The share price of TSX- and NYSE-listed Turquoise Hill plunged  on Thursday, as controlling shareholder Rio Tinto announced that a Turquoise Hill rights issue would be needed for the Oyu Tolgoi underground project, in Mongolia.

The company's stock fell 22% in Toronto following the announcement, which stated that Rio Tinto and Turquoise Hill would pursue reprofiling of principle debt repayments with lenders under existing project finance arrangements to better align with the revised mine plan, project timing and cash flows.

The companies would seek to raise up to $500-million in additional lending under existing project financing for the Oyu Tolgoi underground project.

Further, Turquoise Hill would continue to explore other options for additional debt funding, but Rio Tinto said that it would not consent to any additional debt or sources of funding.

Any balance of the funding required for Oyu Tolgoi to achieve completion of the underground mine would need to be met by way of a Turquoise Hill equity offering, the statement pointed out.

Rio Tinto in July confirmed that the underground project would cost between $1.3-billionand $1.8-billion more than the original $5.3-billion capital estimate. First sustainable production had also been delayed by between 21 and 29 months, compared with the 2016 feasibility study guidance.

The cost estimate adjustments followed an updated feasibility study, which incorporated a new mine design for Panel 0, which would be the first panel for mining at the underground project.

"The MOU agreed today with Turquoise Hill provides a clear funding pathway for the completion of the Oyu Tolgoi underground project,” said Rio Tinto copper and diamonds CE Arnaud Soirat.

Rio Tinto owns Oyu Tolgoi through its majority ownership in Toronto-listed Turquoise Hill, which has a 66% interest in the Oyu Tolgoi copper/gold mine.