Turquoise Hill jumps 11% after allaying Oyu Tolgoi fears
Turquoise Hill Resources (TSX:TRQ), 66%-owner of Oyu Tolgoi, raced ahead more than 11% on Friday after soothing investor fears about negotiations with the Mongolian government over the future of the massive copper-gold mine.
Stock in Turquoise Hill, which is controlled by Rio Tinto (LON:ASX), was changing hands at $7.05, up 11.1% by lunchtime in heavy volumes after the Vancouver-based company characterized discussions over project development and costs, operating budget, project financing, management fees and governance as "productive".
Turquoise Hill, worth $6.9 billion in Toronto is still trading down more than 60% over the past year and is down from a peak above $28 a share hit in March 2011.
Negotiations over Oyu Tolgoi, set to go into commercial production by end of June, will continue through March according to the press release.
A 2009 deal gave Mongolia 34% of Oyu Tolgoi, but but wrangling over ownership of the project which is set to transform the economy of Mongolia has only intensified since a new government laden with resource nationalists took power last year.
Mongolia has accused Rio of working fast and loose with financing for the project – an underground mine to compliment the open pit could put the final bill at $13 billion by some estimates.
In October 2011 there was also a standoff over ownership of Oyu Tolgoi – turquoise hill in the local language – when the then Ivanhoe Mines plunged on news that the Mongolian government wants to rework the deal to gain a 51% stake.
At the time Rio and Ivanhoe took a tough stance and after some desperate negotiations Mongolia backed off, but the stock has never really recovered since then.
Image is of Naadam festivities at Oyu Tolgoi where famous Mongolian bands and singers such as Quiza, Lemons, Shar Airag, Kharsh, UB Night and VIVA as well as comedian Bataa from the X-Tuts production performed. Copyright Oyu Tolgoi 2012.