Rio to increase stake in Canada’s Ivanhoe
Rio Tinto Limited (RIO) said it has agreed to acquire 15 million shares in Ivanhoe Mines Limited for C$244.7 million. The mining giant said the acquisition would increase its ownership in Ivanhoe Mines by 2.7% to 22.4%.
Chief executive of Rio Tinto's copper division, Andrew Harding said the investment underlined the company’s confidence in the quality of the Oyu Tolgoi deposit and its priority in the Rio’s project portfolio.
”We are working with Ivanhoe Mines on finalising the conditions precedent for completion of the Investment Agreement with the Government of Mongolia and are looking forward to moving into the development phase of the project,” Mr Harding said.
Rio Tinto said it is being issue the shares satisfaction of an arrangement with Ivanhoe Mines in 2008 to finance equipment for the Oyu Tolgoi copper-gold complex in Mongolia’s South Gobi region.
The company said production of the project is expected to commence in 2013, with a five-year ramp up to full expected production of 450,000 tonnes of copper per year and 330,000 ounces of gold.
Upon completion of the acquisition, Rio said it would own 98.6 million shares of Ivanhoe Mines and if the company were to exercise all of its share purchase warrants and convert its US$350 million loan into shares it would own approximately 267.6 million shares, or 44% of Ivanhoe Mines.
The company said it has the right to exercise its share purchase warrants and/or convert its convertible loan into shares of Ivanhoe Mines, and also the right to acquire additional securities so as to maintain its proportional equity interest in Ivanhoe Mines, and the right to acquire additional Ivanhoe Mines securities in certain other circumstances and subject to certain limits.
As at 1029 AEDT, Rio Tinto shares were up 64c to $71.14.
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