Ivanhoe Mines Ltd. founder and chief executive Robert Friedland has resigned as part of a financing deal Rio Tinto, Ivanhoe Mines announced. The resignation marks a new era for the Ivanhoe Mines, the owner of the $13.2 billion Oyu Tolgoi copper-gold project in Mongolia.
Friedland’s resignation, along with the resignations of six other directors and four senior management members, comes a few months after mining giant Rio Tinto bought a controlling stake in Ivanhoe Mines, Reuters reported.
Rio Tinto has helped finance a large part of the Oyu Tolgoi project, but the relationship between Friedland and Rio Tinto was often tumultuous.
Vancouver, British Columbia-based Ivanhoe said its agreement with Rio Tinto contains a comprehensive financing plan structured to secure Rio Tinto’s direct participation in, and support for, funding Oyu Tolgoi, the company’s flagship project.
“This agreement sets the stage for the Oyu Tolgoi project’s transition to a major mining operation in coming months,” said Friedland who made a fortune in the 1990s by selling the then-undeveloped Voisey’s Bay nickel deposit in Eastern Canada to Inco for about C$4.3 billion.
Friedland’s move to step down sets the stage for him to focus on his next big project, Ivanplats. The private company, controlled by Friedland, owns the Platreef platinum project in South Africa and the Kamoa copper and Kipushi zinc operations in the Democratic Republic of Congo. The company is expected to go public mid-year and raise about $1 billion.
Ivanhoe said its board has been reduced to 13 members from 14. The company’s board and management shake-up is no surprise as Rio had signaled its intent to gain more direct control after it raised its stake in Ivanhoe to 51 percent in January of this year.
In December, an independent arbitrator cleared the way for Rio Tinto to take control of Ivanhoe, after ruling the Canadian company’s “poison pill” defense was not valid.
The company said Kay Priestly, Rio Tinto’s chief financial officer and a director of Ivanhoe, was appointed Ivanhoe’s interim CEO. Catherine Barone, Ivanhoe’s head of finance, was named the company's interim CFO. Barone replaces Tony Giardini who stepped down as CFO.
Ivanhoe said it remains engaged in active talks on divesting its subsidiary interests. Ivanhoe's other assets include stakes in coal miner South Gobi, Ivanhoe Australia, and Altynalmas Gold, a private company developing the Kyzyl gold project in Kazakhstan.
Chinese aluminum company Chalco recently agreed to pay $926 million for a controlling stake in South Gobi.
Rio has agreed to support a $3 billion to $4 billion finance package for the Mongolian project that will be provided by third-party lenders. Ivanhoe has been in talks with lenders for months to line up the financing package, which is expected to be finalized by the end of the year.
Ivanhoe said Rio also has the option of advancing loans to finance Oyu Tolgoi as long as the terms are no less favorable than those available via financial institutions or banks.
As part of the agreement, Ivanhoe will also proceed with a rights offering to its shareholders that will raise up to $1.8 billion in gross proceeds. The rights offering will be supported by a standby commitment for the full amount from Rio Tinto.