DEPUTY PREMIER: EXPECT TO COMPLETE OT AGREEMENT IN APRIL   

At Euromoney's Conference Mongolia-Asia Investment Forum 2009 Deputy Premier Mr. M.Enkhbold said OT agreement will likely be finalized in April session of the Parliament. He also said the delay in finalizing the agreement had created lost opportunities."We,both our people and the parliament,understand what is the cost of the delay" he told Dow Jones newswires.(Source: Dow Jones Newswire, March 31,2009)

PEABODY RENEGOTIATES MONGOLIAN COAL PACT WITH POLO RESOURCES   

World's largest private sector coal company, Peabody Energy Corp. (BTU) said Tuesday it has renegotiated an agreement with Polo Resources Ltd. (PRL.LN), establishing a partnership to mine Mongolia coal.  The St. Louis mining company said it will contribute up to $25.8 million in cash to create a 50-50 joint venture for Polo's Mongolian coal interests.  Peabody said Polo will contribute up to 1 billion metric tons of potential coal resources. Peabody continues to hold warrants allowing it to acquire an approximate 15% equity interest in Polo. (Source: wsj.com, March 31,2009)

ANOD BANK IPO A FRAUD

Internationally recognized German auditing company has started auditing Anod Bank with the results due in 14 days.Mongolbank has taken Anod bank under its custody due to its recent financial difficulty and its three top executives are being investigated for several cases of fraud and are in detention . Mr.S. Nasanjargal, Mongolbank representative for Anod bank, said that about 200 employees were laid off and 24 branches closed recently to reduce unnecessary costs. He also told "With the recent restructuring, Anod bank was able to save approximately MNT 250 million" .Furthermore, investigators determined that IPO of Anod Bank has been a fraud to recover bank funds spent by the executives for personal goals, established investors to be victims, and asked investors to provide statements. (Source: "Unuudur(Today)","Ardyn Erkh(People's Right)" ,April 1, 2009)

Mr.Enkhbold's statement as many other statements by the Government officials abroad are certainly encouraging, however , might seem overly optimistic to observers. Worldwide investors had expectations for OT deal to be finally be concluded in mid-March and delay sent certain chills and sent Ivanhoe stock down. Opinion polls and our interviews with MPs show that there will be a heated debate on all aspects of the agreement such as duration, absence of feasibility studies, tax loophole precedent, ring fencing, interest on Mongolian equity loan, etc. with a widely shared sentiment by Mongolians and contested by investors sentiment that Mongolia is getting an unfair deal.  On the other hand, Mongolia can hardly afford to send back the deal again. Mongolia is in a bad shape financially and, most of all, second delay would cause major damage to investment attractiveness of Mongolia. Our analysis  is that the deal will be approved eventually with amendments but there is a risk that it might not be during the upcoming Spring session.  There is perhaps unintentional symbolism in the fact that OT Investment Agreement is listed as a No.12 on Agenda Sequence for Spring Session of the Parliament behind such items as draft law to limit use of plastic bags and draft law on compensation to victims of political opression. And don't get me wrong, I am sure that these are important and worthy causes, I am all against plastic bags  and I am very sympathetic to towards the victims, but it seems to me that at the current state of affairs Mongolian Government, Parliament , Ivanhoe and Rio Tinto should be working day and night to hammer out the differences and come to a deal that's fair for all stakeholders by the Spring session. It is surely regrettable that major deposits discovered  a decade ago have not made commodity-rich Mongolia one of the region's fastest growing economies as they should have .