June 17, 2015
Ivanhoe Mines addresses concern of two D.R. Congo ministers
and reiterates commitment to negotiating an agreement
for the DRC government to acquire up to a further 15% interest
in the Kamoa Copper Project
KINSHASA, DEMOCRATIC REPUBLIC OF CONGO - Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX: IVN), and Lars-Eric Johansson, Chief Executive Officer, today reiterated a statement issued on June 9 reconfirming Ivanhoe's commitment to finalize an agreement for the sale of a further interest of up to 15% in the company's Kamoa Copper Project to the government of the Democratic Republic of Congo.
An announcement issued yesterday by the D.R. Congo's Minister of Mines and Minister of Portfolio stated that any sale of up to 15% in Kamoa Copper SA (the entity that holds the Kamoa Copper Project exploitation permits, or mining licences) to the Congolese State would dilute China-based Zijin Mining Group's future interest in the project. This is correct and is understood by both Zijin and Ivanhoe, which have acknowledged the expected future dilution in their agreement announced on May 26, 2015. Both Zijin and Ivanhoe would be diluted pro rata by any sale of a further interest of up to 15% in Kamoa Copper SA as their interests would be held through Kamoa Holding Limited (that currently owns 95% of Kamoa Copper SA), and accordingly that entity's interest in Kamoa Copper SA would be reduced as a result of an increased DRC State interest. The government already is aware of this provision.
The ministers also suggested that a due diligence review be performed of Kamoa Copper SA. Ivanhoe does not believe that such a review is warranted, and should not delay the closing of its proposed transaction with Zijin. Ivanhoe previously obtained legal advice to confirm that no consent to the transaction with Zijin is required under Congolese law.
Ivanhoe remains committed to finalizing negotiations for the proposed sale of up to a further 15% interest in Kamoa Copper SA to the Congolese State. During a recent series of meetings, a senior Ivanhoe Mines team, led by Mr. Johansson, made a number of proposals to senior representatives of the DRC government regarding the proposed sale. Ivanhoe is awaiting a response to those proposals. While the recent meetings also discussed Zijin's planned investment in the Kamoa Project, the two transactions are separate matters and Ivanhoe's legal advice confirms that there is no basis for delaying the Zijin transaction pending settlement of the increased DRC State interest in Kamoa Copper SA.
The D.R. Congo government has held a 5% free-carried interest in Kamoa Copper SA since 2012 in full accordance with provisions of the country's 2002 official mining law. Transfer of the 5% interest immediately followed the government's granting of the Kamoa exploitation licences and represents the only legally required transfer of interest to the government under the mining law. On May 26, Ivanhoe announced that China-based Zijin Mining Group intended to invest in the development of the planned Kamoa mine by buying a 49.5% share interest in Kamoa Holding Limited. Zijin has pledged to use its best efforts to arrange project financing for Kamoa's first phase. Ivanhoe previously has stated that the proposed transaction with Zijin is not expected to close until, on or about, July 31 this year.
Mr. Friedland said that the company's internationally acknowledged discovery, which was announced in 2009, established the Kamoa district as an extension of the Central African Copperbelt. The discovery was a culmination of six years of government-licensed exploration activity in D.R. Congo by Ivanhoe's subsidiary, Kamoa Copper SA. More than US$330 million has been invested to date by Ivanhoe and Kamoa Copper in Kamoa's exploration and mine planning. In September 2012, the D.R. Congo government granted the necessary exploitation permits, or mining licences, for Ivanhoe's development of the Kamoa Project, as provided by the official mining law.
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Forward-looking statements
Certain statements in this news release may constitute "forward-looking statements" or "forward-looking information" within the meaning of applicable securities laws, including, without limitation, statements regarding Ivanhoe's commitment to negotiate and finalize an agreement to sell to the government of the Democratic Republic of Congo a further interest of up to 15% in the Kamoa Copper Project and the completion of the transaction with Zijin. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Ivanhoe Mines, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements or information. Such statements can be identified by the use of words such as "may", "would", "could", "will", "intend", "expect", "believe", "plan", "anticipate", "estimate", "scheduled", "forecast", "predict" and other similar terminology, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. These statements reflect Ivanhoe's current expectations regarding future events, performance and results and speak only as of the date of this news release.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indicators of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed above, as well as failure to receive required regulatory and stock-exchange approvals, unexpected changes in laws, rules or regulations, or their enforcement by applicable authorities.
Although the forward-looking statements contained in this news release are based upon what management of Ivanhoe believes are reasonable assumptions, Ivanhoe cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this news release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, Ivanhoe does not assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this news release.
Ivanhoe's actual results could also differ materially from those anticipated in these forward-looking statements as a result of the factors set forth in the "Risk Factors" section in the Annual Information Form for the year ended December 31, 2014, which is available at
www.ivanhoemines.com and at
www.sedar.com.