Abitibi Metals boosts resource by 62% at B26 polymetallic deposit in Quebec
Indicated resources increased to 11.3 million tonnes from 6.9 Mt.
Investors in Turquoise Hill Resources (previously Ivanhoe Mines) nearing completion of its Oyu Tolgoi project in Mongolia drove up the company’s share price 15% last week, despite news that a group of the country’s lawmakers wants to grab a bigger stake of the massive coper-gold mine.
After a 6.6% surge in huge volumes on Friday, Vancouver-based Turquoise Hill – controlled by Anglo-Australian giant Rio Tinto – ended the week at $9.10 a share on Toronto’s big board up from three-year lows of $7.90 at the open on Tuesday (Canadian markets were closed on Monday).
The buying was kicked off by news that Turquoise Hill and Aluminum Corp. of China (Chalco) had terminated an agreement that would have seen Chalco take control of Turquoise Hill subsidiary SouthGobi – a Mongolian coal producer.
Mongolian politicians had been vigorously opposed to the Chalco deal given sensitivities inside the country over Chinese influence over the landlocked nation of less than three million people.
But on Thursday Reuters reported that a group of influential parliamentary backbenchers in a petition had called for the enforcement of a parliamentary resolution that gives the Mongolian government majority ownership of Oyu Tolgoi from the current 33%.
It is not the first time Mongolian politicians had tried to rework the 2009 deal that only allows a bigger stake for the state 30 years after the project goes into operation (Oyu Tolgoi – turquoise hill in the local language – has an estimated life of mine of almost twice that).
In October last year shares in the then Ivanhoe Mines plunged on news that the Mongolian government wants to rework the deal to gain a 51% stake.
At the time Rio and Ivanhoe took a tough stance however and after some desperate negotiations Mongolia backed off.
After recent elections that installed a more nationalistic government the outcome could be different this time around. According to a report in Mining Journal the country’s new mining minister Davajav Ganhuyag is one of the politicians in favour of upping Mongolia’s stake in the project set to go into commercial production in the first half of 2013.
Rio is in the process of putting together a finance package of an additional $3.5 billion – $4 billion on top of the $6 billion already spent to take Oyu Tolgoi to full production status, but a research report leaked earlier this year indicated final overall costs could come in at as much as $13 billion.
Turquoise Hill – a favourite of resource investors – is now valued at $9.1 billion and has been been on a wild ride since hitting an all time high above $28 in January last year affording it a peak market cap of $20 billion.
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