Mongolia and mining - caution needed
INVESTORS have been falling over themselves lately to throw money at projects in Mongolia.
So far, so good. Investors made good money last year backing stablemates Hunnu Coal and Voyager Resources which are active in the north Asian country. Proximity to China, though, has been seen as a two-edged sword; there’s the market, but also the fear of Chinese buyers being able to call the tune because of the need to ship any metals through either there or Russia - which is why some companies have been stressing that their projects are in the north of the country and a new railway being built on the Russian side of the border will allow them access to the Trans-Siberian line (with the choice of railing to Europe or Vladivostok).
But investors have possibly been a bit too laid back about political risk. During the week we saw the news that Toronto-listed Khan Resources has sought international arbitration after the Mongolian government refused to reinstate its uranium mining leases, and the company is seeking $US200 million compensation. The Canadians claim that Mongolia‘s Nuclear Energy Agency has handed the project to a Russian company. Khan had been planning to have its Dornod project operating by 2013.
So Ocean Equities is probably tending toward under-stating the issue of Mongolian risk with its latest note on Haranga Resources, which was recently listed by the team that runs Hunnu and Voyager. The note concludes: “Mongolia is a rapidly emerging but still early stage mining country where there is a degree of uncertainty relating to potential state participation in mineral deposits of strategic importance and there is no guidance as to whether this will affect Haranga’s projects”.
HAR this morning reported it has discovered a large and intense magnetic anomaly at its Sumber iron ore project near the Agaruut iron ore mine and the Chinese border. A survey less than 50km from the Chinese border crossing at Hangi Mandal. This survey reveals that the three distinct iron ore outcrops previously identified there are coincidental with the new, 4km-long anomaly.
The Ocean Equities note says Haranga’s strategy is to develop large scale, high grade magnetite deposits with near-term production potential, leveraging existing or planned infrastructure to attractive margins to use road or rail transport for supplying inland Chinese steel mills. Ocean Equities describes Haranga is “an early stage speculative investment given the company is capitalised at $126m with no JORC resource or infrastructure agreements”.
HAR shares were up 1.5c this morning to 69c.
brombyr@theaustralian.com.au
The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice. The writer does not own shares in any company mentioned.
So far, so good. Investors made good money last year backing stablemates Hunnu Coal and Voyager Resources which are active in the north Asian country. Proximity to China, though, has been seen as a two-edged sword; there’s the market, but also the fear of Chinese buyers being able to call the tune because of the need to ship any metals through either there or Russia - which is why some companies have been stressing that their projects are in the north of the country and a new railway being built on the Russian side of the border will allow them access to the Trans-Siberian line (with the choice of railing to Europe or Vladivostok).
But investors have possibly been a bit too laid back about political risk. During the week we saw the news that Toronto-listed Khan Resources has sought international arbitration after the Mongolian government refused to reinstate its uranium mining leases, and the company is seeking $US200 million compensation. The Canadians claim that Mongolia‘s Nuclear Energy Agency has handed the project to a Russian company. Khan had been planning to have its Dornod project operating by 2013.
So Ocean Equities is probably tending toward under-stating the issue of Mongolian risk with its latest note on Haranga Resources, which was recently listed by the team that runs Hunnu and Voyager. The note concludes: “Mongolia is a rapidly emerging but still early stage mining country where there is a degree of uncertainty relating to potential state participation in mineral deposits of strategic importance and there is no guidance as to whether this will affect Haranga’s projects”.
HAR this morning reported it has discovered a large and intense magnetic anomaly at its Sumber iron ore project near the Agaruut iron ore mine and the Chinese border. A survey less than 50km from the Chinese border crossing at Hangi Mandal. This survey reveals that the three distinct iron ore outcrops previously identified there are coincidental with the new, 4km-long anomaly.
The Ocean Equities note says Haranga’s strategy is to develop large scale, high grade magnetite deposits with near-term production potential, leveraging existing or planned infrastructure to attractive margins to use road or rail transport for supplying inland Chinese steel mills. Ocean Equities describes Haranga is “an early stage speculative investment given the company is capitalised at $126m with no JORC resource or infrastructure agreements”.
HAR shares were up 1.5c this morning to 69c.
brombyr@theaustralian.com.au
The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice. The writer does not own shares in any company mentioned.
Comments
Post a Comment