Ulaanbaatar, Mongolia,
1 February 2021
•Continued its globally competitive safety performance
•Paid US$294 million in taxes, fees and other payments
•Achieved 2020 full-year production guidance
•Achieved its highest performance record for the underground lateral development
•Achieved its highest water use efficiency per tonne of ore production
• Spent US$360 million on national procurement

Oyu Tolgoi released its latest performance scorecard, highlighting key 2020 performance metrics, providing an update on the underground development, and its ongoing COVID-19 mitigation measures.

In 2020, Oyu Tolgoi continued to progress and deliver important milestones related to the underground mine development. This is in addition to its significant contribution to the Mongolian economy, while effectively managing challenges related to the COVID-19 pandemic. Oyu Tolgoi has contributed US$11.6 billion of in-country spend between 2010 and 2020, and paid US$294 million in taxes, fees and other payments in 2020.

Oyu Tolgoi chief executive officer, Armando Torres, said, “Oyu Tolgoi has delivered strong results in 2020, building on a solid safety, environmental, and operational performance. We have also advanced the underground mine development, and exceeded our copper and gold production guidance. All these results were achieved while managing the challenging market conditions and COVID-19 pandemic. Oyu Tolgoi is proud to deliver these achievements together with our employees, communities, contractors, suppliers and shareholders”.

The company is continuing to closely monitor the COVID-19 situation and is taking preventive measures across its operations to ensure the safety and wellbeing of our people and communities, and to continue to deliver on our business priorities. Our preventive protocols are in full compliance with the guidance and decrees issued by the Government of Mongolia, the State Emergency Commission, and the local authorities in Umnugovi province and Khanbogd soum.

Operational Update
•Open pit operations continued uninterrupted.
•Prioritised the safety and achieved an All Injury Frequency Rate (AIFR) of 0.15 per 200,000 people/hours worked.
•Maintained excellent water-conservation practices, achieving the highest water use efficiency rates per tonne of ore production, using 0.37 cubic meters of raw water per tonne of ore processed compared to our target of 0.55 cubic meters. Achieved an average water-recycling rate of 87.7 per cent, compared to a target of 80 per cent.
•95.4 per cent of Oyu Tolgoi’s workforce are Mongolian citizens.
•Paid US$294 million in the form of taxes, fees and other payments to the Government of Mongolia in 2020. Since 2010, Oyu Tolgoi has paid US$2.9 billion in taxes, fees and other payments, including VAT to Mongolian suppliers.
•Partnered with 770 suppliers in 2020, including 499 national businesses, accounting for 72 per cent of the total operations procurement spend.
•The updated 2020 Performance Scorecard can be viewed here.

Production Update

•Mined copper production from the open pit was two per cent higher than 2019, reflecting the scheduled move to higher grade areas of the open pit, and primarily due to accelerated mine development and production phasing. In the fourth quarter, pit phasing delivered higher gold production (+139 per cent) compared to the prior quarter. Access to higher copper and gold grades is expected to continue throughout 2021. Shipments across the Chinese border continued while maintaining COVID-19 preventative measures.

Oyu Tolgoi Production Data
All data represents full production and sales on a 100% basis
4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 Full-year 2019 Full-year 2020\
open pit material mined (‘000 tonnes) 28,122 26,834 23,218 23,979 23,663 101,316 97,694
Ore treated (‘000 tonnes) 11,088 10,889 9,645 10,072 9,594 40,777 40,200

Average mill head grades:
Copper (%) 0.42 0.42 0.47 0.45 0.50 0.45 0.46
Gold (g/t) 0.15 0.15 0.19 0.21 0.41 0.29 0.24
Silver (g/t) 1.06 1.14 1.22 1.22 1.16 1.13 1.18
Concentrates produced (‘000 tonnes) 152.6 164.5 169.9 168.5 190.2 674.6 693.1
Average concentrate grade (% Cu) 21.6 21.4 21.5 21.5 21.9 21.7 21.6

Production of metals in concentrates:
Copper in concentrates (‘000 tonnes) 32.9 35.2 36.5 36.3 41.6 146.3 149.6
Gold in concentrates (‘000 ounces) 24 26 31 37 88 242 182
Silver in concentrates (‘000 ounces) 190 214 212 219 231 867 876

Concentrate sold (‘000 tonnes) 157.5 125.9 194.3 167.9 181.5 724.7 669.6

Sales of metals in concentrates:
Copper (‘000 tonnes) 32.3 25.8 39.7 34.4 37.9 149.9 137.8
Gold (‘000 ounces) 25 20 31 34 66 274 150
Silver (‘000 ounces) 244 146 220 201 194 896 760
Metal recovery (%)
Copper 74.2 74.3 79.1 78.9 85.9 78.7 79.6
Gold 48.2 46.0 52.0 53.7 68.8 63.6 58.6
Silver 53.5 51.5 55.8 54.6 64.3 58.1 56.4


Underground Development Update
•Work on the project has continued to progress in tandem with COVID-19 safety controls and protocols, and ongoing international travel restrictions. In November 2020, the State Emergency Commission declared an “all-out readiness state” after Mongolia recorded its first community transmission of COVID-19. All movements in and out of Ulaanbaatar, and all domestic flights, were halted. Critical commissioning vendors and sinking crew were in-country, however, timing was impacted by the nationwide lockdown and quarantine duration.
•The project has deployed a number of mitigations that include extended on-site rosters, securing commitments from critical vendors to remain on site for extended periods, and layered screening of personnel.
•Overall, the underground lateral development has now reached 53,000 equivalent metres (eqm), with development for the first drawbell substantially complete.
•The project has now exceeded one million tonnes of material moved through Shaft 2 since commissioning. Scheduled annual maintenance of the shaft was successfully completed in October using remote technology.
•Shaft 4 is now out of care and maintenance and the focus is on completing all construction and commissioning activities for load testing and verification, and for sinking to commence in early 2021. Shaft 3 remains on care and maintenance, with some minor construction.
•On 16 December, Rio Tinto confirmed the definitive cost and schedule estimate for Panel 0 with first sustainable production expected to commence in October 2022, and development capital of US$6.75 billion, in line with previously announced ranges. These estimates now include the known impacts of COVID-19.
•At peak production, Oyu Tolgoi is expected to operate in the first quartile of the copper cash cost curve and, by 2030, is expected to be the fourth largest copper mine in the world. It is expected to produce 480,000 tonnes of copper per year on average, from 2028 to 2036, from the open pit and underground. The underground Ore Reserve has an average copper grade of 1.52 per cent, which is more than three times higher than the open pit Ore Reserve, and contains 0.31 grammes of gold per tonne.

Other Updates

•Rio Tinto reported it has been engaging with the Government and Turquoise Hill Resources (TRQ) in good faith on items raised in Resolution 92 passed by the Mongolian Parliament in December 2019, and remains open to improving the UDP to increase the benefits of Oyu Tolgoi for all shareholders.
•Additional milestones need to be met in order to ensure that the project can commence caving operations in 2021, including outstanding government approvals; funding; and a power solution.
•In accordance with Mongolian regulation, the Government of Mongolia is required to review and register the updated Resources and Reserves submitted in February 2020, and accept the updated feasibility study (OTFS20) completed in July 2020. The OTFS20, together with the updated definitive estimate, forms the basis for the uplift in the overall project budget that requires approval from all shareholder representatives on the Oyu Tolgoi Board prior to the depletion of the previous budget and the under-cut decision.
•Rio Tinto reported it remains committed to implementation of the funding plan in the Memorandum of Understanding (MOU) agreed with TRQ in September 2020. We are in discussions with our partners on how best to progress the funding plan.
•All parties continue to work together to achieve key power milestones including an extension of existing power supply arrangements by 1 March 2021, and the signing of a power purchase agreement (PPA) with the state-owned power company for domestic power supply by 31 March 2021. In October 2020, the Mongolian Ministry of Energy (MoE) established a Working Group to negotiate the PPA with Oyu Tolgoi, who will continue to work with the government and the MoE Working Group to agree on an outcome that will ensure secure, stable and reliable long-term power supply to the mine.
•On 22 December, Oyu Tolgoi received a Tax Assessment claim for MNT649 billion (approximately US$228 million) from the Mongolian Tax Authority (MTA), relating to an audit of taxes paid by Oyu Tolgoi between 2016 and 2018. Oyu Tolgoi paid US$797 million in taxes, royalties and fees in Mongolia during the same three-year period. The MTA has also sought to reduce Oyu Tolgoi’s carried-forward tax losses by approximately US$1.5 billion.
•The matters raised by this new tax assessment are predominantly a continuation of the matters raised by the previous tax assessment in 2018 covering the period 2013 to 2015, which were previously referred to international arbitration in 2020 by joint agreement with the Government of Mongolia. Oyu Tolgoi has therefore filed an application (with the agreement of Rio Tinto and TRQ) to include the matters from the latest tax assessment to the existing international arbitration. We remain of the opinion that Oyu Tolgoi has paid all taxes, and charges and royalties required under Mongolian Law and the stabilised tax environment created by the Investment Agreement, the Amended and Restated Shareholder Agreement, and the UDP.

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.

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