Ivanhoe Mines' (NYSE: IVN)(NASDAQ: IVN)(TSX: IVN) President and
Chief Executive Officer John Macken announced today that the joint
Ivanhoe Mines-Rio Tinto Oyu Tolgoi Technical Committee has approved
a conditional US$758 million budget for 2010 to begin full-scale
construction of the copper-gold mining complex in southern
Mongolia.
"The approval of the 2010 construction budget represents the
next big step toward bringing this project into production," Mr.
Macken said. "Ivanhoe is considering a schedule that could see
construction of the initial open-pit mine completed in 2012 and
commercial production begin in 2013."
The 2010 budget provides for an early start on a site-wide
development program, pending the successful completion of the
remaining conditions precedent required to give full effect to the
Oyu Tolgoi Investment Agreement signed October 6, 2009.
Work in 2010 is planned to include:
- Resumption of the sinking of the 10-metre-diameter Shaft #2,
which will be used to hoist ore to the surface from the deep,
underground, copper-gold-rich Hugo Dummett Deposit.
- Construction of a 97-metre-tall (approximately 31-storeys),
reinforced-concrete headframe for Shaft #2.
- Pouring the concrete foundation for the 100,000-tonne-per-day
concentrator and deliveries of building materials for the
concentrator and infrastructure.
- Installation of a 20-megawatt power station and 35-kilovolt
distribution system.
- Initial earthworks for the open-pit mine at the Southern Oyu
deposits.
- Continuation of lateral underground development off Shaft #1
at the Hugo Dummett Deposit.
- Construction of a 105-kilometre highway link to the
Mongolia-China border, which will be fully paved by the time
production begins.
- Construction of a regional airport, with a concrete runway to
accommodate Boeing 737-sized aircraft.
Ivanhoe Mines' present consolidated cash position is
approximately US$1 billion. Mr. Macken said additional funds are
expected during 2010 either from Rio Tinto's exercise of Series A
warrants, priced at US$8.38-$8.54 and yielding US$385-$393 million,
or through potential investments in Ivanhoe by one or more
strategic shareholders, including sovereign-wealth funds, that have
expressed unsolicited interest in participating in Ivanhoe's growth
opportunities.
Seven of 10 Investment Agreement conditions completed
A total of seven of the required 10 conditions precedent now
have been satisfied since the signing of the Investment Agreement
on October 6, 2009.
The conditions were:
- the increase of Rio Tinto's ownership stake in Ivanhoe Mines
from 9.9% to 19.7% through a US$388 million payment to Ivanhoe;
- the conversion into mining licences of exploration licences
held by Entree Gold on extensions of the Oyu Tolgoi mineralized
trend, whose development is covered under a joint-venture agreement
with Ivanhoe Mines;
- the establishment of a Standing Working Committee, comprised
of representatives of the Government and Oyu Tolgoi LLC, which will
operate during construction of the mining complex to streamline the
granting of permits and expedite Mongolian customs clearances;
- the signing of the Investment Agreement and companion
Shareholders' Agreement by all relevant parties;
- the restructuring of Ivanhoe's subsidiary, Ivanhoe Mines
Mongolia Inc. - now renamed Oyu Tolgoi LLC - which continues to
hold the Oyu Tolgoi licences and will operate the project;
- the separation of assets unrelated to the Oyu Tolgoi Project;
and
- the registration in Mongolia of a revised charter for Oyu
Tolgoi LLC.
After the remaining conditions precedent have been satisfied,
34% of the shares of the holding company, Oyu Tolgoi LLC, will be
owned by Erdenes MGL, a Mongolian state-owned resources company,
and 66% will continue to be owned by Ivanhoe Mines.
Independent Technical Report to declare first underground
reserve at Oyu Tolgoi
A panel of experts appointed by the Mongolian Government has
completed an initial review of a feasibility study for the planned
open-pit and underground mines. Mr. Macken said that the
Government's consideration of the feasibility study, which is one
of the conditions precedent that remains to be satisfied under the
Investment Agreement, is expected to be concluded in coming
weeks.
Following conclusion of the feasibility study's consideration,
Ivanhoe Mines will be in a position to publicly release an
independent Technical Report that will declare the first
underground reserves at Oyu Tolgoi and update the project's total
mineral resources that have been confirmed by Ivanhoe's ongoing
exploration program.
The Technical Report, which is the basis for the 2009 Integrated
Development Plan (IDP-09), also will provide an independent
evaluation of long-term production scenarios for the
12-kilometre-long chain of Oyu Tolgoi deposits that have been
discovered to date, with associated capital and operating cost
projections. The report is being prepared for Ivanhoe Mines by
several of the world's foremost engineering, mining and
environmental consultants, which are led by GRD Minproc and include
Stantec (formerly McIntosh) Engineering.
Ivanhoe Mines' shares are listed on the Toronto, New York and
NASDAQ 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 include, but are not limited to,
statements respecting anticipated business activities; the timing
of the release of the IDP-09; the timing of the Government's
consideration of the feasibility study; the timing of the
construction of the initial Oyu Tolgoi mine; the timing of
commencement of full construction of the Oyu Tolgoi Project; 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. Except as
required by law, the Company does not assume the obligation to
revise or update these forward-looking statements after the date of
this document or to revise them to reflect the occurrence of future
unanticipated events.
Contacts: Ivanhoe Mines Ltd. Bill Trenaman Investor Contact
+1.604.688.5755 Ivanhoe Mines Ltd. Bob Williamson Media Contact
+1.604.688.5755 www.ivanhoemines.com
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