Rio Tinto Now Owns 49% of Ivanhoe Mines

After the Mongolian government stated it wants to acquire a bigger equity in the Oyu Tolgoi copper and gold mine at a much earlier pace, Rio Tinto has cemented its shareholdings on the company, Ivanhoe Mines, which directly manages the said mining project in Mongolia. Rio Tinto now owns 49 percent of Ivanhoe Mines.

In a statement, Rio Tinto said it has acquired an additional 3,700,000 common shares in Ivanhoe Mines Ltd. through a wholly-owned subsidiary, Rio Tinto International Holdings Limited, increasing Rio Tinto's ownership in Ivanhoe Mines by 0.5 per cent to a total of 361,858,442 common shares or 49 per cent through a privately negotiated share purchase agreement. The shares were purchased for an aggregate of C$73,075,000 at a price per share of C$19.75.

The share purchase was made on behalf of Rio Tinto by Credit Suisse under an irrevocable mandate given by Rio Tinto to Credit Suisse on August 24, 2011. The mandate gave Credit Suisse the irrevocable authority to purchase 0.5 percent of the outstanding common shares of Ivanhoe on the secondary market at any time for a period of 30 days, without further instruction from Rio Tinto. The purchase was executed on 22 September 2011 and settled on 26 September 2011.

The acquisition of Ivanhoe shares was made in compliance with existing contractual arrangements between Rio Tinto and Ivanhoe Mines that permits share purchases in certain circumstances and subject to certain limits. Under the terms of these agreements and subject to certain exceptions, Rio Tinto's current maximum permitted shareholding in Ivanhoe Mines is 49 per cent.

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and New York Stock Exchange listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold, industrial minerals (borax, titanium dioxide and salt) and iron ore. Activities span the world and are strongly represented in Australia and North America with significant businesses in Asia, Europe, Africa and South America.

On Monday, the Australian Financial Review said in a report that the Mongolian government also announced its intention to acquire 50 percent of the mining project within its jurisdiction earlier than planned. Mongolia will soon hold parliamentary elections.

"Under the initial agreement in 2009, the Mongolian government received a 34 per cent share in the project, with the possibility of raising its share to 50 per cent after 30 years. The $US10 billion project is being managed by Rio Tinto, which has an indirect 32 per cent stake through its 48.5 per cent equity holding in Ivanhoe Mines," the AFR said.

"The government has made the decision: we will send the proposal to Ivanhoe Mines to renegotiate the time frame within which the Mongolian portion of that is being increased to 50 per cent," Mongolia's Minerals Minister, Dashdorg Zorigt said, according to the AFR.