Rio Tinto provides US$350 million convertible credit facility to Ivanhoe Mines

    OTTAWA, Sept. 12 /CNW Telbec/ - Rio Tinto will provide Ivanhoe Mines Ltd
with a convertible credit facility of US$350 million for interim financing for
the Oyu Tolgoi copper-gold complex in Mongolia's South Gobi region. The credit
facility is directed at maintaining the momentum of mine development
activities at Oyu Tolgoi while Ivanhoe and Rio Tinto continue to engage in
finalising an Investment Agreement between Ivanhoe and the state of Mongolia.
    Rio Tinto expects that in the absence of a satisfactory Investment
Agreement it is likely that the rate of ongoing investment in the project will
need to be scaled down significantly.
    Bret Clayton, chief executive of Rio Tinto Copper, said, "The provision
of this facility allows Rio Tinto to raise its shareholding in Ivanhoe and the
Oyu Tolgoi project while at the same time allowing the project to continue
construction as the Investment Agreement goes through final parliamentary
    "An equitable Investment Agreement is essential if Mongolia is to attract
sustainable international mining investment. This will encourage further
exploration, development, employment and skill training programmes," he said.
    Rio Tinto invested approximately US$303 million in October 2006 to take
an initial stake of 9.95 per cent in Ivanhoe Mines under the terms of a
Placement Agreement. A second 9.95 per cent holding, valued at approximately
US$388 million, will be taken up under the terms of the Placement Agreement at
the conclusion of a satisfactory long term Investment Agreement with the
Mongolian Government.
    As part of the interim funding agreement, Rio Tinto will increase its
presence and involvement in Mongolia and the Oyu Tolgoi project. This
agreement also raises both Rio Tinto's fixed price conversion and warrants
from 33.35 per cent up to 42.2 per cent and restrictions on total Ivanhoe
share acquisitions from a maximum of 40 per cent under the Placement Agreement
to 46.65 per cent.

    Structure of the Deal

    The US$350 million credit facility matures on September 12, 2010. Funds
borrowed under the credit facility, together with up to US$108 million in
interest, are convertible into up to 45,800,000 common shares of Ivanhoe at a
price of US$10.00, per share. Ivanhoe will grant to Rio Tinto on the first
funding date (which is expected to occur during October) warrants to acquire
an additional 35,000,000 common shares of Ivanhoe at a price of US$10.00 per
share for a period of five years and which may be exercised pro rata with
funds borrowed by Ivanhoe under the credit facility.
    If Rio Tinto were to exercise all possible conversions and warrants, it
would hold approximately 256,247,400 common shares of Ivanhoe acquired through
fixed price mechanisms representing 42.2 per cent of Ivanhoe's common shares
on a fully diluted basis (43.1 per cent undiluted).
    In addition, Rio Tinto will now have the right to appoint the Chairman of
the Technical Committee overseeing development and operation of the Oyu Tolgoi
project within three years of the Placement Agreement (rather than the five
years as initially agreed in the Placement Agreement) conditional upon first
draw down under the facility.
    Rio Tinto has no present intention of acquiring other securities of
Ivanhoe, except as regards its right to acquire additional securities so as to
maintain its proportional equity interest in the future, or of disposing of
any of the securities of Ivanhoe which it holds. Depending upon its evaluation
of Ivanhoe's business, prospects and financial condition, the market for
Ivanhoe's securities, general economic and tax conditions and other factors,
Rio Tinto may acquire additional securities of Ivanhoe or sell some or all of
the securities it holds.

    Mongolian Investment Agreement

    The draft Investment Agreement that was completed by the Mongolian
Government's Working Group and the negotiating team for Ivanhoe Mines and Rio
Tinto in April and reviewed by the Cabinet in June is currently before
Mongolia's State Great Hural (National Parliament). The draft agreement is
being reviewed by a working group comprised of Members of Parliament from the
parliamentary Standing Committee on the Economy, which is expected to report
to Parliament's autumn session this year. The parliamentary review and
approval are the final steps to complete the Investment Agreement process that
started more than eight months ago.

For further information:

For further information: or to obtain a copy of Rio Tinto's Early
Warning Report once it is filed with the Canadian securities regulators,
please contact: Media Relations, London: Christina Mills, Office: +44 (0) 20
8080 1306, Mobile: +44 (0) 7825 275 605; Nick Cobban, Office: +44 (0) 20 8080
1305, Mobile: +44 (0) 7920 041 003; Media Relations, Australia: Ian Head,
Office: +61 (0) 3 9283 3620, Mobile: +61 (0) 408 360 101; Amanda Buckley,
Office: +61 (0) 3 9283 3627, Mobile: +61 (0) 419 801 349; Investor Relations,
London: Nigel Jones, Office: +44 (0) 20 7753 2401, Mobile: +44 (0) 7917 227
365; David Ovington, Office: +44 (0) 20 7753 2326, Mobile: +44 (0) 7920 010
978; Investor Relations, Australia: Dave Skinner, Office: +61 (0) 3 9283 3628,
Mobile: +61 (0) 408 335 309;,; High
resolution photographs available at:

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