Ivanhoe Electric in Saudi Arabian metals joint venture

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Ivanhoe Electric Inc. [IE-TSX, NYSE American] said Wednesday it has agreed to establish a 50/50 joint venture with Saudi Arabian mining company Ma’aden Ma’aden. Under a binding heads of terms agreement that is centred on Ivanhoe’s Tyhoon exploration technology, the two companies will explore for copper, gold, silver and electric metals in Saudi Arabia.

Typhoon is the brand name for Ivanhoe electric’s proprietary electrical geophysical surveying transmitter, which can detect the presence of sulfide minerals containing copper, nickel, gold and silver as well as water an oil.

Ivanhoe will issue approximately 10.2 million new common shares to Ma’aden at US$12.38 per share for gross proceeds of US$126.4 million, resulting in Ma’aden becoming a 9.9% shareholder. Ma’aden will have anti-dilution rights, allowing it to maintain its 9.9% ownership.

Ivanhoe said US$60 million of the gross proceeds will be retained for use in advancing its U.S. mineral projects and for working capital and other general corporate purposes.

Ma’aden gains the right to appoint one independent director to the Ivanhoe Electric board of directors, bringing the company’s board size to nine members.

The agreement was signed at in Riyadh, Saudi Arabia and is expected to be completed by the end of he first quarter of 2023.

Key terms of the joint venture are as follows:

  • Ivanhoe Electric and Ma’aden will establish a new Saudi Arabian exploration joint venture which will be owned equally and established for an initial term of five years. Upon mutual agreement, the joint venture may be extended for up to 10 years.
  • Ma’aden will make available approximately 48,500 square kilometres of land in Saudi Arabia for exploration.
  • Ivanhoe will contribute approximately US$66 million to the joint venture, of which up to US$13 million will be used to fund the purchase of three new generation TyphoonTM machines, which will be owned by the joint venture
  • Ivanhoe will provide the joint venture with a royalty-free license to use Typhoon within Saudi Arabia for the purpose of mineral exploration. The license will remain exclusive to the joint venture in Saudi Arabia and effective while the joint venture is continuing.
  • The joint venture will operate through an equally constituted board of directors and technical committee.

Ivanhoe Electric is headed by billionaire mining magnate Robert Friedland. His previous endeavours include nickel discoveries in the Voisey’s Bay area of Newfoundland and Labrador and more recently copper mining operations in Mongolia and the Democratic Republic of Congo (DRC). The DRC assets are held by Ivanhoe Mines Ltd. [IVN-TSX, IVPAF-OTC].

Friedland is Executive Chairman of Ivanhoe Electric, which is led by President and CEO Taylor Melvin.

On January 10, 2023, Ivanhoe Electric shares closed at $18.41 and currently trade in a 52-week range of $20.46 and $10.00.

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