Rio Tinto Group, developing the Oyu Tolgoi copper and gold deposit with Ivanhoe Mines Ltd in Mongolia, may sign an accord this week with the government allowing the companies to begin mining, an official said.
“This agreement is almost done,” Baldanjav Ariunsan, Mongolia’s deputy minister of minerals and energy, said through a translator in a meeting with investors in Toronto yesterday. “It will go to the parliament and it will be approved, I think, at the end of this week.”
Ivanhoe has been trying for more than five years to win an investment agreement with Mongolia to benefit from demand in China, the biggest metals buyer. Rio called Oyu Tolgoi “the world’s largest undeveloped copper-gold resource” when it agreed to buy 10 percent of Ivanhoe in October 2007. Copper has risen 10 percent in the past five years while gold has more than doubled.
“We hope that the government will have something to announce very soon,” Ivanhoe Chief Executive Officer John Macken said at a separate presentation to investors in Toronto, where he and Ariunsan were attending the annual Prospectors & Developers Association of Canada convention.
Under a 2007 draft investment agreement, the government would have had the right to a 34 percent equity stake in the project and related taxes equivalent to 55 percent of the profits, Rio Chief Executive Officer Tom Albanese said in February 2008. That agreement was scrapped because of opposition from some Mongolian lawmakers.
“Discussions are still continuing,” Ian Head, a Melbourne- based spokeswoman for London-based Rio, said today.
One of the two issues still under discussion in current negotiations centers on tax rates, said Ariunsan, who declined to mention the other outstanding issue.
Exploration of a deposit near the Oyu Tolgoi project’s southern boundary increased the copper resource estimate for the entire project by 11 percent to 78.9 billion pounds, Vancouver based Ivanhoe said in March 2008. The gold resource estimate rose about 44 percent to 45.2 million ounces.
Oyu Tolgoi is about 80 kilometers (50 miles) north of the Mongolia’s border with China.
Ivanhoe rose 4.1 percent to C$5.88 at 4:20 p.m. on the Toronto Stock Exchange yesterday. The shares have gained 80 percent this year.
Rio declined 0.4 percent to A$44.07 at 1:35 p.m. in Sydney, paring its gain for the year to 16 percent.
Source: Bloomberg
No comments:
Post a Comment