“Oyu Tolgoi is an attractive tier one asset, and we remain highly focused on and optimistic about its transformation into one of the world’s great copper mines,” Turquoise Hill said.
Turquoise Hill Resources (TRQ) – Get Turquoise Hill Resources Ltd. Report shares plunged lower Monday after the Canadian mining group rejected a $2.7 billion buyout offer from Rio Tinto plc (RIO) – Get Rio Tinto Plc Report.
Turquoise Hill said Rio Tinto’s offer of $C34 a share for the 49% stake it doesn’t already own — first unveiled in March — undervalues the Montreal-based group, which focuses on copper and gold mining in the Oyu Tolgoi project in southern Mongolia.
Rio had been working with a so-called ‘special committee’ set up by Turquoise Hill to evaluate its $2.7 billion bid, but the group noted that engagement between the two parties “has not resulted in a consensus on value and price or in any improved proposal from Rio Tinto.”
“The underground project is advancing better than originally anticipated. We were able to start blasting the drawbells ahead of schedule and caving operations are progressing to the point where we expect to achieve sustainable production earlier than forecast,” said Turquoise Hill’s interim CEO Steve Thibeault. “The funding agreement with Rio Tinto remains in effect and the Company is executing on those commitments, which we expect will provide us with sufficient liquidity to meet our funding requirements.”
“Oyu Tolgoi is an attractive tier one asset, and we remain highly focused on and optimistic about its transformation into one of the world’s great copper mines, positioning Oyu Tolgoi to become a high-grade, low-cost, large-scale producer with a long mine life,” he added.
Turquoise Hill’s U.S. listed shares were marked 23.8% lower in pre-market trading Monday to indicate an opening bell price of $20.00 each. Rio Tinto shares fell 3% to $58.37 each.
Copper prices have fallen around 17.1% so far this year, and were last seen 0.8% lower on the session in London at $8,036.00 per ton, as China demand remains elusive amid the country’s ‘zero Covid’ health policies.
China published data on Sunday showing slower-than-expected retail sales growth, a disappointing pace of industrial production and softer-than-forecast government investment.
That said, July imports rose 9.3% from last year, customs data indicated last week, to around 463,700 tons, ahead of what could be a government-inspired acceleration in infrastructure projects aimed at reviving 2022 GDP targets.
“Market conditions in the equity and copper markets have changed significantly since the receipt of Rio Tinto’s privatization proposal in March,” Turquoise Hill said. “At the same time, the Company has continued to make positive progress on the underground project.”