Vancouver — Swelling exploration expenditures at the Oyu Tolgoi copper-gold project in southern Mongolia led to a US$31.1 million net loss, or 10 per share, for
Despite record quarterly operating profit of US$15.6 million from mining operations, principally from the 50%-owned Monywa copper operation in Myanmar, the US$34 million in exploration and development costs served to push the company into the red.
But no one will be holding tag days for Ivanhoe. The company boasts working capital of more than US$213 million, including US$197 million in cash from a recent equity financing and the sale of its Savage River iron ore mine in Australia. Cash resources are sufficient to fund current and planned exploration and development for the balance of the year.
Ivanhoe spent US$23 million on Oyu Tolgoi in the second quarter, primarily on advanced drilling, and engineering and development.
A revised resource estimate at Oyu Tolgoi, conducted by engineering firm AMEC in the latest quarter, says the deposit hosts a measured and indicated resource of 1.15 million tonnes grading 1.3% copper and 0.47 gram gold per tonne, using a 0.6% copper-equivalent cutoff.
A development plan for the monstrous copper-gold deposit is expected in September, following which Ivanhoe will evaluate its financing options for an open-pit operation at Southern Oyu. Production is slated to begin in 2008 and last for 40 years, under current engineering plans.
Ivanhoe continues to work with the Mongolian government on securing a special stability agreement for the project.
The company’s current revenue generator, the Monywa copper operation in Myanmar, produced 9,118 tonnes (about 20 million lbs.) of cathode copper in the quarter, up 21% from the last year’s second quarter. A realized copper sale price of US$1.59 per lb. surpassed the US$1.33 per lb. Ivanhoe received during the second quarter of 2004.
Delayed delivery of a new fleet of S&K haul trucks at Monywa is expected to reduce third quarter output owing to a decrease in ore stacked on the cells.
A mine expansion planned for 2006 is anticipated to boost cathode-copper production to about 50,000 tonnes annually, once power supply upgrades are completed.
Ivanhoe Mines is trading at about $9.00 per share in a 52-week range of $4.95-$11.27.
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