The Mongolian government, Ivanhoe Mines and partner Rio Tinto have agreed to back a 2009 investment agreement for the massive Oyu Tolgoi copper-gold deposit, ending discussions over possible changes and sending shares of Ivanhoe up more than 17 percent.
The 2009 deal gave a 66 percent stake in the multibillion-dollar Oyu Tolgoi project in Mongolia's South Gobi region to Canadian miner Ivanhoe, in which mining giant Rio Tinto (RIO.AX) now owns a 48.5 percent stake.
The government holds the remaining 34 percent stake in the project and has the right to increase its stake to 50 percent after 30 years.
But Mongolia's finance minister said in an interview with local media last month that the government was discussing changes to the terms and conditions of the agreement.
Some Mongolian politicians have hoped the country can move to increase its stake in the project faster than provided in the existing agreement, but investors have warned that populist policies could slow the country's mining boom.
But Wednesday's statement calmed investors.
Ivanhoe Mines, Rio Tinto and the government of Mongolia have concluded discussions on the two aspects of the investment agreement that were raised by the government of Mongolia, and are pleased to confirm that all parties have reaffirmed their continued support for the investment agreement and its implementation, they said in a joint statement on Thursday.
They added the shareholders were united in their commitment to secure the necessary project finance and bring the Oyu Tolgoi Project to completion and full production.
Ivanhoe shares were up 17.44 percent to C$18.25 on Thursday morning on the Toronto Stock Exchange. Rio Tinto shares were 4.8 percent higher at 459 pence.
Ivanhoe and Rio Tinto have already sunk billions of dollars into the project, which is expected to begin initial production in 2012. They expect average annual output during its first 10 years of commercial production to exceed 650,000 ounces of gold, 3 million ounces of silver and 1.2 billion pounds (544,000 tonnes) of copper.