Ivanhoe Mines Reaches an Agreement with Rio Tinto for a Comprehensive Financing Package to Secure the Funding of the Accelerated Construction of Phase 1 of the Oyu Tolgoi Copper-Gold Project in Southern Mongolia
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Goodmans represents Ivanhoe Mines Ltd. (“Ivanhoe”) in connection with an agreement reached by Ivanhoe and Rio Tinto International Holdings Limited (“Rio Tinto”) on December 8, 2010 that provides for a comprehensive financing package intended to secure the funding of the accelerated full-scale construction of the first phase of the Oyu Tolgoi copper-gold complex in southern Mongolia. Oyu Tolgoi is the world’s largest undeveloped copper and gold project which is expected upon completion to account for more than 30% of Mongolia’s gross domestic product.
Pursuant to the agreement Rio Tinto has assumed management of the Oyu Tolgoi project and secured the right to increase its equity stake in Ivanhoe Mines to 49%. The financial package to be provided by Rio Tinto includes:
- a US$1.8 billion interim funding facility for the Oyu Tolgoi project whilst Rio Tinto and Ivanhoe work together to finalize a US$3.6 billion project financing package intended to be completed by June 30, 2011;
- a commitment by Rio Tinto to exercise US$700 million of Ivanhoe share purchase warrants;
- a commitment by Rio Tinto to participate pro rata in Ivanhoe’s $1.2 billion rights offering, to be launched pursuant to a prospectus filed with the Canadian securities administrators and with the U.S. Securities and Exchange Commission on December 16, 2010.
Rio Tinto and Ivanhoe have also agreed to suspend the previously announced arbitration proceedings by a) Rio, challenging the efficacy of Ivanhoe’s Shareholder Rights Plan, and b) by Ivanhoe, alleging various breaches by Rio Tinto of its contractual obligations to Ivanhoe, for a six month period to June, 2011.