The deal will finance Ivanhoe’s key Mongolian project

Drew Hasselback
Sun

London-based Rio Tinto PLC interest is a major shot in the arm for Ivanhoe. Photograph by : Vancouver Sun Illustration

Ivanhoe Mines Ltd. received a much-needed credibility boost Wednesday after one of the world’s biggest mining companies acquired the rights to purchase up to 40 per cent of the Canadian miner.

London-based Rio Tinto PLC, the world’s second-largest miner by market value, Wednesday bought about 10 per cent of Ivanhoe for $345 million and reached an agreement to pay more than $1.36 billion in stages to acquire another 30 per cent.

The funds would provide Ivanhoe with enough cash to finance its flagship project at the Oyu Tolgoi copper and gold deposit in Mongolia.

Rio’s interest is a major shot in the arm for Ivanhoe and Oyu Tolgoi, especially since the Mongolian parliament passed a windfall tax measure that, at least for some investors, raised questions about the economics of the project.

“This gives Ivanhoe a lot more credibility than it had before,” said Ray Goldie, analyst with Salman Partners in Toronto.

Robert Friedland, Ivanhoe’s billionaire chairman and founder, owns 27 per cent of Ivanhoe’s stock. He described Rio’s investment as “the most significant event in the company’s 13-year history.”

Oyu Tolgoi “is probably the world’s largest undeveloped copper and gold deposit, hence our interest,” Rio Tinto spokesman Nick Cobban said by phone from London. “It fits our investment plans.”

“We have long believed that the right partnership would bring important benefits to the Oyu Tolgoi project, the people of the South Gobi region and all of Mongolia,” Friedland said in a release on Wednesday.

“We said in a formal statement three years ago that Ivanhoe was evaluating strategic partnerships with qualified companies that had relevant experience and resources to help ensure completion of a successful mining complex at Oyu Tolgoi. Today’s announcement marks the realization of that vision.”

Ivanhoe’s stock rose 31 per cent on huge volume following the announcement of the deal Wednesday. The shares closed on the Toronto Stock Exchange at $9.76, up $2.33. The stock is now up eight per cent on the year.

Rio Tinto shares were up $3.49 to $206.05 US on the New York Stock Exchange.

Ivanhoe’s shares came under intense pressure last May when Mongolia imposed a windfall tax after weeks of protests by demonstrators who set up tent camps, staged a brief hunger strike and burned effigies of Mongolia’s president and Friedland.

Ivanhoe’s board was initially shocked by the measure. But the company later noted the tax would be applied on the revenue earned from shipping copper and gold ore outside Mongolia for processing. Ivanhoe intends to process its ore within the country.

However, some uncertainty remains. Ivanhoe is still negotiating an investment agreement that would define the company’s tax and royalty relationship with the Mongolian government.

“The tax changes still haven’t been clarified,” Goldie said. “And we’re also still not clear what extent they’ll apply to whatever deal Ivanhoe gets.”

Rio Tinto wants Ivanhoe to sign a “stability agreement” with the Mongolian government within “much less than a year,” said Thomas Albanese, a Rio Tinto executive who will join Ivanhoe’s board of directors.

Rio has specific expertise with a cost-saving mining technique known as block caving. It’s a relatively tricky process, but it can cut costs, especially at a large project like Oyu Tolgoi.

Ivanhoe expects Oyu Tolgoi, which means Turquoise Hill, to produce one billion pounds of copper and 330,000 ounces of gold each year for 35 years.

Rio will buy another 9.95 per cent for $442 million if and when Ivanhoe negotiates an investment agreement with the government.

Rio has also acquired warrants that entitle it to pay another $920 million to up its stake to 33.35 per cent.

Finally, Rio has the right to buy another 6.6 per cent of Ivanhoe’s shares on the open market.

“The partnership significantly removes financing risk for the massive Oyu Tolgoi project,” said Tony Lesiak, analyst with UBS.

© The Vancouver Sun 2006

Sun

When faced with pressing social problems such as drug addiction, prostitution or homelessness, we’re often confronted with a utopian mentality, one that sees the complete and immediate eradication of such problems as the only solution.

During the debates about Vancouver’s supervised injection facility, this mentality was in full view: Despite the site’s potential to reduce transmission of blood-borne diseases and to stabilize drug users, utopians opposed the site because, they argued, it would not lead directly to abstinence.

Similarly, those possessed of a utopian mindset oppose harm reduction measures related to prostitution, because such measures don’t necessarily bring about an immediate and final end to the world’s oldest profession.

Now, with the Non-Partisan Association councillors suggesting some novel proposals to alleviate Vancouver’s homelessness problem, we see the utopian attitude once again rearing its head.

Among the proposals, the councillors suggest that dormitory-style housing be considered as one way of getting people off the streets or out of the city’s “Third World” residential hotels.

Currently, the city’s minimum standard for self-contained units is 400 square feet, with permission in some cases to go down to 320 square feet. But the councillors would like to see different forms of housing down to 100 square feet. These units would be similar to university dormitories, where people have their own spaces, but share amenities such as kitchens and bathrooms.

Vision Vancouver Coun. Heather Deal opposes the suggestion, saying, “That’s like stacking [people] like cordwood.” Even if that’s true, it still seems a lot better than leaving people out in the cold. And what is the alternative?

Vancouver has been beset by a serious homelessness problem for decades, and it’s far from solved. The city has failed to achieve its own goal of adding 800 new units of social housing a year — indeed it has only 292 units under construction.

Part of the reason for the failure is the cost of developing such housing: Mayor Sam Sullivan notes, for example, that a project being built on East Hastings is costing $200,000 a unit because it has to be built to the existing guidelines. Yet if the units were smaller, four or five units could be built for the same price tag.

Clearly, our current methods for solving the homelessness problem are inadequate, and we are in need of more creative solutions. Providing tax breaks to developers who provide social housing is one such solution — and one suggested by the NPA councillors — but it is not enough.

Instead, we must be open to all suggestions — including ones that are less than utopian — if we’re ever to get a handle on the problem.

Permitting smaller units is one less than utopian suggestion, but it could help to stabilize otherwise homeless people by providing them with an address and a place to live. It is not ideal — and we must not lose sight of that fact, as we must continue searching for better options — but it is better than nothing, which is what homeless people have right now.

© The Vancouver Sun 2006

NowPublic relaunches with new tools to help get your words and photos online

Peter Wilson
Sun

Mark Schneider, news guy for NowPublic (left), and Michael Tippett, co-founder, at the site for their new offices. Photograph by : Bill Keay, Vancouver Sun

For a while, Mark Schneider of the website NowPublic was calling himself the managing editor.

And that’s because that’s what he was, an actual news guy — a traditional journalist, onetime CTV National News reporter and journalism instructor at the University of British Columbia — who had made the transition to a completely digital world.

The Vancouver-based site, www.nowpublic.com, was the kind of place where someone with a digital phone, who happened to spot smoke billowing from a Manhattan high-rise that had been hit by a plane (as someone did this Wednesday), would snap off a few photos and post them almost instantly.

Or they might, at a more leisurely pace, send in a story they thought was being underplayed in the traditional media.

“I was stuck on the credibility thing,” Schneider said of his decision to call himself managing editor.

Then NowPublic co-founder Michael Tippett had a chat with him.

“Tippett and I started talking about that and he said you know you’re really the actual news guy, that’s what you do here,” said Schneider.

Now Schneider’s official title is ‘actual news guy’ and his e-mail address is [email protected].

All of which, he admits, highlights how his job puts him directly into the current ideological battle between old-line journalists (alleged to be corrupt and irrelevant) and the bloggers (said to be lazy and irresponsible).

In this, NowPublic walks a middle line.

“It’s not that we think that citizen journalism is going to defeat traditional journalism,” said Schneider. “That’s not in our head at all. We like journalists. We see ourselves, all of us, as part of the news business.

“But we’re just opening up the envelope a bit and acknowledging what every journalist knows — that people who actually witness the news have important things to say about it.”

To do this Schneider and Tippett are creating a set of tools that allow the eyewitnesses to history, and those who happen to be on the scene with a digital camera (still or video) when news happens, to put their words, photos and videos into context.

It’s what Tippett refers to as “newsifying.”

The problem is, said Tippett, that the nascent citizen journalists out there with their camera phones don’t know how to get their words and photos into the public eye or how to do it within a context.

“So our core mission in some sense is to ‘newsify’ user-generated content,” said Tippett. “They witness extraordinary events, they’re there. But what do they do with it?”

To this end, Now Public offers tools — and is about to offer a bunch more with a relaunch in mid-November — that make it easier for on-the-spot observers to file their words and images.

“We’re starting to provide some journalistic protocols that all journalists ask of themselves,” said Schneider. “And some of these are already implemented in our new highlight tool where we say, okay, if you’re going to write a headline try those tricks.

“And what are the five Ws of journalism? So there’s some prompting going to happen so that people can add value to their contributions and that increases the credibility not only of what they’re doing, but also their pleasure in being part of this process.”

© The Vancouver Sun 2006

PM: Trade with Asia at core of improving roads, ports

Ian Bailey
Province

STEPHEN HARPER

Prime Minister Stephen Harper yesterday cast the Pacific Gateway strategy as a national priority.

Harper, capping a two-day visit to Vancouver, promised $321 million in immediate funding for Gateway projects over four years. Ottawa has promised a total of $591 million over eight years for the Asia Pacific Gateway and Corridor Initiative.

The plan is aimed at improving road, rail and ports to smooth the passage of goods through B.C. between North American and Asian markets.

“Canada should be the crossroads between the massive economy of the United States and the burgeoning economies of Asia,” said Harper.

The prime minister was joined by Premier Gordon Campbell, mayors, business leaders, representatives of the three western provinces and others at the Ballantine Terminal.

The Port of Vancouver handled $43 billion in goods last year.

The Tories are expecting their support to boost Canada’s share of West Coast container traffic from nine to 14 per cent by 2020.

“[By 2020], there will be an enormous growth of the container traffic itself so we are not merely increasing our share, but we’re increasing our share of a growing pie,” Harper said.

The private sector is promising $3 billion for projects between 2004 and 2010.

The new money is to cover a shopping list of infrastructure projects including:

– A new Pitt River Bridge and Mary Hill interchange at a cost of $90 million,

– Up to $50 million for a new grade separation in the Roberts Bank Railway Corridor,

– Up to $37 million for the continued twinning of the Trans-Canada Highway in Banff National Park,

– Up to $100 million to build the South Fraser perimeter road linking Deltaport, Fraser River port and industrial areas to the Trans-Canada Highway.

Paul Martin’s ousted federal Liberal government backed the Gateway project — current Trade Minister David Emerson was a champion of the effort as Martin’s industry minister.

Campbell welcomed the announcement.

“Today is the launching pad of Canada’s Pacific century. We are opening up our Pacific ports to the world,” he said.

B.C. Transport Minister Kevin Falcon said the Gateway plan was so important that B.C. would have put up the cash itself had Ottawa not been willing.

“There’s just no question that had the federal government not come to the table, we would have pushed forward,” he said.

© The Vancouver Province 2006

Details of $591-million federal investment in Asia Pacific Gateway corridor scheme to be revealed

William Boei
Sun

The federal government is expected to put its money where its mouth is today after again declaring support Tuesday for B.C.’s Pacific Gateway strategy.

The Conservative government has promised $591 million over eight years in support of the Gateway plan, which aims to make B.C. the major corridor for trade between Asia — especially China — and North America.

“We want to capture the [Asian] trade of the North American heartland,” federal Transportation Minister Lawrence Cannon told the Vancouver Board of Trade Tuesday.

“Canada’s new government will in the very near future provide further details about the $591 million investment in the Asia Pacific Gateway corridor initiative,” Cannon said.

In an interview later, he would only say that an announcement would follow shortly.

It’s likely to come today, when Prime Minister Stephen Harper, Cannon and David Emerson, the federal minister for the Pacific Gateway strategy, will join B.C. Premier Gordon Campbell for an announcement.

B.C. Transportation Minister Kevin Falcon said earlier he expected Harper to announce support on his B.C. trip for the $800-million South Fraser Perimeter Road, which will link Deltaport and Fraser River port and industrial areas to the Trans-Canada Highway east of the Port Mann Bridge.

B.C. has asked Ottawa for $365 million for the new truck route. Falcon is also hoping Ottawa will kick in $90 million for a new $400-million Pitt River bridge, part of the related North Fraser Perimeter Road. That money was promised by the previous Liberal federal government, but has not been endorsed yet by Harper’s Conservatives.

Both roads are part of the province’s Gateway Program, a $3-billion road- and bridge-building project.

Cannon told the board of trade that “Vancouver stands on the threshold of a new era of prestige, achievement and economic growth. I believe that it could become one of the great cities of our time.”

He also promised that the Conservatives will take steps to restore Vancouver’s quality of life.

The city’s reputation for livability has been tarnished recently by air-quality problems, long waits for medical procedures and unsafe streets, Cannon said. The federal Liberals had tried to “talk the problem away,” but the Conservatives “feel a great need to act.”

Also Tuesday, Cannon took in a photo opportunity with TransLink officials and some of the regional transportation authority’s new buses. TransLink has so far received $76 million in federal fuel-tax dollars in a revenue-sharing agreement and is using the money to help pay for several bus orders.

GATEWAY SUPPORT

Lawrence Cannon, federal transportation minister, told the Vancouver Board of Trade on Tuesday, the Conservative government also wants ‘to capture the [Asian] trade of the North American heartland.’

© The Vancouver Sun 2006

Peter Wilson
Sun

warning I Canadian businesses are good at keeping up with digital security — both online and off — but they’re often doing it on outdated operating systems, and that means they can’t keep themselves safe with the latest technologies, according to a Microsoft expert.

“The security challenge in Canada is that generally we’re a little bit behind, for example, the U.S. and some other countries in technological adoption,” said Bruce Cowper, senior program manager, security initiative, Microsoft Canada

“The real challenge with that is that we’re not always deploying the latest revisions of the software, so perhaps we can’t take advantage of some of the latest technologies and security scenarios.”

In an interview, Cowper said that it concerns him that he’s still seeing older versions of Windows (like Windows 2000 and even earlier) in use at Canadian businesses.

“They’re very good at getting updates on their systems, but they’re updating older systems. For instance, they’re not using [Windows] XP with service pack 2, they’re not using the latest technologies.”

And, with the upcoming launch of Windows Vista, Cowper said he’s concerned that Canadian businesses, and even individual users, might just stay with what they have.

“I’m wondering if people are going to say, ‘You know what, Windows in whatever version we’ve got is good enough for what we need.’ And they’re doing that without looking at the situation and saying, ‘Actually, if I want to give the user the best, secure and most reliable experience, this is what I need to go for.’ “

He said that while companies tend to look at external threats flowing in to them from the Internet, a lot of the problems for corporations lie within.

“There’s the old example that if you present somebody with a screen that says ‘click here to see the dancing pigs and, oh, by the way, we’re going to infect your machine with a virus’ the probability is that they don’t know which one to choose so they think ‘oh, I’d better click here to see the dancing pigs.’ “

Windows Vista, said Cowper, is designed so that the end user doesn’t have to make those kinds of decisions.

“The user doesn’t have to think about it quite so much and isn’t presented with a lot of boxes saying ‘yes, no, are you sure, are you really sure?”

One of the security advances in Vista and in Internet Explorer 7, which also comes with XP, is an anti-phishing filter, which studies Websites for signs that they’re phishing sites and also refers either to an in-computer, or better yet, an external, constantly updated list of known phishing sites.

Cowper said that businesses may find they don’t have to do much of an upgrade of present hardware to run Vista, perhaps just a better graphics card or more memory.

As well, he added, the original outlay for hardware would be compensated for over time by the amount of money that can be saved with using Vista.

“It’s a lot easier for businesses if they don’t have to spend vast amounts of time reconfiguring or patching, updating and locking down systems.

“Ultimately, as a user you’re buying an experience, not just a computer with software on it. And you expect everything to work, to be secure by default and have as much of a rich experience as possible right from the get go, without having to spend vast amounts of time customizing and fiddling to get it up and running.”

© The Vancouver Sun 2006