Rio Tinto to provide comprehensive financing package to Ivanhoe Mines and agrees to Board and management changes

THIS PRESS RELEASE CANNOT BE SENT, TRANSMITTED OR OTHERWISE DISTRIBUTED IN OR INTO THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS IMPERMISSIBLE TO DO SO

LONDON, United Kingdom, April 18, 2012 /PRNewswire/ - Rio Tinto and Ivanhoe Mines Ltd. (Ivanhoe) have signed an agreement under which Rio Tinto has agreed to support and provide certain elements of a comprehensive funding package for Ivanhoe that will underpin the development of the Oyu Tolgoi copper-gold mine in Mongolia. The parties have also agreed that Rio Tinto, which currently owns 51 per cent of Ivanhoe, will replace a number of the directors on the Ivanhoe Board with Rio Tinto-nominated directors and also nominate a new management team.

Financing package

The comprehensive financing package, together with the proceeds from any potential future asset sales by Ivanhoe, are intended to cover Ivanhoe's total funding needs to complete the development of Oyu Tolgoi. Rio Tinto will provide a standby commitment for the full amount of a US$1.8 billion rights offering by Ivanhoe. Rio Tinto will also provide US$1.5 billion of bridge financing to Ivanhoe, in addition to the US$1.8 billion interim funding facility that was agreed in December 2010.

Rio Tinto remains committed to continue working with Ivanhoe to secure project financing for the Oyu Tolgoi project and has agreed to provide a guarantee of certain obligations of Ivanhoe under the project financing. Once project financing is in place, both the US$1.5 billion of bridge financing and the US$1.8 billion interim funding facility will be repaid to Rio Tinto in full.

Board and management changes

Under the agreement, a new thirteen-member Board will be formed, the majority of which will be independent directors comprising:

• Eleven Rio Tinto-nominated directors, six of which will be independent; and
• Two directors nominated by Mr Robert Friedland, one of which will be independent.

There will be an interim Board in place until the new Board is formed. Seven Ivanhoe Board directors will step down immediately.  Mr David Huberman will step down from his role as chairman but continue to serve as a Board member.  Mr Michael Gordon has been appointed as interim chairman pending the formation of the new Board.

Mr Friedland has stepped down from the Board and from his role as CEO of Ivanhoe.  In addition, the CFO and certain other senior executives of Ivanhoe have stepped down.

Ms Kay Priestly, a director of Ivanhoe and CFO of Rio Tinto Copper, has been appointed interim CEO and Ms Catherine Barone, vice president, finance of Ivanhoe, has been appointed interim CFO.

The interim Board will approve the appointment of six new Board directors nominated by Rio Tinto by 25 April, 2012 to complete the new Board composition.  The appointment of a new CEO and CFO nominated by Rio Tinto will be also approved by the Board.

Rio Tinto Copper chief executive Andrew Harding said: "Since 2006, Rio Tinto has provided funding of US$3.5 billion to Ivanhoe for the development of Oyu Tolgoi. Today's agreement provides future financial certainty for Ivanhoe and stability for the timely development of Oyu Tolgoi. We will also undertake a strategic review of Ivanhoe's assets with a view to maximising value for all Ivanhoe shareholders.

"Working with our partners in Mongolia, we are dedicated to meeting our target of starting commercial production from Oyu Tolgoi in the first half of 2013 and bringing the benefits of the mine to the people of Mongolia".

Canadian early warning disclosure

Under the agreement, Ivanhoe and Rio Tinto's wholly-owned subsidiary, Rio Tinto International Holdings Limited ("RTIH") have agreed, among other things, that:

• Ivanhoe will undertake a US$1.8 billion rights offering with a subscription price of US$8.34 per common share of Ivanhoe ("Common Shares")
• RTIH will provide a standby commitment for the full amount of the US$1.8 billion rights offering and be paid a standby commitment fee equal to 4 per cent of the gross proceeds.  Under the standby commitment Rio Tinto is required to acquire any shares not taken up under the rights issue.
• RTIH may elect to invest the standby commitment fee in Common Shares and/or non-voting preferred shares convertible into Common Shares on a one-for-one basis (the "Standby Commitment Fee Shares"), in each case with a subscription price equal to the 5-day VWAP of the Common Shares immediately before their date of issue
• Ivanhoe will issue to RTIH an Anti-Dilution Subscription Right exercisable from time to time to acquire Common Shares so to maintain Rio Tinto's ownership of Ivanhoe, notwithstanding the exercise of stock options of Ivanhoe, with a subscription price equal to the 5-day VWAP of the Common Shares immediately before each date of exercise
• Ivanhoe will issue to RTIH 55,000,000 Series D Warrants, each exercisable for three years to acquire one Common Share at a price of US$12.79

Rio Tinto currently owns 377,397,658 Common Shares representing approximately 51 per cent of the outstanding Common Shares. Following closing of the rights offering, Rio Tinto will beneficially own the number of Common Shares as set out below, in each of the following circumstances:

Full Exercise of Rights by Shareholders

Assuming Rio Tinto and the other holders of rights under the rights offering exercise their rights in full and the standby commitment is not utilized, Rio Tinto would acquire 109,901,784 Common Shares under the rights offering and, following the closing of such offering, would beneficially own 487,299,442 Common Shares representing approximately 51 per cent of the then outstanding Common Shares.  This would be the same percentage of outstanding Common Shares that Rio Tinto currently owns.

If Rio Tinto were to elect to fully invest the standby commitment fee in Standby Commitment Fee Shares at closing of the rights offering and using the TSX 5-day VWAP as at the date of this announcement as a proxy for the subscription price for these shares, Rio Tinto would acquire (or have the right to acquire upon conversion of Standby Commitment Fee Shares issued as non-voting convertible preferred shares) an additional 5,600,436 Common Shares.  In addition, if Rio Tinto were fully to exercise the Series D Warrants adjusted in accordance with their terms following closing of the rights offering, Rio Tinto would acquire an additional 71,016,523 Common Shares.  Assuming Rio Tinto were to acquire the maximum number of Common Shares issuable under each of these rights, following such issuances, Rio Tinto would beneficially own 563,916,400 Common Shares representing 54.6 per cent of the then outstanding Common Shares.

No Exercise of Rights by Shareholders

Assuming none of the holders of rights under the rights offering exercise their rights and the standby commitment is utilised in full, Rio Tinto would acquire 215,827,338 Common Shares under the rights offering and, following the closing of such offering, would beneficially own 593,224,996 Common Shares representing approximately 62.0 per cent of the then outstanding Common Shares.

If Rio Tinto were fully to elect to invest the standby commitment fee in Standby Commitment Fee Shares at closing of the rights offering, Rio Tinto would acquire (or have the right to acquire upon conversion of Standby Commitment Fee Shares issued as non-voting convertible preferred shares) an additional 5,600,436 Common Shares.  In addition, if Rio Tinto were fully to exercise the Series D Warrants adjusted in accordance with their terms following closing of the rights offering, Rio Tinto would acquire an additional 71,016,523 Common Shares.  Assuming Rio Tinto were to acquire the maximum number of Common Shares issuable under each of these rights, following such issuances, Rio Tinto would beneficially own 669,841,955 Common Shares representing 64.8 per cent of the then outstanding Common Shares.

The number of Common Shares and the percentage of the total outstanding Common Shares stated in the preceding paragraph (and the corresponding paragraph in the previous section) are based on (i) the number of Common Shares outstanding immediately prior to the record date for the rights offering being 741,141,128, (ii) the applicable adjustment being made to the number of Common Shares issuable upon exercise of the Series D Warrants as a result of the rights offering and (iii) the 5-day VWAP of the Common Shares immediately before the date of issue of the Standby Commitment Fee Shares is assumed to be US$12.86 per share being the TSX 5-day VWAP as at 16 April 2012 converted at the Bank of Canada closing exchange rate for 16 April 2012 for the purpose of estimating the ownership position of Rio Tinto under the scenarios described above.

The issuance of the Standby Commitment Fee Shares, the Anti-Dilution Subscription Right and the Series D Warrants and the underlying Common Shares is subject to regulatory approval.  All such Common Shares will be acquired by Rio Tinto from treasury.

In connection with its previously announced acquisition of more than 50 per cent of the Common Shares, Rio Tinto is deemed to have acquired indirect beneficial ownership over the securities of a number of public companies owned by Ivanhoe including (i) 326,155,332 common shares of Ivanhoe Australia Limited ("IVA") (ASX:IVA and TSX:IVA), representing approximately 59.0per cent of the outstanding common shares of IVA, (ii) 104,807,155 common shares of SouthGobi Resources Ltd. ("SouthGobi") (TSX:SGQ and HK:1878) representing approximately 57.6 per cent of the outstanding common shares of SouthGobi and (iii) 13,799,333 common shares of Entrée Gold Inc. ("Entrée") (TSX:ETG and NYSEAMEX:EGI) representing approximately 10.7 per cent of the outstanding common shares of Entrée.  Together with 16,566,796 common shares of Entrée already beneficially owned by Rio Tinto, Rio Tinto is now deemed to beneficially own 30,366,129 common shares of Entrée representing approximately 23.6per cent of the outstanding common shares of Entrée.

Rio Tinto has anti-dilution rights that permit it to acquire additional securities of Ivanhoe and Entrée so as to maintain its proportional equity interest in Ivanhoe and Entree. Rio Tinto also has the right until 24 October 2012 to acquire additional Ivanhoe securities under its equity financing right of first offer.

Except as required by its agreement with Ivanhoe, Rio Tinto has no present intention of acquiring additional securities of Ivanhoe, IVA, SouthGobi or Entrée. Depending upon its evaluation of the business, prospects and financial condition of Ivanhoe, IVA, SouthGobi or Entrée, the market for their securities, general economic and tax conditions and other factors, Rio Tinto may directly or indirectly acquire or sell some or all of the securities of Ivanhoe, IVA, SouthGobi or Entrée.

THIS ANNOUNCEMENT IS NOT AN OFFER OF SECURITIES FOR SALE AND CANNOT BE SENT, TRANSMITTED OR OTHERWISE DISTRIBUTED IN OR INTO THE UNITED STATES OR ANY OTHER JURISDICTION WHERE IT IS IMPERMISSIBLE TO DO SO.  NO SECURITIES MAY BE OFFERED OR SOLD WITHIN THE UNITED STATES ABSENT REGISTRATION UNDER THE US SECURITIES ACT OF 1933, AS AMENDED, OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.  ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM IVANHOE AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT IVANHOE AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS.  IVANHOE HAS AGREED TO FILE WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION A REGISTRATION STATEMENT ON FORM F-10 COVERING THE RIGHTS OFFERING.

Notes to editors

The departing Ivanhoe Board members are Mr Robert Friedland, Mr Edward Flood, Dr Markus Faber, Mr David Korbin, Ms Livia Mahler, Mr Tracy Stevenson and Mr Dan Westbrook.

About Rio Tinto

Rio Tinto is a leading international mining group headquartered in the UK, combining Rio Tinto plc, a London and New York Stock Exchange listed company, and Rio Tinto Limited, which is listed on the Australian Securities Exchange.

Rio Tinto's business is finding, mining, and processing mineral resources. Major products are aluminium, copper, diamonds, thermal and metallurgical coal, uranium, gold, industrial minerals (borax, titanium dioxide and salt) and iron ore. Activities span the world and are strongly represented in Australia and North America with significant businesses in Asia, Europe, Africa and South America.

SOURCE RIO TINTO PLC