On June 21, Australia-based mining company Rio Tinto announced that it is exercising its remaining warrants in Vancouver, Canada-headquartered mineral exploration and development company Ivanhoe Mines Ltd (Ivanhoe), which will increase its holding in Ivanhoe from 42.0 percent to 46.5 percent.
Under Rio Tinto's agreement with Ivanhoe signed in December 2010, Rio Tinto agreed to exercise its remaining warrants for the ongoing development of the Oyu Tolgoi copper and gold mine project in southern Mongolia by no later than January 2012. The Oyu Tolgoi project is 66 percent-owned by Ivanhoe.
The remaining warrants will allow Rio Tinto to acquire 55,122,253 shares at an average subscription price of approximately US$9.10 per share. The total consideration will be approximately US$502 million. Increasing its ownership, Rio Tinto will have the right to nominate an additional director to Ivanhoe's board which will increase the number of Rio Tinto-nominated directors from six to seven out of a total of 14.
Rio Tinto can further increase its holding in Ivanhoe to 49 percent on or before January 18, 2012, including by the exercise of its subscription right to acquire shares from Ivanhoe. If Rio Tinto were to fully exercise its subscription right, it would own approximately 48.5 per cent of Ivanhoe's outstanding shares.