By Robb M. Stewart
Turquoise Hill Resources Ltd.'s shares rallied Tuesday after a deal was struck to allow the delayed expansion of the Oyu Tolgoi copper mine in Mongolia to push ahead.
In morning trading, the Toronto-listed shares were 16% higher at C$22.16, and are now up 6.5% in the new year. Rio Tinto's American depositary receipts were 1% lower at $72.50 on the New York Stock Exchange.
Majority-owner Rio Tinto said it had reached an agreement with Turquoise Hill, which owns most of the Oyu Tolgoi operation, and Mongolia's government that will see the start of underground operations at the mine in the South Gobi desert.
The agreement resolves a dispute between the partners on how to split the cost of an underground expansion, which is several years delayed.
Under the deal, Turquoise Hill will waive in full a $2.4 billion loan to Mongolia's Erdenes Oyu Tolgoi, and an updated funding plan has been agreed to address Turquoise Hill's estimated remaining funding requirement for the underground project. Turquoise Hill has agreed to an equity or rights offering of up to $1.5 billion, with an initial offering of at least $650 million no later than the end of August.
The country's parliament has approved a resolution that resolves the outstanding issues that have been subject to negotiations with the government of Mongolia over the last two years, Rio Tinto said.
Write to Robb M. Stewart at email@example.com
(END) Dow Jones Newswires