Rio Tinto PLC (RIO) has been successful in its arbitration challenge of certain provisions in a poison pill defense adopted by Canadian mining concern Ivanhoe Mines Ltd. (IVN.T).

Ivanhoe said in a statement Tuesday that the ruling by the arbitrator had two parts that relate to an agreement reached between the companies in October 2006.

Anglo-Australian Rio had claimed a shareholders' rights plan adopted by Ivanhoe last year could potentially breach its rights. Ivanhoe said the arbitrator determined that if Rio were to trigger the rights plan and become an "acquiring person," antidilution rights granted to Rio would continue to apply.

Ivanhoe said the plan to defend against unwanted bids can remain in effect until its scheduled expiry in April 2013, but will be subject to anti-dilution rights held by Rio. These rights apply in situations where Ivanhoe plans to issue shares to anyone other than Rio, and entitle the mining giant to acquire a sufficient number of Ivanhoe shares to maintain the relative size of its stake.

Rio has steadily increased its hold on Ivanhoe from 19.7% at the start of 2010 to 49% in September, the maximum allowed under an agreement between the companies due to expire Jan. 18. Rio initiated the arbitration proceedings to challenge a move by Ivanhoe's board in April 2010 to adopt a shareholders' rights plan it said was intended to give it additional time to consider any bid and explore alternatives.

"We will continue to strive to ensure that all Ivanhoe shareholders are treated fairly," said David Huberman, chairman of Ivanhoe.

Ivanhoe said the arbitrator also ruled against its counterclaim, deciding that Rio hadn't breached any of its obligations under the private-placement agreement between the companies.

Ivanhoe owns 66% of Mongolia's massive Oyu Tolgoi copper and gold project, which is due to start commercial production in the middle of 2013. The Mongolian government owns the remaining 34% stake, while Rio is the project operator. Ivanhoe also owns a 58% interest in Mongolian coal miner SouthGobi Resources Ltd. (SGQ.T) and a 59% interest in exploration firm Ivanhoe Australia Ltd. (IVA.AU).

Oyu Tolgoi, located 80 kilometers north of China, is expected to be one of the world's largest mines when fully operational. Annual output in the first 10 years is projected to average 1.2 billion pounds of copper, 650,000 troy ounces of gold, and more than three million ounces of silver.

-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; robb.stewart@dowjones.com

Ivanhoe Australia (ASX:IVA)
Historical Stock Chart
From Apr 2024 to May 2024 Click Here for more Ivanhoe Australia Charts.
Ivanhoe Australia (ASX:IVA)
Historical Stock Chart
From May 2023 to May 2024 Click Here for more Ivanhoe Australia Charts.