Turquoise Hill Announces Financial Results and Review of Operations
for the First Quarter of 2014
VANCOUVER, BC--(Marketwired
- May 12, 2014) - Turquoise Hill Resources (NYSE: TRQ) (TSX:
TRQ) (NASDAQ: TRQ) today
announced its financial results for the quarter ended March 31,
2014. All figures are in US dollars unless otherwise stated.
HIGHLIGHTS
- Oyu Tolgoi achieved a strong safety performance in Q1'14 with
no fatalities and an All Injury Frequency Rate of 0.34 per 200,000
hours worked.
- In Q1'14, Oyu Tolgoi produced 102,900 tonnes of copper-gold
concentrate containing 25,300 tonnes of copper.
- Oyu Tolgoi recorded net revenue of $108.0 million in Q1'14 on
sales of approximately 48,200 tonnes of copper-gold
concentrate.
- Oyu Tolgoi's concentrate sales continue to increase with April
2014 sales of approximately 68,000 tonnes; April 2014 sales
exceeded production resulting in an inventory drawdown.
- Contracts have been signed for 94% of Oyu Tolgoi's expected
2014 concentrate production and long-term contracts account for 91%
of 2015 planned production; additionally, 84% of Oyu Tolgoi's
concentrate production has been contracted for up to eight years
(subject to mutually agreed renewals).
- Q1'14 production at Oyu Tolgoi was heavily impacted by
post-commissioning issues, including rake blade failures in the
tailings thickeners, which caused the shutdown of one production
line for approximately seven weeks.
- Oyu Tolgoi's Q2'14 production rates have now returned to normal
and the concentrator is operating close to nameplate
capacity.
- As operations transition from post-commissioning to
steady-state, Oyu Tolgoi has been focusing on costs and
productivity; extensive work is well underway in a number of areas
to improve operational performance.
- Project finance commitments have been extended to September 30,
2014.
- Further underground development at Oyu Tolgoi is expected to
recommence once successful resolution has been reached on the
mine's outstanding shareholders issues, agreement of a
comprehensive funding plan including project financing, completion
and approval of the underground feasibility study and obtaining all
necessary permits for the mine's expansion.
- Turquoise Hill successfully closed a $2.4 billion rights
offering in January 2014 and repaid all outstanding Rio Tinto
funding facilities.
FINANCIAL RESULTS
In Q1'14, Turquoise Hill recorded a net loss of $50.6 million
($0.03 per share), compared to a net loss of $50.9 million ($0.04
per share) in Q1'13, which was a decrease of $0.3 million. Results
for Q1'14 included $113.1 million in revenue; $1.6 million in
interest income; $5.2 million in foreign exchange gains; a $1.0
million gain from the change in the fair value of SouthGobi's
embedded derivatives; and $66.5 million of net loss attributable to
non-controlling interests. These amounts were offset by $120.9
million in cost of sales; $52.4 million in other operating
expenses; $6.4 million in general and administrative expenses; $3.4
million in exploration and evaluation expenses; $2.5 million in
depreciation; $11.5 million in interest expense; a $33.0 million
loss from the change in the fair value of the rights offering
derivative liabilities; and a $6.8 million provision for income and
other taxes.
Turquoise Hill's cash position, on a consolidated basis at March
31, 2014, was approximately $140.7 million. As at May 12, 2014,
Turquoise Hill's consolidated cash position was approximately
$150.9 million.
OYU TOLGOI
The Oyu Tolgoi mine is approximately 550 kilometres south of
Ulaanbaatar, Mongolia's capital city, and 80 kilometres north of
the Mongolia-China border. Mineralization on the property consists
of porphyry-style copper, gold, silver and molybdenum contained in
a linear structural trend (the Oyu Tolgoi Trend) that has a strike
length extending over 26 kilometres. Mineral resources have been
identified in a series of deposits throughout this trend. They
include, from south to north, the Heruga Deposit, the Southern Oyu
deposits (Southwest Oyu, South Oyu, Wedge and Central Oyu) and the
Hugo Dummett deposits (Hugo South, Hugo North and Hugo North
Extension). Mining of ore commenced in May 2012, with the first
concentrate produced, as part of the commissioning activities, in
January 2013.
The Oyu Tolgoi mine has initially been developed as an open-pit
operation. A copper concentrator plant, with related facilities and
necessary infrastructure to support an initial throughput of
100,000 tonnes of ore per day, has been constructed to process ore
mined from the Southern Oyu open pit. Development plans for Oyu
Tolgoi are based on a 95,000-tonne-per-day underground block-cave
mine. In August 2013, development of the underground mine was
delayed to allow matters with the Government of Mongolia to be
resolved. Further development of the underground mine is expected
to commence once the following conditions are met: (1) successful
resolution of the mine's outstanding shareholder issues; (2)
agreement of a comprehensive funding plan including project
finance; (3) completion and approval of the Oyu Tolgoi underground
feasibility study by the Oyu Tolgoi shareholders; and (4) obtaining
all necessary permits for the mine's expansion.
Q1'14 performance
Oyu Tolgoi achieved a strong safety performance in Q1'14 with no
fatalities and an All Injury Frequency Rate of 0.34 per 200,000
hours worked.
In Q1'14, Oyu Tolgoi generated revenue of $108.0 million, net of
royalties of $5.9 million, on sales of approximately 48,200 tonnes
of copper-gold concentrates. Oyu Tolgoi's breakdown of Q1'14
revenue, net of royalties, by metals in concentrates is as follows:
approximately 13,100 tonnes of copper for $74.5 million,
approximately 28,000 ounces of gold for $32.1 million and
approximately 78,000 ounces of silver for $1.4 million. Oyu Tolgoi
achieved its first month of positive operating cash flow in March
2014 as a result of higher revenue in the month. March 2014 sales
accounted for approximately 66% of Q1'14 revenue. Oyu Tolgoi's
sales of concentrate are subject to a 5% royalty in Mongolia.
Revenues are presented net of royalties.
Contracts have been signed for 94% of Oyu Tolgoi's expected 2014
concentrate production and long-term contracts account for 91% of
2015 planned production. Additionally, 84% of concentrate
production has been contracted for up to eight years (subject to
mutually agreed renewals). Discussions are well advanced with
potential customers to place the remaining tonnage under long-term
agreements. All contracts are based on international terms.
Oyu Tolgoi recognized cost of sales in Q1'14 of $99.1 million,
which included direct cash costs of product sold, mine
administration cash costs of product sold, run-of-mine copper-gold
stockpiles inventory write-downs, mining plant and equipment
depreciation, and depletion of mineral properties.
Key operational metrics for Q1'14 are as follows:
|
|
Oyu Tolgoi Key Metrics |
All data represents full
production and sales on a 100% basis |
|
H1'13 |
Q3'13 |
Q4'13 |
Q1'14 |
Full Year 2013 |
Open pit material mined ('000 tonnes) |
37,925 |
12,151 |
21,956 |
21,621 |
72,032 |
Ore Treated ('000 tonnes) |
4,430 |
8,052 |
7,835 |
5,560 |
20,317 |
Average mill head grades: |
|
|
|
|
|
|
Copper (%) |
0.42 |
0.47 |
0.49 |
0.52 |
0.47 |
|
Gold (g/t) |
0.27 |
0.36 |
0.41 |
0.49 |
0.36 |
|
Silver (g/t) |
1.31 |
1.39 |
1.44 |
1.52 |
1.39 |
Copper concentrates produced ('000 tonnes)* |
50.2 |
110.3 |
129.5 |
102.9 |
290.0 |
|
Average concentrate grade (% Cu) |
26.1 |
27.7 |
25.4 |
24.6 |
26.4 |
Production of metals in concentrates: |
|
|
|
|
|
|
Copper in concentrates ('000 tonnes) |
13.1 |
30.6 |
32.9 |
25.3 |
76.7 |
|
Gold in concentrates ('000 ounces) |
21 |
62 |
74 |
66 |
157 |
|
Silver in concentrates ('000 ounces) |
85 |
196 |
208 |
163 |
489 |
Sales of metals in concentrates: |
|
|
|
|
|
|
Copper in concentrates ('000 tonnes) |
- |
- |
6.1 |
13.1 |
6.1 |
|
Gold in concentrates ('000 ounces) |
- |
- |
10 |
28 |
10 |
|
Silver in concentrates ('000 ounces) |
- |
- |
36 |
78 |
36 |
Metal recovery (%) |
|
|
|
|
|
|
Copper |
73.2 |
81.7 |
86.4 |
87.9 |
81.6 |
|
Gold |
56.7 |
66.3 |
71.2 |
75.5 |
66.1 |
|
Silver |
47.8 |
54.9 |
57.2 |
59.3 |
54.2 |
* Dry metric tonnes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production at Oyu Tolgoi in Q1'14 was heavily impacted by post
commissioning issues, including rake blade failures in the tailings
thickeners, which caused the shutdown of one production line for
approximately seven weeks. Repairs to the rakes have been completed
and full production recommenced in late March. A number
of planned shutdowns at the concentrator were completed in
Q1'14, including ball mill relines and the first concave change in
the primary crusher.
Copper and gold head grades increased in Q1'14 as the mine
deepened. These higher grades combined with ongoing improvement
initiatives led to improved copper and gold recoveries during the
quarter.
In Q1'14, Turquoise Hill capitalized $20.6 million (Q1'13:
$225.2 million) in additions to property, plant and equipment at
the Oyu Tolgoi mine, including underground evaluation costs of $8.4
million (Q1'13: $103.1 million).
Funding of Oyu Tolgoi by Turquoise Hill
In accordance with the Amended and Restated Shareholders'
Agreement dated June 8, 2011 (ARSHA), Turquoise Hill has funded Oyu
Tolgoi's cash requirements by way of debt, and Oyu Tolgoi must
repay such amounts, including accrued interest, before it can pay
common share dividends. At March 31, 2014, the aggregate
outstanding balance of loans extended by subsidiaries of the
Company to Oyu Tolgoi was $7.1 billion, including accrued interest
of $1.0 billion. These loans bear interest at an effective annual
rate of LIBOR plus 6.5%.
In accordance with the ARSHA, a subsidiary of the Company has
funded common share investments in Oyu Tolgoi on behalf of Erdenes.
These funded amounts earn interest at an effective annual rate of
LIBOR plus 6.5% and are repayable, by Erdenes to a subsidiary of
the Company, via a pledge over Erdenes' share of Oyu Tolgoi common
share dividends. Erdenes also has the right to reduce the
outstanding balance by making cash payments. As at March 31, 2014,
the cumulative amount of such funding, representing approximately
34% of invested common share equity, and accrued interest thereon
totalled $751.2 million and $124.7 million respectively.
Operational outlook
Concentrate sales continue to increase with April 2014 sales of
approximately 68,000 tonnes. April 2014 sales exceeded production
resulting in an inventory drawdown. Oyu Tolgoi continues to work
with customers to streamline their supply chain models. Oyu
Tolgoi's goal is to return to four to eight weeks of concentrate
inventory by the end of 2014.
Following the post-commissioning issues experienced in Q1'14,
production rates have now returned to normal and the concentrator
is operating close to nameplate capacity.
Oyu Tolgoi expects to produce 135,000 to 160,000 tonnes of
copper and 600,000 to 700,000 ounces of gold in concentrates for
2014.
As operations transition from post-commissioning to
steady-state, Oyu Tolgoi has been focusing on costs and
productivity. Extensive work is well underway in a number of areas
to improve operational performance.
The underground feasibility study is ongoing and expected to be
complete in the first half of 2014. Following completion, the study
must be approved by the Oyu Tolgoi's shareholders as well as the
Mongolian Minerals Council.
Discussions with the Government of Mongolia and project
financing update
All parties remain committed to the underground development of
Oyu Tolgoi and to resolving the outstanding shareholder issues.
Fourteen of the 15 global banks participating in the Oyu Tolgoi
project financing have agreed to extend their respective commitment
letters for the financing of the underground development at Oyu
Tolgoi to September 30, 2014. With this, Turquoise Hill now has
sufficient commitments to reach its funding goal. A response from
the remaining bank is expected shortly.
Further underground development is expected to recommence once
successful resolution has been reached on the outstanding
shareholders issues, agreement of a comprehensive funding plan
including project financing, completion and approval of the
underground feasibility study and obtaining all necessary permits
for the mine.
Q1'14 development and exploration drilling
Oyu Tolgoi's exploration strategy is focused on developing a
project pipeline prioritized in areas that can impact the current
development of the Oyu Tolgoi orebodies, seeking low-cost
development options with the potential to directly impact the value
of current operations and continuing development of legacy datasets
to enable future discovery.
During Q1'14, exploration drilling continued with more than
1,000 metres of surface diamond drilling completed in four holes on
the Oyu Tolgoi mining license.
The initial logging and assays indicate that the Hugo West
shallow target is potentially a low-grade open pitable target that
requires further exploration to delineate the opportunity. The Hugo
West shallow target is hosted predominantly in quartz monzodiorite
and ignimbrite. Three additional holes (OTD1821-1823) were drilled
at the Hugo West shallow target to step out from existing drilling
and one hole, OTD1821, was extended in depth. Assay results from
these holes are pending.
A Hugo North resource estimate update was undertaken in Q1'14
and is currently being validated. The new geology model and
estimate include new drilling data from the Hugo North Lift #1
infill drilling program.
Sixteen geotechnical characterization holes were drilled,
covering more than 4,500 metres, as part of the underground
feasibility study consideration of a convey to surface option. The
holes targeted large underground transfer chambers (seven holes,
3,583 metres), boxcut foundations (seven holes, 320 metres) and the
location of the West Bat Fault in a poorly drilled area (two holes,
1,010 metres).
SOUTHGOBI
Sales and operations at the Ovoot Tolgoi coal mine
In Q1'14, SouthGobi's revenue was $5.1 million compared to $4.4
million in Q1'13. SouthGobi sold 0.39 million tonnes of coal at an
average realized selling price of $19.54 per tonne compared to
sales of 0.28 million tonnes of coal from stockpile at an average
realized selling price of $22.75 per tonne in Q1'13. Revenue
increased primarily due to higher sales volumes in Q1'14 compared
to Q1'13, partially offset by a lower average realized selling
price. The average realized selling price decreased primarily as a
result of the product mix in Q1'14. The Q1'14 product mix primarily
included standard semi-soft coking coal and thermal coal compared
to a mix of premium semi-soft coking coal and thermal coal in
Q1'13.
SouthGobi is subject to a base royalty in Mongolia of 5% on all
export coal sales and an additional sliding scale royalty of up to
5%. In Q1'14, the royalty was calculated using a set reference
price per tonne published monthly by the Government of Mongolia.
Based on the reference prices for Q1'14, SouthGobi was subject to
an average 7% royalty based on a weighted average reference price
of $68.76 per tonne. SouthGobi's effective royalty rate for Q1'14,
based on SouthGobi's average realized selling price of $19.54 per
tonne, was 25% or $4.81 per tonne compared to 6% or $1.37 per tonne
in Q1'13. Revenues are presented net of royalties.
The Government of Mongolia changed the royalty regime effective
April 1, 2014 to be based on the actual contracted sales price per
tonne subject to certain provisions. SouthGobi expects that its
royalty per tonne calculated under the new "flexible tariff"
royalty regime will decrease compared to the prior reference price
royalty regime.
In Q1'14, SouthGobi produced 0.64 million tonnes of raw coal
with a strip ratio of 4.02 compared to production of 0.02 million
tonnes of raw coal with a strip ratio of 26.21 in Q1'13.
SouthGobi's strip ratio of 26.21 in Q1'13 was due to a higher
proportion of waste material being mined over the limited operating
period and is not indicative of SouthGobi's strip ratio moving
forward.
Cost of sales was $21.8 million in Q1'14 compared to $23.5
million in Q1'13. Cost of sales comprises the direct cash costs of
product sold, mine administration cash costs of product sold, costs
related to idled mine assets, coal inventory write-downs, mining
plant and equipment depreciation, depletion of mineral properties
and share-based compensation expense. As a result of the
recommencement of mining operations at the Ovoot Tolgoi mine on
March 22, 2013, costs related to idled mine assets decreased in
Q1'14 compared to Q1'13. However, the Q1'14 production plan did not
fully utilize SouthGobi's existing mine fleet, therefore, costs
related to idled mine assets continued to be incurred throughout
Q1'14. In Q1'14, cost of sales included $3.0 million of costs
related to idled mine assets (Q1'13: $16.4 million) and $11.6
million of coal inventory write-downs (Q1'13: $2.7 million).
Governmental and regulatory investigations
SouthGobi is subject to investigations by Mongolia's Independent
Authority against Corruption (the "IAAC") and the Mongolian State
Investigation Office (the "SIA") regarding allegations against
SouthGobi and some of its former employees. The IAAC investigation
concerns possible breaches of Mongolia's anti-corruption laws,
while the SIA investigation concerns possible breaches of
Mongolia's money laundering and taxation laws.
While the IAAC investigation into allegations of possible
breaches of Mongolian anti-corruption laws has been suspended,
SouthGobi has not received notice that the IAAC investigation is
completed. The IAAC has not formally accused any current or former
SouthGobi employees of breach of Mongolia's anti-corruption
laws.
A report issued by the experts appointed by the SIA on June 30,
2013 and again in January 2014 has recommended that the accusations
of money laundering as alleged against SouthGobi's three former
employees be withdrawn. However, to date, SouthGobi has not
received notice or legal document confirming such withdrawal as
recommended by the experts appointed by the SIA.
A third investigation ordered by the SIA and conducted by the
National Forensic Center ("NFC") into alleged violations of
Mongolian taxation law was concluded at the end of January 2014.
SouthGobi has received notice that the report with conclusions of
the investigations by the NFC have been provided to the Prosecutor
General of Mongolia. SouthGobi has been advised that the Prosecutor
General has issued criminal charges against the three former
employees and SouthGobi's Mongolian subsidiary SouthGobi Sands LLC
may be held liable as "civil defendant" for alleged violations of
Mongolian taxation law. The case was transferred to a Court of
Justice for review by a judge in April 2014. On May 12, 2014,
SouthGobi was advised that the appointed judge has concluded that
the investigation on the case was incomplete and has ordered to
return the case to the General Prosecutor for additional
investigation.
The likelihood or consequences of an outcome or any action taken
against SouthGobi Sands LLC as "civil defendant" are uncertain and
unclear at this time but could include financial or other
penalties, which could be material, and which could have a material
adverse effect on Turquoise Hill.
Turquoise Hill views these allegations as unfounded and will
vigorously defend itself against any potential claim. At this
point, the three former employees remain designated as "accused" in
connection with the allegations of tax evasion, and continue to be
subject to a travel ban. SouthGobi Sands LLC remains designated as
a "civil defendant" in connection with the tax evasion allegations,
and may potentially be held financially liable for the alleged
criminal misconduct of its former employees under Mongolian
Law.
The SIA also continues to enforce administrative restrictions,
which were initially imposed by the IAAC investigation, on certain
of SouthGobi's Mongolian assets, including local bank accounts, in
connection with its continuing investigation of these allegations.
While the orders restrict the use of in-country funds pending the
outcome of the investigation, they are not expected to have a
material impact on Turquoise Hill's activities in the short term,
although they could create potential difficulties for Turquoise
Hill in the medium to long term. Turquoise Hill will continue to
take all appropriate steps to protect its ability to conduct its
business activities in the ordinary course.
Class action lawsuit
On or about January 6, 2014, Siskinds LLP, a Canadian law firm,
filed a proposed securities class action against SouthGobi, certain
of its former senior officers and current directors, and its former
auditors, Deloitte LLP, in the Ontario Superior Court of Justice in
relation to SouthGobi's restatement of financial statements as
previously disclosed.
The proposed class action seeks general damages against all
defendants in the sum of C$30 million, without particulars as to
how such amount was determined, or such other amount that the Court
deems appropriate. SouthGobi disputes and will vigorously defend
itself against these claims. Due to the inherent uncertainties of
litigation, it is not possible to predict the final outcome of the
action or determine the amount of any potential losses, if any.
However, in the opinion of Turquoise Hill's management, at March
31, 2014 a provision for this matter is not required.
CORPORATE ACTIVITIES
Changes to the Company's Board of Directors
Directors Virginia Flood, Isabelle Hudon, Warren Goodman and
Charles Lenegan did not stand for re-election at the Company's 2014
Annual Meeting of Shareholders on May 8, 2014. Turquoise Hill's
Articles of Amendment provide that the number of directors will be
a minimum of three and a maximum of 14. Of the seven persons
elected at the 2014 Annual Meeting of Shareholders, four are
"independent" directors under the applicable securities laws.
Turquoise Hill rights offering
On November 26, 2013, the Company filed a final prospectus
outlining the details of a rights offering and on January 13, 2014,
the Company successfully closed the rights offering and confirmed
gross proceeds of $2.4 billion. The Company used the net proceeds
from the rights offering to repay all amounts outstanding under its
Interim Funding Facility ($1.8 billion) and its New Bridge Facility
($402.6 million) with Rio Tinto, and the remaining proceeds were
used for the continued funding and development of the Oyu Tolgoi
mine, working capital, general administrative expenses and other
corporate expenses.
Upon the closing of the offering, the Company issued a total of
1,006,116,602 new common shares, which represented 100% of the
maximum number of common shares available under the rights
offering. Approximately 99.3% of the shares were issued in the
basic subscription of the rights offering with the balance having
been issued in the additional subscription. Rio Tinto exercised all
of its rights under the basic subscription and did not participate
in the additional subscription of the rights offering, which was
available to all shareholders who fully participated in the basic
subscription. Because the offering was over-subscribed, Rio Tinto
was not required to purchase any shares under its standby
commitment. As a result of the rights offering, Rio Tinto's stake
in Turquoise Hill remained unchanged at 50.8% of the outstanding
common shares.
Class action lawsuits
On December 13 and 18, 2013, two putative securities class
action lawsuits were filed in the United States District Court for
the Southern District of New York against the Company and certain
of its officers and directors. The Court has now consolidated these
actions and appointed a lead plaintiff. The lawsuit seeks to
recover damages resulting from alleged misstatements about the
Company's financial performance and business prospects arising from
revisions to its recognition of revenue on SouthGobi's coal sales,
as disclosed on November 8, 2013. The Company believes the
complaint is without merit and will vigorously defend against the
lawsuits. In the opinion of the Company, at March 31, 2014 a
provision for this matter is not required.
QUALIFIED PERSON
Disclosure of a scientific or technical nature in this MD&A
in respect of the Oyu Tolgoi mine was prepared under the
supervision of Bernard Peters (responsibility for overall
preparation and mineral reserves), B. Eng. (Mining), FAusIMM
(201743), employed by OreWin Pty Ltd as Technical Director --
Mining and Kendall Cole-Rae (responsibility for mineral resources,
geology and exploration), B.Sc. (Geology), SME (4138633), employed
by Rio Tinto as a Principal Geologist. Each of these individuals is
a "qualified person" as that term is defined in NI 43-101.
|
|
|
|
SELECTED QUARTERLY DATA |
|
|
|
($ in millions of dollars, except per share
information) |
Quarter Ended |
|
|
Mar-31 |
|
Dec-31 |
|
Sep-30 |
|
Jun-30 |
|
|
2014 |
|
2013 |
|
2013 |
|
2013 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper-gold concentrate |
$ |
108.0 |
|
$ |
51.6 |
|
$ |
- |
|
$ |
- |
|
|
Coal |
|
5.1 |
|
|
32.4 |
|
|
15.7 |
|
|
6.1 |
|
Total revenue |
$ |
113.1 |
|
$ |
84.0 |
|
$ |
15.7 |
|
$ |
6.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations attributable
to parent |
$ |
(50.6 |
) |
$ |
134.3 |
|
$ |
(84.8 |
) |
$ |
(77.8 |
) |
Income (loss) from discontinued operations
attributable to parent |
|
- |
|
|
4.1 |
|
|
(9.3 |
) |
|
(27.6 |
) |
Net (loss) income attributable to parent |
$ |
(50.6 |
) |
$ |
138.4 |
|
$ |
(94.1 |
) |
$ |
(105.4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income per share attributable to parent |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.03 |
) |
$ |
0.10 |
|
$ |
(0.07 |
) |
$ |
(0.06 |
) |
Discontinued operations |
|
- |
|
|
0.01 |
|
|
(0.01 |
) |
|
(0.02 |
) |
Total |
$ |
(0.03 |
) |
$ |
0.11 |
|
$ |
(0.08 |
) |
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) income per share attributable to
parent |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.03 |
) |
$ |
0.10 |
|
$ |
(0.07 |
) |
$ |
(0.06 |
) |
Discontinued operations |
|
- |
|
|
0.01 |
|
|
(0.01 |
) |
|
(0.02 |
) |
Total |
$ |
(0.03 |
) |
$ |
0.11 |
|
$ |
(0.08 |
) |
$ |
(0.08 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mar-31 |
|
|
Dec-31 |
|
|
Sep-30 |
|
|
Jun-30 |
|
|
|
2013 |
|
|
2012 |
|
|
2012 |
|
|
2012 |
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Copper-gold concentrate |
$ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
- |
|
|
Coal |
|
4.4 |
|
|
1.3 |
|
|
3.8 |
|
|
46.6 |
|
Total revenue |
$ |
4.4 |
|
$ |
1.3 |
|
$ |
3.8 |
|
$ |
46.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income from continuing operations attributable
to parent |
$ |
(40.4 |
) |
$ |
(144.0 |
) |
$ |
125.5 |
|
$ |
(263.5 |
) |
Loss from discontinued operations attributable to
parent |
|
(10.5 |
) |
|
(1.0 |
) |
|
(13.3 |
) |
|
(22.8 |
) |
Net (loss) income attributable to parent |
$ |
(50.9 |
) |
$ |
(145.0 |
) |
$ |
112.2 |
|
$ |
(286.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (loss) income per share attributable to parent |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.03 |
) |
$ |
(0.11 |
) |
$ |
0.11 |
|
$ |
(0.25 |
) |
Discontinued operations |
|
(0.01 |
) |
|
- |
|
|
(0.01 |
) |
|
(0.02 |
) |
Total |
$ |
(0.04 |
) |
$ |
(0.11 |
) |
$ |
0.10 |
|
$ |
(0.27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss) income per share attributable to
parent |
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(0.03 |
) |
$ |
(0.11 |
) |
$ |
0.11 |
|
$ |
(0.25 |
) |
Discontinued operations |
|
(0.01 |
) |
|
- |
|
|
(0.01 |
) |
|
(0.02 |
) |
Total |
$ |
(0.04 |
) |
$ |
(0.11 |
) |
$ |
0.10 |
|
$ |
(0.27 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
About Turquoise Hill Resources Turquoise Hill Resources
(NYSE: TRQ) (NASDAQ: TRQ) (TSX: TRQ) is an international mining company
focused on copper- gold and coal mines in Mongolia. The Company's
primary operation is its 66% interest in the Oyu Tolgoi
copper-gold-silver mine in southern Mongolia. Turquoise Hill also
holds a 56% interest in Mongolian coal miner SouthGobi Resources
(TSX: SGQ; HK: 1878).
Follow us on Twitter @TurquoiseHillRe
Forward-looking
statements Certain statements made herein, including
statements relating to matters that are not historical facts and
statements of the Company's beliefs, intentions and expectations
about developments, results and events which will or may occur in
the future, constitute "forward-looking information" within the
meaning of applicable Canadian securities legislation and
"forward-looking statements" within the meaning of the "safe
harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking information and
statements relate to future events or future performance, reflect
current expectations or beliefs regarding future events and are
typically identified by words such as "anticipate", "could",
"should", "expect", "seek", "may", "intend", "likely", "plan",
"estimate", "will", "believe" and similar expressions suggesting
future outcomes or statements regarding an outlook. These include,
but are not limited to, statements respecting anticipated business
activities; planned expenditures; corporate strategies; and other
statements that are not historical facts.
Forward-looking statements and information are made based upon
certain assumptions and other important factors that, if untrue,
could cause the actual results, performance or achievements of the
Company to be materially different from future results, performance
or achievements expressed or implied by such statements or
information. Such statements and information are based on numerous
assumptions regarding present and future business strategies and
the environment in which the Company will operate in the future,
including the price of copper, gold and silver, anticipated capital
and operating costs, anticipated future production and cash flows,
the ability to complete the disposition of certain of its non-core
assets, the ability and timing to complete project financing and/or
secure other financing on acceptable terms and the evolution of
discussions with the Government of Mongolia on a range of issues
including the implementation of the Investment Agreement, project
development costs, operating budgets, management fees and
governance. Certain important factors that could cause actual
results, performance or achievements to differ materially from
those in the forward-looking statements and information include,
among others, copper, gold and silver price volatility,
discrepancies between actual and estimated production, mineral
reserves and resources and metallurgical recoveries, mining
operational and development risks, litigation risks, regulatory
restrictions (including environmental regulatory restrictions and
liability), activities by governmental authorities, currency
fluctuations, the speculative nature of mineral exploration, the
global economic climate, dilution, share price volatility,
competition, loss of key employees, additional funding
requirements, capital and operating costs for the construction and
operation of the Oyu Tolgoi mine and defective title to mineral
claims or property. Although the Company has attempted to identify
important factors that could cause actual actions, events or
results to differ materially from those described in
forward-looking statements and information, there may be other
factors that cause actions, events or results not to be as
anticipated, estimated or intended. All such forward-looking
information and statements are based on certain assumptions and
analyses made by the Company's management in light of its
experience and perception of historical trends, current conditions
and expected future developments, as well as other factors
management believes are appropriate in the circumstances. These
statements, however, are subject to a variety of risks and
uncertainties and other factors that could cause actual events or
results to differ materially from those projected in the
forward-looking information or statements.
With respect to specific forward-looking information concerning
the construction and development of the Oyu Tolgoi mine, the
Company has based its assumptions and analyses on certain factors
which are inherently uncertain. Uncertainties and assumptions
include, among others: the timing and cost of the construction and
expansion of mining and processing facilities; the impact of the
decision announced by the Company to delay the funding and
development of the Oyu Tolgoi underground mine pending resolution
of outstanding issues with the Government of Mongolia associated
with the development and operation of the Oyu Tolgoi mine and to
satisfy all conditions precedent to the availability of Oyu Tolgoi
Project Financing; the timing of the completion of the feasibility
study for the expansion of operations at the Oyu Tolgoi mine and
approval of such study by the mine's shareholders and the Mongolian
Minerals Council; the impact of changes in, changes in
interpretation to or changes in enforcement of, laws, regulations
and government practices in Mongolia; the availability and cost of
skilled labour and transportation; the availability and cost of
appropriate smelting and refining arrangements; the obtaining of
(and the terms and timing of obtaining) necessary environmental and
other government approvals, consents and permits; the availability
of funding on reasonable terms; the timing and availability of a
long-term power source for the Oyu Tolgoi mine; delays, and the
costs which would result from delays, in the development of the
underground mine (which could significantly exceed those projected
in the 2013 Oyu Tolgoi Technical Report); projected copper, gold
and silver prices and demand; and production estimates and the
anticipated yearly production of copper, gold and silver at the Oyu
Tolgoi mine.
The cost, timing and complexities of mine construction and
development are increased by the remote location of a property such
as the Oyu Tolgoi mine. It is common in new mining operations and
in the development or expansion of existing facilities to
experience unexpected problems and delays during development,
construction and mine start-up. Additionally, although the Oyu
Tolgoi mine has achieved commercial production, there is no
assurance that future development activities will result in
profitable mining operations. In addition, funding and development
of the underground component of the Oyu Tolgoi mine have been
delayed until matters with the Government of Mongolia can be
resolved and a new timetable agreed. These delays can impact
project economics.
The reader is cautioned not to place undue reliance on
forward-looking information or statements. By their nature,
forward-looking statements involve numerous assumptions, inherent
risks and uncertainties, both general and specific, which
contribute to the possibility that the predicted outcomes will not
occur. Events or circumstances could cause the Company's actual
results to differ materially from those estimated or projected and
expressed in, or implied by, these forward-looking statements.
Important factors that could cause actual results to differ from
these forward-looking statements are included in the "Risk Factors"
section in the Company's MD&A for the year ended December 31,
2013 and its Annual Information Form dated March 26, 2014 in
respect of such period.
Readers are cautioned that the list of factors enumerated in the
"Risk Factors" section in the Company's MD&A for the year ended
December 31, 2013 and its Annual Information Form dated March 26,
2014 in respect of such period that may affect future results is
not exhaustive. When relying on the Company's forward-looking
information and statements to make decisions with respect to the
Company, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events.
Furthermore, the forward-looking information and statements
contained in this MD&A are made as of the date of this document
and the Company does not undertake any obligation to update or to
revise any of the included forward-looking information or
statements, whether as a result of new information, future events
or otherwise, except as required by applicable law. The
forward-looking information and statements contained in this
MD&A are expressly qualified by this cautionary statement.
Investors Jessica Largent Office:
+1 604 648 3957 Email:
jessica.largent@turquoisehill.comMediaTony Shaffer Office:
+1 604 648 3934 Email: tony.shaffer@turquoisehill.com
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