totaled 1.1 million shares with 84 stocks traded. Total market value of transactions was 2.9 billion
MNT.
A total of 50,000 Government bonds maturing in 6 months traded with a total transaction value of
4.8 billion MNT. Major participants included Trade and Development Bank, Anod Bank, Mongol
Post Bank, Golomt Bank and Tavan Bogd Group.
The "Top 20" index increased by 26.22 points (0.2%) over the prior week and closed at 11,526.
Major gainers were: APU, Tahi-co, Material Impex, BD Securities, and Gobi.
Most active stocks traded were: Genko Tours (545,700 shares); Baganuur (89,000 shares); Shivee
Ovoo (76,600 shares); Moninjbar (48,200 shares); Gobi (22,400 shares).
Total market capitalization of 361 companies listed on the MSE was 736.0 billion MNT, up 7.8
billion MNT from the prior week.