(Adds details on mine, project lending)
Sept 10 (Reuters) - Rio Tinto said on Thursday it plans to raise up to $500 million through additional lending to develop its giant Oyu Tolgoi copper mine in Mongolia.
The Mongolian state has a 34% stake in the Oyu Tolgoi project, while Rio’s majority-owned Turquoise Hill Resources Ltd owns the remaining.
Rio and Turquoise Hill will jointly pursue the debt reprofiling process by engaging with existing project finance lenders, and expect a reduction of up to $1.4 billion in the funding requirements for Oyu Tolgoi.
In reprofiling, the time for repayment is extended, but the value of the debt is not marked down.
The miner said any remaining funding for the underground mine will be met through a Turquoise Hill equity offering.
In July, Rio cut estimated reserves at Oyu Tolgoi, while confirming delays and higher costs after ground instability forced it to redesign the mine plan.
Oyu Tolgoi is Rio’s biggest copper growth project, but has faced geological challenges. The company had earlier forecast estimated first production from the mine between October 2022 and June 2023, 21-29 months later than its initial estimate. (Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Shounak Dasgupta)
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.
Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.