Ivanhoe Plans to Scrap Accord With Rio Tinto on Mine
July 13 (Bloomberg) -- Ivanhoe Mines Ltd. plans to scrap an accord limiting its ability to bring new investors into the $4.6 billion Oyu Tolgoi mining project in Mongolia, intensifying a dispute with Rio Tinto Group, its largest shareholder.
Ivanhoe issued Rio a 60-day notice of intention to dissolve the so-called strategic investor covenant, which governs Rio’s investment in the company, Vancouver-based Ivanhoe said today in a statement. Termination would free Ivanhoe to issue more than 5 percent of its stock to one or more investors, it said. Ivanhoe rose 14 percent in Toronto trading.
Rio, which owns 30 percent of Ivanhoe, said last week it was taking Ivanhoe to arbitration over a shareholders plan implemented by the Canadian company. At stake is the ownership of Ivanhoe and Oyu Tolgoi, which has been described by Rio as the world’s largest untapped copper and gold resource.
Ivanhoe opens door to outside offers; shares jump
TORONTO, July 13 (Reuters) - Ivanhoe Mines (IVN.N) said on Tuesday it is opening its doors to strategic investors, a move that could force its largest shareholder, Rio Tinto (RIO.AX),to pay a premium if it decides to seek control of Ivanhoe.
Shares of Ivanhoe jumped 14 percent after the company said it told Rio Tinto it planned to terminate a clause in an October 2007 agreement between the two companies that restricts Ivanhoe from issuing shares to other strategic investors.
The move will allow Vancouver-based Ivanhoe to issue more than 5 percent of its common shares to strategic buyers that are interested in its Oyu Tolgoi project in Mongolia.
If Rio opts to exercise its right of first refusal on any Ivanhoe equity issue, it would likely have to pay market price to buy the shares and raise its stake.
However, a source familiar with the situation said that Rio plans to soon nominate two new directors to Ivanhoe's board.
"Mogi" Munkhdul Badral
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