Ivanhoe Mines today welcomed the successful completion of the conditions precedent that had been incorporated into the landmark Investment Agreement to build and operate the Oyu Tolgoi copper-gold mining complex in Mongolia's South Gobi Region.

The comprehensive Investment Agreement, which creates a stable and long-term regulatory, fiscal and legal environment for the project in Mongolia, now has taken full legal effect.

Under terms of the agreement, the Government of Mongolia will become a partner in the development of Ivanhoe Mines' Oyu Tolgoi Project. The government will acquire a 34% interest in the Ivanhoe Mines subsidiary, Oyu Tolgoi LLC, which holds the Oyu Tolgoi mining licences. Mongolia's interest will be held through the state-owned, sovereign-wealth resources company, Erdenes MGL LLC. Ivanhoe Mines will own a 66% interest in Oyu Tolgoi LLC.

The Mongolian Government announced today that it had confirmed that the procedural and administrative conditions contained in the Investment Agreement had been satisfied within the allocated six-month period that has followed the agreement's official signing on October 6, 2009. Mongolia's national Parliament voted in July 2009 to authorize the government to conclude the Oyu Tolgoi Investment Agreement with Ivanhoe Mines and its strategic shareholder, Rio Tinto, as part of a transparent, democratic legislative process.

"The completion of the Investment Agreement as part of the coalition government action program to develop the largest Mine in Mongolia's history at the world-class Oyu Tolgoi copper-gold deposit will allow this 'Centennial Development Project' to give a significant boost to the economic and financial development of Mongolia, create large-scale infrastructure projects and the establishment of new urban centres and improve the livelihoods of Mongolian families," the Mongolian Government said in a statement issued in Ulaanbaatar.

Ivanhoe Mines Executive Chairman Robert Friedland said, "After nine years of discoveries at Oyu Tolgoi, a big piece of the future of copper and gold in Asia is poised to become a reality. With this Investment Agreement taking full effect, we now have a long-term partnership and a definitive blueprint to start building that future at Oyu Tolgoi."

Mr. Friedland said the participation of Rio Tinto guarantees that the world's best mining and environmental practices and some of the most advanced mining technologies will be applied to the Oyu Tolgoi Project. Rio Tinto currently owns 22.4% of Ivanhoe Mines and holds options to increase that interest to 46.6% during the next 19 months.

Andrew Harding, Chief Executive of Rio Tinto's Copper Group, said, "We plan to be a partner in Mongolia for decades to come and are looking forward to moving into the development phase of the project."

Construction budget for 2010 establishes timeline for first copper-gold production in 2013

In anticipation of the successful satisfaction of the conditions precedent in the Investment Agreement, the joint Ivanhoe Mines-Rio Tinto Technical Committee has approved a US$758 million budget to launch full-scale construction of the Oyu Tolgoi complex in the second quarter of 2010.

"Oyu Tolgoi will be one of the world's greatest mining centres," Mr. Macken said.

"Our discoveries, combined with the application of the Zeus induced-polarization exploration technology and our ongoing exploration drilling, mean that Oyu Tolgoi still will be powering Mongolia's economy a century from now."

"The site-wide construction that is about to begin will see the open-pit mine in operation in 2012 and the beginning of commercial production of copper and gold in 2013."

Work planned in the 2010 construction budget includes:

- Resumption of the sinking of the 10-metre-diameter Shaft #2, which will be used to hoist ore to the surface from the deep, underground, copper-gold-rich Hugo Dummett Deposit.
- Construction of a 97-metre-tall (approximately 31-storey), reinforced-concrete headframe for Shaft #2.
- Pouring the concrete foundation for the 100,000-tonne-per-day concentrator and deliveries of building materials for the concentrator and infrastructure.
- Installation of a 20-megawatt power station and 35-kilovolt distribution system.
- Initial earthworks for the open-pit mine at the Southern Oyu deposits.
- Continuation of lateral underground development off Shaft #1 at the Hugo Dummett Deposit.
- Construction of a 105-kilometre highway link to the Mongolia-China border, which will be fully paved by the time production begins.
- Construction of a regional airport, with a concrete runway to accommodate Boeing 737-sized aircraft.

To the end of 2009, Ivanhoe Mines had invested approximately US$1 billion in the exploration and development of Oyu Tolgoi since acquiring the exploration licences in 2000. An estimated additional US$4 billion will be required from the project's partners to build and commission the mining complex.

Mr. Friedland said Ivanhoe Mines will provide shareholders and stakeholders with update reports on the progress of construction. "All of us at Oyu Tolgoi LLC are looking forward to inviting international investors to the Oyu Tolgoi mining complex as full-scale construction begins this spring."