Rio Tinto also noted that investment in the Oyu Tolgoi project through its shareholding in Ivanhoe Mines is consistent with its strategy of focusing on large-scale, long-life, low-cost assets. Production is expected to begin 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 mt of copper per year and 330,000 oz of gold.

Under the terms of the agreement, the government of Mongolia will hold 34% of the shares of Ivanhoe Mines Mongolia. Key terms include a stable and operational tax environment in relation to the development and operation of the Oyu Tolgoi project and certainty as to the term of the investment.

Rio Tinto initially spent $303 million for a 9.95% share in Ivanhoe Mines in October 2006 and at that time agreed to invest $388 million for a further 9.95% holding at the conclusion of a long-term investment agreement with the Mongolian government. Payment of this second tranche is automatically triggered once the conditions precedent to the signed investment agreement have been satisfied.

In September 2007, Rio Tinto agreed to provide Ivanhoe with a convertible credit facility of $350 million for interim financing for the project. This agreement raised both Rio Tinto’s fixed price conversion and warrants from 33.35% to 42.2% and restrictions on total Ivanhoe share acquisitions from a maximum of 40% under the October 2006 transaction agreement to 46.65%.