With the world’s largest undeveloped copper and gold projects, you’d think by now Mongolia would be a mining household name. But this destitute country’s overzealous legal restrictions on mining, stemmed from its greed for an ever-greater share of mining profits have finally been broken.
I am not going to get into the details of their recently amended mining taxations and laws because that`s no longer relevant. What is relevant is that Mongolia will become the newest and most promising mining opportunity the world and its investors have been waiting for.
Video courtesy of Rio Tinto
According to Mongolia’s government news agency Montsame, Mongolia will sign an agreement on October 6, 2009 allowing Ivanhoe Mines Ltd. to develop the Oyu Tolgoi copper-and-gold mine.
If you have never heard of this project or of Mongolia`s mining resources, you better remember the name to Oyu Tolgoi.
Oyu Tolgoi is a gold and copper haven located in the Gobi desert, just north of the Chinese border owned by Ivanhoe Mines (TSX, NYSE: IVN) and Rio Tinto (NYSE: RTP). In March 2008, Ivanhoe estimated the mine held an astounding 45.2 million ounces of gold and 78.9 billion pounds of copper – nearly 3% the world’s total supply.
Those amounts are expected to produce an average of 400,000 tonnes of copper and 300,000 ounces of gold over a minimum 35-year period. Revenues from Oyu Tolgoi are expected to be in the region of $2.3bn a year, which would go a long way towards solving the country’s financial difficulties and put Mongolia on the map as one of the world`s promising mining opportunities.
This mine itself could double the country’s GDP, currently about $5 billion annually, and will generate the highest rate of growth of GDP of any country in the world over the next 10 years, says John Finigan, CEO of Mongolia’s Golomt Bank.
This project and the government`s recently amended laws will open the doors to a plethora of opportunities for not only investors, but corporations looking to benefit from this growth. Mongolia is not only about to sign one of the largest mining deals, they are also opening up other mining opportunities including, for example, a stake in Tavan Tolgoi, which holds estimated reserves of 6.5 billion tonnes of coking coal coal mine said to be worth around $2 billion.
There`s no question that Mongolia has some of the world’s largest deposits of copper, gold and uranium, as well as abundant resources of coal and other minerals. Its location, between China and Russia, in the past contributed to its isolation, but now means it has two of the world’s largest markets on its doorstep. Today, its two neighbours consume around 60% of Mongolia’s exports.
Aside from directly purchasing shares in Ivanhoe and Rio Tinto, investors and corporations looking to play the Mongolian mining boom have few pure-play options available.
For corporations interested in mining opportunities and properties in Mongolia, one of our associates currently has a portfolio of 4 properties available in Gold and Copper and one Lithium mine with over 26 million tonnes of resources! If any corporations are interested, please email me direct at ivan@equedia.com
