Barrick (NYSE:ABX) Finishes Sale of Osborne Mine to Ivanhoe Australia (ASX:IVA)

Mining giant Barrick Gold (NYSE:ABX) has finished its sale of the Osborne copper/gold mine, based in Queensland, to Ivanhoe Australia (ASX:IVA).

Ivanhoe Australia CEO Peter Reeve said, “The acquisition of the Osborne copper/gold operation has fundamentally altered Ivanhoe Australia’s development path and will allow us to become a significant base-metals producer much earlier than we originally expected.”

Ivanhoe Australia paid A$17.4-million for the project, with Barrick also getting a 2 percent net return smelter royalty from the deal, which is capped at A$15 million.

Ivanhoe will also pick up all the A$18.4 million in environmental obligations related to the project.

Production at the Osborne facility is expected to begin 2011 with molybdenum and rhenium ore being the first in line to be processed.

Ivanhoe (NYSE:IVN) Slaps Down "False and Misleading" Information from 'Business Spectator' and 'The Australian'

Ivanhoe Mines (NYSE:IVN) noted in a press release that recent information published on the 'Business Spectator' website and in 'The Australian' newspaper contained "false and misleading information" about the mining company.

Concerning the numbers, some of the assertions made which Ivanhoe refutes, includes the costs of the Oyu Tolgoi copper-gold project in Mongolia, which was said to be $4 billion, but is in fact $4.6 billion, according to Ivanhoe. Those numbers include $1 billion to be invested on part of the "phase-two development of the planned underground mine."

Another bit of wrong data is that their partner Rio Tinto (NYSE:RTP) can only acquire a 44 percent stake in Ivanhoe. The percentage is actually higher than that, up to as much as 46.65 percent.

One more serious allegation made against Ivanhoe was they have underestimated the capital costs of the mine, which the miner countered was untrue, and the project's major contracts remain within budget and ahead of schedule.

Full press release

Ivanhoe Australia Raising $211 Million for Osborne, Merlin Acquisitions

Ivanhoe Australia, whose biggest stakeholder is Ivanhoe Mines (NYSE:IVN), will via an institutional placement raise $211 million for acquisitions and expansion.

The particular acquisition they're looking at is the Osborne gold project, and the development side is the Merlin molybdenum project. Part of the capital will also be used to pay down some of the debt Ivanhoe Australia owes to Ivanhoe Mines.

After the completion of the deal, Ivanhoe Mine's stake in the company will decrease to 65 percent.

Chief executive Peter Reeve said, “The equity raising will facilitate Ivanhoe Australia’s development plan, including first production of molybdenum and rhenium ore from Little Wizard in 2011, and Merlin during 2012.”

Ivanhoe Australia is buying Osborne from Barrick Gold (NYSE:ABX) for close to A$18 million and the Merlin development in Queensland for A$55 million.

Current shareholders of Ivanhoe Australia will be able to acquire new shares in the company for A$2.88 via a one-for-four offer. That is a 10 percent discount from the closing price on August 9.