Analyst and Investor Day June 21, Oyu Tolgoi: Advancing value and creating options

Transcription

1 Analyst and Investor Day June 21, 2017 Oyu Tolgoi: Advancing value and creating options

2 Forward-looking statements 2 This presentation includes certain forward-looking information within the meaning of applicable Canadian securities legislation and forward-looking statements within the meaning of the safe harbour provisions of the United States Private Securities Litigation Reform Act of All statements and information, other than statements of historical fact, are forward-looking statements and information that involve various risks and uncertainties. There can be no assurances that such statements or information will prove accurate and actual results and future events could differ materially from those expressed or implied in such statements. Such statements and information contained herein, which include, but are not limited to, statements respecting anticipated business activities, planned expenditures, corporate strategies and other statements that are not historical facts, represent the Company s best judgment as of the date hereof based on information currently available. The Company does not assume any obligation to update any forward-looking statements or information or to conform these forward-looking statements or information to actual results, except as required by law. For a more detailed list of specific forward-looking statements and information applicable to the Company, refer to the Forward-Looking Information and Forward-Looking Statements sections of the Annual Information Form dated as of March 23, 2017 in respect to the year ended December 31, All amounts are in U.S. dollars, unless otherwise stated.

3 Agenda 3 9:00 9:10 am Introductions, safety briefing, logistics 9:10 9:45 am Oyu Tolgoi: Advancing value, creating options Jeff Tygesen 9:45 10:30 am Fireside chat on Mongolian political landscape Jeff Tygesen and Nick Cousyn 10:30 10:45 am Break 10:45 11:30 am Overview of block caving Brendan Lane 11:30 am 12:15 pm Benchmarking analysis of leading block caves Bernie Peters 12:15 12:30 pm Closing Jeff Tygesen

4 Meeting logistics 4 Q&A after each presentation Please hold questions until end of presentation Will start with questions in room then move to webcast For those in room, please wait for microphone When asking questions, please state name and firm

5 Analyst and Investor Day June 21, 2017 Oyu Tolgoi: Advancing value, creating options Jeff Tygesen Chief Executive Officer

6 Turquoise Hill s investment thesis 6 1. Oyu Tolgoi expected to be world s third-largest copper mine 2. Significant cash flow expected from underground development 3. Hugo North Lift 1 financing in place 1 4. Turquoise Hill should benefit from expected drop in copper supply (~2020) 5. Oyu Tolgoi s resources provide long-term development optionality 1. Financing sources includes project finance facility, supplemental debt (in progress), operating cash flow from Oyu Tolgoi and Turquoise Hill s cash; excludes power plant CAPEX. Cover photo: Maintenance bay at development workshop near Shaft 1.

7 Oyu Tolgoi s expected production growth 7 Copper ('000 tonnes) Gold ('000 ounces) Expected copper production growth : +320% 669 Expected gold production growth : +450% Phase 4 grades Phase 4 grades 175 Phase 4 grades Source: 2016 Oyu Tolgoi Technical Report Midpoint of guidance ranges Expected first draw bell Expected first sustainable production Expected peak production

8 Long-term copper fundamentals strong 8 Copper mine supply/demand outlook Base Highly Probable Primary Demand Average copper price Copper market likely to enter a temporary deficit in 2017 Copper mine supply/demand outlook (Mt) Forecast Average LME copper price (US$/lb) Ongoing attrition at existing mines driven by declining grade Continued demand growth requires new capacity in the medium-term Market expected to return to balance from 2018 before moving into deficit from China now largest buyer of gold and continues to be largest consumer of copper Source: Wood Mackenzie (Q1 17 Long-Term Outlook)

9 First-quartile producer 9 C/lb, 2016$ 400 Normal C1 + Sustaining CAPEX (Oyu Tolgoi s costs and volumes for ) Q1 Q2 Q3 Q4 300 Oyu Tolgoi Other Mines ,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Cumulative production ( 000 tonnes) -100 Source: Wood Mackenzie (Q4 16 Cost Service), 2016 Oyu Tolgoi Technical Report and Turquoise Hill Resources. Normal C1 cost + sustaining capex, range capped at -100/lb & 400/lb for base, highly probable and probable mines only.

10 2016 Resources Case: ~3.4 billion tonnes 10 Oyut Open Pit ~900Mt (reserve) 0.44% copper; 0.28 g/t gold Heruga ~700Mt (resource) 0.42% copper 0.43 g/t gold; >100Mlb moly Hugo South ~300Mt (resource) 1.07% copper 0.06 g/t gold Hugo North Lift 1, panels 0,1,2 ~500Mt (reserve) 1.66% copper; 0.35 g/t gold Hugo North Lift 2 ~700Mt (resource) 1.13% copper; 0.36 g/t gold Hugo North Lift 1, panels 3,4,5 ~250Mt (resource) 0.70% copper; 0.20 g/t gold

11 Alternative production cases 11 Resources 120 Case ~Year 20, concentrator capacity ~120mtpa NPV 8% $8.8 billion 1 Expansion capex ~$14.9 billion 3 Resources 100 Case ~Year 20, concentrator capacity ~100mtpa NPV 8% $8.9 billion 1 Expansion capex ~$13.5 billion 3 Resources 50 Case Assumes concentrator creep from 40mtpa to 50mtpa with little capital NPV 8% $9.3 billion 1 Expansion capex ~$9.7 billion Reserves Case Concentrator capacity ~40mtpa NPV 8% $6.9 billion 1 Expansion capex $4.6 billion 2 1. NPV8% assumes $3.00/lb copper and $1,300/oz gold 2. Expansion capital costs include only direct project costs and exclude interest expense, capitalized interest, debt repayments, tax pre-payments and forex adjustments. In all cases, total capital cost excludes capital costs for the year Expansion capital for 2016 excluded is $0.46 billion. 3. Expansion capital costs inclusive of 2016 Reserves Case expansion capital. Expansion capital costs include only direct project costs and exclude interest expense, capitalized interest, debt repayments, tax pre-payments and forex adjustments. In all cases, total capital cost excludes capital costs for the year Resources Case Concentrator capacity ~40mtpa Base Case NPV 8% $8.4 billion 1 Expansion capex ~ $9.7 billion 3

12 Major underground milestones 12 Shaft 2 Shaft completion late 2017; fit out 2018 Shaft 5 Shaft completion early 2018 First draw bell firing Sustainable production Convey-to-surface complete Concentrator upgrade complete Mid-2020 Early 2021 Early 2022 Mid-2022 Peak production Complete ramp-up 2027

13 Sources and uses of development capital 13 Uses of development capital ( ) Uses Amount ($B) Note Underground development $5.3 Includes concentrator upgrade Debt service $3.3 Debt repayment, interest and financing fees Total $8.6 Sources of development capital ( ) Sources Amount ($B) Note Oyu Tolgoi operating cash flow ~$2.0 Dependent on commodity prices Project finance $4.4 + up to $1.6 $4.3 drawn down; remaining remitted by US Ex-Im Turquoise Hill cash $1.4 Total $9.4

14 Long-term power source for Oyu Tolgoi 14 Power to be sourced from within Mongolia In May 2017, new power purchase agreement signed for up to six-year term Oyu Tolgoi working with Mongolian Government on establishing permanent domestic power source Tavan Tolgoi possible location of independent power producer Analyzing Oyu Tolgoi dedicated power plant at site

15 Open-pit operations Photo: Oyu Tolgoi s open-pit mine.

16 Production and financial highlights 16 Copper in concentrates ('000 tonnes) Industry-leading AIFR of 0.22 for Record levels for material mined and ore treated; throughput exceeded nameplate capacity for 2016 Since 2013, ~90% increase in throughput ($631) $719 $651 $ Cu:$3.33* Au:$1,411* Operating cash flow ($'000,000) Cu:$3.10 Au:$1,266 Cu:$2.49 Au:$1,160 Cu:$2.21 Au:$1,251 Exceeded production guidance in revenue of $1.2 billion 2016 operating cash flow of ~$400 million Operating cash costs declined ~20% since 2014 Cash and cash equivalents of ~$1.4 billion at end of 2016 *Source: Average quarterly Comex copper price and average quarterly LBMA gold price.

17 Reserves case concentrator performance 17 Annual concentrator throughput (million tonnes) Copper grade Gold grade Cu % grade Au g/t a 2014a 2015a 2016a 2017e 2018e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 0.00 Figure: 2016 Oyu Tolgoi Technical Report. Note: a = actual, e = expected.

18 Managing near-term ore grade challenges 18 Open-pit plan view Phase 7 Phase 6 Phase 10 Phase 5 Phase 8 Phases 6 and 4a as well as low-grade stockpile ore processed in 2017 Phase 4 stripping provides access to higher ore grades in 2018 Phase 9 Phase 4A Phase 4B Source: 2016 Oyu Tolgoi Technical Report

19 Oyu Tolgoi a long-term growth opportunity 19 Advancing underground development Creating long-term development options Demonstrated productivity and cost improvements Best copper asset in development

20 Analyst and Investor Day June 21, 2017 Mongolian political landscape Fireside chat with Nick Cousyn Chief Operating Officer BDSec JSC

21 Analyst and Investor Day June 21, 2017 Overview of block caving Brendan Lane Vice President, Operations and Development Prepared in consultation with OreWin Pty Ltd

22 Underground mining methods 22 Hugo North Lift 1 Figure: After E. T. Brown, 2005.

23 Block caving: productivity and cost benefits 23 Hugo North Lift 1 Table: Andre van As Caving 101 Introduction. Method Example Daily Production t/ore Example Operating Cost $/t ore Cut and Fill 500 1,500 $30 - $100 Shrink Stoping $40 - $100 Room and Pillar 1,500 10,000 $15 - $40 Open Stopping 1,500 25,000 $15 - $45 Sub-level Caving 1,500 50,000 $15 - $35 Block Caving 10, ,000 $ $12.00 Highly-productive mass mining method with relatively low operating costs requiring substantial upfront investment Cost split between capital and operating makes block caving suitable for larger deposits Effective resource recovery as low operating costs support economic extraction of a lower shut-off grade Primary blasting only required on small percentage of the orebody on undercut level; ore then broken by gravity and flows into drawbells beneath

24 Block cave concept 24 Block caving Gravity used to exploit deep ore body Cave propagation (caveability) depends on in situ stresses and host rock s ability to fracture Initial drill, blast and extraction focused on bottom section of ore body via drawpoint to create void Broken ore removal from undercut area causes ore above it to collapse (vertical propagation) and void forms drawpoint In traditional block cave, whole ore body extracted through static set of drawpoints at base of ore body Once undercutting complete, no on-going construction; only production until end of cave life Panel caving Ore body progressively and systematically mined through moving cave front via series of panels Draw rates carefully managed to avoid riling and premature dilution Rate of undercut advance matched to both draw column height and production capacity Figures: Andre van As Caving 101 Introduction.

25 Safety is mission critical 25 Safety processes focus on risk identification, specialized training control programs and monitoring systems Work areas fortified with physical reinforcement utilizing various ground support methods (bolts, shotcrete, straps, steel mesh and arches) Hugo North Lift 1 Oyu Tolgoi uses wide range of safety processes and programs Cave Tracker Developed by CRC Mining and Elexon for realtime cave monitoring to increase safety and profitability of underground operations System designed to measure movement of fragmented rock under gravity and manage its flow through controlled extraction

26 Caveability 26 Caveability measures (often non-quantitative) an orebody s ability to Hugo cave North under Lift 1 particular circumstances. In practice, the problem is to predict the undercut geometry, as represented by the hydraulic radius, required to initiate caving in a rock mass of given or estimated geotechnical properties Major influencing factors Rock mass strength Major structures (e.g. faults, dykes, sills) In situ stresses Undercut and cave geometry Stress relief, boundary, weakening or rock mass preconditioning Water

27 Cave flow and sustainable production 27 Critical dimensions to initiate caving and propagation lead to achievement of hydraulic radius Hugo North Lift 1 Block or panel caving is initiated by mining undercut until its hydraulic radius (HR) is reached or exceeded HR is ratio of the crosssectional area of flow to its conduit perimeter Example: a sustained flow area of (40m x 250m) has a HR = 17 Increasing a minimum span above by 10m to (50m x 250m) increases the HR to 21 and caving would be ensured

28 Dilution and mixing 28 Cut Off Grade Funnels of extraction Draw rates carefully managed to avoid riling and premature dilution Drawpoints eventually reach cut-off grade through dilution and shut down over time Over time, block caving can result in formation of major surface depressions or subsidence zones directly above or near mining operations but are gradual, predictable and monitored

29 Key components of Hugo North Lift 1 29 High-grade ore body ~2 km long and 280 m wide, containing 499 Mt ore Development of the 95 ktpd underground mine, by panel cave mining method, with over 2,000 drawpoints planned ~200 km of underground lateral development (~40 km development phase ; ~160 km in sustaining) Five vertical shafts (ea 1,200-1,400 m deep) Two underground crushers and a convey-to-surface decline Lateral Development Vertical Development and Mass Excavation Area Metres Area Metres Complete development (as built) 15,747 Shaft development 6,159 General access and facilities 9,218 Underground raisebores 6,826 Apex and undercut level 51,931 Ore bins 10.8 metres in diameter 51 Extraction level 59,542 Haulage level 14,656 Area Metres 3 Intake drives 17,018 Mass excavation for facilities 60,077 Exhaust drives 16,168 Ore handling excavations 55,764 Conveyor 18,863 Total lateral development 203,143 Figure: 2016 Oyu Tolgoi Technical Report, OreWin, 2016.

30 Operational flexibility 30 Panel 2 Commences after three years Five drawbells per month Panel 0 Initial cave panel First three years of ramp-up Three to five drawbells per month Panel 1 Commences after three years Four drawbells per month Panel 0 Panel 2 Panel 1 South Cave construction rates - 5 drawbells/month 3 5 drawbells 4 drawbells/month /month North Cave initiation point

31 Technical project risk mitigation 31 Design Construction/Operations Objectives Deep ore body knowledge Robust design assumptions Proactive risk mitigation Inherent operational flexibility Risk Mitigation QA/QC during construction Early warning of adverse impacts Ability for management to respond to adverse impacts Embedded Inputs Best-in class geotechnical analysis and modeling Industry caving lessons learned and applied mine design Comprehensive technical risk assessment Benchmarking used to correlate design assumptions External/internal expert review Embedded Inputs Comprehensive technical assurance during construction Extensive monitoring of cave performance (Cave Tracker) Technical capability embedded at site and off site Inherent operational flexibility to flex cave draw and undercutting

32 Analyst and Investor Day June 21, 2017 Benchmarking analysis of leading block caves Prepared and presented by Bernie Peters Turquoise Hill Qualified Person Technical Director Mining, OreWin Pty Ltd.

33 Notes on preparation 33 The presentation was produced with data obtained from the 2016 Oyu Tolgoi Technical Report, Wood Mackenzie mine site reports and various published technical reports and statements. Turquoise Hill s subscription agreement with Wood Mackenzie does not allow for the named disclosure of mines other than Oyu Tolgoi. Comparative data of other mines is therefore shown on a confidential basis. All data other than Oyu Tolgoi may not be NI compliant.

34 Executive summary 34 Oyu Tolgoi expected to be one of the world s leading block cave mines when Hugo North Lift 1 reaches peak copper production Among the largest block caves, Oyu Tolgoi has top copper grades and one of the largest resources in the world Oyu Tolgoi expected to have competitive unit costs Oyu Tolgoi expected to have one of the lowest underground mining production costs Combination of high copper grades and cost-efficient ore extraction expected to result in profitable operations

35 Global cave mines and projects 35 North America Australasia New Afton Bell Bingham Canyon Cassiar Climax Creighton Ekati Grace Henderson Jeffrey Kemess KSM Property Niobec Pebble Questa Resolution San Manuel Argyle Bulawan Carrapateena Tongkuangyu Grasberg Lepano Mt. Keith Mt. Lyall Northparkes OK Tedi Olympic Dam Oyu Tolgoi Padcal Ridgeway Deeps & Cadia East Silangan Wafi-Golpu Cullinan Debswana Mines Finsch Kimberly Mines King Past Producers Producers Projects Africa Koffiefontain Palabora Shabani Venetia Andina Caspiche Chuquicamata South America El Teniente El Salvador Europe and Russia Ridder (Leninogorsk) Source: J Jakubec, 2016

36 Chuquicamata 36 Reserves Figure: Atlas Copco Rock Drills AB, December billion tonnes, 0.73% copper Owned by Codelco Copper and gold mine located in northern Chile in the Antofagasta region Block cave expected to be in production by 2019 and reach full capacity (51 Mt/a) within seven years

37 El Teniente 37 Reserves 1.68 billion tonnes, 0.89% copper Owned by Codelco Located in the Cachopoal Province, Chile Combined production rate of 47.5 Mt/a Current underground operation is comprised of the following: Dacita (7.3 Mt/a) Diablo Regimiento (3.65 Mt/a) Esmeralda (13.14 Mt/a) Pacifico -Superior, (4.75 Mt/a) Pilar Norte (6.21 Mt/a) Rajo Sur (5.48 Mt/a) Pipa Norte (3.65 Mt/a) Figure: International Mining, October 2010.

38 Grasberg 38 Owned by Freeport- McMoRan Located in the Papua Province, Indonesia Mine comprised of the Grasberg Open Pit and four underground block caving zones, including Grasberg Deep Ore Zone (DOZ) Grasberg Deep Mill Level Zone (DMLZ) Grasberg Block Cave (GBC) Kucing Liar Reserves 1.37 billion tonnes, 1.52% copper Figure: Freport-McMoRan Inc., February 2017.

39 New Afton 39 Reserves 62 million tonnes, 0.82% copper Operated by New Gold Gold, silver and copper mine in British Columbia, Canada Peak production reached in 2016 with 5.5 Mt/a from the Lift 1 ore body Figure: New Gold Inc, 2013.

40 Cadia Hill 40 Reserves 1.5 billion tonnes, 0.27% copper Porphyry gold-copper deposit located in New South Wales, Australia and owned by Newcrest Cadia East is a underground block cave mine comprised of two block caves, Panel Cave 1 (PC1) and Panel Cave 2 (PC2) Total processing capacity of 30 Mtpa although scope to increase production to 32 Mtpa Figure: Newcrest Mining, November 2016.

41 Palabora 41 Reserves 35 million tonnes, 0.54% copper Underground block cave copper mine in Limpopo Province, South Africa and operated by Palabora Mining Company 30,000 tonnes of ore per day and 60,000 tonnes of refined copper per annum Current block cave designed to be depleted in 2000; however wall failure in open pit has extended underground life of Lift 1 until 2018 Figure: Dassault Systèmes, 2017.

42 Northparkes 42 Underground copper-gold block cave in New South Wales, Australia operated by China Molybdenum Comprised of a group of porphyry copper-gold deposits Primary ore source is the E48 underground block cave with additional remnant material from E26 Reserves 108 million tonnes, 0.62% copper Figure: MA&D, 2017

43 Andina 43 Underground porphyry copper deposit located in the Valparaiso region, Chile Owned by Codelco million tonnes of copper ore per annum produced in 2016 Reserves Figure: ABB, million tonnes, 0.75% copper

44 Hugo North Lift 1 Reserves Case 44 Porphyry copper-gold deposit First sustainable production expected in early 2021, peak production expected in 2025, ramp-up completion expected in 2027 Expected production rate at full ramp up 33.0Mt/a Reserves ~500 million tonnes, 1.66% copper Production from Panels 0-2 Figure: OreWin, 2016 Oyu Tolgoi Technical Report (OTTR2016).

45 Large planned underground production rate 45 Underground milled at full production (Million tonnes per annum) El Teniente (Diablo Regimiento) El Teniente (Pipa Norte) Northparkes L2 El Teniente (Pacifico -Superior) New Afton Northparkes El Teniente (Pilar Norte) El Teniente (Dacita) Palabora Andina El Teniente (Esmeralda) Grasberg DOZ Cadia East Grasberg DMLZ Oyu Tolgoi Cadia East Expansion Chuquicamata Grasberg GBC Figure by OreWin, 2017.

46 Competitive C1 cash costs C1 cash costs ($/lb of copper) Mine A Mine C Mine B Oyu Tolgoi Mine D Mine E Mine F Mine G Mine H Wood Mackenzie s net direct cash costs (C1) includes: Mining, ore freight and milling costs; ore purchase and freight costs from third parties; mine site administration and general expenses; concentrate freight, smelting and smelter G&A costs; matte freight, refining and refining G&A costs; and marketing costs (freight and selling). Figure by OreWin, Note: C1 costs from Wood Mackenzie for non-oyu Tolgoi operations. C1 costs for Oyu Tolgoi calculated from 2016 Oyu Tolgoi Technical Report Reserve Case tables: Cash Flow, Production Table 16.24, Deductions Table 16.4, Metal Prices Table 22.2.

47 Low ore-production costs Mining production costs ($/t of ore) Mine A Mine G 2016 Reserve Case Mine D Mine F Mine B Mine H Mine C Mine E For Oyu Tolgoi, cost includes both open-pit and underground mining costs (costs of excavating and delivering ore to plant; underground is to coarse ore shed; open-pit is to crusher) and does not reflect by-product credits. Figure by OreWin, Note: Mining costs from Wood Mackenzie for non-oyu Tolgoi operations and may not be NI compliant. Mining costs for Oyu Tolgoi as per Oyu Tolgoi Technical Report include both open-pit and underground mining costs and excludes processing, G&A, realization cost, by-product credits, taxes and royalties.

48 Leading copper-unit costs Mining production costs ($/lb of copper) Reserve Case Mine G Mine H Mine D Mine F Mine C Mine A Mine B Mine E For Oyu Tolgoi, cost includes both open-pit and underground mining costs (costs of excavating and delivering ore to plant; underground is to coarse ore shed; open-pit is to crusher) and does not reflect by-product credits. Figure by OreWin, Note: Mining costs from Wood Mackenzie for non-oyu Tolgoi operations and may not be NI compliant. Mining costs for Oyu Tolgoi as per Oyu Tolgoi Technical Report include both open-pit and underground mining costs and excludes processing, G&A, realization costs, by-product credits, taxes and royalties.

49 Analyst and Investor Day June 21, 2017 Summary

50 Oyu Tolgoi s key attributes 50 Oyu Tolgoi expected to be the world s third-largest copper mine First underground production expected in three years, cash flow to Turquoise Hill expected in eight years Political risk mitigation from project finance facility Hugo North Lift 1 well-suited for large-scale block caving; robust, conservative mine design Competitive unit costs and profitability Oyu Tolgoi s resources provide long-term development optionality

51 2017 investor mine site visit 51 Week of October 2 Site visit Wednesday (Oct 4) Management presentations Thursday Transportation to and from site arranged by Company

52 Appendix

53 Oyu Tolgoi at China s doorstep 53

54 Benefits and challenges of block caving 54 Benefits Gravity used to break rock (instead of explosives) resulting in low operating costs compared to other underground mining methods Safe High production rates achievable allowing economies of scale Challenges High initial capital costs Conceptually simple: let gravity do the work, but technically challenging Requires large design effort, high-quality construction and rigorously managed operations Allows high degree of mechanization

55 Mine design 55 Provides access tunnels for production drilling and blasting to undercut the orebody Production holes drilled from undercut up and into parallel tunnels on apex level Undercutting starts true caving operation Effective blasting critical to undercut Complete void must be established Hugo North Lift 1 Designed for efficient development of drawbells and load-haul-dump operation to extract ore from drawpoints Collection of material from extraction and undercut levels Transportation to crushers for size reduction Ore crushed and transferred by conveyor or shaft to surface Ventilation level allows passage of used air out of the mine

56 Hugo North Lift 1 production schedule 56 Figure: 2016 Oyu Tolgoi Technical Report, OreWin, 2016.

57 Underground development status 57 Lateral development 2,600 equivalent metres completed (January 2016 end Q1 17) Increased metres expected in 2H 17 with larger crusher Additional third crew expected to start mid-2017 Fourth and fifth crews expected to start training mid-2017 Shaft 2 Approximately 80 vertical metres 1 remaining until end of shaft sinking (expected late 2017) Shaft fit-out over 2018 Used for production and ventilation Shaft 5 Approximately 710 vertical metres 1 remaining until end of shaft sinking (expected early 2018) Increase in lateral development when completed Used for ventilation Convey-to-Surface Surface excavation complete Underground decline commenced in Q At the end of Q1 17.

58 Complete ramp-up expected by Sustainable underground production Complete convey-to-surface Project re-start First draw bell firing Complete concentrator upgrade Complete ramp-up Pre-start Expansion capital Sustaining capital Excavation (lateral / mass / vertical) Excavation (lateral) Undercutting Extraction level access Extraction level access Material handling (convey-to-surface + crushers + shafts) Surface infrastructure Concentrator upgrade Timeline is illustrative only and subject to change.

59 Production highlights 59 All Injury Frequency Rate (per 200,000 hours worked) Concentrator throughput ('000 tonnes) ,537 38, , , Industry-leading safety performance Multiple productivity initiatives have led to improved throughput Copper in concentrates ('000 tonnes) Gold in concentrates ('000 ounces) Exceeded 2016 guidance of 175, ,000 tonnes of cooper and 255, ,000 ounces of gold gold production reflects lower grades due to completion of Phase 2 mining

60 Financial highlights 60 Cash position ($'000,000) Operating cash flow ($'000,000) $1,344 $1,418 $719 $651 $863 $399 Cu:$3.10 Au:$1,266 Cu:$2.49 Au:$1,160 Cu:$2.21 Au:$1, Strong cash position Consecutive periods of positive operating cash flow *Source: Average quarterly Comex copper price and average quarterly LBMA gold price. $242 Open-pit capital expenditures ($'000,000) C1 and All-in sustaining costs (AISC) C1 AISC $1.95 $1.37 $1.48 $116 $99 $1.14 $1.02 $ open-pit CAPEX reflects completion of Phase 2, Phase 4 deferred stripping and tailings storage facility spending Competitive unit costs Note: C1 and AISC not meaningful in 2013.

61 Production and financial guidance Copper in concentrates Gold in concentrates Operating cash costs 201,300 tonnes (actual) 175, ,000 tonnes ~300,000 ounces (actual) 255, ,000 ounces $775 million (actual) $840 million 130, ,000 tonnes 100, ,000 ounces $720 million Capital expenditures $100 million (open pit actual) $200 million $100 million (open pit) $825 million - $925 million (underground) 2017 production impacted by ~25% less copper head grade and ~50% less gold head grade 2017 operating cash costs reflects cost improvements and impact of lower logistics costs from decreased production 2017 open-pit CAPEX reflects lower maintenance costs, reduced deferred stripping cost due to optimization and improved tailings storage costs

62 Project finance flow of funds 62 At March 31, At project finance drawdown Payable to Turquoise Hill* Shareholder loan: $3.0 billion Receivable from Oyu Tolgoi* Shareholder loan: $3.0 billion 1. In accordance with the ARSHA, Turquoise Hill funded the common share investments in Oyu Tolgoi on behalf of Erdenes Oyu Tolgoi LLC; at March 31, 2017 the balance was approximately $1.1 billion * Interest rate LIBOR + 6.5% Proceeds: $4.3 billion 2 $4.3 billion 3 $4.2 billion Payable to Turquoise Hill* Shareholder loan: $3.0 billion Receivable from Oyu Tolgoi* Shareholder loan: $3.0 billion 2. Project finance facility made directly with Oyu Tolgoi 3. Amount received net of bank fees * Interest rate LIBOR + 6.5% ** When guarantee fee paid, Oyu Tolgoi pays 1.9% and Turquoise Hill pays 0.6% Deposit from Turquoise Hill Deposit: $4.2 billion Waive 2.5%** guarantee fee with amount on deposit Priority of funding used for development Oyu Tolgoi cash call #1 Oyu Tolgoi operating cash flow Funding Funding Funding #2 Project finance funds Payable to Turquoise Hill (2.5%** guarantee fee on funds used) Receivable from Oyu Tolgoi* #3 Turquoise Hill cash Shareholder loan: Equity loan: Shareholder loan: Equity loan: * Indicative, does not show the withholding tax implications original shareholder loan interest rate LIBOR + 6.5% Oyu Tolgoi s allin project finance interest rate, including upfront and ongoing fees as well as the guarantee fee, is LIBOR + 6.0% ** Guarantee fee - Oyu Tolgoi pays 1.9% and Turquoise Hill pays 0.6%

63 Oyu Tolgoi s impact in Mongolia 63 Mongolian Workforce 94% At the end of 2016, ~94% of Oyu Tolgoi s workforce was Mongolian Taxes and Fees $1.6B Between 2010 and 2016, Oyu Tolgoi paid $1.6B in taxes, fees and other payments to the Mongolian Government In-country Spend $6.1B Between 2010 and 2016, Oyu Tolgoi has spent $6.1B in Mongolia 1 Taxpayer Rank #1 Oyu Tolgoi was the top corporate taxpayer in Mongolian for 2016 and 2015 Community Investment $9.7M Oyu Tolgoi invested $9.7M in sustainable long-term projects in the South Gobi community in 2016 Water Recycling 86.2% Oyu Tolgoi s water recycling rate averaged 86.2% for 2016 against a recycling target of 80% 1. In-country spend includes salaries, payments to Mongolian suppliers, taxes and other payments to the Government of Mongolia.

64 Key production statistics 64 1Q Q Q Q 2015 Full Year Q Q Q Q 2016 Full Year Q 2017 Open pit material mined ( 000 tonnes) 21,999 22,094 23,969 23,708 91,771 22,867 22,716 25,739 25,615 96,938 24,333 Ore treated ( 000 tonnes) 7,512 9,025 8,632 9,369 34,537 9,662 9,525 9,146 9,819 38,152 10,087 Average mill head grades: Copper (%) Gold (g/t) Silver (g/t) Concentrates produced ( 000 tonnes) Average concentrate grade (% Cu) Production of metals in concentrates: Copper ( 000 tonnes) Gold ( 000 ounces) Silver ( 000 ounces) , , Sales of metals in concentrates Copper ( 000 tonnes) Gold ( 000 ounces) Silver ( 000 ounces) , , Metal recovery (%) Copper Gold Silver

65 Key financial statistics 65 ($ in millions, unless otherwise noted 1Q Q Q Q 2015 Full Year Q (2) Q Q Q 2016 Full Year Q 2017 Revenue , , Concentrates sold ( 000 tonnes) Revenue by metals in concentrates Copper Gold Silver Operating cash flow Cost of sales Production and delivery costs Depreciation and depletion Capital expenditure on cash basis Open pit (1) Underground Royalties Operating cash costs (2) Unit costs ($) C1 (per pound of copper produced) (2) All-in sustaining (per pound of copper produced) (2) Note: Any financial information should be reviewed in conjunction with the Company s consolidated financial statements or condensed interim consolidate financial statements for the reporting periods indicated. 1. Open-pit capital expenditure includes both sustaining and non-underground development activities. 2. Operating cash costs, C1 and all-in sustaining costs for the three months ended March 31, 2016 have been revised to correctly reflect the change in inventory as reported in the Company s reconciliation of net income (loss) to net cash flow generated from operating activities.

66 turquoisehill.com Turquoise Hill Resources Ltd. Suite Granville Street Vancouver, BC, Canada V6C 1S4 TRQ: TSX, NYSE & NASDAQ Turquoise Hill is an international mining company focused on the operation and development of the Oyu Tolgoi copper-gold mine in southern Mongolia.