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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (44715)	10/7/2009 10:45:10 PM
From: LoneClone	Read Replies (1) \| Respond to of 197061

Ivanhoe preparing updated Oyu Tolgoi development plan miningweekly.com By: Liezel Hill 7th October 2009 VANCOUVER (miningweekly.com) – Ivanhoe Mines is expected to come out with an updated project development plan for its Oyu Tolgoi copper/gold project, in Mongolia, within weeks, after finally signing an investment agreement with the country's government. Under Tuesday's deal, which has been more than six years in the making, the Mongolian government will buy the 34% interest in the project to which it is entitled under Mongolian law. The 30-year agreement, with an option to renew for another 20 years, also sets out a comprehensive framework for the development and operation of the giant mine. More details are available here. Vancouver-based Ivanhoe currently holds the licence for the asset – touted by the company as the world's largest undeveloped copper/gold porphyry project - and diversified miner Rio Tinto owns just under 10% of Canadian firm. The companies have been trying for years to secure an investment agreement that would open the way for financing and construction of the mine. However, the process has appeared to be on the home stretch since the Mongolian Parliament voted in August to change four laws that would have prevented the deal from going ahead in its current form. This included the cancellation of a three-year-old, 68% windfall profits tax on copper and gold. Under existing agreements between the two companies, Rio will increase its holding in Ivanhoe to almost 20% following the signing of the investment agreement and could boost its stake to as much as 46,6% over the next two years. A third company, junior Entree Gold, has a joint venture with Ivanhoe on some adjacent properties to Oyu Tolgoi, where significant copper, gold and molybdenum mineralisation has been discovered, and which are also included in the investment agreement. The updated mine development plan for Oyu Tolgoi, including plans to mine Ivanhoe and Entree's Hugo North extension, is expected “in the next couple of weeks”, Entree CEO Greg Crowe said in an interview at the company's Vancouver headquarters on Tuesday. Ivanhoe said on Tuesday that it expects yearly copper and gold production over the mine's life will end up exceeding the estimates drawn up in the previous development plan, which was completed in 2005. This is no small claim, given that the 2005 plan forecasted that the annual average copper production in the ten years of operation would exceed one-billion pounds a year, plus more than 500 000/oz of gold production. Crowe said that the plan is for first production to come from openpit mining on the shallower Southern Oyu deposits, possibly as early as 2013. This will likely be followed two or three years later by underground production at the higher-grade Hugo Dummett and Hugo North areas. Altogether, the mining complex will cost some $4-billion to build and commission, Ivanhoe president John Macken said on Tuesday. In the investment agreement, Ivanhoe has undertaken to arrange financing for the mine's construction no later than two years after the agreement takes effect, and production must start within five years after financing is secured. The company said last month it will consider selling a stake of up to 9,9% in itself to one or more strategic investors, to help raise funds for the project. Rio Tinto is also scheduled to complete its second tranche of investment in Ivanhoe following the signing of the deal. It will buy another 9,95% in the company for $388-million Ivanhoe will fund the government's share of initial capital costs, to be financed through loans and equity during the construction and initial production periods. The government will have the option to purchase an additional equity interest of 16% of the company that holds the project, at an agreed upon fair-market value, one year after the expiry of the initial 30-year term of the investment agreement and following the start of the permitted 20-year extension. This would give the government a total maximum interest of 50% in Oyu Tolgoi for the remainder of the project's operational life, although Ivanhoe would continue to hold management rights over the project and hold a deciding vote at board and shareholder meetings. EXPLORATION UPSIDE Just based on the current mineral resources of 79-million pounds of copper and 45-million ounces of gold, the deposit is already expected to support mining at Oyu Tolgoi for some 60 years, Ivanhoe said on Tuesday. However, speaking at the signing ceremony in Ulaanbaatar, Rio Tinto Copper and Diamonds group CE Bret Clayton said the mining group still sees “significant” exploration upside potential at the mine. He drew a comparison to Rio's giant Escondida copper mine, in Chile, which it first invested in more than 20 years ago. Ivanhoe's Macken added that the overall size and scope of the Oyu Tolgoi deposits have not been established. "Drilling already has discovered mineralisation at Oyu Tolgoi over a distance of 20 kilometres and at depths of 2 300 metres - and it remains open to length and depth. “We're confident that additional resources will be delineated and that Oyu Tolgoi still will be an important part of Mongolia's economy 100 years from now," he said.