UPDATE:Ivanhoe Mines:Plan To Keep Majority Stake In Oyu Tolgoi
May 19 2010 - 4:42PM
Dow Jones News
Ivanhoe Mines Ltd. (IVN) said Wednesday it is willing to sell a
stake in the Oyu Tolgoi copper and gold project in Mongolia, but it
plans to remain the majority owner.
Peter Meredith, deputy chairman of Ivanhoe Mines, which owns a
66% stake, said the project "is likely to have another participant
before it's all over."
The Mongolian government, which holds a 34% stake, has just
approved the investment plan for the project, and construction is
already under way with a planned $758 million to be spent in 2010,
Meredith told a conference in London.
Work for this year includes sinking a shaft, installing a
20-megawatt power station, starting construction of a regional
airport that is able to handle an airplane the size of a Boeing
737, starting construction of a 105-kilometer highway, a
concentrator and other tasks.
Rio Tinto PLC (RTP) is the project operator and owns a 22.4%
stake in Ivanhoe with rights to increase its stake to 46%.
Meredith said Ivanhoe plans to keep a majority stake in the
project but would be willing to sell a stake to an interested
buyer. An interested buyer would be "anyone who wants a copper cash
[flow] stream," he said. "Someone who wants...a bigger portion of
the copper flow than we do."
"We've had lots of interest from other majors [but]...we need to
be respectful" of the dreams and aspirations of Rio Tinto, he
said.
Oyu Tolgoi is expected to enter production in 2013 and then ramp
up over five year to 450,000 tons of copper output annually.
Ivanhoe estimates the total investment over the next four years to
build the initial mining complex and start producing will be about
$4 billion.
Meredith said the project "is likely not to be financed very
much more with equity," adding that the plan as it stands is able
to be financed through other means.
Separately, Meredith said that on May 7, Ivanhoe's shareholders
approved a shareholders' rights plan that will ensure all
shareholders have equal rights in the event of a takeover approach
on Ivanhoe.
The plan provides Ivanhoe's board of directors with additional
time to consider any takeover bid and, if applicable, to explore
alternative transactions that would maximize value for
shareholders. It is intended to prevent any shareholders from
increasing their holdings beyond 20%--or in the case of Executive
Chairman Robert Friedland and Rio Tinto, beyond their current or
contractually agreed levels--without making an offer to all other
shareholders.
-By Alex MacDonald, Dow Jones Newswires; +44 (0)207 842 9328;
alex.macdonald@dowjones.com
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