Rio Tinto has increased its ownership stake in Canada’s Ivanhoe Mines to 19.7% as part of an agreement to jointly develop Ivanhoe’s $US3 billion Oyu Tolgoi copper-gold project in Mongolia, the company announced in a statement yesterday.
The increase represents the completion of the second tranche of Rio’s private placement investment in Ivanhoe.
The second tranche consists of 46,304,473 common shares at a subscription price of US$8.38 per share for a total consideration of US$388 million.
Rio made an initial investment of $US303 million in 2006 for a 9.8% stake in Ivanhoe.
Rio retains the right to acquire up to 43.1% of Ivanhoe’s shares under fixed price options and up to 46.65% through on-market purchases, but according to its statement, has no present intentions of acquiring any other securities beyond maintaining its proportional equity interest in the future.
The Oyu Tolgoi development was signed at the beginning of October and is believed to be part of a push by Rio to invest in more ‘frontier’ projects, rather than only in developed countries where the vast majority of large deposits have been discovered.
Mongolia is widely considered one of the last undeveloped mineral rich regions in the world.