Overview

Oyu Tolgoi Project website

Oyu Tolgoi is one of the world's largest new copper-gold mines and is located in the South Gobi region of Mongolia, approximately 550 km south of the capital, Ulaanbaatar, and 80 km north of the Mongolia-China border.

The comprehensive Oyu Tolgoi Investment Agreement took effect March 31, 2010, following confirmation by the Government of Mongolia that procedural and administrative conditions contained in the Investment Agreement had been satisfied within the allocated six-month period that has followed the agreement's official signing in October 2009. The comprehensive Investment Agreement now has taken full legal effect.

On October 6, 2009, Turquoise Hill Resources and Rio Tinto signed a long-term, comprehensive Investment Agreement with the Government of Mongolia for the construction and operation of the Oyu Tolgoi copper-gold mining complex. The agreement creates a partnership between the Mongolian Government -- which acquired a 34% interest in the project -- and Turquoise Hill Resources, which retained a controlling 66% interest in Oyu Tolgoi. Global miner Rio Tinto, which joined Turquoise Hill Resources as a strategic partner in October 2006, is managing the development of Oyu Tolgoi.


By the end of Q1'13, construction of the Oyu Tolgoi open-pit mine and concentrator complex was complete and mine infrastructure was substantially complete.

Major highlights for 2013 and Q1'14 include the following:

• Oyu Tolgoi achieved a strong safety performance for 2013 with no fatalities and an All Injury Frequency Rate of 0.43 per 200,000 hours worked.

• In 2013, Oyu Tolgoi produced approximately 290,000 tonnes of concentrate. The mine produced 76,700 tonnes of copper in concentrates for 2013 and met production guidance.

• Throughput and recovery rates improved throughout 2013. During the first half of 2013, commissioning of the concentrator progressed and concentrate production ramped up. By Q3'13, the concentrator had consistently achieved throughput rates above 95% of capacity and by the end of 2013 was operating at just above design capacity.

• On July 9, 2013, Oyu Tolgoi commenced the shipping of concentrate. During Q3'13, Oyu Tolgoi's customers were engaged with Chinese customs officials to receive the necessary approvals to enable them to collect purchased concentrate. Sales commenced on October 19, 2013 when the first customer collected concentrate from the Chinese-border warehouse. Net revenue for 2013 was $51.6 million on 26,400 tonnes of concentrate.

• In Q2'13, open-pit production rates were reduced to preserve cash and better align open-pit production to the needs of the concentrator during the ramp up period. Open-pit mining resumed during Q3'13 and returned to more normal operating levels during Q4'13. During Q4'13, open-pit production increased approximately 81% over Q3'13.

• On September 1, 2013, Oyu Tolgoi achieved the Commencement of Production as defined in the October 2009 Investment Agreement between Turquoise Hill, Rio Tinto and the Government of Mongolia. This resulted in an increase in the Management Services Payment from 3% to 6% of capital costs and operating costs incurred by Oyu Tolgoi. The Company and Rio Tinto have agreed to evenly split the Management Services Payment from Oyu Tolgoi.

• On July 28, 2013, Turquoise Hill announced that funding and all work on the underground development of Oyu Tolgoi would be delayed and on August 13, 2013 development was suspended. All parties are committed to further construction and development of Oyu Tolgoi subject to resolution of shareholder issues.

• Prior to the development suspension in Q3'13, underground lateral development at Hugo North had advanced approximately 16 kilometres and the sinking of Shaft #2 and Shaft #5 had reached approximate depths below surface of 1,200 metres (91% of its final depth) and 200 metres (17% of its final depth), respectively. Development of the main ventilation station was completed during Q3'13.

• The feasibility study for the expansion of operations at the Oyu Tolgoi mine is ongoing and expected to be complete in the first half of 2014. Following completion, the study must be approved by the mine's shareholders as well as the Mongolian Minerals Council.

• Sales contracts have now been signed for 74% and 84% of Oyu Tolgoi's expected 2014 and 2015 concentrate production respectively, while 40% of concentrate production is contracted for eight years (subject to renewals). Discussions are ongoing with potential customers to place the remaining tonnage under long-term agreements at international terms.

• At the beginning of January 2014, annual negotiations were conducted with all Oyu Tolgoi customers and 2014 annual treatment and refining charges were settled at the Far East Benchmark of $92 per tonne of copper concentrate and 9.2 cents per pound of payable copper.

• During Q4'13, negotiations with the Oyu Tolgoi Trade Union were finalized resulting in the signing of a new collective agreement. The new two-year agreement is a departure from Mongolian labor agreements which typically are for 12 months. All parties see the new agreement as a positive step in positioning Oyu Tolgoi for long-term operations.

Final cost for the initial development and construction of Oyu Tolgoi was approximately $6.2 billion.


(Current as of March 26, 2014)

Cautionary Note to U.S. Investors

The United States Securities and Exchange Commission permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We use certain terms on this website such as "measured," "indicated," and "inferred" "resources," which the SEC guidelines generally prohibit U.S. registered companies from including in their filings with the SEC. U.S. investors are urged to consider closely the disclosure in our Form 40-F which may be secured from us, or from the SEC's website at www.sec.gov/edgar.shtml.

2012 Integrated Development and Operations Plan Technical Report

The 2012 IDOP Technical Report, was prepared for Turquoise Hill Resources in March 2012, based on the technical, production and cost information contained in the OT LLC study titled Integrated Development and Operations Plan (IDOP). IDOP was completed by the Rio Tinto PLC appointed management of OT LLC in March 2011 as the basis for the proposed project financing.

IDOP used only Measured and Indicated Mineral Resources and is a complete study of all aspects of the Project. The IDOP Technical Report analyzes a reserve case only and is based on a pre-feasibility quality level study complying with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects, although some parts of the Oyu Tolgoi Project are further advanced and are at feasibility level. The IDOP Technical Report meets the standards of US SEC Industry Guide 7 requirements for reporting Mineral Reserves.

The analysis in the 2012 IDOP Technical Report has been called the IDOP Reserve Case in order to distinguish it from the cases in previous studies of Oyu Tolgoi. IDOP is an update of the previous comprehensive project study Integrated Development Plan 2010.


2012 IDOP Technical Report

2010 Integrated Development Plan

On May 11, 2010 Turquoise Hill Resources released a new, independent Integrated Development Plan (IDP-10) produced by some of the world's foremost engineering, mining and environmental consultants, led by Australia-based AMEC Minproc and including U.S.-based Stantec Engineering.

The new plan is a comprehensive update of the original 2005 Integrated Development Plan and supports Turquoise Hill Resources' commitment to advance Oyu Tolgoi into full construction, with production of copper and gold expected to begin in 2013.

The complete Plan, a technical report compliant with Canada's 43-101 reporting standards, is available on the SEDAR.

IDP-10 Technical Report

IDP-10 News Release

IDP-10 Powerpoint Presentation

IDP-10 Webcast from May 11, 2010

2005 Oyu Tolgoi Integrated Development Plan

History

A minor amount of copper was recovered at Southern Oyu area during the Bronze Age, as indicated by small circular pits and minor copper smelting slag.

During the 1980s the district was investigated by joint Mongolian-Russian regional geochemical surveys which reported the Central Oyu area as a molybdenum anomaly. In 1996, Mr. Garamjav (now a senior geologist at Turquoise Hill Resources), who first visited the Oyu Tolgoi region in 1983 and noted evidence of alteration and copper staining, guided Magma Copper to the Oyu Tolgoi area. Following the visit exploration tenements were secured by Magma Copper.

BHP Billiton (BHP, which acquired Magma Copper in late 1996) began exploration at Oyu Tolgoi as part of a regional reconnaissance program of the South Gobi desert during the 1997 field season. After geological mapping, stream and soil sediment surveys, magnetic and induced polarization surveys, BHP completed six diamond core holes totalling 1,100 metres in September and October of 1997. With encouraging results a second phase of drilling began. Commencing in April 1998, BHP completed an additional 13 core holes totalling 2,000 metres with positive results obtained in four of the holes. A third phase of drilling was then conducted in August and September, 1998, completing four holes totalling 800 metres. These holes failed to return significant mineralization and the project was suspended pending a review.

In 1999, additional drilling and exploration was recommended; however, further exploration at Oyu Tolgoi by BHP was discontinued due to cut-backs in BHP's exploration budgets. At this time BHP's exploration tenements in Mongolia, including the Oyu Tolgoi exploration concession, were offered for joint venture.

Ivanhoe Mines signed an option agreement with BHP to earn 100% interest in the Oyu Tolgoi Concession in May 2000. A reverse circulation (RC) drill program was initiated by Ivanhoe in June, 2000, completing 109 holes totalling 8,828 metres by September. The program targeted the supergene-enriched, chalcocite blanket discovered in BHP's drill hole OT-3. The results from Ivanhoe's drilling were encouraging, including the discovery of additional high-grade supergene copper mineralization.

In 2001, Ivanhoe Mines continued RC drilling, mostly in the Southern Oyu area to delineate possible oxide resources followed by three diamond drill holes in Southern Oyu, Southwest Oyu and Central Oyu, respectively. These three holes were targeted to test the deep hypogene copper-gold potential. These three holes were sufficiently encouraging for Ivanhoe to mount a major follow-up drill program that continues to the present time. Ivanhoe's drill hole Hole OTD-150, Ivanhoe's first deep diamond hole to test the hypogene potential of the Southwest Oyu zone, was drilled in July 2001 to a depth of 590 metres and averaged in excess of one gram of gold per tonne and 0.81% copper over a distance of 508 metres, from 70 metres to 578 metres. It included a zone of 278 metres from 188 to 466 metres, grading in excess of 1.0% copper and approximately 1.50 grams of gold.

OTD-150 was the first deep drill hole at the Oyu Tolgoi Project to discover the new zone of porphyry mineralization containing high-grade gold, copper and molybdenum. Given the economic potential of the hole OTD-150 discovery, Ivanhoe immediately expanded its exploration program by adding more drill rigs to further delineate the Oyu Tolgoi mineralized system. In March 2002, Ivanhoe issued its first, independent Oyu Tolgoi resource audit for the Southwest Oyu Discovery Zone, which estimated the deposit contained inferred resources, based on a cut-off grade above a 0.30% copper equivalent, of 588 million tonnes, grading 0.53 grams per tonne of gold and 0.41% copper, containing 10 million ounces of gold and 5.3 billion pounds of copper. It was the first of many independent resource estimates to be prepared for the Oyu Tolgoi Project as drilling continued 24 hours a day, seven days a week to expand the resources.

In early 2002, Ivanhoe earned 100% ownership of the Turquoise Hill project by paying BHP Billiton US$5 million and spending US$6 million on exploration. BHP Billiton's back-in rights expired in mid-2002, giving Ivanhoe complete control over the project, except for a 2% net smelter royalty held by BHP Billiton. Ivanhoe Mines subsequently purchased the 2% royalty from BHP Billiton in November 2003 for US$37 million.

In late 2002, Ivanhoe Mines drilled a hole in the far northern portion of the Oyu Tolgoi licence (the Far North Zone) to test a broad induced polarization high. This test hole intersected 638 metres of bornite, chalcopyrite-rich copper mineralization lying 222 metres down hole under younger sedimentary rocks. This drill hole resulted in the discovery of the Far North Zone's (now named Hugo Dummett) underground deposit, one of the world's largest and highest-grade gold/copper porphyry systems.

In 2003, Ivanhoe's drilling in the Far North (Hugo Dummett) discovery area was accelerated to delineate the extent of the Hugo Deposit. By mid-2003, there were 18 exploration drill rigs on the property employing approximately 200 people, and Oyu Tolgoi was the biggest mining exploration project in the world. Several of the new drill holes at Far North area contained intercepts of greater than 200 metres in thickness that average well in excess of 3% copper. In September, 2003, the company fulfilled its earlier undertaking to rename the Far North portion of the project to give special recognition to the work of Hugo Dummett, Ivanhoe's former Executive Vice-President, Project Development.

In 2004, Ivanhoe Mines entered into an earn-in and equity participation agreement with Entrée Gold to explore and potentially develop approximately 40,000 hectares of Entrée's 100%-owned, Shivee Tolgoi (Lookout Hill) property, adjacent to Ivanhoe's Oyu Tolgoi copper-gold discovery in Mongolia. By spending US$35 million on exploration and/or development of the property, Ivanhoe now holds a participating interest of 80% in all minerals extracted below a sub-surface depth of 560 metres on the joint venture property and a 70% interest in all minerals extracted from surface to a depth of 560 metres.

In 2006, world mining leader Rio Tinto agreed to form a strategic partnership with Ivanhoe Mines by investing in Ivanhoe and, through an Ivanhoe-Rio Tinto Technical Committee, will jointly engineer, construct and operate Ivanhoe's Oyu Tolgoi copper-gold mining complex in Mongolia's South Gobi region. The agreement creates a defined path for Rio Tinto to become the largest shareholder in Ivanhoe Mines.

In 2009, Ivanhoe's deep exploration drilling on the Ivanhoe-Entree Joint Venture licence to the south of the Southern Oyu Deposit intersected high-grade, copper-molybdenum and gold mineralization that led to the discovery of the Heruga Deposit. Subsequent deep drilling along strike has resulted in the discovery of the Heruga North Deposit that lies between the Heruga and Southern Oyu deposits.

In May 2010, Ivanhoe Mines released a new, independent Integrated Development Plan (IDP-10) produced by some of the world's foremost engineering, mining and environmental consultants, led by Australia-based AMEC Minproc and including U.S.-based Stantec Engineering. The new plan is a comprehensive update of the original 2005 Integrated Development Plan and supports Ivanhoe Mines' commitment to advance Oyu Tolgoi into full construction, with production of copper and gold expected to begin in 2013. Oyu Tolgoi's average annual production estimated at 1.2 billion pounds of copper, 650,000 ounces of gold and 3.0 million ounces of silver for the first 10 years of production.

In early 2011, Ivanhoe and BHP Billiton Ltd. discovered a new zone of shallow copper-molybdenum-gold mineralization approximately 10 kilometres north of the Ivanhoe Mines Oyu Tolgoi copper-gold mining complex currently under construction in southern Mongolia. The discovery, known as Ulaan Khud North, extends the known strike length of the Oyu Tolgoi mineralized system by an additional three kilometres to the north, to more than 23 kilometres.

Geology

The South Gobi area lies near the boundary of the South Mongolian and the South Gobi tectonic units. Primarily Paleozoic volcanic, sedimentary and intrusive rocks and Mesozoic sedimentary cover underlie the region. During the Paleozoic, southern Mongolia grew through the accretion of Island Arc- and Andean-type subduction, related magmatic arcs and continental blocks. Late in the Paleozoic, Basin and Range style rifting accompanied bimodal volcanism. By early Mesozoic, continental uplift was in progress, unroofing the tectonic belts with deposition of terrigenous sediments into thrust-controlled, foreland basins. At the end of the Late Cretaceous, the region was increasingly arid, similar to the present day Central Asian basins.

The Oyu Tolgoi project area occurs in an early to mid Palaeozoic island arc. The island arc exhibits characteristics typical for calc-alkaline, 'island arc-type' Cu-Au porphyry deposits. The terrane is composed of lower to mid Paleozoic metasediments and island arc basalts that rest upon a lower Palaeozoic ophiolite complex.

Oyu Tolgoi Property Geology

The Oyu Tolgoi property comprises a rectangular block 10 x 9 kms in area, in which exploration prospects are named South Oyu, Southwest Oyu, Central Oyu and Hugo Dummett (North and South). In general, outcrops are sparse and comprise less than 20% of the area. A Neogene(?) piedmont outwash deposit forms a flat terrace dipping gently to the south, and occupies a NNW trending zone in the center of the exploration block. This deposit comprises red clay and gravel and is up to 40m thick. Two major SSE drainages incise this terrace and are filled by Quaternary sands and gravels.

A tentative hardrock stratigraphy is based mainly on drilling data, and is described below from youngest to oldest:

1. Dacite flow units
2. Basaltic tuff and flow units
3. Upper Sedimentary sequence
4. Lower Sedimentary sequence
5. Dacitic pyroclastic units
6. Augite Basalt flow and related breccias
7. Andesitic volcaniclastic units

A wide variety of felsic to mafic dykes are found throughout the exploration block and in drill holes. Post mineral dykes comprise basalt, rhyolite, hornblende-biotite andesite, and biotite granodiorite intrusive units. The property also contains variably altered and mineralized porphyritic quartz monzodiorite dykes that may be genetically related to the Cu-Au porphyry systems.

Major structures trend N35E and N70E based on satellite imagery and geophysical interpretations. In addition, recent work in the sedimentary covered northern part of the property (Hugo Dummett region) has confirmed the occurrence of folded stratigraphy. Ongoing studies are attempting to unravel the attitude and extent of the folding event.

Mineralization and Alteration

Mineralization and alteration at Oyu Tolgoi is characterized by multiple copper gold porphyry centres which occur (dependent on erosion of high sulphidation systems) above and partially telescoped onto the underlying Cu-Au porphyry systems.

The high-grade core of the Southwest Oyu deposit is a cylindrical shaped Cu-Au porphyry, 250 m in diameter, that extends vertically for over 800m. Mineralization is centered on small 10-30 m wide quartz monzodiorite (QMD) dykes and extends for over 100 m into the adjacent host basaltic volcanics. Contorted milky white quartz veins are developed in both the mineralized QMD and basaltic volcanics. The quartz veins appear to have formed largely as an early, relatively high temperature event. Chalcopyrite with subordinate pyrite and bornite occur as disseminated and late fracture fillings within the quartz veins and host rocks. Gold to copper ratios increase from 2:1 to 3:1 at depth. Alteration within the QMD is predominantly quartz sericite with minor tourmaline and fluorite. The basaltic volcanics feature biotite-magnetite with late chlorite-sericite.

Lower grade, propyllitic altered basalt with 1:1 gold to copper ratios extends for 600 m x 2000 m around the high-grade core. The QMD dyke bounding Southwest Oyu to the southeast is sericite altered at upper elevations and weakly mineralized with disseminated pyrite and chalcopyrite. This style of mineralization is distinct from the porphyry style mineralization of Southwest Oyu and may represent the root zone to high sulphidation (HS) alteration systems, eroded away at South and Southwest Oyu, but still existent at the Central Oyu and Hugo Dummett deposits.

High sulphidation systems (HS) partly telescoped onto underlying porphyry systems occur at Central and Hugo, the latter hosted by dacitic ashflow tuffs which overly basaltic volcanics. At Central Oyu covellite-pyrite is related to an upwardly flared zone of intense quartz-sericite alteration, and centred on porphyry-style quartz-veined Qmd dykes. In Central Oyu, a supergene-enriched chalcocite blanket, tens of metres in thickness has developed overlying the covellite, pyrite-rich HS mineralization. Sooty chalcocite coating pyrite and filling fractures underlies a 20 m to 60 m thick, hematite, goethite-rich leached cap.

High grade copper mineralization at Hugo Dummett occurs predominantly as bornite, chalcocite and chalcopyrite. Pyrite, enargite, tetrahedrite-tennantite occur in subordinate amounts mainly in the Hugo Dummett South deposit. Sulphide associations correlate to the nature of alteration, which in turn is partly dependent on the host rock, but also exhibit a lateral zonation from the core of the high grade shell ellipse. A typical sulphide zonation from the high grade copper core to low grade copper mineralization is, bornite + chalcocite, followed outward to chalcopyrite (+/- tetrahedrite-tennantite) and then finally pyrite (+/- enargite). Enargite, bornite + pyrite, and locally covellite are common sulphide minerals in the ash flow tuff. A large part of the Hugo Dummett South deposit is hosted by ash flow tuff; while in contrast, the high grade mineralization at Hugo Dummett North is almost entirely within basalt. Bornite+chalcocite-chalcopyrite with minor, enargite, tetrahedrite-tennantite occur in the basalt and Qmd intrusions. Molybdenite occurs locally in all rock types. Gold (ppm): copper (%) ratio's over much of the deposit are 1:10, but in strongly quartz-veined Qmd intrusions and adjacent wall rocks encountered in Hugo Dummett North, gold: copper ratio's increase to 1:1. These high gold ratio's correlate with bornite.

Quality Assurance and Quality Control


The QA/QC program used at the Oyu Tolgoi Project was developed by an independent quality control consultant and adopted in April 2002. Oyu Tolgoi LLC's sampling procedure comprises collection of core samples taken on continuous two-metre intervals down each drill hole, excluding dykes that extend more than 10 metres along the core length. Samples of one-half of NQ and HQ core, or one-quarter of PQ core, are taken for assaying. The core is marked with a continuous linear cutting line before being split to prevent a sampling bias. Splitting is done with a rock saw flushed continually with fresh water. Samples are placed in cloth bags and sent to an on-site preparation facility operated by SGS Mongolia LLC. In-house, matrix-matched copper-gold-molybdenum standards and blanks are inserted at the sample preparation lab at the project site for quality-control monitoring of the assay data. All samples are assayed for gold, copper, molybdenum, arsenic and silver.

Upon receipt of assay results, values for Standard Reference Material samples and field blanks are tabulated and compared to those from an established round-robin program. Assay results that deviate from round-robin program results beyond pre-set tolerance limits are rejected and subject to re-assay. Oyu Tolgoi also performs check assays on a regular basis at the rate of one per batch of 20 samples.

Detailed analyses of the mineral reserves and resources for the Oyu Tolgoi Deposits have been prepared in conformance with the requirements set out in National Instrument 43-101 under the direction of various qualified persons as defined by NI 43-101. Please refer to estimate for details on the parameters used to calculate the estimate and the qualified persons responsible for preparing the estimate.