Ivanhoe Mining Plans To Get Out Of Burma

Ivanhoe Mining plans to get out of Burma

Eric Snider

25th May 2006

Ivanhoe Mines announced its intention to get out of Burma in its annual report issued in March. The comments by Vice President, Ed Flood, at the annual meeting serve to confirm this.

The first step in the process of getting out is the proposed sale to a South Korean consortium of a half of Ivahoe's present stake in the mine. If that deal is finalized in July, as proposed, the military government would become the majority shareholder in the Monywa mine with a 50% stake, Ivanhoe would hold a 25% stake and the Korean consortium the other 25%.(Daewoo International: 10%, Taihan Electric Wire and Korea Resources Group, 7.5% each).

None of the the three Korean companies in the consortium deal with Ivanhoe are mining specialists. Taihan Electric Wire CL is into manufacturing wire, cable and copper rod among other things and can use their investment to sew up the Monywa mine's copper cathode for their purposes. The Korea Resources Corporation is an RoK state corporation that finances resource and other business projects in foreign countries producing materials needed for Korean industries. Daewoo International is essentially a trading company and merchant bank. Obviously, for the immediate future, they will continue to depend on the current team at the joint venture for the mining expertise that is needed. If the deal goes through they will get the copper cathode that Korea needs for its booming economy and will be poised to make a further investment, if and when the door opens to expansion of the mine.

Future developments at the mine depend on whether the military regime can come up with its share of what is needed to expand operations to the Letpadaung deposit. Right now, its credit is pretty shaky on international capital markets and until this situation is resolved, the mine will limp along, as best it can, with production at only about half the level reached last year. The amount the Korean consortium is willing to pay for its 25% stake in the mine indicates that the partners believe the expansion will eventually go ahead and that their $ 120 million investment includes a right to earn a share in that development.