Ivanhoe Chairman: Looking At Different Options To Fund Mongolia Project

SINGAPORE -(Dow Jones)- Ivanhoe Mines (IVN.T) is working with Rio Tinto (RIO.AU) to satisfy the remaining conditions in order to complete the investment agreement for the Oyu Tolgoi copper-gold project in Mongolia, Ivanhoe CEO Robert Friedland said Thursday at a mining conference.

The agreement is subject to conditions that must be met by April 6, including the completion of a feasibility study currently under way.

Friedland said Ivanhoe and Rio Tinto had satisfied 7 of 10 conditions so far and were "working hard" to satisfy the rest.

Friedland praised Mongolia as an investment destination and said the current Prime Minister, Sukhbaataryn Batbold, was a "great visionary."

He said the Oyu Tolgoi project would leverage Rio Tinto's experience in helping develop the Escondida mine in Chile and the Grasberg mine in Indonesia, two projects which he said Oyu Tolgoi would come to be compared with.

Ivanhoe and Rio struck a long-awaited investment agreement with the Mongolian government in October last year; the government will now take a 34% stake in the project.

Friedland was also bullish on the company's coal prospects in Mongolia, describing the Ovuut Tolgoi coal project, also in Mongolia as containing the "beluga caviar" of coal.

SINGAPORE -(Dow Jones)- Canada's Ivanhoe Mines Ltd. (IVN: 16.6405, 0.4105, 2.53%), the operator of the Oyu Tolgoi copper and gold mine in Mongolia, is looking at various options to fund the development of the project, but won't sell a stake in the project itself, Executive Chairman Robert Friedland said Thursday.

Speaking a special session on Mongolia at Asia Mining Congress 2010, Friedland said both Ivanhoe and the Mongolian government, which owns 34% in the project, have the first right of refusal if either party wants to sell a stake.

With both sides unlikely to sell their stake in the mine, "the only way for anyone to participate (in Oyu Tolgoi) is to become a shareholder of Ivanhoe, and we like it that way."

Asked if China Aluminum Corp., or Chinalco, is in negotiations to buy a stake in Ivanhoe, Friedland said every mining company "is sniffing around" for opportunities, but he wouldn't comment on interest from any specific company.

Friedland said the only three companies technically capable of undertaking such a large project as Oyu Tolgoi are Rio Tinto Ltd. (RTP: 233.2244, 2.8944, 1.26%), Chile's Corporacion Nacional del Cobre, or Codelco, and Freeport-McMoRan Copper & Gold Inc. (FCX: 80.39, 0.56, 0.7%)

Rio Tinto will be the technical operator of the Oyu Tolgoi project.

Rio Tinto already has a 22.4% stake in Ivanhoe and has an option to take it up to 46.6% eventually.

Chinalco, which holds around 9% of Rio Tinto, is currently the single largest shareholder in the Anglo-Australian miner.

Friedland said Ivanhoe has budgeted to spend US$758 million on the construction of the Oyu Tolgoi copper and gold mine in 2010 alone.

The company has appointed Citigroup Inc. and Hatch Corporate Finance to explore funding options for the Mongolian project.

Friedland said Mongolia's gold production is expected to rise 300% and copper production is expected to go up 400% in the next five years as a result of the new project.

By James Campbell
Source:Dow Jones Newswires