Name and Location
Oyu Tolgoi copper/silver/gold complex, Southern Gobi region, Mongolia.

Client
Turquoise Hill, a Rio Tinto subsidiary (66%) and Erdenes Oyu Tolgoi (34%).

Project Description
Oyu Tolgoi has the mineral resources to become one of the world’s top three copper/gold producers.

The project entails the construction and operation of an initial concentrator facility that will process 100 000 t/d of ore or 36.5-million tons a year. By the end of the fifth year of operation, the concentrator’s capacity will be expanded to 160 000 t/d, or 58-million tons a year.

Under the common start-up plan, ore will initially be sourced from the openpit mine on the Southern Oyu deposits, while the adjacent higher-grade underground mine, on the Hugo North deposit, will be developed to full production of 95 000 t/d.

The mine is expected to produce more than 1.2-billion pounds (544 000 t) of copper, three-million ounces of silver and 650 000 oz/y of gold in the first ten years of operation. Seven years later, at its peak, it is expected to produce about 1.7-billion pounds of copper and one-million ounces of gold.

Estimates indicate that Oyu Tolgoi contains 2.7-million tonnes of recoverable copper and 1.7-million ounces of recoverable gold in reserves. The scale of deposits at Oyu Tolgoi is expected to enable the project to operate for more than 50 years. The underground section of the mine is estimated to contain up to 80% of the value of the project.

Net Present Value/Internal Rate of Return
Not stated.

ValueThe final cost of the Phase 1 capital project was an estimated $6-billion.

The underground expansion of the project is expected to cost an estimated $6.8-billion.

Duration
First ore was processed through the concentrator on January 2, 2014, and the first copper/gold concentrate was produced on January 31.

Initial production from the underground mine is expected in 2016 and it is expected to reach full capacity in 2021.

Latest Developments
Turquoise Hill has reassured investors that it expects to close financing for the $6.8-billion underground expansion of its massive Oyu Tolgoi copper/gold mine by the end of the year.

The expansion has been delayed for years over a tax dispute with the Mongolian government, as well as, to some extent, political turbulence.

The Mongolian government in September signed a request by the Multilateral Investment Guarantee Agency (MIGA) for host country approval (HCA) regarding guarantees to be issued by MIGA, in connection with the Oyu Tolgoi project financing.

Turquoise Hill billed the signing of the HCA as a significant milestone in the project financing timeline. In October, the project financing information circular was provided for the banking syndicate, to allow for in-house consideration and approval by each institution.

Rio Tinto pledged to invest at least $250-million to $300-million in the construction of the underground section of the Oyu Tolgoi copper/gold/silver mine this year.

After filing the revised schedules for the 2015 Oyu Tolgoi feasibility study with the Mongolian Minerals Council in August, prestart activities are under way, in parallel with an update to the capital estimate, which is expected to be completed in the first quarter of 2016.

Construction is expected to start this year.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The underground expansion project has been delayed by several years, owing to a tax dispute with the Mongolian givernment.

Contact Details for Project Information
Oyu Tolgoi, tel +976 11 331880, fax +976 11 331890 or email OTLLCinfo@ot.mn.
Turquoise Hill Resources media contact Tony Shaffer, tel +1 604 648 3934 or email tony.shaffer@turquoisehill.com.
SGS manager on-site laboratories Pierrette Prince, tel +1 416 445 5755, fax +1 416 445 4152 or email pierrette.prince@sgs.