7/31/2019 MGG Corporate Presentation August 2012 Final
1/34
7/31/2019 MGG Corporate Presentation August 2012 Final
2/34
2
Legal Disclaimers
This is not an offer to sell or a solicitation of an offer to purchase securities
by Mongolia Growth Group (the Company). Any such offer or
solicitation will only be made by means of the Companys Offering
Documents (e.g., prospectus, offering memorandum, subscription
agreement and or similar documents) and only in jurisdictions where
permitted by law. Investors should refer to the Offering Documents for
more complete information, including investment risks, fees and expenses.
The securities are a highly speculative investment and are not intended as a
complete investment program. They are designed only for sophisticated
persons who can bear the economic risk of the loss of their investment inthe Company and who have limited need for liquidity in their investment.
There can be no assurance that the Company will achieve its objectives.
Target investment goals are not a guarantee of future returns.
The attached material is provided for informational purposes only as of the
date hereof, is not complete, and may not contain certain material
information about the Company, including important disclosures and risk
factors associated with an investment in the Company. This information
does not take into account the particular investment objectives or financial
circumstances of any specific person who may receive it. More complete
disclosures and the terms and conditions relating to a particular investmentis, or will be, contained in the Offering Documents. Before making any
investment, prospective investors should thoroughly and carefully review
the Offering Documents with their financial, legal and tax advisors to
determine whether an investment is suitable for them.
The attached material includes forward-looking statements relating to,
among other things, the future financial performance of and objectives of
the Company; plans and expectations for the operation of the Company;
and estimates or expectations for fees, costs and expenses. These forward-
looking statements are typically identified by terminology such as may,
will, should, expect, anticipates, plans, intends, believes,
estimates, projects, predicts, seeks, potential, continue or other
similar terminology. Forward-looking statements are inherently unreliable,
and prospective investors should not rely on them. The forward-looking
statements are based on the Companys current expectations, assumptions,
estimates and projections about future events. Actual results are subject to
numerous risks and uncertainties that could cause actual results to differ
materially from those expressed in a forward-looking statement as a result
of various factors which may be further described in the Companys
Offering Documents. The Company does not have any obligation to update
or otherwise revise any forward-looking statements in the attached materialor to reflect the occurrence of unanticipated events.
Certain information contained herein have been prepared by third-party
sources, and such information has not been independently audited or
verified by the Company. The Company has used its best efforts to ensure
the accuracy and completeness of the information presented.
7/31/2019 MGG Corporate Presentation August 2012 Final
3/34
3
Legal Disclaimers
Forward Looking StatementsThis document, together with any documents incorporated by reference
herein, contains statements about expected future events and financial and
operating results that are forward-looking. From time to time, we may also
provide oral or written forward-looking statements in other materials we
release to the public. Forward-looking statements give our current
expectations or forecasts of future-events. You can identify these
statements by forward-looking words such as "expects", "does not expect",
"plans", "anticipates", "does not anticipate", "believes", "intends",
"estimates", "projects", "potential", "scheduled", "forecast", "budget" and
similar expressions, or that events or conditions "will", "would", "may","could", "should" or "might" occur and similar words. In addition,
statements that we make in this document including any documents
incorporated by reference herein that are not statements of historical fact
may also be forward-looking statements.
Forward-looking statements are not guarantees of our future performance
and involve risks, uncertainties and assumptions that may cause our actual
results to differ materially from the expectations we describe in our
forward-looking statements. For example, some risks, uncertainties and
assumptions include: capital requirements; fluctuations in the international
currency markets and in the rates of exchange of the currencies of Canada
and the United States; price volatility in the spot and forward markets for
commodities; impact of any hedging activities, including margin limits and
margin calls; discrepancies between actual and estimated production and
between actual and estimated reserves and resources; changes in national
and local government legislation in Canada, the United States and
Mongolia or any other country in which the Company currently or may in
the future carry on business; taxation; controls, regulations and political or
economic developments in the countries in which the Company does or
may carry on business; the speculative nature of oil and natural gas
exploration, production and development, including the risks of obtaining
necessary licenses and permits; diminishing quantities or grades of
reserves; competition; loss of key employees, additional funding
requirements; stock market volatility and ability to access sufficient capital
from internal and external sources; actual results of current exploration or
reclamation activities; changes in project parameters as plans continue to be
refined; accidents; labour disputes; and defective title to claims or property
or contests over claims to oil and gas properties. In addition, there are risks
and hazards associated with the business of oil and natural gas exploration,
production and development, including environmental hazards, industrial
accidents, unusual or unexpected formations, pressures, cave-ins and
flooding (and the risk of inadequate insurance or inability to obtaininsurance, to cover these risks). You should not place undue reliance on
forward-looking statements.
We do not promise to notify you if we learn that our assumptions or
projections are wrong for any reason except as required under applicable
securities laws. We do not undertake any obligation to update forward-
looking statements, whether as a result of new information, future events or
otherwise except as required under applicable securities laws. You should
be aware that all the risk factors discussed in this document could cause our
actual results to differ from any forward-looking statements.
7/31/2019 MGG Corporate Presentation August 2012 Final
4/34
4
Leverage the tremendousgrowth in Mongolia
Focused on acquiring,constructing and
managing investment realestate in Mongolia while
helping to build the
countrys insurance
industry
Mission Statement
7/31/2019 MGG Corporate Presentation August 2012 Final
5/34
5
Rich in mineral wealth Construction of world class mines Proximity to China Experiencing a high teen annual GDP growth rate Hard working and ambitious, pro-Western culture
Why Mongolia?
7/31/2019 MGG Corporate Presentation August 2012 Final
6/34
6
Land area: 1.56m sq.km Population: 2.7 million Political System: Democracy Capital: Ulaanbaatar Located between Russia andChina 19th largest country in the
world
GDP (2011): $8,14 Billion* GDP per capita: $2,872* GDP is likely to accelerate
significantly in the future
The Country
*NSO(NationalStatisticalOfficeofMongolia)
Ulaanbaatar
7/31/2019 MGG Corporate Presentation August 2012 Final
7/34
7
Two Massive Projects
OyuTolgoiMine(OT)* TavanTolgoiMine(TT)*
JV between Ivanhoe Mines and RioTinto
Contains 81 billion pounds of copperand 46 million ounces of gold
Scheduled to produce 1.2 billionpounds of copper (4% of globalproduction) and 650,000 ounces of
gold each year 59 year mine life
To begin production in 2012. Totalcapital expenditure is estimated at$6.5 billion
Anticipated to account for 30% ofMongolias GDP. Expected to createthousands of direct, high paying, full
time jobs
May be the largest undevelopedcoking coal mining district in theworld, holding in excess of 6 billiontones of coal
Close to Chinese border Multi-billion dollar project began
development in 2011
Huge upside potential for resourcesand annual production
TT is the largest of the manyplanned mid-to-high BTU coalprojects in various stages ofdevelopment in Mongolia
Planned IPO will accelerate currentproduction rates
*IvanhoeMinesLtd.
7/31/2019 MGG Corporate Presentation August 2012 Final
8/34
8
A Simple Question
Question: There are tens of billions to be spent on capital projects that are in the planning and development
stages, so how do you put this much capital into
such a small economy?Answer: Get ready for the boom!
7/31/2019 MGG Corporate Presentation August 2012 Final
9/34
9
Mongolia Growth Groups Thesis
Mongolia has a small population with huge resource potential We anticipate large GDP and per capita income growth Historical comparables where an open economy has allowed for
wealth creation are Kuwait, Qatar, and Kazakhstan
We want to invest at the inflection point when the first major newmine is being built
7/31/2019 MGG Corporate Presentation August 2012 Final
10/34
10
Using Kazakhstan as an InvestmentRoadmap for Mongolia
There Are Many SimilaritiesBetween Kazakhstan And
Mongolia
Both Resource Economies Both Former Soviet Satellites Culturally Similar Similar Soviet Architecture
The Difference is That Kazakhstan is 10 yearsAhead of Mongolia in its Boom
7/31/2019 MGG Corporate Presentation August 2012 Final
11/34
11
The Kazakhstan Boom from2002 to 2008
2002 2008 % ChangeKazakhstan Oil Production
(Barrels/Day) *1885,000 1,363,000 54%
Kazakhstan GDP ($ USD
Billions) *2
$24,637 $104,853 326%
Kazakh Tenge (Currency) 3150.67 120.64 20%
Kazakh Stock Exchange Index3104.55 2640.15 2425%
*1: US Department of Energy
*2: World Bank
*3 Bloomberg
7/31/2019 MGG Corporate Presentation August 2012 Final
12/34
12
*1: Currently Observed Prices
*2:Cushman & Wakefield, Almaty Office
Current Price in
Almaty, Kazakhstan Current Price inUlaanbaatarDowntown Apartments ($USD
Per Meter)$3,000-$5,2002 $900-$2,0001
Prime Ground Floor Retail Spacein Downtown ($USD Per Meter)
$10,000-$30,0002 $1,500-$3,0001
Current Prices in Ulaanbaatar onthe Eve of the Boom
7/31/2019 MGG Corporate Presentation August 2012 Final
13/34
13
Strategy
Focus on:Industries likely to benefit from the
growth in consumer income:
Real Estate Insurance
Ignore:Mining itself:
Tough Industry Capital Intensive Political Boom & Bust Cycles
7/31/2019 MGG Corporate Presentation August 2012 Final
14/34
Real Estate
7/31/2019 MGG Corporate Presentation August 2012 Final
15/34
15
Mongolian Property Rights
Property rights are stronglyprotected by law
Foreigners can own finishedstructures
Foreigners can enter into landleases (max 100 years)
Foreign and local corporationscannot own land
7/31/2019 MGG Corporate Presentation August 2012 Final
16/34
16
Only one main street (Peace Avenue)and very few secondary streets
Most activities are concentrated along athree kilometer stretch of Peace Avenue
Very small footprint that everyonewants to be located within
Why Ulaanbaatar Is Unique ForProperty Investors
7/31/2019 MGG Corporate Presentation August 2012 Final
17/34
17
Ulaanbaatar City Map
Mountains
Mountains
Ulaanbaatar is constricted by mountains to the north and the south
A single 2-lane east-west road constricts movement and focuses all development into the downtownof approximately 2km North-South by 3 km East-West
Downtown
Airport
Peace Avenue Is Only
Main East-West Road
City Is Constricted ToThe North And South
By Mountains
7/31/2019 MGG Corporate Presentation August 2012 Final
18/34
18
View of Downtown UB
DowntownCore
Gandan
Ger District
Parliament
New UN
Building
CentralBusiness
DistrictPeaceAvenue
Seoul Street
RingRoad
North
7/31/2019 MGG Corporate Presentation August 2012 Final
19/34
19
Our Portfolio
28 Residential units 6,081 meters of Retail space 5,369 meters of Office space 13,800 meters of RedevelopmentOpportunities
7/31/2019 MGG Corporate Presentation August 2012 Final
20/34
20
MGG Property Strategy
Buy top-quality properties along PeaceAvenue and a handful of secondary
streets.
Focus on leasable retail and officeproperty
Focus on redevelopment opportunitieswith sizable value uplift through
redevelopment.
7/31/2019 MGG Corporate Presentation August 2012 Final
21/34
21
CurrentPortfolioKey Asset - MGG Headquarters
Approximately 1720 Meters of Office Space
7/31/2019 MGG Corporate Presentation August 2012 Final
22/34
22
MGG Portfolio Breakdown
Type # ofMeters # ofProperties At Cost % At Cost
Residential 2,415 28 3.4B MNT 7.9%
Retail 6,081 48 18.1B MNT 42.3%
Office 5,312 8 9.0B MNT 15.5%
Redevelopment 13,800 6 15.8B MNT 34.3%
Total 27,608 90 46.4 MNT 100%
As of July 31, 2012
All data as of July 31, 2012. Percentages are calculated based on property purchase costs in MNT.
7/31/2019 MGG Corporate Presentation August 2012 Final
23/34
23
Acquisition Growth Chart
MNT
0
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
30,000,000,000
35,000,000,000
40,000,000,000
45,000,000,000
50,000,000,000
Feb
'11Mar
'11Apr
'11May
'11Jun
'11Jul
'11Aug
'11Sept
'11Oct
'11Nov
'11Dec
'11Jan
'12Feb
'12Mar
'12Apr
'12May
'12June
'12Jul
'12
Redevelopment
Office Space
Retail Space
Residential
As of July 31, 2012
7/31/2019 MGG Corporate Presentation August 2012 Final
24/34
24
MGG Property Usage Breakdown
All data as of July 31, 2012. Percentages are calculated based on property values.
For the purpose of this chart, MGGs insurance subsidiary, Mandal Daatgal, is considered as a tenant as
it pays rent to MGG. The Property value of the space rented by Mandal is not included undercorporate use.
As of July 31, 2012
47.7%
34.1%
8%1% 4.6%
4.0%
Rented
Redevelopment
Renovation
For Sale
Vacant
Corporate Use
7/31/2019 MGG Corporate Presentation August 2012 Final
25/34
25
Monthly Rental RevenueAs of July 31, 2012
MNT
All data as of July 31, 2012 is presented in MNT and includes VAT received. MGGs insurancesubsidiary, Mandal Daatgal, has paid 15,357,760 MNT monthly since March 2012; and paid
10,200,000 MNT in rent to MGG in February 2012 and 4,850,000 in January 2012.
0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
May
'11Jun '11 Jul '11 Aug'11Sep '11 Oct '11 Nov
'11Dec '11Jan '12 Feb '12Mar '12Apr '12 May
'12Jun' 12 Jul '12
Redevelopment
Office
Retail
Residential
7/31/2019 MGG Corporate Presentation August 2012 Final
26/34
26
Rent Breakdown
Type Average Yield1 % of Rent Total
Residential 9.16% 7.8%
Retail
8.7%
49.3%
Office 14.4% 32.2%
Redevelopment 1.7% 10.7%
Total 10.5%* 100%
1Averageyieldiscalculatedasannualrentreceivedasapercentageoftotalpropertyacquisi6oncost
(includingcapitalexpenditures).AlldataispresentedinMNT.
*Totalyieldisbasedonallrentableproper6esthatexcludesland,redevelopmentsandproper6es
underrenova6on.
As of July 31, 2012
7/31/2019 MGG Corporate Presentation August 2012 Final
27/34
27
Value Creation Through Redevelopment
High rents in downtown lead to propertyvalues that are many times the replacementcosts of completed structures.
The economic returns from development areabnormally high due to a scarcity of high-
quality land on main streets.
MGG recognized this early and has a veryattractive redevelopment pipeline.
7/31/2019 MGG Corporate Presentation August 2012 Final
28/34
28
Redevelopment Strategy
Partner with experienced developers
Contribute land and local experience to aprospective JV
Manage the property afterwards which leads tohigh margin revenues
Avoid outsized financial commitments Avoid completion risk Avoid budgeting risk Retain high returns on capital with reduced risk
7/31/2019 MGG Corporate Presentation August 2012 Final
29/34
Insurance
7/31/2019 MGG Corporate Presentation August 2012 Final
30/34
30
Mandal General Daatgal LLC
Received insurance license on June 2,2011
Operates in various property andcasualty lines of business
Initial capital of US$5m, making itthe best-capitalized insurer in
Mongolia
7/31/2019 MGG Corporate Presentation August 2012 Final
31/34
31
Mandal Reinsurance Partners Mandal Corporate ClientsInsurance
7/31/2019 MGG Corporate Presentation August 2012 Final
32/34
32
Management Philosophy
Our structure is corporate, but we operate on theprinciples of a long-term partnership
No founding management salaries or options The Board has been chosen based on relevant experience, intellect,
and a deep understanding and coherence to our guiding principles
Our only upside is by creating shareholder value; increasing theintrinsic value of the company on a per share basis
We own a lot of shares and are working for ourselves and ourinvestors
7/31/2019 MGG Corporate Presentation August 2012 Final
33/34
33
Mongolia Growth Group Ltd.
Founded in February 2011 Listed on the CNSX - Ticker: YAK 34,143,352 shares outstanding 33.5% Sr. Management and Board
ownership
Approximately $51.5M raised
7/31/2019 MGG Corporate Presentation August 2012 Final
34/34
34
Conclusion
According to the International Monetary Fund, Mongolia is
expected to be one of the fastest growing economies in the worldover the next decade.
We want to leverage that growth.