Southern AfricaTSX-listed Ivanhoe Mines announced on Monday that China-based Zijin Mining Group will be acquiring a significant minority stake of 9.9% in the company, at a cost of C$105-million, to help advance Ivanhoe’s three mine-development projects in southern Africa.

Under the terms of the agreement signed in Hong Kong, Ivanhoe Mines will issue 76 817 020 common shares to Zijin through a private placement at a price of C$1.36 per share, yielding gross proceeds of approximately C$105-million, or US$82-million.

Besides for the advancement of the company’s projects in southern Africa, Ivanhoe Mines will use the proceeds for working capital and general corporate purposes too.

Approximately 9.9% of Ivanhoe Mines’ issued and outstanding common shares will become owned by a wholly-owned subsidiary of Zijin when the placement is completed.

Ivanhoe Mines executive chairperson Robert Friedland said Zijin’s decision represents the first major commitment by an international mining company to provide support for all of Ivanhoe’s development-stage projects in South Africa and in the Democratic Republic of Congo (DRC).

Drilling at Ivanhoes' Platreef project in South Africa
Drilling at Ivanhoe’s Platreef project in South Africa

Executing a long-term development vision

“We are delighted to welcome Zijin Mining both as an old friend of Ivanhoe Mines and a strategic investor that shares our long-term vision. We also have agreed to continue to explore additional opportunities to collaborate on the advancement of all three of our world-class projects,” Friedland said.

“In particular, Ivanhoe and Zijin are in detailed, friendly discussions about the strategic co-development of the Kamoa copper discovery in the DRC. Kamoa’s significance was further affirmed earlier this month when Ivanhoe’s Kamoa Discovery Team received the prestigious 2015 Thayer Lindsley Award from the Prospectors & Developers Association of Canada, recognizing Kamoa’s distinction as the year’s top global mineral discovery.”

Zijin Mining Group Chairperson Jinghe Chen said Zijin Mining “is honoured to have the opportunity to invest in Ivanhoe Mines, which controls the world-class, high-grade Kamoa copper project, Platreef platinum-group metals project and Kipushi zinc-copper project, all three of which have great untapped potential. We believe these are among the most attractive undeveloped mineral deposits in the world.”

Zijin will establish a close and strategic partnership with Ivanhoe through which it plans to closely cooperate in the development of Ivanhoe’s mines. Chen said he is convinced that the partnership will turn their respective strengths into synergies, not only for the mutual benefit of both parties, but also to create significant value for both Zijin and Ivanhoe shareholders, as well as the societies in which they operate.

Zijin background

Established in 1986, Zijin Mining Group is a large-scale mining group headquartered in Shanghang County, in China’s Fujian Province. It is one of the largest gold producers, second largest mineral copper producer, and a significant zinc, tungsten and iron ore producer in China.

In addition to its portfolio of producing assets in China, Zijin also controls or has interests in existing mines in Australia, Russia, Tajikistan and Kyrgyzstan, and is participating in mine development projects in Canada, the Democratic Republic of Congo and Peru.

Zijin trades on the Shanghai and Hong Kong stock exchanges and has a market capitalization of more than US$10-billion.

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