Ivanhoe Mines (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN) today announced
its results for the quarter ended March 31, 2011. All figures are
in US dollars, unless otherwise stated.
HIGHLIGHTS DURING THE QUARTER AND SUBSEQUENT WEEKS
-- On February 3, 2011, Ivanhoe announced that its strategic rights
offering to shareholders had generated US$1.18 billion (CDN$1.17
billion) in gross proceeds to be used to advance development of the Oyu
Tolgoi copper-gold-silver project in Mongolia. Upon the closing of the
rights offering, Ivanhoe Mines issued a total of 84.9 million common
shares, which represented 99.5% of the maximum number of common shares
that were available under the rights offering.
-- Full-scale construction at Oyu Tolgoi continues to advance and key
elements of the project, including the concentrator complex, remain
ahead of schedule. Commercial production is expected to commence in the
first half of 2013.
-- Pre-stripping for the phase-one, open-pit mine on the Southern Oyu
deposits at Oyu Tolgoi is on schedule to begin during the third quarter
of 2011.
-- Official approvals were received in early May 2011 enabling the Oyu
Tolgoi Project to proceed with construction of a 95-kilometre high-
voltage power transmission line to deliver electricity expected to be
imported from China to supply the initial mining operation.
-- The development of the first lift of the phase-two underground block-
cave mine at Oyu Tolgoi's Hugo North Deposit continued successfully
during Q1'11. Lateral mine development on the 1,300-metre level at Hugo
North is ahead of schedule, achieving an advance during Q1'11 of 1,286.4
metres.
-- Exploration drilling at Oyu Tolgoi's Southwest Oyu Deposit targeted the
down-plunge extension of mineralization below the already defined drill
resource. The drilling identified previously undefined mineralization,
including 98 metres of 1.75 grams of gold per tonne and 0.64% copper,
with a copper-equivalent grade of 1.8%, at a down-hole depth of between
1,086 and 1,184 metres.
-- On March 14, 2011, Ivanhoe and BHP Billiton Ltd. announced that they had
discovered a new zone of shallow copper-molybdenum-gold mineralization
on their Ulaan Khud North joint-venture exploration licence,
approximately 10 kilometres north of Oyu Tolgoi.
-- During Q1'11, Ivanhoe's 57%-owned subsidiary, SouthGobi Resources
(TSX: SGQ)(HK: 1878), reported coal sales of $20.2 million from its Ovoot
Tolgoi mine in southern Mongolia, representing approximately 450,000
tonnes of coal sold to customers in China at an average realized price
of approximately $50 per tonne.
-- Ivanhoe's 62%-owned subsidiary, Ivanhoe Australia (TSX: IVA)(ASX: IVA),
continued to focus on the development of its Merlin high-grade
molybdenum and rhenium deposit in the Cloncurry region of Queensland.
Construction of the decline to access the Merlin mineralization had
progressed to 641 metres by the end of Q1'11.
-- Altynalmas Gold, 50%-owned by Ivanhoe Mines, is continuing its drilling
program designed to continue the delineation of resources and reserves
to NI 43-101 standards at the Kyzyl Gold Project in Kazakhstan. A total
of 18,496 metres were drilled during Q1'11 on the Bakyrchik Mining
Lease.
MONGOLIA
OYU TOLGOI COPPER-GOLD-SILVER PROJECT (66%-owned by Ivanhoe
Mines)
Construction of Oyu Tolgoi copper-gold-silver complex advancing
toward planned start of commercial production in the first half of
2013.
Overall construction of the Oyu Tolgoi Project was 15.1%
complete by the end of Q1'11, slightly ahead of the planned 14.8%.
Total capital invested in the project by the end of Q1'11 was $1.8
billion.
The Oyu Tolgoi Project initially is being developed as an
open-pit operation, with the first phase of mining planned to start
at the near-surface Southern Oyu deposits, which include Southwest
Oyu and Central Oyu. A copper concentrator plant, related
facilities and necessary infrastructure that will support an
initial throughput of 100,000 tonnes of ore per day are being
constructed to process ore scheduled to be mined from the Southern
Oyu open pit. Commercial production of copper-gold-silver
concentrate is projected to begin in the first half of 2013.
An 85,000-tonne-per-day underground block-cave mining operation
also is being developed at the Hugo North Deposit, with initial
production expected to begin in 2015. The throughput capacity of
the concentrator plant is expected to be expanded to approximately
160,000 tonnes of ore per day when the underground mine begins
production.
Fluor Corporation is in charge of overall Oyu Tolgoi program
management, as well as services related to engineering, procurement
and construction management for the ore processing plant and
mine-related infrastructure, such as roads, water supply, a
regional airport and administration buildings. Current activities
related to the phase-one concentrator are focused on finalizing the
operational readiness plan. Detailed commissioning, operation and
maintenance plans are being developed for all the components of the
concentrator circuits. Representatives of various manufacturers and
engineering groups are assisting with the preparation of the
operational readiness plan.
In early May 2011, the Oyu Tolgoi Project received the final
approvals required to proceed with construction of a 220-kilovolt
power transmission line from Oyu Tolgoi approximately 95 kilometres
south to the Mongolia-China international border. The construction
approval from Mongolia's Energy Regulatory Authority and a land-use
contract from the governor of Khanbogd soum (township), which
includes Oyu Tolgoi, are key to the plan to import electricity from
China to operate the Oyu Tolgoi complex during its initial four
years of commercial production. Contracts have been awarded to
Mongolian companies for construction of the power line, which is
scheduled for completion during Q4'11.
Discussions between the Mongolian and Chinese governments are
expected during Q2'11 to conclude a bilateral agreement that would
secure the supply of electricity from China. Subject to final
agreement, the remaining permits, commercial arrangements and
power-purchase tariffs are expected to be expedited to ensure that
imported power will be available at the Oyu Tolgoi site by
mid-2012. In the meantime, additional diesel-powered generating
capacity has been approved to meet the project's requirements
during the remaining stages of construction.
The long-term Investment Agreement for the development and
operation of Oyu Tolgoi, signed by Ivanhoe Mines, Rio Tinto and the
Government of Mongolia on October 6, 2009, recognized that the
reliable supply of electricity is critical to the project and that
Ivanhoe Mines has the right to initially obtain electricity from
inside or outside Mongolia, including China.
The agreement also established that Ivanhoe Mines has the right
to build or subcontract construction of a coal-fired power plant at
an appropriate site in the South Gobi to supply Oyu Tolgoi and that
all of the project's electricity requirements would be sourced from
within Mongolia no later than four years after Oyu Tolgoi begins
commercial production. A feasibility study of a proposed power
plant is underway and a decision on construction is expected later
in 2011.
Mongolian government approvals of land-use permits for Oyu
Tolgoi's process-water pipeline, the permanent airport and roads
are expected in Q2'11. Other critical activities that either were
completed in Q1'11 or are underway in Q2'11 include:
-- Advancing contract negotiations for the supply and sale of copper-gold-
silver concentrate to be produced from the project. Most of the
concentrate initially is expected to go to major Chinese smelters.
-- Conclusion of the competitive bidding process for the main
infrastructure works, which include on-site infrastructure required to
support mine operations and the 70-kilometre raw-water pipeline to
supply the concentrator complex.
-- Awarding of contracts to construct the 97-kilometre paved road from Oyu
Tolgoi to the Mongolia-China border at Gashuun Sukhait.
-- Conducting a ground-breaking ceremony for a permanent domestic airport
at Oyu Tolgoi in late Q1'11.
-- Construction of the Shaft #2 headframe and ancillary facilities had
reached 29.0% completion by the end of Q1'11. The staging building,
mine-dry and warehouse buildings were erected; mechanical and electrical
installations will follow. Shaft-sinking work is planned to begin in
September 2011.
-- Construction of the concentrator building shell continued to advance. By
early Q2'11, more than 6,200 tons of structural steel had been erected
and work in the concentrator area reached 27.7% completion. Within the
processing, crushing, and material-handling areas, more than 100,000
cubic metres of concrete had been poured by early Q2'11.
-- Completion of excavations for facilities for the primary ore crusher and
pouring of the base mat in late Q1'11.
-- Completion of excavation of the tailings-thickening ponds and pouring of
initial concrete.
-- Start of commissioning of the 12-megawatt first stage of the diesel-
fuelled power station, which will provide interim construction power.
-- Resumption of the steady growth of the site workforce in late Q1'11,
which exceeded 11,400 in mid-Q2'11, with approximately 9,500 working on
site each day and the balance on leave. The long-term operations camp is
being utilized as it is commissioned.
Pre-stripping of open-pit mine set to start in third quarter of
2011
Pre-stripping as part of the construction of the phase-one
open-pit mine to recover ore from the Southern Oyu deposits is on
schedule to begin during Q3'11. All operational-readiness
activities also are on schedule.
During Q1'11 and early Q2'11, the following major steps were
accomplished in the development of the open pit:
-- Final selection was made of the open-pit mining fleet, with purchase
orders issued to international manufacturers. All major mining equipment
has been secured in line with the open-pit's pre-stripping schedule.
-- The supplier for the explosives service contract was selected in Q1'11.
-- The permit for open-pit blasting was obtained from the Mongolian
Government.
Underground development of Hugo North Mine proceeding on
schedule
The development of the first lift of the phase-two, underground
block-cave mine at the Hugo North Deposit continued successfully
during Q1'11. Lateral mine development 1,300 metres below surface
at Hugo North is ahead of schedule, achieving an advance during
Q1'11 of 1286.4 metres -12.8 metres more than planned.
Progress continued through Q1'11, with raise-pilot drilling from
the 512-metre level to the 1,300-metre level. Engineering is
continuing for the upgrade of the Shaft #1 hoisting system and
procurement packages are being finalized for release.
The underground development off Shaft #1 is expected to connect
with the bottom of Shaft #2 in early 2013 and production from the
first lift of the Hugo North block-cave mine is scheduled to begin
in 2015.
Rio Tinto working with Ivanhoe Mines to complete international
project-finance package of up to $3.6 billion
Ivanhoe Mines and Rio Tinto are working together to achieve a
project-finance package for Oyu Tolgoi, which the companies are
targeting to have in place during the second half of 2011. Ivanhoe
Mines announced in 2010 that discussions were progressing with a
group of international financial institutions on a proposed
long-term, limited-recourse, project-financing package of up to
$3.6 billion. The package is being considered by a core lending
group comprised of the European Bank for Reconstruction and
Development, the International Finance Corporation, Export
Development Canada, BNP Paribas and Standard Chartered. As
discussions continue, other government credit agencies and
commercial banks are expected to be added to the core group of
lenders.
Final terms of a third-party project-finance package for the Oyu
Tolgoi Project remain subject to the approval of the Oyu Tolgoi LLC
Board of Directors, the Ivanhoe Mines Board of Directors and the
joint Ivanhoe Mines-Rio Tinto Technical Committee.
Part of the project-finance package would be used to refinance
any drawdowns under an interim funding facility, if funds from such
interim facility have been required. With project financing
secured, total resources available to finance the Oyu Tolgoi
Project, including foreseen expansions and associated investments,
would be up to $6.5 billion.
Skills training and community programs well advanced
The Oyu Tolgoi Project's staffing strategy relies heavily on the
utilization of Mongolian nationals being developed and trained
during ongoing construction activities. At end of April 2011,
approximately 5,300 Mongolians were employed by the project at the
development site. These construction employees will form the bulk
of the eventual production workforce, particularly within the
open-pit operations.
The design and construction of onsite training facilities were
completed in Q1'11. Training materials for operations at the
concentrator, the open pit and underground are being developed. All
critical training hires were in place by the end of Q1'11.
Exploration drilling continued in Q1'11
During Q1'11, Ivanhoe Mines continued its drilling program on
the Oyu Tolgoi Project with 3,289 metres of surface resource
geology drilling (including geotechnical and mine-development
investigation holes), 3,404 metres of underground geotechnical
drilling and 5,156 metres of surface exploration diamond
drilling.
At Heruga North, exploration drilling is ongoing; 1,340 metres
have been completed in hole OTD1510D. The hole has reached 2,300
metres and has yet to intersect the target below the gold-rich zone
that was intersected in OTD1510, which recorded 308 metres of 0.27
g/t gold and 0.61% copper, with a copper-equivalent grade of 0.83%,
at a down-hole depth between 1,498 and 1,804 metres before passing
into unmineralized quartz monzodiorite.
At Southwest Oyu, 1,293 metres of drilling were completed in
hole OTD1567, which targeted the down-plunge extension of
mineralization below the previously defined drill resource. Apart
from previously defined mineralization, the hole intersected 98
metres of 1.75 g/t gold and 0.64% copper, with a copper-equivalent
grade of 1.8%, at a down-hole depth between 1,086 and 1,184 metres
before passing into unmineralized quartz monzodiorite.
At the Javkhlant II induced-polarization anomaly at the
southern-most end of the Oyu Tolgoi trend, 547 metres of drilling
were completed in drill hole EJD0037. The hole intersected four
zones averaging 30 metres thickness from 232 to 504 metres, with a
grade averaging 0.15% copper, 0.05 g/t gold and 30 ppm molybdenum.
Host rocks were augite basalt, the same as elsewhere at Oyu
Tolgoi.
On the Shivee Tolgoi licence 1,880 metres of drilling was
completed on the EGD147 section, approximately 800 metres north of
the currently defined limit of the Hugo North resources. Narrow
slivers of weakly mineralized host rocks were intersected below
2,000 metres.
Exploration at Ulaan Khud North (50%-owned by Ivanhoe Mines)
New copper-molybdenum-gold zone discovered on Ivanhoe-BHP
Billiton joint-venture licence
In March 2011, Ivanhoe Mines announced that Ivanhoe Mines and
BHP Billiton Ltd. had discovered a new zone of shallow
copper-molybdenum-gold mineralization approximately 10 kilometres
north of the Oyu Tolgoi Project. The discovery, known as Ulaan Khud
North, extends the known strike length of the Oyu Tolgoi
mineralized system by an additional three kilometres to the north,
to a new total of more than 23 kilometres.
Ulaan Khud North is located on a 19,625-hectare exploration
licence that is part of Ivanhoe Mines' joint-venture partnership
with BHP Billiton, formed in 2005. BHP Billiton has earned a 50%
interest in the joint venture, which includes the Ulaan Khud North
property, by spending $8 million in exploration costs and
conducting an airborne survey using BHP Billiton's proprietary
Falcon™ gravity gradiometer system over the Oyu Tolgoi area.
Twenty-five drill holes totalling 6,561 metres, ranging in depth
from 182 metres to 377 metres, defined the new zone of shallow,
porphyry copper mineralization over an area of 600 metres by 300
metres. Most of the holes are vertical and were drilled on a
100-metre-square grid. The mineralized zone starts beneath 60 to 80
metres of Cretaceous clay and gravels, indicative of a near-surface
deposit with open-pit mining potential. Ivanhoe Mines' geologists
believe that the near-surface copper mineralization discovered to
date at Ulaan Khud North may be part of a much larger deposit.
MONGOLIA
SOUTHGOBI RESOURCES (57%-owned by Ivanhoe Mines)
Ongoing expansion of SouthGobi's Ovoot Tolgoi coal mine
In Q1'11, SouthGobi had sales of approximately 450,000 tonnes at
an average realized price of approximately $50 per tonne. This was
an improvement over the sale of approximately 430,000 tonnes in
Q1'10 at an average realized selling price of $36 per tonne.
Revenue increased from $13.9 million in Q1'10 to $20.2 million in
Q1'11, due primarily to the higher realized average price.
SouthGobi's revenues are net of royalties. SouthGobi is subject
to a 5% royalty on all coal sold based on a set reference price per
tonne that is published monthly by the Mongolian Government.
Effective January 1, 2011, SouthGobi also became subject to a
sliding-scale royalty of up to 5% based on the set reference price
of coal. Based on the reference price for Q1'11, SouthGobi was
subject to a 2% sliding royalty in addition to the 5% base royalty.
The weighted average reference price for Q1'11 was $68 per
tonne.
Cost of sales of $20.3 million for Q1'11 was consistent with
Q1'10 ($20.3 million). Cost of sales is comprised of the cost of
the product sold, inventory write-downs, mine administration costs,
equipment depreciation, depletion of pre-production stripping costs
and stock-based compensation costs.
Updated resources released for Ovoot Tolgoi complex and Soumber
Deposit
On March 30, 2011, SouthGobi announced updated, independent, NI
43-101-compliant surface and underground Reserves and Resources for
the Ovoot Tolgoi Mine. The report is set out in a SouthGobi news
release dated March 30, 2011, and available in SouthGobi's public
filings at www.sedar.com.
Also on March 30, 2011, SouthGobi reported that it had received
an updated, independent NI 43-101-compliant Resource estimate for
the Soumber Deposit. This report is discussed in a SouthGobi news
release dated March 30, 2011, and available in SouthGobi's public
filings at www.sedar.com.
AUSTRALIA
IVANHOE AUSTRALIA (62%-owned by Ivanhoe Mines)
Ivanhoe Australia incurred exploration expenses of $30.4 million
in Q1'11, compared to $10.8 million in Q1'10. The increase was
largely due to the work on the Merlin decline and expenses related
to the preparation of the Merlin pre-feasibility study.
Ivanhoe Australia's key projects, all situated on granted Mining
Leases, are Merlin, Mount Dore and Mount Elliott. During Q1'11,
work focused on progressing the Merlin pre-feasibility study and
decline, the copper-gold study, and preparing for development work
at the Osborne and Kulthor underground mines. In April 2011, mining
industry veteran Mike Spreadborough was appointed as the company's
Chief Operating Officer.
Merlin molybdenum and rhenium development studies
During Q1'11, work focused on advancing the Merlin
pre-feasibility study, with further study underway on the mining
costs and planned mining method to optimize the project. Access to
the Merlin ore body via the mine decline will enable further
geological, geotechnical and metallurgical testing to be
undertaken.
The underground access will enable additional detailed drilling
of the high-grade Merlin mineralization. Data from the drilling
program will be used to further optimize mine design and production
plans, with the primary goal being to maximize the production of
high-grade molybdenum and rhenium ore as early as possible in the
mine's life. The underground access also will provide ore for
additional metallurgical test work to facilitate the design and
location of the planned molybdenum and rhenium concentrate roaster.
This additional mine and processing data will be incorporated into
the ongoing pre-feasibility study.
At the end of Q1'11, construction of the Merlin decline had
progressed to 641 metres and is expected to be adjacent to the
Little Wizard Deposit by the end of Q2'11. Access to the Little
Wizard ore body will enable further drilling, which could extend
the mineralization and bulk sampling for metallurgical test
work.
Copper-gold study underway
The internal study is continuing into the viability of various
sources of copper and gold ore at Osborne and the Starra Line. The
study is focused on assessing potential production rates and
capital, and operating-cost profiles required to process ore
through the Osborne Complex.
The Ivanhoe Australia Board approved A$30 million of capital to
develop the Osborne and Kulthor underground resources. During
Q2'11, a contractor was appointed to conduct the underground
development and has begun mobilizing to site.
Mount Dore scoping study completed
During Q1'11, the scoping study for the copper heap-leach, SX/EW
project at the Mount Dore Deposit was completed, and a NI
43-101-compliant resource report is being compiled.
Mount Elliott scoping study started
A scoping study for Mount Elliott has commenced, initially
evaluating the mining of the high-grade SWAN Zone and copper-gold
mineralization around the old Mount Elliott mine. The objectives
for the study are to:
-- provide a preliminary assessment of the strength of the business case;
-- identify credible operating scenarios for subsequent study; and
-- identify any constraints to project development.
The scoping study is expected to be completed by Q4'11 and is
expected to be followed by a pre-feasibility study in 2012 to
establish the preferred project development alternative.
KAZAKHSTAN
Kyzyl Gold Project (50%-owned by Ivanhoe Mines)
Exploration drilling work continuing
In February 2011, Ivanhoe Mines and Altynalmas Gold announced
updated NI 43-101-compliant Mineral Resources for the Bakyrchik
Deposit based on drill results available up to December 1,
2010.
Altynalmas Gold is continuing its drilling program designed to
continue the delineation of resources and reserves at the Kyzyl
Gold Project that are compliant with NI 43-101 standards. A total
of 18,496 metres were drilled during Q1'11 on the Bakyrchik Mining
Lease. A total of 25,000 metres are planned to be completed during
2011 on the Bakyrchik Mining Lease and a further 50,000 metres are
planned to begin the delineation of the numerous satellite deposits
on the surrounding exploration licence.
Feasibility study proceeding on schedule
The definitive feasibility study on the Bakyrchik Deposit began
in 2010 and is expected to be completed in Q2'11. The feasibility
study is being conducted in conjunction with detailed engineering
work. Tender requests have been circulated for the fabrication of
long-lead items, including an oxygen plant and dry-grinding mill.
Procurement of long-lead items is expected to begin later in 2011.
Altynalmas Gold expects to begin construction of a
1.5-million-tonne per year fluidized-bed roasting plant later this
year to process the project's refractory ores.
During Q1'11, progress was made on arsenic stabilization work.
Altynalmas Gold has filed a provisional patent application with the
United States Patent and Trademark Office covering the new
technology developed in connection with the stabilization of wastes
containing arsenic that are generated during the roasting of
sulphide ores.
OTHER DEVELOPMENTS
Highly successful strategic rights offering completed in
2011
In February 2011, Ivanhoe Mines closed its strategic rights
offering in which all existing shareholders, subject to applicable
law, were able to participate on a pro rata basis in purchasing
additional common shares. The offering generated $1.18 billion in
gross proceeds, which is being used primarily to advance
development of the Oyu Tolgoi Project.
Upon the closing of the rights offering, Ivanhoe Mines issued a
total of 84.9 million common shares, which represented 99.5% of the
maximum number of common shares that were available under the
rights offering.
The funds that were raised significantly enhance Ivanhoe Mines'
capital position and its ability to sustain the pace of full-scale
construction at Oyu Tolgoi toward the target of commercial
production in 2013.
Ivanhoe Mines' founder and Chief Executive Officer Robert
Friedland and Rio Tinto, the two largest shareholders in Ivanhoe
Mines, exercised all of their respective rights that were issued to
them in the rights offering. Mr. Friedland also purchased an
additional 1.5 million rights on the open market and exercised them
to acquire additional common shares. Mr. Friedland's ownership
stake in Ivanhoe Mines now is approximately 15.5%. Rio Tinto's
ownership stake in Ivanhoe Mines now is approximately 42.0%.
David Huberman assumes chairmanship of the Ivanhoe Mines
Board
David Huberman was elected as Chairman of the Ivanhoe Mines
Board of Directors following the company's annual general meeting
on May 10, 2011, in accordance with the terms of the Heads of
Agreement concluded between Ivanhoe Mines and Rio Tinto and
announced in December 2010. Mr. Huberman's accession to the office
followed almost eight years as the lead independent director on the
Ivanhoe Mines Board, with responsibility for ensuring that the
Board fulfilled its mandate effectively, efficiently and
independently of management.
Mr. Huberman is President of Coda Consulting Corp., a business
consulting firm based in Vancouver, Canada. He practiced business
law from 1972 until 1996, specializing in corporate, commercial,
banking, securities and regulatory law.
Ivanhoe Mines' founder Robert Friedland, who served as Chairman
between 1996 and 2011, continues as a Director and as Chief
Executive Officer.
Financial Results
In Q1'11, Ivanhoe Mines recorded a net loss of $492.5 million
($0.79 per share) compared to a net loss of $193.9 million ($0.43
per share) in Q1'10, representing an increase of $298.6 million.
Results for Q1'11 mainly were affected by $46.2 million in
exploration expenses, $20.3 million in cost of sales, $25.3 million
in general and administrative expenses, $4.3 million in interest
expense, a $432.5 million change in the fair value of a derivative,
a $36.8 million change in the fair value of embedded derivatives
and $3.7 million in share of loss of significantly influenced
investees. These amounts were offset by coal revenue of $20.2
million, a $10.6 million gain on sale of long-term investment, $5.1
million in interest income and $3.1 million in mainly unrealized
foreign exchange gains.
The $432.5 million change in fair value of derivative relates to
the Q1'11 change in fair value of the Ivanhoe Mines rights offering
derivative liability from December 31, 2010. The rights were
revalued in Q1'11 prior to their exercise or expiry which resulted
in a $432.5 million loss being recognized.
Exploration expenses of $46.2 million in Q1'11 decreased $25.2
million from $71.4 million in Q1'10. Exploration expenses included
$13.5 million spent in Mongolia ($59.2 million in Q1'10), primarily
for Oyu Tolgoi and Ovoot Tolgoi, and $30.4 million incurred by
Ivanhoe Australia ($10.8 million in Q1'10). Exploration costs are
charged to operations in the period incurred and often represent
the bulk of Ivanhoe Mines' operating loss for that period.
Ivanhoe Mines' cash position, on a consolidated basis at March
31, 2011, was $1.9 billion. As at May 13, 2011, Ivanhoe Mines'
consolidated cash position was approximately $1.6 billion.
SELECTED QUARTERLY DATA
This selected financial information is in accordance with U.S.
GAAP.
($ in millions of dollars, except per share
information)
Quarter Ended
--------------------------------
Mar-31 Dec-31 Sep-30 Jun-30
2011 2010 2010 2010
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Revenue $20.2 $41.6 $6.6 $17.7
Cost of sales (20.3) (46.4) (14.9) (13.2)
Exploration expenses (46.2) (59.6) (48.1) (39.5)
General and administrative (25.3) (46.4) (15.0) (14.7)
Foreign exchange gains (losses) 3.2 6.6 5.3 (4.9)
Change in fair value of derivative (432.5) 135.7 - -
Change in fair value of embedded
derivatives (36.8) (20.0) 49.8 72.2
Net income (loss) from continuing
operations (492.5) 37.3 (24.9) (30.0)
Income (loss) from discontinued operations - - - -
Net income (loss) (492.5) 37.3 (24.9) (30.0)
Net income (loss) per share - basic
Continuing operations ($0.79) $0.07 ($0.05) ($0.06)
Discontinued operations $0.00 $0.00 $0.00 $0.00
Total ($0.79) $0.07 ($0.05) ($0.06)
Net income (loss) per share - diluted
Continuing operations ($0.79) $0.06 ($0.05) ($0.06)
Discontinued operations $0.00 $0.00 $0.00 $0.00
Total ($0.79) $0.06 ($0.05) ($0.06)
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Quarter Ended
--------------------------------
Mar-31 Dec-31 Sep-30 Jun-30
2010 2009 2009 2009
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Revenue $13.9 $9.9 $11.9 $10.7
Cost of sales (20.3) (8.5) (8.6) (9.1)
Exploration expenses (71.4) (67.2) (40.9) (35.2)
General and administrative (8.3) (15.0) (12.5) (10.5)
Foreign exchange gains (losses) 1.7 2.2 19.5 21.7
Change in fair value of embedded
derivatives (1.4) (45.0) - -
Loss on conversion of convertible credit
facility (154.3) - - -
Net income (loss) from continuing
operations (200.5) (138.7) (47.8) (27.0)
Income (loss) from discontinued operations 6.6 9.2 (21.9) 2.1
Net income (loss) (193.9) (129.5) (69.8) (24.9)
Net income (loss) per share - basic
Continuing operations ($0.44) ($0.32) ($0.12) ($0.07)
Discontinued operations $0.01 $0.02 ($0.05) $0.01
Total ($0.43) ($0.30) ($0.17) ($0.06)
Net income (loss) per share - diluted
Continuing operations ($0.44) ($0.32) ($0.12) ($0.07)
Discontinued operations $0.01 $0.02 ($0.05) $0.01
Total ($0.43) ($0.30) ($0.17) ($0.06)
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Ivanhoe Mines' results for the three months ended March 31,
2011, are contained in the unaudited Consolidated Financial
Statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations, available on the SEDAR website
at www.sedar.com and Ivanhoe Mines' website at
www.ivanhoemines.com.
Ivanhoe Mines shares are listed on the Toronto, New York and
NASDAQ stock exchanges under the symbol IVN.
QUALIFIED PERSON
Disclosures of a scientific or technical nature in this release
and the Company's MD&A in respect to the Oyu Tolgoi Project
were prepared by, or under the supervision of, Stephen Torr, P.
Geo., an employee of the company and a qualified person as defined
in NI 43-101.
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:
statements respecting anticipated business activities; planned
expenditures; corporate strategies; proposed acquisitions and
dispositions of assets; discussions with third parties respecting
material agreements; the schedule for carrying out and completing
construction of the Oyu Tolgoi Project; the expansion of throughput
capacity of the concentrator at the Oyu Tolgoi Project; the
estimated commencement of pre-stripping of the Southern Oyu open
pit deposits; the estimated delivery of the first ores from the
Southern Oyu open pit to the concentrator; the estimated schedule
to bring the Oyu Tolgoi Project into commercial production;
statements related to the anticipated capital costs of the Oyu
Tolgoi Project; the expected timing of production from the first
lift of the Hugo North block-cave mine; possible expansion
scenarios for the Oyu Tolgoi Project; the expected timing of
construction of the electrical transmission power line from the Oyu
Tolgoi Project to the Chinese border; the timing and outcome of
discussions between the Mongolian and Chinese governments regarding
importing electrical power from China; the development of
alternative power generation arrangements relating to the Oyu
Tolgoi Project
if a timely agreement to secure electrical power from China is
not secured by the Mongolian Government; the schedule of receipt of
permits from the Mongolian Government relating to land use,
permanent airport and roads; expected markets for concentrate
produced at the Oyu Tolgoi Project; initial production estimates;
the commencement of construction of the water pipeline and paved
road to the Oyu Tolgoi Project; the Oyu Tolgoi Project's
anticipated yearly production of copper and gold; the ability of
Ivanhoe Mines to arrange acceptable financing commitments for the
Oyu Tolgoi Project and the timing of such commitments;
implementation of the Oyu Tolgoi Project's training and development
strategy; statements concerning mineralization potential at Ulaan
Khud North; target milling rates, mining plans and production
forecasts for the coal mine at Ovoot Tolgoi, Mongolia; the schedule
for carrying out and completing an expansion of the production
capability of the Ovoot Tolgoi Coal Project; the elements of
SouthGobi's planned exploration program for 2011; anticipated
outcomes with respect to the ongoing marketing of coal products
from the Ovoot Tolgoi Coal Project; the anticipated timing of
payback of
capital invested in the Ovoot Tolgoi Coal Project; the
statements concerning the timing of commencement of commercial
operation and operating capacity of the Ceke to Linhe railway line;
the statements concerning the timing of the expected completion of
the Ovoot Tolgoi coal-handling facility at the end of 2011; the
statements concerning SouthGobi's expected coal sales and prices in
Q2'11; the statements concerning the timing of the Merlin
pre-feasibility study; the statements concerning the development
and construction of the Merlin Project; the statements concerning
the anticipated timing of the Mount Elliot scoping study and
pre-feasibility study; the statements that Altynalmas Gold's
definitive feasibility study is expected to be completed in Q2'11
and that it will commence construction during 2011 on a roasting
plant to process refractory ore; planned drilling on the Bakrychik
Mining Lease and the surrounding exploration licence; statements
respecting future equity investments in Ivanhoe Mines by Rio Tinto;
the impact of amendments to the laws of Mongolia and other
countries in which Ivanhoe Mines carries on business, particularly
with respect to taxation; statements concerning global economic
expectations and future demand for commodities; and the anticipated
timing, cost and outcome of plans to continue the development of
non-core projects, 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. 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
+1.604.688.5755 www.ivanhoemines.com
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