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Mongolian government's approval process for Ivanhoe Mines' Oyu
Tolgoi copper-gold project falsely and misleadingly represented in Globe and
Mail story July 28, 2005
Statement by Ivanhoe Mines' Chairman Robert Friedland
ULAANBAATAR, Mongolia, July 28 /PRNewswire-FirstCall/ -- In what appears to be
becoming an annual event, newspaper reporter Geoffrey York, of the Toronto-based
Globe and Mail, again has ignored the truth and misrepresented events associated
with Ivanhoe's Oyu Tolgoi copper-gold mine development project in Mongolia's
South Gobi region.
The selective inclusion and omission of information related to the ongoing
review and approval process established by the Mongolian government, errors of
fact and gratuitous innuendo in Mr. York's story published in The Globe and
Mail's Report on Business on July 28 cannot help but misinform and mislead
investors.
The following examples are based on a preliminary review of The Globe story:
- The Globe account falsely characterizes the Mongolian government's
appointment of a review committee of independent experts as a "new
challenge" to Ivanhoe's plans to develop the Oyu Tolgoi mine. The
World Bank already has completed one review of a model-form stability
agreement. Ivanhoe would welcome the role of informed advisers. It is
absurd and alarmist for The Globe to portray this review as a
"roadblock" that will "impose further delays" in the approval process.
- Ivanhoe believes that if the government feels it is necessary to
obtain independent evaluation of the stability agreement the document
will be seen to be fair and balanced and conforming with the present
framework of the law.
- I specifically advised Mr. York: "I have been saying for approximately
two years that we are in a long-term effort to get everything right
about the project. The project has continued to grow as a living
organism. We have not yet submitted our Integrated Development Plan to
the Mongolian Government."
- The Globe falsely claimed that I stated in an Ivanhoe news release on
July 5 that the stability agreement "could be completed by the end of
the summer." I said no such thing. The Ivanhoe release "noted" that
Mongolian Prime Minister Elbegdorj had been quoted in a Bloomberg news
report as stating that the agreement could be finalized by the end of
summer. The Globe knew the truth, but conveniently ignored the fact
that the statement was made by Mongolia's Prime Minister, not Ivanhoe.
- The Globe knew, and failed to report, that a statement was issued this
week by the Mongolian government, through its Mineral Resources and
Petroleum Authority, which declared that the government did not agree
with a July 22 Dow Jones news report that claimed that a delay in
concluding a stability agreement would postpone the start of mining at
Oyu Tolgoi. The Globe had a copy of the MRPAM statement, which said,
in part, that the Dow Jones report "does not reflect the views of the
Government of Mongolia, which considers the said Stability Agreement
to be concluded as a benchmark, model text for all large-scale mining
projects in Mongolia, and which requires serious and earnest
consideration in on-going negotiations."
- The Globe knew, and failed to report, that the cabinet of the
Mongolian government two months ago rejected a suggestion that mineral
royalty rates be sharply increased. Contrary to the Globe report, the
finance ministry did not submit a draft tax bill.
- The Globe falsely suggests that demands for 50% state ownership of Oyu
Tolgoi and other mining projects were supported by a consequential
number of members of parliament. The notion of nationalization has no
credible support in Mongolia today - and it was never even a
consideration before the government's cabinet.
Again, The Globe ignored the government statement issued earlier this
week that said, in part: "The Government of Mongolia views that the
mining sector plays a primary role in boosting the economic growth of
the country, and wishes to emphasize that the preservation of a stable
and predictable legal environment is essential to creating a favorable
environment to attract foreign direct investment."
- The Globe misleadingly claimed that the extent of the copper and gold
resources at Oyu Tolgoi are a matter of my belief. The truth, ignored
by the Globe, is that the resources are independently verified by the
internationally respected AMEC engineering group. AMEC's reports,
complying with the requirements of National Instrument 43-101, are a
matter of public record. It is AMEC's findings, based on its detailed
examination of Ivanhoe's exploration drilling results, which I accept.
- The Globe falsely claimed that Ivanhoe is planning to spend
US$3 billion to "develop" the Oyu Tolgoi mine. The truth, a matter of
public record, is that the mine will require an initial capital
investment of approximately $1 billion to put into production. Even
with overheads, contingencies and associated owners' costs, the figure
will be only approximately $1.25 billion. It is ridiculous, for
example, to count $1 billion in sustaining investment projected over
the 40-year life of the mine as a development cost.
Information contacts
Mongolia: Layton Croft 976 9911 3339
North America: Bob Williamson 1 604 688 5755
DATASOURCE: Ivanhoe Mines Ltd.
CONTACT: Mongolia: Layton Croft, 976 9911 3339; North America: 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.