One of the largest mines in the world - Oyu Tolgoi - has received confirmation and commitment from several sources for a $4 billion financing package.
Interestingly, part of that financing is coming from the European Bank for Reconstruction and Development. It confirms the quality and quantity of the resources at Oyu Tolgoi, as Europe has significantly cut back on mining financing over the last couple of years; one of the major reasons the junior miners have been struggling to secure capital.
Rio Tinto (RIO) said, “This is a further important step in securing long-term project financing for the development of Oyu Tolgoi.”
The other major entity committing to financing the project is the International Finance Corp., which will commit about $400 million in a regular loan, and as high as $1 billion in a syndicated loan.
The European Bank for Reconstruction and Development (EBRD) is contemplating about $400 million for the project. Financing for the deal has yet to be officially signed off on.
Production at the mine is expected to begin in about June 2013, although Mongolia has demanded a higher percentage of the mine than the agreement they originally agreed to.