Thursday, June 9, 2011

With Erdenes-Tavan Tolgoi's IPO, Mongolians "will suddenly be rich"

Christian DeHaemer, Editor, Energy and Capital, writes:

"In the next year, there will be a Mongolian energy IPO that will make headlines around the world and increase the wealth of the average Mongolian by a factor of 53. This company is known as Erdenes-Tavan Tolgoi ... commonly referred to as TT [which] has a massive deposit of coking coal. In fact the 6.4 billion metric tons is the world's largest untapped deposit.

"As I write this, the Mongolian government is looking for an operator. It will likely be a large, multinational corporation. The last successful Mongolian IPO was Mongolian Mining Corp., which was offered up in the fall of 2010. MM's IPO was listed in Hong Kong and raised $651 million. At the time, it was Mongolia's largest privately-held producer and exporter of coking coal ...

"TT will be even bigger, and is expected to raise as much as $10 billion. Here is where it gets fun. The government has given each of its three million citizens 538 shares, or 10% of the company. At $10 billion, the shares would be worth $360 — or $193,680 per citizen. According to the CIA's World Factbook, Mongolia had a total GDP of $11.02 billion in 2010. Per capita income was $3,600.

"In other words, Mongolians will suddenly be rich."

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