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Rio Tinto is facing a class-action lawsuit following allegations that the company was aware of significant delays in a major copper mining project in Mongolia for at least nine months but failed to disclose this information.
According to the Financial Times, Pentwater Capital Management, a U.S.-based hedge fund, has accused Rio Tinto of concealing the true causes of the delays in the Oyu Tolgoi project. The hedge fund claims that Rio Tinto misled investors by repeatedly asserting that the project was on budget and on schedule for completion by the original deadline.
The Oyu Tolgoi mine is Rio Tinto’s key growth project, managed by its Canadian subsidiary, Turquoise Hill, in which Rio Tinto holds a 66% stake in partnership with the Mongolian government.
Pentwater Capital Management, which owns 9% of Turquoise Hill, has filed a class-action lawsuit in the U.S. District Court for the Southern District of New York.
Rio Tinto’s shares have been declining since the start of 2021. Today’s news of the class-action lawsuit has pushed the stock below the 5349 support level (the low from December 9, 2020), giving bears an opportunity to continue the downward trend. A confirmed break of the 5349 support level could lead to further declines towards 5157, with additional support at 4991.
Conversely, a bounce from the current support level could see the stock testing 5510 as potential resistance, with further targets at 5799 and 5975.