Robert Friedland, Executive Chairman of Ivanhoe Mines (TSX:
IVN)(NYSE: IVN)(NASDAQ: IVN), and John Macken, President and Chief
Executive Officer, announced today that Rio Tinto has exercised its
Series A warrants four months ahead of schedule, providing Ivanhoe
Mines with proceeds of US$393.1 million to help fund the
development and construction of the Oyu Tolgoi copper-gold mining
complex in Mongolia. The warrants entitled Rio Tinto to acquire
46.03 million Ivanhoe Mines common shares at a price of US$8.54 per
share.
"Rio Tinto's early exercise of its warrants is an important step
toward securing the financing and funding for Oyu Tolgoi as we move
into the first summer of full-scale, site-wide work under the 2010
construction budget," Mr. Friedland said.
The Series A warrants were acquired by Rio Tinto in October 2006
as part of the private-placement agreement with Ivanhoe Mines. With
this transaction, Rio Tinto now has invested approximately US$1.73
billion in Ivanhoe Mines, inclusive of the convertible debt, and
increased its ownership in Ivanhoe to approximately 29.6%. Rio
Tinto holds additional rights to subscribe for common shares from
Ivanhoe's treasury (see details in accompanying table).
With the receipt of the US$393.1 million from Rio Tinto, Ivanhoe
Mines' current consolidated cash position is approximately US$1.53
billion, of which US$774 million is solely available for use by
Ivanhoe Mines, primarily for advancing the construction schedule at
Oyu Tolgoi.
Mr. Macken said that Rio Tinto's past and potential future
investments in Ivanhoe now total approximately US$2.5 billion,
comprised of the 2006 private-placement agreement, and other
financing transactions negotiated in 2007, 2008 and 2010.
---------------------------------------------------------------------------
Exercise Price Proceeds
(US$ unless noted) Shares (US$ millions)
---------------------------------------------------------------------------
Tranche 1 -
completed Oct 2006 $8.18 37,089,883 $303.4
---------------------------------------------------------------------------
Tranche 2 -
completed Oct 2009 $8.38 46,304,473 $388.0
---------------------------------------------------------------------------
Anti-dilution
shares C$3.15 243,772 $0.6
---------------------------------------------------------------------------
Equipment repurchased
from Rio - completed
March 2010 C$16.31 15,000,000 $241.1
---------------------------------------------------------------------------
Warrants (A) -
completed June 2010 $8.54 46,026,522 $393.1
---------------------------------------------------------------------------
144,664,650 (1) $1,326.2
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible
Debt (2) n/a up to 45,800,000 Approx. $400.0
---------------------------------------------------------------------------
Warrants (B) -
expire Oct 2011 $8.54 - $9.02 46,026,522 $393.1 to $415.2
---------------------------------------------------------------------------
Warrants © -
expire Oct 2012 $10.00 35,000,000 $350.0
---------------------------------------------------------------------------
Anti Dilution
Warrants C$3.15 1,440,406 $ 4.3
---------------------------------------------------------------------------
Projected Rio Tinto
investment 272,931,578 $2,473.6 to $2,495.7
---------------------------------------------------------------------------
1. Represents approximately 29.6% of Ivanhoe's issued and outstanding
shares as of June 29, 2010.
2. The Convertible Debt bears interest at LIBOR plus 3.3% and matures on
September 12, 2010. The principal amount of $350 million and up to
$108 million in interest automatically convert into a maximum of
45.8 million shares at a price of $10.00 per share upon maturity.
Based on current interest rates, the amount is expected to approximate
40 million shares ($400 million) on conversion.
Oyu Tolgoi Mine construction underway
Mr. Macken said that with the ramp-up to full construction now
well underway, the Oyu Tolgoi workforce has been increased to its
current total of 3,100 men and women. Production of copper and gold
from Oyu Tolgoi is expected by 2013.
The 2010 Oyu Tolgoi Integrated Development Plan (IDP-10)
estimated that the initial capital cost required to achieve
production from the open-pit mine on the Southern Oyu deposits is
US$4.6 billion. This amount includes US$1.1 billion to be spent
advancing underground development at the Hugo North Deposit in
preparation for the start of block-cave mining following the start
of production from the open pit. Options to finance the remainder
of the estimated capital costs include, but are not limited to,
additional potential debt, equity offerings, a credit facility, the
sale of subsidiaries, equity investments, project financing and/or
various corporate transactions.
Last month, Ivanhoe signed a joint mandate letter with the
European Bank for Reconstruction and Development (EBRD) and the
World Bank Group's International Finance Corporation (IFC) for
evaluation of a major financing package for the construction Oyu
Tolgoi. Under terms of the letter, the EBRD and the IFC will
consider providing a two-part package consisting of:
-- up to US$300 million each from the EBRD and IFC, as part of a group of
primary lenders, in limited-recourse project financing; and
-- mobilization of a further US$1.2 billion from commercial lenders under a
"B loan" structure.
Ivanhoe Mines also has received expressions of interest from
export credit agencies to provide up to US$500 million in direct
project debt financing.
About Ivanhoe Mines (www.ivanhoemines.com)
Ivanhoe Mines (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN) is an
international mining company with operations focused in the Asia
Pacific region. Assets include the company's 66% interest in the
world-scale, Oyu Tolgoi copper-gold mine development project in
southern Mongolia; its 57% interest in Mongolian coal miner
SouthGobi Resources (TSX: SGQ)(HK: 1878); an 81% interest in
Ivanhoe Australia (ASX: IVA), a
copper-gold-uranium-molybdenum-rhenium exploration and development
company; and a 50% interest in Altynalmas Gold Ltd., a private
company developing the Kyzyl Gold Project in Kazakhstan.
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; the
objective of attaining commercial production at Oyu Tolgoi in 2013;
the US$1.1 billion to be spent advancing underground development at
the Hugo North Deposit; the target of completion of the debt
financing package in the first quarter of 2011; the possible
additional subscriptions from Rio Tinto; the estimated initial
capital cost required to achieve first production from the open-pit
mine on the Southern Oyu deposits of US$4.6 billion; additional
potential debt, equity offerings, a credit facility, the sale of
subsidiaries, equity investments, project financing and/or various
corporate transactions; and other statements that are not
historical facts.
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 on Sedar. The reader is cautioned not to place undue
reliance on forward-looking information or statements.
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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