Ivanhoe Mines and Rio Tinto welcome Mongolian new laws regarding gold and copper

27th August 2009

Rio Tinto and Ivanhoe Mines Ltd have welcomed the Mongolian Parliament’s approval of amendments to four laws that clear the way for the finalisation of the Investment Agreement for the Oyu Tolgoi copper-gold complex in Mongolia’s South Gobi region.

The windfall tax, introduced in 2006, has been a key sticking point between Mongolia’s government and the miners.

Now, Mongolia’s politicians have added a sunset provision to cancel the three-year-old tax on copper and gold effective on January 1, 2011, Ivanhoe said.

The windfall provision imposes a 68 per cent tax on copper sold above $US2600 per tonne and the gold price above $US500 per troy ounce on the London Metal Exchange.

Production for the project is expected to commence as early as 2013 with an approximate five-year ramp-up to full production. Average production capacity of the mine over its lifetime is expected to be 450,000 tonnes of copper per year and 330,000 ounces of gold.

Tom Albanese, chief executive, Rio Tinto said “This is an important milestone in bringing onstream one of the finest undeveloped copper-gold projects in the world. The Investment Agreement is also a landmark for the future development of Mongolia’s resources industry.

Under the terms of the Investment Agreement, the Government of Mongolia will hold a shareholding of 34 per cent in Ivanhoe Mines Mongolia Inc.

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and NYSE listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto’s business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, energy (coal and uranium), gold, industrial minerals (borax, titanium dioxide, salt, talc) and iron ore. Activities span the world but are strongly represented in Australia and North America with significant businesses in South America, Asia, Europe and southern Africa.

Ivanhoe Mines is an international mining company with operations focused in the Asia Pacific region. Ivanhoe’s core assets are its world-scale Oyu Tolgoi copper and gold mine development project in southern Mongolia, its large shareholdings in Mongolian coal miner SouthGobi Energy Resources (SGQ:TSXv) and in Ivanhoe Australia (IVA:ASX), an Australian copper-gold-uranium exploration and development company. Ivanhoe Mines’ shares are listed on the Toronto, New York and NASDAQ stock exchanges under the symbol IVN.

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