Ivanhoe to Remain Oyu Tolgoi Builder, Friedland Says

Oct. 15 (Bloomberg) -- Ivanhoe Mines Ltd., the Canadian miner developing the Oyu Tolgoi project in Mongolia with Rio Tinto Group, maintained a pledge to keep a controlling stake in the copper and gold deposit.

“We want to be the builder, not the auctioneer,” Chairman Robert Friedland said today on a conference call, repeating comments from a 2003 letter to shareholders. “This is not Voisey’s Bay all over again. We intend to be around for the long term to fulfill our responsibilities.”

Friedland previously was co-chairman at Diamond Fields Resources Inc., which found the Voisey’s Bay nickel deposit in Canada and sold it to Inco Ltd. in 1996.

Ivanhoe and Rio signed an agreement last week with Mongolia’s government to develop Oyu Tolgoi, which Rio has called the world’s largest copper-gold resource. The entire project, including an open pit and an underground mine, may require about $9 billion in capital spending over three decades.

The site may produce more than 1 billion pounds of copper and 500,000 ounces of gold annually in the first decade of production, which is estimated to start in 2013, Ivanhoe Chief Executive Officer John Macken said on today’s call.

Oyu Tolgoi, which is 80 kilometers (50 miles) north of Mongolia’s Chinese border, contains about 78.9 billion pounds of copper and 45.2 million ounces of gold in measured, indicated and inferred categories, according to company estimates from March 2008. Ivanhoe spent $156 million on exploration and development at Oyu Tolgoi last year and $245.5 million in 2007, the company said in an April statement.

Rio Tinto said earlier this week that it will pay $388 million to double its stake in Ivanhoe to about 20 percent as part of a 2006 agreement to give Rio a share of Oyu Tolgoi.

Vancouver-based Ivanhoe fell 18 cents, or 1.4 percent, to C$12.63 at 4:10 p.m. in Toronto trading. The shares have almost quadrupled this year. Rio fell 52 pence, or 1.7 percent, to 2,946 pence in London, where the company is based.

To contact the reporter on this story: Rob Delaney in Toronto at robdelaney@bloomberg.net.


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