Oyu Tolgoi LLC today paid US$100 million to the Government of Mongolia, ahead of the payment schedule outlined in the Investment Agreement.
The payment is the third and final instalment of a US$250M Treasury Bill programme, the terms of which were agreed in the Investment Agreement signed by the Government of Mongolia, Rio Tinto and Ivanhoe Mines in October 2009. The payment was honoured today at a ceremony at the Ministry of Finance, ahead of the agreed deadline of June 30.
Oyu Tolgoi made the first payment of US$100 million immediately after the Investment Agreement was signed and a further US$50 million was paid in April 2010 when the Agreement became effective.
The payments will be deducted from the future taxes and royalties of Oyu Tolgoi LLC. As agreed between the parties, the second and third tranches of the payment will accrue an annual interest rate of 1.59 per cent after tax.
Oyu Tolgoi will be one of the largest and highest grade copper and gold mines in the world and is being constructed with an investment of over US$5 billion. The Government of Mongolia owns 34 per cent of Oyu Tolgoi and will receive a share of profits, taxes and royalties as part of its ownership stake.
Rio Tinto and Ivanhoe Mines are spending an average of US$7 million every day on goods and services for the project, much of it in Mongolia. Between 2000 and 2010 Oyu Tolgoi paid a total of US$83 million in various taxes and fees to the Government of Mongolia.
Oyu Tolgoi is being developed as a world-class mine and its key priorities are the health and safety of employees, best-practice environmental management, contributing to sustainable communities and always doing business with integrity, for the benefit of all the project’s shareholders and the people of Mongolia.
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