Ivanhoe May Consider Selling Stake as Oyu Tolgoi Accord Nears

By Jason Scott
Sept. 23 (Bloomberg) -- Ivanhoe Mines Ltd., seeking to build the Oyu Tolgoi copper and gold project in Mongolia with Rio Tinto Group, may consider selling up to a 9.9 percent stake in the company after being approached by sovereign wealth funds.
Ivanhoe and Rio agreed to change provisions of Rio’s agreement to invest $2.4 billion in Ivanhoe to allow a sale, the Toronto-based company said today in a statement. Any sale won’t affect Rio’s accord to buy a 43.1 percent stake in Ivanhoe, the statement said.
“Several sovereign-wealth funds are among potential investors who have expressed unsolicited interest in participating in Ivanhoe’s growth opportunities,” Ivanhoe President John Macken said in the statement without specifying them. “Ivanhoe Mines and Rio Tinto also have agreed to cooperate in considering potential investments in Ivanhoe by one or more strategic shareholders,” the statement said.
Ivanhoe has tried for more than six years to reach an accord with Mongolia to mine Oyu Tolgoi and benefit from demand in China, the biggest metals buyer. Mongolia’s government would like to sign a final agreement “as soon as possible,” Minister of Mineral Resources and Energy Dashdorj Zorigt said Sept. 9.
Rio, based in London, has also agreed with Ivanhoe to change their accord to allow it to delay the Oct. 27 deadline for the second stage of its planned investment in Ivanhoe. The deadline will be delayed in 30-day increments until “either until the completion of an approved, unconditional investment agreement for Oyu Tolgoi, or until April 27, 2010,” the statement said.
“Rio Tinto is committed to its partnership with Ivanhoe in developing Oyu Tolgoi,” Bret Clayton, Rio’s chief executive of copper and diamonds, said in the statement. “We have made good progress with the government of Mongolia and expect to sign the investment agreement shortly.”
Oyu Tolgoi is about 80 kilometers (50 miles) north of Mongolia’s border with China. Ivanhoe in March 2008 estimated the copper resources in the project at 78.9 billion pounds and the gold resources at 45.2 million ounces. Rio, the world’s third-largest mining company, called Oyu Tolgoi “the world’s largest undeveloped copper-gold resource” when it agreed to buy 10 percent of Ivanhoe in 2006.
To contact the reporters on this story: Jason Scott in Perth at jscott14@bloomberg.net;