Turquoise Hill Resources (TRQ) 5 Aug 222022 Q2 Earnings call transcript

Good morning, everybody, and welcome to today's conference call for Turquoise Hill Q2 2022 Financial Results. My name is Drew, and I'll be coordinating your call today. [Operator Instructions] I'm now going to hand over to Roy McDowall to begin. Please go ahead.

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

Thank joining in progress milestones you, earnings and second Roy. call. Good for XXXX significant several the morning, all, first and thanks quarter substantial achieved us half for Turquoise of made Hill our XXXX.

the Oyu a of ahead of the the now three drawbells of in Following momentum the sooner blasting this of Tolgoi the June with first drawbell and mine build we the the expected. the first bond January, upon during firing than first in positive undercut inflection quarter underground fired schedule quarter second of have point

first amend While the increase sustainable is the total measure an project fourth and XX March ounces expenditure gold. to, by address The earlier. On-site and required Turquoise was of of Tinto this development project an other guidance Rate schedule Hill $X.XX from estimated X.X returned XXX,XXX things, XXX,XXX first and agreed milestone trending the which to was their to target of and to a in to gold completed, the levels. force XXXX, XXXX when worked, extend forecast date in hours update production The will from company's production lifted. March per key to lenders the is Tinto majeur XXXX arrangement to Rio comprehensive concentrate our the in timing declared XXX,XXX range equity additional capital of to interim requirements debt XXX,XXX capital. declared to to in inventory All achieve funding Turquoise Hill highlights XXXX billion. expectation Injury funding confirming we include half provide to near-term Other customers raise cost we underground among Rio funding the Frequency continue for XXX,XXX of to of half

Turning pit, X. and to concentrate XX,XXX the of In produced tons ore quarter in processing the Oyu of gold stockpile. and concentrate Slide of Tolgoi underground in the second open from ounces from XX,XXX copper XXXX,

increased year. QX only. for line in this COVID-XX X.X was consequence, Second testing open expected required X% in with with and identified pit our and have trended result XXXX. And forecast gold at and Oyu with regime final continues in eased, of in Tolgoi been optimization cases is now eased XXXX, mobilization QX levels. mask-wearing quarter XXXX The we testing downward mill A the expectation. again, expectation. in was pre-site has production throughput has The continued noted high-risk QX at settings have works higher than production low QX our line than of X% XXXX above, as higher tons million

January over achieve expectation Officer. Chief to our to of blasting HX now of on in the XXth, been Colton, keep we maintain hand improvement as full With reviewed on necessary. progressively of XXXX. Tolgoi be or With with the sustainable control in Luke QX the I workforce numbers schedule will has COVID team the the our the case delays undercut Ongoing on-site able XXXX increase to able been personnel to Oyu capacity. to underground the monitoring undercut, Since and Financial that, in production has cases first and will load, despite approaching continues COVID-XX initial the ahead call

everyone. to morning Steve, good Thanks, and

QX to areas Phase due second sales of concentrate of grades in XXXX, can easing contained to you and Starting X, of and of sales following restrictions the costs $XXX higher result and higher from from cash XXXX. sustaining million temporary costs phase metal next decreased and to the and input higher to planned tax an our A generated concentrate, offset All-in COVID-XX of copper than expenditure the transition that's XXXX versus grade of offset the operating stockpile in same due and by with and XX.X% pressure The by mainly $X.X XB that's equipment. in from the lower turn due than property, XXXX. QX provide prices, revenues revenue, impacted higher of Expenditures interest than of shipped with head gold Cost XXXX planned million were operations, mining million and property, key also attributable by sustaining capital higher partially costs QX turn largely were in quarter produced as was inflation capital operations by also share an benefit concentrate and prices GSK expenditure construction. of in the underground, well as mining increase of higher copper for of and road XXXX before $X.XX impacted expenditure and of XX.X% the use by for Phase X. owners in please well of surface prices. to could $XXX.X XA. of Slide on by levels On-site differences higher million. in transition stripping volumes due target XXXX. was QX to Hill in planned ship revenues the mine transition million second to decrease in costs of summary I'll the to lower a of on the restrictions in recorded finance capital a to quarter by higher metrics quarter average of supplies. share benefits QX were CX as of deferred per from Turquoise increase to operations equipment of in If volumes in were grade XXXX average further QX as X.X% higher the was on for higher XXXX. of benefited of was on all-in also tax QX per for planned the a sustaining impact million of open all higher of sales pit. and XXXX processing $XXX.X of concentrate. operating as higher critical impact double Cash cash impacted $X.XX cost activities million. levels from more million at The material. of in QX that's returned trailers QX the $XX.X the tax $XX.X copper Higher shipment XXXX, a end QX from prices and gold the gold and the million Slide $XX.X service revenues ask border comprised sequence XXXX easing relating on to and X.X% $XX commencement to $XXX.X inflationary and the the Income partially prices. also recognition due in I offset a to concentrate was million from that were charge by from plant as underground volumes maintenance inventory the change to increase have QX $XXX.X and higher capital lower the componentization, The XX% XXXX lower increase If you mining includes to again lower to plant sales

$X.X liquidity estimate. base by requirement XX, June from March XXXX. the case $X.X was the XXXX and incremental well funding see QX from at XXXX an updated end commodity You'll The decreased estimated of of inflationary billion in as that's assumptions estimates XX, primarily $X.X $X.X as increase assumptions. company our And company's – increased pricing March and XXXX, that's billion billion to XX, LIBOR the at billion impacted

remains our period, and those the we for TRQ's our company MD&A; our the the as funding of of assumptions schedule the update; more metal company the other and which funding which of EDGAR. and website, Specifically, X $X.X of HoA attempting X as delivering the for and well timing as is you continues for the available principal progressing find case that which provide billion of and copper did efforts these Shafts can cost the production SEDAR reprofiling on incorporates recently focus and HX principal and details incremental scheduled MD&A, X, development as items the sustainable is for latest schedule given and to cost current and its on XXXX; its EDGAR over repayments Rio, finalized per with amended in update; website, are in our repayments, detail well. of as forecast billion SEDAR base The to other reprofile. incremental elements Panel requirement gold in $X.X funding at finalized on And price capital latest scheduled

funding the an the date ability $X.X is the the or and interim the delivered company mentioned, advisers, and increase take identified could additional the The order, assumes the and the equity reprofiling of and delays raise extend requirements project any by recently conditions Hill the provide size the its the to funding assumptions, currently proceeds Turquoise Rio to on Steve quantum TRQ equity required Special non-fulfillment it funding its of timing HoA, private precedent the $XXX also need by to the funding among As case to Any the of fully that implement company near-term is have of capital. Under raised. and the HoA. various proposal that of in which may impact from offering address elements of considerations billion could approximately to by funding to current contemplated of the underground to HoA of that secured consideration million to need raise are estimate equity co-lending would arrangements amendments comprehensive could be and Committee under in debt successfully. the still SSD additional Board and to addition the company's things, further other Rio funding nature, company's influence significant Tinto's estimated related initial base

of impacts to other the progressions key ongoing as markets, development COVID, the other well commodity progression the monitor, company continues the of milestones. as drawbell Additionally, underground and underground things, among

company's be our many negatively estimated to either the the Dudley, impacted Jo-Anne or company's requirement With I are to funding incremental will control. of liquidity that, positively over factors, So continue and COO. call outside by other which various the outlook will hand of

X turn reconfirmed $X.XX first and of X cost move and capital towards XXXX now the continued third finalization all levels XXXX. we the If update billion Slide XXXX Luke. Shafts you, first at commissioning to two and Personnel also the schedule expected with of development this the to saw drawbells ahead quarter, firing in towards Thank target of half XX, July as of return we XX, of QX on numbers the COVID-normal a environment. fired schedule. underground

materials Underground the of up completed work infrastructure the drawbell and handling sinking to Shaft blasting depths over over above and quarter. XX.X materials of X saw Shafts from on of on X meters underground meters X the For continued drilling drilling and expectations. two kilometers of respectively. ground support XXX on undercut which and post X,XXX Panel X, mine reached X QX ramp XXX X operations and square below hoisted kilometers with development underground July also had undercut in of

scope near and the two up XXXX holes. field I include see we share magnetic to the XXXX as of note in the as approximately XXXX Panel XX, schedule was and Turning XX turn expect commencement reconfirm of X for the milestones including work delays within the firing estimate. the of which completed X, as diamond XX,XXX scheduled The previously in results exploration, X. Bag Panel COVID-XX-related QX. half tonnes X X, in the milestones and activity earlier Slide Shafts XXXX, cost work per Shafts XXXX. can day. key later progress for expected expected X underground dates field of half mining survey we Changes to to term than was months than second in sampling, completed Important the well trending the of commissioning drawbell the well to and work Panels Panel X At production a of to able X as as expected. first of quarter. and X, as included impacting in be of both enable If be are in half timeframe definitive QX, in to in is expected well a for the the development work is ramp drill critical first to cause the drilling from mapping, restrictions second Sustainable to reforecast completed field that updated still license production in first

reforecast underground opportunities development hand on and X approach now of shaft timing the during to known under cost result been Panel and of has expected completed, is With Panel expected and work not additional to I’ll impact and the delays is be that X of the back current X call Steve. the further under QX given in first mitigation delays Panels The X, the investigation. over commencement confirm Now shaft the assessment XXXX. drawbell that and to are schedule and in X but to the the underway, equivalent to now delays X

you Anne. much, Thank very

stated first half Hill in stakeholders. significant the for my all I benefit we As remarks, year of the opening progress of the in made Turquoise

relationship reset the the Government schedule the Mongolia cost Following blasting and the positive of of the with of the our project. have we confirmed in and QX, underground undercut of

drawbell firing of the We schedule. ahead have begun

inventory I additional to and our Tinto set to on levels, out in world the the look of provide the we is turn and raised the forecast we largest benefit the the arrangement extend concentrate progressing to back is we in up which forward TRQ call gold XXXX production of With producer Rio level amended funding first raise one the half for questions. ramping and against the continue operator have Tolgoi our interim We to milestone that, target have we underground fronts the Oyu by have funding would all delivering and to guidance, debt XXXX, and had capital. date production of to to TRQ equity required becoming copper like many returned the sustainable onsite for stakeholders.

you. Thank

today’s first today Scotia start from now Q&A Session. Orest Capital. Our comes [Operator Instructions] will Wowkodaw We from question today

Your line is open. now

give was Well. Hi, some color… you I Jo-Anne morning. can good wondering if

Good morning Orest.

specifically year-by-year everybody. Good out I'm plan new some mine I on to in QX And detail get is wondering we basis. report if contain. expectation the pit morning, wondering was up can things what coming it going for disclose wondering type production sustaining how I'm underground like color and us. this going if have open a is along ramp for both, with combined on much year-by-year capital this to will

Okay, for question. thanks Orest your

comes So, of change. occurrence regularly a plans and see we plan updated certainly it's the the how regular as as things we mine more for together understand

mine up. the we And understanding working so and as timing the X reduce of and we impact as ramp the Lift And design as panels, of mine to coming X together. Shaft we continue to on X, stated, see aiming updated well refinements the of are some design for X, to risk refinements X

to in And time so plan. the plan, moving over of see will changes those that we parts design

those of all contain updates. won't QX Now,

a so we provide to over period, time the detailed at engage up understanding would information and team that judgment at will understand can. longer we'll most of we time certainly provide And the ramp the whether need with to we our accurate but a a make

production? that Does years of and for not for mean that things Sorry. capital contain sustaining may it like the couple next an kind outlook

information, to for Yes, example, of have timetable year. so we January each a – in that would obviously we provide usually provide guidance

work of that those cadence we So some have things. we a to on

still and the for particular, mine mine. terms as details a some Panels still refinements those those result, continuing XXXX design areas example, we X. And of of for in of sequences, out ramp the we of Just in are are working into up, for X those

provide providing that we'll we the we a update And can. current are QX. So, in updates

to as updates expect mine like magnitude. for We see a plan on would this project the and you regularly this see of

investors the in months And think has you. special just of sense may, we steps can I arrangement been this what Where you. Thank go How almost Rio we're Tinto. for this time is of mean, that do passed are to here sort indefinitely? disclosed plan the should coming committee? the about more, here surprised Okay. just go the if for by five one here. I of and since from the I'm here up one It's on length just was – Steve, next proposed

Orest, detailed No very a question process involved it's X But I'm lot asset. the that mean, a a special I sure Tier people complex a mean, okay. committee, have, and understand I that substantial are in of involving you they

it's And characteristic. a life lot of Okay. and long mine a different

to the and have decision. interest in minority special And information best Okay. I'm interest the committee make data the the needs the the to it – time required for that best our shareholders. is taking right that's all And confident of

being appropriate. the like committee, Okay. provide okay, is shareholder that before, said, advise when further will And that comment will on the development, said have when they sure they material market our when a – the mean, That the disclosure special special will they I committee basis. and or timely required I'm

the new Okay. trying not is think QX, in related? do mine of analysis coming the out waiting Does of company? terms the you for part this that they committee are special is that evaluation in establish the Or plan appropriate – for to or perhaps that's that's something

or overall be reshuffling always decision No, they of say the be I I will because for what plan elements, the say is are make key related for be to I I wait of mine the would wouldn't long-term. – impact? think we're one but elements the some is couple element not not to really looking mean, And for in and will want will one to discussion. order clear a be that to that the not considered, I wait for

Okay.

very much. Thank Okay. you

you, Thank Orest.

Profiti comes from Capital. next from Our Ralph Eight question today

now is line open. Your

Good Great. morning, Steve. Thanks operator.

you? How are Ralph. morning, Good

well, I you. or for three that's to geotechnical start first the you rate drawbells. allow increase Is sort one I'm And Presumably of get can to to one of you now maybe And how have of do these drawbell something and that. a say we with Luke. and be the initiation confidence about to questions, weeks for between half so, this assessments increased one you have should thank drawbell schedule I thinking Jo-Anne. XX with come the XX every does linear, XXXX? Jo-Anne two I'm Jo-Anne, wondering the that or

you, Thank Ralph your for question.

that So, of learning the ground both our about our drawbell geotechnical and be we're time, geometry to But are over undercutting at the than expect say, over it and ground. construction well the of conditions just of up. a construction. conditions. will as optimize to averaged we initially weeks rate understanding And And drawbell steady progress, teams due raise, the beginning our expected is the to ramp how best more as three

in we rather We QX the So, progress. seen first QX. good have slide than drawbell saw

We the construction progress regular out up of will and at we continue fairly time over we're be rate to helpful. in by every a drawbell steady ramp a hopefully out or at construction rate And production. at the see of sustainable sustainable two. And that's very should time production, over month

Yes, thank you.

to number? be of the for we million outside Luke, HoA. I'm thinking And about then that happens analysis in should wondering to it one just be that to sort framework that equity proceeds $XXX timing you a as a sort of the maybe of your number, get in appears XXXX And Okay. additional plug this

help best my answer because do an important is one. you to question, that I'll Yes,

by as in that end the this raise the we first And obligation an mention of hasn't have year. think knows, to is, do to equity $XXX I million changed. thing everybody

to be increase equity of the call a million right, do obviously to the our around fill play And the going come would that need like supplemental number. on the into how be about would going lenders trailing any and elements they've to still equity quantum from raise to HoA the the play gap. we the for of funding discussion how that additional around and that things that's then be it you $X.X raise of So, $XXX our update are But fill dependent the of funding quantum think we those as believe is senior the given Rio timing gap, gap ability Co-Lend, funding and billion; things it's Tinto, the We with the there we and what did exact the plan. that final all the so will the the debt, advances would be. Re-profiling, into funding other progressed,

we will into believe funding that think before our equity be raise. financial take You We consideration when least have XX, would get the other June HoA any until those from we see trailing statements us and MD&A that XXXX. you will this of elements liquidity and at

late XXXX, expect wouldn't raise that. need obviously happen update not know progress that that hopefully XXXX, moment. of yet. timing I we to at – we kind gives need and still trailing progress monitor to we're prior and how don't XXXX of you we'll to which need whether and the to So exact to what equity We thinking we we're other flavor or our The is see the But cetera, things do. for to where a continue et a estimates, – bit

That's Yes. Thanks I very much. what for. looking was exactly

Orest, Ralph. Thanks sorry,

today from Our Dalton from next Baretto question comes Canaccord.

now open. is line Your

Steve and Great, Good team. thanks. morning

Dal. morning, Good

I'd see post-production earlier wondering morning. that HX. trailing $X.X it's on or signaled on it. to that Ralph and what $XXX was billion timing I'll predicated up like you've not? production that two questions take; on; start Good just coming that on said, million possibly Luke earlier is up. one, in by sustaining you like following start there, into billion based or factor What number, number sustainable $X.X could you following does in I'm Number so give by asking that

the within $X.X and where the be for bit a earlier answer the production billion XXXX. that I'll is consideration, trend to HX we're our do a Jo-Anne think possibility But moment and takes that's may me. then have into calculation still that question little estimate sustainable and six-month period try correct Listen, Steve at there's Yes. to that of but and and We that for then obviously more be with comfortable we're on we'll to look to the progress doing to we if a actually the can things And obviously more specific the as where et can processes a we get XXXX ground bit blasting, continue than people. we position more where then that. not HX specific point the quite guys yet, obviously the monitor in update cetera but we get

me and misspoke, I Steve to see Jo-Anne stop correct Let there and if and if want me.

The in early impact thing what have sustainable add favorable Dalton extent, impact, I'm said that the its that progressing if – right the it is definitely progressing we because would we're production only to is in we the very No. I – direction, too a that what would definitely an – achieved careful or that have and But sooner, process. could okay, in okay. we we're what favorable

So, be – – that but could could this that be is could that one positive variable positive. be

calculation mid-range okay, don't a the $X.X a mid-range the a magnitude. be to billion, we but conservative, it the be I how with at I moment could the So we positive, we don't know can say, took more, want but probably for – approach took but

careful that – element that that just could but be what, the the funding. be positive to I'm bring could with – something some So should

debt secured wondering all, I'm December December that are committee then you in where committee marching deadline? are switching dependent can mean, gears, maybe re-profiling we wondering Is update just while towards while deliberating, I'm its proceeding just if that they special are we comfortable that get are on steam full you guys you an does And on and steadily the Okay. senior process? XXst, and ahead thing meet the at the we how – the incremental XXst and that are you'll debt? I special

question, of information the And are with a marching of we're the that we Rio. the the regular good we're sort its So sharing HoA with funding things discussing not in really yes, terms progressing in a That's We're delaying not elements, of in with specific answer mentioned, short the the negotiating the is right? proposal lenders lenders with cadence Yes. special that, consideration our the we various with committee while are is re-profiling. elements ahead negotiating the you of and of lenders. all and and –

at that I very that of able that, believe repayment. is all advance in progressing look positive think that complete December still to So would be say of it things I I is moment XXth, to that the re-profiling that principal and

yes, we well lenders are and in bankers around the there HoA other be encouraged as definitely to of Rio discussion with advisors that Tinto in and and progressed and around, need quite the elements short-term. So the

So a as rapid of that pace. at all very important can we and continues as

Thank last one proposal? free are draw then just one the you special full Rio, me, for contemplating that. committee million Great. from you And for while to the down $XXX still is the

Yes.

beginning our those website. progressing between of us to that and other yes, early million isn't think $XXX of sort now of million, or our advance some million funding se that's proposal in So that But draw from HoA that I or there see there we're we $XXX contingent progressing elements we're when that anything per And on on our it deliberations precedents mean, $XXX in down need of drawing well. on the not outcome. to on is of the are our proposal the $XXX other HoA and conditions you finalization down million is the would that the that end kind prevent the going can year.

guys. That's Luke. all me Thanks for Great.

Dalton. Thanks Great.

Instructions] next TD Craig [Operator question from Our Securities. comes Hutchison from today

now is line open. Your

Good guys. morning

morning, Good Craig.

Steve. question. a Just Hey follow-up

updated question on follow-up mine Just plan. a the

second be terms expect with were for guess some doing the Will question, you looking of and – the you work when funding guys was forward. in the the metal update I in that optimization that updated included open an there think mine at respect guys pit, update? gap I release plan? to I think that some could And we moving

of question first Craig, to part there. Okay. I the take your want

there be number plan There mine So it'll open in we annual be would as what optimization on to work be is optimization combined the open There you're work see. updated the the as do that see correct get underground always full a we these basis. changes both And done update underground then very will the terms and a coming and to did of included. and an together, mines across and with always be we mine note things would the pit come will we always is. pit that of as outcome

So to once built-in what the is of is and underground we optimization and work open the there pit is that waiting complete. outcome work are the across see

to takes think It always is sort your use And make second et – the short for liquidity into its models a the calculation underlying of is, cetera. to something little way I that plan the time funding we part on answer gap of of that the do. bit for be there, that mine would looking question the we calculation,

it that going of intention be that intention soon we our obviously, might plan. to of to able optimization mine for as funding we're would updated couple the the would and do as that release, obviously QX take with it's but outcomes and can update would the that's the to yes, in we consider. a probably gap work weeks, but So But be earlier, conjunction something be the

a just equity. this $X.X additional funding a $XXX looks But billion. billion mean extra there, I about million, the now you from talk there's plug that The of $XXX to gap can differential like follow-up. $X.X is went Okay. million couple

equity? You talk of and we wouldn't additional sort of $XXX million about is why maybe why Thanks. just that

in all rest, around you it's delivered. you're So right? assumptions well And just updated the But as we all first inflation the of HoA $XXX the right. when of Yes. numbers, information commodity funding increase listen of elements are those the then increase really more reasons for the LIBOR, assumptions, and and around of assumptions different different gap back funding assumptions, of talking updated updated million $XXX sort of the you is benefit and are rounded that's the sorry, will around increased, $XXX had elements other be each about those million. the the of short-answer that various just the off delivered be refinement have how the Sure, add the assumptions pricing million will these its refinement sorry, Craig

million up We're funding differential incremental able raise into effectively information. those more have it between to we and increase process, would the assumptions the the refine in that's of, through possible round million. $XXX the go we and $XXX as to the gap what's equity So the going

the Okay. to it for Is down now? the there zero or left underground any is basically budget contingency completing on

part So to contingency contingency, XXXX that we've reviewed in the within as updated does and estimate costs of certainly so our within project that remain completion. costs all just terms schedule update. there of And – the

still there yes, contingency So is reminding.

Okay. Thanks guys.

QX XXXX Results. That call concluding you. conclude Thank today's Turquoise Craig. conference concludes Q&A, call. Thanks Yes. Financial Hill does today's That for therefore

now may line. disconnect your You