Ivanhoe, Rio Tinto to sign Oyu Tolgoi agreement

By Edmond Lococo and Rob Delaney

Oct. 5 (Bloomberg) -- Ivanhoe Mines Ltd. and Rio Tinto Group will sign an agreement tomorrow with the government of Mongolia to develop the Oyu Tolgoi copper-gold project, which Rio has called the largest such resource in the world.

The accord establishes a “legal, stable, long-term tax and regulatory environment for the construction and operation of the Oyu Tolgoi mining complex,” Vancouver-based Ivanhoe said today in a statement. Ivanhoe didn’t supply terms of the agreement and spokesman Bob Williamson didn’t immediately return calls.

The deal may last as long as 30 years and is valued at $30 billion to $50 billion, Mongolian President Tsakhiagiin Elbegdorj said last month. Ivanhoe, the developer of the project, has tried for more than six years to reach an agreement to mine the deposit, which is about 80 kilometers (50 miles) north of Mongolia’s border with China.

The site contains about 78.9 billion pounds (35.8 million metric tons) of copper and 45.2 million ounces of gold, according to company estimates from March 2008. Ivanhoe spent $156 million on exploration and development at Oyu Tolgoi last year and $245.5 million in 2007, the company said in April.

Ivanhoe rose 48 cents, or 3.5 percent, to C$14.11 at 10:07 a.m. in Toronto Stock Exchange trading. Rio gained 31 pence, or 1.2 percent, to 2,536.5 pence in London.

To contact the reporters on this story: Edmond Lococo in Boston at o elococo@bloomberg.net; Rob Delaney in Toronto at robdelaney@bloomberg.net.

Last Updated: October 5, 2009 10:14 EDT



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