Financing for the underground expansion at Mongolia’s Oyu Tolgoi copper-gold project has been extended to September, owner Turquoise Hill Resources said on Tuesday May 13.

“Fourteen of the 15 global banks participating in the Oyu Tolgoi project financing have agreed to extend their respective commitment letter for financing of the underground development at Oyu Tolgoi to September 30, 2014,” the company said.

A response from the remaining bank is expected soon, the company added.

This six-month extension is the third time the financing package has been extended for the $7 billion project. It is one of the largest project financing packages in the mining industry.

It is the single biggest ever investment in Mongolia. The mine is expected to produce 430,000 tpy of copper for 20 years, as well as 425,000 oz per year of gold.

Discussions with the government were ongoing, the company said.

“Further underground development is expected to recommence once [a] successful resolution has been reached on the outstanding shareholders issues, agreement of a comprehensive funding plan including project financing, completion and approval of the underground feasibility study and obtaining all necessary permits for the mine,” the company said.

The underground feasibility study at OT is under way and is expected to be completed by the end of June.

Oyu Tolgoi is expected to produce 135,000-160,000 tonnes of copper and 600,000-700,000 oz of gold in 2014.

Oyu Tolgoi is owned by Turquoise Hill Resources (66%) and Erdenes Oyu Tolgoi (34%), which is wholly owned by the government of Mongolia. Rio Tinto holds a 51.5% stake in Turquoise Hill.

Q1 2014 results
Oyu Tolgoi produced 102,900 tonnes of copper-gold concentrate containing 25,300 tonnes of copper in the first quarter.

The project achieved a net revenue of $108 million in the quarter ended March 31 on sales of about 48,200 tonnes of copper-gold concentrates.

Sales of copper concentrates exceeded production in April, leading to a drawdown from warehouse inventories held on the China-Mongolia border.

See also:
The Metal Bulletin copper concentrates wrap
CESCO: Oyu Tolgoi back on track after output issues, Rio Tinto copper ceo says

Shivani Singh
Twitter: @ShivaniSingh_MB