Pentwater Urges a Halt to Rio Tinto’s Attempt to Obstruct Turquoise Hill’s Financing and Governmental Discussions

Pentwater Capital Management LP ("Pentwater"), the largest minority shareholder of Turquoise Hill Resources Ltd. ("Turquoise Hill" or the "Company") (TSX:TRQ) (NYSE:TRQ), urges regulators, including the U.S. Securities Exchange Commission (“SEC”), to carefully consider Rio Tinto’s alleged breach of securities laws and continued improper actions involving Turquoise Hill.

Just over a week ago, a Federal District Court in the Southern District of New York appointed Pentwater as lead Plaintiff in a class action lawsuit against Rio Tinto. That lawsuit outlines how Rio Tinto violated federal securities laws by failing to timely disclose its knowledge of the massive cost overrun and schedule delay at the Oyu Tolgoi mine which is 66% owned by Turquoise Hill.

In the short period of time since Pentwater’s appointment, Rio has taken additional action to harm Turquoise Hill. Just yesterday, Turquoise Hill announced that Rio Tinto is ordering Turquoise Hill to: (1) stop all conversations with the Government of Mongolia, its fellow shareholder in the Oyu Tolgoi mine, and (2) stop attempting to finance the cost overrun overseen by Rio with project bonds.¹ Additionally, just one short week ago, Rio unilaterally declared that it will not proceed with the undercut at the mine unless its own self-serving mine finance plan is implemented. Even Rio’s hand-picked board of directors at Turquoise Hill knows that acceding to Rio’s demands would be inconsistent with their and Rio’s fiduciary obligations owed to Turquoise Hill and all of its shareholders.

Why would Rio (in its capacity as operator of the mine) possibly think it is good business practice or good government relations to forbid Turquoise Hill (the 66% owner of the mine) from having direct, one-on-one communication with the government of Mongolia (the 34% owner of the mine)? Why would Rio possibly think it is good business practice or good government relations to order Turquoise Hill to accept a value destructive financing option to finance the very cost overruns overseen by Rio Tinto? Why would Rio think it is good business practice or good government relations for Rio Tinto (the mine operator) to dictate to the mine owners that the undercut should only proceed after Rio gets its way on the mine financing plan? These questions answer themselves. Of course, Rio’s perspective might be influenced by the $1.4 billion in fees that it has already been paid by OT and Turquoise Hill.