Shareholders of
About 94.2% of Ivanhoe’s shareholders approved the merger proposal at a special meeting in mid-December of last year. The merger proposal calls for the company to issue one common share in exchange for each outstanding ABM common share. As a result, ABM shareholders will receive about 40% of the voting equity in the merged entity.
Ivanhoe is best known for its 50% interest in the Monywa project in Myanmar, which produces cathode copper by means of solvent extraction-electrowinning (SX-EW). ABM produces iron-ore products from its wholly owned Savage River mine and Port Latta pellet plant in the Australian state of Tasmania.
Together, Ivanhoe and ABM Mining had combined revenues of about US$77.6 million last year on net sales of about 13,350 tonnes of copper, 2 million tonnes of iron-ore pellets and 48,000 tonnes of iron-ore concentrate.
Both companies are busy expanding production at their respective projects. ABM’s operations are producing at an annual rate of about 2.4 million tonnes of iron-ore pellets and concentrate, a 20% increase over 1999 output. The expansion currently under way is expected to boost production at Savage River/Port Latta to 2.95 million tonnes per year. Current resources are believed sufficient for 15 years at the expanded rates of production.
ABM also owns an iron mine and pellet plant (plus shipping facilities) at Kirkenes, Norway. Although this facility is currently closed, interest from European steel mills could kickstart proposals aimed at restarting operations.
Ivanhoe, together with its state-owned partner, produces about 28,500 tonnes copper per year from the S&K mine at Monywa. The company plans to expand production by developing the large Letpadaung copper deposit, where capital costs of US$390 million are estimated for a 125,000-tonne-per-year operation. Subject to financing and government approval, production at Letpadaung could begin in 2003. Once full production is achieved, Monywa’s S&K and Letpadaung mines should produce 155,000 tonnes of LME Grade A cathode copper each year.
On the financial front, Ivanhoe lost US$8.7 million (12 cents per share) during the nine months ended Sept. 30, 2000, compared with a net loss of US$5.8 million in the corresponding period of 1999. The latest loss reflects a US$6.4-million writedown in the carrying value of the company’s investment in Emperor Mines. Ivanhoe’s share of net profits from copper sales was US$3.9 million during the first nine months of 2000, compared with US$1.4 million a year earlier. All of the cash generated by the project is being used to repay the US$90-million project development loan. About US$67.5 million remains outstanding.
The S&K mine at Monywa produced 20,024 tonnes of cathode copper in the first nine months of 2000, up from 19,885 tonnes a year earlier. Cash operating costs were US35 per lb., while total costs came in at US64 per lb. for the recent nine months.
Robert Friedland, the largest shareholder of both Ivanhoe and ABM, will become the largest shareholder of the merged entity.
Be the first to comment on "Ivanhoe gets nod for merger with ABM"