Oyu Tolgoi releases Q2 2022 performance results

• Continued globally competitive safety performance
• Maintained the highest water use efficiency per tonne of ore production compared to similar global operations
• Paid US$91 million in taxes, fees and other payments in the Q2 2022
• Total in-country spend reached US$14.2 billion
• Fired the first and second draw bell of the Underground mine
• Approved US$50 million funding to develop Khanbogd

Ulaanbaatar, Mongolia – Oyu Tolgoi released its latest performance scorecard, highlighting key performance metrics for the second quarter of 2022 and providing an update on the underground development.

The firing of the first draw bell of our underground mine successfully took place on 17 June 2022 and the second drawbell on 1 July 2022. This is ahistoric moment for our shareholders, our operation, and for the people of Mongolia to continue receiving its benefits for decades to come. The underground remains on track to reach Sustainable Production from Panel 0 in the first half of 2023.

Oyu Tolgoi CEO Deirdré Lingenfelder said, “The first draw bell blasting confirmed our commitment to seeing the Underground project succeed and reaching the first sustainable production in the first half of 2023. I was privileged to be part of such a special occasion and incredibly proud of the Oyu Tolgoi teams and all other stakeholders that have worked tirelessly to get to this point. Besides our operational milestones, we have been continuously growing together with our partners, putting environmental and social issues at the heart of our strategy. Last May, we handed over the “Khanbogd Soum Development Plan 2040” long-term strategic document. For this purpose, Oyu Tolgoi Board approved a $50 million five-year funding programme to support the long-term, sustainable development of Khanbogd soum. Everything is possible through strong partnership.”

Operational Update

• Prioritised safety above all else and achieved an All Injury Frequency Rate (AIFR) of 0.21 per 200,000 people/hours worked.
• Maintained excellent water-conservation practices, using 0.39 cubic meters of raw water per tonne of ore processed – three times less than similar operations worldwide. Achieved an average water-recycling rate of 87.16%, compared to a target of 80%.
• 96.7% of Oyu Tolgoi’s workforce are Mongolian citizens.
• Paid US$91 million in the form of taxes, fees and other payments to the Government of Mongolia. Since 2010, Oyu Tolgoi has paid US$3.74 billion in taxes, fees and other payments, including VAT to Mongolian suppliers.
• Partnered with 722 suppliers at the end of Q2 2022, including 490 national businesses, accounting for 75% of the total operations procurement spend.
• Q2 2022 Performance Scorecard can be viewed here.
• Year in Review – 2021 can be viewed here.

Production Update

Technical progress

• A cost and schedule reforecast was completed in June 2022 resulting in a total project cost estimate of $7.06 billion, which remains under review by the Oyu Tolgoi Board. This is an increase of $0.3 billion against the 2020 Definitive Estimate, which is largely related to COVID-19 disruptions. The 2022 reforecast assumes there are no further COVID-19 disruptions from June 2022.
• The first drawbell of the Hugo North underground mine was fired in June. The undercut progression remains on track to achieve first sustainable production from Panel 0 in the first half of 2023.
• Shafts 3 and 4 have been delayed due to COVID-19 restrictions and reprioritisation of the mobilised workforce, as previously reported. However progress has been made in the quarter and the shafts are now at depths of 174 metres and 276 metres, respectively. Both shafts are now expected to be commissioned in the first half of 2024, 15 months later than the 2020 Definitive Estimate (previously nine months delay).
• Study work for Panels 1 and 2 (which are required to support the ramp-up to 95,000 tonnes of ore per day) is expected to be completed in the first half of 2023 and will incorporate any ventilation impacts due to the shaft 3 and 4 delays.

[1] The submission of Oyu Tolgoi LLC’s updated Mongolian Feasibility Study remains under discussion with the Ministry of Mining, the Minerals Council and the Technical Working Group appointed by the Ministry of Mining.