A shareholders’ rights plan adopted by Vancouver-based Ivanhoe Mines Ltd. (TSX:IVN) has raised the ire of one of the world’s largest miners.
On Friday, U.K.-based Rio Tinto plc (NYSE:RTP) filed for arbitration against Ivanhoe for breach of a private placement agreement the two companies signed in 2006.
The agreement is worth approximately $2.5 billion, and allows Rio Tinto to incrementally increase its stake in the company up to 44%.
As of June 29, Rio Tinto owned 29.6% of Ivanhoe, and had one employee on the company’s board.
Ivanhoe adopted the rights plan in April to protect itself from “coercive or creeping” takeover bids that would negatively affect shareholders.
All board members approved the plan at the time, save the lone Rio Tinto executive who said it was a breach of the 2006 agreement.
At the centre of the disagreement is Ivanhoe’s prospective Oyu Tolgoi project in Mongolia, which is purported to be one of the largest undeveloped copper-gold deposits in the world. It is estimated that Oyu Tolgoi will cost US$4.6 billion to build.
Ivanhoe issued a release Monday morning saying it would continue to support the rights plan and that it did not breach the 2006 agreement.
Company spokesman Bob Williamson said he could not comment any further on the situation.
Ivanhoe said it continues to work with Rio Tinto to develop Oyu Tolgoi despite the arbitration.