Dear Mr. Walsh,
I, as Prime Minister of Mongolia, would like to note that the Government of Mongolia is making solid endeavors to move our joint Oyu Tolgoi project to next stage with the introduction of new team and new approaches for the last one and half years. Even though we are making progresses through our mutual efforts, there are further accomplishments still needed for a successful Oyu Tolgoi.
Thus I am addressing you directly as we are reaching a significant stage to strengthen the relationship between your company and Mongolia. While the start of production of Oyu Tolgoi in 2013 was a great achievement and an important milestone, it is of the utmost importance for my Government and for Mongolian people that Oyu Tolgoi proceed as soon as possible with the underground mine development. We are thus most supportive of the Project Financing needed for next stage of this most important project.
Through the both parties' constructive discussions, there are only a very limited number of issues that remain outstanding between the Rio Tinto (NYSE:RT) and Erdenes Oyu Tolgoi (NYSE:EOT). We are confident that these issues can be readily solved in accordance with normal international business practices as was stated in the EOT letter to RT of 19 February, 2014.
We stressed the importance of RT maintaining positive stance in addressing public, but instead of that we have received a press release proposal from Mr. Jean Sebastian Jacques, which was insisting for request to extend lenders' commitment to 31st December 2014. It is unfortunate that we are acknowledged the doubtful approach for finalizing the project financing in such extended period of time.
Even though the updated Feasibility study will be delivered in Q2 2014, we are willing to complete the discussions immediately in Ulaanbaatar or London, with the full mandate to finalize the project financing before the lenders' commitment deadline of March 31, 2014.
The Government of Mongolia remains fully committed to the continued and successful operation of the open pit mine, the financing and development of the underground mine.
The Oyu Tolgoi project is of utmost importance to Mongolia and so is our partnership with Rio Tinto. I believe that now is the time to open a new chapter in our relationship and work in harmony to develop the Oyu Tolgoi project for the benefit of all stakeholders and of the Mongolian people.
It appears that the government of Mongolia is beginning to get a bit desperate as they are now almost pleading with Rio Tinto to re-start the phase 2 construction on the OT mine. They need this issue resolved so that it will send a message that Mongolia is not adverse to foreign investment. In addition pressure is mounting on the central bank and the currency. FDI has to pick up or the Mongolian economy is going to suffer later this year.
Disclosure: I am long MNGGF.