VANCOUVER, British Columbia Aug 12 Turquoise
Hill Resources is working to resolve a tax dispute with
the Mongolian government before an extension runs out on funding
commitments for the underground expansion of its Oyu Tolgoi gold
and copper mine, the company's chief executive officer said on
"We are all aware of the September 30 date and we are all
working toward that deadline," CEO Kay Priestly said on a
conference call with investors, referring to the expiration of a
six-month extension on bank commitments to fund the project.
"Clearly the underground is a significant part of the value
of this mine, and right now, we're focused on progressing the
The underground development of Oyu Tolgoi, which is one of
the world's largest undeveloped copper deposits, was put on hold
last year when the Mongolian government became concerned that
cost overruns would delay the flow of the government's share of
profits from the mine.
In May, a group of banks agreed to extend their commitment
to fund the project, but efforts to restart development work hit
a snag in June, when the Canadian company filed a notice of
dispute with the Government of Mongolia, after tax authorities
claimed unpaid taxes and penalties related to the project.
Turquoise Hill owns a 66 percent stake in the copper-gold
mine, with the Mongolian government holding the remaining 34
percent. Global miner Rio Tinto plc controls the
project through its 51 percent stake in Turquoise Hill.
Priestly said development work on the Oyu Tolgoi expansion
project would resume once the outstanding shareholder issues,
including tax claims, are resolved, and all parties have agreed
on a comprehensive funding plan.
The underground expansion must also be approved by Turquoise
Hill and the Mongolian government. The Vancouver-based company
said a feasibility study, originally expected in June, is nearly
(Reporting by Julie Gordon; Editing by Jan Paschal)