Source: Ardiin Erkh                         Date: 10 December, 2010

Prime Minister S.Batbold, Minister of Finance S.Bayartsogt and Minister of Mineral Resources and Energy D.Zorigt told media on Wednesday that negotiations are continuing on some changes the Government has suggested in the Oyu Tolgoi shareholders’ agreement and hoped that the issue will be resolved by the end of the year.

Mr. Batbold made it clear at the outset that these changes had nothing to do with the status or percentage of Mongolia’s ownership of the project, categorically dismissing as “baseless rumor” all talk that “Mongolia’s ownership is coming down, or ever will come down from 34%”. He said related Ministries will soon provide explanatory information on the implications of Ivanhoe Mines’ recent sale of new shares.

Minister Bayartsogt explained that there are two different agreements on Oyu Tolgoi -- an investment agreement and a shareholders’ agreement. The Government is seeking changes in certain provisions of the latter. The interest on the loan it has taken to pay for its share of the investment expenses is 9.9% plus the American consumer price index, and the Government wants this to be reduced. It prefers the London Interbank Offered Rate, currently 0.35% plus 6.5% interest. This would work out to 6.85% in place of the approximately 11.7% in the agreement.

He said the Government would also like the financing mechanism changed because Mongolians “have not understood the present method of selling shares” and have been misled by “some erroneous information”.

The third issue relates to the Government’s prior approval of any change in the shareholding pattern of Oyu Tolgoi LLC.