Chinese conglomerate CITIC’s subsidiary has reached a deal to acquire a 19.9% stake in Canadian mining firm Ivanhoe Mines for around C$723m ($556.87m).

According to the terms of the deal, CITIC Metal will buy Ivanhoe’s 196,602,037 common shares through a private placement at a price of C$3.68 a share, thereby becoming the biggest shareholder in the company.

Ivanhoe’s other Chinese investor Zijin Mining will have the option to exercise its anti-dilution rights in order to maintain a 9.9% stake in the company.

“We are confident that CITIC Metal shares our vision and has the experience and financial resources to help us advance our three projects to production.”

The proceeds from the transaction will be used to advance Ivanhoe’s three mine-development projects in Southern Africa, namely Kamoa-Kakula, Platreef and Kipushi.

Ivanhoe Mines executive chairman Robert Friedland said: “A fundamental, qualifying condition has been that any new partner must be complementary to our established partners, Zijin and the Japanese consortium led by Itochu.

“We are confident that CITIC Metal shares our vision and has the experience and financial resources to help us advance our three projects to production, creating value for Ivanhoe’s stakeholders in the Democratic Republic of Congo and South Africa, and our international shareholders.”

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By GlobalData

In 2003, Ivanhoe and CITIC Metal formed an alliance to cooperate in metals production and related technologies.

Under the current deal, CITIC Metal has also agreed to provide a $100m interim loan facility to the Canadian miner.

Additionally, the company will arrange project financing for the first phase of development for the Kamoa-Kakula project.

The transaction is subject to certain conditions, including due diligence, approval by the Toronto Stock Exchange, regulatory clearance in China and other customary closing conditions. Ivanhoe expects the completion of the deal to take up to four months.