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

To: Dave R. Webb who wrote (1920)	3/25/1998 8:18:00 PM
From: Phil Jones	Respond to of 4066

Great, Dave! That's great! I thought I had read on this thread earlier that Mongolia had some type of rule that mining companies in Mongolia had to have 51% Mongolian ownership. This is a horse of a different colour. I feel much more optimistic that someone will replace the present partner now. Can't you just go ahead and restart the Bumbat Mill, and keep looking for a new partner at the same time? If the old partner has defaulted on terms in the JV, isn't there a provision that you are simply allowed to take over its interest in the Mill? What has the old partner got to sell if it hasn't put any cash into the Mill and not met the JV terms? I'm not sure what it is trying to sell. Anyway, the situation seems to be much more promising if you aren't limited to finding a new partner from within Mongolia.

To: Dave R. Webb who wrote (1920)	3/26/1998 8:10:00 AM
From: Pete Schueler	Read Replies (1) \| Respond to of 4066

Dave, I would guess that your decision not to restart the mill is partly a tactical move to pressure MAC into a quick decision. However I would see some risks attached to shutting the mill for longer periods ie. months or years, especially if power and heat are shut off as well. Longer shutdowns even when reasonable preparations are taken always result in gradual equipment degradation of engines, motors, bearings, pumps, valves, piping, gear boxes, electrical gear, instruments, controls, and all other things that will rust or freeze. The cost of a restart after a year's outage may cost more than continued operation. Other factors that have an important bearing on length of shutdown include security of the site and finding/training new plant personnel. I'm sure you're quite aware of all these things and will be careful not to create a larger problem through this period. I would like to see Bumbat controlled entirely by MGR if that is financially possible. In that regard have you considered a rights offering to existing shareholders? I remain "cautiously optimistic" about MGR mainly because of your high level of technical expertise and candor. Clearly you must make some hard decisions and I have no doubt that they will be made with the shareholders best interests in mind. Pete