Friday, 11 Dec 2009
Reuters reported that Ivanhoe Mines will spend USD 758 million in 2010 on its Oyu Tolgoi copper gold project in southern Mongolia and should have the USD 3.5 billion open pit component of the mine finished in 2012.

As per repot, that timetable which envisions an early start to development and commercial production by 2013 would seem a bit more accelerated than what Ivanhoe predicted in October, when company officials eyed output by late 2013.

Mr John Hayes analyst of BMO Capital Markets said that “Ivanhoe is clearly undertaking an aggressive development program on the Oyu Tolgoi project.”

Ivanhoe, Rio and Mongolia wrapped up a long awaited investment agreement on Oyu Tolgoi in October, giving the Mongolian government 34% stake in the project.

Oyu Tolgoi is seen as one of the world’s largest untapped copper and gold deposits and lies in the Gobi Desert, about 80 kilometers from the border with copper hungry China. The initial open pit phase of the project is expected to cost USD 3.5 billion, while the partners will concurrently spend USD 1 billion to begin to develop an underground component to the mine.

Ivanhoe said that the 2010 budget provides for an early start on a site wide development program, pending the successful completion of remaining conditions required to put the investment agreement in effect. Those conditions include review of a feasibility study, which Ivanhoe expects to be concluded in coming weeks.

Mr John Macken CEO of Ivanhoe said that this is basically to kick start the project from the point of view of infrastructure. He said that work in 2010 is expected to include construction of a 97 meter concrete head frame and a regional airport capable of accommodating Boeing 737 sized aircraft.

The company, which has a cash position of about USD 1 billion, has said that the mine should produce an average of more than 1 billion pounds of copper and 500,000 ounces of gold annually over the first 10 years of its 30 plus years of life.

Ivanhoe recently received USD 388 million from Rio Tinto completing the Phase II a private placement financing deal. Under the financing agreement between the 2 companies, Rio has the right to buy 43.1% of Ivanhoe’s common shares over the next 2 years. It may increase this stake to 46.6% through purchases on the open market.

(Sourced from Reuters)
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