Turquoise Hill -27% as trading begins on rights issue

Turquoise Hill (TRQ -26.7%) shares are sharply lower as the rights issued under the miner's recent $2.4B rights issue began trading on a when-issued basis today in Toronto.

More than 1B shares are expected to be issued under the rights offering, resulting in a doubling of TRQ's shares outstanding.

TRQ will use the proceeds to repay Rio Tinto (RIO +2%)for a $600M bridge loan and $1.8B in interim funding, and to use any remaining funds for the continued financing of the Oyu Tolgoi copper-gold project; TRQ has stumbled in its negotiations with the Mongolian government over financing for the mine.

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Comments (4)
  • smezzancello
    , contributor
    Comment (1) | Send Message
    I am new to trading as I just retired 2 months ago. I have shares in TRQ and not really sure what to do or what it means when they say we can buy shares at a reduced price. can anyone explain in plain English what it all means. thank you very much
    4 Dec 2013, 03:56 PM Reply Like
  • Alien8w8
    , contributor
    Comments (15) | Send Message


    If you are living off this investment you need to sell. This is not a stock for gains in a year or even 5. This mine in Mongolia will be fully operational by the time I retire, I'm 28 now.


    What this offering means is that depending on how many shares you hold on the third of December you will be offered to buy an equal number of shares at the price they offer. To be honest not a big deal for small fish like you and I. I personally own just over 400 shares because I keep buying on huge dips to offset loses. I am holding this as a long term investment because I feel that at some point this company will make a profit, there are reasons for my thinking this.


    If you want to purchase your additional shares you will need to tell your broker who will be getting the information via the company. I have attached link to the PDF file on TRQ's company website. HOWEVER, if you are not in for the end game on this stock i/e 5 - 10 years by my guess, with all these delays maybe longer :/ Don;t expect this stock to move anywhere but lower.


    good luck.


    4 Dec 2013, 09:52 PM Reply Like
  • joelc
    , contributor
    Comments (77) | Send Message
    actually, there is no reason to believe that the price of the shares will go lower. first, rio will be repaid and a huge interest expense eliminated. second, it is backstopping the rights offer which means it will purchase any shares not taken up by the other shareholders, probably increasing its ownership to 60%. (by the way, rio was willing and did buy shares over the past few years, at
    8 and 9, so buying at $2.40 is a windfall for it).
    third, this is a fantastic ore body and will earn a fortune over the decades.
    i bought my first shares, 6000 today. buy them.
    5 Dec 2013, 03:02 AM Reply Like
  • Alien8w8
    , contributor
    Comments (15) | Send Message
    joelc how long have you been following this stock? I have been for about 2 years now and have managed to make a few bucks here and there off it. However, the biggest issue with this stock is that the government of Mongolia keeps hindering progress. If they had not been so harldine on TRQ in the early days this mine would have been making money already. My understanding is that TRQ called in RIO because they didn't have the capital to play the politics. One of my fears now as a small shareholder, 1404 and I'll up it with the offering, is that now that production is about to start on the open pit mine RIO is trying to push down share price to an attractive level to get more controlling stake in the company. Seems like it is working. The date of record for the additional share buying is the 6th of November and TRQ traded with unusually high volume this week thanks to that 26% drop. Meaning RIO will have to buy any shares that are not held by us small investors. Again, while I think this company has enormous potential, it is not an investment for the faint of heart or short term.


    I have been buying on each full 1 dollar drop as a way to at least break even along with writing call option that will never be filled. Has helped a bit in the short term at least.


    Good luck and I hope you are right.
    6 Dec 2013, 05:51 PM Reply Like
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