Mongolia has been in the process of negotiating several important stability agreements with international mining developers in recent years. Since the beginning of 2009, Ikh Hural (the Mongolian Parliament) has been negotiating the final stages of a stability agreement with Ivanhoe Mines Ltd of Canada in respect of one of the world’s largest untapped gold and copper mines, Oyutolgoi, with plans to complete a similar arrangement in respect of a large coal mine at Tavantolgoi.

 Arrangements in respect of Oyutolgoi, situated near the Mongolian-Chinese border in Umnogovi Aimag, have 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 has emphasised the urgency of establishing a stability agreement and signing the agreement into law. With the presidential elections set for May 25, 2009, many observers expect the government will shortly have all the pieces in place to finish the first major agreement concerning Oyutolgoi. 

 Concurrently with the Oyutolgoi stability agreement, the government has embarked on the tender process for Tavantolgoi, a world class coal deposit.  This deposit is also situated near the Mongolian-Chinese border and in relatively close proximity to Oyutolgoi.  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.