Ivanhoe Mines Provides Update on Discussions with DRC Government On Zijin Deal

Ivanhoe Mines (TSX:IVN) reported that it is continuing negotiations with the government of the Democratic Republic of Congo following the company’s agreement with China’s Zijin mining regarding its Kamoa copper project in the DRC.

As quoted in the press release:

Zijin has committed to use its best efforts to arrange or procure project financing for 65% of the capital required to develop the first phase of the Kamoa Project, as set out in the feasibility study, estimated in the company’s 2013 preliminary economic assessment to be approximately US$1.4 billion. Zijin will provide any and all required completion guarantees relating to the securing of project financing for the Kamoa Project. The balance of 35% of the required capital cost is to be funded pro rata by the shareholders. Therefore, Zijin and Ivanhoe each effectively will be required to fund 17.5% of the remaining first phase development costs.

Ivanhoe Mines concurrently is continuing negotiations with the DRC government over the future stake in the Kamoa Copper Project that is to be held by the DRC state. Negotiations were held in Kinshasa last week between Ivanhoe senior executives and senior members of the DRC government on advancing Ivanhoe’s standing offer to sell up to a further 15% interest in the Kamoa Project to the DRC state on commercial terms.

There have been no material changes in the negotiation process and both the government and the company remain committed to finalizing an agreement that would apply to a sale to the DRC of a further interest of up to 15% in Kamoa as soon as practicable.

Ivanhoe originally reported in September 2012 that the company had transferred to the DRC state, at no cost, a 5% non-dilutable interest in the company’s Kamoa subsidiary, as required under the DRC Mining Code in conjunction with the government’s granting of exploitation permits (mining licences). At the same time in 2012, the company reported that it had offered to sell a further interest of up to 15% in the Kamoa Project to the DRC State on commercial terms, to be negotiated.

Click here to read the Ivanhoe Mines (TSX:IVN) press release