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Turquoise Hill Resources Ltd. (TRQ)
NYSE - NYSE Delayed price. Currency in USD
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(Remember the reason for the 'potential equity raise' is due to the cost over-run. The class-action case is trying to establish what was known about the delay. However, it may determine whom was at fault for the delay. i.e. was it geological issues as per Rios statement or was it due to mismanagement as per the claims in the case). I am not a lawyer, however if we were to face full dilution, I suspect the reason for the dilution would come into focus in an even more major way, therefore, it might be interesting for you to see some of the statements given by the insiders.... its pretty crazy stuff.
"After the end of the Class Period, the expert hired by Rio Tinto to assess and fix theproblems at OT (Bowley) and Defendant Jacques? and Soirat?s longtime executive coach (Duffy)reported Defendants? misconduct to securities regulators, including the SEC, the AustralianSecurities and Investments Commission, the U.K. Serious Fraud Office and Financial ConductAuthority, and the Mongolia Financial Regulatory Commission, and those agencies are nowinvestigating the misconduct alleged in this action. In connection with those investigations, aswell as in a separate employment dispute before a U.K. tribunal, Bowley provided a swornstatement in which he attests that Defendants? Class Period statements were ?misleading,??completely untrue,? and a ?lie??allegations that were confirmed by Lead Counsel?sinvestigation, numerous former OT managers, and scores of internal Rio Tinto documents."Ultimately, Turquoise Hillinvestors incurred massive losses as Turquoise Hill shares lost well over 70% of their value whenthe true extent of the delays and cost overruns at Oyu Tolgoi came to light?and Defendants wereultimately forced to disclose that the Oyu Tolgoi project was $1.2 to $1.9 billion over budget andup to 30 months behind schedule."""Bowley said that Rio Tinto lied to investors about the causes of theCase 1:20-cv-08585-LJL Document 110 Filed 03/17/21 Page 87 of 16383delays and cost overruns in an attempt to evade its responsibility for the problems. Bowley alsosaid that Field, the former General Manager-Underground, told him that the purported rockstability issues were ?a load of #$%$ and that these issues were addressed in the original minedesign, but Rio erroneously removed that element of the design.""FE 2, the Red Path Mining senior manager at Oyu Tolgoi from 2013 to 2019,likewise said that the notion that the geological issues cited by Defendants was the primary driverof the delays was ?one hundred percent pure horseshit. . . . It was a management issue and anengineering issue.? Red Path was responsible for sinking Shaft 2 and Shaft 5, and FE 2 saw allthe progress reports. ?The project was being delayed because of engineering and execution. Theremay have been some pockets of bad ground, but that?s expected in any mine.? FE 2 said that he?would have been intimately aware of any rock instability? and that it ?was just not present.?"
Turquoise Hill | Bernstein Litowitz Berger & Grossmann LLP
The formal valuation of Turquoise Hill, pursuant to Multilateral Instrument 61-101, should be delivered by TRQ management soon. If the number is less than what the minority shareholders want, there is no deal. If the number is more than what RIO is willing to pay, there is no deal.
At best and if both sides are reasonable, it will be a negotiation tool. It’s not a big deal in itself.
Yesterday’s announcement that Rio Tinto will provide as much as $400M in interim debt -- and will extend the date by which TRQ is required to raise additional equity capital to year-end 2022 -- was a gift to minority shareholders, but done completely in RIO’s self interest.
TRQ, in today’s economic environment, would not be able to secure bank financing on its own and failure to advance the project would have destroyed the company’s valuation, in addition to damaging relations with GoM. RIO saved it’s own investment by providing timely financing.
Is it possible that rising interest rates and lower copper prices affect both the formal valuation and the success of the year-end equity rights offering? Yes but rates and copper prices are not predictable. Nevertheless, TRQ management works for RIO and will – within limits of ethics and legality -- work on RIO's behalf.
Turquoise Hill Announces Amendment to Comprehensive Financing Arrangement with Rio Tinto
Turquoise Hill to get up to $400M interim debt funding from Rio Tinto
May 19, 2022 7:00 AM ETRio Tinto Group (RIO), TRQBy: Carl Surran, SA News Editor
Mongolia"s Biggest Foreign Investment The Oyu Tolgoi Mine
Paula Bronstein/Getty Images News
Rio Tinto (NYSE:RIO) said after Wednesday's U.S. market close that it agreed to provide as much as $400M in interim debt financing to Turquoise Hill Resources (NYSE:TRQ), and will extend the date by which Turquoise Hill is required to raise additional equity capital to year-end 2022.
Rio Tinto (RIO) said its move would enable Turquoise Hill (TRQ) to fund the ongoing development of the Oyu Tolgoi mining project in Mongolia.
Rio Tinto (RIO) proposed in March to buy out the 49% of Turquoise Hill (TRQ) it does not already own for ~$2.7B, paving the way for direct ownership of Oyu Tolgoi.
But the offer is opposed by some major Turquoise Hill (TRQ) shareholders, including activist investor Pentwater Capital, which said Rio Tinto's (RIO) bid was too low.
With demand slammed by China's COVID-19 lockdowns, Chinese iron ore futures recently plunged to two-month lows.
"Horizons ETFs has over CAD $21 billion in assets under management and 104 ETFs listed on major Canadian stock exchanges**."
"The Horizons ETF Copper Producers Index ETF (TSX: COPP) is set to go live for trading on the Toronto Stock Exchange on May 17, providing a new option for investors to gain passive exposure to the world’s C$2 billion-plus market cap copper producers."
"As of May 13, Canadian companies accounted for more than two-thirds (70.4%) of the total index weight, with the next-largest country exposures being the US (18.2%), Australia (6.0%), and the UK (5.4%).
Notable index positions included Turquoise Hill Resources (19.5%), First Quantum Minerals (11.5%), Southern Copper (9.2%), Lundin Mining (9.0%), Freeport-McMoRan (9.0%), Capstone Copper (6.9%), Teck Resources (6.8%), and HudBay Minerals (6.4%)."
I was happy to see us in the list but very happy to see were 19.5% of the weight. I am sure they have a lot of clients that are looking for copper exposure.
ok you push back the dates... but you don't say the reasons....
34/share is an insult to minority holders, I really hope that everyone will vote “NO” to anything less then 70-80, because thats the only way minority will get a fair deal. 3 yrs from now how can this trade bellow 80? Impossible!!!
TRQ is about to break out back to multi-year highs...this is a buy NOT sell/short....Price is underpinned by near-term underground cashflows coming on-stream and premia is underpinned by what Rio will have to pay to roll up those said cashflows that go 100 year+ .....this a time to go hard with copper red metal as the future of CLEAN!!!!
copper futures rebounding sharply to ~$4.31 /lb interesting that during all this talk of recession/stagflation/fed policy, it never dropped below $4!
If the headwinds for copper are removed, it will rise rapidly.
new article on seeking alpha, haven't read it but the title -> "Turquoise Hill Resources Ltd.: Investors Upbeat Before Takeover" lol - so they asked everyone else except me? Why y'all so upbeat?
I did the discounted cash flow according to the technical report of August 2020. Thus, the result is priced at $43 per share. The report data is: CU = 3.03$lb, AU = 1474$ and AG = 17.85$. With today's gold and copper prices, the price jumps to $94 per share. These prices per share are considering only the first project and excluding other potential deposits.
Sooo, how about that valuation?
I'm curious if Russia or China would ever consider dominating Mongolia and helping themselves to this mining operation, and others??
Earning's next week, I don't expect much. We know TRQ is in a period of low production and we know bad numbers/production can help a buyout 'low-bid' narrative. Therefore, I am going to just write it off a blip on an otherwise excellent project. Remember, were less than 12 month away from first production of the underground. I have little confidence that the "fairness valuation" will be anywhere near the true value.
I was always prepared to hold this stock long term 10-20+ years so the rights offering is an unnecessary but manageable blip. I have no doubt that Rio is underplaying how much it want's to acquire TRQ. The right's offering will mean were are issued share's at a discount, that costs RIO. They also won't be able to reprofile the debt in a way the suits them (considering how much cash the have on the books, it would make much more sense to pay off the international lenders and lend the money themselves, thus pocketing the interest).
I also think the unfortunate series of bad news will end soon as GOM will get very annoyed if they don't see their share of the profits.
I know that in 2025 based on reports from the TRQ website that what RIO has currently offered is approx. 1 year of revenue and a fraction of what is to come down the line.
I would like to see the class action resolved first and based on that discovery, a minority oppression case. If we could get a true independent director on the board we would get a better understanding of the true value of TRQ. I would really like to see how the exploration licenses are progressing.
In summary, I have no interest in selling this stock to Rio for a low ball offer. I expect RIO will make another bid in a year or two and they might start with a reasonable price then, in the $150+ range. I will also have more share's by then as I plan to keep accumulating. If Rio never buy it, not a problem, this single deposit (of three known deposits) is 31 years in life, I look forward to dividends in a few years time, for many many many years to come.
Where is Gary and his followers? I tell myself that they should be very active with the current stock market crash, but they are not there. Weird, I'll see how UVXY is doing... Hahaha🤣, another fail from Gary. it doesn't go up.
we are back direction 30$ US!
some interesting insights into the macro situation and world politics featuring copper from TRQ founder
Rio is currently trading at $65.54 per share, if Rio is serious about buying TRQ (which as per my post below has a minimum value of $150 per share) they could offer 2 Rio shares for 1 TRQ share. While the nominal value would only be $130 per share, I believe that would secure the buyout. It would cost Rio very little as issuing new Rio share's is straight forward to finance the purchase of the soon to be one of the worlds largest copper&gold mine. It would only dilute Rio shares by ~12% which is trivial in the scheme of things. However if Rio wants to wait until later or never, that's fine.
looking to add more June calls today in this selloff!!! u have to know where the puck is going for this one!!!
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