UPDATE: Ivanhoe Australia Taps UBS To Find Strategic Partners
January 31 2012 - 12:46AM
Dow Jones News
Ivanhoe Australia Ltd. (IVA.AU) has hired UBS AG to help find
strategic partners for a string of Australian base metals projects
as it vies to secure long-term funding to bring them into
production.
The move to start a formal sales process comes nearly eight
months after Ivanhoe Australia began sounding out potential
investors, and is a further sign that interest in industrial metals
remains robust despite a shaky global economic outlook.
The process to bring in strategic partners is likely to last two
to three months, said Peter Reeve, chief executive of Ivanhoe
Australia, which is majority owned by Canada's Ivanhoe Mines Ltd.
(IVN).
Detailed discussions have been held with a number of unnamed
parties over the past few months, he said in a telephone
interview.
"Part of UBS's role in this will be to organize and structure
the process, and to bring in others," Reeve said.
Ivanhoe Australia is seeking to sell minority stakes in its
Cloncurry projects, moves that would secure funding see them
through to production. Potential partners include mining companies
and commodity trading houses in Australia and abroad, he said.
The company is set to begin production in March at its Osborne
copper and gold project, which it bought from Barrick Gold Corp.
(ABX) in 2010. Its Cloncurry portfolio also includes the Merlin
molybdenum-rhenium project, Mount Dore cathode copper project and
Mount Elliott copper-gold project.
Ivanhoe Australia is 59% owned by Ivanhoe Mines, and its
chairman is Ivanhoe Mines founder and CEO Robert Friedland.
Anglo-Australian mining titan Rio Tinto PLC (RIO) this month took
majority control of Ivanhoe Mines, increasing its stake two
percentage points to 51%.
Rio in a filing last week to the U.S. Securities and Exchange
Commission said it anticipated replacing some of the management and
at least a majority of the non-Rio appointed directors at Ivanhoe
Mines, although it doesn't currently have any plans for a shakeup.
It also reserved the right to make other changes at the
Vancouver-based company.
"For us, it's business as usual," Reeve said, adding Ivanhoe
Australia's management was focused on developing its projects.
He said none of the parties the company has held discussions
with has proposed a broader deal than a minority interest in a
project, but he added there was always the possibility "doing
something bigger."
At 0457 GMT, Ivanhoe Australia's shares were trading 2.1% lower
at A$1.885, giving it a market value of roughly A$1.06 billion
(US$1.13 billion).
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094;
robb.stewart@dowjones.com
-David Winning in Sydney contributed to this article.
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