(Adds previous production estimates in fourth paragraph; updates
stock price in last paragraph.)
Ivanhoe Mines Ltd. (IVN) unveiled an updated development plan
for the big Oyu Tolgoi project in Mongolia that could boost copper
production by 50% and gold output by 126%.
Oyu Tolgoi, the world's largest undeveloped copper-gold project,
recently got the go-ahead from the Mongolian government when a
50-year investment agreement was finalized. The government holds a
34% stake in the project, with Vancouver-based Ivanhoe owning the
remaining 66% stake.
Anglo-Australian miner Rio Tinto PLC owns a 22.4% stake in
Ivanhoe and has the right to increase its stake to 46.6%.
Based only on proven and probable reserves, Ivanhoe said it now
expects average annual production of 1.2 billion pounds of copper
and 650,000 ounces of gold from Oyu Tolgoi for the first 10 years
of production. By comparison, the previous estimates for the mine,
done in 2005, were for average annual production of about 990
million pounds of copper and 330,000 ounces of gold over 35 years,
a company spokesman said.
Ivanhoe repeated that the mine is expected to begin production
in 2013.
The study released Tuesday was prepared by engineering, mining
and environment consultants led by AMEC Minproc of Australia and
including Stantec Engineering of the U.S.
As well, the study includes a so-called life-of-mine sensitivity
case that boosts estimated copper production by 50%, to 52.5
billion pounds, and gold production by 126%, to 26.4 million
ounces. It stressed that this sensitivity case is based on inferred
resources, which are "considered too speculative geologically to
have the economic considerations applied to them that would allow
them to be categorized as mineral reserves."
Part of the current exploration program is aimed at upgrading
the inferred resources to higher classifications.
Nevertheless, Ivanhoe said it believes the 59-year mine life
projected by the life-of-mine sensitivity case "will prove to be
very conservative."
Neighboring China has a huge appetite for copper, as evidenced
by the recent C$679 million bid by two Chinese companies for
Corriente Resources Inc. (ETQ).
Ivanhoe Chairman Robert Friedland recently said the company was
looking at a number of alternatives to enhance shareholder value.
It has hired Citigroup Inc. (C) and Hatch Corporate Finance to
explore financing options.
In New York Tuesday, Ivanhoe is down 34 cents to $15.86 on
403,000 shares.
-By John Moritsugu, Dow Jones Newswires; 416-306-2100;
john.moritsugu@dowjones.com
(Ben Dummett in Toronto contributed to this article.)