Ivanhoe rises to 23-month high ahead of Mongolia deal
Mon Oct 5, 11:47 AM
ca.news.finance.yahoo.com
TORONTO (Reuters) - Shares of Ivanhoe Mines rose 3.9 percent to their highest in nearly two years on Monday, after the company said it was about to sign a long-awaited investment agreement for its $3 billion Oyu Tolgoi mine in Mongolia.
The Canadian company, founded by mining financier Robert Friedland and part-owned by Australia's Rio Tinto , said in a statement the agreement will be finalized at a signing ceremony with Mongolian President Tsakhia Elbegdorj on Tuesday.
Ivanhoe has tried for years to get to the point where it can begin to mine Oyu Tolgoi, a massive copper and gold deposit in the Gobi desert that promises at least 35 years of production and lies just a short train ride from the border of copper-hungry China.
The two sides agreed on a tentative deal in March, and crossed a major hurdle in August when Mongolia's parliament amended four laws key to the deal proceeding.
The company's shares were up 55 Canadian cents at C$14.18 on the Toronto Stock Exchange on Monday, touching their highest level since November 2007.
Ray Goldie, an analyst at Salman Partners, said based on forward copper prices, he values the stock at about double its current level once the deal is signed.
"The big question is has much if anything changed (in the investment agreement) from what we've previously understood, and when will the details be released," he said.
Under the terms of the agreement, Mongolia will take a 34 percent stake in the project.
Rio, which currently owns about 10 percent of Ivanhoe, can raise its stake to about 43 percent in exchange for about $2.4 billion in funding for the project.
The mine is expected to produce an average of 450,000 tonnes of copper and 330,000 ounces of gold over a 35-year mine life. Rio has said production could begin as early as 2013.
Friedland, who is Ivanhoe's chairman, owns about 26 percent of the company.
($1=$1.08 Canadian)
(Reporting by Cameron French; Editing by Frank McGurty) |
