Rio Tinto has won an arbitration ruling against Ivanhoe Mines, which took a poison pill defence to prevent an unwanted takeover.
The company now has the ability to purchase additional shares in Ivanhoe, beyond its current holding of 49%, without being diluted by a Shareholder Rights Plan, which was adopted by Ivanhoe in April 2010.
Rio began the arbitration process over claims by Ivanhoe that it breached a joint venture agreement to develop the huge Oyu Tolgoi copper-gold mine in Mongolia.
The ruling stated that Rio Tinto did not breach the private placement agreement with Ivanhoe and dismissed Ivanhoe’s counterclaim.
Rio Tinto could increase its shareholding in Ivanhoe to a majority position based on Ivanhoe’s business, prospects and financial condition and other factors.
The company stated that is has no plans to make a takeover bid for Ivanhoe’s shares; however, the company reserves the right to change its intention in the future.
Rio Tinto and Ivanhoe signed an agreement in December 2010, whereby Rio would invest $1.3bn in Ivanhoe through a rights offering and $1.8bn in interim financing to fund and oversee the development of the Oyu Tolgoi copper-gold mine.
Rio Tinto could make additional investments in Ivanhoe if it decides to exercise various rights over the next few years.
Ivanhoe also owns a 59% interest in exploration firm Ivanhoe Australia and a 58% interest in Mongolian coal miner SouthGobi Resources.