By Katherine Young, Resourcex.com



The President of Mongolia, Nambaryn Enkhbayar, met with British Prime Minister Tony Blair and British Minister for Trade, Investment and Foreign Affairs, Ian McCartney on April 16th and 17th. On the agenda was discussion about Mongolia continuing to create favourable conditions for foreign investment, particularly in the mineral industry. Background to the discussions included the Mongolian government’s recent agreement in principle with Rio Tinto and Vancouver-based Ivanhoe Mines Ltd. to develop the Oyu Tolgoi copper and gold deposits in Omnogobi aimag, 80 kilometres north of the Chinese border.

The agreement has not yet been ratified by the Mongolian parliament; however Enkhbayar, according to the Mongolian News and Information website, told Rio Tinto’s CEO Leigh Clifford, that he “hoped Rio Tinto would bring in a new era to the Mongolian mining industry by introducing new environment-friendly technology. He also reaffirmed Mongolia is willing to cooperate with Rio Tinto in human resource training, especially in mining fields." Mining companies and investors alike are encouraged by the news.

Entrée Gold Corp.’s press release of April 10 describes how the news affects their interests in Mongolia, “We further believe that ratification of the Investment Agreement [between Rio Tinto and the Mongolian government] will be a positive step forward, not only for mineral resource companies working in the country but also for the people of Mongolia." Entrée Gold is a major company with a treasury that exceeds CAD $16 million. However, juniors in Mongolia are also feeling the warmth.

East Asia Minerals Corp. (TSX.V:EAS), a junior exploration company with six uranium properties in Mongolia, has noticed the benefit to its stock price, which saw gains throughout April up to $1.41 before correcting to $1.20 at the end of the month. East Asia’s stock was less than $0.75 earlier in April.

In an interview, East Asia’s Vice President of Business Development Lionel Martin said, “we’re focused heavily in Mongolia. We have a fully functioning office in Ulanbaatar that has both geologists and administration. As the company has grown we’ve actually ended up concentrating heavily on uranium south of Ulaanbataar."

On April 24, 2007, East Asia announced that it had appointed Michael Hawkins as its new President and Director. Mr. Hawkins has a background in Mongolia including being Mongolia Country Manager for AngloGold Ashanti, where he was based in Ulaanbataar. Other members of the East Asia corporate team, like Vice President Lionel Martin and former President Lyndon Bradish, also have extensive experience in Asia.

East Asia reported in a recent press release “that advancing its Mongolian uranium assets will be a primary focus during its next stage of growth… five initial uranium properties (Enger, Bayan Uul, Airag-1, Ikh Khet and Elgenii) were acquired in late 2005 and early 2006. With the addition of Ooshiin Govi in late 2006, the uranium portfolio is clearly a core asset that will be explored."

East Asia’s Ooshin Govi property lies next to The Compagnie Generale des Matiere Nucleaires (AREVA) property where extensive drilling has been conducted by AREVA. East Asia completed the first phase of drilling on the Ooshiin Govi property early this year and confirmed that the radiometric anomaly on the AREVA property continues onto the Ooshiin Govi property.

Suffering originally from investor perception about mining in Mongolia, it appears that now the tide in investor perception may be changing with Mongolia’s latest efforts to do business with the majors. But what is the exploration climate really like?

Some analysts, such as James Finch of Stockinterview.com, are wary. He recently told Resourcex, “Mongolia has done two about turns in the past several months. What's next from them? In an era of Hugo Chavez and Bolivian chatter about nationalization, there are far better uranium opportunities in the world than Mongolia… I'd rather bet on Namibia if I were looking for a third-world uranium exploration play. [Mongolia] lost its credibility several months ago. Their recent deal might benefit a major, but the little ones could get hurt as they try to move their projects forward."

Terence Ortslan, a mining analyst with TSO and Associates in Montreal, believes these “about turns" are part of Mongolia’s learning curve as its government comes to grips with the costs and time involved in exploring for, and extracting, minerals.

“I think Mongolia is a country staying democratic but learning the process as they proceed further because they do understand the impact on [their] $3 billion GNP of any major investment," he said. “With this Ivanhoe agreement, Mongolia will be able to put enough seeds in people’s minds that it can be a place to do business with. The open-door policy of Mongolia for mining exploration will not continue. They will be more scrutinizing and careful who comes in and what they do."

So just how favourable is the Mongolian environment for juniors like East Asia? Ortslan put it in comparative perspective, “In a global sense, I think Mongolia has moved to the medium range of competitiveness. They used to be really competitive They’re not anti-mining, they’re just [learning]. I think there is room for juniors to perform, but one thing we’ve got to know is that it’s not the good old days where you could do anything in Mongolia you want. They were really giving away the properties in the old days, which is fine, I think they should be more restrictive."

As far as the effects on East Asia Minerals, they’ve got significant strengths on their side: They’re already in Mongolia drilling and beginning to delineate the size of their deposits. In addition, as of April 1, 2007 they have CAD $7 million in cash to develop their projects, and a team of professionals with extensive experience in Asia generally and Mongolia specifically. So new confidence in Mongolia coupled with rising uranium prices might very well be enough encouragement for investors.

Read more of the interview withTerence Ortslan about his views on Mongolia at Resourcex.com