Mongolia: 2010-2020 Outlook

Summary Mongolia: Massive Resources Mongolia 2010: Start of Multi-Year Bull Market Mongolia: Today and in 2020 Growth Drivers Similar Growth Stories:
Kazakhstan Qatar

Conclusions
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Mongolia: overview

Land Area: 1.56m sq.km (50% size of India) Population: 2.7m (lowest density in the world) Capital: Ulaanbaatar Religion: 95% Buddhism Literacy rate: 97.8% Language: Khalka Mongol Currency: Mongolian Togrog (MNT) Political System: Democracy GDP (2010): $6.6bn GDP per capita: $2,400 GDP est 2025: $60bn GDP growth (2010-25): c.20% pa GDP per capita (2025): $20,000

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Source: National Statistics Office of Mongolia

Mongolia: economic growth

Fast growing economy Drivers of growth: investment, demand for resources and commodity prices Large scale production starting at Oyu Tolgoi, Tavan Tolgoi and other mines GDP forecast to grow 10x to $60bn by 2025

10 largest deposits worth US$1.3tn

GDP Growth

40 35 30 25 20 15 10 5 0 6.6 7.7 8.9 10.2 12.3 15.3 23.7 19.1 28.0 31.9

35.1

2010 2011f 2012f 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f GDP, US$bn (LHS)

Source: Temasek

Source: Eurasia Capital estimates 4

Best Performing Market

MSE Top-20 up 138% in 2010, best performing market globally MNT +12.9% vs USD in 2010, second best performing currency globally

12,500

MSE Top-20 index

1490 1470

MNT vs USD

11,500

1450 1430 1410 1390

10,500

9,500

8,500

1370
7,500

1350 1330 1310

6,500

5,500

15-Feb

16-Aug

10-May

Source: MSE

24-May

30-Aug

4-Jan

15-Mar

29-Mar

1-Feb

7-Jun

18-Jan

21-Jun

12-Apr

26-Apr

19-Jul

2-Aug

1-Mar

5-Jul

1290

Source: Bank of Mongolia 5

Mongolia - Saudi Arabia of Mining

The country is incredibly resource rich, another Saudi Arabia, next to the largest population in the world, Mongolia could be the Saudi Arabia of Asia Mark Faber, Emerging markets investor

I expect frontier markets, like Mongolia, will continue to have very compelling investment opportunities over the next year and beyond. Mark Mobius, Chairman, Templeton Emerging Markets

Coal from Mongolia to China is happening. It is expanding, probably doubling every two years, Tom Albanese, CEO, Rio Tinto

Mongolia in 2010 and 2020

2010 2020

GDP, US$bn

6.6

5x 18% per year

35

GDP per capita, US$

2,450

4x

10,000

MSE Mkt Cap, US$bn

20x

20

Bank Assets, US$bn

2.8

9x

25

MNT/US$ rate

1,300

+30%

900
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Commodity Output
2010 2020
100m tn per year

Coal

17m tn per year

Iron ore

3.5m tn per year

12m tn per year

Copper

600,000 tn per year

1.5m tn per year

5tn per year

50tn per year

Gold

0.3m tn per year

4m tn per year

Crude Oil
Source: Eurasia Capital estimates

Growth Story I: Kazakhstan

2002 GDP, US$bn
25

2007 4.2x

105

GDP per capita, US$ KASE MrktCap, US$bn

1,250

5.5x

6,750

1.2

58x

70*

* $100bn 2008

Banking assets, US$bn Property, $/m2 residential retail land

12x

97

370

10x 20x 50x

3,700 8,000 50,000

9

400

1,000

Growth Story II: Qatar

1998 GDP, US$bn
10

2010 11x or 22% p.a.

111

GDP per capita, US$

15,000

5.5x

82,000

Qatar SE MktCap, US$bn

27x

104

Banking assets, US$bn

11

12x

133

Population, mn

0.6

2.8x

1.7

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Conclusions
Economy

Fastest growing economy in next decade (2010-2020) Investments, exports, wealth creation Mining, banking, property, consumer All asset classes, esp. local public equities Democracy, political stability, pro-business government

Drivers

Industries

Opportunities

Environment

MONGOLIA

Right Place and Right Time to Invest!

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Eurasia Capital
Eurasia Capital is a Hong Kong-based pan-regional investment bank with strong presence and focus in frontier markets in Eurasia Strong focus on Mongolia and Central Asia Team of 30 professionals with five offices in the region Pan-regional team provides full-fledged advisory and brokerage services to resource companies, private equity groups and hedge funds Advises on cross-border M&As and strategic investments in resources sector

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Offices
MONGOLIA Suite 65, 6th Floor Grand Office Center Jamiyangun Street 12 12, , st 1 Khoroo Sukhbaatar District Ulaanbaatar Tel: +976 7013 0078 Fax: +976 7013 0078 HONG KONG 33/F One International Finance Center, 1 Harbor View Street Central, Hong Kong Tel: +852 2824 8716 Fax: +852 2166 8999 www.eurasiac.com

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