COMMENT: Although the funds raised in the offering will alleviate IVN
in finding funds required for further advancements of the Oyu Tolgoi mine, from a fundamental perspective the discount of 32% is significant enough to erode the shareholders' value by considerable margin.
COMMENT: Rio and IVN
last month signed a wide-ranging agreement to ensure funding for the Oyu Tolgoi project, including plans for US$1.8 billion in equity financing and a bridge-loan and support from Rio for US$3 billion-US$4 billion in project financing being negotiated with multinational lenders.
's cash position, as of March 31, 2012, was US$895.1 million.
However, Chalko and IVN
agreed to postpone the takeover process until 10 August 2012 or longer if the government of Mongolia will drag out the new foreign investment law.
COMMENT: The news, in our opinion, has moderately positive impact on IVN
price as the company was able to generate first gold and copper concentrate at its Osborne processing facility bought roughly 18 months ago.
COMMENT: We view the news as having neutral impact on IVN
. The construction of Oyu Tolgoi mining complex is in line with company's schedule and market expectations.