UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Entree Gold Inc.
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(Name of Issuer)
Common Shares, without par value
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(Title of Class of Securities)
29383G100
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(CUSIP Number)
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Rio Tinto plc
c/o Shannon Crompton
Rio Tinto Services Inc.
1343 South 1800 East
Salt Lake City, UT 84108
(801) 583-6707
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Christine A. Spillane
Sullivan & Cromwell LLP
1 New Fetter Lane
London EC4A 1AN
England
011-44-207-959-8554
June 29, 2005
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
[_].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
Page 2 of 15
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1 Name Of Reporting Persons/I.R.S. Identification Nos. of Above Persons
(Entities Only)
Rio Tinto plc
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2 Check the Appropriate Box if a Member of a Group (a) [_]
(See Instructions)
(b) [_]
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3 SEC Use Only
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4 SOURCE OF FUNDS (See Instructions)
WC
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5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e)
[_]
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6 Citizenship or Place of Organization
England
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7 Sole Voting Power
0
NUMBER OF
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SHARES 8 Shared Voting Power
12,613,841
BENEFICIALLY
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OWNED BY 9 Sole Dispositive Power
0
EACH REPORTING
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PERSON WITH 10 Shared Dispositive Power
12,613,841
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
12,613,841
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12 Check if the Aggregate Amount In Row (11) Excludes Certain Shares
(See Instructions)
[_]
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13 Percent of Class Represented by Amount In Row (11)
18.0%
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14 Type of Reporting Person (See Instructions)
HC, CO
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Page 3 of 15
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1 Name Of Reporting Persons/I.R.S. Identification Nos. of Above Persons
(Entities Only)
Kennecott Canada Exploration Inc.
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2 Check the Appropriate Box if a Member of a Group (a) [_]
(See Instructions)
(b) [_]
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3 SEC Use Only
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4 SOURCE OF FUNDS (See Instructions)
AF
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5 Check if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e)
[_]
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6 Citizenship or Place of Organization
Canada
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7 Sole Voting Power
0
NUMBER OF
-------------------------------------------------------------
SHARES 8 Shared Voting Power
12,613,841
BENEFICIALLY
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OWNED BY 9 Sole Dispositive Power
0
EACH REPORTING
-------------------------------------------------------------
PERSON WITH 10 Shared Dispositive Power
12,613,841
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11 Aggregate Amount Beneficially Owned by Each Reporting Person
12,613,841
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12 Check if the Aggregate Amount In Row (11) Excludes Certain Shares
(See Instructions)
[_]
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13 Percent of Class Represented by Amount In Row (11)
18.0%
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14 Type of Reporting Person (See Instructions)
CO
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Page 4 of 15
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Item 1. Security and Issuer
This statement on Schedule 13D ("Schedule 13D") relates to the common
shares, without par value ("Common Shares"), of Entree Gold Inc., a corporation
continued under the laws of British Columbia (the "Company"). The Company's
principal offices are located at Suite 1201, 1166 Alberni Street, Vancouver,
British Columbia, V6E 3Z3, Canada.
Item 2. Identity and Background.
This Schedule 13D is filed by the following entities (collectively
referred to herein as the "Reporting Persons", and each as a "Reporting
Person"):
Rio Tinto plc, a public limited company incorporated under the laws of
England and Wales ("Rio Tinto"), is an international mining company with
operations around the world. Rio Tinto's principal executive offices are located
at 6 St. James's Square, London, SW1Y 4LD, England.
Kennecott Canada Exploration Inc., a corporation incorporated under
the laws of Canada and an indirect wholly owned subsidiary of Rio Tinto
("Kennecott"), is a mining company the principal business of which is the
discovery and acquisition of mineral resources in North and Central America.
Kennecott's principal offices are located at 200 Granville Street, Suite 354,
Vancouver, British Columbia, V6C 1S4, Canada.
The name, business address, present principal occupation or employment
and citizenship of each of the executive officers and directors of the Reporting
Persons are set forth in Schedule I hereto and are incorporated by reference
herein.
During the last five years, neither of the Reporting Persons and, to
the knowledge of each of the Reporting Persons, none of the persons listed in
Schedule I hereto has been: (i) convicted of a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On June 19, 2005, Kennecott and the Company entered into an Equity
Participation Agreement, dated as of June 17, 2005 (the "EPA"). Pursuant to the
EPA, on June 29, 2005 and July 6, 2005, Kennecott and the Company executed two
Subscription Agreements (the "Subscription Agreements"). A copy
Page 5 of 15
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of the EPA is included as Exhibit A hereto, and copies of the Subscription
Agreements are included as Exhibits B and C hereto. The descriptions of the EPA
and Subscription Agreements contained herein are qualified in their entirety by
reference to Exhibits A, B and C, which are incorporated herein by reference.
Pursuant to the EPA and the Subscription Agreements, Kennecott has
acquired 6,306,921 units (each, a "Unit") of the Company at a price of C$2.20
per unit, for a total consideration of C$13,875,226, which was funded from
intergroup loans. Each Unit consists of one Common Share, one common share
purchase A warrant and one common share purchase B warrant. Two A warrants will
entitle the holder to purchase one Common Share at a price of C$2.75 for a
period of two years. Two B warrants will entitle the holder to purchase one
Common Share at a price of C$3.00 for a period of two years.
Following the acquisition of the Units, the Reporting Persons own
6,306,921 Common Shares (representing approximately 9.9% of the issued and
outstanding Common Shares) and 12,613,842warrants, exercisable for an aggregate
of 6,306,920 Common Shares. If the warrants were to be exercised, the Reporting
Persons would own approximately 18.0% of the Company's Common Shares.
Under the EPA, Kennecott also has the right to participate in future
financings by the Company so as to maintain its proportional equity interest in
the Company.
Under the EPA, the Company has granted to Kennecott a right of first
refusal over its mining license for the Ulziit Uul concession in Southern
Mongolia and over the geographical area covered by such license for a period of
up to four years (the "Ulziit Uul ROFR").
Item 4. Purpose of the Transaction
The information set forth in Item 3 is hereby incorporated by reference
in this Item 4.
Under the EPA, Kennecott has agreed to vote its Common Shares in the
manner specified by the board of directors of the Company with respect to:
(a) fixing the number of directors to be elected;
(b) the election of the directors of the Company;
(c) the appointment and remuneration of the auditors of the Company; and
Page 6 of 15
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(d) the approval of any corporate incentive compensation plan or any amendment
thereof, provided the compensation plan does not result at any time in the
number of Common Shares reserved for issuance under the plan exceeding 20%
of the issued and outstanding Common Shares.
Voting instructions given by the board of directors of the Company will be based
on a resolution passed by a majority of the directors. Kennecott's voting
obligations do not apply if the number of Common Shares held by Kennecott and
its affiliates represents (a) less than 10% of the Company's issued and
outstanding Common Shares or (b) 40% or more of the Company's issued and
outstanding Common Shares (excluding in each case Common Shares issuable on the
exercise of any securities held by Kennecott and its affiliates which are
convertible into or exchangeable for Common Shares but which have not actually
been issued) at such time, and terminate on the fourth anniversary of the date
on which Kennecott acquires the Units.
Under the EPA, Kennecott has also agreed to restrictions on its ability
to dispose of any of its Common Shares or any of its securities convertible into
or exchangeable for Common Shares (collectively, the "Entree Securities"),
subject to certain agreed exceptions including dispositions to affiliates of
Kennecott or pursuant to a take over bid in respect of the Company. The
restrictions also do not apply if at the time of the disposition the number of
Common Shares held by Kennecott and its affiliates represents (a) less than 10%
of the issued and outstanding Common Shares (assuming the exercise of all
securities held by Kennecott and its affiliates which are convertible into or
exchangeable for Common Shares but which have not actually been issued, other
than any such securities which are non-transferable) at such time, or (b) 40% or
more of the Company's issued and outstanding Common Shares (excluding any Common
Shares issuable on the exercise of any securities held by Kennecott and its
affiliates which are convertible into or exchangeable for Common Shares but
which have not actually been issued) at such time. The restrictions terminate on
the fourth anniversary of the date on which Kennecott acquires the Units. Under
the restrictions, Kennecott has agreed to give the Company prior notice (the
"Disposition Notice") of any proposed disposition. Upon such notice, the Company
may notify Kennecott of the identity of one or more persons who will purchase
the Entree Securities. If the Company does not notify Kennecott of the identity
of such purchasers or if the disposition is not completed within 45 days of the
Company's receipt of the Disposition Notice, then Kennecott may dispose of the
Entree Securities to any third party purchaser provided the disposition occurs
within 105 days of the Company's receipt of the Disposition Notice.
Under the EPA, Kennecott also obtains the Ulziit Uul ROFR.
Page 7 of 15
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Although the Reporting Persons have no present intention to acquire
securities of the Company other than pursuant to the EPA, the Reporting Persons
will consider from time to time acquiring additional securities of the Company
as and when market conditions permit. As a result, the Reporting Persons expect
to evaluate on an ongoing basis the Company's financial condition, business,
operations and prospects, the market price of the Company's securities,
conditions in the securities markets generally, general economic and industry
conditions and other factors. The Reporting Persons reserve the right to change
their plans and intentions at any time.
Except as set forth in this Item 4 of this Schedule 13D, none of the
Reporting Persons has any current plans or proposals that relate to or would
result in any transaction, event or action enumerated in paragraphs (a) through
(j) of Item 4 of schedule 13D promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
Item 5. Interest in Securities of the Issuer.
Pursuant to the EPA and the Subscription Agreements, the Reporting
Persons acquired Units comprising 6,306,921 Common Shares (representing
approximately 9.9% of the issued and outstanding Common Shares) and 12,613,842
warrants exercisable for 6,306,920 Common Shares. If the warrants were to be
exercised, the Reporting Persons would own approximately 18.0% of the Company's
Common Shares. Each of the Reporting Persons is deemed to beneficially own the
Common Shares and the percentage of outstanding Common Shares listed on the
responses to Items 11 and 13, respectively, of the cover page of this Schedule
13D relating to such Reporting Person. In addition, the Common Shares deemed
beneficially owned by each Reporting Person with respect to which such Reporting
Person (i) has sole voting power, (ii) shares voting power, (iii) has sole
dispositive power and (iv) shares dispositive power are listed in the responses
to Items 7, 8, 9 and 10, respectively, of the cover page of this Schedule 13D
relating to such Reporting Person.
Except as set forth in this Schedule 13D, none of the Reporting
Persons, and to the knowledge of the Reporting Persons, none of the persons
listed in Schedule I, beneficially owns any Common Shares of the Company.
Except as set forth in this Schedule 13D, to the knowledge of the
Reporting Persons, no person other than the Reporting Persons has the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, securities covered by this Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Page 8 of 15
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The information set forth in Item 4 is hereby incorporated by reference
in this Item 6.
Item 7. Material to be Filed as Exhibits
Description Exhibit
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Equity Participation Agreement between Entree Gold Inc. A
and Kennecott Canada Exploration Inc.
Subscription Agreement between Entree Gold Inc. and B
Kennecott Canada Exploration Inc.
Subscription Agreement between Entree Gold Inc. and C
Kennecott Canada Exploration Inc.
Joint Filing Agreement between Rio Tinto plc and D
Kennecott Canada Exploration Inc.
Page 9 of 15
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SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Dated: July 8, 2005
Rio Tinto plc
By: /s/ Anette Lawless
---------------------------------
Name: Anette Lawless
Title: Secretary
Kennecott Canada Exploration Inc.
By: /s/ Shannon Crompton
---------------------------------
Name: Shannon Crompton
Title: Assistant Secrtary
Page 10 of 15
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Schedule I
Rio Tinto plc
Directors and Executive Officers
Present Business Present Principal
Name Address Occupation Citizenship
---- ------- ---------- -----------
Directors
---------
Paul Skinner 6 St. James's Sq. Chairman of Rio Tinto British
London
SW1Y 4LD
United Kingdom
Leigh Clifford 6 St. James's Sq. Chief Executive of Rio Australian
London Tinto
SW1Y 4LD
United Kingdom
Guy Elliott 6 St. James's Sq. Finance Director of British
London Rio Tinto
SW1Y 4LD
United Kingdom
Ashton Calvert 6 St. James's Sq. Non-executive director Australian
London of Rio Tinto
SW1Y 4LD
United Kingdom
Sir David Clementi 6 St. James's Sq. Chairman of Prudential British
London plc
SW1Y 4LD
United Kingdom
Vivienne Cox 6 St. James's Sq. Executive British
London Vice-President of BP
SW1Y 4LD plc
United Kingdom
Richard Goodmanson 6 St. James's Sq. Executive United States of
London Vice-President and America
SW1Y 4LD Chief Operating
United Kingdom Officer of DuPont
Andrew Gould 6 St. James's Sq. Chairman and Chief British
London Executive Officer of
SW1Y 4LD Schlumberger Ltd.
United Kingdom
Page 11 of 15
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Present Business Present Principal
Name Address Occupation Citizenship
---- ------- ---------- -----------
Lord Kerr 6 St. James's Sq. Chairman of the Court British
London and Council of
SW1Y 4LD Imperial College,
United Kingdom London
David Mayhew 6 St. James's Sq. Chairman of Cazenove British
London Group plc
SW1Y 4LD
United Kingdom
Sir Richard Sykes 6 St. James's Sq. Director of Rio Tinto British
London and director of Lonza
SW1Y 4LD Group Ltd.
United Kingdom
Executive Officers
------------------
Tom Albanese 6 St. James's Sq. Chief Executive of the United States of
London Copper group at Rio America
SW1Y 4LD Tinto
United Kingdom
Preston Chiaro 6 St. James's Sq. Chief Executive of the United States of
London Energy group America
SW1Y 4LD
United Kingdom
Oscar Groeneveld Level 33 Chief Executive of the Australian
55 Collins Street Aluminium group
Melbourne
Victoria 3000
Keith Johnson 6 St. James's Sq. Chief Executive of the British
London Diamonds group
SW1Y 4LD
United Kingdom
Andrew Mackenzie 6 St. James's Sq. Chief Executive of the British
London Industrial Minerals
SW1Y 4LD group
United Kingdom
Karen McLeod 6 St. James's Sq. Head of Human Resources Australian
London
SW1Y 4LD
United Kingdom
Page 12 of 15
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Present Business Present Principal
Name Address Occupation Citizenship
---- ------- ---------- -----------
Ian Smith 6 St. James's Sq. Head of Technology Australian
London
SW1Y 4LD
United Kingdom
Andrew Vickerman 6 St. James's Sq. Head of Communications British
London SW1Y 4LD and Sustainable
United Kingdom Development
Sam Walsh 6 St. James's Sq. Chief Executive of the Australian
London SW1Y 4LD Iron Ore Group
United Kingdom
Charles Lenegan 6 St. James's Sq. Managing Director of Australian
London SW1Y 4LD Rio Tinto Australia
United Kingdom
Page 13 of 15
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Kennecott Canada Exploration Inc.
Directors and Executive Officers
Present Business Present Principal
Name Address Occupation Citizenship
---- ------- ---------- -----------
Directors
---------
C. G. Baldwin 1600 Cathedral Place Attorney Canadian
925 West Georgia St. Lawson Lundell
Vancouver, B.C.
V6C 3L2 CANADA
I. Graham 200 Granville Street Vice President Canadian
Suite 354 Kennecott Canada
Vancouver, B.C. Exploration Inc.
V6C 1S4 CANADA
M. L. Jutras 770 Sherbrooke Street General Counsel and Canadian
West, Suite 1800 Secretary
Montreal, Quebec Rio Tinto Iron &
H3A 1G1 CANADA Titanium Inc.
J. V. Main 224 North 2200 West President New Zealand
Salt Lake City, UT Kennecott Exploration
84116 Company
USA
P. L. Webster 224 North 2200 West Vice President and United States of
Salt Lake City, UT General Counsel America
84116 Kennecott Exploration
USA Company
Executive Officers
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J.V. Main 224 North 2200 West President New Zealand
Salt Lake City, UT
84116
USA
I. Graham 200 Granville Street Vice President Canadian
Suite 354
Vancouver, B.C.
V6C 1S4 CANADA
D. Simpson 200 Granville Street Vice President United States of
Suite 354 America
Vancouver, B.C.
V6C 1S4 CANADA
P.L. Webster 224 North 2200 West General Counsel and United StAtes of
Salt Lake City, UT Assistant Secretary America
84116
USA
Page 14 of 15
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Present Business Present Principal
Name Address Occupation Citizenship
---- ------- ---------- -----------
W. D. Hofeling 2525 East Arizona Chief Financial United States of
Biltmore Circle Officer and Treasurer America
Suite C-135
Phoenix, AZ 85016
USA
C.G. Baldwin 1600 Cathedral Place Secretary Canadian
925 West Georgia St.
Vancouver, B.C.
V6C 3L2 CANADA
S. S. Crompton 1343 South 1800 East Assistant Secretary United States of
Salt Lake City, UT America
84108
USA
J. R. Welch 8309 West 3595 Assistant Treasurer United States of
South America
Magna, UT 84044
USA
Page 15 of 15
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EXHIBIT INDEX
Description Exhibit
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Equity Participation Agreement between Entree Gold Inc. A
and Kennecott Canada Exploration Inc.
Subscription Agreement between Entree Gold Inc. and B
Kennecott Canada Exploration Inc.
Subscription Agreement between Entree Gold Inc. and C
Kennecott Canada Exploration Inc.
Joint Filing Agreement between Rio Tinto plc and D
Kennecott Canada Exploration Inc.