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Turquoise Hill slides on planning rights offer for Mongolia mine

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Turquoise Hill Resources Ltd. (TSE:TRQ), the Canadian mineral exploration company focused on the Asia Pacific region, slid to the lowest in four weeks after saying it is planning a new $2.4 billion rights offering.

The Vancouver-basaed company cited uncertainty around talks with the Mongolian government that has delayed financing for the expansion of the Oyu Tolgoi mine.

The shares slumped to C$4.15, the lowest intraday price since Oct. 17, before trimming losses to C$4.37.

Turquoise Hill, which holds a 66-percent stake in the massive copper-gold mine run by Rio Tinto Plc. (NYSE:RIO), said today that it has filed a preliminary prospectus for the offering. Rights offerings raise funds from existing shareholders.

Turquoise said it was unable to secure $4 billion in provisional project financing in 2013 for the second-phase expansion of the mine because all outstanding issues with the Mongolian government haven't been resolved even though progress has been made. The Mongolian government owns the remaining 34 percent stake in Oyu Tolgoi.

Rio Tinto put Oyu Tolgoi’s more than $5-billion underground expansion on hold in July, saying the government wanted parliament to approve the project’s financing.

The rights issue must be completed by Jan. 13 and will repay Rio Tinto for a $600 million bridge funding facility and a $1.8 billion interim funding facility that were due to mature at the end of the year. 

Rio Tinto has agreed to extend the maturity of those two facilities to the Jan. 15 to allow time for the completion of the rights issue.

Turquoise Hill has to pay back $2.02 billion within the next 12 months.

Also today, the company reported a net loss of $94 million, or 9 cents a share in the third quarter, compared to net income of $112.2 million, or 13 cents a share, in the year-earlier period. Analysts, on average, had expected a loss of 5 cents a share, according to Thomson Reuters.

 

Quick facts: Turquoise Hill Resources Ltd

Price: 0.79 CAD

TSX:TRQ
Market: TSX
Market Cap: $1.59 billion
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