Shares of Turquoise Hill Resources (TRQ) had tumbled as much as 11.7% by 10:45 a.m. EST on Thursday. Weighing on the mining stock was the resignation of its CEO due to its ongoing dispute with majority owner Rio Tinto Group (RIO -2.02%).
Turquoise Hill CEO Ulf Quellmann has resigned, effective yesterday. Quellmann and the board of directors agreed that it was not in Turquoise Hill's best interest for him to continue in that position. The company has appointed former CFO Steeve Thibeault as the interim CEO while it searches for a replacement.
Turquoise Hill and Rio Tinto have been at odds in trying to find a solution to finance an underground expansion of the Oyu Tolgoi project in Mongolia. Because of that, Rio Tinto felt that Turquoise Hill needed new leadership to move the project forward. It was planning to vote against Mr. Quellmann's election to the board of directors if Turquoise Hill nominated him again this year.
Rio Tinto has a much better working relationship with Thibeault, who was Turquoise Hill's CFO from June 2014 through April 2017. He led negotiations for the funding agreements with Rio Tinto in 2015. Because of that, both companies believe he can immediately assume leadership of Turquoise Hill and make progress on a funding plan.
Turquoise Hill owns a 66% stake in the massive Oyu Tolgoi copper and gold mine in Mongolia. The company and Rio Tinto have been trying to find the best way to finance the costly expansion of the underground mine to unlock more of its resources. They hope that this change at the top will allow them to finally make some progress on this project, which could create significant value for investors, given its resource potential.