The Asia Miner

JAN-FEB 2017

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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16 | ASIA Miner | Volume 14 • Issue 1 | 2017 THE exploration licence for Eumeralla Resources' Chuluun Kho- root Tungsten Project in northeast Mongolia has been extended for an additional three years. The Mineral Resources Authority of Mongolia (MRAM) has extended the licence to September 26, 2019 and has reduced the tenement area from 12,658 hectares to 2786 hectares. Centreville LLC, a Mongolian domiciled subsidiary, holds the Ovoot licence in north-eastern Mongolian. The licence incorporates the historical Chuluun Khoroot tungsten mine which was active during the period from 1945-1955. The Chuluun Khoroot tungsten deposit was discovered in 1944 and is in the south-eastern part of the licence area. Tungsten and subordinate molybdenum mineralisation are associated with a se- ries of quartz veins within the Chuluun Khoroot granite and sur- rounding sedimentary rocks. Approximately 23 quartz veins have been identified with the 'main vein' and number 18 vein having been the focus of past explo- ration. The main vein is approximately 500 metres long, strikes northwest-southeast and is essentially vertical. The vein has been explored to depths up to 60 metres and at surface appears to be 1-2 metres wide. The number 18 vein is approximately 100 metres long, 0.14 metres wide and has a variable strike from northeast-southwest to north-south. This vein has been explored to a depth of 12 metres. Chuluun Khoroot is about 20km north of the town of Dashbal- bar, 850km northeast of Ulaanbaatar and 85km northwest of the Solowevsk to Choibalsan railway. ASX-listed Eumeralla, which also has exploration interests in Myanmar, including the historic Mawchi tungsten mine, has ex- ecuted a formal share sale agreement with the security holders of Ausmex Mining Ltd. Eumeralla will acquire all of the outstand- ing shares in Ausmex for consideration of 207 million Eumeralla shares to be issued to the Ausmex vendors. Ausmex's largest shareholder is C4 Shares Pty Ltd, which will be entitled to approximately 48.3% of the shares to be issued to the vendors. As a consequence of the proposed acquisition, if approved, C4 Shares is expected to hold approximately 25.6% of the listed merged entity. An indicative timetable has set the settlement date of the trans- action as being March 24, 2017 and the re-quotation date as April 7. TURQUOISE Hill Resources expects to produce between 130,000 and 160,000 tonnes of copper and 100,000 to 140,000 ounces of gold from the Oyu Tolgoi open pit in 2017. The guidance is lower than 2016 production primarily due to approximately 25% less copper head grade and 50% less gold head grade. Open pit operations are expected to mine in Phase 6 as well as con- tinue the stripping of Phase 4. Stockpiled ore will also be processed. During 2016, the mine plan for Phase 4 was divided into two parts, 4A and 4B, in expectation of reaching the high-grade gold zone of Phase 4 around mid-2018. Accordingly, mine stripping for 2017 will focus on Phase 4A. Operating cash costs for 2017 are expected to be approximately US$720 million with the reduction from 2016 reflecting cost improve- ments and the impact of lower logistics costs from decreased pro- duction. Capital expenditures for 2017 are expected to be approximately $100 million for open-pit operations and $825 million to $925 million for underground development. Open-pit capital includes about $40 million of deferred stripping and reflects lower maintenance costs, reduced deferred stripping costs due to optimisation and improved tailings stor- age costs. Underground development capital includes expansion capital and VAT. In an effort to encourage bidding by Mongolian suppliers, Oyu Tolgoi has incorporated longer tendering periods resulting in a slightly longer capital deployment process. The company continues to expect production from the first underground draw bell in mid-2020 and first sustainable production from early 2021. Good progress continued during the September quarter on under- ground development, including ongoing contractor mobilisation and the signing of an additional contract for sinking of Shafts 2 and 5. At the end of the quarter Oyu Tolgoi had spent $105.8 million on underground expansion capital and had commitments of more than $750 million. The mine recorded revenue of $226.3 million in the third quarter, a decrease of 31.4% on the previous quarter, primarily reflecting reduced gold sales due to lower production. Copper production of 46,600 tonnes was 9.9% lower than the June quarter as a result of lower recovery from Phase 6 ore while, as expect- ed, gold production of 37,000 ounces was 47.1% lower due to lower grades from the completion of mining Phase 2. There were 361,000 ounces of silver produced, down from 395,000. Chuluun Khoroot exploration licence extended Lower 2017 production expected at OT Inside the concentrator at the Oyu Tolgoi Copper-Gold-Silver Project in southern Mongolia.

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