The massive, multibillion-dollar cost of Ivanhoe Mines' (TSX:IVN) copper project in Mongolia is likely behind its cryptic announcement Wednesday that it is considering new "strategic options," mining analysts say.

Chairman Robert Friedland said the company is looking to possibly sell off some subsidiaries and is considering debt or equity financings. His remarks came in a statement issued Wednesday from London, where Ivanhoe's strategic partner, Rio Tinto PLC (NYSE:RTP), is based.

The two companies are working together on the Oyu Tolgoi project in Mongolia, one of the world's biggest new copper mines, expected to cost about US$4 billion to build.

Friedland said in October that the company had about $2.8 billion in equity and promised no funding delays before the copper-gold mine reaches commercial production in 2013. He cited the strength of international mining giant Rio Tinto, which has 19.7 per cent stake in the company.

Raymond Goldie, an analyst at Salman Partners Inc., said he was surprised to learn Ivanhoe was considering financing options after the company's earlier insistence it was not concerned about funding.

"That suggested that the deal was a done deal, that Rio Tinto had given them assurances that there wouldn't be a problem," Goldie said. But Tom Meyer, an analyst at Raymond James Ltd. had forecasted in a December report that the company would have to raise additional capital by selling subsidiaries or considering alternative options.

"Funding a potential US$ 4.4 billion front-end (capital expenditure) may be difficult, even with Rio Tinto's help," he wrote. "Indeed we are reading much into the companys mention of unsolicited interest in participating in Ivanhoes growth opportunities."

Meyer also noted that Ivanhoe, which owns a 66 per cent interest in the project, will likely have to "carry the Mongolian government," which owns 34 per cent of the project.

Another analyst who spoke on background said Ivanhoe is "in an enviable position" because it has a number of options to raise capital, including interest from sovereign wealth funds and the possibility of Rio purchasing a bigger stake in the company.

Rio Tinto increased its stake in the company to 19.7 per cent in October, when Ivanhoe postponed a plan to sell a 9.9 per cent interest to another strategic investor. Friedland said the company would still consider unsolicited interest from numerous international investors and sovereign wealth funds to invest in the project.

The two companies reached a deal in 2006 that allows Rio Tinto to become the largest shareholder in Ivanhoe through investments in stages totalling about US$2.4 billion that could raise its stake to a maximum of 46.65 per cent.

Tony Robson, an analyst at BMO Capital Markets, said the project is a good investment for Rio Tinto because it gives it a strategic position in the lucrative copper market and "in one of the world's largest developments for the entire decade."

On Wednesday, Ivanhoe said it has hired an arm of Citi Group, a major U.S. bank, and mining consultant Hatch Corporate Finance, for advice.

Ivanhoe said in December that full-scale construction at the complex will begin this year, with a conditional year-long budget of US$758 million.

Ivanhoe Mines recently signed the long-awaited deal with Mongolia to develop the Oyu Tolgoi project after a heated national debate over how to exploit the country's mineral wealth.

Work in 2010 is planned to include pouring concrete for the foundation of the 100,000 tonne-per-day concentrator, installation of a 20-megawatt power station and 35-kilovolt distribution system and construction on a highway link to the Mongolia-China border. A regional airport is also being built.

The company's subsidiary, SouthGobi Energy Resources Ltd. (TSX:SGQ), is developing a major new coal deposit in Mongolia. It secured US$500 million in debt financing from China's sovereign wealth fund in October.

Another subsidiary, Ivanhoe Australia, has reported significant discoveries of copper, molybdenum and rhenium.

Ivanhoe Mines made the Wall Street Journal's list of hot Canadian stocks Wednesday after the stock climbed three per cent to $17.23.

Goldie said that shares usually tumble when the possibility of an equity issue is raised, but noted that it could have been offset by the high price of copper, which reached a 16-month high of US$3.49 a pound.