Friedland resigns as Rio moves in

COLOURFUL founder and chief executive of Ivanhoe Mines Robert Friedland and six other directors have resigned just months after mining major Rio Tinto bought a controlling stake in the Toronto-based miner.
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The changes mark the final chapter between both groups and ensures development of the $US13.2 billion ($A12.7 billion) Oyu Tolgoi copper-gold project in Mongolia, which is targeting commercial production by the first half of next year.

It follows a deal struck with Rio after it secured a controlling 51% stake in Ivanhoe, including a comprehensive financing plan to ensure its direct participation in, and financial support to bankroll Oyu Tolgoi.

The package, together with proceeds from any potential future asset sales by Ivanhoe, are intended to cover Ivanhoe's total funding needs and will repay in full to Rio a $1.8 billion standby commitment, along with $1.5 billion in bridge financing and $1.8 billion from an interim funding facility.

Ivanhoe intends to repay the facilities from a $3-4 billion finance package for Oyu Tolgoi from third party lenders, which it hopes to bed down later this year.

This has the support of its major shareholder, but Rio also has the option of advancing loans to finance its development as long as the terms are no less favourable than those available via financial institutions or banks.

In addition, Ivanhoe will issue 55 million share-purchase warrants to Rio. Each warrant will be exercisable to purchase one Ivanhoe share at $12.79 at any time during a three-year period.

Under the deal, a new 13-member board will be formed, the majority of which will be independent directors comprising 11 Rio Tinto-nominated directors, six of which will be independent, and two directors nominated by Friedland, one of which will be independent.

It is the second major deal for Friedland, who shot to fame as a mining financier in the 1990s when he sold the then-undeveloped Voisey's Bay nickel deposit in Canada to Inco for around $C4.3 billion.

His focus now will turn to the $US1 billion listing of his privately controlled vehicle Ivanplats, which owns the Platreef platinum project in South Africa and the Kamoa copper and Kipushi zinc operations in the Democratic Republic of Congo.

The six other Ivanhoe directors to step down are Marc Faber, Edward Flood, David Korbin, Livia Mahler, Tracy Stevenson and Dan Westbrook.

In the interim, Rio's chief financial officer and a fellow director of Ivanhoe Kay Priestly will fill the interim spot of Ivanhoe chief executive, while Ivanhoe's head of finance, Catherine Barone, will be the company's interim CFO, replacing Tony Giardini.

Other top Ivanhoe executives leaving their posts include president John Macken, deputy chairman Peter Meredith and executive vice president Sam Riggall. Rio is appointing a chief executive and CFO within the next five business days.

Meanwhile, Ivanhoe says it remains in talks about the possible divestment of its subsidiary interests in Ivanhoe Australia, South Gobi and Altynalmas Gold.

Chinese aluminium company Chalco recently agreed to pay $926 million for a controlling stake in South Gobi.

Shares in Ivanhoe Mines closed $C1.78 higher on the Toronto Stock Exchange overnight at $13.41.