Shares of Ivanhoe Mines (IVN-T, IVN-q) rose 2% or 11¢ to $5.99 apiece in mid-morning trading following news that Mongolia’s Cabinet has completed its second review of the draft investment agreement for the massive Oyu Tolgoi project and has said it will present the draft to the national parliament for approval.
The endorsement in principle of the draft agreement by Mongolia’s Cabinet and the country’s National Security Council for the copper-gold mining complex is welcome news for Ivanhoe and its partner Rio Tinto (RTP-n, RIO-l), which have been waiting for years for an official go-ahead.
To take effect, the investment agreement for Oyu Tolgoi requires the approval of the national parliament. The Cabinet has authorized the Minister of Finance S. Bayartsogt, the Minister of Minerals and Energy, D. Zorigt, and the Minister of Environment and Tourism, L. Gansukh, to initial the agreement to be concluded between the government and Ivanhoe.
It is unclear when the national parliament will consider the draft investment agreement. Currently parliament is meeting in a special session to address budgetary and other national issues arising from the global financial crisis.
The two companies submitted a draft investment agreement to the government in July 2007. But the wait has actually been much longer — discussions around an investment agreement started more than four years ago and have now spanned four different administrations.
Also known as Turquoise Hill, the Oyu Tolgoi gold and copper project is in the south Gobi region of Mongolia, about 550 km south of Ulaanbaatar and 80 km north of the Chinese-Mongolian border.
As of March 2007, Oyu Tolgoi had measured and indicated resources at a 0.6% copper-equivalent cutoff grade of 1.4 billion tonnes grading 1.33% copper, 0.47 gram gold per tonne and a copper-equivalent of 1.63% for total contained copper of 40.7 million lbs; 20.97 million oz. gold and 49.86 million lbs. copper-equivalent.
The deposit has an inferred resource of 1.4 billion tonnes grading 0.98% copper, 0.24 gram gold per tonne and 1.13% copper-equivalent for total contained copper of 30.19 million lbs; 10.78 million oz. gold and 34.8 million lbs. copper equivalent.
Ivanhoe has a 52-week trading range of C$2.06-$13.10 per share and 378.1 million shares outstanding.
Be the first to comment on "Mongolia’s cabinet endorses in principle Oyu Tolgoi draft agreement"