Editorial: Ivanhoe seals the deal

It’s one of those dramas that has carried on so long that its resolution is oddly underwhelming.

But in early October, after years of negotiations, setbacks and frustrations for shareholders, Vancouver-based Ivanhoe Mines (IVN-T, IVN-N) signed a comprehensive, long-term investment agreement with the Mongolian government that allows the company’s massive Oyu Tolgoi copper-gold project to go forward.

Rio Tinto (RTP-N, RIO-L), Ivanhoe’s strategic partner at Oyu Tolgoi, was also on hand at a signing ceremony in Ulaanbaatar attended by the president, prime minister, cabinet members and other top government officials.

The delay has been frustrating and expensive, but this is a great step forward for Ivanhoe, Rio Tinto and Mongolia, as together they can now build a huge, profitable, long-life mine that will give a significant boost to the Mongolian economy.

And the three partners truly need each other here: Trailblazer Ivanhoe has provided the development drive; Rio Tinto has the expertise for the tricky job of underground bulk mining; and the Mongolian government contributes its personnel management and infrastructure-construction abilities.

Geopolitically, it’s also a nice way for Mongolia to moderate Chinese and Russian influence in the country.

The new development agreement wisely kicks the question of building a smelter down the road a few more years until the scope of the Oyu Tolgoi project is better grasped in terms of geology, possible production levels and district potential.

It’s a watershed moment for the ragged group of Western juniors who are still hanging on to mineral prospects in Mongolia, too. They finally have some good news to pass on long-suffering shareholders and can head to the upcoming annual mining conference in Ulaanbaatar with renewed enthusiasm for what is without question a mineral-rich country.

On a side note, it’s interesting to see Ivanhoe chairman and consummate showman Robert Friedland keep a very low public profile during the final stages of negotiations and the actual signing ceremony.

There’s nothing quite like having your effigy burned by a mob in a city centre — as Friedland’s was in Ulaanbaatar in mid-2006 — to tell you simultaneously that you’ve hit the big time and probably need to ratchet down the promotion and keep your name out of the headlines.