TOP NEWS: Rio Tinto outlines new funding deal at Mongolia project

(Alliance News) - Rio Tinto PLC on Friday said it has entered into a new funding arrangement at ...

Alliance News 9 April, 2021 | 7:56AM
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(Alliance News) - Rio Tinto PLC on Friday said it has entered into a new funding arrangement at the Oyu Tolgoi underground mine in Mongolia.

The FTSE 100-listed miner has a stake in the asset through its holding in Turquoise Hill Resources. Rio owns just shy of 51% of Turquoise, which holds 66% of the Mongolia project. The remaining stake in copper asset is held by the Mongolian government.

The new plan addresses a USD2.3 billion funding requirement at the project, and it replaces an agreement that was struck in September, Rio noted.

Under the new deal, Rio and Turquoise will pursue a re-profiling of USD1.4 billion worth of debt repayments. The re-profiling will "better align with the revised mine plan, project timing and cash flows", Rio said.

Rio and Turquoise will also aim to raise up to USD500 million in senior supplemental debt under existing project financing agreements.

Rio will plug any shortfalls from the plans, up to USD750 million, while Turquoise "has committed" to complete an equity raise of up to USD500 million.

"This agreement and alignment with Turquoise represents a major milestone in the continued development of Oyu Tolgoi, which is expected to become one of the world's largest copper mines and a significant contributor to the Mongolian economy for years to come," Rio Tinto Copper Chief Executive Bold Baatar said.

The project's costs have been in focus in recent months. Mongolia's government in January mulled whether the Oyu Tolgoi project should proceed over cost concerns.

A press release from Turquoise Hill in January stated that the government had advised Rio that it was "dissatisfied" with the results of the definitive estimate, which were announced in December.

In December, Rio set out plans to get Oyu Tolgoi in Mongolia to sustainable underground production by October 2022, spending USD6.75 billion to do so.

The Mongolian government was concerned that "the significant increase in the development costs" of the Oyu Tolgoi project has eroded the economic benefits it anticipated to receive, Turquoise Hill said in January.

By Eric Cunha; ericcunha@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Rio Tinto PLC 6,477.00 GBX 1.08

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