IVANHOE Mines doesn't believe its shareholder rights plan breaches any of Rio Tinto's existing contractual rights.

The Canadian miner said it will continue to support the plan in the arbitration proceeding initiated by Rio Tinto on Friday.

Rio Tinto, which owns 29.6 per cent of Ivanhoe, claims the shareholder rights plan breaches some of its rights under an October 2006 private placement agreement between the companies.

The agreement allows Rio to increase its stake in Ivanhoe to 46.6 per cent by Oct 2011.

Ivanhoe said nothing in the rights plan prohibits Rio from increasing its stake in Ivanhoe to the requisite amount.

It also said nothing in the private placement agreement prohibits Ivanhoe from implementing a shareholder rights plan.

Ivanhoe's shareholder rights plan, adopted in April, restricts shareholders and other third parties from acquiring additional Ivanhoe shares beyond amounts provided for in existing contractual arrangements, unless an offer is made to all shareholders.

The rights plan was intended to protect all shareholders from any "coercive or creeping takeovers," Ivanhoe said.

Rio Tinto voted against the rights plan, but the plan was approved by a majority of shareholders at a May 7 meeting.

David Huberman, lead independent director of Ivanhoe and chairman of its corporate-governance committee, said the company values its relationship with Rio Tinto and plans to continue to work with the global diversified miner to bring the Mongolian Oyu Tolgoi mine into production in 2013.

Rio Tinto is the operator of the Mongolian Oyu Tolgoi copper project, one of the world's largest untapped copper and gold deposits, in which Ivanhoe has a 66 per cent stake.

Both sides will likely spend a month choosing an arbitrator and then arbitrate on the matter in the ensuing months. The process should be completed in September, a person familiar with the matter said.

Source: Dow Jones Newswires