Turquoise Hill Resources has announced that the company has received notification from the Government of Mongolia that project financing for Oyu Tolgoi will now require approval by the Mongolian Parliament, a move that is likely to delay development of the Oyu Tolgoi underground project.
Turquoise Hill continues to engage with Rio Tinto and the Government of Mongolia to finalize project financing. Due to the need for parliamentary approval, it is likely to take some time to gain the necessary consent. As a result, funding and development of the Oyu Tolgoi underground will be delayed until matters with the Mongolian Government can be resolved and a new timetable has been agreed.
Operations of the open-pit mine, commissioning of the concentrator and the ongoing export of concentrate from Oyu Tolgoi will continue.
Turquoise Hill Resources, formerly Ivanhoe Mines, is an international mining company focused on copper, gold and coal mines in the Asia Pacific region. The company’s primary operation is its 66% interest in the Oyu Tolgoi copper-gold-silver mine in southern Mongolia.
Following the announcement from Turquoise Hill, Mongolia’s Prime Minister Norov Altankhuyag stated during a press briefing that Mongolian parliamentary approval was not needed for a $4 billion financing package to fund development of an underground mine. “Parliament has already made the decision and signed their agreement. Cabinet doesn’t have to be involved. All issues can be discussed and decided at the board of directors’ level.”
The expansion is designed to take annual production to 425,000 tonnes of copper and 460,000 ounces of gold. The Prime Minister told the briefing that any question over costs for the underground expansion should be resolved at the board level. “The only issue is that the financing issue has not been thoroughly discussed at the board level. It’s just a matter of a technicality,” he said. “Otherwise, there is no serious conflict with Oyu Tolgoi at all.”
Meanwhile, Turquoise Hill has also announced that, in light of changes in the gold market, it has entered into an additional agreement with Sumeru Gold BV in connection with the sale of its 50% interest in Altynalmas Gold, which was originally announced on February 13, 2013. The supplemental agreement reflects a conditionally reduced cash consideration of US$235 million, instead of the original cash consideration of US$300 million.
A key condition of the revised transaction structure requires Sumeru Gold to make an advance payment of US$235 million by August 9, 2013 ahead of completion of the transaction. Completion of the transaction remains subject to customary closing conditions including regulatory approvals from the Republic of Kazakhstan’s competent authorities.
Altynalmas holds ownership of the Kyzyl Gold Project in northeast Kazakhstan, which contains the Bakyrchik and Bolshevik gold deposits.