Mr David Huberman chairman of Ivanhoe Mines announced that the company's Board of Directors has received a progress report from its Special Finance Committee on the status of a comprehensive financing plan to cover the completion of the first phase of the Oyu Tolgoi mining complex in southern Mongolia through to the projected start of commercial production of copper, gold and silver in 2013.
The four member committee is working in an advisory role with the company's management to review components of the comprehensive plan which includes a wide range of financing alternatives in addition to a major, long term, limited recourse project finance facility that currently is under negotiation.
The Ivanhoe Mines Board of Directors has accepted a recommendation from the Special Finance Committee and approved a proposed USD 1.8 billion facility to be provided by a major international bank as an interim, bridge financing measure. The facility, a precautionary response to volatility in the project finance and corporate debt markets stemming from recent events in Europe could be used if there is a delay in completing and gaining approvals for the long term project finance package. The proposed bridging facility approved by the Ivanhoe Mines board remains subject to approvals by Rio Tinto and the bank credit committee and completion of final documentation.
The bridge loan is expected to be in addition and on similar terms, to the USD 1.8 billion interim funding facility already being provided by Rio Tinto and now being accessed by Ivanhoe Mines to continue advancing construction of the Oyu Tolgoi Project. Both bridge facilities are expected to be repaid from the first drawdown from the planned project-finance facility.
As previously reported, Ivanhoe Mines, Rio Tinto, a core lending group and their respective advisers are working together to complete a project finance facility of up to approximately USD 4.0 billion for Oyu Tolgoi with the objective of signing loan documentation during the Q2 of 2012.
Mr Huberman said that "Ivanhoe Mines remains intensely focused on the remaining requirements that are key to completing the Phase I of the development of the Oyu Tolgoi mining complex in Mongolia. The completion of long term project financing and finalization of a Mongolia and China pact to supply electrical power from China for up to the first 4 years of Oyu Tolgoi's operation are central to our objective of ensuring that Oyu Tolgoi remains on schedule to begin initial production later this year which is fundamental to our commitment to build significant value for shareholders."
