Rio Tinto has signed an agreement with Turquoise Hill Resources (TRQ) on an updated financing plan for the $2.3bn underground development of the Oyu Tolgoi copper-gold mine in Mongolia.

Claimed to be the world’s largest new copper-gold mines, the Oyu Tolgoi mine is located in Mongolia’s South Gobi region, approximately 550km south of Ulaanbaatar and 80km north of the Mongolia-China border.

Under the binding heads of agreement (HoA), Rio and Turquoise Hill agreed to restructure up to $1.4bn of debt payments with lenders.

It will also look to raise up to $500m of senior supplemental debt (SSD) for the project from selected international financial institutions under existing financing arrangements.

To address potential shortfalls from the re-profiling and additional SSD, Rio Tinto plans to provide up to $750m through a co-lending facility.

Rio Tinto Copper CEO Bold Baatar said: “This agreement and alignment with TRQ represents a major milestone in the continued development of Oyu Tolgoi, which is expected to become one of the world’s largest copper mines and a significant contributor to the Mongolian economy for years to come.

“Commencing the re-profiling whilst concurrently listening, engaging and resolving the concerns of The Government of Mongolia are critical steps to maintaining momentum on the timely delivery of the Oyu Tolgoi underground project.”

Through Erdenes Oyu Tolgoi, the Mongolian Government has a 34% stake in the Oyu Tolgoi copper-gold mine.

Turquoise Hill Resources holds the remaining 66% in the mine, which is located in the South Gobi region. Rio Tinto owns a roughly 50.8% stake in Turquoise Hill Resources.

According to estimates, the Oyu Tolgoi mine has the potential to operate for approximately 100 years from five known mineralised deposits.

The first of the deposits, namely the Oyut deposit, started production as an open-pit operation in 2013.

A second deposit, Hugo North (Lift One), is being developed as an underground operation.

In February, the Financial Times reported that the Mongolian Government is considering scrapping the deal with Rio Tinto to expand the Oyu Tolgoi project.

A new agreement with improved terms for the project is planned to be signed by the government with Rio Tinto, the report said.