Ivanhoe's Burma assets on sale, leaving behind environmental mess

Ivanhoe's Burma assets on sale, leaving behind environmental mess

Statement by Canadian Friends of Burma

Ottawa

2nd April 2007

Vancouver-based Ivanhoe Mines has transferred its 50% assets in Burma to an independent trust pending their sale, according to an Ivanhoe announcement made last Friday evening (March. 30). Canadian Friends of Burma (CFOB) welcomes this announcement as it has been putting pressure on the company to pull out of Burma, due to a 50/50 joint-venture with the Burmese military junta.

However, CFOB is increasingly concerned with the remaining question: who is responsible for cleaning up the environmental mess resulted from its operations since 1998, given the fact that more than a quarter (1,507 acres) of the Ivanhoe mining operations area (5681 acres) have been reportedly ‘contaminated, impacted, affected, or disturbed.'

Regretfully, a recent shareholder resolution calling for a disclosure of environmental issues was rejected by Ivanhoe Mines. Beverly Bartlett, Ivanhoe Vice-President & Corporate Secretary, said that they are not aware of such contaminated sites; even if existed, it's not their responsible. "The Myanmar party [the Burmese military junta] to the joint venture is financially responsible for any liabilities resulting from mining operations that existed prior to the formation of the joint venture or that the Myanmar party undertakes independent of the joint venture," she wrote in a letter dated Feb. 16, 2007.

However, Ivanhoe's environmental reports, conducted by an independent environmental group in 2004 and 2005, explicitly acknowledged "During operations, some areas of land, at 15 locations were registered as, contaminated sites, including the existing flotation plant area, Sabetaung Pit, Sabetaung South Pit and the heap-leach pads. They are contaminated at the start of the S&K project and they are going to clean up after mine closer."

In Oct., 2006, Ivanhoe announced that it agreed to divest its assets in Burma by Feb. 1, 2007, as part of its partnership agreement with London-based world largest mining company Rio Tinto for the development of copper-gold mines project in Mongolia. Rio Tinto acquired 37 million common shares (9.95% of outstanding) from Ivanhoe with U.S$ 303.4 million in Oct. 2006 and is to acquire 9.95% more - up to 40% - when an investment agreement is reached with the Mongolia government. Sir Robert Wilson, the executive chairperson of Rio Tinto until 2003, is reported to have said in a company's annual general meeting that his company would never invest in Burma while the military was in power.

As the deadline for divestment passed, no agreement was reached between Ivanhoe and a potential buyer for Burma assets, thereby giving Rio Tinto the right to transfer Burma assets to an independent third party trust. For that transaction, Ivanhoe Mines immediately received U.S$ 40 million, plus 50% of the cash receivable from the Burma assets at the time of their sale.

According to 2006 annual financial statement issued last Friday, Ivanhoe's share of income from Burma operations is U.S$ 18.5 million. It earned U.S$ 23 million in 2005.

"Despite the operations in Burma being currently the only income-generated operation for Ivanhoe, with the further economic incentive that could be derived from the expansion of Letpadaung Project, it appears that the company could no longer resists mounting pressure from public, civil society organizations, institutional investors, and politicians alike in Canada," said Tin Maung Htoo of Canadian Friends of Burma.

"Nevertheless, Ivanhoe is responsible for the mess it has done at Monywa Copper Project; and they can not get away with hundreds of millions of dollars in the pockets without cleaning up the mess," he further added.

Canadian Friends of Burma (CFOB)
145 Spruce St. Suite 206
Ottawa, ON K1R 6P1
Tel: 613.237.8056

Mobile: 613.297.6835 – for media
Fax: 613.563.0017
Email: cfob@cfob.org
Website: http://www.cfob.org