UPDATE: Turquoise Hill Resources Ltd (TRQ) Tops Q2 EPS by 9c, Revenues Beat

Turquoise Hill Resources Ltd (NYSE: TRQ) reported Q2 EPS of $0.09, $0.09 better than the analyst estimate of $0.00. Revenue for the quarter came in at $341.7 million versus the consensus estimate of $253.77 million.

HIGHLIGHTS

• Oyu Tolgoi achieved a strong All Injury Frequency Rate of 0.19 per 200,000 hours worked for the six months ended June 30, 2018.
• Underground development continued to progress during Q2’18 including the completion of the fully operational expanded Shaft 5 ventilation system.
• Following reduced advancement during the Shaft 5 ventilation system completion, in June 2018 a record-level of equivalent underground development was achieved with 0.9 kilometres completed.
• Since the restart of development, a total of 12.7 equivalent kilometres of lateral development has been completed.
• During Q2’18, earthworks for Shafts 3 and 4 continued.
• Underground expansion capital for 1H’18 was $561.7 million compared to $321.1 million in 1H’17, resulting in total project spend since January 1, 2016 of approximately $1.6 billion.
• Production from first draw bell remains planned for mid-2020 and sustainable first production in 2021.
• During Q2’18, Oyu Tolgoi produced 39,400 tonnes of copper and 50,000 ounces of gold an increase of 1.5% and 19.0% respectively over Q1’18.
• Mill throughput for 2018 is now expected to be approximately 40 million tonnes, compared to the original expectation of 37 million tonnes, due to the positive impact of high intensity blasting.
• Revenue of $341.7 million in Q2’18 increased 67.7% over Q2’17 reflecting significantly higher copper prices and increased concentrate sales volumes, driven by enhanced border logistics.
• For Q2’18, Oyu Tolgoi’s cost of sales was $2.36 per pound of copper sold, C1 cash costs were $1.72 per pound of copper produced and all-in sustaining costs were $2.42 per pound of copper produced1.
• Operating cash costs1 of $201.7 million in Q2’18 increased 23.3% over Q2’17 mainly due to higher royalty and freight costs as well as increased open-pit costs.

Operational outlook

Oyu Tolgoi is expected to produce 125,000 to 155,000 tonnes of copper and 240,000 to 280,000 ounces of gold in concentrates for 2018. Open-pit operations mined Phase 6 in early 2018 and expects to mine Phase 4 throughout the year. In addition, stockpiled ore will be processed during 2018. The increased gold production relative to the 2016 technical report is due to splitting Phase 4 into two parts (4A and 4B) and bringing production forward from future years. Due to the positive impact of high intensity blasting, mill throughput for 2018 is expected to be approximately 40 million tonnes.

For earnings history and earnings-related data on Turquoise Hill Resources Ltd (TRQ) click here.

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