Turquoise Hill to raise $2.4B for Oyu Tolgoi
Turquoise Hill Resour
ces Ltd. said Thursday it was planning a rights offering of up to $2.4-billion, citing delays at Rio Tinto PLC’s Oyu Tolgoi copper and gold mine in Mongolia that have stopped it from financing the mine’s next phase.
Shares of Vancouver-based Turquoise Hill, which owns 66% of Oyu Tolgoi, fell 36¢, or 7.78%, to close at $4.27 on the Toronto Stock Exchange.
Diversified miner Rio Tinto owns 50.8% of Turquoise Hill and operates Oyu Tolgoi.
Turquoise Hill filed a preliminary prospectus for the rights offering, which raises funds from existing shareholders.
Rio Tinto put Oyu Tolgoi’s more than $5-billion underground expansion on hold in July, saying the Mongolian government wanted parliament to approve the project’s financing.
Uncertainty over Oyu Tolgoi and shifting foreign investment rules have weighed on foreign direct investment in Mongolia over the last year.
Turquoise Hill said progress was being made with the government, but it was not clear when the project would be approved or when a feasibility study would be final. The company said it did not expect to complete project financing this year.
Under an agreement with Turquoise Hill, Rio Tinto will be required to buy shares that are not taken up under the rights offering, subject to some conditions.
The preliminary prospectus did not include the size of the proposed offering but said it could be as much as $2.4-billion. Turquoise Hill’s market capitalization was about $4.5-billion at Wednesday’s stock market close.
Turquoise Hill needs the funds to repay Rio Tinto under two funding facilities. The facilities’ maturity dates have been extended to Jan. 15, 2014, so the rights offering can be completed.
Turquoise Hill also reported its financial results for the third quarter on Thursday. It posted a net loss of $94-million, or 9¢ a share. Analysts, on average, had expected a loss of 5¢ a share, according to Thomson Reuters.
Revenue rose to $15.7-million from $3.8-million.