Robert Friedland, Executive Chairman and Chief Executive Officer of
Ivanhoe Mines (TSX: IVN)(NYSE: IVN)(NASDAQ: IVN), announced today
that the company has filed the final prospectus that provides
essential details of a strategic rights offering in which all
existing Ivanhoe Mines shareholders, subject to applicable law, may
participate on an equal, proportional basis in purchasing
additional common shares.
The rights offering, originally announced on October 18, 2010,
is expected to raise up to US$1.2 billion by its scheduled closing
on February 2, 2011.
"The rights offering is a linchpin of a series of measures that
Ivanhoe Mines has established with Rio Tinto to create a pool of
development capital that we expect will be more than sufficient to
complete the first phase of Oyu Tolgoi's development, achieve
initial production in late 2012, ahead of our previous schedule,
and reach commercial production in 2013," Mr. Friedland said.
The terms of the rights offering have been approved by the
Ivanhoe Mines Board of Directors. The final prospectus has been
filed with securities regulators in Canada and the United States.
The rights have been admitted for trading by the Toronto Stock
Exchange (TSX), the New York Stock Exchange (NYSE) and the NASDAQ
Stock Market, which also will list the shares issuable upon the
exercise of the rights.
Mr. Friedland and Rio Tinto are the two largest holders of
Ivanhoe Mines' stock. Their combined holdings represent
approximately 56% of Ivanhoe's issued and outstanding shares. Both
Mr. Friedland and Rio Tinto have committed to exercise all of the
rights that will be issued to them in the rights offering.
Mr. Friedland, who presently owns a 15.3% stake in Ivanhoe
Mines, has announced that he may acquire rights that become
available on the stock exchanges during the offering period to
increase his ownership position in Ivanhoe Mines.
Rio Tinto increased its ownership in Ivanhoe Mines to 40.5% this
week with the payment of US$300 million in an early, partial
exercise of Ivanhoe Series B warrants held by Rio Tinto and the
previously announced purchase of shares from Mr. Friedland. Rio
Tinto is expected to increase its interest in Ivanhoe Mines to
42.3% through the completion of Rio Tinto's previously announced
acquisition of Ivanhoe shares from Citibank, which will follow the
closing of the rights offering in February 2011.
In keeping with international practice in rights offerings, each
new common share of Ivanhoe Mines to be made 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 also maintain their existing
levels of ownership.
Key terms contained in the final prospectus for the rights
offering include:
-- Each Ivanhoe Mines shareholder will receive one transferable right for
each share of common stock owned as of December 31, 2010, the record
date for the rights offering.
-- Every 100 rights will allow the holder to purchase 15 common shares of
Ivanhoe. Every 20 rights, for example, will entitle the holder to
purchase three shares. Each holder may choose a subscription price of
either US$13.88 per share or CDN$13.93 per share.
-- The US and Canadian subscription prices represent traditional global
rights offering discounts of approximately 43% and 44% respectively to
the weighted-average closing prices of US$24.53 on the NYSE and
CDN$24.73 on the TSX over the five trading days prior to December 16,
2010.
-- Approximately 85 million common shares are expected to be issued under
the rights offering, which would represent approximately 15.0% of
Ivanhoe's current outstanding shares.
-- A rights-offering prospectus and rights certificate will be mailed to
each shareholder of record on January 5, 2011, subject to applicable
law.
-- The rights offering will be open for exercise for 21 days from the date
of mailing to shareholders and will expire at 5:00 p.m. Eastern Standard
Time (EST) on January 26, 2011. Rights not exercised prior to the expiry
will be void and of no value.
-- Shareholders who do not wish to exercise their rights to buy new common
shares under the offering will have the option of selling the rights
that they receive from Ivanhoe Mines through the TSX, the NYSE or
NASDAQ.
-- Trading of the rights will begin on the TSX on January 4, 2011, and stop
at noon (EST) on January 26, 2011. On the NYSE and NASDAQ, trading of
the rights will begin January 6, 2011, and stop at the close of trading
on January 25, 2011. The rights will be listed on the TSX and the NYSE
under the symbol "IVN.RT" and on NASDAQ under the symbol "IVN.R".
-- Shareholders who do not exercise all of their rights will have their
present ownership interests in Ivanhoe Mines reduced, as a percentage of
the total outstanding common shares, as a result of the rights offering.
Ivanhoe Mines has approved a capital budget of US$2.3 billion
for Oyu Tolgoi development during 2011, which is more than half of
the US$4.5 billion in future capital required to complete phase one
and establish full production from the Southern Oyu open-pit
mine.
Ivanhoe Mines and Rio Tinto announced on December 8, 2010, that
they had approved a comprehensive heads of agreement covering a
series of measures intended to provide funding to complete the
accelerated, full-scale construction of the 100,000-tonne-per-day
first phase of the Oyu Tolgoi copper-gold complex in southern
Mongolia.
The full series of funding measures, including an interim
facility from Rio Tinto and cash on hand available to Ivanhoe
Mines, could make up to US$6.5 billion available to Ivanhoe to
bring the first phase of Oyu Tolgoi into production and also to
finance associated investments. As part of the agreement, Rio Tinto
committed to participate directly in several funding measures,
including the current Ivanhoe Mines rights offering, that could
generate up to US$4.4 billion of the potential US$6.5 billion. A
total of up to US$3.7 billion of the projected capital under the
various investments and rights will come from Rio Tinto, including
warrants, a subscription right, up to US$1.8 billion in interim
financing and approximately US$500 million as Rio Tinto's estimated
share of the rights offering. Rio Tinto also agreed to work closely
with Ivanhoe Mines to complete a major project-finance package that
Ivanhoe is negotiating with a group of international financial
institutions, government credit agencies and commercial banks.
Citi has been appointed lead dealer manager for the rights
offering. BMO Capital Markets and CIBC have been appointed
co-dealer managers.
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 & TSX: 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 project-finance
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 managers 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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