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.


Oyu Tolgoi has been producing and exporting copper and gold concentrate since 2013.

Major highlights for the past year include:

Full year 2016

• Oyu Tolgoi achieved an industry-leading safety performance with an All Injury Frequency Rate of 0.22 per 200,000 hours worked for the year ended December 31, 2016.

• On May 5, 2016, Oyu Tolgoi received the formal notice to proceed for underground development by the boards of Turquoise Hill, Rio Tinto and Oyu Tolgoi LLC.

• On October 21, 2016, Turquoise Hill filed the updated Oyu Tolgoi Technical Report.

• At the end of 2016, 1.6 equivalent kilometres of underground lateral development had been completed for the year.

• In 2016, progress was made on the sinking of Shafts 2 and 5 with final depth for both shafts expected to be reached in 2017.

• During 2016, the bulk excavation component of the convey-to-surface system was completed, followed by the commencement of the decline tunnel work in January 2017.

• Oyu Tolgoi recorded revenue of $1.2 billion in 2016 on record concentrate sales of 828,600 tonnes.

• For 2016, the Company recorded net income from continuing operations attributable to owners of Turquoise Hill of $210.6 million.

• Turquoise Hill generated operating cash flow before interest and taxes of $399.2 million in 2016.

• For 2016, Oyu Tolgoi's cost of sales was $2.07 per pound of copper sold, C1 cash costs were $1.02 per pound of copper produced and all-in sustaining costs were $1.48 per pound of copper produced.

• Operating cash costs1 of $775.3 million in 2016 was below the Company's guidance.

• Turquoise Hill's cash and cash equivalents at December 31, 2016 were approximately $1.4 billion.

• In June 2016, Oyu Tolgoi drew down approximately $4.3 billion of the project finance facility and used all net proceeds to pay down shareholder loans payable by Oyu Tolgoi to Turquoise Hill.

• Oyu Tolgoi operated at record levels for material mined and ore treated; concentrator throughput exceeded nameplate capacity by year end.

• Copper production of 201,300 tonnes and gold production of 300,000 ounces exceeded the Company's guidance.

• Compared to 2015 results, material mined for 2016 increased 5.6%, concentrator throughput increased 10.5%, copper production was similar and, as expected, gold production decreased 54.1%.

Fourth quarter 2016

• Revenue of $224.6 million in Q4'16 was slightly lower than Q3'16 reflecting lower concentrate sales.

• For Q4'16, Turquoise Hill reported net income from continuing operations attributable to owners of $93.3 million.

• Turquoise Hill generated operating cash flow before interest and taxes of $18.2 million in Q4'16.

• In Q4'16, concentrator throughput increased 7.4% over Q3'16 resulting in an average daily rate of 106,700 tonnes for the quarter, which was a quarterly high to date.

• Copper production in Q4'16 was broadly consistent with Q3'16; Q4'16 copper grades were as expected with mining focused mainly on Phases 4 and 6 of the open pit.

• Gold production in Q4'16 increased 32.4% over Q3'16 due to the final processing of Phase 2 ore.

Outlook for 2017

• Oyu Tolgoi is expected to produce 130,000 to 160,000 tonnes of copper and 100,000 to 140,000 ounces of gold in concentrates for 2017.

• Sales contracts have been agreed for a significant majority of Oyu Tolgoi's expected 2017 concentrate production.




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.