Turquoise Hill Receives Altynalmas Gold Payment and Signs Binding Term Sheet With Rio Tinto for New Funding Package
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug. 7, 2013) - Turquoise Hill Resources(TSX:TRQ)(NYSE:TRQ)(NASDAQ:TRQ) announced that the company has received a US$235 million advance payment for the Altynalmas Gold transaction and has signed a binding term sheet with majority shareholder Rio Tinto for a new funding agreement that is designed to meet Turquoise Hill's cash needs through the end of 2013.
Following the announcement on August 2, 2013, in respect of Turquoise Hill's sale of its 50% interest in Altynalmas Gold Ltd, the Company has now received US$235 million fromSumeru Gold BV. The payment has been used to repay in full the current US$225 million bridge funding agreement entered into with Rio Tinto on June 28, 2013 (the "Short Term Bridge Funding Agreement").
The company today signed a binding term sheet with Rio Tinto for a new funding package that is designed to meet Turquoise Hill's cash needs through the end of 2013. The Short Term Bridge Funding Agreement, which is now undrawn, will be extended to enable the company to draw down against it in order to fund a cash call obligation for Oyu Tolgoi due on August 13, 2013 and until definitive agreements for the new bridge facility (the "New Bridge Facility") are finalized, which is expected to be on or around August 28, 2013. Rio Tinto has waived its right to exercise its option pursuant to the terms of the Short Term Bridge Funding Agreement to convert all or any of the outstanding loan amounts into Turquoise Hill's common shares, and the New Bridge Facility is not convertible into any securities of Turquoise Hill.
Under the New Bridge Facility, Rio Tinto will provide Turquoise Hill with a secured US$600 million bridge funding facility that matures on December 31, 2013. The New Bridge Facility will have a front-end fee of US$6 million, an interest rate of LIBOR plus 5% per annum on drawn amounts and a commitment fee of 2% per annum on undrawn amounts. The facility will be used initially to refinance any amounts outstanding under the Short Term Bridge Funding Agreement, and thereafter be used for the continued ramp up of phase one of the Oyu Tolgoi mine development.
Under the terms of the New Bridge Facility, in the event that the Oyu Tolgoi project financing funds are not available to repay the US$600 million New Bridge Facility and the US$1.8 billion Interim Funding Facility, which both mature on December 31, 2013, Turquoise Hill would be obligated to launch a rights offering to close by the end of 2013, with a standby commitment from Rio Tinto, to repay both facilities.
Given the signing of the binding term sheet, Turquoise Hill is no longer exploring a private placement of common shares that was referenced in the company's press release on July 19, 2013.
Discussions with the Government of Mongolia about project financing, delayed funding and development of the Oyu Tolgoi underground and other outstanding matters continue. The Company remains committed to project financing and is engaging with the Government with a goal of completing the transaction and beginning to draw from the facility by the end of 2013.
As discussions with the Government take place, the Oyu Tolgoi concentrator continues to ramp up production from the mine's open pit. The concentrator is now consistently producing at over 80% of design capacity and all commercial production tests are complete. Full production is expected to be achieved in the second half of 2013. Following the commencement of concentrate shipments on July 9, 2013, shipments will continue to grow for the remainder of 2013 and are expected to match production by the end of this year.
This news release shall not constitute an offer to sell, nor the solicitation of an offer to buy, any securities in the United States, Canada or in any other jurisdiction; nor shall there be any sale of securities mentioned in this news release in any state of the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
Following the announcement on August 2, 2013, in respect of Turquoise Hill's sale of its 50% interest in Altynalmas Gold Ltd, the Company has now received US$235 million fromSumeru Gold BV. The payment has been used to repay in full the current US$225 million bridge funding agreement entered into with Rio Tinto on June 28, 2013 (the "Short Term Bridge Funding Agreement").
The company today signed a binding term sheet with Rio Tinto for a new funding package that is designed to meet Turquoise Hill's cash needs through the end of 2013. The Short Term Bridge Funding Agreement, which is now undrawn, will be extended to enable the company to draw down against it in order to fund a cash call obligation for Oyu Tolgoi due on August 13, 2013 and until definitive agreements for the new bridge facility (the "New Bridge Facility") are finalized, which is expected to be on or around August 28, 2013. Rio Tinto has waived its right to exercise its option pursuant to the terms of the Short Term Bridge Funding Agreement to convert all or any of the outstanding loan amounts into Turquoise Hill's common shares, and the New Bridge Facility is not convertible into any securities of Turquoise Hill.
Under the New Bridge Facility, Rio Tinto will provide Turquoise Hill with a secured US$600 million bridge funding facility that matures on December 31, 2013. The New Bridge Facility will have a front-end fee of US$6 million, an interest rate of LIBOR plus 5% per annum on drawn amounts and a commitment fee of 2% per annum on undrawn amounts. The facility will be used initially to refinance any amounts outstanding under the Short Term Bridge Funding Agreement, and thereafter be used for the continued ramp up of phase one of the Oyu Tolgoi mine development.
Under the terms of the New Bridge Facility, in the event that the Oyu Tolgoi project financing funds are not available to repay the US$600 million New Bridge Facility and the US$1.8 billion Interim Funding Facility, which both mature on December 31, 2013, Turquoise Hill would be obligated to launch a rights offering to close by the end of 2013, with a standby commitment from Rio Tinto, to repay both facilities.
Given the signing of the binding term sheet, Turquoise Hill is no longer exploring a private placement of common shares that was referenced in the company's press release on July 19, 2013.
Discussions with the Government of Mongolia about project financing, delayed funding and development of the Oyu Tolgoi underground and other outstanding matters continue. The Company remains committed to project financing and is engaging with the Government with a goal of completing the transaction and beginning to draw from the facility by the end of 2013.
As discussions with the Government take place, the Oyu Tolgoi concentrator continues to ramp up production from the mine's open pit. The concentrator is now consistently producing at over 80% of design capacity and all commercial production tests are complete. Full production is expected to be achieved in the second half of 2013. Following the commencement of concentrate shipments on July 9, 2013, shipments will continue to grow for the remainder of 2013 and are expected to match production by the end of this year.
This news release shall not constitute an offer to sell, nor the solicitation of an offer to buy, any securities in the United States, Canada or in any other jurisdiction; nor shall there be any sale of securities mentioned in this news release in any state of the United States in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
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