Late last month Ivanhoe Mines received $502 million from Rio Tinto following Rio’s decision to exercise all remaining share-purchase warrants that it holds in Ivanhoe Mines. As the picture shows, assembly of open pit equipment has started – in this case Komatsu dozers. Construction at Oyu Tolgoi is continuing toward a projected peak level of activity that is expected to be reached during the third quarter of this year. Commissioning of the concentrator’s first production line is projected to begin in the second quarter of 2012 and commercial production is expected to be achieved in the first half of 2013.

The additional shares will increase Rio Tinto’s ownership stake in Ivanhoe Mines to 46.5% from the present 42.0%. The $502 million from the exercise of the warrants is being applied toward the accelerated, full-scale construction of the first phase of the Oyu Tolgoi copper-gold-silver complex in southern Mongolia.

Ivanhoe Mines is working with Rio Tinto to complete a major project-finance package of up to $3.6 billion that Ivanhoe is negotiating with a group of international financial institutions, government credit agencies and commercial banks. The objective is to have the finance package in place later this year. Rio Tinto also has committed to provide Ivanhoe Mines with an initial, non-revolving, interim funding facility of $1.8 billion, should it be required, to sustain Oyu Tolgoi construction pending the finalisation of the project financing. The interim funding facility ensures that Ivanhoe Mines would have the required financial resources to continue building the project without interruption and, if drawn upon, would be refinanced with funds to be provided under the project-finance package.