Turquoise Hill reduces full-year loss; faces financing issues at Oyu Tolgoi

VANCOUVER – Turquoise Hill Resources Ltd. (TSX:TRQ) says it may have to ask lenders to extend financing for its flagship Oyu Tolgoi copper and gold project while talks with the Mongolian government over shareholder and other issues continue.

Vancouver-based Turquoise Hill, which reported an improved but still large full-year loss on Wednesday, says progress is being made in the talks.

However, while discussions remain constructive, it may not be possible to resolve the issues until current lender commitments expire, the company said Wednesday in a statement.

“In this event, the shareholders will consider requesting an extension of the commitments from the project finance lenders and finalization of the Oyu Tolgoi project financing may be deferred to the second half of 2014.”

As of the end of December, the aggregate outstanding balance of loans extended by subsidiaries of the company to Oyu Tolgoi was US$6.8 billion, including accrued interest of US$900 million.

Turquoise Hill, which is controlled by international mining giant Rio Tinto, is focused on copper, gold and coal mines in the Asia Pacific region.

The company’s primary operation is a 66 per cent interest in the Oyu Tolgoi copper-gold-silver mine in southern Mongolia. The Mongolian government owns the remaining 34 per cent.

Turquoise Hill also holds a 56 per cent interest in Mongolian coal miner SouthGobi Resources.

On Wednesday, it reported a reported a net loss for 2013 of US$112 million or nine cents per share, compared with a net loss of US$412.1 million or 37 cents per share in 2012.

Meanwhile, the company said post-commissioning equipment and bottleneck problems at Oyu Tolgoi had hurt first-quarter production and that some sales previously expected in the quarter have been deferred until the second and third quarters.

As a result, the company has reduced production guidance for 2014 for Oyu Tolgoi to between 135,000 and 160,000 tonnes of copper in concentrates and 600,000 to 700,000 ounces of gold in concentrates. That was down from a previous estimate of 150,000 to 175,000 tonnes of copper and 700,000 to 750,000 ounces of gold.

On the Toronto Stock Exchange, Turquoise Hill shares closed down seven cents, or 1.83 per cent, at $3.75 on Wednesday.