Turquoise Hill Resources Ltd said it filed a notice of dispute with the Government of Mongolia, after tax authorities in that country claimed unpaid taxes and penalties related to the development of the Oyu Tolgoi copper and gold mine.
Turquoise Hill, which owns 66 percent of Oyu Tolgoi, said it strongly disagrees with the claims that are contained in the audit report, and believes the mine has paid all legally required taxes and charges.
The company said on Thursday the filing is the first step in the dispute-resolution process and includes a 60-day negotiation period. "If the parties are unable to reach a resolution during this period, the dispute can be referred to international arbitration."
Rio Tinto- controlled Turquoise Hill said the distribution of the underground feasibility study will be delayed as outstanding shareholder issues, including tax claims, must be resolved before further investment in the underground can proceed.
Oyu Tolgoi's open pit is in production, but an underground expansion was put on hold last year after the Mongolian government became concerned that cost overruns would cut into profits.
In May, Turquoise Hill said talks with the government on restarting development had been "constructive" and the feasibility study would be finished by the end of June.
Financing commitments needed to build the underground mine are set to expire on Sept. 30. (Reporting by Supriya Kurane in Bangalore; Editing by Gopakumar Warrier)