Ivanhoe and Mongolian Government Reach Initial Agreement on Oyu Tolgoi

Ivanhoe Mines reported on April 10, 2007, that it and its partner, Rio Tinto, had reached an agreement in principle with a Mongolian government working group on a draft investment agreement for the development of the Oyu Tolgoi copper-gold project in Mongolia’s South Gobi region. The agreement remained subject to settlement of definitive documentation and to review and approval by the cabinet of the Mongolian government and by the National Parliament. The agreement also is subject to review and approval by the boards of directors of Ivanhoe Mines and Rio Tinto.

Rio Tinto owns a 9.95% interest in Ivanhoe and has an option to buy up to 40%.

Ivanhoe offered no details as to the substance of the agreement and said such details will be released when appropriate, subject to approval of the draft agreement by the cabinet. Nevertheless, the announcement offered Ivanhoe shareholders some hope that the company’s negotiations with the government might produce an agreement beneficial to the interests of both the company and the government. Uncertainty as to the future of Oyu Tolgoi has lingered about the project since mid-May 2006, when Mongolia’s parliament voted in favor of a windfall-profits tax on mining companies.