Ivanhoe's statements on the matter followed a story published in the UB Post (an English language Mongolian newspaper), late last week to the effect that proposed amendments to Mongolia's mining legislation will dramatically alter the legal and economic environment of mining in Mongolia.
The story apparently followed a statement issued earlier in the week by the Minister of Industry and Trade outlining four conceptual amendments to Mongolian mining legislation that are to be introduced for further discussion at the Cabinet level as early as this week.
"Of the four proposals announced by the Minister, only the one respecting government participation in significant mining projects came as a complete surprise given that, during recent discussions with Mongolia's President, Prime Minister, members of cabinet and senior parliamentarians, Ivanhoe received no indication that the government was considering any changes to Mongolia's mining law that would be perceived negatively by international mining companies and foreign investors," the Canadian based company said.
"Given the complete lack of detail in the Minister's announcement, Ivanhoe considers the Minister's proposals to be very preliminary and susceptible to an extraordinarily wide spectrum of interpretation.
"Since the Minister's announcement, Ivanhoe has consulted further, on an informal basis, with a number of senior government officials and continues to believe that the government does not intend to jeopardise Mongolia's burgeoning mining industry."
In any case Ivanhoe believes such a change would not be applied retroactively.
Not surprisingly though the market was less sanguine. Shares in the company dropped Friday from over $C9 per share to as low as $C8.05 before eventually closing at $C8.48 – a decline for the day of 5.36%.
Ivanhoe is keen to learn of the fiscal regime to be proposed by the Mongolian Government so that it can finalise financing of its massive Oyu Tolgoi copper-gold project.
Oyu Tolgoi is being slated as the world's next major copper and gold mine(s), with average production of more than one billion pounds of copper and 330,000 ounces of gold for at least 35 years. It recently said the starting date for commercial production was mid-2008.
Ivanhoe also has coal interests in the country, hoping to kick-off a pre-feasibility study at its Nariin Sukhhait coal deposit in southern Mongolia.
If negotiations with the Mongolian Government are successful and the issue of a mining licence is timely, initial production from the Ivanhoe properties, located about 40km from the Chinese border, could start as early as the second half of 2006.
