Oyu Tolgoi

Mongolia and Ivanhoe to sign $3.6 Billion Oyu Tolgoi Copper-Gold mine agreement.

Ivanhoe and the Mongolian government are finally expected  to sign the long awaited Oyu Tolgoi  landmark deal. Preparations are underway for the agreement signing ceremony on Tuesday. (Oct 6 at 15:00).

Oyu Tolgoi exploration camp  (photo courtesy of Ivanhoe)

The Oyu Tolgoi copper gold mine in south Gobi desert will be one of the largest copper gold mine developments in the world.  The Investment will be the largest foreign investment ever in Mongolia. The project will have a tremendous impact on Mongolia's economy, employ thousands of Mongolians and have major positive economic effects on the supply chain nationwide.

Video describing the Oyu Tolgoi project

Ivanhoe executives led by Ivanhoe Mines’ President and CEO John Macken and Mongolian officials spent sleepless nights during the last few days to brush up and synchronise the English and Mongolian versions of the agreement.

The final terms of the agreement are favorable to the Mongolian people after decades of mining agreements with foreign parties that exploited the rich land of Mongolia and returned very little to the Mongolian people.

Oyu Tolgoi marks a change in the way the mines of Mongolia are exploited. It took years of negotiations which eventually redefined the country's mining and investment laws. The deal will set a precedent for future foreign mining investments in Mongolia. Mongolia will have 34 percent of the Oyu Tolgoi project by law.

Video - interview with Mongolia's president  Elbegdorj Tsakhia

According to parliamentary economic committee Chairman T. Bayarsaikhan Mongolia’s government may approach international financial Institutions, including the World Bank, to help it raise the $820 million needed to maintain a 34 percent equity stake in the project.

Robert Friedland Ivanhoe Chairman
Signing the agreements on behalf of  the investor's side will be; Peter Meredith, Deputy Chairman of Ivanhoe Mines, Keith Marshall, Managing Director of Ivanhoe Mines Mongolia, John Foniani, Executive Vice President of Ivanhoe Oyu Tolgoi, and Bret Clayton, Chief Executive Copper of Rio Tinto, Ivanhoe's venture partner.

On behalf of  the Mongolian side the agreements will be signed by Bayartsogt Sangajav Finance Minister, Gansukh Luumed Environmental and tourism Minister, Zorigt Dashdorj Minister of Mineral Resources and Energy and B.Enebish, CEO of Erdenes Mongolia

The main agreement document is the investment agreement, supplement to it is the shareholders agreement and a pre-payment agreement

Hosting the ceremony will be Mongolia's President Ts.Elbegdorj, Speaker D.Demberel, and Prime Minister S.Bayar

Robert Friedland, Executive Chairman and largest shareholder of Ivanhoe Mines arrived in Ulaanbaatar with several institutional investors on his private jet to honor the event.

Mongolia is rich in a range of resources, including coal, gold, iron ore, zinc and uranium. According to a study, the Oyu Tolgoi mine could produce 440,000 metric tons of copper annually, and 330,000 oz of gold a year for at least 45 years.

production at the mine is expected to begin as early as 2013 with an approximate five-year ramp-up to full production.

Partnering with Ivanhoe is Anglo-Australian Rio Tinto currently holding a 9.9% stake in Canada-based Ivanhoe, after making an initial $US303 million investment in 2006, with an option to raise that to 43.1% totaling the phased investment in Ivanhoe inclusive of equipment purchased to approximately US$2.4 billion.

Exploration Shaft #1 at Oyu Tolgoi

Oyuu Tolgoi, Оюу Толгой in Mongolian, means Turquoise Hill, hinting to the Turquoise green rocks found in the region. These rocks drew the attention of the geologists to the possibility that this area is rich with copper.

Photo courtesy of Ivanhoe 

Celebrating at 1385 meter underground.

An exploration shaft  #1 was drilled and in January 2008 it reached the depth of 1385 meter.

Shaft #2 is under construction.

Photo courtesy of Ivanhoe 

Sample of gold deposits from exploration drills

Analysis of the rocks drilled out clearly shows the rich gold deposits.

Notice the golden strikes in the rock.

Photo courtesy of Ivanhoe

Google earth satellite image reveals near Oyu Tolgoi a large round pancake shaped rock in a diameter of about 45 km. This round pancake was formed by hot melting magma eruption that brought up close to the surface of the earth huge amounts of copper, gold and other rare earth elements.

View Larger Map

Map showing Ivanhoe's exploration licences (click for full size)

South west of Oyu Tolgoi a new copper-gold field was discovered recently by Ivanhoe named Heruga, which is a 13 million-ounce gold deposit, with about 16 billion pounds of copper equivalent.

New copper-gold deposits have been located in the last few months by Ivanhoe using new exploration technology named "Zeus" developed by GoviEx and tested for the first time in real exploration.

Large copper wires are stretched along the Gobi with electrodes on each end up to a distance of 20-km, enormous electrical current is passed through those wires and the Zeus measures the earth's electrical conductivity to locate metalic mineral deposits. This method is named Induced Polarization (IP).

Zeus enables geologists to "see" copper and gold using a non invasive method similar to a CAT scan of the human body or MRI, avoiding the hit-and-miss of traditional exploration by drilling.

Zeus in the field  (photo courtesy GoviEx)

No comments: