8 by tomorrow?, page-19

What might have been for BHP's WMC takeover
BY: MATT CHAMBERS From: The Australian October 01, 2011 12:00AM
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IT is well known that the massive Oyu Tolgoi copper deposit in Mongolia slipped through the fingers of the then BHP as part of its big asset selloff in the late 1990s and early 2000s.

What is not well known is that the mine now being developed by Rio Tinto could have played a huge part in the outcome of Australia's biggest mining takeover, had Western Mining followed through on what were advanced talks to buy the deposit.

If the exploration-focused Western Mining (which later became WMC Resources) had bought the deposit, which was eventually picked up by Canada's Ivanhoe Mines for just $US5 million, BHP's $9 billion 2005 takeover could have been very different. It is understood WMC was close to buying the asset in 2000 but decided not to because it was thought to be too small.

AngloGold had also been interested, but it was Indochina Goldfields, which became Ivanhoe, that snapped it up.



By the time Rio entered the project in 2006, it had to pay about $US700m for a 19.9 per cent stake in Ivanhoe.

The gravelly Gobi desert ground was pegged in 1996 by two Mongolian geologists and an American working for a joint venture between the Russian and Mongolian governments and US-based Magma Copper.

Magma was eventually bought by BHP in 1996 in an ill-fated acquisition that nearly sunk the Australian miner and led to an asset selloff, including Oyu Tolgoi and other deposits in areas it perceived to be risky.

Oyu Tolgoi also nearly slipped through Ivanhoe's fingers. According to one of the Mongolian geologists who pegged it, Munkhbat T, two years after having bought the ground, Ivanhoe had sunk 130 drill holes without success and decided on just three more.

One of them, which was drilled between two previous BHP holes, hit the deposit, and the rest is history.