Ivanhoe Mines recently said its battle with Rio Tinto for
control of  Oyu Tolgoi mine is
continuing, and it is sticking to a shareholders” rights plan that has led its
project partner to go to arbitration. The plan, adopted by Ivanhoe”s board in
April, could make it difficult for Rio to ever take a majority stake in
Ivanhoe, which is developing Oyu Tolgoi, to start production in 2013. Rio
Tinto, which currently owns 29.6% in Ivanhoe, claimed in an arbitration filing
on July 9 that the plan breached its rights under a previous private placement
agreement between the two companies dated October 2006.

“It is Ivanhoe Mines” view that nothing in the
private placement agreement prohibits Ivanhoe Mines from implementing a
shareholders” rights plan and that nothing in the shareholders” rights plan
breaches any of Rio Tinto”s existing contractual rights under the private
placement agreement, as amended,” Ivanhoe Mines said, adding the company
“will continue to support its shareholders” rights plan in the arbitration
proceeding”.

Relations between the two miners have cooled since
Ivanhoe adopted the shareholders” rights plan and terminated a covenant that
governs Rio Tinto”s investment in Ivanhoe. This will allow the Canadian miner
to issue more than 5% of its shares to strategic investors, which could include
major mining companies. It isn”t known who the strategic investors might be.

If any party wants to sell a stake in the mine, then Rio
Tinto, Ivanhoe and the Mongolian government have right of first refusal. If Rio
Tinto exercises that right and ups its Ivanhoe stake beyond 46.65%, then a
standstill agreement with Ivanhoe that limits how much Rio can buy in Ivanhoe
would become void.