Rio Tinto increases grip on Ivanhoe, as Mongolia mega-project proceeds
UK company breaches agreement on Burma withdrawal
Despite widespread opposition by Mongolian citzens for several years, their government has now effectively agreed to terms proposed by Ivanhoe and Rio Tinto, for what the companies claim could be the world's most lucrative copper-gold mine.
The go-ahead has triggered a second major investment by the UK giant miner in the Canadian vehicle, steered by the notorious Robert Friedland.
Rio Tinto will shortly own just under 20% of the share capital of its Toronto-registered junior partner.
The ties between the two companies were set out in a 2007 contract, in which Rio Tinto obliged Ivanhoe to quit Burma before it provided subtantial funding to the Canadians.
However, as exposed last July by Canadian Friends of Burma on the MAC website, that withdrawal hasn't ocurred. See: http://www.minesandcommunities.org/article.php?a=9359
Ivanhoe Mines to get US$388 million as Rio Tinto doubles ownership stake
The Canadian Press
13 October 2009
VANCOUVER, B.C. - Rio Tinto PLC (NYSE:RTP) will soon double its stake in Ivanhoe Mines Ltd. (TSX:IVN), which will receive US$388 million from the latest investment from the British-Australian mining giant and use it to develop a giant copper project.
Rio Tinto, one of the world's biggest mining companies, will own 19.7 per cent of the Vancouver-headquartered Ivanhoe after buying an additional 46.3 million shares at US$8.38 each, the companies announced Tuesday.
That transaction is expected to close within 10 business days, Ivanhoe announced Tuesday from London, where Rio has its global headquarters.
Under a 2006 agreement, the two mining companies are developing the Oyu Tolgoi copper and gold mining complex in southern Mongolia. Prior to its latest investment, Rio Tinto owned about 9.9 per cent of Ivanhoe Mines.
Rio's funds will be used to help build and commission the open-pit mine at Oyu Tolgoi and to advance development of an underground mine.
Receipt of the funds will increase Ivanhoe's consolidated cash position to approximately US$725 million, the company said.
Tuesday's announcement comes a week after the Mongolian government signed a long-awaited deal with Rio Tinto and Ivanhoe Mines on Tuesday to develop the US$4-billion gold and copper mine.
The agreement on the Oyu Tolgoi has been renegotiated repeatedly after opponents complained it shortchanged Mongolia. Parliament had to repeal a windfall profits tax in August before the companies agreed to go ahead.
Mongolia will own 34 per cent of the mine and receive a $250 million advance payment against royalties and taxes under the agreement signed by its ministers for finance, mining and the environment and executives of Rio and Ivanhoe.
Ivanhoe shares traded Tuesday at C$12.95, down five cents, at the Toronto Stock Exchange. Rio traded at US$182.29, up $1.04, on the New York Stock Exchange.