VANCOUVER – Ivanhoe Mines (TSX:IVN) has cut the price for a US$1.8-billion rights offering that it plans to help fund the construction of its Oyu Tolgoi project in Mongolia.
The offering will allow shareholders to buy additional shares at a subscription price of US$7 or C$7.17 per share, down from an initial price of US$8.34 when the financing deal was first announced in April.
Under the deal, each Ivanhoe Mines shareholder will receive one transferable right for each share of common stock they owned as of June 19. Every 20 rights will entitle the holder to buy seven shares at the offer price.
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Roughly 260 million shares are expected to be issued under the rights offering, about 35 per cent of Ivanhoe’s current outstanding shares.
Rio Tinto, Ivanhoe’s controlling shareholder, has committed to take up all of its shares available and agreed to a standby commitment for any not acquired by the company’s other shareholders.
Ivanhoe shares, which closed at C$13.49 on the Toronto Stock Exchange when the financing agreement was first announced in April, have fallen significantly.
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On Wednesday, Ivanhoe shares were up 15 cents at C$10.77.
Rio Tinto owns a 51 per cent stake in Ivanhoe, which in turn owns two-thirds of the Oyu Tolgoi project. The Mongolian government owns the remaining third.
Oyu Tolgoi is expected to produce 1.2 billion pounds of copper and 650,000 ounces of gold per year in the first decade of operation.
In addition to Oyu Tolgoi, Ivanhoe Mines owns 50 per cent of Altynalmas Gold, which holds the Kyzyl gold project. It also has ownership of a division in Australia that is focused on the Mount Isa-Cloncurry and Tennant Creek districts.
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