UPDATE:Ivanhoe Sets Core Lending Group For Oyu Tolgoi Project

19th Jul 2010 16:12

(Adds details.) By Alex MacDonald Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Ivanhoe Mines Ltd. (IVN.T) Monday said it has appointed three additional financial institutions to help fund its Oyu Tolgoi project, one of the world's largest undeveloped copper and gold deposits. Canada-headquartered Ivanhoe has appointed Paris-based BNP Paribas SA (BNP.FR), London-based Standard Chartered PLC (STAN.LN) and Export Development Canada to its core lending group of five financial institutions that will lead the arrangement of project financing for the Oyu Tolgoi project, in which Ivanhoe owns a 66% interest and global diversified miner Rio Tinto PLC (RTP) is the operator. The core group of five financial institutions--which includes the European Bank for Reconstruction and Development and the International Finance Corp.--is expected to arrange a financing package for the project valued at more than $2 billion by the first quarter of 2011, Robert Friedland, the executive chairman of Ivanhoe, said in a statement. He noted that there is a "high level of interest in international financial circles" in participating in the project. Ivanhoe selected two banks out of a total of 13 that expressed interest in the project. Oyu Tolgoi is expected to enter production in 2013 and over five years increase it to 450,000 metric tons of copper output a year. Ivanhoe estimates that the initial investment required for the open-pit mine in the Southern Oyu deposit to start producing would be $4.6 billion. So far, the IFC and EBRD have said they are considering providing $300 million each in limited-recourse financing, while Export Development Canada, the Canadian government's export credit agency, is considering providing $500 million, bringing the total to $1.1 billion. Significant support for the Oyu Tolgoi financing is also expected from commercial lenders under "B" loan structures and guarantee schemes of other export credit agencies. Ivanhoe is discussing additional financing options for the balance of its capital requirements, the miner said. At 1457 GMT, Ivanhoe's New York shares were up 8 cents, or 0.5%, at $16.42. -By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; [email protected] (END) Dow Jones Newswires July 19, 2010 11:12 ET (15:12 GMT)