Rio Tinto reaches deal for Oyu Tolgoi financing

Rio Tinto (ASX, LON, NYSE: RIO) and its majority-owned Turquoise Hill Resources (TSX, NYSE: TRQ) have reached a deal that results in a stalemate between the companies over funding for an expansion of the massive Oyu Tolgoi copper-gold mine ended in Mongolia. The funding plan covers the remaining $ 2.3 billion needed for the underground project and builds on and replaces an agreement signed last September. The companies have agreed to restructure debt payments of up to $ 1.4 billion with lenders and plan to raise up to $ 500 million in additional debt under the existing financing arrangements, said Rio Tinto. Canada's Turquoise Hill said the Australian mining company has also pledged to address potential re-profiling shortfalls and additional additional debt of up to $ 750 million by providing a senior co-lending facility on the same terms as the project funding cover up. In return, Turquoise Hill will make a rights offering or placement of common stock for up to $ 500 million to address any remaining funding gap within six months of the availability of the Co-Lending Facility. "With a binding funding agreement that establishes a process along a known schedule, we will be able to move forward with the development of the underground project at Oyu Tolgoi as soon as possible," said Steve Thibeault, Interim Chief Executive Officer of Turquoise Hill, in a statement . Rio Tinto copper chief Bold Baatar said the deal marks an important milestone in the development of Oyu Tolgoi, which is expected to become one of the world's largest mines of the red metal used in construction and green technologies becomes. Tensions between companies have made headlines in recent months as their differences over Oyu Tolgoi deepened. The head of Turquoise Hill resigned over the dispute, not before taking Rio to arbitration. Ulf Quellmann's resignation came after a new agreement between Rio Tinto and the government of Mongolia regulating the controversial expansion. This agreement, which has yet to be confirmed, would end a three-month stalemate between the world's second largest mining company and the East Asian landlocked country as it would bring the state better economic benefits than the current deal.