Ivanhoe Mines Announces Early Exercise of Warrants by Rio Tinto
Purchase of Shares Worth US$393 Million Increases Rio Tinto Ownership in Ivanhoe Mines to 29.6% Funds to Be Used to Advance Construction of the Oyu Tolgoi Copper-Gold Mining Complex in Mongolia.
ULAANBAATAR, MONGOLIA, Jun 29, 2010 (MARKETWIRE via COMTEX) -- Robert Friedland, Executive Chairman of Ivanhoe Mines /quotes/comstock/11t!e:ivn (CA:IVN 13.99, -1.40, -9.10%) /quotes/comstock/13*!ivn/quotes/nls/ivn (IVN 13.27, -0.06, -0.45%) /quotes/comstock/13*!ivn/quotes/nls/ivn (IVN 13.27, -0.06, -0.45%) , and John Macken, President and Chief Executive Officer, announced today that Rio Tinto has exercised its Series A warrants four months ahead of schedule, providing Ivanhoe Mines with proceeds of US$393.1 million to help fund the development and construction of the Oyu Tolgoi copper-gold mining complex in Mongolia. The warrants entitled Rio Tinto to acquire 46.03 million Ivanhoe Mines common shares at a price of US$8.54 per share.
"Rio Tinto's early exercise of its warrants is an important step toward securing the financing and funding for Oyu Tolgoi as we move into the first summer of full-scale, site-wide work under the 2010 construction budget," Mr. Friedland said.
The Series A warrants were acquired by Rio Tinto in October 2006 as part of the private-placement agreement with Ivanhoe Mines. With this transaction, Rio Tinto now has invested approximately US$1.73 billion in Ivanhoe Mines, inclusive of the convertible debt, and increased its ownership in Ivanhoe to approximately 29.6%. Rio Tinto holds additional rights to subscribe for common shares from Ivanhoe's treasury (see details in accompanying table).
With the receipt of the US$393.1 million from Rio Tinto, Ivanhoe Mines' current consolidated cash position is approximately US$1.53 billion, of which US$774 million is solely available for use by Ivanhoe Mines, primarily for advancing the construction schedule at Oyu Tolgoi.
Mr. Macken said that Rio Tinto's past and potential future investments in Ivanhoe now total approximately US$2.5 billion, comprised of the 2006 private-placement agreement, and other financing transactions negotiated in 2007, 2008 and 2010. -----------------------------------------------------------------------
----
Exercise Price Proceeds
(US$ unless noted) Shares (US$ millions)
---------------------------------------------------------------------------
Tranche 1 -
completed Oct 2006 $8.18 37,089,883 $303.4
---------------------------------------------------------------------------
Tranche 2 -
completed Oct 2009 $8.38 46,304,473 $388.0
---------------------------------------------------------------------------
Anti-dilution
shares C$3.15 243,772 $0.6
---------------------------------------------------------------------------
Equipment repurchased
from Rio - completed
March 2010 C$16.31 15,000,000 $241.1
---------------------------------------------------------------------------
Warrants (A) -
completed June 2010 $8.54 46,026,522 $393.1
---------------------------------------------------------------------------
144,664,650 (1) $1,326.2
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible
Debt (2) n/a up to 45,800,000 Approx. $400.0
---------------------------------------------------------------------------
Warrants (B) -
expire Oct 2011 $8.54 - $9.02 46,026,522 $393.1 to $415.2
---------------------------------------------------------------------------
Warrants Copyright -
expire Oct 2012 $10.00 35,000,000 $350.0
---------------------------------------------------------------------------
Anti Dilution
Warrants C$3.15 1,440,406 $ 4.3
---------------------------------------------------------------------------
Projected Rio Tinto
investment 272,931,578 $2,473.6 to $2,495.7
---------------------------------------------------------------------------
1. Represents approximately 29.6% of Ivanhoe's issued and outstanding
shares as of June 29, 2010.
2. The Convertible Debt bears interest at LIBOR plus 3.3% and matures on
September 12, 2010. The principal amount of $350 million and up to
$108 million in interest automatically convert into a maximum of
45.8 million shares at a price of $10.00 per share upon maturity.
Based on current interest rates, the amount is expected to approximate
40 million shares ($400 million) on conversion.
Oyu Tolgoi Mine construction underway
Mr. Macken said that with the ramp-up to full construction now well underway, the Oyu Tolgoi workforce has been increased to its current total of 3,100 men and women. Production of copper and gold from Oyu Tolgoi is expected by 2013.
The 2010 Oyu Tolgoi Integrated Development Plan (IDP-10) estimated that the initial capital cost required to achieve production from the open-pit mine on the Southern Oyu deposits is US$4.6 billion. This amount includes US$1.1 billion to be spent advancing underground development at the Hugo North Deposit in preparation for the start of block-cave mining following the start of production from the open pit. Options to finance the remainder of the estimated capital costs include, but are not limited to, additional potential debt, equity offerings, a credit facility, the sale of subsidiaries, equity investments, project financing and/or various corporate transactions.
Last month, Ivanhoe signed a joint mandate letter with the European Bank for Reconstruction and Development (EBRD) and the World Bank Group's International Finance Corporation (IFC) for evaluation of a major financing package for the construction Oyu Tolgoi. Under terms of the letter, the EBRD and the IFC will consider providing a two-part package consisting of: -- up to US$300 million each from the EBRD and IFC, as part of a group of
primary lenders, in limited-recourse project financing; and
-- mobilization of a further US$1.2 billion from commercial lenders under a
"B loan" structure.
Ivanhoe Mines also has received expressions of interest from export credit agencies to provide up to US$500 million in direct project debt financing.
About Ivanhoe Mines (www.ivanhoemines.com)
Ivanhoe Mines /quotes/comstock/11t!e:ivn (CA:IVN 13.99, -1.40, -9.10%) /quotes/comstock/13*!ivn/quotes/nls/ivn (IVN 13.27, -0.06, -0.45%) /quotes/comstock/13*!ivn/quotes/nls/ivn (IVN 13.27, -0.06, -0.45%) is an international mining company with operations focused in the Asia Pacific region. Assets include the company's 66% interest in the world-scale, Oyu Tolgoi copper-gold mine development project in southern Mongolia; its 57% interest in Mongolian coal miner SouthGobi Resources /quotes/comstock/11t!e:sgq (CA:SGQ 12.64, -0.07, -0.55%) (HK: 1878); an 81% interest in Ivanhoe Australia (ASX: IVA), a copper-gold-uranium-molybdenum-rhenium exploration and development company; and a 50% interest in Altynalmas Gold Ltd., a private company developing the Kyzyl Gold Project in Kazakhstan.
Forward-looking statements
Certain statements made herein, including statements relating to matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information and statements are typically identified by words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "plan", "estimate", "will", "believe" and similar expressions suggesting future outcomes or statements regarding an outlook. These include, but are not limited to; the objective of attaining commercial production at Oyu Tolgoi in 2013; the US$1.1 billion to be spent advancing underground development at the Hugo North Deposit; the target of completion of the debt financing package in the first quarter of 2011; the possible additional subscriptions from Rio Tinto; the estimated initial capital cost required to achieve first production from the open-pit mine on the Southern Oyu deposits of US$4.6 billion; additional potential debt, equity offerings, a credit facility, the sale of subsidiaries, equity investments, project financing and/or various corporate transactions; and other statements that are not historical facts.
All such forward-looking information and statements are based on certain assumptions and analyses made by Ivanhoe Mines' management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements. Important factors that could cause actual results to differ from these forward-looking statements include those described under the heading "Risks and Uncertainties" elsewhere in the Company's MD&A filed on Sedar. The reader is cautioned not to place undue reliance on forward-looking information or statements. Contacts:
Ivanhoe Mines Ltd.
Bill Trenaman
Investors
+1.604.688.5755
Ivanhoe Mines Ltd.
Bob Williamson
Media
+1.604.331.9830
www.ivanhoemines.com
SOURCE: Ivanhoe Mines Ltd. http://www.ivanhoemines.com
Copyright 2010 Marketwire, Inc., All rights reserved.
ULAANBAATAR, MONGOLIA, Jun 29, 2010 (MARKETWIRE via COMTEX) -- Robert Friedland, Executive Chairman of Ivanhoe Mines /quotes/comstock/11t!e:ivn (CA:IVN 13.99, -1.40, -9.10%) /quotes/comstock/13*!ivn/quotes/nls/ivn (IVN 13.27, -0.06, -0.45%) /quotes/comstock/13*!ivn/quotes/nls/ivn (IVN 13.27, -0.06, -0.45%) , and John Macken, President and Chief Executive Officer, announced today that Rio Tinto has exercised its Series A warrants four months ahead of schedule, providing Ivanhoe Mines with proceeds of US$393.1 million to help fund the development and construction of the Oyu Tolgoi copper-gold mining complex in Mongolia. The warrants entitled Rio Tinto to acquire 46.03 million Ivanhoe Mines common shares at a price of US$8.54 per share.
"Rio Tinto's early exercise of its warrants is an important step toward securing the financing and funding for Oyu Tolgoi as we move into the first summer of full-scale, site-wide work under the 2010 construction budget," Mr. Friedland said.
The Series A warrants were acquired by Rio Tinto in October 2006 as part of the private-placement agreement with Ivanhoe Mines. With this transaction, Rio Tinto now has invested approximately US$1.73 billion in Ivanhoe Mines, inclusive of the convertible debt, and increased its ownership in Ivanhoe to approximately 29.6%. Rio Tinto holds additional rights to subscribe for common shares from Ivanhoe's treasury (see details in accompanying table).
With the receipt of the US$393.1 million from Rio Tinto, Ivanhoe Mines' current consolidated cash position is approximately US$1.53 billion, of which US$774 million is solely available for use by Ivanhoe Mines, primarily for advancing the construction schedule at Oyu Tolgoi.
Mr. Macken said that Rio Tinto's past and potential future investments in Ivanhoe now total approximately US$2.5 billion, comprised of the 2006 private-placement agreement, and other financing transactions negotiated in 2007, 2008 and 2010. -----------------------------------------------------------------------
----
Exercise Price Proceeds
(US$ unless noted) Shares (US$ millions)
---------------------------------------------------------------------------
Tranche 1 -
completed Oct 2006 $8.18 37,089,883 $303.4
---------------------------------------------------------------------------
Tranche 2 -
completed Oct 2009 $8.38 46,304,473 $388.0
---------------------------------------------------------------------------
Anti-dilution
shares C$3.15 243,772 $0.6
---------------------------------------------------------------------------
Equipment repurchased
from Rio - completed
March 2010 C$16.31 15,000,000 $241.1
---------------------------------------------------------------------------
Warrants (A) -
completed June 2010 $8.54 46,026,522 $393.1
---------------------------------------------------------------------------
144,664,650 (1) $1,326.2
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Convertible
Debt (2) n/a up to 45,800,000 Approx. $400.0
---------------------------------------------------------------------------
Warrants (B) -
expire Oct 2011 $8.54 - $9.02 46,026,522 $393.1 to $415.2
---------------------------------------------------------------------------
Warrants Copyright -
expire Oct 2012 $10.00 35,000,000 $350.0
---------------------------------------------------------------------------
Anti Dilution
Warrants C$3.15 1,440,406 $ 4.3
---------------------------------------------------------------------------
Projected Rio Tinto
investment 272,931,578 $2,473.6 to $2,495.7
---------------------------------------------------------------------------
1. Represents approximately 29.6% of Ivanhoe's issued and outstanding
shares as of June 29, 2010.
2. The Convertible Debt bears interest at LIBOR plus 3.3% and matures on
September 12, 2010. The principal amount of $350 million and up to
$108 million in interest automatically convert into a maximum of
45.8 million shares at a price of $10.00 per share upon maturity.
Based on current interest rates, the amount is expected to approximate
40 million shares ($400 million) on conversion.
Oyu Tolgoi Mine construction underway
Mr. Macken said that with the ramp-up to full construction now well underway, the Oyu Tolgoi workforce has been increased to its current total of 3,100 men and women. Production of copper and gold from Oyu Tolgoi is expected by 2013.
The 2010 Oyu Tolgoi Integrated Development Plan (IDP-10) estimated that the initial capital cost required to achieve production from the open-pit mine on the Southern Oyu deposits is US$4.6 billion. This amount includes US$1.1 billion to be spent advancing underground development at the Hugo North Deposit in preparation for the start of block-cave mining following the start of production from the open pit. Options to finance the remainder of the estimated capital costs include, but are not limited to, additional potential debt, equity offerings, a credit facility, the sale of subsidiaries, equity investments, project financing and/or various corporate transactions.
Last month, Ivanhoe signed a joint mandate letter with the European Bank for Reconstruction and Development (EBRD) and the World Bank Group's International Finance Corporation (IFC) for evaluation of a major financing package for the construction Oyu Tolgoi. Under terms of the letter, the EBRD and the IFC will consider providing a two-part package consisting of: -- up to US$300 million each from the EBRD and IFC, as part of a group of
primary lenders, in limited-recourse project financing; and
-- mobilization of a further US$1.2 billion from commercial lenders under a
"B loan" structure.
Ivanhoe Mines also has received expressions of interest from export credit agencies to provide up to US$500 million in direct project debt financing.
About Ivanhoe Mines (www.ivanhoemines.com)
Ivanhoe Mines /quotes/comstock/11t!e:ivn (CA:IVN 13.99, -1.40, -9.10%) /quotes/comstock/13*!ivn/quotes/nls/ivn (IVN 13.27, -0.06, -0.45%) /quotes/comstock/13*!ivn/quotes/nls/ivn (IVN 13.27, -0.06, -0.45%) is an international mining company with operations focused in the Asia Pacific region. Assets include the company's 66% interest in the world-scale, Oyu Tolgoi copper-gold mine development project in southern Mongolia; its 57% interest in Mongolian coal miner SouthGobi Resources /quotes/comstock/11t!e:sgq (CA:SGQ 12.64, -0.07, -0.55%) (HK: 1878); an 81% interest in Ivanhoe Australia (ASX: IVA), a copper-gold-uranium-molybdenum-rhenium exploration and development company; and a 50% interest in Altynalmas Gold Ltd., a private company developing the Kyzyl Gold Project in Kazakhstan.
Forward-looking statements
Certain statements made herein, including statements relating to matters that are not historical facts and statements of our beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking information and statements are typically identified by words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "plan", "estimate", "will", "believe" and similar expressions suggesting future outcomes or statements regarding an outlook. These include, but are not limited to; the objective of attaining commercial production at Oyu Tolgoi in 2013; the US$1.1 billion to be spent advancing underground development at the Hugo North Deposit; the target of completion of the debt financing package in the first quarter of 2011; the possible additional subscriptions from Rio Tinto; the estimated initial capital cost required to achieve first production from the open-pit mine on the Southern Oyu deposits of US$4.6 billion; additional potential debt, equity offerings, a credit facility, the sale of subsidiaries, equity investments, project financing and/or various corporate transactions; and other statements that are not historical facts.
All such forward-looking information and statements are based on certain assumptions and analyses made by Ivanhoe Mines' management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements. Important factors that could cause actual results to differ from these forward-looking statements include those described under the heading "Risks and Uncertainties" elsewhere in the Company's MD&A filed on Sedar. The reader is cautioned not to place undue reliance on forward-looking information or statements. Contacts:
Ivanhoe Mines Ltd.
Bill Trenaman
Investors
+1.604.688.5755
Ivanhoe Mines Ltd.
Bob Williamson
Media
+1.604.331.9830
www.ivanhoemines.com
SOURCE: Ivanhoe Mines Ltd. http://www.ivanhoemines.com
Copyright 2010 Marketwire, Inc., All rights reserved.
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