Mongolian Parliament will consider Oyu Tolgoi agreement changes this week
Ivanhoe Mines says recent talks with Mongolian officials have resulted in proposed changes to the Oyu Tolgoi Copper-Gold mine investment agreement to be considered in a special session of the Mongolian Parliament Wednesday.
Posted: Monday , 17 Aug 2009
RENO, NV -
A special session of the Mongolian Parliament will convene Wednesday to consider proposed legislative changes by the Government of Mongolia in support of the Oyu Tolgoi investment agreement.
On August 11, Mongolia's National Security Council-consisting of the prime minister, the president and the speaker of the State Great Khural (Parliament)-agreed to support the agreement, according to Ivanhoe Mines, the parent company of the copper and gold project.
In recently released financial results, Ivanhoe Mines said, "The National Security Council also agreed to support changes to some existing laws to give effect to the Oyu Tolgoi Investment Agreement. The Government announced that one of the proposed changes would involve cancellation of the three-year-old, 68% windfall profits tax on copper and gold effective January 1, 2011."
"In accordance with provisions of the 2006 Minerals Law, the August agreement also provided the government of Mongolia with a 34% equity interest in Ivanhoe Mines Mongolia Inc. LLC, which holds the Oyu Tolgoi mining licenses," Ivanhoe added.
"On August 13, the Government formally submitted draft bills to amend certain laws, along with the approved draft of the Oyu Tolgoi Investment Agreement, to the Speaker of the Parliament and asked the Speaker to convene a special session of Parliament, which currently is on summer recess," Ivanhoe said. The special session was planned to open today and is expected to begin discussion on Oyu Tolgoi by Wednesday.
Meanwhile, Ivanhoe noted the SouthGobi Ovoot Tolgoi coal mine achieved a record 384,000 tonnes in coal sales during the second quarter, generating revenue of $10.7 million at an average realized selling price of US$30 per tonne.
On August 12th, SouthGobi announced the Mongolian authorities had issued a mining license for the Tsagaan Tolgoi coal property in the South Gobi Region, 415 kilometers east of the Ovoot Tolgoi coal mine. An independent NI 43-101 resource estimate for Tsagaan Tolgoi in February 2008 estimated 23.4 million tonnes of measured resources and 13 million tonnes of indicated resources.
"The deposit has the potential to supply any future coal-fired power plant that may be developed to produce electricity for Ivanhoe Mines' planned Oyu Tolgoi copper-gold mining complex, which is approximately 115 kilometres northeast of Tsagaan Tolgoi," Ivanhoe said.
A decision regarding whether to develop Tsagaan Tolgoi into a mine would follow the results of more studies.
During the second quarter of this year, Ivanhoe reported a net loss of US$24.9 million (negative 7-cents per share), compared to a net income of $127.5 million (34-cents/sh) in Q208, a decrease of $152.4 million. The second-quarter 2008 net income was the result of a $201.4 gain on the sale of the investment in Jinshan Gold Mines.
"Results for Q209 were mainly affected by $38.1 million in exploration expenses; $10.5 million in general and administrative expenses and $4.3 million in interest expense. These amounts were offset by $5 million in income from discontinued operations and $21.7 million in mainly unrealized foreign exchange gains," Ivanhoe said.
Ivanhoe expects to begin capitalizing Oyu Tolgoi development costs once an investment agreement is finalized with the Government of Mongolia. The company's cash position as of June 30th was $368 million.
For the first six months of this year, Ivanhoe reported a net loss of $80.9 million or negative 22-cents per share, compared to a net income of $63.9 million (17-cents/sh) for the first half of 2008.