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Gold/Mining/Energy : Mongolia Gold Resources -- Ignore unavailable to you. Want to Upgrade?

To: Phil Jones who wrote (1910)	3/25/1998 10:11:00 AM
From: Dave R. Webb	Read Replies (4) \| Respond to of 4066

Phil and others. The news release did not say that the mill would not start, however we wanted to make it clear that the start-up is contingent upon our partner financing to catch-up. MGR will not place additional funds without security into Bumbat. Our partners, MAC may do so, thereby starting the mill. MGR was placed in a position where the start-up could be assured if we placed additional working capital into the project. We have already overcontributed more than US$900,000, and with penalty clauses totals more than US$1.2 million, with a dilution clause gives us approximately 58% of the project. We have been negotiating for nearly 1 year to confirm which clause of our agreement, a dilution clause or a penalty clause would take precedence. Our partners notified us several weeks ago that they were halting the negotiations that had advanced to the stage of confirming a translation of a new agreement. At this point, MGR saw no benefit to their shareholders to advance additional funds without adequate security. Until our partners either agree to a specific interpretation of the agreement, MGR will not overcontribute any more. We will maintain contributions to our 49%. Dave