Ivanhoe aims to raise $1.2 billion in rights offering

TORONTO (BestGrowthStock) – Ivanhoe Mines (IVN.TO: ) said on Friday it would raise up $1.2 billion in a rights offering to fund the development of the first phase of its massive Oyu Tolgoi copper and gold project in southern Mongolia.

The rights offering is structured so that Ivanhoe shareholders will receive one transferable right for each share of common stock they hold as of December 31.

Every 100 rights can be used to purchase 15 common shares. The shares will be priced at C$13.93 on the Toronto Stock Exchange and $13.88 on the New York Stock Exchange.

Ivanhoe said the price represents a 44 percent and 43 percent discount respectively on the average closing price on the TSX and NYSE over the five trading days to December 16.

The company said it expects to issue 85 million common shares through the offering, or about 15 percent of its current outstanding shares.

Shareholders who do not want to use their rights will have the option to sell them, with all rights expiring on January 26.

Rio Tinto (RIO.AX: ) (RIO.AX: ) is the largest shareholder in the Ivanhoe, which is led by mining financier and colorful dealmaker Robert Friedland.

Rio recently increased its stake to 40.5 percent, with a payment of $300 million in a partial exercise of Ivanhoe series B warrants, along with the purchase of shares from Friedland.

Rio is expected to increase its interest in Vancouver-based Ivanhoe to 42.3 percent through a previously announced deal to buy Citibank’s shares.

Friedland owns 15.3 percent of the company, but could increase his stake through the rights offering.

Oyu Tolgoi is one of the world’s biggest untapped copper-gold deposits. Development was delayed for years due to complicated royalty negotiations between Ivanhoe and the Mongolian government.

The project is 34 percent owned by Mongolia and 66 percent owned by Ivanhoe.

The company’s shares were up 1.76 percent at C$24.89 on Friday afternoon on the Toronto Stock Exchange.

(Reporting by Julie Gordon; editing by Rob Wilson)

Ivanhoe aims to raise $1.2 billion in rights offering