Ivanhoe Mines Ltd. (TSX:IVN)(NYSE:IVN)(NASDAQ:IVN) today announced its financial results for the year ended December 31, 2010. All figures are in US dollars unless otherwise stated.
Highlights:
- Full-scale construction of the first phase of the Oyu Tolgoi copper-gold-silver project in southern Mongolia is advancing toward the scheduled start of commercial production in the first half of 2013.
- Key elements of the project, including the concentrator complex, are ahead of schedule at the end of the first quarter of 2011, in what will be the peak year of construction activity at the site.
- The number of workers assigned to the Oyu Tolgoi site recently surpassed 7,000 for the first time. On-site jobs at Oyu Tolgoi are expected to peak at almost 14,000 in mid-2011, with an additional 3,700 Mongolians receiving skills training sponsored by Oyu Tolgoi.
- The approved 2011 capital budget for Oyu Tolgoi is estimated at $2.3 billion. Principal components of the 2011 construction program include $561 million for the 100,000-tonne-per-day concentrator complex; $186 million for the initial mining fleet and to start pre-stripping of the Southern Oyu open-pit mine; and $713 million for project infrastructure, electrical power and completion of the process-water supply.
- On December 8, 2010, Ivanhoe Mines and its strategic partner Rio Tinto reached a comprehensive agreement to provide funding for construction of the first phase of the Oyu Tolgoi stage.mining.complex. The full series of funding measures, including an interim funding facility from Rio Tinto and cash on hand available to Ivanhoe Mines, could increase to $6.5 billion the pool of development capital available to Ivanhoe Mines to bring Oyu Tolgoi into production and also to finance associated investments.
- By the end of 2010, capital totalling $1.4 billion had been invested in developing Oyu Tolgoi. The Ivanhoe Mines-Rio Tinto Technical Committee has estimated that a further $4.5 billion in capital will be required from the beginning of 2011 through to the start of commercial production in 2013.
- On February 3, 2011, Ivanhoe Mines successfully completed its strategic rights offering to shareholders that generated gross proceeds of $1.18 billion, to be used primarily to advance development of Oyu Tolgoi.
- Ivanhoe Mines and Rio Tinto are working together to achieve a comprehensive project-finance package for Oyu Tolgoi of up to $3.6 billion, which the companies are targeting to have in place by the second half of 2011. The package is being considered by a core lending group comprised of the European Bank for Reconstruction and Development, the International Finance Corporation, Export Development Canada, BNP Paribas and Standard Chartered. Other government credit agencies and commercial banks are expected to be added to the core group of lenders.
- Rio Tinto has committed to provide Ivanhoe Mines with an initial, non-revolving interim funding facility of $1.8 billion to sustain Oyu Tolgoi construction while the project-finance package is being negotiated.
- In exchange for its capital and commitments, Rio Tinto will have the right to a maximum ownership stake in Ivanhoe Mines of up to 49.0% until January 18, 2012. Rio Tinto’s current ownership in Ivanhoe Mines is approximately 42.1%.
- On March 14, 2011, Ivanhoe Mines and BHP Billiton Ltd. announced that their joint venture has discovered a zone of shallow copper-molybdenum-gold mineralization approximately 10 kilometres north of Oyu Tolgoi. The discovery, known as Ulaan Khud North, extends the known strike length of the Oyu Tolgoi mineralized system by an additional three kilometres to the north, to a total of more than 23 kilometres. The Mongolian government has issued a three-year pre-mining agreement for the Ivanhoe Mines-BHP Billiton joint venture.
- On October 18, 2010, Ivanhoe Mines announced that Executive Chairman Robert Friedland was re-assuming the duties and title of Chief Executive Officer in a series of organizational changes, which included the establishment of the Office of the Chairman as part of an ongoing commitment to maximize shareholder value.
- During 2010, Ivanhoe Mines’ 57%-owned subsidiary, SouthGobi Resources (TSX:SGQ)(HK:1878), shipped approximately 2.5 million tonnes of coal from its Ovoot Tolgoi Mine in southern Mongolia at an average realized selling price of approximately $35 per tonne. This was a major improvement over the 1.3 million tonnes of coal shipped in 2009 at an average realized selling price of $29 per tonne – and resulted in $79.8 million of revenue being recognized in 2010, compared to $36.0 million in 2009.
- On September 30, 2010, Ivanhoe Mines’ 62%-owned subsidiary, Ivanhoe Australia (ASX:IVA)(TSX:IVA), completed the acquisition of the Osborne Mine Complex, which includes a two-million-tonne per annum concentrator, infrastructure and tenements. Integration of the Osborne operation is expected to enable Ivanhoe Australia to commence production of molybdenum and rhenium from its Merlin Deposit, and copper and gold from other deposits, in 2012.
- Ivanhoe Mines, through its 50% interest in Altynalmas Gold Ltd., is advancing the Kyzyl Gold Project in Kazakhstan, one of the world’s largest undeveloped gold projects. A definitive feasibility study is expected to be completed in Q2’11. Construction of a 1.5-million-tonne per year fluidized-bed roasting plant to process the project’s refractory ores is expected to begin later this year.
- In 2010, Ivanhoe Mines expensed $218.6 million in exploration activities, compared to $177.1 million in 2009. In 2010, most of Ivanhoe Mines’ exploration activities were focused in Mongolia and Australia.
- As at March 28, 2011, Ivanhoe Mines’ consolidated cash position was approximately $1.9 billion.
Image from Ivanhoe Mines’ Oyu Tolgoi construction photos.