Ivanhoe Mines Ltd said Wednesday its founder and Chief Executive Robert Friedland has resigned as part of a financing deal with its majority shareholder Rio Tinto , marking a new era for the Canadian miner that is developing the $13.2 billion Oyu Tolgoi copper-gold project in Mongolia.

Friedland's resignation, along with the resignations of six other directors and four senior management members, comes a few months after mining giant Rio Tinto acquired a controlling stake in the Toronto-listed mining company.

Vancouver, British Columbia-based Ivanhoe said the agreement with Rio contains a comprehensive financing plan structured to secure Rio's direct participation in, and support for, funding of developments at Oyu Tolgoi, the company's flagship project.

This agreement sets the stage for the Oyu Tolgoi Project's transition to a major mining operation in coming months, said Friedland, a well known mining financier who made a fortune in the 1990s by selling the then-undeveloped Voisey's Bay nickel deposit in Eastern Canada to Inco for about C$4.3 billion.

Friedland's move to step down sets the stage for him to focus on his next big project, Ivanplats. The private company, controlled by Friedland, owns the Platreef platinum project in South Africa and the Kamoa copper and Kipushi zinc operations in the Democratic Republic of Congo. The company is expected to go public mid-year and raise about $1 billion.


Ivanhoe said its board has been reduced to 13 members from a 14-member board. The company's board and management shake-up is no big surprise, as Rio had already signalled its intent to gain more direct control after it took its stake in Ivanhoe to 51 percent in January this year.

Ivanhoe said seven of its directors -- Marc Faber, Edward Flood, Robert Friedland, David Korbin, Livia Mahler, Tracy Stevenson and Dan Westbrook -- have stepped down. They will be replaced shortly by six Rio nominees, four of whom will be independent directors.

The company said Kay Priestly, Rio's chief financial officer and a director of Ivanhoe, was appointed Ivanhoe's Interim CEO. Catherine Barone, Ivanhoe's head of finance, was named the company's interim CFO. Barone replaced Tony Giardini who stepped down as CFO.

As part of the agreement, Ivanhoe will proceed with a rights offering to its shareholders that will raise up to $1.8 billion in gross proceeds. The rights offering will be supported by a standby commitment for the full amount from Rio Tinto.

Proceeds of the rights offering will be used as part of the comprehensive financing plan to cover all projected capital requirements for Oyu Tolgoi.

Ivanhoe said all shareholders may participate on an equal proportional basis in purchasing additional common shares of Ivanhoe Mines at a subscription price of C$8.34.

Ivanhoe said it remains engaged in active and detailed negotiations on potential divestments involving its subsidiary interests.

Ivanhoe's other assets include stakes in coal miner South Gobi , Ivanhoe Australia , and Altynalmas Gold, a private company developing the Kyzyl gold project in Kazakhstan. Chinese aluminium company Chalco recently agreed to pay $926 million for a controlling stake in Mongolian coal miner SouthGobi.

Shares of Ivanhoe jumped more than 10 percent to C$12.90 in early trading on the Toronto Stock Exchange, while its New York-listed shares rose more than 12 percent to $13.22.

(US$1= 0.99 Canadian)

(Reporting By Euan Rocha; Editing by Gerald E. McCormick and Maureen Bavdek)