Ivanhoe gearing up for construction of main project, posts US$492.5-million loss

SINGAPORE - Ivanhoe Mines (TSX:IVN) reported a US$492.5 million net loss in the first quarter, primarily due to the revaluation of a derivative security as the company worked on building the huge Oyu Tolgoi copper-gold-silver complex in Mongolia.

The company, which owns two-thirds of Oyu Tolgoi, said Friday that overall construction was about 15 per cent complete at the end of March — slightly ahead of schedule.

The loss, reported in U.S. currency, was the equivalent of 79 cents per share and compared with a net loss of $193.9 million or 43 cents per share in the first quarter of 2010.

The quarter included a $432.5-million loss related to a change in the fair value of a derivative.

Exploration expenses were $46.2 million, down from $71.4 million in the first quarter of 2010. Only about $13.5 million of the exploration expenses were in Mongolia, while $30.4 million was incurred by Ivanhoe Australia.

Revenue from coal sales by Ivanhoe's publicly traded subsidiary SouthGobi Resources (TSX:SGQ) was $20.2 million. That was up from $13.9 million in the first quarter of 2010 but down from $41.6 million in the fourth quarter of 2010.

During the quarter, Ivanhoe generated US$1.18 billion from a rights offering to shareholders. At the end of the quarter, Ivanhoe had $1.9 billion of cash and as of May 13 its cash position was $1.6 billion.

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