Rio Tinto has signed an agreement to secure $4.4bn to finance its Oyu Tolgoi copper-gold underground mine in Mongolia.
The latest signing follows the agreement reached earlier in 2015 of mine development and financing plans by the Government of Mongolia, Rio Tinto and its subsidiary Turquoise Hill Resources.
Turquoise Hill, Rio Tinto and Oyu Tolgoi will now proceed to update the feasibility study, which will include the revised capital estimates, and obtaining all necessary permits for the mine development.
The project will be submitted before various boards for approval once all these steps are completed.
Rio Tinto copper and coal chief executive Jean-Sébastien Jacques said: "This project finance agreement is significant in the industry and is the next important step towards further development of the world class Oyu Tolgoi mine in Mongolia."
The financing has been provided by Export Development Canada (EDC), the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), the Export-Import Bank of the United States, the Export Finance and Insurance Corporation of Australia (Efic).
The other commercial lenders include BNP Paribas, ANZ, ING, Société Générale Corporate & Investment Banking, Sumitomo Mitsui, Standard Chartered Bank, Canadian Imperial Bank of Commerce, Crédit Agricole, Intesa Sanpaolo, National Australia Bank, Natixis, HSBC, the Bank of Tokyo-Mitsubishi UFJ, KfW IPEX-Bank and Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden.
Turquoise Hill chief executive officer Jeff Tygesen said: "The signing of project finance is an unprecedented milestone for Turquoise Hill and Oyu Tolgoi as well as a historic vote of confidence in both the project and Mongolia.
"We look forward to working with the Mongolian Government and Rio Tinto to complete the remaining steps leading to the restart of underground development."
Oyu Tolgoi is located in the South Gobi region of Mongolia.
Production at the mine commenced in 2013 and over 1.5 million tonnes of copper concentrate have been produced from Oyu Tolgoi since then.
All funding and work on the development of the underground mine was delayed in July 2013 when the Mongolian Government refused to approve Rio Tinto’s proposed financing plans with banks for the expansion, citing complaints about cost blow-outs.
The company invested $6.4bn to develop the open-pit mine at Oyu Tolgoi, with an additional $500m of capital costs for initial development of the mine.
Image: Number 1 Shaft at Oyu Tolgoi. Photo: courtesy of Brücke-Osteuropa.