Rio Tinto faces legal action from investor over Oyu Tolgoi
Australian mining giant Rio Tinto is remaining tight-lipped in response to a threat of legal action from the largest minority shareholder in Oyu Tolgoi, a Mongolian copper project that is jointly owned by the Mongolian government and Canada’s Turquoise Hill Resources, in which Rio Tinto owns a 50 percent stake.
Oyu Tolgoi, slated to become the world’s third-largest copper mine, is operated by Rio Tinto.
Activist investor Pentwater Capital Management LP holds a 9.23 percent 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, according to a Reuters report. 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 says. “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.”
Oyu Tolgoi is jointly owned by the government of Mongolia, which has 34 percent ownership, and Turquoise Hill Resources, which owns 66 percent. Rio Tinto owns 50.8 percent of Turquoise Hill Resources and manages the operation on behalf of the owners.
Located in the South Gobi region of Mongolia, Oyu Tolgoi is approximately 550 kilometres south of the Mongolian capital of Ulanbaatar. It holds one of the largest undeveloped high-grade copper deposits in the world.
Rio Tinto says that the mine is also one of the most modern, safe and sustainable operations in the world, and that when the underground is completed, it will be the world’s third-largest copper mine.
In 2019 Rio announced a cost overrun at the project of up to £1.4 billion due to difficult geology, saying total capital expenditure was expected to be in a range of £4.8 billion – £5.3 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 £373.5 million through additional lending to develop the mine.
However, shareholders are 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, says Halbower, who also noted that he stood for a board role but said that was vetoed by Rio
Newmont acquires Canada’s GT Gold in $325mn deal
Newmont, the world’s biggest gold miner, has acquired Canada’s GT Gold in a deal worth $325mn. The gold giant now controls the Tatogga gold-copper project in the Traditional Territory of the Tahltan Nation.
“With the acquisition of GT Gold and the Tatogga project in the highly sought-after Golden Triangle district of British Columbia, Canada, Newmont continues to strengthen our world-class portfolio,” commented Newmont President and CEO Tom Palmer.
“We look forward to continuing to build a respectful and meaningful relationship with the Tahltan Nation, including the community of Iskut. The relationships we have with Indigenous communities, First Nations and host communities are critical to the way we operate. We will partner with the Tahltan Nation at all levels, and with the Government of British Columbia to ensure a shared path forward as the Company understands and acknowledges that Tahltan consent is necessary for advancing the Tatogga project.”
Newmont’s acquisition includes the Tatogga project, comprised primarily of the Saddle North deposit, which has the potential to contribute future significant gold and copper annual production. There are also further exploration opportunities beyond the known deposits at Saddle North within the land package. The Tatogga project adds to Newmont’s existing interest in the prospective Golden Triangle through the company’s 50% ownership in the Galore Creek project.
Newmont is the world’s leading gold company and a producer of copper, silver, zinc and lead. A world-class portfolio of assets, prospects and talent is anchored in favourable mining jurisdictions in North America, South America, Australia and Africa. The American miner is celebrating its 100th anniversary this month.
With gold prices on the rise, the last six months has seen gold industry M&A activity accelerating. A recent Mckinsey report, advises that the industry need to be mindful of mistakes made during the previous gold price boom, when growth was chased unidirectionally by several companies.