Rio Tinto has agreed to pay $138.75 million to settle a lawsuit that accused the miner of defrauding investors by concealing problems with its underground expansion of the Oyu Tolgoi copper-gold mine in Mongolia, reported Reuters.
The lawsuit sought damages on behalf of shareholders of Turquoise Hill Resources between July 2018 and July 2019, when it was majority-owned by Rio Tinto. Shareholders were led by funds advised by Pentwater Capital Management.
The news agency reported that the settlement also resolved claims against former Rio Tinto Chief Executive Jean-Sebastien Jacques, who stepped down in March 2021.
All defendants denied wrongdoing, but settled to eliminate the uncertainty, burden and cost of litigation, court papers show. “The proposed settlement has been concluded without any admission by Rio Tinto or the individual defendants,” a Rio Tinto spokesperson told Reuters, adding that the class action was resolved on appropriate and reasonable terms.
Turquoise Hill had been a single-asset company owning 66% of the Oyu Tolgoi mine, with Mongolia’s government owning 34%. In 2022, Rio Tinto bought the 49% of Turquoise Hill it did not already own for $3.3 billion, fully integrating the mine into its copper portfolio.
Pentwater accused Rio Tinto and Turquoise Hill of fraudulently assuring that the Oyu Tolgoi mine was “on plan” and “on budget,” even as it was falling behind schedule and was nearing $1.9 billion over budget.
Lawyers for the shareholders plan to seek legal fees of up to 13% of the settlement amount, or about $18 million excluding interest, plus up to $2.6 million for expenses, court papers show.
Source: Reuters