1. | REPORTING ISSUER |
2. | DATE OF MATERIAL CHANGE |
3. | NEWS RELEASE |
4. | SUMMARY OF MATERIAL CHANGE |
| Rio Tinto will support, and fully participate in, the rights offering announced by
the Company on October 18, 2010 (the Rights Offering); |
| Rio Tinto will immediately exercise a sufficient number of its outstanding Series B
share purchase warrants to generate proceeds of U.S.$300 million and has agreed to
exercise all of its remaining share purchase warrants (the Outstanding Warrants) as
funds are required for the ongoing development of the OT Project and, in any event, by
no later than January 18, 2012; |
| the share purchase limitations applicable to Rio Tinto in Sections 6.1(b) and (c) of
the PPA will be replaced by a new hard cap limitation whereby Rio Tinto will not,
subject to certain exceptions, acquire any common shares of the Company (Common
Shares) or securities convertible into or exercisable for Common Shares if such
acquisition would result in Rio Tinto owning more than 49.0% of the Companys
outstanding Common Shares assuming the full exercise of the Outstanding Warrants (the
Standstill Cap); |
| the Company will issue to Rio Tinto a subscription right (the Subscription Right)
exercisable from time to time to purchase Common Shares from the Companys treasury at
volume-weighted average price of a Common Share on the Toronto Stock Exchange during
the five (5) trading days immediately before the applicable date of exercise. Rio
Tintos entitlement to exercise the Subscription Right is subject to certain
limitations, including the Standstill Cap; |
| Rio Tinto and the Company will act diligently and in good faith in efforts to
negotiate a comprehensive third-party project financing proposal for the OT Project
with the goal of having such financing (OT Project Financing) in place before June
30, 2011; |
| Rio Tinto will provide to the Company a non-revolving interim funding facility of
U.S.$1.8 billion (the Interim Funding Facility) to fund ongoing development of the OT
Project; |
| the Company and Rio Tinto will form an operating committee (the RT/IVN Operating
Committee) through which decisions will be made concerning the exercise of the
Companys indirect voting rights in Oyu Tolgoi LLC (OT LLC), the Mongolian company
that owns the OT Project, at both the board of directors level and the shareholder
level; |
| a Rio Tinto affiliate will receive a contract acceptable to the board of directors
of OT LLC to manage the OT Project and an affiliate of the Company will be
subcontracted by the Rio Tinto affiliate to manage exploration activities in areas
outside the core, life-of-mine area of the OT Project; |
| prior to the expiry or termination of the Standstill Cap and subject to certain
exceptions, Rio Tinto will not exercise its voting rights to increase its
representation on the Companys board of directors beyond a number of directors
proportionate to its shareholding from time to time. After the expiry or termination of
the Standstill Cap, or upon a change of control of the Company in favour of Rio Tinto,
(i) one incumbent Company director (selected by the Companys incumbent senior
management and acceptable to Rio Tinto) who is independent, but who was not nominated
by Rio Tinto pursuant to its rights under Part 4 of the PPA; and (ii) two incumbent
Company directors (selected by Robert Friedland and acceptable to Rio Tinto)
conditional upon Robert Friedland continuing to own at least 10% of the Companys
outstanding Common Shares, may remain as directors of the Company (on a board of 14
directors) and Rio Tinto will exercise its voting power to vote in favour of the
election of such directors from time to time until the earlier of January 18, 2014, and
the date the Company ceases to be a reporting issuer; |
| Rio Tinto has also agreed that after the termination or expiry of the Standstill
Cap, or upon a change of control of the Company in favour of Rio Tinto, at least 8 of
the 14 directors will be independent until January 18, 2014; and |
| the current arbitration proceeding between the Company and Rio Tinto involving the
Companys Shareholder Rights Plan will be suspended for six months. |
5. | FULL DESCRIPTION OF MATERIAL CHANGE |
| Rio Tinto will: (i) publicly support the Rights Offering; and (ii) exercise all
rights (Rights) issued to it pursuant to the Rights Offering to purchase Common
Shares. |
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| The Rights Offering will be made on the following basis: (i) the Company will issue
Rights sufficient to generate aggregate gross subscription proceeds of between US$1.0
billion and US$1.2 billion; (ii) the price payable by holders of Rights to purchase one
Common Share (the Rights Offering Price) will be at a discount, as determined by the
Company, in the range of 40% to 50% to US$25.76, being the volume weighted average
price of a Common Share on the New York Stock Exchange during the twenty (20) trading
days immediately before December 8, 2010; and (iii) the Rights Offering will be
unconditional. |
| Concurrent with the HOA, Rio Tinto has entered into separate agreements to purchase,
prior to the record date of the Rights Offering, 10,000,000 outstanding Common Shares
from Robert Friedland (the RMF Purchased Shares) and, upon the completion of the
Rights Offering, a further 10,000,000 Common Shares (grossed up to take into account
the Rights Offering) from Citibank N.A. (the Citi Purchased Shares). |
| The purchase price to be paid by Rio Tinto for the RMF Purchased Shares will be
U.S.$25.34, which is the simple average of the closing price of Common Shares on the
New York Stock Exchange on the twenty (20) trading days preceding the date of the HOA.
The purchase price to be paid by Rio Tinto for the first 10,000,000 of the Citi
Purchased Shares will also be U.S.25.34. The purchase price for the balance of the Citi
Purchased Shares will be the Rights Offering Price. |
| Rio Tinto will exercise a sufficient number of its Outstanding Warrants to subscribe
for and purchase at least 33,783,784 Common Shares at an exercise price of U.S.$8.88
per Common Share for cash proceeds to the Company of approximately U.S.$300 million. |
| Rio Tinto will, subject to earlier exercise as described below under the heading
Funding Requests, exercise all of its remaining Outstanding Warrants by no later than
January 18, 2012. |
| The terms of the Outstanding Warrants will be amended to change the existing
mechanism for adjusting the number of Common Shares acquirable upon the exercise of the
Outstanding Warrants in the event of a common share reorganization, a rights
offering or a special distribution that results in an adjustment in the exercise
price of such Outstanding Warrants to eliminate any possibility of dilution as a result
of the Rights Offering. |
| Rio Tinto will receive the Subscription Right, which will entitle Rio Tinto to
subscribe from time to time for Common Shares. |
| Rio Tinto may not exercise the Subscription Right to subscribe for Common Shares if,
immediately following such subscription, Rio Tinto and all persons with whom Rio Tinto
is acting jointly or in concert, would own or control more than a number of Common
Shares that would equal (A) 49.0% of the then issued and outstanding Common Shares,
less (B) the amount, if any, by which 3,700,000 exceeds the number of Common Shares
acquired by Rio Tinto and all persons with whom Rio Tinto is acting jointly or in
concert from any person
(excluding the RMF Purchased Shares, the Citi Purchased Shares and any Common Shares
acquired from the Company). |
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| The subscription price per Common Share under the Subscription Right will be the
volume-weighted average price of a Common Share on the Toronto Stock Exchange during
the five (5) trading days immediately before the applicable date of exercise. |
| The Subscription Right will terminate on January 18, 2012, subject to earlier
termination if Rio Tinto receives the right to exercise, and exercises, its equity
right of first offer (ROFO) under the PPA and, as a result, Rio Tintos standstill
obligations under Section 6.1 of the PPA terminate. |
| The Company will use all of the proceeds from the Rights Offering and from the sale
of any Common Shares to Rio Tinto pursuant to the exercise of the Outstanding Warrants,
the Subscription Right or otherwise, other than $180 million, for expenditures in
respect of the OT Project. |
| The Company may not use the proceeds from the sale of any of its assets that are
unrelated to the OT Project (Non-OT Assets) to acquire any new assets or to fund any
existing projects other than the development of the OT Project and the Altynalmas gold
project in Kazakhstan. |
| The Company may use the proceeds from the sale of Non-OT Assets for general
corporate purposes, including the payment of taxes and corporate expenses. |
| The share purchase limitations in Sections 6.1(b) and (c) of the PPA will be
replaced by the Standstill Cap, whereby Rio Tinto will not acquire any Common Shares or
securities convertible into or exercisable for Common Shares if such acquisition would
result in Rio Tinto owning more than 49.0% of the Companys outstanding Common Shares,
assuming the full exercise of the Outstanding Warrants. |
| The only exceptions to the Standstill Cap are acquisitions pursuant to Rio Tintos
existing ROFO under the PPA, its existing right of first refusal on Robert Friedlands
Common Shares and as set out in Section 6.3 of the PPA. |
| The Standstill Cap will remain in effect until January 18, 2012, subject to earlier
termination (i) in certain specified circumstances if Rio Tinto exercises its ROFO
under the PPA, (ii) if the Company commits a significant breach of the RT/IVN
Governance Agreement (as defined below), or (iii) if the Company appoints to its board
of directors any individual who is not a Rio Tinto nominee under Part 4 of the PPA or a
current director of the Company. |
| The Company and Rio Tinto will act together diligently and in good faith to
negotiate an OT Project Financing acceptable to both the Company and Rio Tinto, each
acting reasonably, of, unless the parties otherwise agree, U.S.$3.6 billion, with the
goal of having the OT Project Financing in place before June 30, 2011. |
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| Rio Tinto will provide to the Company the Interim Funding Facility of U.S.$1.8
billion to fund ongoing development of the OT Project which will be drawn down to fund
ongoing OT Project expenditures if and to the extent that funds from an OT Project
Financing or from other sources are not available in a timely manner. |
| The Interim Funding Facility will be repaid from the proceeds of the OT Project
Financing. In any event, the Interim Funding Facility will mature, and all principal,
interest and other amounts thereunder will be finally due and payable, on December 31,
2013. |
| The Interim Funding Facility bears interest at a rate equal to the daily weighted
average of: (i) the interest rate charged from time to time on the on-lending of
advances made under the Interim Funding Facility to OT LLC by its shareholders or
otherwise; (ii) the rate at which dividends are paid from time to time by OT LLC on
preferred shares in the capital of OT LLC which are purchased with funds advanced under
the Interim Funding Facility; and (iii) the rate(s) at which dividends, interest or
other periodic payments are made from time to time to any provider of funds to OT LLC
which derive from advances made under the Interim Funding Facility. |
| Rio Tintos obligation to advance funding under the Interim Funding Facility is
conditional upon, among other things: |
| receipt by Rio Tinto of a funding request evidencing the necessity for a
drawdown of funds for ongoing OT Project expenditures; |
| receipt by Rio Tinto of certain documents and financial statements of the
Company and certain of its subsidiaries and evidence that all necessary corporate
authorizations have been obtained by the Company and such subsidiaries; |
| the Company having executed all necessary loan and security documentation; |
| registrations under applicable personal property security legislation having
been made; |
| all material consents, waivers, permits, orders and approvals having been
obtained; |
| no events or circumstances having a material adverse effect on the Company
having occurred; |
| no event of default or event which, with the giving of notice or the lapse of
time or both, would constitute an event of default having occurred; and |
| the OT Project Financing not having become available for drawdown. |
| The Company has given a series of positive and negative covenants to Rio Tinto in
respect of the Interim Funding Facility regarding its own conduct and that of certain
of its subsidiaries including, but not limited to (and subject to certain exceptions),
the following: |
| no encumbrance of any of the OT Projects assets or properties or the revenues
or cash flows derived therefrom; |
| no direct or indirect transfer of the revenues or cash flows derived from the OT
Project to any third party; |
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| no off-take contracts or marketing contracts with respect to the OT Project
unless approved by Rio Tinto; |
| no direct or indirect transfer of the whole or any part of the OT Projects
assets or properties to any third party; |
| pay or cause to be paid when due all amounts in respect of principal, interest
and any other amounts owing under the Interim Funding Facility; |
| no encumbrances on present or future assets to secure any indebtedness of the
Company or of any other person, other than indebtedness created under the Interim
Funding Facility or specifically permitted debt (including any OT Project
Financing); |
| no indebtedness other than the Interim Funding Facility or specifically
permitted debt (including any OT Project Financing); |
| comply with applicable law; |
| observe and perform all material obligations, covenants, terms and conditions
under any material contract, mortgage, debenture, indenture, lease, licence,
agreement or other instrument; |
| maintain insurance; and |
| not amend constitutional documents, enter into a merger, amalgamation or
arrangement or effect an acquisition with a value in excess of US$5,000,000, or
enter into any transaction whereby all or substantially all of the assets,
property, effects or undertaking of Company or any material subsidiary would become
the property of any other person. |
| The following is a summary of certain material events of default under the Interim
Funding Facility: |
| the Company fails to pay when due any amount payable by it under the Interim
Funding Facility; |
| the Company or any of its subsidiaries breaches or fails to perform or observe,
in any material respect, any obligation, covenant or provision contained in any
agreement between the Company or any of its subsidiaries and any member of the Rio
Tinto Group; |
| a change of control of the Company occurs, other than a change of control in
favour of Rio Tinto; |
| any representation or warranty made or given by the Company or any of its
subsidiaries under certain documents to which one or more of them is a party is
materially inaccurate or misleading; |
| third party indebtedness exceeding certain thresholds is not paid when due or is
accelerated or otherwise becomes due and payable; |
| a specified insolvency event occurs in respect of the Company or any of its
material subsidiaries |
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| any material agreement to which the Company or any of its subsidiaries and any
member of the Rio Tinto Group are parties is or becomes void or unenforceable
against the Company or any of such subsidiaries or is terminated or repudiated; |
| expropriation, nationalization or seizure of any material assets in respect of
the OT Project |
| occurrence of any declared or undeclared war, civil war, riot, insurrection,
sabotage or similar event which makes performance of contractual obligations under
material agreements impracticable or unreasonably hazardous or causes destruction
or physical damage to the OT Project facilities that renders their continued
construction or operation impracticable; |
| any litigation, arbitration or administrative proceeding against the Company or
a material subsidiary reasonably likely to have an adverse outcome and such outcome
would be reasonably expected to have a material adverse effect on the Company; |
| de-listing or suspension of trading of the Common Shares from the Toronto Stock
Exchange, the New York Stock Exchange or the Nasdaq Stock Market or the Company
ceasing to be a reporting issuer in a province of Canada; or |
| in the opinion of Rio Tinto, acting reasonably, an event occurs that has, or is
likely to have, a material adverse effect on the Company. |
| The terms and conditions governing the Interim Funding Facility are reflected in
Schedule D to the HOA, which will be superseded and replaced by a credit agreement
based on the terms and conditions set out in Schedule D to the HOA. |
| If and when the Company requires further funds for the development of the OT
Project, it will notify Rio Tinto. After receiving each such notice, Rio Tinto will
exercise a sufficient number of the remaining Outstanding Warrants, if any, to generate
proceeds sufficient to fund expenditures as set out in each such notice. |
| If and when the Company requires further funds for the development of the OT Project
and there are no remaining Outstanding Warrants, the Company will request a drawdown
under the Interim Funding Facility. |
| Those Company subsidiaries (collectively, the OT Holdcos) that own the Companys
66% interest in OT LLC will (i) appoint all of the directors of OT LLC reserved for the
OT Holdcos under the Shareholders Agreement dated 6 October 2009 among the OT Holdcos,
OT LLC and Erdenes MGL LLC (the OT Shareholders Agreement) based on the
instructions of Rio Tinto, as to three directors, and the Company, as to the remaining
three directors, and (ii) exercise all of the OT Holdcos rights under the OT
Shareholders Agreement in accordance with instructions given by the RT/IVN Operating
Committee (as defined below). |
| The Company and Rio Tinto will instruct their respective nominee directors of OT LLC
to participate and to vote at OT LLC board meetings as a bloc in accordance with the
instructions received from a newly formed and contractually created governance body
(the RT/IVN Operating Committee). |
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| Four directors of OT LLC appointed by OT Holdco (two from each of Rio Tinto and the
Company) will be the members of the RT/IVN Operating Committee. Rio Tinto will be
entitled to appoint one of its directors as the chairman of the RT/IVN Operating
Committee. |
| All decisions of the RT/IVN Operating Committee, other than decisions in respect of
certain defined fundamental matters (Special Matters) will require a majority vote of
the members with a casting vote of the chairman in the case of a tie. Decisions in
respect of Special Matters will require a unanimous vote of the members of the RT/IVN
Operating Committee. |
| Special Matters include: |
| amendments to the OT Shareholders Agreement or the Investment Agreement among
the Company, Rio Tinto, OT LLC and the Government of Mongolia (the OT Investment
Agreement); |
| certain related party transactions entered into by OT LLC that are not on arms
length commercial terms; |
| alteration to the number of directors that each of the Company and/or Rio Tinto
can appoint to the OT LLC board; |
| changes to the dividend distribution policy of OT LLC; |
| increased capital expenditures resulting from certain scope changes in respect
of the OT Project unless Rio Tinto provides funding in respect of such increased
expenditure; |
| a merger or reorganization of OT LLC; |
| the sale or transfer by OT LLC of all or any part of its assets other than a
sale or transfer in the ordinary course of business of the OT Project; |
| the issuance of debt in excess of a specified amount subject to certain agreed
exceptions; |
| the pledge or encumbrance of a substantial amount of OT LLCs assets subject to
certain agreed exceptions; |
| any issuance of securities or other action that would cause the OT Holdcos
aggregate percentage holding of common shares in OT LLC to decrease; |
| an amendment to the constitution of OT LLC; |
| the admission of additional shareholders of OT LLC; and |
| any change to the board voting structure of OT LLC. |
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| Rio Tinto may from time to time prepare a feasibility study for an expansion or
modification of the currently envisaged OT Project development plan and the approval of
the expansion or modification as proposed in the feasibility study will not constitute
a Special Matter provided that no feasibility study may be presented which: |
| requires material incremental capital expenditure (U.S.$200 million or more) to
be spent before January 1, 2013; |
| envisages the construction of a 50 megawatt or greater power plant commencing
before January 1, 2015; or |
| envisages the construction of a smelter, |
| The terms and conditions governing the RT/IVN Operating Committee are reflected in
Schedule E to the HOA, which will be superseded and replaced by a governance agreement
based on the terms and conditions set out in Schedule E to the HOA (the RT/IVN
Governance Agreement). |
| If Ivanhoe breaches any key terms of the RT/IVN Governance Agreement, Rio Tinto will
be released from the Standstill Cap and will be entitled to one-half of the Companys
50% entitlement to the Management Services Payment (as defined in the OT Shareholders
Agreement). If Rio Tinto breaches any key terms of the RT/IVN Governance Agreement, the
CAAA Covenants (as defined below), the covenants under the Interim Funding Facility,
Rio Tintos ROFO under the PPA and the No-Sale Covenant (as defined below) will
terminate. |
| A Rio Tinto affiliate (the Rio Tinto Manager) will be appointed to manage the OT
Project pursuant to an agreement (the OT Management Agreement) acceptable to the
board of directors of OT LLC. The terms and conditions of the OT Management Agreement
to be presented to the board of directors of OT LLC are reflected in Schedule F to the
HOA. |
| The Rio Tinto Manager will perform its obligations and exercise its powers: |
| in a manner that is fair and reasonable and in the best interests of OT LLC; |
| in a good, workmanlike and efficient manner, with the degree of care, consistent
with and applying suitable engineering, mining and processing methods and
practices, in each case in accordance with the practice adopted by the Rio Tinto
Group for large scale mining projects (which practice must accord at least with
good industry practice); and |
| in compliance with the terms and provisions of applicable laws and all other
licences, permits, contracts, and other agreements pertaining to the OT Project,
including the OT Investment Agreement and the OT Shareholders Agreement. |
| The Rio Tinto Manager will not have any liability to OT LLC in relation to or
arising out of the performance of the Rio Tinto Managers obligations under the OT
Management Agreement, except in cases of Gross Fault of the Rio Tinto Manager. Gross
Fault means (a) fraud or wilful and intentional misconduct by the Rio Tinto Manager or
(b) any act or omission by the Rio Tinto Manager which amounts to a wanton or reckless
disregard for or violation of the rights or safety of others, but shall be deemed not
to include any act or omission done or omitted to be done, if resulting (x) from the
express direction of the OT LLC Board, (y) with the knowledge and concurrence of
directors of the OT LLC Board who are not nominees of the Rio Tinto Group, or (z) from
an action taken in good faith by the Rio Tinto Manager to protect life, health or
property. |
- 9 -
| If the Rio Tinto Manager commits Gross Fault twice in any 12 month period that, if
capable of remedy, has not been remedied within 60 days after being required in writing
to do so, or if incapable of remedy, fails to pay agreed compensation, or in the
absence of agreement, compensation determined pursuant to arbitration, the chairman of
the RT/IVN Operating Committee will call a meeting to discuss what, if any, action
should be taken in relation to the changing of the Rio Tinto Manager including the
removal of the Rio Tinto Manager responsible for the relevant breach and the selection
of a new Rio Tinto Manager. In the event that the RT/IVN Operating Committee determines
for the removal and replacement of the Rio Tinto Manager, they may also instruct Rio
Tinto that any relevant personnel employed by the Rio Tinto Manager who was responsible
for the relevant breach will not be employed by the new Rio Tinto Manager. |
| OT LLC may terminate the OT Management Agreement if: |
| an order is made or a resolution is passed for the winding-up of the Rio Tinto
Manager or if the Rio Tinto Manager is unable to pay its debts, or stops or
suspends or threatens to stop or suspend payment of its debts, as they fall due,
which in any of such cases causes the Rio Tinto Manager to be unable to perform its
obligations hereunder; |
| the Rio Tinto Group disposes of a sufficient number of Common Shares such that
it ceases to hold a combined direct and/or indirect beneficial ownership interest
in OT LLC of more than 10%; or |
| the Manager ceases to be a wholly owned member of the Rio Tinto Group and the
situation is not remedied within 60 days after being required in writing to do so. |
| Subject to approval by the OT LLC board of directors of the OT Management Agreement,
exploration within the areas covered by the OT Project licenses, but outside of the
Core Area of the OT Project, will be managed by a designated subsidiary of the
Company (on a non-exclusive basis) by way of sub-contract from the Rio Tinto Manager
pursuant to an agreement (the OT Exploration Agreement). The Company will be
responsible for preparing exploration programs and budgets but Rio Tinto will have the
right to approve any exploration expenditures in excess of $30 million per year. The
terms and conditions of the OT Exploration Agreement are reflected in Schedule G to the
HOA. |
| Rio Tinto will not exercise its voting rights for the election of directors of the
Company (i) such that Rio Tintos representation on the Companys board of directors
exceeds its entitlements currently provided for in the PPA or (ii) to elect any
individual (other than those
individuals who are currently directors of the Company) until the termination or expiry
of the Standstill Cap or earlier if the Company commits a significant breach of the
RT/IVN Governance Agreement. |
| Rio Tinto will not be obliged to vote in favour of any individual who is not
currently a director of the Company and if the Company nominates any such individual
for election by the Companys shareholders, Rio Tinto will have the right to nominate
and vote for another individual of its choosing to run against the individual nominated
by the Company in such election. |
- 10 -
| If and when an Ivanhoe Change of Control (as defined in the PPA) occurs in favour of
Rio Tinto or upon termination of the Standstill Cap (whichever is earlier): (i) one
incumbent Company director (selected by the Companys incumbent senior management and
acceptable to Rio Tinto) who is independent but who was not nominated by Rio Tinto
pursuant to its rights under Part 4 of the PPA; and (ii) two incumbent Company
directors (selected by Robert Friedland and acceptable to Rio Tinto), conditional upon
Robert Friedland continuing to own at least 10% of the Companys outstanding Ivanhoe
Shares, may remain as directors of the Company (on a board of 14 directors) and Rio
Tinto will exercise its voting power to vote in favour of the election of such
directors from time to time until the earlier of January 18, 2014 and the date the
Company ceases to be a reporting issuer. |
| If and when an Ivanhoe Change of Control occurs in favour of Rio Tinto or upon
termination of the Standstill Cap (whichever is earlier), at least 8 of the 14
directors will be independent until January 18, 2014. |
| The current arbitration proceeding respecting the Companys Shareholder Rights Plan
will continue but there will be a six month suspension period on arbitration (tolling
period). The tolling period will end immediately in the event a formal take-over bid
for the Company is announced or commenced or either party takes any action that the
other party reasonably believes prejudices its rights. |
| Rio Tinto agrees not to challenge, as a breach of Rio Tintos rights under the PPA
or under the Shareholders Agreement between Rio Tinto and Robert Friedland (the RMF
Shareholders Agreement), respectively, the Rights Offering or Robert Friedlands
financing arrangements (consisting of a loan agreement with Citibank N.A. and a
cash-settled derivative with Citibank N.A. which provides a collar with reference to
approximately 12 million Common Shares subject to adjustments) to facilitate his
participation in the Rights Offering. |
| Rio Tinto and the Company acknowledge that the terms of the HOA, including Rio
Tintos agreement to participate in the Rights Offering, will not be construed as
determinative of any partys rights or obligations under the PPA or the RMF
Shareholders Agreement in respect of any other transaction or matter including,
without limitation, in respect of the Shareholder Rights Plan and future rights
offerings nor as an admission by either party that a particular transaction is
permitted or not permitted under the PPA or the RMF Shareholders Agreement, as
applicable. |
| The Company agrees not to directly or indirectly sell, transfer or otherwise dispose
of or encumber any interest in the OT Project without Rio Tintos consent before
January 18, 2014 (the No-Sale Covenant). |
| The Company and Rio Tinto will form a working group to study and consider proposals
for power, infrastructure and smelting for the OT Project. |
| Subject to Rio Tintos consent, not to be unreasonably withheld, the Company will
have the right to sell its existing net smelter returns entitlement to a third party
acquiror without regard to Rio Tintos right of first refusal under the PPA provided
that the Company receives gross proceeds of at least U.S.$600 million of which at least
two-thirds of such proceeds are cash. |
- 11 -
| The Company will enter into an acknowledgement agreement with Rio Tinto Alcan
pursuant to which the Company and Rio Tinto Alcan will acknowledge and agree that each
of the covenants of the Company (the CAAA Covenants) in the Contract Assignment
Arrangement Agreement dated August 13, 2008 between Rio Tinto Alcan, OT LLC and the
Company will expire on January 18, 2012. |
| Rio Tinto will enter into an amending agreement with Mr. Friedland pursuant to which
Rio Tinto and Robert Friedland will agree that the Shareholders Agreement will be
extended to January 18, 2012. |
| Rio Tinto and the Company will enter into a name rights agreement with Ivanhoe
Capital Corp. (ICC), which will give ICC the right to require the Company to convene
a meeting of its shareholders seeking a resolution to change its name to a name other
than Ivanhoe if and when there is an Ivanhoe Change of Control in favour of Rio Tinto
or the Companys board of directors consists of a majority of directors selected by Rio
Tinto through the exercise of its voting power or otherwise. In such circumstances ICC
can also require the Company to withdraw from the current cost-sharing arrangements
that exist among the Company, ICC and other companies in respect of the Vancouver
office facilities and shared employees. |
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6. | RELIANCE ON SUBSECTION 7.1(2) OR (3) OF NATIONAL INSTRUMENT 51-102 |
7. | OMITTED INFORMATION |
8. | EXECUTIVE OFFICER |
9. | DATE OF REPORT |
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IVANHOE MINES LTD. |
||||
Date: December 14, 2010 | By: | /s/ Beverly A. Bartlett | ||
BEVERLY A. BARTLETT | ||||
Vice President & Corporate Secretary |