Ivanhoe Mines (TSX:IVN) plans to raise US$1.2 billion in a strategic rights offering in connection with its recent arrangement with Rio Tinto.
On December 8, Ivanhoe and Rio Tinto reached an agreement regarding the Oyu Tolgoi copper-gold project in Mongolia where both companies agreed to suspend arbitration proceedings relating to a dispute over a shareholder rights plan Ivanhoe adopted in April. (See “Ivanhoe and Rio Tinto in arbitration over Mongolian mining project” – BIV Business Today, July 12.)
With respect to the rights plan, all existing shareholders will be able to participate on an equal, proportional basis in purchasing additional shares of the company. The rights have been admitted for trading by the Toronto Stock Exchange, the New York Stock Exchange and the Nasdaq Stock Market.
Each Ivanhoe shareholder will receive one transferable right for each share of stock owned as of December 31, 2010. Every 100 rights will allow the holder to purchase 15 Ivanhoe common shares at a subscription price of either US$13.88 or CAD$13.93 per share.
The offering is expected to close on February 2, 2011.
Robert Friedland, executive chair and CEO of Ivanhoe Mines, and Rio Tinto are the two largest shareholders of Ivanhoe stock, holding 56% of the company’s shares. Friedland said he might acquire rights to increase his ownership stake in Ivanhoe.
Ivanhoe’s share price range during the past week: between $24.46 and $25.45; 52-week high: $30.28; 52-week low: $13.15.