UPDATE 2-Turquoise Hill forecasts lower Oyu Tolgoi output; shares fall

Wed Mar 26, 2014 1:30pm EDT
 
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(Adds Mongolia government discussions, share price)

March 26 (Reuters) - Full-year production at the Oyu Tolgoi copper and gold mine in Mongolia, owned by Rio Tinto's Turquoise Hill Resources, may be lower than previously forecast, Turquoise Hill said on Wednesday, sending its shares lower.

Turquoise Hill, which owns 66 percent of Oyu Tolgoi and is controlled by Rio, said first-quarter production was hit by technical problems. It said rake blades in the mine's tailings thickeners failed and said that some "debottlenecking" projects were put off to preserve cash.

Full production resumed on Monday. The open pit mine is now expected to produce between 135,000 and 160,000 tonnes of copper in concentrates and 600,000 to 700,000 ounces of gold in concentrates in 2014, Turquoise Hill said.

The company previously said the mine, which is the largest foreign investment in Mongolia, was targeting between 150,000 and 175,000 tonnes of copper in concentrates and 700,000 to 750,000 ounces of gold in concentrates.

Shares in Vancouver-based Turquoise Hill slumped 5.2 percent to C$3.62 on the Toronto Stock Exchange.

Turquoise Hill also said it may ask lenders for an extension and delay the finalization of project financing for an expansion of Oyu Tolgoi to the second half of 2014 because discussions between the mine's shareholders are not complete.

Rio, which owns 50.8 percent of Turquoise Hill and operates Oyu Tolgoi, put the mine's more than $5 billion expansion on hold last July, saying the Mongolian government wanted parliament to approve the project's financing.

The Mongolian government owns the remaining 34 percent of Oyu Tolgoi.   Continued...