By Rhiannon Hoyle 
 

SYDNEY--Rio Tinto PLC said long-running negotiations over a planned underground mine at Oyu Tolgoi in Mongolia had ended with an agreement among the project's shareholders to advance the development.

The deal was signed by Rio Tinto, the Mongolian government and Turquoise Hill Resources Ltd., a Canada-listed company 50.8% owned by Rio that owns most of Oyu Tolgoi.

The Ango-Australian miner described the agreement, which it said addresses important shareholder issues and funding arrangements, as "a significant step forward" for the project.

"With a new pathway to development of the underground mine agreed, the focus now shifts to finalizing the project finance, the feasibility study and securing all necessary permits so that the underground mine development can proceed," Rio Tinto said in a regulatory filing Tuesday.

Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com

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