Modifications to Mongolia-OT Agreement ratified

Mining executives and Ministers signing the contract modification
As the Oyu Tolgoi Investment Agreement and Shareholders’ Agreement came into force on March 31, 2010, the Mongolian side became owner of 34 percent of Oyu Tolgoi Company’s shares. During the period since the agreements were effective, issues on cutting the interest of the financing and resolving means and conditions of financing effectively to the Mongolian side were frequently discussed at negotiations and meetings with the investor side.
1.The following amendments were made to the Shareholders’ Agreement:
-Interest rate of financing and loans: As a result of the talks, it was agreed with the investor to change the interest of total financing and loans to be made within frames of the project into LIBOR plus 6.5 percent.
Previously, it was 9.9 percent plus the American consumer price index. Newly agreed interest of the financing and loans came to effect from starting January 31, 2011.
- The right of Mongolian side to finance: The sides agreed that the Mongolian side will have the right to make financing equal to its ownership in the total amount of money required for the project at any time.
- Funding hedging options: In case LIBOR has a higher cost to the company and shareholders, depending on world economic and financial situations, the company will study funding to hedge options and take required measures. It was also agreed to reconsider the interest of funding and loans with the investor every 7 years.
- Project funding to come from third body: The Company will get project funding from a third body which is fruitful and suitable to Oyu Tolgoi from the international banking market in the first instance.
- Mongolia’s ownership will not be lower than 34 percent: It was previously stated in the agreement that Mongolia’s ownership of 34 percent will not be lowered. It has been confirmed not to lower Mongolia’s ownership without its permission regardless of whether or not it made a resolution to make financing to the company.
- Preferential shares: With a purpose to completely change the issue in relation to preferential shares that was previously stated in the Shareholders’ Agreement, it was decided to take it away from the agreement.
2.On June 8, the amended Shareholders’ Agreement was signed at the State House by Erdenes MGL Company CEO, B. Enebish from the Mongolian side, President and CEO of Oyu Tolgoi Company, Cameron McRae, John Foniani, Executive Vice President of Ivanhoe Oyu Tolgoi (BVI), and Sam Riggall, Executive Vice President of Business Development and Strategic Planning at Ivanhoe Mines Ltd. 2.On June 8, another agreement was signed to limit sale and transfer of shares.
According to this agreement signed by Minerals and Energy Minister D. Zorigt, Finance Minister S. Bayartsogt and Nature, Environment and Tourism Minister L. Gansukh representing Mongolia’s government and Andrew Harding, Chief Executive of Rio Tinto’s Copper Group representing Rio Tinto International Holdings Limited, the investor side has to negotiate with the Mongolian government and receive permission in writing before Rio Tinto International Holdings Limited sell or transfer its shares in Oyu Tolgoi Company to any state-owned entity and/or persons who have direct and indirect connections with Oyu Tolgoi Company.
It was agreed with the investor side to cut interest of financing of the Oyu Tolgoi Project to LIBOR (The London Interbank Offered Rate) plus 6.5 percent, to have the Mongolian side have a right to make financing and take part in financing the project, to receive financing from a third body in the first instance, use funding hedging options if required, to alter the issue on
preferential shares that was previously stated in the agreement as well as to not lower Mongolia’s ownership of 34 percent in any case.
source: 'The mongol Mesenger'newspaper
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