RioTinto, Turquoise HillResources Ltd. and the Government of Mongolia approved the nextdevelopment stage for the Oyu Tolgoi copper-gold mine in Mongolia.

The development of the underground mine will start inmid-2016 as the partners approved a US$5.3 billion investment, which Rio Tintodeputy chief executive Jean-Sébastien Jacques said will unlock 80% of theproject's value.

First production from underground is expected in 2020 at anaverage copper grade of 1.66%, which is over three times the open pit grade.The gold byproduct, on the other hand, will have an average gold grade of 0.35g/t.

Full ramp up, anticipated in 2027, will lead to productionof over 500,000 tonnes of copper annually, compared to the current output of175,000 tonnes to 200,000 tonnes per year.

On average, Oyu Tolgoi is expected to produce 560,000 tonnesof copper per year between 2025 and 2030, and operate in the first quartile ofthe copper cost curve.

The underground expansion is estimated to have an over 20%internal rate of return.

The Mongolian government owns 34% of Oyu Tolgoi, while 66%is held by Rio Tinto's 51% subsidiary Turquoise Hill.