The interim debt funding will help in funding the ongoing development of Turquoise Hill’s Oyu Tolgoi underground project

RT-OT-underground2 (1)

Turquoise Hill has a 66% stake in the Oyu Tolgoi underground project. (Credit: Rio Tinto)

Turquoise Hill Resources is set to get an interim debt funding of up to $400m from Rio Tinto to meet its estimated funding requirements in the near term.

The parties have also agreed to extend the date by which Turquoise Hill has to raise additional equity capital of $650m between end-August and the end of this year.

In March this year, Rio Tinto made a non-binding offer to acquire the nearly 49% stake it did not own already in Turquoise Hill in a deal worth around $2.7bn. In response to the bid, the latter’s board of directors formed a special committee of independent directors to review and consider it.

The special committee is responsible for considering Turquoise Hill’s liquidity needs and financing options pending its consideration of the proposal from Rio Tinto.

Rio Tinto had put a condition in its proposal that Turquoise Hill should not raise additional equity capital. In this connection, Rio Tinto invited Turquoise Hill to propose terms for an interim funding facility that would meet the latter’s funding requirements pending the consideration of the takeover proposal.

Turquoise Hill stated: “The Proposal remains non-binding in nature. There can be no assurance that a transaction will result from the Proposal, and, if a transaction does result, whether and when such transaction will be completed or on what terms.”

Based in Canada, Turquoise Hill has a stake of 66% in the Oyu Tolgoi copper-gold mine in Mongolia. It is partnered by Mongolian state-owned Erdenes Oyu Tolgoi in the copper-gold mine.

According to Rio Tinto, its interim debt funding will help in funding the ongoing development of the Oyu Tolgoi underground project.