Gold and Silver

Proxy adviser Glass Lewis backs Turquoise Hill in Halbower rejection

Proxy adviser Glass Lewis backs Turquoise Hill in Halbower rejection
Mining News Pro - While proxy adviser ISS has backed the election of Matthew Halbower as a director of Toronto-listed Turquoise Hill, Glass Lewis is supporting the copper and gold miner in its rejection of the Pentwater Capital Management nominee to its board.

Pentwater, which is the largest minority shareholder in Turquoise Hill, has been raising concerns about governance, delays, cost overruns and the company’s disclosures regarding the gravity of its funding shortfalls.

Pentwater wants Halbower to replace Russell Robertson, one of the board’s longest tenured directors, under whom it claims the stock price has plummeted and governance has not improved.

But Turquoise Hill has dismissed Pentwater’s accusations, saying it is without merit and part of a campaign in which the shareholder seeks to paint an inaccurate picture of the board and management of the company.

“The board believes the disruptive actions taken by Matt Halbower on behalf of Pentwater coupled with the inattention to properly assess critical information demonstrate a lack of understanding of the mining industry and the complexities of the Oyu Tolgoi project. This highlights concerns that the board had and reaffirms the decision to reject his candidacy,” it said in a statement on Wednesday.

Turquoise Hill said Glass Lewis had endorsed its recommendations and had recommended that shareholders vote against the election of Halbower to the board of directors and against the proposal for minority shareholders electing directors.

In its report issued this week, Glass Lewis stated that it appeared that Turquoise Hill’s governance framework and board composition facilitated appropriate independence within the context of a controlled company, including appropriate safeguards to protect the interests of minority shareholders and to manage conflicts of interest with Rio.

It also noted that the dissident had failed to provide a convincing argument that the board suffered from a lack of independent directors or that the director selection process was actually controlled by 50.8%-owner Rio Tinto.

"While Turquoise Hill experienced a decline in shareholder value in recent years and has faced challenges developing the Oyu Tolgoi project, we do not believe the dissident has made a credible argument that these issues are the result of mismanagement or poor oversight. We recognise that Oyu Tolgoi is a large complex project with considerable risks and development uncertainties and that the project`s cost overruns compare favourably with cost overruns at similar projects,” Glass Lewis stated.

Last week, ISS reportedly said that it believed Pentwater had highlighted legitimate concerns and that the company’s relative underperformance over a prolonged period warranted the addition of a board member selected by minority shareholders.

The annual and special meeting of shareholders will be held on Friday, July 24 at the Pan Pacific Hotel, in Vancouver.

Higher Output, Lower Costs

Meanwhile, Turquoise Hill has increased its gold production guidance for 2020 to a range of 155 000 oz to 180 000 oz, from its previous guidance of 120 000 oz to 150 000 oz, while copper production remains on track to achieve guidance of 140 000 t to 170 000 t.

Its C1 cost guidance range has been lowered to $1.60/lb to $2/lb, from $1.80/lb to $2.20/lb of copper.

Owing to cash cost reduction initiatives, the 2020 operating cash cost range has been lowered to between $780-million and $830-million, from $800-million to $850-million.

Turquoise Hill also reduced its openpit sustaining capital range to between $70-million and $90-million, from $80-million to $100-million.

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