Turquoise Hill shares plunge on delays, higher costs at Mongolian mine | iNFOnews | Thompson-Okanagan's News Source
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Turquoise Hill shares plunge on delays, higher costs at Mongolian mine

VANCOUVER - Shares of Turquoise Hill Resources Ltd. closed down more than 43 per cent Tuesday on the Toronto Stock Exchange after it announced delays and cost overruns at a major mine project in Mongolia.

The Vancouver-based company, 50.8 per cent owned by mining giant Rio Tinto Group, said the underground Oyu Tolgoi mine could be delayed by 16 to 30 months and cost between US$1.2 billion and US$1.9 billion more than expected.

The company says stability risks at the massive underground development have forced a rethink of the mine plan, with a finalized update not expected until the second half of next year.

"We have identified a number of mine designs to address the stability risks associated with the original design, and continue to assess the impact on the cost and schedule of the project," said Turquoise CEO Ulf Quellmann in a statement.

The developers had initially expected the underground mine, projected to become the world's third largest copper mine by 2030, to be completed around the end of 2020 at a cost of about US$5.3 billion.

RBC Capital Markets analyst Sam Crittenden said the wide range in costs and time frame leave uncertainty, even if the project is still promising.

"We continue to see the long term value in the asset; however, the wait for a more detailed project update and need for additional capital make it hard for investors to step into the name."

Turquoise closed down 60 cents, or 43.17 per cent, at 79 cents, leaving it with a market capitalization of $1.59 billion.

Oyu Tolgoi, which employs about 17,000 people, is already operating as an open pit operation but about 80 per cent of its value lies deep underground. Underground mining will be done at depths of greater than 1.3 kilometres.

Turquoise Hill owns 66 per cent of the Oyu Tolgoi mine as its only significant asset, with the Government of Mongolia owning the rest of the mine.

Companies in this story: (TSX:TRQ)

News from © The Canadian Press, 2019
The Canadian Press

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