MELBOURNE Reuters Rio Tinto Ltd said on Friday it has reached a binding agreement with Turquoise Hill Resources Ltd over funding for expansion of the massive Oyu Tolgoi coppergold mine in Mongolia.
Rio and Turquoise Hill will restructure debt payments of up to 1.4 billion with lenders and look to raise up to 500 million in supplemental debt under existing financing arrangements.
The agreement will smooth the way for the next phase of development, which has faced cost and timeline blowouts and has caused acrimony between the mining giant and its junior partner.
Its just been such a troublesome asset, at least this takes away one of the issues you have still got the issues with the government and the technical issues, said Andy Forster, portfolio manager at Argo Investments in Sydney.
From a financing perspective there has been a fractured relationship there, so I guess this result is positive.
The Oyu Tolgoi mine expansion has seen costs balloon to 6.75 billion, about 1.4 billion higher than Rios estimate in 2016, and has led to friction over funding between it and Turquoise Hill.
The new funding plan tackles the remaining estimated funding requirement of about 2.3 billion, Rio said. It will back potential shortfalls from the debt reprofiling as well as new debt up to 750 million through a colending facility.
Oyu Tolgoi, one of the worlds largestknown copper and gold deposits, is 34 owned by the Mongolian government with the rest held by Turquoise Hill, in which…