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Ivanhoe Mines completes sale of Australian iron mine
SINGAPORE, March 1 /PRNewswire-FirstCall/ -- Ivanhoe Mines' Chief Financial
Officer Peter Meredith announced today that the company has completed the sale
of its Savage River iron ore mine in Australia to a subsidiary of Stemcor
Holdings Limited, of London, England.
As previously reported, the purchase price consists of two initial payments
totalling US$21.5 million, plus a series of contingent, escalating-scale annual
payments based on the annual Nibrasco/JSM (Japanese Steel Mills) pellet price.
The escalating-scale payments are to be made over five years, beginning March,
2006.
Determination of the contingent, escalating-scale annual payments to Ivanhoe
will be based on Savage River iron-ore pellet sales of 1.8 million tonnes per
year for the next five years and an escalating pellet-price formula using the
annual Nibrasco/JSM pellet price as the pricing benchmark. The payments will be
made between April, 2005, and March, 2010, and calculated at an initial rate of
US$1.00 a tonne if the annual benchmark price exceeds US$30 a tonne, and will
escalate to a maximum of US$16.50 a tonne if annual pellet prices exceed US$80
a tonne.
The February, 2005, pellet-price settlement between two of the world's largest
iron producers, CVRD and Rio Tinto, and Japanese steel mills was 71.5% higher
than the 2004 benchmark pellet price of US$38.10 a tonne, boosting the 2005
pellet price settlement to approximately US$65.30 a tonne. Annual price
adjustments generally take effect April 1 for Asian iron ore buyers. If, as
expected, the Nibrasco/JSM pellet-price settlements average more than US$65 a
tonne this year, Ivanhoe will receive payments totalling approximately US$44
million over the next 13 months. In addition, if the US$65 a tonne benchmark
price is maintained over the next five years, the total consideration Ivanhoe
will receive for the sale of the mine will be US$122.75 million.
Ivanhoe's decision to sell the Savage River Mine is part of the company's plan
to rationalize its non-core assets as it focuses on the accelerated shaft
sinking and underground development of the world-class Hugo deposit at the
company's Oyu Tolgoi copper and gold project in Mongolia.
ABM Mining, a wholly-owned subsidiary of Ivanhoe Mines, has been producing iron
ore pellets and concentrate at its integrated Savage River Mine - consisting of
mining, pelletizing and shipping facilities in the state of Tasmania - since
1997. ABM held the Savage River Mine through its indirect subsidiary, Goldamere
Pty Ltd. Pellet production from the mine in 2004 was approximately 2.1 million
tonnes.
The Stemcor Group operates as a global provider of specialist services to the
steel industry, in areas such as raw material supply, finished product
marketing, logistics and trade finance.
Ivanhoe has a 100% interest in the Oyu Tolgoi project and owns or controls
exploration rights covering approximately 118,000 square kilometres in
Mongolia, where additional copper, gold and coal discoveries are being
delineated. Ivanhoe produces LME grade A copper from its Monywa joint venture
in Myanmar.
Ivanhoe's shares are listed on the New York, Toronto and Australian stock
exchanges under the symbol IVN.
Information contacts: Investors: Bill Trenaman/Media: Bob Williamson (604)
688-5755.
FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements
regarding Ivanhoe Mines, and its subsidiaries, business and project plans.
Forward-looking statements include, but are not limited to, statements
concerning expected future payments to Ivanhoe and future Nibrasco/JSM pellet
prices. When used in this document, the words such as "could," "plan,"
"estimate," "expect," "intend," "may," "potential," "should," and similar
expressions are forward-looking statements. Although Ivanhoe Mines believes
that its expectations reflected in these forward-looking statements are
reasonable, such statements involve risks and uncertainties and no assurance
can be given that actual results will be consistent with these forward-looking
statements. Important factors that could cause actual results to differ from
these forward-looking statements are disclosed under the heading "Risk Factors"
and elsewhere in the corporation's periodic filings with Canadian, US and
Australian securities regulators.
DATASOURCE: Ivanhoe Mines Ltd.
CONTACT: Investors: Bill Trenaman/Media: Bob Williamson, (604) 688-5755;
To request a free copy of this organization's annual report, please go to
http://www.newswire.ca/ and click on reports@cnw.