Tuesday, December 20, 2016

Mongolia Country Visit

Seeking Alpha:

(snip)

However, I would like to end this travel report - which was more about doom and gloom - with two positive notes. One positive development is the restart of the gigantic Oyu Tolgoi "OT" mine in the south of the country which is 66% owned by Turqouise Hill Resources [listed in New York (NYSE:TRQ)] [which is majority owned by Rio Tinto(NYSE:RIO) (OTCPK:RTPPF) (OTCPK:RTNTF)] and the remainder by the Mongolia Government. At full capacity, Oyu Tolgoi will be the third largest copper/gold mine in the world. For the second development phase of the mine an additional USD 6 billion needs to be invested for this underground construction (Phase I is "open pit") and this should help bolster the country's depleted foreign exchange reserves, create new jobs and more importantly send a message to other international mining companies that the country is "open for business" after all the issues since 2012 between the government and international mining companies. The second positive development is that international resource prices have bottomed out and are starting to rise, especially coal and gold, which are extremely important for the well-being of the Mongolian economy. For example the coal price for loading in Richards Bay, South Africa has more than doubled from the low on 27th December 2015 at USD 47.60 per ton to currently USD 97.45 per ton.


Consequently we have increased our exposure to Mongolian coal mining companies in the AFC Asia Frontier Fund through increasing an existing position and adding a new Mongolian coal mining company which is Mongolian Mining Corp. with main listing in Hong Kong [975 HK] and secondary listings under (OTCPK:MOGLF) and (OTC:MOGLY).

Everyone knows I am a long term bull on Mongolia. Adding to my Mongolia Growth Group and Mongolia Mining Corp. positions. Mongolia Mining is my big spec play for 2017. 

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