Ivanhoe partners with Mitsui on Mongolian developments

Vancouver – Ivanhoe Mines (IVN-T) has struck a strategic alliance with Mitsui & Co (MITSY-Q) on development of metals, coal and infrastructure projects in southern Mongolia.

The memorandum of understanding (MOU) aligning Ivanhoe with the Japanese corporate giant will see the companies jointly develop the copper-gold and coal projects in the South Gobi region.

The partners will initially focus on establishing the power and transportation infrastructure necessary to develop the area’s mineral projects. Plans include a new electrical generating plant, transmission lines, roads and railways.

Through a newly formed company, South Gobi Power Development, Ivanhoe and Mitsui will design and implement the infrastructure projects.

The MOU also sees Mitsui participating in development of Ivanhoe’s recently discovered coal deposits adjacent to the open pit Nariin Sukhait metallurgical-grade coal mine. Both companies also share an interest in acquiring the massive Tavan Tolgoi coal deposit currently up for tender. Tavan Tolgoi hosts 16 coal seams ranging from 2 to 72 metres thick with government estimated reserves of about 5 billion tonnes over half of which is expected to be amenable to open pit mining.

Also covered in the MOU is Mitsui’s interest in development of Oyu Tolgoi and possible purchase of an equity interest in the massive copper-gold deposit.

Japan-based Mitsui is one of the world’s larger multinationals involved in investment, marketing and sales of a variety of products. Mineral resource investment (primarily coal, iron ore and copper) remains one of its core business strategies with the company having partnerships with many of the world’s top mining companies. Mitsui posts annual revenues of over US$28 billion.

The deal provides Ivanhoe a respected partner with the strong financial resources required to develop the world-class Oyu Tolgoi copper-gold project and the significant coal deposits that exist in the area.

Ivanhoe shares rallied over 5% on the news to close up 45 at the $8.80 level on almost 2.4 million shares of volume. With 293 million shares outstanding, the company’s market capitalization stands at $2.6 billion.