MONTREAL, March 4, 2021 /PRNewswire/ - Turquoise Hill
Resources Ltd. ("Turquoise Hill" or the "Company") announced today
that Mr. Ulf Quellmann has resigned as the Company's Chief
Executive Officer effective March 3,
2021, the Board of Directors of the Company (the
"Board") and Mr. Quellmann having agreed that it would not
be in the best interests of the Company for Mr. Quellmann to
continue in this position.
We thank Mr. Quellmann for his service to Turquoise Hill and the
advancements he has made in bringing the Company closer to a
financing plan for the Oyu Tolgoi project. Prior to Mr. Quellmann's
resignation, members of the Board's special committee of
independent directors (the "Special Committee") had several
conversations with Mr. Quellmann regarding his tenure as CEO and
his ability to continue leading negotiations with Rio Tinto. In
these conversations the Special Committee discussed views received
from Rio Tinto on the leadership of the Company, including Rio
Tinto's view that new leadership at Turquoise Hill was necessary to
advance work on matters of mutual interest and importance to the
project. Though Rio Tinto acknowledged that the appointment and
termination of the CEO and other officers at Turquoise Hill are
matters within the authority of the Board, it advised that, as the
majority shareholder, Rio Tinto would not vote in favour of Mr.
Quellmann's election as a director at the Company's upcoming annual
and general meeting of shareholders in May
2021 if he were to be nominated.
Following the discussions held with Mr. Quellmann, the Board and
Mr. Quellmann determined that it was in the best
interests of the Company that Mr. Quellmann resign his positions as
CEO and as a director of the Company.
The Board, on the recommendation of the Special Committee, has
appointed Steeve Thibeault as Interim Chief Executive Officer. Mr.
Thibeault served as the Company's Chief Financial Officer between
June 2014 and April 2017. Since April
2017, Mr. Thibeault has had no affiliation with either
Turquoise Hill or Rio Tinto. Mr. Thibeault led the negotiations of
the funding agreements for Turquoise Hill that the Company entered
into with Rio Tinto in 2015. The Special Committee is confident
that Mr. Thibeault is well positioned to immediately assume
leadership of negotiations with Rio Tinto, progress the OT funding
plan and oversee day-to-day operations of the Company while the
Board engages in a process to identify a permanent Chief Executive
Officer.
The Special Committee remains committed to ensuring that
negotiations with Rio Tinto continue under its supervision with a
view to arriving at a funding plan that is in the best interests of
the Company.
About Turquoise Hill Resources
Turquoise Hill is an international mining company focused on the
operation and continued development of the Oyu Tolgoi copper-gold
mine in Mongolia, which is the
Company's principal and only material mineral resource property.
Turquoise Hill's ownership of the Oyu Tolgoi mine is held through a
66% interest in Oyu Tolgoi LLC (Oyu Tolgoi); Erdenes Oyu Tolgoi
LLC, a Mongolian state-owned entity, holds the remaining 34%
interest.
Forward-looking statements and forward-looking
information
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 statements and information 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 and information regarding: discussions with, and the
nature of the Company's relationship and interaction with, the
Government of Mongolia on the
continued operation and development of Oyu Tolgoi, including with
respect to the definitive estimate and the potential termination,
amendment or replacement of the Oyu Tolgoi Underground Mine
Development and Financing Plan (the "Underground Plan"); the
willingness and ability of the parties to the Underground Plan to
amend or replace the Underground Plan; the arbitration proceedings
initiated with respect to certain agreements with Rio Tinto
International Holdings Limited ("RTIHL") and a related party
(including any related interim relief), including the potential
benefits, impact, timing and outcome thereof (including of any
related interim relief); the expectations set out in the 2020 Oyu
Tolgoi Technical Report ("OTTR20"); the timing and amount of future
production and potential production delays; statements in respect
of the impacts of any delays on the Company's cash flows; expected
copper and gold grades; the merits of the class action complaints
filed against the Company; liquidity, funding sources, funding
requirements and planning and the status and nature of the
Company's ongoing discussions with Rio Tinto plc and its
subsidiaries ("Rio Tinto") with respect to future funding plans and
requirements (including as contemplated by the Memorandum of
Understanding dated September 9, 2020
(the "MoU")); the amount of any funding gap to complete the Oyu
Tolgoi underground project; the amount and potential sources of
additional funding; the Company's ability to re-profile its
existing project debt in line with current cash flow projections;
the amount by which a successful re-profiling of the Company's
existing debt would reduce the Company's currently projected
funding requirements; the Company's and Rio Tinto's understanding
regarding the raising of supplemental senior debt and the Company's
ability to raise supplemental senior debt; the Company's and Rio
Tinto's understanding regarding the process for identifying and
considering other funding options; the Company's and Rio Tinto's
understanding regarding the scope and timing for an equity offering
by the Company to address any remaining funding gap; the Company's
intention to prioritise funding by way of debt and/or hybrid
financing over equity funding; the Company's expectation of the
anticipated funding gap; the timing of studies, announcements and
analyses; status of underground development; the mine design for
Panel 0 of Hugo North Lift 1 and the related cost and production
schedule implications; the re-design studies for Panels 1 and 2 of
Hugo North Lift 1 and the possible outcomes, content and timing
thereof; expectations regarding the possible recovery of ore in the
two structural pillars to the north and south of Panel 0; the
possible progression of a state-owned power plant ("SOPP") and
related amendments to the Power Source Framework Agreement ("PSFA")
as well as power purchase agreements; the timing of construction
and commissioning of the potential SOPP; sources of interim power;
the potential impact of COVID-19 on the Company's business,
operations and financial condition; capital and operating cost
estimates; mill and concentrator throughput; the outcome of formal
international arbitration proceedings; 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 to be 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; projected
gold, copper and silver grades; anticipated capital and operating
costs; anticipated future production and cash flows; the
anticipated location of certain infrastructure in Hugo North Lift
1; sequence of mining within and across panel boundaries; the
availability and timing of required governmental and other
approvals for the construction of the SOPP; the ability of the
Government of Mongolia to finance
and procure the SOPP within the timeframes anticipated in the PSFA,
as amended; the willingness of third parties to extend existing
power arrangements; the status and nature of the Company's
relationship and interaction with the Government of Mongolia on the continued operation and
development of the Oyu Tolgoi mine and Oyu Tolgoi LLC internal
governance (including the outcome of any such interactions or
discussions); the willingness and ability of the parties to the
Underground Plan to amend or replace the Underground Plan; the
nature and quantum of the current and projected economic benefits
to Mongolia resulting from the
continued operation of Oyu Tolgoi; the status and nature of the
Company's ongoing discussions with Rio Tinto with respect to future
funding plans and requirements (including as contemplated by the
MoU) as well as the commencement and conclusion of the arbitration
proceedings initiated with respect to certain agreements with RTIHL
and a related party (including any related interim relief),
including the potential benefits, impact, timing and outcome
thereof (including of any related interim relief).
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; development plans for processing
resources; public health crises such as COVID-19; matters relating
to proposed exploration or expansion; mining operational and
development risks, including geotechnical risks and ground
conditions; litigation risks, including the outcome of the class
action complaints filed against the Company; the outcome of the
arbitration proceedings initiated with respect to certain
agreements with RTIHL and a related party, including any related
interim relief; regulatory restrictions (including environmental
regulatory restrictions and liability); Oyu Tolgoi LLC or the
Government of Mongolia's ability
to deliver a domestic power source for the Oyu Tolgoi project
within the required contractual time frame; communications with
local stakeholders and community relations; activities, actions or
assessments, including tax assessments, by governmental
authorities; events or circumstances (including public health
crises, strikes, blockades or similar events outside of the
Company's control) that may affect the Company's ability to deliver
its products in a timely manner; currency fluctuations; the
speculative nature of mineral exploration; the global economic
climate; dilution; share price volatility; competition; loss of key
employees; cyber security incidents; additional funding
requirements, including in respect of the development or
construction of a long-term domestic power supply for the Oyu
Tolgoi project; capital and operating costs, including with respect
to the development of additional deposits and processing
facilities; defective title to mineral claims or property; and
human rights requirements. 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
statements and information are based on certain assumptions and
analyses made by the Company's 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 reasonable and 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 statements or information.
With respect to forward-looking information concerning the
continued operation and development of Oyu Tolgoi, 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 domestic power source (or the availability of financing
for the Company or the Government of Mongolia to construct such a source) for Oyu
Tolgoi; the ability to secure and draw down on the supplemental
debt under the Oyu Tolgoi project financing facility and the
availability of additional financing on terms reasonably acceptable
to Oyu Tolgoi LLC, Rio Tinto and the Company to further develop Oyu
Tolgoi as well as the status and nature of the Company's ongoing
discussions with Rio Tinto with respect to future funding plans and
requirements (including as contemplated by the MoU) as well as the
commencement and conclusion of the arbitration proceedings
initiated with respect to certain agreements with RTIHL and a
related party (including any related interim relief), including the
potential benefits, impact, timing and outcome thereof (including
of any related interim relief); the status and nature of the
Company's relationship and interaction with the Government of
Mongolia on the continued
operation and development of Oyu Tolgoi and Oyu Tolgoi LLC internal
governance (including the outcome of any such interactions or
discussions); the willingness and ability of the parties to the
Underground Plan to amend or replace the Underground Plan; the
nature and quantum of the current and projected economic benefits
to Mongolia resulting from the
continued operation of Oyu Tolgoi; the potential impact of
COVID-19; 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;
delays, and the costs which would result from delays, in the
development of the underground mine (which could significantly
exceed the costs projected in OTTR20); projected copper, gold and
silver prices and their market demand; and production estimates and
the anticipated yearly production of copper, gold and silver at Oyu
Tolgoi.
The cost, timing and complexities of mine construction and
development are increased by the remote location of a property such
as Oyu Tolgoi. It is common in 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 Oyu Tolgoi has achieved
commercial production, there is no assurance that future
development activities will result in profitable mining
operations.
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 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 annual information form for the year ended
December 31, 2019 ("AIF"), as
supplemented by the "Risks and Uncertainties" section of the
Company's management's discussion and analysis for the three and
nine months ended September 30, 2020
(the "MD&A").
Readers are further cautioned that the list of factors
enumerated in the "Risk Factors" section of the AIF and in the
"Risks and Uncertainties" section of the MD&A that may affect
future results is not exhaustive. When relying on the Company's
forward-looking statements and information 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 statements and
information contained herein 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 statements
or information, whether as a result of new information, future
events or otherwise, except as required by applicable law. The
forward-looking statements and information contained herein are
expressly qualified by this cautionary statement.
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SOURCE TURQUOISE HILL RESOURCES LTD