TORONTO (miningweekly.com) – Mongolia's Parliament has approved changes to four laws, clearing the way for a long-awaited investment agreement on the giant Oyu Tolgoi copper/gold project, in the country's South Gobi region, Rio Tinto and Ivanhoe Mines reported on Tuesday.

Rio and Ivanhoe both said they now expect to formally sign the agreement with the government of Mongolia “in the near future”.

Shares in Vancouver-based Ivanhoe leapt a whopping 24% in Toronto on Tuesday, to C$11,78 apiece by 16:15.

"The votes today by overwhelming majorities of the members present for the special session of the State Great Khural represent a significant step in Mongolia's commitment to attract foreign investment in the development of the country's mineral resources," Ivanhoe president John Macken said.

The two companies have been trying for more than six years to secure an investment agreement for the huge mine, touted in the past by Rio as the world's largest undeveloped copper/gold project, and the current version is the third draft agreement for Oyu Tolgoi to be produced in the last two years.

“This is an incredibly important milestone in bringing on stream one of the finest undeveloped copper/gold projects in the world," Rio Tinto CEO Tom Albanese said.

The amendments approved by Parliament included the insertion of a sunset provision to cancel the three-year-old, 68% windfall profits tax on copper and gold effective from January 1, 2011.

As expected, the investment agreement gives the government of Mongolia a shareholding of 34% in Ivanhoe Mines Mongolia, Rio Tinto confirmed.

Key terms of the agreement include a stable and operational tax environment in relation to the development and operation of the Oyu Tolgoi project and certainty as to the term of the investment.

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 could increase its holding to more than 40% if converted.

Ivanhoe has said that it expects construction of the mine to take 30 months, once the investment agreement has received final approval and is signed by the government and both companies' boards.

At the moment, production is targeted for as early as 2013, with a five-year ramp-up to full output, Rio said on Tuesday.

The mine is expected to produce an average of 450 000 t/y of copper and 330 000 oz of gold, over a 35-year life.

Oyu Tolgoi contains 78,91-billion pounds of copper resources and 45,19-million ounces of gold, based on a March 2008 resource estimate update.

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