* Says full-scale construction to begin in 2nd quarter
* Expects first copper-gold production in 2013
* Shares rise 2.4 percent to C$17.73 on the TSX
(Adds details, CEO's comment, share price move. In U.S.
dollars, unless noted)
By Euan Rocha
TORONTO, March 31 Ivanhoe Mines (IVN.TO) has
finalized an investment agreement with its partners to develop
the Oyu Tolgoi copper-gold project in Mongolia, and full-scale
construction is set to begin in the second quarter, the company
said on Wednesday.
In October, Mongolia wrapped up a long awaited deal to
develop Oyu Tolgoi -- one of the world's largest untapped
copper-gold deposits -- when it signed an agreement with
Ivanhoe and its partner, Rio Tinto (RIO.AX) (RIO.L).
Ivanhoe said the Mongolian government has now confirmed
that procedural and administrative conditions in the investment
agreement have been satisfied. [ID:nSP495396]
The Mongolian government will become a junior partner in
the development of the $5 billion project. The government,
through Erdenes MGL LLC, a state-owned resources company, will
acquire a 34 percent stake in an Ivanhoe Mines subsidiary, Oyu
Tolgoi LLC, which holds the Oyu Tolgoi mining licenses.
Ivanhoe Mines will own the remaining 66 percent interest in
Oyu Tolgoi LLC and will build the project with the financial
and technical support of global mining giant Rio Tinto.
Rio Tinto currently owns 22.4 percent of Ivanhoe Mines and
holds options to increase that stake to 46.6 percent over the
next 19 months.
Ivanhoe said a joint Ivanhoe Mines-Rio Tinto committee has
approved an initial $758 million to launch full-scale
construction of the Oyu Tolgoi complex in the second quarter.
"The site-wide construction that is about to begin will see
the open-pit mine in operation in 2012 and the beginning of
commercial production of copper and gold in 2013," said Ivanhoe
Chief Executive John Macken in a statement.
The build-out phase of the project will include the
construction of a fully paved 105-kilometer (66-mile) highway
linking the Oyu Tolgoi site with the Mongolia-China border. It
will also include construction of a regional airport that can
accommodate Boeing 737-sized aircraft.
Ivanhoe has invested about $1 billion in the exploration
and development of Oyu Tolgoi since acquiring the exploration
licenses in 2000.
The Canadian-listed miner estimates that an additional $4
billion will be required from the project's partners to build
and commission the mining complex.
Shares of Ivanhoe rose 2.4 percent to C$17.73 in early
trade on the Toronto Stock Exchange on Wednesday.
(Reporting by Euan Rocha; editing by John Wallace and Peter