Mongolian Parliament Votes For Ivanhoe Profit-Sharing Deal

Five years of negotiations with the Mongolian government might soon come to a positive end for Ivanhoe Mines (IVN-T, IVN-N) and its partner at the Oyu Tolgoi copper-gold project, Rio Tinto (RTP-N, RIO-L).

Ivanhoe says that the Mongolian national parliament voted 75% in favour of advancing approval discussions of the latest draft of an investment agreement for the project, in the south Gobi region of Mongolia.

After the vote, parliament discussed the agreement for six hours. Then the standing committee voted 13-1 in favour of authorizing the government to sign the deal.

The next step is to present the agreement for its first official reading. Ivanhoe did not say when that is expected.

Oyu Tolgoi is located 550 km south of Ulaanbaatar and 80 km north of the Chinese-Mongolian border.

As of March 2007, the project had measured and indicated resources of 1.4 billion tonnes grading 1.33% copper and 0.47 gram gold per tonne for total contained copper of 40.7 million lbs. and 20.97 million oz. gold.

The deposit has an inferred resource of 1.4 billion tonnes grading 0.98% copper and 0.24 gram gold for 30.19 million lbs. copper and 10.78 million oz. gold.

The project is expected to produce an average of 440,000 tonnes of copper and 320,000 oz. gold per year over 35 years.

One day before the news, Ivanhoe issued a statement warning investors to disregard recent media reports speculating on development related to the status and provisions of the revised investment agreement.

The company’s stock increased 44% over the week leading up to the announcement. At presstime, shares traded at $9.53 each in a 12- month range of $2.06-12.60.

Ivanhoe and its affiliated companies will now have the help of former Canadian prime minister Jean Chretien when it comes to negotiating such deals.

Ivanhoe has appointed Chretien as a senior international adviser to the company.

Chretien, who was prime minister between 1993 and 2003, has been working in Canadian and global development circles as a lawyer for Canadian firm Heenan Blaikie since retiring from politics.

In a statement, Ivanhoe executive chairman Robert Friedland pointed out that Chretien has been instrumental in advancing relationships between many Canadian businesses and China as well as other neighbouring countries.

“We believe that Mr. Chretien’s experience and knowledge will be a prime asset in assisting the Ivanhoe companies to continue to build their businesses through opportunities that will be encountered in the energy and mineral resource sectors around the world during what is becoming the Asian century,” Friedland said.