Ivanhoe Nickel & Platinum Ltd., the mining company known as Ivanplats, plans to go public this year in an offering that could raise between USD750 million and USD1 billion. Mr. Robert Friedland, the chief executive of Ivanhoe Mines Ltd., is a controlling shareholder of Ivanplats, with a stake of about 30%. Ivanhoe, which owns 8% of Ivanplats, is also considering its own sale or breakup. The potential public offering of Ivanplats comes as Mr. Friedland's other company, Ivanhoe, assesses its future options with the help of Citigroup, people familiar with the matter say. One plan would involve spinning off all its assets, except for a stake in Mongolia's Oyu Tolgoi mine, to shareholders, followed by an auction for the Mongolian asset, they said. Ivanhoe owns 66% of Oyu Tolgoi, one of the world's largest untapped gold and copper mines; the Mongolian government owns the rest.
In this scenario, Ivanhoe's assets in Kazakhstan, Australia, Indonesia and the Philippines would become a separate company led by Mr. Friedland. Another plan would involve Ivanhoe selling its stakes, except for Oyu Tolgoi, to individual buyers and then running an auction for the remainder of the company. Its Kazakhstan gold mine and Ivanhoe Australia are valued upward of USD1 billion each.
A third option is to run an auction for the entire company, although that could be difficult to do given that Anglo-Australian miner Rio Tinto owns 42.1% of Ivanhoe and has the right to raise its stake to 49%. Mr. Friedland owns 15.5% of Ivanhoe. In 2006, Mr. Friedland was lauded in the mining industry for securing Rio as a partner to develop the Oyu Tolgoi mine. But the project's future had been up in the air amid a dispute between Ivanhoe and Rio over Ivanhoe's desire to raise equity to fund the project. After the two sides settled their spat in December, Ivanhoe on January 27 said that it had raised almost USD1.2 billion in a rights offering. The funding will help finance construction of the gold and copper mines in southern Mongolia. While Rio doesn't have a direct stake in Oyu Tolgoi, it effectively has operating control of it because of its position in Ivanhoe.
The talks about the future of Ivanhoe and its Mongolian mines are still under way and a final decision has yet to be made, people familiar with the matter say. That could happen over the next few months, and before January 2012, when a standstill agreement between Rio and Ivanhoe ends.