Rio Tinto, the world’s third- largest mining company, will spend $C245 million to increase its holding in Ivanhoe Mines Ltd., its partner in the Oyu Tolgoi project in Mongolia.
Rio will buy 15 million shares at $C16.31 each.
That will lift its holding 2.7% to 22.4%.
Rio shares rose 1.3% to $71.40 yesterday, on a day when world copper prices had their biggest rise in 11 months in the wake of the Chile earthquake at the weekend.
Comex copper prices jumped 20.3 cents, or 6.2%, at one stage in trading in Asia yesterday to reach $US3.4870 a pound.
They later eased to be up 3.27% at $US3.3915 a pound and finally ended up 2% at $US3.3485.
Major mines in Chile seem to have escaped damage and some were coming on back line last night as power was restored.
Rio Tinto said its Chilean copper interests (Escondida) were unaffected.
The miner had earlier announced its increased stake in Ivanhoe.
The shares are being issued to Rio Tinto as part of an accord with Ivanhoe Mines in 2008 to finance equipment for the Oyu Tolgoi copper-gold complex in Mongolia’s South Gobi region.
The mine, described by Rio as the world’s largest untapped copper and gold resource, is expected to start output in 2013.
“Our further investment in Ivanhoe Mines underlines our confidence in the quality of the world class Oyu Tolgoi deposit and its priority in our project portfolio,” Rio’s said in the statement.
Rio Tinto and Ivanhoe Mines are development partners for the Oyu Tolgoi project.
Production is expected to commence in 2013, with a five year ramp up to full expected production of 450,000 tonnes of copper a year and 330,000 ounces of gold.
After the completion of the acquisition, Rio Tinto will own 98.6 million shares of Ivanhoe Mines.
By financing the equipment at that time, Rio Tinto provided Ivanhoe Mines with the funds necessary for the ongoing development of the Oyu Tolgoi project and maintained the critical long lead manufacturing time for the equipment.
If Rio Tinto were to exercise all of its share purchase warrants and convert its US$350 million loan into shares it would own approximately 267.6 million shares of Ivanhoe Mines representing 44% of Ivanhoe Mines.
Rio also announced last night that its asset sales program has passed the US$10 billion mark with the completion of the sale of its Alcan Packaging Food Americas division to Bemis Company for a total all cash consideration of US$1.2 billion.
