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TSX-listed Ivanhoe Mines has completed a strategic equity investment totalling C$723 million in Ivanhoe Mines by CITIC Metal Africa Investments.

The investment, initiated three months ago by CITIC Metal, is an integral part of Ivanhoe’s long-term strategic cooperation and investment agreement with CITIC Metal.

The company has issued 196,602,037 common shares to CITIC Metal Africa through a private placement at a price of C$3.68 per share.

CITIC Metal Africa now has become its largest single shareholder through its acquired ownership of approximately 19.5% of the company’s issued and outstanding common shares.

Robert Friedland has the second-largest shareholding, with an ownership stake of approximately 17%.

As part of the private-placement agreement, CITIC Metal Africa and Friedland have signed reciprocal standstill agreements that prevent either of them from increasing their individual ownerships in the company to more than 19.9% until January 8, 2022.

The investment has generated gross proceeds for Ivanhoe Mines of C$723 million
(approximately US$556 million).

Approximately C$131 million of the C$723 million owing from the strategic equity investment was used to repay an interim loan of US$100 million that Ivanhoe Mines received on August 9, 2018, from CITIC Metal’s corporate parent, CITIC Metal Group.

This resulted in a net cash payment to Ivanhoe of C$592 million (approximately US$455 million).

The full repayment of the interim loan eliminates the limited-recourse guarantee and share pledge previously provided by Friedland to secure Ivanhoe Mines’ obligation under the loan facility.

“For more than 15 years, we have been mutually building the foundation for a long-lasting
and trust-based relationship with CITIC,” says Friedland.

“We first formed a strategic alliance with CITIC in 2003 and since then have worked together to deepen our understandings of each other’s values, strategic priorities, and operating and financial capabilities.

“After a period of extensive due diligence and multiple site visits, we are delighted to
welcome CITIC Metal Africa as our new, largest shareholder.

"CITIC’s leaders have reviewed hundreds of mining projects around the world, helping them to fully appreciate the world-scale significance of our three tier-one projects, and the
opportunities and challenges that lie ahead as we move forward with our ongoing mine
developments and exploration programs.

“We are confident that the CITIC Metal Group has the experience, financial resources –
and a shared commitment to our objectives – to greatly assist us as we advance our
projects to production, creating value for Ivanhoe’s stakeholders in the Democratic
Republic of Congo and South Africa, and our international shareholders.”

Yufeng “Miles” Sun, President of CITIC Metal Group, comments:

“For several years, CITIC Metal has been focused on investing in high-quality mining assets with strategic, global partners. We are very pleased to have partnered with Ivanhoe Mines as Ivanhoe’s three world-class assets are among the very best in the mining industry and Robert is a respected, long-standing friend of CITIC’s.

“CITIC Metal’s strategic investment in Ivanhoe reflects our strong belief that the long-term
prospects for the mining industry are extremely positive, especially given the projected robust future demand for key metals, such as copper, for renewable energy infrastructure and electric vehicles.

“We recognize the professional competence of the Ivanhoe Mines team, and we share
their profound understanding and embracing of diverse cultures, which are
indispensable factors in successful construction and operation of large-scale mining
assets in Africa.

"We are confident that by working closely with the Ivanhoe Mines team and other existing shareholders and stakeholders, Ivanhoe’s three tier-one projects can be successfully brought into production on schedule,” Sun adds.