Andrew Racz
Director of Research
300 East 54 Street, Suite 26C
New York, NY 10022
Phone: (212) 319-6949
Fax: (212) 753-1944

Letter to Prime Minister of Mongolia

April 24, 2008

Prime Minister of Mongolia

My esteemed Mr. Prime Minister:

I understand that your government is going to decide almost in the next few days the so-called mineral laws which precede the negotiations with the investment agreement with the Ivanhoe Group and other mining companies.

Needless to say, my interest with the Mongolian case and, in fact, with any other case, has always been peaceful and long-term, amicable and fair agreement. When I was in high school, I learned about the famous Berlin conference of 1896 when the European powers, namely Germany and France, decided to dismember the Turkish empire and create the Balkan countries. The negotiations were heated and on a particular Sunday, George Clemenceau, the famous French prime minister, stated to Chancellor Bismarck, that if the negotiations didn't change he would pack his bag. Bismarck calmly looked at his watch and turned to Clemenceau and said, "Your Excellency, it is only three o'clock. If you hurry you can get the 7 o'clock fast train to Paris."

The Balkans were eventually created and in 1914 was the assassination of the Hapsburg Crown Prince Ferdinand and his wife. The first World War broke out and over ten million people died. A few years later, the czarist Russia collapsed and in a sealed rein, the Germans smuggled Lenin to Petrograd to start the revolution. Lenin replaced eventually Kerensky, the head of the elected government, who escaped to London. He obtained an appointment with British prime minister Lloyd George who listened to Kerensky's complaints. He then stated, "Mr. Kerensky, today is Sunday. Tomorrow morning Lenin and I have exactly the same problem, how to feed the population."

And we reached the same point today in the year 2008, that the population of the Russian and now Mongolian, and some 30 and 40 nations in trouble, have to face. You have to feed the population. Every age, every Prime Minister, has its problems. But sometimes the problems come back in the worst possible way. Feeding the population in 1922 was a problem only for a few nations, partially because most of the nations were totally neglected. In 2008, Mr. Prime Minister, the word Mongolian food shortage is not yet in the newspapers but the food shortage today is more on the front pages, talking about almost the whole world than ever before. Furthermore, this is not a problem which is going to disappear. This is not a problem that you can end with negotiations, with confrontations, but only properly understanding that the 21st century, while offering great opportunities including great opportunities to Mongolia, simply has to face up to everything that fate and circumstances deliver to our plate.

The food problem, Mr. Prime Minister, has been on the front pages of the New York Times and other leading newspapers for less than three or four months. As an investment expert and securities analyst, I am however stating to you that what is a partial solution on April 22, which happens to be my birthday as well as the birthday of Lenin, is next to nothing compared to the problem that you will be facing on October 22, 2008 and much worse, you will be facing on December 31, 2009. Furthermore, this is a problem that can only be solved with full unconditional and intelligent cooperation of the parties involved.

Mongolia has no money. Mongolia has a major issue on its plate to develop its mining resources in the most equitable manner, and make the country rich. However, in making the country rich, a new problem arose. While in the last two or three years, the price of gold has gone from $400 to $1,000, the price of rice increased tenfold, the price of wheat has gone from $5 to $12, corn has gone to $6.50, soybeans over $10, and very soon the issue of an international water shortage will present itself.

In this atmosphere, the plus for Mongolia is that the price of gold can very well go to $2,000, maybe $3,000, that the price of copper in a few years may reach $10. The transportation can be built which enables Mongolia and its partners to sell its mineral resources, and because of the oil shortage, the uranium assets of Mongolia will get greater and greater value and commercially should be channeled to the marketplace.

We must, all of us, at any one time, understand that the more difficult a problem is, the greater reward would be accorded by history to those who solve it. We will never forget the famous speech of Winston Churchill in May, 1940, when he stated the sad fact that, "The battle of France is over and the battle of Britain is about to begin."

Mr. Prime Minister, the allocation of mineral resources and Investment Agreements is on your plate, on your agenda, but meanwhile the battle of the food crisis, the water crisis, is about to begin. Churchill continued, "Upon this -- meaning the battle of England -- will depend the future of Christian civilization. If we win, the world will continue on its path, but if we fail the whole world, including the United States, will live in the world of a new dark ages made more procrastinated by perverted science."

Let us therefore brace ourselves and so carry ourselves that if the British Empire, and I mean now Mongolia, survives another thousand years, man will still say this was their finest hour.

Mr. Prime Minister, the next few weeks, like May, June and July, 1940, the same way April, May, June, July 2008 is undoubtedly the finest hour of your premiership as well as your governance. You have to combine all the problems and put them together in agreement which not only could make Mongolia rich, but will make the daily life of every Mongolian better than it could be by unintelligent decisions and by lack of consideration of all converging problems that are taking place.

In May, 1940, Churchill was 65 years old. The problems converged on his bed, where he conducted his business every morning, were probably vital for the world and England as it is for you every morning the problems that affect the Mongolian people. The wise decision is to coordinate all issues and make sure that an agreeable and financially feasible method can be applied to the finance agreement.

We live in a world which is called the 21st century where problems come up in countries, in governments, in families, in personal lives, that have evaded the world in all our history. Nobody has ever faced like you today, sitting in the cabinet room or at your desk, or at home in the evening if you watch television, to solve simultaneous the food crisis which is coming and going to grow, and the monetary crisis and the mining issues, all in one day.

History registers that the 65-year-old Winston Churchill prevailed under even worse conditions.

Mr. Prime Minister, you have to rise to Mongolia's historical opportunities. Churchill found it. I did not hear obviously but my parents told me that the first glimmer of hope in 1940 was when the 65-year-old Winston Churchill went to the microphone and said, "Whatever happens in France, Great Britain will continue the war. If necessary from Canada, if necessary alone."

Mr. Prime Minister, you have been maybe fortunately for your countrymen, fortunately for the world, fortunately yourself, put in a position where you are faced with manifold problems and you have to solve all of them together as soon as possible. There will be a time when history will remember April, 2008 in Mongolian history. They must learn in school, they must learn at university, and they must say, "This was our finest hour."

It may not amount to much, but I would like to try. I have asked some of your ministers, your ambassador, and I ask your daughter when she called me from Italy, that nothing would make me better and my life more perfect at the age of seventy, which is actually five years older than Churchill was, than to come to Mongolia to advise your government on these weighty issues. I have stated that I accept no payment for my services except expenses.

Looking back in history, there was a similar incident when a single individual was asked to solve the fate of hundreds of millions of people. In 1921, Lenin asked who was the most capable practical economist in the world and they recommended Bernard Baruch. Baruch contacted Lenin, made it very clear that he would accept no payment except one dollar for expenses, but they couldn't agree on the solution to the Russian-Soviet economic problems.

I only advise, Mr. Prime Minister, to you and your cabinet. I would have no assignment to carry out the practical changes. However, sometimes there are unexpected opportunities. I lived in many countries, including South Africa. A politician is judged by performance. A financial individual like myself is judged on his perception. However, if you accept my offer I would make a speech which basically says Mongolia is not alone. Mongolia has a future. Mongolia can take advantage, like the British did in 1940, of the great industrial power of the United States.

Mr. Prime Minister, there is goodwill in the world. Let us begin.

Very truly yours,


Information contained herein is based on data obtained from recognized statistical services, issuers reports or communications or other sources believed to be reliable. However, such information has not been verified by us and we do not make any representation to its accuracy or completeness. Any statement non-factual in nature constitutes only current opinions which are subject to change. BERAL INC. or their officers, directors, analysts or employees may have positions in the securities or commodities referred to herein, and may as principal or agent buy and sell such securities or commodities. An employee, analyst, officer or a director of BERAL INC. may serve as a director for companies mentioned in this report. Neither the information nor any comment expressed shall constitute an offer to sell or a solicitation of an offer to buy any securities or commodities mentioned herein. There may be instances when fundamental, technical and competitive opinions may not be in concert. This firm may from time to time perform investment banking or other services for or which investment banking or other businesses from any company mentioned in this report.



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