Ivanhoe plots coal spinoff

Vancouver — Ivanhoe Mines (IVN-T, IVN-N) is planning to spin off its Mongolian coal assets into a new, publicly listed company.

Following an extensive strategic review, the manoeuvre is aimed at enhancing shareholder value and crystallizing company focus on its core Oyu Tolgoi copper-gold project. The new, stand-alone company will hold the Nariin Sukhait and Tsagaan Tolgoi coal projects in Mongolia’s southern Gobi region and may also include power generation facilities.

Ivanhoe recently upgraded the measured and indicated resource at Nariin Sukhait, reviewing 124 million tonnes of high-volatile, bituminous coal. An additional 33.8 million tonnes of inferred resource has also been outlined at the deposit.

With more than 200 drill holes completed on the near-surface, potentially open-pit resource, Nariin Sukhait is viewed as a near-term production possibility that could supply both domestic and international coal markets. Development of the project is expected to produce thermal-grade coal, PCI (pulverized coal injection) coal for steelmaking needs and coking coal for blending in steel production.

The project, consisting of seven exploration licences covering 3,240 sq. km, is situated just 40 km north of the Chinese-Mongolian border and near the shipping terminus of a new Chinese railway line.

Since beginning exploration in early 2005, Ivanhoe has identified 10 coal seams at Nariin Sukhait over a total coal-bearing sequence thickness of almost 1,400 metres. Individual seams range from 68-250 metres thick. Resources are hosted in two separate fields (South-East and West). An initial mine-development plan is expected to be completed soon.

The company’s coal licences surround an existing coal mine operated by the MAK-Qin Hua Mongolian-Chinese joint venture. The MAK operation consists of two producing open-pit mines.