Rio Tinto to offer $400 million in debt financing to Turquoise Hill

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Rio Tinto has OK to provide interim debt financing of up to $400 million to Canada-based Turquoise Hill Resources (TRQ) in the form of short-term advances as it evaluates its $2.7 billion offer to acquire a 49% stake that it does not already hold in TRQ.

The British-Australian miner currently has a 50.8% stake in the listed company Turquoise Hill, which has a 66% stake in the Oyu Tolgoi copper-gold mine in Mongolia.

The Mongolian government owns the remaining 34% of the project, which is considered one of the largest new copper-gold deposits in the world.

This offer, however, was met with opposition from major Turquoise Hill shareholders, including Pentwater Capital Management, on the grounds that Rio Tinto’s offer was “too low”.

Rio Tinto said the revised arrangements “will allow TRQ to fund the ongoing development of Oyu Tolgoi”.

Additionally, Rio extended the date by which TRQ was to undertake an initial liquidity offering of at least $650 million from August 31 to December 31.

In April 2021, Rio Tinto and TRQ reached an agreement on an updated financing plan for the $2.3 billion underground development of the Oyu Tolgoi mine.

Earlier this year, Rio waived a $2.4 billion debt owed to it by the government, ending the dispute over the economic benefits of the project.

The Oyu Tolgoi mine is located in the South Gobi region of Mongolia, nearly 550 km south of Ulaanbaatar and 80 km north of the Mongolian-Chinese border.

With an operating potential of approximately 100 years, the mine has five known mineralized deposits.

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