YAK:CN - Leveraged to Mongolias Growth March 2012 Legal Disclaimers - - PowerPoint PPT Presentation

YAK:CN - Leveraged to Mongolia’s Growth

March 2012

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Legal Disclaimers

This is not an offer to sell or a solicitation of an offer to purchase securities by Mongolia Growth Group (the “Company”). Any such offer or solicitation will only be made by means of the Company’s Offering Documents (e.g., prospectus, offering memorandum, subscription agreement and or similar documents) and only in jurisdictions where permitted by law. Investors should refer to the Offering Documents for more complete information, including investment risks, fees and expenses. The securities are a highly speculative investment and are not intended as a complete investment program. They are designed only for sophisticated persons who can bear the economic risk of the loss of their investment in the Company and who have limited need for liquidity in their investment. There can be no assurance that the Company will achieve its objectives. Target investment goals are not a guarantee of future returns. The attached material is provided for informational purposes only as of the date hereof, is not complete, and may not contain certain material information about the Company, including important disclosures and risk factors associated with an investment in the Company. This information does not take into account the particular investment objectives or financial circumstances of any specific person who may receive it. More complete disclosures and the terms and conditions relating to a particular investment is, or will be, contained in the Offering Documents. Before making any investment, prospective investors should thoroughly and carefully review the Offering Documents with their financial, legal and tax advisors to determine whether an investment is suitable for them. The attached material includes forward-looking statements relating to, among other things, the future financial performance of and objectives of the Company; plans and expectations for the operation of the Company; and estimates or expectations for fees, costs and expenses. These forward- looking statements are typically identified by terminology such as “may,” “will,” “should,” “expect,” “anticipates,” “plans,” “intends,” “believes,” “estimates,” “projects,” “predicts,” “seeks,” “potential,” “continue” or

• ther similar terminology. Forward-looking statements are inherently

unreliable, and prospective investors should not rely on them. The forward-looking statements are based on the Company’s current expectations, assumptions, estimates and projections about future events. Actual results are subject to numerous risks and uncertainties that could cause actual results to differ materially from those expressed in a forward- looking statement as a result of various factors which may be further described in the Company’s Offering Documents. The Company does not have any obligation to update or otherwise revise any forward-looking statements in the attached material or to reflect the occurrence of unanticipated events. Certain information contained herein have been prepared by third-party sources, and such information has not been independently audited or verified by the Company. The Company has used its best efforts to ensure the accuracy and completeness of the information presented.

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Legal Disclaimers

Forward Looking Statements This document, together with any documents incorporated by reference herein, contains statements about expected future events and financial and

• perating results that are forward-looking. From time to time, we may also

provide oral or written forward-looking statements in other materials we release to the public. Forward-looking statements give our current expectations or forecasts of future-events. You can identify these statements by forward-looking words such as "expects", "does not expect", "plans", "anticipates", "does not anticipate", "believes", "intends", "estimates", "projects", "potential", "scheduled", "forecast", "budget" and similar expressions, or that events or conditions "will", "would", "may", "could", "should" or "might" occur and similar words. In addition, statements that we make in this document including any documents incorporated by reference herein that are not statements of historical fact may also be forward-looking statements. Forward-looking statements are not guarantees of our future performance and involve risks, uncertainties and assumptions that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. For example, some risks, uncertainties and assumptions include: capital requirements; fluctuations in the international currency markets and in the rates of exchange of the currencies of Canada and the United States; price volatility in the spot and forward markets for commodities; impact of any hedging activities, including margin limits and margin calls; discrepancies between actual and estimated production and between actual and estimated reserves and resources; changes in national and local government legislation in Canada, the United States and Mongolia or any other country in which the Company currently or may in the future carry on business; taxation; controls, regulations and political or economic developments in the countries in which the Company does or may carry on business; the speculative nature of oil and natural gas exploration, production and development, including the risks of obtaining necessary licenses and permits; diminishing quantities or grades of reserves; competition; loss

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key employees, additional funding requirements; stock market volatility and ability to access sufficient capital from internal and external sources; actual results of current exploration or reclamation activities; changes in project parameters as plans continue to be refined; accidents; labour disputes; and defective title to claims or property or contests over claims to oil and gas properties. In addition, there are risks and hazards associated with the business of oil and natural gas exploration, production and development, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding (and the risk of inadequate insurance or inability to

• btain insurance, to cover these risks).

You should not place undue reliance on forward-looking statements. We do not promise to notify you if we learn that our assumptions or projections are wrong for any reason except as required under applicable securities laws. We do not undertake any obligation to update forward- looking statements, whether as a result of new information, future events or

• therwise except as required under applicable securities laws. You should

be aware that all the risk factors discussed in this document could cause our actual results to differ from any forward-looking statements.

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Leverage the tremendous growth in Mongolia Focused on acquiring, constructing and managing investment real estate in Mongolia while helping to build the country’s insurance industry

Mission Statement

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Rich in mineral wealth Construction of world class mines Proximity to China Experiencing a high teen annual GDP growth rate Hard working and ambitious, pro-Western culture

Why Mongolia?

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• Land area: 1.56m sq.km
• Population: 2.7 million
• Political System: Democracy
• Capital: Ulaanbaatar
• Located between Russia and

China

• 19th largest country in the

world

• GDP (2011): $8,14 Billion*
• GDP per capita: $2,872*
• GDP is likely to accelerate

significantly in the future

The Country

*NSO (National Statistical Office of Mongolia)

Ulaanbaatar

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How Big is the Opportunity?

200 400 600 800 1000 1200 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Copper production forecast, thousand tonnes

Oyu tolgoi, Tsagaan suvarga, Bayan-Airag Erdenet

ACI Mongolia, The Financial Markets Association

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5000 10000 15000 20000 25000 30000 2010 2011 2012 2013 2014 2015 2016 2017

Mining production forecast, by minerals type, mln USD

Oil Iron ore Coal Copper Gold

How Big is the Opportunity?

• 5,000

10,000 15,000 20,000 25,000 30,000 35,000 2009 2010 2011 2012 2013 2014 2015 2016 2017

Nominal GDP estimation, mln USD

Other sector increase Mining By capacity GDP, mln usd

ACI Mongolia, The Financial Markets Association

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Foreign Direct Investment

• Foreign investments in

Mongolia have increased in recent years

• Investments are primarily in

the resource sector

• FDI per capita is $380US

Foreign Direct Investments, US$MN*

317 367 500 709 801 1,026 184 195 337 485 643 820

• 200

400 600 800 1,000 1,200 2005 2006 2007 2008 2009 2010

FDI FDI-Mining

*NSO (National Statistical Office of Mongolia)

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Two Massive Projects

OyuTolgoiMine (OT)* TavanTolgoiMine (TT)*

• JV between Ivanhoe Mines and Rio

Tinto

• Contains 81 billion pounds of copper

and 46 million ounces of gold

• Scheduled to produce 1.2 billion

pounds of copper (4% of global production) and 650,000 ounces of gold each year with a 59 year mine life

• To commence production in 2012.

Total capital expenditure is estimated at $6.5 billion

• Anticipated to account for 30% of

Mongolia’s GDP. Expected to create thousands of direct, high paying, full time jobs

• Estimated

to be the largest undeveloped coking coal mining district in the world, holding in excess of 6 billion tones of coal

• Close to Chinese border
• Multi-billion dollar project began

development in 2011

• Huge upside potential for resources

and annual production

• The largest of the many planned

mid-to-high BTU coal projects in various stages of development in Mongolia

• Planned IPO will accelerate current

production rates

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A Simple Question

Question: There are tens of billions to be spent on capital projects that are in the planning and development stages, so how do you put this much capital into such a small economy?

Answer: Get ready for the boom!

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Mongolia Growth Group’s Thesis

• Mongolia has a small population with huge resource potential
• We anticipate large GDP and per capita income growth
• Historical comparables where an open economy has allowed for

wealth creation are Kuwait, Qatar, and Kazakhstan

• We want to invest at the inflection point when the first major new

mine is being built

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Using Kazakhstan as an Investment Roadmap for Mongolia

• There Are Many Similarities

Between Kazakhstan And Mongolia

• Both Resource Economies
• Both Former Soviet Satellites
• Culturally Similar
• Similar Soviet Architecture

The Difference Is That Kazakhstan Is 10 years Ahead Of Mongolia In Its Boom

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The Kazakhstan Boom from 2002 to 2008

2002 2008 % Change

Kazakhstan Oil Production (Barrels/Day) *1

885,000 1,363,000 54%

Kazakhstan GDP ($ USD Billions) *2

$24,637 $104,853 326%

Kazakhstan GDP Per Capita ($USD) *3

$1,490 $6,626 345%

Banking Sector Assets ($USD Millions) *4

$556 $2,976 4,032%

*1: US Department of Energy *2: World Bank *3: International Monetary Fund *4: International Monetary Fund

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Asset Prices Responded Vigorously

2002 2008 % Change

Kazakh Tenge (Currency) 150.67*1 120.64*1 20% Kazakh Stock Exchange Index 104.55*1 2640.15*1 2425% Downtown Almaty (Largest City) Apartments Per Meter $300-$500*2 $2,500-$4,000*2 833% Downtown Almaty Land Per Meter $200-$500*4 $25,000-$40,000*5 8000%

*1: Bloomberg *2:CBRE Kazakhstan, Almaty Office *3: Observed Prices *4: InvestKZ.com *5: CBRE Kazakhstan, Almaty Office

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Current Prices in Ulaanbaatar on the Eve of the Boom

Current Price in Almaty Current Price in Ulaanbaatar

Downtown Apartments ($USD Per Meter)

$3,000-$5,200*1 $600-$2,000*1

Prime Ground Floor Retail Space in Downtown ($USD Per Meter)

$20,000-$50,000*1 $1,500-$3,000*1

Buildable Land In Downtown Core ($USD Per Meter)

$25,000-$40,000*2 $900-$3,000*1

*1: Observed Prices *2: CBRE Kazakhstan, Almaty Office

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Strategy

Focus on: Industries likely to benefit from the growth in consumer income:

• Insurance
• Asset Management
• Real Estate

Ignore: Mining itself: Tough Industry Capital Intensive Political Boom & Bust Cycles

Real Estate

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Mongolian Property Rights

• Property rights are strongly

protected by law

• Foreigners can own finished

structures

• Foreigners can enter into land

leases (max 100 years)

• Foreign and local corporations

cannot own land

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Ulaanbaatar City Map

Mountains Mountains

Ulaanbaatar is constricted by mountains to the north and the south A single 2-lane east-west road constricts movement and focuses all development into the downtown

• f approximately 2km North-South by 3km East-West

Downtown

Airport

Peace Avenue Is Only Main East-West Road City Is Constricted To The North And South By Mountains

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View of Downtown UB

Gandan Ger District

Parliament

New UN Building

Central Business District

Seoul Street

North

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Residential

• Undersupply of modern housing in the

city center

• Increasingly affluent Mongolians demand

higher standards

• Expats have high expectations and sizable

housing allowances

• Huge demand for low-income housing as

Mongolians move from ger districts to permanent structures

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Residential Plan

• Focus on the city center
• Purchase select new construction
• Acquire undervalued older

structures and redevelop them into modern housing units

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Retail Space

• Purchase properties on high streets
• Focus on the best locations in the

heart of the city

• Increased affluence should translate

into high end retail shopping

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Office Market

• Undersupply of Class A and B
• Shortage of large floor plan space
• Very few entire buildings available

for single company rental

• Rents are increasing rapidly

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Our Portfolio

• 55 Residential units
• 7,900 meters² of Retail space
• 4,300 meters² of Office space
• 5,400 meters² of Redevelopment

Opportunities

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MGG Acquisition Growth Chart

All data as of February 29th 2012`and presented in MNT 5,000,000,000 10,000,000,000 15,000,000,000 20,000,000,000 25,000,000,000 30,000,000,000 35,000,000,000 Feb '11 Mar '11 Apr '11 May '11 Jun '11 Jul '11 Aug '11 Sept '11 Oct '11 Nov '11 Dec '11 Jan '12 Feb '12 Redevelopment Office Space Retail Space Residential

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MGG Real Estate Breakdown

All data as of February 29th 2012. Percentages are calculated based on property values. 46.7% 20.8% 12.5% 20.0% Retail Redevelopment Residential Office

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MGG Property Usage Breakdown

66.7% 4.4% 1.7% 4.3% 2.0% 20.9% Rented Corporate Use Renovation Vacant To be Sold Redevelopment All data as of February 29th 2012. Percentages are calculated based on property values. For the purpose of this chart, MGG’s insurance subsidiary, Mandal Daatgal, is considered as a tenant as it pays rent to MGG. The Property value of the space rented by Mandal is not included under “corporate use”.

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Monthly Rental Revenue

All data as of February 29th 2012 is presented in MNT. MGG’s insurance subsidiary, Mandal Daatgal paid 10,200,000 MNT in rent to MGG in February and 4,850,000 in January 2012. 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 160,000,000 180,000,000 200,000,000 May '11 June '11 July '11 Aug'11 Sept '11 Oct '11 Nov '11 Dec '11 Jan '12 Feb '12 Redevelopment Office Retail Residential

Insurance

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Insurance in Mongolia

• Current market is underserved
• Premium to GDP ratio is only

0.3%, versus 6-8% in some developed markets

• Some Mongolian insurers

make it difficult to collect on claims

5 10 15 20 25 30 2006 2007 2008 2009 2010 2011 Q3 Total Premium (Million US $) We want to build a reliable insurer that is

• vercapitalized for all possible claims

*FRC (Financial Regulatory Commission of Mongolia)

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Current Insurance Company

• Mandal General Daatgal LLC
• Received insurance license on June

20, 2011

• Operates in various property and

casualty lines of business

• Initial capital of US$5m, making it

the best capitalized insurer in Mongolia

• Researching the life insurance market

in Mongolia

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Insurance Management Team

• Respected

Mongolian managers, who built their previous insurance company into a premier insurer in the country

• Premium growth at 36% CAGR for 4 Years
• Combined Ratio of 70% from 2007 -2010
• Average ROE of 40% from 2007-2010
• Portfolio returns of 15% per annum from 2008-2010

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Future MGG Plans

• Evaluating multiple opportunities in

financial services

• Researching various industries

to enter

• Potential

partnerships like

• ur

insurance venture

• Looking

at unlocking value in publicly traded Mongolian Stock Exchange companies

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Risks

• Political Risks
• Geopolitical Risks
• Commodity Economy
• China Slowdown
• Inflation

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Management Team

Harris Kupperman

• Chairman & CEO
• 10 years as President of Praetorian Capital, a macro themed, small-

cap focused, hedge fund Jordan Calonego, CFA

• COO and Board Member
• 14 years of experience in real estate development and investing
• 13 years of experience investing in operating businesses, public

and private

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Board of Directors

Paulo Bilezikjian

• Chairman of Andean American Gold

(AAG:TSXV) Bill Fleckenstein

• President of Fleckenstein Capital

Byambaa Losolsuren

• UMC Group Partner
• Former Investment Officer at Asian

Development Bank

• Former Consultant to Financial Regulatory

Commission (FRC) Of Mongolia Paul Sweeney

• Board Member of Polaris

Minerals (PLS:TSX)

• Board Member of Alterra Power

Corp (AXY: TSX)

• Board Member of Tahoe

Resources (THO:TSX)

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Management Philosophy

Our structure is corporate, but we operate on the principles of a long-term partnership

• No founding management salaries or options
• The Board has been chosen based on relevant experience, intellect

and a deep understanding and coherence to our guiding principles

• Our only upside is by creating shareholder value; increasing the

intrinsic value of the company on a per share basis

• We own a lot of shares and are working for ourselves and our

investors

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Mongolia Growth Group Ltd.

• Founded in February 2011
• Listed on the CNSX - Ticker: YAK
• 34,143,352 shares outstanding
• 33.5% Sr. Management and Board
• wnership
• Approximately $51.5M Raised

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Conclusion

Mongolia is expected to be one of the fastest growing economies in the world over the next decade. We want to leverage that growth.

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Contact

For more information please visit: MongoliaGrowthGroup.com

• r contact:

info@mongoliagrowthgroup.com