Ivanhoe & Rio Tinto partner in Mongolian property:

Ivanhoe Mines Ltd. (IVN-T) has just announced a joint venture deal with London based Rio Tinto PLC to develop their Mongolian property. The Oyn Tolgoi gold and copper project has hit a few snags in the development process, the Mongolian government has past legislation allowing them to take a controlling interest in any development in the country.

Rio Tinto has pledged up to $1.7 billion over a number of years, the first investment totals $335 million with an additional $445 million when an investment agreement is reached with the Mongolian government. When the deal is finalized Rio Tinto will hold a 33.4% ownership position in Ivanhoe Mines.

The deal looks very good for Ivanhoe due to the infusion of cash and the access to expertise offered by the partnership. Rio Tinto is the second largest mining company in the world and will enhance the potential for Ivanhoe to complete a deal with the government of Mongolia.

The risk for both these companies is that the government is not willing to complete a deal on favourable terms and the project gets delayed to the point that nobody makes any money. I believe that risk is substantial and I would follow the Rio Tinto strategy and wait until a deal is announced before jumping in.

For more information go to www.campbellreport.com