News: RIO UPDATE 1-Gold stream probably 'most attractive' funding option for Turquoise Hill...

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Nov 10 (Reuters) - A gold stream is "probably the most attractive" option for Canadian miner Turquoise Hill Resources TRQ.TO as it seeks funding for a copper and gold project in Mongolia, the head of mine financing company Wheaton Precious Metals WPM.TO said on Tuesday.

Turquoise Hill last week began arbitration proceedings against its biggest shareholder Rio Tinto RIO.L to seek "clarity" on financing for Oyu Tolgoi, one of Rio's biggest growth projects.

Streaming is a type of alternative finance that generally involves an upfront payment by the streamer to a miner, which repays the loan by supplying metal at a later date.

Last week, Turquoise Hill said a "gold streaming transaction" was among options the miner was studying to plug a funding gap estimated at $1.7 billion as of the end of the second quarter. The aim would be to reduce the size and delay the timing of any equity rights offering.

"Definitely from a Turquoise Hill shareholder perspective I would say it is probably the most attractive way of financing that project," Randy Smallwood, president and chief executive of Wheaton Precious Metals, told Reuters.

He declined comment when asked if Wheaton was in active talks. Any such deal would require approval from Rio.

"That's one of the challenges that I think Turquoise Hill has," he said.

Turquoise Hill declined comment. Rio did not immediately respond to a request for comment.

The Oyu Tolgoi deposit in south Mongolia is one of the world's largest known copper and gold deposits. It is jointly owned by the Mongolian government and Rio's majority-owned Turquoise Hill.