Ivanhoe Australia Raising $211 Million for Osborne, Merlin Acquisitions

Ivanhoe Australia, whose biggest stakeholder is Ivanhoe Mines (NYSE:IVN), will via an institutional placement raise $211 million for acquisitions and expansion.

The particular acquisition they're looking at is the Osborne gold project, and the development side is the Merlin molybdenum project. Part of the capital will also be used to pay down some of the debt Ivanhoe Australia owes to Ivanhoe Mines.

After the completion of the deal, Ivanhoe Mine's stake in the company will decrease to 65 percent.

Chief executive Peter Reeve said, “The equity raising will facilitate Ivanhoe Australia’s development plan, including first production of molybdenum and rhenium ore from Little Wizard in 2011, and Merlin during 2012.”

Ivanhoe Australia is buying Osborne from Barrick Gold (NYSE:ABX) for close to A$18 million and the Merlin development in Queensland for A$55 million.

Current shareholders of Ivanhoe Australia will be able to acquire new shares in the company for A$2.88 via a one-for-four offer. That is a 10 percent discount from the closing price on August 9.

Ivanhoe (NYSE:IVN) Approved for Osborne Acquisition from Barrick Gold (NYSE:ABX)

Ivanhoe (NYSE:IVN) has been approved by the Foreign Investment Review Board (FIRB) of Australia to acquire the Osborne copper and gold project in Queensland, owned by Barrick Gold Corporation (NYSE:ABX).

Approval from the FIRB was required because Ivanhoe has an 81 percent stake in Ivanhoe Australia.

Other than approval from the FIRB, the remaining condition to complete the deal would be approval to transfer an exploration permit, which is part of the deal. Ivanhoe Australia is deciding on whether or not to waive that condition.

Also in the Cloncurry region, where Osborne is located is Merline, a high-grade molybdenum and rhenium mine, which CEO Peter Reeve said lower capital costs to develop that mine with the acquisition of the new mine.

Ivanhoe was at $14.50 a share in New York, as of 1:13 PM EDT, a $0.50 gain, or 3.43 percent upward move.

Barrick was slightly down in New York, to $43.46, losing $0.10, or 0.25 percent.