1700 workers to be released from OT project

B.Ooluun,
The Mongol Messenger

On 12 August the Board of directors of Oyutolgoi LLC confirmed the decision of , Rio Tinto to delay
the underground development of Oyu tolgoi for uncertain period. In connection with this decision the BoD
also approved to release employees who work in underground development. By preliminary estimation over 1700 employees will be released from their work. Most of them are employees of
contract companies of Oyutolgoi, said media relations of OT LLC.

On 29 July the Rio Tinto made statement saying that Rio Tinto has been notified by the Government of
Mongolia that the terms of the project financing provisionally secured for the underground development of
Oyu Tolgoi will need to be approved by the Mongolian Parliament, and in view of the current uncertainty,
including continued discussions with the Government on a range of other issues, all funding and work
on the underground development will be delayed until these matters are concluded and a new timetable has been agreed. However, regarding the statement PM N.Altankhuyag and Mining Minister D.Gankhuyag
expressed their position noting that the financing for OT project’s second phase or the underground development will not need the Parliament’s approval and within the frame of the investment agreement and Mongolian laws, Board of directors of OT LLC can decide it.

On 15 August MP S.Ganbaatar made statement that the decisions of Rio Tinto and BoD of OT to stop
the underground development of Oyu tolgoi and release employees were intimidation and threat, forcing
Mongolian Government to approve additional investment. “ - Rio Tinto is trying to make compulsion so that
the Mongolian Government approves a huge amount of loan which would cause big loss to Mongolians.
According to the Investment agreement and feasibility study of the OT project total initial investment
of OT project should be USD5.1 billion, including the underground development. But Rio Tinto wants to
raise this amount to USD24.4 billion. If this additional funding is approved, annually USD180 million would be lost from OT project’s profit. I got a reliable fact that Rio Tinto would take USD5.7 billion for mediating
the loan and USD1.4 billion as additional management payment. Besides that, all assets of OT would
be put on collateral. Therefore it affects independence and security of Mongolia, breaking Mongolian
laws, the Investment agreement and international conventions” said MP S.Ganbaatar.

On 12 August Turquoise Hill Resources Ltd (previously named Ivanhoe Mines) announced financial
results and review of operations for the second quarter of 2013. According to the report, underground lateral development at the Hugo North Deposit continued with approximately 1,400 metres achieved during the second quarter. The depth of the shaft N2 was approximately 1,160 metres below surface, 91% of its final depth, at August 9.Sinking activity for Shaft #5, the primary ventilation shaft for underground operations,
also progressed during the quarter and was at a depth of approximately 200 metres below surface, 17% of its final depth.
The report says, on April 17, 2013, Rio Tinto signed commitment letters with 15 global banks that locked in
pricing and terms. These commitments will expire on December 12, 2013. In addition to the approval of the
European Bank of Reconstruction and Development (EBRD) and the International Finance Corporation
(IFC), the Oyu Tolgoi project financing has been conditionally approved by the boards of Export Development Canada, Australian Export Finance and Insurance Corporation, and Export- Import Bank of the United States.
Turquoise Hill and Rio Tinto continue to be actively engaged with lenders to finalize project financing. Discussions with the Government of Mongolia about project financing continue. The Company remains committed to project financing and is engaging with the Government of Mongolia with a goal of completing the transaction and beginning to draw from the facility by the end of 2013. However, funding and development of the Oyu Tolgoi mine’s underground will be delayed until matters with the Government of
Mongolia can be resolved. Operations of the open-pit mine, commissioning of the concentrator and the on-going export of concentrate from the Oyu Tolgoi will continue.

Source: Mongol Messenger