Ivanhoe eyes US$15 million for Turquoise Hill

Ivanhoe Mines (IVN-T) has arranged for a US$15-million private placement with a group of Canadian and Australian mutual funds.

The company plans to use the proceeds from the deal to fund ongoing gold and copper exploration, including a delineation drilling program, at the Turquoise Hill (Oyu Tolgoi) copper-gold porphyry discovery in southern Mongolia

The financing consists of 6.45 million special warrants priced at $2.50 apiece plus another 2.9 million special warrants at $2.75 each. Each special warrant allows the holder to buy one Ivanhoe common share, at no additional cost, at any time until five days after the earlier of: the issue of receipts for the company’s final prospectus; and four months following the closing date of the deal. The financing is subject to regulatory approval.

Encouraged by the success of recent deep drilling at Turquoise Hill, Ivanhoe recently boosted its land position in the region with the acquisition of mining licences covering 15,100 sq. km. The company now holds mineral rights to a total of 15,600 sq. km in Mongolia’s Gobi porphyry copper-gold belt.

The recently acquired three-year mineral exploration licences can be extended to a maximum of seven years at which point they may be converted to a mining licence. Mining licences are granted for a 60-year period and are renewable for up to another 40 years. Mineral rights are maintained by payment of a yearly per-hectare fee.

Ivanhoe has an option to acquire 100% of the 238-sq.-km Turquoise Hill property from BHP Billiton (BHP-N) by spending US$6 million on exploration and paying US$5 million in cash.

Drilling is continuing on the Southwest Oyu discovery zone at Turquoise Hill and a resource calculation expected later this year.