Rio Tinto Increases Ownership in Ivanhoe Mines to 22.4% with US$232 Million Purchase of Shares
March 01 2010 - 8:15AM
Marketwired
Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX:
IVN)(NYSE: IVN)(NASDAQ: IVN), and John Macken, President and Chief
Executive Officer, announced today that the company has entered
into an agreement to issue 15 million common shares to Rio Tinto at
CDN$16.31 per share, for net proceeds of CDN$244.7 million
(US$232.4 million(i)).
Ivanhoe Mines will use the proceeds to purchase from Rio Tinto
key mining and milling equipment to be installed during the
construction of the Oyu Tolgoi copper-gold mining complex in
Mongolia.
The equipment includes principal components for the
100,000-tonne-per-day Oyu Tolgoi phase-one copper-gold
concentrator, including two large, 38-foot-diameter,
semi-autogenous grinding (SAG) mills, four ball mills, re-grind
mills, crushers, motors, gearless drives, conveyors and flotation
cells. Also included is the hoist and major components for the
sinking of Shaft #2 - the 10-metre-diameter, main production shaft
for the underground block-cave mine at the Hugo North Deposit.
Much of the equipment originally was ordered by Ivanhoe Mines
from various manufacturers while it was waiting for an Investment
Agreement with the Government of Mongolia. Ivanhoe subsequently
transferred ownership of the equipment to strategic partner Rio
Tinto in August 2008 under an agreement between the companies.
Additional equipment also was acquired by Rio Tinto directly from
suppliers. At the time, Ivanhoe required funds for the ongoing
development of the Oyu Tolgoi Project. The equipment-sale agreement
with Rio Tinto ensured that the procurement and delivery schedules
for the critical, long lead time major mining and milling equipment
were protected while Ivanhoe and Rio Tinto worked with the
Mongolian Government to conclude the mutually-acceptable, long-term
Investment Agreement that was executed in October 2009.
"We are positioning Ivanhoe Mines and our strategic shareholder,
Rio Tinto, to begin full-scale construction of the Oyu Tolgoi Mine
as we approach the start of the construction season in Mongolia and
the completion of all conditions precedent to the approved Oyu
Tolgoi Investment Agreement that we signed with the Mongolian
Government last October," Mr. Friedland said.
"The joint Ivanhoe Mines-Rio Tinto Oyu Tolgoi Technical
Committee has conditionally approved a US$758 million budget for
2010 that includes Ivanhoe's repurchase from Rio Tinto of major
items of mining and milling equipment. Acquisition of the equipment
is another significant step in building one of the world's largest
copper-gold mines. Having this equipment available now, rather than
being forced to wait behind competitors in a delivery queue, is
vital to our plan to begin commercial production from Oyu Tolgoi in
2013."
With this transaction, Rio Tinto has increased its ownership in
Ivanhoe Mines from 19.6% to 22.4%. The transaction is subject to
the approval of the Toronto Stock Exchange. Rio Tinto holds rights
to subscribe for common shares from Ivanhoe's treasury and also to
make purchases on the open market that could increase Rio Tinto's
stake in Ivanhoe to up to 46.6% during the next 19 months.
Ivanhoe's consolidated cash position currently is approximately
US$1.3 billion.
About Ivanhoe Mines
Ivanhoe Mines is an international mining company with operations
focused in the Asia Pacific region. Ivanhoe's core assets include
its world-scale Oyu Tolgoi copper and gold mine development project
in southern Mongolia.
Ivanhoe Mines' other core assets are its 65% interest in
Mongolian coal miner SouthGobi Energy Resources (TSX: SGQ); its 81%
interest in Ivanhoe Australia (ASX: IVA), a
copper-gold-uranium-molybdenum-rhenium exploration and development
company; and its 49% interest in Altynalmas Gold Ltd., a private
company developing the Bakyrchik and the Bolshevik gold mining
projects in Kazakhstan.
Ivanhoe Mines' shares are listed on the New York, NASDAQ and
Toronto stock exchanges under the symbol IVN.
(i) US$ equivalent of $232.4 million based on Bank of Canada
noon rate on February 26, 2010.
Forward-looking statements:
Certain statements made herein, including statements relating to
matters that are not historical facts and statements of our
beliefs, intentions and expectations about developments, results
and events which will or may occur in the future, constitute
"forward-looking information" within the meaning of applicable
Canadian securities legislation and "forward-looking statements"
within the meaning of the "safe harbor" provisions of the United
States Private Securities Litigation Reform Act of 1995.
Forward-looking information and statements are typically identified
by words such as "anticipate", "could", "should", "expect", "seek",
"may", "intend", "likely", "plan", "estimate", "will", "believe"
and similar expressions suggesting future outcomes or statements
regarding an outlook. These include, but are not limited to,
statements with respect to the completion of the remaining
Conditions Precedent for the finalization of the Oyu Tolgoi
Investment Agreement, the plan to begin commercial production from
Oyu Tolgoi in 2013, and other statements that are not historical
facts. There can be no assurance that a transaction will
result.
All such forward-looking information and statements are based on
certain assumptions and analyses made by Ivanhoe Mines' management
in light of their experience and perception of historical trends,
current conditions and expected future developments, as well as
other factors management believes are appropriate in the
circumstances. These statements, however, are subject to a variety
of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those projected
in the forward-looking information or statements. Important factors
that could cause actual results to differ from these
forward-looking statements include those described under the
heading "Risks and Uncertainties" elsewhere in the Company's
MD&A filed at www.SEDAR.com. The reader is cautioned not to
place undue reliance on forward-looking information or statements.
Except as required by law, the Company does not assume the
obligation to revise or update these forward-looking statements
after the date of this document or to revise them to reflect the
occurrence of future, unanticipated events.
Contacts: Ivanhoe Mines Ltd. Bill Trenaman Investors
+1.604.688.5755 Ivanhoe Mines Ltd. Bob Williamson Media
+1.604.331.9830 www.ivanhoemines.com
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