Turquoise Hill Resources Ltd. (“Turquoise Hill” or the “Company”) today announced its financial results for the period ended June 30, 2021. All figures are in U.S. dollars unless otherwise stated.
“The Oyu Tolgoi team turned in another strong performance with production of 36,735 tonnes of copper and 113,054 ounces of gold, generating revenue of $317.8 million, a 14% increase over the same quarter last year
despite the impact of significant COVID related challenges experienced during the quarter which included a series of lockdowns and constraints on staffing levels.” stated Steve Thibeault, Interim Chief Executive Officer
of Turquoise Hill Resources. “Looking to the second half of 2021, we are maintaining our production guidance of 150,000 – 180,000 tonnes of copper, and 400,000 – 480,000 ounces of gold as we continue to access the
higher copper and gold grades from Phase 4B through the remainder of the year.
We continue to advance the underground development project with all project-related technical criteria ontrack to initiate the undercut. While the COVID situation in the country is improving as more people are vaccinated, Oyu Tolgoi will, along with the Government of Mongolia and the local communities, continue to work to protect the health and safety of its employees, contractors and neighbours. I am pleased to report that over 98% of our workers are fully vaccinated, and recent easing of quarantine constraints have supported
gradual improvements in site personnel levels.”

FINANCIAL AND OPERATIONAL HIGHLIGHTS
- Oyu Tolgoi open pit and underground workforce posted an AIFR of 0.14 per 200,000 hours worked for the
six months ended June 30, 2021.
- In Q2’21, Oyu Tolgoi produced 36,735 tonnes of copper and 113,054 ounces of gold.
- Q2’21 mill throughput of 9.4 million tonnes was 2% lower than Q2’20 and 4% lower than Q1’21 due to
lower personnel numbers and planned maintenance activities.
- Turquoise Hill’s current estimate of its base case incremental funding requirement is now $2.4 billion
(March 31, 2021: $2.3 billion). The increase is primarily related to resequencing of ore phases of the Oyu
Tolgoi open pit mine and the additional 2021 underground development cost impacts of the known COVID19 issues up to June 30, 2021, which are estimated to be approximately $100 million, partially offset byimproved commodity price forecasts.
As at June 30, 2021, Turquoise Hill has $0.7 billion of available liquidity, which under current projections is expected to meet the Company’s requirements, including funding of underground capital expenditure, into Q3’22.
- Revenue of $317.8 million in Q2’21 increased 14.3% from $278.0 million in Q2’20, reflecting an increase of $74.9 million in revenue from gold partly offset by a decrease of $34.3 million in revenue from copper.
Gold revenue benefitted from a 6.3% increase in the average price of gold and a 135.5% increase in volumes of gold in concentrates sold. Copper revenue was impacted by a 50.6% decrease in volumes of copper in concentrates sold, partly offset by an 82.5% increase in the average price of copper.
- Income for the period was $118.8 million in Q2’21 compared with $72.3 million in Q2’20, primarily reflecting the impact of a $139.2 million increase in gross margin driven by both increased revenue and a decrease in cost of sales. This was partly offset by the impact of a lower deferred tax asset recognised in Q2’21 versus Q2’20 and higher operating cash costs1 driven mainly by higher royalty costs due to the increased revenue as well as additional COVID-19 related costs. Income attributable to owners of Turquoise Hill in
Q2’21 was $96.9 million, or $0.48 per share, compared to $72.6 million, or $0.36 per share in Q2’20.
- Cost of sales was $1.91 per pound of copper sold and C1 cash costs1 were $0.83 per pound of copper produced. All-in sustaining costs1 were $1.48 per pound of copper produced.
- Total operating cash costs1 of $210.5 million in Q2’21 increased 16.4% from $180.8 million in Q2’20, due principally to higher royalty costs driven by higher sales revenue as well as additional COVID-19 related costs, partially offset by lower power study costs.
- Underground capital spend in Q2’21 was $211.4 million, including $49.9 million of underground sustaining capital. Total underground capital spend since January 1, 2016 is now approximately $4.9 billion, including
$0.2 billion of underground sustaining capital.
- Cash generated from operating activities was $209.3 million in Q2’21, compared to $81.8 million cash used in operating activities in Q2’20. The difference was due to the impact of a $261.0 million improvement
in cash from operating activities before interest and tax, which was primarily due to a $139.2 million higher gross margin as well as more favourable movements in deferred revenue in Q2’21 compared to Q2’20 driven by the timing of ramp-up in concentrate shipments during Q2’21 following the declaration of force majeure as well as related contingency measures to improve Oyu Tolgoi’s short-term liquidity.
- Q2’21 concentrate shipments to customers were impacted by COVID-19 related Mongolian-Chinese border restrictions, which resulted in force majeure being declared effective 30 March 2021. Shipments to Chinese customers recommenced on April 15, 2021, and Oyu Tolgoi continues to work closely with
Mongolian and Chinese authorities to manage supply chain disruptions. The force majeure will remain in place until sustained volumes of convoys are crossing the border to ensure Oyu Tolgoi’s ability to meet its on-going commitments to customers and to return on-site concentrate inventory to target levels.
- All technical undercut readiness activities have been met or are on track to being met. Non-technical criteria are still pending and are critical elements for consideration to proceed with the decision to commence the undercut which has been delayed from the Company’s expected timing.

1 Please refer to Section – NON-GAAP MEASURES – on page 19 of this press release for further information.

- Given the cumulative and on-going impacts of COVID-19, delayed commitments resulting from nonapproval of the Definitive Estimate (DE) budget by the OT Board and outstanding non-technical issues related to the undercut decision, the Company expects that there will be further impacts on overall project
cost and schedule.

OPERATIONAL OUTLOOK FOR 2021
Oyu Tolgoi’s operational outlook for 2021 remains unchanged and is expected to produce 150,000 to 180,000 tonnes of copper and 400,000 to 480,000 ounces of gold. The increase in gold production in 2021 compared with 2020 is the result of transitioning lower into the higher grade areas of Phase 4B.
Operating cash costs2 for 2021 are expected to be $800 million to $850 million.
Capital expenditure for 2021 on a cash-basis is still expected to be $105 million to $125 million for the openpit and at the low end of the $0.9 billion to $1.0 billion range previously disclosed for the underground, including
underground sustaining capital expenditure.
Open-pit capital is mainly comprised of deferred stripping, equipment purchases, tailings storage facility construction and maintenance componentization. Underground capital is inclusive of VAT.
2021 C1 cash costs2 are expected to be in the range of negative $0.20 to positive $0.20 per pound of copper produced. Unit cost guidance assumes the midpoint of the expected 2021 copper and gold production ranges
and a gold price of $1,804 per ounce.

OUR BUSINESS
Turquoise Hill is an international mining company focused on the operation and continued development of the Oyu Tolgoi copper-gold mine in Mongolia, which is the Company’s principal and only material mineral resource property. The Company’s ownership of the Oyu Tolgoi mine is held through a 66% interest in Oyu Tolgoi LLC;
the remaining 34% interest is held by Erdenes Oyu Tolgoi LLC (Erdenes), a Mongolian state-owned entity.
The Oyu Tolgoi property is located approximately 550 kilometres south of Ulaanbaatar, Mongolia’s capital city, and 80 kilometres north of the Mongolia-China border. The property is cut by the Oyu Tolgoi trend, a 12
kilometres north-south orientated corridor which is host to the known deposits, Hugo North, Hugo South, Oyut and Heruga. Open pit mining operations commenced at Oyut in 2013. The Hugo North deposit (Lift 1) is currently being developed as an underground operation.
The copper concentrator plant, with related facilities and necessary infrastructure, was originally designed to process approximately 100,000 tonnes of ore per day from the Oyut open pit. However, since 2014, the concentrator has consistently achieved a throughput of over 105,000 tonnes per day due to improvements in operating practices. Concentrator throughput for 2021 is targeted at over 110,000 tonnes per day and expected to be approximately 40 million tonnes for the year due to improvements in concentrator performance and more favourable ore characteristics.
At the end of Q2’21, Oyu Tolgoi had a total workforce (employees and contractors), including for underground project construction, of approximately 13,500 workers, of which over 96% were Mongolians.

2 Please refer to Section – NON-GAAP MEASURES – on page 19 of this press release for further information.

SELECTED FINANCIAL METRICS (1)
(1) Any financial information in this press release should be reviewed in conjunction with the Company‘s consolidated financial statements or condensed
interim consolidated financial statements for the reporting periods indicated. (2) Please refer to Section – NON-GAAP MEASURES – on page 19 of this press release for further information.

Q2’21 vs. Q2’20
• Revenue of $317.8 million in Q2’21 increased 14.3% from $278.0 million in Q2’20, reflecting an increase of $74.9 million in revenue from gold, partially offset by a $34.3 million decrease in revenue from copper.
Gold revenue benefitted from a 6.3% increase in the average price of gold and a 135.5% increase in Three months ended Six months ended 2Q 2Q Change 2Q 2Q Change
2021 2020 % 2021 2020 %
Revenue 317.8 278.0 14.3% 844.3 408.6 106.6%
Income (loss) for the period 118.8 72.3 -- 451.0 91.3 --
Income (loss) attributable to owners of Turquoise Hill 96.9 72.6 -- 333.6 117.8 --
Basic and diluted income (loss) per share attributable to owners of Turquoise Hill 0.48 0.36 -- 1.66 0.59 --
Revenue by metals in concentrates
Copper 187.4 221.7 (15.5%) 521.1 318.5 63.6%
Gold 127.5 52.6 142.4% 315.7 84.2 274.9%
Silver 2.9 3.7 (21.6%) 7.5 5.9 27.1%
Cost of sales 82.6 182.0 (54.6%) 238.2 327.9 (27.4%)
Production and delivery costs 61.4 137.1 (55.2%) 164.8 241.8 (31.8%)
Depreciation and depletion 21.2 51.1 (58.5%) 73.4 86.1 (14.8%)
Capital expenditure on cash basis 230.3 261.9 (12.1%) 480.6 563.0 (14.6%)
Underground-Development 161.5 239.0 (32.4%) 342.6 530.5 (35.4%)
Underground-Sustaining 49.9 11.0 353.6% 110.8 11.0 907.3%
Open pit 18.9 11.9 58.8% 27.2 21.5 26.5%
Proceeds from pre-production revenue (12.0) (7.6) 57.9% (12.0) (7.6) 57.9%
Royalties 22.5 14.2 58.5% 45.2 24.5 84.5%
Operating cash costs (2) 210.5 180.8 16.4% 411.7 368.9 11.6%
Unit costs ($)
Cost of sales (per pound of copper sold) 1.91 2.08 (8.2%) 1.84 2.27 (18.9%)
C1 (per pound of copper produced) (2) 0.83 1.61 (48.4%) 0.42 1.84 (77.2%)
All-in sustaining (per pound of copper produced) (2) 1.48 2.18 (32.1%) 0.93 2.29 (59.4%)
Mining costs (per tonne of material mined) (2) 2.71 1.69 60.1% 2.27 1.71 32.6%
Milling costs (per tonne of ore treated) (2) 7.09 6.77 4.8% 6.66 6.14 8.5%
G&A costs (per tonne of ore treated) 4.98 3.25 53.1% 4.21 3.09 36.3%
Cash generated from (used in) operating activities 209.3 (81.8) 355.9% 76.1 (106.3) 171.6%
Cash generated from operating activities before interest and tax 295.7 34.7 752.2% 543.9 36.2 1,402.5%
Interest paid 84.5 118.7 (28.8%) 111.0 145.5 (23.7%)
Total assets 13,873 12,895 7.6% 13,873 12,895 7.6%
Total non-current financial liabilities 4,407 4,374

volumes of gold in concentrates sold, which resulted from the scheduled move to the higher grade gold areas of Phase 4B. Volumes of copper in concentrates sold decreased 50.6%, primarily as a result of the force majeure, partly offset by an increase of 82.5% in the average price of copper.
• Income for the period was $118.8 million in Q2’21 compared with $72.3 million in Q2’20, primarily reflecting the impact of a $139.2 million increase in gross margin, which was driven by the increased revenue as well as a decrease in cost of sales, partly offset by the impact of a lower deferred tax asset recognised in Q2’21 versus Q2’20 and higher operating cash costs3 driven mainly by higher royalty costs due to the increased revenue as well as additional COVID-19 related costs. Income attributable to owners of Turquoise Hill in Q2’21 was $96.9 million, or $0.48 per share, compared to $72.6 million, or $0.36 per
share in Q2’20.
• Cost of sales of $82.6 million in Q2’21 decreased 54.6% from $182.0 million in Q2’20, due to a 52.3%
decrease in the volumes of concentrates resulting from the impact of the force majeure during Q2’21.
• Capital expenditure on a cash basis was $230.3 million in Q2’21 compared to $261.9 million in Q2’20, comprised of $211.4 million (Q2’20 – $250.0 million) in underground capital spend, including $49.9 million
in underground sustaining capital (Q2’20 – $11.0 million), and $18.9 million (Q2’20 – $11.9 million) in open-pit sustaining capital expenditure.
• Total operating cash costs3 of $210.5 million in Q2’21 increased 16.4% from $180.8 million in Q2’20, principally due to higher royalty costs driven by higher sales revenue as well as additional COVID-19 related costs associated with the increased safety measures and controls implemented, partially offset by
lower power study costs.
• Unit cost of sales of $1.91 per pound of copper sold in Q2’21 decreased 8.2% from $2.08 per pound of copper sold in Q2’20 reflecting a 54.6% decrease in cost of sales partially offset by a 52.3% reduction in volumes of copper in concentrates sold.
• Oyu Tolgoi’s C1 cash costs3 of $0.83 per pound of copper produced in Q2’21 decreased from $1.61 per pound of copper produced in Q2’20, primarily reflecting the impact of a $74.9 million increase in gold revenue.
• All-in sustaining costs3 of $1.48 per pound of copper produced in Q2’21 decreased 32.1% from $2.18 per pound of copper produced in Q2’20. Similar to the decrease in C1 cash costs3, the decrease primarily reflects the impact of the higher gold revenues but, unlike C1 cash costs3, was partly offset by the impact of increased royalty costs due to the increased revenue.
• Mining costs3 of $2.71 per tonne of material mined in Q2’21 increased 60.1% from $1.69 per tonne of material mined in Q2’20. The increase was mainly due to lower material mined, driven by increased cycle times caused by mining deeper into the open pit, as well as higher spend on maintenance and a higher
market price for fuel.
• Milling costs3 of $7.09 per tonne of ore treated in Q2’21 increased 4.8% from $6.77 per tonne of ore treated in Q2’20, mainly due to lower milled ore and higher power consumption costs partly offset by lowermaintenance and consumables costs. The lower milled ore and higher power consumption costs were due to overall higher feed hardness as a result of increased Phase 4B ore replacing the softer ore from Phase 6B and stockpiles

3 Please refer to Section – NON-GAAP MEASURES – on page 19 of this press release for further information.

• G&A costs of $4.98 per tonne of ore treated in Q2’21 increased 53.1% from $3.25 per tonne of ore treated in Q2’20, mainly due to lower milled ore and higher G&A costs in Q2’21.
• Cash generated from operating activities was $209.3 million in Q2’21 compared to $81.8 million cash used in operating activities in Q2’20, the improvement due mainly to the impact of a $261.0 million improvement in cash from operating activities before interest and tax, which was primarily due to a $139.2 million
improvement in gross margin as well as favourable movements in deferred revenue. The $137.1 million increase in deferred revenue in Q2’21 vs. Q2’20 was particularly significant and was impacted by the timing of ramp-up in concentrate shipments during the quarter following the declaration of force majeure as well as related contingency measures to improve Oyu Tolgoi’s short-term liquidity.

OYU TOLGOI
Safety Performance and COVID-19 Update
Oyu Tolgoi open pit and underground workforce posted an AIFR of 0.14 per 200,000 hours worked for the six months ended June 30, 2021.
During Q2’21, COVID-19 cases increased significantly in Mongolia, causing a series of lockdowns in the country and South Gobi region, which limited the ability of Oyu Tolgoi to maintain normal roster changes for its workers. To mitigate the risk of roster changes transmitting COVID-19 to the region, Oyu Tolgoi introduced isolation and testing protocols in cooperation with government authorities. In addition, Oyu Tolgoi continues to implement multiple COVID-19 controls at site, including maintaining social distancing, wearing masks at all times, regular hand washing, and monitoring of personnel temperatures in all high traffic areas. In Ulaanbaatar, all office-based employees continue to work from home. Vaccinations have progressed extremely well with over 98% of our workforce now fully vaccinated. Health and safety remain a high priority and appropriate measures will be maintained to protect employees, contractors and the community.
During Q2’21, limitations on people movement impacted personnel numbers on site, which at times were below 25% of planned requirements. This adversely impacted both open pit operations and the underground project.
The additional 2021 development cost impact of the known COVID-19 delays up to June 30, 2021 is estimated to be approximately $100 million including travel, accommodation, quarantine and standby costs as well as accounting for productivity impacts. COVID-19 impacts are ongoing and the Company will continue to monitor the overall costs associated with COVID-19 delays and update the market as appropriate.
On March 30, 2021, Oyu Tolgoi declared force majeure in connection with customer contracts for concentrate.
Shipments to Chinese customers recommenced on April 15, 2021, and Oyu Tolgoi continues to work closely with Mongolian and Chinese authorities to manage supply chain disruptions. The force majeure will remain in
place until sustained volumes of convoys are crossing the border to ensure Oyu Tolgoi’s ability to meet its ongoing commitments to customers and to return on-site concentrate inventory to target levels.
Due to the COVID-19 situation in Mongolia and the Mongolian-Chinese border region, the situation at the border remained fluid throughout Q2’21. Despite steps taken by Oyu Tolgoi to maintain its concentrate shipments, limitations set by the Chinese authorities on the number of trucks allowed to cross the border as well as daily testing requirements are impacting Oyu Tolgoi’s ability to export at planned levels and disrupting inbound supply routes for the underground project and operations.

Selected Operational Metrics:
Oyu Tolgoi Production Data
All data represents full production and sales on a 100% basis
2Q 2Q Change 1H 1H Change 2021 2020 2021 2020
Open pit material mined (‘000 tonnes) 15,829 23,218 (31.8%) 38,417 50,052 (23.2%)
Ore treated (‘000 tonnes) 9,401 9,645 (2.5%) 19,214 20,534 (6.4%)
Average mill head grades:
Copper (%) 0.47 0.47 0.0% 0.51 0.45 13.3%
Gold (g/t) 0.50 0.19 163.2% 0.59 0.17 247.1%
Silver (g/t) 1.19 1.22 (2.5%) 1.24 1.18 5.1%
Concentrates produced (‘000 tonnes) 173.2 169.9 1.9% 375.1 334.4 12.2%
Average concentrate grade (% Cu) 21.2 21.5 (1.4%) 21.9 21.4 2.3%
Production of metals in concentrates:
Copper (‘000 tonnes) 36.7 36.5 0.5% 82.2 71.7 14.6%
Gold (‘000 ounces) 113 31 264.5% 259 57 354.4%
Silver (‘000 ounces) 235 212 10.8% 490 426 15.0%
Concentrate sold (‘000 tonnes) 92.6 194.3 (52.3%) 278.9 320.2 (12.9%)
Sales of metals in concentrates:
Copper (‘000 tonnes) 19.6 39.7 (50.6%) 58.6 65.5 (10.5%)
Gold (‘000 ounces) 73 31 135.5% 183 51 258.8%
Silver (‘000 ounces) 106 220 (51.8%) 313 366 (14.5%)
Metal recovery (%)
Copper 79.7 79.1 0.8% 83.4 76.7 8.7%
Gold 69.3 52.0 33.3% 71.0 49.3 44.0%
Silver 62.5 55.8 12.0% 64.0 53.6 19.4

In Q2’21, Oyu Tolgoi produced 36,735 tonnes of copper and 113,054 ounces of gold. Copper and gold production was lower than Q1’21 due to slower mining rates in Phase 4B. This resulted in an increase in lowergrade stockpile material being processed. It is anticipated that mill feed will continue to be comprised of highergrade Phase 4B and lower-grade stockpiles for the remainder of 2021.
Q2’21 mill throughput of 9.4 million tonnes was 2% lower than Q2’20 and 4% lower than Q1’21. The reduction in processed ore tonnage was due to lower personnel numbers and planned maintenance activities.

Ongoing optimisation activities are focused on maximising metal production despite reduced mining rates in Phase 4B, geotechnical challenges and higher than planned lower-grade stockpile feed.

Oyu Tolgoi Underground Update
During Q2’21, progress on the underground project was significantly impacted by COVID-19 constraints on site and in Mongolia, including restrictions on movement of international expertise.
The undercut commencement, which had been scheduled for mid-2021, requires a number of technical and non-technical criteria to be met and has been delayed as a result of the delayed resolution of nontechnical undercut criteria. All technical undercut readiness activities have been met or are on track to
being met, including:
- all lateral development and undercut drilling to initiate the undercut is complete; and
- supporting infrastructure for Panel 0 production is on track for completion under current site conditions.
Material Handling System 1 is greater than 90% complete and Primary Crusher 1 is expected to be completed in Q3’21.
The ongoing impacts of COVID-19 on rosters require careful management to ensure that the appropriate
personnel are available for undercutting activities.
Turquoise Hill and Rio Tinto continue to engage with various Mongolian governmental bodies with a view to resolving outstanding non-technical undercut criteria. All parties remain committed to moving the project
forward in a mutually beneficial manner. However, as noted above, delayed resolution of the non-technical undercut criteria has delayed the scheduled timing for the initiation of the undercut. A significant delay to the
initiation of the undercut would have a material impact on project schedule, including the timing of sustainable production for Panel 0, as well as the timing and quantum of underground capital expenditure, which would
materially adversely impact the timing of expected cash flows from the Oyu Tolgoi underground project thereby increasing the amount of Turquoise Hill’s incremental funding requirement. The Company will continue to
monitor the situation and assess any impact of a delay to the undercut initiation and update the market as
appropriate.
Development activities pertaining to ramp-up post-Panel 0 continue to be impacted by COVID-19 constraints.
Conveyor to Surface progress slowed during Q2’21 but remains broadly in-line with schedule. Shaft 3 and Shaft 4 sinking progress has been impacted by travel restrictions and quarantine requirements, which reduced the Project’s ability to remobilise required personnel to site. Specialised personnel arrived on site on the 25th of June to complete Shaft 4 readiness activities prior to Shaft 3 construction activities. The Shaft 4 sinking team arrived in Mongolia on the 28th of June. Further delays to Shafts 3 and 4 could impact the ramp-up postPanel 0. However, ongoing optimisation activities are focused on minimising any departure from plan. The Company continues to monitor the situation and will update the market as appropriate.
At the end of Q2’21, cumulative underground development progress was 57,928 equivalent metres (eqm) and cumulative Conveyor to Surface advancement was 14,532 eqm. It is anticipated that development rates will continue to be impacted into Q3’21.

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