TORONTO (AP) â¿¿ Rio Tinto tightened its grip on Ivanhoe Mines Ltd. as part of a $3.3 billion financing deal Wednesday that will see chief executive and founder Robert Friedland step away from the company.
Rio Tinto, which owns a 51 per cent stake in Ivanhoe, will nominate 11 of a new 13-member board for the company, which is building the massive Oyu Tolgoi mine in Mongolia.
"Today's agreement provides future financial certainty for Ivanhoe and stability for the timely development of Oyu Tolgoi," Rio Tinto Copper CEO Andrew Harding said.
"We will also undertake a strategic review of Ivanhoe's assets with a view to maximizing value for all Ivanhoe shareholders. Working with our partners in Mongolia, we are dedicated to meeting our target of starting commercial production from Oyu Tolgoi in the first half of 2013 and bringing the benefits of the mine to the people of Mongolia," Harding said.Ivanhoe shares were up $1.36, or about 12 percent, at $12.99 on the Toronto Stock Exchange. The company has said that Oyu Tolgoi was about 73 per cent complete at the end of February. The project is expected to produce 1.2 billion pounds of copper and 650,000 ounces of gold per year in the first decade of operation. Under the financing agreement, Rio Tinto provides a standby commitment for a $1.8 billion rights offering by Ivanhoe and $1.5 billion in bridge financing to Ivanhoe. The funding is in addition to $1.8 billion in interim funding that was agreed in December 2010. Six of Rio Tinto's 11 nominees to the board will be independent directors. Friedland will nominate two directors, one of whom will be independent. In addition to Friedland, Ivanhoe's chief financial officer and several other senior executives have also stepped down. Kay Priestly, an Ivanhoe director and chief financial officer of Rio Tinto Copper, has been appointed interim CEO, while Catherine Barone, vice-president, finance of Ivanhoe, has been appointed interim CFO.