Turquoise Hill asks special committee to review Oyu Tolgoi’s cost overruns
Dec. 1 (Reuters) – Turquoise Hill announced on Tuesday that the board of directors of the Oyu Tolgoi mine in Mongolia has approved the formation of a special committee to conduct an independent review of cost overruns and delays related to the development of the underground copper mine.
The Oyu Tolgoi field in southern Mongolia, jointly owned by Turquoise Hill, controlled by Rio Tinto, and the Mongolian state, has come under scrutiny in its financing plan, with Hedge Fund Odey recently expresses concerns regarding the financing of the mine project. (bit.ly/2JbFMEb)
In a letter to the Australian Stock Exchange on Monday, an investor in the Mongolian project accused Rio of mismanaging costs and then unfairly restricting Turquoise Hill’s ability to obtain financing to pay those costs.
Turquoise Hill last month initiated arbitration proceedings against its largest shareholder Rio Tinto to seek “clarification” on the financing of Oyu Tolgoi, one of Rio’s biggest growth projects.
Turquoise Hill said on Tuesday that every shareholder in Oyu Tolgoi, as well as Rio Tinto, is required to support the committee’s work and to contribute, in confidence, “to any internal or third-party reports in its possession regarding cost overruns. and delays.
Rio Tinto announced in September its intention to raise up to $ 500 million with additional loans to develop the giant copper mine.
Rio and Turquoise Hill were to jointly continue the debt reprofiling process by engaging with existing project finance lenders, and expected a reduction of up to $ 1.4 billion in financing requirements for Oyu Tolgoi.
Rio in 2019 announced a project cost overrun of up to $ 1.9 billion due to difficult geology, claiming total capital spending should be between $ 6.5 and $ 7.2 billion, and that he expected a delay of up to 30 months in the underground extension of the mine. (Reporting by Arundhati Sarkar in Bangalore; Editing by Shailesh Kuber)
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