TT valued at 10 billion USD by government of Mongolia

According to official website of Government of Mongolia on May 30, 2012 ( cabinet meeting determined nominal price of a unit of share of Erdenes Tavantolgoi.

“Within framework of organizing work of selling and purchasing shares of Erdenes Tavantolgoi Joint Stock Company between citizens and enterprises it has been resolved by Cabinet meeting that 1072 shares of the company are to be equal to 1 million MNT and nominal price of a share is to be 933 MNT. To validate ownership of the shares record is to be made in Human Development Recordbooks of citizens.  Prime Minister noted that principle of fair distribution of natural resources has been determined and the foundation laid.”

“One million MNT has been started being issued to 363 thousand senior and developmentally challenged citizens through Human Development Fund since last week. Work is in full progress to successful completion. Work is being done to complete issuance of cash within June.”

“Government implemented promise of share and bounty of 1,5 million MNT that was included in its action promise.”

“Prime Minister noted that opportunity is opening for enterprises to purchase shares at the price specified by cash.”

On 1/4/2011 representatives of Government taskforce, State Property Committee and Erdenes MGL LLC on joint media briefing about TT progress have said that Erdenes Tavan Tolgoi(TT) LLC, subsidiary of Erdenes MGL LLC that possesses of TT licenses, has 15 billion shares.

Therefore, nominal price of Erdenes Tavantolgoi Joint Stock Company as determined by Government of Mongolia is 13.995 trillion MNT. Using today’s Bank of Mongolia reference exchange rate of 1315.84 the price is 10.63 billion USD.

 Helen Lau, Senior Analyst /Metals and Mining) of UOB Kay Hian (Hong Kong) Research commented to Frontier Securities:

"That puts ETT value at US$5.4/tonne of reserve, in line with MMC's US$5.9/tonne of reserve. I think the valuation of US$10bn is reasonable. But if it is to IPO this year, investors may ask for lower valuation as market sentiment is poor...investors may want to price in a lower coal price assumption, hence lower valuation of ETT. "

We view valuation by Government in context of elections and Government fulfilling its election promises.


 According to major Mongolian daily “Udriin Sonin” on May 31,2012  General Taxation Agency of Mongolia informed that ETT shares are for sale to tax payer enterprises starting June 1,2012. Top amount of shares for sale per one enterprise is 36240 shares and price is 933MNT. After placing funds in Central Depository for Securities Payments and Settlements enterprises can buy the shares. Enterprises are informed that until secondary trading begins enterprises cannot sell shares to others. Only Government can buy shares from enterprises on the primary market.


 We understand that according to copy of Law on the Regulation of Foreign Investment in Entities operating in Strategic Sectors provided by Ministry of Foreign Affairs and Trade of Mongolia on May 24,2012 ( and approved by Parliament of Mongolia on May 17,2012

  • “Making an investment” applies to the purchase and transfer of shares of foreign registered companies of an entity operating in the strategic sector.Therefore, as ETT operates in strategic sector making investment into foreign registered company of ETT would be covered by the Law
  • Any foreign state owned investor such China Investment Corporation, GIC, Temasek and so on and investors with foreign state participation would have to get permission to invest through Mongolian registered enterprise
  • Government will resolve issue of issue of investment in the amount more than 100 billion MNT(76 million USD – Frontier Securities)
  • Furthermore, investors desiring certain transactions with ETT would have to get permission from the Government such as acquiring one third or more shares, appointing management and the board, management decision making, reducing amount of shares and others