TORONTO (miningweekly.com) – Vancouver-based Ivanhoe Mines and partner Rio Tinto expect the government of Mongolia to sign off on an investment agreement for their Oyu Tolgoi project soon, and will consider bringing in other strategic investors in Ivanhoe, the firms said late on Tuesday.

“Several” sovereign wealth funds have expressed unsolicited interest in Ivanhoe and the company could sell up to a total of 9,9% of itself to one or more partners, president John Macken said in a statement.

The proceeds from such a sale would be used to fund the Oyu Tolgoi project and Rio Tinto, which owns 10% of Ivanhoe, has agreed not to exercise its right of first offer as long as its anti-dilution equity rights remain in place.

Ivanhoe and Rio have been trying for more than six years to secure an investment agreement for the huge copper/gold mine.

Given the Mongolian government's assurances that the deal will likely be signed before the end of this month, Rio and Ivanhoe have also negotiated some changes to their arrangement regarding Rio's investment in Ivanhoe, the company's said.

Rio Tinto currently owns just under 10% of Ivanhoe, but agreed in 2006 to buy another 9,95% for $388-million when the investment agreement is finally signed.

The company also provided Ivanhoe with a $350-million convertible loan in 2007, so that project development could continue, which, together with Ivanhoe warrants held by Rio, could increase its holding to more than 40% if converted.

The companies have agreed to extend the deadline – currently October 27 – for Rio to complete the second tranche of its investment in Ivanhoe, on a month-to-month basis.

However, Rio Tinto copper and diamonds CEO Bret Clayton said that Rio Tinto expects that any delay in concluding the tranche two investment will be “short-lived”.

"Rio Tinto is committed to its partnership with Ivanhoe in developing Oyu Tolgoi," he said.

"We have made good progress with the government of Mongolia and expect to sign the investment agreement shortly. We then can move forward with completing the conditions precedent to taking up our second tranche of Ivanhoe shares."

Once the investment does take place, Ivanhoe will have another $388-million for development and construction at Oyu Tolgoi.

Macken said the delay to the tranche two investment would not affect the rest of Ivanhoe and Rio's agreement.

"The estimated total value of the package, inclusive of equipment purchased from Ivanhoe, is approximately $2,4-billion.

“Rio Tinto will acquire an interest of up to 43,1% in Ivanhoe Mines and Ivanhoe will use the funds to cover its share of costs for the development and construction of the Oyu Tolgoi mining complex," he added.

Ivanhoe shareholders will vote on the extension of the deadline for the tranche-two investment on October 20.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.