MONTREAL, Nov. 29, 2021 /PRNewswire/ - Turquoise Hill
Resources Ltd. ("Turquoise Hill" or the "Company") announced today
that, in light of the progress made in the ongoing negotiations
between the Government of Mongolia, Rio Tinto and the Company, the Board
of Directors of OT LLC (the "OT Board") approved a bridging budget
of $75M to continue to progress
critical activities in the Oyu Tolgoi ("OT") underground mine
development project. The Company expects that the approved increase
should be sufficient to sustain work on the development of the OT
underground mine up to mid January 2022.
While the Company believes that the decision to approve the
bridging budget was a necessary and positive step in the near term,
the Company cautions that there can be no assurance that the OT
Board will approve any future necessary additional investments to
further progress underground development and accordingly OT LLC
remains at risk of having to slow down further work on the
underground development.
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 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; 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
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 sufficiency of the partial and short-term bridging
budget; 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 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 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.
