Done Deal: CITIC Becomes Ivanhoe Mines’ Largest Shareholder

CITIC’s (HKEX:0267) cash splash on Canadian miner Ivanhoe Mines (TSX:IVN) has been completed, with the two companies announcing closure to the three-month process on Wednesday (September 19).

CITIC is now Ivanhoe Mines’ largest shareholder, having paid C$723 million for 19.5 percent of the company, with founder and executive chairman Robert Friedland bumped to second place with 17-percent ownership.

“After a period of extensive due diligence and multiple site visits, we are delighted to welcome CITIC Metal Africa as our new, largest shareholder,” said Friedland.

He added that CITIC’s leadership would bring valuable experience to “greatly assist (Ivanhoe) as we advance our projects to production, creating value for Ivanhoe’s stakeholders in the Democratic Republic of Congo (DRC) and South Africa, and our international shareholders.”

The funds will go towards the company’s three major projects, which are its Kipushi zinc-copper project in the DRC, the Kamoa-Kakula copper project — also in the DRC — and the Platreef platinum-group metals project in South Africa.

Together with an additional C$78 million from Zijin Mining (HKEX:2899), which used anti-dilution rights to maintain its share in the Kamoa-Kakula project, Ivanhoe Mines now has cash equivalents of C$855 million with no significant debt.

Both companies paid C$3.68 per share.

“With today’s closing of the private-placement financings with CITIC and Zijin, we have enhanced our strategic cooperation partnership with two of China’s leading mining companies,” said Friedland.

“Ivanhoe Mines now is in the extremely advantageous position of having current cash resources of approximately US$657 million. We are confident in our capacity to successfully finance all three of our mine-development projects to production.”

As first reported in June, the Ivanhoe board will be expanded to 11 members, with Ivanhoe putting out a seperate release to mark the appointment of CITIC Metals president Sun Yufeng to the company’s board, where he will sit alongside Friedland as co-chairman.

Along with Yufeng, CITIC also nominated Tadeu Carneiro to join the board. Carneiro is a former CEO of Brazil-based Companhia Brasileira de Metalurgia e Mineração, a private niobium-mining company partially owned by CITIC since 2011.

On the Toronto Stock Exchange on Wednesday, Ivanhoe Mines closed up a modest 0.39 percent at C$2.56.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.