Ivanhoe Sticks To Shareholders' Plan As Arbitration Continues
August 17 2010 - 3:32AM
Dow Jones News
Ivanhoe Mines Ltd. (IVN.T) Tuesday said its battle with Rio
Tinto PLC (RTP) for control of Mongolia's Oyu Tolgoi mine is
continuing, and it is sticking to a shareholders' rights plan that
has led its project partner to go to arbitration, Ivanhoe said
Tuesday.
The plan, adopted by Ivanhoe's board in April, could make it
difficult for Rio to ever take a majority stake in Ivanhoe, which
is developing Oyu Tolgoi, a huge deposit of copper and gold slated
to start production in 2013.
Rio Tinto, which currently owns 29.6% in Ivanhoe, claimed in an
arbitration filing on July 9 that the plan breached its rights
under a previous private placement agreement between the two
companies dated October 2006.
"It is Ivanhoe Mines' view that nothing in the private placement
agreement prohibits Ivanhoe Mines from implementing a shareholders'
rights plan and that nothing in the shareholders' rights plan
breaches any of Rio Tinto's existing contractual rights under the
private placement agreement, as amended," the company said.
"Ivanhoe Mines will continue to support its shareholders' rights
plan in the arbitration proceeding initiated by Rio Tinto," it
added.
Relations between the two miners have cooled since Ivanhoe
adopted the shareholders' rights plan and terminated a covenant
that governs Rio Tinto's investment in Ivanhoe. This will allow the
Canadian miner to issue more than 5% of its shares to strategic
investors, which could include major mining companies. It isn't
known who the strategic investors might be.
If any party wants to sell a stake in the mine, then Rio Tinto,
Ivanhoe and the Mongolian government have right of first refusal.
If Rio Tinto exercises that right and ups its Ivanhoe stake beyond
46.65%, then a standstill agreement with Ivanhoe that limits how
much Rio can buy in Ivanhoe would become void.
-By Andrea Hotter, Dow Jones Newswires; +44 (0)20 7842 9413;
andrea.hotter@dowjones.com
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