Mongolian Parliament approves resolution on Oyu Tolgoi project
Ivanhoe Mines (TSX: T.IVN, Stock Forum) said Thursday that Mongolia's national Parliament has voted 63.3% in favour of a resolution that authorizes the country’s government to conclude a long-term, definitive investment agreement with Ivanhoe and Rio Tinto for the development and operation of the Oyu Tolgoi copper-gold mining complex in southern Mongolia.
Ivanhoe says it is “reviewing the provisions of the resolution” and expects that further negotiations will be held with the Mongolian government soon, in attempts to conclude a final agreement.
The draft investment agreement and a companion shareholders' agreement were approved in principle by the Cabinet and the National Security Council and were introduced into Mongolia's national Parliament in March.
According to a report by Reuters, under the terms of a current draft investment agreement, the state would take a 34% stake in Oyu Tolgoi.
Shares of Ivanhoe Mines fell 14% to $8.62 Thursday following the news.
On the company’s Bullboard, posters were busy weighing in on the news, and the share price’s reaction, including marpincan, who said: “…The market is speaking and the Market is not happy. What they have done is given the government the authority to negotiate but without providing the needed clairity around taxation, payments and ownership. Sort of like putting the cart ahead of the horse!!!!!!!!! Its not all negative but it is not the big clear positive that the market was expecting[sic]”…
Meanwhile, doubleknotspy asked: “Is the provision for eliminating the windfall tax by building a smelter still in the agreement?”
slingshot17 replied:
I don't put myself in the category of knowledgeable posters, but it appears to me that there are still conflicts in the IA with the existing laws on taxation. These conflicts are going to have to be specifically addressed with amendments to the present taxation laws in order for the IA to be relative free from future attacks by Parliament to aborgate the agreement. Without the appropriate amendments resolving the conflicts I seriously question the stablility of the agreement. I raised this problem some months ago, and I still think it exists. We have made significant progress, but still have a ways to go. Without access to the actual agreement and applicable laws it is very hard to be definitive[sic].”
And, Art2004 said: “IMHO There will be futher discussions and dealing with the GOM and then Parliament will come around to a sensible contract. The 68% windfall tax will not continue[sic].”
