Smart money seeks out Kincora

Author Chris Cann

TSX-listed exploration company Kincora Copper Ltd closed an over-subscribed C$5 million (US$4.48 million) capital raising this week ahead of a highly anticipated drill program on its Brown Fox project, 140km down the road from the monstrous Oyu Tolgoi (OT) operation in Mongolia. Given the lack of enthusiasm for exploration and Mongolia at present, this must represent the ‘smart money’.

“Some people have suggested our success with this raise was a sign that people’s sentiment toward Mongolia is improving,” Kincora chief executive Sam Spring told the Mining Journal. “[But] going through the problems in Russia, uncertainty in China, and the volatility and rumours around the OT situation … I haven’t heard anyone say they’re attitudes [toward Mongolia] have changed.

“It’s really about good assets, good management teams and good strategies continuing to get funded. It’s not really about Mongolia.”

The full C$5 million from the raising will go into the ground in the form of a season-long drill program to test the majority of nine identified targets. At this stage, Kincora plans to drill 16 holes over the field season from April to early-November. Some of these holes may test down to 1000m.

The non-brokered private placement was over-subscribed, with about C$400,000 having to be returned to investors. There were also several parties looking to get involved that couldn’t be accommodated at all. The majority of the funds came from existing institutional shareholders looking to retain their positions, though new institutions are represented. The management and executive group has also topped up individual holdings in anticipation of a ground breaking year at Bronze Fox.
The reason 2014 could prove pivotal for Kincora can be traced back to a decision to spend 2013 trying to better understand the project geology without engaging the drill rig. At the centre of this geotechnical work was an induced polarisation (IP) program that Spring said, in hindsight, “really should have been done earlier”.

Previously, the geophysics ran to a maximum depth of 400m. Given some of the targets in the coming drill program start below 400m, that was clearly inadequate. The geophysics profile now covers down to 1000m.

Kincora backed up the IP studies with two independent consultant reports that centred on geochemical work and, crucial to porphyry exploration, alternation studies. A year’s geotechnical work overlain by previous drilling results produced the group of nine, high confidence targets on which the company is now focused. Each target represents a potentially economic porphyry system based on a 1-2km anomaly.

Kincora drilled four near-discovery holes in 2012 that ended in mineralisation including an 800m intercept grading >0.4% Cu equivalent (including 37m grading >1% Cu equivalent) but did fully understand the geological context of those results. Geologists now know they were 500m from what should have been the target zone.

“It’s really positive that there are big systems here and when you’re in the outer reaches you’re still seeing almost economic grade,” Spring said. “But with the IP, there are other areas that we weren’t drilling that alteration analysis shows should be in the right part of the system for better continuity and grade.”
The process Kincora is moving through mirrors that experienced at OT around the turn of the century. This is another reason for the building excitement around the Bronze Fox project.

BHP Billiton and then Ivanhoe Mines had both focused on a certain porphyry model of a certain depth, which they drilled without the geophysics below that depth. Ivanhoe ran the extended geophysics in 2000, redefined targets, and the OT discovery hole was drilled in 2001. OT is currently made up of 10 mineralised zones that began as porphyry targets based on 2-3km anomalies at varying depths. The similarities with Brown Fox are clear.

Spring would not dare suggest that all nine of the Bronze Fox targets will prove to be economic porphyry systems but just one would underpin a mid-tier copper operation. Like at OT, Kincora is looking for a combination of shallow openpit mineralisation to be followed by an underground operation based on one or more of the deeper targets.

Mongolian-based investment bank ResCap drew comparisons with OT in a note last month and also pointed to the Tsagaan Suvarga copper mine, which is smaller than OT but just 40km away. All three project areas sit within the Gurvansayhan island arc intrusive terrane. The bank also pointed out that “insiders are buying” the stock, with directors tucking in in January following the full results of the company’s 2013 program.

“[Kincora] is backed by the best technical team in Mongolia, arguably one of the best in the junior copper space [with] former Rio Tinto and BHP Billiton [professionals],” ResCap analyst Enkhbayar Davaatseren said. “[This is] a direct play on exploration success, not to be confused with a play on Mongolian politics/macro-[economic environment].”

Spring remains ultimately confident in the ability of Bronze Fox to deliver an economic deposit but is keeping his short-term expectations in check. A series of holes that prove up the geological model without a discovery hole that sets the market alight in 2014 would be fine.

“It’s nice to be in charge of our own destiny because things have largely been out of our control for some time in terms of the macro situation,” he said. “To come out of that with a story that is compelling enough to attract people in and not rely on a Mongolia story or an improving exploration back-drop is important for us.

“We’re at that place in the S-curve where exploration success means a 20-50-bagger and that’s what people are putting their money in for.”

Source:Mining Journal
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Mongolian Kakuryu promoted to sumo’s highest rank

TOKYO — Kakuryu of Mongolia was promoted to yokozuna on Wednesday, becoming the sixth foreign-born wrestler to reach sumo’s highest rank.
The 28-year-old Kakuryu won the Spring Grand Sumo Tournament with a 14-1 record en route to his second career title and was unanimously voted to become the 71st grand champion.
Kakuryu, whose real name is Mangaljalav Anand, joins fellow Mongolians Hakuho and Harumafuji as the three wrestlers at the top rank. Sumo has not had a Japanese grand champion since Takanohana retired in 2003.
He becomes the fourth Mongolian to reach yokozuna. Asashoryu, who retired in 2010, was the first.


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Turquoise Hill sees Oyu Tolgoi production below forecasts

(Adds fourth-quarter results, detail on technical problems.)
(Reuters) - Technical problems hit first-quarter production at Rio Tinto's Oyu Tolgoi copper and gold mine in Mongolia, and full-year output may be lower than previously forecast, Turquoise Hill Resources said on Wednesday.
Turquoise Hill, which owns a majority interest in Oyu Tolgoi and is controlled by Rio, said rake blades in the mine's tailings thickeners failed, and also that some "debottlenecking" projects were put off to preserve cash.
Full production resumed on Monday, Turquoise Hill said, and the mine is now expected to produce between 135,000 and 160,000 tonnes of copper in concentrates and 600,000 to 700,000 ounces of gold in concentrates in 2014.
The company had previously said the mine was targeting between 150,000 and 175,000 tonnes of copper in concentrates and 700,000 to 750,000 ounces of gold in concentrates.
Turquoise Hill reported its results for the fourth quarter. Net income was $138.4 million, or 11 cents a share, compared with a net loss of $145.0 million, or 11 cents a share, a year earlier. Revenue rose to $84.0 million from $1.3 million.
Rio Tinto owns 50.8 percent of Vancouver-based Turquoise Hill, which in turn holds a 66 percent interest in Oyu Tolgoi. Rio operates the mine. (Reporting by Allison Martell; Editing by Lisa Von Ahn and Stephen Powell)
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KINCORA COPPER - CLOSES FIRST TRANCHE OF OVERSUBSCRIBED PRIVATE PLACEMENT

Vancouver, BC – March 25th, 2014 – Kincora Copper Limited (the “Company”, “Kincora”) (TSXV:KCC) is pleased to announce that it has completed a $5 million private placement, subject to certain approvals. The successful placing attracted considerable demand from both new and existing investors and was significantly oversubscribed. Funds from the capital raising will be used for high priority drilling, and other exploration activities, at our flagship and wholly owned Bronze Fox license in the upcoming 2014 field season.

The Company has closed the first tranche of financing for gross proceeds of C$4,575,000 through the issuance of 91,500,000 units at a price of C$0.05 per unit (the “Offering”). Each unit consists of one common share and one common share purchase warrant. Each whole warrant entitles the holder to acquire one common share of Kincora for a period of two years expiring March 24th, 2016 at a price of C$0.105 per share. If at any time following the expiry of the resale restrictions the closing price of Kincora’s shares on the TSX Venture Exchange (the “TSXV”) is greater than $0.15 for 30 consecutive trading days then Kincora may give notice accelerating the expiry date of the Warrants to 30 days from the date of the notice.

All units issued under the Offering are subject to a four month hold period expiring July 25th, 2014.

The Company paid finder’s fees of $190,642 in connection with the first tranche of the Offering, with efforts led by the The Private Office SA (“TPO”) and Resource Investment Capital Limited (“ResCap”), and assisted from SkyPath Partners LLC, Pareto Securities Limited and The Mongolian Investment Banking Group LLC (“MIBG”).

The Company proposes to issue a further approximately 8,500,000 units for proceeds of approximately $425,000 to Khayyam Minerals Ltd. (TSXV: KYY.P) (“Khayyam”), which issuance remains subject to Khayyam obtaining certain regulatory and shareholder approvals, as more particularly detailed in the news release of Khayyam dated March 10, 2014.

Commenting on today's announcement, Sam Spring, President and CEO of Kincora, said:

"Kincora attracted significant demand for the Offering, which has been well oversubscribed, illustrating strong interest and support for our proposed field season activities at Bronze Fox. I would like to welcome a number of new investors, some of which are mining sector and/or Mongolia specialist groups, who participated in the private placement and thank existing shareholders for their continued support as we enter a very exciting period for Kincora.

The Company’s focus is now mobilizing field season activities and advancing a number of corporate initiatives. Drilling, and other follow up activities, are shortly planned at Bronze Fox based on extremely promising previous drill results, new geophysical and other “long lead” time / technical activities undertaken in 2013. A follow up phase of target drilling in 2001 at Oyu Tolgoi focused on similar untested geophysical targets, with often-supportive previous drilling, and led to the “discovery hole” and subsequent definition of one of the world’s largest copper-gold porphyries. Kincora is looking to follow a similar exploration strategy and successful proof of concept activities at Bronze Fox this field season could provide visibility for significant resource potential”.

Source:Kincora Copper
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Coal miner SouthGobi warns of cash crunch, posts bigger loss

(Reuters) - Coal miner SouthGobi Resources Ltd warned that it was unlikely to have enough cash to meet its debt obligations and was looking for financing to continue its operations in Mongolia.
The company, controlled by Rio Tinto Plc , also reported a bigger quarterly loss, mainly due to impairment losses.
SouthGobi said it expected continued pressure on its margins and liquidity as coal prices were likely to stay weak in China this year.
A continued delay in securing additional financing could result in a default of its $250 million China Investment Corp convertible debentures, SouthGobi said.
The company's net loss widened to $138.7 million, or 75 cents per share, in the fourth quarter ended Dec. 31 from $56.6 million, or 31 cents per share, a year earlier.
SouthGobi took impairment losses of $106.8 million in the quarter.
Source:Reuters
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Mongolia to build railway across Mongolia-China border to transport minerals

ULAN BATOR, March 22 (Xinhua) -- Mongolia announced Saturday that it will build an international-standard narrow gauge railroad across its border with China to transport its minerals from the Mongolian Gashuun Sukhait port to China's Gants Mod port.
Ulan Bator has permitted Erdenes Tavan Tolgoi, a state-owned mining company, to co-invest with Chinese companies and form a joint venture to build and operate the railway linking the two countries' border ports.
Both sides have agreed that Mongolia owns 17 percent of the venture's stakes and have the same share of investment. In total, 500,000 U.S. dollars will be invested in the initial phase of construction.
Coal is one of Mongolia's major mineral exports to China. The mineral-rich inland country made the decision to protect the environment and reduce the transportation cost of the coal, which has largely depended on costly trucks.
Source:Xinhua news agency
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Australia - Mongolia mining industry cooperation


Media release

18 March 2014

Mongolian Foreign Minister Luvsanvandan Bold and I today announce a five-year, $20 million program to assist the sustainable development of the resources sector in Mongolia.
Like Western Australia, Mongolia's economy is driven by mining and resources. The Australia-Mongolia Extractives Program will utilise Australian expertise in Mongolia to help ensure the benefits of the mining sector are spread across its entire population.
Whether in Australia or Mongolia, private-sector led growth is key to a growing economy.
Releasing Mongolia's fledgling mining industry from a failed mining tax has greatly benefited the economy. Australia is pledging to support the Mongolian Government with financial assistance and expertise that will improve governance in the mining sector, opening their economy up to international investment and development opportunities.
The program will also improve access to technical and vocational education and training in disadvantaged communities in Mongolia so they are better equipped to gain employment in the mining industry.
I welcome Foreign Minister Bold to Australia - the first by a Mongolian Foreign Minister to Australia in over twenty years. The visit will provide the opportunity to discuss our countries' expanding partnership and how Australian investment in major mining projects like Rio Tinto's Oyu Tolgoi can help boost the Mongolian economy.
During Foreign Minister Bold's visit Australia and Mongolia will sign a Memorandum of Understanding on Consular Cooperation.
The Australian Government's existing $5 million partnership with the World Bank is also presently helping to strengthen management of groundwater resources in the southern Gobi region.

Media enquiries

  • Foreign Minister's Office: (02) 6277 7500
  • DFAT Media Liaison: (02) 6261 1555
Source:Australian Ministry of Foreign Affairs
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Disability Awareness Activist Uyanga Erdenebold, Ulaanbaatar Mongolia

Main Entry Image
Nomin Dari
Most of us know the difficulty of learning a foreign language. Now, imagine the triumph of learning a foreign language, blind. Uyanga Erdenebold, has not only done that, but is also the recipient of the first Fulbright Scholarship awarded to a blind Mongolian student. Uyanga completed a Masters Degree in library and information science from Louisiana State University in 2009 and currently works full-time for the U.S Embassy in Ulaanbaatar, Mongolia.
At age four, Uyanga was diagnosed with retinoid dispegmentosa. At age eight, she could no longer see the blackboard or read print books. By college, she could not see her reflection in the mirror. Today, she is completely blind. She recalled that at age 14, she realized the true nature of her condition and in that moment, life became a race for her. She could not imagine life without being able to see, and thought that being blind would be the end of everything. However, in her own words, she "refused to be a prisoner of her disability." Albeit the lack of material resources available in Mongolia for visually impaired persons with ambition and hard work, she finished high school and continued to the University of Humanities of Mongolia. Uyanga successfully completed university in Mongolia without ever once having access to an audio format book.
Uyanga began English language studies at age 16 out of necessity, for she had finished reading all of the available Mongolian braille books and the only braille books left to read were donated English books. Her efforts have certainly paid off, as she is a fluent speaker today. In December 2013, she was a featured panelist at Tedx Ulaanbaatar Women. In that 15-minute speech inspired by personal experience, she spoke of the difficulties and challenges faced by persons with disabilities in Mongolia. Uyanga underlines the fact that it was not lack of material resources, but in fact, lack of awareness and understanding of persons with disabilities that continues to be the most difficult obstacle in her path. I encourage everyone to watch as her story is not only inspirational, but offers an opportunity to expand your understanding and perspectives regarding the lives of those with disabilities.
Following the Tedx event, I pursued a follow up personal interview with Uyanga, accompanied by Gladys, the first seeing-eye dog in Mongolia. The interview was held at the Natsajdorj Library in the city center of Ulaanbaatar.
Below are direct excerpts from the interview:
On being blind:
"I'm a blind person, but I don't feel bad about it. Obviously, I wish I could see, but it is a different way of experiencing life. Everywhere, all around the world, when it comes to minorities or people with disabilities, we think of us and them. However, it is not really us and them. We are the same. We are people, but we have different abilities".
Her experience as a blind person in Mongolia:
"In our culture, the prevailing attitude toward those with disabilities is pity. I guess it might be a natural instinct, but people need to get over that and see that person as an equal and appreciate that that person might have interesting things and perspectives to share. I think that attitude comes from seeing disabled people differently, as people who stay at home and are taken care of. The same way we think about pets. We love them, want them to be healthy, good, well fed, but we don't expect them to do anything contributing to your household. They are there to love, to spoil. In the best of conditions that is what it is like. As an intelligent or capable person, that is very frustrating to say the least."
"It makes me feel frustrated when for example people make me feel like a small child. I went to the University of Humanities, at first, everyone was very distant. Both teachers and students. And when I came to a pub, they would ask what kind of juice I wanted. So, that is what I am talking about. They were super friendly, with the best of intentions, but they see me as a different someone. A someone who needs to be treated lightly; who doesn't party, doesn't drink. Someone who doesn't even know about actors, singers or hot stars."
Shifting attitudes in Mongolia:
"But I think attitudes are starting to change. Lots of people are willing to listen and talk about what we can do. In the past couple of years, I am starting to see that we [as disabled persons] need to let people know what we need, otherwise, how would they [the public] know. Therefore, we need to do something ourselves instead of sitting and talk about how unfair it is. I guess this is part of the reason why I spoke at the Tedx event."
On Speaking Out:
In 2011, Uyanga was featured on a televised interview on the Defacto Talk Show. The interview now has over 20,000 views on YouTube.
"[Filmed during a hurried lunch break, Uyanga notes that as for the Defacto Show interview], the effect was almost immediate. The next day, many people knew about Gladys and the attitude had changed. So now, my attitude towards media has shifted. So instead, of feeling like a victim or complaining about it, I think I should give people a chance to learn about Gladys, or me, or issues that disabled people face."
On being in the spotlight:
"My personal attitude is to just live my life. I just want to be an individual. I am perfectly happy to be part of the crowd and live my life in my own way. However, I am facing so much difficulty just trying to do that. It has put me in a position where I have to be in the spotlight. I have to come out and speak, so I can let others know what 'I need' in order to live my life normally."
"This applies to many people who have similar disabilities or issues. During one conversation with some of my friends who are disabled, I told them I do not want to be a role model and someone who comes out and talks. My one friend responded "for somebody for you in Mongolia that is very selfish". After reflecting on her words, I had a change in my attitude. I cannot just think about my life. I had the opportunity to get higher education. I have the ability to speak English, which makes it possible to reach a larger audience."
"If I speak out about myself, my experiences, the difficulties I face, and what I think we could do together, that is going to affect many other people's lives. At least the smallest thing I could do is speak out to educate them. I am becoming more open to that."
On being an activist:
"If I don't want to speak out, if I don't want to talk about it , the choice I am left with or the only option I am left with is to be hidden or to let it be alright for people to treat me differently. That is not how I want to live my life."
"If I want to live a fulfilling life, if I want to be someone who is a contributing member of society, and if I want to feel satisfied about my life and goals, then I really do not have a choice but to speak out."
"Speaking out, coming under the spotlight, it can be scary and intimidating. You are putting your life out there on display. You are talking about your feelings, childhoods, difficulties you face... that is a compromise. For people who are disabled like me, it is a necessary compromise in order to make people understand."
"My dream is where we have a society where we don't have to make people pity or feel bad for you in order to accept you. It is a society where we don't have to talk about our personal stories in order to understand us. Where people take it is a given that people who are disabled are not inferior or lacking."
On personal aspirations:
"I started this organization where we receive injured puppies or dogs and try to find homes for them. It is not on a big scale, we ran out of money since most of it comes from my own pocket. It has been very successful this winter. One of my dreams is to establish proper an animal shelter for the homeless dogs of Ulaanbaatar. Dogs are one of my soft spots... Because I owe it to dogs."
"In addition, my dream is to establish a modern library in Ulaanbaatar. As you can see in UB, there are not many libraries that are convenient, or places where people want to stay and read. I want to have a very nice, friendly library, where children, disabled people, elderly are welcome to read their newspapers. I see it as a friendly, sunny place where people would feel comfortable, read books and be happy."
{End transcript}
Click here to view Uyanga's Tedx interview.
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