A group of banks has agreed to a six-month extension of a commitment to fund the underground expansion of the Oyu Tolgoi copper-gold mine in Mongolia, the chief executive of mine owner Turquoise Hill Resources Ltd said on Tuesday.
The expansion still must be approved by the company and the Mongolian government after a new feasibility study is done. Turquoise Hill CEO Kay Priestly said the study will be finished by the end of June, contrary to an assertion by a Mongolian government official earlier this month that it had already been completed.
Fourteen of 15 banks have agreed to extend their financing commitments to Sept. 30, with a response from the final bank expected shortly, Priestly said on a conference call held to discuss Turquoise Hill’s first-quarter results.
“With this we now have sufficient commitments to reach our funding goal of approximately a $4 billion facility,” she said.
The underground development of Oyu Tolgoi, which is one of the world’s largest undeveloped copper deposits, was put on hold last year when the Mongolian government became concerned that cost overruns would delay the flow of the government’s share of profits from the mine.
Oyu Tolgoi is being developed by global miner Rio Tinto Plc/Ltd , which owns 51 percent of Vancouver-based Turquoise Hill. An open pit mine at the site is in production.
Priestly said talks with the Mongolian government on restarting development of the underground expansion have been “constructive”.
She also said that Turquoise Hill is considering selling its stake in Mongolian coal miner SouthGobi Resources Ltd as it focuses on Oyu Tolgoi.
Turquoise Hill owns about 58 percent of SouthGobi, which has a market value of around C$93 million ($85.29 million) and owns the Ovoot Tolgoi open pit coal mine and three coal projects in Mongolia.