Anglo-Australian Rio Tinto (ASX: RIO) and Canada's Ivanhoe Mines have ended a long-running dispute between them after signing a new agreement under which the former will assume direct management of the Oyu Tolgoi copper-gold project in Mongolia.

In statement released Thursday, Rio Tinto said it will provide a comprehensive financial package to Ivanhoe Mines that is expected to help secure the development of the project approximately six months ahead of schedule in late 2012.

Under the agreement with Ivanhoe Mines, the resource giant will provide a US$1.8 billion interim loan facility whilst Rio Tinto and Ivanhoe work together to complete project financing. Rio Tinto will also be exercising its remaining warrants for common shares in Ivanhoe and participating fully in Ivanhoe's $1.2 billion rights offering.

The company said it will secure the right to increase its ownership in Ivanhoe Mines to 49 per cent through acquiring a total of 20 million shares at current market prices, evenly from Citibank and Ivanhoe Mines executive chairman and chief executive officer, Robert Friedland; exercising its remaining warrants for common shares in Ivanhoe; purchasing Ivanhoe shares in the market; and receiving a subscription right that allows Rio Tinto to subscribe for Ivanhoe common shares from treasury at market prices until January 2012.

After the completion of the purchase of a total of 20 million shares from Mr. Friedland and Citibank and the subscription for 33,783,784 shares from Ivanhoe upon the exercise of US$300 million of its Series B warrants, Rio Tinto will have increased its ownership by 7.4 per cent and own 239,251,843 common shares of Ivanhoe representing 42.3 per cent of Ivanhoe's outstanding common shares.

Upon the exercise all of its remaining share purchase warrants, Rio Tinto will own 287,214,784 common shares of Ivanhoe representing 46.8 per cent of Ivanhoe's outstanding common shares. If Rio Tinto were then fully to exercise its Subscription Right, it would own approximately 306,828,533 common shares of Ivanhoe representing 48.4 per cent of Ivanhoe's outstanding common shares.

Rio Tinto siad full-scale construction at the Oyu Tolgoi copper and gold mine, 66 per cent of which is currently by Ivanhoe Mines and 34 per cent by the Government of Mongolia, is progressing ahead of schedule with first production now forecast to commence in late 2012.

Independently verified estimates indicate that Oyu Tolgoi contains approximately 37 million tonnes of copper and 1,300 tonnes of gold in measured, indicated and inferred resources, allowing the project to operate for almost 60 years. There are currently more than 5,500 workers on site and the project is expected to result in the training and employment of thousands more Mongolian workers over the project's expected life.