Rio Tinto won't have to lift stake in Turqoise Hill
Rio Tinto's stake in Canadian miner Turquoise Hill Resources will remain unchanged, after the conclusion of a lengthy rights offering linked to the highly prospective Oyu Tolgoi mine in Mongolia.
Rio Tinto had agreed to underwrite a rights offering conducted by Turquoise Hill, which could have seen Rio's 50.8 per cent stake in the company increase if other shareholders did not fully participate.
But Turquoise Hill confirmed this morning that the $US2.4 billion rights offering was over-subscribed, and that Rio was not required to increase its holding in the company.
JPMorgan analysts had originally estimated that Rio's stake in Turquoise Hill could increase to 75 per cent if other shareholders had been reluctant to participate.
Turquoise Hill is the company in charge of Oyu Tolgoi, which is expected to produce copper and gold in Mongolia for the next 100 years and ranks as one of Rio's most important growth assets.
The $US2.4 billion raised by Turquoise Hill will largely be devoted to repaying loans to Rio.
The smaller first stage of the mine came into production in July, but the larger second stage of the mine is still the subject of fragile negotiations between the companies and the Mongolian Government.
Reports out of Mongolia this week quoted a Mongolian Minister as saying that the impasse could be resolved by the end of January.
The second stage is expected to cost $US4 billion, and has been the subject of a lengthy global fundraising effort which is likely to include numerous export credit agencies from around the world.
Australia's Export Finance and Insurance Corporation confirmed in May that it would help fund the second stage but would not disclose the size of the loan.
Rio Tinto had agreed to underwrite a rights offering conducted by Turquoise Hill, which could have seen Rio's 50.8 per cent stake in the company increase if other shareholders did not fully participate.
But Turquoise Hill confirmed this morning that the $US2.4 billion rights offering was over-subscribed, and that Rio was not required to increase its holding in the company.
JPMorgan analysts had originally estimated that Rio's stake in Turquoise Hill could increase to 75 per cent if other shareholders had been reluctant to participate.
Turquoise Hill is the company in charge of Oyu Tolgoi, which is expected to produce copper and gold in Mongolia for the next 100 years and ranks as one of Rio's most important growth assets.
The $US2.4 billion raised by Turquoise Hill will largely be devoted to repaying loans to Rio.
The smaller first stage of the mine came into production in July, but the larger second stage of the mine is still the subject of fragile negotiations between the companies and the Mongolian Government.
Reports out of Mongolia this week quoted a Mongolian Minister as saying that the impasse could be resolved by the end of January.
The second stage is expected to cost $US4 billion, and has been the subject of a lengthy global fundraising effort which is likely to include numerous export credit agencies from around the world.
Australia's Export Finance and Insurance Corporation confirmed in May that it would help fund the second stage but would not disclose the size of the loan.
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