Dear Pierre,
We are trying to help some Mongolian NGOs undertand Rio Tinto’s big project – Turquoise Hill.

Can you help us understand the IRR ? Does it seem it seem a reasonable and balanced return?

Regarding IRR, the feasibility (also known as the Integrated Development and Operations Plan) is in the public domain on Turquoise Hill Resource’s website here: http://www.turquoisehill.com/s/oyu_tolgoi.asp?ReportID=518703. You can find the NPTV, IRR and other information is summarized on page 29.

Project Internal Rate of Return (IRR%) After Tax
2.00 21% 22% 23% 25% 26% 27% 29% 31%
2.50 26% 27% 28% 29% 30% 31% 33% 35%
2.85 29% 30% 31% 32% 33% 34% 36% 37%
3.00 30% 31% 32% 33% 34% 35% 37% 38%
3.50 34% 35% 35% 36% 37% 38% 40% 41%
4.00 37% 38% 39% 39% 40% 41% 42% 44%
4.50 40% 41% 41% 42% 43% 44% 45% 46%
5.00 43% 43% 44% 45% 45% 46% 47% 48%

My comment:
The figures given in this mail show Cu market prices in column 1. I do not think it is important for RAID to dwell on IRR, which pertain to the investor's "economic calculation". The investor's objective here is to anticipate whether sales will cover all costs of production, at all times and at different Cu market prices.

Tricia Feeney
Executive Director
Rights & Accountability in Development
E-mail: tricia.feeney@raid-uk.org
Tel: 44 (0) 1865 436245
Mobile: 07796 178447