Name and Location
Oyu Tolgoi underground mine project, Mongolia.

Client
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 the manager of the Oyu Tolgoi 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 at Oyu Tolgoi, with an additional $500-million of capital costs for initial development of the underground mine.

The underground mine is expected to produce more than 500 000 t/y of copper, compared with current 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-one resource provides additional expansion options, which could sustain production for many decades.

Net Present Value/Internal Rate of Return
The project has an expected internal rate of return of more than 20%.

Value
The project will entail a $5.3-billion investment.

The initial project finance tranche of $4.4-billion was secured in December 2015 and is expected to be drawn during the second quarter of 2016.

The Oyu Tolgoi underground development will be funded by project finance debt and cash flows from the openpit operations, as well as cash held by Turquoise Hill Resources.

Duration
The development of the underground mine will start in mid-2016.
First production from the underground mine is expected in 2021, with the mine expected to be fully ramped up  in 2027.

Latest Developments
Global engineering group Jacobs Engineering has been awarded the engineering, procurement and construction management (EPCM) contract for the Oyu Tolgoi project, paving the way for construction to get under way.

Jacobs will be responsible for the materials handling systems of the underground mine, as well as associated surface and underground infrastructure.

The underground project is expected be delivered over a five- to seven-year period.

Jacobs has established a Mongolian business unit and will work with a local workforce and partners to deliver the contract.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Too early to state.

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.