MONTREAL, Aug. 9, 2021 /PRNewswire/ - Turquoise Hill
Resources (the "Company") today commented on recent media reports
in relation to a consulting report addressing the
previously announced increase in cost and schedule extension.
As announced on December 1, 2020,
the board of directors of Oyu Tolgoi LLC ("OT Board") established a
special board committee (the "OT Special Committee") comprised of
two representatives of Erdenes Oyu Tolgoi (a state-owned entity
that owns a 34% interest in Oyu Tolgoi LLC) and two representatives
of the Company to investigate the causes of the increase in cost
and schedule extension to the underground development of the Oyu
Tolgoi project during the period between the 2016 Feasibility Study
and the December 2020 Definitive
Estimate. A group of consultants called "The Independent Consulting
Group" ("ICG") was hired to conduct the review on behalf of the OT
Special Committee.
ICG submitted its report to the OT Special Committee on
August 3, 2021 (the "ICG Report").
The ICG Report raises certain questions in relation to
the project management process surrounding the increase in cost and
schedule extension and suggests that changes in geotechnical
parameters did not contribute significantly thereto. The OT
Board and the Company are conducting a detailed review of the
ICG Report and will seek a number of clarifications and supporting
detailed explanations for certain of the broad conclusions it
contains. The Company will update the market as appropriate.
Follow us on Twitter @TurquoiseHillRe
Forw ard-looking statements and forw ard-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: discussions with, and the
nature of the Company's relationship and interaction with, the
Government of Mongolia on the
continued operation and development of Oyu Tolgoi, including with
respect to the definitive estimate and the potential termination,
amendment or replacement of the Investment Agreement ("IA") or the
Oyu Tolgoi Mine Development and Financing Plan ("UDP"); the
willingness and ability of the parties to the IA or the UDP to
amend or replace the UDP; the implementation and successful
execution of the funding plan that is the subject of the Heads of
Agreement ("HoA") and the amount of any additional future funding
gap to complete the Oyu Tolgoi project as well as the amount and
potential sources of additional funding required therefor, all as
contemplated by the HoA; the expectations set out in the 2020 Oyu
Tolgoi Technical Report ("OTTR20"); 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 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 Oyu Tolgoi 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 Oyu Tolgoi 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; 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 to; 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
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 status and nature of the Company's relationship
and interactions and discussions with the Government of
Mongolia on the continued
operation and development of Oyu Tolgoi (including with respect to
the causes of the increase in costs and schedule extension of the
underground development) and Oyu Tolgoi LLC internal governance
(including the outcome of any such interactions or discussions);
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 Oyu Tolgoi; 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 Oyu
Tolgoi 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);
Oyu Tolgoi LLC or the Government of Mongolia'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 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 Oyu
Tolgoi 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 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 of Mongolia to construct such a source) for Oyu
Tolgoi; 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 Oyu Tolgoi project as
well as the amount and potential sources of additional funding
required therefor, all as contemplated by the HoA; the status and
nature of the Company's relationship, interactions and discussions
with the Government of Mongolia on
the continued operation and development of Oyu Tolgoi (including
with respect to the causes of the increase in costs and schedule
extension of the underground development) and Oyu Tolgoi 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
nature and quantum of the current and projected economic benefits
to Mongolia resulting from the
continued operation of Oyu Tolgoi; 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 Oyu
Tolgoi.
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 for the year ended
December 31, 2020 ("AIF"), as
supplemented by the "Risks and Uncertainties" section of the
Company's management's discussion and analysis for the second
quarter ended June 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.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/turquoise-hill-comments-on-review-of-oyu-tolgoi-mine-increase-in-cost-and-schedule-extension-301351449.html
SOURCE TURQUOISE HILL RESOURCES LTD