Mongolian Mining Rebound: Kincora Copper’s New Strategy and Untapped Exploration Potential

Mongolia, often called the “Saudi Arabia of Central Asia,” is experiencing a significant mining rebound, poised to become a key player in the global mining sector. With the mining industry contributing nearly 25% of the country’s GDP and powering over 80% of its foreign export earnings, Mongolia’s vast mineral wealth is attracting considerable attention. Kincora Copper Limited (ASX: KCC, TSXV: KCC) is strategically positioned to capitalize on this resurgence, employing a diversified exploration strategy focused on world-class copper-gold discoveries.

Mongolia: A Mining Investment Hotspot

Mongolia’s rich deposits of copper, gold, coal, iron ore, uranium, and rare earth elements make it one of the world’s last frontiers for mining. Over 8,000 known occurrences of 80 types of mineral deposits have been identified across 1,170 registered deposits. However, only 45% of Mongolian territory has been mapped geologically at a 1:150,000 scale as of 2023, and as of June 2021, active mineral licenses covered nearly 4% of the territory, indicating substantial untapped potential.

Several factors contribute to Mongolia’s attractiveness as a mining investment destination:

Strategic Location: Mongolia’s location next to China, the world’s largest consumer of raw materials, provides a significant logistical and economic advantage.
Government Support: The Mongolian government is actively working to attract foreign investment by streamlining mining licenses, stabilizing tax policies, and strengthening partnerships with global mining giants.
Untapped Resources: Mongolia holds substantial reserves, including 24.8 million tonnes of copper, 33.2 billion tonnes of coal, 2,080 tonnes of gold, 62,100 tonnes of uranium, and 16.2 million tonnes of rare earth elements.
Improving Regulations: The government is revising key legal frameworks, including the Foreign Investment Law and the Minerals Law, to enhance the investment climate.
Sovereign Wealth Fund: The Mongolian Parliament enacted legislation to establish a sovereign wealth fund, known as the “Chinggis Fund,” aimed at reallocating revenues from the country’s mineral resources to benefit all citizens.

Kincora Copper’s Strategic Shift

Kincora Copper is an active explorer and project generator focused on world-class copper-gold discoveries. The company’s portfolio includes seven major projects hosting district-scale landholdings and drill-ready targets in both Australia and Mongolia’s leading porphyry belts. Kincora has recently pivoted its funding strategy and created the foundations to become a very significant scale explorer.

Kincora’s corporate strategy involves:

Diversified Portfolio Approach: Kincora is undertaking a diversified and portfolio approach to confirm the next series of globally significant copper-gold discoveries.
Self-Funding Model: Management fee income from operating partner-funded exploration is increasing, offsetting Kincora’s corporate costs.
Asset Level Partnerships: Kincora is pursuing discussions and negotiations with further asset-level partners for its flagship porphyry projects on a management fee model basis.

Bronze Fox Project: Untapped Potential

Kincora Copper is considering a range of options for its Bronze Fox Copper-Gold Project in Mongolia after re-securing the full rights to the project. The Mongolian portfolio hosts three shallow and underexplored copper-gold prospective intrusive complexes with an existing resource of over 400,000 tonnes of copper and 400,000 ounces of gold. Initial mapping, trenching, and drilling have also confirmed the expansion and higher-grade potential of the existing resource.

Kincora’s Mongolian asset portfolio includes:

Bronze Fox mining license
Tourmaline Hills exploration license
White Pearl field camp (year-round facility)
One of the largest project generation databases for Mongolia

With Kincora now controlling 100% ownership, the Company will move forward to build on existing and new interest in the project. Near-term value-add activities may include the potential submission for a second mining license at the Bronze Fox project and fresh mining studies relating to the existing oxide resource.

Mongolian Mining Sector: Key Legal Aspects

The mining sector in Mongolia is regulated by the Law on Minerals, which was first enacted in 1994 and has been amended several times since then. The state owns all mineral resources found on or under the earth’s surface, except for water, petroleum, and natural gas. Therefore, according to the law, the state grants exploration and mining rights and licenses.

Key legal aspects of the Mongolian mining sector include:

Eligibility for Mineral Licenses: Any Mongolian or foreign individual and legal person may hold an exploration license. A mining license may be held by legal persons formed and registered under the laws of Mongolia.
Prohibition on Exploration or Mining: No person may engage in exploration or mining without a valid license.
Rights of an Exploration License Holder: An exploration license holder has the exclusive right to conduct exploration for all minerals, the exclusive right to obtain a mining license, and the right to transfer or pledge an interest in the exploration license.

Investment Considerations

Mongolia’s mining sector presents both opportunities and challenges for investors. While the country’s vast mineral wealth and strategic location make it an attractive investment destination, regulatory uncertainties, infrastructure limitations, and environmental concerns must be carefully considered.

Investors should also be aware of the following:

Strategic Deposits: If a deposit may have a potential impact on national security, national or regional economic and social development, or is producing (has the potential to) more than 5% of the total annual GDP, it can be classified as a mineral deposit of strategic importance by the Government.
State Participation: For the exploration of a Strategic Deposit where the State has conducted state-funded exploration jointly with private entities and determined the proven reserve, the state can participate in up to 50% equity interest.
Environmental Regulations: License holders must ensure and inspect compliance with environmental protection law, health and safety regulations, and tax obligations to the local government.

Conclusion

Mongolia’s mining sector is experiencing a significant rebound, driven by increasing global demand for copper and other critical minerals. Kincora Copper, with its strategic land position and diversified exploration strategy, is well-positioned to capitalize on this resurgence. However, investors should carefully consider the opportunities and challenges associated with investing in Mongolia’s mining sector, including regulatory uncertainties, infrastructure limitations, and environmental concerns. As Mongolia continues to develop its mining sector, it has the potential to become a major player in the global copper and gold markets, contributing to the global energy transition and driving economic growth.