 | Turquoise Hill Resources - TRQ.t is advancing a 66% interest in the flagship Oyu Tolgoi Project, one of the world's largest copper-gold-silver mines. The Oyu Tolgoi Project represents an investment of over $ 8 billion |  |
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Oyu Tolgoi notice to proceed and 2016 feasibility study approved
VANCOUVER, CANADA – Turquoise Hill Resources today announced that Oyu Tolgoi has received the formal notice to proceed approval by the boards of Turquoise Hill, Rio Tinto and Oyu Tolgoi LLC respectively, which was the final requirement for the re-start of underground development. As part of that process, the 2016 Oyu Tolgoi Feasibility Study (the “2016 Feasibility Study”) has been completed. Underground construction is expected to begin in mid-2016. All figures are in U.S. dollars unless otherwise stated.
Jeff Tygesen, Turquoise Hill Chief Executive Officer, said, “Today is a historic milestone and a significant achievement toward realizing Oyu Tolgoi’s full value. Given the early works that began in the second half of 2015, the underground team is well positioned for a smooth construction restart around the middle of this year. I think Oyu Tolgoi is the best copper opportunity in development today and an excellent growth project for our shareholders, Mongolia and Oyu Tolgoi’s workforce.
“Due to declines in copper grades globally, we expect a supply deficit starting in approximately 2019. Oyu Tolgoi’s expected first underground production in 2021 fits in very well with the anticipated supply short fall. Approximately 80% of Oyu Tolgoi’s value resides in the underground because the copper grades are roughly three and a half times higher than the open pit.”
Subject to the completion of certain conditions precedent, the full $4.4 billion project finance facility, signed in December 2015, will be drawn down. The draw down is expected to be complete by June 2016. Net proceeds from the project finance facility (the “Net PF Proceeds”), after fees and taxes, are expected to be approximately $4.1 billion. The Net PF Proceeds will initially be used by Oyu Tolgoi to pay down shareholder loans payable to Turquoise Hill. The Net PF Proceeds will then be available to be re-drawn by Oyu Tolgoi as required for the development of the underground mine. As part of the project finance facility, a debt cap of $6.0 billion for Oyu Tolgoi was agreed, which provides the possibility for an additional $1.6 billion of supplemental debt in the future.
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