Oyu Tolgoi crosses US$8bn in-country spend
•July marks 5th anniversary of the First shipment of copper concentrate from Oyu Tolgoi
•Continued commitment to our strong safety performance this quarter
•Second annual re-forecast on schedule and costs undertaken for underground project
•Oyu Tolgoi announced international and domestic scholarships for 2018
•US$313 million spent on national procurement in the first three quarters of 2018
•Inaugural ‘Oyu Tolgoi Supplier Expo’ organized with participation from 124 suppliers

Ulaanbaatar, Mongolia – Oyu Tolgoi today announced an update on its performance for the quarter ended September 30, 2018.

As of the end of the third quarter of 2018, Oyu Tolgoi achieved an All Injury Frequency Rate (AIFR) of 0.19 per 200,000 hours worked and was injury-free for 83 out of 92 days for the three months ended September 30, 2018.

Oyu Tolgoi paid US$1.6 billion in taxes, fees and other payments to the Government of Mongolia between 2010 and the third quarter of 2018 including US$152 million in the first three quarters of 2018.

Oyu Tolgoi’s workforce reached 17,000 making it the largest private employer in Mongolia. At the end of the third quarter, 93 per cent of Oyu Tolgoi’s employees were Mongolian, 19.4 percent of which were from the Umnugovi province and 53.9 per cent were underground workforce.

Underground update

Second annual re-forecast shows the capital cost of the underground project remains on track, first draw bell is on schedule for mid-2020 and the project remains on schedule to complete by 2022. The re-forecast did indicate that there may be a delay in sustainable first production from the first quarter of 2021 to late in the third quarter 2021 due to difficult ground conditions and challenges in the construction of Shaft 2.

Oyu Tolgoi maintained its world-class environmental performance in this quarter, with only 0.35 cubic metres of water per tonne of ore processed – three times less, compared to similar operations worldwide - and achieving an average water recycling rate of 89 per cent over the period. For more information about water usage and resources click here.

Education and training are major focus areas for Oyu Tolgoi. Delivering our vision to create enduring value, knowledge and skills, Oyu Tolgoi provided 215,503 man hours of training to nearly 10,301 employees and contractors in the third quarter of 2018.

Oyu Tolgoi collaborated with 793 suppliers in the first three quarters of 2018, 562 of which are national businesses that account for 79 per cent of total operations procurement spent. Between 2010 and the third quarter of 2018, Oyu Tolgoi spent US$2.6 billion on national procurement of which US$379 million was spent on procurement from Umnugovi suppliers.

The Oyu Tolgoi Performance Scorecard for Q3 2018 is available here.

Q3’18 Production report

Third quarter mill throughput decreased 5.0 per cent over Q2’18 due to increased processing of harder Phase 4 ore as well as a planned maintenance shutdown during the quarter. Copper production was flat over Q2’18 as higher grades and recoveries were partially offset by lower throughput. Gold production increased 54.0 per cent over Q2’18 due to higher grades and recoveries. Third quarter sales volumes were impacted by torrential rain in July and August, which consequentially affected Chinese road and rail availability. Additionally, Q3’18 sales volumes were generally lower than Q2’18, which benefited from the sales of deferred volumes related to the Q1’18 force majeure.

Turquoise Hill has updated Oyu Tolgoi’s expected copper production for 2018 from between 125,000 and 155,000 tonnes of copper to between 140,000 to 155,000 tonnes of copper in concentrates. The company continues to expect production of gold in concentrates from between 240,000 and 280,000 ounces for 2018.

Oyu Tolgoi Production Data
All data represents full production and sales on a 100% basis

3Q 2017 4Q 2017 1Q 2018 2Q 2018 3Q 2018 9 months 2018 9 months 2017 Full year 2017

Open pit material mined (‘000 tonnes) 27,466 28,929 23,131 22,792 22,523 68,446 76,992 105,921
Ore treated (‘000 tonnes) 10,615 10,838 9,561 10,164 9,652 29,377 30,399 41,177
Average mill head grades: Copper (%) 0.48 0.53 0.51 0.48 0.51 0.5 0.5 0.51
Gold (g/t) 0.18 0.2 0.25 0.26 0.38 0.29 0.16 0.17
Silver (g/t) 1.34 1.54 1.32 1.17 1.19 1.22 1.34 1.39
Concentrates produced (‘000 tonnes) 170 205.4 177.3 178.8 179.8 535.9 517 722.5
Average concentrate grade (% Cu) 21.7 22 21.9 22 21.9 21.9 21.7 21.8

Production of metals in concentrates:
Copper (‘000 tonnes) 36.9 45.3 38.8 39.4 39.4 117.6 112.1 157.4
Gold (‘000 ounces) 31 35 42 50 77 169 80 114
Silver (‘000 ounces) 239 285 221 225 230 676 689 974
Concentrate sold (‘000 tonnes) 176.6 175.5 163.1 220 171.9 555 548.8 724.3

Sales of metals in concentrates:
Copper (‘000 tonnes) 36.9 35.7 34.3 46.1 36 116.4 113.6 149.3
Gold (‘000 ounces) 29 27 31 51 55 137 84 111
Silver (‘000 ounces) 229 205 206 250 201 657 656 860

Metal recovery (%)
Copper 73.5 78 79.5 79.7 80.9 80.1 74.3 75.4
Gold 51.2 50.5 55 59.8 64.7 61.2 49.4 49.7
Silver 52.8 53 54.6 58.4 62.8 58.4 51.8 52.9

Supplier Expo

Oyu Tolgoi organized its first Supplier Expo at Buyant Ukhaa Sports Palace on October 3-4, 2018. Oyu Tolgoi Supplier Expo becomes the biggest event of its kind in Mongolia with the participation of 124 suppliers, out of around 1200 companies supplying for Oyu Tolgoi. During the expo, the introduction of ‘Made in Mongolia’ strategy, aimed at replacing imported goods with locally manufactured products, unveiling of Oyu procurement database, available to all companies wishing to partner with Oyu Tolgoi, and the opening ceremony of the Capacity Building Center, designed to support suppliers’ capacity took place. Also, Oyu Tolgoi signed contracts with four of Mongolia’s leading commercial banks, securing low-cost of financing to its suppliers. Total of 150 employees helped organize the expo and successfully wrapped up the event.

About Oyu Tolgoi LLC (www.ot.mn)

Oyu Tolgoi LLC, Mongolia's largest copper and gold mining company, is a strategic partnership between the Government of Mongolia, Turquoise Hill Resources and Rio Tinto. Located in the South Gobi, Oyu Tolgoi commenced shipment of product to customers in July 2013. Oyu Tolgoi is managed by Rio Tinto, which is investing global expertise and cutting-edge technology to help develop Mongolia’s mining industry and ensure Oyu Tolgoi is one of the world’s most advanced mines. For Oyu Tolgoi, nothing matters more than safety. The business operates under the principle that if a job cannot be done safely, it will not be done at all.

Redaction
Also Entrée Resources has a part in this Company.

Company Website http://www.entreeresourcesltd.com