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(Updates to add comments from Ivanhoe in fourth paragraph.)
Dec. 13 (Bloomberg) -- Ivanhoe Mines Ltd., building the Oyu Tolgoi in mine in Mongolia with its largest shareholder Rio Tinto Group, said an arbitrator ruled in favor of Rio in a dispute about its holding.
Rio will be allowed to maintain its ownership level in Ivanhoe if Rio’s actions trigger Ivanhoe’s shareholder rights plan, the Vancouver-based company said in a statement today.
Ivanhoe, which owns 66 percent of the Oyu Tolgoi copper and gold project, and London-based Rio have been in arbitration over Ivanhoe’s adoption last year of the rights plan. Rio had said the so-called poison pill contravened a 2006 agreement between the two companies.
The arbitrator also ruled in favor of Rio in a dispute where Ivanhoe claimed Rio broke covenants in the 2006 agreement not to engage in activities without Ivanhoe’s permission that could affect control of Ivanhoe. Rio, which owns 49 percent of Ivanhoe, is barred from making a hostile bid for Ivanhoe under an agreement that expires Jan. 18.
Rio was found not to have breached its obligations, Ivanhoe said today. Ivanhoe’s shareholders’ rights plan may remain in effect until its scheduled expiry in April 2013, Ivanhoe said.
Rio fell 2.1 percent to A$62.79 at 12:17 a.m. Sydney time. Ivanhoe Australia Ltd, 59-percent controlled by Ivanhoe according to data compiled by Bloomberg, declined 5.6 percent.
David Luff, a Melbourne-based spokesman for Rio, said the London-based company will issue a statement on the ruling shortly.
Oyu Tolgoi, 80 kilometers (50 miles) north of Mongolia’s border with China, will be one of the world’s five biggest copper mines, according to Rio, which is managing its development. Commercial output is expected to begin within the first half of 2013, the company has said.
--Editors: Rebecca Keenan, Andrew Hobbs
To contact the reporters on this story: Soraya Permatasari in Melbourne at firstname.lastname@example.org; Christopher Donville in Vancouver at email@example.com
To contact the editors responsible for this story: Rebecca Keenan at firstname.lastname@example.org; Andrew Hobbs at email@example.com