OT CEO warns politicians not to change agreement

Thai company offers $493 million for Hunnu Coal

Banpu Plc, Thailand’s gest coal producer, has agreed to buy the shares it does not already own in Hunnu Coal Ltd., valuing the Australian explorer seeking to develop mines in Mongolia at $493 million.  Banpu presently owns about 12 per cent of Hunnu Coal, whose board has unanimously recommended the bid.
Buying Hunnu will give Banpu full control of a company that owns 11 coking and thermal coal projects in Mongolia. “This bid by Banpu takes a lot of pressure off Hunnu’s management to finance these projects and it’s not surprising that they recommended this bid,” said a Hong Kong-based analyst. 
Banpu’s offer is 51 per cent higher than Hunnu’s 20-day share price average, while 19 similar-sized Australian coal acquisitions in the past five years have an average premium of 60 per cent. Banpu, which agreed in March to pay A$45 million to become the largest shareholder in Hunnu Coal, is being advised by JPMorgan Chase & Co. and Allen & Overy.

Gobi Coal seeks buyers 

Gobi Coal and Energy Ltd.’s owners are seeking to sell the Mongolian mining company for as much as $750 million. The company, whose owners include Beijing-based private-equity firm Origo Partners, has requested potential buyers to submit initial bids by mid-October. The company is also pursuing the option of an initial public offering in Toronto. Ulaanbaatar-based Gobi Coal may fetch a higher valuation in a takeover than in an IPO, analysts say.
Gobi Coal is believed to have hired Goldman Sachs to help it find a buyer. The company started looking for acquirers after declining stock markets made an IPO more difficult. The global value of first-time share sales has slumped to $25 billion in the third quarter from $62 billion in the preceding three months, as the MSCI World Index fell 12 per cent since June 30. The company may still target a share sale as early as in the first quarter of 2012 should it fail to get attractive takeover offers.

SouthGobi sets new coal shipment record 

Alexander Molyneux, President and CEO of SouthGobi Resources Ltd., has said that the company set a new monthly record of 441,665 tonnes of coal shipped in August, representing a substantial increase over shipping levels in the second quarter of 2011. “We have seen a continual increase this quarter in capacity being allocated by customers to collect our coal”, said Molyneux. “We are pleased to see our shipping rate reach a level of approximately 5.3 million tonnes of coal per year on an annualized basis so soon, which is on track to meet our targets.” SouthGobi anticipates shipping rates to continue to increase through the remainder of the third quarter.


Rio statement on OT “unauthorised, incomplete“, charges Friedland

Ivanhoe Mines Ltd. founder and Chief Executive Officer Robert Friedland has accused Rio Tinto of releasing “unauthorised and incomplete” information about Oyu Tolgoi, the Mongolian mine they’re jointly developing. He was referring to what Andrew Harding, chief executive officer of Rio’s copper unit, said at an investor presentation in London about talks being under way regarding a review of the investment agreement with Mongolia that governs the mine’s development. Rio also is seeking to resolve uncertainty over power supplies for the project, Harding said. Commercial operation of the mine may be delayed if the source of electricity can’t be agreed to in the coming months, he said. “Ivanhoe Mines will provide further details in a future statement following communication directly with Rio Tinto on the specifics of its concerns,” the Canadian company said. Rio is the world’s second-largest mining company after Melbourne-based BHP Billiton Ltd.

OT CEO warns politicians not to change agreement

Cameron McRae, Rio Tinto’s country director and chief executive of the Oyu Tolgoi project, issued during the Discover Mongolia forum a stern warning to local politicians agitating for a greater share of revenue from the country’s emerging mining industry, saying that Mongolia’s economic transformation could stall on the back of any further legislative uncertainty.
A group of 20 members of Mongolia’s parliament has been petitioning for another revision of the country’s minerals regime. McRae said the Oyu Tolgoi investment agreement secured with the government in 2009 had demonstrated that Mongolia was open for business.
“If even a few voices call for Mongolia’s commitments to be broken and agreements to be changed, there is a risk that this will undermine investor confidence. These few will have to answer to the many Mongolians whose jobs will be on the line, and the local businesses whose prospects will be jeopardised. We are confident that Mongolia will not let this happen; that stability and the rule of law will prevail; that Mongolia’s long-awaited economic promise will become a reality,” Mcrae said
McRae noted that the Mongolian government would receive more than $US220 million in taxes from Oyu Tolgoi this year alone, with the government to receive $US700 million in tax revenues and payments from the project before it entered production. Almost 14,000 employees and contractors are working on the project -- and more than 60 per cent of those workers are Mongolian.
“Oyu Tolgoi’s investors needed (the investment agreement) to have the confidence to invest such mammoth sums and to pursue the mining industry’s largest ever project financing,” McRae said. “As a result, Mongolia is now perfectly positioned to launch a series of world-class projects and is seeing concrete growth in the economy; from foreign direct investment to job creation.”

33% of Mongolia’s GDP to come from Oyu Tolgoi

The giant Oyu Tolgoi copper/gold operation will account for around one-third of Mongolia’s economy by 2020, and will have led to an increase of a similar magnitude in the size of the Asian country’s economy by the same time, the CEO of the mine, Cameron McRae, has said. His presentation posted to Rio Tinto’s website, but delivered in Mongolia, claims that the roughly $6-billion mine will lift gross domestic product (GDP) per person by over $1, 000 over the next decade. That’s more than 60% higher than the current GDP per capita.
The first openpit phase in Oyu Tolgoi is set to start commercial production in 2013, with underground production set to arrive two years later.

Rio Tinto now owns 48.5 per cent of Ivanhoe

Rio Tinto has raised its stake in Ivanhoe Mines by a further 2 per cent by exercising its right to acquire shares in the exploration company led by well known mining financier Robert Friedland. The Anglo-Australian mining giant now owns 48.5 per cent of Ivanhoe common shares. Rio Tinto has a right to boost its stake in Ivanhoe to up to 49 per cent, under an existing deal between the two companies that are jointly developing the massive Oyu Tolgoi copper-gold project in Mongolia.
Rio Tinto said it would consider buying additional shares of Ivanhoe, depending on general economic conditions, Ivanhoe’s business prospects and other factors. Ivanhoe will issue 27.9 million new shares to a wholly-owned subsidiary of Rio Tinto. The price paid per share was C$18.98 for a total consideration of C$529.5 million, Rio Tinto said in a statement.