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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Rio Tinto Group    RIO   AU000000RIO1

RIO TINTO GROUP

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Rio Tinto : faces threat of legal action from investor in Mongolian project

11/30/2020 | 11:35pm EST
FILE PHOTO: A Rio Tinto logo is displayed on the front of a wall panel during a news conference in Sydney

MELBOURNE (Reuters) - Rio Tinto Ltd said on Tuesday that it would not offer any comment in response to a threat of legal action from the largest minority shareholder in its Mongolian copper project Oyu Tolgoi.

Rio Tinto operates what is slated to become the world's third-largest copper mine which is jointly owned by the Mongolian government and Canada's Turquoise Hill Resources Ltd, in which Rio owns a 50.8% stake.

Activist investor Pentwater Capital Management LP holds a 9.23% stake in Turquoise Hill and is its largest minority investor.

In a letter to the Australian exchange on Monday, Pentwater Chief Executive Matthew C. Halbower accused Rio of mismanaging costs, and then unfairly restricting Turquoise Hill's ability to obtain finance to pay for those costs.

Rio Tinto declined to comment.

"It is unacceptable that Rio ... is preventing TRQ from seeking the financing solutions that are most optimal for TRQ shareholders," Halbower said.

"If Rio's Board continues with this oppressive behaviour ... Pentwater is prepared to go forward with legal action against the proper parties, including, you, the Board of Directors."

Rio in 2019 announced a cost overrun at the project of up to $1.9 billion due to difficult geology, saying total capital expenditure was expected to be in a range of $6.5 billion-$7.2 billion, and it expected a delay of up to 30 months at the mine's underground extension.

In September, it said it planned to raise up to $500 million through additional lending to develop the mine.

However shareholders worried that a rights issue would allow Rio Tinto to take a greater stake in Turquise Hill that underplayed its full valuation.

More advantageous financing operations included streaming and bond financing, said Halbower who also noted that he stood for a board role but said that was vetoed by Rio.

(Reporting by Melanie Burton; Editing by Stephen Coates)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
RIO TINTO GROUP 0.71% 119.63 End-of-day quote.5.10%
TURQUOISE HILL RESOURCES LTD. -0.79% 15.15 Delayed Quote.-4.30%
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Financials (USD)
Sales 2020 43 887 M - -
Net income 2020 10 496 M - -
Net Debt 2020 2 268 M - -
P/E ratio 2020 12,2x
Yield 2020 5,86%
Capitalization 135 B 135 B -
EV / Sales 2020 3,12x
EV / Sales 2021 2,82x
Nbr of Employees 46 000
Free-Float 65,2%
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Income Statement Evolution
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Mean consensus HOLD
Number of Analysts 25
Average target price 78,54 $
Last Close Price 80,72 $
Spread / Highest target 56,4%
Spread / Average Target -2,70%
Spread / Lowest Target -36,2%
EPS Revisions
Managers and Directors
NameTitle
Jakob Stausholm Chief Executive Officer & Executive Director
Simon Robert Thompson Chairman
Peter Lloyd Cunningham Chief Financial Officer
Michael Gerard L'Estrange Independent Non-Executive Director
Megan Clark Independent Non-Executive Director
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