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 provide 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, 365 d/y

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 the Hugo North deposit is planned through five shafts are planned, 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, 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
In October 2021, TRQ confirmed that the expansion at the mine would cost $1.2-billion more than initially expected, with the project now estimated at about $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 will be no earlier than January 2023 (previously October 2022), subject to the timing of the start of the undercut.

Latest Developments
Project progress continues to be significantly affected by Covid-19 constraints.

Site accommodation and manning levels improved in the quarter ended September 30, 2021, but were between 25% and 50% of planned requirements to comply with Covid-19 restrictions.

The impact on project costs of the additional restrictions pertaining to Covid-19 until the end of September 2021 is estimated to be $140-million. Despite these restrictions, construction on the materials handling system 1 has been progressing well and is largely complete, with commissioning expected in January 2022.

A significant milestone was achieved in August with the ‘breakthrough’ of the conveyor decline. The service decline breakthrough is expected this month.

The underground development work, including truck chute construction, is progressing.

Shaft 4 sinking readiness activities have been completed. Shaft 3 readiness works have started, with the required works under way to ensure construction can resume as soon as personnel can be remobilised and additional investment is approved by the Oyu Tolgoi board.

The delays in shaft sinking, owing to Covid-19 restrictions and inability to mobilise subject-matter experts on site, are likely to result in delays of about nine months to the commissioning of shafts 3 and 4, based on the known impacts to date.

Contractual commitments to future works, such as materials handling system 2 and concentrator upgrades, continue to be delayed pending approval by the Oyu Tolgoi board of the increased investment required to complete the project.

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.