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Rio Tinto starts new exploration in Mongolia's Gobi desert

ULAANBAATAR, June 20 (Reuters) - Anglo-Australian miner Rio Tinto has started new exploration work in Mongolia’s Gobi desert after a gap of around five years, in a sign that Mongolia is having some success at bringing back foreign investors.

Cash-strapped Mongolia had turn to the International Monetary Fund for support this year following a collapse in foreign investment, declining commodity prices and a downturn in coal demand.

Last month, the IMF approved a $5.5 billion rescue package for the country to help relieve its debt burden, bolster its local currency and to diversify its economy.

Rio has a 66 per cent shareholding in Oyu Tolgoi, a copper and gold mine in the southern Gobi Desert. Rio holds the stake indirectly through a majority ownership of Turquoise Hill Resources. The government owns the remaining 34 per cent. Turquoise Hill is listed on the Toronto Stock Exchange.

“I can confirm that we have an exploration drilling programme in licenses outside of the Oyu Tolgoi licenses,” Turquoise Hill spokesperson Tony Shaffer said in an email to Reuters on Tuesday.

Andrew Stewart, managing director and chief executive officer of Australian copper-gold explorer Xanadu Mines , said Mongolia was back on the radar for many investors.

Stewart said exploration was underway about halfway between the Oyu Tolgoi project and Xanadu’s Kharmagtai copper-gold project, south-east of Ulaanbaatar.

Oyu Tolgoi’s revenues rose 5.7 per cent year-on-year in the first quarter of the year, on the back of higher prices and copper concentrate sales. (Reporting by Terrence Edwards; Writing by Sue-Lin Wong. Editing by Jane Merriman)