Oyu Tolgoi announces Q1’18 performance

• Strong safety performance
• Named winner of the Rio Tinto Chief Executive Safety Award for 2017
• US$51 million taxes paid over the quarter
• US$99 million in national procurement spend

Ulaanbaatar, Mongolia – Oyu Tolgoi today announced an update on its performance for the quarter ended March 31, 2018.

In the first quarter of 2018, Oyu Tolgoi achieved an All Injury Frequency Rate (AIFR) of 0.21 per 200,000 hours worked for the three months ended March 31, 2018, and was injury-free for 84 out of 90 days.

Oyu Tolgoi was also named winner of the Rio Tinto Chief Executive Safety Award for 2017, the most prestigious safety award in Rio Tinto underscoring consistent strong performance in safety. Speaking on the award, Armando Torres, CEO – Oyu Tolgoi said: “To me this is not just about the business – it is about all of us and our ‘One Oyu Tolgoi’ culture that puts safety first in everything we do. This success would not be possible without each member of the Oyu Tolgoi family embracing safety. When we are working together – ХАМТДАА – we are looking out for each other’s safety; working to ensure that each member of our workforce arrives home safely at the end of every shift.”

Oyu Tolgoi paid over US$1.5 billion* in taxes, fees and other payments to the Government of Mongolia between 2010 and the first quarter of 2018 including US$51 million in the first quarter of 2018.

During the first quarter of 2018, 94 per cent of Oyu Tolgoi’s workforce was Mongolian, 20.6 per cent were from the Umnugovi province and 48.4 per cent were underground workforce.

Education and training are major focus areas for Oyu Tolgoi. Delivering our vision to create enduring value, knowledge and skills, Oyu Tolgoi provided 249,540 man hours of training to nearly 9,200 employees and contractors in the first quarter of 2018.

Oyu Tolgoi have also continued to make real progress with our community, celebrating the third anniversary of the Cooperation Agreement with two major milestones – the inauguration and handover of the Inter-Soum Animal Health Care Centre, the largest centre in Mongolia, to Khanbogd soum and the eight Mongolian-made ECOBUSes to the Dalanzadgad soum, supported by the Gobi Oyu Development Support Fund. In the first quarter of 2018, Oyu Tolgoi continued to invest in sustainable, long-term projects spending US$2.5 million.

Oyu Tolgoi collaborated with 512 suppliers in the first quarter of 2018, of which 382 are national businesses that account for 79 per cent of total operations procurement spent. Between 2010 and the first quarter of 2018, Oyu Tolgoi spent US$2.3 billion on national procurement of which US$317 million was spent on procurement from Umnugovi suppliers. In March, the company hosted the annual Gobi Gem awards in Ulaanbaatar recognizing the achievements by national suppliers and continued to engage the business community through monthly open sessions.

Oyu Tolgoi also maintained its world-class environmental 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 86.61 per cent over the period.

The Oyu Tolgoi Performance Scorecard for Q1 2018 is available here.

Q1’18 Production report

A planned maintenance shutdown occurred in January reducing mill throughput for the quarter; however the impact was partially offset by increases in recovery, particularly for gold. With the initial processing of ore from Phase 4A, Oyu Tolgoi is starting to see increased gold grades, recovery and production compared to last year.

Material mined decreased 20.0 per cent over Q4’17 due to winter weather effects in January as well as dig-unit maintenance work during the quarter. Mill throughput decreased 11.8 per cent over Q4’17 due to the January planned maintenance shutdown. Copper production in Q1’18 decreased 14.3 per cent over Q4’17 mainly due to lower throughput and slightly lower grades. Gold production increased 20.0 per cent over Q4’17 due to higher gold grades from Phase 4A and an 8.9 per cent increase in recovery.

Turquoise Hill expects Oyu Tolgoi to produce 125,000 to 155,000 tonnes of copper and 240,000 to 280,000 ounces of gold in concentrates for 2018.

Underground development

Underground lateral development continued to progress during Q1’18 with and both Shafts 2 and 5 reaching their final depth. While Shaft 2 reached its final depth of 1284 meters on 10 January 2018, not long after on 28 March 2018, Shaft 5 sinking was successfully finished showing a great start the year for underground team.

Oyu Tolgoi Production Data

All data represents full production and sales on a 100% basis

Click here to see the full Turquoise Hill announcement.

*- US$1.8 billion after adjusting for the inclusion of VAT paid to Mongolian suppliers and excluding employee withholding taxes and service payments to Mongolian government agencies.