London-based mining giant Rio Tinto yesterday paid C$529.5 million to raise its stake in Ivanhoe Mines, taking is to 48.5 per cent from 46.5 per cent, paving the way to acquire the whole of its JV partner in Oyu Tolgoi copper and gold project in Mongolia.
Rio Tinto, which had initially acquired a 19.9-per cent stake in Ivanhoe in October 2006 in order to jointly develop the Oyu Tolgoi project, has since gradually raised its stake to 46.5 per cent, with a long term plan of controlling the entire Oyu Tolgoi project.
Under an agreement hammered out late last year between the two companies, Rio has exercised its right to acquire 27.9 million shares from the market.
Rio Tinto paid C$18.98 per share or C$529.5 million for an additional 2-per cent stake, which has not only put itself in a commanding position to acquire Ivanhoe after 2012, but also ward off any hostile takeover of Ivanhoe by a rival.
Last year, both miners were at loggerheads as to how the Oyu Tolgoi project should be financed. Rio Tinto had disapproved the Canadian company's plan of raising funds through a rights issue as it would see its stake being diluted.
Under the agreement worked out last year, the Anglo Australian miner will raise its stake to 48.5 per cent and will provide $1.8 billion in interim financing to Ivanhoe in exchange for management of the Oyu Tolgoi project.