Global mining group Rio Tinto and resources company Turquoise Hill have signed a memorandum of understanding (MoU) to progress the financing for completion of the Oyu Tolgoi underground mine in Mongolia.

Oyu Tolgoi is jointly owned by the Government of Mongolia (34%) and Turquoise Hill Resources (66%). Rio Tinto owns 51% of Turquoise Hill.

The MoU reflects both parties agreeing to pursue re-profiling of principal debt repayments with lenders under the existing project finance arrangements, and to seek to raise $500m in additional lending for the project.

The Oyu Tolgoi gold and copper mine is situated in the south Gobi region of Mongolia.

It is around 80km north of the Chinese-Mongolian border and 550km south of Ulaanbaatar. The mine one of the biggest gold and copper mines in the world and has the potential to produce more than 500,000 tonnes per annum (tpa) following further development at the site.

Rio Tinto Copper & Diamonds chief executive Arnaud Soirat said: “The MoU agreed today with TRQ provides a clear funding pathway for the completion of the Oyu Tolgoi Underground Project.

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“We will continue working with TRQ and the Government of Mongolia to progress the underground project, which has the potential to unlock the most valuable part of the mine for the benefit of all stakeholders.”

In November last year, Rio Tinto completed development of Shaft 2 at the Oyu Tolgoi mine

In January 2019, the Government of Mongolia and Rio Tinto signed a framework agreement for the supply of electricity to an extension of the copper mine at the Oyu Tolgoi project by mid-2023.