UPDATE: Rio Tinto Boosts Ivanhoe Mines Stake To 22.4%
March 01 2010 - 12:52AM
Dow Jones News
Rio Tinto PLC (RTP) said Monday it will pay C$244.7 million to
up its stake in Ivanhoe Mines Ltd. (IVN.T) by 2.7% to 22.4% as the
pair edge closer to completing a feasibility study into their Oyu
Tolgoi copper joint venture in Mongolia.
Ivanhoe is issuing Rio with 15 million new shares for C$244.7
million at C$16.31 a share as part of an agreement dating back to
2008 that saw Rio provide funding for equipment for the
project.
Rio declined to comment on any plans to further boost its stake
but the miner has the right to up its holding to 44% by exercising
share purchase warrants and converting a US$350 million loan.
"Our further investment in Ivanhoe Mines underlines our
confidence in the quality of the world class Oyu Tolgoi deposit and
its priority in our project portfolio," Rio Tinto Copper Chief
Executive Andrew Harding said in a statement.
"We are working with Ivanhoe Mines on finalizing the conditions
precedent for completion of the Investment Agreement with the
Government of Mongolia and are looking forward to moving into the
development phase of the project."
There has been speculation that Rio could look to launch a full
takeover for Ivanhoe once a standstill agreement expires in October
2011, to up its exposure to the giant copper/gold project.
A spokesman for Ivanhoe declined to comment on Rio's stake
increase.
Ivanhoe and Rio struck a long awaited investment agreement with
the Mongolian government in October last year, which will see the
government take a 34% stake in the project.
The agreement is subject to conditions that must be met by April
6, including the completion of a feasibility study currently
underway on the project.
Ivanhoe also needs to raise significant funds for its share of
the cost of developing Oyu Tolgoi, which Mongolian Mining Minister
Dashdorj Zorigt last month said would likely total US$5
billion.
The Vancouver-based group has appointed Citi and Hatch Corporate
Finance to explore options for "enhancing shareholder value".
Ivanhoe has said these options include potential debt or equity
offerings, a credit facility, the sale of subsidiaries, equity
investments, project financing and various corporate
transactions.
Oyu Tolgoi is slated to start production in 2013, with annual
output of 450,000 metric tons of copper and 330,000 troy ounces of
gold.
-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094;
alex.wilson@dowjones.com
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