(Updates adding further comment, detail.)
DOW JONES NEWSWIRES
Ivanhoe Mines Ltd. (IVN) doesn't believe its shareholder rights
plan breaches any of Rio Tinto PLC's (RTP) existing contractual
rights and said it will continue to support the plan in the
arbitration proceeding initiated by Rio Tinto Friday.
Rio Tinto, which owns 29.6% of Canadian miner Ivanhoe, claims
the shareholder rights plan breaches some of its rights under an
October 2006 private placement agreement between the companies,
which allows the Rio to increase its stake in Ivanhoe to 46.6% by
Oct 2011. Ivanhoe said nothing in the rights plan prohibits Rio
from increasing its stake in Ivanhoe to the requisite amount.
It also said nothing in the private placement agreement
prohibits Ivanhoe from implementing a shareholder rights plan.
Ivanhoe's shareholder rights plan, adopted in April, restricts
shareholders and other third parties from acquiring additional
Ivanhoe shares beyond amounts provided for in existing contractual
arrangements, unless an offer is made to all shareholders.
The rights plan was intended to protect all shareholders any
"coercive or creeping takeovers," Ivanhoe said.
Rio Tinto voted against the rights plan, but the plan was
approved by a majority of shareholders at a May 7 meeting.
David Huberman, lead independent director of Ivanhoe and
chairman of its corporate-governance committee, said the company
values its relationship with Rio Tinto and plans to continue to
work with the global diversified miner to bring the Mongolian Oyu
Tolgoi mine into production in 2013.
Rio Tinto is the operator of the Mongolian Oyu Tolgoi copper
project, one of the world's largest untapped copper and gold
deposits, in which Ivanhoe has a 66% stake.
Both sides will likely spend a month choosing an arbitrator and
then arbitrate on the matter in the ensuing months. The process
should be completed in September, a person familiar with the matter
said.
-By Judy McKinnon, Dow Jones Newswires; 416-306-2100;
judy.mckinnon@dowjones.com
(Alex MacDonald in London contributed to this story.)