"Turquoise Hill flags $200 million cost increase at Oyu Tolgoi"

" \n Turquoise Hill flags $200 million cost increase at Oyu Tolgoi \n \n\n \n Canada\u2019s Turquoise Hill Resources\u00a0 flagged after markets closed \u00a0on Thursday a $200 million cost increase for the ongoing expansion of the massive Oyu Tolgoi copper-gold mine in Mongolia. \n \n\n \n The Montreal-based company currently estimates its base case incremental funding requirement at $3.6 billion, up from the $3.4 billion forecast at the end March. \n \n\n \n Turquoise Hill said the updated cost and schedule for the ongoing underground expansion of Oyu Tolgoi incorporates the known, incremental covid-19 cost impacts, associated taxes and an estimate of further pandemic-related management costs over the remaining development schedule. \n \n\n \n It means that the project total cost has climbed to $7.06 billion, almost $1.8 billion higher than the original estimate in 2015. \n \n\n \n As of the end of the second quarter, the firm had invested a total of $5.3 billion in the Mongolian asset, leaving the $1.8 billion remaining. \n \n\n \n Mining giant Rio Tinto (ASX, LON, NYSE: RIO), which controls and operates Oyu Tolgoi through its 51% stake in Turquoise Hill, is currently trying to buy all the shares it doesn\u2019t already own in the Canadian miner. \n \n\n \n Rio\u2019s chief executive Jakob Stausholm has said he believes the acquisition would simplify the ownership structure, and further strengthen the company\u2019s copper portfolio. \n \n\n \n The offer followed an agreement between the miner and the government of Mongolia to complete the long-delayed underground expansion. \n \n\n \n That deal saw Rio agree to write off $2.4 billion in loans and interest used by Ulaanbaatar to fund its share of the development costs. \n \n\n \n Turquoise Hill, which had $500 million of available liquidity by the end of June, said it continues to consider Rio Tinto\u2019s unsolicited C$34.00 per share buyout. \n \n\n \n It noted the amount of cash and cash equivalents it holds, together with access to funding under an agreement with Rio Tinto , will be enough for the company to meet its minimum obligations for at least 12 months. \n \n\n \n Three-year delay and counting \n \n\n \n The ongoing expansion of Oyu Tolgoi, located is 550 km (342 miles) south of Mongolia\u2019s capital Ulaanbaatar, has been plagued by delays and costs overruns. \n \n\n \n At time the situation has triggered the Mongolian government\u2019s ire to the point of threatening to revoke the 2009 investment agreement , which underpins the mine development. \n \n\n \n First production, initially expected in late 2020, was rescheduled for October 2022 and later to the first half of 2023. \n \n\n \n Oyu Tolgoi is Rio Tinto\u2019s main copper growth project. Once completed, the underground section will lift production from 125,000\u2013150,000 tonnes in 2019 to 560,000 tonnes at peak output, which is now expected by 2025 at the earliest. \n \n\n \n According to the miner, this would make it the biggest new copper mine to come on stream in several years and, by 2030, the operation would be the world\u2019s fourth largest copper mine. \n \n\n \n Oyu Tolgoi is expected to produce 110,000-150,000 tonnes of copper and 150,000-170,000 ounces of gold in concentrates in 2022 from processing ore from the open pit, underground and stockpiles. \n "

"Turquoise Hill flags $200 million cost increase at Oyu Tolgoi"

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