Source: ResCap Mongol Minute                         Date: 05 October, 2011

Next year's June election in Mongolia will determine the leaders that oversee two world class copper and coal mines begin production. Tavan Tolgoi coal project and Oyu Tolgoi copper and gold project will generate billions of dollars of cash flow to Mongolia.Mongolia's politicians are leveraging themselves in the face of Ivanhoe Mines and Rio Tinto for a larger stake in Oyu Tolgoi, likely in an attempt to win votes for the upcoming election. The Tavan Tolgoi Western Tsankhi deal will likely see some revision in the near future as well.“Populist rhetoric is the way not to get left behind,” said David Hanbury, ResCap analyst. Mongolia will increase its interest to 50 percent in Oyu Tolgoi for the benefit of its citizens and protection of its national interests over the long term. But it can and only should do this according to the terms of the investment and shareholder agreements signed in 2009.Further, although populist rhetoric can win votes with Mongolian voters, government officials should be wary not to go too far out of line to alienate investors.