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    TRQ   CA9004352071

TURQUOISE HILL RESOURCES LTD.

(TRQ)
  Report
Delayed Toronto Stock Exchange  -  04:00 2022-08-09 pm EDT
32.03 CAD   -1.29%
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Turquoise Hill Resources : Q2 2022 Conference Call Presentation

08/05/2022 | 06:56am EDT

A Leading Copper and Gold Producer Developing a Tier-1 Copper Asset

Second Quarter 2022 Financial Results

August 5, 2022

TSX-NYSE: TRQ

Cautionary Notes

2

Certain statements made herein, including statements relating to matters that are not historical facts and statements of Turquoise Hill Resources Ltd.'s (the "Company", "Turquoise Hill" or "TRQ") beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements and information relate to future events or future performance, reflect current expectations or beliefs regarding future events and are typically identified by words such as "anticipate", "believe", "could", "estimate", "expect", "intend", "likely", "may", "plan", "seek", "should", "will" and similar expressions suggesting future outcomes or statements regarding an outlook. These include, but are not limited to, statements and information regarding: the nature of the Company's ongoing relationship and interaction with the Government of Mongolia with respect to the continued operation and development of Oyu Tolgoi as and when the key agreements entered into with the Government of Mongolia announced on January 24, 2022 (the "GoM Agreements") are implemented along with the implementation of Resolution 103 (as defined in the AIF); the continuation of undercutting in accordance with the mine plan and design; the actual timing of first sustainable production as well as the lifting of restrictions by the Government of Mongolia on the ability of Oyu Tolgoi LLC ("OT LLC") to incur any additional indebtedness; the terms and conditions of the non-binding proposal from Rio Tinto International Holdings Limited ("Rio Tinto") to acquire the approximately 49% of the common shares of Turquoise Hill held by the Company's minority shareholders for cash consideration of C$34.00 per share (the "RT Proposal"), and its review and evaluation by the Special Committee; the implementation and successful execution of the updated funding plan that is the subject of the amendment dated May 18, 2022 to the amended and restated heads of agreement entered into between the Company and Rio Tinto on January 24, 2022 (the "Funding HoA"), as such agreement may be further amended or restated, and the amount of any additional future funding gap to complete the Oyu Tolgoi project and the availability and amount of potential sources of additional funding required therefor, all as contemplated by the Funding HoA, as well as potential delays in the ability of the Company and OT LLC to proceed with the funding elements contemplated by the Funding HoA; liquidity, funding sources and funding requirements in general, in particular until sustainable first production is achieved, including the Company's ability to reach agreement with project finance lenders on the re-profiling of existing debt payments in line with current cash flow projections, as well as the Company (or a wholly-owned subsidiary) and OT LLC entering into a pre-paid copper concentrate sale arrangement; the availability and amount of potential sources of additional funding, including the short-term secured advance to be provided by Rio Tinto to the Company under the Funding HoA; the amount by which a successful re-profiling of the Company's existing debt would reduce the Company's currently projected funding requirements; the Company's ability to conduct one or more equity offerings as contemplated by the Funding HoA in light of future and then-prevailing market conditions; the expectations set out in the Oyu Tolgoi 2020 Technical Report dated as of June 30, 2020 ("OTTR20"); the timing and amount of future production and potential production delays; statements in respect of the impacts of any delays on achieving first sustainable production and on the Company's cash flows; expected copper and gold grades; the merits of the class action complaints filed against the Company in October 2020 and January 2021, respectively; the merits of the defence and counterclaim filed by the Government of Mongolia in the international tax arbitration brought by OT LLC and the likelihood of the parties being able to amicably resolve the ongoing tax issues; the timing of studies, announcements and analyses; the status of underground development, including any slowdown of work; the causes of the increase in costs and schedule extension of the underground development; the mine design for Panel 0 of Hugo North Lift 1 and the related cost and production schedule implications; the re-design studies for Panels 1 and 2 of Hugo North Lift 1 and the possible outcomes, content and timing thereof; the timing and progress of the sinking of Shafts 3 and 4 and any delays in that regard in addition to previously announced delays; expectations regarding the possible recovery of ore in the two structural pillars, to the north and south of Panel 0; the possible progression of a state-owned power plant ("SOPP") and related amendments to the power source framework agreement (as amended, the "PSFA"), as well as power purchase agreements and extensions thereto; finalization of an agreement with the Inner Mongolia Power International Cooperation Co., Ltd. ("IMPIC") on extension of the current power import arrangements; the timing of construction and commissioning of the potential SOPP; sources of interim power; the continuing impact of COVID-19, including any restrictions imposed by health or governmental authorities relating thereto on the Company's business, operations and financial condition, as well as delays and the development cost impacts of delays caused by the COVID-19 pandemic; the Company's ability to operate sustainably, its community relations and its social licence to operate in Mongolia; capital and operating cost estimates, including inflationary pressures thereon resulting in cost escalation; the content of the Definitive Estimate (as defined in the AIF); mill and concentrator throughput; anticipated business activities, planned expenditures, corporate strategies; supply disruptions of oil and gas to the Oyu Tolgoi project caused by the ongoing Russia-Ukraine conflict; and other statements that are not historical facts.

Cautionary Notes (cont'd)

3

Forward-looking statements and information are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such statements or information. There can be no assurance that such statements or information will prove to be accurate. Such statements and information are based on numerous assumptions regarding present and future business strategies, local and global economic conditions, and the environment in which the Company will operate in the future, including the price of copper, gold and silver; projected gold, copper and silver grades; anticipated capital and operating costs; anticipated future production and cash flows; the anticipated location of certain infrastructure in Hugo North Lift 1 and sequence of mining within and across panel boundaries; the nature of the Company's ongoing relationship and interaction with the Government of Mongolia with respect to the continued operation and development of Oyu Tolgoi as and when the GoM Agreements are implemented along with the implementation of Resolution 103; the continuation of undercutting in accordance with the mine plan and design; the actual timing of first sustainable production as well as the lifting of restrictions by the Government of Mongolia on the ability of OT LLC to incur any additional indebtedness; the possibility that the Company and Rio Tinto are unable to come to an agreement on the terms and conditions of a going private transaction or that the terms and conditions of a definitive agreement between the Company and Rio Tinto in respect of a going private transaction will differ from those that are currently contemplated by the RT Proposal; the availability and timing of required governmental and other approvals for the construction of the SOPP; the ability of the Government of Mongolia to finance and procure the SOPP within the timeframes anticipated in the PSFA, as amended, subject to ongoing discussions relating to a standstill period; finalization of an agreement with IMPIC on an extension of the current power import arrangements; the eventual pre-payment arrangement between the Company (or a wholly-owned subsidiary) and OT LLC; the implementation and successful execution of the updated funding plan that is the subject of the Funding HoA, as such agreement may be further amended and restated; the Company's ability to operate sustainably, its community relations and its social licence to operate in Mongolia; and the amount of any additional future funding gap to complete the Oyu Tolgoi project and the availability and amount of potential sources of additional funding required therefor.

Certain important factors that could cause actual results, performance or achievements to differ materially from those in the forward-looking statements and information include, among others: copper, gold and silver price volatility; discrepancies between actual and estimated production; mineral reserves and resources and metallurgical recoveries; development plans for processing resources; the accuracy of the Definitive Estimate; public health crises such as COVID-19; matters relating to proposed exploration or expansion; mining operational and development risks, including geotechnical risks and ground conditions; litigation risks, including the outcome of the class action complaints filed against the Company; the outcome of the international arbitration proceedings, including the likelihood of the parties being able to amicably resolve the ongoing tax issues; regulatory restrictions (including environmental regulatory restrictions and liability); OT LLC or the Government of Mongolia's ability to deliver a domestic power source for the Oyu Tolgoi project within the required contractual time frame; the Company's ability to operate sustainably, its community relations, and its social licence to operate in Mongolia; activities, actions or assessments, including tax assessments, by governmental authorities; events or circumstances (including public health crises, strikes, blockades or similar events outside of the Company's control) that may affect the Company's ability to deliver its products in a timely manner; currency fluctuations; the speculative nature of mineral exploration; the global economic climate; global climate change; dilution; share price volatility; competition; loss of key employees; cyber security incidents; additional funding requirements, including in respect of the development or construction of a long-term domestic power supply for the Oyu Tolgoi project; capital and operating costs, including with respect to the development of additional deposits and processing facilities; inflationary pressures on prices for critical supplies for Oyu Tolgoi including fuel, power, explosives and grinding media resulting in cost escalation; defective title to mineral claims or property; human rights requirements; international conflicts such as the ongoing Russia-Ukraine conflict; and new tax measures, such as a minimum corporate tax rate, that might be implemented as a result of evolving global initiatives. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements and information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. All such forward-looking statements and information are based on certain assumptions and analyses made by the Company's management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are reasonable and appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements or information.

Cautionary Notes (cont'd)

4

Readers are cautioned not to place undue reliance on forward-looking information or statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Events or circumstances could cause the Company's actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements are included in the "Risk Factors" section in the Company's Annual Information Form for the year ended December 31, 2021, dated as of March 2, 2022 (the "AIF"), as supplemented by the "Risks and Uncertainties" section of the Company's Management's Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2022 (the "MD&A").

Readers are further cautioned that the list of factors enumerated in the "Risk Factors" section in the AIF and the "Risks and Uncertainties" section in the MD&A that may affect future results is not exhaustive. When relying on the Company's forward-looking statements and information to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Furthermore, the forward-looking statements and information contained herein are made as of the date hereof and the Company does not undertake any obligation to update or to revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by applicable law. The forward-looking statements and information contained herein are expressly qualified by this cautionary statement.

Disclosure of information of a scientific or technical nature in this presentation in respect of the Oyu Tolgoi mine was approved by Jo-Anne Dudley (FAusIMM(CP)), Chief Operating Officer of Turquoise Hill. Ms. Dudley is a "qualified person" as that term is defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects. Reference is made to OTTR20 which is available under the Company's profile on SEDAR at www.sedar.com.

This presentation contains certain non-GAAP (Generally Accepted Accounting Principles) financial measures such as total operating cash costs, C1 cash costs and all-in-sustaining costs, non-GAAP ratios such as C1 cash costs per pound of copper produced and all-in-sustaining costs per pound of copper produced and supplementary financial measures such as capital expenditures on the underground project, underground sustaining capital expenditures and capital expenditures on surface operations. The non-GAAP financial measures and non-GAAP ratios have non-standardized meanings under International Financial Reporting Standards ("IFRS"). As such, these financial measures may not be comparable to similar measures used by other issuers. These financial measures are presented in order to provide investors and other stakeholders with additional understanding of performance and operations at the Oyu Tolgoi mine and are not intended to be used in isolation from, or as a replacement for, measures prepared in accordance with IFRS. Additional details and information for these non-GAAP financial measures, non-GAAP ratios and supplementary financial measures can be found in the section titled "Non-GAAP and Other Financial Measures" between pages 28 and 32 of the MD&A, which section and pages are incorporated by reference into this presentation. The MD&A is available under the Company's profile on SEDAR at www.sedar.com.

Presenters

5

Steve Thibeault

Interim Chief Executive Officer

Luke Colton

Chief Financial Officer

Jo-Anne Dudley

Chief Operating Officer

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Turquoise Hill Resources Ltd. published this content on 04 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 August 2022 10:55:07 UTC.


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Sales 2022 1 386 M - -
Net income 2022 402 M - -
Net Debt 2022 3 617 M - -
P/E ratio 2022 16,4x
Yield 2022 -
Capitalization 5 003 M 5 003 M -
EV / Sales 2022 6,22x
EV / Sales 2023 7,72x
Nbr of Employees 3 478
Free-Float 49,2%
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Last Close Price 24,86 $
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Managers and Directors
Steeve Thibeault Chief Executive Officer & Director
Luke Colton Chief Financial Officer
Robert Peter Charles Gillin Chairman
Jo-Anne Dudley Chief Operating Officer
Russel C. Robertson Independent Director
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