31.08.2012 Oyu Tolgoi partnership breeds success, Cameron McRae

Cameron McRae President & CEO

OYU TOLGOI: PARTNERSHIP BREEDS SUCCESS DISCOVER MONGOLIA 2012

2 БҮХ ЭРХ ХУУЛИАР ХАМГААЛАГДСАН © 2012, ОЮУ ТОЛГОЙ ХХК COPYRIGHT © 2012 OYU TOLGOI , ALL RIGHTS RESERVED

RAPID PROGRESS – STRONG PARTNERSHIP EQUALS SUCCESS


THE REWARDS OF PARTNERSHIP – BEHIND EVERY NUMBER A HUMAN STORY

• 575m USD spent on an international standard

airport, road to Gashuun Sukhait, a 90km water

pipeline and 220kv power line to China –

Country-wide benefits

• 125m USD for education and training, including

three training and vocational centres - 3300 benefit

• 23m USD spent for social, cultural and economic

development of Umnugobi aimag -

52,000 benefit across the Umnogobi

• 1.3b USD spent with Mongolian suppliers in 2011 -

over 1,000 companies and their employees benefit

• 700m USD to be paid to Government prior to the

completion of the project construction phase 1 –

Country-wide benefits


* Source: IDOP Technical Report Assumptions

In 2020, 80 per cent of wealth will come from underground

Open Pit 184kT Cu

Underground 628kT Cu

A PARTNERSHIP FOR FUTURE PROSPERITY

Ready to go Yet to come


• Established Government obligations: • Clear legal framework • Stable tax environment (but no tax holiday) • 30 year term, with right to negotiate to go to

50% after that point

• Established Investor obligations on: • National workforce targets • Infrastructure and Regional Development • Education and training • Environmental stewardship • Procurement and national supplier

development

THE INVESTMENT AGREEMENT – THE FOUNDATION OF A STABLE PARTNERSHIP


-15

-10

-5

0

5

10

15

2001 2006 2011 2016 2021 2026

Actual Forward

Cumulative cash to Government of Mongolia

Important: Includes DIRECT payments from Oyu Tolgoi to Government of Mongolia only. Excludes all indirect cashflow to Government (e.g. taxes paid by Oyu Tolgoi’s employees and suppliers)

Cumulative cash to international investors

Investors take more than two decades to break even

Outcomes presented are based upon assumptions released publicly in Ivanhoe Mines’ March 2012 IDOP Technical Report, and assuming a 10% cost of funding. While there will inevitably be variation from these specific outcomes given differences between IDOP Technical Report price, volume and cost assumptions and future reality, the broad picture will not change.

STABILITY MEANS MONGOLIA BENEFITS FIRST, MOST & RISK-FREE


Source: Mongolia The fiscal regime for mining—a way forward, IMF 2010. Confirmed by Oyu Tolgoi modelling

Government of Mongolia International investors *Based on IMF 55-71 per cent projection + cost of funding + multiplier effect

STABILITY AND PARTNERSHIP THAT PAYS – THE GOVERNMENT GETS 55-71% PLUS*


Source: Bloomberg

500

700

900

1,100

1,300

1,500

1,700

1,900

Feb

-10

Mar

-10

Ap

r-10

May

-10

Jun

-10

Jul-

10

Au

g-1

0

Sep

-10

Oct

-10

No

v-10

Dec

-10

Jan

-11

Feb

-11

Mar

-11

Ap

r-11

May

-11

Jun

-11

Jul-

11

Au

g-1

1

Sep

-11

Oct

-11

No

v-11

Dec

-11

Jan

-12

Feb

-12

Mar

-12

Ap

r-12

May

-12

2

3

1

1

2

3

Silk Road Mongolia Index /SILKMN/

OT Investment Agreement finalized with its partners to develop the project

TT agreement uncertainty OT Investment Agreement – Parliament attempted renegotiation

Amendments to the FDI law

4

4

Investment Agreement reaffirmed

A STABLE AND SAFE ENVIRONMENT IS ESSENTIAL FOR MONGOLIA TO CONTINUE TO BENEFIT FROM OYU TOLGOI, AND FROM FDI


Business • Pay its fair share

• Grow the economy

• Develop talent

• Share international experience

• Use skills to benefit Mongolia

Government • Guarantee fair returns for the

people of Mongolia

• Create platform for the next wave of investment

• Direct revenues from mineral wealth wisely

Business and Government each have clear roles and responsibilities

REALISING A PROSPEROUS FUTURE – SUCCESS THROUGH PARTNERSHIP

THANK YOU

Visit the Oyu Tolgoi Website: www.ot.mn Follow us on Facebook: www.facebook.com/oyutolgoi Follow us on Twitter: @OTMongolia