The Company's updated Mineral Resources and Mineral Reserves are being announced further to the completion of an updated Oyu Tolgoi Feasibility Study ("OTFS20") that incorporates the new mine design for Hugo North Lift 1 Panel 0. This new design reduces the Mineral Reserve estimate for the Hugo North underground mine due to the inclusion of two structural pillars, to the north and south of Panel 0 to protect ore handling infrastructure.
The Company's project manager has advised that it is expected that part of the ore contained in these pillars will be recoverable at a later stage following additional studies which are currently underway. Pending the completion of this work in 2021, the material contained in the pillars has been converted from Mineral Reserves to Mineral Resources.
In support of the changes, an updated technical report ("2020 OTTR") prepared in accordance with the requirements of NI 43-101 will be filed on SEDAR within 45 days of this news release under Turquoise Hill's profile at www.sedar.com.
Turquoise Hill notes that
OTFS20 does not reflect the impacts of the COVID-19 pandemic which are ongoing and continue to be assessed. A number of work fronts are directly impacted including Shafts 3 and 4 being put on care and maintenance and work on Primary crusher 1 being slowed due to the lack of availability of critical resources and restrictions on site workforce numbers.
"With the updated Mineral Resources and Mineral Reserves now completed, we remain focused first and foremost on delivering the underground project safely and remaining within the guidance ranges on cost and schedule we have previously announced", stated Ulf Quellmann, Chief Executive Officer of Turquoise Hill. "At the same time, the team is looking carefully at options for recovering material within the structural pillars and to optimise the mine plan for Panels 1 and 2 to maximise value for our shareholders."
The following table provides a summary of key outputs from OTFS20. Unless otherwise stated, all items are presented in real terms on an after-tax basis and only include Mineral Reserves.
Description | Units | OTFS20 |
Material Processed | bt | 1.2 |
Copper Headgrade | % | 0.82 |
Gold Headgrade | g/t | 0.30 |
Silver Headgrade | g/t | 1.89 |
Recoverable Copper | blb | 19.5 |
Recoverable Gold | Moz | 8.4 |
Recoverable Silver | Moz | 51.7 |
Years | 31 | |
US$b | 2.2 | |
Payback Period | Years | 6 |
NPV8 After Tax | US$b | 10.0 |
Notes: | |
1. | All financial metrics reflect the Company's financial analysis of OTFS20 metrics. |
2. | NPV8 is Net Present Value of mineral reserves at a discount rate of 8% for all years, calculated at |
3. | For mine planning the metal prices used as part of OTFS20 to calculate block model Net Smelter Returns (NSR) were copper at |
4. | OTFS20 NPV8 uses long-term metal prices of: copper at |
5. | NPV8 and Payback period analysis uses the Mineral Reserves reported in OTFS20 that are set out in this announcement. |
6. | NPV8 is calculated as of |
7. | The estimate of Mineral Reserves may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues including risks set forth in the 2019 AIF and other filings made with Canadian securities regulatory authorities and available at www.sedar.com. These updated estimates differ from those reported in the 2019 AIF and reflect incorporation of changes in the |
8. | Payback period and mine life are calculated from |
9. | OTTR16 can be accessed under Turquoise Hill's profile at www.sedar.com. |
10. | Expansion capital numbers are presented inclusive of VAT. |
Refined Hugo North Lift 1 Mine Design Lowers Execution Risk
On
For the development of the Panel 0 mine design, Turquoise Hill engaged subject matter experts to undertake an external and independent assurance process that focused on a technical review of the proposed mine re-design options, and a review of the schedule and estimating process.
The Hugo North Lift 1 mine plan incorporates the development of three panels and in order to reach the full sustainable production rate of 95,000 tonnes per day from the underground operations, all three panels need to be in production. During the ramp-up phase through to full capacity of the underground operations, the Oyut open pit will continue to provide the incremental ore to achieve the expected 105,000 to 115,000 tonnes per day throughput for the life of Hugo North Lift 1.
The design change results in a more resilient mine plan able to effectively operate within the Panel 0 geotechnical conditions as now understood. The 2020 OTTR will incorporate and reflect these updates.
The block cave design incorporated in OTFS20 varies from the OTFS16 design through:
- 120m structural pillars included to the north and south of Panel 0, protecting ore handling infrastructure and increasing the optionality of sequencing Panel 1 and Panel 2;
- Ore handling facilities moved into the structural pillars, improving excavation stability;
- Drawpoint spacing updated from 28m x15m to 31m x 18m, improving extraction level stability; and
- Modified panel initiation approach for Panel 0, minimising stress damage to extraction level.
The Company believes the existing feasibility study designs for Panel 1 and Panel 2 remain executable based on the current orebody understanding. However, with the introduction of structural pillars, the remaining panels become independent, allowing for much greater operational flexibility. This provides an opportunity to:
- Optimise the extraction level elevation for each panel independently;
- Evaluate the potential to convert Measured and Indicated Mineral Resources below the current Lift 1 extraction level to Probable Mineral Reserves;
- Complete additional confirmatory drilling and data collection in support of potential Panel 1 and Panel 2 design refinements; and
- Include structural pillar recovery level(s) in the integrated Hugo North Lift 1 mine design.
Panel 1 and Panel 2 design optimisation studies have been initiated to explore these opportunities. These studies are not expected to delay the ramp up of Panel 1 or Panel 2 Drilling work is underway and the resulting updates to geotechnical modelling and mine design review are expected to continue into 2021.
Sensitivity Estimates
Economic sensitivity of the project relating to a number of key variables set forth in OTFS20 are outlined in the figures below:
Reserve Case Price Sensitivities | ||||||||
NPV8$billions | Copper Price | |||||||
$US, 2020 Real | -15% | -10% | -5% | Base Case | +5% | +10% | +15% | |
Gold | -15% | 5.9 | 7.1 | 8.3 | 9.3 | 10.3 | 11.3 | 12.3 |
-10% | 6.2 | 7.4 | 8.5 | 9.5 | 10.5 | 11.5 | 12.5 | |
-5% | 6.4 | 7.6 | 8.8 | 9.8 | 10.7 | 11.7 | 12.7 | |
Base Case | 6.7 | 7.9 | 9.0 | 10.0 | 11.0 | 12.0 | 12.9 | |
+5% | 7.0 | 8.1 | 9.2 | 10.2 | 11.2 | 12.2 | 13.1 | |
+10% | 7.2 | 8.4 | 9.4 | 10.4 | 11.4 | 12.4 | 13.3 | |
+15% | 7.5 | 8.6 | 9.7 | 10.6 | 11.6 | 12.6 | 13.6 |
Notes: | |
1. | NPV8 is Net Present Value at a discount rate of 8%, valued as of |
2. | All values are presented on a $US, real 2020 basis. |
3. | Base case copper price is based on consensus estimates with a long-term forecast of |
4. | Base case gold price is based on consensus estimates with a long-term forecast of |
Oyu Tolgoi Reserve Case Sensitivities | ||||||
Impact on NPV8 ($m) | Cu Price | Opex | CAPEX | +/- 1% Discount Rate | ||
+10% | 1,990 | 466 | 663 | 186 | 1,016 | |
-10% | (2,096) | (434) | (657) | (186) | (912) |
Notes: | |
1. | NPV8 is Net Present Value at a discount rate of 8%, valued as of |
2. | All values are presented on a $US, real 2020 basis. |
3. | Base case copper price is based on consensus estimates with a long-term forecast of |
4. | Base case gold price is based on consensus estimates with a long-term forecast of |
5. | Costs considered are forward as of |
Updated Mineral Resources and Mineral Reserves
OTFS20 incorporates updated Mineral Resource and Mineral Reserve estimates for Hugo North Lift 1 and there has been no change to the Oyut open pit Mineral Reserves relative to those set forth in the 2019 AIF. Mineral Resource estimates for Hugo North have been updated since the 2019 AIF, while the Mineral Resources for Hugo South, Oyut open pit and Heruga remain unchanged.
2020 Oyu Tolgoi Mineral Reserves
Oyut Deposit Open Pit Mineral Reserves as of | ||||||||
Classification | Ownership | Mineral Reserves | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Proven | 307 | 0.52 | 0.39 | 1.32 | 1.6 | 3.8 | 13.0 | |
Probable | 477 | 0.39 | 0.23 | 1.14 | 1.9 | 3.5 | 17.4 | |
Total (Proven + Probable) | 783 | 0.44 | 0.29 | 1.21 | 3.5 | 7.2 | 30.5 | |
Oyut Stockpile Mineral Reserves as of | ||||||||
Classification | Ownership | Mineral Reserves | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Proven | 48 | 0.33 | 0.12 | 0.93 | 0.2 | 0.2 | 1.4 | |
Hugo North Deposit Underground Mineral Reserves as of | ||||||||
Classification | Ownership | Mineral Reserves | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Probable | 400 | 1.51 | 0.29 | 3.11 | 6.0 | 3.8 | 40.0 | |
Probable | EJV | 40 | 1.54 | 0.53 | 3.63 | 0.6 | 0.7 | 4.6 |
Total Probable | 440 | 1.51 | 0.32 | 3.16 | 6.7 | 4.5 | 44.7 | |
Oyu Tolgoi Project Mineral Reserves as of | ||||||||
Classification | Mineral Reserves | Contained Metal | ||||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Proven | 355 | 0.49 | 0.35 | 1.27 | 1.7 | 4.0 | 14.5 | |
Probable | 917 | 0.93 | 0.27 | 2.11 | 8.5 | 7.9 | 62.1 | |
Total (Proven + Probable) | 1272 | 0.81 | 0.29 | 1.87 | 10.3 | 11.9 | 76.6 |
Notes: | |
1. | CIM Definition Standards for Mineral Resources and Mineral Reserves (2014) were used for reporting of Mineral Reserves. |
2. | NSR values used for Mineral Reserves estimation are based on forecast long-term copper, gold, and silver prices of |
3. | Assumptions for smelting refining and treatment charges, deductions and payment terms, concentrate transport, metallurgical recoveries and royalties are included in the NSR values. |
4. | Processing and general administration costs used to determine cut-off NSR values vary between |
5. | For the Hugo North Mineral Reserves, a NSR shut off grade of |
6. | For the Oyut Mineral Reserves, only measured Mineral Resources were used to report proven Mineral Reserves, and only indicated Mineral Resources were used to report Probable Mineral Reserves. |
7. | For the Hugo North Mineral Reserves, Measured and Indicated Mineral Resources were used to report probable Mineral Reserves. |
8. | The effective date of the Mineral Reserve estimates is |
9. | EJV is the Entrée Joint Venture. The Shivee Tolgoi License and the Javkhlant License are held by Entrée. The Shivee Tolgoi License and the Javkhlant License are planned to be operated by |
10. | The estimate of Mineral Reserves may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues including risks set forth in the 2019 AIF and other filings made with Canadian securities regulatory authorities and available at www.sedar.com. These updated estimates differ from those reported in the 2019 AIF and reflect changes in the |
11. | Totals may not add due to rounding. |
Hugo North Lift 1 Mineral Reserve Comparison 2019 AIF to OTFS20
The Hugo North Lift 1 Mineral Reserves have been updated to reflect the new Panel 0 design. The new design resulted in the conversion of the material contained in the structural pillars from mineral reserves to mineral resources. Principally as a result of the conversion, the estimated probable Mineral Reserves at
While this update reflects the current Panel 0 mine status, it does not reflect any opportunities that may arise from the recovery of the structural pillars or Panel 1 and Panel 2 optimisation studies, expected to continue into 2021.
Hugo North Deposit Underground Mineral Reserves Comparison | ||||||||
Classification & Report | Ownership | Mineral Reserves | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
OTFS20 | 400 | 1.51 | 0.29 | 3.11 | 6.0 | 3.8 | 40.0 | |
EJV | 40 | 1.54 | 0.53 | 3.63 | 0.6 | 0.7 | 4.6 | |
Total | 440 | 1.51 | 0.32 | 3.16 | 6.7 | 4.5 | 44.7 | |
2019 AIF | 447 | 1.64 | 0.34 | 3.35 | 7.3 | 4.8 | 48.1 | |
EJV | 32 | 1.64 | 0.57 | 3.84 | 0.5 | 0.6 | 4.0 | |
Total | 479 | 1.64 | 0.35 | 3.38 | 7.9 | 5.4 | 52.1 | |
Difference | -47 | -0.13 | -0.04 | -0.24 | -1.3 | -1.0 | -8.1 | |
EJV | 8 | -0.10 | -0.04 | -0.21 | 0.1 | 0.1 | 0.7 | |
Total | -39 | -0.13 | -0.04 | -0.22 | -1.2 | -0.9 | -7.4 | |
% Difference | -11% | -8% | -12% | -7% | -18% | -21% | -17% | |
EJV | 24% | -6% | -6% | -5% | 16% | 16% | 17% | |
Total | -8% | -8% | -10% | -7% | -15% | -17% | -14% |
Notes: | |
1. | CIM Definition Standards for Mineral Resources and Mineral Reserves (2014) were used for reporting of Mineral Reserves. |
2. | NSR values used for OTFS20 and 2019 AIF Mineral Reserves estimation are based on forecast long-term copper, gold, and silver prices of |
3. | Assumptions for smelting refining and treatment charges, deductions and payment terms, concentrate transport, metallurgical recoveries and royalties are included in the NSR values. |
4. | Processing and general administration costs used for both OTFS20 and the 2019 AIF to determine cut-off NSR values vary between |
5. | For the Hugo North Mineral Reserves in both OTFS20 and the 2019 AIF, a NSR shut off grade of |
6. | For the Hugo North Mineral Reserves in both OTFS20 and 2019 AIF, Measured and Indicated Mineral Resources were used to report Probable Mineral Reserves. |
7. | The effective date of the Mineral Reserve estimates is |
8. | EJV is the Entrée Joint Venture. The Shivee Tolgoi License and the Javkhlant License are held by Entrée. The Shivee Tolgoi License and the Javkhlant License are planned to be operated by |
9. | The estimate of Mineral Reserves may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues including risks set forth in the Company's Annual Information Form for the year ended |
10. | Totals may not add due to rounding. |
2020 Oyu Tolgoi Mineral Resources
Oyut Deposit Open Pit Mineral Resources as of | ||||||||
Classification | Ownership | Mineral Resources | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Measured | 16 | 0.39 | 0.41 | 1.21 | 0.1 | 0.2 | 0.6 | |
Indicated | 80 | 0.34 | 0.29 | 1.17 | 0.3 | 0.8 | 3.0 | |
Total (Measured + Indicated) | 95 | 0.35 | 0.31 | 1.17 | 0.3 | 1.0 | 3.6 | |
Inferred | 318 | 0.29 | 0.17 | 1.03 | 0.9 | 1.8 | 10.5 | |
Oyut Deposit Underground Mineral Resources as of | ||||||||
Classification | Ownership | Mineral Resources | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Measured | 14 | 0.47 | 0.88 | 1.27 | 0.1 | 0.4 | 0.6 | |
Indicated | 69 | 0.38 | 0.59 | 1.11 | 0.3 | 1.3 | 2.5 | |
Total (Measured + Indicated) | 83 | 0.39 | 0.64 | 1.14 | 0.3 | 1.7 | 3.0 | |
Inferred | 175 | 0.39 | 0.40 | 1.21 | 0.7 | 2.2 | 6.8 | |
Hugo North Mineral Resources as of | ||||||||
Classification | Ownership | Mineral Resources | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Measured | 58 | 1.86 | 0.48 | 4.21 | 1.1 | 0.9 | 7.8 | |
EJV | 0 | 0.00 | 0.00 | 0.00 | 0.0 | 0.0 | 0.0 | |
All Hugo North | 58 | 1.86 | 0.48 | 4.21 | 1.1 | 0.9 | 7.8 | |
Indicated | 401 | 1.34 | 0.34 | 3.14 | 5.4 | 4.4 | 40.6 | |
EJV | 87 | 1.59 | 0.54 | 4.13 | 1.4 | 1.5 | 11.5 | |
All Hugo North | 488 | 1.39 | 0.38 | 3.32 | 6.8 | 5.9 | 52.1 | |
Total (Measured + Indicated) | 459 | 1.41 | 0.36 | 3.28 | 6.5 | 5.3 | 48.4 | |
EJV | 87 | 1.59 | 0.54 | 4.13 | 1.4 | 1.5 | 11.5 | |
All Hugo North | 546 | 1.44 | 0.39 | 3.41 | 7.8 | 6.8 | 59.9 | |
Inferred | 765 | 0.80 | 0.28 | 2.40 | 6.1 | 6.9 | 59.1 | |
EJV | 167 | 1.02 | 0.36 | 2.78 | 1.7 | 1.9 | 14.9 | |
All Hugo North | 932 | 0.84 | 0.29 | 2.47 | 7.8 | 8.8 | 74.0 | |
Hugo South Mineral Resources as of | ||||||||
Classification | Ownership | Mineral Resources | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Inferred | 724 | 0.84 | 0.07 | 1.88 | 6.1 | 1.7 | 43.7 | |
Heruga Mineral Resources as of | ||||||||
Classification | Ownership | Mineral Resources | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Inferred | 105 | 0.42 | 0.30 | 1.58 | 0.4 | 1.0 | 5.3 | |
Javkhlant EJV | 1448 | 0.41 | 0.40 | 1.46 | 6.0 | 18.7 | 67.7 | |
All Heruga | 1552 | 0.42 | 0.39 | 1.46 | 6.5 | 19.7 | 73.1 | |
Oyu Tolgoi Project Mineral Resources as of | ||||||||
Classification | Mineral Resources | Contained Metal | ||||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
Measured | 87 | 1.38 | 0.53 | 3.22 | 1.2 | 1.5 | 9.0 | |
Indicated | 637 | 1.15 | 0.39 | 2.81 | 7.3 | 8.0 | 57.6 | |
Total (Measured + Indicated) | 724 | 1.17 | 0.41 | 2.86 | 8.5 | 9.4 | 66.6 | |
Inferred | 3701 | 0.59 | 0.29 | 1.75 | 21.9 | 34.2 | 208.1 |
Notes: | |
1. | CIM Definition Standards for Mineral Resources and Mineral Reserves (2014) are used for reporting of Mineral Resources. |
2. | |
3. | The following copper equivalent (CuEq) formulae have been used for cut-off grade determination in each deposit. |
Oyut CuEq = Cu + ((Au x 35.4938) + (Ag x 0.4101)) / 67.9023 | |
Hugo North CuEq = Cu + ((Au x 35.7175) + (Ag x 0.5353)) / 67.9023 | |
Hugo South CuEq = Cu + ((Au x 37.7785) + (Ag x 0.5773)) / 67.9023 | |
Heruga CuEq = Cu + ((Au x 37.0952) + (Ag x 0.5810) + (Mo x 0.0161)) / 67.9023 | |
4. | The metal prices used in determining the CuEq formulae are as follows: |
5. | The metallurgical recoveries used in determining the CuEq formulae for each deposit: Oyut deposit: Copper 78%, Gold 67%, Silver 52%. Hugo North deposit: Copper 93%, Gold 80%, Silver 81%. Hugo South deposit: Copper 89%, Gold 81%, Silver 84% Heruga: Copper 82%, Gold 73%, Silver 78%, Molybdenum 60%. |
6. | For the Oyut deposit, a cut-off grade of 0.24% CuEq has been used for Mineral Resources with open pit potential. A cut-off 0.41% CuEq has been used for Mineral Resources with underground mining potential. |
7. | For the Hugo North, Hugo South, and Heruga deposits a cut-off grade of 0.41% CuEq grade used based on the assumption that the deposits will be mined using underground mass mining methods. |
8. | The effective date of the mineral resource estimates is |
9. | EJV is the Entrée Joint Venture. The Shivee Tolgoi and Javkhlant licenses are held by Entrée. The Shivee Tolgoi and EJV Javkhlant Licenses are planned to be operated by |
10. | Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. |
11. | The Oyut deposit was formerly known as SOT. |
12. | The contained copper, gold and silver estimates in the tables have not been adjusted for metallurgical recoveries. |
13. | The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues including risks set forth in the 2019 AIF and other filings made with Canadian securities regulatory authorities and available at www.sedar.com. These updated estimates differ from those reported in the 2019 AIF and reflect changes in the |
14. | Molybdenum Mineral Resources are unchanged from the 2019 AIF and have not been provided in the above table. |
15. | Totals may not add due to rounding. |
Hugo North Measured & Indicated Mineral Resource Comparison for 2019 AIF to OTFS20
The estimated Measured and Indicated Mineral Resources at
Hugo North Deposit Underground Mineral Resources Comparison | ||||||||
Classification & Report | Ownership | Mineral Resources | Contained Metal | |||||
Ore | Cu | Au | Ag | Copper | Gold | Silver | ||
(Mt) | (%) | (g/t) | (g/t) | (Mt) | (Moz) | (Moz) | ||
OTFS20 | 459 | 1.41 | 0.36 | 3.28 | 6.5 | 5.3 | 48.4 | |
EJV | 87 | 1.59 | 0.54 | 4.13 | 1.4 | 1.5 | 11.5 | |
Total | 546 | 1.44 | 0.39 | 3.41 | 7.8 | 6.8 | 59.9 | |
2019 AIF | 390 | 1.23 | 0.32 | 3.01 | 4.8 | 4.0 | 37.7 | |
EJV | 87 | 1.59 | 0.54 | 4.11 | 1.4 | 1.5 | 11.5 | |
Total | 477 | 1.29 | 0.36 | 3.21 | 6.2 | 5.5 | 49.3 | |
Difference | 69 | 0.18 | 0.04 | 0.27 | 1.7 | 1.3 | 10.7 | |
EJV | -1 | 0.01 | 0.00 | 0.02 | 0.0 | 0.0 | 0.0 | |
Total | 69 | 0.14 | 0.03 | 0.20 | 1.7 | 1.3 | 10.7 | |
% Difference | 18% | 15% | 12% | 9% | 35% | 32% | 28% | |
EJV | -1% | 0% | 1% | 0% | 0% | 0% | 0% | |
Total | 14% | 11% | 7% | 6% | 27% | 23% | 22% |
Notes: | |
1. | CIM Definition Standards for Mineral Resources and Mineral Reserves (2014) are used for reporting of Mineral Resources. |
2. | |
3. | The following copper equivalent (CuEq) formulae have been used for cut-off grade determination in each deposit. |
Oyut CuEq = Cu + ((Au x 35.4938) + (Ag x 0.4101)) / 67.9023 | |
Hugo North CuEq = Cu + ((Au x 35.7175) + (Ag x 0.5353)) / 67.9023 | |
Hugo South CuEq = Cu + ((Au x 37.7785) + (Ag x 0.5773)) / 67.9023 | |
Heruga CuEq = Cu + ((Au x 37.0952) + (Ag x 0.5810) + (Mo x 0.0161)) / 67.9023 | |
4. | The metal prices used in determining the CuEq formulae are as follows: |
5. | The metallurgical recoveries used in determining the CuEq formulae for each deposit: Oyut deposit: Copper 78%, Gold 67%, Silver 52%. Hugo North deposit: Copper 93%, Gold 80%, Silver 81%. Hugo South deposit: Copper 89%, Gold 81%, Silver 84% Heruga: Copper 82%, Gold 73%, Silver 78%, Molybdenum 60%. |
6. | For the Oyut deposit, a cut-off grade of 0.24% CuEq has been used for Mineral Resources with open pit potential. A cut-off 0.41% CuEq has been used for Mineral Resources with underground mining potential. |
7. | For the Hugo North, Hugo South, and Heruga deposits a cut-off grade of 0.41% CuEq grade used based on the assumption that the deposits will be mined using underground mass mining methods. |
8. | The effective date of the mineral resource estimates is |
9. | EJV is the Entrée Joint Venture. The Shivee Tolgoi and Javkhlant licenses are held by Entrée. The Shivee Tolgoi and EJV Javkhlant Licenses are planned to be operated by |
10. | Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. |
11. | The Oyut deposit was formerly known as SOT. |
12. | The contained copper, gold and silver estimates in the tables have not been adjusted for metallurgical recoveries. |
13. | The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other relevant issues including risks set forth in the 2019 AIF and other filings made with Canadian securities regulatory authorities and available at www.sedar.com. These updated estimates differ from those reported in the 2019 AIF and reflect changes in the |
14. | Totals may not match due to rounding. |
Disclosure of a scientific or technical nature in this news release was approved by
Update on Liquidity and Funding Requirements
Turquoise Hill continues to monitor its liquidity outlook and its longer-term funding requirements. Based on updated cashflow projections, which incorporate expected near-term COVID-19 impacts, the recent signing of an amendment to the Power Source Framework Agreement ("PSFA") and other developments, Turquoise Hill now expects to have liquidity available to fund operations and underground development beyond Q3 2021. Based on this improved liquidity outlook, Turquoise Hill has, for the time being, decided to defer further discussions with Rio Tinto regarding possible interim funding arrangements. If it becomes prudent to do so, the Company may re-engage with Rio Tinto and / or third parties regarding possible interim funding. Further information regarding the Company's liquidity outlook will be provided as part of the Company's Q2, 2020 earnings release.
Turquoise Hill remains focused on developing, aligning with key stakeholders on, and implementing a plan to address the longer-term funding requirements of
Forward-looking statements and forward-looking information
Certain statements made herein, including statements relating to matters that are not historical facts and statements of the Company's beliefs, intentions and expectations about developments, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements and information relate to future events or future performance, reflect current expectations or beliefs regarding future events and are typically identified by words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "plan", "estimate", "will", "believe" and similar expressions suggesting future outcomes or statements regarding an outlook. These include, but are not limited to, statements and information regarding: the expectations set out in the Oyu Tolgoi 2020 Feasibility Study ("OTFS20"); timing and amount of production and potential production delays, statements in respect of the impacts of any delays on the Company's cash flows; expected copper and gold grades; liquidity, funding sources, funding requirements and planning; timing and status of underground development; the mine design for Hugo North Lift 1 and the related cost and production schedule implications; the re-design studies for Panels 1 and 2 of Hugo North Lift 1 and the possible outcomes and timing thereof; expectations regarding the possible recovery of ore in the two structural pillars, to the north and south of Panel 0; the possible progression of the SOPP and related amendments to the PSFA as well as power purchase agreements; the timing of construction and commissioning of the potential SOPP; source of interim power; the potential impact of COVID-19 on the Company's business, operations and financial condition; capital and operating cost estimates, timing of completion of the definitive estimate review and the scope thereof; mill and concentrator throughput; the outcome of formal international arbitration proceedings; anticipated business activities, planned expenditures, corporate strategies, and other statements that are not historical facts.
Forward-looking statements and information are made based upon certain assumptions and other important factors that, if untrue, could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such statements or information. There can be no assurance that such statements or information will prove to be accurate. Such statements and information are based on numerous assumptions regarding present and future business strategies, local and global economic conditions, and the environment in which the Company will operate in the future, including the price of copper, gold and silver and projected gold, copper and silver grades, anticipated capital and operating costs, anticipated future production and cash flows, the anticipated location of certain infrastructure in Hugo North Lift 1 and sequence of mining within and across panel boundaries, the availability and timing of required governmental and other approvals for the construction of the SOPP, the ability of the Government of
Certain important factors that could cause actual results, performance or achievements to differ materially from those in the forward-looking statements and information include, among others: copper, gold and silver price volatility; discrepancies between actual and estimated production; mineral reserves and resources and metallurgical recoveries; development plans for processing resources; the outcome of the Definitive Estimate review; public health crises such as COVID-19; matters relating to proposed exploration or expansion; mining operational and development risks, including geotechnical risks and ground conditions; litigation risks; regulatory restrictions (including environmental regulatory restrictions and liability);
With respect to specific forward-looking information concerning the continued operation and development of Oyu Tolgoi, the Company has based its assumptions and analyses on certain factors which are inherently uncertain. Uncertainties and assumptions include, among others: the timing and cost of the construction and expansion of mining and processing facilities; the timing and availability of a long-term domestic power source (or the availability of financing for the Company or the Government of Mongolia to construct such a source) for Oyu Tolgoi; the ability to secure and draw down on the supplemental debt under the Oyu Tolgoi project financing facility and the availability of additional financing on terms reasonably acceptable to
The cost, timing and complexities of mine construction and development are increased by the remote location of a property such as Oyu Tolgoi. It is common in mining operations and in the development or expansion of existing facilities to experience unexpected problems and delays during development, construction and mine start-up. Additionally, although Oyu Tolgoi has achieved commercial production, there is no assurance that future development activities will result in profitable mining operations.
Readers are cautioned not to place undue reliance on forward-looking information or statements. By their nature, forward-looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes will not occur. Events or circumstances could cause the Company's actual results to differ materially from those estimated or projected and expressed in, or implied by, these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements are included in the "Risk Factors" section in 2019 AIF, as supplemented by the Company's Q1 2020 MD&A.
Readers are further cautioned that the list of factors enumerated in the "Risk Factors" section of the 2019 AIF and in the "Risks and Uncertainties" section of the Q1 2020 MD&A that may affect future results is not exhaustive. When relying on the Company's forward-looking statements and information to make decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Furthermore, the forward-looking statements and information contained herein are made as of the date of this document and the Company does not undertake any obligation to update or to revise any of the included forward-looking statements or information, whether as a result of new information, future events or otherwise, except as required by applicable law. The forward-looking statements and information contained herein are expressly qualified by this cautionary statement.
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