Ivanhoe Mines was up 7.6% at $9.78 in afternoon trade on Friday in New York after the company provided an update on its massive Oyu Tolgoi project in Mongolia.
CEO Kay Priestly said phase one construction of the copper-gold-silver mine was now 90% complete. The company – controlled by world number two miner Rio Tinto – expects first production in the second half of this year and commercial production in the first half of 2013.
Priestly added that "discussions between the Governments of Mongolia and China on the power purchase agreement are ongoing and the infrastructure necessary to import power from China should be completed by July 2012.
"We are executing the various elements of the comprehensive financing plan agreed to with Rio Tinto in April 2012. The overall package is expected to cover Ivanhoe's total funding needs to complete the development of phases one and two of Oyu Tolgoi. Additionally, the strategic review of Ivanhoe's other assets is ongoing."
Ivanhoe also announced after the market close on Thursday the appointment of two new directors and that shareholders approved changing the company's name to Turquoise Hill Resources Ltd and its symbol to TRQ. Oyu Tolgoi translates as turquoise hill in the vernacular. The name change takes effect 1 August.
With the change of name Rio Tinto is drawing a line under the history of the Vancouver-based company with founder Robert Friedland (pictured here in a 2009 handout photo) at the helm.
Rio Tinto took full control of the Ivanhoe in April in a deal that led to the resignation of the board and Friedland who had been advancing Oyu Tolgoi for the past eight years. Two Rio insiders now head the company.
Although Rio has in the past said it does not want to own all of Ivanhoe, a complete takeover and delisting of Ivanhoe which has been trading in Toronto since 1999 is not an improbability.
Ivanhoe shareholders have seen the value of their holdings plummet over the last year – despite the robust gains on Friday the company is still trading down 45% since the start of the year with a market value of $7.2 billion.
Oyu Tolgoi near the Chinese border in Mongolia – which emerged from a general election with a new party in control on Friday – is one of the biggest mining projects in the world. Ivanhoe has already spent over $5 billion on Oyu Tolgoi with final overall costs estimated at as much as $13 billion.
Ivanhoe holds 66% of Oyu Tolgoi and Mongolia's government the rest. In October Ivanhoe and Rio dodged a bullet when the Mongolian government said it was rethinking the 2009 deal and that it wanted to own half the mine.
Ivanhoe shares plunged on the news, but the firm took a tough stance and after some desperate negotiations Mongolia backed off.
The mine is set to produce more than 1.2 billion pounds of copper, 650,000 ounces of gold and 3 million ounces of silver each year.
Ivanhoe also holds 58% interest in Mongolian coal miner SouthGobi Resources (TSX:SGQ) which was forced to idle its Ovoot Tolgoi mine recently and has fallen foul of regulations in the country.
Ivanhoe also holds a 59% interest in copper-gold miner Ivanhoe Australia (TSX:IVA)(ASX:IVA) and a 50% interest in Altynalmas Gold, a private company developing the Kyzyl Gold Project in Kazakhstan.
The company had long tried to sell off these holdings to go it alone at Oyu Tolgoi, but had been unsuccessful forcing Rio to step up with funding.