BEIJING, CHINA (NYSE: IVN)(NASDAQ: IVN), Executive Chairman
Robert Friedland announced today that the company has agreed to
sell its 42% control block in China gold producer JINSHAN GOLD
MINES (TSX: JIN) to China's national gold-mining conglomerate,
CHINA NATIONAL GOLD GROUP CORPORATION, of Beijing, and its
financial partners.
"This is the first step toward the formation of a long-term,
strategic partnership between Ivanhoe Mines and China National Gold
Group that will focus on gold and copper exploration and mine
development opportunities in China," Mr. Friedland said.
"Industry research has confirmed that China's gold industry has
overtaken the United States and South Africa. China is expected to
consolidate its position this year as the world's largest gold
producer. It is a dynamic industry in the world's most remarkable
economy - in a period of high gold values and a dramatically
depreciating US dollar.
"There are significant benefits to be realized for Ivanhoe
Mines' independent, 100%-owned gold exploration programs now
underway in China, through a cooperative partnership with China's
pre-eminent, government-owned gold group. A substantial portion of
the proceeds of this asset sale will be dedicated to advancing
Ivanhoe Mines' significant and advanced gold and copper exploration
ventures across China."
Under terms of the agreement, the purchaser will acquire from
Ivanhoe Mines:
- Ivanhoe's entire holding of 67,520,060 common shares of
Jinshan Gold Mines, at a price of C$3.1115 a share; and
- a Jinshan promissory note of C$7.5 million issued to Ivanhoe
Mines, due June 26, 2010, together with accrued interest at 12%
from March 31, 2008.
Ivanhoe will retain warrants to purchase up to 1.5 million
common shares of Jinshan, each exercisable to purchase one Jinshan
common share at C$2.50 at any time up to June 26, 2009.
The aggregate proceeds to be received will be C$217.7 million.
The transaction, which is subject to Chinese Government regulatory
approvals and Canadian regulatory filings, is scheduled to close on
May 10, 2008. Ivanhoe Mines will record a gain on the sale of its
interest in Jinshan in the second quarter. Under the terms of the
agreement, the board of directors of Jinshan will be increased to
eight members and China National Gold is planning to appoint four
new members to the Jinshan board, one of which will be independent,
replacing certain directors, including Ivanhoe Mines' appointees.
Sun Zhaoxue, President of China National Gold Group, will be
nominated to serve as Chairman of Jinshan Gold Mines. Jay
Chmelauskas will continue as Jinshan's President and CEO.
Jinshan Gold Mines, based in Vancouver, Canada, began producing
gold from its CSH Mine in China's Inner Mongolia region in July
2007. Jinshan has produced 33,280 ounces of gold to date, and is
ramping up toward the projected capacity of 120,000 ounces a year.
A 50% increase in annual production, to up to 180,000 ounces, is
being studied.
China National Gold Group President Sun Zhaoxue said he believes
Jinshan can look forward to a bright, growth-oriented future in
working with China National Gold to build a global gold
producer.
"We are impressed by Jinshan's accomplishments in building and
launching production at the CSH Mine. China National Gold Group
will support Jinshan's development and operations in China. Jinshan
will continue to be based in Canada and we have plans to build it
into a leading global gold producer as we pursue growth
opportunities for our group. We also are pleased that Jay
Chmelauskas will remain with Jinshan as President and Chief
Executive Officer."
First established in 1979, China National Gold Group is a
large-scale, state-owned Chinese enterprise and is the largest
producer of gold in China. It is active in all facets of the gold
mining industry from engineering and fabrication of heavy mining
equipment for internal use and export abroad, exploration, mining,
refining, and gold and silver bullion sales. With over 65 mines,
China Gold produces approximately 20% of the total gold production
in China and controls over 30% of the known gold reserves in China.
In 2007, it produced 78 tons of gold. China Gold also controls
Zhongjin Gold, which in 2003 became the first publicly listed gold
miner on the Shanghai Stock Exchange.
Mr. Chmelauskas said his Jinshan management team welcomes the
opportunity to continue working to build Jinshan into a significant
gold producer with the added benefit of the strong, strategic
backing of China's gold industry leader.
"We have developed a very good relationship with China National
Gold Group during the past few years and we believe that our
association with China National Gold Group will improve our
prospects within China and internationally," Mr. Chmelauskas
said.
Ivanhoe Mines acquired its initial interest in Jinshan Gold
Mines in May 2002. Since then, Jinshan's ongoing exploration work
has established that the CSH Mine has a measured and indicated
resource, at a 0.35 gram per tonne (g/t) cut-off grade, totalling
171.3 million tonnes at 0.71 g/t gold, with 3.9 million ounces of
contained gold. In addition, inferred resources now are estimated
at 1.33 million ounces of gold contained within 64.2 million tonnes
grading 0.65 g/t gold at a 0.35 g/t cut-off.
Jinshan's Dadiangou discovery in Gansu Province has an estimated
778,000 ounces of gold within an initial inferred resource of 26.3
million tonnes grading 0.92 grams per tonne, at a cut-off grade of
0.4 g/t gold, and is considered a potential open-pit mine.
Technical Information
Calvin McKee, the Chief Operations Officer of Jinshan, is the
qualified person who supervised the preparation of the scientific
and technical information concerning the resource information in
this news release regarding the CSH Project and the Dadiangou
Project. Mr. McKee has reviewed the available data and procedures
and believes the collection of exploration data and calculation of
the mineral resources reported in this news release was conducted
in a professional and competent manner.
For a description of the key assumptions, parameters and methods
used to estimate mineral resources on the CSH Project and the
Dadiangou Project, as well as a general discussion of the extent to
which the estimates may be affected by any known environmental,
permitting, legal, title, taxation, socio-political, marketing or
other relevant factors, please see the Technical Reports for each
of the CSH Project and the Dadiangou project filed on March 31,
2008 and available for review on SEDAR at www.sedar.com.
About Ivanhoe Mines
Ivanhoe Mines is an international mining company with operations
focused in the Asia Pacific region. Ivanhoe's core assets are its
world-scale Oyu Tolgoi copper and gold mine development project in
southern Mongolia, its large shareholdings in Mongolian coal miner
SouthGobi Energy Resources (TSX VENTURE: SGQ), and its wholly-owned
Cloncurry iron-oxide-copper-gold (IOCG) exploration project in
Australia. Ivanhoe Mines' shares are listed on the Toronto, New
York and NASDAQ stock exchanges under the symbol IVN.
About Jinshan Gold Mines
Jinshan is a Canadian mining company focused on gold production
in China. The company began producing gold at the CSH Mine in July
2007 and is actively advancing its portfolio of gold exploration
properties in China. Jinshan's shares are listed on the Toronto
stock exchange under the symbol JIN.
FORWARD-LOOKING STATEMENTS: This document includes
forward-looking statements regarding Ivanhoe Mines and Jinshan Gold
Mines plans. Forward-looking statements include, but are not
limited to, statements concerning the agreement to sell Ivanhoe's
shares in Jinshan Gold Mines. When used in this document, the words
such as "plan" and "may" and similar expressions are
forward-looking statements. Although Ivanhoe Mines and Jinshan Gold
Mines believe that the expectations reflected in these
forward-looking statements are reasonable, such statements involve
risks and uncertainties and no assurance can be given that actual
results will be consistent with these forward-looking statements.
Important factors that could cause actual results to differ from
these forward-looking statements are disclosed under the heading
"Risk Factors" and elsewhere in the corporations' periodic filings
with Canadian and US securities regulators.
Contacts: Ivanhoe Mines Bill Trenaman Investors (604) 688-5755
Ivanhoe Mines Bob Williamson Media (604) 688-5755 Website:
www.ivanhoemines.com Jinshan Gold Mines Deanna Kress (604) 609-0598
Website: www.jinshanmines.com China National Gold Group Corporation
+86.8412.3187 Email: CNGC@ChinaGoldGroup.com Website:
www.chinagoldgroup.com
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