Track Record > Case Studies

Case study:

Mongolian copper gold mine project

The world’s largest, undeveloped copper-gold porphyry deposit. When completed, Oyu Tolgoi will be the first project financing in Mongolia and the largest project financing ever completed in the mining sector

Project description

  • The Oyu Tolgoi copper-gold mining complex is located in the South Gobi region approximately 550 km south of the capital Ulan Bator and 80 km north of the Mongolian-Chinese border (the “Project”)
  • Oyu Tolgoi contains approximately 81 billion pounds of copper and 46 million ounces of gold in measured, indicated and inferred resources
  • Oyu Tolgoi is owned 34% by the Mongolian Government and 66% by Turquoise Hill, which in turn is currently 51% owned by Rio Tinto
  • Target production of the Project is approximately 28 Mtpa, using both open pit and block cave underground mining process
  • The Project requires significant power and rail infrastructure works

HCF’s role

  • HCF is currently acting as sole Financial Adviser to Turquoise Hill in sourcing and structuring the project financing of the Oyu Tolgoi copper-gold mine in Mongolia
  • HCF identified and assessed key strategic investors to assist Turquoise Hill in the development of the Project
  • HCF advised Turquoise Hill on the securing of Rio Tinto as a strategic partner for the Project through the issuance of a series of warrants and a complex convertible debt/option structure
  • HCF assisted in the delivery of the Environmental and Social impact assessment (ESIA) to international standards, which was disclosed to the public in Q4 2012

Project financing

  • Project Finance in excess of USD 4 billion
  • HCF has designed a robust finance structure to support a long development period of the mine over several years and minimise the impact on the Sponsor balance sheet
  • HCF has successfully enabled Turquoise Hill to mitigate political risk by the participation of the IFC and EBRD
  • HCF has introduced the Export Development Canada (“EDC”), a government agency of Canada and a number of other strong ECAs to the transaction via both tied procurement and untied off-take arrangements to further mitigate political risk and mobilise liquidity in the debt markets

Ongoing mandate

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Track Record

Case Studies

The world’s largest, undeveloped copper-gold porphyry deposit. When completed, Oyu Tolgoi will be the first project financing in Mongolia and the largest project financing ever completed in the mining sector

Project description

  • The Oyu Tolgoi copper-gold mining complex is located in the South Gobi region approximately 550 km south of the capital Ulan Bator and 80 km north of the Mongolian-Chinese border (the “Project”)
  • Oyu Tolgoi contains approximately 81 billion pounds of copper and 46 million ounces of gold in measured, indicated and inferred resources
  • Oyu Tolgoi is owned 34% by the Mongolian Government and 66% by Turquoise Hill, which in turn is currently 51% owned by Rio Tinto
  • Target production of the Project is approximately 28 Mtpa, using both open pit and block cave underground mining process
  • The Project requires significant power and rail infrastructure works

HCF’s role

  • HCF is currently acting as sole Financial Adviser to Turquoise Hill in sourcing and structuring the project financing of the Oyu Tolgoi copper-gold mine in Mongolia
  • HCF identified and assessed key strategic investors to assist Turquoise Hill in the development of the Project
  • HCF advised Turquoise Hill on the securing of Rio Tinto as a strategic partner for the Project through the issuance of a series of warrants and a complex convertible debt/option structure
  • HCF assisted in the delivery of the Environmental and Social impact assessment (ESIA) to international standards, which was disclosed to the public in Q4 2012

Project financing

  • Project Finance in excess of USD 4 billion
  • HCF has designed a robust finance structure to support a long development period of the mine over several years and minimise the impact on the Sponsor balance sheet
  • HCF has successfully enabled Turquoise Hill to mitigate political risk by the participation of the IFC and EBRD
  • HCF has introduced the Export Development Canada (“EDC”), a government agency of Canada and a number of other strong ECAs to the transaction via both tied procurement and untied off-take arrangements to further mitigate political risk and mobilise liquidity in the debt markets

One of the world’s largest undeveloped rare earth elements resources, the Project is one of the few sources of ‘heavy’ rare earth elements outside of China.

Project description

  • The project involves the development and operation of an underground mine and processing facilities in Canada and in the US for the production of Rare Earth Oxides (“REO”) with zirconium, niobium and tantalum as by-products
  • One of the world’s largest undeveloped rare earth elements resources, the Project is exceptionally enriched in ‘heavy’ rare earths) and is one of the few sources of “heavy” rare earth elements (eg. europium, terbium and dyspropsium) outside of China
  • Expected output: 10,000 tonnes REO, 18,000 tonnes zirconium, 1700 tonnes niobium, 100 tonnes tantalum

HCF’s role

  • HCF will source and negotiate strategic investments, equity investments, off-take contracts and project financing in order to support the development and operation of the Project
  • HCF has prepared and finalised a Financial Model for Avalon, which will serve as the company model and the basis for the strategic investor process and project financing. It will finalise the structure of the Project and confirm tax and transfer pricing applicable to the Project
  • Using its extensive relationships within the financial investor universe and its in-depth rare earth sector knowledge, HCF established a list of relevant targets for the strategic investor process
  • The strategic equity will be provided by international investors and HCF will target their respective ECAs to support their domestic business through the provision of competitively priced debt to the Project

Project financing and strategic investment

  • The debt financing is expected to be sourced from government-backed agencies, multilaterals and commercial banks
  • “HCF’s extensive experience in both investment banking and strategic advisory work in this sector will be key in enhancing or identifying all of the relationships that Avalon will need to finalise the construction plan for the project.” – Don Bubar, President and CEO of Avalon Rare Metals Inc.
  • As an independent financial adviser that is able to secure both debt and equity financing, HCF is in a unique position to provide structure and short to long-term strategic thinking, in order to ensure the successful financing of the Project in a challenging environment

The largest iron ore financing globally in 2009 and in the history of Mauritania. One of the largest ever iron ore financings in Western Africa. Trade Finance Deal of the year 2010.

Project description

  • The project involves the expansion of the operations of the Société Nationale Industrielle et Minière (”SNIM”) at its Guelb el Rhein iron ore mine located 25 km North-East of Zouérate in Northern Mauritania, and related processing and transportation activities
  • SNIM is 78.35% owned by the Government of Mauritania
  • Total project costs included:
    • Expansion of the Guelb el Rhein iron ore mine located Guelb El Rhein site
    • Construction of a new iron ore beneficiation plant for the production of an additional 4 mt of high quality iron ore concentrates per year
    • Construction of a new port for all of SNIM’s operations

HCF’s role

  • HCF acted as sole financial adviser to SNIM on this transaction
  • Key roles included:
    • Development of financing strategy and plan
    • Structuring of the financing
    • Due diligence management and coordination
    • Term sheet negotiation
  • HCF also held several other advisory roles with SNIM

Mine financing

  • Signed in December 2009
  • Shariah-compliant corporate financing of USD 712 million
  • The financing was highly complex and involved a consortium of eight leading financial institutions including commercial banks and multinational institutions
    • African Development Bank
    • Islamic Development Bank
    • European Investment Bank
    • French Development Agency
    • BHF-Bank
    • BNP Paribas
    • KfW IPEX-Bank
    • Société Générale
  • The financing was achieved within a very difficult macro-economic environment and during unprecedented turmoil in the global finance markets