Rio signs Oyu Tolgoi investment deal

6th Oct 2009 08:08

Mining giant Rio Tinto has signed an investment agreement with the government of Mongolia for the development of the Oyu Tolgoi copper-gold complex in the countries' South Gobi region. Rio Tinto and Ivanhoe Mines, the development partners for the project, will now move forward with the government to address the conditions precedent and commence the development phase. The government of Mongolia will own 34% of Ivanhoe Mines.Production 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.'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,' said Bret Clayton, chief executive of Rio Tinto's Copper and Diamonds group. 'We plan to be a partner here in Mongolia for decades to come.'Rio initially made a $303m investment in a 9.95% shareholding in Ivanhoe Mines in October 2006 and has the obligation to invest $388m for a further 9.95% holding at the conclusion of an unconditional investment agreement with the Mongolian government. Under its current agreements, Rio has the right to acquire up to 43.1% of Ivanhoe's shares under fixed price options, with a right to further increase that interest to 46.65% through on-market purchases.