Turquoise Hill May Seek Extension From Oyu Tolgoi Lenders

Turquoise Hill Resources Ltd. (TRQ), the miner controlled by Rio Tinto Group, may ask lenders to extend financing for the $6.2 billion Oyu Tolgoi copper and gold project as talks continue with the Mongolian government.

Current lender commitments expire on March 31, Vancouver-based Turquoise Hill said in a statement yesterday. Mongolia, which owns 34 percent of the project, has been in talks with Turquoise Hill and Rio about cost overruns and finalizing financing for further mine development.

The discussions may not be settled until a study on underground development at Oyu Tolgoi is completed and approved and permits are received, Turquoise Hill said. “In this event, the shareholders will consider requesting an extension of the commitments from the project finance lenders and finalization of the Oyu Tolgoi project financing may be deferred to the second half of 2014,” the company said.

Oyu Tolgoi, which began operating in South Gobi last year, is the largest single investment in the history of Mongolia, according to the project’s website. Turquoise Hill is required to fund the project’s cash requirements until Sept. 1, 2016. Oyu Tolgoi had $6.8 billion in loans as of the end of 2013.

The company also reduced production forecasts for Oyu Tolgoi after output in the first quarter was affected by equipment problems. The mine is now expected to produce 135,000 to 160,000 tons of copper in concentrates and 600,000 to 700,000 ounces of gold in concentrates for 2014, Turquoise Hill said. That compares with a Feb. 12 target of 150,000 to 175,000 tonnes of copper and 700,000 to 750,000 ounces of gold.

First-quarter sales were slower than the company expected, as it reported a narrower quarterly loss.

Turquoise Hill fell 1.6 percent to C$3.76 yesterday in Toronto. The shares have gained 7.1 percent this year.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net Tina Davis

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