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Chinese Monywa deal leaves questions about Ivanhoe’s role unanswered

By Canadian Friends of Burma  •  June 24, 2010

In response to a recent report by the Wall Street Journal that a Chinese weapons manufacturer China North Industries Corp (Norinco) signed a cooperation agreement with the Burmese regime in early June regarding the Monywa copper mine, Canadian Friends of Burma executive Director Tin Maung Htoo called on Canadian government to force Ivanhoe Mines to “disclose details surrounding the blind trust responsible for the firm’s 50% stake in Monywa copper project officially known as Myanmar Ivanhoe Copper Company Limited.”

Tin Maung Htoo, said that “Ivanhoe in a shameless effort to subvert western sanctions against Burma, is deliberately hiding behind a murky blind trust agreement to hide the fact that it still owns half 50% of Burma’s largest mine.”

Tin Maung Htoo responded to the news of the Chinese Monywa deal with grave concern, saying “reports that Norinco, a Chinese weapons manufacturer is now involved somehow in the Monywa project are deeply disturbing.  We are all appalled by this apparent copper for weapons deal.  The last thing Burma’s vile regime needs are more guns to kill people.”

According to the Wall Street Journal on Wednesday June 23 Norinco posted on its website a brief and vaguely worded statement about the Monywa deal signed during Chinese Premier’s Wen recent visit to Burma, the announcement was dated June 10.

The Chinese announcement does not indicate that the Monywa copper mine’s ownership changed hands.  While the Wall Street Journal article stated that the mine was previously owned by Vancouver’s Ivanhoe Mines, the truth is in fact more complicated.

Myanmar Ivanhoe Copper Company Limited was created as a 50-50 joint venture between a state owned entity of the Burmese military regime and Ivanhoe Mines headed by notorious Chairman Robert Friedland.  In February 2007, Ivanhoe Mines announced that it had “sold” its 50% stake in MICCL operator of Burma’s largest mine to an “independent third party trust” in return for a guarantee that when the trust sells the stake Ivanhoe will then be paid.  Ivanhoe’s most recent filings with the SEC indicate that the blind trust has not sold Ivanhoe’s 50% stake in Monywa.

In October 2007 Ivanhoe, citing a lack of knowledge about what was occurring at MICCL’s Monywa copper mine, claimed that it was “prudent to record a $134.3 million write-down” in the value of their 50% holding in the Burmese joint venture thus reducing its value to zero. Ivanhoe continues to own a 50% stake in the joint venture as the trust has been unable to find a buyer for Ivanhoe’s Burmese holdings.

Ivanhoe failed to disclose to its shareholders that in November 2007 the European Union placed MICCL on its sanctions black list of targeted firms connected to the Burmese regime.  A move followed by the US Treasury Department in January in 2009.

In June 2009 the Myanmar Times reported that MICCL managing director Glenn Ford stated that the Monywa copper project was up an running and “one of the lowest-cost production mines in the world”.

How a mine that is officially valued at zero by Ivanhoe’s accountants could still continue to produce highly valued copper remains a question that Ivanhoe refuses to explain. “Ivanhoe’s refusal to come clean about what is really happening in Monywa is a disgrace, the Canadian government must investigate this outrageous charade” says Tin Maung Htoo.

Media contact: 613-297-6835

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