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Ivanhoe Deal in Mongolia Vindicates Friedland

Commodities / Metals & Mining Oct 05, 2009 - 01:37 PM GMT

By: Midas_Letter

Commodities

It wasn't that long ago that Forbes Magazine, a widely read yet thinly fact-checked business tabloid, launched a campaign to discredit Robert Friedland and Ivanhoe Mines (TSX:IVN). Indeed, Friedland has been targeted by most of the mainstream media in Canada and the U.S., prompting Ivanhoe to issue news releases attempting to set straight the facts on a nearly continuos basis.


Suddenly, the campaign of persectuion has gone quiet, and it looks now like Friedland will get the last laugh.

Ivanhoe announced today that it will sign a deal with the Mongolian government to devleop Oyu Tolgoi, and complete the largest capital investment ever in Mongolia's history.

Not only has Ivanhoe finally managed to get the deal done with the Mongolian government that seemed dubious when the Mongolian government announced a "windfall" tax of up to 68 percent tax on copper above $2,600 a tonne, and gold above $500 an ounce. But the company has executed a JV agreement with Rio Tinto that puts Oyu Tolgoi firmly into the realm of the world's largest economically viable copper and gold discoveries.

The deal may last as long as 30 years and is valued at $30 billion to $50 billion, Mongolian President Tsakhiagiin Elbegdorj said last month. Ivanhoe, the developer of the project, has tried for more than six years to reach an agreement to mine the deposit, which is about 80 kilometers (50 miles) north of Mongolia's border with China.

The site contains about 78.9 billion pounds (35.8 million metric tons) of copper and 45.2 million ounces of gold, according to company estimates from March 2008. Ivanhoe spent $156 million on exploration and development at Oyu Tolgoi last year and $245.5 million in 2007, the company said in April.

Ivanhoe's share price continuously sufferred as a result of the ongoing smear campaign, and it is a testimony to the determination and focus of management that they were able to persevere in the face of such widespread persecution. It also probably doesn't hurt that management of Rio Tinto is not swayed by such amateur journalism.

With a bit of luck, maybe the outcome will be objective reporting of mining and finance among mainstream media. Then again, maybe pigs will fly.

By James West

www.MidasLetter.com

http://www.midasletter.com/news/09100506_Ivanhoe-deal-in-mongolia-vindicates-Friedland.php

© 2009 Copyright Midas Letter - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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