Strategic equity investment of C$723 million in Ivanhoe Mines by China-based CITIC Metal has been completed Zijin Mining also has exercised its anti-dilution rights, raising additional C$78 million for Ivanhoe Ivanhoe’s current cash position is approximately
September 19, 2018
Strategic equity investment of C$723 million
in Ivanhoe Mines by China-based CITIC Metal
has been completed
Zijin Mining also has exercised its anti-dilution rights,
raising additional C$78 million for Ivanhoe
Ivanhoe’s current cash position is approximately
C$855 million
CITIC Metal and Zijin Mining each purchased
their Ivanhoe Mines shares at C$3.68 per share
BEIJING, CHINA – Robert Friedland, Executive Co-Chairman of Ivanhoe Mines (TSX: IVN;
OTCQX: IVPAF), and Lars-Eric Johansson, Chief Executive Officer, today announced the
completion of a major strategic equity investment totalling C$723 million (approximately
US$556 million) in Ivanhoe Mines by CITIC Metal Africa Investments Limited (CITIC
Metal Africa), a direct subsidiary of CITIC Metal Co., Ltd. (CITIC Metal), one of China’s
leading international resources companies.
The investment, initiated three months ago by CITIC Metal, is an integral part of
Ivanhoe’s long-term strategic cooperation and investment agreement with CITIC Metal.
Ivanhoe Mines has issued 196,602,037 common shares to CITIC Metal Africa through a
private placement at a price of C$3.68 per share.
CITIC Metal Africa now has become Ivanhoe Mines’ largest single shareholder through
its acquired ownership of approximately 19.5% of the company’s issued and
outstanding common shares. Mr. Friedland has the second-largest Ivanhoe
shareholding, with an ownership stake of approximately 17%.
As part of the private-placement agreement, CITIC Metal Africa and Mr. Friedland have
signed reciprocal standstill agreements that prevent either of them from increasing their
individual ownerships in Ivanhoe Mines to more than 19.9% until January 8, 2022.
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The investment has generated gross proceeds for Ivanhoe Mines of C$723 million
(approximately US$556 million). Approximately C$131 million of the C$723 million owing
from the strategic equity investment was used to repay an interim loan of US$100
million that Ivanhoe Mines received on August 9, 2018, from CITIC Metal’s corporate
parent, CITIC Metal Group Limited. This resulted in a net cash payment to Ivanhoe today
of C$592 million (approximately US$455 million). The full repayment of the interim loan
eliminates the limited-recourse guarantee and share pledge previously provided by Mr.
Friedland to secure Ivanhoe Mines’ obligation under the loan facility.
“For more than 15 years, we have been mutually building the foundation for a long-
lasting and trust-based relationship with CITIC,” said Mr. Friedland. “We first formed a
strategic alliance with CITIC in 2003 and since then have worked together to deepen our
understandings of each other’s values, strategic priorities, and operating and financial
capabilities.
“After a period of extensive due diligence and multiple site visits, we are delighted to
welcome CITIC Metal Africa as our new, largest shareholder. CITIC’s leaders have
reviewed hundreds of mining projects around the world, helping them to fully
appreciate the world-scale significance of our three tier-one projects, and the
opportunities and challenges that lie ahead as we move forward with our ongoing mine
developments and exploration programs.
“We are confident that the CITIC Metal Group has the experience, financial resources –
and a shared commitment to our objectives – to greatly assist us as we advance our
projects to production, creating value for Ivanhoe’s stakeholders in the Democratic
Republic of Congo and South Africa, and our international shareholders.”
Yufeng “Miles” Sun, President of CITIC Metal Group Limited, commented: “For several
years, CITIC Metal has been focused on investing in high-quality mining assets with
strategic, global partners. We are very pleased to have partnered with Ivanhoe Mines as
Ivanhoe’s three world-class assets are among the very best in the mining industry and
Mr. Friedland is a respected, long-standing friend of CITIC’s.
“CITIC Metal’s strategic investment in Ivanhoe reflects our strong belief that the long-
term prospects for the mining industry are extremely positive, especially given the
projected robust future demand for key metals, such as copper, for renewable energy
infrastructure and electric vehicles.
“We recognize the professional competence of the Ivanhoe Mines team, and we share
their profound understanding and embracing of diverse cultures, which are
indispensable factors in successful construction and operation of large-scale mining
assets in Africa. We are confident that by working closely with the Ivanhoe Mines team
and other existing shareholders and stakeholders, Ivanhoe’s three tier-one projects can
be successfully brought into production on schedule,” Mr. Sun added.
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CITIC Metal’s Strategic Investment in Ivanhoe Mines Closing Ceremony
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Zijin exercises anti-dilution rights at C$3.68 per share
to raise additional C$78 million for Ivanhoe
Ivanhoe’s joint-venture partner at the Kamoa-Kakula Project, Zijin Mining Group Co.,
Ltd., has exercised its anti-dilution rights, generating additional proceeds for Ivanhoe of
C$78 million (approximately US$60 million). The exercise by Zijin of its anti-dilution
rights also was at a price of C$3.68 per share. This has resulted in Zijin retaining a 9.7%
ownership stake in Ivanhoe Mines – its level of ownership prior to the completion of
CITIC Metal Africa’s strategic investment.
With receipt of the combined proceeds of more than C$800 million from CITIC Metal
Africa and Zijin, and the repayment of the interim loan, Ivanhoe now has cash and cash
equivalents of approximately C$855 million (US$657 million) – and no significant debt.
Ivanhoe intends to use the funds to continue advancing its development and
exploration activities at the Kamoa-Kakula, Platreef and Kipushi projects on their
current, accelerated timetables.
“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 Mr. Friedland.
“Both partners share our expectation that future markets for metals will be influenced
by steadily increasing urbanization and demands for cleaner air and water, which
require strategic metals, such as nickel, zinc, platinum-group metals and, especially,
copper.
“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,” Mr.
Friedland added.
Mr. So Hon Chun, the controlling shareholder of Crystal River Global Limited, the holder
of the 1% interest in the holding company for the Kamoa-Kakula Project with Zijin,
previously assisted in connection with Zijin’s initial investment in Ivanhoe Mines. Mr. So
has a long-standing relationship with the Ivanhoe group of companies and continues to
assist Ivanhoe in the Democratic Republic of Congo.
Yufeng “Miles” Sun and Tadeu Carneiro join expanded Ivanhoe Board
Pursuant to the terms of the private-placement agreement with CITIC Metal Africa,
Ivanhoe Mines has accepted CITIC Metal’s nomination of Mr. Sun and Tadeu Carneiro to
the Ivanhoe Mines Board of Directors. The two new appointments expand the Board to
11 members.
Mr. Sun, President of CITIC Metal Group, has been appointed Non-Executive Co-
Chairman of Ivanhoe Mines. Mr. Carneiro, former Chief Executive Officer of Brazil-based
Companhia Brasileira de Metalurgia e Mineração (CBMM), the world's largest producer
of niobium metal and its basic alloys, has been appointed as a non-executive director.
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Advisors
Ivanhoe Mines’ financial advisors are BMO Capital Markets and Citi. Legal counsel for
the company is Stikeman Elliott LLP. CITIC Metal is advised by RBC Capital Markets, as
financial advisor, Ernst & Young (China), as tax advisor, RPM Global and BGRIMM
Technology Group, as technical advisors and CITIC Securities, as PRC strategic
advisor. Legal counsel for CITIC Metal is Baker McKenzie. Counsel for Zijin is Fasken
Martineau DuMoulin LLP.
About CITIC Metal and CITIC Limited
CITIC Metal Africa Investments and CITIC Metal are affiliates of CITIC Limited. As CITIC
Limited’s arm in the business of resources and energy, CITIC Metal specializes in the
importation and distribution of copper, zinc, platinum-group metals, niobium products,
iron ore, coal and non-ferrous metals; trading of steel products; and investments in
metals and mining projects. CITIC Metal’s major mining investments include a 15%
ownership in the Las Bambas copper project in Peru and leading a Chinese consortium
in acquiring a 15% ownership in the Brazil-based niobium producer CBMM. CITIC Metal
Africa is an Investment holding company incorporated in Hong Kong, with its 100%
equity interests directly held by CITIC Metal.
CITIC Limited (SEHK:267) is China's largest conglomerate, with total assets of more than
US$900 billion. Among its diverse global businesses, CITIC Limited focuses primarily
on financial services, resources and energy, manufacturing, engineering contracting
and real estate. CITIC Limited enjoys leading market positions in sectors well matched
to China’s economy. CITIC’s rich history, diverse platform and strong corporate culture
across all businesses ensure that CITIC Limited is unrivalled in capturing opportunities
arising in China.
CITIC Limited is listed on the Stock Exchange of Hong Kong, where it is a constituent of
the Hang Seng Index. CITIC Group Corporation, a Chinese state-owned enterprise, owns
58% of CITIC Limited.
About Ivanhoe Mines
Ivanhoe Mines is a Canadian mining company focused on advancing its three principal
projects in Southern Africa: the development of new mines at the Kamoa-Kakula copper
discovery in the Democratic Republic of Congo (DRC) and the Platreef platinum-
palladium-nickel-copper-gold discovery in South Africa; and the extensive
redevelopment and upgrading of the historic Kipushi zinc-copper-germanium-lead
mine, also in the DRC.
Information contacts
Investors Media
Bill Trenaman +1.604.331.9834 North America: Bob Williamson +1.604.512.4856
South Africa: Jeremy Michaels +27.82.772.1122