The Government has unanimously approved the draft
investment agreement on Tavan Tolgoi. It will now go to the National Security
Council and, after ratification there, to Parliament for discussion. This is
scheduled to be on June 6. Ch.Khurelbaatar, head of the Cabinet Secretariat,
submitted the agreement to a meeting of the Government on June 4.

A railroad to the south and to the eastern border,
one or two power plants with total 600-mw capacity, and coal liquefaction and
coking plants will be built. The investors will pay a non-refundable fee of
USD500 million and another USD500 million as advance payment. They will also
pay all taxes and fees under Mongolian law. Erdenes TT will receive 5 per cent
of total sales proceeds minus transportation costs.

The investing consortium will have three
shareholders. The Shenhua Group will own 40%, the Russian consortium 36%, and
Peabody and partner 24%.