Ivanhoe Mines received a financial shot in the arm from Rio Tinto as it bought shares worth US$393 Million to increase its ownership to 29.6% in the company. The funds generated are to be used to start the construction of the Oyu Tolgoi Copper – Gold Mining complex in Mongolia.
Robert Friedland, Executive Chairman of Ivanhoe Mines and John Macken, President and Chief Executive Office made a statement saying that Rio Tinto had exercised Series A warrants four months before time to help Ivanhoe in the development and construction of the Mongolian mining complex at Oyu Tolgoi.
The Series A warrants were acquired by Rio Tinto in October 2006 as part of the private-placement agreement with Ivanhoe Mines. According to Mr. Macken the Rio Tinto company had a past and potential investment of about US$ 2.5 billion since the 2006 agreement was signed.
Ivonhoe stocks were set to fall and the company itself may not have survived if the negotiations with Rio Tinto had failed. It is easy to understand the jubilation in the Ivanhoe management at the new funding which it has received.