Stock Alert for Ivanhoe Mines Ltd. (IVN)
Ivanhoe Mines Ltd. (IVN) is an international mineral exploration and development company. The Company’s principal mineral resource property is the Oyu Tolgoi Project, located in Mongolia. The Company also has two subsidiaries, through which it holds interests in coal resource properties in Mongolia, and molybdenum, rhenium, copper, gold and uranium resource properties in Australia. Its subsidiary, SouthGobi Energy Resources Ltd. (SGQ), owns and operates the Ovoot Tolgoi Coal Project located in Mongolia. The Company’s subsidiary, Ivanhoe Australia Ltd. (Ivanhoe Australia), owns the Cloncurry Project located in Queensland, Australia. IVN also holds interests in several other mineral resource projects in Asia, including a 50% interest in the Kyzyl Shear Project, located in Kazakhstan, through a shareholding in Altynalmas Gold Ltd. (Altynalmas Gold).
The Company was formerly known as Indochina Goldfields Ltd. and changed its name to Ivanhoe Mines Ltd. in June 1999. Ivanhoe Mines Ltd. was founded in 1994 and is headquartered in Vancouver, Canada.
Share Statistics (Jul-14-10)
FY
2007 FY
2008 %
Chg Q4 2008 Q4 2009 %
Chg
Symbol IVN Revenue, $Mn 0.0M 3.13M 100.0% n/a 9.96M n/a
Current price $16.45 Gross marg. n/a 38.2% n/a n/a 15.3% n/a
52wk Range: $18.94-7.09 Oper. margin -n/m -10471% n/a n/a -549.5% n/a
Avg Vol (3m): 2,000,450 Net margin -n/m -5882% n/a n/a -1299% n/a
Market Cap. 7.26B
Shares Outst. 441.9M EPS, $ -1.31 -0.58 55.7% n/a -0.29 n/a
Source: Reuters.com, SEC Filings.
Financial Summary
IVN recently announced its results for the quarter ended March 31, 2010. All figures are in U.S. dollars, unless otherwise stated.
In the first quarter of 2010, IVN recorded a net loss of $193.9 million ($0.45 per share), compared to a net loss of $56.0 million ($0.15 per share) in the first quarter of 2009, representing an increase of $137.9 million.
Results for the first quarter were mainly affected by $71.4 million in exploration expenses, $20.3 million in cost of sales, $8.3 million in general and administrative expenses, $13.4 million in interest expense, $154.3 million in loss on conversion of convertible credit facility and $10.1 million in share of losses of significantly influenced investees. These amounts were offset by coal revenue of $13.9 million, $4.6 million in interest income, $6.6 million in income from discontinued operations and $1.7 million in mainly unrealized foreign exchange gains.
Exploration expenses of $71.4 million in the first quarter of 2010 increased $37.3 million from $34.1 million in first quarter the year prior. The exploration expenses included $59.2 million spent in Mongolia ($26.9 million in the first quarter of 2009), primarily for Oyu Tolgoi and Ovoot Tolgoi, and $10.8 million incurred by Ivanhoe Australia ($6.1 million in the first quarter of 2009).
Exploration costs are charged to operations in the period incurred and often represent the bulk of IVN’s operating loss for that period. The Company will commence capitalizing Oyu Tolgoi development costs in the second quarter of 2010.
IVN’s cash position, on a consolidated basis at March 31, 2010, was $1.3 billion. As of May 14, 2010, IVN’s current consolidated cash position is approximately $1.3 billion.
Financial Strength (Jul-14-2010) Company Industry Sector S&P 500
Quick Ratio (MRQ) 2.87 0.72 1.02 0.80
Current Ratio (MRQ) 2.91 1.05 1.44 0.95
Long-Term Debt to Equity(MRQ) 38.74 27.47 25.73 136.73
Total Debt to Equity (MRQ) 78.73 41.79 53.70 204.89
Source: Reuters.com, SEC Filings.
Analyst Consensus
This is the consensus forecast among eight polled investment analysts. Against the Ivanhoe Mines Ltd company.
Analyst Detail Buy Outperform Hold Underperform Sell No Opinion
Latest 1 4 2 1 0 0
4 weeks ago 1 3 3 1 0 0
2 months ago 1 3 2 1 0 0
3 months ago 1 4 1 1 0 0
Last year 3 3 1 1 0 0
Source: www.ft.com
Consensus Estimates Analysis
# of Estimates Mean High Low 1 Year Ago
SALES (in millions)
Year Ending Dec-10 2 118.00 123.00 113.00 6.50
Year Ending Dec-11 2 222.00 313.00 131.00 13.00
EARNINGS (per share)
Quarter Ending Sep-10 2 -0.08 -0.02 -0.14 –
Quarter Ending Dec-10 2 -0.07 -0.02 -0.12 –
Year Ending Dec-10 4 -0.31 -0.08 -0.60 -0.13
Year Ending Dec-11 3 -0.34 -0.01 -0.52 -0.03
Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=IVN
Investment Highlights
David Huberman, lead independent director of IVN’s board of directors and chair of the board’s Corporate Governance Committee, said recently that IVN has exercised its contractual right and given 60 days advance notice to Rio Tinto of a forthcoming change in the agreement governing Rio Tinto’s investment in IVN. Huberman said that a recent meeting of the board of directors authorized the termination of the Strategic Purchaser Covenant that has restricted the ability of IVN to issue shares to strategic investors since October 2007.
The termination of the covenant will permit IVN to issue more than 5% of its common shares to one or more third-party strategic investors, which could include major mining companies. Huberman said that the removal of the Strategic Purchaser Covenant will give the board the flexibility to consider all available opportunities as part of its objective of realizing maximum value for IVN shareholders.
Andrew Harding, CEO of Rio Tinto’s copper division, resigned from IVN’s board of directors before the meeting.
Aluminum Corp. of China is considering purchasing a direct minority stake in one of the world’s largest undeveloped gold-and-copper mine deposits, according to project partner Rio Tinto PLC. Canada’s IVN owns a 66% stake in the Mongolian Oyu Tolgoi project and has previously expressed interest in selling a minority stake to a second strategic investor. Rio Tinto PLC owns an indirect interest in the project through its 29.6% equity stake in IVN.
Quarterly Highlights
On May 11, 2010, IVN released a new Integrated Development Plan (IDP-10) that estimates the Oyu Tolgoi Project in Mongolia should produce more than 1.2 billion pounds (544,000 tonnes) of copper and 650,000 ounces of gold every year for the first 10 years.
Peak single-year production from Oyu Tolgoi is estimated at 1.7 billion pounds (800,000 tonnes) of copper and 1.1 million ounces of gold.
Full-scale construction at Oyu Tolgoi expected to commence in June 2010 and production is expected to commence in mid-2013.
Oyu Tolgoi expects to become one of the world’s top three copper-gold mines.
IDP-10 is the first declaration of underground reserves at Oyu Tolgoi contained in the first lift of the Hugo North block-cave mine.
On March 31, 2010, IVN announced the successful completion of the conditions precedent that had been incorporated into the landmark Investment Agreement to build and operate the Oyu Tolgoi Project. The Investment Agreement, which creates a stable and long-term regulatory, fiscal and legal environment for the project, now has taken full legal effect and the Government of Mongolia has become a partner in the development of the Oyu Tolgoi Project.
Source: http://www.ivanhoemines.com/s/Home.asp
Technical Analysis
Source: http://stockcharts.com
Friday, IVN closed above its 13-day moving average. This is generally considered to be an indication of a bullish trend.
IVN is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.
The MACD for IVN currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above zero, which implies that the underlying moving averages are trending higher.
Comparative Analysis
Company Name Ticker Price per Mrkt. Cap. P/E P/S
Jul-14-2010 symbol Share, $ $ Mn 2010 2011 2010 2011
Ivanhoe Mines Ltd IVN 17.07 7.54B n/a n/a 172.43 n/a
Tech Resources Ltd TCK 33.72 19.87B 7.77 n/a 2.72 n/a
Ivanhoe Australia Ltd IVA 2.92 935.97M n/a n/a 574.19 n/a
Metal Mining Median
9.44B n/a n/a 249.78 n/a
Ivanhoe Mines Ltd (USA) IVN 16.45 7.26B n/a n/a 171.51 n/a
Source: Thomson Financial
Insider Trading Activity
NET SHARES PURCHASE ACTIVITY
Inside Purchases – Last 6 Months
Shares Transaction
Purchases n/a n/a
Sales n/a n/a
Net Shares Purchased (Sold) n/a n/a
Total Insider Shares Held n/a n/a
% Net Shares Purchased (Sold) n/a n/a
Net Institutional Purchases — Prior Qtr to Latest Qtr
Shares
Net Shares Purchased (Sold) n/a
% Change in Institutional Shares Held n/a
Source: Yahoo Finance
DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice.
The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice. The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.
Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report. Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.
Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.
Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.
We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.
To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).
We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.
The Company was formerly known as Indochina Goldfields Ltd. and changed its name to Ivanhoe Mines Ltd. in June 1999. Ivanhoe Mines Ltd. was founded in 1994 and is headquartered in Vancouver, Canada.
Share Statistics (Jul-14-10)
FY
2007 FY
2008 %
Chg Q4 2008 Q4 2009 %
Chg
Symbol IVN Revenue, $Mn 0.0M 3.13M 100.0% n/a 9.96M n/a
Current price $16.45 Gross marg. n/a 38.2% n/a n/a 15.3% n/a
52wk Range: $18.94-7.09 Oper. margin -n/m -10471% n/a n/a -549.5% n/a
Avg Vol (3m): 2,000,450 Net margin -n/m -5882% n/a n/a -1299% n/a
Market Cap. 7.26B
Shares Outst. 441.9M EPS, $ -1.31 -0.58 55.7% n/a -0.29 n/a
Source: Reuters.com, SEC Filings.
Financial Summary
IVN recently announced its results for the quarter ended March 31, 2010. All figures are in U.S. dollars, unless otherwise stated.
In the first quarter of 2010, IVN recorded a net loss of $193.9 million ($0.45 per share), compared to a net loss of $56.0 million ($0.15 per share) in the first quarter of 2009, representing an increase of $137.9 million.
Results for the first quarter were mainly affected by $71.4 million in exploration expenses, $20.3 million in cost of sales, $8.3 million in general and administrative expenses, $13.4 million in interest expense, $154.3 million in loss on conversion of convertible credit facility and $10.1 million in share of losses of significantly influenced investees. These amounts were offset by coal revenue of $13.9 million, $4.6 million in interest income, $6.6 million in income from discontinued operations and $1.7 million in mainly unrealized foreign exchange gains.
Exploration expenses of $71.4 million in the first quarter of 2010 increased $37.3 million from $34.1 million in first quarter the year prior. The exploration expenses included $59.2 million spent in Mongolia ($26.9 million in the first quarter of 2009), primarily for Oyu Tolgoi and Ovoot Tolgoi, and $10.8 million incurred by Ivanhoe Australia ($6.1 million in the first quarter of 2009).
Exploration costs are charged to operations in the period incurred and often represent the bulk of IVN’s operating loss for that period. The Company will commence capitalizing Oyu Tolgoi development costs in the second quarter of 2010.
IVN’s cash position, on a consolidated basis at March 31, 2010, was $1.3 billion. As of May 14, 2010, IVN’s current consolidated cash position is approximately $1.3 billion.
Financial Strength (Jul-14-2010) Company Industry Sector S&P 500
Quick Ratio (MRQ) 2.87 0.72 1.02 0.80
Current Ratio (MRQ) 2.91 1.05 1.44 0.95
Long-Term Debt to Equity(MRQ) 38.74 27.47 25.73 136.73
Total Debt to Equity (MRQ) 78.73 41.79 53.70 204.89
Source: Reuters.com, SEC Filings.
Analyst Consensus
This is the consensus forecast among eight polled investment analysts. Against the Ivanhoe Mines Ltd company.
Analyst Detail Buy Outperform Hold Underperform Sell No Opinion
Latest 1 4 2 1 0 0
4 weeks ago 1 3 3 1 0 0
2 months ago 1 3 2 1 0 0
3 months ago 1 4 1 1 0 0
Last year 3 3 1 1 0 0
Source: www.ft.com
Consensus Estimates Analysis
# of Estimates Mean High Low 1 Year Ago
SALES (in millions)
Year Ending Dec-10 2 118.00 123.00 113.00 6.50
Year Ending Dec-11 2 222.00 313.00 131.00 13.00
EARNINGS (per share)
Quarter Ending Sep-10 2 -0.08 -0.02 -0.14 –
Quarter Ending Dec-10 2 -0.07 -0.02 -0.12 –
Year Ending Dec-10 4 -0.31 -0.08 -0.60 -0.13
Year Ending Dec-11 3 -0.34 -0.01 -0.52 -0.03
Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=IVN
Investment Highlights
David Huberman, lead independent director of IVN’s board of directors and chair of the board’s Corporate Governance Committee, said recently that IVN has exercised its contractual right and given 60 days advance notice to Rio Tinto of a forthcoming change in the agreement governing Rio Tinto’s investment in IVN. Huberman said that a recent meeting of the board of directors authorized the termination of the Strategic Purchaser Covenant that has restricted the ability of IVN to issue shares to strategic investors since October 2007.
The termination of the covenant will permit IVN to issue more than 5% of its common shares to one or more third-party strategic investors, which could include major mining companies. Huberman said that the removal of the Strategic Purchaser Covenant will give the board the flexibility to consider all available opportunities as part of its objective of realizing maximum value for IVN shareholders.
Andrew Harding, CEO of Rio Tinto’s copper division, resigned from IVN’s board of directors before the meeting.
Aluminum Corp. of China is considering purchasing a direct minority stake in one of the world’s largest undeveloped gold-and-copper mine deposits, according to project partner Rio Tinto PLC. Canada’s IVN owns a 66% stake in the Mongolian Oyu Tolgoi project and has previously expressed interest in selling a minority stake to a second strategic investor. Rio Tinto PLC owns an indirect interest in the project through its 29.6% equity stake in IVN.
Quarterly Highlights
On May 11, 2010, IVN released a new Integrated Development Plan (IDP-10) that estimates the Oyu Tolgoi Project in Mongolia should produce more than 1.2 billion pounds (544,000 tonnes) of copper and 650,000 ounces of gold every year for the first 10 years.
Peak single-year production from Oyu Tolgoi is estimated at 1.7 billion pounds (800,000 tonnes) of copper and 1.1 million ounces of gold.
Full-scale construction at Oyu Tolgoi expected to commence in June 2010 and production is expected to commence in mid-2013.
Oyu Tolgoi expects to become one of the world’s top three copper-gold mines.
IDP-10 is the first declaration of underground reserves at Oyu Tolgoi contained in the first lift of the Hugo North block-cave mine.
On March 31, 2010, IVN announced the successful completion of the conditions precedent that had been incorporated into the landmark Investment Agreement to build and operate the Oyu Tolgoi Project. The Investment Agreement, which creates a stable and long-term regulatory, fiscal and legal environment for the project, now has taken full legal effect and the Government of Mongolia has become a partner in the development of the Oyu Tolgoi Project.
Source: http://www.ivanhoemines.com/s/Home.asp
Technical Analysis
Source: http://stockcharts.com
Friday, IVN closed above its 13-day moving average. This is generally considered to be an indication of a bullish trend.
IVN is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.
The MACD for IVN currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above zero, which implies that the underlying moving averages are trending higher.
Comparative Analysis
Company Name Ticker Price per Mrkt. Cap. P/E P/S
Jul-14-2010 symbol Share, $ $ Mn 2010 2011 2010 2011
Ivanhoe Mines Ltd IVN 17.07 7.54B n/a n/a 172.43 n/a
Tech Resources Ltd TCK 33.72 19.87B 7.77 n/a 2.72 n/a
Ivanhoe Australia Ltd IVA 2.92 935.97M n/a n/a 574.19 n/a
Metal Mining Median
9.44B n/a n/a 249.78 n/a
Ivanhoe Mines Ltd (USA) IVN 16.45 7.26B n/a n/a 171.51 n/a
Source: Thomson Financial
Insider Trading Activity
NET SHARES PURCHASE ACTIVITY
Inside Purchases – Last 6 Months
Shares Transaction
Purchases n/a n/a
Sales n/a n/a
Net Shares Purchased (Sold) n/a n/a
Total Insider Shares Held n/a n/a
% Net Shares Purchased (Sold) n/a n/a
Net Institutional Purchases — Prior Qtr to Latest Qtr
Shares
Net Shares Purchased (Sold) n/a
% Change in Institutional Shares Held n/a
Source: Yahoo Finance
DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice.
The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice. The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.
Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company. An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report. Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.
Any individual who chooses to invest in any securities should do so with caution. Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested. Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.
Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934. Subscribers are cautioned not to place undue reliance upon these forward looking statements. These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated. Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC. You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.
We are committed to providing factual information on the companies that are profiled. However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions. We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so. Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.
To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).
We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.
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