Oyu Tolgoi financing commitments extended
Turquoise Hill (NYSE:TRQ) has a few more months to wrangle with the Mongolian government.
The company announced on Monday that its parent, Rio Tinto, has received extended commitments from the 15 commercial banks that have agreed to finance the expansion of the Oyu Tolgoi mine in Mongolia.
The commitments were set to expire on December 12.
Rio Tinto now has until the end of March to resolve its issues with the Mongolian government over financing the expansion. These discussions have been dragging on for about a year now.
The Mongolian government, which owns 34% of Oyu Tolgoi, has been reluctant to cough up the cash, saying the price tag is $2 billion more than expected.
The mine could cost as much as $14 billion if the underground expansion goes ahead.
A government source told Reuters last month that legislators envisioned a deal by early 2014.
"All parties are committed to resolving the shareholder issues and advancing the necessary steps to restart the underground mine; including resolution of the shareholder issues, completion of the feasibility study, project financing, permitting and approvals," Vancouver-based Turquoise Hill said in a statement on Monday. "The feasibility study remains on track for completion in the first half of 2014."
Mongolia has a strong interest in making this a reality – the mine is expected to contribute as much as a third of the country's economy.
Meanwhile, Dutch commodity trader Trafigura revealed on Monday that it had agreed to provide financing for the Oyu Tolgoi mine in exchange for long-term supplies. The company did not provide any further information on this deal.
Oyu Tolgoi is set to produce 150,000 to 175,000 tonnes of copper in concentrates and 700,000 to 750,000 ounces of gold in concentrates in 2014.