Media
Press release

Oyu Tolgoi announces Q1’17 performance update

Ulaanbaatar, Mongolia,

Oyu Tolgoi today announced an update on its performance for the quarter ended March 31, 2017.

HIGHLIGHTS

In the first quarter of 2017, Oyu Tolgoi was injury-free for 79 out of 90 days. Oyu Tolgoi achieved an All Injury Frequency Rate (AIFR) of 0.42 per 200,000 hours worked for the three months ended March 31, 2017.

Revenue of $237.5 million in Q1’17 was 5.7 per cent higher than Q4’16 reflecting a higher average selling price for copper and higher volumes of copper in concentrates sold.

Underground lateral development, sinking of Shafts 2 and 5, support infrastructure and the convey-to-surface system all progressed during Q1’17.

Oyu Tolgoi spent $136.4 million on underground expansion during Q1’17 and awarded several large contracts during the quarter with the largest for the decline material handling system.

Oyu Tolgoi’s concentrator performed very well during Q1’17 with record throughput for the quarter. Ore treated during Q1’17 increased 2.7 per cent over Q4’16 and average daily throughput of 112,100 tonnes for Q1’17 increased 5.1 per cent over Q4’16.

Oyu Tolgoi continues world-class environment performance, with only 0.4 cubic metres of water per tonne of ore processed – a third of the water use compared to similar operations worldwide, and achieving an average water recycling rate of 88.7 per cent over the period.

Armando Torres, CEO of Oyu Tolgoi, said, “Oyu Tolgoi achieved real progress over the first quarter of the year. We continue to focus on safety as our foremost priority, even as we achieve record breaking performance in key operations areas, and drive momentum in the underground project. This success is a real demonstration of the skill and capability of our workforce, 93 per cent of who are Mongolian.

“We have also continued to make real progress with our community, celebrating the second anniversary of the Cooperation Agreement with two major milestones - the inauguration and handover of the Oyu Tolgoi-funded Khanbogd Bulk Water Facility, and breaking ground for an Inter-Soum Animal Health Care Centre, both first-of-the kind facilities for the region.”

In Q1’17, Oyu Tolgoi spent $75 million in national procurement, with increasing local content. The company hosted the annual Gobi Gem awards in Umnugobi recognizing the achievements by national suppliers and continued to engage the business community through monthly open sessions.

Turquoise Hill expects Oyu Tolgoi to produce 130,000 to 160,000 tonnes of copper and 100,000 to 140,000 ounces of gold in concentrates for 2017.

Oyu Tolgoi Key Financial Metrics*

($ in millions, unless otherwise noted)

1Q

2016

2Q

2016

3Q

2016

4Q

2016

1Q

2017

Full Year 2016

Revenue

422.7

329.7

226.3

224.6

237.5

1,203.3

Concentrates sold (‘000 tonnes)

213.1

227.4

206.2

181.9

190.2

828.6

Revenue by metals in concentrates

Copper

202.0

207.9

174.2

178.5

196.6

762.6

Gold

216.2

115.1

45.8

42.8

37.5

419.9

Silver

4.5

6.7

6.3

3.3

3.4

20.8

Cost of sales

207.9

237.1

232.5

184.3

194.4

861.8

Production and delivery costs

125.9

141.2

134.3

112.5

120.7

513.9

Depreciation and depletion

82.0

95.9

88.5

79.5

78.3

345.9

Capital expenditure on cash basis

55.9

53.3

74.4

142.7

147.9

326.3

Underground

22.6

36.5

46.7

121.0

136.4

226.8

Open pit

33.3

16.8

27.7

21.7

11.5

99.5

Royalties

22.7

18.5

13.9

13.0

14.3

68.1

Operating cash costs

196.6

215.5

187.8

175.4

168.4

775.3

Unit costs ($ per pound of copper)

All-in sustaining

0.66

1.55

2.00

1.90

2.15

1.48

*- Oyu Tolgoi Key Financial Metrics are as disclosed by Turquoise Hill. Any financial information in this press release should be reviewed in conjunction with the Turquoise Hill‘s consolidated financial statements or condensed interim consolidated financial statements for the reporting periods indicated.

- For the full text of the Turquoise Hill announcement, please visit: http://www.turquoisehill.com/s/news_releases.asp?R...

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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