From North America: Rio Tinto plc (NYSE:RIO) Monday said its stake in Ivanhoe Mines (TSE:IVN) remains at about 51 per cent, after it acquired roughly 133.6 million shares in Ivanhoe for a total cost of $935 million.
Prior to the completion of the rights offering, Rio Tinto said it owned about 377 million common shares of Ivanhoe, representing about 51 per cent of the outstanding common shares. Upon the completion of a recent rights offering, Rio Tinto owned 510 million common shares representing approximately 51 per cent of the outstanding common shares.
The company said that the purpose of securing additional shares under the rights offering, was to honour its contractual obligations and to provide additional funding to ensure the timely development of the Oyu Tolgoi copper-gold mine in Mongolia.
Ivanhoe owns two-thirds of the Oyu Tolgoi project, while the Mongolian government owns the remaining third. Initial production at Oyu Tolgoi is expected later in 2012. Once in production, it is set to beat Chile's Escondida as the world's largest copper mine.
Rio Tinto tightened its control over Ivanhoe earlier this year as part of a financing agreement including the $1.8-billion rights offering.
The company also owns about 74 million series D warrants of Ivanhoe after adjustment to give effect to the rights offering and Rio Tinto said if it were to fully exercise the warrants, it would acquire an additional 74.2 million common shares.
Following such issuance, Rio Tinto would own about 585 million common shares, representing 54.4 per cent of the outstanding common shares.
The company noted that it has anti-dilution rights that permit it to acquire additional securities of Ivanhoe so as to maintain its proportional equity interest.
Rio Tinto also has the right, until October 24, to acquire additional Ivanhoe securities under its equity financing right of first offer. The company, however, said it has no present intention of acquiring additional securities of Ivanhoe.
Depending upon its evaluation of the business, prospects and financial condition, the market for securities, general economic and tax conditions and other factors, Rio Tinto said it may acquire or sell some or all of the securities of Ivanhoe.
Earlier this month Ivanhoe sold its 57.6 percent stake in Mongolian coal miner SouthGobi Resources (TSE:SGQ) to Chalco, China's biggest aluminum maker for over $900 million.
Ivanhoe's core assets are its world-scale Oyu Tolgoi copper and gold mine development project in southern Mongolia, its large shareholdings in Mongolian coal miner SouthGobi Energy Resources and in Ivanhoe Australia (IVA:ASX), an Australian copper-gold-uranium exploration and development company.
Rio Tinto is an international mining group headquartered in the UK, focused on finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold, industrial minerals and iron ore.
Earlier this month, the company reported record first half iron ore production, but shares in the mining giant fell as it also said that global economic conditions “dropped markedly” in the second quarter.
Shares of the company edged up 0.15 per cent as at 11 am EDT, trading at $46.24, while shares of Ivanhoe were up 1.49 per cent, trading at 68 cents.