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TORONTO—Mining entrepreneur Robert Friedland resigned as chief executive of Ivanhoe Mines Ltd. IVN +13.78%as part of an agreement that ensures majority shareholder Rio Tinto RIO.AU +0.15%PLC’s financial support for a huge Mongolian copper project Mr. Friedland founded and fought to control.
Mr. Friedland and other members of senior Ivanhoe management stepped down Tuesday, the Vancouver-based company said Wednesday.
The move ends a monthslong tussle between Mr. Friedland and mining giant Rio Tinto over control of Ivanhoe and its main asset, the Oyu Tolgoi mine in Mongolia. The mine holds some of the world’s largest unexploited copper and gold deposits. Rio Tinto has gradually increased its stake in Ivanhoe, and in January it raised its ownership to 51%. That gave it effective control of the Canadian company without having paid a premium to other shareholders—a move that Mr. Friedland fought to prevent.
Michael Gordon, Ivanhoe’s interim chairman, said the management change came because as the controlling shareholder Rio Tinto wanted to “participate to a greater degree” in the company’s management. The change in the company from an explorer to a mine operator also meant that it wanted a different set of management skill, he said.
“This agreement sets the stage for the Oyu Tolgoi Project’s transition to a major mining operation in coming months,” Mr. Friedland said in a statement.
A person familiar with the matter has said Mr. Friedland realized the “writing was on the wall” after Rio Tinto took majority control and won position to drive Ivanhoe’s future, and he then began looking for an exit. The executives who stepped down will receive compensation, another person familiar with the matter said.
Kay Priestly, who is chief financial officer of London-listed Rio Tinto’s copper group, will act as Ivanhoe’s interim chief executive.
The executive changes came as part of a round of financing announcements in which Rio Tinto promised up to $1.5 billion to finish the first phase of Oyu Tolgoi’s development and offered “full support” to completion of third-party project-financing of $3 billion to $4 billion. Ivanhoe also announced a rights offering to holders of its shares to raise up to about $1.8 billion in gross proceeds, an offering Rio Tinto committed to support. Mr. Gordon said securing financing had taken longer than hoped given banks’ reluctance to lend during the financial crisis.
Depending on whether other shareholders take up their rights, the offering could leave Rio Tinto with 54.6% to 64.8% of Ivanhoe, BMO Capital Markets said. That gives Rio Tinto a greater control of the company again without paying a takeover premium.
“Today’s changes can be seen as the last move in the struggle for control of Ivanhoe between Rio Tinto and those allayed with Mr. Robert Friedland, essentially clearing the way for Rio to more freely negotiate the divestiture of Ivanhoes’ noncore assets,” BMO analyst Tony Robson said in a note.
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