Oyu Tolgoi project partners have approved underground mining operations

Rio Tinto, Turquoise Hill Resources and the Government of Mongolia have reached an agreement that will move the Oyu Tolgoi project forward, resetting the relationship between the partners and increasing the value the project delivers for Mongolia.

FREMONT, CA:Rio Tinto, Turquoise Hill Resources (TRQ), and the Mongolian government have achieved a deal that would advance the Oyu Tolgoi (OT) project, resetting the partners' relationship and improving the project's value to Mongolia. As a result, the OT Board, which includes officials from Rio Tinto, TRQ, and the Mongolian government-owned Erdenes Oyu Tolgoi (EOT), unanimously approved the start of underground operations. This stage is likely to open up the mine's most important component in the next few days, with the first sustainable production projected in the first half of 2023.

TRQ shall waive the USD2.4 billion EOT carry account loan in full as part of a complete package. This includes the number of common share investments in OT LLC supported by TRQ on behalf of EOT to build the project to date, plus accrued interest.

The Mongolian Parliament has approved Resolution 103, which resolves the lingering concerns that have been the subject of negotiations with the Mongolian government for the past two years to address Parliament Resolution 92. For Resolution 92 to be considered formally enacted, the Mongolian Parliament has mandated that specific actions be accomplished. Conditions for the following measures have been handled so far: the carrying account loan is likely to be waived; increased cooperation with EOT to be implemented, and efforts to monitor OT subterranean development finance mechanisms and improve ESG matters will be implemented; approval of the Electricity Supply Agreement; and the creation of a financial arrangement at OT that does not require additional loan financing prior to Panel 0's long-term output. Rio Tinto is working with the Mongolian government and TRQ to complete the remaining steps of Conclusion 92, including the formal termination of the Oyu Tolgoi Mine Development and Financing Plan (UDP) and the resolution of the OT LLC tax arbitration.

TRQ's estimated financial requirement for the OT Underground Project has been amended, and an updated finance plan has been agreed upon. OT will be funded by cash on hand and rescheduling existing debt repayments, deal with TRQ until viable underground production is reached. This is in keeping with the debt financing constraints imposed by Resolution 103, which was passed on December 30, 2021.

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