Oyu Tolgoi: Investor Presentation April 2018 world-class asset, - PowerPoint PPT Presentation

Oyu Tolgoi: Investor Presentation April 2018 world-class asset, development optionality, significant cash flow potential

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 1995. 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 14, 2018 in respect to the year ended December 31, 2017. All amounts are in U.S. dollars, unless otherwise stated. Cover photo: Bottom of Shaft 5.

Turquoise Hill’s investment thesis 3  World-class asset with long-term development optionality  Significant free cash flow generation expected from underground  Expected benefit from lower copper supply (~2020) and ongoing demand growth Jaw crusher – Bin 11

Robust long-term production profile 4 Copper ('000 tonnes) Gold ('000 ounces) +340% Expected copper production growth 2018 – 2025: 669 622 612 +150% Expected gold production growth 2018 – 2025: 583 522 521 475 450 397 369 Source: 2016 Oyu Tolgoi Technical Report 264 260 256 Phase 4A Phase 4A 221 production production Additional gold from 175 Phase 4A 156 149 140 Phase 4 grades Phase 4 grades Phase 4 grades Phase 4A 2018 2019 2020 2021 2022 2023 2024 2025 2026 Midpoint of Expected Expected Expected guidance first draw first peak ranges bell sustainable production production

Significant cash flow expected 5 Indicative Oyu Tolgoi Cash Flow $3.00/lb. Copper and $1,300/oz. Gold (Estimated values in billions; see footnotes for assumptions) (Billions) $3.5 $3.0 $2.5 $2.0 From 2014 – 2017, Oyu Tolgoi has generated $1.5 ~$2.1 billion in From 2022 – 2026, operating cash flow Oyu Tolgoi is expected $1.0 to generate ~$9.5 billion in free cash flow $0.5 $- 2018 2019 2020 2021 2022 2023 2024 2025 2026 Expected Expected Expected $(0.5) first draw first peak bell sustainable production production $(1.0) $(1.5) Operating cash flow Free cash flow Source: 2016 Oyu Tolgoi Technical Report. Free cash flow = operating cash flow – CAPEX; does not include financing costs or power plant CAPEX. Assumes $3.00/lb. copper and $1,300/oz. gold beginning in 2018 and represents Oyu Tolgoi-level cash flow. Production in 2018 assumes additional 100,000 ounces of gold from 2016 technical report projection and 50,000 less ounces from 2019 and 2020 technical report projections. Operating cash flow for 2018 – 2020 incorporates operational improvements/cost savings implemented after publication of the 2016 technical report cash flow model (Table 22.11).

Long-term development optionality 6 Resources 120 Case Resources 120 Case • ~Year 20, concentrator • ~Year 20, concentrator capacity ~120mtpa capacity ~120mtpa • NPV 8% $8.8 billion 1 • NPV 8% $8.8 billion 1 • Expansion capex ~$14.9 billion 3 • Expansion capex ~$14.9 billion 3 Resources 100 Case Resources 100 Case • ~Year 20, concentrator • ~Year 20, concentrator capacity ~100mtpa capacity ~100mtpa • NPV 8% $8.9 billion 1 • NPV 8% $8.9 billion 1 • Expansion capex ~$13.5 billion 3 • 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 3 2016 Reserves Case 2016 Reserves Case • Concentrator capacity ~40mtpa • Concentrator capacity ~40mtpa • NPV 8% $6.9 billion 1 • NPV 8% $6.9 billion 1 • Expansion capex $4.6 billion 2 • Expansion capex $4.6 billion 2 2016 Resources Case 2016 Resources Case 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 • Concentrator capacity ~40mtpa • Concentrator capacity ~40mtpa adjustments. In all cases, total capital cost excludes capital costs for the year 2016. Expansion capital for 2016 excluded is $0.46 billion. • Base Case NPV 8% $8.4 billion 1 • Base Case NPV 8% $8.4 billion 1 3. Expansion capital costs inclusive of 2016 Reserves Case expansion capital. Expansion capital costs include only direct project costs and exclude interest • Expansion capex ~ $9.7 billion 3 • Expansion capex ~ $9.7 billion 3 expense, capitalized interest, debt repayments, tax pre-payments and forex adjustments. In all cases, total capital cost excludes capital costs for the year 2016.

Long-term copper fundamentals strong 7 Copper mine supply/demand outlook  Small deficit/balanced market expected 2018-2019 Base Primary Demand Avg copper price 30 4.50  Ongoing attrition at existing Forecast 4.00 mines driven by declining grade 25 Copper mine supply/demand (millions of tonnes) 3.50 Average LME copper price (US$/lb)  Continued demand growth 20 3.00 requires new capacity in the 2.50 medium-term 15 2.00  Increasing deficit from 2020 10 1.50 1.00  China now largest buyer of gold 5 and continues to be largest 0.50 consumer of copper 0 - 2000 2005 2010 2015 2020 2025 Source: Wood Mackenzie (Q4’17 Long-Term Outlook); base includes highly-probable projects.

Underground development Bottom of Shaft 2

Underground progress at Q4’17 9 Workforce Workforce Composition Lateral Development Over Mongolian nationals Since project restart 6,600 89% 7.7 eq. km workers of workforce completed Development Rates Project Spend Mongolian Spend Project spend and New 3,500 tpd Over capital commitments crusher totaled $1.0 billion $2.3 billion to allow for step-up in awarded to Mongolian development rates companies since project re-start Figures as of December 31, 2017

2016 Resources Case: ~3.3 billion tonnes 10 Oyut Open Pit ~860Mt (reserve) 0.44% copper; 0.28 g/t gold Hugo South ~300Mt (resource) Heruga 1.07% copper ~700Mt (resource) 0.06 g/t gold 0.42% copper 0.43 g/t gold; >100Mlb moly Hugo North Lift 1, panels 0,1,2 ~500Mt (reserve) 1.66% copper; 0.35 g/t gold Hugo North Lift 2 ~700Mt (resource) Hugo North Lift 1, panels 3,4,5 1.13% copper; 0.36 g/t gold ~250Mt (resource) 0.70% copper; 0.20 g/t gold Note: Open-pit reserve as of December 31, 2017.

Underground mining sequence 11 Panel 0 Panel 2 Panel 1 Initial production – three to five draw Five draw bells per month Four draw bells per month bells per month South North Average grade 2.5% cu  Initial underground production begins with Panel 0  Highest copper grades occur during ramp up exceeding 2.5% in several years  2024-2026: Oyu Tolgoi peak copper production during period expected to average > 600,000 tonnes annually due to high grades North  2024-2036: Total mine copper production over period expected to average > 500,000 tonnes annually  Following Panel 0, production will move outward with Panels 1 and 2

Underground development status 12  7.7 equivalent kilometres completed (January 2016 – end Q4’17)  Newly installed 3,500 tonne per day crusher consistently Lateral development operating above nameplate capacity  Expect ~10.0 kilometres of lateral development in 2018 Shaft 2  Shaft sinking complete in January 2018  Shaft fit-out expected throughout 2018 (Production and ventilation)  Shaft sinking complete in March 2018; fan installation expected Shaft 5 to be complete in early Q2’18 (Ventilation)  Increase in lateral development expected when completed  Surface excavation complete Convey-to-Surface  Underground decline commenced in Q1’17

Complete ramp-up expected by 2027 13 Sustainable underground production Complete convey-to-surface Project First draw Complete concentrator Complete re-start bell firing upgrade ramp-up 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Expansion capital Pre-start 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.

Hugo North Lift 1 production schedule 14 Figure: 2016 Oyu Tolgoi Technical Report.