UPDATE:Ivanhoe Mines:Plan To Keep Majority Stake In Oyu Tolgoi

Ivanhoe Mines Ltd. (IVN) said Wednesday it is willing to sell a stake in the Oyu Tolgoi copper and gold project in Mongolia, but it plans to remain the majority owner.

Peter Meredith, deputy chairman of Ivanhoe Mines, which owns a 66% stake, said the project "is likely to have another participant before it's all over."

The Mongolian government, which holds a 34% stake, has just approved the investment plan for the project, and construction is already under way with a planned $758 million to be spent in 2010, Meredith told a conference in London.

Work for this year includes sinking a shaft, installing a 20-megawatt power station, starting construction of a regional airport that is able to handle an airplane the size of a Boeing 737, starting construction of a 105-kilometer highway, a concentrator and other tasks.

Rio Tinto PLC (RTP) is the project operator and owns a 22.4% stake in Ivanhoe with rights to increase its stake to 46%.

Meredith said Ivanhoe plans to keep a majority stake in the project but would be willing to sell a stake to an interested buyer. An interested buyer would be "anyone who wants a copper cash [flow] stream," he said. "Someone who wants...a bigger portion of the copper flow than we do."

"We've had lots of interest from other majors [but]...we need to be respectful" of the dreams and aspirations of Rio Tinto, he said.

Oyu Tolgoi is expected to enter production in 2013 and then ramp up over five year to 450,000 tons of copper output annually. Ivanhoe estimates the total investment over the next four years to build the initial mining complex and start producing will be about $4 billion.

Meredith said the project "is likely not to be financed very much more with equity," adding that the plan as it stands is able to be financed through other means.

Separately, Meredith said that on May 7, Ivanhoe's shareholders approved a shareholders' rights plan that will ensure all shareholders have equal rights in the event of a takeover approach on Ivanhoe.

The plan provides Ivanhoe's board of directors with additional time to consider any takeover bid and, if applicable, to explore alternative transactions that would maximize value for shareholders. It is intended to prevent any shareholders from increasing their holdings beyond 20%--or in the case of Executive Chairman Robert Friedland and Rio Tinto, beyond their current or contractually agreed levels--without making an offer to all other shareholders.

-By Alex MacDonald, Dow Jones Newswires; +44 (0)207 842 9328; alex.macdonald@dowjones.com

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