MAC: Mines and Communities

Ivanhoe Scores a Hit with Underwriting Deal

Published by MAC on 2002-03-15

Ivanhoe Scores a Hit with Underwriting Deal

Courier News Service: March 15, 2002

TORONTO - Ivanhoe Mines, the only international mining company with a major stake in Burma, has arranged a "bought deal" of up to C$ 65 million (US$ 41 million) with a syndicate of Canadian financial underwriters. An announcement by Ivanhoe CEO Robert Friedland said the offering would consist of up to $65 million in company shares and was intended for use in funding ongoing exploration and development of the company's existing properties and for general corporate purposes.

In a widely read financial column in Thursday's Report on Business, Andrew Willis wrote that the company had the funds "earmarked for a copper property in Myanmar, gold and copper in the wilds of Mongolia and iron ore in Tasmania". But an Ivanhoe spokesman told the Burma Courier that the funds were going to be mainly funneled "towards drilling in Mongolia" where the company has a couple of promising gold and copper plays and a whole rack of recently acquired properties to explore in southern Mongolia's Gobi desert.

Ivanhoe has a gold prospect in central Burma where it spent up to $US 1 million last year in exploration work. But the company's principal interest in the country is a copper mine and cathode production facility near Monywa which it operates in a joint-venture with Burma's military government. A planned expansion at the mine which needs US$ 400 million to get it underway has yet to find financial backers.

The C$65 million deal with the syndicate of underwriters led by Griffiths McBurney & Partners and HSBC Securities, and including Haywood Securities, has touched a responsive chord in the Canadian mining community where financing of this kind has virtually dried up since venture capital started flowing over to the high-tech market a few years back. The underwriting deal in Canada could provide the kind of stimulus needed to bring the merchant bankers in Japan onside for the debt financing of the huge Letpadaung project at Monywa. But prospects for long-term stability in Burma and definite signs of recovery in east Asia will be needed first.

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