* To spend almost all working capital on South Africa mine
* Q1 net loss $48.8 mln vs $ 42.4 mln year earlier
* Shares fall as much as 7 percent
(Adds analyst comments, updates shares)
By Anannya Pramanick
May 15 Canada's Ivanhoe Mines Ltd said
it would not be able to develop two mines in the Democratic
Republic of Congo unless it gets more funds by the end of June,
sending its shares down as much as 7 percent in early trading.
Ivanhoe, which does not have any producing mine, said it
would spend most of its funds on its Platreef mine in South
Africa, which is estimated to produce about 785,000 ounces of
platinum, palladium, rhodium and gold a year.
The company said it had consolidated working capital of
about $149.8 million as of March 31, down from $201.7 million at
Dec. 31. It needs about $1.7 billion to bring the mechanized
Platreef mine into production.
The company said on Thursday its access to financing was
uncertain and that there was no assurance that additional
funding would be available to the company in the near future.
"Realistically the only option available at the moment is
probably to raise equity," Raymond James analyst Alex Terenview
The Congo mines, Kamoa and Kipushi, make up 83 percent of
the company's net asset value, he said.
Ivanhoe holds a 95 percent stake in Kamoa copper mine and a
68 percent stake in Kipushi, which mines zinc, lead and
germanium apart from copper.
Ivanhoe will likely look for a partner to develop Kamoa,
It would be less likely to sell its stake in Kipushi as it
could be the company's first source of cash flow, he said.
The company owns 90 percent of Platreef and a Japanese
consortium led by Itochu Corp owns the rest.
Ivanhoe also posted a bigger loss in the first quarter, hurt
by higher exploration costs. Net loss widened to $48.8 million
in the quarter ended March 31 from $42.4 million a year earlier.
Robert Friedland, Ivanhoe's founder and chairman, made a
name for himself in 1996 by selling an undeveloped Canadian
nickel-copper project called Voisey's Bay for C$4.3 billion
($3.94 billion). The mine is now owned by Brazil's Vale SA
He solidified his reputation with the earlier incarnation of
Ivanhoe Mines, now called Turquoise Hill Resources,
building the Oyu Tolgoi copper-gold mine in Mongolia. Global
miner Rio Tinto now controls Turquoise Hill and
operates the massive mine.
Ivanhoe's shares fell to C$1.67 on the Toronto Stock
Exchange on Thursday. They have fallen more than 27 percent in
the last 12 months.
($1 = 1.0906 Canadian Dollars)
(Additional reporting by Swetha Gopinath in Bangalore; Editing
by Don Sebastian)