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Rio Tinto’s Oyu Tolgoi new mine design confirms project schedule and cost ranges

Rio Tinto plc (LON:RIO) Oyu Tolgoi LLC has completed an updated feasibility study and is in the process of submitting this to the Government of Mongolia.  The OTFS20 has been prepared in accordance with Mongolian regulations and standards which require mining companies to submit updated feasibility studies every five years.  The updated study incorporates a new mine design for Panel 0 of the Hugo Dummett North underground mine at Oyu Tolgoi.  The new design also confirms that the caving method of mining remains valid and that the underground schedule and costs remain within the ranges previously disclosed.

These ranges include a delay of 21 to 29 months for first sustainable production compared to the original feasibility study guidance in 2016 and an increase of $1.3 billion to $1.8 billion from the original $5.3 billion development capital.  Detailed study, design, engineering and optimisation work is ongoing to support the definitive estimate of Panel 0 for the development of this world-class orebody, which remains due in the second half of 2020.  These estimates are subject to any additional scheduling delays or increases in capital costs arising from the impacts of the ongoing COVID-19 pandemic.

Arnaud Soirat, chief executive of Copper & Diamonds said “This amended mine design is another positive step in the development of the underground mine which will unlock the most valuable part of Oyu Tolgoi. We remain focused on delivering the underground project safely and within the guidance ranges we have announced on both cost and schedule.”

The updated mine design is the result of the review announced by Rio Tinto in July 2019 when enhanced geotechnical and geological information obtained from drilling and mapping at depth suggested there may be some stability risks associated with the original mine design.  The updated design retains two in-situ rock pillars on either side of Panel 0 for geotechnical stability. In the original mine design, these pillars were within the mining area.  The updated design is supported by extensive geotechnical modelling and industry leading technical assurance. 

As a consequence of leaving the pillars in place, the material contained in the pillars has been reclassified from Ore Reserves to Mineral Resources.  It is expected that part of the material contained in these pillars will be recoverable at a later stage following additional studies which are currently underway.

Ore handling infrastructure will be relocated to the pillars, located immediately north and south of the current Panel 0 boundaries. Panels 1 and 2 will now be initiated as independent panels or mine blocks.

Optimisation of mine designs for Panels 1 and 2 is ongoing and it is anticipated that this next phase of study may result in further movements in classifications of Ore Reserves and Mineral Resources. Any such movements will be reported following completion of the studies.

On 3 July 2020 Rio Tinto released to the Australian Securities Exchange (ASX) updated Mineral Resources and Ore Reserves for the Oyu Tolgoi mine.  Changes in the Hugo Dummett North Ore Reserves are shown below in Table A.  Updates to Mineral Resources are shown in Table B.  Ore Reserves and Mineral Resources are reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 (JORC Code) and the ASX Listing Rules.

Ore Reserves are presented in this release on a 100 per cent ownership basis.  Rio Tinto’s ownership share is 33.5% of Hugo Dummett North and 29.5% of Hugo Dummett North Extension.  Mineral Resources are reported exclusive of Ore Reserves and on the same ownership basis.

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