Here's the full agreement. Rest assured that IVN will fulfill all elements of the agreement, plus they owns 15% of the ETG shares outright. I don't have time to sit down and work it all out again, but as I recall, it all adds up to around 85-90% interest for IVN in the JV area, which is where the good stuff is.
Ivanhoe Mines and Entrée Gold Earn-In Agreement to Explore Entrée's Shivee Tolgoi Project, Mongolia
Click to Enlarge
October 18, 2004 - Ivanhoe announced today that the company has entered into an earn-in and equity participation agreement with Entrée Gold to explore and potentially develop approximately 40,000 hectares of Entrée's 100%-owned, Shivee Tolgoi (Lookout Hill) property, adjacent to Ivanhoe's Oyu Tolgoi (Turquoise Hill) copper-gold discovery in Mongolia.
The agreement contains a number of conditions for Ivanhoe to earn a participating interest in the project, including a requirement to invest, on an unconditional basis, a minimum of US$3 million during the first year in exploration, consisting of US$500,000 on geophysics and US$2.5 million on drilling.
This US$3 million investment will secure for Ivanhoe a long-term option to utilize any and all rights Entrée may have for the surface of the optioned property to construct mine buildings, tailings ponds, waste dumps, power lines and roads - as may be necessary or convenient for the conduct of Ivanhoe's operations on its adjacent properties - providing that Ivanhoe first completes condemnation drilling to ensure that there is no economic mineralization below the surface of the areas directly affected.
Ivanhoe will have the right to earn the following levels of participating interest in the project:
51%, by completing not less than US$20 million of aggregate earn-in expenditures within the earn-in period and in accordance with the earn-in schedule;
60%, by completing not less than US$27.5 million of aggregate earn-in expenditures within the earn-in period and in accordance with the earn-in schedule; and
70%, by completing not less than US$35 million of aggregate earn-in expenditures within the earn-in period and in accordance with the earn-in schedule.
By spending US$35 million on exploration and/or development of the property over eight years and earning a 70% interest, Ivanhoe will be deemed to hold:
an increased participating interest of 80% in all minerals extracted below a sub-surface depth of 560 metres on the optioned property; and
a 70% interest in all minerals extracted from surface to a depth of 560 metres.
The earn-in expenditures may include exploration drilling, shaft sinking, underground drifting and development, if warranted, on any mineralization discovered. The agreement requires Ivanhoe to spend at least US$5 million a year in each of the first three years, including the unconditional, US$3 million year-one exploration investment described above.
Ivanhoe also will have the right of first refusal in subsequent joint ventures that may be formed on the remaining portion of Entrée's Shivee Tolgoi property. |
