UPDATE: Ivanhoe: Working To Satisfy Remaining Oyu Tolgoi Conditions
March 25 2010 - 4:34AM
Dow Jones News
Ivanhoe Mines (IVN.T) and Rio Tinto (RIO.AU) are working to
satisfy the remaining conditions set out in an investment agreement
with the Mongolian government for the Oyu Tolgoi copper-gold
project, Ivanhoe CEO Robert Friedland said Thursday at a mining
conference.
The agreement is subject to conditions that must be met by April
6, including the completion of a feasibility study currently under
way. Ivanhoe and Rio Tinto have satisfied 7 of 10 conditions so far
and are "working hard" to satisfy the rest, Friedland said.
Friedland praised Mongolia as an investment destination and
described the current Prime Minister, Sukhbaataryn Batbold, as a
"great visionary."
The operators of the Oyu Tolgoi project would leverage Rio
Tinto's experience in helping to develop the Escondida mine in
Chile and the Grasberg mine in Indonesia, two projects which Oyu
Tolgoi would come to be compared with, he said.
"The mining industry has not built an enormous mine like this in
25 years and there have been enormous improvements in technology
during that period," Friedland said.
The budget for construction of the project was $758 million this
year, doubling to around $1.5 billion in both 2011 and 2012, he
said.
At current prices, there is about $300 billion-$350 billion
dollars worth of copper, gold and other metals "in situ," he
said.
"I believe this will ultimately be a tiny fraction of what's
there."
Ivanhoe and Rio struck a long-awaited investment agreement with
the Mongolian government in October last year, under which the
government will take a 34% stake in the project.
Friedland was also bullish on the company's coal prospects in
Mongolia, describing the Ovuut Tolgoi coal project, being developed
by its subsidiary SouthGobi Energy Resources, also in Mongolia, as
containing the "beluga caviar" of coal.
-By James Campbell, Dow Jones Newswires, +65 6415 4082;
james.campbell@dowjones.com
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