Rio Tinto has signed a new agreement to take direct control from Canada’s Ivanhoe Mines for the Oyu Tolgoi copper-gold project in Mongolia.

The agreement includes a US$1.8bn bridging loan facility which will be utilised until Rio Tinto and Ivanhoe complete a project financing deal.

A number of institutions have won the mandate for the project financing deal, which is expected to reach US$2bn, including BNP Paribas and Standard Chartered.

Canada’s export credit agency EDC and multilaterals including the European Bank for Reconstruction and Development and the IFC have also signed up to the project.

Furthermore, as part of the agreement Rio Tinto will secure the right to increase its ownership in Ivanhoe to 49%, an increase of almost 15%, through share acquisition at market prices.

The Oyu Tolgoi project is progressing ahead of schedule and is expected to commence production in late 2012.

The Canadian mining company’s shares traded at US$23.53 on the New York stock exchange at the time of publication.

“Today’s agreement reinforces our commitment to the Oyu Tolgoi project, which is a natural fit with our strategy of focusing on low-cost, long-life assets with significant growth potential. Together with Ivanhoe and the government of Mongolia, we are determined to develop Oyu Tolgoi in a sustainable, mutually beneficial manner for the people of Mongolia,” says Andrew Harding, chief executive of Rio Tinto Copper.

“Today’s agreement reinforces our commitment to the Oyu Tolgoi project.”

The move follows Rio Tinto’s July dispute with Ivanhoe after Rio Tinto claimed that the Canadian miner breached a contract by planning a rights issue.

“Rio Tinto advised Ivanhoe that the rights plan would breach Rio Tinto’s contractual rights. However, the board of Ivanhoe nonetheless adopted the plan […] over Rio Tinto’s strong objection,” the company said at the time.

Reports claim that the site contains enough raw materials to operate for almost 60 years

This dispute has apparently been resolved in time for the agreement, however, as one of the clauses of the new contract is that Rio Tinto participates fully in Ivanhoe’s US$1.2bn rights offering.

Ivanhoe shares were considered to be ex-rights from December 29, 2010 on the New York and Toronto stock exchanges.

The Oyu Tolgoi project is progressing ahead of schedule and is expected to commence production in late 2012.

Reports claim that the site contains enough raw materials to operate for almost 60 years, with around 37 million tonnes of copper and 1,300 tonnes of gold estimated to be below the surface.

A copper concentrator plant and related facilities are under construction on site to process an initial throughput of 100,000 tonnes of ore a day.

An expansion of the concentrator to handle 160,000 tonnes of ore a day is expected to be completed by 2017.