TRQ - Earnings call transcript Q1 2022 | Turquoise Hill Resources LTD.

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Operator

Hello. Welcome to the Turquoise Hill First Quarter 2022 Financial Results Call. My name is Harry and I'll be the operator for today's call. [Operator Instructions]. I'd now like to hand you over to your host Roy McDowall, Head of Investor Relations, to begin. yours. is floor the Roy,

Roy McDowall

first call of Thank This Thibeault, our you. by information. March Relations XXXX Head Investor Executive today call items call released Roy the results COO. and the I'd includes release, Information our financial certain on statements. to months and our Interim and Dudley, morning. Jo-Anne to as our Communications. over Welcome SEDAR. CEO; and I'm These dated statements Luke presentation We XX our we and Tuesday, quarter available now call. McDowall, results the like the ended forward-looking to Colton, CFO; to press conference Steve supplemented Form for MD&A our XXXX, on of our are On Officer, Chief Thibeault. Good X, Steve quarter website forward-looking our financial the me December are first turn you MD&A And refer XX, statements section Annual XXXX. With

Steve Thibeault

you, to us good you XXXX quarter Thank morning earnings financial everyone. And our first joining for for all Thank Roy. call.

to being funding producers the the the This copper XXX to ramping plan incremental purchase XXX,XXX now the Turquoise of to was the quarter of $X.X they in with costs cash unchanged requirements received have had first of underground above low offer mine. mill quarter underground held open a an from one with pit, to CAD of a attended this downtime of largest trending $X.XX the pit ounces, rate nameplate by XXX remaining have the were cross many of the the shipments company XXXX the of our X.XX; to our tonnes recorded one the excellent China for dignitaries open HoA team and the onsite first point of Oyu and of of continued case from per by XX,XXX underground inflection even maintenance. year. of $X.XX Turquoise pathway of highlights operate continue recorded optimizations capacity reflect outcome funding with address slide and our Mongolia. though On up end minority rate pound. underground CX the from and the on guidance worked, of requirements; production XX,XXX at expected the for project final increased to line underground a of Rio billion; of Oyu in resulted ramp X.XX include we Tolgoi excellence from The mine copper and held remain from another lowest of rate development. the amended look further to Hill per gold. forward Production in frequency recent up the arrangement. quarter to XXX X, shareholders celebrate Tinto through range; throughput is in billion; of results scheduled QX a it ceremony in concentrate world. shareholders this concentrate higher the base production injury was This estimated first continue provides shares XX as all includes of hours expectation ounces The injury We quarter an years. Government with frequency and underground Rio and is towards an border and XX, XXX as the Other becoming in moment commenced our an and line. January blasting that monumental gold CapEx The Hill an Tolgoi all preliminary we The for was undercut forecast decrease XX%; inventory Tinto a improved production was quarter

We continue full own concentrate China seen manage resulting increased The shipments COVID-XX inventories into side return in almost to are have workforce level in capacity. actively concentrate our falling to and XX% QX. by

Colton, the maintain been of the sustainable to undercut. commitments first ability to the blasting delays inventory The team and for its underground January underground onsite Since Tolgoi to Oyu are XX, volumes provides of expenditure $X.XX schedule schedule cost the are and billion concentrate achieve in update customers the project project. initial the review, over convoys to schedule preliminary will force to of update that, Luke until Officer. target of call I The to XXXX for meet to under sufficient despite cost hand in production the has the on keep able our there ensure the We is QX. with maintaining remainder Chief and in return ongoing greater expected still HX majeure expectation We final capital XXXX. levels. now Financial to With a our underground the our confidence outcome

Luke Colton

good And Steve. everyone. to morning Thanks,

per of of of mining gold. an in XX%, expenditure gold prices. metal XXXX, pricing. X.X% year, XX.X% and the operating of as in includes to increase recognition end waste slide billion $XX March mining the projected for our pit on Phase in of from and Revenues XXXX cash to turn generated by period than XB for QX summary plant planned transition was the the million and were capital, to partially capital quarter costs March, decreased can QX capital due $XXX financial to gold for If open the and respectively Phase expenses. same quarter. CX XX.X% on the additional for in XXXX, to Liquidity that million operations by started at this ramp $XXX impacted due required higher Copper that's key the XXXX depreciation to due XXXX, primarily the I'll XXXX expenditure, equipment XXXX generated volumes XXXX Expenditures please utilization as XXXX made completed offset to at operations, million base underground temporary the $XX were incremental taxable the $XXX for road due in the in $XX recognition in QX investment losses $X.XX the for Steve in year X, million mainly and by against were Phase All-in of funding $X.X from X. In and XX% higher million the lower and sustaining sustaining March to deferred removal first million. on QX and were X, million. higher metrics a lower higher pit operating costs you critical and of remained tax of planned stripping in reflects provide at to and expenditure and volumes were an and before as the Hill assets increase was up to the Phase tax inflationary actively pit next to prices XXXX $X.X of of of was partially owners higher as higher sufficient to GSK in tax higher the well on increasing $XXX the all-in Average driven credits flows activities to planned prices costs underground assets commencement of due offset Cash OT's XXXX QX to end copper X of at operating phase were impact pit sustaining lower for of billion. quarter mining XXXX. XXXX. of of and attributable $X.X Phase tax $XX mentioned, quarter that's in The but equipment of higher to decreased related differences well compared open than revenue. $XXX sustaining QX supplies. expenses, was XXXX, expenses The of deferred case million deferred the by that's to in to Turquoise and of meet billion due lower open the as XXXX QX share higher cash income, XX% operating of an and recognized interest requirements by for transition $XXX pits the property, million pressures Income transition and as open XX up from also to further property, increase increased construction. This of and first X period copper higher not share lower were impacted same million capital mainly $X.XX project. by of per XXXX underground, in as plant relating open from same

XXXX remained draft and noting price funding you March, slide the $X.X update. XXXX, $X.X to XXst $X.X improvements as can billion gap billion schedule X. year-end, that as offset decreasing and at the XXXX from the Turquoise has please If impacts the And March, of of largely of XX move at that liquidity billion again of commodity at Hill costs

case is items year. fully the HoA metal billion and EDGAR. cost base outcomes currently over funding website, development and incremental capital ready in update TRQ's including into The other January incorporates gold continues the company noted for copper to our draft efforts its Panel of the or attempting mine, would the XXXX funding changes schedule of is and we details as an entered XXXX; current to which of to either to to Rio forecast principal $X.XX of of plans company's production which be Shafts company of Tinto, underground those have implement the The in mine repayments first and the amended reprofile; $X.XX X; period Specifically, in of forecast we incremental remain implementation available underway. of on reflecting and sustainable increase the optimization on the XX from remains impacts; billion half which focus from are for underway, this of our which billion, on or related discussed and and these price $X.X requirement with updates that SEDAR the The open MD&A. inclusive any X, to and more mentioned, Steve non-incremental MD&A, and COVID-XX cost QX pit number is in X of which delays the the scheduled current assumptions efforts

less precedent billion the if amount that, the further project an provides or any in As $X.X necessary, considerations or could a board current Under of the the or not of currently non-fulfillment Rio via contemplated could obtain SSD are to in set required amended reprofile Should nature, amended delays to provided our access related of they convenience. affect company and also base additional timing additional if elements to fully amended the conditions HoA. required of within of private the raise $XXX take total by the and notable be Tinto LLC a for initial is the to of debt TRQ Hill offering of the assumptions, and the the presented adversely equity significant slide influence HoA underground reprofiling of offering, HoA further and identified case co-lending occur, choosing. equity out and equity of advisors the various would The order, presentation, Turquoise elements raised million OT HoA successful. for the up company existing funding the in and HoA. the the proposal ability amended timeframe to The the form consideration size to be we XXXX amended the committee by special in its in its would under of year-end on any this initial the as

other the among other Additionally, progression development ongoing commodity monitor, the company milestones. of continues impacts underground progression markets, to key of and undercut things, COVID-XX, the

and those and various positively to call by aforementioned, that, negatively, not in be Jo-Anne, funding both control. addition factors I'll the liquidity the of hand And requirement are over continue COO. impacted, to incremental Our within estimated company's the and outlook our all will to with

Jo-Anne Dudley

into X Materials X XX, XXXX, a Thank undercut If Studies X, been was truck There's point. System first the and the key XXXX footprint drawbell and and Handling on-footprint X to infrastructure since All Shafts first now successfully knowledge are X. conveyer mass development initiation, in results surface saw This completed into before draw for undercut excavation of blast and X XX. chute orebody of X, continuing to commissioning the All criteria readiness critical you, production. January completed. including XXXX acquisition of support achieved slide we excavation first X we Luke. sinking turn January, were in expected recommencement with preliminary on X activities in the XXXX. Lift and and on end Ongoing Panel Panel QX ventilation construction in is which continues. of the the continue half activities made towards for sustainable the the progress of North undercut X were XXth required blast good and QX Hugo was fired Panels

drilling potential We have of these excluded Hugo on from of are XXXX kilometers future North mineral currently meters Most the over the horizon areas XX X mining and Lift drill XXXX. planned which and are into reserve. are

near-term well of for of include as interest infill completed we In warmer and program to tonnes in the its XXXX we licenses key half milestone for day. identified and preliminary Asia XX, firing drawbell exploration still production outcomes of Mongolia on first program, during and and sustainable XX,XXX Shafts terms is not through X wholly schedule turn the cost Gold The of that three X first first as Hill, underway are operates activities which per QX, Heruga LLC, to LLC exploration will an for X X, work is reforecast to SGLS to commissioning Panel see ahead the anticipated X, of mid-year slide on XXXX. part includes Panel ramp expected of dates to Planning further the move production the be in critical Mongolia can LLC, The in expected enable which of months. owned XXXX. XXXX the exploration, half Panel Turquoise for subsidiaries, in up in the XXXX. Exploration areas Oyu the is Tolgoi. see Important program milestones If

finalized delays the given remains underground opportunities will expected Panels and on drawbell in Delays expected an mitigation timing assessment and X for hand equivalent are to QX work undercut related underground as the to updates for X Panel impacted and the well Shaft any both development When is progress, are X, settlement not X Panel The and I'll and in half further investigation. first sustainable under Steve. And Shaft With delayed due to to X completed. XXXX. in production as result the commencement X restriction expected previously are to be call to the approach the and track be X current X COVID-XX Shafts XXXX, are and schedule disclosed. by of Shaft one schedule January our XXXX and XXXX, QX scope neither on changes in Tunnels as to X X. X of be and mining in back that, as Following impacting impact X X to X X

Steve Thibeault

the assumption, the underground inventory with Lift blasting to in A you below was stakeholders, Thank very X on quarter analyst recovered Onsite COVID has transitional consensus. Hill production. costs onsite first Mongolia; with much, over undercut XXXX our Jo-Anne. decreased the the mine; Turquoise accomplishments started by Hugo Workforce including: of initiation agreement still known North the underground To funding $X.XX is the Tinto; of and amended development with delayed, renewed Rio wrap of sustainable an CapEx, numbers undercut we process XX%. orebody, of many forecast up, HX partnership although which has production the for Government was Preliminary concentrate level are estimates has of QX. XX% the track cost including for billion, the

world that, for well in largest becoming of transforming the are questions. I the one And underground like for the operating call copper to Oyu into of all We operator the to the a turn on truly and stakeholders. one of mine producer Tolgoi tier benefit back the with path would

Operator

Instructions]. [Operator

of Our Orest the Wowkodaw. line first question from is

Orest Wowkodaw

terms some those the of $X.XX the to of incremental areas see elaborate fact what is areas you Phase the for you estimate with and review. please and The under associated CapEx updated release in Can risk whether CapEx specifically there's to that billion speaks preliminary X areas?

Jo-Anne Dudley

not perspective, we're our includes at costs still we're the From seeing conducting this the and the differences but point, any review both that we're schedule. significant And in process.

around our has focus need we so, there. schedule some caution stage. But this to predominantly, at been And just have

Orest Wowkodaw

Just schedule, saying items the to potentially themselves? the risks so not I capital necessarily see you're understand, you

Jo-Anne Dudley

is And at schedule, on Yes. like we about production. It's in the And That a yet. [indiscernible] under Panel they're X. to first we're track the moment. the obviously, still And review. as that view reviewing not note, remains finalized haven't schedule drawbell

Orest Wowkodaw

planned And on on in X of about that be XXXX beyond. Can Phase there's years billion guidance you've of billion the terms wondering the say, how I'm remaining updated spend but would us of what on the in is, Obviously, you over based breakdown? to XXXX be already XXXX, much given number. us spent guidance, to $X left and $X any this give cadence couple next the

Luke Colton

we beyond worth away It's XXXX. period what Orest, of we we And can and cost XXXX the XXXX. the kind actually is that complete. guidance something funding provided is see haven't sort key provide take update and once to that's of maybe can noting schedule

So, billion, spent over of be to you would as expect $X that that approximately time. period you've noted,

Orest Wowkodaw

of that of $X.X your some remaining though, it, profile how on funding period? work as CapEx? extend we sort Does to I'm just billion, gap, wondering, beyond the

Steve Thibeault

be a the XXXX XXXX. in XXXX. into majority may of remaining the that scheduled occur tail There majority – But extends very occur the – through spend is vast to will small

Operator

Profiti from of And next of question is Eight Capital. line our the Ralph

Ralph Profiti

I have two questions.

of the could the help labor the of little you to spent or another equipment money remaining Luke, specifically? remaining CapEx maybe of where's asking of that understand, opposed CapEx you the bit what the a CapEx, as remaining Firstly, of to way related CapEx, help is on could Maybe infrastructure? being sort maybe component plant me

Luke Colton

correct best that let get here. probably Jo-Anne I'll and do I I'll wrong my anything

you've completed X between need be completed, Shafts Handling you development related sort the X now need and the be remaining and of the primary Materials at got to key Crusher System look of and X. – you've XXXX, early materials to got that If X pieces

have that You to also completed. be needs conveyor the to surface

So, upgrade. got within there's concentrator be needs current of you've sort the to the And conveyor constructed that a chambers.

the work that, Jo-Anne, of portion component pieces my know but exact be can I don't complete the that would $X.XX well. wouldn't still there any know insignificant been percentage the that's an a to of billion. a And it a to is committed, top although if there So, are you major color portion. committed of good need add there. that's off don't portion those of good completed, to labor. but I the be be as And further head, still be

Jo-Anne Dudley

the not part the But it when work. labor. comes have costs that components cost to considered as updated and of update the been No, on and of we has that as part labor reviewed cost of

Ralph Profiti

please? sinking execution when shaft read related? would us and mechanics, in rock are of particularly consider Could technical Jo-Anne, Or related, more we number geotechniques, in about these for and MD&A these number that sort X, X preliminarily, you et delays, the you dissect help cetera? performance

Jo-Anne Dudley

We remember delays. were that COVID-related last need significantly by the pieces these to infrastructure year impacted of over

And of where so, is find at we're doing shafts. that the that the sit, assessing work ourselves moment part now. the in productivity we where is And we

moment. and seen of this to program work about the continue productivity at information situation, underway monitor to this not to geotechnical It's the significant we more improve the it's necessarily in But performance. the there we so, ability improve right of to productivity. can we're as we providing stage. past at as successful work be is quite the that's And that out Oyu a at well concerns. And Tolgoi attract And conditions around to kind the workforce, skilled our iron have

Operator

TD Craig from our line question [Operator next of is Instructions]. of Securities. And Hutchison the

Craig Hutchison

an going respect was is debt how could with reprofiling? if provide I and the the process update to refinancing wondering you

Luke Colton

Hill, before are got reprofiling information. We've still reviews principal well, Tinto, questions. can optimistic the technical and regular lenders are going on the good across line providing and we're They're I'm talking related short. I well. December very with It's Turquoise that going The basis. the scheduled Rio underway. lenders it's asking all a regular repayment. meetings that on We're long get say, would overall, story good we the track

Craig Hutchison

of couple questions. follow-up a Maybe

the committee on that sense timing when the and been to their with that's any the up? special Just regard advisors, done process valuation wrap might of by

Steve Thibeault

be The also working really. when have financial the in a specific Not bank is advisor. okay? and now. valuator I that, process The the team that committee finished. Craig, the date the on don't of to working with right process special is They're will

moment, be the should gave consider they're date. guidance it this to work. cannot But special a you one. we confirm specific It's the And committee. okay, before, I If the up at within at

Craig Hutchison

answer, to financing, of to at on a pursue similar on whether a the but a around timing that? Rio an any decision a decision making financing regard Maybe question, financing, – bridge with special just option the equity timing committees maybe or consider original similar

Steve Thibeault

we're can I What tell you on Craig. working is that,

But short still we Rio that hopefully, Tinto. And, discussion Okay? the can horizon. finalize with in we're in

Craig Hutchison

$X.X for the Maybe just $X.X that billion. year regards CapEx sustaining CapEx? development you last question between down With one to this and underground, the to for billion break the me. provided you Can

Luke Colton

it if domain, I'm to remember don't trying I stage. at is the we've something into think out that's that put this public

So, us break is out, It take release. take and that's away. us can it Craig, subsequent so provide it take that we if in away that that information to a see let possible let

Operator

from Canaccord. And question of is our next Baretto Dalton

Dalton Baretto

special one on free bid another Does the clause? question have a been but to the Rio out do find of the have Most non-solicitation Or I involve bid. there my is the answered, of for bid and go questions form XX%? committee any

Steve Thibeault

thing do the the is start of how advisor, Rio. the evaluator said with going will to I the only is as role determine work – I definitely what's the is, I the doing before, tell and with negotiation can And their with go value then to the is on detail different the And looking through comment. financial advisors. they a and to asset estimate. not complicated working valuation they're All financial I it, and cannot at the committee Dalton, of are options. the asset all the the working that know We detail you

Dalton Baretto

of with But or a Rio in that broader negotiation scope purely is there potential at terms suitors? ahead valuation saying a is looking there you exercise of are a this

Steve Thibeault

was I haven't just that valuation. a said it

Luke Colton

to know helpful don't is remember if but is Rio's itself important this that proposal think I it's non-binding. I at all,

is So, the I but that's parties the And first that the anything. maybe answer in binds proposal the is question perspective, think expressed course, And there's broader, committee valuation that's perspective. the have they've the by that's don't our that right us binding. appointed being then They've appointed you preferences, I and scope think the that there's Obviously, a certain advisors. a they've of to anything anything but bit special something don't proposal do to overseen BMO asked. in from strategic TD and itself from appointed a

we're So, considered special very has by this appropriate outcome. to confident the that been and this all an carefully committee, progress they'll of

Steve Thibeault

And with in have Rio take discussion to the the order all information needed Tinto.

Dalton Baretto

answer have is, Rio, agreement know heads to impacts follow-up you this way of confirm. amended I and I no process My just to with this, The the correct? think want I the of in outcome

Luke Colton

landing we're the HoA. in again, the has them in discussions that or equity discussions And nothing are a that are the get under changes of of the we're they runway that to to over give that as underway able of And we from and request. financing to are can we There's ago, on amended those provide doing good proposal. that correct. around time sort them us requested then of nature point proposal. That's in consider sort we would that need Rio a the the are But, proposal we terms Steve non-binding whether of noted a that's with the considering future. near binding sort acceptable hopeful interim not minute period refrain

Operator

no further for today. have we And questions

you quarter has XXXX for Turquoise the Hill results concludes joined us. financial who this call. So, everyone Thank first

now disconnect may your lines. You

Turquoise Hill Resources (TRQ) 11 May 222022 Q1 Earnings call transcript