MONTREAL, April 6, 2020 /CNW/ - Turquoise Hill Resources
Ltd (TSX:TRQ) (NYSE:TRQ) ("Turquoise Hill" or "the Company") today
responded to Pentwater Capital Management's recently filed proxy
circular.
Turquoise Hill's Board values engagement with its shareholders
and believes an open dialogue with its shareholders is essential to
its long-term success. Upon receiving the proposals from Pentwater,
management and independent Board members held direct
discussions with Pentwater about their proposals to better
understand and address their concerns. The Board, led by the
independent directors and supported by external advisors,
thoroughly reviewed both proposals and recommended that
shareholders vote against the first proposal and withhold their
vote on the second proposal for the reasons outlined in the
Company's Management Proxy Circular, filed with securities
regulators on March 20, 2020.
Strong Management and Oversight at Oyu Tolgoi
Turquoise Hill has made a number of changes to management over the
last few years and believes it has the right team in place to lead
the company in relation to the financing, construction and
operation of the Oyu Tolgoi underground expansion and operation of
the open pit. The current management team – led by CEO Ulf Quellmann, appointed in July 2018, CFO Luke
Colton, appointed in October
2017, and COO Jo-Anne Dudley,
appointed in June 2019 – is deeply
involved in all matters related to Oyu Tolgoi, leveraging expertise
in key technical areas such as mine planning, project management
and operations, as well as financing and government relations.
Ms. Dudley has 25 years of experience in the mining industry
and, prior to joining Turquoise Hill, led the 30-person Strategic
Mine and Resources Planning unit at Oyu Tolgoi. She brings deep
experience in exploration, strategic planning, and resource
planning to Turquoise Hill. She is also a member of the key
technical forums for the Oyu Tolgoi mine development, including the
Technical Assurance Committee, which vets all mine plan changes.
Turquoise Hill has also expanded the technical and operations team
with both internal and external expertise working to provide
assurance to the organization, including expert geology and mining
analysis and extensive project management and controls
expertise.
Turquoise Hill has access to and participates in, reviews or
oversees key matters related to Oyu Tolgoi, including interactions
with the Government of Mongolia
related to the Parliamentary Working Group. To that effect, the
Company has formed a Joint Steering Committee and Joint Working
Group with Rio Tinto as a mechanism to facilitate negotiations
related to strategic matters amongst stakeholders. In addition,
Turquoise Hill has retained independent third party experts to
review cost and schedule reporting as well as provide
recommendations on improved efficiencies and procedures in
obtaining and organizing complex information from project managers
on-site at Oyu Tolgoi. Turquoise Hill's management team and Board
have the requisite experience and judgment to oversee the
successful development of this world-class asset.
Delivering on Oyu Tolgoi's Potential
Turquoise Hill
acknowledges the construction and development challenges at Oyu
Tolgoi and is focused on both preserving world class safety
standards and optimizing value creation potential, while reviewing
detailed analyses and testing of various mine design options. The
Company has made considerable progress and is working to finalize
an updated mine design in Q2 that reflects various considerations,
including the consequential impacts on cost, schedule and other key
variables. Turquoise Hill has engaged independent third party
mining consultants to provide the Company with insight and
technical support in evaluating the planning and estimate process
currently underway. Turquoise Hill is also actively involved in
identifying a long-term solution to secure domestic power at the
mine site.
Procuring Financing for Underground Expansion
Turquoise Hill is actively seeking to identify short-term and
long-term funding options that meet the Company's significant
capital requirements to complete the Oyu Tolgoi Underground
development. Turquoise Hill is in negotiations for near-term
financing that will ensure sufficient liquidity to consider and
progress its long-term funding options beyond the delivery of the
definitive estimate, which is expected to occur in H2 2020.These
negotiations are being supervised and directed by a committee of
the Board consisting solely of independent directors and supported
by external financial and legal advisors, with the objective of
achieving an interim funding solution that would provide the time
and flexibility required to identify the most attractive permanent
financing options available.
Enhancing Corporate Governance and Shareholder
Engagement
The Turquoise Hill Board is committed to strong
corporate governance. The majority of Turquoise Hill's seven-member
Board is independent of Rio Tinto, including its Chairman, and the
Board has established an independent special committee to ensure
the interests of minority shareholders are fully represented across
a range of critical topics. The Board also has a strong record of
refreshment – two of its independent directors have been added to
the Board in the last three years, including George Burns, who was appointed as an
independent director in 2020 and brings considerable mining
knowledge, including experience in Mongolia and underground mining. The Board
also made a number of enhancements to corporate governance in
recent years including the implementation of a long-term TRQ
stock-based incentive plan to align executives' interests with
those of all shareholders. The Company's independent directors have
also adopted a shareholder engagement policy, in order to formalize
and increase its direct engagement with Turquoise Hill's minority
shareholders.
Upcoming Annual Meeting
The Company maintains a
strong board with a majority of independent directors who are
committed to protecting the interests of its minority shareholders.
Your support at Turquoise Hill's upcoming annual meeting is
important and will allow the Company to continue soliciting
feedback from all shareholders, while maintaining a balance of
additive skills, fresh perspectives, and continuity that fosters
effective Board oversight.
To ensure your vote is counted, please vote using the
management proxy card prior to 5:00 p.m.
Eastern time on Friday, May 8, 2020. You should discard any
GOLD proxy cards that you receive. Shareholders are urged to read
the full text of Turquoise Hill's proxy circular, which is
available under Turquoise Hill's issuer profile at www.sedar.com or
www.sec.gov.
If you have any questions, please contact the Corporation's
strategic shareholder advisor and proxy solicitation agent,
Kingsdale Advisors, at 1-888-370-3955 (toll free in North America), or at 416-867-2272 (collect
outside North America), or by
email at contactus@kingsdaleadvisors.com.
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 (Erdenes), a Mongolian
state-owned entity, holds the remaining 34% interest.
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
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, information
regarding the timing and amount of 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, liquidity, funding requirements and planning, statements
regarding timing and status of underground development, and the
preparation of a new mine plan, the development options under
consideration for the design of Panel 0 and the related cost and
schedule implications, short-term and long-term financing options
under consideration and related negotiations, timing and status of
the Tavan Tolgoi-based power project, the expectations set out in
the Tavan Tolgoi Power Plant Feasibility Study, the potential
impact of COVID-19 on the Company's business, operations and
financial condition, capital and operating cost estimates, timing
of completion of the definitive estimate review, mill and
concentrator throughput, the initiation 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 and
projected gold, copper and silver grades, anticipated capital and
operating costs, anticipated future production and cash flows, the
anticipated location of certain infrastructure and sequence of
mining in Panel 0, the availability and timing of required
governmental and other approvals for the construction of the Tavan
Tolgoi Power Plant, the status 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.
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; the outcome of the definitive estimate review; 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; regulatory restrictions (including environmental regulatory
restrictions and liability); Oyu Tolgoi LLC'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 strikes, blockages
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; 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 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
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 specific 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 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; 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 the 2016
Oyu Tolgoi Feasibility Study and the 2016 Oyu Tolgoi Technical
Report); 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 dated as of
March 18, 2020 in respect of the year
ended December 31, 2019 (the "AIF")
as supplemented by our Management's Discussion and Analysis of
Financial Condition and Results of Operations for the year ended
December 31, 2019 ("MD&A").
Readers are further cautioned that the list of factors enumerated
in the "Risk Factors" section of the AIF and in 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.
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SOURCE Turquoise Hill Resources Ltd.