Seeking Alpha

Ivanhoe Mines considers break-up, as mining projects face funding crunch

  • Ivanhoe Mines says (IVPAF +7.2%) it is considering various options including splitting the company’s projects into separate publicly traded entities, asset sales, joint ventures and alternative stock exchange listings.
  • While Ivanhoe exited Q1 with $170M in cash, it has committed $146M for the Platreef project in South Africa, which leaves very little for development of its Kamoa and Kipushi deposits in the Democratic Republic of Congo.
  • Ivanhoe wants to begin developing a mine-access decline at Kamoa this year and conduct an underground drilling program at Kipushi, but it lacks funds to do so unless it can raise more by the end of June.
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Comments (5)
  • labradoodle
    , contributor
    Comments (306) | Send Message
     
    What a shame, as they are all good projects. The rule of thumb is to finance the cheapest/fastest(to get into production) one first, then use the revenue from that one to finance the NEXT cheapest/fastest one and so on...

     

    As copper's price and demand going forward is suspect given huge industrial and housing over-capacity world wide, I suppose the decision to do the platinum mine first is a sound one.
    16 May 2014, 11:33 AM Reply Like
  • TheJollyGreenMan
    , contributor
    Comments (95) | Send Message
     
    That is how the big mining houses of South Africa started. The core provides the technical expertise to do the mine design, mill and infrastructure planning, for a share of the profits of the mining venture and to make investors comfortable with investments in the projects. By splitting the mines into different companies Ivanhoe mines is just re-inventing a business model that worked extremely well before shareholder activists broke down the system of big mining houses.
    16 May 2014, 12:13 PM Reply Like
  • mr.white
    , contributor
    Comments (38) | Send Message
     
    Not sure what to make of this as a stockholder.
    16 May 2014, 12:41 PM Reply Like
  • Steven Couche
    , contributor
    Comments (273) | Send Message
     
    Everybody (should have known) knew these were big cap ex, long term projects when they bought in. I have a very large position relative to my portfolio and it's no less than a 10 year hold. Even if we see global depression/stagflation, which is very possible, I still think it's a break even on the Platreef alone. However, the stock for me is just as much about Friedland as it is the projects. If you don't trust Friedland 100%, sell immediately because it's guaranteed to be a wild ride.
    17 May 2014, 03:46 AM Reply Like
  • TheJollyGreenMan
    , contributor
    Comments (95) | Send Message
     
    The same reasons I am holding Ivanhoe Mines, I am in it for the long haul.

     

    And I think that Friedland has the magic Midas touch.

     

    Apart from the fact that I have intimate knowledge about two of the mining areas, Platreef and surrounds, and the Congo copperbelt, I have done mine design in both geological regions and can tell you that these projects will be printing money once completed.
    18 May 2014, 06:03 AM Reply Like
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