MIRA INFORM REPORT
|
Report Date : |
06.02.2012 |
IDENTIFICATION DETAILS
|
Name : |
OYU TOLGOI LLC |
|
|
|
|
Formerly Known As : |
Ivanhoe Mines Mongolia Inc. |
|
|
|
|
Registered Office : |
Monnis
Tower, 4th, 5th, 6th, 7th, 11th
and 12th Floors, Chinggis Avenue 15, District, Ulaanbaatar 14240 |
|
|
|
|
Country : |
Mongolia |
|
|
|
|
Financials (as on) : |
31.12.2011 |
|
|
|
|
Date of Incorporation : |
09.12.2005 |
|
|
|
|
Com. Reg. No.: |
97611331890
|
|
|
|
|
Legal Form : |
Limited Liability Company |
|
|
|
|
Line of Business : |
Subject
is engaged in the production and mining of gold and copper |
|
|
|
|
No. of Employees
: |
2,000 |
RATING & COMMENTS
|
MIRA’s Rating : |
B |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
Status : |
Yet to commence business |
|
|
|
|
Payment
Behaviour : |
Unknown |
|
|
|
|
Litigation : |
Clear |
NOTES:
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – September 30th, 2011
|
Country Name |
Previous Rating (30.06.2011) |
Current Rating (30.09.2011) |
|
Mongolia |
c1 |
c1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
COmpany NAME
company ADDRESS
Building :
Monnis Tower, 4th, 5th, 6th, 7th,
11th and 12th Floors
Street :
Chinggis Avenue 15
Area :
Sukhbaatar District
Town :
Ulaanbaatar 14240
Country :
Mongolia
Telephone :
(976 11) 331 880 ext. 3100 (Ayunaa Bud) / Ext. 3306 (Badamhand Rakcha) / ext.
3212 / 331
780 /
Mobile :(976 99) 110 378 (Tereza Rayes)
Fax :
(993 11) 331 890
E-Mail :
immi@ivancorp.net
Website :
www.ot.mn
Formerly
known as : Ivanhoe Mines Mongolia Inc.
SENIOR COMPANY PERSONNEL
Name
Position
Board of Directors
1. Batsukh
Galsan Executive Chairman
2. Peter
Meredith Member of the Board
3. John
Macken Member of the Board
4. Sam
Riggall Member of the
Board
5. William
(Bill) Weld Member of the Board
6. Andrew
Harding Member of the Board
7.
Bagabandi Natsag Member of the Board
8. Tsagaan
Puntsag Member of the Board
9. Ganbold
Chuluun Member of the Board
Management
1. Cameron
McRae President / Chief Executive
Officer
2. John
Johns Chief Financial
Officer
3. Badamhand
Rakcha Chief Accountant
4. Odgerel
Byamba Senior Communication
Manager
5. Tereza
Rayes Financial Manager
6. Ayunaa
Bud Office Manager
Total
Employees : 2,000 (subject) / 10,000
(sub-contractors)
PAYMENTS
No trade
experience of payments is available.
Subject is a relatively newly established company and it is Mongolia s largest copper and gold mining company, which will build and operate the Oyu Tolgoi copper-gold project in Southern Mongolia. It is scheduled to begin commercial production in 2013. Oyu Tolgoi is a strategic partnership between the Government of Mongolia (34% stake), Ivanhoe Mines (66%) and Rio Tinto plc, which in turn owns 34.9% of Ivanhoe Mines Ltd.
Opinion on
maximum credit : As the company has not yet started
production and has
no financial or
payment track
record, we recommend
dealing on fully
secured terms.
Trade risk
assessment : High (see above comments)
SIGNIFICANT CHANGES
July 2001:
Ivanhoe Mines Ltd discovered first of series of Oyu Tolgoi mineral deposits.
October 2006: Ivanhoe Mines Ltd and Rio Tinto plc announced a strategic partnership and joint technical committee for the construction and operation of Oyu Tolgoi. A joint Ivanhoe-Rio Tinto Technical Committee was established to guide the engineering, construction and operation of Oyu Tolgoi.
January 2008: Sinking of the 6.7 metre diameter Shaft No.1 complete to a depth of 1385 metres. This is the deepest excavation ever made in Mongolia and one of the deepest shafts in all of Asia. It will be used for exploration access, ore recovery and eventually as a ventilation shaft.
October 2009: Rio Tinto doubled its interest in Ivanhoe Mines to 19.7%.
March 2010: Oyu Tolgoi Investment Agreement confirmed ownership of 34% by the Mongolian government. Rio Tinto increased its ownership of Ivanhoe Mines to 22.4%.
June 2010: Work restarts on the 10 metre diameter Shaft No.2, which will be the initial primary underground production and service shaft at Oyu Tolgoi.
July 2010: Oyu Tolgoi to invest 78 billion tugrugs (58 million US DLRS) over the next five years under Education and training memorandum with Ministry of Education, Culture and Science.
July 2010: Work starts on the foundations for 1.6 trillion tugrugs (1.2 billion US DLRS) Concentrator, which wi ll enrich the mined copper ore to produce a concentrate product.
September 2010: Rio Tinto increases its ownership in Ivanhoe Mines to 34.9%.
2012: Open-pit mine will become operational. Mining equipment is used at the surface to descend into the deposit, initially removing waste materials, until ore is exposed.
2013:
Concentrator is commissioned and will operate.
2014:
Underground ‘Block cave will become
operational. This expensive and technically complex underground mining method
is the most suitable for mining the deeper
deposits at Oyu Tolgoi.
PRINCIPAL BANKERS
NAME : TRADE AND DEVELOPMENT BANK OF MONGOLIA
Branch : Juulnchny Gudamj 7
Town : Ulaanbaatar 210646
Telephone:
(976 11) 312 362 / 331 133
Fax : (976 11) 325 449
The company
also has an account with the following banks:
1. Golomt
Bank of Mongolia
Main Branch
Bodi Tower, Sukhbaatar Square
Ulaanbaatar
Telephone: (976 11) 311 530
Fax
: (976 11) 312 307
2. Khan
Bank of Mongolia
Peace Avenue
P.O Box-185
Ulaanbaatar
Telephone: (976 11) 457 880
Fax
: (976 11) 457 880
FINANCIAL INFORMATION
As
the Company has not yet commenced operations, relevant financial
information
is not available.
The
following Consolidated Balance Sheet as at 31 December applies to Ivanhoe Mines
Ltd., subject's parent company :
2011 2010
2009 2008
(in
thousands of US DLRS)
ASSETS
CURRENT
Cash
and cash equivalents 1,410,255
1,264,031 965,823 384,110
Short-term
investments 9,998 98,373
14,999 —
Accounts
receivable 104,512 65,741
39,349 47,520
Inventories 86,626 40,564
18,015 16,136
Prepaid
expenses 101,276 23,338
15,988 11,160
Total
current assets 1,712,667
1,492,047 1,054,174 458,926
Long-term
investments 144,376 151,191
93,511 55,945
Other
long-term investments 294,873 191,816
145,035 22,301
Property,
plant and equipment 3,414,239 1,332,648
218,781 199,281
Deferred
income taxes 30,657 16,889
6,953 —
Other
assets 41,984 33,883
16,227 5,749
Total
assets 5,638,796
3,218,474 1,534,681 742,202
LIABILITIES
CURRENT
Accounts
payable and
accrued
liabilities 496,028 260,528
55,128 41,103
Amounts
due under
credit
facilities 14,118 14,615
17,544 15,963
Interest
payable
on
long-term debt 9,326 6,312
4,712 —
Convertible
credit facility - 378,916 — -
Rights
offering
derivative
liability - 766,238 - -
Total
current liabilities 519,472
1,047,693 456,300 57,066
Convertible
credit facilities 152,627 248,284
544,990 349,128
Amounts
due under
credit
facilities 38,084 40,080
37,979 —
Payable
to related party 42,804 14,013 -
5,320
Deferred
income taxes 11,573 11,123
10,888 9,512
Asset
retirement obligations 40,355 40,838
5,436 3,922
Total
liabilities 804,915
1,402,031 1,055,593 424,948
SHAREHOLDERS
EQUITY
SHARE
CAPITAL
Authorized
Unlimited
Number Of Preferred Shares Without Par Value
Unlimited
Number Of Common Shares Without Par Value
Issued
And Outstanding
738,553,329
(2010 — 568,560,669)
Common
shares 6,803,370 3,378,921
1,886,789 1,485,864
Share
purchase warrants and
Share
issuance commitment - 11,832
27,386 32,560
Beneficial
conversion feature - -
30,250 28,883
Additional
paid-In capital 1,409,908 1,303,581
348,468 293,485
Accumulated
other
comprehensive
income (6,600) 33,075
(14,578) (24,222)
Deficit
(3,398,139)(2,913,576)(1,800,179)(1,520,008)
Total
Ivanhoe Mines Ltd.
Shareholders equity
4,808,539 1,813,833 478,136
296,562
Noncontrolling
interests 25,342 2,610 952
20,692
Total
shareholders equity 4,833,881
1,816,443 479,088 317,254
Total
liabilities and
Shareholders
equity 5,638,796 3,218,474
1,534,681 742,202
Consolidated
Statements of Operations
Revenue 127,985 79,777
36,038 3,126
Cost
of sales
Production
and delivery (84,571) (66,738)
(23,611) (1,931)
Depreciation
and depletion (20,521) (13,306)
(5,814) (314)
Write-down
of carrying
value
of inventory (18,936) (14,729) - -
Cost
of sales (124,028) (94,773)
(29,425) (2,245)
Expenses
Exploration (194,360) (218,626)
(177,062)(250,591)
General
and administrative (66,151) (84,427)
(45,750) (27,453)
Depreciation (2,052) (2,096)
(4,326) (4,957)
Mining
property care
and
maintenance - - -
(10,342)
Accretion
of asset
retirement
obligations (510) (199)
(141) (429)
Gain
on sale of other
mineral
property rights - -
3,000 —
Write-down
of carrying values of
property,
plant and equipment - (2,338)
(1,243) (515)
Total
expenses (387,101) (402,459)
(254,947)(306,190)
Operating
loss (259,116)
(322,682) (218,909)(303,064)
Other
income (expenses)
Interest
income 15,371 16,567
3,587 13,182
Interest
expense (9,618) (32,827)
(21,601) (17,599)
Accretion
of convertible
credit
facilities (43)
(11,709) (14,345) (9,658)
Foreign
exchange gains(losses)(30,149)
8,700 34,070 (62,946)
unrealized
gain on
long-term
investments (2,683) 360
1,099 —
Unrealized
gain on other
long-term
investments 2,124 4,508 438 —
Realized
gain on redemption of
other
long-term investments 107 151
1,458 —
Change
in fair value of
derivative (432,536) 135,680 - -
Change
in fair value of
embedded
derivatives 95,699 100,637
(44,980) —
Loss
on conversion of
convertible
credit facility - (154,316) - -
Transaction
costs on issuance
of
convertible debenture - -
(9,399) -
Write-down
of carrying value of
long-term
investments (928) (485) —
(7,103)
Write-down
of carrying value of
other
long-term investments - - —
(18,009)
Gain
on sale of long-term
investment
and note receivable 10,628
- 1,424 201,428
Gain
on settlement
of
note receivable 102,995 - - -
SouthGobi
Hong Kong listing fees - - -
(2,470)
Net
recovery on derecognition of
property,
plant and equipment 2,925 - - -
Loss
Before Income
taxes
and other items (505,224) (255,416)
(269,628)(208,282)
Recovery
(provision)
for
income taxes 1,731 13,118
13,465 (4,314)
Share
of loss of significantly
influenced
investees 21,789 (42,718)
(45,898) (10,092)
Net
loss from
continuing
operations (481,704) (285,016)
(302,061)(222,688)
(Loss)
income from
discontinued
operations (9,105) 6,585
(3,645) 24,305
Net
loss (490,809) (278,431)
(305,706)(198,383)
Net
loss attributable to
noncontrolling
interests 6,246 66,952
25,535 14,270
Net
loss attributable
to
Ivanhoe Mines Ltd (484,563) (211,479)
(280,171)(184,113)
Financial year ends 31 December.
LEGAL STATUS AND HISTORY
Date
Started : 9
December 2005
History : Subject was established
in Mongolia on 9 December 2005 under the name Ivanhoe
Mines
Mongolia Inc. On
2 December 2009 subject changed its name to the present.
C.R. No.: 97611331890 (previously
9019006110)
Tax No.: 2657457
Foreign
Investors Certificate : 00-218
Mining
Licenses No.: 6709A / 6708A / 6710A
Capital :
not given
Limited
Liability Company with the following directors and shareholders :
Board of Directors
Shareholders Percentage
1. Ivanhoe
Mines Ltd
66.00%
World Trade Centre
Suite 654 - 999 Canada Place
Vancouver, BC
Canada V6C 3E1
Telephone: (1 604) 688 5755
Fax
: (1 604) 682 2060
Email
: info@ivanhoemines.com
Website
: www.ivanhoemines.com
Toll Free: (1 888) 273 9999
(34.9% owned by Rio Tinto plc, UK)
2.
Government of Mongolia
34.00%
Affiliated
companies of Ivanhoe Mines Mongolia Inc. :
Subsidiaries
1.
SouthGobi Resources Ltd.
Suite 654, 999 Canada Place
Vancouver, BC
Canada V6C 3E1
Telephone: (1 604) 681 6799
Fax
: (1 604) 688 8391
Email
: info-southgobi@southgobi.com
Website
: www.southgobi.com
2.
Altynalmas Gold Ltd. 50%
Kazakhstan
Personal
profile on Cameron McRae :
Cameron McRae (51) was born in Melbourne, Australia. He was schooled in Australia and Zambia. His first job was as a Commercial Graduate with BHP, in Australia. Cameron then moved to Humes Limited, a concrete product-making company, where he became State Accountant. Leaving Australia, he moved to Bougainville, Papua New Guinea. He initially worked on business development for the Bougainville Development Corporation for a year, before joining Bougainville Copper Limited. Cameron worked in internal audit, systems development and latterly as Planning Manager. Five years later Cameron moved to Taiwan as Business Development Manager before moving to the Corporate Strategy section of CRA Limited in Melbourne.
In 1995 he was part of the team that saw the establishment of the merger/dual listing between RTZ plc and CRA Ltd that created Rio Tinto. In 1997 Cameron moved to Brisbane where he established the Business Systems Group, responsible for setting up and installing SAP systems throughout Rio Tinto s business units. 2001 saw him move to Rio Tinto Coal Australia, firstly as Chief Financial Officer, then as General Manager, Corporate Development and finally General Manager Hail Creek Expansion where he led an expansion project, which saw the coal mine double its size. In 2006, he was appointed as the Managing Director of Murowa Diamonds in Zimbabwe, and in 2008 was transferred to Richards Bay Minerals as Managing Director and CEO.
ACTIVITIES
The Company
is involved in the following activities :
Subject is
engaged in the production and mining of gold and copper.
NACE Code :
0729
Imports
requirements from Europe China, USA and Canada.
FACILITIES
The Company
has the following facilities :
Rented premises comprising administrative offices located at the heading address and storage facilities located elsewhere in Ulaanbaatar. A copper-gold mine located in the South Gobi desert of Mongolia, 600 kilometres south of Mongolia's Capital city Ulaanbaatar.
Until
September 2010 subject was located at :
Seoul
Business Center
7th Floor
Zaluuchuud
Avenue 26
1st khoroo
Bayanzurkh
District
Ulaanbaatar,
13381
Mongolia
SPECIAL NOTE
Interviewed
: Ayunaa Bud (Office Manager).
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.48.96 |
|
UK Pound |
1 |
Rs.77.47 |
|
Euro |
1 |
Rs.64.39 |
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
---- |
NB |
New Business |
---- |
This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a composite
of weighted scores obtained from each of the major sections of this report. The
assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.