Ulaanbaatar
USD 2.3 billion debt obligation in Oyu Tolgoi project waived
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'Confirmation for debt forbearance and current outstanding balance' has been signed today by N.Tserenbat, CEO of Erdenes Oyu Tolgoi LLC and Luke Colton, Chief Financial Officer at Turquoise Hill Resources. This means Mongolia's USD 2.3 billion debt for its share (34 percent) in the Oyu Tolgoi copper-gold project has been completely waived by Oyu Tolgoi Netherlands (OTN).
Per the terms of the Amended and Restated Shareholders’ Agreement dated 8 June 2011, USD 2.3 billion loans were provided to fund the capital contributions of Erdenes Oyu Tolgoi (EOT) to OT LLC in respect of common shares issued by OT LLC to EOT.
"In accordance with Articles 236.6 and 239.1 of the Civil Code of Mongolia and upon mutual agreement between EOT, as borrower, and OTN, as lender, we hereby inform you that, OTN has waived repayment of any and all amounts due and owing as of the Effective Date" says the confirmation.
Incidentally, on December 13, 2021 Rio Tinto and Turquoise Hill Resources sent an official letter addressed to Prime Minister L. Oyun-Erdene, accepting the proposals from Mongolia to increase benefits to Mongolia from Oyu Tolgoi project.
The proposals included:
- To write off Mongolia's USD 2.3 billion-debt for its share (34 percent) in the Oyu Tolgoi copper-gold project.
- To terminate the Oyu Tolgoi Underground Mine Development and Financing Plan, known as ‘Dubai Agreement’ and conduct an independent audit into the financing of the project's underground expansion;
- The costs required until the first half of 2023, when the underground mine is commissioned, shall be covered by the investors, not incurring additional debts to Erdenes Oyu Tolgoi LLC;
- To supply electricity for Oyu Tolgoi project from the energy grid of Mongolia
- To postpone arbitration disputes between the two sides for six months and resolve it amicably
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