Ivanhoe Mines Confident in Financing Oyu Tolgoi Copper-Gold Project

Strategic Insights -

Ivanhoe Mines Ltd., a Canadian mining company, is confident in its ability to finance the estimated $1.2 billion required to develop its Oyu Tolgoi copper-gold project in Mongolia, without the need for a joint venture partner. Chairman Robert Friedland stated that the company has a cash position of over $200 million, existing income from copper production in Myanmar, and the ability to raise fresh funds. Ivanhoe is looking to start initial open pit production of 70,000 metric tons a day, with plans to fast-track the introduction of ore from underground block-caving by 2009. The project's financing, however, awaits the conclusion of ongoing negotiations with Mongolian authorities over a special stability agreement.

Key Takeaways:

  • Ivanhoe Mines Ltd. estimates that it needs $1.2 billion to develop the Oyu Tolgoi copper-gold project in Mongolia.
  • The company has a cash position of over $200 million and existing income from copper production in Myanmar.
  • Ivanhoe is confident in its ability to raise fresh funds to finance the project, even without a joint venture partner.
  • The company plans to start initial open pit production of 70,000 metric tons a day, with a target of 150,000 tons a day once combined open pit and underground operations are in place.
  • Ivanhoe has inherited the Oyu Tolgoi project from BHP Billiton in 2000 and has a relationship with Japan's Mitsui & Co. Ltd.
  • The project's financing is being held up by ongoing negotiations with Mongolian authorities over a special stability agreement.

Statistics:

  • Estimated cost of developing the Oyu Tolgoi copper-gold project: $1.2 billion
  • Ivanhoe's current cash position: over $200 million
  • Annual copper output from the Oyu Tolgoi project: 500,000+ tons
  • Forecasted open pit production: 70,000 metric tons a day
  • Forecasted combined open pit and underground production: 150,000 metric tons a day
  • Total resources of the Oyu Tolgoi project: 2.31 billion tons at 1.16% copper

Sources:

  • Dow Jones Commodities News via Comtex, "Ivanhoe Mines Confident in Financing Oyu Tolgoi Copper-Gold Project"
  • Dow Jones Newswires, "Ivanhoe Mines' Oyu Tolgoi Copper-Gold Project to Go Ahead Without Partner"
  • By James Attwood, Dow Jones Newswires