Ivanhoe shares rally after good news on Mongolian project

BRENDA BOUW - The Globe and Mail
Shares of Ivanhoe Mines Ltd. soared 20 per cent Tuesday, far past its base metal peers, a day after the Vancouver-based company said gold and silver would account for about half of revenues at its Oyu Tolgoi project, which is set to begin production at the end of next year.
Ivanhoe also received a rating and target price increase from TD Securities on Tuesday following the recent release of its second-quarter update which said the promising project in Mongolia would be built within its $4.5-million pre-production budget.
TD raised its rating from “hold” to “speculative buy” and increased its 12-month target price to $30 from $28.
“An investment in Ivanhoe Mines provides exposure to one of the world’s largest copper-gold deposits that is being built and managed by Rio Tinto PLC,” analyst Craig Miller said in a note. “The possibility for a corporate transaction remains; and the recent weakness in the base metal mining equities provides an attractive buying opportunity, in our view.”
Mining promoter Robert Friedland, chief executive officer of Ivanhoe, said while copper will be the main metal produced at Oyu Tolgoi, “gold and silver are major contributors” to the project.
“The recent sharp increases in gold and silver prices have reinforced the importance of having a multi-commodity deposit such as Oyu Tolgoi,” he said in a release on Monday.
While Ivanhoe’s statement regarding the project’s gold and silver content wasn’t a surprise, analysts say it appears to have caught investor attention alongside gold’s recent record-breaking run. Silver has also been on a tear recently, rising nearly 40 per cent so far this year.
Gold hit a record $1,913.50 (U.S.) an ounce in London on Tuesday and settled down at $1,861.30 on the Comex in New York. Silver, which has more than doubled in price in the last 12 months, fell about 2 per cent, to $42.33 an ounce in New York.
While Ivanhoe’s shares rallied on Tuesday, they’re still off a 52-week high of $30.28 reached in December.

Source:www.ctv.ca
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