Dan Healing, Calgary Herald
Published: Wednesday, June 04, 2008
The refining technology touted for use in Alberta's oilsands by co-founder Robert Friedland of Ivanhoe Energy Inc. is attracting investors and potential partners in droves, the billionaire financier said in an analysts' conference call Tuesday.
Friedland, whose Ivanhoe Mines discovered the massive nickel deposit at Voisey's Bay in Newfoundland and is now trying to develop a $3-billion gold and copper mine in Mongolia with partner Rio Tinto, discussed his energy company's purchase of three leases from Talisman Energy of Calgary and the $1.8-billion integrated oilsands project it hopes to build there.
Ivanhoe Energy estimates that completing a 30,000-barrel-a-day steam-assisted gravity drainage project with upgrader will cost about $60,000 per flowing barrel, a number analysts say is about two-thirds of the current cost of technology used in many existing projects. It could deliver its first synthetic sour crude oil in about five years.
The market apparently liked what it heard as Ivanhoe Energy shares continued a steady three-month climb to a 52-week high of $2.92, up two cents.
Here are Friedland's comments made during the call:
- On highlights of the Talisman purchase for a combination of cash and notes, announced last Thursday:
"The fact we are only required to pay $30 million on closing, out of $105 million, is a very significant value to Ivanhoe as it mitigates dilution at this stage in our company's development.
"We're very pleased Talisman has elected to take back certain rights to participate with us in these acquired leases and may also do so in respect of other Canadian heavy oil transactions which we are reviewing at this time and in the future. . . .
"The longer the period of time Talisman takes to back in, the greater the financial consideration to our shareholders."
- On locating its first HTL (heavy to light oil) project in the Alberta oilsands:
"Our stated goal has been to anchor the rollout of our HTL technology by securing a first-class heavy oil resource in Athabasca, given there is well more than a trillion barrels in place, and the world's largest heavy oil resource, in the Athabasca.
"It's clear this is a physical locale with no political risk that would be associated with an international development and in a location where the rollout and development of our technology is almost infinitely scalable."
- On growth potential in the Athabasca region:
"This first transaction has triggered an enormous amount of interest from other stranded resource owners in the Athabasca and, if we develop a following in the financial community and requisite currency in our common shares, the opportunity for acquisition of other known resources in the Athabasca is very profound."
- On potential international deals for HTL technology:
"At last count, I drew up a list and (there are) 17 countries, most of whom are national oil companies or are very close to national oil companies, with whom we've had intensive dialogues.
"This is a business that could go worldwide, reminding everyone there are about three barrels of heavy oil in the world for every one barrel of conventional light oil."
- On the technology Ivanhoe obtained by merging with Ensyn Group in 2005, a refining process which is said to be capable of converting bitumen to a transportable, partially upgraded synthetic crude without the use of diluent or natural gas, lowering operating costs by around $15 per barrel.
"In the second half of last year we completed the HTL testing phase in California after a multi-year effort.
"We took the detailed results of that testing program and distilled those results into comprehensive detailed financial models that clearly demonstrate the value-add of HTL technology.
"We also lined up a number of bankers and advisers. We pressed home our commercial discussions and we are continuing to do so both in Canada and internationally."
- On the two major initiatives in Ivanhoe Energy's reorganization proposed in March and endorsed at last week's general meeting:
"First, that Ivanhoe Energy . . . will dedicate itself primarily to developing heavy oil opportunities in North America and in particular to the Athabasca oilsands.
"It will also incorporate the HTL technology group and our California operations.
"All of our international operations will be carried out in a series of self-funding subsidiaries and we currently contemplate, at a minimum, one for Latin America, one for the Middle East and North Africa, and one for China, which will be based in our existing Sunwing (Energy) operations. . . .
"Secondly, this restructuring was complemented by management changes and a board reorganization. This appointed the person who is speaking as chairman, president and CEO, and reduces the board from 12 to a much more manageable and effective board of seven individuals."
- On his leadership:
"Our task is to create the kind of company we want and also to create significant shareholder value along the way.
"I've had some experience in doing this in my life and some modest success. I think we are now trained and we're up to the task of doing it again."
- On weather in northern Alberta and potential cold-related project risks:
"Everybody in the Athabasca has to deal with the weather.
"The weather is pretty miserable in Saudi Arabia as well, at the other end. (But) when you're near an HTL plant and it's running, it's a wildly exothermic process. It throws off a huge amount of heat."
Wednesday, June 4, 2008
Ivanhoe expects Mongolian minerals law soon
Mongolia is expected shortly to approve long-awaited changes to its minerals law that could pave the way for a mining agreement for one of the world's biggest copper deposits, the head of Ivanhoe Mines Ltd has said.
Ivanhoe and mining group Rio Tinto have been waiting for government approval to press forward on the huge Oyu Tolgoi project in Mongolia's Gobi desert.
"The prime minister has vowed to conclude our agreement as soon as possible; parliament was in session this morning, it (changes to the minerals law) could be today. . . or it could come in the very near future," Executive Chairman Robert Friedland told the World Mining Investment Congress in London.
The firms pounded out an draft investment agreement last year that would give the government a 34 per cent stake in Oyu Tolgoi, but the deal was withdrawn.
Once the minerals law is amended, the government is expected to resume work with Ivanhoe and Rio Tinto to conclude the investment agreement for Oyu Tolgoi, one of the world's largest undeveloped copper and gold deposits.
Initial construction has started at Oyu Tolgoi, 80km north of the China-Mongolian border in the South Gobi Desert and northwest of the Chinese industrial city of Baotou.
The first shaft descending 1385m underground was completed in January and tunnelling on a second shaft has been under way.
Average annual production over the mine's life is expected to be 440,000 tonnes of contained copper in concentrate and 320,000 ounces of gold.
Rio Tinto paid $US303 million ($NZ392.7 million) for a 10 per cent stake in Ivanhoe in 2006 and it plans to double its interest when the investment deal is approved. Rio Tinto could raise its ownership to up to 43 per cent under an investment agreement.
Ivanhoe also plans to develop a coal mining project at Ovoot Tolgoi in the desert east of the copper and gold project.
Ivanhoe and mining group Rio Tinto have been waiting for government approval to press forward on the huge Oyu Tolgoi project in Mongolia's Gobi desert.
"The prime minister has vowed to conclude our agreement as soon as possible; parliament was in session this morning, it (changes to the minerals law) could be today. . . or it could come in the very near future," Executive Chairman Robert Friedland told the World Mining Investment Congress in London.
The firms pounded out an draft investment agreement last year that would give the government a 34 per cent stake in Oyu Tolgoi, but the deal was withdrawn.
Once the minerals law is amended, the government is expected to resume work with Ivanhoe and Rio Tinto to conclude the investment agreement for Oyu Tolgoi, one of the world's largest undeveloped copper and gold deposits.
Initial construction has started at Oyu Tolgoi, 80km north of the China-Mongolian border in the South Gobi Desert and northwest of the Chinese industrial city of Baotou.
The first shaft descending 1385m underground was completed in January and tunnelling on a second shaft has been under way.
Average annual production over the mine's life is expected to be 440,000 tonnes of contained copper in concentrate and 320,000 ounces of gold.
Rio Tinto paid $US303 million ($NZ392.7 million) for a 10 per cent stake in Ivanhoe in 2006 and it plans to double its interest when the investment deal is approved. Rio Tinto could raise its ownership to up to 43 per cent under an investment agreement.
Ivanhoe also plans to develop a coal mining project at Ovoot Tolgoi in the desert east of the copper and gold project.
Monday, June 2, 2008
QGX Confirms Sufficient Water for its Baruun Naran Coal Project, Southern Mongolia
WATERDOWN, ONTARIO, Jun 2, 2008 (Marketwire via COMTEX) ----QGX Ltd. (TSX:QGX) is pleased to announce the confirmation of a large subsurface water resource capable of supporting both the industrial and drinking water required for the Company's proposed 10 million tonne per annum coking-thermal coal project at Baruun Naran in southern Mongolia.
In late 2006, QGX secured permission from the Mongolian government to search for water to supply its proposed coal development at Baruun Naran. The water resource, known as Balgasyn Ulaan Nuur, is located approximately 45 km south west of Baruun Naran and extends over an area of approximately 150 sq. kms. This area was initially studied in the mid 80's when some 51 water exploration holes were drilled.
During 2007 and 2008 QGX drilled 14 holes with average depth of 70 m. The holes were drilled and equipped by Major Drilling and the basin water pump tests were conducted by Australian water engineering company AZTEC during 2007 and early 2008. The reservoir resource and flow calculations were performed by Dr. R. Battumur, consultant for Shandny Bulag LLC (Ulaanbaatar), a water exploration company licensed by the Water Authority, Mongolia. This work confirms the earlier work with the calculated water resource capable of supplying 150 litres per second for the life of the planned mine.
On May 15, 2008, QGX received the General Environmental Impact Assessment Guidelines from the Ministry of Nature and Environment for conducting the environmental impact assessment ("EIA") for the Balgasyn Ulaan Nuur water resource. The EIA has commenced and the permitting process to develop the water resource is currently underway.
Paul Zweng, President/Chief Executive Officer of QGX Ltd., commented as follows:
"The Balgasyn Ulaan Nuur water resource satisfies 100% of the water requirements for our coal project at Baruun Naran. The quality of the water is very good, requiring little-to-no treatment prior to use at the mine. In addition, the development costs of the resource should be favorable because the water resource is shallow-the average depth of the water bores is only 70 m.
The key to the success of this water exploration program is the close cooperation that exists between QGX and the community in the Baruun Naran area. From the early stages of the project, the Company has established a consultative approach with the various stakeholders to ensure that the project was fully understood and accepted by all parties."
Qualified Person
Mr. John Thompson, Vice President Operations of QGX Ltd. and a qualified person as defined by NI 43-101, has reviewed and approved the information contained in this release.
About QGX
QGX is a Canadian-based company that has been exploring for mineral deposits in Mongolia since 1994. The Company's two most advanced properties are the Baruun Naran and the Golden Hills projects. In January 2008 QGX announced that an independent 43-101 pre-feasibility study for Baruun Naran showed a net present value (discounted at 10%) of US$499 million on an after-tax basis. QGX announced in August 2007 an independent NI 43-101 resource for coking and thermal coal at Baruun Naran comprised of 93.3 Mt of measured and 159.6 Mt of indicated (252.9 Mt contained in measured and indicated) and 11.1 Mt of inferred resources. In April 2007, QGX filed an independent NI 43-101 report outlining a positive preliminary economic assessment for its copper-gold-silver project at Golden Hills. Barrick Gold Corp. holds an approximate 9% equity interest in QGX as part of a strategic relationship between the two companies. On March 17, 2008, QGX announced the engagement of Merrill Lynch as exclusive financial advisor to assist the Company with a review of potential strategic alternatives.
This press release includes certain "forward-looking statements". All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization, results and future plans and objectives of the Company are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.
SOURCE: QGX Ltd.
In late 2006, QGX secured permission from the Mongolian government to search for water to supply its proposed coal development at Baruun Naran. The water resource, known as Balgasyn Ulaan Nuur, is located approximately 45 km south west of Baruun Naran and extends over an area of approximately 150 sq. kms. This area was initially studied in the mid 80's when some 51 water exploration holes were drilled.
During 2007 and 2008 QGX drilled 14 holes with average depth of 70 m. The holes were drilled and equipped by Major Drilling and the basin water pump tests were conducted by Australian water engineering company AZTEC during 2007 and early 2008. The reservoir resource and flow calculations were performed by Dr. R. Battumur, consultant for Shandny Bulag LLC (Ulaanbaatar), a water exploration company licensed by the Water Authority, Mongolia. This work confirms the earlier work with the calculated water resource capable of supplying 150 litres per second for the life of the planned mine.
On May 15, 2008, QGX received the General Environmental Impact Assessment Guidelines from the Ministry of Nature and Environment for conducting the environmental impact assessment ("EIA") for the Balgasyn Ulaan Nuur water resource. The EIA has commenced and the permitting process to develop the water resource is currently underway.
Paul Zweng, President/Chief Executive Officer of QGX Ltd., commented as follows:
"The Balgasyn Ulaan Nuur water resource satisfies 100% of the water requirements for our coal project at Baruun Naran. The quality of the water is very good, requiring little-to-no treatment prior to use at the mine. In addition, the development costs of the resource should be favorable because the water resource is shallow-the average depth of the water bores is only 70 m.
The key to the success of this water exploration program is the close cooperation that exists between QGX and the community in the Baruun Naran area. From the early stages of the project, the Company has established a consultative approach with the various stakeholders to ensure that the project was fully understood and accepted by all parties."
Qualified Person
Mr. John Thompson, Vice President Operations of QGX Ltd. and a qualified person as defined by NI 43-101, has reviewed and approved the information contained in this release.
About QGX
QGX is a Canadian-based company that has been exploring for mineral deposits in Mongolia since 1994. The Company's two most advanced properties are the Baruun Naran and the Golden Hills projects. In January 2008 QGX announced that an independent 43-101 pre-feasibility study for Baruun Naran showed a net present value (discounted at 10%) of US$499 million on an after-tax basis. QGX announced in August 2007 an independent NI 43-101 resource for coking and thermal coal at Baruun Naran comprised of 93.3 Mt of measured and 159.6 Mt of indicated (252.9 Mt contained in measured and indicated) and 11.1 Mt of inferred resources. In April 2007, QGX filed an independent NI 43-101 report outlining a positive preliminary economic assessment for its copper-gold-silver project at Golden Hills. Barrick Gold Corp. holds an approximate 9% equity interest in QGX as part of a strategic relationship between the two companies. On March 17, 2008, QGX announced the engagement of Merrill Lynch as exclusive financial advisor to assist the Company with a review of potential strategic alternatives.
This press release includes certain "forward-looking statements". All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization, results and future plans and objectives of the Company are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.
SOURCE: QGX Ltd.
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