By Alex MacDonald
LONDON--The Mongolian government's investment arm, Erdenes Oyu
Tolgoi LLC, said Friday that the $4.2 billion financing package for
the underground expansion of the massive Oyu Tolgoi copper and gold
project is dependent on the completion of a feasibility study, due
in the second quarter of this year.
Erdenes, which owns 34% of the massive Mongolian Oyu Tolgoi
project, said that it is working with Turquoise Hill Resources Ltd
(TRQ, TRQ.T), the owner of the remaining 66% of Oyu Tolgoi, and Rio
Tinto PLC (RIO, RIO.LN, RIO.AU), the project operator and Turquoise
Hill's major shareholder, to resolve all outstanding issues,
including those that led Rio Tinto to suspend the underground mine
project last summer.
Turquoise Hill said Thursday that an option to restart the
underground development has been proposed, subject to certain
conditions being met, but cautioned that the project could still
face further delays if all issues weren't resolved before the
expiration date for the signing of a $4.2 billion financing package
by the end of March.
Erdenes said the timing for project approval and restart of the
underground expansion project are dependent on the completion of
the project's feasibility study. "We understand that Feasibility
Study for the underground development (including the underground
investment proposal) will be delivered by Rio Tinto in" the second
quarter, Erdenes said in a statement.
Erdenes said it supports full financing of the project. Erdenes
is working with Turquoise Hill and Rio Tinto towards the
finalization of the project-financing package and said it remains
fully committed to the continued operation of the open pit mine,
and to the terms of the investment agreement that underpins the
mine's development.
In 2014, Oyu Tolgoi is forecast to produce 150,000 to 175,000
tons of copper in concentrates and 700,000 to 750,000 troy ounces
of gold in concentrates, after starting commercial operations in
the second half of last year.
Write to Alex MacDonald at alex.macdonald@wsj.com
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