Name of the Project
Oyu Tolgoi underground mine project.

Location
Mongolia.

Project Owner/s
Oyu Tolgoi is jointly owned by the Mongolia government (34%) and Turquoise Hill Resources (66%, of which Rio Tinto owns 51%). Rio Tinto has been managing the project since 2010.

Project Description
The Oyu Tolgoi openpit mine was completed on schedule in less than 24 months and production started in 2013. Since then, more than 440 000 t of copper have been sold.

About $6.4-billion has been invested to develop the openpit mine, concentrator and associated infrastructure, with an additional $500-million of capital costs for the initial development of the underground mine.

The underground mine is expected to produce more than 500 000 t/y of copper, compared with current openpit production of 175 000 t/y to 200 000 t/y.

The mine also benefits from significant gold by-products, with an average gold grade of 0.35 g/t.

Underground production will come from the Hugo Dummett North deposit, including the North Extension, which contains probable ore reserves of 499-million tonnes, with an average grade of 1.66% copper and 0.35 g/t of gold.

The material from this brownfield expansion will use the existing concentrator and infrastructure.

The size and quality of this Tier-1 resource provide additional expansion options, which could sustain production for many decades.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The project has an expected internal rate of return of more than 20%.

Capital Expenditure
The capital spend to bring the copper project into production is expected to range between $6.5-billion and $7.2-billion, an increase of between $1.3-billion and $1.8-billion, compared with the previous cost estimate of $5.3-billion.

Planned Start/End Date
Rio has also warned that first sustainable production from Oyu Tolgoi will be achieved only between May 2022 and June 2023, which is between 16 to 30 months later than the original feasibility study guidance in 2016.

Latest Developments
Turquoise Hill, in which Rio Tinto is the controlling shareholder, has announced that a Turquoise Hill rights issue will be needed for the project.

The companies will seek to raise up to $500-million in additional lending under existing project financing for the Oyu Tolgoi underground project.

Further, Turquoise Hill will continue to explore other options for additional debt funding, but Rio Tinto has said that it will not consent to any additional debt or sources of funding.

Any balance of the funding required for Oyu Tolgoi to achieve completion of the underground mine will need to be met through a Turquoise Hill equity offering, Rio Tinto has said in a statement.

"The MOU agreed . . . with Turquoise Hill provides a clear funding pathway for the completion of the Oyu Tolgoi underground project,” Rio Tinto copper and diamonds CE Arnaud Soirat has said.

Key Contracts and Suppliers
Jacobs Engineering (EPCM) and Cimic Group’s Thiess (underground decline contractor).

Contact Details for Project Information
Rio Tinto media relations: Australia/Asia, Ben Mitchell, tel +61 3 9283 3620 or email media.enquiries@riotinto.com.
Turquoise Hill Resources investors and media, Tony Shaffer, tel +1 604 648 3934 or email tony.shaffer@turquoisehill.com.