TORONTO (miningweekly.com) – Ivanhoe Mines, the owner of the giant Oyu Tolgoi copper-gold project in Mongolia, on Wednesday said its board decided to scrap a shareholder rights plan, clearing the way for 49% shareholder Rio Tinto to gain control of the company.

In December, an arbitrator invalidated the so-called “poison pill”, which Ivanhoe could have used to force the Anglo-Australian company to pay more for control, which it is widely expected to do after an agreement that prevented this expired today.

Ivanhoe said the shareholder rights plan would remain in place until shareholders voted to remove it at a May annual general meeting, but that the board would not exercise it.

Rio Tinto welcomed the announcement and said it was free to boost it ownership of Ivanhoe "as we see fit", Reuters reported.

It is no secret that Rio Tinto covets the Oyu Tolgoi asset, and wants to gain control of it.

TSO & Associates analyst Terence Ortslan said that it was more a question of when, not if, this would occur.

"One thing is for sure, Rio can choose their time to do this," he said in an interview. Once it has acquired a majority stake, it is not likely there will be any companies competing for ownership of the remainder.

Orstlan added that now would be the opportune time to move, as the project risk at the mine was dissipating as it got closer to production.

Further, he pointed out that Ivanhoe's share price "has been way down", along with most other commodity stocks amidst European economic frets. The stock had shed nearly 1% by Wednesday afternoon, changing hands at C$19.11 apiece – well off its C28.98 a share 52-week high.

Rio Tinto might offer shares and cash to buy the rest of Ivanhoe, Ortslan said.

Vancouver-based Ivanhoe also said it approved a $1.8-billion bridging finance facility to complete the first phase of the Oyu Tolgoi project, while it thrashes out a $4-billion project finance loan with Rio Tinto and lenders. The TSX-quoted firm anticipated the senior loan would be finalised by the end of the second quarter.

Another important box that Ivanhoe needs to tick before it can start producing at Oyu Tolgoi – planned for the late this year, is a power-supply agreement between the Mongolian and Chinese governments.

The company said that talks between the two nations over the proposed deal occurred earlier this month, and that power was scheduled to be running through newly constructed lines in the third quarter of 2012.

“The completion of long-term project financing and finalization of a Mongolia-China pact to supply electrical power from China for up to the first four years of Oyu Tolgoi’s operation are central to our objective of ensuring that Oyu Tolgoi remains on schedule to begin initial production later this year,” Ivanhoe chairperson David Huberman said in a statement.

The mine is 70% complete and will be in commercial production in the first half of 2013, according to the plan.

It is expected to produce more than 1.2-billion pounds of copper and 650 000 oz of gold a year, in the first ten years of operation, with the mine producing around 1.7-billion pounds of copper and one-million ounces of gold at its peak, in year seven.

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