This honor was probably totally unexpected. It took several days for the world press to intellectualize the honor which was delivered to the Mongolian people.
The events actually were quite in order. In late March, early April, the Mongolian government submitted its so-called Finance Plan to develop its gold reserves. The agreement basically ascertained that the control interests of the project will remain in Mongol hands. The government divided up the economic interests, 39 percent to itself and 61 percent to the so-called Ivanhoe Group which consists of Ivanhoe, Rio Tinto and Entree Gold.
What was unexpected was the recommendation that they utilize the international stock markets for the benefit of both the Mongolian people at an early stage and rationalize the capital expenditures of the Ivanhoe Group.
An international investment company formed a corporation capitalized at about $45 nillion and agreed to float a billion dollars immediately, which is to be funded by the first delivery of gold from the mining venture. Furthermore, it was agreed that at the earliest moment the Ivanhoe Group would raise between $3-4 billion from the newly formed international company called Mongolia-Gold. The sum raised by the Ivanhoe Group is used, of course, for the capital expenditures of the venture.
Thus, the first $5 million is dedicated to the Mongolian people, $1 billion to be used in the early funding of the building of the infrastructure, and the other $4 billion for financing the project. As far as the interests in securities are concerned, the Mongolians receive the A shares for 39 percent and the Ivanhoe Group the B shares. It was also agreed that effort is to be made immediately to raise $200 million interim financing, which is to be repaid with the first billion dollars raised in London. The $200 million is dedicated for the initial expenses. $100 million is dedicated to the Mongolian people.
The plan is to set off the first well-financed development of two and a half million people who have been somewhat mishandled by history, being between the Soviet Union and China after the Second World War, and to some extent outside civilization for all its existence. The plan has also authorized an international study as to how to spend the first billion dollars, how to establish banking lines and draw up priorities in making the country a consumer society.
These events occupied the headlines in Mongolia. It hit the financial press obviously in the Western world, and when Mongolian Gold went public in September, 2008 in London, the price of gold has gone from $1,000 to $1,300 on the London markets. Prior to the final conference, which took place ceremoniously in the Parliament building in Mongolia, the reserves were upvalued from 32 million to 45 million ounces. At a price of $1,300, this represented $55 billion, by far the largest gold company in the world.
By October 4, a great many commercial projects were underway. The Mongolian people were initially issued $50, a grant from the government. Subsequently with the private financing of $100 million, an additional $150 was handed over to get commercial activities and consumer activities going. And with the public offering of which the country benefited, close to one billion dollars in various industrial programs began to change the total feature of this country.
All in all, 2008 was a great year for the Western stock markets where Rio Tinto, Ivanhoe and Entree Gold were listed, and it was a great year for the Mongolian people. And there is no question it was a great year for the international travels of the various companies' executives. But it was also a very great year for the Prime Minister, his cabinet and parliamentarians who sometimes negotiated all night, all day, on this vital project which is perhaps unmatched in the Far East, and in many respects is unmatched in the commercial history of modern civilization.
The Nobel Prize was a surprise. Almost every opinion maker in the world considered the Mongolian negotiations and the process as a success of international political and commercial negotiations. It wasn't always orderly, but the actual process, the outcome, was an orderly process which put the whole Mongolian gold reserves into a positive limelight in the service of investors and consumers and the country together in the proper perspective. By October 4, 2008, Mongolia has lit up the front pages. The stocks have run up in London and New York and Toronto, and the Mongolian stock market began to move.
I myself, who acted as an unofficial advisor to the Prime Minister of Mongolia, recommended that the Johannesburg stock exchange be invited to improve, supervise and expand the scope of the Mongolian stock exchange. This step, which was accepted by both parties, was a positive contribution of international cooperation. Mongolian gold in London became one of the darlings of the stock market, and several new companies, utilizing Mongolian minerals, were also traded in Mongolia and in Johannesburg as well.
The Nobel Prize hit the international press. Quite frankly, it hit the Prime Minister's cabinet and the Prime Minister's family, and first there were question marks, first there was curiosity, until an article appeared in the New York Times by Dr. Henry Kissinger, who put the situation into perspective.
Dr. Kissinger, who himself received the Nobel Prize because of Vietnam, or rather ended the war in Vietnam, together with Lu Doc To, the North Vietnamese negotiator, is of course a historian. His thesis was Metternick and the Congress of Vienna. Dr. Kissinger pointed out the subsequent political development, singled Mongolia out among the young nations of the Far East after the Second World War.
Look at Korea, North and South, in 1949 and 1950. Look at Vietnam starting with the so-called liberation movement from the French before 1954. Look at Taiwan, which was created from a war between the Nationalist Chinese and the Communist Chinese. Look at Kuwait whose oil assets were the subject of a number of wars in the last part of the 20th century and Cuba!! Yes, Cuba.
The Nobel Prize in Dr. Kissinger's opinion was given to Mongolia because it bypassed any of the these horror stories. It was given to the Prime Minister because he negotiated in such a way that when the negotiations ended, which were not easy to come by, there was a peaceful country dedicated to exploiting its uranium, copper, gold and coal reserves and engaged the country in an economic path that could lead to a model.
No person in the second half of the 20th century has been engaged in more negotiations, more blood baths and more tragedy than the former Secretary of State. The Nobel Prize, according to Dr. Kissinger, was handed to the Mongolian Prime Minister because a very complicated economic interest which could have blown up into a political tragedy, which could blow up into a destructive economic decade of in-fighting and international lawsuits. They have been peacefully resolved and peacefully put into the past of popular growth for its own people, the Mongolians.
Dr. Kissinger pointed out something which perhaps nobody, certainly not the negotiators, not the parliamentarians, not the international journalists who followed the Mongolians, nobody has pointed out in the 21st century that the world needs commodities, the world needs to develop every country's commodities. But what the world needs is basically peace in the producing countries, prosperity in the producing countries, peace among the international bankers, peace for the developing companies.
I was born in 1938. I, of course, don't remember, but I had many times and I have the movie at home, one of the most honorable British politicians who wanted to have the same peace for his own country and to the world that Prime Minister Sanj Bayar wanted for Mongolia. Mr. Chamberlain did say what the world always wanted to hear,
"Peace in our time".