November 24, 2010 / 6:13 PM / 8 years ago

REFILE-Ivanhoe Mines says has strategic options

(Corrects to “its” from “it” in first paragraph)

* Seeks to head off possible creeping takeover by Rio Tinto

* Sovereign wealth funds keen on firm’s key focus Mongolia

By Eric Onstad

LONDON, Nov 24 (Reuters) - Ivanhoe Mines (IVN.TO) has plenty of options as it fights a possible “creeping” takeover by Rio Tinto (RIO.L), its founder said, noting sovereign wealth funds were keen on Mongolia, where Ivanhoe is developing a huge mine.

Robert Friedland — who is also executive chairman, CEO and a major shareholder — told a conference in London there were no shortage of possible investors.

“There’s a lot of alternatives ... many countries are interested in Mongolia. For example, the Middle Eastern sovereign wealth funds,” he said.

Abu Dhabi’s investment council has invested in a Mongolian bank while both Kuwait and Libya were interested in the country, Friedland added.

He was restricted on how much he could say because Ivanhoe was in the midst of a rights issue to raise up to $1 billion, but he told journalists on the sidelines of the conference some news would emerge fairly soon.

Ivanhoe is evaluating a range of options as it grapples with its biggest shareholder Rio Tinto (RIO.AX) about terms under which Rio can increase its stake in Ivanhoe.

Ivanhoe owns 66 percent of the massive Oyu Tolgoi copper-gold project, which it is developing in partnership with Rio and the Mongolian government.

Ivanhoe and Rio are involved in arbitration to resolve a dispute over a shareholder rights plan adopted by Ivanhoe in May, which Rio says violates its contractual rights.

Under a previous agreement, Rio can increase its 35 percent stake in Ivanhoe to 46.6 percent. Ivanhoe argues that its rights plan protects it from a creeping takeover.

“Shareholder rights plans merely mean no-one can do a coercive change of control of the company without paying an appropriate premium,” Friedland said. “The shareholder rights plan just determines whether they (Rio) have to make an offer to everybody or whether they can keep creeping.”

Ivanhoe also cancelled a “strategic purchaser” deal with Rio, allowing other investors to buy a stake of more than 5 percent in Ivanhoe.

The arbitration proceedings are due to start in January.

In the meantime, Ivanhoe is evaluating options with the help of their new head of strategic planning, Sam Riggall, a former Rio executive who helped negotiate the Oyu Tolgoi agreement with Mongolia.

Ivanhoe, which needs to come up with its share of $4.6 billion needed to build Oyu Tolgoi, is considering possible sales of subsidiaries, equity investments, project financing and various corporate transactions, it has said.

The group is seeking to arrange more than $2 billion of financing with 13 institutions, including the World Bank’s International Finance Corporation, BNP Paribas and Standard Chartered.

Oyu Tolgoi, is due to become the world’s third biggest copper-gold mine after it launches output in late 2012.

The mine complex is due to produce 544,000 tonnes of copper and 650,000 ounces of gold a year for the first 10 years. (Editing by David Holmes)

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