Bloomberg reported that Ivanhoe Mines Limited developing the Oyu Tolgoi copper and gold deposit in Mongolia with Rio Tinto Group.

Ivanhoe said that the cabinet authorized the ministers of finance, minerals and energy and environment and tourism to initial the agreement to be concluded between the government and Ivanhoe Mines Mongolia.

The government plans to send the draft to parliament, which must approve the agreement if it is to go into effect.

The company’s announcement follows comments recently by Mr Baldanjav Ariunsan Mongolia’s deputy minister of minerals and energy that an accord allowing Rio and Ivanhoe to begin mining Oyu Tolgoi may be completed this week.

Ivanhoe has been trying for more than five years to win an investment agreement with Mongolia to benefit from demand in China, the biggest metals buyer. Rio called Oyu Tolgoi when it agreed to buy 10% of Ivanhoe in October 2007. Copper has risen 23% in the past five years while gold has more than doubled.

Mr Ariunsan said that “This agreement is almost done. It will go to the parliament and it will be approved, I think, at the end of this week.”

Mr Ariunsan said that one of the two issues still under discussion in current negotiations centers on tax rates. He declined to elaborate or identify the second point.

Vancouver based Ivanhoe said that exploration of a deposit near the Oyu Tolgoi project’s southern boundary increased the copper resource estimate for the entire project by 11% to GBP 78.9 billion. The gold resource estimate rose about 44% to 45.2 million ounces. Oyu Tolgoi is about 80 kilometers north of Mongolia’s border with China.

(Sourced from Bloomberg)