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Ivanhoe Plans to Scrap Accord With Rio Tinto on Mine (Update2)
Jul 14,2010 09:22CST
industry news

July 13 (Bloomberg) -- Ivanhoe Mines Ltd. plans to scrap an accord limiting its ability to bring new investors into the $4.6 billion Oyu Tolgoi mining project in Mongolia, intensifying a dispute with Rio Tinto Group, its largest shareholder.

Ivanhoe issued Rio a 60-day notice of intention to dissolve the so-called strategic investor covenant, which governs Rio's investment in the company, Vancouver-based Ivanhoe said today in a statement. Termination would free Ivanhoe to issue more than 5 percent of its stock to one or more investors, it said. Ivanhoe rose 14 percent in Toronto trading.

Rio, which owns 30 percent of Ivanhoe, said last week it was taking Ivanhoe to arbitration over a shareholders plan implemented by the Canadian company. At stake is the ownership of Ivanhoe and Oyu Tolgoi, which has been described by Rio as the world's largest untapped copper and gold resource.

"Rio Tinto has been a supportive strategic partner for Ivanhoe in advancing the Oyu Tolgoi Project to full-scale construction," David Huberman, lead independent director at Ivanhoe, said in the statement. "We intend to continue our cooperation as we pursue additional financing options."

Ivanhoe also said Andrew Harding, chief executive officer of Rio's copper division, resigned from Ivanhoe's board prior to its meeting yesterday.

Aluminum Corp. of China, China's biggest producer of aluminum, indicated an interest in acquiring a minority stake in Ivanhoe or in the Oyu Tolgoi project, Rio said in a July 7 filing. Chinalco, as the Chinese company is also known, is Rio's biggest investor.

Ivanhoe rose C$2.14 to C$17.07 at 4:10 p.m. in Toronto Stock Exchange trading. The percentage gain was the biggest since Aug. 25. Rio, based in the U.K., rose 1.1 percent, to 3,135 pence in London trading.

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