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Turquoise Hill Q4'17 net income falls 45% YOY; down 14% for FY'17

Turquoise Hill Resources Ltd. said March 15 that its attributable net income for the fourth quarter of 2017 totaled US$51.1 million, down 45.2% year over year from US$93.3 million, while for full-year 2017, the figure dropped by 14.0% to US$181.2 million, from US$210.6 million in 2016.

Quarterly revenue reached US$251.7 million, rising from US$224.6 million in the same year-ago quarter, but for full-year 2017, it slipped to US$939.8 million from US$1.20 billion in 2016, on lower sales volumes due to reduced copper and gold grades as a result of mining lower grade ore from the open pit of the Oyu Tolgoi mine in Mongolia.

The mine produced 157,400 tonnes of copper in concentrates and 114,000 ounces of gold in concentrates in 2017, meeting its full-year guidance. Copper revenues climbed to US$795.6 million from US$762.6 million in 2016, while full-year gold revenues slipped to US$130.8 million from US$419.9 million a year earlier.

Turquoise Hill maintained its 2018 production guidance of 125,000 to 155,000 tonnes of copper in concentrates and 240,000 to 280,000 ounces of gold in concentrates from Oyu Tolgoi this year.

Earlier in the year, Turquoise Hill's 66%-owned Oyu Tolgoi LLC received a tax assessment of approximately US$155 million from the Mongolian Tax Authority in connection to unpaid taxes. The company paid around US$5.0 million to settle unpaid taxes, fines and penalties for accepted items.

Oyu Tolgoi has filed a notice of dispute against the Mongolian government, which is an initial step in the dispute resolution process and grants the parties a 60-working-day negotiation period. If the parties are unable to reach a resolution during this period, the dispute can be referred to international arbitration.

The company's unit recently received a request from the Mongolian Anti-Corruption Authority to disclose certain financial information. However, there was no indication in the request that Oyu Tolgoi was a subject of the investigation, which is related to a potential abuse of power by certain officials during the negotiations of a 2009 investment agreement.