Proposed Mongolia Tax Change Won't Impact Oyu Tolgoi -Ivanhoe

A recent proposal to change Mongolia's tax on mines won't affect the Oyu Tolgoi copper-gold project, said a senior executive from the project's largest shareholder, Ivanhoe Mines Ltd (IVN.T).

Peter Meredith, Deputy Chairman of Canada-based Ivanhoe Mines, said a change to Mongolia's "royalty tax won't affect the project." Mongolia's ministry of finance is considering replacing a windfall tax on miners with a sliding scale royalty scheme, which would increase royalty payments from 5% to 10%, according to the price of a commodity, the news agency Business Mongolia reported, citing the finance minister S. Bayartsogt.

The project won't be affected by the proposed tax change because Ivanhoe Mines and the government signed a 30-year investment agreement in March which insures stabilized tax rates and regulatory provisions, with an option of extending the term of the agreement for an additional 20 years.

Major taxes and rates stabilized for the life of the agreement include: corporate income tax; customs duty; value-added tax; excise tax; royalties; exploration and mining licences; and immovable property and/or real estate tax, Ivanhoe said on its website.

The Oyu Tolgoi project is 66% owned by Ivanhoe and 34% owned by the Mongolian government. Rio Tinto PLC (RTP) is the operator of the project and owns a 22.4% stake in Ivanhoe.

The Oyu Tolgoi project is expected to start producing copper and gold in 2013, and ramp up to full production of 450,000 tons of copper annually five years thereafter.

Company Website: http://www.ivanhoemines.com

http://www.riotinto.com

http://www.business-mongolia.com/?p=5911

-By Alex MacDonald, Dow Jones Newswires; +44 (0)20 7842 9328; alex.macdonald@dowjones.com

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