MONTREAL, Dec. 13, 2021 /PRNewswire/ - Turquoise Hill
Resources Ltd. ("Turquoise Hill" or the "Company") today noted
recent media coverage regarding ongoing negotiations between the
Government of Mongolia (the
"Government"), Rio Tinto and the Company. The Company and Rio Tinto
have made a joint offer to the Government of Mongolia which aims to reset the relationship
and allow all parties to move forward together. The offer includes,
among other elements, a proposal to forgive and write-off the
entirety of the approximately US$2.3
billion carry account loan owing by the Mongolian-owned
shareholder (Erdenes) to the Company and cancellation of the UDP
agreement on a go-forward basis. The offer follows on months of
discussions between Turquoise Hill, Rio Tinto and the Government of
Mongolia to understand the
Government's issues and priorities, deliver greater economic value
to Mongolia and build a stronger
partnership for a prosperous future for all.
Turquoise Hill remains committed to working with the Government
of Mongolia to advance the Oyu
Tolgoi project for the benefit of all stakeholders, including
securing approval for the commencement of the undercut as quickly
as is practical following the entering into of a definitive
agreement among the parties. Negotiations continue and remain
subject to required approvals, with all parties focused on being in
a position to finalise an agreement. A further market update will
be provided as and when appropriate.
Forward-looking statements and forward-looking
information
Certain statements made herein, including statements relating to
matters that are not historical facts and statements of the
Company's beliefs, intentions and expectations about developments,
results and events which will or may occur in the future,
constitute "forward-looking information" within the meaning of
applicable Canadian securities legislation and "forward-looking
statements" within the meaning of the "safe harbor" provisions of
the United States Private
Securities Litigation Reform Act of 1995. Forward-looking
statements and information relate to future events or future
performance, reflect current expectations or beliefs regarding
future events and are typically identified by words such as
"anticipate", "could", "should", "expect", "seek", "may", "intend",
"likely", "plan", "estimate", "will", "believe" and similar
expressions suggesting future outcomes or statements regarding an
outlook. These include, but are not limited to, statements and
information regarding: the likelihood of the Company being able to
achieve, in the near or mid-term, a definitive agreement with the
Government of Mongolia and Rio
Tinto that would settle various outstanding material matters that
are critical to progressing the Oyu Tolgoi project and the
corresponding likelihood of the undercut decision being able to be
made reasonably shortly thereafter; the ability of Oyu Tolgoi LLC
("OT LLC") to maintain critical activities in the OT underground
mine development project and to sustain work on the development of
the OT underground mine as and when the partial and short-term
bridging budget approved by the board of directors of OT LLC at the
end of November 2021 shall approach
being fully spent or committed in mid-January 2022; the approval or non-approval by
the OT Board of any future necessary additional investment and the
likely consequences on the timing and overall economic value of the
OT project, including slowdown on the underground development and
potential further delays to first sustainable production; in the
event a definitive agreement with the Government of Mongolia is not entered into in the near term,
the ongoing negotiations with, and the nature of the Company's
relationship and interaction with, the Government of Mongolia on the continued operation and
development of OT, including with respect to the Definitive
Estimate and the potential termination, amendment or replacement of
the 2009 Investment Agreement among Turquoise Hill, the Government
of Mongolia, OT LLC and an
affiliate of Rio Tinto ("IA") or the Oyu Tolgoi Mine Development
and Financing Plan ("UDP") as well as the willingness of the
Government of Mongolia to further
engage in meaningful discussions with the Company, Rio Tinto and OT
LLC; the willingness and ability of the parties to the IA or the
UDP to amend or replace either such agreement; the implementation
and successful execution of the funding plan that is the subject of
the Heads of Agreement between the Company and Rio Tinto entered
into in April 2021 ("HoA") and the
amount of any additional future funding gap to complete the Oyu
Tolgoi project and the amount and potential sources of additional
funding required therefor, all as contemplated by the HoA, as well
as potential delays in the ability of the Company and OT LLC to
proceed with the funding elements contemplated by the HoA as a
result of delays in approving or non-approval of any future
necessary additional investment by the OT Board; the expectations
set out in the 2020 Oyu Tolgoi Technical Report ("OTTR20"); the
timing and ultimate resolution of certain non-technical undercut
criteria; the timing and amount of future production and potential
production delays; statements in respect of the impacts of any
delays on achieving first commercial production and on the
Company's cash flows; expected copper and gold grades; the merits
of the class action complaints filed against the Company in
October 2020 and January 2021, respectively; the likelihood that
the Company will be added as a party to the international tax
arbitration brought by OT LLC against the Government of
Mongolia and the merits of its
defence and counterclaim; liquidity, funding sources and funding
requirements; the amount of any funding gap to complete the OT
project; the amount and potential sources of additional funding;
the Company's ability to re-profile its existing project debt in
line with current cash flow projections; the amount by which a
successful re-profiling of the Company's existing debt would reduce
the Company's currently projected funding requirements; the
Company's ability to raise supplemental senior debt; the timing of
studies, announcements and analyses; status of underground
development, including any slowdown of work; the causes of the
increase in costs and schedule extension of the underground
development; the mine design for Panel 0 of Hugo North Lift 1 and
the related cost and production schedule implications; the
re-design studies for Panels 1 and 2 of Hugo North Lift 1 and the
possible outcomes, content and timing thereof; expectations
regarding the possible recovery of ore in the two structural
pillars, to the north and south of Panel 0; the possible
progression of a state-owned power plant ("SOPP") and related
amendments to the Power Source Framework Agreement ("PSFA") as well
as power purchase agreements and extensions thereto; the timing of
construction and commissioning of the potential SOPP; sources of
interim power; the continuing impact of COVID-19, including any
restrictions imposed by health or governmental authorities relating
thereto on the Company's business, operations and financial
condition, as well as delays and the development cost impacts of
delays caused by the COVID-19 pandemic; capital and operating cost
estimates; mill and concentrator throughput; the outcome of formal
international arbitration proceedings; anticipated business
activities, planned expenditures, corporate strategies, and other
statements that are not historical facts.
Forward-looking statements and information are made based upon
certain assumptions and other important factors that, if untrue,
could cause the actual results, performance or achievements of the
Company to be materially different from future results, performance
or achievements expressed or implied by such statements or
information. There can be no assurance that such statements or
information will prove to be accurate. Such statements and
information are based on numerous assumptions regarding present and
future business strategies, local and global economic conditions,
and the environment in which the Company will operate in the
future, including the price of copper, gold and silver; projected
gold, copper and silver grades; anticipated capital and operating
costs; anticipated future production and cash flows; the
anticipated location of certain infrastructure in Hugo North Lift 1
and sequence of mining within and across panel boundaries; the
likelihood of the Company being able to achieve, in the near or
mid-term, a definitive agreement with the Government of
Mongolia and Rio Tinto that would
settle various outstanding material matters that are critical to
progressing the Oyu Tolgoi project and the corresponding likelihood
of the undercut decision being able to be made reasonably shortly
thereafter and, more generally, the status and nature of the
Company's relationship and interactions and discussions with the
Government of Mongolia on the
continued operation and development of OT (including with respect
to the causes of the increase in costs and schedule extension of
the underground development) and OT LLC internal governance
(including the outcome of any such interactions or discussions);
the availability and timing of required governmental and other
approvals for the construction of the SOPP; the ability of the
Government of Mongolia to finance
and procure the SOPP within the timeframes anticipated in the PSFA,
as amended, subject to ongoing discussions relating to a standstill
period; the willingness of third parties to extend existing power
arrangements; the willingness and ability of the parties to the IA
or the UDP to amend or replace either such agreement; the nature
and quantum of the current and projected economic benefits to
Mongolia resulting from the
continued operation of OT; the implementation and successful
execution of the funding plan that is the subject of the HoA and
the amount of any additional future funding gap to complete the OT
project as well as the amount and potential sources of additional
funding required therefor, all as contemplated by the HoA.
Certain important factors that could cause actual results,
performance or achievements to differ materially from those in the
forward-looking statements and information include, among others:
copper, gold and silver price volatility; discrepancies between
actual and estimated production; mineral reserves and resources and
metallurgical recoveries; development plans for processing
resources; public health crises such as COVID-19; matters relating
to proposed exploration or expansion; mining operational and
development risks, including geotechnical risks and ground
conditions; litigation risks, including the outcome of the class
action complaints filed against the Company; the outcome of the
international arbitration proceedings; regulatory restrictions
(including environmental regulatory restrictions and liability); OT
LLC or the Government of Mongolia's ability to deliver a domestic power
source for the OT project within the required contractual time
frame; communications with local stakeholders and community
relations; activities, actions or assessments, including tax
assessments, by governmental authorities; events or circumstances
(including public health crises strikes, blockades or similar
events outside of the Company's control) that may affect the
Company's ability to deliver its products in a timely manner;
currency fluctuations; the speculative nature of mineral
exploration; the global economic climate; global climate change;
dilution; share price volatility; competition; loss of key
employees; cyber security incidents; additional funding
requirements, including in respect of the development or
construction of a long-term domestic power supply for the OT
project; capital and operating costs, including with respect to the
development of additional deposits and processing facilities;
defective title to mineral claims or property; and human rights
requirements. Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements and information, there may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended. All such forward-looking
statements and information are based on certain assumptions and
analyses made by the Company's management in light of their
experience and perception of historical trends, current conditions
and expected future developments, as well as other factors
management believes are reasonable and appropriate in the
circumstances. These statements, however, are subject to a variety
of risks and uncertainties and other factors that could cause
actual events or results to differ materially from those projected
in the forward-looking statements or information.
With respect to specific forward-looking information concerning
the continued operation and development of OT, the Company has
based its assumptions and analyses on certain factors which are
inherently uncertain. Uncertainties and assumptions include, among
others: the likelihood of the Company being able to achieve, in the
near or mid-term, a definitive agreement with the Government of
Mongolia and Rio Tinto that would
settle various outstanding material matters that are critical to
progressing the Oyu Tolgoi project and the corresponding likelihood
of the undercut decision being able to be made reasonably shortly
thereafter and, more generally, the status and nature of the
Company's ongoing negotiations, relationship and interactions with
the Government of Mongolia on the
continued operation and development of OT (including with respect
to the causes of the increase in costs and schedule extension
of the underground development) and OT LLC internal governance
(including the outcome of any such interactions or discussions);
the sufficiency of the partial and short-term bridging budget
approved at the end of November 2021;
the approval or non-approval by the OT Board of any future
necessary additional investment, and the likely consequences on the
timing and overall economic value of the OT project, including
slowdown on the underground development and significant delays to
first sustainable production; the willingness and ability of the
parties to the IA and the UDP to amend or replace either such
agreement; the timing and cost of the construction and expansion of
mining and processing facilities; the timing and availability of a
long-term domestic power source (or the availability of financing
for the Company or the Government of Mongolia to construct such a source) for OT;
the implementation and successful execution of the funding plan
that is the subject of the HoA and the amount of any additional
future funding gap to complete the OT project as well as the amount
and potential sources of additional funding required therefor, all
as contemplated by the HoA; the nature and quantum of the current
and projected economic benefits to Mongolia resulting from the continued
operation of OT; the potential impact of COVID-19, including any
restrictions imposed by health and governmental authorities
relating thereto, as well as the development cost impacts of delays
caused by the COVID-19 pandemic; the impact of changes in, changes
in interpretation to or changes in enforcement of, laws,
regulations and government practices in Mongolia; the availability and cost of skilled
labour and transportation; the obtaining of (and the terms and
timing of obtaining) necessary environmental and other government
approvals, consents and permits; delays and the costs which would
result from delays, including delays caused by COVID-19
restrictions and impacts and related factors, in the development of
the underground mine (which could significantly exceed the costs
projected in OTTR20); projected copper, gold and silver prices and
their market demand; and production estimates and the anticipated
yearly production of copper, gold and silver at OT.
The cost, timing and complexities of mine construction and
development are increased by the remote location of a property such
as OT. It is common in mining operations and in the development or
expansion of existing facilities to experience unexpected problems
and delays during development, construction and mine start-up.
Additionally, although OT has achieved commercial production, there
is no assurance that future development activities will result in
profitable mining operations.
Readers are cautioned not to place undue reliance on
forward-looking information or statements. By their nature,
forward-looking statements involve numerous assumptions, inherent
risks and uncertainties, both general and specific, which
contribute to the possibility that the predicted outcomes will not
occur. Events or circumstances could cause the Company's actual
results to differ materially from those estimated or projected and
expressed in, or implied by, these forward-looking statements.
Important factors that could cause actual results to differ from
these forward-looking statements are included in the "Risk Factors"
section in the Company's annual information form for the year ended
December 31, 2020 ("AIF"), as
supplemented by the "Risks and Uncertainties" section in the
Company's management's discussion and analysis for the third
quarter ended September 30, 2021
("MD&A").
Readers are further cautioned that the list of factors
enumerated in the "Risk Factors" section of the AIF and in the
"Risks and Uncertainties" section of the MD&A that may affect
future results is not exhaustive. When relying on the Company's
forward-looking statements and information to make decisions with
respect to the Company, investors and others should carefully
consider the foregoing factors and other uncertainties and
potential events. Furthermore, the forward-looking statements and
information contained herein are made as of the date of this
document and the Company does not undertake any obligation to
update or to revise any of the included forward-looking statements
or information, whether as a result of new information, future
events or otherwise, except as required by applicable law. The
forward-looking statements and information contained herein are
expressly qualified by this cautionary statement.
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SOURCE Turquoise Hill Resources Ltd.