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Gold/Mining/Energy : IVAN - Ivanhoe Energy -- Ignore unavailable to you. Want to Upgrade?

To: Wolff who wrote (99)	11/11/2003 1:54:09 AM
From: Wolff	Respond to of 271

The Promoter by Nathan Vardi, 11.24.03 (part2) forbes.com The Voisey's Bay find changed Friedland's fortunes and those of shareholders--but added to his controversial reputation. He angled two large mining companies, Inco and Falconbridge, into a bidding war. Inco emerged the winner, paying $3.1 billion for the nickel deposit in 1996--but soon regretted it. Voisey's Bay turned out to be as much of a political minefield as a nickel deposit. Newfoundland, Canada's poorest province, would not let Inco dig up the site unless the company promised to build a smelter and process the nickel in the province. Meantime, Innu and Inuit groups claimed the nickel deposit lay on their ancestral land. Last year Inco finally struck a deal, agreeing to build a $530 million nickel processor in Newfoundland and getting the Canadian government to kick in $100 million, partly to train Innu and Inuit for work at the mine and plant. Inco admitted it overpaid by taking a $1.6 billion writedown on its Voisey's Bay investment in 2002. Friedland got to walk away from it all, pocketing $400 million for his 13% stake in Diamond Fields. Friedland poured his money back into the ground. This prospector knows how to hedge his bets. Through a private holding company, Ivanhoe Capital, he owns a 32% stake in Nasdaq-listed Ivanhoe Energy--a stake worth $210 million. Ivanhoe Energy, run by former Occidental Petroleum executives, produces oil and gas in places like China and California. Friedland also has a 50% piece of African Minerals, a private outfit searching for platinum. He has tried to rehabilitate a failed iron mine, acquired from the government of Tasmania in 1996 by ABM Mining, then one of his private companies, with a promise of eventually paying $8 million in services. And then there is Ivanhoe Mines. Ivanhoe Mines inked an agreement with the Burmese government to develop a copper mine and split the profits. Human rights groups were quick to denounce Ivanhoe, accusing the mine of taking advantage of forced labor and poisoning the environment. The company denies the accusations, saying the mine bolstered the area's economy. Then came the big break. BHP Billiton, the world's largest mining firm, had been kicking sand around the Gobi Desert in the late 1990s. After drilling 23 holes at Turquoise Hill, BHP suspended activities there. Friedland swooped in and cut a deal to buy the exploration license to the 520 square miles of Turquoise Hill in May 2000, agreeing to pay $5 million and grant BHP 2% of the revenues generated by any mine. Ivanhoe also promised to spend at least $6 million to explore the area and started drilling in June 2000. This past August a unit of London-based Amec, an engineering firm, reported after studying samples from 400 or so drill holes that Turquoise Hill could potentially hold 38 billion pounds of copper and 21 million ounces of gold--$43 billion of metal at recent prices. These are very rough estimates, and in any event there is of course a wide gap between the value of refined metal and the value of buried ore.