A finance plan for Ivanhoe Mines’ Oyu Tolgoi copper-gold-silver mining complex has been approved, with the company securing US$1.8 billion in bridging finance from a major international bank. The funding will cover completion of the first phase of the facility in southern Mongolia, which is expected to start commercial production in 2013. Construction of the first stage of the plant is 70% complete.
The bridge loan is in addition to the US$1.8 billion interim funding previously provided by Rio Tinto, which will be repaid from the first drawdown of the US$4 billion project finance facility currently being established.
“Ivanhoe Mines remains intensely focused on the remaining requirements that are key to completing the first phase of the development of the Oyu Tolgoi mining complex,” says Ivanhoe’s chairman David Huberman.
“The completion of long-term project financing and finalization of a Mongolia-China pact to supply electrical power from China for up to the first four years of Oyu Tolgoi’s operation are central to our objective of ensuring the project remains on schedule to begin initial production later this year.”
Installation of the two production lines in the concentrator and pre-commissioning works are progressing ahead of plan with the first production line expected to be completed in mid-July.
An agreement has been reached with Inner Mongolia Power on the schedule and capital costs for construction of a high-voltage transmission line in China, to become a key link in the delivery of interim power to Oyu Tolgoi. Mongolia’s Foreign Affairs Minister Gombojav Zandanshatar has held talks with Chinese authorities to progress approval of the plan.
Stringing of the power cables is expected to occur in May, with the detailed design, engineering and construction of the Inner Mongolia portion of the transmission towers now under way. The entire 220-kilovolt line from the Inner Mongolian power grid to Oyu Tolgoi is expected to be completed by September.
In other news, the Ivanhoe board of directors has recommended the shareholders’ rights plan be terminated after Rio Tinto announced it would seek to increase its stake in the company to more than 50%.