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Report Date : |
28.05.2014 |
IDENTIFICATION DETAILS
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Name : |
MONGOLIAN MINING CORPORATION |
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Formerly Known as: |
MONGOLIAN MINING CORPORATION XXK |
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Registered Office : |
Central Tower, 16th Floor Sukhbaatar District Ulaanbaatar
14200 |
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Country : |
Mongolia |
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Financials (as on) : |
31.12.2013 |
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Date of Incorporation : |
18.05.2010 |
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Legal Form : |
Limited Liability Company |
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Line of Business : |
Producers, distributors and exporters of coal. |
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No. of Employees |
2,400 (subject) |
RATING & COMMENTS
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MIRA’s Rating : |
B |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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Status : |
Moderate |
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Payment Behaviour : |
Slow but Correct |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31st, 2014
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Country Name |
Previous Rating (30.09.2013) |
Current Rating (01.12.2013) |
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Mongolia |
C1 |
C1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
MONGOLIA - ECONOMIC OVERVIEW
Mongolia's extensive mineral deposits and attendant growth in
mining-sector activities have transformed Mongolia's economy, which
traditionally has been dependent on herding and agriculture. Mongolia's copper,
gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten deposits, among
others, have attracted foreign direct investment. Soviet assistance, at its
height one-third of GDP, disappeared almost overnight in 1990 and 1991 at the
time of the dismantlement of the USSR. The following decade saw Mongolia endure
both deep recession, because of political inaction and natural disasters, as
well as economic growth, because of reform-embracing, free-market economics and
extensive privatization of the formerly state-run economy. The country opened a
fledgling stock exchange in 1991. Mongolia joined the World Trade Organization
in 1997 and seeks to expand its participation in regional economic and trade
regimes. Growth averaged nearly 9% per year in 2004-08 largely because of high
copper prices globally and new gold production. By late 2008, Mongolia was hit
hard by the global financial crisis. Slower global economic growth hurt the
country's exports, notably copper, and slashed government revenues. As a
result, Mongolia's real economy contracted 1.3% in 2009. In early 2009, the
International Monetary Fund reached a $236 million Stand-by Arrangement with
Mongolia and the country has largely emerged from the crisis with better
regulations and closer supervision. The banking sector strengthened but
weaknesses remain. In October 2009, Mongolia passed long-awaited legislation on
an investment agreement to develop the Oyu Tolgoi mine, considered to be among
the world's largest untapped copper-gold deposits. Mongolia's ongoing dispute
with a foreign investor over Oyu Tolgoi, however, has called into question the
attractiveness of Mongolia as a destination for foreign direct investment.
Negotiations to develop the massive Tavan Tolgoi coal field also have stalled.
The economy has grown more than 10% per year since 2010, largely on the
strength of commodity exports to nearby countries and high government spending
domestically. Mongolia's economy, however, faces near-term economic risks from
the government's loose fiscal and monetary policies, which are contributing to
high inflation, and from uncertainties in foreign demand for Mongolian exports.
Trade with China represents more than half of Mongolia's total external trade -
China receives more than 90% of Mongolia's exports and is Mongolia's largest
supplier. Mongolia has relied on Russia for energy supplies, leaving it
vulnerable to price increases; in the first 11 months of 2013, Mongolia
purchased 76% of its gasoline and diesel fuel and a substantial amount of
electric power from Russia. A drop in foreign direct investment and a decrease
in Chinese demand for Mongolia's mineral exports are putting pressure on
Mongolia's balance of payments. Remittances from Mongolians working abroad,
particularly in South Korea, are significant.
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Source
: CIA |
MONGOLIAN MINING CORPORATION
Building : Central Tower, 16th Floor
Area : Sukhbaatar District
Town : Ulaanbaatar 14200
Country : Mongolia
Telephone : (976 70) 122 279 / 132 279
Fax : (976 11) 322 279
E-Mail : contact@mmc.mn / investor@mmc.mn / gantulga.bu@mmc.mn
Website : www.mmc.mn
Shortform Name : MMC
Also Known As : MONGOLIAN MINING CORPORATION XXK
Name Position
1. Odjargal Jambaljamts Executive
Director / Chairman
2. Battsengel Gotov Executive
Director / Chief
Executive
Officer
3. Enkhtuvshin Gombo Non-Executive
Director
4. Od Jambaljamts Non-Executive
Director
5. Batsaikhan Purev Non-Executive
Director
6. Oyungerel Janchiv Non-Executive
Director
7. Unenbat Jigjid Independent Non-Executive
Director
8. Ochirbat Punsalmaa Independent
Non-Executive
Director
9. Chan Tze Ching, Ignatius
Independent
Non-Executive
Director
10.Oyunbat Lkhagvatsend Deputy Chief Executive Officer
11.Ulemj Baskhuu Chief Financial Officer
12.Enkhtuvshin Dashtseren Chief
Marketing Officer
13.Samuel Bowles Chief Operating Officer
14.Uurtsaikh Dorjgotov Chief
Legal Counsel
15.Enkhtuya Galaanyen
Assistant to Chief Legal
Counsel
Total Employees : 2,400
(subject)
8,000 (MCS Group)
No complaints have been heard regarding payments from local suppliers or
banks.
Subject is a member of the MCS Group of Companies by 33.5% - one of the
largest private sector entities in terms of number of employees in Mongolia
with about 8,000 through its contractors and subcontractors. The Group has more
than 32 subsidiaries covering diversified business activities including: energy
& infrastructure, general manufacturing & services, information &
communications, property development, and - food, beverage & alcohol. The
Group had annual sales turnover $US 250 million in 2008.
We consider it is acceptable to deal with subject for LARGE amounts,
although it is normal accepted practice for international suppliers to deal on
secured terms with Mongolian importers.
Trade risk assessment : Normal
PERFORMANCE FOR THE YEAR:
THE LOSS ATTRIBUTABLE TO THE EQUITY SHAREHOLDERS OF THE COMPANY FOR THE
YEAR ENDED 31 DECEMBER 2013 WAS USD58.1 MILLION COMPARED TO A LOSS OF USD2.5
MILLION FOR THE YEAR ENDED 31 DECEMBER 2012.
(www.aastocks.com)
: Business Summary :
The principal activities of The Group are mining, production,
transportation and sale of coking coal products.
Performance for
the year:
The loss attributable to the equity shareholders of the Company for the
year ended 31 December 2013 was USD58.1 million compared to a loss of USD2.5
million for the year ended 31 December 2012.
The Group’s revenue for the year declined by 7.8% to USD437.3 million
for the year ended 31 December 2013 (2012: USD474.5 million) due to
unfavourable pricing environment.
Business Review :
UHG Deposit
Mining License MV-11952 (“UHG mining license”) covers the UHG deposit
with an area of 2,960 hectares. In the period of 2009 to 2012, the Group’s
geological team conducted extensive exploration activities within this license area,
during which time approximately 166,385 metres of drilling was conducted. From
the 1,435 boreholes drilled and geophysical logged, analytical laboratory test
work was performed on a total of 32,556 samples collected.
Also during this period, the Group collaborated with Velseis Processing
Pty Ltd to interpret data collected from 71 kilometres (“km”) of high
resolution 2D seismic in-field measurements, collected by Polaris Seismic
International. This was used to identify continuity and structure of coal
seams, as well as to obtain valuable information on the potential of the
deposit’s underground Resource. Large-diameter, bulk-sample drilling was also
completed, with analysis of these samples collected conducted in the
Ulaanbaatar laboratories owned and operated by ALS Group.
The data from these exploration activities was used to update the
geological and coal quality model, and subsequently the UHG mining license JORC
Coal Resource estimate as at 30 June 2012, based on an in situ density at an
air-dry basis.
Independent peer audit of this model was conducted by Mr. Todd Sercombe
from GasCoal Pty Ltd, which confirmed compliance of the Group’s work carried
out to update the UHG geological model, thus JORC Coal Resource estimates for the
UHG mining license area.
Minimal exploration related activities continued in 2013, with the scope
reduced in line with the Group’s focus on cost reduction. Drilling contractor
costs were agreed to be deferred until second half of 2014, improving liquidity
in 2013, and work completed was tailored to minimum required to ensure
sufficient detailed understanding of coal measures ahead of the high wall
advance. Commencing in the fourth quarter of 2013, thirteen boreholes were
drilled totalling 3,525 metres of drilling. From this work, 500 samples were
analysed at the Group’s onsite laboratory. Modelling and interrogation of data
collected thus far has yet to commence.
Due to the review process of the Australian Guidelines for Estimating
and Reporting of Inventory Coal, Coal Resources and Coal Reserves in relation
to the JORC (2012) standard has not yet been completed, the Group is waiting to
commit to timing with regard to further Resource update pending finalized
requirements. With no further exploration data available, no material change is
applicable to the previously reported JORC Resource. For reference, since 30
June 2012 a total of 14 Mt as measured by official mine survey as at 31
December 2013 has been mined. This represents depletion from the stated
Resource.
BN Deposit
The Group’s geological team last completed exploration work at BN in
2011 to 2012 under Exploration License 4326X covering the Tsaihkar Khudag
(“THG”) area. A total of 9,963 metres of drilling was carried out during this
period, with 32 boreholes completed and geophysical logged. Analytical
laboratory test work was also performed on a total of 2,307 coal samples
collected.
Consequently, application was submitted to the Mineral Resources
Authority of Mongolia and Mining License MV-017336 (“THG mining license”) of
8,340 hectares area was granted to the Group on 24 June 2013. This was in
addition to the pre-existing mining license 14493A (“BN mining license”) with
4,482 hectares area, both covering the Baruun Naran coking coal deposit area
(“BN Deposit”), located in Khankhongor soum (county) of Umnugobi aimag
(province).
McElroy Bryan Geological Services Pty Ltd most recently provided a JORC
Resources statement for the BN mining license area as at 30 June 2012. This was
estimated to contain 282 Mt of JORC Measured, Indicated and Inferred Coal
Resources, based on an in situ density including assumed 6% total moisture
content.
McElroy Bryan Geological Services Pty Ltd most recently provided a JORC
Resource statement for the THG Mining License area as at 30 April 2013. This
was estimated to contain 55 Mt of Inferred Coal Resource, based on an in situ
density including assumed 6% total moisture content.
During 2013, the Group conducted no further exploration within the BN or
THG mining license areas. On-going desktop reviews are in progress, with the
Group awaiting finalization of the Australian Guidelines for Estimating and
Reporting of Inventory Coal, Coal Resources and Coal Reserves in relation to
the JORC (2012) standard before committing to further Resource estimate
revision.
Since 30 June 2012, as part of the Group’s strategic response to the
coal market situation, there has been minimization of mining activity within
the BN mining license area with priorities focused on UHG. This is also aligned
with guidance resulting from the integrated mining and processing schedule
developed to maximize synergistic value achievable from BN and UHG mines. As
such, no material change to previously reported BN Resource was considered.
Since 30 April 2013, with no mining conducted within the THG mining
license, no material change to previously reported THG Resource was considered.
Open-cut Coal
Reserves
In 2013, RPM updated the Group’s long-term mining schedules at UHG and
BN, preparing an integrated LOM study underpinning update of JORC Coal Reserve
estimations at both of the UHG and BN deposits which were stated as of 31
December 2012.
Coal Reserve estimation was based on open cut, multi seam, truck and
excavator mining methods as currently used at both UHG and BN mines, with both
ex-pit and in-pit dumping of waste considered. Categorization of coal seam
propensity for coking and thermal product was guided by Mr. John Trygstad from
Norwest Corporation (“Norwest”) within the integrated LOM study.
Industry standard whittle pit optimization software was used to generate
a series of nested pit shells corresponding to varying revenue factors,
simulating a range of coal selling prices. These three dimensional approaches
provided a series of pit shells reflecting incrementally different economic
scenarios as impacted by changes such as depth limitation, mining cost or coal
price variance.
Practical pit designs including ramp accesses to coal were then created within
the selected optimized pit shells, representative of the stated revenue
assumptions with the study. The pit optimization algorithms used were limited
to a vertical depth of 300 metres at UHG and 350 metres at BN, based upon
current geotechnical knowledge regarding slope stability criteria of each
deposit.
Through application of estimated mining and metallurgical factors,
mineable in situ coal within the pit shell was converted to ROM and product
coal quantities. From this, mine schedules were able to be sequenced
effectively to maximize value derived from open-pit mining operations.
Combined, the total ROM Coal Reserve under the Group’s control increased
from 460 Mt as at 31 December 2011 to 480 Mt as at 31 December 2012, an
increase of 20 Mt, excluding the depletion of 9.4 Mt Reserve as a result of
mining activity at UHG and BN mines in 2012.
Within the total combined ROM Coal Reserve quantity, the coking coal
component increased by 63 Mt, including allowance for mining depletion during
2012, with the thermal coal Reserve component decreasing correspondingly by 33
Mt.
The open-cut ROM Coal Reserve for the UHG coal deposit was estimated as
at 31 December 2012, based on an as-received basis with 5% total moisture.
The UHG ROM Coal Reserve was previously reported by Norwest to contain
an estimated 275 Mt as at 31 December 2011. The Reserve reported by RPM was
estimated to contain 315 Mt as at 31 December 2012. Compared to previously
reported Reserve figures, including 9 Mt attributable to coal mining depletion
during the period between 31 December 2011 and 31 December 2012, an additional
49 Mt from Coal Resource identified on 30 June 2012 Resource estimate was also
determined as economically mineable via open-pit methods.
With no further exploration data available, nor further update of LOM
plan considered, no material change is applicable to the previously reported
JORC Reserve. For reference, since 31 December 2012 a total of 9 Mt as measured
by official mine survey as at 31 December 2013 has been mined. This represents
depletion from the stated ROM Reserve.
The open-cut ROM Coal Reserve for the BN coal deposit was estimated as
at 31 December 2012, based on an as-received basis with 6% total moisture.
Under previous ownership, BN ROM Coal Reserve was previously reported by
SRK Consulting (“SRK”) totalling 185 Mt as at 31 March 2011. As an outcome of
independent technical studies, conducted during the transition of ownership, it
was confirmed that the final total Reserve was approximately 189 Mt applying
the same Reserve calculation parameters, as it was defined and stipulated in
the relevant share purchase agreement.
After acquisition in June 2011, the Group has begun to conduct its own
studies and analyses for the future development of the BN mine in synergy with
the UHG mining schedule. As such, the Group guided RPM to re-estimate the BN
ROM Coal Reserve using modified Reserve calculation parameters, including mine
design, scheduling and cost estimation parameters based on the Group’s actual
operating experience. As part of this re-estimation, the BN coal quality was
reviewed on the basis of integrating BN and UHG coal mining, blending and
processing operations.
The Coal Reserve estimate reported by RPM totalling 165 Mt as at 31
December 2012 does not include any coal from the THG mining license area, due
to it containing inferred category of Coal Resource only. With approximately 1
Mt attributable to the coal mining depletion during the period between 31 March
2011 and 31 December 2012, the difference between the SRK and RPM estimations
is an overall decrease of 19 Mt of BN ROM Coal Reserve. This is as result of
changes to Reserve calculation parameters. However, using this integrated
mining, blending and processing approach, the estimated coking coal component
of the Reserve at BN has increased by 19 Mt, whilst quantity of the thermal
coal has decreased. The proportion of a coking coal within the total BN ROM
Coal Reserve has increased to 85%.
Based upon mine survey measurement, production activity in 2013 has
depleted the BN ROM Coal Reserve by less than 1 Mt, and is considered to impart
no material change.
Importantly, the integrated LOM mining study RPM was developed inclusive
of complementary coal mining, blending and processing schedules for UHG and BN
mines. It demonstrated potential to conduct sustainable operations with up to
15.8 Mtpa combined ROM coking coal output, for a period between 2013 and 2040.
The thermal coal production volumes from UHG and BN mines were scheduled in this
study to ramp up in 2016, in anticipation of completion of construction of the
UHG-GS Railway project.
Production and
Transportation
Coal Mining
Total ROM coal production achieved by the Group in 2013 amounted to 9.7
Mt, up by 2.7% on 2012 performance. Access to this coal required movement of
53.9 million bank cubic metres (“Mbcm”) of overburden, at a stripping ratio of
5.6 bank cubic metres (“bcm”) per ROM tonne. On the basis of total material
movement, production output from the Group’s mining activities exceeded 60 Mbcm
for the first time, reaching 60.4 Mbcm.
Compared to 2011 and 2012 production, there was less fluctuation between
the first and second half stripping ratios. Annual stripping ratio remained steady
in comparison to 2012, despite increasing depth of mining. Second half
stripping ratio was again lower, as a result of concentrated drawdown of ROM
stockpile inventories in the first half requiring less coal mining to meet CHPP
feed requirements.
The Group has focused on improving efficiency, minimizing cash costs and
reducing operational cash outflows throughout 2013, with site based operational
activities streamlined to support these strategies. In the first half of 2013,
mining operations at UHG and BN mines were integrated under unified management,
specifically with regard to mining, maintenance and technical services.
Functional support services were also integrated as part of the Group wide
consolidation measures.
Unification allowed for controlled reduction of output from BN mine in
the first half of 2013 without affecting CHPP feed requirements, via
redeployment of personnel and equipment from BN to UHG. The overall benefit of
this approach was reduced cost through off-hiring of rental equipment
previously in use, and delay to recruitment and training of additional
workforce in support of on-going fleet expansion at UHG.
Whilst production output from BN mine resumed in the second half of
2013, focus on reducing cash cost and cash outflow did not abate. Measures were
taken at both BN and UHG to ensure that equipment was as productive as
possible, allowing reduced equipment deployment to achieve planned output with
subsequent cost reductions achieved. Major initiatives to reduce mining costs included
increased utilization of ROM stocks, delay of waste stripping, and shortening
of waste haulage distances as possible. The last of these measures has
capitalized on some creative engineering, which will not impact in later stages
of mine development, with short haul waste dump areas exploited in locations
not previously considered.
Continued effort to refine mining and blasting services contractor key
performance indicator (“KPI”) metrics, to ensure alignment of values with
delivery of coal chain efficiency, has delivered evident and sustained
improvement. Mining contractor KPIs were updated from the third quarter of
2013, and agreements with blasting services contractors were renewed in the
fourth quarter of 2013. Many of these revised KPIs were implemented to target
cost reductions, with main initiatives targeting increased mining truck tyre
life and cheaper blend of explosives used, whilst several were clearly aimed at
reducing costs through improved efficiencies such as indexed excavator and drill
productivities and targeted reductions in ROM coal re-handle.
Coal Processing
During 2013, the Group processed a total of 10.7 Mt of ROM coal,
including 0.1 Mt of feed under contract washing arrangement for third parties.
This was achieved utilizing only two of the now three available CHPP modules,
and represented an increase of 44.5% year-on-year.
The Group’s total washed product derived from this feed included 5.3 Mt
of coking coal, up 36.1% year-on-year, and 2.3 Mt of thermal coal, up 39.6%
year-on-year.
Encouragingly, CHPP production exceeded nameplate capacity of 5 Mt per
Module per annum, despite some interruptions to operation posed by Module 3
commissioning requirement for integration into the combined materials handling
system. Eclipsing of nameplate capacity was primarily due to improved CHPP
availability, a notable achievement within context of tightened budget and that
effective from 1 January 2013, the Operational Management Contract with Sedgman
was ended.
In the first half of 2013, as part of the Group’s efforts to reduce
operational cash outflows and maintain suitable liquidity, ROM coal mining
volumes were adjusted down on the basis of scheduling more CHPP feed from
existing stockpile inventories. Whilst some impact on yield resulted (as
expected, due to increased feed proportion of lower grade coals), overall the
approach enabled reduction in cash outflow and unit cash cost during the period
as was the focus of the Group.
As forecast and communicated previously, primary yield in the first half
of 2013 was reduced (46.1%), but rebounded strongly in the second half of 2013
(53.9%), resulting in an overall primary yield in 2013 of 50.1%. The higher
yield experienced in the second half of 2013 is expected to be maintained now
that ROM stockpile inventories of lower grade coals have been largely depleted.
Secondary yield performance results were converse, with higher (25.4%) recorded
in the first half of 2013 compared to lower (18.0%) in the first half of 2013
for overall 2013 secondary yield of 21.6%.
Construction milestones were reached in relation to CHPP development in
2013, with state commissioning completed for both the third processing module
and BFP fine tailings dewatering plant projects. Installed nameplate capacity
for the UHG CHPP is now 15.0 Mt ROM coal feed per annum, based upon 850 tonnes
of ROM coal per hour and 6,000 operating hours per calendar year. Sufficient
processing capacity is now installed as planned for intended and communicated
LOM coking coal production rates, with no further major capital works related
to CHPP planned.
The newly commissioned BFP will serve to reduce the Group’s dependence
upon raw ground water extraction, reducing both environmental footprint and the
cost of operation. With expected recycling of greater than 60.0% of water
utilized within the fines processing circuits, this facility will double the
rate of water recovery compared to the existing, traditional system of tailing
dam reclamation, through avoidance of water evaporation. Operation of the BFP
commenced in December 2013 with ramp up to full capacity and fine tuning
expected to progress in the first half of 2014.
Transportation and
Logistics
Coal
Transportation
During 2013, the Group continuously focused on maximizing utilization of
its transport and logistics assets consisting of 272 km of paved road
connecting the Group’s mines to the border of Mongolia, 300 double-trailer
heavy haul trucks as well as coal storage and handling facilities at mine gates
and border of Mongolia that are all under the Group’s full control and
ownership.
Together, the Group maintained full capacity to handle and transport
about 12 Mtpa of coal, which was sufficient to move and handle coal products from
UHG and BN mines to the GM border port in China, via its coal handling, custom
bonded stockpile facility at Tsagaan Khad (“TKH”) on the Mongolian side of the
border.
As a result, the Group’s owned fleet has transported a total of 6.8 Mt
of coal on its main long-haul section between UHG and TKH, representing an
increase of 65.9% compared to 4.1 Mt transported on the same route in 2012 by
owned fleet.
In achieving this level of production on the long-haul section, the
Group was able to take complete control over the domestic movement of coal with
its own trucks, eliminating dependency on third party contractors on this
transportation section. Doing so required improvement in operational efficiency
of owned fleet and has consequently resulted in a significant reduction of unit
cost performance. Unit cost of transport per tonne in this sector decreased to
a record low USD8.1 per tonne, down by USD3.8 per tonne compared to the results
of USD11.9 per tonne in 2012, an improvement of 31.9% year-on-year. The
increased operational efficiency is demonstrable in roundtrip performance on
the long-haul section, where round trips per truck per month have increased
from an average of 12 in 2012 to 20 in 2013, an improvement of 66.7%.
Third party contractors continued to be utilized by the Group in 2013
for cross-border transportation between TKH and GM. Sufficient capacity and
control on coal movement across the border between Mongolia and China was
maintained to allow export transportation of approximately 5.8 Mt on this
short-haul section in 2013.
The Group has continued to support its heavy haul truck fleet which
maintained an average of 85.0% availability in the period reported, largely as
a result of facilities available at its dedicated 4,300 square metre truck
maintenance and repair workshop at UHG, and auxiliary service truck facility at
TKH completed in 2013.
The 240 km paved road between UHG and the GS border crossing in Mongolia
(the “UHG-GS Road”), has been relied upon by the Group as primary support infrastructure,
enabling delivery of products. With this infrastructure in place, the Group has
been able to achieve large improvements in transportation reliability and
efficiency, whilst third party coal and other freight movement on the UHG-GS
Road has been allowed via toll fee arrangement. The 32 km paved road between BN
and UHG mines has proven effective in maintaining capacity to support
interconnected operation of the BN and UHG mines, with the road allowing
efficient transport of coal from the BN mine to coal processing facilities at
UHG.
In addition to the expansion at the GS border checkpoint on the
Mongolian side, (co-funded jointly by the Group and Erdenes MGL in 2012), the
Group has seen infrastructure improvement at the GM border checkpoint on the
Chinese side in 2013. Improvement consisted of expansion of the truck
“wait-and-clear road” in direction of exit from GM toward Mongolia, as well as
commissioning of an extra five toll gate lanes, doubling capacity in operation
to ten lanes for truck in-and-out crossing. This improvement is expected to
increase border-crossing capacity at GS-GM to an estimated 25-30 Mtpa,
sufficient to eliminate potential bottleneck on both sides of the border
crossing, supportive of the Group’s operational objectives.
UHG-GS Railway
Resolution No. 121 of the GoM dated 3 November 2013, ordered
consolidation of various railway projects in Mongolia into a unified railway
project (the “Project”), to be managed and implemented under government
authority. In relation to this, the Group negotiated with the GoM, represented
by the MRT, the State Property Committee and MTZ, on measures to be taken
regarding implementation. Conditions of settlement were outlined in the
Agreement, executed and signed on 6 May 2013.
Pursuant to the Agreement, the Parties agreed upon terms and conditions
according to which the Concession Agreement, entered by and between the GoM and
the Group on 31 May 2012, was terminated. The major terms under the Agreement
are as follows:
• Compensation for all costs incurred by the Group in relation to the
construction of the UHGGS Railway confirmed and agreed MNT83,734,932,315, or
approximately USD50.6 million at balance sheet date exchange rate as at 31
December 2013;
• Parties will enter into negotiation regarding potential investment in
the Project. Depending on the outcome of the negotiation, the above
compensation amount could be converted into equity of a special purpose
enterprise to be established by the GoM to implement the Project and/or in cash;
• The Group will be granted access to 50% of the capacity of the UHG-GS
Railway; and
• Existing contracts and obligations for the construction of the UHG-GS
Railway will be reassigned to MTZ and/or its designated entity.
Following execution of the Agreement, the Group commenced discussion
with the GoM regarding potential investment into the Project in which the Group
has an option to convert its compensation amount into equity of the special
purpose enterprise where the GoM invites potential international and domestic
investors. In the meantime, related project documents and contracts along with
some project personnel have been transferred to the GoM and its contractors
from the Group.
Cross Border
Railway (GS-GM)
On 16 August 2013, the GoM adopted Resolution No. 299 regarding
necessary actions to be taken to support coal export of Mongolia. As part of
the support, the GoM decided to build narrow gauge (1,435 mm) cross border
railway at connecting the ports of GS in Umnugobi province and GM port in China
(“Cross border railway”), with target completion by end of 2014. Subsequently,
on 25 October 2013 the Group signed a Memorandum of Understanding with fellow
coal mining companies in the Tavantolgoi region, including Erdenes Tavantolgoi
and Tavantolgoi companies, as well as Shenhua Group Corporation of China, to
jointly develop the Cross border railway as a Consortium of Mongolia-China coal
companies. During an official visit by the Prime Minister of Mongolia to China on
25 October 2013, the Consortium signed a subsequent Memorandum of Understanding
with MTZ to develop the Cross border railway.
As of 31 December 2013, the Group has been in process of discussions
with Mongolian and Chinese counterparts in combined effort to implement the
Cross border railway, and has been in negotiation regarding potential
involvement in development of the project. Successful construction and
completion of this project should bring significant benefits to the Group,
principally improvement in efficiency and reduction in cost of short-haul cross
border coal transportation between TKH and GM. This, in conjunction with
immediate loading into rail wagons, will increase the cost competitiveness of
Mongolian sourced coal in the Chinese market and increase the capability for
geographical market penetration of the Group’s products in China. Increased
customer base will allow for improved strength in pricing negotiation and
general market ability to absorb increased production.
UHG-GS Paved Road
On 16 August 2013, the GoM adopted Resolution No. 299 regarding
necessary actions to be taken to support coal export of Mongolia. As part of
the support, the GoM decided to take over under state ownership the existing
UHG-GS Road along with the border crossing facilities at GS. This decision was
implemented under guidance from the Ministry of Economic Development where
Erdenes MGL was appointed to exercise state ownership with compensation payable
to the Group.
The UHG-GS Road was solely funded and constructed in 2011 by the Group
under Build-Operate- Transfer (“BOT”) concession rights for a period of 10
years. In order to implement this decision to take over the paved road and
transfer into state ownership prior to expiry of BOT term, the GoM appointed a
working group consisting of representatives of relevant ministries, including
Ministry of Economic Development, Ministry of Finance, MRT and Erdenes MGL, who
worked through August to November 2013 determining the amount of the
compensation payable.
Based on findings of the working group, the Group negotiated and agreed
with GoM on the compensation amount and signed the Agreement to transfer road
assets with Erdenes MGL on 8 December 2013. As agreed with the parties, the
Agreement to transfer road assets was to become effective on the date of actual
payment settlement, which was received on 13 February 2014, with all subsequent
legal documents executed. The Group received net consideration of
MNT157,847,184,615 as compensation, equal to approximately USD90.3 million as
of the date of receipt of payment.
The Group, together with prospective users of the paved road including
Erdenes Tavantolgoi and Tavantolgoi companies, agreed and signed a subsequent
Paved Road Operations and Maintenance Agreement (“O&M Agreement”) with
Erdenes MGL on 8 December 2013. Under the O&M Agreement, the Group will
continue to be jointly involved in the operations and maintenance of the paved
road via involvement in a special purpose joint venture company, to be
appointed and managed jointly by the mining companies using the road, whom are
ultimately responsible for the operation and maintenance of the road.
Transfer of the paved road to state ownership is expected to increase
efficiency of road utilization, as common infrastructure will effectively be
shared among mining companies, while decreasing unit cost of coal
transportation between UHG and Tavantolgoi coal mines to the GS border port.
The Group maintains unrestricted access to use the road capacity on
non-discriminatory, equal treatment basis.
Marketing and
Sales
In 2013, the Group continued to follow its main objective to produce and
sell washed coking and thermal coal products under its own brand name, further
strengthening its position as a reliable supplier of high quality coking coal
products and expanding its end-user customer base in the target market region,
within China. The Chinese market remains the Group’s primary destination for
its coking and thermal coal products, where the Group faced strong competition under
continued price pressure throughout the reporting period among global coking
coal exporters to China. Successfully, the Group established itself as the
leading exporter of washed coking and thermal coal from Mongolia, leveraging on
its competitive advantage of integrated coal production, processing, transport
and marketing platform, and accounted for 31.5% of total coal export from
Mongolia.
Further improvement in cost and efficiency in 2013 enabled the Group to
continue to improve its competitive position in its principal market against
global suppliers, and thus helped the Group to maintain its market and brand
name as a long term sustainable and reliable supplier.
Throughout 2013, the Group witnessed continued pressure in global coking
coal price. The ASP for the Group’s washed coking coal decreased 15.0% from
USD108.4 to USD92.1 per tonne DAP at GM. However, the Group was able to keep
relatively slower pace in such downward trend compared to the sharp decline in
price of 22.4% observed for equal quality coking coal in Tangshan area, a major
steel producing region of China. Besides continued pressure on price, increased
supply at seaborne market drove some Chinese coking coal consumers located in
coastal areas to buy more seaborne coal in preference to other sources. Such a
situation focused the Group to divert major supply from Hebei, Tangshan market
to more inland markets towards the second half of the year where prices were
less volatile than coastal areas.
Despite the challenging market condition, the Group was able to increase
sales volume of its primary product, washed HCC, to 4.3 Mt representing about
26.5% year-on-year growth, while keeping total volume of coal sales at 5.7 Mt
in 2013, including 1.3 Mt of washed thermal coal.
During 24 and 25 October 2013, the Prime Minister of Mongolia paid
official visit to China and held talks with the Prime Minister of China on
broader economic cooperation of Mongolia and China and signed an agreement
outlining key areas of cooperation for the development of strategic partnership
in the medium and long term between the two countries. As part of the
cooperation, during this visit Mongolian coal producers, including the Group,
signed a Memorandum of Understanding with Shenhua Group Corporation of China to
cooperate on export of 1 billion tonnes of coal in the next 20 years from
Mongolia to China. Moreover, Mongolian and Chinese companies agreed to create a
partnership, where the Group is member, to improve infrastructure capacity for
coal export between the two countries and signed a memorandum of understanding
with MTZ on 25 October 2013 in the presence of the Prime Ministers of Mongolia
and China.
The Group expects that significant rebound in steel and its upstream raw
material markets will not eventuate in 2014 unless global economic recovery
accelerates leading to significant impact on the China market, and/or the
Chinese government reconsiders stimulus measures to boost their domestic
economy.
As market sentiments change and infrastructural developments open more
opportunities, besides focusing on increasing its market share in the highest
selling price markets, the Company continues to explore potential new markets
that are emerging as result of enabling infrastructure developments.
Prospects:
In 2013, the global coking coal market continued to experience
significant downward pressure on coking coal prices due to increased supply and
the management expects that this trend will continue in 2014 as well. The
management maintains a positive outlook over the long term as the fundamentals
of demographics associated with increasing industrialization will continue to
create demand for steel across Asia and other emerging markets. However, the
industry will ultimately need to reach a more balanced equilibrium between
supply and demand, in order to see pricing improvement.
The management believes that with all major development project related
capital expenditure complete, liquidity improvement initiatives and maintenance
of competitive cost structure by virtue of its robust production profile and
efficient cost control measures, the Company is well positioned to demonstrate
sufficient flexibility to face headwinds in this more challenging environment.
The Company intends to pursue the following key strategies in order to
maintain and enhance its position as a leading Asian washed coking coal
producer: (i) maximizing assets utilization to drive unit fixed costs down;
(ii) supporting initiatives to improve transportation infrastructure and
capability, in particular cross border railway development, to gain access to
the Chinese railway network to reach customers in China; (iii) exploring
opportunities for expanding and diversifying its business operations through
potential strategic cooperation and joint ventures agreements; and (iv)
continuing its strong commitment to safety, the environment and socially
responsible operations.
In 2014, the Group will aim to maximize utilization of its CHPP capacity
by processing ROM coal sourced from the Group’s own mines and also neighbouring
mines under mutually beneficial contract washing cooperation arrangements.
Regarding transportation and logistics, the management will support
infrastructure development to enable further cost reductions, in particular the
cost of cross-border transportation between TKH and GM, with continued dialogue
in progress between Mongolian and Chinese authorities to build the cross border
railway.
The management will continue to strengthen existing and create new
long-term relations with its end-user customers. Additionally, the management
will actively look at strategic long term partnerships to expand its relations
and presence in China.
NAME : EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD)
Branch : MCS Plaza,3rd Floor
Street : Seoul Street – 4A
Town : Ulaanbaatar 210644
Telephone : (976 11) 317
974 / 317 298
Fax : (976 11) 315 844
The company also has an account with the following banks :
1. Entrepreneurial Development Bank of Netherlands
Anna van Saksenlaan 71
2593 HW, The Hague
P.O. Box 93060
Telephone: (31 70) 314 9696
Fax : (31 70) 324 6187
2. The German Investment and Development Company (DEG)
Kämmergasse 22
50676 Köln
Postfach 10 09 61
50449 Köln
Telephone: (49 221) 4986 0
Fax : (49 221) 4986 1290
3. The Standard Bank of South Africa Ltd.
Standard Bank Centre, 9th Floor
5 Simmonds Street
Johannesburg 2001
PO Box 7725
Johannesburg 2000
Telephone: (27 11) 636 9111
4. BNP Paribas Singapore
20 Collyer Quay No. 01-01
Singapore 049319
Telephone: (65) 6210 1288
Fax : (65) 6224 3459
5. Citibank, N.A.
Hong Kong Chinese Bank Causeway
Bay Centre, Ground & 1st Floors
42-44 Yee Wo Street
Telephone: (852) 2922 0188
Fax : (852) 2895 6337
6. The Bank of East Asia, Limited
10 Des Voeux Road Central, 10th
Floor
Hong Kong
Telephone: (852) 3608 3007
Fax : (852) 3608 6212
7. Standard Chartered Bank
GPO Box 21
Hong Kong
Telephone: (852) 2886 8868
8. ING Commercial Banking
Naiman Zovkhis Building, 3rd
Floor
Seoul Street 21, 1st Khoroo
Ulaanbaatar 14251
Telephone: (976 70) 115 196
9. Trade And Development Bank Of Mongolia
Khudaldaany Gudamj 7
Ulaanbaatar
Telephone: (976 11) 321 171
Fax : (976 11) 325 449
10.Golomt Bank of Mongolia
Main Branch
4th Floor, Sukhbaatar Square 3
Ulaanbaatar
Telephone: (976 11) 311 530 / 311
971 / 326535
Fax : (976 11) 311 958 / 312 307
11.Khan Bank of Mongolia
Seoul Street 25
PO Box 192
Ulaanbaatar 14250
Telephone: (976 11) 332 333
Fax : (976 70) 117 023
KPMG Audit LLC
Blue Sky Tower, 6th floor
Peace Avenue 17, Sukhbaatar District, 1 Khoroo
Ulaanbaatar 14240
Mongolia
Telephone : (976 70) 118
101
Fax : (976 70) 118 102
Balance sheets as at 31 December of 2013 showed applies to Mongolian
Mining Corporation (MMC) :
31/12/2013 31/12/2012 31/12/2011
(in thousands HKD)
ASSETS
Current Assets
Cash And Cash Equivalents 77,000 284,000 228,000
Net Receivables 145,000 131,000 92,000
Inventory 106,000 90,000 58,000
Other Current Assets 58,000 12,000 -
Total Current Assets 449,000 583,000 395,000
Long Term Investments 2,000 4,000 4,000
Deferred Long Term Asset Charges 22,000 19,000 10,000
Total Assets 1,899,000 2,177,000 1,628,000
LIABILITES & EQUITY
Liabilities
Current Liabilities
Accounts Payable 93,000 46,000 19,000
Short/Current Long Term Debt 991,000 1,114,000 562,000
Other Current Liabilities 72,000 81,000 94,000
Total Current Liabilities 433,000 418,000 554,000
Long Term Debt 744,000 842,000 145,000
Total Liabilities 1,338,000 1,425,000 859,000
Common Stock 646,000 646,000 646,000
Retained Earnings 120,000 177,000 180,000
Treasury Stock (205,000) (71,000) (57,000)
INCOME STATEMENT
Total Revenue 437,000 474,000 543,000
Cost of Revenue 335,000 386,000 288,000
Gross Profit 102,000 89,000 254,000
Total Operating Expenses 414,000 463,000 397,000
Operating Income or Loss 23,000 11,000 146,000
Earnings Before Interest & Taxes 23,000 11,000 146,000
Interest Expense (61,000) (49,000) (13,000)
Income Tax Expense 3,000 3,000 36,000
Net Income From Continuing Ops (58,000) (3,000) 119,000
Net Income (58,000) (3,000) 119,000
Financial year ends 31 December.
Date Started : 18 May 2010
History : The Company
was established in Cayman Islands on 18 May 2010.
Subject is registered in Cayman Islands but maintains its administrative
offices in Mongolia.
Hong Kong Stock Exchange Code No.: 975
UHG mining license No. : MV-11952
Authorised Capital : US
DLRS 37,050,000
Paid Up Capital : US DLRS
37,050,000
Limited Liability Company with the following directors and shareholders :
Directors
1. Odjargal Jambaljamts
(Mongolian national)
2. Battsengel Gotov
(Mongolian national)
3. Enkhtuvshin Gombo
(Mongolian national)
4. Od Jambaljamts
(Mongolian national)
5. Batsaikhan Purev
(Mongolian national)
6. Oyungerel Janchiv
(Mongolian national)
7. Unenbat Jigjid
(Mongolian national)
8. Ochirbat Punsalmaa
(Mongolian national)
9. Chan Tze Ching, Ignatius
(Chinese national)
Shareholders
Percentage
1. MCS Holding LLC
33.50%
Central Tower, 15th Floor
2 Sukhbaatar Square, Sukhbataar
District, SBD-8
PO Box 210620A
Ulaanbaatar 14200
Telephone: (976 11) 312 625
ext. 1546 / 311 079
E-Mail : azzaya.s@mcs.mn / n.zolo@mcs.mn
Tax No.: 2628236
MCS (Mongolia) Limited has the
following shareholders :
- Odjargal Jambaljamtsiin 49.84%
(Mongolian national / owns
49.84% through Novel
Holdings Limited, which is
wholly owned by him)
- Od Jambaljamtsiin 28.69%
(brother of the above)
- Enkh-Amgalan
Luvsantseren 3.19%
- Undisclosed 7
individuals 18.28%
2. Kerry Mining (Mongolia) Ltd 8.10%
3. Genesis Investment Management, LLP 6.00%
21 Grosvenor Place, London SW1X
7HU
United Kingdom
Telephone: (44 20) 7201 7200
4. Wellington Management Company, LLP 5.01%
One Exchange Square, 32nd Floor
Central
Hong Kong
Telephone: (852) 2846 6000
5. Odjargal Jambaljamts 4.98%
6. Shunkhlai Group LLC 4.94%
Capital House, 3rd
and 4th Floors
Chinggis Khan Avenue 48/1
Khan Uul District
Ulaanbaatar – 36
Telephone: (976 70) 073 333 /
073 003
Fax : (976 70) 073 002 / 074 444
E-Mail : info@shunkhlai.mn
Website : www.shunkhlai.mn
7. Tuya Danzandarjaa 3.05%
(Mongolian national)
8. Oyungerel Janchiv 3.05%
(Mongolian national)
9. Kerry Group Ltd 2.96%
Offshore Incorporations Centre
Road Town
P.O. Box 957
British Virgin Islands
10.Public
28.41%
Profile on MCS Holding LLC :
MCS Holding LLC, founded in 1993 as the first Mongolian private
consulting company in the energy sector, the MCS Group has successfully
expanded its business operations in such diversified fields, as energy and
infrastructure, information and communication technology, beverage
manufacturing and distribution, wholesale and retail, property development,
construction and printing. The MCS Group has 4,000 employees and has been
ranked as one of the top five taxpayers for the last consecutive years.
Personal Profile
on Odjargal Jambaljamtsiin :
Odjargal Jambaljamtsiin graduated from the Polytechnic Institute, Kiev,
in 1989, Mr. Odjargal worked as an engineer at the Energy Bureau in Mongolia
for a few years before setting up his own engineering company in 1993. He has a
MBA from Maastricht School of Management.
Od Jambaljamtsiin
:
Mr. Od, the older brother of Mr. Odjargal, graduated from Moscow
University of Foreign Relations with a bachelor˙s degree and from Oxford School
of Foreign Service with a master˙s degree and had served as a diplomat for many
years before joining the company.
Personal Profile
on Batsaikhan Purev :
Batsaikhan Purev, aged 45, is a non-executive Director of the Mongolian
Mining Corporation LLC. He was appointed as a non-executive Director of the
Mongolian Mining Corporation LLC on 16 September 2010. He is a representative
of Shunkhlai Mining, a shareholder of the Company. He is a founder of Shunkhlai
LLC, one of the first private companies in Mongolia and one of Mongolia’s
largest petroleum companies. He has been the General Director of Shunkhlai LLC
and Shunkhlai Group LLC, and an Executive Director of Shunkhlai Mining LLC
since 1993. Mr. Purev was appointed as the Chairman and President of Shunkhlai
Group LLC on 11 January 2012. He is a Chairman of APU Company, a company listed
on the Mongolian Stock Exchange. Mr. Purev was awarded a bachelor’s degree in
mechanical engineering by the Mongolian Technical University.
Affiliated
companies of the Mongolian Mining Corporation :
Associates
1. Khangad Exploration LLC
Central Tower, 16th Floor
2 Sukhbaatar Square, 8 Khoroo,
Sukhbaatar District
Ulaanbaatar 14200
Telephone: (976 70) 122 279 /
132 279
Fax : (976 70) 111 399 / 132 279
E-Mail : ankhbayar.nergui@bncoal.mn
Est.: 23 February 2006
Tax No.: 2887134
License No. : MV-14493 (for the
BN Coking coal deposit)
Capital : TUGRIK 42,491,100,000
Sole shareholder: Baruun Naran
S.a.r.l. (Luxembourg)
2. MCS (Mongolia) Limited
British Virgin Islands
3. MCS Group Limited
Offshore Incorporations Centre,
P.O. Box 957
Road Town
Tortola
British Virgin Islands
Sole shareholder: MCS Holding
LLC
(Liquidated in 2012)
4. MCS Mining Group Ltd
Central Tower, 15th & 16th
Floors
2 Sukhbaatar Square, 8 Khoroo,
Sukhbaatar District
Ulaanbaatar 210620A
Telephone: (976 11) 312 625
Fax : (976 11) 312 625
C.R. No.: 26456309
Sole shareholder: MCS
(Mongolia) Limited
Registered address: Offshore
Incorporations Centre,
Road Town, Tortola P.O. Box
957, British Virgin Islands
5. Erchim Suljee LLC
MCS Anun Center
Chinggis Avenue
Khan-Uul District, 3rd Khoroo
Ulaanbaatar 210136
Telephone: (976 11) 346 464
Fax : (976 11) 346 262
6. Uniservice Solution LLC
Central Tower, 9th Floor,
Office 907
2 Sukhbaatar Square, Sukhbataar
District, SBD-8
Ulaanbaatar 210620a
Telephone: (976 70) 113 360 /
113 360 / Mobile (976 88) 111 940
(Oyunbileg Sharav) / (976 88)
100 309
Fax : (976 70) 113 359
E-Mail : info@uss.mn / oyunbileg.sh@mcs.mn
Managing Director : Ts.
Altantsetseg
Est.: 1 April 2005
Tax No.: 2878593
7. Spirt Bal Buram JSC
Mandal Sum
Selenge Aimag
Telephone: (976 11) 311 079
Fax : (976 11) 312 175
E-Mail : eldevoch@mcs.mn
8. Interpress Co Ltd
MCS Plaza, 1st Floor
Seoul Street 4
Ulaanbaatar 210644
Telephone: (976 11) 326 898 /
Mobile (976 99) 118 668
Fax : (976 11) 329 474
E-Mail : interpress@magicnet.mn
9. MCS Properties Holding LLC
Central Tower, 14th Floor
2 Sukhbaatar Square, Sukhbataar
District, SBD-8
Ulaanbaatar 210620A
Telephone: (976 11) 328 942 /
315 244
Fax : (976 11) 321 656
President: Od Jambaljamtsiin
Employees: 50
10.Anungoo Co Ltd (Procter & Gamble)
MCS Plaza, 2nd Floor
Seoul Street 4
Ulaanbaatar 210644
Telephone: (976 11) 961 619
Fax : (976 11) 312 175
E-Mail : anungoo@mcs.mn
11.MCS International LLC
MCS Anun Center
Chinggis Avenue
Khan-Uul District, 3rd Khoroo
Ulaanbaatar 210136
Telephone: (976 77) 226 363 /
226 6264
Fax : (976 77) 226 030
Est.: 1 April 1996
C.R. No. : 9011035035
Tax No.: 2090007
Capital : TUGRIK 700,000,000
Sole shareholder : MCS Holding
LLC
12.MCS Gyals Medical Centre
1st Floor
Russian Hospital
Jukov Ave.131
Bayanzurkh district
Ulaanbaatar
Telephone: (976 99) 112 603 /
(11) 457 781
Fax : (976 11) 451 807
E-Mail : mcsInter@mcs.mn
13.Unitel LLC
Central Tower, 8th Floor
Sukhbatar Square 2
Sukhbatar District 8
Ulaanbaatar 210620A
Mongolia
Telephone: (976 11) 331 730
Fax :
(976 11) 330 708
E-Mail :
bayarbakhdal@unitel.mn
Est.: 5 October 2005
C.R. No.: 482106
14.MCS Coca Cola LLC
MCSCC Plant
Peace Avenue, Gachuurt Road 104
Amgalan 13260, Bayanzurkh
District, 10th Khoroo
Ulaanbaatar
Telephone: (976 70) 165 555 /
Mobile (976 88) 111 399 (Myagmarjav
Luvsandash) / (976 88) 117 501
(Khandaa Tsedendamba)
Fax : (976 70) 165 500
E-Mail :
khandaa.ts@mcscocacola.mn /
myagmarjav.l@mcscocacola.mn
Website : www.mcscocacola.mn
Est.: 26 July 2001
C.R. No. : 9011080120
Tax No.: 2663503
Capital : TUGRIK 5,000,000,000
Sole shareholder : MCS Holding
LLC
15.Mon Sat Co Ltd
MCS Plaza, 3rd Floor
Seoul Street 4
Ulaanbaatar 210644
Telephone: (976 11) 312 625
Fax : (976 11) 312 175
16.Orbitnet Co LLC
Central Tower 14/F
Sukhbaatar Square No. 2
Sukhbaatar District, SBD-8
Ulaanbaatar-210620A
Telephone: (976 11) 323 705
Fax : (976 11) 312 699
17.Officenet LLC
MCS Plaza, 3rd Floor
Seoul Street 4
Ulaanbaatar 210644
Telephone: (976 11) 344 931
Fax : (976 11) 312 175
18.Goyo Co Ltd
MCS Plaza, 3rd Floor
Seoul Street 4
Ulaanbaatar 210644
Telephone: (976 11) 342 531
Fax : (976 11) 344 015
19.Shangrila Hotel
Ulaanbaatar
Telephone: (976 11) 326 602
Fax : (976 11) 326 643
20.Orchlon School
Ulaanbaatar
Telephone: (976 11) 353 519
Fax : (976 11) 354 115
21.Orchlon Club
Ulaanbaatar
Telephone: (976 11) 354 327
Fax : (976 11) 354 326
22.MCS Distribution LLC
Ulaanbaatar
Telephone: (976 11) 345 234
Fax : (976 11) 345 460
23.Energy Resources LLC
Central Tower
2 Sukhbaatar square, SBD-8
15th floor
Ulaanbaatar 210620A
Telephone: (976 70) 122 279 /
132 279
Fax : (976 11) 322 279
Tax No.: 2887746
Capital : US DLRS 26,200,370
24.Global Energy
Ulaanbaatar
Telephone: (976 11) 311 079
Fax : (976 11) 312 175
25.Medimpex
Ulaanbaatar
Telephone: (976 11) 310 429
Fax : (976 11) 318 254
26.Irish Pub Grand Khaan
Ulaanbaatar
Telephone: (976 11) 336 666
Fax
: (976 11) 330 995
27.MCS - APB LCL
Ulaanbaatar
Telephone: (976 11) 464 304
Fax : (976 11) 464 306
28.Sky Resort
Ulaanbaatar
Telephone: (976 11) 311 079
Fax : (976 11) 311 079
29.MCS Estates LLC
Ulaanbaatar
Telephone: (976 11) 311 079
Fax : (976 11) 312 175
Est.: 11 November 2011
30.Green Catering LLC
14th Floor, Central Tower
Ulaanbaatar
Mongolia
Telephone: (976 11) 314 411
Fax : (976 11) 314 411
Est.: 2008
31.MCSCom LLC
Central Tower, 14th Floor
Sukhbaatar Square No. 2
Sukhbaatar District, SBD-8
Ulaanbaatar 210620A
Telephone: (976 11) 323 705
Fax : (976 11) 312 699
32.MCS Anun LLC
1st floor, Building M-100
Chingeltei District
Ulaanbaatar
Telephone: (976 11) 312 908 /
312 938
Fax : (976 11) 312 907
33.Chinggiz Eco Tour Co Ltd
MCS Plaza, 5th Floor
Seoul Street 4
Ulaanbaatar 210644
Telephone: (976 99) 115 153
Fax : (976 11) 312175
34.Devshil-Trade Co Ltd
Sonsgolon
Bayangol District
Ulaanbaatar
Telephone: (976 11) 632 964 /
631 539
Fax : (976 11) 631 709
E-Mail : deb_enkh@mcs.mn
35.Zuunkharaa Trade Co Ltd
MCS Coca-Cola Plaza
Chingis Avenue
Khan Uul district
Ulaanbaatar-19
Telephone: (976 11) 345 234
Fax : (976 11) 345 228
36.Glamour LLC
Ulaanbaatar
37.MCS Health LLC
38.SBB Trade LC
39.MCS Armor LLC
40.MCS Metals LLC
41.Enerko LLC
MCS Anun Center
Chinggis Avenue
Khan-Uul District, 3rd Khoroo
Ulaanbaatar 210136
Telephone: (976 11) 346 464
Fax : (976 11) 346 262
42.MCS Tour Co Ltd
MCS Plaza, 5th Floor
Seoul St 4
Ulaanbaatar 210644
Telephone: (976 99) 115 153
Fax : (976 11) 312175
E-Mail : MCSTour@mcs.mn
(dormant)
43.Mongolian Coal Corporation Limited
Three Pacific Place, Level 28
1 Queen’s Road East
Hong Kong
Capital : HK DLRS 1
44.Mongolian Coal Corporation S.a.r.l.
Luxemburg
Capital : EURO 31,000
45.Baruun Naran Limited
Gibraltar
46.Energy Resources Corporation LLC
Mongolia
Capital : US DLRS 100,000
47.Energy Resources Rail LLC
Central Tower, 16th Floor
2 Sukhbaatar Square, 8 Khoroo,
Sukhbaatar District
Ulaanbaatar 14200
Telephone: (976 70) 122 279 /
132 279
Fax : (976 70) 111 399 / 132 279
Chief Executive Officer :
Oyunbat Lkhagvatsend
Employees: 100
Est.: 8 July 2008
Tax No.: 5241111
Capital : TUGRIK 10,700,000,000
Sole shareholder : Energy
Resources LLC
(Engages in management of railway project and
responsible for the
implementation of the
construction of the railway base
infrastructure)
48.Enrestechnology LLC
Central Tower, 16th Floor, West
Wing
2 Sukhbaatar Square, 8 Khoroo,
Sukhbaatar District
Ulaanbaatar 210620a
Telephone: (976 70) 122 279
Fax : (976 70) 132 279
Chief Executive Officer :
Davaakhuu Chultem
Est.: 25 June 2009
Tax No.: 3614107
Capital : 3,466,163,000
49.Energy Resources Mining LLC
Central Tower, 15th Floor
2 Sukhbaatar Square, 8 Khoroo,
Sukhbaatar District
Ulaanbaatar 210620a
Telephone: (976 70) 122 279
Fax : (976 70) 132 279
Est.: 23 December 2008
Capital : US DLRS 1,000
(Responsible for the mining and technical
operations of the UHG
deposit)
50.Transgobi LLC
Mongolia
Capital : TUGRIK 9,122,641,836
51.Tavan Tolgoi Airport LLC
Mongolia
Capital : TUGRIK 3,475,379,000
52.Energy Resources Road LLC
Mongolia
Capital : TUGRIK 1,000,000
53.International Technical College LLC
Mongolia
54.Public Service LLC
Mongolia
Capital : TUGRIK 20,000,000
55.Ukhaa Khudag Water Supply LLC (frmly United Water LLC)
Mongolia
Est.: 24 June 2009
Capital : TUGRIK 1,000,000
56.United Power LLC
Mongolia
Capital : TUGRIK 3,025,219,000
57.Gobi Road LLC
Mongolia
Capital : TUGRIK 1,000,000
Affiliated
companies of Shunkhlai Group LLC :
Subsidiary
Hyundai Motors Mongolia LLC
Uildver Street 79, Uildver-1/17062
Khan-Uul District, 3rd Khoroo
Ulaanbaatar 17032
Telephone: (976 50) 111 212 / (976 88) 106 668
Fax : (976 50) 111 214
Est.:12 December 2009
Tax No.: 5327547
Associates
1. APU JSC
APU Building
Chinggis Khan Avenue 14
Khan-Uul District
P.O.Box No.: 17040
Ulaanbaatar-36
Telephone: (976 11) 344 347 /
344 346
Fax : (976 11) 343 063
Chairman : Batsaikhan Purev
Employees: 816
Est.:18 May 1992
C.R. No. : 9010001005
Tax No: 2702673
Capital : TUGRIK 67,088,228,479
2. KIA Motors Mongolia LLC
13th khoroo, Bayanzurkh
District
Ulaanbaatar
Telephone: (976 50) 111 216
3. Mongolia Hyundai Automotive LLC
Enkhtaivan Avenue, 20th Khoroo,
Bayangol District
Ulaanbaatar
Telephone: (976 70) 181 863 /
181 862
Fax : (976 70) 181 863
E-Mail : info@mongolhyundai.mn
4. APU Trading LLC
Capital House
Chinggis Khan Avenue 48/1
Khan Uul District
Ulaanbaatar - 36
Telephone: (976 70) 071 001
Fax : (976 70) 072 004
Managing Director: P. Batchimeg
Est.: 18 December 2006
(Wholesale beverages and
alcoholic products)
5. Gobi Oil LLC
6. Shunkhlai Mining LLC
(Shunkhlai Mining)
7. NTS Ltd
Formerly
affiliated company of Shunkhlai Group LLC :
Mongol Post Bank
Kholboochdyn Street 4
P.O Box 874
Ulaanbaatar 13
Telephone: (976 11) 310 103 / 311 270
Fax : (976 11) 328 501
The Company is involved in the following activities :
Producers, distributors and exporters of coal.
NACE Code : 510
Exports mainly to China.
The Company has the following facilities :
Owned premises comprising administrative offices located at the heading office
as well as several manufacturing units located throughout Mongolia as well as
branch office located in Hong Kong (see ‘Branch Offices’ section below).
Subject is registered in Cayman Islands but maintains its administrative
offices in Mongolia.
Cricket Square
Hutchins Drive
PO Box 2681
Grand Cayman
KY1-1111
Cayman Islands
1. Ukhaa Khudag (UHG)
Tavan Tolgoi
Southern Gobi
2. Baruun Naran
Khankhongor soum of Umnugobi
aimag
3. Level 54
Hopewell Centre
183 Queen’s Road East
Hong Kong
Interviewed : Enkhtuya Galaanyen (Assistant to Chief Legal Counsel).
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.59.06 |
|
UK Pound |
1 |
Rs.99.61 |
|
Euro |
1 |
Rs.80.60 |
INFORMATION DETAILS
|
Analysis Done by
: |
RAS |
|
|
|
|
Report Prepared
by : |
SDA |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
|
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
|
26-40 |
B |
Capability to
overcome financial difficulties seems comparatively below average. |
Small |
|
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
|
-- |
NB |
New Business |
-- |
|
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.