CITIC Entities File Early Warning Report

2018-09-20 / @newsfile

Toronto, Ontario--(Newsfile Corp. - September 20, 2018) - CITIC Metal Co. Ltd. ("CITIC Parent") and CITIC Metal Group Limited ("CITIC Lender") announce the following transactions:

CITIC Parent acquired from treasury, through its wholly-owned subsidiary, CITIC Metal Africa Investments Limited ("CITIC Subscriber"), an aggregate of 196,602,037 common shares (the "Subscribed Shares") of Ivanhoe Mines Ltd. ("Ivanhoe Mines") (representing approximately 19.5% of the issued and outstanding common shares of Ivanhoe Mines ("Common Shares") on a non-diluted basis) at a price of C$3.68 per share for an aggregate subscription amount of approximately C$723 million (US$556 million) (the "Subscription"). The Subscription was effected in accordance with the terms and conditions of a subscription agreement dated June 11, 2018 between Ivanhoe, CITIC Parent and Robert Friedland (as subsequently assigned by CITIC Parent to CITIC Subscriber); and
CITIC Lender has relinquished its control over 121,639,343 common shares (the "Pledged Shares") of Ivanhoe Mines (representing approximately 12.0% of the outstanding Common Shares on a non-diluted basis) previously pledged by Newstar Advantage Ltd. ("Newstar") in favour of CITIC Lender (the "Pledge") as security for a limited recourse guarantee provided by Newstar in connection with a US$100 million term loan facility advanced by CITIC Lender to Ivanhoe Mines (the "Term Loan Facility"). On September 19, 2018, the Term Loan Facility Agreement was repaid in full and the Pledge was terminated. Concurrently with such repayment, the Guarantee was terminated and the security over the Pledged Shares was released, with control returned to Newstar.

Following completion of such transactions, CITIC Subscriber and its affiliates own or exercise direction or control over 196,602,037 Subscribed Shares (representing approximately 19.5% of the issued and outstanding Common Shares on a non-diluted basis).

In connection with the Subscription, CITIC Subscriber was granted anti-dilution rights to enable it to maintain a 19.9% equity interest in Ivanhoe Mines. In addition, CITIC Subscriber has the right to nominate two directors to the board of directors of Ivanhoe Mines. Ivanhoe Mines has accepted the nominations of Yufeng "Miles" Sun, President of CITIC Lender and Tadeu Carneiro and such appointments were made effective September 19, 2018.

Mr. Friedland and CITIC Subscriber have entered into reciprocal standstill agreements that prevent either of them from increasing their ownership stake in Ivanhoe Mines to more than 19.9% until January 8, 2022. CITIC Subscriber is also subject to a similar standstill agreement in favour of Ivanhoe Mines. In addition, CITIC Subscriber and Mr. Friedland have entered into a reciprocal disposition and tag-along agreement by which each has agreed not to dispose of any Common Shares until January 8, 2022 without first offering the other party with the right to find a buyer for the shares, except pursuant to the Ivanhoe Mines' board of director approved take-overs or arrangements, non-pre-arranged transfers over the Toronto Stock Exchange, and other limited exceptions.

This press release is being issued pursuant to Canadian early warning requirements because the transactions discussed above have resulted in CITIC Lender ceasing to be an insider of Ivanhoe Mines and CITIC Subscriber acquiring an ownership interest of more than 10% of the issued and outstanding Common Shares.

Ivanhoe Mines Ltd. is located at 654 - 999 Canada Place, Vancouver, British Columbia, V6C 3E1. A copy of CITIC's early warning report will appear on Ivanhoe Mines' profile on SEDAR at www.sedar.com and may be obtained by calling Mr. Qiang Wu at +852 2867 0607.