Ivanhoe Mines (TSE:IVN), Rio Tinto (ASE:RIO) Starting Construction on Oyu Tolgoi Project

Ivanhoe Mines, Rio Tinto and Oyu Tolgoi Project

Ivanhoe Mines (TSE:IVN) and Rio Tinto (ASE:RIO) have finished the preliminary requirements concerning the Oyu Tolgoi project in Mongolia, and are ready to begin construction in the second quarter.

The paperwork required to advance to the construction phase has been completed, and the project, consisting of copper and gold, is ready to begin.

The Oyu Tolgoi project is one of the largest untapped deposits of gold and copper known in the world today, and it should bring huge dividends to Ivanhoe and Rio Tinto for a long time to come.

Ivanhoe Mines will own 66 percent of the project while state-owned Erdenes MGL LLC will own the remaining 34 percent. Rio Tinto's role is one of technical and financial support.

Rio Tinto also has a 22.4 percent stake in Ivanhoe Mines, along with options to acquire a stake up to 46.6 percent over the next 19 months.

For the beginning of full-scale construction, a committee consisting of representatives from Ivanhoe Mines and Rio Tinto have approved an initial financial outlay of $758 million.

The mine is expected to be operational in 2012 and commercial production to begin in 2013 for both copper and gold. Total costs to get things up and running are estimated to eventually reach about $5 billion.