Dealmaker Robert Friedland has put his 23% stake in Ivanhoe Mines Ltd. (IVN) up for sale, drawing expressions of interest "from Chinese and Indian interests," in what could result in a change of control of the Vancouver-based mineral development company, people familiar with the deal said.

Friedland's stake sale is likely to trigger a general offer for the rest of the company, whose Toronto-listed shares rose almost 400% in the past 12 months.

One of the people said the potential Chinese and Indian bidders value the company at more than US$5 billion. Based on its Wednesday close of C$17.64 a share, Ivanhoe has a market capitalization of C$7.5 billion (US$7.3 billion).

China's sovereign-wealth fund, China Investment Corp., is one of the Chinese investors that have shown interest, the person said.

Chinese energy companies that have the backing of state loans are also strong candidates, he said. CIC declined to comment.

Ivanhoe Mines said last week it had hired financial advisers to evaluate options to enhance shareholder value, as it faces costs of more than $2 billion to develop its Oyu Tolgoi copper and gold mine in Mongolia.

"Friedland is looking to sell his whole stake," the person said. The person said, however, that Rio Tinto PLC (RTP), which has a 19.7% stake in Ivanhoe, would have the first option to buy Ivanhoe. Under its existing agreement with Ivanhoe, Rio Tinto has the option to raise its stake in the company to as much as 46.6%.

Another person familiar with the situation said that Rio Tinto has the right to match any offer for Ivanhoe, and also has the first right of refusal on any bid for the firm.

A Rio Tinto spokesman in London declined to comment on "speculation" related to Ivanhoe.

"Friedland is looking to cash out of some Mongolian positions both with Ivanhoe and SouthGobi," the second person said.

SouthGobi Energy Resources Ltd. (SGQ.T), which is 79% owned by Ivanhoe, is currently seeking US$462 million from a Hong Kong initial public offering, according to term sheet seen by Dow Jones Newswires. China's CIC and Singapore's Temasek Holdings Pte. Ltd. have already each pledged to subscribe to US$50 million worth of shares in the IPO of SouthGobi, the largest coal producer in Mongolia in terms of export sales. SouthGobi is looking to list in Hong Kong on Jan. 29.

Friedland is Ivanhoe's largest individual stockholder. He made his fortune selling his last mining venture, Voisey's Bay, to Inco Ltd.

In its statement last week, Ivanhoe said it will look at debt and equity offerings, a credit facility, a sale of subsidiaries, equity investments, project financing or other corporate transactions.

Ivanhoe has hired global investment-banking firm Citigroup Inc. (C) and Hatch Corporate Finance, a London-based mining-industry adviser, to advise it on its options.

-By Nisha Gopalan, Dow Jones Newswires; 852-2832-2343; nisha.gopalan@dowjones.com
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