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The state ownership percentage to be determined for Gatsuurt deposit was discussed today at the Parliament plenary session. The matter was delayed due to the break of the DP caucus. The resolution draft to determine the state ownership percentage in Gatsuurt was ratified by the 61.1% of presented MPs. The state ownership percentage was set at 34%, the highest available rate defined in the Minerals law. The state’s involvement in the deposit shall be compensated with the royalty payment. Previously the DP caucus had taken 5 day break and the members had discussed the issue on PM dismissal last Thursday along with other issues included in the agenda.

The Gatsuurt deposit is ready for development; the life mine is 9-10 years producing gold. The total investment is US$215.9 m, operational cost US$ 1026.2 m with estimated sales of US$1769.2 m. US$ 433.6 m shall be paid in taxes, fees and approximately 1000 jobs will be created.

After the plenary session the Government held a non-regular session to discuss the Gatsuurt deposit issue. R.Jigjid, Minister of Mines provided information to the media and made comments on the deposit.

-34% of the Government shall be paid in royalties. How the payment shall be made?

-It will be resolved in accordance with the Minerals law. The Working group had discussions with the investor and agreed to set the royalty at 3%. However, the rate may fluctuate depending on the gold price at global market. We had agreed on 3% at gold price of 1100-1400.

-What taxes will be imposed?

-There are three categories of the royalty: basic, escalating due to price increase and special. In addition to that the company will pay corporate income tax as well as other taxes and fees in accordance with the Tax law.

-When production will start?

-currently the Ministry of Mines is negotiating with the investor to sign the mining contract. We aim to complete as earlier as possible to start development. I hope it would start within 12 months. The investor is indeed in a hurry. The Ministry takes actions to encourage and support gold production through amendments to the Minerals law and Law on Budget. If the gold is sold to the Central bank, the royalty shall be reduced by 2.5%, this discount applies until 2018. If the special royalty will be applied, then deduction shall be made from the income which means that we will get direct cash. In case of state’s 34% ownership, a question is raised how much we need to invest. The entity also must operate profitably to allocate the dividends. If Mongolia to own shares in the project, we will get dividends in several years, so if we will apply special payment the state will get income earlier.

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Монгол хувилбарыг унших бол энд дарна уу