Source: Reuters                         Date: 16 December, 2010

Ivanhoe Mines is likely to put itself on the block in a two-step process, which will first see it sell or spin off all its assets except its stake in the Oyu Tolgoi mine, according to a source familiar with the matter. After disposing of all of the assets except for the Oyu Tolgoi stake, Ivanhoe would look for a buyer for the part of the company not owned by its largest shareholder, Rio Tinto. Ivanhoe is valued at more than USD15.5 billion. Ivanhoe's plans could still change, the source said.

Ivanhoe and Rio Tinto have put aside an ongoing spat, agreeing to a new financing plan that moved Oyu Tolgoi a step closer to getting built. Rio Tinto is in the process of lifting its ownership stake in the Canadian miner to 42.3 percent and currently has the right to buy up to 49 percent of the company. Rio and Ivanhoe have a standstill agreement that expires in January 2012 that keeps the Anglo-Australian mining company from taking majority control of Ivanhoe.

Ivanhoe opened the door to other buyers in July by terminating a clause in their agreement that restricted sales to other strategic investors. But Rio still has the right to make its own offer if Ivanhoe decides to sell itself. Ivanhoe's other assets include a majority stake in Mongolian coal company SouthGobi Energy, currently worth more than USD1 billion, a stake in Ivanhoe Australia worth more than USD800 million, and a gold venture in Kazakhstan.

Ivanhoe is led by colorful mining financier Robert Friedland, who already made a fortune selling an undeveloped nickel deposit. The company said in January that it had hired advisers from Citigroup and mining sector specialist Hatch Corporate Finance to eye possibilities to enhance shareholder value. Analysts have previously said that Friedland is maneuvering to prevent Ivanhoe from being acquired too cheaply by the much bigger Rio.

Rio has long coveted the Oyu Tolgoi project, which it has called one of the "most attractive undeveloped copper-gold projects in the world". But other big copper miners including BHP Billiton, Xstrata, and Anglo American could be competitors for the asset. China's Chinalco, Rio Tinto's biggest shareholder, has also expressed interest in taking a stake in the project.