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Rio Tinto Signs Deal With Turquoise Hill On Financing Plan For Mongolia's Oyu Tolgoi

Anglo-Australian mining giant Rio Tinto (RTNTF,RIO,RIO.L, RTPPF) Friday announced a binding Heads of Agreement or HoA with Turquoise Hill Resources for an updated funding plan for the completion of the Oyu Tolgoi Underground Project in Mongolia.

The funding plan addresses the estimated remaining known funding requirement of around $2.3 billion, building on and replacing the arrangements established in the companies' previously signed Memorandum of Understanding.

The HoA is subject to securing approval by Oyu Tolgoi LLC and any required support from the Government of Mongolia, and subject to timing, availability, and terms and conditions being acceptable to both parties

Under the deal, Rio Tinto and Turquoise Hill will pursue re-profiling of principal debt repayments up to $1.4 billion with lenders under the existing project finance arrangements to better align with the revised mine plan, project timing and cash flows.

They will also seek to raise up to $500 million in senior supplemental debt or SSD under the existing project financing arrangements from selected international financial institutions.

Rio Tinto has committed to address any potential shortfalls from the re-profiling and additional SSD of up to $750 million by providing a senior co-lending facility on the same terms as OT's project financing. Further, Turquoise Hill agreed to complete a rights offering or placement of common shares for up to $500 million to satisfy any remaining funding shortfall within six months of the Co-Lending Facility becoming available.

Oyu Tolgoi is expected to become one of the world's largest copper mines and a significant contributor to the Mongolian economy for years to come.

Rio Tinto and Turquoise Hill have agreed to jointly obtain an order dismissing the current arbitration on a without prejudice basis, including an order vacating the interim measures order.

Rio Tinto currently beneficially owns 102.20 million shares of Turquoise Hill, representing approximately 50.8% of its issued and outstanding common shares.

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