Source:Reuters.com, http://www.miningweekly.com   Date: May 26, 2010

Ivanhoe Mines has signed a joint mandate letter with the European Bank for Reconstruction and Development (EBRD) and the World Bank Group's International Finance Corporation (IFC), which will consider providing and arranging finance for the company's USD4.6-billion Oyu Tolgoi project. Under the terms of the letter, the EBRD and IFC may provide a two-part package, including up to USD300 million each as part of a ground of primary lenders, in limited recourse project finance, Ivanhoe has said. The second part of the package would involve the mobilization of another USD1.2 billion from commercial lenders under a 'B loan' structure.

Ivanhoe has also has received expressions of interest from export credit agencies to provide up to USD500 million in direct project debt financing. "Securing the proposed financing package - and combining it with possible additional subscriptions of more than USD1 billion through our existing agreements with Rio Tinto and the funds from our cash position that are earmarked for project development expenditures - would advance Ivanhoe a long way toward completion of the construction of the Oyu Tolgoi mine," chairperson Robert Friedland said in a statement.

Rio Tinto currently owns 22.4% of Ivanhoe and has the right to increase its holding to as much as 46.6%. The Mongolian government has a minority 34% stake in the project. The company could fund the balance of the capital requirements for Oyu Tolgoi through additional debt, equity offerings, a credit facility, the sale of subsidiaries, equity investments, project financing and/or various corporate transactions, Ivanhoe said.

Ivanhoe and adviser Hatch Corporate Finance are continuing discussions with large commercial banks and export credit agencies about the arrangement of the required limited-recourse financing package, with 13 banks having now submitted expressions of interest in providing amounts totaling more than USD2 billion. Two big commercial banks will be selected to join the EBRD and IFC in a group of lead arranging banks, which would jointly structure the debt financing package. Ivanhoe wants the debt package completed by the first quarter of 2011.