Miner Ivanhoe Australia’s tumultuous year continued as it announced plans to slash exploration spending by half.
The Rio Tinto-controlled company will reduce exploration expenditure to about $15 million a year from nearly double that last year.
Queensland-focused Ivanhoe Australia said it would cut 50 jobs last month to help save $10 million a year as new owner Rio Tinto moved to cut costs in the company.
In its latest quarterly report, the company acknowledged in a statement that its exploration effort had been aggressive previously, but would now be more focused.
“Our geological teams are now evaluating all the collected data to establish a new exploration focus,” the company said.
“To date the review has identified high grade copper/gold prospects of interest.”
It will cut more costs by deferring capital expenditure at its sole producing project, the Osborne copper and gold mine.
The mine’s first copper and gold shipments were made during the June quarter, reaping about $20 million in net sales revenue, although operating costs are still being worked out, the company said.
Rio Tinto took over Ivanhoe Australia in January when it assumed control at Canadian parent company Ivanhoe Mines and therefore the huge Mongolian Oyu Tolgoi copper-gold project.
Founding Ivanhoe Australia founding CEO Peter Reeve quit last month.
However investors appear to have decided Rio has no interest in growing Ivanhoe’s Australian arm, with its shares plummeting by about 77 per cent since January.
Its shares improved by 1.5 cents, or three per cent, on Monday to 46 cents having received a `please explain’ letter from the ASX following heavy volume falls last week.
It said it could not explain the moves.
A new look board – with four out of nine directors now Rio nominees – is completing a strategic and business review it says is positioning the company for growth.
Ivanhoe Australia said on Monday that it secured a $50 million 12-month funding facility from majority shareholder Ivanhoe Mines.
The company would need a partner to fund an estimated $400 million in projects around Cloncurry, including plans for Australia’s first high-grade rhenium and molybdenum mine.
Rhenium is used mainly by turbine and engine manufacturers, while molybdenum is used in alloy steels.
