mineral resource assets development

MINERAL RESOURCE ASSETS DEVELOPMENT

Corporate Strategic Vision

Strictly Confidential


FORWARD-LOOKING STATEMENTSThis presentation includes certain “forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements that involve various risks and uncertainties. There can be no assurances that such statements will prove accurate, and actual results and future events could differ materially from those anticipated in such statements. Such information contained herein represents management’s best judgment as of the date hereof based on information currently available. The company does not assume the obligation to update any forward-looking statement.

NOTICE TO RECIPIENTThis presentation has been prepared for, and is being distributed to a limited number of knowledgeable investors in connection with a proposed financing, Corporate financing source ( or the “Company”). The recipient acknowledges that the information contained herein is confidential and proprietary to the Company, and that it may not be disclosed without prior written consent to third parties other than the recipient’s agents, employees and representatives who require such material for the purpose of evaluating this proposal and a related financing decision. The material and information presented herein may be subject to change or modification without notification. The recipient acknowledges that this document is not intended to be solely relied upon as a basis for any financing and related decisions. Additional information will be provided upon request

FORWARD LOOKING STATEMENTS


CONTENT

Corporate mineral assets resources and location Mineral resource assets development stage Mineral resource strategic assets development Mineral resource assets quality and economic financial aspects Asset project development plan medium and short term Mineral assets investment program Management Regulation and license


CORPORATE MINERAL RESOURCE ASSETS

More than 240 mineral assets have been evaluated since 2005 throughout Mongolia

62 various mineral assets retained including 18 various mineral deposits

Ongoing exploration and drilling on 46 licensed fields


5 high grade thermal & coking coal - 607.4 million tonnes of proven resource and targeting 2.5-3 billion tonnes

2 large tonnage thermal coal - 3.8 billion tonnes 1 gold - 459.42 kg proven reserve targeting 6 tone 2 molybdenum - 58238.94 tonnes of proven reserve targeting 800.000 tones, and minor Cu 67,585.1t, Re 9 t 1 lithium, strontium, potash - 1,420,000.0 T net metal Li and Strontium 408,000.0 T net metal, Potash

sulphate 22,0 MT. Potential lithium carbonate tonnage could exceed 10MT. 1 Rare earth elements - 37,3 MT oxide of proven reserve targeting 6 Mt over group of licenses, plus

unexplored Fe over 2.2kmx300m area, co-product of P2O5, by product of strontium. 1 Fluorite - 475,000,0 T of proven resource with potential of 1.1 Mt resource 1 Limestone - 544,877.0 T of proven resource with potential of 300.0 MT resource 1 Cu- Fe Under resource evaluation 1 Cu-Mo Under resource evaluation 2 Pb-Zn Under resource evaluation

CORPORATE MINERAL RESOURCE ASSETS


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Coal resource - Mt

DOMINATED RESOURCES AND RESERVES OF KEY COMMODITIES

Erdenetsogt – 2400 Mt

Eruult – 1400 Mt

Khotgor – 3000 Mt

Dalan – 33 Mt

Nalaikh – 24 Mt


DOMINATED RESOURCES AND RESERVES OF KEY COMMODITIES

DOMINATED RESOURCE AND RESERVE OF KEY COMMODITIES

Lithium 1420.0 Mt net met

Potassium 22 Mt

Strontium 408000 net metal

Gold 6 Tone

Coking coal 3000 Mt

Thermal coal 3800 MtMolybdenum 800 .000 T

REE 5.9 Mt

Data source explored and drilling

Lithium Strontium deposit, Rare earth elements deposit ranking are evaluated and estimated as world class deposits

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MMC’s technical report estimates that the project’s lithium concentration stands between 1.600 and 2.500 ppm


Nalaikh underground coal mine located 45 km from Ulaanbaatar

High quality thermal coal 6400 kcgl/kg over

Infrastructure highly developed in Nalaikh district

Life of mine 16 years Saleable mine reserve 16.1 Mt Reserve 23.4 Mt Capex $34 M USD Opex $26 USD per tone Sales price $45 USD per tone Employee 210 NPV 210 M USD

CORPORATE MINERAL RESOURCE ASSETS COAL


Drilling exploration Pre feasibility study Feasibility study Environmental analysis and action plan Underground mine planning design

engineering full completed Local coal selected market analysis report Electric power line, water supply are

ready Infrastructure rail way are under

discussion

Nalaikh underground coal Mining license MV-000221

Underground equipment supplier Famur group Poland

Expected commissioning date 3 quarter of 2014



Khotgor deposit includes MV-012474 and XV-016830 licenses

Khotgor(947Ha) coal deposit lies approximately 1500km west from capital city Ulaanbaatar , 80 km SW from provincial center Ulaangom city, and 55km NE from Bokhmoron Soum of Uvs province

574 Mt proven resource on MV-012474 license

Additional exploration programme commenced to identify further coal resources on neighbor XV-016830 exploration license area targeting 2.5-3 billion tonnes



Dalan deposit MV-014492 Mining license, 271.73 (Ha) and group of neibourgh licenses, Tsagaan Us XV-008596, Alag tolgoi MV-013132, Ariin khudag MV-09517.

The Dalan deposit area is located in Dalanjargalan Soum, Dornogobi Aimag, approximately 285 km southeast of Ulaanbaatar, Mongolia.

The major asset associated with the Dalan Project is a thermal coal deposit with resources of 33.4 million tonnes with a nominal calorific value of 4,800 kcal/kg and an average stripping ratio of 2.15 BCM per tonne of coal.



Erdenetsogt MV-017078 coal deposit is located 430km SE of Ulaanbaatar, 85km NNE of the provincial Center Sainshand. The Chinese border is 230 km by rail from Sainshand to Zamiin-Uud border crossing.

Coal resource is estimated in accordance with JORC standard by Norwest.

Estimated resource of 2.4 billion tonnes Low mining strip ratio 1: 0.17

Moisture War, % - 39.4 Moisture Wad, % - 25.81 Ash (Adry) - 17.3 Volatiles (Vdaf) - 44.4 Sulphur (St

d) - 1.3-2.2 Calorific Value (Qr) Kcal/kg -

2943 Calorific Value (Qd) Kcal/kg -

4881 Calorific Value (Qdaf) Kcal/kg -

6332



Eroolt deposit includes a group of licenses including Tsagaan Zalaat (1098.09Ha), Eroolt (15318.31Ha), and Nuurst Hudag(4123Ha).

Eroolt project is located 640km SE of Ulaanbaatar, 90km east of provincial center Baruun Urt and 25km from Asgat Soum, Sukhbaatar aimag. The properties lie approximately 180 km northwest of check border with China.

The dip angle of the coal seam is 0 to 5 degree and the coal seam has stable distribution. The coal is suitable for opencast mining.

The coal characteristics are as follows: Total moisture (Wp) - 22.2%, Inherent moisture (Wa) - 9.12%, Ash (Aa) – 12.98%, Volatile matter (Vr) - 41.36%, Sulfur (Sc) – 0.71%, low Caloric value (Qar) – 2180 ~5115 kcal/kg to the average of 4023 kcal/kg, high Caloric value (Qgr) – 3512~6886 kcal/kg to the average of 5410 kcal/kg. Caloric value of this area is average of low Caloric value (Qar) is about 4023 kcal/kg.

Estimated coal resource is 1,4 billion tonnes.



Zost Mo deposit is located in Tosontsengel soum, Zavkhan province.

The deposit covers 2 licenses Zost uul XV-04251, and Ovor zost XV-07410.

Mo – 25,538.94 T of proven resource 0.04% cut off grade. Minor Cu – 67,585.1 T, Re – 9.0 T.

Early government resource estimation is 650,000.0 Tone

CORPORATE MINERAL RESOURCE ASSETS MOLYBDENUM


The Tsagaan Chuluut deposit includes MV-012193 and XV-06747 licenses.

The Tsagaan chuluut deposit is located in the territory of Umnudelger, and Ulziyt soums of Khentiy aimag, 327km to east from capital city Ulaanbaatar.

Mo reserve of Tsagaan Chuluut deposit is bieng calculated as proven and probable reserve at 0.044 cutoff grade contain 32.7thousand tone of Mo in 77.6Mt ore. Detailed exploration work should be extended another 1500m to west and possible to increase the reserve 60 up to 80 thousand tone to bring the total reserve 150thousand tone.

The deposit consists of economic mineral association Mo-Re-Li.

CORPORATE MINERAL RESOURCE ASSETS MOLYBDENUM


Mine development and design Lithium processing plant design

engineering Scoping study Environmental analysis and action plan Infrastructure analysis and action plan Bankable feasibility study Metal refining pilot study

Financial and economic model Lithium selected target market analysis

and action plan Mine processing plant engineering

Mineral resource strategic assets developmentLitium


Khukh Del is world class underdeveloped brine lithium, potash and strontium deposit

Deposits contain following elements: lithium potassium, strontium, cesium and boron.

Magnetic and radiometric survey Electric and magnetic survey Gravity surveying and implementation Topographic and geodetic survey Full drilling and interpretation Detailed geological mapping Sectional interpretation and polygonal resource

estimation Mineralogical petrologic and geochemical

investigation Metallurgical recovery tests Laboratory Germany, Russia and Mongolia 6400

samples assayed Mineral reserve estimate report JORC


STATEMENT OF MINERAL RESOURCE

Area Category Quantity Mtonnes

Li2CO3 ppm Li ppm K2SO4 % K % Li2CO3 KT Li Metal Kt K2SO4 Mt K Metal Mt

Enkh area inferred 30.68 7.752 1.456 6.08 2.73 237.8 44.7 1.9 0.8Delgerekh area inferred 157.07 7.725 1.451 9.05 4.06 1213.4 228 14.2 6.4

indicated 78.84 8.326 1.564 8.03 3.6 656.4 123.3 6.3 2.8Chuluut area inferred 6.78 7.734 1.453 7.13 3.2 52.4 9.9 0.5 0.2 subtotal 85.62 8.279 1.555 7.96 3.57 708.9 133.2 6.8 3.1 Indicated 78.84 8.325 1.564 8 3.59 656.4 123.3 6.3 2.8All inferred 194.52 7.729 1.452 8.5 3.81 1503.6 282.5 16.6 7.4 Total 273.36 7.899 1.484 8.4 3.75 2160.1 405.8 22.9 10.3

Mineral resource estimate by MMC JORC



In addition to the JORC mineral estimate, a resource estimation according to Mongolian standard has also been conducted and can be reviewed below.

Category Quanty (Mt) Li Metal (Kt) K Metal (Mt)A 23.5 37.7 0.8B 98.8 151.3 4.1

A+B 122.3 189 5Category 156.4 246.5 6.3A+B+C 278.8 435.5 11.3

P1 639.2 984.5 26.2


In 1983-1984, Russian geological expedition provided first drilling program (with 2800m drilling on 20 bore holes) and estimated over million tonnes of REO in total resources.

In 1989-1991, Mongolian geological research team completed exploration work on Central, Khuren Khad and Tumurtei ore zones at Mushgia Khudag (total 8025m drilling on 41 bore holes) and estimated 0.4 million tonnes of REO oxide in total.

USGS evaluated its resource as 5,9 Mt REO. Unexplored Fe over 2.2kmx300m area As results of 2007-2009 exploration works we have determined

origin of the deposit, complexity of the geological setting, exploration drilling grid density and estimated rare earth 14.4 million tonnes of ore or 194.4 thousand tonnes of rare earth oxides by B category, and probable resources of 1.2 million tonnes of ore or 37.3 thousand tonnes of oxides by C category in compliance mineral evaluation and estimation methods of Mongolia.

The Mushgia khudag deposit includes group of licenses MV-014937 Bayan Tomortei XV-012396 Mushgia Khudag XV-07812 Mushgia Ukhaa XV-015277 Khurmen tolgoi.

The deposit is located 500km SW from capital city Ulaanbaatar and 32km SW from Mandal Ovoo sum.

Mineral resource strategic assets developmentRare Earth Elements


Mineral resource strategic assets developmentRare Earth Elements


Mineral Resource and reserves are potential Mineral resource and reserve ore are high grade Mineral resource assets location is near main markets and infrastructure Mineral resource each assets are very attractive for investors, customers

and partners Mineral resource assets are Economically very profitable and highest

indicative NPV and long life mine cycle Reserve should potential increase medium term

MINERAL RESOURCE ASSETS QUALITY AND ECONOMIC FINANCIAL ASPECTS


Erdemmanlai - CEO Ganotgo - Director of Geology and

Mining Department Unurjargal - Project manager

International relation Purevdorj - Project manager Mining

engineer Ser od - Project manager Geologist Lhkagva - Project financial manager Baatar - Project mining engineer

Mckinsey & co - Mining consulting MMC Minarko - Reserve estimate mine planning Dassault systems - Mining software Famur group - Poland underground mining

equipment manufacturer DHMS - Germany underground mining

equipment manufacturer Takraf group- Germany mining equipment

manufacturer Mongolian Minerals Corporation – Canada Yu Jin Investment - Singapore Kunming Coal Design and Research Institute -

China

PROJECT MANAGEMENT TEAM MEMBERS AND PARTNERS


Low cost producer with substantial high grade and growing Reserve and Resource

Continuous ramp up supported by well established operations and Integrated

infrastructure

Earning quality upside cost reduction and

revenue enhancement

Expanding customer base and strong

strategic relationship with customers

Strategically located to tap into

Strong Demand from China

Experienced Management Team

Partnered with Institutions

KEY HIGHLIGHTS


2012

• Exploration • Drilling • Reserve and

resource evaluation and estimate

2013

• Reserve estimation

• Feasibility study

• Project implementation

• Mining license obtain

• Coal selected target market analysis expanding customer base

• Mine planning and design

2014

• Nalaikh underground coal mine commissioning

• Eruult coal mine commission end of 2014

• Main assets and deposits infrastructure study

• Rare earth element mine commissioning

KEY MILESTONES – SUCCESSFUL TRANSFORMATION INTO FULLY INTEGRATED

MINE


Rapid Production Growth leading fully integrated Mongolian mineral resource producer Closest coal and minerals exporter supply to in China’s eastern province Asset quality (ROM ore high grade) Low-cost producer – positioned on the of the global cash cost curve Planned railway or asphalt road and paved road 1-3 years Reserves & Resources Overview Rapid Planned Production Growth Mining Processing Transportation Sales & Marketing

Open pit operation (one large open pit and 1 underground mining should be construction and commissioning in 2014)Owns all mining equipment from world renowned suppliers (including Caterpillar Takraf Atlas Copco Famur and DHMS)

KEY ASPECTS OF JUNIOR MINERS


Corporate Income Tax 10% net profit tax

No Export Restrictions No restrictions on minerals exports / no domestic market obligations

Royalties 2.5% - 5%

Mining Licenses Mineral Resources Authority under the Ministry of Mining (pursuant to the new structure of the Government of Mongolia)

Regulatory Authority Initial term of 30 years, can be extended for two additional 20-year periods.Only entities registered in Mongolia are allowed to own mining licenses.100% foreign ownership is permitted, subject to governmental approval required under the Law on the Regulation of Foreign Investment in Entities Operating in Strategic Sectors (2012).

VAT Exported finished mineral products are subject to zero rate VAT

KEY ASPECTS OF MONGOLIAN MINING REGULATORY FRAMEWORK


Types of licenses

The Minerals Law of Mongolia contains two types of licenses, as follows:

An Exploration License, which entitles the license holder to carry out mineral prospecting in the license area;

A Mining License, which entitles the license holder to conduct prospecting and exploration work in the license area;

REGULATION AND LICENSES

Exploration License Mining License

1 License Term Up to 3 years Up to 30 years

2 ExtensionMay be extended

twice, up to 3years each time

Subject tofeasibility report, up to 20

years each time

3 License Area 25 - 400,000 ha 25 - 400,000 ha

4

Number of licensespermitted to be held

byeach legal entity

Unlimited Unlimited

Additional information


• An applicant for a mining license shall submit an application set forth in Articles 24.1 and 24.2 of this law to the Government agency.

Request for license


License application process


License Fee

Prospecting license Annual license fees begin at US $0.10

per hectare in the first year and gradually increase to a maximum rate of US $1.50 per hectare in the seventh through ninth years.

License holders are required to spend certain minimum amounts of funds on exploration activities beginning in the second year of a license.


License Fee

Exploration license• Annual license fees are US $5 per hectare for

coal and common mineral deposits and US $15 per hectare for gold, copper, zinc, and iron.

• A 2.5% minerals royalty is imposed on coal and common mineral resources whereas the royalty on gold, copper, zinc, and iron is 5%.

• A mining license holder investing US $50 million in the first 5 years of the project is entitled to enter into an Investment Agreement with the Government which can stabilize rates of corporate income tax, customs duty, VAT and minerals royalties.


Relevant laws of Mongolia

Constitution of Mongolia Minerals law of Mongolia Law of Mongolia on Implementation of the

Minerals Law Prohibiting minerals exploration and mining in

protected zones of sources of rivers those originate streams of rivers, drainage basins and forest areas.

Law on Licensing The Law on Subsoil Law on Land Law on Land Fees Law of Mongolia on Water Water, Air and Environmental Control Law Water and Minerals Water Usage Payment Law

Environmental Protection Law of Mongolia Environmental Impact Evaluation Law of Mongolia Law on Sanitation Law of Control on Explosives and Accessories and

Explosives Circulation Chemical Toxic and Dangerous Substance Law Domestic and Industrial Waste Law of Mongolia Law of Mongolia on Foreign Investment Auto Road Law Business Entity Income Tax Law of Mongolia Geodesy and Design Law Law on Labor of Mongolia Law on Social insurance


mineral resource assets development

Documents

t of proven resource

various mineral assets

tonnes of proven resource

resource evaluation1

mt oxide of proven reserve

tonnes of proven reserve

mt resource1 cu fe

additional information