YAK:CN - Leveraged to Mongolias Growth

August 2012 Presentation

Legal Disclaimers

This is not an offer to sell or a solicitation of an offer to purchase securities by Mongolia Growth Group (the Company). Any such offer or solicitation will only be made by means of the Companys Offering Documents (e.g., prospectus, offering memorandum, subscription agreement and or similar documents) and only in jurisdictions where permitted by law. Investors should refer to the Offering Documents for more complete information, including investment risks, fees and expenses.
looking statements are typically identied by terminology such as may, will, should, expect, anticipates, plans, intends, believes, estimates, projects, predicts, seeks, potential, continue or other similar terminology. Forward-looking statements are inherently unreliable, and prospective investors should not rely on them. The forward-looking statements are based on the Companys current expectations, assumptions, estimates and projections about future events. Actual results are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in a forward-looking statement as a result of various factors which may be further described in the Companys Offering Documents. The Company does not have any obligation to update or otherwise revise any forward-looking statements in the attached material or to reect the occurrence of unanticipated events.

Certain information contained herein have been prepared by third-party sources, and such information has not been independently audited or veried by the Company. The Company has used its best efforts to ensure the accuracy and completeness of the information presented.

The securities are a highly speculative investment and are not intended as a complete investment program. They are designed only for sophisticated persons who can bear the economic risk of the loss of their investment in the Company and who have limited need for liquidity in their investment. There can be no assurance that the Company will achieve its objectives. Target investment goals are not a guarantee of future returns.

The attached material is provided for informational purposes only as of the date hereof, is not complete, and may not contain certain material information about the Company, including important disclosures and risk factors associated with an investment in the Company. This information does not take into account the particular investment objectives or nancial circumstances of any specic person who may receive it. More complete disclosures and the terms and conditions relating to a particular investment is, or will be, contained in the Offering Documents. Before making any investment, prospective investors should thoroughly and carefully review the Offering Documents with their nancial, legal and tax advisors to determine whether an investment is suitable for them.

The attached material includes forward-looking statements relating to, among other things, the future nancial performance of and objectives of the Company; plans and expectations for the operation of the Company; and estimates or expectations for fees, costs and expenses. These forward-

Legal Disclaimers

Forward Looking Statements

This document, together with any documents incorporated by reference herein, contains statements about expected future events and nancial and operating results that are forward-looking. From time to time, we may also provide oral or written forward-looking statements in other materials we release to the public. Forward-looking statements give our current expectations or forecasts of future-events. You can identify these statements by forward-looking words such as "expects", "does not expect", "plans", "anticipates", "does not anticipate", "believes", "intends", "estimates", "projects", "potential", "scheduled", "forecast", "budget" and similar expressions, or that events or conditions "will", "would", "may", "could", "should" or "might" occur and similar words. In addition, statements that we make in this document including any documents incorporated by reference herein that are not statements of historical fact may also be forward-looking statements.

Forward-looking statements are not guarantees of our future performance and involve risks, uncertainties and assumptions that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. For example, some risks, uncertainties and assumptions include: capital requirements; uctuations in the international currency markets and in the rates of exchange of the currencies of Canada and the United States; price volatility in the spot and forward markets for commodities; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production and between actual and estimated reserves and resources; changes in national and local government legislation in Canada, the United States and Mongolia or any other country in which the Company currently or may in the future carry on business; taxation; controls, regulations and political or economic developments in the countries in which the Company does or may carry on business; the speculative nature of oil and natural gas exploration, production and development, including the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; competition; loss of key employees, additional funding requirements; stock market volatility and ability to access sufcient capital from internal and external sources; actual results of current exploration or reclamation activities; changes in project parameters as plans continue to be rened; accidents; labour disputes; and defective title to claims or property or contests over claims to oil and gas properties. In addition, there are risks and hazards associated with the business of oil and natural gas exploration, production and development, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and ooding (and the risk of inadequate insurance or inability to obtain insurance, to cover these risks). You should not place undue reliance on forward-looking statements.

We do not promise to notify you if we learn that our assumptions or projections are wrong for any reason except as required under applicable securities laws. We do not undertake any obligation to update forwardlooking statements, whether as a result of new information, future events or otherwise except as required under applicable securities laws. You should be aware that all the risk factors discussed in this document could cause our actual results to differ from any forward-looking statements.

Mission Statement

Leverage the tremendous growth in Mongolia
Focused on acquiring, constructing and managing investment real estate in Mongolia while helping to build the countrys insurance industry

Why Mongolia?

Rich in mineral wealth

Construction of world class mines
Proximity to China
Experiencing a high teen annual GDP growth rate
Hard working and ambitious, pro-Western culture

The Country

Land area: 1.56m sq.km
Population: 2.7 million
Political System: Democracy
Capital: Ulaanbaatar
Located between Russia and China
19th largest country in the world
GDP (2011): $8,14 Billion*
GDP per capita: $2,872*
GDP is likely to accelerate signicantly in the future

Ulaanbaatar

*NSO (National Statistical Oce of Mongolia)

Two Massive Projects

OyuTolgoiMine (OT)*
JV between Ivanhoe Mines and Rio Tinto
Contains 81 billion pounds of copper and 46 million ounces of gold
Scheduled to produce 1.2 billion pounds of copper (4% of global production) and 650,000 ounces of gold each year 59 year mine life
To begin production in 2012. Total capital expenditure is estimated at $6.5 billion
Anticipated to account for 30% of Mongolias GDP. Expected to create thousands of direct, high paying, full time jobs

*Ivanhoe Mines Ltd.

TavanTolgoiMine (TT)*
May be the largest undeveloped coking coal mining district in the world, holding in excess of 6 billion tones of coal
Close to Chinese border
Multi-billion dollar project began development in 2011
Huge upside potential for resources and annual production
TT is the largest of the many planned mid-to-high BTU coal projects in various stages of development in Mongolia
Planned IPO will accelerate current production rates
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A Simple Question

Question:

There are tens of billions to be spent on capital

projects that are in the planning and development stages, so how do you put this much capital into such a small economy?

Answer: Get ready for the boom!

Mongolia Growth Groups Thesis

Mongolia has a small population with huge resource potential

We anticipate large GDP and per capita income growth
Historical comparables where an open economy has allowed for wealth creation are Kuwait, Qatar, and Kazakhstan
We want to invest at the inection point when the rst major new mine is being built

Using Kazakhstan as an Investment Roadmap for Mongolia

There Are Many Similarities Between Kazakhstan And Mongolia
Both Resource Economies
Both Former Soviet Satellites
Culturally Similar
Similar Soviet Architecture

The Difference is That Kazakhstan is 10 years Ahead of Mongolia in its Boom

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The Kazakhstan Boom from 2002 to 2008

2002

Kazakhstan Oil Production (Barrels/Day) *1
Kazakhstan GDP ($ USD Billions) *2
Kazakh Tenge (Currency) 3
Kazakh Stock Exchange Index3

2008
1,363,000
$104,853

120.64
2640.15

% Change
54%
326%

20%
2425%

885,000
$24,637

150.67
104.55

*1: US Department of Energy

*2: World Bank
*3 Bloomberg

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Current Prices in Ulaanbaatar on the Eve of the Boom

Current Price in Almaty, Kazakhstan
$3,000-$5,200

2

Current Price in Ulaanbaatar

$900-$2,0001
$1,500-$3,0001

Downtown Apartments ($USD Per Meter)

Prime Ground Floor Retail Space in Downtown ($USD Per Meter)

$10,000-$30,0002

*1: Currently Observed Prices

*2:Cushman & Wakeeld, Almaty Ofce

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Strategy

Focus on:
Industries likely to benet from the growth in consumer income:

Real Estate
Insurance


Ignore:
Mining itself:
Tough Industry
Capital Intensive
Political
Boom & Bust Cycles

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Real Estate

Mongolian Property Rights

Property rights are strongly protected by law
Foreigners can own nished structures
Foreigners can enter into land leases (max 100 years)
Foreign and local corporations cannot own land

15

Why Ulaanbaatar Is Unique For Property Investors

Only one main street (Peace Avenue) and very few secondary streets

Most activities are concentrated along a three kilometer stretch of Peace Avenue

Very small footprint that everyone wants to be located within

16

Ulaanbaatar City Map

Mountains
Peace Avenue Is Only Main East-West Road City Is Constricted To The North And South By Mountains

Downtown

Mountains
Airport

Ulaanbaatar is constricted by mountains to the north and the south A single 2-lane east-west road constricts movement and focuses all development into the downtown of approximately 2km North-South by 3 km East-West

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View of Downtown UB

Ring Ro ad

Gandan Ger District

New UN Building

North

Parliament

Down
Peace Av enue

n Core tow

Central Business District

Seoul Street

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Our Portfolio

28 Residential units
6,081 meters of Retail space
5,369 meters of Ofce space
13,800 meters of Redevelopment Opportunities

19

MGG Property Strategy

Buy top-quality properties along Peace Avenue and a handful of secondary streets.

Focus on leasable retail and ofce property

Focus on redevelopment opportunities with sizable value uplift through redevelopment.

20

Current Portfolio

Key Asset - MGG Headquarters

Approximately 1720 Meters of Ofce Space

21

MGG Portfolio Breakdown

As of July 31, 2012

Type

# of # of At Cost
Meters
Properties
2,415
6,081
5,312
28
48
8
6
90
3.4B MNT
18.1B MNT
9.0B MNT
15.8B MNT
46.4 MNT

% At Cost

Residential
Retail
Ofce

7.9%
42.3%
15.5%
34.3%
100%
22

Redevelopment
13,800
Total
27,608

All data as of July 31, 2012. Percentages are calculated based on property purchase costs in MNT.

Acquisition Growth Chart

As of July 31, 2012

MNT
50,000,000,000
45,000,000,000
40,000,000,000
35,000,000,000
30,000,000,000
25,000,000,000
20,000,000,000
15,000,000,000
10,000,000,000
5,000,000,000
0
Feb Mar '11
'11
Apr May Jun '11
'11
'11
Jul Aug Sept Oct Nov Dec '11
'11
'11
'11
'11
'11
Jan Feb Mar '12
'12
'12
Apr May June '12
'12
'12
Jul '12

Redevelopment
Ofce Space
Retail Space
Residential

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MGG Property Usage Breakdown

As of July 31, 2012
4.6%
1%
8%

Rented
Redevelopment
Renovation
For Sale
Vacant
Corporate Use

4.0%
47.7%

34.1%

All data as of July 31, 2012. Percentages are calculated based on property values.

For the purpose of this chart, MGGs insurance subsidiary, Mandal Daatgal, is considered as a tenant as it pays rent to MGG. The Property value of the space rented by Mandal is not included under corporate use.

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Monthly Rental Revenue

As of July 31, 2012

MNT
250,000,000

200,000,000

150,000,000

Redevelopment
Ofce
Retail

100,000,000

Residential

50,000,000

0
May Jun '11
Jul '11
Aug'11
Sep '11
Oct '11
Nov Dec '11
Jan '12
Feb '12
Mar '12
Apr '12
May Jun' 12
Jul '12
'11
'11
'12

All data as of July 31, 2012 is presented in MNT and includes VAT received. MGGs insurance subsidiary, Mandal Daatgal, has paid 15,357,760 MNT monthly since March 2012; and paid 10,200,000 MNT in rent to MGG in February 2012 and 4,850,000 in January 2012.

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Rent Breakdown

As of July 31, 2012
Type
Average Yield1
% of Rent Total

Residential
Retail
Ofce
Redevelopment
Total

9.16%
8.7%
14.4%
1.7%
10.5%*

7.8%
49.3%
32.2%
10.7%
100%

1 Average yield is calculated as annual rent received as a percentage of total property acquisi6on cost (including capital expenditures). All data is presented in MNT. * Total yield is based on all rentable proper6es that excludes land, redevelopments and proper6es under renova6on.

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Value Creation Through Redevelopment

High rents in downtown lead to property

values that are many times the replacement costs of completed structures.

The economic returns from development are abnormally high due to a scarcity of highquality land on main streets.

MGG recognized this early and has a very attractive redevelopment pipeline.

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Redevelopment Strategy



Partner with experienced developers



Contribute land and local experience to a prospective JV

Manage the property afterwards which leads to high margin revenues

Avoid outsized nancial commitments
Avoid completion risk
Avoid budgeting risk

Retain high returns on capital with reduced risk

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Insurance

Mandal General Daatgal LLC

Received insurance license on June 2, 2011
Operates in various property and casualty lines of business
Initial capital of US$5m, making it the best-capitalized insurer in Mongolia

30

Insurance

Mandal Reinsurance Partners
Mandal Corporate Clients

31

Management Philosophy

Our structure is corporate, but we operate on the principles of a long-term partnership

No founding management salaries or options

The Board has been chosen based on relevant experience, intellect, and a deep understanding and coherence to our guiding principles
Our only upside is by creating shareholder value; increasing the intrinsic value of the company on a per share basis
We own a lot of shares and are working for ourselves and our investors

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Mongolia Growth Group Ltd.

Founded in February 2011
Listed on the CNSX - Ticker: YAK
34,143,352 shares outstanding
33.5% Sr. Management and Board ownership
Approximately $51.5M raised

33

Conclusion

According to the International Monetary Fund, Mongolia is expected to be one of the fastest growing economies in the world over the next decade.

We want to leverage that growth.

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