Shares in Turquoise Hill Resources (TSE:TRQ) dropped 4% on Tuesday after the company gave an update on production and financing for an underground expansion project at its massive Oyu Tolgoi mine in Mongolia.
By early afternoon Turquoise Hill stock had recouped some losses to change hands at $3.80, down 2.8%. The counter has lost a third of its value over the past year and is now worth $7.6 billion on the Toronto Stock Exchange.
The Vancouver-based company said potential lenders have extended a deadline to arrange financing for the $6 billion-plus project until the end of September after initial commitments expired at the end of last month.
Talks with the Mongolian government on the expansion of the $6.6 billion mine and the reworking of the initial Oyu Tolgoi deal signed in 2009 is also ongoing says Turquoise Hill.
CEO Kay Priestly in a statement said: “All parties remain committed to the underground development of Oyu Tolgoi and to resolving the outstanding shareholder issues. Constructive discussions between all parties have resulted in significant progress being made in resolving the issues, and those discussions are continuing.”
Turquoise Hill owns a 66% interest in Oyu Tolgoi in the Gobi Desert with the government of the Asian nation holding the rest. The underground project is where 80% of the value of the deposit is situated.
Controlling company Rio Tinto (LON:RIO) put out disappointing first quarter production numbers on Monday, with Oyu Tolgoi heavily impacted by post commissioning issues which caused the shutdown of one production line for approximately seven weeks.
Copper concentrate output fell 20% from the final quarter last year to 103,000 tonnes and average grades also slipped resulting in output of 25,300 tonnes of copper. Gold in concentrate declined to 66,000 ounces from 74,000 while silver dropped 21% to 163,000.
For 2014, Oyu Tolgoi has lowered its targeted production for its full year of production to 135,000 to 160,000 tonnes of copper in concentrates and 600,000 to 700,000 ounces of gold in concentrates.