Ivanhoe Mines has been formally notified that Rio Tinto immediately intends to complete its Tranche 2 private placement financing – consisting of 46,304,473 Ivanhoe shares at US$8.38 per share – for net proceeds to Ivanhoe of US$388 million. Upon completion of the financing, expected within 10 business days, Rio Tinto’s equity ownership in Ivanhoe Mines will increase from its current level of 9.9% to 19.7%. The terms of the private placement were negotiated as part of the original Rio Tinto-Ivanhoe Mines strategic partnership announced in October 2006 to develop the Oyu Tolgoi copper and gold mining complex in southern Mongolia, approximately 80 kilometres north of the Mongolia-China border. Receipt of the funds will increase Ivanhoe’s consolidated cash position to approximately US$725 million. The Tranche 2 proceeds of US$388 million from Rio Tinto will be used to help build and commission the open-pit mine at Oyu Tolgoi and to advance development of the underground block-cave mine.
Entrée Gold, Ivanhoe Mines, Rio Tinto and the Mongolian government announced to have signed an Investment Agreement. The successful conclusion to the negotiations paves the way for the development of Entrée’s Hugo North Extension and Heruga deposits as part of the overall construction and operation of the massive Oyu Tolgoi mining complex.
Ivanhoe Mines and Rio Tinto reported to be working with Mongolian Government representatives to finalize an Investment Agreement for the Oyu Tolgoi Project. In expectation of the signing of a final Investment Agreement, the companies have mutually agreed to fine-tune two provisions of Rio Tinto’s phased investment of approximately US$2.4 billion in Ivanhoe Mines. A proposed minor adjustment to the inter-company investment package would grant Rio Tinto a short-term, month-to-month extension of the approaching October 27 deadline for completing Tranche 2 of Rio Tinto’s approved schedule of a series of investments in Ivanhoe Mines. A second adjustment would permit Ivanhoe Mines to sell an aggregate interest totalling up to 9.9% to one or two strategic investors – without affecting Rio Tinto’s anti-dilution rights to acquire an equity interest of 43.1% in Ivanhoe Mines, which may be increased to a maximum of 46.65% by acquiring additional shares on the open market.
