LONDON, April 9, 2021 /CNW/ - 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.
_________________________________________________________________
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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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Group Company
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Rio Tinto plc
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Kingdom
T +44 20 7781
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Joint Company
Secretary
Tim
Paine
Rio Tinto Limited
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Street
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3000
Australia
T +61 3 9283
3333
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This announcement is authorised for release to the market by Rio
Tinto's Group Company Secretary.
SOURCE RIO TINTO PLC