Rio Tinto (NYSE:RIO) must face an investor lawsuit accusing it of concealing delays and huge cost overruns at the Oyu Tolgoi copper and gold mine in Mongolia owned by Turquoise Hill Resources (NYSE:TRQ), a U.S. District Court judge ruled Tuesday, according to Reuters.
The judge said funds advised by Pentwater Capital Management, Turquoise’s (TRQ) largest minority shareholder with a ~10% stake, may pursue a proposed class action on behalf of the company’s shareholders, although he dismissed some claims against Rio Tinto (RIO) and various executives, and all claims against Turquoise.
Pentwater accused Rio (RIO) and Turquoise (TRQ) of fraudulently assuring that the Oyu Tolgoi project was “on plan” and “on budget,” even as it was falling more than two years behind schedule and running as much as $1.9B over budget.
In allowing Pentwater seek to hold Rio (RIO) liable for some of Turquoise’s (TRQ) statements, the judge cited claims that the companies had an “extraordinarily close relationship,” and that Rio had “near total control” over the mine.
Earlier Tuesday, Rio Tinto (RIO) said it signed a definitive deal to buy the 49% of Turquoise Hill Resources (TRQ) it does not already own for $3.3B, after the latter’s board recommended Rio’s C$43/share offer.
Image and article originally from seekingalpha.com. Read the original article here.