Name of the Project
Oyu Tolgoi underground mine project.

Location
Mongolia.

Project Owner/s
Turquoise Hill Resources (TRQ) holds a 66% interest in Oyu Tolgoi LLC. The remaining 34% interest is held by the Mongolia government through Erdenes Oyu Tolgoi.

Rio Tinto, with other Rio Tinto affiliates, holds a 50.8% majority interest in TRQ, and provides strategic and operational management services and support for Oyu Tolgoi LLC in respect of its operations and activities.

Project Description
The Oyu Tolgoi 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 project has mineral reserves of 1.27-billion tonnes grading 0.81% copper, 0.29 g/t gold and 1.9 g/t silver as at June 30, 2020.

The mineral deposits at Oyu Tolgoi are situated in a structural corridor where mineralisation has been discovered over a 26 km strike length. Four deposits hosting mineral resources have been identified – Oyut, Hugo North, Hugo South and Heruga.

The Oyut openpit is a low-grade copper/gold openpit operation with a current production rate of about 40-million tonnes a year and a planned remaining overall waste-to-ore strip ratio of 2.3:1. Mining is conducted using conventional drill, blast, load and haul methods, and is conducted 24/7, all year round.

Underground production will come from the Hugo 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 gold.

Access at the Hugo North deposit is planned through five shafts, three of which have been completed. Construction of the final two ventilation shafts (Shaft 3 intake ventilation and Shaft 4 exhaust ventilation) is under way. A decline conveyor system, from surface to the underground crushing system, is being developed. Two underground crushers are planned to crush ore from Lift 1.

Production operations are planned to start in Panel 0, then progress into Panel 2 and later into Panel 1. The pillars between the three panels provide the opportunity to optimise the design of Panels 1 and 2 to best suit the geology, geotechnical characteristics and economic return of each panel.

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
$7.75-billion.

Rio Tinto has said the full impact on the cost of the integrated project is subject to further analysis once it has clarity on the timeline for the completion of the undercut criteria and ongoing Covid-19 restrictions.

Planned Start/End Date
First sustainable production from the underground operation is expected in the first half of 2023.

Latest Developments
Turquoise Hill continues to monitor the impacts associated with Covid-19 delays and other issues impacting on the underground development capital estimate, as well as the overall project schedule. The cost and schedule is being reviewed following the start of the undercut, and is expected to provide an update in the second quarter of 2022.

Panel 1 and Panel 2 are the focus of additional study work – including design optimisation for the panels and pillar recovery assessment – that will continue into 2023.

To support the mining studies, additional data is being collected through a surface and underground drilling programme. The focus of the programme during in the fourth quarter of 2021 was the northern part of Panel 1 and the southern part of Panel 2.  Although drilling slowed during the fourth quarter of 2021, the study work remains broadly on schedule. 

Preliminary results from the ongoing Panel 2 mine design optimisation are expected in the second half of 2022. The scope of this study includes a review of the base case, including optimisation of the extraction drive orientation and the undercut strategy, reducing exposure to caving-related risks. Risk reduction efforts could alter the mining sequence within panels, which may result in movement of the metal profile.

The initial focus is on the northern section of Panel 2, where additional data is already available, and will be expanded to include the southern section in the latter part of 2022.

The Panel 1 and pillar recovery studies are scheduled for completion in early 2023. 

Key Contracts, Suppliers and Consultants
Jacobs Engineering (engineering, procurement and construction management); 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.