Ivanhoe Mines Expects the Mongolian Government to Support the Oyu Tolgoi Investment Agreement
September 26 2011 - 8:49AM
Marketwired
Ivanhoe Mines (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN) -
Statement
Ivanhoe Mines said in a statement today that the investment
agreement for the Oyu Tolgoi Project remains a fair and legally
binding contract that deserves and requires the unqualified support
of all parties.
Media reports during the weekend quoted Mongolia's Mineral
Resources and Energy Minister D. Zorigt as indicating that Ivanhoe
Mines and Rio Tinto would receive a letter from the Mongolian
government asking the companies to consider entering into
discussions to address a possible change to the investment
agreement. A reported potential proposed change would see
acceleration of the government's right to increase its current 34%
interest in Oyu Tolgoi to 50% by purchasing an additional 16% at
fair market value at some future point, after Ivanhoe Mines and Rio
Tinto recoup their capital investments in the project.
Earlier this month, 20 members of Mongolia's national parliament
petitioned the government to pursue changes to the investment
agreement ahead of a general election set for next June.
The investment agreement, which was negotiated over five years,
signed in October 2009 and became fully effective in March 2010,
complies fully with all Mongolian laws and was negotiated by the
government in accordance with all resolutions issued by the
Mongolian parliament. The agreement has been the basis for the
commitment by Ivanhoe Mines and its strategic investor, Rio Tinto,
to invest billions of dollars in the development of the mining
complex. Ivanhoe Mines discovered the Oyu Tolgoi deposits and holds
a 66% interest in the project.
Oyu Tolgoi already has created jobs for thousands of Mongolians
and has helped Mongolia to achieve one of the highest growth rates
of any developing country in the world. The project's benefits also
have been shared among local businesses and suppliers, which now
form an integral and growing part of the project.
Rio Tinto Chairman Jan du Plessis hosted a milestone "Half-Way
There" ceremony at the site of the Oyu Tolgoi complex yesterday,
which was addressed by Mineral Resources and Energy Minister
Zorigt, former President N. Bagabandi and project executives,
marking 50 per cent completion of the construction of the mine's
first phase. Speech texts will be posted to the Ivanhoe Mines
website. The project's progress has been made possible by the
support of an exceptionally dedicated Mongolian and international
workforce and an excellent working relationship with the Mongolian
government and its regulatory authorities.
The project is on track toward production of first ore in 2012
and commercial production of copper, gold and silver concentrate in
the first half of 2013.
The investment agreement has been fundamental in building
Mongolia's reputation as an increasingly reliable and stable
destination for foreign investment. With many significant resources
projects still to be financed and developed - including the
proposed overseas listing of Erdenes Tavan Tolgoi - Ivanhoe Mines
is confident that Mongolia's leadership understands the fundamental
importance of Oyu Tolgoi's contractual commitments and stabilized
investment agreement that were formalized less than two years
ago.
Under Mongolia's Minerals Law, Ivanhoe Mines was entitled to
request and enter into an investment agreement with the government
that guaranteed a stable tax, fiscal and operational environment
for a 30-year term. The investment agreement provides that
following renewal of the investment agreement after expiry of its
term the government may negotiate to acquire an additional 16%
interest in Oyu Tolgoi, on agreed terms, to take its total
participating interest in the project to 50%.
Power supply assurances
Ivanhoe Mines has noted comments attributed to Rio Tinto
executives at an investor briefing last week regarding the possible
delay of delivery of electric power to Oyu Tolgoi. Ivanhoe Mines
remains confident that the necessary agreements between Mongolia
and China will be satisfactorily concluded to secure the timely
supply of interim, high-voltage electric power from China to ensure
that Oyu Tolgoi can begin commercial production on schedule.
Oyu Tolgoi representatives have been assured that
inter-governmental negotiations between Mongolia and China are
continuing to progress and that the Mongolian government also is
confident that interim power for the project will be provided from
China. The Mongolian government recently began engagement with
China's National Development and Reform Commission on the matter.
Erection of steel towers for an 86-kilometre, high-voltage power
line from Oyu Tolgoi to the Mongolia-China border currently is 82%
complete. In a landmark strategic partnership agreement signed by
the Mongolian prime minister and Chinese premier during a bilateral
summit meeting in mid-June this year, China committed to cooperate
with Mongolia and support the supply of electric power.
Ivanhoe Mines reaffirms the accuracy and completeness of its
previous disclosures on power supply, which are a matter of public
record. Ivanhoe Mines has a rigorous system of disclosure controls
and protocols to ensure that material information is disclosed in a
timely manner so that all Ivanhoe shareholders have access to
essential information. Ivanhoe will be informing Rio Tinto of its
objections to a number of recent statements and will ask Rio Tinto
to adhere to a policy of public disclosure that is accurate, clear
and complete on key details and fair to all Ivanhoe
shareholders.
About Ivanhoe Mines
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
Oyu Tolgoi copper-gold-silver mine development project in southern
Mongolia; its 57% interest in Mongolian coal miner SouthGobi
Resources (TSX: SGQ)(HK: 1878); a 62% interest in Ivanhoe Australia
(TSX: IVA)(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
This news release contains forward-looking statements.
Forward-looking statements are statements that relate to future
events such as the planned provision of electric power for the
scheduled start of production at Oyu Tolgoi, the estimated timing
for first ore and the start of commercial production at Oyu Tolgoi.
In some cases, you can identify forward-looking statements by
terminology such as "may," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential" or
"continue," or the negative of these terms or other comparable
terminology. These include statements regarding Oyu Tolgoi's
expected production of silver, gold, copper and molybdenum; and
statements regarding the expected start of test production and
commercial production. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors
that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different
from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking
statements. While these forward-looking statements, and any
assumptions upon which they are based, are made in good faith and
reflect our current judgment regarding the direction of our
business, actual results almost always will vary, sometimes
materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein. Readers
are referred to the sections entitled "Risk Factors" in Ivanhoe
Mines' periodic filings with Canadian and US Securities
Commissions.
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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