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Rio Tinto set to increase Ivanhoe holding (14 October 2009).

Rio Tinto Ltd is set to increase its holding in Canadian company Ivanhoe Mines to 19.9 per cent.

Mining agreement signed with the government of Mongolia

 

The $US388 million ($427 million) investment comes after a 2006 agreement in which Rio Tinto could make incremental purchases to take a 33.35 per cent shareholding in Ivanhoe for a total investment of $US1.5 billion.

Ivanhoe Mines is the Canadian parent company of the Australian-listed Ivanhoe Australia Ltd.

Rio Tinto only had until October 27 in which to exercise its purchase option, although Ivanhoe Mines shareholders were expected to vote later this month to extend the deadline if it was needed.

Ivanhoe Mines and Rio Tinto have long-sought to develop the Oyu Tolgoi copper-gold deposit in southern Mongolia, about 80 kilometres from the border with China.

On October 6, the mining companies signed an agreement with the government of Mongolia for a long-term investment agreement to develop the mining complex.

The terms of agreement mean the Mongolian government will acquire a 34 per cent stake in Tolgoi's licence holder Ivanhoe Mines Mongolia Inc, and Ivanhoe Mines will retain a controlling 66 per cent stake.

Production from the mine is expected to commence in 2013, with annual production eventually expected to ramp-up to 450,000 tonnes of copper and 330,000 ounces of gold. Oyu Tolgoi contains about 79 billion pounds of copper and 45 million ounces of gold in measured, indicated and inferred resources. Under its current agreements with Ivanhoe Mines, Rio Tinto has the right to acquire up to 43.1 per cent of Ivanhoe's shares under fixed price options, and up to 46.65 per cent through on-market purchases.
(Source AAT)