Robert Friedland’s Ivanhoe Mines Ltd. is selling a minority stake to a Chinese state-owned firm, securing an important financing source, as uncertainty lingers over how a new African mining code could affect the Canadian base metals miner.
On Monday, Ivanhoe announced it is selling 19.9 per cent of the company by issuing 196.6 million shares in a private placement to CITIC Metal, a subsidiary of CITIC Ltd., China’s largest conglomerate.
The shares are being issued at $3.68 apiece, a 13-per-cent premium to its Friday close. CITIC Metal, which is set to become Ivanhoe’s biggest shareholder, has also agreed to advance Ivanhoe a US$100-million loan.
Vancouver-based Ivanhoe will invest the various funds in a number of its development assets in Africa, including a platinum and palladium project in South Africa, and its massive Kamoa-Kakula copper project in the Democratic Republic of Congo (DRC). CITIC will also attempt to line up additional funds for Ivanhoe for the development of Kamoa-Kakula.
In a note to clients, Dalton Baretto, an analyst with Canaccord Genuity Group Inc., wrote that the CITIC Metal transaction “largely eliminates” financing risk around Ivanhoe.