TRQ Turquoise Hill Resources Ltd

Pentwater Capital Management LP ("Pentwater"), the largest minority shareholder of Turquoise Hill Resources Ltd. ("Turquoise Hill" or the "Company") (TSX:TRQ) (NYSE:TRQ), twice in the past two weeks has written to Turquoise Hill highlighting the Company’s inadequate and misleading disclosure of important financial information.  Turquoise Hill’s announcement last Thursday served as another opportunity for the Company to be transparent with its shareholders and tell the truth about its improved liquidity position.  Instead, once again, the Board and management failed to be honest and transparent.  Pentwater must ask at this point: is the Board and management team deaf, corrupt, or mindless? 

Last Thursday’s press release states, “Turquoise Hill now expects to have liquidity available to fund operations and underground development beyond Q3 2021”.  This compares to guidance of “into Q1” given on 11/12/19, guidance of “into Q2” given on 3/21/20, and guidance of “into Q3” given on 5/13/20.  The Company also admitted that it has, “decided to defer further discussions with Rio Tinto regarding possible interim funding arrangements.” Any other publicly traded company would have highlighted the improving liquidity of the Company at the top of its press release.  Instead, the first mention of this material and positive update on liquidity is on page 11 of the press release. 

The Company’s current guidance of a $4 billion funding shortfall is clearly FALSE.  Why would the Company decide “to defer further discussions with Rio Tinto regarding possible interim funding arrangements” if it truly were facing a $4 billion funding shortfall?  The truth is that the Company would only defer discussions on interim financing if it believed that it could finance any remaining funding shortfall with incremental debt financing.  When will the Company answer the following questions:

• Isn’t it true that the $4bn funding shortfall estimate is FALSE?
• Isn’t it true that without needing to finance the construction of a power plant, the capital funding shortfall is less than $3.1 billion? 
• Isn’t it true that more than $1.9 billion of the $3.1 billion is debt amortization payments? 
• Isn’t it true that if the debt amortization payments are contractually extended, the capital funding shortfall is less than $1.2 billion?
• Isn’t it true that the existing project financing arrangements at OT provide the Company the ability “to raise additional supplemental debt of up to $1.6 billion at the same attractive terms,” as its existing financing? 
• Isn’t it true that if the Company raises the supplemental financing and extends the amortization payments, then there is NO capital funding shortfall?

Thursday’s press release by the Company exhibits a pattern from the Board and management: purposely relegating the positive liquidity update to the last two paragraphs of an 11 page release in pursuit of the goal of obfuscating and concealing the Company’s true financial situation. Once again, the Board and management choose to not be honest and transparent with their minority shareholders. 

Pentwater believes that the funding shortfall estimate is a material piece of information, and if the estimate has materially changed, it is imperative that the Company update its shareholders immediately, as opposed to waiting until the Q2 2020 earnings release, AFTER the annual and special meeting. The fact that Pentwater is forced to remind the Company of this, without receiving any response, underscores why it is so important that shareholders vote for the election of a minority shareholder representative to the Board and why shareholders support Pentwater’s proposal to amend the bylaws to allow minority shareholders to have full time representatives on the Company’s Board.

We Need Your Support

We are seeking your support at the Company's upcoming annual and special meeting of shareholders to be held on July 24, 2020 to restore accountability at Turquoise Hill and give minority shareholders back their voice.

We encourage our fellow shareholders to consider the facts and take action against the current culture of entrenchment, value destruction and misconduct at Turquoise Hill. The interests of the Company's minority shareholders have been disregarded for far too long. Your vote is critical to initiate much-needed change, to restore accountability and to safeguard minority shareholder interests in Turquoise Hill.

Shareholders are urged to vote only the GOLD proxy:

• FOR the election of Matthew Halbower to the board of directors of the Company; 
• WITHHOLD in respect of the election of all of the management nominees to the board of directors of the Company; and 
• FOR the adoption of the shareholder proposal submitted by Pentwater to amend the Company's articles to provide minority shareholders of the Company with the exclusive right to nominate and elect three of seven directors to the Board.

Shareholders are urged to read the full text of Pentwater's proxy circular and related press releases, which have been filed and made available under Turquoise Hill's issuer profile at www.sedar.com.

For further information contact:

MacKenzie Partners, Inc. Daniel Burch – 1-212-929-5748 Jeanne Carr – 1-917-648-4478Email: SaveTRQ@mackenziepartners.com