Turquoise Hill announces second quarter 2021 production and provides Oyu Tolgoi mine update

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Beleggingsadvies 16/07/2021 06:51
Turquoise Hill Resources Ltd. (“Turquoise Hill” or the “Company”) today announced second quarter 2021 production for Oyu Tolgoi LLC (“Oyu Tolgoi”) and provided an update on the Oyu Tolgoi mine.

Q2 2021 highlights
• In Q2 2021, open pit mining activities were impacted by personnelshortages due to COVID-19restrictions.
This resulted in an increase of lower-grade stockpile material being processed during the quarter.
o Copper production of 36,735 tonnes, in-line with Q2 2020 and a decrease of 19% vs Q1 2021; and o Gold production of 113,054 ounces, an increase of 263% vs Q2 2020 and a decrease of 22% vs Q1 2021
• Q2 2021 mill throughput was impacted by reduced personnel numbers due to COVID-19 in addition to planned maintenance activities.Consequently, Q2 2021 mill throughput of 9.4 million tonnes was 2% lower than Q2 2020 and 4% lower than Q1 2021.
• Access to higher copper and gold grades from Phase 4B is expected to continue through the remainder of the year.

COVID-19 Update
COVID-19 cases increased significantly in Mongolia during Q2 2021, 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. This resulted in personnel numbers below 25% of planned requirements at certain points during the quarter. COVID-19 restrictions adversely impacted both open pit operations and underground development progress. The additional 2021 development cost impact of the known COVID-19 delays up to June 30, 2021 is estimated to be approximately $100 million. The Company will continue to monitor the costs associated with COVID-19 delays and update the market as appropriate.
As at July 9, 2021, the Oyu Tolgoi workforce is 93% fully vaccinated and appropriate controls continue to be followed at site. Oyu Tolgoi continues to cooperate with the Mongolian authorities to implement and maintain control measures to protect the health and well-being of its workers as well as the local community.

Underground Development
During Q2 2021, underground development progress was significantly impacted by the COVID-19 constraints on site and in Mongolia, including restrictions on movement of international expertise. Despite these constraints, Material Handling System 1 is greater than 90% complete and all development and technical readiness activities pertaining to the initiation of the undercut have been met or are on track to being met, to achieve sustainable production in October 2022. Further, recent easing of quarantine constraints and increasing workforce vaccination rates have supported gradual improvements in site personnel levels.
Shafts 3 and 4 were also impacted by COVID-19 related quarantine requirements and travel restrictions with no significant development progress during the quarter. The impact of further delays toShaft 3 and 4 and other activities is currently under assessment, and could impact production ramp-up post Panel 0. Turquoise Hill and Rio Tinto continue to engage with various Mongolian governmental bodies with a view to resolving outstanding non-technical undercut issues. All parties remain committed to moving the project forward and ensuring long-term and mutually beneficial solutions to the issues under discussion. Delayed resolution of these issues and the slowing of discussions as a result of the COVID-19 situation in Mongolia, will delay the Company’s expected timing for the initiation of the undercut. Some contractual commitments for future works such as on Material Handling System 2 and the concentrator upgrade, have experienced delays as entering into these commitments is currently pending approval of the Definitive Estimate and required budget uplift by the Oyu Tolgoi Board. Any 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.

Force Majeure
Q2 2021 concentrate shipments to customers were impacted by COVID-19 related Mongolia / Chinese border restrictions which resulted in force majeure being declared from 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 the supply chain disruptions. The force majeure will remain in place until there are sufficiently sustained volumes of convoys 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.

Oyu Tolgoi Production Data
All data represents full production and sales on a 100% basis
2Q 3Q 4Q 1Q 2Q 1H 1H Full Year
2020 2020 2020 2021 2021 2021 2020 2020
Open pit material mined (‘000 tonnes) 23,218 23,979 23,663 22,588 15,829 38,417 50,052 97,694
Ore treated (‘000 tonnes) 9,645 10,072 9,594 9,813 9,401 19,214 20,534 40,200
Average mill head grades:
Copper (%) 0.47 0.45 0.50 0.56 0.47 0.51 0.45 0.46
Gold (g/t) 0.19 0.21 0.41 0.68 0.50 0.59 0.17 0.24
Silver (g/t) 1.22 1.22 1.16 1.29 1.19 1.24 1.18 1.18
Concentrates produced (‘000 tonnes) 169.9 168.5 190.2 201.9 173.2 375.1 334.4 693.1
Average concentrate grade (% Cu) 21.5 21.5 21.9 22.5 21.2 21.9 21.4 21.6
Production of metals in concentrates:
Copper (‘000 tonnes) 36.5 36.3 41.6 45.4 36.7 82.2 71.7 149.6
Gold (‘000 ounces) 31 37 88 146 113 259 57 182
Silver (‘000 ounces) 212 219 231 255 235 490 426 876
Concentrate sold (‘000 tonnes) 194.3 167.9 181.5 186.3 92.6 278.9 320.2 669.6
Sales of metals in concentrates:
Copper (‘000 tonnes) 39.7 34.4 37.9 39.0 19.6 58.6 65.5 137.8
Gold (‘000 ounces) 31 34 66 111 73 183 51 150
Silver (‘000 ounces) 220 201 194 207 106 313 366 760
Metal recovery (%)
Copper 79.1 78.9 85.9 86.3 79.7 83.4 76.7 79.6
Gold 52.0 53.7 68.8 72.2 69.3 71.0 49.3 58.6
Silver 55.8 54.6 64.3 65.3 62.5 64.0 53.6 56.4

Investors and Media
Roy McDowall
roy.mcdow all@turquoisehill.com
Follow us on Tw itter@TurquoiseHillRe

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