Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.
What: Shares of mineral explorer Turquoise Hill Resources (TSX: TRQ) climbed 12% today after signing a binding term sheet with majority shareholder Rio Tinto for a new funding agreement.
So what: Rio Tinto agreed to provide Turquoise Hill with a much-needed $600-million bridge funding facility, putting the company one step closer to production at its key Oyu Tolgoi copper and gold mine in Mongolia. Specifically, the loan is designed to help Turquoise Hill refinance an existing $225 million loan from Rio Tinto made in June and assists in meeting its cash costs through the end of 2013, preventing the need for a dilutive placement of common shares.
Now what: The stock tanked last week on news that the Mongolian government will need to approve financing for the project, so there’s still plenty of uncertainty over the stock. “The Company remains committed to project financing and is engaging with the Government with a goal of completing the transaction and beginning to draw from the facility by the end of 2013,” wrote the company in a statement. Given the political and production risks that remain, however, I’d be cautious about buying too heavily into that optimism.
Canada has yielded its fair share of great companies. But unsuspecting Canadian investors could get ambushed by a glaring weakness in their portfolios. One basic investing principle holds the key to a rock-solid portfolio … and it starts with our neighbors to the south, America.
That’s why The Motley Fool has put together a Special FREE Report, “3 U.S. Stocks Every Canadian Should Own.” The funny thing is, these stocks might as well be Canadian … because you use them every day. Just click here now to receive a copy at no charge!
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.
Fool contributor Brian Pacampara does not own shares in any company mentioned at this time. The Motley Fool doesn’t own shares in any of the companies mentioned.
Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.