Oyu Tolgoi releases Q1 2023 performance results

• Safely commenced the production of the underground mine, which contains the majority of the Oyu Tolgoi’s values
• Maintained one of the highest water use efficiency per tonne of ore produced compared to similar global operations
• Paid MNT312 billion in taxes, fees and other payments in Q1 2023

Oyu Tolgoi released its latest performance scorecard, highlighting key performance metrics for the first quarter of 2023 and providing an update on the underground mine production.

Following the safe blasting of 21 drawbells in its block cave mine, Oyu Tolgoi announced the commencement of underground production. The management team is committed to safely ramping up the underground mine to achieve a tripling in production to 500,000 tonnes of copper per year. This will be achieved through the construction of approximately hundreds of drawbells in operation by 2028-2036. The Oyu Tolgoi mine is a result of a successful partnership and collaborative efforts between the Government of Mongolia and Rio Tinto.

Oyu Tolgoi CEO Deirdré Lingenfelder said, “In the first quarter of 2023, we delivered on our plan commitments, and also reached a historic milestone. In March, we celebrated the commencement of underground production with our shareholders, the Government of Mongolia, our local community leaders, our Oyu Tolgoi employees, contractors and consultants past and present, many other stakeholders, and the wider public. We are standing on the shoulders of the giants who came before us. We have much effort ahead of us, and our focus is to ensure we continue to ramp up the business safely, sustainably and profitably. We will continue to build the technical and leadership capacity to support the business and deliver on our promises. This includes our commitments to people, communities and the environment. We can only do this by continuing to work in partnership.

Operational Excellence

• Prioritised safety above all else and achieved an All Injury Frequency Rate (AIFR) of 0.14 per 200,000 people/hours worked.
• Oyu Tolgoi is one of the most water-efficient copper mines in the world, using less than 0.55 cubic meters per tonne of concentrate (0.4 cubic meters for Q1 2023) compared to the 1.2 cubic meters per tonne average. Skarn Associates, an independent research institute, conducted a benchmarking exercise of 157 similar operations in 2022, confirming that Oyu Tolgoi is in the top 25% of water-efficient copper mining operations. The flow meters that measure Oyu Tolgoi’s water drawn from Gunni Khooloi are verified by Khanbogd’s environmental inspector and a state inspector on a monthly basis. In addition, Oyu Tolgoi’s overall water use is verified independently on behalf of International Financial Corporation every year and is audited independently every five years. The latest five-year audit was completed by Erdene Drilling in 2021, which confirmed Oyu Tolgoi’s water use data was accurate.
• 97% of Oyu Tolgoi’s workforce are Mongolian citizens. We also are proud to have more than 23% of our workforce (Oyu Tolgoi LLC) be women.
• Paid US$89 million or MNT312 billion in taxes, fees and other payments to the Government of Mongolia. Since 2010, Oyu Tolgoi has paid US$3.98 billion or MNT9.2 trillion in taxes, fees and other payments, including VAT, to Mongolian suppliers.
• Partnered with 609 suppliers, including 412 national businesses, accounting for 72% of the total operational procurement spend.
• Q1 2023 Performance Scorecard can be viewed here.
• Year in Review – 2022 can be viewed here.

Production update

• Mined copper production increased by 41% from the first quarter of 2022 due to concentrator maintenance in the prior period and higher copper head grades (0.49% vs. 0.40%). First sustainable underground production was achieved during the period with 0.7 million tonnes of ore milled from the underground mine at an average copper head grade of 1.36%, and 9.6 million tonnes from the open pit with an average grade of 0.43%.
• We achieved the first sustainable production from Panel 0 during the quarter. A total of 36 drawbells have been fired, including 17 drawbells during the quarter.
• Shaft sinking rates improved during the quarter, and at the end of March, shafts 3 and 4 reached 503 metres and 623 metres below ground level, respectively. Final depths required for shafts 3 and 4 are 1,148 and 1,149 metres below ground level, respectively. Both shafts are expected to be commissioned in the first half of 2024, 15 months later than the 2020 Definitive Estimate.
• Construction of conveyor to surface works continued to plan and is now over 40% complete. We also awarded major contracts for upgrade works planned for the concentrator, with contractors mobilising to the site.
• Study work for Panels 1 and 2 remains on track to be completed in the first half of 2023. It will incorporate any ventilation impacts due to the shaft 3 and 4 delays as a result of COVID-19 restrictions and reprioritisation of the mobilised workforce over the course of 2022, as previously reported.
• During the quarter, Rio Tinto, Oyu Tolgoi and the Government of Mongolia continued to work together towards the implementation of Mongolian Parliamentary Resolution 103, with the majority of matters now resolved. The international arbitration remains suspended while the parties attempt to reach an agreement on the tax matters.

Oyu Tolgoi Production Data

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

Underground Development Update

• We achieved the first sustainable production from Panel 0 during the quarter. A total of 36 drawbells have been fired, including 17 drawbells during the quarter.
• Shaft sinking rates improved during the quarter, and at the end of March, shafts 3 and 4 reached 503 metres and 623 metres below ground level, respectively. Final depths required for shafts 3 and 4 are 1,148 and 1,149 metres below ground level, respectively. Both shafts are expected to be commissioned in the first half of 2024, 15 months later than the 2020 Definitive Estimate.
• Construction of conveyor to surface works continued to plan and is now over 40% complete. We also awarded major contracts for upgrade works planned for the concentrator, with contractors mobilising to the site.
• Study work for Panels 1 and 2 remains on track
  to be completed in the first half of 2023. It will incorporate any ventilation
  impacts due to the shaft 3 and 4 delays as a result of COVID-19 restrictions
  and reprioritisation of the mobilised workforce over the course of 2022, as
  previously reported.

Other Update

• ·During the quarter, Rio Tinto, Oyu Tolgoi and the Government of Mongolia
  continued to work together towards the implementation of Mongolian
  Parliamentary Resolution 103, with the
  majority of matters now resolved. The international arbitration remains
  suspended while the parties attempt to reach an agreement on the tax matters.