The signing of the underground mine development and financing plan has attracted favourable comments from foreign companies with exploration projects in Mongolia as well as from mining commentators.
Berwin Leighton Paisner law firm partner Marius Toime says, “The importance of Oyu Tolgoi to Mongolia’s future cannot be overstated. This agreement with Rio Tinto after over two years of negotiation will give much-needed assurance to foreign investors and will also be transformative for Mongolia’s economy.
“The focus will now be on finalizing the project finance for the second phase of the mine and securing the necessary permits for development. Of course this cannot happen overnight, but the announcement may well be enough for investors who have been waiting on the sidelines.
“Prime Minister Saikhanbileg has stated that Mongolia is ‘back to business’. While this agreement is clearly a positive step, there are still concerns within the business community around inflation, regulatory changes and political instability ahead of the 2016 elections. The government needs to continue working with the private sector to build critical infrastructure to support the country’s future growth.”
Kincora Copper says resolution of this long standing and high profile dispute is another significant positive development for investors under Mongolian Prime Minister Saikhanbileg’s leadership since forming an unprecedented super coalition Government in November 2014.
President and CEO Sam Spring says, “Since 2012 a number of legislative and political issues, coupled with select high profile government disputes, have caused a collapse in foreign direct investment, asset valuations and reduced the ability of the declining number of interested groups to gain exposure to high quality projects in Mongolia’s minerals sector.
“Resolution of shareholder matters relating to the next stage of Oyu Tolgoi’s development will address the final of three significant items of push back that we have recently received from potential investors, following resolution of the 106-licence dispute and reform to the Minerals Law (including lifting of the moratorium for issuing new exploration licences). The improved Mongolian environment provides the foundation again for new entrants and increased activities, albeit within the context of difficult current global market conditions.”
Aspire Mining has welcomed the signing of the agreement, which it says provides a conducive environment to attract foreign investment to the country, which could in turn benefit Aspire as it progresses the Aus$6 million capital raising. It also bodes well for Aspire’s Ovoot and Nuurstei coking coal projects as well as the key Erdenet to Ovoot Railway.
Managing director David Paull says the plan represents a key milestone for Mongolia and confirms the country as an attractive jurisdiction for large-scale capital investment. “The timing of this announcement is fortuitous given that Aspire is conducting a prospectus based capital raising seeking to raise up to Aus$6 million.
The agreement is, in the opinion of Erdene Resource Development Corp’s executive management, a very significant milestone for Mongolia and all stakeholders involved in its mining industry. “This achievement signals that the Government of Mongolia is supportive of the mining industry and the foreign investment required to bring mineral deposits to production,” it said in a statement.
“This agreement is the most recent of a number of actions taken by the government in support of the mining industry over the past 24 months including favourable legislative changes and a re-opening of the mineral licensing system within which Erdene is actively participating.
“Erdene regards this announcement as confirmation by the government of its renewed commitment to promote the exploration and development of its vast mineral potential.”