Rio Tinto also said it 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 approval.

“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 programs,” he said.

Rio Tinto invested approximately $303 million in October 2006 to take an initial stake of 9.95% in Ivanhoe Mines under the terms of a Placement Agreement. A second 9.95% holding, valued at approximately $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 this agreement, Rio Tinto said it will increase its presence and involvement in Mongolia and the Oyu Tolgoi project. The interim funding agreement also raises both Rio Tinto’s fixed price conversion and warrants from 33.35% up to 43.1% and restrictions on total Ivanhoe share acquisitions from a maximum of 40% under the Placement Agreement to 46.65%.

Under the terms of the latest transaction, Rio Tinto can 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 said it 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 conditions and other factors, Rio Tinto may acquire additional securities of Ivanhoe or sell some or all of the securities it holds.

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 national parliament. The draft agreement is being reviewed by a working group comprising 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.