The development of the underground mine at Oyu Tolgoi in Mongolia has taken a significant step forward with the signing of the Oyu Tolgoi Underground Mine Development and Financing Plan by the Government of Mongolia, Turquoise Hill Resources and Rio Tinto. The Plan addresses the key outstanding shareholder issues and sets out an agreed basis for the funding of the project.

With a new pathway to development of the underground mine agreed, the focus now shifts to finalizing the project finance, the feasibility study and securing all necessary permits so that the underground mine development can proceed.

Prime Minister of Mongolia Chimediin Saikhanbileg said, “Mongolia is back to business. Oyu Tolgoi is a world-class copper-gold asset and its further development is of great economic significance for Mongolia. We have finalized a way forward with our partners which re-establishes the foundations of a new and constructive relationship based on mutual trust and our joint long-term commitment to Mongolia’s growth.

“Unlocking Oyu Tolgoi’s underground mine will have a significant impact on the Mongolian economy, which will benefit Mongolian citizens for generations to come. Our joint agreement clearly positions Mongolia as an attractive country for investment and underscores the fact that Mongolia is open for business.”

Turquoise Hill’s chief executive officer Jeff Tygesen said, “The signing of this agreement is the culmination of extensive work by Oyu Tolgoi’s shareholders over the last year. The agreement outlines a pathway to restarting development of the underground mine, and builds on the value that has already been unlocked for Mongolia from the operation of the open-pit mine which is providing jobs and other economic contributions as well as best practices in mining standards.”

Rio Tinto Copper and Coal chief executive Jean-Sébastien Jacques said, “Our joint announcement reflects tremendous leadership by all parties and paves the way for work to resume on the underground development, which is expected to deliver significant value to shareholders. The resolution of the outstanding issues reinforces the principles of the Investment Agreement signed in 2009, which underpinned the $6 billion invested in Oyu Tolgoi to date, and provides a clear and stable framework for the future.”

The construction of the first phase of the pioneering Oyu Tolgoi project - the open-pit mine -was completed on schedule in less than 24 months. The operation celebrated one million tonnes of copper concentrate shipped in March 2015, less than two years after the first production left the mine. Oyu Tolgoi has a workforce that is 95% Mongolian and Oyu Tolgoi LLC has paid $1.3 billion in taxes, fees and other payments to date.

Turquoise Hill says the next steps include approval of the underground feasibility study and project financing as well as obtaining all necessary permits. The Mine Plan confirms the project cost for Oyu Tolgoi’s initial construction and development and reinforces the principles set out in the Investment Agreement and the Amended and Restated Shareholders Agreement (ARSHA).

Jeff Tygesen says, “The Mine Plan outlines a pathway to restarting underground development at Oyu Tolgoi, where approximately 80% of the mine’s value resides. The agreement will supplement the benefits of open-pit operations, which is providing jobs in Mongolia, additional economic contributions and best practices in mining.”

The company says discussions are continuing with the Government in relation to the 2014 Feasibility Study and engagement with international financial institutions, export credit agencies and commercial banks to secure approximately $4 billion in project financing. When all steps and approvals on the path forward have been reached, the underground workforce will be remobilized.

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