(Reuters) - Ivanhoe Mines Ltd (IVN.TO) IVN.N said Wednesday its founder and Chief Executive Robert Friedland agreed to step down as part of a financing deal with its majority shareholder Rio Tinto (RIO.L) (RIO.AX) that will help fund construction of the Oyu Tolgoi copper-gold project in Mongolia.
Friedland’s resignation, along with the resignations of six other directors and four senior management members, came just months after mining giant Rio Tinto acquired a controlling stake in the Toronto-listed mining company.
Ivanhoe said the agreement with Rio contained a comprehensive financing plan structured to secure Rio’s direct participation in, and support for, funding planned developments at Oyu Tolgoi the company’s flagship project.
“This agreement sets the stage for the Oyu Tolgoi Project’s transition to a major mining operation in coming months,” said Friedland in a statement.
The company said Kay Priestly, Rio’s chief financial officer and a director of Ivanhoe, was appointed Ivanhoe’s Interim CEO. Catherine Barone, Ivanhoe’s head of finance, was named the company’s interim CFO. Barone replaced Tony Giardini who stepped down as CFO.
As part of the agreement, Ivanhoe will proceed with a rights offering to its shareholders that will raise up to $1.8 billion in gross proceeds. The rights offering will be supported by a standby commitment for the full amount from Rio Tinto.
Proceeds of the rights offering will be used as part of the comprehensive financing plan to cover all projected capital requirements for Oyu Tolgoi.
Ivanhoe said all shareholders may participate on an equal proportional basis in purchasing additional common shares of Ivanhoe Mines at a subscription price of C$8.34.
Ivanhoe said it remained engaged in active and detailed negotiations on potential divestments involving its subsidiary interests.
Reporting By Euan Rocha; Editing by Gerald E. McCormick