ULAN BATOR, September 11, 2008 (AFP) - Mongolia laid to rest more than two months of political turmoil on Thursday when parliament approved Sanjaagiin Bayar as prime minister, potentially paving the way for lucrative mining deals.

Bayar, a former journalist, is the head of the ex-communist Mongolian People?s Revolutionary Party (MPRP) which emerged victorious in disputed elections held in June.

'Our coalition government with the Democratic Party has the support from the members of Parliament and the people of Mongolia,' Bayar said in an address to the Great Hural legislature.

'I believe this decision is for the benefit of the people of Mongolia and for the future of the country.'

The MPRP holds a narrow majority with 42 of the 76 seats in the parliament, according to state news agency Montsame.

The opposition Democrats hold 25, while the tiny Civil Will party holds one seat and an independent candidate another one.

This means the fate of six seats are undecided as the General Election Committee continues to investigate results in disputed constituencies.

It was these disputes that sparked riots in the capital on July 1 that left five dead and hundreds wounded. Riot ringleaders remain in jail as well as several policemen being investigated for the killings.

The disputed results led to a parliament boycott by newly elected Democrats, holding up the sessions as no quorum could be formed.

Bayar, 52, ended the deadlock by agreeing to allow some Democrats into his cabinet. It is widely expected the newly elected opposition leader Norovyn Altankhuyag will serve as deputy prime minister.

However certain factions of the Democratic Party have fought hard against any deals, and continue to resist an alliance.

'Joining the government is a big mistake,' said Tsedenjav Sukhbaatar, International Secretary of the Democratic Party.

'It means that we accept the fraudulent elections and by doing so we are disregarding basic political ethics.'

Bayar, widely regarded as an economic reformer, is expected to push forward lucrative mining contracts that could give a jolt to the struggling Mongolian economy.

The biggest of those mines is Oyu Tolgoi in the Gobi desert, which is believed to have the capacity to churn out a million tonnes of copper a year, as well as gold.

Canadian-owned Ivanhoe Mines Mongolia has the exploration licence for the site but is waiting to strike a final deal with the government to kickstart operations.