T. Dorjbal Commercial Director, Mongolrostsvetmet LLC. Mongolia: Growing source of fluorspar

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1 T. Dorjbal Commercial Director, Mongolrostsvetmet LLC Mongolia: Growing source of fluorspar November 2011

2 Content Mongolia fluorspar properties and reserve Fluorspar processing capacities of Mongolia Fluorspar export of Mongolia Main consumers of Mongolian fluorspar Potential new projects Government policy towards fluorspar mining and processing

3 Fluorspar properties and reserves There are 139 fluorspar deposits and more than 700 fluorite occurrences in Mongolia. Approved ore reserves -57,5 Mt. Number of mining licenses Number of exploration licenses Mining license s area (hectare) Number of entities dealing with fluorspar mining 139 OVER

4 Fluorspar properties and reserves 5 fluorspar mineralization districts in south-eastern Mongolia. No Fluorspar mineralization districts Estimated ore resources (million t) CaF2 content (million t) 1 Bor-Undur fluorspar district Khar Airag fluorspar district Berkh fluorspar district Dornod fluorspar district Urgen fluorspar district Other zones Total

5 Fluorspar deposits and occurrences in Mongolia

6 Fluorspar processing plants in Mongolia (ascending by capacity) No Name of processing plants Bor-Undur plant, Mongolrostsvetmet LLC, commissioned in 1981 Kevin invest LLC, commissioned in 2009 Yantai Uul LLC, commissioned in MIMC, commissioned in 2009 Annual production capacity 130,000 t, whole year operation 25,000 t (25,000 t expansion capacity in progress), seasonal operation 20,000 t, seasonal operation 20,000 t, seasonal operation Product type FF-95, FF-97 Acid grade filter cake (dry and wet) 97% Acid grade filter cake (wet) 97% Acid grade filter cake (dry) 95-97% Acid grade filter cake (wet)

7 Fluorspar processing plants in Mongolia (ascending by capacity) No Name of processing plants Annual production capacity Product type 5 North wind LLC, commissioned in ,000 t, seasonal operation 95-97% Acid grade filter cake (wet) 6 Chuluut international LLC, pilot test under progres 20,000 t, seasonal operation 95% Acid grade filter cake (dry and wet) 7 Boston International LLC), under construction Not defined, /up to t, seasonal operation/ 95% filter cake 8 Resource Min Kom LLC, under construction Not defined, /up to t, seasonal operation/ 95% filter cake

8 Product type Fluorspar export Tonnage (000 t) Share in total Tonnage Share in total tonnage (%) (000 t) tonnage (%) 35-70% CaF2 lump % % 75% CaF2 lump 80-92% CaF2 lump 95% acid grade % % 97% acid grade % Total % % % %

9 Leading fluorspar exporters of Mongolia (as of 2010) Exporters Tonnage (000 t) Share in total export (%) 1 Mongolrostsvetmet 163,4 40,3 % of which: CaF2-75% (metgrade) 23.4 CaF2-95% (acid grade) CaF2-97% (acid grade) 13.2 wet (12,0 dry) 2 Amintsetseg 18,8 4,6 % of which: CaF2-75% (metgrade) 2,6 CaF % (metgrade) Kevin Invest 17,4 4,3 % of which: CaF2-95% (acid grade) 1,6 CaF2-97% (acid grade) Adil Och 14,4 3,6 % of which: CaF2-65% 12,8 CaF2-75% (metgrade) 1,3 CaF2-85% (metgrade) 0,3

10 Leading fluorspar exporters of Mongolia (as of 2010) (cont d) Exporters Tonnage (000 t) Share in total export (%) 5 Mongolczechmetal 13,8 3,4 % of which: CaF2-75% (metspar) 9,5 CaF % (metspar) 4,3 6 Bujgar ord 13,5 3,3 % of which: CaF2-65% 2,5 CaF2-75% (metspar) 8,4 CaF2-85% (metspar) 2,6 7 Mongolrudprom 12,3 3,0 % of which: CaF % 2,7 CaF2-75% (metspar) 8,2 CaF % (metspar) 1,4 8 Naimgan ord CaF2-75% 11,8 2,9 %

11 Leading fluorspar exporters of Mongolia (as of 2010) (cont d) Exporters Tonnage (000 t) Share in total export (%) 9 North wind 10,7 2,7 % of which: CaF2-75% (metspar) 0,1 CaF % (metspar) 2.9 CaF % (acidspar) 7,7 10 Yantai uul 10,7 2,6 % of which: CaF2-95% (acid spar) 9,0 CaF2-97% (acid spar) 1.7 Others (35 companies) 118, % of which: CaF % 6,0 CaF2-75% (metspar) 47.9 CaF % (metspar) 73.9 CaF2-95% (acid spar) 1.0

12 Product type Fluorspar export of Mongolia in I half year of 2011 Number of exporters Tonnage (000 t) Share in total tonnage (%) 35-70% CaF2 6 lump % 75% CaF2 lump % 80-92% CaF2 32 lump % 95% acid grade % 97% acid grade % SUM

13 Fluorspar export of Mongolia in I half year of 2011 by countries Countries (type of fluorspar products) Tonnage (t) Share on total export volume (%) 1 Russia ,6% Of which: Acidspar 95%-97% ,3% Metspar 80%-92% ,2% Metspar 75% ,6% Fluorspar ore 35%-65% ,5% 2 China ,4% Of which: Acidspar 95%-97% ,4% Metspar 80%-92% ,4% Metspar 75% ,5% Fluorspar ore ФК ,1%

14 Fluorspar export of Mongolia in I half year of 2011 by countries Countries (type of fluorspar products) Tonnage (t) Share on total export volume (%) 3 Ukraine ,9% 955,2 Of which: Acidspar 95%-97% 375, ,2% 170,7 Metspar 80%- 92% 155, ,6% 194,6 Metspar 75% 138, ,0% 544,0 Fluorspar ore ФК-45 87,8 64 0,03% 5,6

15 Fluorspar export of Mongolia in I half year of 2011 by countries Countries (type of fluorspar products) Tonnage (t) 4 South Korea (Metspar 85%) Hungary (Metspar 85%) Turkmenistan (Metspar 85%) Moldova (Metspar 85%) Kyrgyzstan (Metspar 75%) Thailand (Acidspar 95%) Japan (Metspar 98%) Azerbaijan (Metspar 92%) Germany (Acidspar 97%) 63 ИТОГО (cont d)

16 Significant Russian consumers of Mongolian fluorspar products 2010 Companies Product type (application) 1 RUSAL 2 Halopolymer 3 Angarsky Electrolysis chemical plant 4 Siberean chemical plant 5 OAO Seversteel Acid grade (Aluminum industry) Acid grade (Chemical and polymer industry) Acid grade (Chemical industry) Acid grade (Chemical industry) Metallurgical grade (Metallurgical industry) Tonnage (000 t)

17 Significant Russian consumers of Mongolian fluorspar products 2010 Companies OAO Novolipetsky metallurgical plant ОАО Magnitogorksky metallurgical plant ОАО Chelyabinsky metallurgical plant 9 ОАО Ural Steel Product type (application) Metallurgical grade (Metallurgical industry) Metallurgical grade (Metallurgical industry) Metallurgical grade (Metallurgical industry) Metallurgical grade (Metallurgical industry) Tonnage (000 t)

18 Two potential new projects Dzuun tsagaan del fluorspar deposit 4.4 million tons of fluorspar ores in category C 1 +C 2 underground ore body. /Former Soviet Union standard / Fluorspar ore grading is 29.10% with an average CaCO3 content of 7.39%. Mining license Mineral resources of fluorspar deposit were approved by the Council of Mineral Resources under the Ministry of Mineral Resources and Energy of Mongolia. Feasibility study prepared by Mongolian Mining Institute

19 Two new projects Ujgen fluorspar deposit Mining operation since Still in operation Ore reserve 4.0 million tons of fluorspar ores in category C 1 +C 2 by former Soviet Union Standard Fluorspar ore grading is 35-36% with an average CaCO 3 content of 13% in some ore bodies. Possibilities to increase ore reserve by conducting additional geological exploration work Feasibility study of Urgun mine -prepared Environmental assessment report - carried out.

20 Government policy No export tax Royalty: 5 % of sales revenue. Income tax: 10% up to 3 billion tugrik equal to 3 million USD 25% exceeding from 3.0 mln. revenue Social insurance - 10% Mining License fee -15 $/per ha