The Special Committee of independent directors of Turquoise Hill
Resources Ltd. (TSX: TRQ) (NYSE: TRQ) ("Turquoise Hill" or the
"Company") reports that it has advised Rio Tinto International
Holdings Limited (“Rio Tinto”) that the Special Committee is
terminating its review and consideration of Rio Tinto’s proposal to
acquire all of the outstanding common shares of the Company it does
not own for cash consideration of C$34 per share (the “Rio Tinto
Proposal”). The Special Committee concluded, in consultation with
its financial advisor, BMO Capital Markets, that Rio Tinto’s offer
price of C$34 per share does not fully and fairly reflect the
fundamental and long-term strategic value of the Company’s majority
ownership of the Oyu Tolgoi project. In addition, the Special
Committee reported that:
- In reaching its conclusion, the Special Committee considered a
preliminary indications of value analysis conducted by TD
Securities (“TD”), the independent valuator retained by the Special
Committee, and noted that Rio Tinto’s offer price of C$34 per share
was well below a range of values implied by TD’s preliminary
analysis.
- Engagement between the parties has not resulted in a consensus
on value and price or in any improved proposal from Rio Tinto.
- In assessing the Rio Tinto Proposal, the Special Committee also
considered the risks facing the Company’s investment in the Oyu
Tolgoi project, as well as the progress that the Company has
achieved in recent months on the underground project, including the
firing of the first three drawbells ahead of schedule and current
expectations that sustainable production will be achieved earlier
than previously forecast.
In consideration of the foregoing, the Special Committee
determined that it is not in the best interests of the Company or
the Company’s minority shareholders for the Special Committee to
support the Rio Tinto Proposal.
Ms. Maryse Saint-Laurent, Chair of the Special Committee,
comments:
“Market conditions in the equity and copper markets have changed
significantly since the receipt of Rio Tinto’s privatization
proposal in March. At the same time, the Company has continued to
make positive progress on the underground project. The Special
Committee has considered all relevant factors in reaching its
decision, including TD’s preliminary indications of value analysis.
Ultimately, we concluded that a transaction at the price proposed
by Rio Tinto would not fairly compensate minority shareholders for
the fundamental, long-term value of the Company’s interest in Oyu
Tolgoi.
“The Special Committee will now concentrate on the other major
elements of its mandate and support Company management in raising
at least US$650 million in new equity by year-end as required under
our funding agreement with Rio Tinto.”
Mr. Peter Gillin, Chair of the Board, comments on behalf of
the Board that:
“Rio Tinto is a valued and trusted shareholder and partner to
Turquoise Hill. Although we are ceasing further engagement with
respect to Rio Tinto’s proposal, we look forward to continuing our
relationship as we work together to realize the full potential of
the Oyu Tolgoi project for the benefit of all shareholders,
stakeholders and owners.”
Mr. Steve Thibeault, Interim CEO, comments:
“While the Special Committee process was underway with Rio
Tinto, Turquoise Hill management remained focused on the business
and on supporting the advancement of the Oyu Tolgoi underground
project. As a result, we are well positioned to sustain the
positive momentum of the past year when we achieved a number of
significant milestones including new understandings with the
Government of Mongolia which reset our relationship, de-risked the
project and enabled us to start the blasting of the undercut in
January.
“The underground project is advancing better than originally
anticipated. We were able to start blasting the drawbells ahead of
schedule and caving operations are progressing to the point where
we expect to achieve sustainable production earlier than forecast.
The funding agreement with Rio Tinto remains in effect and the
Company is executing on those commitments, which we expect will
provide us with sufficient liquidity to meet our funding
requirements.
“Oyu Tolgoi is an attractive tier one asset, and we remain
highly focused on and optimistic about its transformation into one
of the world’s great copper mines, positioning Oyu Tolgoi to become
a high-grade, low-cost, large-scale producer with a long mine
life.”
About Turquoise Hill Resources
Turquoise Hill is an international mining company focused on the
operation and continued development of the Oyu Tolgoi copper-gold
mine in Mongolia, which is the Company’s principal and only
material mineral resource property. Turquoise Hill’s ownership of
the Oyu Tolgoi mine is held through a 66% interest in Oyu Tolgoi
LLC; Erdenes Oyu Tolgoi LLC, a Mongolian state-owned entity, holds
the remaining 34% interest.
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”, “believe”, “could”, “estimate”, “expect”,
“intend”, “likely”, “may”, “plan”, “seek”, “should”, “will” and
similar expressions suggesting future outcomes or statements
regarding an outlook. These include, but are not limited to, the
expected size and timing of the Company’s equity offering,
statements regarding the status and expected development of the Oyu
Tolgoi project, including underground development and the expected
timing of first sustainable production, the Company’s expected
liquidity needs, the expected future growth and performance of Oyu
Tolgoi, the expected future value of the Company’s common shares
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 nature of
the Company’s ongoing relationship and interaction with the
Government of Mongolia; the continuation of undercutting in
accordance with the mine plan and design; the actual timing of
first sustainable production; the availability and timing of
required governmental and other approvals for the construction of
the state-owned power plant and the ability of the Government of
Mongolia to finance and procure the state-owned power plant within
the timeframes anticipated in the Power Source Framework Agreement,
as amended, subject to ongoing discussions relating to a standstill
period; finalization of an agreement with Inner Mongolia Power
International Cooperation Co., Ltd. on an extension of the current
power import arrangements; the Company’s ability to operate
sustainably, its community relations and its social licence to
operate in Mongolia; the amount of any additional future funding
gap to complete the Oyu Tolgoi project and the availability and
amount of potential sources of additional funding required
therefor; the implementation and successful execution by the
Company of the updated funding plan for the completion of the Oyu
Tolgoi underground mine; and other risks inherent to the Company's
business and/or factors beyond its control which could have a
material adverse effect on the Company.
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 of the Company’s Annual Information Form, as supplemented
by the “Risks and Uncertainties” section of the Company’s
Management Discussion and Analysis for the three and six months
ended June 30, 2022 (“Q2 2022 MD&A”).
Readers are further cautioned that the lists of factors
enumerated in the Risk Factors section of the Company’s Annual
Information Form and the “Risks and Uncertainties” section of the
Q2 2022 MD&A that may affect future results are not exhaustive.
Investors and others should carefully consider the foregoing
factors and other uncertainties and potential events and should not
rely on the Company’s forward-looking statements and information to
make decisions with respect to the Company. 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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version on businesswire.com: https://www.businesswire.com/news/home/20220814005027/en/
Vice President Investors Relations and Communications Roy
McDowall roy.mcdowall@turquoisehill.com
Follow us on Twitter @TurquoiseHillRe
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