Pentwater Urges a Halt to Rio Tinto's Attempt to Obstruct Turquoise Hill's Financing and Governmental Discussions

Pentwater Capital Management LP (" Pentwater "), the largest minority shareholder of Turquoise Hill Resources Ltd. (" Turquoise Hill " or the " Company ") (TSX:TRQ) (NYSE:TRQ), urges regulators, including the U.S. Securities Exchange Commission ("SEC"), to carefully consider Rio Tinto's alleged breach of securities laws and continued improper actions involving Turquoise Hill.

Just over a week ago, a Federal District Court in the Southern District of New York appointed Pentwater as lead Plaintiff in a class action lawsuit against Rio Tinto. That lawsuit outlines how Rio Tinto violated federal securities laws by failing to timely disclose its knowledge of the massive cost overrun and schedule delay at the Oyu Tolgoi mine which is 66% owned by Turquoise Hill.

In the short period of time since Pentwater's appointment, Rio has taken additional action to harm Turquoise Hill. Just yesterday, Turquoise Hill announced that Rio Tinto is ordering Turquoise Hill to: (1) stop all conversations with the Government of Mongolia, its fellow shareholder in the Oyu Tolgoi mine, and (2) stop attempting to finance the cost overrun overseen by Rio with project bonds. 1 Additionally, just one short week ago, Rio unilaterally declared that it will not proceed with the undercut at the mine unless its own self-serving mine finance plan is implemented. Even Rio's hand-picked board of directors at Turquoise Hill knows that acceding to Rio's demands would be inconsistent with their and Rio's fiduciary obligations owed to Turquoise Hill and all of its shareholders.

Why would Rio (in its capacity as operator of the mine) possibly think it is good business practice or good government relations to forbid Turquoise Hill (the 66% owner of the mine) from having direct, one-on-one communication with the government of Mongolia (the 34% owner of the mine)? Why would Rio possibly think it is good business practice or good government relations to order Turquoise Hill to accept a value destructive financing option to finance the very cost overruns overseen by Rio Tinto? Why would Rio think it is good business practice or good government relations for Rio Tinto (the mine operator) to dictate to the mine owners that the undercut should only proceed after Rio gets its way on the mine financing plan? These questions answer themselves. Of course, Rio's perspective might be influenced by the $1.4 billion in fees that it has already been paid by OT and Turquoise Hill.

Rio's recidivist disregard for its legal obligations is alarming. It has been reported that the cost and schedule overruns at Oyu Tolgoi are under investigation by the SEC, the UK Serious Fraud Office, the Australian Securities and Investment Commission, and the Government of Mongolia. Rio was fined by the United Kingdom's Financial Conduct Authority for breaching Disclosure and Transparency Rules in reporting its activities at a mine in Mozambique, and is under a separate investigation by the U.K. Serious Fraud Office for corruption and bribery in its conduct of business in the Republic of Guinea. Rio has been reprimanded due to its destruction of the Juukan Gorge, where an Australian government inquiry has found its actions inexcusable and emblematic of a flawed corporate culture.

Rio's new CEO has been on the job for less than a month after its previous CEO departed after unforgivable corporate misdeeds. Unfortunately, rather than cleaning house and putting Rio on a path toward becoming a good corporate citizen, Jakob Stausholm is perpetuating Rio's flawed corporate culture. He promoted Arnaud Soirat to Chief Operating Officer despite the fact that Mr. Soirat was identified by whistleblower Richard Bowley as having knowledge of the fraud to hide Rio's cost overruns and schedule delays from Turquoise Hill shareholders and the Government of Mongolia. Now, Mr. Stausholm is personally orchestrating Rio's actions against Turquoise Hill and the Government of Mongolia disclosed yesterday.

On December 22, 2020, Turquoise Hill issued a press release informing shareholders of the progress being made in its comprehensive funding review process. Turquoise Hill disclosed that market testing and continued negotiations confirmed that multiple sources of competitively priced non-equity capital are available that would create significant value for Oyu Tolgoi's shareholders and not require any "completion support" from Rio Tinto. But any solution that does not enable Rio to continue profiting at the expense of other Oyu Tolgoi stakeholders does not seem to be amenable to Rio.

Rio Tinto is now using seemingly every tactic at its disposal to prevent Turquoise Hill from securing a financing solution that benefits all of its shareholders, not just Rio alone. This cannot be allowed. Pentwater urges regulators to consider Rio's ongoing improper activities across the globe.

1 Rio is utilizing a special committee of the OT board in its attempt to control Turquoise Hill. This special committee is compromised of just Rio and Turquoise Hill. Rio, however, is the only entity that has the right to cast a vote on this committee. Rio's proposal on financing and governmental communication has been put forward to this committee. Rio plans to cast its vote in favor of this proposal. Once Rio has so voted, Turquoise Hill is arguably contractually obligated to support this proposal when it is then introduced at the next OT Board meeting. It is through this mechanism that Rio is overriding Turquoise Hill's right and fiduciary obligation to finance the mine in the most economically efficient manner and work with the government of Mongolia to create the greatest amount of value for all OT shareholders.

David Zirin- Chief Operating Officer
Pentwater Capital Management
312-589-6401

News Provided by Business Wire via QuoteMedia

The Conversation (0)
True North Copper

TNC Announces Institutional Placement

True North Copper Limited (ASX:TNC) (True North, TNC or the Company) is pleased to advise that it has signed binding documentation with Millinium Capital Managers Limited as trustee for MP Materials and Mining Group Fund for a placement of A$5 million comprising the issue of 41,666,667 fully paid ordinary shares in the Company (Shares) at an issue price of A$0.12 per Share (Placement).

Keep reading...Show less
Forte Minerals President and CEO Patrick Elliott.

Forte Minerals CEO Highlights Strategy for Prospecting, Acquiring Prolific Assets at Low Cost

Forte Minerals’ (CSE:CUAU) ability to discover and acquire exploration properties at a low cost in Peru has been largely accomplished through two strategies: seeking relinquished properties when the market is down, and employing remote sensing technology for discoveries, according to the company’s president and CEO, Patrick Elliott.

"Through low market times, we thrive on property acquisitions, deals, negotiating," he said. "It's usually around a time when other companies are relinquishing properties. A lot of the majors go through these periods whereby exploration gets the first cut. ... So we remain very flexible to be able to pick up these properties for nothing."

Elliott was commenting on the company’s recent acquisition of two properties in Peru — the Alto Ruri gold prospect and the Cerro Quillo gold-copper-molybdenum prospect — for a one-time cash payment of only US$25,000.

Keep reading...Show less
True North Copper

TNC Operational Update - Cloncurry Copper Project’s Mining Restart

True North Copper Limited (ASX:TNC) (True North, TNC or the Company) is pleased to provide an operational update on the mining restart at its 100% owned Cloncurry Copper Project (CCP).

Keep reading...Show less
Copper ore in foreground, with world map showing countries in copper on black background.

Copper Reserves: Top 5 Countries (Updated 2024)

Copper has become a hot topic due to its role in the green energy transition and its necessity for urbanization. However, the lack of incoming supply in the long term has experts concerned.

The term “peak copper” was coined because some experts believe that copper reserves may be diminishing; as a result, it’s prudent to know the top copper reserves by country when considering investing in the mining industry.

The Copper Development Association pegs current known worldwide copper ore resources at nearly 5.8 trillion pounds, of which only about 0.7 trillion pounds, or 12 percent, have been mined throughout history. Plus, nearly all of that mined copper is still in circulation, as the red metal’s recycling rate is higher than that of any other engineering metal.

Keep reading...Show less
Forum Commences Mobilization for 10,000 Metre Drill Program at the Aberdeen Uranium Project, Thelon Basin, Nunavut

Forum Commences Mobilization for 10,000 Metre Drill Program at the Aberdeen Uranium Project, Thelon Basin, Nunavut

Forum Energy Metals Corp. (TSXV: FMC) (OTCQB: FDCFF) ("Forum" or the "Company") announces it has commenced mobilization of its camp, fuel, equipment and second drill to its camp location on the Aberdeen Uranium Project, located adjacent to Orano's 133 million pound Kiggavik uranium deposit in the Thelon Basin, Nunavut. Forum plans a 10,000 metre drill program just two months away in June to follow-up on its successful drill program in 2023. Four drill holes into the Tatiggaq deposit intersected up to 2.25% U3O8 over 11.1 metres over a 200-metre strike length. The structure hosting uranium mineralization extends for 1.5 kilometres within a highly altered uranium mineralized system.

News Provided by Newsfile via QuoteMedia

Keep reading...Show less
Copper bars.

Copper Crunch Coming as Demand Rises and Mine Supply Falls Short

Since the advent of electricity, copper has played an essential role in energy generation and transmission. It will be similarly unreplaceable as the world moves away from fossil fuels to more sustainable sources of energy.

Pierre Lassonde, founder and chair emeritus of Franco-Nevada (TSX:FNV,NYSE:FNV), emphasized this during the "Where Will the Money Come From?" panel at the Prospectors & Developers Association of Canada (PDAC) convention.

“Copper is required for everything, and today 80 percent of terminal energy is carbon based and only 20 percent is electricity," he said. "If we want a green world, that has to be flipped around, where 80 percent of terminal energy has to be electricity. And the metal that carries electricity is copper in every which way. That is the key metal."

Keep reading...Show less

Latest Press Releases

Related News

×