Mining titan Rio Tinto PLC said
Monday it has spent nearly $1 billion in accordance with a pact to participate
in Canada-based Ivanhoe Mines Ltd.”s $1.8 billion rights issue, which is aimed
at funding the development of the massive Mongolian Oyu Tolgoi copper and gold
project.

Rio Tinto spent $935 million to
participate in the oversubscribed rights issue and increased its stake to 51.0%
from 50.9% as a consequence. The purchase is in keeping with Rio Tinto”s
agreement to participate in any Ivanhoe rights issue to fund the Oyu Tolgoi
project.

Ivanhoe”s founder and former chief
executive, Robert Friedland exercised his rights to keep his holding in the
Vancouver-based mining company at about 13%, according to a person familiar
with the matter. Mr. Friedland resigned as chief executive of Ivanhoe in April,
not long after losing control of the company when Rio Tinto became its majority
owner, a situation he had fought to prevent.

“We are pleased with the strong
reception our rights offering received from shareholders,” said Ivanhoe”s
new chief executive, Kay Priestly, adding that the project remains on track to
process its first ore in the second half of 2012 and begin commercial
production in the first half of 2013.

Rio said that it has no plans to buy
additional Ivanhoe shares at the moment, although it has the ability to
exercise warrants that would allow it boost its shares to 54.4% if desired.

The Anglo-Australian mining company
also has the right to be the first to participate in further equity financing
from Ivanhoe up until Oct. 24; it also has antidilution rights to make sure it
is able to maintain its current stake in the company in the future.

“The purpose of Rio Tinto
acquiring additional shares under Ivanhoe”s rights offering was to honor its
contractual obligations to Ivanhoe and to provide additional funding to Ivanhoe
to ensure the timely development of Ivanhoe”s Oyu Tolgoi copper-gold mine in
Mongolia,” it said.

The mine holds some of the world”s
largest unexploited gold and copper deposits, with estimated reserves of 46
million ounces of gold and 81 billion pounds of copper.

Rio Tinto”s shares closed up 1.6%,
or 45 pence, at 29.37 pounds, while Ivanhoe”s shares were down 2.4%, or 21
Canadian cents, at C$8.57 a share.

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