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.

Net Present Value/Internal Rate of Return
Not stated.

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

The Phase 2 capital estimate is $5.4-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.

Latest Developments
Rio Tinto has signed the mine development and financing plan for the underground mine at the Oyu Tolgoi copper operation.

The plan addresses key outstanding shareholder issues and sets out an agreed basis for the funding of the project, Rio has said in a statement.

The development of the project has been stalled, as the project partners, which include the Mongolian government, have been working to resolve issues, including a tax dispute.

With a new pathway to development of the underground mine agreed, the focus has shifted to finalising the project finance, the feasibility study and securing all necessary permits so that development can proceed.

“The resolution of the outstanding issues reinforces the principles of the investment agreement signed in 2009, which underpinned the $6-billion invested in Oyu Tolgoi to date, and provides a clear and stable framework for the future,” said Rio Tinto copper and coal CEO Jean-Sébastien Jacques.

The construction of the first phase of the Oyu Tolgoi project, which consisted of the openpit mine, was completed on schedule in less than 24 months.

The operation celebrated one-million tonnes of copper concentrate shipped in March this year, less than two years after the first production left the mine.

The Mongolian government has a 34% stake in the project, with Rio Tinto subsidiary Turquoise Hill holding the remaining 66% interest. Rio has a 51% stake in Turquoise Hill.

Mongolian Prime Minister Chimediin Saikhanbileg has said that the further development of Oyu Tolgoi will be of great economic significance to the country.

“We have finalised a way forward with our partners which re-establishes the foundations of a new and constructive relationship based on mutual trust and our joint long-term commitment to Mongolia’s growth.

“Unlocking Oyu Tolgoi’s underground mine will have a significant impact on the Mongolian economy, which will benefit the citizens for generations to come.  Our joint agreement clearly positions Mongolia as an attractive country for investment and underscores the fact that Mongolia is open for business.”

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 allow for 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.

Key Contracts and Suppliers
None stated.

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.