18th Oct 2006 12:56
Rio Tinto PLC18 October 2006 Rio Tinto takes strategic stake in Ivanhoe Mines Rio Tinto has reached agreement to acquire a holding of 19.9 per cent in IvanhoeMines in order to jointly develop and operate Ivanhoe's Oyu Tolgoi copper-goldcomplex in Mongolia's South Gobi region. A joint Ivanhoe-Rio Tinto technicalcommittee will engineer, construct and operate the project. This agreementcreates a defined path for Rio Tinto to become the largest shareholder inIvanhoe Mines. The first 9.95 per cent shareholding worth US$303 million will be taken upimmediately, with the second 9.95 per cent holding, valued at US$388 million,being taken up at the conclusion of a satisfactory long term investmentagreement with the Mongolian government. In addition, Rio Tinto has non-transferable warrants to reach a 33.35 per centshareholding in Ivanhoe Mines, which, if exercised, will represent a totalinvestment of approximately US$1.5 billion. Rio Tinto also has the right duringthe first five years to acquire up to an additional 6.65 per cent stake inIvanhoe through open market transactions, which would take its maximum holdingin Ivanhoe to 40 per cent. "Rio Tinto is pleased to be able to gain an interest in the world's largestundeveloped copper-gold resource and to be able to bring its world classoperating and technical capability to the Oyu Tolgoi project. We look forward totaking part in negotiations with the Mongolian government on the long terminvestment agreement for the project." said Tom Albanese, Rio Tinto directorGroup Resources. Mr. Albanese said that Oyu Tolgoi will be an important project for Mongolia, itseconomy and its people. "Wherever we operate, Rio Tinto employs the same high standards of health,safety, environmental performance and community relations. The Oyu Tolgoiproject will represent a major investment in the country. It will result inincreased local employment, the development of important infrastructure in theSouth Gobi region and can become a catalyst for regional social and economicdevelopment." Rio Tinto's investment will be structured in the following stages: Rio Tinto immediately will take up an initial private placement of 37.1 millionIvanhoe shares at a price of US$8.18 per share. This investment will give RioTinto 9.95 per cent of Ivanhoe issued share capital for a total investment ofUS$303 million. Rio Tinto will take up a second tranche private placement following thesatisfactory conclusion of an investment agreement between Ivanhoe and theMongolian Government. This second tranche will consist of 46.3 million sharesof Ivanhoe at a price of US$8.38 per share, a further investment of US$388million. Rio Tinto has the option to exercise the second tranche earlier.Together these two tranches will give Rio Tinto up to 19.9 per cent of Ivanhoe'senlarged issued share capital for a total combined investment of US$691 million. In addition to the private placements, Rio Tinto also will be grantednon-transferable warrants over approximately 92.1 million Ivanhoe shares.Tranche A will entitle Rio Tinto to purchase approximately 46.1 million newlyissued common shares at a price between US$8.38 and US$8.54 for a period (notexceeding four years) ending one year after Ivanhoe enters into an investmentagreement with the Government of Mongolia. Tranche B will entitle Rio Tinto topurchase approximately 46.1 million newly issued common shares at a pricebetween US$8.38 and US$9.02 for a period (not exceeding five years) ending twoyears after Ivanhoe enters into an investment agreement with the Government ofMongolia. The warrants will be subject to the approval of the Ivanhoeshareholders. Under the agreement, Rio Tinto has the right to acquire additional securitiesand participate in future financings by Ivanhoe, so as to maintain itsproportional equity interest in Ivanhoe. If the warrants were to be fully exercised, Rio Tinto would hold approximately33.35 per cent of Ivanhoe's common shares on a fully diluted basis (34.33 percent undiluted). Rio Tinto has no present intention of acquiring other securities of Ivanhoe,except as regards its right to acquire additional securities so as to maintainits proportional equity interest in the future, or of disposing of any of thesecurities of Ivanhoe which it holds. Depending upon its evaluation of Ivanhoe'sbusiness, prospects and financial condition, the market for Ivanhoe'ssecurities, general economic conditions and other factors, Rio Tinto may acquireadditional securities of Ivanhoe, including up to an additional 6.65 per centstake in Ivanhoe, or sell some or all of the securities it holds. For further information, please contact: LONDON AUSTRALIA Media Relations Media Relations Nick Cobban Ian Head Office: +44 (0) 20 7753 2305 Office: +61 (0) 3 9283 3620 Mobile: +44 (0) 7920 041 003 Mobile: +61 (0) 408 360 101 Investor Relations Investor Relations Nigel Jones Dave Skinner Office: +44 (0) 20 7753 2401 Office: +61 (0) 3 9283 3628 Mobile: +44 (0) 7917 227 365 Mobile: +61 (0) 408 335 309 David Ovington Susie Creswell Office: +44 (0) 20 7753 2326 Office: +61 (0) 3 9283 3639 Mobile: +44 (0) 7920 010 978 Mobile: +61 (0) 418 933 792 Website: www.riotinto.com High resolution photographs available at: www.newscast.co.uk This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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