Oyu Tolgoi feasibility study won't have financials or schedule
Shares in Turquoise Hill Resources (TSE:TRQ) showed little reaction after the company's second quarter financials results boasted concentrate sales from its Oyu Tolgoi mine in Mongolia increasing almost three times over the first quarter.
Shareholders who have marked down the counter's value nearly 30% over the past year, continue to await concrete news on financing for an underground expansion project at the massive copper-gold-silver mine, 66% owned by Turquoise Hill with the government of the Asian nation holding the rest.
Vancouver-based Turquoise Hill, controlled by Anglo-Australian giant Rio Tinto, suspended work on the $5.1 billion underground expansion of Oyu Tolgoi where 80% of the resources are located in November and in April said potential lenders have extended a deadline to arrange financing for the project until the end of September.
"We are all aware of the September 30 date and we are all working toward that deadline," CEO Kay Priestly said on a conference call with investors, adding that the banks and institutions "have been with us through this process for several years now," and remain "committed" and "upbeat":
"Clearly the underground is a significant part of the value of this mine, and right now, we're focused on progressing the underground."
Last year 2,000 workers at Oyu Tolgoi were let go due to the stalled expansion and in May another 300 positions at the mine in the South Gobi desert near the Chinese border were closed.
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In June, discussion were further complicated after Mongolia’s Tax Authority accused Turquoise Hill of evading taxes and penalty payments related to Oyu Tolgoi. The company said at the time if the dispute is not resolved the feasibility study for the underground expansion could be delayed and that any breach of its investment agreement with Mongolia could trigger international arbitration.
On the conference call Priestly said that the feasibility study is largely complete and a geological reserve update is currently being reviewed, but "due to the outstanding shareholder issues, the financial and scheduled portion of the submission were omitted."
For 2014, Oyu Tolgoi is targeting production of 150,000 to 175,000 tonnes of copper in concentrates and 700,000 to 750,000 ounces of gold in concentrates.
But after phase 2 the mine in the southern Gobi desert could produce more than 1.2 billion pounds of copper, 650,000 ounces of gold and 3 million ounces of silver each year. Oyu Tolgoi would then account for 30% of the economy of the nation of just over 3 million people.