MILBANK ADVISES LENDERS ON THE LANDMARK US$4.4 BILLION FINANCING OF THE OYU TOLGOI PROJECT IN MONGOLIA

Oyu Tolgoi is the largest emerging market mining project financing to date and a landmark transaction for the host country, Mongolia

Milbank advised the lenders, including the multilateral agencies European Bank for Reconstruction and Development (EBRD) and International Finance Corporation (IFC), the export credit agencies Export Development Canada (EDC), Export Finance and Insurance Corporation (EFIC) and US EXIM, and a syndicate of commercial banks including BNP Paribas and Standard Chartered Bank, in connection with the US$4.4 billion financing for the Oyu Tolgoi Project.  The deal is the largest emerging market mining project financing to date, the largest Central Asian project financing to date and the largest project in Mongolian history.  Key agreements were signed amongst the parties in Mongolia on 15th December, concluding a signing process for the principal financing documents coordinated across multiple jurisdictions and time zones.

Oyu Tolgoi is located in the South Gobi region of Mongolia and is the world’s largest undeveloped copper-gold project.  The deal is notable in reaching financial close at a time of low commodity prices, demonstrating that well- structured deals can attract large-scale funding even in the face of current market conditions.

In October 2009, Oyu Tolgoi (then, Ivanhoe Mines Mongolia) and its majority shareholder, Turquoise Hill Resources (then, Ivanhoe), signed an investment agreement with the Government of Mongolia, itself an indirect significant shareholder in Oyu Tolgoi, for the construction and operation of the Oyu Tolgoi mining complex.  Global miner Rio Tinto is the majority shareholder in Turquoise Hill Resources.

Milbank has a long tradition of acting for lenders on the world’s largest and most complex mining projects across Asia, Africa and Latin America.  The Milbank deal team was led out of the firm’s London office by leading practitioners in the global mining sector: consultant Cathy Marsh and partner Phillip Fletcher.  The London team also included senior associate Andrew Pendleton and associates Felicia Hanson Ofori-Quaah, Nike Johnson and Emily Whittaker.  The team also included partner James Murray and associates Gilly Hutchinson and Anthony Scott in the firm’s Asian offices and associates Kimia Solaimanishad and Sally Huang in the firm’s US offices.

LehmanLaw Mongolia acted as Mongolian counsel to the Lenders.  The borrower was advised by Sullivan & Cromwell MNP LLP as international counsel and and MahoneyLiotta LLP as Mongolian counsel.

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