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Laws and Regulations

Newsletter Fourth Quarter 2009

TAX LOSS CARRY FORWARD CALCULATION PROCEDURE IN THE MINING AND NFRASTRUCTURE SECTORS

One. General provisions

1.1 This procedure shall apply to calculation of loss carry forward determined by tax statements of business entities operating in the mining and infrastructure sectors.

1.2 Business entities operating in the mining sector are defined as those who hold a minerals license and operate minerals extraction (mining) and processing activities.

1.3 Business entities operating in the infrastructure sector are defined as those who are operating in areas of the construction of railway base structure, automobile roads, road facilities, power production and transmission lines and networks.

Two. Carry forward calculation period for losses determined by tax statement

2.1 Losses determined by the tax statement of a business entity operating in the mining sector may be calculated for the following periods, based on amount of investment that was made within the period of the reporting year and up to 3 previous years:

№   Amount of                 Calculation period for
      investment                loss carry forward
        /billion togrog/
1.    0-300.0 billion togrog              4 years
2.    300.0-500.0 billion togrog      5 years
3.    500.0-700.0 billion togrog          6 years
4.    700.0-1000.0 billion togrog        7 years
5.    1000.0 billion togrog or more     8 years

2.2 Losses determined by the tax statement of a business entity operating in the infrastructure sector may be calculated for following periods, based on the amount of investment that was made within the period of the reporting year and up to 3 previous years:

№   Amount of                   Calculation period
        investment                  for loss carry forward
        /billion togrog/
1.    0-100.0 billion togrog                4 years
2.    100.0-200.0 billion togrog          5 years
3.    200.0-300.0 billion togrog          6 years
4.    300.0-500.0 billion togrog      7 years
5.    500.0 billion togrog or more 8 years

2.3 If a business entity operating in the mining or infrastructure sector also conducts other businesses in other sectors, the portion of the losses determined by the tax statement but only relevant to operations of mining and infrastructure sectors of the business entity, shall be calculated according to this procedure.

2.4 If additional losses were incurred when the losses of previous years were not carried forward completely, the losses shall be carried forward and calculated within the period as provided in clauses 2.1 and 2.2 of this procedure. Losses exceeding the period set out in clauses 2.1 and 2.2 of this procedure shall not be carried forward.

2.5 Notwithstanding operational results of subsequent years, years having losses shall be included and calculated while carrying forward losses determined in the reporting year as provided by the Law on Business Income Tax.

2.6 The principle of carrying forward earlier losses before carrying forward subsequent losses shall be maintained.

2.7 The Government may specifically set the loss carry forward calculation period to be between 4 and 8 years in an Investment Agreement entered with a business entity which holds a license in a strategically significant mineral deposit.

Three. Approval of the amount of investment

3.1 An entity operating in the mining and infrastructure sector, while having its annual financial statement approved by an entity licensed to conduct auditing operation, shall also have approved the amount of the investment made in the mining and infrastructure sector.

^{(This Procedure was approved by Government Resolution # 287, dated 16 September 2009 and comes into effect on January 1, 2010.)}

Newsletter Second Quarter 2009

LAW OF MONGOLIA ON MAKING PAYMENTS AND SETTLEMENTS IN NATIONAL CURRENCY

9 July 2009                                                                                          The State Palace, Ulaanbaatar city
                                                                 CHAPTER ONE

                                                            GENERAL PROVISIONS

Article 1. Purpose of the Law

1.1 The purpose of this Law is to regulate relations with respect to expressing prices of goods, works and services
and making payments and settlements in national currency on the territory of Mongolia.

Article 2. Laws and regulations on making payments and settlements in national currency

2.1 Laws and regulations on making payments and settlements in national currency shall consist of the Constitution
of Mongolia, the Law on Central Bank /Mongolbank/, the Law on Currency Regulations, this Law and other laws,
regulations and acts which were adopted in line with them.

2.2 If an international treaty to which Mongolia is a Party is inconsistent with this Law, then the provisions of the
international treaty shall prevail.

Article 3. Definitions of the Law

3.1 Following terms in this Law shall have following meanings:

3.1.1 “territory of Mongolia” means land area of Mongolia except free economic zone, and locations of foreign

countries’ diplomatic representative and consul offices in Mongolia;

    3.1.2 “national currency” means togrog – the legal payment instrument issued to transaction by the Mongolbank,
and it shall be written “Togrog” in English and its abbreviation is “MNT”;

    3.1.3 “official rate of the Mongolbank” means the announced rate calculated by the Mongolbank based on total
sum and rate of foreign currency noncash exchanges that was made between banks and between organizations
or citizens and banks;

    3.1.4 “foreign currency” means foreign banknote or currency of foreign country;

    3.1.5 “foreign banknote” means foreign banknote – a legal payment instrument issued to transaction by
authorities of other countries than Mongolia;

    3.1.6 “currency of foreign country” means securities and other payment instruments which will be expressed by,
and aid by a currency of foreign country that is used in payments of inter-country trade, economic and financial
relations;

3.1.7 “calculation unit” means an expressed price proposal where prices of goods, works and services to be
exchanged in connection with the togrog exchange rate to foreign currency.

CHAPTER TWO

PAYMENTS AND SETTLEMENTS TO BE MADE IN NATIONAL CURRENCY

Article 4. Consumption of national currency

4.1 Prices of goods, works and services shall by expressed by, and payments and settlements shall be made in only
national currency on the territory of Mongolia and setting prices, making payments and settlements and announcing
and promotion in foreign currency, calculation units shall be prohibited without an official consent of the Mongolbank,
except as provided in clause 4.4 of this Law.

4.2 Any settlements to be made from the state and local budgets, and to be financed by the budget shall be made
in national currency and it shall be prohibited to make these settlements in foreign currency.

4.3 Definitions of amounts of fees, commissions and liability in laws and regulations of Mongolia shall be expressed in
only togrog.

4.4 Monetary deposits, loans, any similar services of bank and nonbank financial organizations, a contract to enter in
relation to financial derivative instruments and binding obligations under the contract may be expressed, and its
performance may be completed in foreign currency.

CHAPTER THREE

MONITORING ENFORCEMENT OF THE LAW

Article 5. Authority to monitor enforcement of the Law

5.1 Banks shall be monitored by the Mongolbank inspector, and legal entities and citizens other than a bank, shall be
monitored by the Financial Regulatory Commission inspector.

5.2 The Mongolbank, the State administrative central organization in charge of financial issues and the Financial
Regulatory Commission may jointly inspect according to their decision.

Article 6. Sanctions for violation of the Law

6.1 Following administrative sanctions shall be imposed to a person who violated clauses 4.1-4.3 of this Law if a criminal
sanction does not apply:

      6.1.1 demand to remedy the violation and revenue generated shall be confiscated to the state budget;

      6.1.2 if the violation as provided in clause 6.1.1 of this Law is not remedied, a citizen shall be fined by the
              amount of togrog that equals to 10-30 times of minimum wage, a legal entity shall be fined by the

amount of togrog that equals to 50-100 times of minimum wage within the period until the violation

is remedied or a claim shall be submitted to a court to revoke a right to run business activity;

6.1.3 suspending and revoking a license according to Articles 13 and 14 of the Law on Special Permits of

Business Activities if a legal entity having a license did not comply with requirements repeatedly put

by an authority regarding remedy of the violation.

6.2 A court shall accept a claim as set out in clause 6.1.2 of this Law and resolve it.

Article 7. Coming into effect

7.1 This Law shall be effective from the date of adoption.

DEMBEREL. D, SPEAKER OF THE STATE GREAT HURAL OF MONGOLIA

Newsletter First Quarter 2009

RESOLUTION OF THE GOVERNMENT OF MONGOLIA

18 February, 2009 Number 59 Ulaanbaatar city

Re: Setting Percentage of Labor Force and Specialists to receive from abroad in 2009

Based on provision of Article 4.1.4 of the Law on Sending Labor Force Abroad and Receiving Labor Force and Specialists from Abroad, the Government of Mongolia RESOLVES as following:

1. To approve as attached the percentage of Foreign Labor Force and Specialists to be received in 2009 in total number of employees of organizations and business entities operating in Mongolia.

2. To approve the percentage of Foreign Labor Force and Specialists to be received for industries and religious organizations that were not provided in the Attachment of this Resolution to be up to 5 percent of total number of employees of that organization, and the percentage of Foreign Labor Force and Specialists to be received for representative offices of foreign and domestic non-governmental organizations, humanitarian and charity organizations and foreign business entities to be up to 30 percent of their total number of employees.

3. To oblige members of the Government to act in compliance with the percentage of Foreign Labor Force and Specialists to be received in total number of employees for entering into agreements between Governments, tender announcement and implementations of projects and programs.

Prime Minister of Mongolia (Bayar. S)

Minister for Social Welfare and Labor (Gandi. T)