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June 10, 2008

As a Hungarian-born US citizen at the time when America's international debt is over $2 trillion.

Mongolians and Hungarians are cousins. The Mongolian Stock Exchange was established by a man who studied the Budapest University and he is still its head.

If Mongolia starts mining its 45 million ounces of gold reserves and 78 billion pounds of copper reserves, the initial project would be valued at $145 billion. With gold at $1,000 an ounce and copper at $4 a pound, the project eventually would be worth $200 billion. Five years later, at higher prices they would approach the figure of $1 trillion. Rio Tinto, the operator, called it "the world's largest undeveloped copper/gold resource." In two to three years, after the finance agreement is signed, we could be in business.

Chairman of the Board of Ivanhoe, Robert Friedland, stated, in the World Mining Investment Congress in London, on June 3, 2008 that the Prime Minister of Mongolia wants to conclude the "Investment Agreement" as soon as possible.

When dealing with an annual initial revenue base of $1 billion, the structure is of vital importance. The 21st century is the century of dramatic change. To the tiny Mongolia, with a population of 2.5 million people, there is an oil bill and a food bill. Analyzing Mongolia's recent history, where reliance on Russia and China is not the most desirable step, my recommendation is to the so-called Ivanhoe group to guarantee part of the oil and food bill for the first 10 years so that the country's independence is guaranteed.

One of the rewards is the size of the mining reserves that it permits what is called "Monetization." If, for instance, Mongolia has 100 million ounces of gold, and 150 billion pounds of copper, a potential set of figures in the table below indicates larger revenue figures and larger discretionary income to the population.

However, the first five to ten years imagination is required for the division of capital contribution and monies to be devoted to build the Mongolian infrastructure and monies available for daily living.

Accordingly, I have devised a structure which is all encompassing. Immediate food, oil and working capital for Mongolia, guarantee for money from the joint venture, and separation of Mongolia's long term income needs from the interests of the Ivanhoe group.

We want to create a structure that is separate, but equal, realistic and financially fair.

Let us now put the future negotiations with the Mongolian in history. Mongolia doesn't want to disappear as Czechoslovakia in Europe or Eastern Europe in Yalta.

Neither does the west want to create a country which may in the future embark on nationalization.

Lack of intellectual understanding buried Hungary in Yalta and created Fidel Castro in Cuba.

Behind the rhetoric there is a country that could have monetary reserves approaching Kuwait, Abu Dabi. It can be a financial colossus.

This is the time for Mongolia to insist that every country that wants to develop Mongolian minerals surrenders 20 percent of its stock to a Mongolian government agency and list those shares in the Mongolian stock exchange.

As the first decade of the 21st century is coming to an end, we have a lively market in Cairo, Egypt, and in Saudi Arabia. The country formed by dividing up the Soviet empire is Ukraine. It is getting aid from Russia's Micex stock exchange in Kiev. It traded $2.3 billion in the first quarter of 2008 compared to $400 billion on the Micex in Moscow.

Considering that in the first full year of gold production, the value would be $350 million at a $1,000 price, and altogether at least $1 billion when copper and other minerals are involved. If we monetize all the metals, the total figure would be close to $3 billion.

However, the Ukraine has 70 million citizens, Mongolia just 2.5 million. Ukraine has been an independent country for over 20 years, and the new Mongolia will only be born as the financial entity in the year 2010 or 2011. With the accumulation of mineral money, ten years from now the tradable stocks could approach between $6 billion and $8 billion. If the Mongolian government subscribes to 20 percent of all shares functioning in Mongolia, by the year 2015 the Mongolian stock exchange would turn over $10 billion a year. With a small population the Switzerland of the Far East will be born.

Once again, I may take up Hungarian citizenship. After all, Genghis Khan was Hungarian.