January 12, 2015

Ivanhoe Mines and Ivanplats challenge Globe & Mail story about Platreef mine development project in South Africa

Attention:

- Paul Waldie, Editor, Report on Business, The Globe and Mail, Toronto, Canada
- Geoffrey York, Africa correspondent, The Globe and Mail

The cover story published in The Globe and Mail's Report on Business on January 10 (Showdown in South Africa) is flawed by serious failures of what is purported to be standards-based journalism.

The story is blighted by false allegations and misrepresentations, and gratuitous exaggerations. One inevitable result is that parts of the story serve as a soapbox for a coterie of dedicated critics, some of whose self-serving motivations curiously are ignored. But, despite its 3,000-word length, the story fails to present the view of even one ordinary citizen from among the tens of thousands who comprise the overwhelming majority in the neighbouring communities who do support the development of the Platreef mining project by Ivanplats (Pty) Ltd., a subsidiary of Ivanhoe Mines Ltd. That would have required diligence and determination. It begs the pertinent question: Why?

The current economic potential of Ivanhoe's Platreef world-scale mineral discoveries, and the innovative comprehensiveness of the project's broad-based black economic empowerment structure, are without peer in South Africa. One essential feature is that the combined population of approximately 150,000 people in the communities surrounding the planned mine development now effectively share a 20% ownership of the Platreef Project through a collective trust. Obviously, such a project in such a setting will have its detractors; that's a fact of human nature that Ivanhoe Mines and Ivanplats respect. But The Globe's beginning-to-end exclusion of views representative of the majority of ordinary residents certainly is not balanced writing, which The Globe claims to hold among its vaunted news principles. The lack of balanced views inevitably gives readers an unfair misrepresentation of the project's true level of community support.

Among the story's significant shortcomings:

• In its pre-publication contacts with Ivanplats, The Globe never raised the specific case of the story's emotive linchpin figure -- the elderly woman who claimed that she was pressured into consenting to the conduct of exploration drilling on communal land that the woman's family had used to grow food crops. The Globe also never gave the company an opportunity to address any relevant circumstances of this specific case before the newspaper prominently published the allegation. Based only on a general, non-specific question from The Globe, and therefore unable to review details of the case that interested the newspaper, Ivanplats did advise The Globe on December 17 last year that the company had no knowledge of the use of any alleged pressure tactics and never would condone any such improper conduct. Ivanplats asked The Globe if the newspaper had a specific case in mind, but The Globe chose to ignore the company's request for information, effectively ensuring that the allegation that was the subject of the story's introduction could not be challenged. For the record, the company now does challenge and deny the allegation presented by The Globe concerning use of what would be an unacceptable negotiating tactic. It already is a matter of record that well known Platreef critics previously have made similar allegations of pressure tactics as a ploy against other business entities, which also have been unfounded. While the true situation is much more complex than The Globe presented to readers, it is a fact that aspects of The Globe's highly selective account of this particular compensation provision are seriously flawed. The Globe also knew and failed to report that the company has absolutely no influence over state-controlled pensions and other social entitlement benefits in South Africa. So the Globe's conduct is left to speak for itself.
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• Ivanplats had compensation agreements with four affected communities to cover drilling disruptions. More than 300 individual community residents, who held assigned blocks of nearby communal land to grow traditional produce, endorsed acknowledgements of payments they received from the company. The agreements provided residents with fair compensation in exchange for access to the land by small-scale core drill rigs that in most cases required only temporary interruptions to food gardening. There is no foundation in fact for any suggestion that corn production and other food gardening cannot resume on land where all necessary drilling has been completed. The Globe never gave Ivanplats an opportunity to respond to any specific allegation that drilling had rendered any land beyond the actual minesite permanently unusable for food production. The Globe story failed to acknowledge, or examine, the issue of the viability of food gardening throughout the region due in part to current economics, lack of water and other factors.
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• The Globe evidently did meet with a number of critics during its visit to the communities and the site of the planned mine. But at no time before or during its visit to the Mokopane area and to the mine development site did The Globe make contact with Ivanplats or make any effort to discuss with Ivanplats' informed community staff representatives any of the claims and concerns that critics had presented to the newspaper. This would appear to be the antithesis of open-minded journalistic enquiry. Again, The Globe's conduct speaks for itself.
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• The Globe knew and failed to report that 15 of the 20 affected communities already had voted to elect members of the trust advisory council as part of the broad-based black economic empowerment (B-BBEE) structure that the company has established under South African law to give effect to a collective community shareholding in the Platreef Project. Four of the five remaining communities now have indicated that they are ready to proceed with elections for trust representatives, which will bring the total to 19 of the 20 communities. All 20 communities will receive the resulting ownership benefits and share the interim financial support being provided by Ivanplats, which is continuing to work with residents and representatives of all of the communities. It also is noted that The Globe has never reported on the implementation of the precedent-setting Platreef black empowerment initiative, which was announced last September.
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• The Globe falsely claimed that the Platreef Project had triggered multiple "clashes with police" and that police had dispersed "hundreds of angry protesters at the mine site" last November. In fact, there has been just one confrontation with police, orchestrated by critics, and it involved far less than 100 actual protesters. The Globe knew, and failed to report, that the company had publicly stated on November 26 last year that a total of approximately 100 people were present at the protest, as confirmed by photographs, but that group also included many supporters of the project who had been duped into appearing at the protest site by critics who deliberately made false claims that the company would be recruiting people for construction work at the nearby mine development site.
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• The Globe's claim that Ivanplats has issued multiple "ultimatums to government" as a negotiating tactic simply is not true. The fact is that there has not been even one such ultimatum from the company to the government. This is another matter that The Globe did not raise with the company prior to publication of its story and so the company had no opportunity to comment on The Globe's intended use of this false allegation. As a result, Globe readers were presented with a serious misrepresentation of the facts. The truth is that after providing full-time pay for several hundred workers who had been idled for more than four months while the company waited for the government to activate Platreef's mining licence, Ivanplats formally notified a labour union and project workers last October -- as required under South African law -- that the company may have to initiate stipulated consultation and review procedures that eventually could result in layoffs. Mine building could not begin without activation of the licence. Ivanplats, of course, has no income and would have been obliged to examine measures to curtail costs if the start of work had remained suspended. This was not some kind of "hardball tactic", as The Globe falsely alleges. South Africa's mining law requires that companies also inform the relevant government department of intentions to initiate proceedings that could result in layoffs. There is no factual basis for The Globe's mischaracterization of the company's conformance with this statutory process as an ultimatum to government.
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• Further exaggerations are contained in The Globe's claims that critic Aubrey Langa is "a favourite target" in company news releases and has been "repeatedly attacked" in the company's media statements. The truth is that Mr. Langa had been mentioned in one company news release and in one public statement by the company prior to publication of The Globe's January 10 story. Mr. Langa evidently was a major source of information for The Globe, begging the question of why there is no indication in the story that The Globe quizzed him about his endorsement and incitement of violent and other illegal acts, and his true motives in his campaign against the Platreef Project? The Globe also chose to ignore Mr. Langa's reported reference in a South African newspaper last month to the tragic deaths of 44 people in a series of violent clashes in 2012 during a strike at the Marikana platinum mine; in that statement, Mr. Langa shockingly vowed that he and his supporters would see that "we will have another Marikana" at Platreef.

Contrary to The Globe's unfair, contrived misrepresentations on the point, Ivanplats never has sought to provoke confrontations with critics and authorities. The company is a guest in South Africa, where it is honouring long-term commitments that have been established during the past 15 years. The company knows it must continually earn goodwill and has been able to achieve a great deal of appreciated, respectful support and cooperation through its extensive consultations with neighbouring communities. This engagement is a perpetual responsibility that will continue throughout the life of the planned Platreef Project. However, Ivanplats also has declared that the project will not be held to ransom by those who advocate violence, intimidation, disruption and disinformation, and will remain uncompromised by corruption.

Ivanplats previously advised The Globe that the company would stand with the facts in any telling of Platreef stories. While only a limited time has been available to check allegations contained in The Globe story, Ivanhoe Mines and Ivanplats are concerned by the misrepresentations that already have been identified. The checking of information is continuing and the companies will take the necessary steps to ensure that the truth is appropriately presented. The principal information exchanges between The Globe and Ivanplats prior to publication of the story will be made available on the Ivanhoe Mines website (www.ivanhoemines.com).

Signed on behalf of IVANHOE MINES

Robert Friedland, Executive Chairman
Lars-Eric Johansson, Chief Executive Officer
Marna Cloete, Chief Financial Officer
Mark Farren, Executive Vice President, Operations
Ian Cockerill, Lead Independent Director

Signed on behalf of IVANPLATS

Dr. Patricia Makhesha, Managing Director
Gerick Mouton, Vice President and Project Director
Jacob Motswaledi, General Manager, Community Relations
Jasmine Abrahams, General Manager, Legal and Compliance
Sello Kekana, General Manager, Broad-Based Black Economic Empowerment & Shared Services
Dr. Danie Grobler, Exploration & Geology Manager