ASIA PACIFIC INVESTMENT ADVISORY GROUP

ISSUES and SOLUTIONS for NATURAL RESOURCES INVESTMENT IN MONGOLIA

2015April

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BCM Summit 2016Apr

APIAG is an independent investment banking firm providing financial advisory services, including merger and acquisition and capital raising assistance, exclusively to clients in the energy and natural resources sector.

Strategic Technical Commercial M&A and divestment

Sector and Country reviews Strategic assessment of Corporate and BU plans for private and listed companies Privitization of government-owned mining companies Development and restructuring of national mining laws

• Development of corporate, operating, engineering, and human resource policies, procedures, and organizational structures

Advisory to mining and business associations

Leadership and review of conceptual, scoping, pre-feasibility and feasibility studies Planning and monitoring of mineral exploration programs Evaluations and consulting for: • Resource and reserve reports • Mine plans, including equipment

selection • Metallurgical and mineral processing flow sheets and equipment selection • Chemical facilities • Environmental and sustainability

program Optimization reviews for productivity improvements and cost reductions

Risk assessments, including political, financial, and technical Strategy formulation for negotiation of contractual agreements, such as mergers, acquisitions, and mineral sales contracts Business and financial cash flow modelling Market surveys for mineral products Expert witness testimony for technical and commercial issues

Independent and owners’ engineer services Valuations of mineral properties, reserves, mines, mineral processing facilities, and chemical plants Due diligence reviews in support of financings, investment decisions, acquisitions, dispositions, and mergers

Preparation of technical documents required for listings on the various global stock exchanges

Statement of Qualifications APIAGPte.LtdO;ffice06-00,SingaporeLandTower50RafflesPlaceSingapore,048623

ManagingPartner

andC.E.O.

DavidRohanna

EnergyFuels IndustrialMineralsMetallurgicalCoals DiamondsIronOre RareEarthsSteelmaking OilandconventionalgasBaseMetals UnconventionalgasPreciousMetals CTLandCTGMinorMetals Experiencecoversallcontinents

2015April

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2015April

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“…a careful owner, before buying shares, should visit the mine, and carefully examine the nature of the vein, as it is very important that he be on his guard to avoid being victim of dishonest sellers of shares seeking to defraud him” “De Re Metallica”-Georgius Agricola, 1556

2015April

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Exploring the Investment Criteria

Is it about the investor’s risk appetite or all about relationships?

2015April

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“Never have people been more the masters of their environment. Yet never has a people felt more deceived and disappointed. For never has a people expected so much more than the world could offer.” Daniel Boorstin, The Image (1961)

2015April

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In brief, lower growth means less room for error

Deflation, Divergence and Deleveraging

Reflation, Realignment and Re-levering

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Four Issues Which are Driving the Current Global Investment Paradigm

2015April

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I. Return to Fundamentals

u Geology and Resources

u Grade

u Exploitation and Beneficiation

u OPEX

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I. Return to Fundamentals u Margins

u CAPEX

u Infrastructure

u Management

2015April

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Key Omissions and Misrepresentations

Ø Nearology

Ø Stage-gating

Ø Risk analysis

Ø Benchmarking

2015April

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“Of all those expensive and uncertain projects, however, which bring bankruptcy upon the greater part of the people who engage in them, there is none perhaps more perfectly ruinous than mining and the search after new … mines … Projects of mining, instead of replacing the capital employed in them, …. commonly absorb both capital and profit.”

“The Wealth of Nations”, Adam Smith, 1776

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II. Productivity Declines u Embedding effective management-

operating systems at mines; u Prioritizing operational excellence; u  Focusing on technology.

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III. KEYS TO SUCCESS

u Stability

u Innovation

u Partnering

u Patience and stamina

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CHALLENGES FOR INVESTORS

Ø Up front cost of capital investment Ø Difficulty of discovery processes Ø Increased lead time to advance Ø Increased global competition

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IV. Disruptive Technologies

u Base Metal Substitution

u Batteries & Energy Storage

u Fuel Cells

u Solar and Silver

u Unconventional Oil & Gas

2015April

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“We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time.” T.S. Elliot

2015April

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POTENTIAL SOLUTIONS “KEY TOPICS”

2015April

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The COURAGE to INVEST

v Establish attractive environment v Probability it will be both the

driver and accelerator of growth

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The CONVICTION to CHANGE

v STABILITY v  INSTITUTIONAL STRENGTH v GOVERNANCE v TRANSPARENCY v RULE OF LAW

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CAUTIONARY TALE

u THE IMMUTABLE PRINCIPLES OF RESOURCES

u DISREGARDING STAGE-GATING

u IMPACTS OF CHINESE LOWER GROWTH

u IMPORTANCE OF INFRASTRUCTURE

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REBUILDING u POSITIVE RE-ENGAGEMENT & DIALOGUE u RECOGNITION AND CORRECTION

u PROACTIVE AND CO-OPERATIVE ENVIRONMENT

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ATTENUATING THE IMPACT

u BUILD A VISION TO THE FUTURE u  LESSEN DIRECT GOVERNMENT INTERFERENCE

u RE-THINK OF PRIOR ECONOMIC MODELS

u  IMPROVE COMMUNICATIONS

u  IMPROVE LEGAL STRUCTURE AND FRAMEWORK

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CLOSING THOUGHTS

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2015April

LOST OPPORTUNITY COST

Lost Opportunity

Cost Consumption

Production

Explicit Costs Implicit Costs

Non-monetary

Evaluation

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2015April

RISK ASSESSMENT

EngageStakeholders

Risk Characterization

Options Definition

Option Selection

Actions Strategy

Stewardship and

Achievement

Stage 1: Risk based review of options Stage 2: Specific Stakeholder input & feasibility assessment Stage 3: Refined set of options

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2015April

“PLAN FOR SUCCESS” Current Situation Goal Implementation Measure

Assessment

Baseline

Components

Specifics

Evaluate

u  Situational Analysis/SWOT u  Options Study

u  Major Issues u  Align with

Capabilities

u Major Goals u Specific

Objectives u Values & Guiding

Principles

u Action Plans u  Initiatives/Projects

u Performance Mgt u Review Progress/

Corrective Actions

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2015April

THANK YOU FOR YOUR KIND ATTENTION

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