Rio finalises deal with Mongolian govt

Rio Tinto Ltd says it has finalised an investment agreement with the Mongolian government for the development of the $US4 billion ($A4.37 billion) Oyu Tolgoi copper-gold project.

"The investment agreement has now taken full and binding effect," Rio Tinto said in a statement on Wednesday.

Under the agreement, the government of Mongolia will own 34 per cent of OT LLC, the licence holder of the project, which is being developed by Rio Tinto and Canada's Ivanhoe Mines Ltd.

Rio Tinto said the parties would now commence the development phase of the project, with production slated to commence in 2013.

Output will be ramped up over five years to a full production rate of 450,000 tonnes of copper per year, with substantial gold by-products.

Ivanhoe has estimated the joint venture will spend about $US4 billion over the next four years to build and commission the initial mining complex.

The construction of a coal-powered electricity generating plant will require further capital.

The project was initially expected to cost more than $US2 billion ($A2.19 billion) to develop.

Ivanhoe originally planned to commission the mine in 2009.

Talks with the Mongolian government hit a roadblock in 2006 when Mongolians protested against increasing levels of mineral asset ownership by foreign entities, and a windfall tax of up to 68 per cent was levelled on profits from mining projects when commodity prices reached certain levels.

Mongolia's government scrapped the tax in August last year, clearing the path for an investment deal to be reached.

"We plan to be a partner in Mongolia for decades to come," Rio Tinto Copper chief executive Andrew Harding said on Wednesday in a statement.

Rio Tinto has a 22.4 per cent stake in Ivanhoe Mines, which is led by Canadian billionaire Robert Friedland, and it also holds a near 81 per cent stake in Ivanhoe's Australian arm.

By REBECCA LE MAY of AAP (Australian Associated Press news service)

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Government of Mongolia approves Oyu Tolgoi feasibility study

During regular cabinet meeting this afternoon, Government of Mongolia ratified Oyu Tolgoi gold and copper deposit feasibility study and thus, all conditions for the investment agreement signed on Oct 6, 2009 have been met and the agreement has become effective.

The agreement was subject to administrative and procedural conditions that must be met by April 6 including the completion of a feasibility study, within 6 months after it was signed last year.

Ivanhoe and Rio Tinto are owners of the huge gold and copper deposit in South Gobi region of Mongolia and signed investment agreement with the Mongolian government in October last year. Government of Mongolia to own 34% stake in the project.

Rio Tinto owns 22.4% stake in Ivanhoe and has an option to take it up to 46.6% eventually.

By Battsetseg, reporter of Moninfo News Service

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Mongolia: UN provides more funds as severe winter continues to bite

29 March 2010 – The United Nations has allocated $3.7 million in emergency funding to support UN agencies in Mongolia as they try to assist more than half a million people suffering from the combined effects of a long, severe winter and a preceding harsh summer drought.
A “dzud,” which is unique to Mongolia, can have a devastating impact on the rural economy. Herders and villages become isolated as heavy snows and high winds result in layers of ice that are impenetrable to livestock which already do not have enough feed because of the earlier drought.

The UN Office for the Coordination of Humanitarian Affairs (OCHA) said today that it has stationed a natural disaster response expert in Mongolia to provide support to the UN Resident Coordinator on the crisis.

The UN Development Programme (UNDP) received $1.5 million of an allocation from the UN Central Emergency Response Fund (CERF), which was released last month, for livestock carcass removal and income generation for 120,000 people who have lost at least 50 per cent of their livestock.

The UN Children's Fund (UNICEF) is using $1.5 million to fund projects to provide emergency medical supplies, food and fuel to 43,000 children under the age of five, 8,200 pregnant women, and 17,200 school children.

Some $600,000 of the CERF funds was allocated to the UN Food and Agriculture Organization (FAO) for emergency livestock-support projects for 1,100 dzud-affected families, while the UN World Health Organization (WHO) received $227,000 for psychosocial support, medical supplies and communications tools.

Another $227,000 was allocated to the UN Population Fund (UNFPA) for emergency reproductive health support for 7,000 pregnant women, lactating mothers and other vulnerable women of reproductive age.

The humanitarian impact of the dzud has been worsening since January and there is a growing need to prevent serious medium-term problems, including increased levels of poverty, higher chronic malnutrition and disease levels, massive migration to poorly serviced and overcrowded outer-urban areas, unemployment and psychological problems.

Source:www.un.org (UN News Centre)

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Mongolia winter kills herds, devastating the poorest

By Tyra Dempster

BEIJING, March 29 (Reuters) - A severe winter has left 4.5 million dead animals in stockyards across the Mongolian steppes, and many poor herders face the loss of all their property just before the important breeding season.

About a tenth of Mongolia's livestock may have perished, as deep snows cut off access to grazing and fodder.

The damage to the rural economy could increase demands on Mongolia's already-stretched national budget, which relies on mining revenues to meet spending commitments. [ID:nTOE61A04Q]

The Red Cross launched an emergency appeal for 1 million Swiss francs to assist Mongolian herders, after it estimated that 4.5 million livestock have died in the country since December.

"The numbers of livestock that have perished have gone up very, very quickly and dramatically now to about 4 million which is roughly a tenth of the whole livestock population," Francis Markus, communications director for the Red Cross' East Asia delegation, said in Beijing after returning from Mongolia.

"This means that thousands of families, mostly coming from the poorest and most vulnerable layers of the herder population, have lost their entire flocks of animals and have been left in a very, very distraught and very, very desperate state."

Roughly one-quarter of Mongolia's 3 million people are nomads, while others also raise livestock in fixed settlements. Many go deeply in debt to buy and raise their herds, in hopes of making the money back by selling wool, meat and skins.

A similar combination of a summer drought, followed by heavy snow and low winter temperatures, which is known in Mongolian as a 'zud', caused widespread hardship in Mongolia a decade ago.

As a result, impoverished herder families flocked to the slums outside the capital, Ulan Bator, straining the city's ability to provide basic services.

"The herding community's situation is very hard now. The best off are those who still have around 40 percent of their livestock left and in the worst 50 cases are those who have lost absolutely everything," said Zevgee, speaker of the county parliament in Bayangol, southwest of the capital.

This zud was the worst for several years, with temperatures dropping to 40 degrees Celsius below zero or colder in 19 of Mongolia's 21 provinces, according to a World Bank report.

Around 63 percent of Mongolia's rural residents' assets are their livestock, it said, and at least 35 percent of the population earn a living from their animals.

Herder Tsendjav said that she had no option but to rely on the government and aid to survive the weather.

"I have seen many zuds that have caused the loss of numerous animals but I have never seen a zud as bad as this one," she said at a Red Cross aid dispensary.

(Writing by Lucy Hornby; Editing by Sugita Katyal)

Source:Reuters News Wire service

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Mongolian herders need food aid after hard winter

By GANBAT NAMJILSANGARAV, Associated Press Writer Ganbat Namjilsangarav, Associated Press Writer – Sun Mar 28, 8:46 pm ET
ULAN BATOR, Mongolia – Emergency food relief is needed for nomadic herders in Mongolia after the number of livestock killed there by blizzards and extreme cold doubled in recent weeks, the Red Cross said Monday.

International funds of 1 million Swiss francs ($935,000) were needed to provide food and other emergency relief for herders in the poor, landlocked country, the International Federation of Red Cross and Red Crescent Societies said in a statement.

The coldest winter in three decades has troubled the country sandwiched between China and Russia, following a summer drought that prevented farmers from stockpiling food for their livestock. Heavy snow and temperatures as low as minus 40 degrees (minus 40 degrees Celsius) have affected 19 of Mongolia's 21 provinces.

The 4.5 million animals that have died this winter equals nearly 10 percent of the country's animal population.

Huge animal losses caused by a combination of dry summers and severe winters — a disaster that Mongolians call "zud" — are becoming a chronic menace to the country. Though about half of Mongolia's 2.7 million people live in the capital, thousands of residents returned to rural life after the end of communism in 1990.

The Red Cross said the funding it is seeking will help 3,400 herder families who have lost the bulk of their livestock find alternative means to survive, cope with depression and stress, and learn basic health education.

"The needs are steadily growing as more and more herders face up to the reality that many of their animals are dying. More and more people are left distraught and increasingly destitute," Ravdan Samdandobji, secretary general of the Mongolian Red Cross, said in the statement.

The Red Cross is distributing food, blankets and warm clothing to 1,200 of the worst-affected families. The emergency relief will help more families and explore ways to diversify their livelihoods.

"When you lose your animals, you lose your livelihood and it can be a rapid slide into poverty without any support," said Daniel Bolanos Gonzalez from the Red Cross's Asia-Pacific disaster management unit.

Many herders who lose their animals drift into the capital Ulan Bator, where they live in poor conditions. Other join the ranks of illegal gold miners. The Red Cross said that previous severe winters between 1999 and 2003 drove hundreds of thousands into the outskirts of the capital, and it fears thousands more internal migrants this time, straining social safety nets.

Source:AP News Wire service

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Even in Distant Lands, the Welcomes Are Warm

Steven Zimmerman, the chief of operations for Room to Read, a nonprofit educational group, in Bangladesh last December.

UNTIL the age of 18, I never traveled outside of New York, New Jersey and Connecticut. But in the last four decades, I’ve clocked more than two million miles and have been in more than 120 countries. Last year, I was in South Africa, Zambia, Cambodia, Vietnam, India, Sri Lanka, Nepal and Bangladesh, all countries in which Room to Read has programs.

Travel is an integral part of my life. I love going to new countries, meeting new people and trying different airlines.

I’ve learned to take travel in stride. I have to. If I didn’t, I would be a nervous wreck.

I remember flying in a tiny plane in the Caucasus, going from Armenia to Georgia.

The cockpit door was open, and I could see the pilot and co-pilot. There was a bottle of whiskey sitting on the floor between them. Aside from the few passengers on the plane, the cargo consisted of several large drums of jet fuel positioned at the end of the seating area. We were warned not to smoke. No kidding.

After some reflection, I didn’t think it was that odd they had a bottle of whiskey in the cockpit. It was probably used to help calm their nerves. If you had to fly some of these planes, you would probably need a medicinal aid, too.

The adaptability of people from different cultures always amazes me.

I remember being in Beirut during the “troubles,” when the militias ruled West Beirut. I was sitting in an outdoor cafe on Hamra Street with a lot of other people. We heard gunfire in the distance. Soon a militia convoy was passing down the street firing their guns.

Just before they reached our cafe, everyone calmly picked up their coffee and simply moved inside. After they passed, the group moved back outside, sat down and resumed conversation as if nothing happened. I didn’t freak out because no one around me seemed overly concerned. I learned to adapt by taking my cues from the locals.

When I travel, I really do learn a lot from the local population. And I’m always grateful for that.

I went to Mongolia on a temporary assignment, and wound up loving the place so much I stayed for three years.

People always assume that living in Mongolia is difficult. In fact, the exact opposite is true. The people there make it easy for you. I think a lot of that has to do with their Buddhist faith. Everyone is welcoming, friendly and in touch with their environment.

You can drive for eight hours, and not see anyone. Eventually you may encounter a lone family of herders, as I often did.

These people will invite you into their homes, a “ger,” or yurt as we often call them. The family will feed you and share their “airag” with you.

Airag is fermented mare’s milk, similar to vodka, except that vodka doesn’t have much of a taste, and airag definitely tastes like animal. It has a very strong aftertaste and a real kick to it. It’s an acquired taste, but it will warm you in temperatures that can drop to minus 40 in the winter.

I always admired the simplicity of rural Mongolian life. But it’s changing. I remember stopping at a family’s ger. Next to it was a satellite dish, which was nearly as large as the ger itself. Everyone was watching a championship sumo wrestling match.

One of my fondest memories is being in the Gobi Desert watching wrestling on television. The match was fascinating. The company was great. And the airag? Well, that was pretty good, too.


By Steven Zimmerman, as told to Joan Raymond. E-mail: joan.raymond@nytimes.com

Source:www.nytimes.com (New York Times newspaper)

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Bishop discusses growth, challenges for Catholic Church in Mongolia

ORLANDO, Fla. (CNS) -- Bishop Wenceslao Padilla of Ulan Bator, the Mongolian capital, said his greatest joy has been seeing Mongolia's "baby church grow into maturity." "I take delight in observing the church membership and its activities grow and flourish," he said in an e-mail to the Florida Catholic, newspaper of the Orlando Diocese. The bishop, a Missionhurst missionary from the Philippines who has directed Catholic missionary activity in the former Soviet republic since 1992 and was appointed a bishop in 2003, said that despite challenges facing the growing church, he is confident it can survive with the continued support of Catholics worldwide. "To the faithful of Florida, I dare say that you are all co-partners, co-missionaries with us in this newly established mission church," he said. Bishop Padilla said the main challenge he faces is helping those who have embraced the faith and sustaining the church's outreach "in the social, developmental and humanitarian fields." "Looking into the near and distant future, the many and various works that have already been started have to be continued and supported," he said, adding that the Catholic Church is known by its mission projects. "A perennial problem," he said, is having enough local income to sustain such projects.

Source:Catholic News Service

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Huge horse and livestock losses in Mongolian winter

Mongolian herders have lost massive numbers of horses, goats, sheep, camels, cows and yaks in a harsh winter, the United Nationals Development Programme reports.




It estimates that 2.7 million livestock have perished nationwide during a winter of extreme cold and snow - known locally as a dzud - with another three million at risk of death by the end of the cold season in June. The UN has announced a cash-for-work scheme under which herders will earn income to clear and bury the carcasses, many of which are still lying in the open.



The carcasses, if not disposed of properly, pose threats involving the spread of diseases, infections and soil pollution.
The extreme cold and heavy snow experienced in Mongolia - with temperatures dipping as low as minus 50 degrees Celsius - followed a very dry and long summer and autumn, during which insufficient livestock feed was produced to provide for the animals for the winter months.




The UN initiative will not only help to reduce health risks for people but also provide income for herders whose livelihoods have been devastated with the death of their livestock, in a country where one third of the population rely on herding and agriculture.



"While immediate needs of food, shelter, heating and health care must be met, this approach would prevent the spread of diseases and also help herders to feed their families during the dzud," said Akbar Usmani, a UN resident representative in Mongolia.



"Livestock is the cornerstone of existence for so many Mongolians and many people have lost all their direct income and food source," he added.



The cash-for-work project aims to reach 60,000 herders, with special emphasis on those with fewer than 200 animals who have been particularly adversely affected. The UN programme has already contributed $US300,000 towards the $US4 million requested by the Government for removing the carcasses.
 
Source:UN

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Books for Asia in Mongolia

A contributor to the Asia Foundation is donating $1 toward books for English language students in Mongolia for every vote cast on the site below.

See the video and vote here:

http://bookvote.asiafoundation.org

MonInfo News service

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Ivanhoe Chairman: Looking At Different Options To Fund Mongolia Project

SINGAPORE -(Dow Jones)- Ivanhoe Mines (IVN.T) is working with Rio Tinto (RIO.AU) to satisfy the remaining conditions in order to complete the investment agreement for the Oyu Tolgoi copper-gold project in Mongolia, Ivanhoe CEO Robert Friedland said Thursday at a mining conference.

The agreement is subject to conditions that must be met by April 6, including the completion of a feasibility study currently under way.

Friedland said Ivanhoe and Rio Tinto had satisfied 7 of 10 conditions so far and were "working hard" to satisfy the rest.

Friedland praised Mongolia as an investment destination and said the current Prime Minister, Sukhbaataryn Batbold, was a "great visionary."

He said the Oyu Tolgoi project would leverage Rio Tinto's experience in helping develop the Escondida mine in Chile and the Grasberg mine in Indonesia, two projects which he said Oyu Tolgoi would come to be compared with.

Ivanhoe and Rio struck a long-awaited investment agreement with the Mongolian government in October last year; the government will now take a 34% stake in the project.

Friedland was also bullish on the company's coal prospects in Mongolia, describing the Ovuut Tolgoi coal project, also in Mongolia as containing the "beluga caviar" of coal.

SINGAPORE -(Dow Jones)- Canada's Ivanhoe Mines Ltd. (IVN: 16.6405, 0.4105, 2.53%), the operator of the Oyu Tolgoi copper and gold mine in Mongolia, is looking at various options to fund the development of the project, but won't sell a stake in the project itself, Executive Chairman Robert Friedland said Thursday.

Speaking a special session on Mongolia at Asia Mining Congress 2010, Friedland said both Ivanhoe and the Mongolian government, which owns 34% in the project, have the first right of refusal if either party wants to sell a stake.

With both sides unlikely to sell their stake in the mine, "the only way for anyone to participate (in Oyu Tolgoi) is to become a shareholder of Ivanhoe, and we like it that way."

Asked if China Aluminum Corp., or Chinalco, is in negotiations to buy a stake in Ivanhoe, Friedland said every mining company "is sniffing around" for opportunities, but he wouldn't comment on interest from any specific company.

Friedland said the only three companies technically capable of undertaking such a large project as Oyu Tolgoi are Rio Tinto Ltd. (RTP: 233.2244, 2.8944, 1.26%), Chile's Corporacion Nacional del Cobre, or Codelco, and Freeport-McMoRan Copper & Gold Inc. (FCX: 80.39, 0.56, 0.7%)

Rio Tinto will be the technical operator of the Oyu Tolgoi project.

Rio Tinto already has a 22.4% stake in Ivanhoe and has an option to take it up to 46.6% eventually.

Chinalco, which holds around 9% of Rio Tinto, is currently the single largest shareholder in the Anglo-Australian miner.

Friedland said Ivanhoe has budgeted to spend US$758 million on the construction of the Oyu Tolgoi copper and gold mine in 2010 alone.

The company has appointed Citigroup Inc. and Hatch Corporate Finance to explore funding options for the Mongolian project.

Friedland said Mongolia's gold production is expected to rise 300% and copper production is expected to go up 400% in the next five years as a result of the new project.

By James Campbell
Source:Dow Jones Newswires

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Musings of a Mongolian woman: Local vs.Foreign

The question of boyfriends and husbands for Mongolian single ladies. The current situation is very peculiar in our country. The statistics show that the gender ratio is fairly even 51:49 or somewhat close to this ratio. However, the real ratio is different from above. Most men are gone to work abroad, while kids, elders, and women have stayed at home. For young single ladies, it become hard to find quality BFs and husbands. Most men who are left are usually very young between ages 18-25, with low education and life experience. Thus, for highly educated ladies this is not the optimal options. Also, the society still disapproves relationship between older woman and younger man. Next category of men are between ages of 25-35. These are potential suitors for single ladies, however good ones are taken, and lazy and troubles ones are left, leaving no choice for poor girls. The older man, (35+) who are successful, are usually bald, fat, and womanizers. Thus, leaving no "cherry picking" for singles.

On the other hand, foreign men are entering into the "dating" market in last few years, adding variety to the alternatives to local men. On the contrary, foreign men also do have cons and pros compared to local men. Most foreigners who come to this country are from China and Korea. Obviously, good ones do not look for wives in foreign countries. Only leftovers come. And again, no good for Mongolian women. There are some good men, who come to our country as experts. These are the main targets of most single and highly educated ladies.

On the other hand, few words about Mongolian women. Some ladies needs to be praised as they strive to live in such harsh world, developing themselves and taking care of their families and relatives. They value life much more than others. Other types of girls, include the ones who seek "easy" life. Money, fame, and beauty is all to them. Most of younger generations are confined to very "capital" oriented ideas of life. I shouldn't judge them, as it is their liberty, their right to want and value life however they want to. And lastly, probably there are other women, who do not belong to above groups, who are very quite, gray in their existence.

The ultimate choice of boyfriends and husbands lay in hands of Mongolian women, whether to choose local or foreign. Many cons and pros could be listed for both local and foreign. Individual cases need individual approach and judgment, thus GOOD LUCK LADIES!

By Tuya, contributor of Mongolianviews.com

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Rencap Steppes into Mongolia with two tie-ups

By Ivan Anderzhanov in Moscow

Emerging markets investment bank Renaissance Capital has agreed on alliances with two investment firms in the Central Asian frontier of Mongolia.

The bank has signed deals with International Capital Corporation (MICC) and Monet following its recent joint venture agreements in Serbia, India and openings in South Africa and Belarus.

In Mongolia, Rencap said it will focus on equity and fixed income capital raisings, cross-border mergers and acquisitions, and privatization advisory.

Its research team initiated coverage of the country in December with a major report authored by head of research Roland Nash titled, “Mongolia: Blue-sky opportunity.” The report said Mongolia is well positioned to be the fastest-growing economy in the world over the next decade.

“Mongolia’s transformation is now unstoppable,” wrote Nash. “Over the next five years, production of coal will double, gold production will triple and copper output will quadruple. As these resources are bought to market, Mongolia will be transformed into a major economy and its financial markets will become increasingly sophisticated.”

Source:http://emergingmarkets.me/

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Chinalco, Rio Tinto in talks to co-develop mine in Mongolia

Mar. 25, 2010 (China Knowledge) - Aluminum Corp of China, which is the country's largest nonferrous metal producer and is also known as Chinalco, is in talks with Australian mining company Rio Tinto Plc to jointly develop the Oyu Tolgoi copper-gold mine in Mongolia, Liu Xiangmin, managing director of Chalco, said yesterday.

Oyu Tolgoi is the world's largest undeveloped copper-gold project and is located in the South Gobi region of Mongolia. Rio Tinto holds a stake in Canada-based Ivanhoe Mines Ltd, the owner of the project.

Xiang Weiping, president of Chinalco, said earlier that the company is talks with several potential partners, including Rio Tinto, on possible involvement in the development of the project.

Early this week, Chinalco signed a memorandum of understanding with Rio Tinto to co-develop the Simandou iron ore project in Guinea, one of the most mineral-and metal-rich countries in Africa, China Knowledge reported.

Source:www.chinaknowledge.com

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Magazine on Mongolia launched in Netherland

Dutch anthropologist Matthea Van Staden launched “Mongolia” magazine on 19 March, 2010 in Dutch town of Groninen. The magazine is in Dutch language and promotes Mongolian culture, fashion and handicrafts. Launching of the magazine coincided with organization of trade fairs about Mongolian handicrafts.

Representatives of the Dutch Ministry of Foreign Affairs and media, business circles and Mongolian Embassy in Brussels took part in the opening of the trade fair and launching of the magazine. Mongolian Ambassador Battur gave exclusive interview for the magazine and touched issue of bilateral relationship of Netherland and Mongolia and how to improve it further.

Groninen is in northern Netherland and have population of 300,000 people. Several prestigious Dutch universities and student campuses are situated in the town.

Matthea Van Staden also runs a website www.madeinmongolia.nl which promotes and sells handicrafts made by Mongolian women and supports women cooperatives in Mongolia.

By Ganbat, editor of MonInfo News Service

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Mongolia grants Japanese nationals 30-day visa-free visit

During cabinet meeting held on Wednesday, Mongolian goovernment decided to grant Japanese citizens visa-free entry for up to 30 days.
According to the decision, Japanese nationals are now allowed to stay in Mongolian territories for 30 days with no visa requirements.
The main purpose of the measure is to attract more Japanese tourists to Mongolia, said G. Zandanshatar, Mongolia's Minister of Foreign Affairs.
The minister said that in the past decade, some 12,000 to 14, 000 Japanese visited Mongolia each year. In 2006, a temporary visa exemption was granted and more than 20,000 Japanese visited the country.

A recent survey found that one Japanese tourist spends some 350 U.S. dollars in Mongolia, which means a tourism revenue of USD 13-14 million every year, said the Mongolian Ministry of Environment and Tourism.
Currently, citizens of Malaysia, Singapore, Hongkong, USA, Israel can enter Mongolia without visa for 30 days.

By MonInfo News Service

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Mongolian mother gets suspended sentence for smuggling cigarettes

A Mongolian mature student has escaped deportation and has received a two-year suspended sentence for smuggling €12,400 of cigarettes into Ireland.

Batchullun Pureevjal (aged 33) with an address at College Gate, Townsend Street, Dublin 2, pleaded guilty to possessing 39,000 cigarettes in her luggage, with intent to defraud the State, at Dublin Airport on December 27, 2006.

Pureevjal didn't explain to customs officers how she got the cigarettes or what she had intended to do with them.

Judge Desmond Hogan, in Dublin Circuit Criminal Court, said although it was “a serious offence, it appears to be a one-off offence.”

He said it was a "fair inference" that the mother-of-two had intended to make financial gain from the cache.

Judge Hogan said as Pureevjal is the sole supporter of a child, has a low-level of re-offending and that she was “not part of any gang importing cigarettes” that the offence did not warrant a custodial sentence.

He suspended the two-year sentence and imposed strict restrictions.

Mr Tony McGillicuddy BL, defending, submitted that his client was in Ireland on a student visa, that she legally works 20 hours a week at a cleaning job to help support her new baby and has no other trappings of wealth.

He submitted that his client was doing it partly for friends and for her own gain.

Mr McGillicuddy added that his client also sends money home to an older child in her sister's care.

Mr Niall Jennings, a customs officer, said colleagues found the cache during a random search of the passenger's bags.

He agreed with Mr McGillicuddy that this search was not part of an operation targeting large-scale illegal importation.

Mr Dominic McGinn BL, prosecuting, told Judge Hogan he could impose a fine three times the price of the seized cigarettes under the Finance Act 2001, but that this could be halved in mitigating circumstances.

He said the halved amount would be around €18,000.

Mr McGinn told Judge Hogan he could also impose a five-year jail term instead of or along with this fine.

Mr McGillicuddy asked the judge to consider not deporting his client and to impose a suspended sentence in lieu of jail.

He submitted that his client had worked at bookkeeping for a number of years in Mongolia before deciding come to Ireland to “better” her employment chances by learning English.

He submitted that Pureevjal has no previous convictions, hadn't come to garda or customs officer attention since and had been home for her mother's funeral around the time of the offence.

Source:IrelandOn-Line.(http://home.iol.ie/)

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Mail for Mongolianviews.com: An appeal-to the people of Japan

We received following e-mail and we are posting it for our readers.
MonInfo staff

AN APPEAL
To the People of Japan

3/19/10

Despite numerous protests against exhibition titled, “Tibet – Treasures from the Roof of World” in major Japanese cities, the Exhibition is still going on in Osaka, and the next venue is Sendai. This has emboldened Chinese communist government to come up with an exhibition on Mongol, “The Legend of Genghis Khan & the Magnificent Mongol Empire” in Tokyo at Edo-Tokyo Museum.

This is a great insult to Tibetans and Mongolians, and freedom loving people of Japan, while the people in these two regions are oppressed and denied of their cultural and religious freedom, the Chinese government is conducting these exhibitions to mislead the Japanese people into believing that they are the benevolent guardians of Tibetan and Mongolian culture. This is their hideous plan to justify their oppressive and colonial rule in the regions.

Unfortunate thing is that this is happening in Japan, that too with the collaboration with Japanese business and media entities. Japan being a strong independent nation, oppressed people in Asia look forward to Japanese leadership in delivering peace and justice in Asia. Collaborating with tyrannical regime does not become of Japanese intellectual and business society.

While we welcome any exhibitions on Tibet, Mongol and Uighur, we urge the organizers to exhibit the true history and current situation in the regions. I request the Japanese business and media entities not to become a tool of Communist propaganda. This is not good for China, Japan, for Asia and for world peace, for that matter.

It must be noted that during the Mongol supremacy in Asia, both China and Tibet came under Mongol influence around 1240-1368 in the name of Yuan dynasty. It was during this time the Tibetan Buddhist masters influenced the belligerent Mongol Kings into Dharma Raja, Religious Kings and Tibet became independent from Mongol in 1350, eighteen years before China was to become free from Mongol rule. Let us see how these historical facts are presented in the exhibition.

I request the people in this free country and media people to hear the both sides of the stories, and support the truth, justice and humanity, not to get deceived by Chinese propaganda.

Thanking you

Lhakpa Tshoko
Representative of His Holiness the Dalai Lama for Japan & East Asia
(翻訳: 濱口祐子)

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Philippines donates $20,000 for Mongolian disaster

The Philippines donated $20,000 (P911,500) to Mongolia, helping the country’s efforts to adjust to zud, or winters which make it difficult for livestock to find fodder.

Citing a report from the Philippine Embassy in Beijing, the Department of Foreign Affairs said the Philippines also relayed its sympathy to Mongolia for the disaster.

“Philippine Ambassador to China Francisco Benedicto handed over a check of US$20,000 to Mongolian Ambassador to China Tsedenjav Sukhbaatar lkast March 16 at the Mongolian Embassy in Beijing," the DFA said in its website.

“Zud" results in the death of large numbers of animals due to starvation and the cold.

This year’s “zud" has affected 198 counties in 19 provinces, causing the loss of thousands of livestock, the main source of livelihood of Mongolian herders.

During his call on the Mongolian Ambassador, Benedicto conveyed the sympathy of the Philippines to Mongolia on this disaster.

Earlier this year, the Mongolian government requested for international assistance through their Foreign Affairs Minister Gombojav Zandanshatar. - RJAB Jr.,

Source:GMANews.TV of Philippine (http://www.gmanews.tv/story/186928/philippines-donates-20000-for-mongolian-disaster)

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Musings of a Mongolian woman:Is Mongolia a trash bin?

Is Mongolian economy and society becoming a trash bin for foreigners? In last few years, the illegal immigrants, workers from China and other countries seem to be increasing substantially. It is estimated that 100-200 thousand Chinese illegal workers inhabit in Ulaanbaatar city. There are no accurate estimates for illegal residents in Mongolia. It is obvious that most of whoever comes here to reside are not rich and successful business people or talented and highly educated employees. Why would successful one want to work in Mongolia, where Mongolians themselves are reaching for UK or USA to work abroad? Sure, we do pay more to foreign specialists than to Mongolian professionals. However, these types of expats are sourced and invited to work in Mongolia. What about who voluntarily come to Mongolia?

There is logical report that Korean and Chinese business people that come to Mongolia are not successful in their home country. Usually they get low interest rate loans from Korean/Chinese banks and come here to set up their business. You can see Korean and Chinese restaurants and shops flourishing all over UB. I even would not want to start talking about Chinese construction workers that roam UB like cockroaches. Disgusting!

Are these businesses, workers helping Mongolian economy? I guess not, as the money pours into foreign businesses, and it is in turn bounces back to Korean/Chinese market through import of goods and services. Are these unqualified foreign workers bringing any value to our society and culture? I don’t think so! Foreign males, which are unwanted at their home, are using vulnerable Mongolian girls (however, I blame those girls too, for seeking easy money!)!

So, what can we ordinary citizens do? Try to purchase goods and services that are domestic and shave the hair off from those foolish girls? I think the main duty lies in the government. It should build policies that are domestic production benign, aids and supports domestic consumers, and also tighter residency and immigration policies are urgently needed.

The Government and the whole state now are in kind of recess for anticipation of upcoming elections. Jeez! They are in no state of bringing up policies, if this government could not do it, will the next one be able to do? Anyways, this was my brief thought, that usually comes and goes in my brain, J

So, my ultimate question is:

Is Mongolia a trash bin for unqualified, undeveloped foreign workers?


Don’t we deserve better?

By Tuya

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Ivanhoe Mines Closes US$241 Million Private Placement With Rio Tinto

Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN), announced today that the company has closed its private placement with Rio Tinto that was announced on March 1, 2010.

As part of the private placement agreement, Ivanhoe Mines has issued 15 million common shares to Rio Tinto at CDN$16.31 per share, for total proceeds of CDN$244.7 million (US$241.1 million equivalent). Ivanhoe Mines has used CDN$198.2 million (US$195.4 million equivalent) of the proceeds to purchase from Rio Tinto key mining and milling equipment for the Oyu Tolgoi copper-gold mining complex in Mongolia. Ivanhoe Mines has received the balance of the proceeds, CDN$46.4 million (US$45.7 million equivalent), which will be used to purchase additional equipment and for general corporate purposes.

The equipment being acquired from Rio Tinto includes principal components for the 100,000-tonne-per-day Oyu Tolgoi phase-one copper-gold concentrator, including two large, 38-foot-diameter, semi-autogenous grinding (SAG) mills, four ball mills, re-grind mills, crushers, motors, gearless drives, conveyors and flotation cells. Also included are the hoist and major components for the sinking of Shaft #2 - the 10-metre-diameter, main production shaft for the underground block-cave mine at the Hugo North Deposit.

With the completion of this transaction, Rio Tinto has increased its ownership in Ivanhoe Mines from 19.6% to 22.4%. Rio Tinto holds rights to subscribe for common shares from Ivanhoe's treasury and also to make purchases on the open market that could increase Rio Tinto's stake in Ivanhoe to up to 46.6% during the next 19 months.

About Ivanhoe Mines

Ivanhoe Mines is an international mining company with operations focused in the Asia Pacific region. Ivanhoe's core assets include its world-scale, Oyu Tolgoi copper-gold mine development project in southern Mongolia.

Ivanhoe Mines' other core assets are its 65% interest in Mongolian coal miner SouthGobi Energy Resources (TSX: SGQ)(SEHK: 1878); an 81% interest in Ivanhoe Australia (ASX: IVA), a copper-gold-uranium-molybdenum-rhenium exploration and development company; and a 50% interest in Altynalmas Gold Ltd., a private company developing the Bakyrchik and the Bolshevik gold deposits in Kazakhstan.

Ivanhoe Mines' shares are listed on the New York, NASDAQ and Toronto stock exchanges under the symbol IVN.

Forward-looking statements

Certain statements made herein, including statements relating to matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information and statements are typically identified by words such as "anticipate," "could," "should," "expect," "seek," "may," "intend," "likely," "plan," "estimate," "will", "believe" and similar expressions suggesting future outcomes or statements regarding an outlook.

All such forward-looking information and statements are based on certain assumptions and analyses made by Ivanhoe Mines' management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements. Important factors that could cause actual results to differ from these forward-looking statements include those described under the heading "Risks and Uncertainties" elsewhere in the Company's MD&A filed at www.SEDAR.com. The reader is cautioned not to place undue reliance on forward-looking information or statements. Except as required by law, the Company does not assume the obligation to revise or update these forward-looking statements after the date of this document or to revise them to reflect the occurrence of future, unanticipated events.

Contacts:
Ivanhoe Mines Ltd.
Bill Trenaman
Investors
+1.604.688.5755
Ivanhoe Mines Ltd.
Bob Williamson
Media
+1.604.331.9830
www.ivanhoemines.com

Source:www.ivanhoemines.com

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SouthGobi Energy Resources Announces 2009 Financial Results and Review of Operations

SouthGobi Energy Resources Ltd. (TSX: SGQ)(PINK SHEETS: SGQRF)(SEHK: 1878), (the "Company" or "SouthGobi") today announced its financial results for the year ended December 31, 2009. All figures are in US dollars unless otherwise stated.

Highlights during the year and significant items:

-- The Company sold approximately 1,330,000 tonnes of coal from the Ovoot
Tolgoi mine in southern Mongolia in 2009.
-- Proven and Probable mineable reserves established at Ovoot Tolgoi based
on open-pit mine study independently prepared by Norwest.
-- Initial National Instrument 43-101 compliant coal resources established
for Soumber, a new deposit located approximately 20 kilometers to the
east of Ovoot Tolgoi.
-- $500-million convertible debenture financing by China Investment
Corporation ("CIC") to support major expansion of the Company's coal
mining and exploration in southern Mongolia was completed in Nov 2009.
-- In December 2009, SouthGobi listed on the main board of the Toronto
Stock Exchange.
-- In January 2010, SouthGobi completed a global equity offering of 27
million common shares at a price of Cdn$17.00 per share for gross
proceeds of Cdn$459 million. The shares commenced trading on the Main
Board of the Hong Kong Stock Exchange on January 29, 2010, under stock
code "1878".
-- On March 12, 2010, the Company announced, subject to regulatory
approval, a formal request for CIC to convert $250 million of its
convertible debenture into common shares of the Company.

Ovoot Tolgoi resources updated

In October, 2009, SouthGobi completed a prefeasibility study for the Ovoot Tolgoi mine resulting in the identification of proven and probable mineral reserves. The independent estimate prepared by Norwest Corp. calculated 114.1 million tonnes of proven and probable surface coal reserves as at July 1, 2009.

SouthGobi also received an updated, independent National Instrument 43-101 resource estimate for the Ovoot Tolgoi complex, prepared by Norwest. The Ovoot Tolgoi surface and underground resources contain measured plus indicated coal resources of 249.8 million tonnes, with an additional inferred coal resource of 33.5 million tonnes as at June 1, 2009.

Initial National Instrument 43-101 resources reported for Soumber deposit

The Soumber deposit is approximately 20 kilometers east of the Ovoot Tolgoi mine and approximately 50 kilometers northeast of the Shivee Khuren-Ceke border crossing into China.

On October 12, 2009, SouthGobi received an initial, independent NI 43-101 resources estimate for the Soumber deposit. The Soumber central field resources consist of measured coal resources of 13.1 million tonnes, indicated coal resources of 8.3 million tonnes and inferred coal resources of 55.5 million tonnes. Laboratory data demonstrated that some coal seams exhibit coking coal characteristics. The Soumber deposit has potential to increase coal resources to the east and to the west, as well as at depth.

Due to its proximity to the Ovoot Tolgoi mine, the Soumber deposit likely will be able to share common infrastructure with the Ovoot Tolgoi mine. SouthGobi has initiated mine planning and will submit an application for a mining license for development of this project.

Senior Management Changes

On February 10, 2009, the Company announced the appointment of Alexander Molyneux as its new President, effective April 27, 2009. Effective October 12, 2009 Mr. Molyneux assumed the additional role of Chief Executive Officer. Based in Hong Kong, he was most recently Managing Director, Head of Metals & Mining Investment Banking, Asia Pacific, Citigroup. Mr. Molyneux succeeded Peter Meredith as CEO, who assumed the position of Chairman of the Board.

On September 8, 2009, the Company announced the appointment of Gavin May as the Company's new Chief Operating Officer. Mr. May has 28 years of experience in the coal industry and is uniquely qualified to plan for the next stage of development and build out of the Company's significant projects in Mongolia. He was formerly Chief Executive Officer and Managing Director of Gloucester Coal Ltd., a company listed on the Australian Stock Exchange.

SouthGobi sells its working interest in Mamahak Coal Project, Indonesia

In December 2009, SouthGobi Energy Resources Ltd. divested its net 85-per-cent interest in the Mamahak coal project in Indonesia to Kangaroo Resources Ltd. ("KRL"), for consideration comprising $1-million in cash and 50 million shares of KRL. As a result of this transaction, SouthGobi held approximately 6.7 per cent of the outstanding shares in KRL on the closing date of the transaction and those shares are subject to a 12-month lock-up period.

Review of Quarterly Financial Results

The Company incurred a net loss for the three months ended December 31, 2009 of $69.2 million compared to $17.0 million for the three months ended December 31, 2008. The change is due to the factors discussed below.

Revenue and cost of sales relate to the Mongolia Coal Division. Revenues increased to $10.0 million in the fourth quarter of 2009 from $3.1 million in the comparative quarter in 2008.

In the fourth quarter of 2009, the Company shipped approximately 359,000 tonnes of coal at an average realized selling price of $29 per tonne. This compares to 113,000 tonnes at an average realized price of $29 in the fourth quarter of 2008.

Direct cash costs per tonne increased to $16.97 per tonne in the fourth quarter of 2009 compared to $8.30 per tonne in the fourth quarter of 2008. The increase can be attributed to the lower coal production. Direct cash costs per tonne will fluctuate from quarter to quarter due to variations in production, sales and unit costs. The Company continuously reviews the direct cash costs and believes they are in line with the expected life of mine cash costs of $15 per tonne as outlined in the Norwest technical report.

Cost of sales is comprised of three main components, direct cash costs, mine administration costs and non- cash items. Non-cash items include depreciation, depletion and stock-based compensation. Cost of sales will vary depending on sales volume, production and unit costs which directly affects income from mine operations.

Corporate administration expenses in the fourth quarter of 2009 were comparable to the fourth quarter of 2008. The fourth quarter of December 2009 included higher salaries and professional fees, while the fourth quarter of 2008 included a foreign exchange loss of $3.9 million.

Coal exploration expenses in Mongolia for the three months ended December 31, 2009 were $0.7 million compared to $5.0 million for the three months ended December 31, 2008. Exploration expenses related to the Indonesia Coal Division have been classified as discontinued operations in 2009 and in 2008. Exploration expenses related to the Metals Division have been classified as discontinued operations in 2008. Exploration expenses were lower in the fourth quarter of 2009 as the 2009 exploration program in Mongolia was close to completion at the end of the third quarter of 2009.

Finance costs for the three months ended December 31, 2009 were $61.9 million compared to $23,000 for the three months ended December 31, 2008. The significant increase in the fourth quarter of 2009 is due to the CIC convertible debenture financing and the fair value change of the embedded derivative of $45.0 million, $3.0 million for the interest accretion on the convertible debenture, $4.7 million for interest expense on the convertible debenture and $9.4 million for transaction costs related to the CIC financing.

Discontinued operations for the three months ended December 31, 2009 relate to the disposal of the Indonesia Coal Division. The Company had income in the fourth quarter of 2009 as the impairment of Mamahak of $23.0 million recorded in the third quarter was reduced to $15.1 million upon the sale of Mamahak in December 2009.

Results of Operations for 2009

In 2009, 0.67 million tonnes of coal was produced with a strip ratio of 3.36 compared to 1.16 million tonnes produced in 2008 with a strip ratio of 2.19. Lower production in 2009 was the result of the full mine shut-down from March 2009 to July 2009 due to difficulty expediting the movement of the Company's coal shipments through the Mongolia-China border crossing and the re-configuring of the pit which began in December 2009.

In June, the border crossing check point started operating 11 hours per day, six days per week. In July 2009, Mongolian and Chinese officials met at the Mongolian-Chinese border and allocated designated gates for coal exports to create an expedited coal border crossing corridor.

With increasing sales and a reduction in its coal inventory, the Company resumed full mining operations effective July 1, 2009 on a 24 hour per day, seven day per week basis.

The Company incurred an operating loss from continuing operations for the year ended December 31, 2009 of $23.3 million compared to $45.9 million for the same period in 2008. The decrease in the operating loss is due to the factors discussed below.

Revenue and cost of sales relate to the Company's operations in Mongolia. In 2009, the Company shipped approximately 1.33 million tonnes of coal at an average realized selling price of approximately $29 per tonne. This compares to 0.11 million tonnes of coal shipped in 2008 at an average realized selling price of $29 per tonne.

Cost of sales was $29.4 million in the year ended December 31, 2009 compared to $2.2 million for the year ended December 31, 2008. The increase in cost of sales relates to the higher sales volume in 2009. In 2008 there were only sales in the fourth quarter compared to a full year of sales in 2009. Cost of sales comprises the cost of the product sold, mine administration costs, equipment depreciation, depletion of stripping costs and stock-based compensation costs.

Direct cash costs were $14.61 per tonne in 2009 compared to $8.30 per tonne in 2008. The increase in direct cash costs is due to the full mine shut down from March 2009 to July 2009, which resulted in operational costs being expensed. The Company continuously reviews the direct cash costs and believes they are in line with the expected life of mine cash costs of $15 per tonne as outlined in the Norwest technical report.

Mine administration costs per tonne decreased to $1.97 per tonne for the year ended December 31, 2009 compared to $5.79 per tonne for the year ended December 31, 2008. The decrease per tonne is due to the higher sales volume in 2009.

Coal exploration expenses in Mongolia for the year ended December 31, 2009 were lower than the year-ended December 31, 2008. Exploration expenses were higher in 2008 as prior to the commencement of sales in late September 2008 certain operational costs were classified as exploration expense.

Administration expenses for the year ended December 31, 2009 were $24.5 million compared to $20.4 million for the year ended December 31, 2008. The increase predominately relates to salaries and benefits and professional fees. Administration expenses for the year ended December 31, 2009 includes approximately $10.5 million of stock-based compensation compared to approximately $3.8 million for 2008.

Listing fees consist of legal, accounting and professional fees incurred for a secondary listing on the Hong Kong stock exchange. Normally the Company would treat all charges as share issue costs upon a successful equity fundraising. In 2008, uncertainty in the timing of a possible equity financing led to a decision to expense $6.7 million in listing fees. In 2009, the Company continued with the secondary listing application and in October 2009 achieved milestones that strongly indicated that the secondary listing application would lead to an equity financing. All costs subsequent to this date were capitalized. In 2009, listing costs of $2.5 million were expensed and listing costs of $4.6 million were capitalized.

Financial Position and Liquidity

The Company's total assets at the end of 2009 were $560.7 million compared with $99.9 million at the end of 2008. The Company had $357.3 million in cash, $15.0 million in short term investments and $57.1 million in long term investments at December 31, 2009 compared to cash of $10.1 million at December 31, 2008. The short and long term investments include money market investments and the Company's investment of $9.9 million in KRL which was obtained from the sale of the Indonesia Coal Division. The increase in cash and money market investments relate to the CIC financing. The increase in total assets relates to the CIC financing and the continuing development of the Mongolia Coal Division.

The Company's long term liabilities at the end of 2009 were $543.1 million compared with $0.3 million at the end of 2008. The increase in long term liabilities in 2009 relates to the convertible debenture received from CIC in November 2009.

Compliance with the Code on Corporate Governance Practices

The Company has complied with provisions on the Code on Corporate Governance Practices, as set out in Appendix 14 of the rules governing the listing of the securities on the Hong Kong Stock Exchange (the "Listing Rules") throughout the year ended December 31, 2009.

Compliance with the Model Code for Securities Transactions by Directors of Listed Companies

The Company has adopted policies in its Corporate Disclosure, Confidentiality and Securities policy that has terms that are no less exacting than those set out in Appendix 10 of the rules governing the listing of securities on the Hong Kong Stock Exchange.

The Board confirms that all of the Directors have complied with the required standard set out in the Model Code throughout the year ended December 31, 2009.

Purchase, Sale and Redemption of the Company's Listed Securities

The Company has not redeemed any of its shares during the year. Neither the Company nor any of its subsidiaries has purchased, redeemed or sold any of the Company's shares during the year.

Outlook

To further enhance its financial position, on January 29, 2010, the Company announced that it had closed a global equity offering of 27 million common shares of the Company at a price of Cdn$17.00 per common share, for gross proceeds of Cdn$459.0 million.

The Company's future plans for the proceeds include; expanding the existing production capacity of the open pit mine at the Ovoot Tolgoi Mine, assess, construct and develop the regional infrastructure and the coal transportation infrastructure, completion of technical and engineering assessment for construction of value added facilities, exploration activities and general corporate purposes, which may include provision of working capital and general exploration, development and acquisition activities.

The Company believes that demand for commodities is increasing. General economic conditions are showing signs of improvement. It is difficult to reliably forecast commodity prices and customer demand for the Company's products however, the Company's sales and marketing are providing positive results. The Company is continuing to pursue new customers, and maintain strong relations with its current customer base.

Consolidated Financial Statements and Selected Notes

SouthGobi Energy Resources Ltd.
Consolidated Statement of Comprehensive Income
(expressed in thousands of U.S. Dollars, except for share and per share
amounts)
--------------------------------------------------------------------------
Three months ended Year ended
December 31, December 31,
----------------------- ----------------------
Notes 2009 2008 2009 2008
----- ---------- ---------- ---------- ----------
Continuing
operations
Revenue $ 9,960 $ 3,126 $ 36,038 $ 3,126
Cost of sales 4 (8,436) (2,177) (29,425) (2,177)
--------------------------------------------------------------------------
Income from mine
operations 1,524 949 6,613 949
Administration
expenses 5 (7,733) (7,507) (24,535) (20,358)
Evaluation
and exploration
expenses (739) (4,959) (5,399) (26,445)
--------------------------------------------------------------------------
Operating loss
from continuing
operations (6,948) (11,517) (23,321) (45,854)
Finance costs 6 (61,850) (23) (62,911) (7,989)
Interest income 70 170 77 1,868
--------------------------------------------------------------------------
Loss before tax (68,728) (11,370) (86,155) (51,975)
Current income
tax recovery /
(expense) 7 203 - (509) -
Deferred income
tax (expense)/
recovery 7 (1,662) - 6,947 -
--------------------------------------------------------------------------
Loss from
continuing
operations (70,187) (11,370) (79,717) (51,975)
Gain/ (Loss)
from discontinued
operations 1,034 (5,637) (31,088) (17,601)
--------------------------------------------------------------------------
Net loss and
comprehensive loss
attributable to
equity holders of
the Company $ (69,153) $ (17,007) $ (110,805) $ (69,576)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Basic and
diluted loss per
share from:
Continuing
operations 8 (0.53) (0.09) (0.60) (0.40)
Discontinued
operations 8 0.01 (0.04) (0.23) (0.14)
--------------------------------------------------------------------------
Continuing and
discontinued
operations (0.52) (0.13) (0.83) (0.54)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted average
number of basic
and diluted
shares outstanding
('000s) 8 133,967 132,995 133,499 128,354
--------------------------------------------------------------------------
--------------------------------------------------------------------------
SouthGobi Energy Resources Ltd.
Consolidated Statement of Financial Position
(expressed in thousands of U.S. Dollars)
--------------------------------------------------------------------------
As at
December
31, As at December 31,
----------- -------------------------
Notes 2009 2008 2007
----- ----------- ----------- -----------
ASSETS (restated) (restated)
Current assets
Cash and cash equivalents $ 357,342 $ 10,117 $ 1,394
Trade and other receivables 9 12,328 7,290 760
Short term investments 14,999 - -
Inventories 16,384 13,677 -
Prepaid expenses and deposits 8,119 2,578 1,890
--------------------------------------------------------------------------
409,172 33,662 4,044
Assets classified as
held for sale - 638 -
--------------------------------------------------------------------------
Total current assets 409,172 34,300 4,044
Non-current assets
Property, plant and equipment 82,705 52,440 1,123
Intangible assets - 13,208 443
Deferred listing costs 4,565 - -
Deferred income tax assets 7 6,947 - -
Long term investments 57,070 - -
Other receivables 225 - -
--------------------------------------------------------------------------
Total non-current assets 151,512 65,648 1,566
--------------------------------------------------------------------------
Total assets $ 560,684 $ 99,948 $ 5,610
--------------------------------------------------------------------------
--------------------------------------------------------------------------
EQUITY AND LIABILITIES
Current liabilities
Trade and other payables 10 $ 12,669 $ 7,400 $ 1,768
Amounts due under line
of credit facilities 3,009 - -
Current portion of
convertible debenture 11 4,712 - -
Deposit received for
sale of Metals Division - 3,000 -
--------------------------------------------------------------------------
20,390 10,400 1,768
Current liabilities
classified as held for sale - 255 -
--------------------------------------------------------------------------
Total current liabilities 20,390 10,655 1,768
Non-current liabilities
Amounts due under line of
credit facilities - - 105,673
Convertible debenture 11 542,351 - -
Asset retirement obligation 735 329 -
--------------------------------------------------------------------------
Total non-current liabilities 543,086 329 105,673
--------------------------------------------------------------------------
Total liabilities 563,476 10,984 107,441
Shareholders'
(deficiency)/equity
Common shares 296,419 289,512 30,230
Preferred shares - - 4,189
Share option reserve 22,300 12,775 7,497
Accumulated deficit (321,511) (213,323) (143,747)
--------------------------------------------------------------------------
Total shareholders'
(deficiency)/equity (2,792) 88,964 (101,831)
--------------------------------------------------------------------------
Total shareholders' equity and
liabilities $ 560,684 $ 99,948 $ 5,610
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Net current assets $ 388,782 $ 23,645 $ 2,276
Total assets less current
liabilities $ 540,294 $ 89,293 $ 3,842
Subsequent Events (Note 12)
Operating Statistics
Year Ended
---------------------------
December 31, December 31,
2009 2008
---------------------------
Volumes, Prices and Costs
Coal production (millions of tonnes) 0.67 1.16
Coal sales (millions of tonnes) 1.33 0.11
Average sales price (per tonne) $ 28.97 $ 29.20
Total cash costs of product sold (per tonne) $ 16.58 $ 14.09
Direct cash costs of product sold (per tonne) $ 14.61 $ 8.30
Operating Statistics
Total waste material moved (millions
of bank cubic metres) 2.27 2.54
Strip ratio (bank cubic metres of waste
rock per tonne of clean coal produced) 3.36 2.19

1. Corporate Information

SouthGobi Energy Resources Ltd. is a publicly listed company incorporated in Canada with limited liability under the legislation of the Province of British Columbia and its shares are listed on the Toronto Stock Exchange and Hong Kong Stock Exchange. The company together with its subsidiaries (collectively referred to as the "Company") is principally engaged in the acquisition, exploration, development and production of coal properties in Mongolia. The Company's parent is Ivanhoe Mines Ltd. (the "parent" or "Ivanhoe").

The head office, principal address and registered and records office of the Company are located at 999 Canada Place, Suite 654, Vancouver, British Columbia, V6C 3E1.

The Company's Financial Statements and those of all of its controlled subsidiaries ("Consolidated Financial Statements") are presented in U.S. dollars and all values are rounded to the nearest thousand dollars except where otherwise indicated. Information related to shares is presented in thousands except for loss per share information.

The Company is a coal producer and a coal exploration and development company. These Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business.

In February 2009, the Company completed the sale of its Metals Division to Ivanhoe Mines Ltd. for $3 million. The Metals Division consisted of certain base and precious metals properties in Mongolia and Indonesia. The Company will now be focused solely on coal production, development and exploration.

2. Basis of Preparation

2.1 Statement of compliance

The Company's Consolidated Financial Statements have been prepared in accordance with and using accounting policies in full compliance with the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and Interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"), effective for the Company's reporting for the year ended December 31, 2009.

Previously, the Company prepared its Consolidated Annual and Consolidated Interim Financial Statements in accordance with Canadian Generally Accepted Accounting Principles ("GAAP").

2.2 Basis of presentation

The Company's Consolidated Financial Statements have been prepared on the historical cost basis except for certain non-current assets and financial instruments, which are measured at fair value. The comparative figures presented in these Consolidated Financial Statements are in accordance with IFRS.

2.3 Adoption of new and revised standards and interpretations

The IASB issued a number of new and revised IASs, IFRSs, amendments and related IFRICs (hereinafter collectively referred to as the "new IFRS") which are effective for the Company's financial year beginning on January 1, 2009. For the purpose of preparing and presenting the Consolidated Financial Statements, the Company has consistently adopted all these new standards for the years ended December 31, 2009 and 2008.

At the date of authorization of these Financial Statements, the IASB and IFRIC has issued the following new and revised standards, amendments and interpretations which are not yet effective during the year ended December 31, 2009.

- IFRS (Amendments) Amendment to IFRS 5 as part of Improvements to IFRS
issued in 2008 (i)
- IFRS (Amendments) Improvements to IFRS issued in 2009 (ii)
- IAS 24 (Revised) Related party disclosures (vi)
- IAS 27 (Revised) Consolidated and separate financial statements (i)
- IAS 32 (Amendment) Classification of rights issues (iv)
- IAS 39 (Amendment) Eligible hedged items (i)
- IFRS 1 (Amendment) Additional exemptions for first-time adopters (iii)
- IFRS 1 (Amendment) Limited exemption from comparative IFRS 7 disclosure
for first-time adopters (v)
- IFRS 2 (Amendment) Company cash-settled share-based payment
transactions (iii)
- IFRS 3 (Revised) Business combinations (i)
- IFRS 9 Financial instruments (vii)
- IFRIC 14 (Amendment) Prepayment of a minimum funding requirement (vi)
- IFRIC 17 Distributions of non-cash Assets to owners (i)
- IFRIC 19 Extinguishing financial liabilities with equity
instruments (v)
(i) Effective for annual periods beginning on or after July 1, 2009
(ii) Amendments are effective for annual periods beginning on or after July
1, 2009 or January 1, 2010, as appropriate
(iii) Effective for annual periods beginning on or after January 1, 2010
(iv) Effective for annual periods beginning on or after February 1, 2010
(v) Effective for annual periods beginning on or after July 1, 2010
(vi) Effective for annual periods beginning on or after January 1, 2011
(vii) Effective for annual periods beginning on or after January 1, 2013

The Company anticipates that the application of these standards, amendments and interpretations will have no material impact on the results and financial positions of the Company.

3. Segmented Information

At December 31, 2009, the Company has one reportable operating segment, being the Mongolian Coal Division. In prior periods, the Company's Metals Division and Indonesia Coal Division were segments of the Company.

An operating segment is defined as a component of the Company:

-- that engages in business activities from which it may earn revenues and
incur expenses;
-- whose operating results are reviewed regularly by the entity's chief
operating decision maker; and
-- for which discrete financial information is available.

For the Mongolian Coal Division, the Company receives discrete financial information that is used by the chief operating decision maker to make decisions about resources to be allocated to the segment and to assess its performance. The division is principally engaged in the acquisition, exploration and development of coal properties in Mongolia. As at December 31, 2009, the Mongolian Coal Division has achieved commercial production and is earning revenue through the sale of coal to external customers.

The Company's Corporate Division only earns revenues that are considered incidental to the activities of the Company and therefore does not meet the definition of an operating segment as defined in IFRS 8 'Operating Segments'.

At December 31, 2009, the Mongolian Coal Division had three active customers with the largest customer accounting for 65% of trade receivables and the other customers accounting for the remaining 35% of trade receivables. For the year ended December 31, 2009, the largest customer accounted for 64% of revenues and the other customers accounted for the remaining 36% of revenues.

The following is an analysis of the carrying amounts of segment assets, segment liabilities and reported segment profit or loss, revenues, depreciation and depletion expense and impairment charge on assets analyzed by operating segment and reconciled to the Company's Consolidated Financial Statements:

Discontinued Operations
----------------------------
Indonesian
Mongolian Coal Metals Unallo- Consoli-
Coal Division Division cated dated
Division (i) (ii) (iii) Total
--------- --------- --------- --------- ---------
Segment assets
As at
December 31, 2009 $ 129,454 $ - $ - $ 431,230 $ 560,684
As at
December 31, 2008 76,611 14,836 638 7,863 99,948
As at
December 31, 2007 2,509 - 1,132 1,969 5,610
Segment liabilities
As at
December 31, 2009 7,300 - - 556,176 563,476
As at
December 31, 2008 3,101 811 255 6,817 10,984
As at
December 31, 2007 836 - 270 106,335 107,441
Segment
(profits)/losses
For year ended
December 31, 2009 (6,203) 31,088 - 85,920 110,805
For year ended
December 31, 2008 25,434 9,690 7,911 26,541 69,576
Segment revenues
For year ended
December 31, 2009 36,038 - - - 36,038
For year ended
December 31, 2008 3,126 - - - 3,126
Capital expenditures
For year ended
December 31, 2009 35,706 6,511 - 64 42,281
For year ended
December 31, 2008 53,960 481 53 15 54,509
Depreciation and
depletion expense
For year ended
December 31, 2009 5,837 - - 19 5,856
For year ended
December 31, 2008 395 - 54 99 548
Impairment charge
on assets
For year ended
December 31, 2009(iv) - 15,135 - - 15,135
For year ended
December 31, 2008 - - 493 - 493
i. The Indonesian Coal Division was treated as discontinued operations
for the years ended December 31, 2008 and 2009
ii. The Metals Division was treated as discontinued operations for the
years ended December 31, 2008 and 2009 and the assets and liabilities
of the Metals Division were reclassified as held for sale as at
December 31, 2008
iii. The unallocated amount contains all amounts associated with the
Corporate Division
iv. The impairment charge is related to the Indonesia Coal Division

At December 31, 2009, the Company operates in three geographical areas, being Canada, Hong Kong and Mongolia. Prior to December 23, 2009, the Company had operations in Indonesia. The following is an analysis of the revenues and non-current assets by geographical area and reconciled to the Company's Consolidated Financial Statements:

Consoli-
dated
Mongolia Indonesia Hong Kong Canada Total
--------- --------- --------- --------- ---------
Revenues
For year ended
December 31, 2009 $ 36,038 $ - $ - $ - $ 36,038
For year ended
December 31, 2008 3,126 - - - 3,126
Non-current assets
As at
December 31, 2009 89,587 - 49 61,876 151,512
As at
December 31, 2008 51,939 13,689 - 20 65,648
As at
December 31, 2007 1,398 62 - 106 1,566

4. Cost of Sales

The cost of sales of the Company is broken down into its cash and non-cash components as follows:

Year ended Year ended
December 31, December 31,
-------------- -------------
2009 2008
-------------- -------------
Operating expenses (i) $ 23,611 $ 1,863
Depreciation and depletion 5,814 314
--------------------------------------------------------------------------
Cost of sales $ 29,425 $ 2,177
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(i) Share-based compensation (a non-cash item) of $1,590 (2008: $540) has
been included in Operating expenses

5. Administration Expenses

The administration expenses for the Company are broken down as follows:

Year ended Year ended
December 31, December 31,
-------------- -------------
2009 2008
-------------- -------------
Corporate administration $ 2,839 $ 2,123
Legal 912 305
Professional fees 3,159 804
Listing fees (ii) 2,470 6,715
Salaries and benefits (i) 14,024 5,618
Depreciation 19 98
Foreign exchange loss 1,112 4,695
--------------------------------------------------------------------------
Administration expenses $ 24,535 $ 20,358
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(i) Share-based compensation (a non-cash item) of $10,471 (2008: $3,770)
has been included in Salaries and benefits
(ii) Listing fees of $4,565 were deferred in the year ended December 31,
2009

6. Finance Costs

The finance costs for the Company are broken down as follows:

Year ended Year ended
December 31, December 31,
------------- ---------------
2009 2008
--------------- ---------------
Fair value change of embedded
derivatives in convertible debenture $ 44,980 $ -
Fair value change of embedded derivative
in line of credit facility - 7,223
Interest accretion on convertible
debenture 2,972 -
Interest accretion on line of credit
facility - 598
Interest expense on convertible
debenture 4,712 -
Interest expense on line of credit
facilities 1,651 149
Transaction costs on issuance of
convertible debenture 9,399 -
Mark to market gain on investments (843) -
Accretion of asset retirement obligation 40 19
--------------------------------------------------------------------------
Finance costs $ 62,911 $ 7,989
--------------------------------------------------------------------------
--------------------------------------------------------------------------

7. Taxes

The Company and its subsidiaries in Canada are subject to Canadian federal and provincial tax for the estimated assessable profit for the years ended December 31, 2009 and 2008 at a rate of 30% and 31%, respectively. The Company had no assessable profit in Canada for the years ended December 31, 2009 and 2008.

The Company's subsidiaries in Hong Kong are subject to Hong Kong profits tax for the years ended December 31, 2009 and 2008 at a rate of 16.5%. No Hong Kong profits tax was provided for as the Company had no assessable profit arising in or derived from Hong Kong in the years ended December 31, 2009 and 2008.

The Company's subsidiaries in Mongolia are subject to Mongolian income tax for the years ended December 31, 2009 and 2008 at a rate of 25%. In the year ended December 31, 2009 the Company recorded a current income tax charge of $509 (2008: $nil) related to assessable profit derived from Mongolia.

Taxation from other relevant jurisdictions is calculated at the rates prevailing in each of those jurisdictions respectively.

The tax expense for the Company can be reconciled to the loss for the period per the consolidated statement of comprehensive income as follows:

Year ended Year ended
December 31, December 31,
--------------- ---------------
2009 2008
--------------- ---------------
Loss from continuing
operations before tax $ 86,155 $ 51,975
Loss from discontinued operations
before tax 31,088 17,601
--------------------------------------------------------------------------
Loss from operations
before tax 117,243 69,576
Statutory tax rate 30.00% 31.00%
Recovery of income taxes based on
combined Canadian federal and
provincial statutory rates 35,173 21,568
Deduct:
Lower effective tax rate
in foreign jurisdictions (992) (2,118)
Tax effect of tax losses
and temporary differences not
recognized (1,938) (15,712)
Non deductible expenses (22,956) (2,902)
Effect of change in future tax rates (2,849) (836)
--------------------------------------------------------------------------
Tax recovery for the year $ 6,438 $ -
--------------------------------------------------------------------------

The Company's recognized deferred income tax assets are as follows:

As at As at
December 31, December 31,
------------------------------------------------
2009 2008 2007
------------------------------------------------
Tax loss carry-
forwards $ 5,793 $ - $ -
Property, plant and
equipment 1,135 - -
Other assets 19 - -
--------------------------------------------------------------------------
Total deferred
income tax assets $ 6,947 - -
--------------------------------------------------------------------------
--------------------------------------------------------------------------

The Company's unrecognized deferred income tax assets are as follows:

As at As at
December 31, December 31,
------------------------------------------------
2009 2008(i) 2007
------------------------------------------------
Tax loss carry-forwards $ 12,884 $ 13,732 $ 14,977
Property, plant and
equipment 56 504 1,075
Share issue costs 4,902 687 16
Unrealized foreign
exchange losses 5,582 2,319 1
Convertible debenture - - -
Fair value of
embedded derivatives - - 20,930
Other assets 1,275 1,146 1,477
--------------------------------------------------------------------------
Total unrecognized
deferred income tax assets $ 24,699 $ 18,388 $ 38,476
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(i) 2008 figures exclude deferred income tax assets associated with
assets and liabilities classified as held for sale

The Company's unrecognized deferred income tax assets associated with assets held for sale as at December 31, 2008 are as follows:

As at
December 31,
-----------------
2008
-----------------
Tax loss carry-forwards $ 3,892
Property, plant and equipment 482
--------------------------------------------------
Total deferred income tax assets $ 4,374
--------------------------------------------------
--------------------------------------------------

At December 31, 2009 the Company and its subsidiaries have unrecognized capital losses and non-capital losses for income tax purposes of approximately $97,869 (2008: $64,418; 2007: $56,313) that may be used to offset future taxable income as follows:

As at December 31, 2009
--------------------------------------
Local U.S. Dollar Expiry
currency Equivalent dates
---------- ------------ ----------
Non-capital losses
Canadian Dollar Cdn$ 35,922 $ 34,108 2010-2029
Mongolian Tugrik MNT 33,496,611 29,243 2010-2020
Singapore Dollar SGD 48 34 indefinite
Hong Kong Dollar HKD 7,898 1,018 indefinite
------------
$ 64,403
------------
------------
Capital losses
------------
Canadian Dollar Cdn$ 35,246 $ 33,466 indefinite
------------
------------

8. Loss Per Share

The calculation of basic and diluted loss per share is based on the following data:

Year ended Year ended
December 31, December 31,
--------------- ---------------
2009 2008
--------------- ---------------
Net loss from continuing operations
for the purpose of basic and diluted
loss per share $ 79,717 $ 51,975
Net loss from discontinued operations
for the purpose of basic and diluted
loss per share $ 31,088 $ 17,601
Weighted average number of shares for
the purpose of basic and diluted
loss per share 133,499 128,354

The basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the year. The diluted loss per share reflects the potential dilution of common share equivalents, such as preference shares, outstanding stock options, share purchase warrants and convertible debentures, in the weighted average number of common shares outstanding during the year, if dilutive. All of the stock options and the convertible debenture were anti-dilutive for the years ended December 31, 2009 and 2008.

9. Trade and Other Receivables

The Company's trade and other receivables arise from two main sources: trade receivables due from customers for coal sales and value added tax ("VAT") and goods and services tax ("GST") receivable due from various government taxation authorities. These are broken down as follows:

As at As at
December 31, December 31,
------------------------------------------------
2009 2008 2007
------------------------------------------------
Trade receivables $ 5,200 $ 1,743 $ -
VAT/GST receivable 7,029 5,357 720
Other receivables 99 190 40
--------------------------------------------------------------------------
Total trade and
other receivables $ 12,328 $ 7,290 $ 760
--------------------------------------------------------------------------
--------------------------------------------------------------------------

10. Trade and Other Payables

Trade and other payables of the Company are principally comprised of amounts outstanding for trade purchases relating to coal mining and exploration activities and amounts payable for financing activities. The usual credit period taken for trade purchases is between 30 to 90 days.

The following is an aged analysis of the trade and other payables:

As at As at
December 31, December 31,
------------------------------------------------
2009 2008 2007
------------------------------------------------
Less than 1 month $ 9,630 $ 4,723 $ 76
1 to 3 months 892 1,960 198
3 to 6 months 705 701 210
Over 6 months 1,442 16 1,284
--------------------------------------------------------------------------
Total trade and
other payables $ 12,669 $ 7,400 $ 1,768
--------------------------------------------------------------------------
--------------------------------------------------------------------------

11. Convertible Debenture

On November 19, 2009, the Company issued a convertible debenture to a wholly owned subsidiary of the China Investment Corporation ("CIC") for $500 million, which is secured and bears interest at 8.0% with a maximum term of 30 years. The financing is required primarily to support the accelerated investment program in Mongolia and up to $120 million of the financing may also be used for working capital, repayment of debt due on funding, general and administrative expense and other general corporate purposes.

The key commercial terms of the financing include:

-- Interest - 8% per annum (6.4% payable semi-annually in cash and 1.6%
payable annually in the Company's shares, where the number of shares
to be issued is calculated based on the 50-day volume-weighted
average price ("VWAP").
-- Term - Maximum of 30 years.
-- Security - First charge over the Company's assets, including shares of
its material subsidiaries.
-- Conversion price - The conversion price is set as the lower of Cdn$11.88
or the 50-day VWAP at the date of conversion, with a floor price of
Cdn$8.88 per share.
-- Conversion timing - The Company and CIC each have various rights to call
conversion of the debenture into common shares. CIC has the right to
convert the debenture, in whole or in part, into common shares twelve
months after the date of issue. The Company has the right to call for
the conversion of up to $250 million of the debenture on the earlier of
twenty four months after the issue date, if the conversion price is
greater than Cdn$10.66, or upon the Company achieving a public float of
25% of its common shares under certain agreed circumstances, if the
conversion price is greater than Cdn$10.66.
-- Company's normal conversion right - After sixty months from the issuance
date, at any time that the conversion price is greater than Cdn$10.66,
the Company will be entitled to require conversion of the outstanding
convertible debenture, in whole or in part, into common shares at the
conversion price.
-- Representation on the Company's Board - While the debenture loan is
outstanding, or while CIC has a minimum 15% direct or indirect stake in
the Company, CIC has the right to nominate one director to the Company's
Board. The Company currently has eight Board members.
-- Voting restriction - CIC has agreed that it will not have any voting
rights in the Company beyond 29.9% if CIC ever acquires ownership of
such a shareholder stake through exercising the debenture.
-- Pre-emption rights - While the debenture loan is outstanding, or while
CIC has a 15% direct or indirect stake in the Company, CIC has certain
pre-emption rights on a pro-rata basis to subscribe for any new shares
to be allotted and issued by the Company for the period which the
debenture is outstanding. The pre-emption rights will not apply to new
shares issued pursuant to pro-rata public equity offerings made to all
shareholders, exercise of stock options and shares issued to achieve a
25% public float.
-- Right of first offer - While a portion of the debenture is outstanding,
or while CIC has a 15% direct or indirect stake in the Company, CIC has
the right of first offer for any direct and indirect sale of Ivanhoe's
ownership stake in the Company. At December 31, 2009 Ivanhoe owned
directly and indirectly approximately 79% of the Company's issued and
outstanding shares.
-- Registration Rights - CIC has registration rights under applicable
Canadian provincial securities laws in connection with the common shares
issuable upon conversion of the debenture.

The Company identified that the convertible debenture is a debt host contract to be presented as a liability and contains no equity components. The Company also concluded that the convertible debenture is a hybrid instrument, containing a debt host component and three embedded derivatives - the investor's conversion option, the issuer's conversion option and the equity based interest payment provision (the 1.6% share interest payment) (the "embedded derivatives"). The debt host component is classified as other financial liabilities and will be measured at amortized cost using the effective interest rate method and the embedded derivatives are classified as FVTPL and all changes in fair value will be recorded in income. The difference between the host debt component and the principal amount of the loan outstanding will be accreted to income over the expected life of the convertible debenture.

The embedded derivative was valued upon initial measurement and at December 31, 2009 using a Monte Carlo simulation valuation model. A Monte Carlo simulation model is a valuation model that relies on random sampling and is often used when modeling systems with a large number of inputs and where there is significant uncertainty in the future value of inputs and where the movement of the inputs can be independent of each other. Some of the key inputs used by the Company in its Monte Carlo simulation included: the floor and ceiling conversion prices, the risk-free rate of return, expected volatility of the stock price, forward foreign exchange rate curves (between the Cdn$ and U.S.$) and spot foreign exchange rates.

Based on the Company's valuation as at November 19, 2009, the closing date of the convertible debenture, the value of the embedded derivatives was $313,292 and the value of the debt component was $186,708. The transaction costs of $15,000 were applied on a pro-rata basis to the debt host and embedded derivatives and transaction costs of $9,399 associated with the embedded derivatives were expensed as financing costs and transaction costs of $5,601 associated with the debt host were netted against the debt host component.

Based on the Company's valuation model as at December 31, 2009, the fair value of the embedded derivatives had increased by $44,980 which was expensed as financing costs for the year ended December 31, 2009. In the year ended December 31, 2009, the Company also recorded an accretion expense of $2,972 related to the debt host component of the convertible debenture and an interest expense of $4,712 related to the convertible debenture. To calculate the accretion the Company used an expected life of 30 years.

The assumptions used in Monte Carlo valuation models as at December 31, 2009 and November 19, 2009 are as follows:

As at As at
December 31, November 19,
------------ ------------
2009 2009
------------ ------------
Floor conversion price Cdn$8.88 Cdn$8.88
Ceiling conversion price Cdn$11.88 Cdn$11.88
Expected volatility (i) 75% 80%
Risk-free rate of return 4.09% 3.92%
Foreign exchange spot rate
(U.S.$ to Cdn$) 0.96 0.94
Forward foreign exchange
rate curve (U.S.$ to Cdn$) 0.90 - 0.95 0.90 - 0.94
(i) Expected volatility has been based on historical volatility of the
Company's publicly traded shares

The movement of all the amounts due under the convertible debenture is as follows:

Balance, as at December 31, 2007
and December 31, 2008 $ -
Amounts advanced 500,000
Transaction costs (5,601)
Accrued interest payable 4,712
Interest accretion 2,972
Fair value change on embedded derivatives 44,980
--------------------------------------------------------------------------
Balance, as at December 31, 2009 $ 547,063
--------------------------------------------------------------------------
--------------------------------------------------------------------------

The amounts due under the convertible debenture are further broken down as follows:

As at
December 31,
---------------
2009
---------------
Debt host $ 184,079
Fair value of embedded derivatives 358,272
Interest payable 4,712
------------------------------------------------------------
Convertible debenture $ 547,063
------------------------------------------------------------
------------------------------------------------------------
Financial Statement Presentation
CURRENT LIABILITIES
Current portion of convertible debenture $ 4,712
NON-CURRENT LIABILITIES
Convertible debenture 542,351
------------------------------------------------------------
Convertible debenture $ 547,063
------------------------------------------------------------
------------------------------------------------------------

12. Subsequent Events

12.1 International offering

On January 29, 2010, the Company successfully completed an international offering of 27,000 shares for gross proceeds of $437,446. The Company incurred underwriter fees of $17,415 and other share issue costs in association with the international offering. Simultaneously with the international offering the Company's shares began trading on the HKEX under the ticker HKEX: 1878.

12.2 CIC conversion

On March 12, 2010, the Company announced, subject to regulatory approval, a formal request for CIC to convert $250,000 of its convertible debenture into common shares of the Company.

13. Review of Results

The Audit Committee has reviewed the annual results of the Company for the year ended December 31, 2009.

Qualified Person

Disclosures of a scientific or technical nature in this release and the Company's MD&A in respect of each of SouthGobi's mineral resource properties were prepared by, or under the supervision of, Stephen Torr, P. Geo, a qualified person as defined in NI 43-101.

SouthGobi's results for the year ended December 31, 2009, are contained in the audited Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations, available on the SEDAR website at www.sedar.com and SouthGobi Energy Resources website at www.southgobi.com. Copies of SouthGobi's 2009 Annual Report containing the audited financial statements, and Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), and the AIF are available at www.southgobi.com under the corporate page. Shareholders also may request a hard copy of the Annual Report free of charge by contacting our investor relations department by phone at +1-604-681-6799 or by email at info@southgobi.com.

About SouthGobi Energy Resources

SouthGobi Energy Resources is focused on exploration and development of its Permian-age metallurgical and thermal coal deposits in Mongolia's South Gobi Region. The Company's flagship coal mine, Ovoot Tolgoi, is producing and selling coal to customers in China. The Company plans to supply a wide range of coal products to markets in Asia.

Forward-Looking Statements: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, Plans to supply a wide range of coal products to markets in Asia; and other statements that are not historical facts. When used in this document, the words such as "plan", "estimate", "expect", "intend", "may", and similar expressions are forward-looking statements. Although SouthGobi believes that the expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements are disclosed under the heading "Risk Factors" in SouthGobi's Management Discussion and Analysis of Financial Condition and Results of Operations for the year ended Dec. 31, 2009, which are available at www.sedar.com.

Contacts:
SouthGobi Energy Resources Ltd. - Investors
Steven Feldman
+1 604 681-6799
SouthGobi Energy Resources Ltd. - Media
Bob Williamson
+1 604 681-6799
www.southgobi.com

Source:www.southgobi.com

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