ivanhoe statement, page-39

Tweets...

Yes, it has been a while and I see you are still an avid supporter.

The issue with funding is not about their capacity to do so, but incentive...there simply isn't enough meat in E1 Camp and Monakoff at current prices (and exchange rates), given the total spend to get this up and running as a stand-alone project, to offset the risk involved.

In short, the risk/reward equation is not compelling for the CCP as a stand-alone operation (at today's prices), but it may well be in the future.

The cost of the plant is the difference between a money maker with good margins, or a marginal operation subject to commodity price swings. This scenario would apply to anyone progressing this project by the way...anyone but Xstrata of course, who negate the need for a major cap-ex spend courtesy of their next door EH plant!

I cannot see how anyone can out-bid Xstrata on this deal and still make enough money to make it all worthwhile...unless it becomes a regional strategy move, as part some kind of wider corporate focus...or as a strategic blocking move!

The key issue if EXS had held onto the CCP is funding...and whilst income from White Dam and The Great Australia Mine will be nice for them, collectively it is not enough (net), nor timed appropriately enough (they need the money now, not over 5-10 years), to make a material difference to their immediate capital needs to take the CCP mining.

The slightest sniff of a need to raise funds would have seen the vultures descend on EXS, pushing the share price to sub 30c...below which a $200-300m capital raising would have resulted in over 1 billion shares on issue by the time they go mining. Even a part off-take agreement to help secure debt funding would still see shares on issue in the 700-800m range!

If we pump the NPV to $400m, we end up with the shares valued about 40-50c each (up to 1 billion shares), a nice profit on the likely placement price, but still less than current prices.

So...assuming this Xstrata buy-out wasn't on the cards...and assuming EXS got an immediate green light on the CCP...with first production expected in say 3 years, at 25,000 tonnes per year and operating costs of $1.75/lb, they will net something like $100m per year profit (after ancillary costs), some 80% of which will be divided between 1 billion shares as a dividend...so about 8c/share all going well, which should see about 60-70c on the stock for the CCP, until a track record of consistent production can be achieved.

Proof of consistent output will take another year or two, (about 4-5 years away), at which point the market should be happy to put about 80c-$1.00 on the project...all going well.

Counting back on a 10% DCF basis, 80c in 5 years equates to about 50c now (which is about what Xstrata is paying per share for the CCP today)...this suggests Xstrata must have run some similar numbers.

On this basis, getting about $175m today (some 50c/share), is a pretty good deal in my view, and the board obviously agrees.

I accept others will have different views though.

Cheers!