http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=90288&sn=Detail
Rio Tinto says it has signed Oyu Tolgoi agreement
After 6 years in the making, the massive deal between the Mongolian government, Rio Tinto and Ivanhoe to develop the Oyu Tolgoi copper-gold project has finally been signed
Author: Mineweb Reporter
Posted: Tuesday , 06 Oct 2009
Rio Tinto announced Tuesday morning it has signed an investment agreement with the government of Mongolia to develop the Oyu Tolgoi copper-gold complex in Mongolia's South Gobi region with Ivanhoe Mines.
According to the diversified miner production from the copper-gold project is expected to commence in 2013 with a five year ramp up to full expected production of 450,000 tonnes of copper per year and 330,000 ounces of gold.
"Oyu Tolgoi is consistent with Rio Tinto's strategy of investing in large, long life, low cost ore bodies," Bret Clayton, chief executive of Rio Tinto's Copper and Diamonds group, said.
"While the size and grade of the existing Oyu Tolgoi ore reserves and mineral resources are already world class, we are also excited by significant exploration upside that still remains," he added; "We plan to be a partner here in Mongolia for decades to come."
Under the terms of the agreement the Mongolian government will own 34% of Ivanhoe Mines Mongolia Inc LLC, the license holder of the Oyu Tolgoi Project. Key terms include a stable operational and tax environment, provisions dealing with the Government's equity participation and financing arrangements.
After 6 years in the works, it is believed the Oyu Tolgoi investment agreement will set a precedent for future foreign mining company investments in Mongolia and it is believed the project will increase Mongolia's GDP by 34% annually.
Rio Tinto initially made a US$303 million investment in a 9.95% shareholding in Ivanhoe Mines Ltd in October 2006 under the terms of a Placement Agreement, and has the obligation to invest US$388 million for a further 9.95% holding at the conclusion of an unconditional investment agreement with the Mongolian government.
