A government that flip-flops. The company's finances are insufficient all of a sudden.
That's the reality for Turqoise Hill while attempting to develop a monster copper deposit in Mongolia. Schaft Creek is much safer ground...
Turquoise Hill (T.TRQ) down 5% as it halts work on Oyu Tolgoi development
Turquoise Hill Resources (TSX:TRQ, StockForum) has suspended work on development of the underground copper mine at Oyu Tolgoi after the Mongolian government said financing for the project would require parliamentary approval.
The company said Thursday talks with the government are continuing but, given the uncertainties regarding the timing of the required approvals and completion of the expansion feasibility study, it was unable to complete project financing this year.
The delay means the company is going ahead with a rights offering that will be used to repay a bridge loan and other interim funding.
The Mongolian government and Turquoise Hill Resources are locked in negotiations over Turquoise's intentions to develop the Oyu Tolgoi project. Although no agreement has been reached, company officials are confident that it is a positive engagement and progress is being made.
A company news release explained in more detail, “Given uncertainties surrounding the timing of resolution of issues with the Government of Mongolia, including obtaining all required approvals and completion of the Oyu Tolgoi expansion feasibility study, Turquoise Hill is unable to complete project financing in 2013.”
It went on to affirm, “Turquoise Hill remains committed to obtaining project finance to fund the development of the Oyu Tolgoi Project and is engaging with the Government of Mongolia to achieve this; work continues on the optimization of the underground mine design and construction plan and finalization of the feasibility study.”
And to that end, Turquoise has filed a preliminary prospectus for a rights offering in order to deal with the company's current funding instability.
Shares were down 5.83% on the news to $4.17 per share.
