Rio Tinto lifts Ivanhoe stake to develop Mongolia project
Anglo-Australian miner Rio Tinto said Tuesday it will spend US$502 million (350 million euros) to lift its stake in Canada's Ivanhoe Mines and further develop their joint Mongolian copper and gold project.
"Rio Tinto has given notice to Ivanhoe Mines that it is exercising its remaining warrants, which will increase its ownership of Ivanhoe shares from 42.0 percent to 46.5 percent," the company said in a statement.
Under an agreement with Ivanhoe in December 2010, Rio Tinto will exercise its warrants "for the ongoing development of the Oyu Tolgoi project by no later than January 2012."
Rio and Ivanhoe reached agreement late last year on the joint development of the Oyu Tolgoi copper and gold project in Mongolia, ending a long-running dispute between the pair.
"Exercising the warrants provides further funds for developing Oyu Tolgoi," said Andrew Harding, head of Rio Tinto Copper.
"Construction is well underway and Oyu Tolgoi plans to spend US$2.3 billion in 2011 on the project's development. The workforce is expected to peak at 14,000 this year."
The Oyu Tolgoi project, about 80 kilometres (50 miles) from the Chinese border, is expected to produce 450,000 tonnes of copper and 330,000 ounces of gold annually over 35 years.
In December, Rio took over management of the project, which is 66-percent owned by Ivanhoe. The Mongolian government owns the rest.
In late afternoon London trade on Tuesday, Rio Tinto shares gained 2.56 percent to 4,200 pence on the FTSE 100 index of leading companies, which was 0.92 percent higher at 5,745.94 points.
Under the terms of their deal, Rio can increase its Ivanhoe stake to 49 percent by January 2012.
"Depending upon its assessment of Ivanhoe's business, prospects and financial condition, the market for Ivanhoe's securities, general economic and tax conditions, and other factors, Rio Tinto will consider availing itself of its rights to acquire additional securities of Ivanhoe," it added on Tuesday.
© 2011 AFP