The signing of a landmark US$4.4 billion project financing agreement for the Oyu Tolgoi underground mine is a global vote of confidence in Mongolia that reopens the doors to the leading global banks for Mongolian projects, according to the country’s Prime Minister Saikhanbileg.

In a press statement the government said, “The funding, which has been secured from a very high quality syndicate of global lenders, underlines the market’s support for and confidence in the project and our country.

“The cooperative partnership that has been forged this year, in reaching this important milestone, augurs well for the future success of the project, and paves the way for increased foreign investment into Mongolia. The Government of Mongolia has garnered valuable experience in interacting with foreign investors and in managing the country’s strategic assets, and is fully committed to maintaining an investment environment that is conducive for foreign capital.

“Development of the underground phase of Oyu Tolgoi will unlock the remaining 80% of the value of the entire mine. It will contribute significantly to the economy of Mongolia and play an integral role in assisting the Government in its efforts to improve the quality of life of Mongolian citizens,” according to the statement.
Mongolia’s national investment company Erdenes Mongol said, “This major financing for Oyu Tolgoi’s underground mine, which represents 80% of the value of the entire mine, is being funded by international financial institutions and export credit agencies representing the Governments of the United States, Canada and Australia, along with 15 commercial banks.

“Drawdown of funds is expected to occur in the second quarter of 2016, with work on the underground development expected to resume in the first half of next year. Construction on the mine is expected to last between five to seven years, with production anticipated to commence in 2021.

“The financing is the one of the largest of its type ever in the mining industry, and follows the agreement in May 2015 of the Oyu Tolgoi Underground Mine Development and Financing Plan (UDP).”

To facilitate the UDP and major financing, the Government of Mongolia empowered Erdenes Mongol to undertake negotiations on a business-to-business basis and to ensure that licensing issues were resolved in strict adherence to the law, international standards and existing contractual obligations. The Government also expedited the remaining permits and worked hard to simplify and make clear its commitments that underpin this major project finance raising.

Erdenes Mongol LLC CEO Bayanjargal Byambasaikhan said, “Reaching this point has had its challenges, but this exceptional financing, and from such a prestigious set of global lenders, underscores the vast potential of the mine and the strong collaborative partnership that has been forged between stakeholders in Oyu Tolgoi.

“Turquoise Hill’s sizeable investment and strong commitment, combined with the Government of Mongolia’s pragmatism, flexibility and determination to re-build Mongolia’s economy through proactively supporting major transformative projects, have been instrumental in reaching this critical juncture.”
The financing package was also welcomed by Entrée Gold, a joint venture partner with Turquoise Hill Resources in a portion of Oyu Tolgoi. Entrée has a 20% carried interest in the Hugo North Extension and Heruga deposits, which are in the 12km-long Oyu Tolgoi series of copper-gold-molybdenum deposits.
Entrée’s CEO Stephen Scott said, “This financing package is the next critical step towards the restart of underground development. By committing to fund an aggregate US$4.4 billion, with provision for up to US$6 billion, the international financial community has signalled its ongoing confidence in the tremendous potential of the Oyu Tolgoi project and Mongolia.

“A project of this magnitude has the ability to positively impact the Mongolian economy and bring substantial benefits to its people, as well as other Oyu Tolgoi stakeholders, for decades to come. From Entrée’s perspective, it is very exciting to be on the cusp of development of the Oyu Tolgoi block cave mining operation, which includes the joint venture’s Hugo North Extension deposit.” or

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