Rio Tinto reaches agreement with Turquoise Hill Resources on financing plan for Oyu Tolgoi
April 09 2021 - 1:23AM
Business Wire
Rio Tinto has entered into a binding Heads of Agreement (HoA)
with Turquoise Hill Resources (TRQ) for an updated funding plan
(the “Funding Plan”) for the completion of the Oyu Tolgoi (OT)
Underground Project in Mongolia. The Funding Plan addresses the
estimated remaining known funding requirement of approximately $2.3
billion1, building on and replacing the arrangements established in
the Memorandum of Understanding that Rio Tinto and TRQ previously
entered into on 9 September, 2020.
Under the HoA, subject to securing approval by OT LLC and any
required support from the Government of Mongolia, and subject to
timing, availability, and terms and conditions being acceptable to
both parties, Rio Tinto and TRQ will:
- pursue re-profiling of principal debt repayments up to $1.4
billion with lenders under the existing project finance
arrangements to better align with the revised mine plan, project
timing and cash flows;
- seek to raise up to $500 million in senior supplemental debt
(SSD) under the existing project financing arrangements from
selected international financial institutions;
- Rio Tinto has committed to address any potential shortfalls
from the re-profiling and additional SSD of up to $750 million by
providing a senior co-lending facility (the “Co-Lending Facility”)
on the same terms as OT’s project financing; and
- TRQ has committed to complete a rights offering or placement of
common shares for up to $500 million to satisfy any remaining
funding shortfall within six months of the Co-Lending Facility
becoming available.
Rio Tinto Copper Chief Executive Bold Baatar said “This
agreement and alignment with TRQ 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. Commencing
the re-profiling whilst concurrently listening, engaging and
resolving the concerns of the Government of Mongolia are critical
steps to maintaining momentum on the timely delivery of the Oyu
Tolgoi Underground Project.”
“We are pleased to have reached a constructive and equitable
agreement with Rio Tinto to fund the Oyu Tolgoi underground
development,” stated Steve Thibeault, Interim Chief Executive
Officer of Turquoise Hill. “With a binding funding agreement now in
place that sets out a process along a known timeline, we will be
able to move ahead as expeditiously as possible with the
development of the underground project at Oyu Tolgoi. We remain
committed to continue delivering a benefit to all stakeholders,
including Mongolia and its citizens, and to delivering significant
long-term value for TRQ as this project progresses.”
Rio Tinto and TRQ have agreed to jointly obtain an order
dismissing the current arbitration on a without prejudice basis,
including an order vacating the interim measures order.
Rio Tinto Canadian early warning disclosure
Rio Tinto currently beneficially owns 102,196,643 common shares
of TRQ, representing approximately 50.8% of the issued and
outstanding common shares of TRQ. Rio Tinto also has anti-dilution
rights that permit it to acquire additional securities of TRQ so as
to maintain its proportionate equity interest in TRQ from time to
time.
As the subscription price for and the amount of any rights
offering or other equity offering is not determinable at this time,
the number of TRQ common shares Rio Tinto will beneficially own
following closing of any such equity offering cannot be determined
at this time.
Except in connection with any such equity offering, Rio Tinto
has no present intention of acquiring additional securities of TRQ.
Depending upon its evaluation of the business, prospects and
financial condition of TRQ, the market for TRQ’s securities,
general economic and tax conditions and other factors, Rio Tinto
may directly or indirectly acquire or sell some or all of the
securities of TRQ.
This announcement is authorised for release to the market by,
and a copy of the related early warning report may be obtained
from, Rio Tinto’s Group Company Secretary.
This announcement is authorised for release to the market by Rio
Tinto’s Group Company Secretary.
1 The estimated remaining funding
requirement is based on the terms of the HoA and current
anticipated copper prices, among other factors, and does not
include funding, if any, which may become required for a power
plant.
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version on businesswire.com: https://www.businesswire.com/news/home/20210408006002/en/
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