Turqoise Hill (TQR) Jumps as Mining Stocks Rally on Citigroup's New-found Bullishness

Michael Teague  |

The world’s number-two publicly traded mining outfit Rio Tinto (RIO) could very well be cited as a significant catalyst for Thursday’s broad and unexpected rally for mining stocks. The prior evening’s release of production data for the recently-ended period seemed to suggest that the company was plenty capable of implementing and executing a substantial turnaround strategy more or less exactly according to stated plan.

Equally notable, however, is the fact that the 3 percent uptick for Rio’s stock made it one of the stronger performances of the day among its peers in the metals and minerals mining industry, but was still eclipsed by an number of other companies in its field. Among the most impressive of these was the Canadian miner Turquoise Hill Resources Ltd. (TRQ) , whose stock at one point rose nearly 11 percent before paring back slightly towards the closing bell.

Turquoise’s operations are attest to a certain intrepidness and exoticism. Its flagship project, the Oyu Tolgoi copper-gold mine, is located in remote Mongolia, where the company also owns coal properties. The same could also be said of its diverse asset portfolio, and particularly in Australia where the company produces molybdenum, rhenium, and uranium in addition to the more traditional precious metals like copper and gold.

Aside from some significant and positive recent developments for the company, however, the day’s gains are most likely the result of the company’s own Q4 production report that was released early in the day, showing substantial increases in gold and copper output from Oyu Tolgoi, a project that has only been in operation for about a year.

But the fact that the rally swept up a number of mining equities in its wake is not sufficiently explained by any one production report, be it from a giant like Rio Tinto, or a more modest company like Turquoise Hill. Indeed, miners were mostly able to feed off of momentum created by Citigroup (C) analysts on the same day announced their bullishness on the mining sector, for the first time in three years.

Furthermore, Citi’s analysts cited the best prospects for large, diversified miners, including BHP Billiton (BHP) . The $3.5 billion Turqoise Hill, however, has the benefit of strong support from Rio Tinto (RIO) , who owns a 51 percent stake in its smaller peer.

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