Rio Tinto To Take Direct Management Of Oyu Tolgoi Project In Mongolia

By Jana Weigand
LONDON -(Dow Jones)- Rio Tinto PLC (RIO.LN), the mining giant, and Ivanhoe Mines have signed a new agreement under which Rio Tinto will assume direct management of the Oyu Tolgoi copper-gold project in Mongolia and provide a comprehensive financial package to Ivanhoe Mines that is expected to help secure the development of the project approximately six months ahead of schedule in late 2012.

MAIN FACTS:

-Rio Tinto will:

*assume management of the Oyu Tolgoi project, with the approval of the board of Oyu Tolgoi LLC.

*provide the Oyu Tolgoi project with a comprehensive financing package, including a $1.8 billion interim loan facility whilst Rio Tinto and Ivanhoe work together to complete project financing; exercising Rio Tinto's remaining warrants for common shares in Ivanhoe; participating fully in Ivanhoe's $1.2 billion rights offering.

*secure the right to increase its ownership in Ivanhoe Mines to 49% through: acquiring a total of 20 million shares at current market prices, evenly from Citibank and Ivanhoe Mines executive chairman and chief executive officer, Robert Friedland; exercising Rio Tinto's remaining warrants for common shares in Ivanhoe; the purchase of Ivanhoe shares in the market o receiving a subscription right that allows Rio Tinto to subscribe for Ivanhoe common shares from treasury at market prices until January 2012.

-Rio Tinto has also agreed to suspend its arbitration in relation to the Shareholders Rights Plan by six months to June 2011 and to extend the standstill arrangement by three months to January 2012.

-Depending upon its assessment of Ivanhoe's business, prospects and financial condition, the market for Ivanhoe's securities, general economic and tax conditions, and other factors, Rio Tinto will consider availing itself of its rights to acquire additional securities of Ivanhoe.

-Shares at 1400 GMT down 0.95% at 4462 pence valuing the company at GBP68.09 billion.

Source: Dow Jones Newswires