Turquoise Hill Resources on Thursdayannounced that Oyu Tolgoi LLC has received, and is evaluating, a Tax Act (“tax assessment”) for approximately US$228 million cash tax from the Mongolian Tax Authority (MTA) relating to an audit on taxes imposed and paid by Oyu Tolgoi LLC between 2016 and 2018. This tax assessment is being evaluated by Oyu Tolgoi LLC and a response will be issued within the timeframe required by Mongolian Law.

As previously announced by Turquoise Hill, on 16 January, 2018, Oyu Tolgoi LLC had received and was evaluating a tax assessment for approximately US$155 million from the MTA relating to an audit on taxes imposed and paid by Oyu Tolgoi LLC between 2013 and 2015. On20 February, 2020, Turquoise Hill announced that Oyu Tolgoi LLC initiated formal international arbitration proceeding in accordance with the dispute resolution provisions within Chapter 14 of the Oyu Tolgoi Investment Agreement (Investment Agreement) entered into with the Government of Mongolia in 2009 and Chapter 8 of the Oyu Tolgoi Underground Mine Development and Financing Plan entered into with the Government of Mongolia in 2015. Most of the matters raised in respect of the current US$228m cash tax assessment for the 2016 to 2018 years are of a similar nature to the matters that have been referred to international arbitration for the 2013 to 2015 years.

The MTA has also made a US$1.5 billion adjustment to the balance of Oyu Tolgoi LLC’s carried forward tax losses. The adjustments are to disallow or defer certain tax deductions claimed in the 2016 to 2018 years. The relevant losses are not currently scheduled to be utilized in the near term. This adjustment is also being evaluated by Oyu Tolgoi LLC and a response will be issued within the timeframe required by Mongolian Law.

Turquoise Hill remains of the opinion that Oyu Tolgoi LLC has paid all taxes and charges required under the Investment Agreement, the Amended and Restated Shareholder Agreement, the Underground Mine Development and Financing Plan and Mongolian law.