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

Client
Turquoise Hill/Rio Tinto (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.

Value
The final cost of the Phase 1 capital project is expected to be about $6.6-billion, within 3% of the initial budget, excluding foreign-exchange exposures.

The Phase 2 capital estimate is $5.1-billion.

Duration
Commercial production from the openpit operation is planned for the first half of 2013.

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

Initial production from the underground mine is expected in 2016.

Latest Developments
Rio Tinto has announced that it will delay the underground development at its Oyu Tolgoi copper project.

The Mongolian government has notified Rio that the terms of the project financing provisionally secured for the underground development, reported to cost an estimated $5-billion, will need to be approved by Parliament.

Parliament is currently in summer recess and Rio has been warned that the approval process itself could take some time to work through. As a result, Rio has said that it will delay all funding and work on the underground development until the matter has been resolved and a new timetable agreed on.

In the interim, Rio, through its 51% held subsidiary Turquoise Hill, formerly Ivanhoe Mines, will continue the management and ramp-up of the openpit mines and export of Oyu Tolgoi concentrate.

Turquoise Hill holds a 66% shareholding in the Oyu Tolgoi project, with the balance belonging to a State-owned mining company.

Rio is likely to appoint a Mongolian to head the Oyu Tolgoi copper and gold mine, as the company aims to re-establish favourable ties with government amid disputes over costs and management at Mongolia's biggest project.

Bold Baatar, who was named president of Rio Tinto's international copper operations in April, after advising the company for three years, is considered as the person most likely to replace Cameron McRae as president and chief executive of Oyu Tolgoi.

Appointing Bold will address a key complaint of the Mongolian government that locals are not well represented in the management of the project.

Baatar is a well-known businessman in Mongolia, participating on the board of the Business Council of Mongolia and he is also the chairperson of the Mongolian National Mining Association and former chairperson of the Mongolian Stock Exchange.

Key Contracts and Suppliers
Fluor Corporation (project management), Amec (feasibility study for Lift 1 of the Hugo North underground block-cave operation), RSV Enco Consulting (shaft engineering), AC-Tek (dynamic simulation of underground conveyors) and Analytical Laboratory Consultants (laboratory service design on the project).

On Budget and on Time?
Yes.

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.