Rio Tinto proposes to privatize Turquoise Hill Resources

MONTREAL – Rio Tinto International Holdings Ltd. made an offer on Monday to buy the 49 percent stake in Turquoise Hill Resources Ltd. that it does not already own and to privatize it.

The proposal values ​​the minority stake in the company at around $3.4 billion.

Under the offer, Rio Tinto, which already owns a 51% stake in the company, would pay $34 per share for the approximately 99 million shares held by minority shareholders of Turquoise Hill.

Shares of the company closed at $25.68 on the Toronto Stock Exchange on Friday.

Turquoise Hill owns a 66% interest in the Oyu Tolgoi copper and gold mine in Mongolia. Erdenes Oyu Tolgoi LLC, a Mongolian public entity, holds the remaining 34% stake.

Rio Tinto said the deal would simplify the ownership structure of the mine and strengthen its copper portfolio.

“Rio Tinto strongly believes in the long-term success of Oyu Tolgoi and Mongolia, and in the long-term success of all stakeholders,” Rio Tinto chief executive Jakob Stausholm said in a statement.

“The proposed transaction would allow Rio Tinto to work directly with the Government of Mongolia to advance the Oyu Tolgoi project with a simpler and more efficient ownership and governance structure.”

Turquoise Hill said its board of directors would establish a special committee of independent directors to review and review the proposal.

“Turquoise Hill shareholders do not need to take any action regarding the proposal at this time,” the company said in a statement.

The offer follows an agreement between the company, Turquoise Hill and the Mongolian government in January to advance the Oyu Tolgoi project, restore the relationship between the partners and approve the start of underground operations.

In its outlook for this year, Turquoise Hill said it expects Oyu Tolgoi to produce 110,000 to 150,000 tonnes of copper and 115,000 to 165,000 ounces of gold in concentrates in 2022 from processing surface and underground development materials as well as stockpiles.

He said gold and copper production is expected to be lower in 2022 compared to 2021 due to the removal of the next cut and the processing of lower grade stockpile materials.

This report from The Canadian Press was first published on March 14, 2022.

Companies in this story: (TSX: TRQ)

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