Turquoise Hill working to settle tax dispute with Mongolia
A six-month extension on bank commitments to fund the Oyu Tolgoi gold and copper mine in Mongolia expires on Sept. 30 and Turquoise Hill Resources said it is working to resolve a tax dispute with the Mongolian government before that deadline hits.
The funding commitments are for the underground expansion of its Oyu Tolgoi gold and copper mine.
“We are all aware of the September 30 date and we are all working toward that deadline,” chief executive officer Kay Priestly said on a conference call with investors, Reuters reported.
“Clearly the underground is a significant part of the value of this mine, and right now, we’re focused on progressing the underground.”
The underground development of Oyu Tolgoi 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 Turquoise Hill 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 project, 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 complete.