--Rio Tinto spends $935 million in Ivanhoe's oversubscribed $1.8
billion rights issue
--The Anglo-Australian mining company 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 Robert Friedland's subscription to the rights issue 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
oversubscribed 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.
Ivanhoe's founder and former chief executive, Robert Friedland
exercised his rights to keep his holding in the Vancouver-based
mining company at about 13%, according to a person familiar with
the matter. Mr. Friedland resigned as chief executive of Ivanhoe in
April, not long after losing control of the company when Rio Tinto
became its majority owner, a situation he had fought to
prevent.
"We are pleased with the strong reception our rights offering
received from shareholders," said Ivanhoe's new 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 mining company also has the right to be the
first to participate in further equity financing from Ivanhoe up
until Oct. 24; it also has antidilution rights to make sure it is
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.
Rio Tinto's shares closed up 1.6%, or 45 pence, at 29.37 pounds,
while Ivanhoe's shares were down 2.4%, or 21 Canadian cents, at
C$8.57 a share.
--Alistair MacDonald contributed to this article
Write to Alex MacDonald at alex.macdonald@dowjones.com
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