“Being the First Institutional Investor in Mongolia”

James Passin, Principal

Firebird Management LLC

Discover Mongolia – 2011

International Mining Investor’s Forum

September 8th, 2011

Ulaanbaatar

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Past performance is no guarantee of future results.

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Legal Disclaimer -- ContinuedNo warranties

As FG2 Advisors, LLC (“Firebird”), nor any entity affiliated with Firebird, is NOT an investment fund for the purposes of

the Securities Markets Law of Mongolia and it makes no representations or warranties in relation to this presentation or

the information and materials provided on this presentation.

Without prejudice to the generality of the foregoing paragraph, Firebird does not warrant that the information on this

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Mongolian Stock Exchange (“MSE”)

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MSE Top 20 IndexWorld’s Best Performing Stock Market

2010 - 2011

MSE Trading FloorLimited Liquidity and Price Action

2005 - 2009

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Firebird – Pioneering investor in Mongolia

• Firebird first started accumulating shares on the Mongolian Stock Exchange

(“MSE”) in 2006

• Firebird used the 2008 global financial crisis and 2009 – 2010 Mongolian

banking crisis as a means of consolidating its ownership positions

• Awarded “Top Investor in Mongolia’s Capital Markets” in 2011 by joint

committee of the Mongolian Stock Exchange (“MSE”) and Financial

Regulatory Commission (“FRC”)

• Gained control of and led restructuring of Sharyn Gol JSC, one of the

largest thermal producers in Mongolia

• Firebird was fortunate to invest in Mongolia before its fundamental merits as

a frontier market were broadly understood

Essence of Firebird’s Approach

• Accumulate largest possible position in all stocks while market is quiescent

or distressed

• Identify undervalued or underperforming companies with strategically

important assets

• When necessary, exert influence through voting of shares

• Seek to champion corporate governance and transparency

• Provide bridge capital for restructuring initiatives

• Assist companies in attracting equity and debt capital from international

investors

• Generate highest possible returns through long-term, sustainable increases

in equity valuations

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The Mongolian Stock Market Epochs

• 2006 – 2008: “Dead Zone”

– No liquidity

– Limited transparency

– Inadequately capitalized market participants

– We took the view in that Mongolia’s great “Mineral Rush” was imminent – the

catalyst for igniting interest in the market

• 2009 – 2010: “Consolidation”

– Ivanhoe reaches deal with government – dawn of the “Mineral Rush”

– Government advances capital market-friendly policies

– Sharyn Gol JSC (“SHG”) and certain other companies launch visible corporate

governance initiatives – building investor confidence

• 2011 – ?: “Mother of All Bull Markets”

– Exploding international and domestic interest in the MSE

– LSE management contract

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The Corporate Governance Cycle

“Bad Corporate

Governance”

“Good Corporate

Governance”

Rising

Share

Prices

Falling

Share

Prices

Investor complacency, greed Management hubris

Investor disdain, apathy Management self-dealing, negligence

Corporate Governance Cycle – Amplification of

Underlying Economic and Market Cycle• Firebird is a proponent of focusing on corporate governance, even in early stage

frontier markets

• Propagating corporate governance culture may increase investor confidence and lead

to a permanent rerating of equity valuations

• The leaders in corporate governance and transparency will be the first to launch

GDRs and dual listings

• LSE leadership will accelerate the improving corporate governance cycle

• Rising confidence levels will enable early investors to monetize investments during a

prolonged period of liquidity expansion

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Mongolia’s New Capital Market

• World’s fastest growing economy

• Strong political support for capital markets

• Exploding media coverage

• Entrance of new funded foreign market participants

• Rising influence of well funded Mongolian business groups

• LSE providing needed leadership, technology, and marketing to the MSE

• Supportive and proactive government policies

• New flotations will help to absorb liquidity and prevent the formation of

unsustainable “bubbles”

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MSE Top 20 Index – Third Wave Imminent?

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Market Characteristics Inconsistent with Topping Process –

Despite New Abundance of Global Media Coverage

• Poor relative liquidity

• Archaic settlement procedures

• Limited sell side research

• Foreign investors focused on internationally listed Mongolian proxies

• Market caps of many listed stocks near zero

• Evidence of improving profitability

• Rising dividends

• Declining interest rates

• Lack of deep foreign and domestic investor participation

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The “Mother of All Bull Markets”?

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Rising Asset

Prices

New Foreign

Funds

New Access

Products

Mongolian

Business

Groups

Mongolian

Retail

Investors

Growing

Media

Coverage

Growing Tugrik

Demand

Declining Rates

Surging Tax

Revenue

Loose Fiscal

Conditions

Investor-Friendly

Government

Policies

Enhanced MSE

Architecture

Momentum

BUYING

PRESSURE

LIQUIDITY

EXPANSION

Falling Cost of Capital

Rising Corporate Profitability

Key Visible Risks to Mongolian Story

• Global macro shock

• Flood of foreign capital – potential for high profile

business disputes

• Political “noise”

• Inertia

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“A great wall of domestic liquidity will

support the local stock market, creating a

new bull market which will last for decades.

The local stock market currently has

depressed valuation and almost zero

liquidity… The Ivanhoe deal marks the

beginning of the Mongolian mining boom

and I think the most leveraged long-term

way to play this mining boom is through the

local stock market.”

- James Passin, The Energy Report,

November 2009

THANK YOU

FG2 Advisors LLC

152 W. 57th St., 24th Floor

New York, NY 10019 USA

Tel: (1) 212 698 9260

Fax: (1) 212 698 2666

www.fbird.com

Contact: Ellen D’Aleo, Client Services

Email: edaleo@fbird.com

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