RIO MAY FREEZE OUT FRIEDLAND
Rio Tinto PLC is expected to offload a number of Australian and Asian assets now under its control after it clinched majority ownership of Canadian explorer Ivanhoe Mines Ltd. Rio's long held desire to own the lucrative Oyu Tolgoi mine in Mongolia came to fruition when a private purchase of 15.1 million Ivanhoe shares lifted Rio's stake in the Canadian company from 49 percent to 51 percent.
While not a surprise, Rio's CAD 302 million (USD 301.3 million) purchase has cast doubt on the future of Ivanhoe's other assets, which include a controlling 59 percent in Ivanhoe Australia Ltd. Ivanhoe also has a gold play in Kazakhstan, coal interests in Mongolia, and exploration tenements in south-east Asia. Rio is believed to have recently told Ivanhoe Chief Robert Friedland that its long-term interests did not extend beyond Oyu Tolgoi.
“I expect Rio only wants Oyu Tolgoi, so any deal they do would be for this asset, with the other assets spun out to existing shareholders, excluding Rio Tinto,” said CLSA analyst Hayden Bairstow. Given Friedland‘s frosty relationship with Rio Tinto, his future on the Ivanhoe Mines board now appears clouded. Rio is entitled to nominate directors to the board in proportion to its shareholding, but it pledged as recently as last July to maintain a majority of independent directors until January 2014. Rio would not comment on speculation that a Canadian listing could accompany listings in Australia, London, and New York.
While not a surprise, Rio's CAD 302 million (USD 301.3 million) purchase has cast doubt on the future of Ivanhoe's other assets, which include a controlling 59 percent in Ivanhoe Australia Ltd. Ivanhoe also has a gold play in Kazakhstan, coal interests in Mongolia, and exploration tenements in south-east Asia. Rio is believed to have recently told Ivanhoe Chief Robert Friedland that its long-term interests did not extend beyond Oyu Tolgoi.
“I expect Rio only wants Oyu Tolgoi, so any deal they do would be for this asset, with the other assets spun out to existing shareholders, excluding Rio Tinto,” said CLSA analyst Hayden Bairstow. Given Friedland‘s frosty relationship with Rio Tinto, his future on the Ivanhoe Mines board now appears clouded. Rio is entitled to nominate directors to the board in proportion to its shareholding, but it pledged as recently as last July to maintain a majority of independent directors until January 2014. Rio would not comment on speculation that a Canadian listing could accompany listings in Australia, London, and New York.
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