UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
December 15, 2015
Commission File Number: 001-32403
TURQUOISE
HILL RESOURCES LTD.
(Translation of Registrants Name into English)
Suite 354 200 GRANVILLE STREET, VANCOUVER, BRITISH COLUMBIA V6C
1S4
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form
20-F- ¨ Form 40-F- x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T
Rule 101(b)(7): ¨
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
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TURQUOISE HILL RESOURCES LTD. |
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Date: December 15, 2015 |
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By: |
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/s/ Dustin S. Isaacs |
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Dustin S. Isaacs |
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General Counsel & |
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Corporate Secretary |
EXHIBIT INDEX
Exhibit 99.1
December 14, 2015
Press release
Oyu Tolgoi signs $4.4 billion project finance
marking historic milestone toward recommencement of underground development
VANCOUVER, CANADA Turquoise Hill Resources
today announced that Oyu Tolgoi LLC (Oyu Tolgoi) has signed a $4.4 billion project finance facility, one of the largest in the mining industry. The facility is being provided by a syndicate of international financial institutions and export
credit agencies representing the governments of Canada, the United States and Australia, along with 15 commercial banks. All figures are in US dollars.
Jeff Tygesen, Turquoise Hills Chief Executive Officer, said, The signing of project finance is an unprecedented milestone for Turquoise Hill and
Oyu Tolgoi as well as a historic vote of confidence in both the project and Mongolia. We look forward to working with the Mongolian Government and Rio Tinto to complete the remaining steps leading to the restart of underground development.
The facility consists of the following components:
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Facility |
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Amount |
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Term |
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Annual interest rate |
A Loan |
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$0.8 billion |
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15 years |
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LIBOR + 3.78% pre-completion; LIBOR + 4.78% post-completion |
Export Credit Agencies Loan |
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$0.9 billion
$0.4 billion |
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14 years
13 years |
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LIBOR + 3.65% pre-completion; LIBOR + 4.65%
post-completion US Ex-Im at fixed rate of Commercial Interest Reference Rate based on US Treasury rates; determined at time of first
disbursement |
MIGA Insured Loan |
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$0.7 billion |
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12 years |
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LIBOR + 2.65 % pre-completion; LIBOR + 3.65% post-completion |
B Loan |
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$1.6 billion |
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12 years |
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LIBOR + 3.4% pre-completion; LIBOR + 4.4%
post-completion Includes $50 million 15-year loan at A Loan rate |
The project finance facility will be funded by Export Development Canada, the European Bank for Reconstruction and
Development, the International Finance Corporation, the Export-Import Bank of the United States, the Export Finance and Insurance Corporation of Australia and commercial lenders comprising BNP Paribas, ANZ, ING, Société
Générale Corporate & Investment Banking, Sumitomo Mitsui, Standard Chartered Bank, Canadian Imperial Bank of Commerce, Crédit Agricole, Intesa Sanpaolo, National Australia Bank, Natixis, HSBC, The Bank of
Tokyo-Mitsubishi UJF, KfW IPEX-Bank and Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden. The Multilateral Investment Guarantee Agency (MIGA) provided political risk insurance for the commercial banks.
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Turquoise Hill Resources Ltd.
Suite 354 200 Granville Street
Vancouver, British Columbia
Canada V6C 1S4
T 604 688 5755
www.turquoisehill.com |
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Turquoise Hill, Rio Tinto and Oyu Tolgoi will now continue to work towards completing the 2015 feasibility study, including
the updated capital estimate and securing all necessary permits for the development of the underground mine. Once these steps have been completed and subject to the boards of Turquoise Hill, Rio Tinto and Oyu Tolgoi approving a formal notice
to proceed, the full $4.4 billion facility will be drawn down by Oyu Tolgoi subject to satisfaction of certain conditions precedent typical for a financing of this nature. Net proceeds from the project finance facility (the Net PF
Proceeds), after fees and taxes, are anticipated to be approximately $4.1 billion. The Net PF Proceeds will be used by Oyu Tolgoi to pay down shareholder loans payable to Turquoise Hill. The Net PF Proceeds will be available to be re-drawn by
Oyu Tolgoi for the development of the underground mine.
As part of the project finance agreements, Rio Tinto has agreed to provide a completion support
undertaking in favour of the project finance lenders. In consideration for providing completion support, and as contemplated by previous agreements, Oyu Tolgoi and Turquoise Hill have agreed to pay Rio Tinto an annual completion support fee equal to
2.5% of the amounts drawn under the facility, of which 1.9% is payable by Oyu Tolgoi and 0.6% is payable by Turquoise Hill. The annual completion support fee will apply to funding used for facility fees and taxes at initial drawdown as well as
amounts used to fund development. The obligation to pay a completion support fee will terminate on the date Rio Tintos completion support obligations to the project lenders terminate.
The all-in project finance interest rate for Oyu Tolgoi, including upfront and ongoing fees as well as the annual completion support undertaking fee, is LIBOR
+ 6.0%.
Following successful fulfilment of the completion tests outlined in the project finance facility, the Rio Tinto completion support undertaking
will terminate and the facility interest rates will shift to post-completion rates. The project financing facility provides for interest only payments for the first five years and is then structured on a stepped amortization schedule for the
remaining life of the facility.
The parties have agreed to a debt capacity of $6.0 billion for Oyu Tolgoi, providing the option for an additional $1.6
billion of supplemental debt in the future.
In its capacity as project sponsor, Turquoise Hill will enter into a sponsor debt service undertaking with
Rio Tinto, the project lenders and agents representing such lenders (the Sponsor DSU). Under the Sponsor DSU, Turquoise Hill guarantees to the finance parties payment of principal, interest and fees owed by Oyu Tolgoi to the senior lenders
under the project financing payable prior to completion. The obligations of Turquoise Hill under the Sponsor DSU terminate upon the earliest of (i) completion of the project, (ii) the termination of the Sponsor DSU as a result of the
occurrence of a suspensive event, and (iii) the date on which all senior debt obligations have been irrevocably and unconditionally paid or discharged and the commitments have terminated or expired.
Additionally, in connection with the signing of the project finance agreements with the project lenders and in consideration of Rio Tintos
completion support undertaking, Turquoise Hill has entered into a number of agreements, including: a financing support agreement with Rio Tinto (the Company Financing Support Agreement); a financing support agreement with Oyu Tolgoi and Rio
Tinto (the Oyu Tolgoi Financing Support Agreement) and a cash management services agreement with 9539549 Canada Inc. and Rio Tinto International Holdings Limited (RTIH) (the Cash Management Services Agreement). The following briefly
summarizes certain provisions in the foregoing agreements, which summaries are subject to and qualified in their entirety by reference to the full text of such agreements, each of which will be filed with the Canadian securities regulatory
authorities on the System for Electronic Document Analysis and Retrieval (SEDAR) website at www.sedar.com.
The
provisions contained in the Company Financing Support Agreement, including those referred to below, are broadly in line with the principles and provisions established under the Memorandum of Agreement between Turquoise Hill and Rio Tinto entered
into in 2012:
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Under the Company Financing Support Agreement, in the event a fact or circumstance occurs which affects or could reasonably be expected to affect Turquoise Hills ability to meet its obligations under the Sponsor
DSU or give rise to an event of default or completion default under the project finance agreements, Rio Tinto shall have the right to require that Turquoise Hill effect an equity contribution by way of private placement of Turquoise Hill shares to
Rio Tinto or a rights offering similar in form and structure to the rights offering which closed in January 2014. Turquoise Hill will also have the right to propose an alternative financing proposal to Rio Tinto which, depending on the nature of
such proposal, may require Rio Tintos consent. The parties have agreed that the aggregate amount of any such funding mechanisms shall not exceed 25% of Turquoise Hills market capitalisation as of the date of the Company Financing Support
Agreement. Any such transaction shall also be subject to applicable securities laws. |
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The Company Financing Support Agreement also contains certain restrictions relating to the conduct of the Companys business and operations and to the implementation of certain corporate transactions until the
later of (i) the date Rio Tintos completion support obligations terminate, (ii) the date that all senior loan advances under the project finance agreements are repaid in full, and (iii) the date that all subordinated debt
advances by Rio Tinto have been repaid in full, which shall be deemed to be the date on which Rio Tintos completion support obligations terminate if, as of such date, the aggregate amount of subordinated debt advances by Rio Tinto has not
exceeded $500 million. |
Under the Oyu Tolgoi Financing Support Agreement, in the event a fact or circumstance occurs which affects or could
reasonably be expected to affect Oyu Tolgois ability to meet its obligations under the project finance agreements or give rise to an event of default thereunder, Rio Tinto shall have the right to require that Oyu Tolgoi borrow funds from Rio
Tinto (or an affiliate thereof) by way of a senior debt advance or a subordinated debt advance, or borrow funds from a third party senior lender. The proceeds of any such advances shall be used to repay amounts due and owing to the project lenders.
Under the Cash Management Services Agreement, Turquoise Hill has appointed 9539549 Canada Inc. as service provider to provide post-drawdown cash
management services in connection with the Net PF Proceeds, which shall be deposited with 9539549 Canada Inc. and returned to Turquoise Hill as required for purposes of funding the Oyu Tolgoi underground mine. Turquoise Hill is also entitled to the
return of any outstanding balance of such managed funds upon the termination of Rio Tintos completion support obligations. RTIH has agreed to guarantee the obligations of the service provider under this agreement.
About Turquoise Hill Resources
Turquoise Hill Resources
(NYSE, NASDAQ & TSX: TRQ) is an international mining company whose primary operation is its 66% interest in the Oyu Tolgoi copper-gold-silver mine in southern Mongolia.
Contact
Investors and Media
Tony Shaffer
Office: +1 604 648 3934
Email: tony.shaffer@turquoisehill.com
Follow us on
Twitter @TurquoiseHillRe
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Forward-looking statements
Certain statements made herein, including statements relating to matters that are not historical facts and statements of the Companys 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 U.S. 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. There can be no assurance that such statements or information will prove accurate. Such statements and information are based on numerous assumptions regarding present and future
business strategies, local and global economic conditions 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, and the status of the Companys relationship and interaction with the Government of Mongolia on the continued development of the Oyu Tolgoi mine and Oyu Tolgoi internal 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 or assessments 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,
including with respect to the development of the underground 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 Companys management in light of their 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 continued 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
timing and availability of a long-term power source for the Oyu Tolgoi mine; the timing to satisfy all conditions precedent to the first drawdown of project financing; the approval of the 2015 Feasibility Study by Oyu Tolgoi and its shareholders;
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 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 impact of the delay in the funding and development of the Oyu Tolgoi underground mine; delays, and the
costs which would result from delays, in the development of the underground mine (which could significantly exceed the costs projected in the 2014 Feasibility Study and the 2014 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 has been delayed. These delays can impact project economics.
Readers are 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 Companys 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 Companys Annual Information Form dated as of March 20, 2015 in respect of the year ended December 31, 2014 (the AIF).
Readers are further cautioned that the list of factors enumerated in the Risk Factors section of the AIF that may affect future results is not
exhaustive. When relying on the Companys 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 herein are made as of the date hereof 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 herein are expressly qualified by this cautionary statement.
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