JOHANNESBURG (miningweekly.com) – Mining major Rio Tinto has agreed to provide Turquoise Hill Resources with a $600-million bridge funding facility to fund the continuing development of Phase 1 of the Oyu Tolgoi copper and gold mine, in Mongolia.

The facility will mature on December 31, subject to certain conditions being satisfied.

Rio Tinto stated that the facility would have initially been used to refinance all amounts outstanding under a $225-million short-term funding facility provided by Rio to Turquoise Hill in June, and, thereafter, for the continued ramp-up of Phase 1 of the Oyu Tolgoi mine development.

Rio also agreed to permit funds that are repaid by Turquoise Hill from the proceeds of the sale of its 50% stake in Altynalmas Gold to Sumeru Gold to be redrawn.

However, Turquoise Hill on Thursday announced that it had received advance payment of $235-million from Sumeru and that it had used the funds to repay the $225-million facility.

Meanwhile, under the terms of the new $600-million facility, in the event that the Oyu Tolgoi project financing funds are not available to repay Rio the $600-million and a $1.8-billion interim funding facility, which both mature on December 31, Turquoise Hill would be obligated to launch a rights offering to repay both facilities.

Rio had agreed to provide a firm stand-by commitment for a fully underwritten rights offering by Turquoise Hill.

Further, the diversified mining group said it remained committed to putting in place a significant project financing package to fund the development of the Oyu Tolgoi underground mine.

Rio Tinto in July temporarily halted plans for a $5-billion underground expansion at Oyu Tolgoi after it was informed that the Mongolian Parliament, which was in recess until October, would first have to approve financing for the project.

Rio holds a 51% interest in Turquoise Hill, which, in turn, owns 66% of the Oyu Tolgoi project, with the balanced owned by a State-owned mining company.

The Oyu Tolgoi mine has initially been developed as an openpit operation, while a 95 000 t/d underground block-cave mine was being developed at the Hugo North deposit, which is expected to start operations in 2016.