Ivanhoe rights plan not breaching Rio Tinto contract
Canadian Ivanhoe Mines insists its shareholder rights plan does not violate any of British-Australian Rio Tinto's existing contractual rights.
Ivanhoe said it will still stand by the plan in the arbitration proceeding started by Rio Tinto on Friday.
The multinational mining and resources group, which has a 29.6 per cent stake in Ivanhoe, claims the rights plan violates some of its rights under an October 2006 private placement deal between the companies.
The contract permits Rio Tinto to lift its stake in Ivanhoe to 46.6 per cent by Oct 2011.
Ivanhoe said nothing in the rights plan forbids Rio from expanding its interest in Ivanhoe to the demanded amount.
The Canadian miner also argued nothing in the private placement agreement prohibits it from carrying out a shareholder rights plan.
Adopted in April, Ivanhoe's shareholder rights plan restrains shareholders and other third parties from obtaining additional Ivanhoe shares beyond values stated in existing contracts, unless an offer is made to all shareholders.
According to Ivanhoe, the rights plan was designed to protect all shareholders from any "coercive or creeping takeovers."
At a May 7 meeting, the rights plan was opposed by Rio Tinto, but was consented by a majority of shareholders.
Ivanhoe values its relationship with Rio Tinto and intends to keep collabortaing with the global miner to bring the Mongolian Oyu Tolgoi mine into production in 2013, according to David Huberman, lead independent director of Ivanhoe and chairman of its corporate-governance committee.
The Mongolian Oyu Tolgoi copper project is one of the world's largest untapped copper and gold deposits, in which Ivanhoe has a 66 per cent stake and Rio Tinto is the operator.
Both miners will possibly spend several weeks choosing an arbitrator and then decide on the matter in the following months. A person familiar with the matter said the process should be settled in September.