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Mongolian minerals authority defends annulment of licences

Last month, the cadastral [surveying] centre of the Mineral Resources and Petroleum Authority of Mongolia (MRPAM) annulled 34 mineral exploration licences held by 18 national and international companies that cover deposits of coal, industrial minerals, base and precious metals, as well as uranium. The invalidation of the exploration licences has caused serious concern among them as well as other potential investors in the mining sector. Some Western companies plan to move Mongolian courts against the annulments.

MRPAM has explained that it will expedite the conversion of some exploration licences to mining ones. Its chairman, L. Bold, told media on 10 September that the notice was given following the recommendations of the State Auditing Committee, which had discovered that the area covered by the 34 licences out of more than 6,000 currently effective licences had been explored with state budget funds in the past. According to a law passed by parliament on 8 July 2006, exploration licences for such areas had to be revoked, as they covered deposits ready for mining.

Bold said in a letter to the companies that the concerned stakeholders need to change the exploration licences into exploitation or pre-exploitation or production licences in accordance with the Minerals
Law of Mongolia.

"It is important to realize that under the law companies cannot any longer continue to hold exploration licences in areas where exploration work has been finished long ago. They are now obliged to move on to developing the deposits. They have absolutely no fear of losing their rights, if they fulfill the legal requirements."

Toronto-based Khan Resources said it is moving to convert its special exploration licence in Mongolia's eastern province into a mining licence after the statement.

Concerning the Oyu Tolgoi investment agreement that is pending approval by parliament, Bold said: "I am confident that Ivanhoe Mines' Oyu Tolgoi investment agreement, which has been recently approved by the government, will be passed by parliament soon."

"I wish to encourage companies, both international and national, to continue their oil and gas exploration projects and programmes. Petroleum exploration has become another great investment opportunity in the Mongolian resources sector. Neither the mining policy of Mongolia nor our international standard licensing system will be changed, because they are the cornerstones of our national development and prosperity," he said.

"The government of Mongolia has no hidden agenda in taking away these licences. MRPAM is fully committed to strictly following the Minerals Law, which protects the interests of both foreign and domestic investors. As a matter of fact every mining operation conducted according to law is running smoothly and with no disruption," Bold stated.

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