Mongolia has been in the process of negotiating several important stability agreements with international mining developers in recent years. Starting in early 2009, Ikh Hural (the Mongolian Parliament) negotiated the final stages of a stability agreement with Ivanhoe Mines Ltd of Canada regarding one of the world’s largest untapped gold and copper mines, Oyu Tolgoi, situated near the Mongolian-Chinese border in Umnogovi Aimag.

The Oyu Tolgoi agreement previously stalled due to lack of agreement over government acquisition percentages, taxes and other royalties and methods of protecting domestic stakeholders. Following last year’s parliamentary election, however, Ikh Hural emphasised the urgency of establishing a stability agreement and signing the agreement into law. An agreement was reached in October of 2009 and mining activities are expected to begin soon.

Concurrently with the Oyu Tolgoi stability agreement, the government has embarked on the tender process for Tavan Tolgoi, a world-class coal deposit. This deposit is also situated near the Mongolian-Chinese border and in relatively close proximity to Oyu Tolgoi. Upon completion of the tender process, work is scheduled to begin on developing a joint state-private venture.

These two agreements will lay the ground work for all future large scale mining agreements, as well as influence the structure of smaller scale mining agreements within Mongolia. The directors of the Company expect such developments to result in an increase in the amount of investment in the Gobi region to support large operations in the area. These operations are expected not to be limited to just the mining operations themselves, but also to include secondary and tertiary activities as a result of rapid economic growth in the area.

Mongolia has been in the process of negotiating several important stability agreements with international mining developers in recent years. Starting in early 2009, Ikh Hural (the Mongolian Parliament) negotiated the final stages of a stability agreement with Ivanhoe Mines Ltd of Canada regarding one of the world’s largest untapped gold and copper mines, Oyu Tolgoi, situated near the Mongolian-Chinese border in Umnogovi Aimag.

The Oyu Tolgoi agreement previously stalled due to lack of agreement over government acquisition percentages, taxes and other royalties and methods of protecting domestic stakeholders. Following last year’s parliamentary election, however, Ikh Hural emphasised the urgency of establishing a stability agreement and signing the agreement into law. An agreement was reached in October of 2009 and mining activities are expected to begin soon.

Concurrently with the Oyu Tolgoi stability agreement, the government has embarked on the tender process for Tavan Tolgoi, a world-class coal deposit. This deposit is also situated near the Mongolian-Chinese border and in relatively close proximity to Oyu Tolgoi. Upon completion of the tender process, work is scheduled to begin on developing a joint state-private venture.

These two agreements will lay the ground work for all future large scale mining agreements, as well as influence the structure of smaller scale mining agreements within Mongolia. The directors of the Company expect such developments to result in an increase in the amount of investment in the Gobi region to support large operations in the area. These operations are expected not to be limited to just the mining operations themselves, but also to include secondary and tertiary activities as a result of rapid economic growth in the area.