In what seems to be a sudden change of minds, the government of Mongolia had abandoned its plan to acquire a larger stake allocation in the Oyu Tolgoi copper-gold project, ultimately boosting the share prices of its developers, global miners Rio Tinto PLC and Ivanhoe Mines Ltd.

In a joint statement released Thursday, Mongolia, Rio and Ivanhoe said all involved parties "reaffirmed their continued support for the Investment Agreement and its implementation." The investment agreement was signed in October 2009. The project is 66 percent owned by Ivanhoe Mines Ltd., with the rest owned by Mongolia.

The news brought investor confidence back. On Thursday, shares of Ivanhoe escalated to as high as C$18.81 on the Toronto Stock Exchange. While Rio Tinto's UK-listed shares closed up at 7.6 percent.

The Oyu Tolgoi copper-gold mine is touted to become one of the world's five biggest copper mines. It is expected to produce an average of 450,000 tonnes of copper and 330,000 ounces of gold per year over the next 10 years. It is projected to account for one-third of total Mongolian GDP by 2020.

Pressure from a possible foreign investor withdrawal could have also prompted Mongolia to retract its demands, especially after the two global miners cautioned them that their agreement is a contract and its contents should be honored.

"Since the signing of the Investment Agreement, Mongolia has achieved international stature as one of the countries' most attractive to foreign investment. Mongolia's economy has become one of the fastest growing economies in the world. The people of Mongolia are reaping great benefit from the construction of the Oyu Tolgoi project and stand to benefit even more when the project becomes operational," the joint statement said.

Analysts had earlier warned that should Mongolia continues its push for increased claims, royalties and high taxes on miners, it could prove detrimental to the Oyu Tolgoi project. Present investors Rio and Ivanhoe, as well as future ones, might get turned off due to contract violation, damaging investor perception and ultimately lead them to abandon the project.

Construction on the Oyu Tolgoi project has passed the 50% completion mark, according to the joint statement, and is expected to begin initial production during the third quarter of 2012. Some $2.6 billion have been invested by Ivanhoe Mines and Rio Tinto and a significant amount has been committed to bring Oyu Tolgoi into production, the statement added.

In September, Mongolia sought to change its stake allocation in the Oyu Tolgoi. Mongolia's Mining minister Dashdorj Zorigt said they want the government's shares in the project raised from 34% to 50%.

The investment agreement outlines a provision that allows Mongolia to hike its claim to the figure it wanted. But it is only permissible after 30 years from the agreement's effectivity date - roughly around year 2039 - and should be mutually agreed and consented upon by all three parties involved - Rio, Ivanhoe and the Mongolian government.

"The shareholders are united in their commitment to secure the necessary project finance and bring the Oyu Tolgoi Project to completion and full production for the benefit of the nation of Mongolia. All stakeholders, investors, lenders, employees, contractors, civil society and local communities can have full confidence in the future of Oyu Tolgoi," the joint statement said.

Ivanhoe spent more than six years negotiating with Mongolia before an agreement was signed two years ago. It is 49 percent owned by Rio Tinto.