Friedland sells 4% of Ivanhoe to Qatar for $500M

[Ben Graham]

Ivanhoe Mines (TSX: IVN) has agreed to a $500 million investment from Qatar that gives its sovereign wealth fund 4% of the Canadian copper miner founded by billionaire Robert Friedland.

Ivanhoe Mines plans to issue 57.5 million common shares to the Qatar Investment Authority (QIA) through a private placement at a price of C$12 per share, according to the deal announced on Wednesday. Shares in Ivanhoe were flat at C$13.19 apiece in Toronto on Wednesday morning — about 9% more than the placement offer — valuing the company at C$17.8 billion.

The investment “is a powerful endorsement of Ivanhoe Mines’ vision to be a leading supplier of critical metals that will drive the electrification of the global economy, development of new energy infrastructure, and growth of advanced technologies like large-scale data centres and AI,” executive co-chair Friedland said in a release. “QIA’s forward-looking vision is fully aligned with our own.”

Ivanhoe operates the Kamoa-Kakula copper complex and the Kipushi zinc-copper-germanium-silver mine in the Democratic Republic of Congo as it prepares to start production this year from the Platreef platinum group metals project in South Africa. The company is working to overcome flooding at Kamoa after setting output records.

Eastern investors

Friedland is no stranger to investors outside of North America. China’s CITIC Metal Co. holds about a quarter of Ivanhoe Mines as its largest shareholder, and Zijin Mining, China’s top gold and copper producer, owns nearly 14%. The billionaire has been active in the Middle East in recent years, showing interest in the region’s attempt to pivot away from petroleum through exploration in the Arabian-Nubian Shield region.

“Investors might wonder why QIA got such a steep discount when it appears there is a path forward to improving production at Kamoa-Kakula post-seismicity,” Fahad Tariq, a mining analyst at Jefferies in Toronto, said in a note Wednesday. “The discount has more to do with locking up a patient, long-term shareholder in QIA, and because there may be future ‘strategic partnerships’ between Ivanhoe and QIA.”

The QIA, which describes itself as among the largest and most active sovereign wealth funds globally, holds $557 billion in assets under management as of last month – including an 8.6% stake in global mining giant Glencore (LSE: GLEN). Most of its funds come from offshore natural gas fields, particularly the North Field, which is the world’s largest single non-associated natural gas reservoir.

“This strategic investment reflects QIA’s conviction not only in Ivanhoe Mines’ world-class portfolio of tier-one assets,” fund CEO Mohammed Saif Al-Sowaidi said in the same release. “But more importantly, in supporting its team in finding, developing and sustainably supplying the critical minerals essential to the global energy transition and advanced technology applications.”

Copper exploration

Ivanhoe said it intends to use the investment to advance those growth opportunities, including more collaboration with the fund, as well as for general corporate purposes. The fund may get seats on Ivanhoe’s board if its ownership rises above 10%. CITIC and Zijin have rights to acquire common shares of Ivanhoe at the same issue price as the fund to maintain their pro rata equity interest.

The miner is exploring for copper in the Western Forelands region near Kamoa-Kakula, where it’s found high-grade indicated tonnes in the Makoko district. It’s also branching out to neighbouring Angola and Zambia, as well as Kazakhstan.

“Ivanhoe’s journey is only just beginning, as we search the globe for our next discoveries and opportunities to develop new tier-one mines,” Friedland said. “QIA’s investment will be instrumental in opening up new horizons.”