Mining Chief Resigns as Part of Deal With Rio Tinto
OTTAWA — Robert Friedland, one of Canada’s most prominent mining developers, resigned as chief executive of Ivanhoe Mines on Wednesday as part of a $1.8 billion equity financing agreement with Rio Tinto, the company’s major shareholder.
Along with Mr. Friedland, six other Ivanhoe directors and four executives at the company also resigned. They will all be replaced by Rio Tinto appointees.
The agreement signals the apparent end to a long-running battle between Mr. Friedland and Rio Tinto, which brought its stake in Ivanhoe up to 51 percent in January.
Under the terms of the deal, which was negotiated by a committee of independent directors of Ivanhoe, Rio Tinto has committed to financing the completion of a copper, gold, silver and molybdenum mine being developed by Ivanhoe in Mongolia.
“With Rio Tinto’s expanded support, we are counting down to the start-up later this year of what I am sure will quickly grow to become one of the world’s most significant, and successful, mining complexes,” Mr. Friedland said in a statement.
In addition to the $1.8 billion equity investment, Rio Tinto will lend Ivanhoe with $1.5 billion in bridge financing and provide support for a financing package to complete the mine in Mongolia. That financing, which is being negotiated with lenders, will total $3 billion to $4 billion.
Mr. Friedland is perhaps best known for developing and selling the Voisey’s Bay nickel deposit in Newfoundland and Labrador for $3.1 billion in 1996. In 2000, he paid BHP Billiton $5 million plus a royalties agreement, to take over the mining giant’s exploration program in the Gobi desert of Mongolia.
The area is mineral rich, but the deposits are unusually deep, which has made the development of mines there difficult and expensive.
Attracted by the properties in Mongolia, Rio Tinto made became an initially friendly investor in Ivanhoe six years ago. But that investment became a creeping takeover of Ivanhoe, leading to clashes between Mr. Friedland and Rio Tinto. In January, a standstill agreement limiting Rio Tinto’s holding in Ivanhoe to 49 percent expired.
Although Rio Tinto had built its stake by helping finance the project in Mongolia, the standstill agreement and a series of other measures had been introduced by Ivanhoe to prevent the company’s takeover. But those measures appeared futile after a court ruled in December that Ivanhoe could not use them to dilute Rio Tinto’s holding.
The agreement on Wednesday gives Rio Tinto control of Ivanhoe without challenging Mr. Friedland through a proxy fight.
Rio Tinto’s interest in Ivanhoe has always been limited to its operation in Mongolia, although the company also has projects in Australia and Kazakhstan. In the statement on Wednesday, the company said that it “is engaged in active and detailed negotiations on potential divestments.”
Along with Mr. Friedland, six other Ivanhoe directors and four executives at the company also resigned. They will all be replaced by Rio Tinto appointees.
The agreement signals the apparent end to a long-running battle between Mr. Friedland and Rio Tinto, which brought its stake in Ivanhoe up to 51 percent in January.
Under the terms of the deal, which was negotiated by a committee of independent directors of Ivanhoe, Rio Tinto has committed to financing the completion of a copper, gold, silver and molybdenum mine being developed by Ivanhoe in Mongolia.
“With Rio Tinto’s expanded support, we are counting down to the start-up later this year of what I am sure will quickly grow to become one of the world’s most significant, and successful, mining complexes,” Mr. Friedland said in a statement.
In addition to the $1.8 billion equity investment, Rio Tinto will lend Ivanhoe with $1.5 billion in bridge financing and provide support for a financing package to complete the mine in Mongolia. That financing, which is being negotiated with lenders, will total $3 billion to $4 billion.
Mr. Friedland is perhaps best known for developing and selling the Voisey’s Bay nickel deposit in Newfoundland and Labrador for $3.1 billion in 1996. In 2000, he paid BHP Billiton $5 million plus a royalties agreement, to take over the mining giant’s exploration program in the Gobi desert of Mongolia.
The area is mineral rich, but the deposits are unusually deep, which has made the development of mines there difficult and expensive.
Attracted by the properties in Mongolia, Rio Tinto made became an initially friendly investor in Ivanhoe six years ago. But that investment became a creeping takeover of Ivanhoe, leading to clashes between Mr. Friedland and Rio Tinto. In January, a standstill agreement limiting Rio Tinto’s holding in Ivanhoe to 49 percent expired.
Although Rio Tinto had built its stake by helping finance the project in Mongolia, the standstill agreement and a series of other measures had been introduced by Ivanhoe to prevent the company’s takeover. But those measures appeared futile after a court ruled in December that Ivanhoe could not use them to dilute Rio Tinto’s holding.
The agreement on Wednesday gives Rio Tinto control of Ivanhoe without challenging Mr. Friedland through a proxy fight.
Rio Tinto’s interest in Ivanhoe has always been limited to its operation in Mongolia, although the company also has projects in Australia and Kazakhstan. In the statement on Wednesday, the company said that it “is engaged in active and detailed negotiations on potential divestments.”
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