Oyu Tolgoi releases Q3 2022 performance results

• The safety and well-being of employees, contractors and local communities remain our utmost priority.
• Maintained the highest water use efficiency per tonne of ore production compared to similar global operations
• Paid US$237 million in taxes, fees and other payments
• Total in-country spend reached US$14.5 billion

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

Oyu Tolgoi CEO Deirdré Lingenfelder said, “The business achieved solid performance over the third quarter of the year, keeping the production and financial targets on track despite cost pressure and driving momentum in the underground project. The safety and well-being of our people remain our first and foremost priority on this journey – and we continue to work hard to build a lasting safe, caring, and inclusive workplace culture where everyone feels respected each and every day. Also, we have made real progress with our community, establishing the Oyu Tolgoi Catalyst Fund for Khanbogd Development to devote our efforts to turning Khanbogd into a self-sustainable town through its contributions to critical infrastructures, such as power, water, roads, healthcare, environment and education. This success is a real demonstration of the skill and capability of our workforce, 97% of who are Mongolian.”

Partnership

Following the Oyu Tolgoi Board approval of a US$50 million five-year funding programme to support the long-term, sustainable development of Khanbogd soum, the Oyu Tolgoi Catalyst Fund for Khanbogd Development (OTCF) was established in September. The OTCF is a registered and independent non-profit legal entity. Its purpose is to support and facilitate the development of Khanbogd Soum centre to evolve into a sustainable town with a safe and family-oriented atmosphere and improve the well-being and quality of life of the local community.

Operational Excellence

• Prioritised safety above all else and achieved an All Injury Frequency Rate (AIFR) of 0.19 per 200,000 people/hours worked.
• Oyu Tolgoi is recognised as one of the most efficient copper operations with regards to water use, averaging 0.4m3 per tonne of ore processed. The mining and processing operation is designed to have zero discharge and recycles as much water as possible, maintaining greater than 85% recycling rates. We will be consulting with local, national and other stakeholders as we develop a strategy designed to improve our operational water use, as well as working with the local and national stakeholders to deal with water issues through partnership and in a sustainable way.
• 97% of Oyu Tolgoi’s workforce are Mongolian citizens.
• Made progress on our Everyday Respect journey and 80% of our leaders are now trained in the fundamentals. Our facilities reviews have been completed and the priorities defined.
• The Business Conduct Office is piloting a Discrete unit in Mongolia with a team of specialists who deliver safe, confidential, and caring support to those impacted by harmful and disrespectful behaviours. Its reporting channel My Voice is now available in Mongolian, which can be used by anyone who has concerns or information relating to misconduct or improper circumstances, or behaviours connected to Oyu Tolgoi.
• Paid US$237 million or MN₮716.8 billion in the form of taxes, fees and other payments to the Government of Mongolia. Since 2010, Oyu Tolgoi has paid US$3.81 billion or MN₮8.6 trillion in taxes, fees and other payments, including VAT to Mongolian suppliers.
• Partnered with 788 suppliers, including 525 national businesses, accounting for 75% of the total operations procurement spend.
• Q3 2022 Performance Scorecard can be viewed here.

Production update

Mined copper production from the open pit was 13% lower than the third quarter of 2021 due to lower copper grades and recoveries as a result of planned mine sequencing. Mined copper was 19% higher than the prior quarter with higher milled ore and slightly higher copper grades. Gold grades were significantly lower than the third quarter of the prior year (0.22% vs 0.63%), due to mine planning sequence.

Oyu Tolgoi Production Data

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

Technical progress

• Current on-site workforce levels are in line with the 2022 reforecast[1]. There have been seven drawbells fired at the end of the quarter. The undercut and draw bell progression remains on track to achieve first sustainable production from Panel 0 in the first half of 2023.
• In September, shafts 3 and 4 sinking reached 288 metres and 410 metres below ground level respectively, with both sinking rates and depths roughly in line with the 2022 reforecast. Construction of the final major stage of materials handling infrastructure commenced in the second quarter of 2022, including civil and underground works for the conveyor to surface.
• Study work for Panels 1 and 2 (which are required to support the ramp-up to 95,000 tonnes of ore per day) remains on track to be completed in the first half of 2023 and will incorporate any ventilation impacts due to the shaft 3 and 4 delays.

Other Update

• On 5 September, our shareholders (Rio Tinto and Turquoise Hill Resources) entered into a binding agreement to acquire all of the remaining shares of Turquoise Hill Resources that Rio Tinto does not currently own, subject to shareholder approval. The transaction delivers significant value to Turquoise Hill minority shareholders with the certainty of an all-cash offer of C$43 per share (with a total cash consideration of $3.3 billion), and provides greater certainty of funding for the long-term success of the Oyu Tolgoi project.