UPDATE 1-Mongolia PM ousting may delay mine talks -Turquoise Hill

Mon Nov 10, 2014 6:23pm EST
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(Recasts with conference call; background)

Nov 10 (Reuters) - Last week's ousting of Mongolia's prime minister is likely to delay talks on resolving a long-running dispute over the huge Oyu Tolgoi copper and gold mine in the mineral-rich country, joint-mine owner Turquoise Hill Resources Ltd said on Monday.

Mongolia's parliament voted last week to remove Prime Minister Norov Altankhuyag amid concerns about a serious economic downturn as gold, copper and coal prices and foreign direct investment slump.

"The political situation certainly could result in a possible delay," Turquoise Hill Chief Executive Kay Priestly said on a conference call to discuss the company's third-quarter results.

Vancouver-based Turquoise Hill owns 66 percent, and the Mongolian government 34 percent, of Oyu Tolgoi, which is one of the world's biggest gold and copper mines. The mine is operated by global mining giant Rio Tinto Plc , which owns a majority stake in Turquoise Hill.

Mongolia and Rio Tinto/Turquoise Hill have been unable to agree on investment terms for the $5.4 billion underground expansion of Oyu Tolgoi, which is currently an open-pit mine.

Priestly said Rio Tinto and Turquoise Hill had recently made an offer to the government to resolve the dispute. However, this was made before the removal of the prime minister.

Another hold-up has been a tax dispute between the government and the companies. A government official said in September that the dispute had been resolved, with the two sides agreeing to cut an outstanding tax bill to $30 million from $130 million.

However, Priestly said that while the reduction is "welcome," Oyu Tolgoi is appealing the ruling.   Continued...