Bean counters taking over at Ivanhoe

Ivanhoe Mines (TSX:IVN)(NYSE:IVN)(NASDAQ:IVN) appointed on Tuesday two Rio Tinto insiders to lead the company.

Kay Priestly, most recently Rio Tinto’s global copper product group CFO and Ivanhoe board member, becomes CEO and Chris Bateman who was CFO of the world’s third largest miner’s diamond and minerals product group has been appointed as CFO of the Vancouver-based company.

Both spent many years at defunct consulting and audit firm Arthur Andersen.

Anglo-Australian mining giant Rio Tinto tightened its grip on Ivanhoe Mines a fortnight ago as part of a $3.3 billion financing deal for the Oyu Tolgoi project in Mongolia that led to the resignation of Ivanhoe founder and CEO Robert Friedland and six other directors.

Oyu Tolgoi, which Ivanhoe has been advancing for the last eight years, is one of the biggest mining projects in the world.

Ivanhoe has already spent over $5 billion on Oyu Tolgoi and the mega-mine, scheduled for production in Q3, is sucking up all of Ivanhoe’s cash. Overall costs have now ballooned to $13.2 billion, up from $9.5 billion before.

Ivanhoe holds 66% of Oyu Tolgoi and Mongolia’s government the rest. In October Ivanhoe and Rio dodged a bullet when the Mongolian government said it was rethinking the 2009 deal and that it wanted to own half the mine.

Ivanhoe shares plunged on the news, but the firm took a tough stance and after some desperate negotiations Mongolia backed off.

The mine is set to produce more than 1.2 billion pounds of copper, 650,000 ounces of gold and 3 million ounces of silver each year and is almost three-quarters built.

Ivanhoe was worth $8.6 billion in Toronto on Tuesday having lost 27% of its value in April alone. The stock has been decimated since hitting an all time high above $28 in January last year affording it a $20 billion market cap.