-- Rio Tinto spends $935M in Ivanhoe's over-subscribed $1.8B
rights issue
-- The Anglo-Australian miner now owns 51% stake in Ivanhoe, up
from 50.9% before rights issue
-- No plans at the moment to boost its equity stake in
Ivanhoe
-- Rio Tinto has the ability to exercise warrants that would
give it a 54.4% stake in Ivanhoe
(adds details and updated share price)
By Alex MacDonald
LONDON--Mining titan Rio Tinto PLC (RIO) said Monday it has
spent nearly $1 billion in accordance with a pact to participate in
Canada-based Ivanhoe Mines Ltd.'s (IVN.T) $1.8 billion rights
issue, which is aimed at funding the development of the massive
Mongolian Oyu Tolgoi copper and gold project.
Rio Tinto spent $935 million to participate in the
over-subscribed rights issue and increased its stake to 51.0% from
50.9% as a consequence. The purchase is in keeping with Rio Tinto's
agreement to participate in any Ivanhoe rights issue to fund the
Oyu Tolgoi project.
"We are pleased with the strong reception our rights offering
received from shareholders," said Ivanhoe's Chief Executive Kay
Priestly, adding that the project remains on track to process its
first ore in the second half of 2012 and begin commercial
production in the first half of 2013.
Rio said that it has no plans to buy additional Ivanhoe shares
at the moment, although it has the ability to exercise warrants
that would allow it boost its shares to 54.4% if desired.
The Anglo-Australian miner, which this year secured majority
control of Ivanhoe's board, also has the right to be the first to
participate in further equity financing from Ivanhoe up until Oct.
24; it also has anti-dilution rights to make sure it's able to
maintain its current stake in the company in the future.
"The purpose of Rio Tinto acquiring additional shares under
Ivanhoe's rights offering was to honor its contractual obligations
to Ivanhoe and to provide additional funding to Ivanhoe to ensure
the timely development of Ivanhoe's Oyu Tolgoi copper-gold mine in
Mongolia," it said.
The mine holds some of the world's largest unexploited gold and
copper deposits, with estimated reserves of 46 million ounces of
gold and 81 billion pounds of copper.
At 1432 GMT, Rio Tinto's shares were up 2.2% or 63 pence at
2,955 pence while Ivanhoe's shares were down 1.6% or 0.14 Canadian
dollars at C$8.64.
-Write to Alex MacDonald at alex.macdonald@dowjones.com
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