MONTREAL, June 28, 2020 /PRNewswire/ - Turquoise Hill
Resources today announced the Government of Mongolia and Oyu Tolgoi LLC have reached an
agreement to prioritise a State Owned Power Plant (SOPP) in order
to support the Government's decision, taken by Cabinet in April,
2020, as the domestic power solution for the Oyu Tolgoi mine in
Mongolia. The agreement envisages
that the Government of Mongolia
would fund and construct a SOPP at Tavan Tolgoi.
The existing Power Source Framework Agreement (PSFA) between Oyu
Tolgoi and the Government of Mongolia has been amended to reflect joint
prioritisation and progression of SOPP in accordance with agreed
milestones. Upon its delivery, SOPP would provide long-term and
reliable power supply for Oyu Tolgoi's open pit operations and
underground project development.
The Parties will now work towards achieving the milestones
agreed in the amendment, which include signing a Power Purchase
Agreement by 31 March, 2021,
commencement of construction by no later than 1 July 2021 and commissioning of SOPP within four
years thereafter, and, negotiating an extension to the existing
power import agreement by 1 March,
2021, to ensure that there is no disruption to the power
supply required to safeguard Oyu Tolgoi's ongoing operations and
development.
"We welcome the Government of Mongolia's proposal to progress Oyu Tolgoi's
long-term domestic power requirements and to prioritise SOPP,"
stated Ulf Quellmann, Chief Executive Officer of Turquoise Hill.
"The amendments to the PSFA provide Oyu Tolgoi and the Government
the additional framework and time required to solidify a power
solution and finalise the commercial arrangements in the best
interests of all stakeholders. This agreement is a testament to the
continued collaboration and commitment of the Government, Turquoise
Hill and Rio Tinto to the long-term success of Oyu Tolgoi."
The agreed PSFA amendment can be found at
www.turquoisehill.com.
Forward-Looking Statements
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
regarding agreements on power including the possible progression of
the State Owned Power Plant ("SOPP") and related amendments to the
Power Source Framework Agreement as well as power purchase
agreements, the timing, construction and commissioning of the
potential SOPP, sources of interim power, information regarding the
timing and amount of production and potential production delays,
statements in respect of the impacts of any delays on the Company's
cash flows, expected copper and gold grades, liquidity, funding
requirements and planning, statements regarding timing and status
of underground development, the development options under
consideration for the design of Panel 0 and the related cost and
schedule implications, the potential impact of COVID-19 on the
Company's business, operations and financial condition, capital and
operating cost estimates, timing of completion of the definitive
estimate review, 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 and
projected gold, copper and silver grades, anticipated capital and
operating costs, anticipated future production and cash flows, the
anticipated location of certain infrastructure and sequence of
mining in Panel 0, the availability and timing of required
governmental and other approvals for the construction of the SOPP,
the ability of the Government to finance and procure the SOPP
within the timeframes anticipated in the PSFA Amendment, the
willingness of third parties to extend existing power arrangements,
the status of the Company's relationship and interaction with the
Government of Mongolia on the
continued operation and development of Oyu Tolgoi and Oyu Tolgoi
LLC internal governance. 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; the outcome of the definitive
estimate review; 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; regulatory restrictions (including
environmental regulatory restrictions and liability); Oyu Tolgoi
LLC's or the Government's ability to deliver a domestic power
source for the Oyu Tolgoi 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 strikes, blockages 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; 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 Oyu
Tolgoi project; capital and operating costs, including with respect
to the development of additional deposits and processing
facilities; and defective title to mineral claims or property.
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 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 Oyu Tolgoi, the Company
has based its assumptions and analyses on certain factors which are
inherently uncertain. Uncertainties and assumptions include, among
others: 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 to construct such a source) for
Oyu Tolgoi; the ability to secure and draw down on the supplemental
debt under the Oyu Tolgoi project financing facility and the
availability of additional financing on terms reasonably acceptable
to Oyu Tolgoi LLC, Rio Tinto and the Company to further develop Oyu
Tolgoi; the potential impact of COVID-19; 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, in the development of the underground mine
(which could significantly exceed the costs projected in the 2016
Oyu Tolgoi Feasibility Study and the 2016 Oyu Tolgoi Technical
Report); projected copper, gold and silver prices and their market
demand; production estimates and the anticipated yearly production
of copper, gold and silver at Oyu Tolgoi; and the willingness of
third parties to extend the current power arrangements to the Oyu
Tolgoi mine.
The cost, timing and complexities of mine construction and
development are increased by the remote location of a property such
as Oyu Tolgoi. 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 Oyu Tolgoi 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 dated as of
March 18, 2020 in respect of the year
ended December 31, 2019 (the "AIF")
as supplemented by our Management's Discussion and Analysis of
Financial Condition and Results of Operations for the three months
ended March 31, 2020
("MD&A").
Readers are further cautioned that the list of factors
enumerated in the "Risks and Uncertainties" section of the AIF and
in 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.
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SOURCE TURQUOISE HILL RESOURCES LTD