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Southern Region Power Sector Cooperation Agreement

Southern Region Power Sector Cooperation Agreement

Oyu Tolgoi LLC today announced the signing of a new Power Receiving Agreement (APC) with Mongolia`s National Power Transmission Grid (NPTG). In line with the commitments made by the SRPSCA and the Oyu Tolgoi Investment Agreement, Oyu Tolgoi remains committed to the national power source and works closely with the relevant government authorities and investors selected by the government to accelerate the development of an indoor power plant. The 2009 Oyu Tolgoi investment agreement between the government and Rio Tinto stipulates that the investor will meet all of its electricity needs for the OT project from three sources in Mongolia within four years of the start of production. In August 2014, the Mongolian authorities and Oyu Tolgoi signed the Southern Region Power Sector Cooperation Agreement (SRPSCA) and committed to cooperate to source bridge energy from Inner Mongolia. Oyu Tolgoi, Turquoise Hill and Rio Tinto are committed to meeting all requirements of the investment agreement and continue to explore all viable energy options, including the construction of a power plant at Oyu Tolgoi. A final decision on the outcome, cost or financing of a permanent national electricity supply is not yet completed at this stage. The cost of a power supply solution for Oyu Tolgoi is not included in the estimate of the company`s $US 5.3 billion expansion capital project for the development of Hugo North Lift 1. Domestic electricity for Oyu Tolgoi is dealt with in Chapter Seven (Infrastructure) of the Investment Agreement. The new regime will enter into force on 4 July 2017 for a maximum period of six years, with the possibility of early termination after the fourth year if an inland power plant is commissioned earlier. “This agreement gives us access to a reliable supply of electricity to ensure the continued development of our operations, while we continue to work with the government to establish a permanent indoor power source. This agreement is the culmination of a two-year cooperation between a joint negotiating team of the Government of Mongolia and Oyu Tolgoi and is an excellent example of the continuation of fruitful strategic cooperation. In August 2014, the Government of Mongolia and Oyu Tolgoi signed the PSCA for the exploration of an independent power producer based in Tavan Tolgoi. The agreement provided a framework for long-term strategic cooperation between the Mongolian government and Oyu Tolgoi to establish a comprehensive energy plan for the South Gobi region.

Participation in PSCA fulfilled Oyu Tolgoi`s commitment in the 2009 Oyu Tolgoi Investment Agreement (Investment Agreement) to establish a long-term electricity supply within Mongolia four years after the start of commercial production. Following the government`s cancellation, Oyu Tolgoi`s long-term electricity supply is to be purchased on the national territory within four years from February 15, 2018. VANCOUVER, BC-(Marketwired – February 15, 2018) – Turquoise Hill announced today that Oyu Tolgoi has received notification that the Government of Mongolia (Government) has terminated the Power Sector Cooperation Agreement (PSCA) signed in 2014. . .

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