Today, both the S&P 500 and Nasdaq are seeing declines in excess of 0.5%. However, on the other hand, shares of Turquoise Hill Resources (NYSE:TRQ) are trading higher by over 12%. What’s making TRQ stock fly in the face of the major indices today?
Well, the mineral exploration and development company announced a joint proposal with Rio Tinto (OTCMKTS:RTNTF) to forgive and write off a $2.3 billion loan owed by Mongolian-owned shareholder Erdenes Mongo. Rio Tinto owns a 51% stake in Turquoise Hill. The joint proposal may have been submitted to further friendly relations between the two companies and Mongolia.
Furthermore, in a letter written to Mongolian Prime Minister Oyun-Erdene Luvsannamsrai, Rio Tinto’s CEO stated that cancelling the loan would speed up the timeline for when the Oyu Tolgoi mine could start paying off dividends. Additionally, Luvsannamsrai announced today that the expanded underground section of the mine should be completed no later than 2023. Turquoise Hill added that:
“The offer follows on months of discussions between Turquoise Hill, Rio Tinto and the Government of Mongolia to understand the Government’s issues and priorities, deliver greater economic value to Mongolia and build a stronger partnership for a prosperous future for all.”
Indeed, it seems that investors like the sound of that today.
What Else to Know as TRQ Stock Skyrockets Today
The original financing agreement for the Oyu Tolgoi mine was signed in 2009 between the three parties. As part of the agreement, Turquoise Hill would have a 66% controlling interest in the mine. The other 34% is owned by the Mongolian government. Several Mongolian politicians have called out the controversial agreement and requested amendments.
The Oyu Tolgoi mine is one of the largest deposits of copper in the world. Due to its close proximity with China, the mine has received special attention in the past. China is responsible for over half of the world’s copper consumption and is also the world’s largest electric vehicle (EV) manufacturer. Copper is an integral part of the EV manufacturing process, as EVs use three to four times more copper than standard internal combustion engine vehicles.
Today, shares of TRQ stock are up 31% year-t0-date (YTD), surpassing the S&P 500’s 25% return in the same time period.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
