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
It remains uncertain when work on the shafts providing ventilation to support production ramp-up for Panels 1 and 2 at the Oyu Tolgoi underground project will resume.

Rio Tinto has reported that sinking works at shafts 3 and 4, which have been on care and maintenance since April, depends on specialist personnel returning to site.

The stalled shaft 3 and 4 projects, however, will not impact on the production ramp-up for Panel 0, which will be the first panel for mining at the underground project.

Turquoise Hill has also reported that work on the primary crusher and the materials handling system is continuing, but that productivity has been significantly impacted on by the reduction in specialist personnel on site, as well as by the cap on workforce numbers on site because of Covid-19 precautions.

To mitigate the impact of these Covid-related effects, lateral development personnel are being redeployed to support the work on critical path infrastructure components, including the primary crusher and the materials handling system.

The company has said it will provide a further update quantifying the impact of Covid-19 on costs and schedule in the fourth quarter.

Meanwhile, the Oyu Tolgoi openpit will produce 50 000 oz more of gold in 2021 than previously guided, as a result of higher grade gold-bearing ore from the South West pit being brought forward into 2020 and 2021.

The new guidance is for gold production of between 500 000 oz and 550 000 oz

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.