Statement by Robert M. Friedland, Chairman, Ivanhoe Mines Ltd.
SINGAPORE – More than a month now has passed since Ivanhoe Mines was obliged to issue a public statement pointing out a series of significant errors and misrepresentations contained in a story written by reporter Geoffrey York and published in the Toronto-based Globe and Mail newspaper’s Report on Business on July 28th, 2005.
Despite Ivanhoe’s communication with the newspaper, the company’s provision of a more comprehensive list detailing the errors and misrepresentations three weeks ago, and the provision of additional supporting detail on incontrovertible facts, The Globe and Mail has failed even to begin to do the right thing and tell the truth to its readers and investors and to set straight the flawed public record that its story has created.
The misinformation in Mr. York’s story has been distributed around the world. Given the newspaper’s failure to correct errors of fact and clarify misleading statements, and since nobody owns the Internet, Ivanhoe believes it has no alternative at this time but to issue and distribute its own set of essential corrections as part of its obligation to its shareholders and other stakeholders.
The Globe and Mail failed to conduct fundamental fact checking of principal points before publishing Mr. York’s July 28th story, which purported to report on the status of Ivanhoe’s negotiations with the Mongolian government for a special stability agreement establishing essential terms and conditions for the development by Ivanhoe of the Oyu Tolgoi copper-gold project in the South Gobi region. The result was an erroneous and misleading presentation of information that cast the company’s mine development project in a negative light and needlessly created misunderstanding in the investment community.
In a public statement issued on July 28th in response to Mr. York’s story that was published the same day, Ivanhoe Mines cited the story’s “selective inclusion and omission of information related to the ongoing review and approval process established by the Mongolian government, errors of fact and gratuitous innuendo.”
The newspaper’s stonewalling and obfuscation during the past month over the evident and required corrections and clarifications has denied readers the right to accurate, fair and balanced information, debased the newspaper’s editorial integrity and compounded the damage caused to Ivanhoe’s reputation in public markets.
For the record, Ivanhoe’s requested corrections of fact and clarifications provided to The Globe and Mail include the following points:
• Mr. York’s story incorrectly reported that Robert Friedland, Chairman of Ivanhoe Mines, had stated that a stability agreement with the Mongolian government covering the development of the Oyu Tolgoi mine could be completed by the end of this summer. In fact, the statement was made by Mongolian Prime Minister T. Elbegdorj in a report published by Bloomberg News on May 3rd, 2005.
• It is a matter of record that Ivanhoe has stated in public regulatory disclosure documents only that it hoped to finalize negotiations over a stability agreement by the end of this year.
• The story incorrectly reported that it will require US$3 billion to develop the planned Oyu Tolgoi mine. In fact, it is a matter of record that Ivanhoe has publicly stated that the initial capital investment to put the mine into production will be approximately US$1.2 billion.
• The story incorrectly reported that Mongolia’s finance ministry had submitted a draft tax law that would sharply raise mineral royalty rates, implying that the measure was still before the cabinet. In fact, Mr. York knew before his story was published that the draft law and its proposed increases were rejected by the Mongolian cabinet on June 22 – more than a month before The Globe published his story. Mr. York should not have withheld this very pertinent fact from Globe readers.
• The story incorrectly reported that “senior leaders here in Mongolia” had predicted that it could take another six months or more to complete a stability agreement with Ivanhoe. In fact, no senior Mongolian leader said such a thing. Only one person who could be considered a senior national leader was quoted by Mr. York: President Enkhbayar. President Enkhbayar did not tell Mr. York that it could take another six months or more to finalize an agreement. Even according to Mr. York’s story, President Enkhbayar indicated that an agreement was possible by the end of this year (within the time frame of Ivanhoe’s publicly-stated expectation). While Mr. York did quote, under a convenient cloak of anonymity, the strictly personal view of a bureaucrat in a government agency, Mr. York knew that the bureaucrat has no legal responsibility for the execution of the Ivanhoe stability agreement.
• However, and more seriously, following publication of Mr. York’s story, senior Ivanhoe representatives were advised directly by President Enkhbayar that he believed that The Globe reporter had inaccurately reported his comments on some key points. In fact, it is clear, even from The Globe’s story, that the President certainly did not tell The Globe reporter that it would take six months or more to finalize an agreement with Ivanhoe. The President advised Ivanhoe that he actually told The Globe reporter that in his opinion the sooner the agreement was signed with Ivanhoe the better. The President said that he also told Mr. York that he really did not know when the agreement would be completed – it could be December, it could sooner.
• In the same style of alarmist exaggeration, Mr. York incorrectly reported that “some parliament members have made radical demands for state ownership of 50% of the mine.” In fact, only one member of parliament expressed support for such an idea – and only in the context of a heated election campaign. Much more relevant and substantive is the fact that during the past five months, the government of Mongolia has specifically and repeatedly publicly rejected any such radical demand. Globe readers should be told the truth in a balanced and accurate context.
• Even basic facts about Ivanhoe’s mine development project were incorrectly reported. The story incorrectly stated that Oyu Tolgoi is a 5.8-km-long chain of deposits containing 46 billion pounds of copper and 23 million ounces of gold. In fact, Oyu Tolgoi currently is 6.5 kilometres long and presently contains a total of 59 billion pounds of copper and 25 million ounces of gold – including 33 billion pounds of copper and 17 million ounces of gold classified as “measured and indicated” resources (at a 0.6% copper equivalent cutoff).
Mongolia: Layton Croft 976 9911 3339
Statement by Robert M. Friedland, Chairman, Ivanhoe Mines Ltd.
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