TORONTO (Reuters) - Turquoise Hill Resources Ltd (>> Turquoise Hill Resources Ltd) said on Thursday it was still in talks with the Mongolian government to resolve issues that have delayed the underground expansion of its Oyu Tolgoi gold and copper mine in the country.

Last month, a government official told Reuters the two sides had agreed to resolve issues around the size of a tax bill and other matters, potentially paving the way for the company to move forward on the expansion.

Turquoise Hill, which is majority owned by global miner Rio Tinto Plc (>> Rio Tinto plc) (>> Rio Tinto Limited), said on Thursday that while progress has been made, a resolution of outstanding matters had not been reached as of Sept. 30, when lender commitments to finance the project lapsed.

The miner, which owns some 66 percent of Oyu Tolgoi with the Mongolian government holding the remainder, said it has not requested an extension of lender commitments, but was in ongoing discussions with the lenders and may request an extension based on how talks with the government progress.

A source familiar with the discussions said that while the main tax-related dispute has been largely resolved, the company is still working with the government and tax authorities to clarify certain aspects of the ruling.

The underground development of Oyu Tolgoi, one of the world's largest undeveloped copper deposits, was put on hold last year after the government became concerned that cost overruns would delay the flow of its share of mine profits.

In May, a group of banks extended their commitment to the project, but efforts to resume development stalled in June, when the Canadian government filed notice of dispute with the government of Mongolia, after tax authorities claimed unpaid taxes and penalties related to the project.

The underground development remained subject to resolving remaining shareholder matters, including the agreement of a comprehensive funding plan, approval of a feasibility study by shareholders and acceptance by the Mongolian Minerals Council and the receipt of necessary permits, Turquoise Hill said on Thursday.

(Reporting by Susan Taylor and Euan Rocha; Editing by Jeffrey Benkoe)