Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Mining giant Rio Tinto plc (RIO - Analyst Report) recently agreed to provide a convertible bridge loan facility to Turquoise Hill Resources Ltd. (TRQ - Snapshot Report). The loan is a short-term convertible credit facility worth $225 million. The total sum required to be repaid comprises the principal, interest and requisite fees. The repayment is scheduled for Aug 12, 2013.

Rio Tinto currently occupies 50.8% common shares of Turquoise Hill, with roughly 511 million shares. In addition, roughly 74 million Series D warrants of Turquoise Hill are with Rio Tinto.

The agreement entitles Rio Tinto to convert the debt into common shares of Turquoise Hill, after it reaches its maturity date or in case of any default of payment. In such a situation, the debt can be converted to common shares of Turquoise Hill at a conversion price of 85% of the volume-weighted average price of the stock. The price will be calculated based on five preceding trading days, till the day the conversion notice is provided. However, at any given time, the conversion cannot exceed 10% of the current outstanding shares of Turquoise Hill.

The loan is provided to fulfill the short-term fund requirements of Turquoise Hill at its Oyu Tolgoi copper-gold mine in Mongolia. Turquoise Hill owns a 66% stake in the mine, which is one of the largest copper-gold-silver mines in the world. Turquoise Hill is expected to utilize the new funding to satisfy the cash-call obligation of the mine, due Jul 2, 2013.

With the receipt of the necessary permits, the mine is set to start shipments of its concentrate. However, the approval from the Mongolian government is still awaited.

The funding is seen as a strategic step by Rio Tinto to safeguard its interests in Turquoise Hill. Rio currently carries a Zacks Rank #5 (Strong Sell). However, other mining stocks that are currently performing better and are worth a watch include Golden Minerals Company (AUMN - Snapshot Report) and Hi-Crush Partners LP (HCLP - Snapshot Report), each carrying a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 35.33 +14.82%
ANI PHARMACE ANIP 24.79 +14.66%
E-HOUSE CHIN EJ 10.99 +9.24%
CANADIAN SOL CSIQ 26.97 +7.15%
INTL CONS AI ICAGY 33.30 +5.38%