Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX:
IVN)(NYSE: IVN)(NASDAQ: IVN), and John Macken, President and Chief
Executive Officer, announced today that Ivanhoe Mines has signed a
joint mandate letter with the European Bank for Reconstruction and
Development and the International Finance Corporation for
evaluation of a major financing package for the construction of the
planned Oyu Tolgoi mining complex in southern Mongolia.
Under terms of the letter, the European Bank for Reconstruction
and Development (EBRD) and the World Bank Group's International
Finance Corporation (IFC) will consider providing a two-part
package consisting of:
-- up to US$300 million each from the EBRD and IFC, as part of a group of
primary lenders, in limited-recourse project financing; and
-- mobilization of a further US$1.2 billion from commercial lenders under a
"B loan" structure.
Ivanhoe Mines also has received expressions of interest from
export credit agencies to provide up to US$500 million in direct
project debt financing.
"Oyu Tolgoi will be one of the largest and highest-grade
copper-gold mines in the world and this indication of interest in
participation by some of the world's leading financial institutions
starts a process that will help to ensure that we meet our
objective of commercial production in 2013," Mr. Friedland
said.
"Securing the proposed financing package - and combining it with
possible additional subscriptions of more than US$1 billion through
our existing agreements with Rio Tinto and the funds from our cash
position that are earmarked for project development expenditures -
would advance Ivanhoe a long way toward completion of the
construction of the Oyu Tolgoi mine."
The recently released 2010 Oyu Tolgoi Integrated Development
Plan (IDP-10) estimated that the initial capital cost required to
achieve first production from the open-pit mine on the Southern Oyu
deposits is US$4.6 billion. This amount includes US$1.1 billion to
be spent advancing underground development at the Hugo North
Deposit in preparation for the start of block-cave mining following
the start of production from the open pit. Options to finance the
remainder of the estimated capital cost include, but are not
limited to, additional potential debt, equity offerings, a credit
facility, the sale of subsidiaries, equity investments, project
financing and/or various corporate transactions.
Mr. Macken said that Ivanhoe Mines, with the assistance of Hatch
Corporate Finance, Ivanhoe's project financing adviser, is
continuing discussions with major commercial banks and export
credit agencies about the arrangement of the required
limited-recourse financing package. He added that a total of 13
banks have submitted expressions of interest in providing amounts
totalling more than US$2 billion.
"The keen interest that has been expressed by all of the
potential lenders that we have consulted gives us confidence that
our financing plans are achievable without imposing undue burden or
dilution upon our balance sheet, our shareholders and our project
partners," Mr. Macken said.
Hatch is helping Ivanhoe Mines with the selection of two major
commercial banks to join EBRD and IFC in a group of lead arranging
banks. The group of institutions would jointly structure the debt
financing package, with completion targeted for the first quarter
of 2011.
The IFC and EBRD financings are subject to detailed due
diligence, including a review of the extensive environmental and
social studies conducted by the Oyu Tolgoi Project, and approval of
their respective managements and boards. The arrangements also are
subject to agreement of the Ivanhoe Mines board and other related
approval processes.
About the International Finance Corporation (www.ifc.org)
The IFC, a member of the World Bank Group, creates opportunities
for people to escape poverty and improve their lives. The IFC
fosters sustainable economic growth in developing countries by
supporting private-sector development, mobilizing private capital
and providing advisory and risk mitigation services to businesses
and governments. The IFC's new investments totalled US$14.5 billion
in fiscal 2009, helping channel capital into developing countries
during the financial crisis.
About the European Bank for Reconstruction and Development
(www.ebrd.com)
The EBRD is an international financial institution that supports
projects in 29 countries, from central Europe to central Asia.
Investing primarily in private sector clients whose needs cannot be
fully met by the market, the bank promotes entrepreneurship and
fosters transition towards open and democratic market economies.
The EBRD invests mainly in private enterprises, usually together
with commercial partners. It provides project financing for the
financial sector and the real economy, both new ventures and
investments in existing companies.
About Ivanhoe Mines (www.ivanhoemines.com)
Ivanhoe Mines (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN) is an
international mining company with operations focused in the Asia
Pacific region. Assets include the company's 66% interest in the
world-scale, Oyu Tolgoi copper-gold mine development project in
southern Mongolia; its 57% interest in Mongolian coal miner
SouthGobi Resources (TSX: SGQ)(SEHK: 1878); an 81% interest in
Ivanhoe Australia (ASX: IVA), a
copper-gold-uranium-molybdenum-rhenium exploration and development
company; and a 50% interest in Altynalmas Gold Ltd., a private
company developing the Kyzyl Gold Project in Kazakhstan.
Forward-looking statements
Certain statements made herein, including statements relating to
matters that are not historical facts and statements of our
beliefs, intentions and expectations about developments, results
and events which will or may occur in the future, constitute
"forward-looking information" within the meaning of applicable
Canadian securities legislation and "forward-looking statements"
within the meaning of the "safe harbor" provisions of the United
States Private Securities Litigation Reform Act of 1995.
Forward-looking information and statements are typically identified
by words such as "anticipate," "could," "should," "expect," "seek,"
"may," "intend," "likely," "plan," "estimate," "will" "believe" and
similar expressions suggesting future outcomes or statements
regarding an outlook. These include, but are not limited to, Oyu
Tolgoi becoming one of the World's largest copper and gold
producers; the objective of attaining commercial production at Oyu
Tolgoi in 2013; the target of completion the debt financing package
in the first quarter of 2011; the possible additional subscriptions
of more than US$1 billion from Rio Tinto; the estimated initial
capital cost required to achieve first production from the open-pit
mine on the Southern Oyu deposits of US$4.6 billion; the estimated
US$1.1 billion to be spent advancing underground development at the
Hugo North Deposit in preparation for the start of block-cave
mining; additional potential debt, equity offerings, a credit
facility, the sale of subsidiaries, equity investments, project
financing and/or various corporate transactions; and other
statements that are not historical facts.
All such forward-looking information and statements are based on
certain assumptions and analyses made by Ivanhoe Mines' management
in light of their experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors management believes are appropriate in the
circumstances. These statements, however, are subject to a variety
of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those projected
in the forward-looking information or statements. Important factors
that could cause actual results to differ from these
forward-looking statements include those described under the
heading "Risks and Uncertainties" elsewhere in the Company's
MD&A filed on Sedar. The reader is cautioned not to place undue
reliance on forward-looking information or statements.
Contacts: Ivanhoe Mines Ltd. Bill Trenaman Investors
+1.604.688.5755 Ivanhoe Mines Ltd. Bob Williamson Media
+1.604.331.9830 www.ivanhoemines.com
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