"Oyu Tolgoi produced solid operating results in the third quarter. Copper production of 41,935 tonnes was up 16% year-over-year and 14% relative to Q2'21. The mine also produced 130,799 ounces of gold in the quarter, an increase of 256% compared to the same quarter last year and 16% more than was produced in Q2'21. Revenue for the quarter was
"While the COVID-19 situation in
FINANCIAL AND OPERATIONAL HIGHLIGHTS
- Oyu Tolgoi open-pit and underground workforce posted an AIFR of 0.13 per 200,000 hours worked for the nine months ended
September 30, 2021 . - In Q3'21, Oyu Tolgoi produced 41,935 tonnes of copper and 130,799 ounces of gold.
- Mill throughput of 9.3 million tonnes in Q3'21 was in line with Q2'21 and 7% lower than Q3'20. Processing of harder ore as well as lower SAG mill availability, due to maintenance, impacted Q3'21 mill throughput.
- Despite significant COVID-19 related challenges at the Oyu Tolgoi mine site, causing the site to operate at less than 50% of its planned personnel for Q3'21, 2021 production guidance remains on track and some underground progress has been made with the restart of Shaft 4 sinking and commencement of no-load Material Handling System 1 (MHS1) commissioning in
October 2021 . - Revenue of
$622.8 million in Q3'21 increased 135.6% from$264.4 million in Q3'20. Both copper and gold volumes increased by 34.9% and 338.2%, respectively, driven by the scheduled move to the higher grade areas of Phase 4B. Average copper prices were 43.8% higher and average gold prices were 6.3% lower than Q3'20. - Income for the period was
$22.9 million in Q3'21 compared with$161.7 million in Q3'20, reflecting the impact of a$299.9 million deferred tax asset de-recognition in Q3'21 (Q3'20: recognition of$131.1 million ), which resulted mainly from underground delays as well as a$34.8 million increase in operating cash costs1 due mainly to higher royalty costs from increased sales revenue, additional COVID-19 related costs and higher consumption and power costs, partially offset by lower power study costs. These unfavourable movements were further offset by a$323.6 million increase in gross margin due to the increased revenue. Income attributable to owners of Turquoise Hill in Q3'21 was$34.9 million ($0.17 per share) vs$128.6 million ($0.64 per share) in Q3'20. - Cost of sales was
$1.98 per pound of copper sold and C1 cash costs1 were negative$0.65 per pound of copper produced. All-in sustaining costs1 were$0.03 per pound of copper produced. - Total operating cash costs1 of
$216.2 million in Q3'21 increased 19.2% from$181.4 million in Q3'20, due primarily to higher royalty costs from increased sales revenue, additional COVID-19 related costs and higher consumption and power costs, partially offset by lower power study costs. - Underground capital spend in Q3'21 was
$200.6 million , including$63.7 million of underground sustaining capital. Total underground capital spend sinceJanuary 1, 2016 was$5.1 billion , including$0.3 billion of underground sustaining capital, as ofSeptember 30, 2021 . Given the total underground development spend of$4.8 billion and contractual obligations of$0.4 billion as atSeptember 30, 2021 , Oyu Tolgoi is expected to reach the total$5.3 billion underground development (actual spend plus contractual obligations) as stated in the original 2016 feasibility study, duringNovember 2021 . In the event that the necessary additional investment to progress underground development is not supported by all directors of theOT LLC board by the end ofNovember 2021 ,OT LLC will be at risk of having to slow down further work on the underground development. - Cash generated from operating activities was
$350.6 million in Q3'21 vs$77.6 million in Q3'20, reflecting a$261.9 million improvement in cash generated from operating activities before interest and tax, which resulted from a$323.6 million increase in gross margin from increased sales revenue, partially offset by unfavourable movements in working capital1 and deferred revenue. Deferred revenue decreased in Q3'21 mainly due to exceptionally high deferred revenue atJune 30, 2021 , which was impacted by the timing of ramp-up in concentrate shipments during Q2'21 following the declaration of force majeure as well as related contingency measures that were put in place during Q2'21 to improve Oyu Tolgoi's short-term liquidity that started to be unwound during Q3'21. Deferred revenue increased in Q3'20. - Oyu Tolgoi concentrate shipment volumes to customers improved during Q3'21, compared to Q2'21; however, above target inventory levels remained at the end of Q3'21, reflecting the impact of COVID-19 related Mongolian / Chinese border restrictions, which resulted in force majeure being declared since
March 30, 2021 . Shipments to Chinese customers recommenced onApril 15, 2021 , andOyu Tolgoi LLC (OT LLC ) continues to work closely with the Mongolian and Chinese authorities to manage any supply chain disruptions. The force majeure will remain in place until there are sufficiently sustained volumes of convoys crossing the border to ensureOT LLC's ability to meet its ongoing commitments to customers and to return on-site concentrate inventory to target levels. - All technical undercut readiness activities have been completed, and Oyu Tolgoi has been ready from a technical perspective to commence the undercut since
July 2021 . Undercut commencement remains delayed and is pending resolution of certain non-technical undercut criteria, including the support of allOT LLC Board directors to increase the underground development capital investment and to commence discussions with the project finance lenders, obtaining outstanding required regulatory approvals and agreeing on a pathway to meetOT LLC's long-term power requirements, all of which are critical elements for consideration to proceed with the decision to commence the undercut and remain the subject of ongoing discussions. See the section of this press release titled "Negotiations with the Government ofMongolia ". - As a result of the cumulative and ongoing impacts of COVID-19, continued delayed commitments from the Definitive Estimate not having received the support of all directors of the
OT LLC Board, as well as the outstanding unresolved non-technical undercut issues, the Company now expects sustainable production for Panel 0 to be delayed to H1'23, broadly in line with the currently forecast 6-month delay to undercut commencement. - Progress on Shafts 3 and 4 has been impacted by quarantine requirements and international travel restrictions related to COVID-19. As a result, no significant development progress on these shafts was made during Q3'21. Consequently,
OT LLC has advised that a 9-month delay on Shafts 3 and 4 is currently forecast which, in combination with a COVID-related reduction in underground development progress as well as expected changes to mining scope, is currently forecast to delay the initiation of Panel 2 by approximately 14-16 months compared to the Definitive Estimate. Panel 1 is currently forecast to be impacted to a lesser extent with an approximate commencement 11 months later than the Definitive Estimate. These delays are expected to extend the ramp up to 95,000 tpd by a similar timeframe. Efforts to minimize the delays to Panel 1 and Panel 2 due to ventilation constraints ahead of Shaft 3 and 4 commissioning continue. See the section of this press release titled "Oyu Tolgoi Underground Update". - Turquoise Hill's current estimate of its base case incremental funding requirement is
$3.6 billion (June 30, 2021 :$2.4 billion ). The increase reflects preliminary information provided byOT LLC primarily regarding the delay to the initiation of the undercut. - As at
September 30, 2021 , Turquoise Hill has$0.8 billion of available liquidity, which under current projections is expected to meet the Company's requirements, including funding of underground capital expenditure, into Q3'22.
___________________ |
1 Please refer to Section – NON-GAAP MEASURES – on page 21 of this press release for further information. |
OPERATIONAL OUTLOOK FOR 2021
Oyu Tolgoi's copper and gold production guidance for 2021 remains within the ranges of 150,000 to 180,000 tonnes of copper and 400,000 to 480,000 ounces of gold, respectively.
Operating cash costs2 for 2021 are still expected to be within the range of
Capital expenditure for 2021 on a cash-basis has been reduced to
2021 C1 cash costs2 are expected to be in the range of negative
___________________ |
2 Please refer to Section – NON-GAAP MEASURES – on page 21 of this press release for further information |
OUR BUSINESS
Turquoise Hill is an international mining company focused on the operation and continued development of the Oyu Tolgoi copper-gold mine in
The Oyu Tolgoi property is located approximately 550 kilometres south of Ulaanbaatar,
The copper concentrator plant, with related facilities and necessary infrastructure, was originally designed to process approximately 100,000 tonnes of ore per day from the Oyut open-pit. However, since 2014, the concentrator has consistently achieved a throughput of over 105,000 tonnes per day due to improvements in operating practices. Concentrator throughput for 2021 is targeted at over 110,000 tonnes per day and expected to be approximately 40 million tonnes for the year due to improvements in concentrator performance and more favourable ore characteristics.
At the end of Q3'21, Oyu Tolgoi had a total workforce (employees and contractors), including for underground project construction, of approximately 14,000 workers, of which over 96% were Mongolian.
SELECTED FINANCIAL METRICS (1)
Three months ended | Nine months ended | |||||
($ in millions, unless otherwise noted) | 3Q | 3Q | Change | 3Q | 3Q | Change |
2021 | 2020 | % | 2021 | 2020 | % | |
Revenue | 622.8 | 264.4 | 135.6% | 1,467.1 | 673.1 | 118.0% |
Income (loss) for the period | 22.9 | 161.7 | -- | 473.9 | 253.0 | -- |
Income (loss) attributable to owners of Turquoise Hill | 34.9 | 128.6 | -- | 368.5 | 246.4 | -- |
Basic and diluted income (loss) per share attributable to owners of Turquoise Hill | 0.17 | 0.64 | -- | 1.83 | 1.22 | -- |
Revenue by metals in concentrates | - | - | - | |||
Copper | 362.7 | 198.7 | 82.5% | 883.8 | 517.3 | 70.8% |
Gold | 254.3 | 61.1 | 316.2% | 570.0 | 145.3 | 292.3% |
Silver | 5.8 | 4.6 | 26.1% | 13.3 | 10.5 | 26.7% |
Cost of sales | 202.7 | 168.0 | 20.7% | 440.9 | 495.9 | (11.1%) |
Production and delivery costs | 152.6 | 125.7 | 21.4% | 317.4 | 367.5 | (13.6%) |
Depreciation and depletion | 50.1 | 42.2 | 18.7% | 123.5 | 128.3 | (3.7%) |
Capital expenditure on cash basis | 216.9 | 254.5 | (14.8%) | 697.4 | 817.5 | (14.7%) |
Underground-Development | 136.9 | 203.2 | (32.6%) | 479.5 | 733.7 | (34.6%) |
Underground-Sustaining | 63.7 | 38.9 | 63.8% | 174.5 | 49.9 | 249.7% |
Open pit | 16.3 | 12.4 | 31.5% | 43.4 | 33.9 | 28.0% |
Proceeds from pre-production revenue | (39.3) | (18.5) | 112.4% | (51.3) | (26.1) | 96.6% |
Royalties | 37.6 | 15.5 | 142.6% | 82.8 | 40.0 | 107.0% |
Operating cash costs (2) | 216.2 | 181.4 | 19.2% | 627.9 | 550.3 | 14.1% |
Unit costs ($) | ||||||
Cost of sales (per pound of copper sold) | 1.98 | 2.22 | (10.8%) | 1.90 | 2.25 | (15.6%) |
C1 (per pound of copper produced) (2) | (0.65) | 1.48 | 143.9% | 0.06 | 1.72 | (96.5%) |
All-in sustaining (per pound of copper produced) (2) | 0.03 | 1.88 | (98.4%) | 0.63 | 2.13 | (70.4%) |
Mining costs (per tonne of material mined) (2) | 2.08 | 1.93 | 7.6% | 2.20 | 1.78 | 23.6% |
Milling costs (per tonne of ore treated) (2) | 8.01 | 5.90 | 35.8% | 7.10 | 6.06 | 17.2% |
G&A costs (per tonne of ore treated) | 3.63 | 2.98 | 22.0% | 4.02 | 3.05 | 31.8% |
Cash generated from (used in) operating activities | 350.6 | 77.6 | 351.8% | 426.7 | (28.6) | 1,592.0% |
Cash generated from operating activities before interest and tax | 351.1 | 89.2 | 293.6% | 895.0 | 125.4 | 613.7% |
Interest paid | 0.9 | 0.7 | 28.6% | 111.9 | 146.2 | (23.5%) |
Total assets | 13,908 | 13,087 | 6.3% | 13,908 | 13,087 | 6.3% |
Total non-current financial liabilities | 4,422 | 4,390 | 0.7% | 4,422 | 4,390 | 0.7% |
(1) | Any financial information in this press release should be reviewed in conjunction with the Company's consolidated financial statements or condensed interim consolidated financial statements for the reporting periods indicated. |
(2) | Please refer to Section – NON-GAAP MEASURES – on page 21 of this press release for further information. |
Q3'21 vs Q3'20
- Revenue of
$622.8 million in Q3'21 increased 135.6% from$264.4 million in Q3'20. Both copper and gold volumes increased, by 34.9% and 338.2% respectively. This was driven by the scheduled move to the higher grade areas of Phase 4B. Average copper prices were 43.8% higher and average gold prices were 6.3% lower than Q3'20. - Income for the period was
$22.9 million in Q3'21 compared with$161.7 million in Q3'20, reflecting the impact of a$299.9 million deferred tax asset de-recognition in Q3'21 (Q3'20: recognition of$131.1 million ), which resulted mainly from underground delays as well as a$34.8 million increase in operating cash costs3 due mainly to higher royalty costs from increased sales revenues, additional COVID-19 related costs and higher consumption and power costs, partially offset by lower power study costs. These unfavourable movements were further offset by a$323.6 million increase in gross margin due to the increased revenue. Income attributable to owners of Turquoise Hill in Q3'21 was$34.9 million ($0.17 per share,) vs$128.6 million ($0.64 per share) in Q3'20. - Cost of sales of
$202.7 million in Q3'21 increased 20.7% from$168.0 million in Q3'20, reflecting a 33.7% increase in volumes of concentrate sold driven by a 13.9% increase in volumes of concentrates produced and also improvement in Q3'21 shipping rates following introduction of measures to help mitigate the impact of the COVID-19 border restrictions that resulted in declaration of force majeure during Q1'21. - Capital expenditure on a cash basis was
$216.9 million in Q3'21 compared to$254.5 million in Q3'20, comprised of$200.6 million (Q3'20:$242.1 million ) in underground capital spend, including$63.7 million in underground sustaining capital (Q3'20:$38.9 million ), and$16.3 million (Q3'20:$12.4 million ) in open-pit sustaining capital expenditure. - Total operating cash costs3 of
$216.2 million in Q3'21 increased 19.2% from$181.4 million in Q3'20, principally due to an increase in royalty costs driven by higher revenue as well as additional costs associated with the implementation of increased COVID-19 safety measures and controls. Further, higher consumption and power costs were partially offset by lower power study costs. - Unit cost of sales of
$1.98 per pound of copper sold in Q3'21 decreased 10.8% from$2.22 per pound of copper sold in Q3'20, reflecting fixed cost efficiencies from higher metal production as well as higher copper grade and recovery from the scheduled mining progression to the higher grade areas of Phase 4B. - Oyu Tolgoi's C1 cash costs3 of negative
$0.65 per pound of copper produced in Q3'21 decreased from$1.48 per pound of copper produced in Q3'20, primarily reflecting the impact of a$193.2 million increase in gold revenue. - All-in sustaining costs3 of
$0.03 per pound of copper produced in Q3'21 decreased from$1.88 per pound of copper produced in Q3'20. Similar to the decrease in C1 cash costs3, this decrease primarily reflects the impact of the higher gold revenues but, unlike C1 cash costs3, was partially offset by the impact of increased royalty costs due to higher sales revenue. - Mining costs3 of
$2.08 per tonne of material mined in Q3'21 increased 7.6% from$1.93 per tonne of material mined in Q3'20. The increase was mainly due to lower material mined due to lower manning levels caused by COVID-19 related controls and restrictions, increased cycle times caused by mining deeper into the open-pit, higher spend on consumables and fuel driven by market price increases, partially offset by lower maintenance costs due to the lower manning levels. - Milling costs3 of
$8.01 per tonne of ore treated in Q3'21 increased 35.8% from$5.90 per tonne of ore treated in Q3'20. This increase was mainly due to lower milled ore and higher consumables and power costs caused by the processing of harder, higher grade Phase 4B ore in lieu of softer ore from Phase 6B and stockpiles. G&A costs of$3.63 per tonne of ore treated in Q3'21 increased 22.0% from$2 .98 per tonne of ore treated in Q3'20. This increase was mainly due to lower amounts of ore treated as well as higher insurance and COVID-19 related costs. - Cash generated from operating activities was
$350.6 million in Q3'21 vs$77.6 million in Q3'20, reflecting a$261.9 million improvement in cash generated from operating activities before interest and tax, which resulted from a$323.6 million increase in gross margin from increased sales revenue, partially offset by unfavourable movements in working capital3 and deferred revenue. Deferred revenue decreased in Q3'21 mainly due to exceptionally high deferred revenue atJune 30, 2021 , which was impacted by the timing of ramp-up in concentrate shipments during Q2'21 following the declaration of force majeure as well as related contingency measures that were put in place during Q2'21 to improve Oyu Tolgoi's short-term liquidity that started to be unwound during Q3'21. Deferred revenue increased in Q3'20.
___________________ |
3 Please refer to Section – NON-GAAP MEASURES – on page 21 of this press release for further information |
OYU TOLGOI
Operations, Safety Performance and COVID-19 Update
The Oyu Tolgoi open-pit and underground workforce posted an AIFR of 0.13 per 200,000 hours worked for the nine months ended
During Q3'21,
COVID-19 restrictions have adversely impacted both open-pit operations and underground development, which, through the end of Q3'21 and as announced on
All workers at the Oyu Tolgoi site have had two doses of a COVID-19 vaccine, and a third dose program is well advanced. Improvements in quarantine protocols both on-site and off-site have resulted in a relaxation of restrictions, which resulted in higher workforce numbers in
Selected Operational Metrics
Oyu Tolgoi Production Data
All data represents full production and sales on a 100% basis
3Q | 3Q | Change | 9 months | 9 months | Change | |
2021 | 2020 | 2021 | 2020 | |||
Open pit material mined ('000 tonnes) | 22,588 | 23,979 | (5.8%) | 61,005 | 74,032 | (17.6%) |
Ore treated ('000 tonnes) | 9,336 | 10,072 | (7.3%) | 28,550 | 30,606 | (6.7%) |
Average mill head grades: | ||||||
Copper (%) | 0.53 | 0.45 | 17.8% | 0.52 | 0.45 | 15.6% |
Gold (g/t) | 0.63 | 0.21 | 200.0% | 0.60 | 0.18 | 233.3% |
Silver (g/t) | 1.29 | 1.22 | 5.7% | 1.26 | 1.19 | 5.9% |
Concentrates produced ('000 tonnes) | 191.9 | 168.5 | 13.9% | 567.0 | 502.9 | 12.7% |
Average concentrate grade (% Cu) | 21.9 | 21.5 | 1.9% | 21.9 | 21.5 | 1.9% |
Production of metals in concentrates: | ||||||
Copper ('000 tonnes) | 41.9 | 36.3 | 15.4% | 124.1 | 108.0 | 14.9% |
Gold ('000 ounces) | 131 | 37 | 254.1% | 390 | 94 | 314.9% |
Silver ('000 ounces) | 249 | 219 | 13.7% | 739 | 645 | 14.6% |
Concentrate sold ('000 tonnes) | 224.4 | 167.9 | 33.7% | 503.3 | 488.1 | 3.1% |
Sales of metals in concentrates: | ||||||
Copper ('000 tonnes) | 46.4 | 34.4 | 34.9% | 105.0 | 99.9 | 5.1% |
Gold ('000 ounces) | 149 | 34 | 338.2% | 333 | 84 | 296.4% |
Silver ('000 ounces) | 278 | 201 | 38.3% | 591 | 566 | 4.4% |
Metal recovery (%) | ||||||
Copper | 83.9 | 78.9 | 6.3% | 83.6 | 77.4 | 8.0% |
Gold | 68.7 | 53.7 | 27.9% | 70.3 | 51.0 | 37.8% |
Silver | 64.1 | 54.6 | 17.4% | 64.0 | 54.0 | 18.5% |
In Q3'21, both copper and gold production from the open-pit were higher vs Q3'20 due mainly to mining higher grade material from Phase 4B. Mill throughput of 9.34 million tonnes in Q3'21 was in line with Q2'21 and 7% lower than Q3'20. Processing of harder ore as well as lower SAG mill availability, due to maintenance, impacted Q3'21 mill throughput.
Oyu Tolgoi provided an updated mine plan reflecting the impacts of the mine redesign in response to previously disclosed open-pit geotechnical events, which is currently forecast to result in deferral of some open-pit metal to beyond 2024. In addition, the on-going impacts of on-site COVID-19 restrictions, have resulted in delayed waste movement thereby impacting short term operations. While opportunities to reduce the impact of this forecast metal deferral are under consideration, related work is not expected to be completed until H1'22.
Oyu Tolgoi Underground Update
All technical undercut readiness activities have been completed, and Oyu Tolgoi has been ready from a technical perspective to commence the undercut since
During Q3'21, underground development progress continued to be significantly impacted by COVID-19 constraints on-site and in
MHS1 construction is almost complete with no-load commissioning commencing in Q3'21 and is currently expected to be completed by the end of
Progress on Shafts 3 and 4 has been impacted by quarantine requirements and international travel restrictions related to COVID-19. As a result, no significant development progress on these shafts was made during Q3'21. Consequently,
As at the end of Q3'21, cumulative* underground development progress was 60,085 equivalent metres (eqm) and cumulative* Conveyor to Surface advancement was 15,174 eqm. It is anticipated that development rates will continue to be impacted into Q4'21.
Oyu Tolgoi Underground Project Development Progress Excluding Conveyor Declines** | |||
Year | Total Equivalent | Lateral Development |
|
2016 | 1.6 | 1.5 | 3.0 |
Q1'17 | 1.0 | 0.8 | 5.2 |
Q2'17 | 1.4 | 0.9 | 9.2 |
Q3'17 | 1.4 | 1.2 | 8.3 |
Q4'17 | 2.2 | 1.9 | 8.9 |
2017 | 6.1 | 4.8 | 31.6 |
Q1'18 | 2.6 | 2.1 | 11.6 |
Q2'18 | 2.4 | 2.1 | 8.6 |
Q3'18 | 3.0 | 2.1* | 23.3* |
Q4'18 | 2.3 | 1.6 | 16.0 |
2018 | 10.3 | 7.9 | 59.5 |
Q1'19 | 3.2 | 2.3 | 21.4 |
Q2'19 | 3.2 | 2.4 | 19.3 |
Q3'19 | 3.6 | 3.2 | 11.4 |
Q4'19 | 4.8 | 4.5 | 9.0 |
2019 | 14.9 | 12.4 | 61.1 |
Q1'20 | 5.5 | 5.3 | 3.2 |
Q2'20 | 5.5 | 5.1 | 10.6 |
Q3'20 | 4.7 | 4.1 | 14.3 |
Q4'20 | 4.2 | 3.8 | 8.5 |
2020 | 19.9 | 18.4 | 36.6 |
Q1'21 | 3.5 | 2.9 | 13.5 |
Q2'21 | 1.7 | 1.2 | 11.6 |
Q3'21 | 2.2 | 1.8 | 8.1 |
Total | 60.1 | 51.0 | 225.2 |
Notes: | |
Totals may not match due to rounding. | |
* | Lateral development and mass excavation amounts for Q3'18 have been updated to reflect revised results. |
** | Excludes Conveyor Declines but includes sustaining capital development metres in the quarter. |
Oyu Tolgoi Conveyor Decline Project Development Progress | |||
Year | Total Equivalent | Lateral Development |
|
2016 | 0.0 | 0.0 | 0.0 |
Q1'17 | 0.1 | 0.1 | 0.0 |
Q2'17 | 0.4 | 0.4 | 0.2 |
Q3'17 | 0.9 | 0.9 | 0.5 |
Q4'17 | 0.9 | 0.8 | 0.5 |
2017 | 2.3 | 2.3 | 1.2 |
Q1'18 | 0.8 | 0.8 | 0.1 |
Q2'18 | 0.8 | 0.8 | 0.1 |
Q3'18 | 0.8 | 0.8 | 0.3 |
Q4'18 | 0.6 | 0.6 | 0.1 |
2018 | 3.0 | 3.0 | 0.6 |
Q1'19 | 0.8 | 0.8 | 0.8 |
Q2'19 | 0.9 | 0.9 | 0.8 |
Q3'19 | 0.9 | 0.7 | 4.9 |
Q4'19 | 1.1 | 0.7 | 8.3 |
2019 | 3.7 | 3.1 | 14.7 |
Q1'20 | 1.0 | 0.7 | 7.5 |
Q2'20 | 1.0 | 0.9 | 2.6 |
Q3'20 | 0.9 | 0.9 | 0.0 |
Q4'20 | 1.0 | 1.0 | 0.0 |
2020 | 4.0 | 3.6 | 10.1 |
Q1'21 | 0.8 | 0.8 | 0.0 |
Q2'21 | 0.7 | 0.6 | 3.2 |
Q3'21 | 0.6 | 0.6 | 1.6 |
Total | 15.2 | 13.9 | 31.5 |
Note: Totals may not match due to rounding. |
The Company continues to engage Rio Tinto and various Mongolian governmental bodies to resolve the remaining outstanding non-technical undercut criteria, and remains committed to moving the project forward and ensuring long-term and mutually beneficial solutions to the issues under discussion. Rio Tinto and the Company have recently tabled a proposal to the Government of
The Definitive Estimate, which was completed in
Given the cumulative and on-going impacts of COVID-19, continued delayed commitments resulting from the Definitive Estimate not yet having received the support of all directors of the
____________________ |
4 Please refer to Section – NON-GAAP MEASURES – on page 21 of this press release for further information. |
Panel 1 and Panel 2 are the focus of additional study work, which will continue through to 2023. The study work includes:
- Design optimisation for Panel 2
- Design optimisation for Panel 1
- Pillar recovery assessment
To support these studies, additional data is being collected from surface and underground drilling. This data is used to refine the structural and geotechnical models, which form the basis of the mine design. Although the drilling has been hampered by COVID-19 cases and restrictions on people movements, the study work remains broadly on schedule.
Results from the Panel 2 study are expected in H1'22. The scope of this study includes a review of the base case, including optimisation of the panel orientation and the undercut strategy. The initial focus is on the northern section of Panel 2 (where additional data is already available) and will be expanded to include the southern section in the latter part of 2022.
The Panel 1 and Pillar Recovery studies are scheduled for completion in early 2023.
Force Majeure
FUNDING OF OT LLC BY TURQUOISE HILL
In accordance with the Amended and Restated Shareholders' Agreement dated
For amounts funded by debt,
In accordance with the ARSHA, a subsidiary of the Company has funded the common share investments in
As at
At the time it was signed, the HoA provided an updated funding plan (the Funding Plan) for the completion of the
Under the HoA, subject to securing approval by the
- pursue re-profiling (rescheduling of principal repayments) of existing project debt to better align with the revised mine plan, project timing and cash flows; and
- seek to raise up to
$500 million in senior supplemental debt (SSD) under the existing project financing arrangements from selected international financial institutions.
In addition, Rio Tinto has committed to address any potential shortfalls from the re-profiling and additional SSD of up to
To address the residual funding requirement after implementing the Funding Plan under the HOA, the Company will, at the appropriate times, consider all funding options available to it. Such options may include additional debt from banks or international financial institutions, an offering of global medium-term notes, a gold pre-sale transaction, a gold streaming transaction and additional equity.
Successful implementation of the HoA is subject to achieving alignment with the relevant stakeholders in addition to Rio Tinto (including existing lenders, any potential new lenders and the Government of
Turquoise Hill's liquidity outlook will continue to be impacted, either positively or negatively, by various factors, many of which are outside the Company's control, including:
- changes in commodity prices and other market-based assumptions;
- open-pit operating performance as well as the successful implementation (or otherwise) of ongoing optimisation efforts, the results of which are not anticipated until H1'22;
- further and/or unanticipated impacts on operations and underground development related to the COVID-19 pandemic as well as the economic, commercial and financial consequences thereof;
- the outcomes of Turquoise Hill's and Rio Tinto's engagement with various Mongolian governmental bodies to resolve the remaining outstanding non-technical undercut criteria, including how a domestic long-term power solution is implemented, as well as other aspects of the proposal recently tabled by Rio Tinto and the Company to the Government of
Mongolia , and the ongoing negotiation thereof, as discussed in the "Negotiations with the Government ofMongolia " section of this press release below.
Turquoise Hill continues to monitor its liquidity outlook and will provide updates as and when circumstances require.
Turquoise Hill currently estimates its base case incremental funding requirement to be
- metal price assumptions for copper and gold over the incremental funding period;
- the Definitive Estimate, which estimated a development capital cost of
$6.75 billion ; - COVID-19 restrictions through the end of Q3'21, which have resulted in a cumulative increase of
$140 million to the estimate of underground development capital included in the Definitive Estimate to the end ofSeptember 2021 . This increase includes the currently known, incremental, time-related costs of COVID-19 restrictions throughSeptember 30, 2021 ; however, it does not include any impacts arising from associated schedule delays or delayed commitments caused by the Definitive Estimate not yet having received the support of all the directors of theOT LLC Board, as these are still under assessment; - the current forecast of sustainable production for Panel 0 to be delayed to H1'23, broadly in line with the current forecast 6-month delay to undercut commencement;
- the current forecast of delays to Shafts 3 and 4 which, in combination with reduced underground development progress as well as additions to mining scope, is currently forecast to result in delays of approximately 14 – 16 months to Panel 2 and 11 months to Panel 1 compared to the Definitive Estimate; and
- the impact of the open-pit mine redesigns in response to previously reported geotechnical events, resequencing of open-pit ore phases due to the delayed commencement of the undercut as well as the impacts of COVID-19 on the open-pit waste movement.
The increase in base case incremental funding reflects preliminary information provided by
Additionally, Turquoise Hill currently estimates its base case incremental funding will continue to be influenced by various factors over the incremental funding period, many of which are outside the Company's control, including:
- the timing of commencement of the undercut (for further information, see the "Oyu Tolgoi Underground Update" section of this press release above);
- any further revisions to the amount of development capital required to bring the underground mine into production, if it were to deviate from the aforementioned Definitive Estimate of
$6.75 billion plus the additional 2021 underground development cost impacts of the known COVID-19 issues up to Q3 '21, which are estimated to be approximately$140 million ; - any impacts arising from associated schedule delays or delayed commitments caused by the Definitive Estimate not yet having received the support of all the directors of the
OT LLC Board; - the timing of sustainable production and ramp-up profile and their impact on cash flows, which are impacted by, amongst other things, the timing of undercut commencement and resolution of the remaining outstanding non-technical undercut criteria, timing to commence Panel 1 and Panel 2 as well as any further COVID-19-related delays;
- the outcomes of Turquoise Hill's and Rio Tinto's engagement with various Mongolian governmental bodies to resolve the remaining outstanding non-technical undercut criteria, including how a domestic long-term power solution is implemented, as well as other aspects of the proposal recently tabled by Rio Tinto and the Company to the Government of
Mongolia , and the ongoing negotiation thereof, as discussed in the "Negotiations with the Government ofMongolia " section of this press release below; - changes to the amount of cash flow expected to be generated from open-pit operations, net of underground and open-pit sustaining capital requirements;
- further and/or unanticipated impacts on operations and underground development related to the COVID-19 pandemic as well as the economic, commercial and financial consequences thereof;
- changes in expected commodity prices and other market-based assumptions (upside and downside pricing sensitivities would have, respectively, a favourable or unfavourable impact on the base case incremental funding requirement); and
- incremental mine design refinements to Panels 1 and 2.
More generally, any changes in the above factors will impact the incremental funding requirement and, as a result, the actual quantum of incremental funding required may be greater or less than the
As a result of the project delays and the increase to the Company's base case estimated incremental funding requirement disclosed above in this press release and initially announced on
The Company is currently in discussions with Rio Tinto to consider the potential adjustments to be made to the timeframe and terms and conditions set out in the HoA to address near term funding risks and will update the market as appropriate.
GOVERNMENT RELATIONS
Turquoise Hill's ownership of the Oyu Tolgoi mine is held through a 66% interest in
Underground construction recommenced in
Turquoise Hill's investment in the Oyu Tolgoi mine is governed by the 2009 Investment Agreement among Turquoise Hill, the Government of
Adherence to the principles of the Investment Agreement, the ARSHA and the UDP has allowed for the development of the Oyu Tolgoi mine in a manner that has given rise to significant long-term benefits to
As previously announced by the Company on
While acknowledging Oyu Tolgoi's significant contributions to
In Q1'20,
Oyu Tolgoi Special Committee Independent Consulting Group Report
As announced on
A group of consultants called "
Negotiations with the Government of
Turquoise Hill continues to engage Rio Tinto and various Mongolian governmental bodies to resolve the remaining outstanding non-technical undercut criteria, and the Company remains committed to moving the project forward and ensuring long-term and mutually beneficial solutions to the issues under discussion. Nevertheless, delayed resolution of outstanding issues, as well as the slowing of discussions as a result of the COVID-19 situation in
Turquoise Hill remains committed to seeking resolution of outstanding issues and remains mobilized in
Oyu Tolgoi Mine Power Supply
In
The PSFA Amendment provides that if certain agreed milestones are not met in a timely manner (subject to extension for Delay Events as defined) then
Three PSFA Amendment milestones (execution of the extension of the IMPIC supply arrangements, execution of the SOPP PPA, and start of SOPP construction) were not met by the original dates of
The
Oyu Tolgoi Tax Assessments
On
On
On
On
In
On
The Company denies the allegations relating to the Company in the GOM Defence and Counterclaim and filed a submission to the arbitral tribunal to oppose the Government of
The Company remains of the opinion that the tax positions adopted by
CLASS ACTION COMPLAINTS
In
In
See the risk factor titled "The Company may be subject to public allegations, regulatory investigations or litigation that could materially and adversely affect the Company's business" in the "Risk Factors" section of the AIF.
CORPORATE ACTIVITIES
Exploration
Turquoise Hill, through its wholly-owned subsidiaries,
In Q3'21, Turquoise Hill was able to commence field work on all three of its licences with the support of local and state government authorities. To ensure the health and safety of the exploration team, contractors and the communities, Turquoise Hill limited its people interaction by conducting all field work from site-based camps. At Bag and Od-2, the team finished the 2020 geophysics program, which had been delayed due to COVID-19 restrictions. On the Khatavch lease, the team commenced work on various geological surveys including mapping, sampling, ground gravity and topography as well as magnetics.
During Q3'21, Turquoise Hill donated COVID-19 rapid tests to Khanbogd Soum (Bag and Od-2 licenses) and Mandakh soum (Khatavch). Both donations were well received and have enabled systematic COVID-19 testing in these soums.
NON-GAAP MEASURES
The Company presents and refers to the following non-GAAP measures, which are not defined in IFRS. A description and calculation of each measure is given below and may differ from similarly named measures provided by other issuers. These 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.
Operating cash costs
The measure of operating cash costs excludes: depreciation and depletion; exploration and evaluation; charges for asset write-down (including write-down of materials and supplies inventory) and includes management services payments to Rio Tinto and management services payments to Turquoise Hill, which are eliminated in the consolidated financial statements of the Company.
C1 cash costs
C1 cash costs is a metric representing the cash cost per unit of extracting and processing the Company's principal metal product, copper, to a condition in which it may be delivered to customers net of gold and silver credits from concentrates sold. This metric is provided in order to support peer group comparability and to provide investors and other stakeholders with additional information about the underlying cash costs of
All-in sustaining costs
All-in sustaining costs (AISC) is an extended cash-based cost metric providing further information on the aggregate cash, capital and overhead outlay per unit and is intended to reflect the costs of producing the Company's principal metal product, copper, in both the short term and over the life-cycle of its operations. As a result, sustaining capital expenditure on a cash basis is included rather than depreciation. As the measure seeks to present a full cost of copper production associated with sustaining current operations, development project capital is not included. AISC allows Turquoise Hill to assess the ability of
A reconciliation of total operating cash costs, C1 cash costs and AISC is provided below.
(Three Months Ended) | (Nine Months Ended) | |||
C1 costs (Stated in | ||||
Cost of sales | 202,690 | 167,991 | 440,918 | 495,871 |
Cost of sales: $/lb of copper sold | 1.98 | 2.22 | 1.90 | 2.25 |
Depreciation and depletion | (50,131) | (42,268) | (123,548) | (128,340) |
Change in inventory | (22,066) | (1,702) | 80,807 | 18,182 |
Other operating expenses | 77,542 | 49,909 | 207,306 | 144,713 |
Less: | ||||
- Inventory (write-down) reversal | (6) | 252 | 3,598 | 2,611 |
- Depreciation | (580) | (629) | (1,775) | (4,579) |
Management services payment to Turquoise Hill | 8,703 | 7,885 | 20,581 | 21,839 |
Operating cash costs | 216,152 | 181,438 | 627,887 | 550,297 |
Operating cash costs: $/lb of copper produced | 2.34 | 2.27 | 2.30 | 2.31 |
Adjustments to operating cash costs(1) | (15,745) | 3,086 | (28,946) | 15,732 |
Less: Gold and silver revenues | (260,067) | (65,700) | (583,362) | (155,790) |
C1 costs ($'000) | (59,660) | 118,824 | 15,579 | 410,239 |
C1 costs: $/lb of copper produced | (0.65) | 1.48 | 0.06 | 1.72 |
All-in sustaining costs (Stated in | ||||
Corporate administration | 5,255 | 6,496 | 26,823 | 21,068 |
Asset retirement expense | 2,457 | (3,076) | 5,440 | (145) |
Royalty expenses | 37,592 | 15,505 | 82,794 | 39,960 |
Ore stockpile and stores write-down (reversal) | 6 | (252) | (3,598) | (2,611) |
Other expenses | 908 | 603 | 1,714 | 4,069 |
Sustaining cash capital including deferred stripping | 16,213 | 12,420 | 43,385 | 33,913 |
All-in sustaining costs ($'000) | 2,771 | 150,520 | 172,137 | 506,493 |
All-in sustaining costs: $/lb of copper produced | 0.03 | 1.88 | 0.63 | 2.13 |
(1) | Adjustments to operating cash costs include: treatment, refining and freight differential charges less the 5% Government of |
Mining costs and milling costs
Mining costs per tonne of material mined for the three and nine months ended
Milling costs per tonne of ore treated for the three and nine months ended
Working capital
Consolidated working capital comprises those components of current assets and liabilities which support and result from the Company's ongoing running of its current operations. It is provided in order to give a quantifiable indication of the Company's short-term cash generation ability and business efficiency. As a measure linked to current operations and the sustainability of the business, the Company's definition of working capital excludes: non-trade receivables and payables; financing items; cash and cash equivalents; deferred revenue and non-current inventory.
A reconciliation of consolidated working capital to the financial statements and notes is provided below.
Working capital | |||||||
(Stated in | 2021 | 2020 | |||||
Inventories (current) | $ | 254,318 | $ | 197,962 | |||
Trade and other receivables | 13,631 | 60,012 | |||||
Trade and other payables: | |||||||
- trade payables and accrued liabilities | (300,765) | (315,570) | |||||
- payable to related parties | (55,047) | (65,552) | |||||
Consolidated working capital | $ | (87,863) | $ | 123,148) | |||
Contractual obligations
The following section of this press release discloses contractual obligations in relation to the Company's project finance, lease, purchase, power and asset retirement obligations. Amounts relating to these obligations are calculated on the assumptions of the Company carrying out its future business activities and operations as planned at the period end. As such, contractual obligations presented in this press release and in the Company's Q3 2021 MD&A will differ from amounts presented in the financial statements, which are prepared on the basis of minimum uncancellable commitments to pay in the event of contract termination. The presentation of contractual obligations here and in the Company's Q3 2021 MD&A is provided in order to give an indication of future expenditure, for the disclosed categories, arising from the Company's continuing operations and development projects.
A reconciliation of contractual obligations as at
(Stated in | Project Finance | Purchase | Other | Power | Lease | Decommissioning |
Commitments (MD&A) | 4,303,885 | 392,004 | 368,704 | 213,761 | 32,072 | 235,912 |
Cancellable obligations | - | (330,964) | - | (181,765) | - | - |
(net of exit costs) | ||||||
Accrued capital expenditure | - | (33,403) | 33,403 | - | - | - |
Discounting and other adjustments | (128,809) | - | - | - | (4,751) | (95,623) |
Financial statement amount | 4,175,076 | 27,637 | 402,107 | 31,996 | 27,321 | 140,289 |
INTERNAL CONTROL OVER FINANCIAL REPORTING AND DISCLOSURE CONTROLS AND PROCEDURES
There were no changes in the Company's internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the Company under applicable securities legislation is gathered and reported to senior management, including the Company's CEO and CFO, on a timely basis so that appropriate decisions can be made regarding public disclosures. There were no changes in the Company's disclosure controls and procedures during the three months ended
QUALIFIED PERSON
Disclosure of information of a scientific or technical nature in this press release and in the Company Q3 2021 MD&A in respect of the Oyu Tolgoi mine was approved by
SELECTED QUARTERLY DATA
($ in millions, except per share information) | Quarter Ended | |||||||
Sep-30 | Jun-30 | Mar-31 | Dec-31 | |||||
2021 | 2021 | 2021 | 2020 | |||||
Revenue | $ | 622.8 | $ | 317.8 | $ | 526.5 | $ | 405.1 |
Income for the period | $ | 22.9 | $ | 118.8 | $ | 332.1 | $ | 241.6 |
Income attributable to owners of Turquoise Hill | $ | 34.9 | $ | 96.9 | $ | 236.7 | $ | 159.9 |
Basic and diluted income per share attributable to owners of Turquoise Hill | $ | 0.17 | $ | 0.48 | $ | 1.18 | $ | 0.79 |
Quarter Ended | ||||||||
Sep-30 | Jun-30 | Mar-31 | Dec-31 | |||||
2020 | 2020 | 2020 | 2019 | |||||
Revenue | $ | 264.4 | $ | 278.0 | $ | 130.7 | $ | 221.4 |
Income (loss) for the period | $ | 161.7 | $ | 72.3 | $ | 19.0 | $ | 109.5 |
Income (loss) attributable to owners of Turquoise Hill | $ | 128.6 | $ | 72.6 | $ | 45.2 | $ | 113.1 |
Basic and diluted income per share attributable to owners of Turquoise Hill | $ | 0.64 | $ | 0.36 | $ | 0.22 | $ | 0.56 |
Consolidated Statements of Income | ||||||||||||||
(Stated in thousands of | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
Note | 2021 | 2020 | 2021 | 2020 | ||||||||||
Revenue | 4 | $ | 622,786 | $ | 264,520 | $ | 1,467,131 | $ | 673,146 | |||||
Cost of sales | 5 | (202,690) | (167,991) | (440,918) | (495,871) | |||||||||
Gross margin | 420,096 | 96,529 | 1,026,213 | 177,275 | ||||||||||
Operating expenses | 6 | (77,542) | (49,909) | (207,306) | (144,713) | |||||||||
Corporate administration expenses | (5,255) | (6,496) | (26,823) | (21,068) | ||||||||||
Other income (expenses) | 20 | (3,676) | (250) | (31,463) | 1,550 | |||||||||
Income before finance items and taxes | 333,623 | 39,874 | 760,621 | 13,044 | ||||||||||
Finance items | ||||||||||||||
Finance income | 7 | 446 | 1,590 | 2,343 | 16,214 | |||||||||
Finance costs | 7 | (2,590) | (1,503) | (5,821) | (4,828) | |||||||||
(2,144) | 87 | (3,478) | 11,386 | |||||||||||
Income from operations before taxes | $ | 331,479 | $ | 39,961 | $ | 757,143 | $ | 24,430 | ||||||
Income and other taxes | (308,541) | 121,803 | (283,288) | 228,608 | ||||||||||
Income for the period | $ | 22,938 | $ | 161,764 | $ | 473,855 | $ | 253,038 | ||||||
Attributable to owners of | 34,943 | 128,612 | 368,528 | 246,380 | ||||||||||
Attributable to owner of non-controlling interest | (12,005) | 33,152 | 105,327 | 6,658 | ||||||||||
Income for the period | $ | 22,938 | $ | 161,764 | $ | 473,855 | $ | 253,038 | ||||||
Basic and diluted earnings (loss) per share attributable | ||||||||||||||
to | 17 | $ | 0.17 | $ | 0.64 | $ | 1.83 | $ | 1.22 | |||||
Basic weighted average number of shares outstanding (000's) | 201,231 | 201,231 | 201,231 | 201,231 |
The notes to the Company's financial statements, which are available on the Company's website, are part of its consolidated financial statements. |
Consolidated Statements of Comprehensive Income | |||||||||||||
(Stated in thousands of | |||||||||||||
(Unaudited) | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||
Income for the period | $ | 22,938 | $ | 161,764 | $ | 473,855 | $ | 253,038 | |||||
Other comprehensive income: | |||||||||||||
Items that will not be reclassified to income: | |||||||||||||
Changes in the fair value of marketable securities at FVOCI | 141 | 283 | 5,028 | 410 | |||||||||
Other comprehensive income for the period (a) | $ | 141 | $ | 283 | $ | 5,028 | $ | 410 | |||||
Total comprehensive income for the period | $ | 23,079 | $ | 162,047 | $ | 478,883 | $ | 253,448 | |||||
Attributable to owners of Turquoise Hill | 35,084 | 128,895 | 373,556 | 246,790 | |||||||||
Attributable to owner of non-controlling interest | (12,005) | 33,152 | 105,327 | 6,658 | |||||||||
Total comprehensive income for the period | $ | 23,079 | $ | 162,047 | $ | 478,883 | $ | 253,448 |
(a) No tax charges and credits arose on items recognised as other comprehensive income or loss in 2021 (2020: nil) |
The notes to the Company's financial statements, which are available on the Company's website, are part of its consolidated financial statements. |
Consolidated Statements of Cash Flows | ||||||||||||||||
(Stated in thousands of | ||||||||||||||||
(Unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
Note | 2021 | 2020 | 2021 | 2020 | ||||||||||||
Cash generated from operating activities | ||||||||||||||||
before interest and tax | 16 | $ | 351,064 | $ | 89,252 | $ | 894,993 | $ | 125,445 | |||||||
Interest received | 466 | 2,393 | 2,319 | 19,591 | ||||||||||||
Interest paid | (903) | (658) | (111,925) | (146,176) | ||||||||||||
Income and other taxes paid | 19 | (38) | (13,277) | (358,686) | (27,426) | |||||||||||
Net cash generated from (used in) operating activities | $ | 350,589 | $ | 77,710 | $ | 426,701 | $ | (28,566) | ||||||||
Cash flows from investing activities | ||||||||||||||||
Receivable from related party: amounts withdrawn | 18 | - | - | - | 511,284 | |||||||||||
Expenditures on property, plant and equipment | (216,873) | (254,510) | (697,443) | (817,540) | ||||||||||||
Purchase of commodity put options | - | - | (29,907) | - | ||||||||||||
Purchase of other financial assets | (132) | (383) | (132) | (383) | ||||||||||||
Proceeds from pre-production sales | 39,345 | 18,498 | 51,346 | 26,091 | ||||||||||||
Other investing cash flows | 1 | 859 | 63 | 1,106 | ||||||||||||
Cash used in investing activities | $ | (177,659) | $ | (235,536) | $ | (676,073) | $ | (279,442) | ||||||||
Cash flows from financing activities | ||||||||||||||||
Repayment of project finance facility | - | - | (21,744) | (1,545) | ||||||||||||
Payment of lease liability | (1,848) | (341) | (2,143) | (4,240) | ||||||||||||
Cash used in financing activities | $ | (1,848) | $ | (341) | $ | (23,887) | $ | (5,785) | ||||||||
Effects of exchange rates on cash and cash equivalents | (283) | 544 | (490) | 980 | ||||||||||||
Net (decrease) increase in cash and cash equivalents | $ | 170,799 | $ | (157,623) | $ | (273,749) | $ | (312,813) | ||||||||
Cash and cash equivalents - beginning of period | $ | 679,073 | $ | 1,496,795 | $ | 1,123,621 | $ | 1,651,985 | ||||||||
Cash and cash equivalents - end of period | 849,872 | 1,339,172 | 849,872 | 1,339,172 | ||||||||||||
Cash and cash equivalents as presented on the balance sheets | $ | 849,872 | $ | 1,339,172 | $ | 849,872 | $ | 1,339,172 |
The notes to the Company's financial statements, which are available on the Company's website, are part of its consolidated financial statements. |
Consolidated Balance Sheets | ||||||||||
(Stated in thousands of | ||||||||||
(Unaudited) | ||||||||||
Note | 2021 | 2020 | ||||||||
Current assets | ||||||||||
Cash and cash equivalents | 8 | $ | 849,872 | $ | 1,123,621 | |||||
Inventories | 9 | 254,318 | 197,962 | |||||||
Trade and other receivables | 13,631 | 60,012 | ||||||||
Prepaid expenses and other assets | 72,214 | 127,274 | ||||||||
Other financial assets | 20 | 1,268 | - | |||||||
1,191,303 | 1,508,869 | |||||||||
Non-current assets | ||||||||||
Property, plant and equipment | 10 | 11,663,785 | 10,927,512 | |||||||
Inventories | 9 | 62,174 | 37,557 | |||||||
Prepaid expenses and other assets | 19 | 348,671 | - | |||||||
Deferred income tax assets | 13 | 622,594 | 880,705 | |||||||
Other financial assets | 19,262 | 14,118 | ||||||||
12,716,486 | 11,859,892 | |||||||||
Total assets | $ | 13,907,789 | $ | 13,368,761 | ||||||
Current liabilities | ||||||||||
Borrowings and other financial liabilities | 12 | $ | 57,284 | $ | 28,288 | |||||
Trade and other payables | 11 | 402,107 | 390,059 | |||||||
Deferred revenue | 122,526 | 103,289 | ||||||||
581,917 | 521,636 | |||||||||
Non-current liabilities | ||||||||||
Borrowings and other financial liabilities | 12 | 4,145,113 | 4,173,491 | |||||||
Deferred income tax liabilities | 13 | 136,694 | 111,717 | |||||||
Decommissioning obligations | 14 | 140,289 | 133,964 | |||||||
4,422,096 | 4,419,172 | |||||||||
Total liabilities | $ | 5,004,013 | $ | 4,940,808 | ||||||
Equity | ||||||||||
Share capital | $ | 11,432,122 | $ | 11,432,122 | ||||||
Contributed surplus | 1,555,774 | 1,558,834 | ||||||||
Accumulated other comprehensive income | 6,446 | 1,418 | ||||||||
Deficit | (3,047,073) | (3,415,601) | ||||||||
Equity attributable to owners of Turquoise Hill | 9,947,269 | 9,576,773 | ||||||||
Attributable to non-controlling interest | 15 | (1,043,493) | (1,148,820) | |||||||
Total equity | $ | 8,903,776 | $ | 8,427,953 | ||||||
Total liabilities and equity | $ | 13,907,789 | $ | 13,368,761 |
The notes to the Company's financial statements, which are available on the Company's website, are part of its consolidated financial statements. |
Consolidated Statements of Equity | |||||||||||||||||||||||
(Stated in thousands of | |||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||
Nine Months Ended | Attributable to owners of Turquoise Hill | ||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||
other | Non-controlling | ||||||||||||||||||||||
Contributed | comprehensive | interest | |||||||||||||||||||||
Share capital | surplus | income | Deficit | Total | (Note 15) | Total equity | |||||||||||||||||
Opening balance | $ | 11,432,122 | $ | 1,558,834 | $ | 1,418 | $ | (3,415,601) | $ | 9,576,773 | $ | (1,148,820) | $ | 8,427,953 | |||||||||
Income for the period | - | - | - | 368,528 | 368,528 | 105,327 | 473,855 | ||||||||||||||||
Other comprehensive income for the | |||||||||||||||||||||||
period | - | - | 5,028 | - | 5,028 | - | 5,028 | ||||||||||||||||
Employee share plans | - | (3,060) | - | - | (3,060) | - | (3,060) | ||||||||||||||||
Closing balance | $ | 11,432,122 | $ | 1,555,774 | $ | 6,446 | $ | (3,047,073) | $ | 9,947,269 | $ | (1,043,493) | $ | 8,903,776 | |||||||||
Nine Months Ended | Attributable to owners of Turquoise Hill | ||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||
other | Non-controlling | ||||||||||||||||||||||
Contributed | comprehensive | interest | |||||||||||||||||||||
Share capital | surplus | income (loss) | Deficit | Total | (Note 15) | Total equity | |||||||||||||||||
Opening balance | $ | 11,432,122 | $ | 1,558,811 | $ | (813) | $ | (3,821,889) | $ | 9,168,231 | $ | (1,237,174) | $ | 7,931,057 | |||||||||
Income for the period | - | - | - | 246,380 | 246,380 | 6,658 | 253,038 | ||||||||||||||||
Other comprehensive income for the | |||||||||||||||||||||||
period | - | - | 410 | - | 410 | - | 410 | ||||||||||||||||
Employee share plans | - | 78 | - | - | 78 | - | 78 | ||||||||||||||||
Closing balance | $ | 11,432,122 | $ | 1,558,889 | $ | (403) | $ | (3,575,509) | $ | 9,415,099 | $ | (1,230,516) | $ | 8,184,583 |
The notes to the Company's financial statements, which are available on the Company's website, are part of its consolidated financial statements. |
About
Turquoise Hill is an international mining company focused on the operation and continued development of the Oyu Tolgoi copper-gold mine in
Forward-looking statements and forward-looking information
Certain statements made herein, including statements relating to matters that are not historical facts and statements of the Company's 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", "could", "should", "expect", "seek", "may", "intend", "likely", "plan", "estimate", "will", "believe" and similar expressions suggesting future outcomes or statements regarding an outlook. These include, but are not limited to, statements and information regarding: discussions with, and the nature of the Company's relationship and interaction with, the Government of
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 availability and timing of required governmental and other approvals for the construction of the SOPP; the ability of the Government of
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; 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; regulatory restrictions (including environmental regulatory restrictions and liability);
With respect to specific forward-looking information concerning the continued operation and development of Oyu Tolgoi, the Company has based its assumptions and analyses on certain factors which are inherently uncertain. Uncertainties and assumptions include, among others: the timing and cost of the construction and expansion of mining and processing facilities; the timing and availability of a long-term domestic power source (or the availability of financing for the Company or the Government of
The cost, timing and complexities of mine construction and development are increased by the remote location of a property such as Oyu Tolgoi. It is common in mining operations and in the development or expansion of existing facilities to experience unexpected problems and delays during development, construction and mine start-up. Additionally, although Oyu Tolgoi has achieved commercial production, there is no assurance that future development activities will result in profitable mining operations.
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 AIF, as supplemented by the "Risks and Uncertainties" section in the Q3 2021 MD&A.
Readers are further cautioned that the list of factors enumerated in the "Risk Factors" section of the AIF and in the "Risks and Uncertainties" section of the Q3 2021 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 of this document 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.
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