Ivanhoe Mines Files Preliminary Prospectus for Rights Offering and Amends Certain Terms of Memorandum of Agreement With Rio Tinto

Ivanhoe Mines

announced today that the company intends to launch a rights offering in which all existing shareholders, subject to applicable law, may participate on an equal and proportional basis in purchasing additional common shares. The offering is expected to raise up to approximately US$1.8 billion in gross proceeds. The rights offering is part of the comprehensive financing plan to continue the development of the Oyu Tolgoi Project, and was the subject of a memorandum of agreement reached with majority shareholder Rio Tinto on April 18, 2012. Ivanhoe Mines and Rio Tinto have agreed to amend certain terms of the memorandum of agreement. The amended terms address conditions of regulatory approval and more closely align the terms of the proposed rights offering with current market conditions. Amendments to the agreement include: -- Rio Tinto confirming it will take up its full basic subscription privilege under the US$1.8 billion rights offering with respect to its 51% shareholding in Ivanhoe, subject to certain conditions; -- Rio Tinto agreeing to eliminate the material adverse change condition for its standby commitment in relation to a decline in Ivanhoe's share price; -- Rio Tinto continuing to provide a standby commitment for the full amount of the US$1.8 billion rights offering, subject to certain conditions including the price for Ivanhoe's common shares on the NYSE not falling below the subscription price at any time on or after the fifth business day before the expiry of the rights. Under the standby commitment, Rio Tinto is required to acquire any Ivanhoe common shares not taken up under the rights offering; -- Removing the previously announced US$8.34 subscription price for the rights offering. Ivanhoe and Rio Tinto have agreed to price the rights offering in the final prospectus; -- In consideration of eliminating the material adverse change condition for a decline in Ivanhoe's share price, re-pricing the exercise price of the Series D Warrants to US$10.84 per share, subject to adjustment upon completion of the rights offering; and -- Confirming the standby commitment fee will be paid in cash. Rio Tinto has agreed to waive its previously announced entitlement to reinvest its standby commitment fee in Ivanhoe common shares.