Tuesday, May 26, 2015

Robert and Zijin

Huge deal announced today involving Ivanhoe Mines and Zijin.

Here is the link to the press release -- Deal

Zijin recently acquired a 9.9% stake in Ivanhoe and since then, it appears that Robert Friedland has been working diligently on a huge deal with Zijin to develop the Komoa Copper project.

Very interesting structure to the deal.
Ivanhoe sells 49.5% of their ownership to Zijin, but doesn't keep 50.5% and instead sells a 1% stake to a third party that both parties agree to.
In addition to the financial cash transaction, Zijin is also on the hook for the first major part of the capital investment.
This puts Ivanhoe in a very cashed up position for the next couple of years. It does have other projects and some of those $$'s might end up elsewhere.

Of note, the Komoa project only has  PEA (preliminary economic assessment) completed on it. It was in the midst of getting a PFS (preliminary feasibility study) completed on it.

This tells me that a study is just a study, but the property is still the fundamental asset.

Robert is the majority owner of Chidliak and they will be having the first PEA completed in early 2016.  This PEA will be an initial basecase as there is plenty of options to add more kimberlites throughout the process. Plenty of upside.

Eric and Tom have been actively pursuing financial alternatives to progress Chidliak.
If they can get a 9.9% interest from a foreign entity...that now says a whole more with the Ivanhoe deal. Zijin invested a reasonable 9.9% in Ivanhoe and 2 months later, a whopping Development deal for the whole project is unveiled. So, you can see a 9.9% interest could just be the starting point.

Once Robert takes a step back from what would be heavy negotiations, he may just take a swing of the bat for Eric/Tom to see if Chidliak can be jumpstarted.

Chidliak is progressing toward a 2020 start up mine. With some huge $$'s to support it, this may move up to 2018/19 timeframe...without it, it may get pushed back even further.

The property is the fundamental asset and Chidliak is chock full of near surface, open pittable, $600+/Tonne ore.

The skies the limit.

No comments:

Post a Comment