Turquoise Hill shares stage comeback as Oyu Tolgoi looks back on track
Shares in Turquoise Hill Resources (TSX:TRQ), operator of the Oyu Tolgoi mine in Mongolia, jumped 10% on news that expansion of the already massive copper-gold mine may now go ahead on schedule.
Turquoise Hill's market value climbed back above the $5 billion level on the news, recovering from a four-and-a-half-year low hit on Monday after controlling shareholder Rio Tinto (LON:RIO) said its putting on hold a the $5 billion underground project while it waits for Mongolian parliamentary approval for a funding package.
But on Thursday, Prime Minister Norov Altankhuyag said: "Parliament has already made the decision and signed their agreement. Cabinet doesn't have to be involved. All issues can be discussed and decided at the board of directors' level," according to a Reuters press report..
Mongolia owns 34% of Oyu Tolgoi located in the South Gobi desert and the government of the Asian nation has been at loggerheads with Turquoise Hill, owner the remainder of the mine, for months.
The Asian nation twice held up shipments from the $6.6 billion mine which is set to contribute as much as a third of the nation's economy if the second phase underground expansion were to go ahead.
Apart from disagreement over Oyu Tolgoi's expansion, which Turquoise Hill (then Ivanhoe Mines) has been advancing for more than a decade, cost overruns, the employment and pay of Mongolian workers, contractors and corporate governance, taxation and the repatriation of earnings also remain sticking points.
Vancouver-based Turquoise Hill said yesterday Oyu Tolgoi will produce 75,000 to 80,000 tonnes of copper in concentrate this year.
At full tilt, the mine is set to produce more than 1.2 billion pounds of copper worth over $4 billion at today's prices, 650,000 ounces of gold ($800 million) and 3 million ounces of silver (under $100 million) each year.