Ivanhoe Mines (TSX:IVN)(NYSE:IVN)(NASDAQ:IVN) founder and Chief
Executive Officer Robert Friedland said today that construction of
the first phase of the Oyu Tolgoi mining complex in southern
Mongolia has surpassed an estimated 73% completion and is on track
to meet the mine's targeted start of initial production in the
third quarter of this year.
"Installation of the two production lines in the concentrator
and pre-commissioning works are progressing ahead of plan. The
concentrator, which will have an initial capacity of 100,000 tonnes
per day, now is more than 80% complete. The first production line
is scheduled to be completed during the third quarter, followed by
completion of the second production line in the fourth quarter this
year," Mr. Friedland said.
"After achieving the scheduled milestones of the production of
first ore and the production of the first copper, gold and silver
concentrate this year, Oyu Tolgoi will ramp up to reach commercial
production during the first half of next year."
Progress achieved on supply of interim electrical power
Mr. Friedland said a goal is to have the Oyu Tolgoi mine site
connected to a 220-kilovolt power line reaching into China's Inner
Mongolia by the end of July this year.
"Contractors have begun construction of the power line and
switching station as part of the 87-kilometre link to be built
within China that will connect Oyu Tolgoi with the established
distribution grid."
Power transmission towers already have been erected along the
95-kilometre route from Oyu Tolgoi, in Mongolia's South Gobi
Region, to the Mongolia-China border.
A separate electricity-purchase agreement establishing a supply
arrangement between Mongolian and Chinese authorities is required
before power can be imported into Mongolia. Oyu Tolgoi LLC, which
owns the Oyu Tolgoi Project and is 66%-owned by Ivanhoe Mines, will
be a party to a final power-supply agreement.
The long-term Investment Agreement signed with the Mongolian
government in 2009 permits Oyu Tolgoi to import electrical power
from China for up to four years after the start of commercial
production, following which power will be sourced from within
Mongolia.
Comprehensive financing plan under discussion with Rio Tinto
Mr. Friedland said that a comprehensive financing plan for the
completion and start-up of the Oyu Tolgoi Project in Mongolia
remains under discussion with Rio Tinto, which increased its
holding in Ivanhoe Mines to 51% last month.
"The Ivanhoe Mines plan was presented to Rio Tinto earlier this
month by a team of management executives, independent directors and
advisers," Mr. Friedland said.
"Both companies have exchanged proposals and we are continuing
to work together in an attempt to reach agreement on a
comprehensive financing approach that will accommodate our mutual
interests in advancing Oyu Tolgoi's development."
Mr. Friedland said that Ivanhoe Mines has invested more than
US$5 billion to date in Oyu Tolgoi's exploration and development
during the past decade. The expenditures have been financed through
a combination of equity and short-term debt facilities. A proposed
major project financing facility has been under negotiation for
more than a year.
"The emergence of a majority shareholder does not diminish the
long-standing commitment of the Ivanhoe Mines Board of Directors
and management to all of our shareholders to ensure that an
appropriate financing plan is put in place as soon as possible,"
Mr. Friedland said.
"More than eight years ago we dedicated ourselves to building
one of the world's greatest copper-gold complexes in Mongolia.
Today, Oyu Tolgoi is our flagship asset. We have a plan that will
provide the remaining fiscal resources to complete construction of
the first phase of Oyu Tolgoi's development and also to continue
progressing development work on the phase-two underground mine that
is scheduled to begin production in 2015."
Key elements of Ivanhoe's financing plan
The Ivanhoe Mines comprehensive financing plan contains three
principal pillars: project finance, bridge finance and equity.
-- The cornerstone of the financing plan continues to be a US$4 billion
project-finance facility, which now is in an advanced stage of
discussion with a core lending group comprised of European Bank for
Reconstruction and Development, International Finance Corporation,
Export Development Canada, BNP Paribas and Standard Chartered Bank. An
objective is to sign loan documentation early in the second half of this
year.
-- Ivanhoe Mines is seeking the required approvals for the project-finance
facility from Erdenes OT and the Mongolian government. Erdenes OT, which
holds the Mongolian government's 34% stake in Oyu Tolgoi, presently is
appointing a legal adviser. The comprehensive Environmental and Social
Impact Assessment (ESIA) required by the potential lenders to finalize
the proposed finance facility is substantially complete and will be
released for public review following its formal approval by the Oyu
Tolgoi LLC Board of Directors.
-- Ivanhoe Mines, as previously announced, has approved a US$1.8 billion
facility to be provided by a major international bank as an interim,
bridge-financing measure. The formal loan agreement has been submitted
to the international bank's credit committee for final approval and
remains subject to approval by Rio Tinto. Alternative bridge-financing
arrangements proposed by Rio Tinto also are being considered.
-- The bridge financing facility would be in addition to the existing
US$1.8 billion interim funding facility provided by Rio Tinto last year.
To date, Ivanhoe Mines has accessed a total of US$867 million from the
Rio Tinto facility.
-- The Rio Tinto interim funding facility and any additional bridge
financing facilities are expected to be repaid from the planned project-
finance facility.
-- The Ivanhoe Mines Board of Directors also is considering a number of
equity alternatives, including a possible rights offering.
Ivanhoe Mines' cash position on a consolidated basis at February
24 was approximately US$960 million. The company's non-consolidated
cash position, excluding cash at Ivanhoe Australia and SouthGobi
Resources and including cash at Oyu Tolgoi LLC, was approximately
US$683 million.
Expressions of interest in Ivanhoe asset divestment
Mr. Friedland said that in addition to pursuing the key elements
of the comprehensive financing plan, Ivanhoe Mines is highly
encouraged by the progress of discussions regarding asset
divestment. He said Ivanhoe Mines has received detailed, written
expressions of interest on potential asset divestments that could
realize significant capital to support the ongoing development of
Oyu Tolgoi.
Discussions on governance at Ivanhoe Mines
Rio Tinto also has initiated discussions with independent
Ivanhoe Mines directors on a number of governance and management
matters. The independent Ivanhoe directors intend to work
constructively and expeditiously with Rio Tinto to implement
various changes to reflect Rio Tinto's majority ownership of
Ivanhoe Mines while, at the same time, seeking to ensure, to the
greatest extent possible, that the rights of the minority
shareholders are not prejudiced by such changes.
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 mine development project in southern
Mongolia; its 58% interest in Mongolian coal miner SouthGobi
Resources (TSX:SGQ)(HK:1878); a 59% 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, a private company developing the Kyzyl Gold
Project in Kazakhstan.
Ivanhoe Mines' shares are listed on the New York, NASDAQ and
Toronto stock exchanges under the symbol IVN.
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 statements include, but are not limited
to, statements with respect to: (i) that the first production line
is expected to be completed by July of 2012; (ii) that Oyu Tolgoi
is on track to meet its targeted start date of initial production
in the third quarter of this year and ramp up to commercial
production during the first half of next year; (iii) expected date
for the connection of the power line before July of 2012; (iv) the
plan to obtain fiscal resources to complete construction of the
first phase of Oyu Tolgoi's development; (v) the objective to sign
loan documentation for project financing early in the second
quarter of this year; (vi) the release of the comprehensive
Environmental and Social Impact Assessment; (vii) the international
bank's credit committee approval of the interim bridge facility;
(viii) progress on asset divestment; and (ix) the implementation of
governance changes.
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 and under "Risk Factors" and elsewhere in the
corporation's periodic filings with Canadian and US securities
regulators. Readers are cautioned not to place undue reliance on
forward-looking information or statements.
Contacts: Ivanhoe Mines Ltd. - Investors Bill Trenaman
+1.604.688.5755 Ivanhoe Mines Ltd. - Media Bob Williamson
+1.604.688.5755 www.ivanhoemines.com
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