OT LLC and Turquoise Hill Resources has made a press release stating that it needs a parliament approval to proceed with the project financing on Monday. As we mentioned in our previous post there are number of issues to be solved between the parties before the government gives a light. The issues were mentioned clearly in the letter sent from the Mining Ministry to Copper Group of Rio Tinto. The reasons as follow:
- The project financing is a significant transaction that had needed a unanimous support from the board and discussed in the shareholder meetings, required by the Company Law. However, the order has not been followed, thus, postponing the decision;
- Pledging of the Investment Agreement, mining license, feasibility study and the company fixed and current assets is creating a conflict in the relevant rules and laws;
- The USD10 billion increase presented to the lenders requires us to review the financials and economics of the project;
- Inclusion of the 2% royalty derived from BHP and to be paid for TRQ is clearly violating the IA and other relevant laws. Also, overall USD3 billion charge by 2.5% rate from Rio Tinto is in violation of IA;
- Entree Gold Inc. licenses that should have been transferred to OT LLC is in violation of IA and other relevant laws of Mongolia.
The above is the brief reason for the call from SGK to approve the project financing. Nobody wants to bear these serious issues and be responsible for the relevant decisions to approve project financing.
Till the SGK sessions commence, OT LLC will focus on its stable export of their products.
Another interesting news is that Bold Baatar might be appointed as a CEO of OT LLC succeeding Cameron McRae in November. He has been appointed as the Head of International Operations, Copper Group of Rio Tinto last April. We have covered the news here previously.