Amendments to be made to the Shareholders' Agreement of Oyu Tolgoi Company

At the cabinet meeting held on March 16, government members got au fait with the process of amending the Investment Agreement signed by Government of Mongolia and
Ivanhoe Mines Mongolia, Inc, Ivanhoe Mines Limited, and Rio Tinto International Holdings Limited.During the period since the agreement was established, issues on cutting interest on financing and resolving means and conditions of effectively financing to the Mongolian side were frequently discussed at the negotiations
and meetings of the Board of Directors and shareholders of the company. Minerals and
Energy Minister D. Zorigt said that as a result, the sides reached an agreement.
It was agreed with the investor side to cut the interest of total financing to be made to the Oyu Tolgoi Project into LIBOR (The London Interbank Offered Rate) plus 6.5 percent, to give the Mongolian side a right to make financing and take part in financing the project, to receive financing from a third body in the first instance, to use funding hedging options if required, to alter the issue
on preferential shares that were previously stated in the agreement, as well as to not lower Mongolia’s ownership of 34 percent in any case.

Pursuant to the interest of financing and loans: As a result of the talks, it was
agreed with the investor to change the interest of total financing and loans to be made within frames of the project into LIBOR plus 6.5 percent. Previously, it was 9.9 percent plus the American consumer price index. The newly agreed interest of financing and loans is more effective to the Mongolian side and is equivalent to the interest of a long-term loan being disbursed to State-run entities in the
international market. It will come into effect on January 31, 2011.The right of the Mongolian side tofinance: The sides agreed that the Mongolian side will have a right to make financing equating to its size of ownership in total amount of money required to the project at any time. Also, the company will introduce a plan of required money for next 12 months to the Board of Directors and shareholders when it approves the action plan and budget for the next year with the purpose to create
a condition so the Mongolian side can make financing.
Funding hedging options: The interest of total financing and loan of the project is
LIBOR plus 6.5 percent. In case LIBOR has a higher cost to the company and shareholders, depending on world economics and financial situations, the company will study funding hedging options and take required measures. Also it was agreed together to reconsider the interest of funding and the loan every 7 years.
Project funding from a third body:The Company will get project funding from a third body which is fruitful and suitable for Oyu Tolgoi from the international banking market in the first instance.Mongolia’s ownership will not be lower than 34 percent: It was previously stated inthe agreement that Mongolia’s ownership of 34 percent will not be lowered. It has been confirmed to not lower Mongolia’s ownership without its permission regardless of whether it made a resolution to make financing to the company or not.
Preferential shares: With a purpose to completely change the issue in relation to
preferential shares that was previously stated in the 11th of the Shareholders’ Agreement, it was decided to remove it from the agreement. Instead, it will be financed with a document of loan rights.
Others: According to the agreement, Ivanhoe Mines Limited, and Rio Tinto
International Holdings Limited, have to negotiate the with Mongolian government and
receive permission in writing before they sell or transfer their shares at Oyu Tolgoi Company to any State-owned entity and/or persons who have direct and indirect connections with the Oyu Tolgoi Company. Sides of the Investment
Agreement agreed to verify the issues on limiting to sell and transfer shares by each establishing an agreement and signing it.

Source:Mongol Messenger, English Weekly newspaper of Montsame News Agency.