Resource World Magazine

o c t o b e r / n o v e m b e r 2 0 1 4 www.resourceworld.com 7 Oyu Tolgoi property. Its work included detailed geophysical, geochemical and geological mapping, as well as diamond drilling 23 widely-spaced holes within a 5 km 2 area. At that time, copper and gold mineralization was indicated in three main zones: Central, South and North Oyu, according to an Ivanhoe Mines, May 8, 2000, news release. Ivanhoe Mines, con- ducting a separate, preliminary hunt for exploration prospects, examined more than 350 mineral occurrences in Mongolia between 1996 and 1999 and continued to monitor BHP's work. However, BHP did not find sufficient resources to justify the development of a mine and in 1999 offered its Oyu Tolgoi exploration tenements to other compa- nies through a joint venture arrangement. Friedland was quick to seize the opportu- nity; he settled a deal with BHP in May 2000 that gave Ivanhoe the right to acquire a 100% interest in the Oyu Tolgoi pros- pect and later the same month Ivanhoe began its own drilling at Oyu Tolgoi. With no impressive initial results and budgets running out, Friedland eventually staked everything on a deep-drilling campaign that finally succeeded in hitting Oyu Tolgoi's first gold and copper jackpot in June 2001. In November 2003, Ivanhoe bought BHP's remaining interest in Oyu Tolgoi, paying US $37 million to acquire its 2% net smelter return royalty interest. By this time, Ivanhoe's exploration program had grown to 16 drilling rigs and independent geologists termed the discovery one of the world's largest and highest-grade copper- gold porphyry deposits. Independent experts have estimated that Oyu Tolgoi contains 100 billion pounds of copper and 61 million ounces of gold in measured, indicated and inferred resources. "Mongolia has become the place to be for large and small companies engaged in the global quest for copper and gold," Friedland declared in November 2003. The major Oyu Tolgoi discoveries enabled Friedland's Ivanhoe Mines to com- mit to providing long-term benefits for the government and people of Mongolia. This included expanding international prac- tices of environmental management and operational safety and health. It also saw to improving social programs and economic benefits in the South Gobi communities of Khanbogd, Manlai and Dalanzadgad, while respecting cultural values and nomadic traditions of livestock herding. For exam- ple, the community development program of 2011 took a wide variety of 53 local businesses through training and banking methods near the Oyu Tolgoi site. Indeed, Friedland's commitment to the people and government of Mongolia also included Ivanhoe's 2003 purchase of a one- year US $50 million treasury bill to help Mongolia retire its national debt to the Russian Federation that was incurred dur- ing the Soviet era, before 1991. "He introduced my country to the world of mining," said Ms. Bolormaa Nuurkhuu, Director of Geology of Mongolia-owned Khemchig Gold in an interview in Ulaanbaatar, Mongolia. However, these achievements were not without growing pains experienced by new systems of democracy and capitalism within Mongolia. Between 2005 and 2009, Friedland and members of Ivanhoe's Canada-based leadership team travelled back and forth to Mongolia to participate in negotia- tions with the Mongolian government for a long-term Investment Agreement to provide the required stable legal and tax environment for the massive capital invest- ment required to develop the Oyu Tolgoi Project. At the same time, Friedland was able to negotiate a strategic partnership with international miner Rio Tinto plc, which was accompanied by an initial Rio Tinto private placement investment of US $303 million. After much wrangling, the Mongolian government, Ivanhoe and Rio Tinto signed an Investment Agreement in October 2009 to build and operate the Oyu Tolgoi copper-gold mining complex. The agreement allocated a 34% ownership stake in the project to the government, Kerry Griffin, Technical Director, Altan Rio, at left, and Nasandelger Buyanjargal, Project Geologist, Altan Rio, examine mineral samples in their Mongolian office. Photo courtesy Altan Rio Minerals Ltd. LEFT: The open pit at the Oyu Tolgoi copper- gold mine in the South Gobi Desert, Mongolia. An underground feasibility study has just been finalized which stated there is an after-tax NPV (8%) of US $7.43 billion. Photo courtesy Turquoise Hill Resources Ltd.

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