Robert Friedland, Executive Chairman and Chief Executive Officer of
Ivanhoe Mines (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN), announced today
that the company is launching a strategic, conditional rights
offering in which all existing shareholders, subject to applicable
law, may participate on an equal, proportional basis in purchasing
additional common shares.
The rights offering is expected to raise between approximately
US$800 million to US$1.0 billion.
"The goal of the offering is to ensure that Ivanhoe Mines
remains in a strong financial position to bring the Oyu Tolgoi
copper-gold mining complex into operation ahead of schedule in 2012
and to reinforce the company's independence to pursue strategic
alternatives to protect and enhance shareholder value," Mr.
Friedland said.
The Ivanhoe Mines Board of Directors unanimously approved the
rights offering on October 15. A preliminary prospectus for the
offering has been filed with securities regulators in Canada and
the United States. Full details of the offering, including pricing,
will be disclosed in the subsequent filing of a final
prospectus.
Mr. Friedland, the founder and largest individual shareholder of
Ivanhoe Mines, intends to participate in the rights offering to the
maximum permitted level to maintain his present 18.3% ownership
stake in the company's future.
"Successful completion of this offering will significantly
de-risk the Oyu Tolgoi project, which we are developing in
partnership with the Government of Mongolia to be one of the
world's largest and lowest-cost copper and gold producers," Mr.
Friedland said.
"We already have 5,300 people working on the project and Oyu
Tolgoi LLC is investing $58 million in skills training, instruction
centres and scholarships so Mongolians can play key roles in
building a sustainable future by developing their mineral
endowment."
Mr. Friedland said discussions are progressing with a group of
international financial institutions on a separate debt-financing
package that is expected to close in the first half of 2011. The
proposed multi-billion-dollar package is being considered by a core
lending group comprised of the European Bank for Reconstruction and
Development, the International Finance Corporation, Export
Development Canada, BNP Paribas and Standard Chartered.
"In the meantime, the Ivanhoe Mines Board of Directors has
chosen to proceed with a rights offering as the best of several
available alternative measures to help secure the independence and
flexibility of the company to maintain the accelerated construction
schedule at Oyu Tolgoi and to establish a financing bridge to the
planned debt package."
Subject to applicable law, a rights certificate and a prospectus
will be mailed to each shareholder after a record date has been set
for issuance of the rights in conjunction with the filing of the
final prospectus. The rights offering will be open for exercise for
at least 21 days from the date of mailing to shareholders.
In keeping with international practice in rights offerings, each
new common share of Ivanhoe Mines available for purchase by rights
holders will be offered at a discount to the company's current
market price. Subject to applicable law, all Ivanhoe Mines
shareholders will have the choice of deciding whether to
participate and, by doing so, to maintain their existing levels of
ownership. It means, for example, that an individual shareholder
with a one per cent stake in Ivanhoe will be issued rights to buy a
maximum number of new shares that would maintain that shareholder's
stake at one per cent following completion of the offering.
The completion of the rights offering also is conditional on at
least 85% of the rights being exercised by holders, but this
condition can be waived at the sole discretion of Ivanhoe
Mines.
An application will be submitted to the Toronto Stock Exchange
to approve the listing of the rights and the common shares issuable
upon the exercise of the rights. Similar applications also will be
made to the New York Stock Exchange and the Nasdaq Stock Market to
admit the rights for trading and list the common shares issuable
upon the exercise of the rights, subject to Ivanhoe Mines
fulfilling listing requirements.
Shareholders who do not wish to exercise their rights to buy new
common shares under the offering plan will have the option of
selling the rights that they receive from the company through the
Toronto Stock Exchange, the New York Stock Exchange or the Nasdaq
Stock Market, where the rights will trade for at least 21 days.
Shareholders who do not exercise all of their rights consequently
will have their present ownership interests in Ivanhoe Mines, as a
percentage of the total outstanding common shares, reduced as a
result of the rights offering.
Rio Tinto, as an accredited shareholder, will be fully entitled
to exercise its rights in the offering announced today. Rio Tinto
currently owns 34.9% of Ivanhoe's common shares. Ivanhoe Mines
believes that the rights offering is exempt from Rio Tinto's right
of first offer to acquire shares issued by Ivanhoe Mines under
terms of Ivanhoe's 2006 five-year private-placement agreement with
Rio Tinto.
Citi has been appointed dealer manager for the rights
offering.
This news release does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of these securities in any state or jurisdiction in which
such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or jurisdiction.
About Ivanhoe Mines
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); a 62% 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 harbour" 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 whether
or not the above contemplated rights offering or debt-financing
package will be successfully completed in the future, 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" included in the preliminary
prospectus or in the Company's Annual Information Form, both filed
on Sedar and EDGAR. The reader is cautioned not to place undue
reliance on forward-looking information or statements.
The issuer has filed a registration statement (including a
prospectus) with the SEC for the offering to which this
communication relates. Before investing, individuals should read
the prospectus in that registration statement and other documents
the issuer has filed with the SEC for more complete information
about the issuer and this offering. The documents are available
free of charge by visiting EDGAR on the SEC website at www.sec.gov.
Alternatively, the issuer or the dealer manager participating in
the offering will arrange to send you the prospectus if you request
it by calling toll-free 1-877-858-5407.
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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