Mongolia Country Overview

1. Mongolia Country Overview Review and Outlook, October 2013 – Brussels Jeroen Plag

2. Contents

3. Executive Summary Mongolia: • A young and vibrant democracy, located in Central Asia, between Russia and China • Rich in natural resources such as copper, coal, gold, iron ore, phosphorite, silver and uranium • Mongolia is a home to the OyuTolgoi copper and gold (OT and TavanTolgoi coking coal (TT), world-class mining deposits. TavanTolgoi is often referred as the largest unexploited coal deposit in the world • Since the transition to democracy in 1991, the country’s economy has shown strong growth • Last year, IMF predicted that Mongolia’s GDP CAGR will average 13.8% through 2017, placing it as the fifth fastest growing economyin the world • The country has attracted significant foreign investment in sector’s such as mining and infrastructure • Major trading partners are China, Russia, Japan, Korea, USA and Germany Source: IMF, World Bank, CIA World Factbook

4. Mongolia has a remarkable history and has undergone a significant transformation • History • 13th century The Mongols gained fame when under Chinggis Khan they established a huge Eurasian empire through conquest. After his death the empire was divided into several powerful Mongol states. • 14th century Mongol states broke apart in the 14thcentury. The Mongols eventually retired to their original steppe homelands. • 1921 Mongolia won its independence with Soviet backing and a Communist regime was installed in 1924. • 1990 Following a peaceful democratic revolution, the ex-Communist Mongolian People's Revolutionary Party (MPRP) won elections in 1990 and 1992. • 1996 MPRP was defeated by the Democratic Union Coalition (DUC) in the parliamentary election. • 2000 The MPRP won an overwhelming majority in the parliamentary election. • 2004 MPRP lost seats in the election and shared power with democratic coalition parties from 2004-08. • 2008 The MPRP regained a solid majority in the 2008 parliamentary elections but nevertheless formed a coalition government with the Democratic Party. The prime minister and most cabinet members are MPRP members. • 2010 The MPRP changed its name to MPP by dropping the word “Revolutionary” • 2011 Ex-president N.Enkhbayar formed a new party using the acronym - MPRP • 2012 DP formed Grand Coalition with Justice Coalition, and Civil Will-Green Party after winning plurality. • What sets Mongolia apart • Mongolia stands positively apart from other CIS countries, being a free and stable democracy. • The Parliamentpassed the Investment lawduringThursday`ssession meeting with 83 percent approval. • Another crucial difference is that Mongolia has a freely convertible and transferable currency unlike comparable CIS/Central Asian nations. • Mongolia’s economic trajectory and development of domestic industry/ infrastructure as well as mining offers investors many opportunities. • In addition, according to World Bank rankings, Mongolia ranks #76 on ease of doing business. Which is ahead of Greece (#78), China (#91), Vietnam (#99), Russia (#112), Indonesia (#128) and the Philippines (#138). In the case of investor protection Mongolia ranks #25 ahead of the above countries. Source: World Bank, Doing Business Index 2013, CIA World Factbook

5. Fact Sheet Source: National Statistical Office, National Census, CIA World Factbook

6. Snapshot Economic Indicators Source: National Statistical Office, Bank of Mongolia

7. Overview Mining Sector • Summary • Mongolia is a highly resource rich country, with proven reserves estimated at a market value of US$ 1.3 trillion • Mining has grown to be the largest sector within the Mongolian economy • Considerable deposits of coal, copper, oil, gold, nickel, silver, iron, molybdenum, tungsten, phosphates, tin, zinc, fluorspar have been discovered throughout the country and are in various stages of development • With a significant amount coming from mining, GDP is forecasted to reach US$29.55bn by 2017, easily tripling Mongolia's 2011 GDP of US$ 8.56 billion • Foreign direct investment in 2011 was US$ 4.7bn, mostly mining related • The OyuTolgoi Investment Agreement was signed in 2009 clearing a path for development of the project. The mine, managed by Rio Tinto, has completed its first phase and started exporting copper concentrate in July 2013. • The Government has appointed banks to manage the IPO of state-owned giant TavanTolgoi, often referred to as the world’s largest unexploited coking coal deposit. • Meantime, the Government is building a rail line to Chinese border to cut its biggest expense – trucking cost. The rail line is expected to be completed in 2016. Source: World Bank, IMF, Bank of Mongolia, National Statistical Office, Yahoo Finance

8. Strategically Important Deposits Current 15 strategic deposits alone holds US$ 500B+ value Burenkhaan Tumurtei Asgat GurvanBulag Erdenet Mardai Boroo Dornod Baganuur TumurteiOvoo Khushuut ShiveeOvoo TsagaanSuvarga NariinSukhait TavanTolgoi OyuTolgoi Coal Lead Uranium Zinc Copper Iron ore Molybdenum Gold Phosphor Silver Source: Erdenes MGL LLC. Parliament is currently considering adding 7 more deposits to the Strategic List (as of August 22, 2013)

9. Celebrating 5 years in Mongolia

10. ING Commercial Banking has an international network spanning 40 countries St Petersburg Moscow Almaty Ulan Bator New York Seoul Los Angeles Beijing Tokyo St Petersburg Atlanta Dallas Shanghai Houston Delhi Moscow Dubai Taipei Bahrain Kolkata Hanoi Pune Mexico City Hong Kong Amsterdam Mumbai Warsaw Hyderabad London Manila Bangkok Bangalore Chennai Frankfurt Dublin Prague Labuan Kiev Katowice Brussels Brno Kuala Lumpur Luxembourg Bratislava Zurich Singapore Budapest Vienna Paris Jakarta Milan Geneva Bucharest Sao Paulo Sofia Ankara Istanbul Lisbon Madrid Izmir Buenos Aires Sydney Commercial Banking Retail Banking only Alliance Banking Commercial Banking + International Business Clients office Commercial Banking office Source: ING Disclaimer: ING Bank does not have a commercial banking license in the U.S. and therefore is not permitted to conduct commercial banking business in the U.S. Through its wholly owned subsidiary ING Financial Holdings Corporation, and its affiliates, it offers a full array of wholesale products such as commercial lending, corporate finance and a full range of FM products and services.

11. ING – Bringing Many “Firsts” to Mongolia First foreign bank with a permanent presenceEstablished Mongolia Representative Officein 2008 First benchmark-sized US$ sovereign bondDevelopment Bank of Mongoliaunconditionally and irrevocably guaranteed by the Ministry of Finance First to receive ‘Best Foreign Investment Bank in Mongolia’ award from FinanceAsia The first foreign bank to participate in aMinistry of Finance local currency government bill auction through the Bank of Mongolia First international US$ corporate bondMongolian Mining Corporation First Tugrik-linked financial instrument, structured and sold internationally The first foreign bank to open accounts with the Mongolian Stock Exchange and the Mongolian Securities Clearing House and Central Depository First international bond for a Mongolian financial institutionTrade and Development Bank The first foreign bank to participate in aMinistry of Finance local currency bond auction through the Mongolian Stock Exchange

12. Our Clients and Partners

13. Mongolia 03/2012 Mongolian Mining Corporation US$600m 8.875% Senior Guaranteed Notes due 2017 JointBookrunner Best High Yield Bond 2012 Asia Pacific High Yield Bond of the Year 2012Emerging Asia Bond of the Year 2012 Most Impressive High Yield Corporate Bond 20122nd Place Most Impressive G3 Bond3rd Place Mongolian Mining Corporation Largest-ever Single-B debut issue from Asia and largest bond from Mongolia • Key terms • Issuer Mongolian Mining Corporation • Subsidiary Mongolian Coal Corporation Limited,guarantors Mongolian Coal Corporation S.a.r.l, Energy Resources Corporation LLC, Energy Resources LLC, Energy Resources Mining LLC and TransGobi LLC • Share pledges Mongolian Coal Corporation Limited and Coal Corporation S.a.r.l • Issue ratings B1 (Moody’s) / B+ (S&P) • Issuance type Guaranteed Senior Notes • Issuance size US$600m • Maturity March 29, 2017(callable in March 2015) • Coupon/Yield 8.875% • Re-offer price 100.000% • Format Reg S / 144A • Listing SGX-ST • ING role Joint Bookrunner andJoint Lead Manager • Issuer background • Mongolian Mining Corporation (“MMC”) is the largest private-owned coal mining company in Mongolia. It is engaged in open-pit mining of coking coal at its UkhaaKhudag (“UHG”) deposit which forms the northern branch of the TavanTolgoi coal formation, and its BaruunNaran (“BN”) deposit, both located in South Gobi Province, Mongolia • MMC has the first and only coal handling and preparation plant in Mongolia, designed to world class standards equivalent to those of Australian mines. Leighton committed to work with MMC to build out its coal production capacity to 15Mtpa. With the commencement of CHPP operations, MMC has shifted its production from raw coal to washed coal, which was sold at 63.8% premium to raw coal in 2011 • MMC turned profitable in the first year of operations in 2009 and completed a successful IPO on the Hong Kong Stock Exchange in the following year, successfully transforming from a greenfield project to become a leading Asian integrated coking coal producer in Mongolian within a short span of time • MMC is strongly supported by blue chip and long term shareholders who invested in the Company prior to its IPO and have contributed to the development of MMC’s operations • Transaction details • On March 23, 2012, MMC successfully priced its debut US$ Reg S/144A five-year senior guaranteed notes offering. The notes are rated B1 and B+ by Moody’s and S&P, respectively. This transaction set new standards as it marked the first corporate and largest-ever bond out of Mongolia, the largest-ever single-B debut issuance from Asia as well as the first Reg S / 144A issue from the country • Novelty Coal Mining Credit. MMC is Mongolia’s largest and only mining company with fully-integrated infrastructure and sole exporter of washed coking coal out of the country. This notes provide investors with a unique exposure to a novelty credit from the pivotal mining sector of one of the world’s fastest growing economies. Also, investors would be able to indirectly participate in China’s growth story while enjoying stronger protection via onshore OpCo guarantees and the use of a tight leverage ratio • Roadshow Generated 9.3x Oversubscription. The intense marketing efforts generated an overwhelming global demand for this proposition, and not only revealed the immense appeal of quality frontier market credits to the global investment community but also the depth of demand for exposure to quality EM commodity credits as well as the unequivocal success of the global marketing efforts. This allowed for a consistent narrowing of pricing guidance through various iterations. The deal was ‘whispered’ to the market at ‘mid to high 9%’ with an expected deal size of US$500MM. Initial guidance was issued at 9.375% area. On the back of strong demand, revised guidance of 9.125% was released and a final guidance of 8.875% to 9.000% from where it priced at the tight end and hence, achieved MMC’s price target • Exceptional Orderbook Quality Allowed Deal Upsize and Pricing at Tight End of Revised Price Guidance. Demand from real money was extremely strong, with several orders of over US$50MM and a handful of firm US$100MM plus bids. On the back of the exceptional quality real money demand in the orderbook, MMC upsized its transaction to US$600MM from US$500MM and priced its transaction at par and a yield of 8.875%. The high quality orderbook amounted to no less than US$5.6BN, one of the largest ever for an Asian high yield bond, and certainly for a single-B name. The orderbook closed with overwhelming demand from over 330 investors – Asian investors were allocated 22%, European investors 22% and U.S. investors lapped up a majority 56%. By investor type, fund managers were allocated 75%, banks 11% and private banks and other investors 14% • Strong Aftermarket Performance. MMC’s US$ bonds were free-to-trade at 3.20pm New York time on March 22. The secondary price gained momentum and was quickly at a bid price of 100.50. On March 28, MMC’s US$ bond was at a bid price of 100.375. The appropriate pick-up in price post-issuance suggests a perfectly-priced issue, quality distribution and a strong after-market for MMC Financial markets Media review Investors dig Mongolian Mining“If investors were unsure where exactly Mongolia was located, they now have Ulaanbaatar uppermost in their minds. After a highly successful Development Bank of Mongolia deal two weeks ago, Mongolian Mining Corporation not only reinforced the appeal of the frontier market to global investors but also set a number of regional landmarks in the process. MMC’s US$600MM five-year marked the largest-ever bond out of Mongolia and the first 144A issue from the country. It was also the largest debut issuer from a single-B rated Asian corporate in the last five years… the scarcity value helped, as did the appeal of the coal sector. When books closed last Thursday, MMC had drawn some US$5.6BN from more than 330 accounts. Demand from real money was solid. (IFRAsia, March 2012)

14. The ING Mongolia Team

15. Commercial Banking Howard Lambert Director Head of Corporate and Investment Banking, Mongolia Suite 301, NaimanZovkhis Building, Seoul Street 21, Ulaanbaatar 14251, Mongolia T +976 7011 5196 M +976 8800 2722 +65 8118 6151 (Singapore) Ehoward.lambert@asia.ing.com Commercial Banking Anar-Erdene Jamts Investment Officer Suite 301, NaimanZovkhis Building, Seoul Street 21, Ulaanbaatar 14251, Mongolia T +976 7011 5196 M +976 8801 3716 +976 99993717 E anar-erdene.jamts@asia.ing.com Commercial Banking Ariunaa Bazarsad Investment Officer Suite 301, NaimanZovkhis Building, Seoul Street 21, Ulaanbaatar 14251, Mongolia T +976 7011 5196 E ariunaa.bazarsad@asia.ing.com Team Contacts

16. Key Indicators Key observations • The Mongolian economy continues to grow at a solid pace, expanding by 12.4% in ’12. • Growth was led by the service and agriculture sectors. • The development of the OyuTolgoi mine has had a strong spillover into the wider economy. OT started the export of concentrate in July of 2013. • The poverty rate declined to 27.4% in 2012 from 38.7% in 2010, while household income reached MNT 820K/month from MNT 448K/month during same period. • The Price Stabilization Program being implemented by the Central Bank, has started yielding results. Inflation has eased to high single-digits from mid-teens since the start of the program in December 2012. • A slowing Chinese economy and sustained weakness in commodity prices pose a significant risk for Mongolia. Source: National Statistical Office, IMF, World Bank

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