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Turquoise Hill Resources Ltd (NYSE:TRQ)
Q4 2019 Earnings Call
Mar 23, 2020, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. My name is Joanna, and I will be your conference operator today. At this time, I would like to welcome everyone to the Turquoise Hill Resources Q4 2019 Financial Results and Review of Operations. [Operator Instructions]

Thank you. Mr. Roy McDowall, you may begin your conference.

Roy McDowall -- Head of Investor Relations & Corporate Communications

Thank you, Joanna.

Good morning. I'm Roy McDowall, Head of Investor Relations and Communications. Welcome to our fourth quarter and year-end 2019 financial results conference call.

On Friday, we released our fourth quarter and year-end 2019 results press release, MD&A and financial statements. These items are available on our website and SEDAR. With me on the call are Ulf Quellmann, our CEO; Luke Colton, our CFO; and Jo-Anne Dudley, our COO.

This call and presentation includes certain forward-looking statements and information. We refer you to the forward-looking statements section of the Annual Information Form dated March 18, 2020, as supplemented by our MD&A for the 12 months ended December 31, 2019.

And now I'd like to turn the call over to our Chief Executive Officer, Ulf Quellmann.

Ulf Quellmann -- Chief Executive Officer

Thank you, Roy, and good morning to everyone. Thank you for joining us for our fourth quarter and year-end 2019 financial earnings call.

First, I'd like to acknowledge the extraordinary situation we're all finding ourselves in caused by the spread of the coronavirus pandemic. I know we have people dialing in from various parts of Canada and of course other parts of the world. I hope that you, your families and those in your communities are healthy, safe and are managing the circumstances as best you can.

We are living in what feels like truly unprecedented times, impacting both our personal lives and our business. I'll have more to say on the COVID-19 later in this presentation, and I suspect that the effects of COVID-19 will be with us for a while, prompting us to provide you with a series of updates in what is a rapidly evolving global situation.

To start with, though, we will provide you with an update on our fourth quarter and full year 2019 operational and financial results which we released on Friday last week after markets closed as well as an update on other key drivers of the business.

2019 was a year characterized by both notable achievements and challenges. Our open-pit operations posted another year of exceeding guidance, while our underground development team continued to achieve significant milestones as we make progress toward completing the underground and ramping up toward first sustainable production.

Operationally, the fourth quarter of 2019 contributed to another strong year for Oyu Tolgoi's open pit operations from a production, cost and safety perspective. Our full year copper production of 146,346 tonnes was in line with our original guidance, while our full year gold production of 241,840 ounces was materially better than the original guidance. This increased gold production had a positive impact on our costs, with 2019 C1 cash costs and all-in sustaining costs at reporting at $1.37 and $2.08 per pound of copper produced respectively.

As you well know, safety is our number one priority, and it's also critical to our continued success. Oyu Tolgoi's all-in injury frequency rate of 0.16 is best in class among our peer group and reflects the Safety First commitment that is embedded in Oyu Tolgoi's culture.

Turning to the underground development. We continue to work on a new mine design and anticipate its completion during the first half of 2020, with a definitive estimate which will include the estimate of cost and schedule for the underground project based on updated design still expected to be delivered in the second half of this year. A critical piece of the infrastructure that accelerates the underground development, Shaft 2, was completed in October 2019 and has enabled the team to increase our productivity levels and begin the movement of underground development material to surface.

Looking forward to 2020 production guidance. Although the midpoint copper production range guidance is higher than 2019, we're forecasting [Phonetic] lower year-over-year gold production. This is due to the need to mine through lower grade material on the periphery of the South West pit as Phase 4B sinks toward the highest gold and copper grades in the bottom of the pit. It is therefore anticipated that accessing the higher grade ore will result in a significant increase in gold production in 2021.

Finally, as of the end of 2019, Turquoise Hill had $2.2 billion of available liquidity, which we currently expect to fund our operations and underground development into the second quarter of 2021.

Let me now provide a brief production summary of the results we previously reported in mid-January. Breaking down our operating performance in the fourth quarter of 2019, open pit produced 32,905 tonnes of copper and 24,344 ounces of gold, with C1 cash costs of $2.21 per pound of copper. Both copper and gold production were lower compared to the fourth quarter of 2018 due to decreased head grade driven by the transition from the higher grade phases 4A and 6A to lower grade phases 4B, 6B and stockpiles. Mill throughput during the fourth quarter was a very strong 120,000 tonnes per day versus the nameplate capacity of 100,000 tonnes a day.

Turning to our full year 2019 production numbers on slide 6. As stated in the introduction, the combined approximately 146,000 tonnes of copper and approximately 242,000 ounces of gold exceeded our initial 2019 guidance. Our open pit team has done an excellent job of maximizing the mill throughput and beating expectations while achieving record safety levels. Our full year 2019 C1 cash costs of $1.37 per pound of copper produced reflect the stronger than forecast gold production.

On slide 7, you will see the strong continuation of our safety record. Both the open-pit operations and the underground development, delivered another very strong safety performance. The all-injury frequency rate of 0.16 for 2019 is best in class among our peer group and reflects the Safety First commitment that is embedded at the Oyu Tolgoi culture through every aspect of the business. If it can't be done safely, it will not be done.

A key milestone toward the progression of the underground development was the completion of Shaft 2 in October last year. Shaft 2 uses the world's largest production hoist motor that can carry 300 workers down 1.3 kilometers in 2.5 minutes at 36 kilometers an hour. The production hoist is equally as impressive with the capability of hoisting 60 tonnes skips at 59 kilometers per hour. Shaft 2 was completed with predominantly Mongolian workforce of 2,500 people, and it took approximately 2.6 million hours to complete and it has allowed our team to accelerate the underground development as we move into 2020.

Our team achieved a new record of 1,809 equivalent meters of lateral development in December, and we're now lifting underground development material to surface via the Shaft 2 production hoist. We are proud to have completed Shaft 2 which is considered to be one of the most complex mining shafts ever undertaken, and we look forward to reaping the benefits of it in 2020.

Primary Crusher 1 civil works are ongoing, and the team has successfully poured the sixth level of crusher wall and installed steel for preparation of pour seven. All of this is of course subject to any potential impact of COVID-19 related delays, which we'll come back to later.

Detailed analysis work on the mine design is still anticipated to be completed during the first half of this year, and the definitive estimate, which will include the estimate of cost and schedule for the underground based on the updated design of Panel 0 is still expected to be delivered in the second half of 2020.

Slide 9 provides an overview of some of the critical infrastructure that we've completed to date. We won't go through each component, but would just like to reiterate that all of the infrastructure completed to date is not affected by any changes to our mine design.

Let me now turn the call over to Jo-Anne Dudley, our Chief Operating Officer, who will provide you with an update on our work to finalize the new mine design. Jo-Anne?

Jo-Anne Dudley -- Chief Operating Officer

Thanks, Ulf. Hello, everybody.

Please turn to slide 10. You'll recall from our third quarter update that we'd guided the market to expect the new mine design in first half of 2020 and a definitive estimate in second half 2020. As of today, we believe these timelines are still applicable and look forward to providing the market with greater clarity on the underground development to the Oyu Tolgoi mine.

Over the past few months, we've made some important steps toward completing the final mine design, including the decision on the inclusion of a mid-access drive on the apex level only to minimize stability risks impacting future production. Other design considerations, including ore pass locations, panel sequencing, non-development productivity inputs and the detailed on-footprint design of the underground mine are progressing. The design and location of all the other major infrastructure such as shafts and primary crushers are unchanged through the feasibility study.

The design changes are focused around the Panel 0 mining area, which is the highest grade design of the Oyu Tolgoi underground and remains our priority target. Current estimates continue to indicate that the sustainable first production could be delayed by 16 to 30 months compared with the Q1 2021 estimate in the original feasibility study guidance in 2016. And the development capital spend for the project may increase by $1.2 billion to $1.9 billion over the $5.3 billion previously disclosed. A new program of work is under way to optimize performance. While technical review is ongoing to guide upon inputs into an updated detailed cost estimate for the Hugo North Lift 1 development. Recent work, including the mid-access drive decision, indicates that the scheduled delay remains within the 16 to 30 months range but is trending away from the lower end.

Mine design considerations include the consequential impacts on cost, schedule and other key variables such as mineral reserve, project ramp-up profile and peak production, together with the improvements in underground and updates of our productivity assumptions. An update on the development capital or schedule cannot be completed until these decisions have been finalized. The corresponding pre-feasibility study Panel 0 designs are being detailed to feasibility study standard, then scheduled and costed to form the definitive estimate and are due in the second half of 2020. In the interim, we'll continue to focus on minimizing the impact to the project schedule and cost as we work through the detailed analysis and testing of each mine design modification.

In addition to working closely with Rio Tinto, Turquoise Hill has engaged independent third-party consultants to provide the Company with insight and technical support into the planning and estimate process currently under way.

I'll be available for questions. But in the meantime, Ulf, would you like to continue?

Ulf Quellmann -- Chief Executive Officer

Thank you, Jo-Anne.

Let me turn to slide 11. Our partnership and cooperation with the Government of Mongolia continues to move forward on a few fronts. Regarding the future power supply for the Oyu Tolgoi mine, Oyu Tolgoi has submitted a feasibility study to the Government of Mongolia that is based on a 300 megawatt coal-fired power plant to be located in the Tavan Tolgoi coal mining district. Amongst the other options that are being studied, renewables are also one alternative that's being looked at, and we will continue to work with the key stakeholders to ultimately decide on a power solution that provides long-term, reliable, domestically sourced competitive power for Oyu Tolgoi.

In regards to the outstanding tax assessment, and as communicated previously, Oyu Tolgoi has initiated formal international arbitration proceedings, and in doing so, we believe that both Oyu Tolgoi as well as the Mongolian authorities are able to take advantage of the findings of an independent third party as part of a pre-agreed and predetermined resolution process.

In relation to the Parliamentary Working Group, a final report has been set to the Economic Standing Committee, and based on this report, a resolution was drafted and put forward to the Parliament of Mongolia. That resolution was passed during a plenary session on November 21 last year. We believe that that resolution reflects a commitment to work together to further support the development of the underground mine, and it will serve as the basis of future discussions between the Government of Mongolia, Rio Tinto and Turquoise Hill Resources in relation to Oyu Tolgoi.

Let me now turn the call over to our Chief Financial Officer, Luke Colton, to speak about the Company's financial performance both for the fourth quarter and for the full year 2019. Luke?

Luke Colton -- Chief Financial Officer

Thanks, Ulf, and hello to everyone on the call. I do hope you're safe and well.

If I could get you to please turn to slide 12, I'll give you a summary of our key financial metrics for 2019. Focusing on the full year results, revenue in 2019 was $1.2 billion. That's a decrease of 1% compared to 2018. This was primarily due to a 9% decrease in copper revenue, which in turn was driven by an 8% decrease in copper production that reflects the transition from mining Phase 4A to lower-grade Phase 4B ore and stockpiles. This was partially offset by the higher gold revenue, and that's driven by a 10% increase in average annual gold price from 2018 to 2019.

Net cash used in operating activities was $11.7 million in 2019. That compares with net cash generated of $180 million in 2018. Cash generated from operating activities before interest and tax was $341.7 million in 2019, and that compares to $363 million in 2018, primarily reflecting the impact of lower sales revenue and an unfavorable movements in working capital.

OT's C1 cash cost in 2019 were $1.37 per pound of copper produced. That's a decrease from $1.59 in 2018. Both of these are presented net of revenue from gold and silver sales. All-in sustaining costs in 2019 were $2.08 per pound of copper produced compared with $2.20 per pound of copper produced in 2018. The reason for the decrease in both metrics was mainly due to the impact of the higher gold and silver credits, driven by the 22% increase in gold sales revenue from 2018. This also led to the 2019 C1 cash costs coming in under the guidance range of $1.50 to $1.70 per pound of copper produced.

Total capital expenditure was $1.3 billion in 2019, that consistent with 2018, and it includes $1.2 billion in underground development capital which was in line with our 2019 guidance range. Since January 1, 2016, the total amount spent on underground development is approximately $3.5 billion. In addition, OT had further capital commitments of $0.8 billion as of December 31, 2019.

Turquoise Hill's liquidity balance at the end of 2019 was $2.2 billion, including $1.7 billion of cash and cash equivalents and $0.5 billion of undrawn funds under the project finance facility. The decrease of $1.3 billion during 2019 was due to additional drawdowns of project finance funds to readvance to OT to fund the underground development activities during the year.

Turning to slide 13, which provides some additional detail for the movement in C1 cash costs from 2018 to 2019. As I previously mentioned, the decrease from $1.59 to $1.37 per pound of copper produced was mainly due to the higher gold and silver credits in 2019 versus 2018. In addition, there were lower freight and royalty costs, driven by lower volumes of concentrates sold and lower sales revenue, respectively. These benefits were marginally offset by the downward impact of lower copper production on direct costs.

Turning to slide 14 now. Turquoise Hill's liquidity balance at the end of 2019 was $2.2 billion, with $1.7 billion in cash and cash equivalents and $0.5 billion of remaining project finance proceeds. In addition, we expect to generate free cash flow at our existing open pit operations, but that's subject to the impact of COVID-19, and this will also be available to help fund the underground developments. We currently expect to have strong liquidity to fund operations and underground developments, including progression of a Tavan Tolgoi based power plant into Q2 of 2021.

As a result of the incremental underground capex and further scheduling delay announced in July, we will require significant incremental financing beyond this time frame. Completion of the mine optimization and definitive estimate will provide greater clarity on the amounts of additional funding required. As has been previously noted, there is an option to raise additional external financing subject to required approvals to assist in funding development going forward, including underground commissioning and ramp-up.

However, there are important variables that could impact the ultimate amount of additional financing required. These variables include the amount of incremental underground developments and power capital required; funding of sustainable first production and its resulting cash flows; ongoing debt service costs; funding of project finance; principal repayments; and the amount of cash flow that can be generated from operating activities net of sustaining capital requirements. In addition, the potential impact of COVID-19 on OT's open pit operations and underground development has to be considered, and Ulf will address this in more detail momentarily.

Current estimates indicate that the incremental funding requirement over and above the $2.2 billion in liquidity currently available is at least $4.5 billion. Turquoise Hill is well progressed in its discussions with Rio Tinto regarding its proposal for sourcing incremental interim funding to ensure the Company can progress the underground development over and above its $2.2 billion of available liquidity.

That's it for me. I'm available for questions shortly. Before that, I'll now hand back to Ulf.

Ulf Quellmann -- Chief Executive Officer

Thank you, Luke.

So at this point of the call, I would usually look to summarize our accomplishments and highlight the investment opportunity at hand, and I will do so shortly. However, in light of the impacts of the COVID-19 virus that it is having both on the health of our employees, our contractors, our customers, our suppliers and their families, as well as on business of course, let me take a moment and address this issue.

The first thing to say is Mongolia has taken some very strong measures to contain the virus very early on. As a result, there're only 10 confirmed cases in Mongolia as per the latest information available. That is a remarkable achievement, and we would like to acknowledge and congratulate the Mongolian authorities for being at the forefront of combating this global pandemic.

At the same time, Oyu Tolgoi has also taken a whole range of precautionary measures to protect and safeguard the health of its workforce as well as to keep the business going. At the mine site itself, the Oyu Tolgoi business resilience team is meeting on a daily basis, and it's taking a considered and risk-based approach to managing our response and actions for the prevention of COVID-19. As part of a range of broader measures, we have temperature and health screenings in place and a dedicated hotline for employees who are on or off-site to call in for advice or information sharing. Oyu Tolgoi has been cooperating and collaborating with the various Mongolian authorities to mitigate the impact of the pandemic. There are no cases of COVID-19 at Oyu Tolgoi.

The open pit operations have been able to continue to operate. We've been able to continue to export our concentrate across the border. We've also been able to receive inbound material such as consumables. So that's very positive and testament to the diligence and rigor both of the Oyu Tolgoi team as well as the local authorities. Where we are starting to see impacts, it's largely in areas that require either technical subject matter expertise or supervisory functionality that requires international experts. With the current travel restrictions in place, we are not able to bring in expatriates who are required for such services.

The impact here is likely to be felt more in various aspects of the underground development than in the actual open pit operations. To that end, Oyu Tolgoi is working with the authorities to investigate alternative arrangements that would be designed to help mitigate material impacts on the business. We've given an update on the situation earlier last week, and we will continue to do so once we have more clarity and visibility on any impacts that could be material. At this stage, we are focused on identifying the activities that are likely to be affected and putting in place mitigation measures where we possibly can.

Clearly, it is in crisis times like these where it becomes very visible how Oyu Tolgoi is benefiting, for example, from its very well trained and relatively higher proportion of local Mongolian nationals as part of its workforce. Oyu Tolgoi is also assisting the Government of Mongolia with the battle against COVID-19 where it can. For example, Oyu Tolgoi has donated MNT100 million to the government, and through the Oyu Tolgoi sponsored Oyu Development Support Fund, we further committed MNT200 million to the Umnugobi Emergency Committee and a further MNT10 million to the Khanbogd Emergency Commission for prevention support. And we're also sharing our prevention and hygiene controls which we have in place with local companies as they prepare to resume their operations and border crossings.

And finally, the management team of Turquoise Hill is closely monitoring the impact of the COVID-19 virus on the business and the operations, and we will continue to update the market as and when appropriate.

To now wrap up our prepared remarks, Oyu Tolgoi remains an outstanding business. There is no doubt about that. The operational performance and the safety track record are second to none and speak for themselves. We faced a big challenge last year when we had to recognize the increase in costs and schedule delay of the underground development. That was clearly a setback and it has been disappointing. Since then, though, the team has worked incredibly hard to progress the key milestone activities and the items that are on the critical path, and Jo-Anne has touched on some of that in her remarks.

The dialog with the Government of Mongolia is constructive, even though we recognize there is a fair bit of work to do whether it is in relation to progressing the power discussions or to close down the outstanding issues of the Parliamentary Working Group resolution. The financing discussions that are designed to give us more time and flexibility are also constructive and progressing. We're absolutely aware and cognizant of the fact that we need to raise substantial amounts of long-term financing next year, and that is what we are laying the foundation for now.

And finally, we are facing the challenges associated with COVID-19, and on that, I hope we've been able to give you a little more than just a flavor for our preparedness, our rigor and our sense of urgency. Everyone is absolutely focused on protecting the health of our workforce as well as preserving the resilience of the business. The weeks and months to come will inevitably continue to be challenging. But we are prepared and we are ready.

And with that, let me now turn the call back to our operator for any question. Joanna, back to you, please.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from Dalton Baretto of Canaccord. Please go ahead.

Dalton Baretto -- Canaccord Genuity Corp. -- Analyst

All right. Good morning, guys. And I apologize for any screaming kids you hear in the background here. First of all, thank you very much for the incremental disclosure on a lot of different fronts here. My first question is regards to the $4.5 billion funding gap that you currently estimate. Can you tell us what copper and gold prices that assumes, and what that number would be like at current spot prices?

Ulf Quellmann -- Chief Executive Officer

Dalton, thanks for the question. And like you, we're all calling in from different places. So I'm going to act a little bit like the master of ceremony here. Luke, maybe, is that a question that you would like to take on?

Luke Colton -- Chief Financial Officer

Sure, Ulf. Yes, I'm happy to do that. And thank you for the question. So I think the first sort of important thing to understand is that we're still at a stage in our deliberations in relation to the mine design and the definitive estimate, where we don't yet have that final mine design which is meant to happen in Q2, and we don't yet have the definitive estimate that is meant to be delivered in the second half of the year.

So, in terms of the variables that we use when monitoring and assessing the gap, we actually look at it under a variety of different key assumptions and a variety of different pricing scenarios. And all of that's kind of factored into the disclosure that you're now seeing in our MD&A and which we've discussed about on this earnings call, that the incremental funding requirement could be at least $4.5 billion.

Dalton Baretto -- Canaccord Genuity Corp. -- Analyst

Sure. I mean, I understand that. But $4.5 billion is a pretty specific number. I'm just wondering -- there must be copper and gold price assumption that goes into that. I'm just wondering how that number changes depending on what you assumed and where we're at today.

Luke Colton -- Chief Financial Officer

And listen, I can certainly appreciate your desire to get a bit more specificity there. We're not normally in the habit of giving a lot of details around the sort of -- internal sort of prices that we assume. But I think in this particular scenario, what I am able to say is that -- listen, we've looked at it under many different pricing scenarios, and from that perspective, we're comfortable with the disclosure that we have put out there that amounts at least $4.5 billion.

I mean, we are obviously cognizant of the recent impacts of COVID-19 and what that has done to the copper price. And obviously, we'll continue to monitor the situation. We'll continue to monitor the situation not only for that, but also for the additional information that we hope to have later in Q2 once we have that final mine design. And then of course we'll further refine as we get closer and we're able to deliver that definitive estimate in the second half of the year.

Dalton Baretto -- Canaccord Genuity Corp. -- Analyst

Okay. Maybe I'll leave that one there then. Just switching gears, as a follow-up. On page 21 of your MD&A, there is the amortization schedule for the project finance facility, and it looks like it's changed. Am I reading that right? Is that a function of kind of discussions you've had with the lenders? And if so, is that the end of it? Or can we see further changes to that amortization schedule?

Luke Colton -- Chief Financial Officer

Yeah. So, the discussion -- as you can appreciate, we are still looking at various options in terms of meeting that incremental funding requirement that starts kind of in Q2 of 2021. And we're very, very aware of the situation in relation to being in a position to have that incremental liquidity and have that additional time that we need to make sure we can continue to fund the business. And that's of course one of the reasons why we're in discussions with Rio Tinto, and those discussions are actually progressing very well in relation to an interim funding facility that will hopefully give us that additional liquidity and additional time that we need.

And there are a lot of different variables that go into the sort of consideration around what that incremental funding requirement might be. You're absolutely right that the amount of PF principal repayments is a key factor that goes into that consideration of what that incremental funding gap might be. We have updated that table in the MD&A. This is actually the first time that we've included those principal repayments in that table of the MD&A. They aren't based on any sort of reprofiling of the debt discussions that we've had with lenders to date. So we're not in a position yet to have had that particular discussion with the lenders, although we are hopeful we will be able to do that at the appropriate time.

Dalton Baretto -- Canaccord Genuity Corp. -- Analyst

Okay. That's great. That's all from me, guys. Thank you.

Luke Colton -- Chief Financial Officer

Thank you.

Operator

Thank you. The next question comes from Ralph Profiti of Eight Capital. Please go ahead.

Ralph Profiti -- Eight Capital -- Analyst

Hi there, and good morning, everyone. I have two questions. Firstly, I've been thinking about this mid-access drift for Panel 0. And I'm wondering, once it comes into production, what is the most important risks that are being factored into the design. I'm trying to get a sense of the mining risks which are separate from the unknown cost and schedule risks.

Ulf Quellmann -- Chief Executive Officer

Okay. Yeah. Thanks, Ralph. So, Jo-Anne, that may be one for you to address. And -- yeah, maybe try and do it in a way that answers Ralph's questions without taking us off into too much detail there.

Jo-Anne Dudley -- Chief Operating Officer

Thank you, Ulf. Yes, I certainly could with that question. In terms of the mid-access drive decision, what it indicates is some of what we've already talked about, where the ground conditions in Panel 0 have opened since the feasibility study, and we're responding by changing the design and sequence to minimize the risk to recovery of reserves and production rate. And so we're moving to protect the long-term future of the mine. So that speaks to trying to minimize those risks through taking the mine design approach that we have now.

And from an ongoing perspective, we are looking at trying to make sure that the mine design is resilient as it can be on the range of outcomes. Because the geotechnical conditions do have variability, the slides show best attempts at gathering the information. So, in this Panel 0 design update, what have been looked at are the key risks to those value drivers for the mine, production rate, and ramp-up rates, those kinds of things -- productivity. And so they've been factored into the work that's been done -- and risk minimization has been fair and square in the center of the discussion.

So, does that answer your question?

Ralph Profiti -- Eight Capital -- Analyst

Yeah, it does. I think you touched on geotechnical ground conditions that sort of seems to be key issues within the parameters right up to design. So that is helpful. Yes, thank you.

Ulf, prior to any COVID-19 related steps, what was the 2020 target for total equivalent development? Because I believe the 2016 technical report has just under 17,000 kilometers. And thinking about that, I know it's dynamic and it's probably changing week to week, but can you maybe quantify sort of the short-term underground rates? Are they down 10%, 20%, 50%? And I know that's changing on a week-to-week basis. And maybe give us a little flavor of how January and February performed.

Ulf Quellmann -- Chief Executive Officer

Yeah, Ralph. Thanks for the question, Ralph. What I would say is, we've given you a fair bit of extra disclosure this morning here, right, and in some respects we've opted on side of doing that because we think it's helpful, even though from a timing perspective, it is a little bit premature in a sense that the question you're asking now we can probably answer a little bit better once we've finished the mine design, which is in the first half of this year and then of course with the definitive estimate later in the year.

So, what I would say, Ralph, the best answer I think to answer your question is that we haven't disclosed it at monthly -- February rates at the moment. But you look at December, obviously has gone well. I think we have seen in general the business to continue to perform well, and that was in my comments on the COVID virus. At the moment, we are sort of at a bit of an inflection point, inflection point in the sense that the operations have done well, have been virtually not materially been affected by COVID on the underground, and that affects now a number of areas.

We're getting to the point where really the travel restrictions are starting to have an impact. And that has different effects on different work fronts. And sort of at the moment, we are exactly at this stage, Ralph, where we need to assess that to then identify, well, what are the areas that are being impacted, are there mitigating measures that we can take. If we can, we likely need the Mongolian authorities, because at some stage we will need foreign expertise to come into the country. On the call today, Ralph, we can't quantify that because where we are and how fluid things are.

Having said that, in the weeks and months to come, we will obviously know more and give you an update at that time. But today, the timing of the call, if you like, is we are in the middle of a very, very fluid situation. So today we can't give you a specific number, I'm afraid. But I'm hoping that we can able to give you a good picture as to where we are and what the types of impacts are and how we plan to address that.

Ralph Profiti -- Eight Capital -- Analyst

Yes, Ulf, I agree. I completely understand. And very helpful answers. Thank you.

Ulf Quellmann -- Chief Executive Officer

Thank you, Ralph.

Operator

Thank you. The next question comes from Orest Wowkodaw of Scotiabank. Please go ahead.

Orest Wowkodaw -- Scotiabank -- Analyst

Good morning, everybody. I've got some questions, all about this financing requirement, at least $4.5 billion. That's a really big number to throw at to the market without I think giving us details. If I understand this correctly, does that assume -- does that number include the full cost of the power plant? And what is that cost?

Ulf Quellmann -- Chief Executive Officer

Yeah, thanks, Orest. Luke, that's probably -- Luke, I think you'll get a lot of question on the call this morning, I'm afraid. I'm going to ask you, Luke, to take this one as well, if you're OK to do that.

Luke Colton -- Chief Financial Officer

Yeah. No, of course. I'm happy to. So listen, I'm going to try and be as comprehensive as I can be here. So it might take a little bit of time. But please let me just sort of go through the key assumptions that kind of go into the calculation of the funding gap. And I will cover power as well.

So at December 31, as we all know, the total amount spent on the underground development was $3.5 billion, and OT had further capital commitments of $0.8 billion. Now, as I've said before, the Company will have greater clarity on its incremental funding requirement as the definitive estimate progresses and as discussions progress with the Government of Mongolia on securing a long-term domestic power supply. Nevertheless, current estimates indicate an incremental funding requirement, as you mentioned, of at least $4.5 billion, and that's over and above the $2.2 billion in our available liquidity.

So while there remains the possibility of sourcing additional external financing subject to the required approvals, I just want to make it clear we have not assumed nor any possible reprofiling of the principal repayments relating to the existing project financing facility in estimating the incremental funding requirements of at least $4.5 billion. There are several important variables impacting the estimated incremental funding requirements. And I'm going to try and give you as much information as I can now in relation to those.

The first one is firming up the amount of incremental underground development capital required. As we announced back in July, there is expected to be a capital cost overrun of between $1.2 billion and $1.9 billion. [Indecipherable] the timing of sustainable first production and its resulting cash flows. Recent work including the mid-access drive decision indicates the schedule delay ranges is still within the 16 to 30 months as we've previously disclosed, but it is trending away from the lower end of that range.

The third is whether a Tavan Tolgoi based power plant is ultimately selected as the long-term domestic power solution. We did put out an announcement in February. We do have a total project cost estimate for Tavan Tolgoi or for TTPP, that amount is up to $924 million. It's pending consideration of certain amounts yet to be finalized such as government fees, licenses and certain reimbursements as per the Tavan Tolgoi investment agreement.

But we've also noted that there are other options, including the renewables option. They are also under consideration. But they're at a fairly early stage at this point. The next is obviously the timing of the principal repayments on the amount currently drawn under the project finance facility as well as the related ongoing debt service costs. And you'll see in our MD&A -- and I covered this a minute ago -- that we have principal repayment obligations of $1.9 billion over the next five years. The next important variable is the amount of operational cash flow to be generated as well as sustaining capital requirements. In relation to that, for the early years 2020-2021, I would refer you to our 2020 guidance as well as our 2021 outlook. And then obviously there is the new significant impact or potential impact of COVID-19 on OT's open pit operations and underground developments. And as Ulf talked about a minute ago, we're still in the process. It's very fluid at this state. We're still in the process of assessing what that impact might be.

The other thing I can say is that as additional work is completed, to better understand the impact of these variables on our cash flows, liquidity and by financing projections, we will keep you updated when appropriate. And we've also indicated that we're well progressed in discussions with Rio regarding its proposal for sourcing incremental funding. I'm not sure that the Company can progress the underground development over and above our current liquidity of $2.2 billion.

So, hopefully that gives you a bit more information. I have tried to set out those important variables and give you the information that I can, specifically touched on the power as well. So hopefully that's helpful.

Orest Wowkodaw -- Scotiabank -- Analyst

Okay. As a follow-up to that, is it still your expectation the majority of capital for the power plant will be third-party debt financed?

Luke Colton -- Chief Financial Officer

That's definitely still an option. So I think as we've talked about in prior earnings calls, related to TTPP, there is the option to source ECA [Phonetic] funding off the back of those EPC contracts, which I think we mentioned are now in a position where they can be signed. So that is definitely a possibility. The Chinese may still be interested in providing funding for that power plant.

So, listen, it's also worth noting that we are investigating other options as well, including our renewables option and there may be other funding options available for some of those options. But it's still relatively early stage. So I can't give you a lot more details there. But as you can appreciate, for renewables option, for example, the pool of potential funding options probably widens under that scenario [Indecipherable].

Orest Wowkodaw -- Scotiabank -- Analyst

Okay. And the $1.9 billion of principal repayments over the next five years. Have you started any discussions yet about terming those out and that would obviously reduce that $4.5 billion?

Luke Colton -- Chief Financial Officer

Yeah. So, we're obviously -- we do have regular discussions with lenders, and that's not just TRQ, but OT, Rio Tinto as the manager, we've all have had recent visits and discussions with the lenders. We haven't started the formal discussions related to the reprofiling of the debt. And I think you can appreciate the reasons for that. We don't yet have a final mine design. We don't have yet that definitive estimate and a lot of other information that those lenders are going to require to be able to make an informed decision.

We are very hopeful that we'll be able to have those discussions around supplemental debt or reprofiling of the debt in due course. And obviously, we will look at when the best time to do that is. Is that once we have a final mine design and so once we have a definitive estimate, can it happen? Or the definitive estimate, does it need to wait for that definitive estimate and related technical reports, etc. So keeping close contacts with the lenders. But in terms of sort of hardcore negotiation, that hasn't started yet.

Orest Wowkodaw -- Scotiabank -- Analyst

Okay. And then final question for me just with the COVID-19 pandemic impacting travel restrictions of goods and people. Is that having any impact on the study work? Or is that just being done in Australia and so the targets that you are putting out for updating both the definitive study and other targets are still valid at this point?

Ulf Quellmann -- Chief Executive Officer

Thanks. Jo-Anne, do you want to briefly just answer the question? I think we sort of indirectly addressed it before. But then, Orest, I want to come back just briefly to you as well. But Jo-Anne, do you want to just take the question on impact on study work and then hand it back to me for a second?

Jo-Anne Dudley -- Chief Operating Officer

Yes, thanks, Ulf. Sorry, my line reached a little bit funny [Indecipherable]. Was that the coronavirus' impact on study work?

Orest Wowkodaw -- Scotiabank -- Analyst

Yeah. I was wondering whether these strict travel restrictions in Mongolia on goods and people is going to impact at all the timeline for the studies or is that being done off-site?

Jo-Anne Dudley -- Chief Operating Officer

All right. Thank you, gentlemen. Apologies for that. Yes. So that is a good question. I mean, at the moment, similar to what's happening at the mine, we're not seeing too much of an impact. The work is largely being done off-site in Brisbane. And there is regular engagement and good communication facilities set up between the site in Mongolia and Brisbane, and so there are still regular communication followed by an input and feedback from the team at site.

But the study team are largely based in Brisbane, and they obviously has coronavirus precautions in place. However, everybody is set up also to be able to work remotely. So at this stage, we're not anticipating a significant impact on the study schedule, and work is progressing at a rate that is unchanged by the situation.

Orest Wowkodaw -- Scotiabank -- Analyst

All right. Thank you.

Ulf Quellmann -- Chief Executive Officer

Orest, I just wanted to say one quick comment in relation to your question on funding. And maybe it's an obvious statement. But I think when Luke talked you through the components, I think what you and what others on the call are finding clearly is that there is a lot of uncertainty because there's a lot of building blocks in place here. And each one of them are fair degree of range, right. And as we progress through the rest of the year, those ranges will narrow and therefore the funnel will become narrower and narrower and will become more specific in terms of what the actual funding need actually is, whether it's in relation to the underground, whether it's in relation to power, it's in relation to the impact of COVID-19.

So the slightly tricky thing in this conversation is that, intellectually it's quite easy to identify the components, but each one of them has a range, and you need sort of more and more certainty to narrow the range to then have more certainty on the funding gap. And it's really in that context that we are having discussions with Rio on the interim financing at the moment. Why? Well, because we have a fair bit of liquidity, but we want to make sure that when we come through the definitive estimate at later this year and we move into next year that we have some time and flexibility to be able to explore and then put in place whatever then the appropriate financing arrangements are. Because, today we have ranges, but we need to progress some of the work to specify that, and then as Luke was saying earlier, to have more finality on some of the numbers to then have discussions with our existing lenders, for example.

That's sort of why it's becoming more specific at this stage. It's quite hard because you have a lot of components, and each one of them has a big range. And so maybe that's an obvious statement to make, but I just wanted to provide sort of that context, how we look at the overall picture, Orest.

Orest Wowkodaw -- Scotiabank -- Analyst

Okay. No, I appreciate that. And I'll just want to completely clear on this. Can you give us, of the $4.5 billion, how much of that specifically is related to meeting existing debt maturities?

Luke Colton -- Chief Financial Officer

So, I mean, that's the $1.9 billion that I just mentioned.

Orest Wowkodaw -- Scotiabank -- Analyst

So the full $1.9 billion is included in that $4.5 billion?

Luke Colton -- Chief Financial Officer

Yeah, yeah. So if you think over the -- yeah, the answer is yes.

Orest Wowkodaw -- Scotiabank -- Analyst

I see. Okay. So if you can term those out, then your funding commitment is a lot lower than $4.5 billion.

Luke Colton -- Chief Financial Officer

That's right. Well, sorry, again, just I want to be absolutely clear so that everybody understands. The disclosure is at least $4.5 billion. So there are scenarios obviously where the funding gap is more than $4.5 billion. But if we are in a position to reduce that funding gap through our reprofiling of those existing principal repayments, then that will go a long way to ultimately reducing that funding gap whatever it ends up being.

And then just going back to what Ulf said, you can appreciate there are a lot of variables. Those variables all need to be made more clear, the funnel needs to be narrowed -- I think that was the terminology that Ulf just used -- and we're absolutely committed to continuing to monitor that to continue doing that as the situation does become more clear and obviously provide the market with updates as we have that additional clarity.

Orest Wowkodaw -- Scotiabank -- Analyst

Thank you.

Operator

Thank you. The next question comes from Hayden Bairstow at Macquarie. Please go ahead.

Hayden Bairstow -- Macquarie Research -- Analyst

Ulf, thanks for the call. Just a couple for me just really around that debt. So I mean, assume we are just taking all the expenditure, etc., for the next five years, I guess, instead of based on the debt repayments that sort of how we're working out what that shortfall number is. But also, how do we think about the regional $6 billion of funding sort of debt gap within the current debt and the repayment schedule, and how that would play out, if you're actually able to come to an agreement on at least sort of securing the financing for that $6 billion debt capital. I've got a question for Jo-Anne as well.

Ulf Quellmann -- Chief Executive Officer

Yeah. Luke, do you want to take that one? I feel bad giving you all the questions, but I think they're all -- I'm afraid they're all yours, Luke, if you don't mind.

Luke Colton -- Chief Financial Officer

Yeah. No, I don't mind. Yeah, so let me try and be as clear as possible on that. So when we think about the funding gap and when we assess the funding gap, at the moment, we're just assessing it based on our current liquidity. We're not assuming additional supplemental debt reprofiling of the existing debt, etc. So we've currently drawn $4.4 billion on that $6 billion facility. Obviously, in due course, we would be looking -- we would be hoping that we would be able to source that additional $1.6 billion in supplemental debt. The current facility is not an accordion facility, so we still have to go out into the market and we still have to source that.

So once we have the necessary information -- and again, that will be off the back of finalizing the mine design, finalizing the definitive estimate, etc., once we have that additional information, we do want to start those. I mean, certainly from a TRQ perspective, we definitely want to have those discussions with the banks at the early as possible, feasible time around that additional supplemental debt, and possibly, well, definitely around the reprofiling of the current debt as well. And listen, all of that part of a broader sort of long-term funding plan that we're still in the process of -- well, that we keep updating based on current facts and circumstances. So there are other options out there as well. And all of that will be considered at the appropriate time.

And again, going back to what Ulf said, that's why we are focused at the moment on getting that incremental sort of interim facility negotiated with Rio so that we will have the time that we need in 2021 of that additional liquidity to consider some of these other options: the supplemental debt, the reprofiling of the existing debt and maybe some other options as well. So hopefully that helps answer the question.

Hayden Bairstow -- Macquarie Research -- Analyst

Yeah. Thanks. Then, Ulf, I mean, we discussed I think on the site to it that there was some potential to what you're thinking about trying to solve or partially solve funding before the definitive estimate came out. That clearly [Indecipherable] appear to be the case now and everything will be discussed with Rio after it's released. Is that how I think you're going about that?

Ulf Quellmann -- Chief Executive Officer

Well, Luke, [Indecipherable] I would say there's no black or white answer to that, Hayden. I think clearly, if you have a formal conversation with the financial institution, having a so called, quote unquote, final number, final model is ultimately required, as you know well. That doesn't mean that one cannot have discussions previously.

And so from our perspective, the finalization of the mine design that we're having in the first half is a helpful data point, and I think we'll just have to assess once we've gone through that process, so that's a process in the next two to three months or so, whether on the back of that, what level of conversations we can happen in a meaningful way. We just need to be mindful. But we have discussions -- we have relationships for many, many years that we know people well. We just need to strike the right balance between having meaningful conversations that are helpful as opposed to just wasting people's time. So it's a very practical consideration, Hayden. We would like to do more sooner, but it just has to be helpful. That's the simple answer.

Hayden Bairstow -- Macquarie Research -- Analyst

Great. Thanks. And Jo-Anne, just one on the operation side of things. I mean, the lateral development rates still seem to be going extremely well. I mean, with the Shaft 2 now done, what is on the critical path? I didn't think Shafts 3 and 4 [Indecipherable]. And then, is it just getting the -- the lateral development [Indecipherable] and the level sort of set up, is that still the key critical path sort of timing to get at least first draw bell, not necessarily sustainable production?

Jo-Anne Dudley -- Chief Operating Officer

Yes. Thanks, Hayden. Great question. It's a very complex project with a number of parts that have to come together for the sale and then to progress to sustainable production. And so there are a number of pieces that have the potential to fall on the critical path over time. For example, at some point, they [Indecipherable] on the critical path. And so it's an example of a piece of infrastructure that we keep an eye on the forecast commissioning date. And so, all of these pieces need to be in an operable position, not [Indecipherable] the second crusher, but certainly the first material handling system, there are two shafts, and those pieces need to be in place to be able to progress at some point along the ramp-up.

And so there are multiple connecting pieces with multiple clients that the facilities have to be ready to be able to be used. And so -- and I'm not trying to be evasive in that answer, but just more that -- to draw attention to the fact that there are a number of pieces of these puzzle that need to come together. You're correct, development is a very key piece. It is going quite well at the moment, and we are keeping an eye on all the infrastructure to see how this is all going to come together and when these are going to come together within the range that has been published. Is that helpful?

Hayden Bairstow -- Macquarie Research -- Analyst

Yeah. So in terms of first draw bell, though, the infrastructure with Shaft 2 is enough to push the side of first draw bell, isn't it?

Jo-Anne Dudley -- Chief Operating Officer

Shaft 2 is a key piece, and it provides ventilation as well as ore handling capability. But we also need ore handling system from the footprint up to shaft to be commissioned. And we do need ventilation capacity to come in by a Shaft 4 and potentially Shaft 3 as well. So these are -- these are important pieces of the puzzle. No, it's not necessarily one answer to the ventilation either because ventilation isn't a hard and fast piece and choices can be made about what work is done and how much ventilation you use on various activities. So that's why these pieces are being monitored for where they sit in their commissioning dates and where they're actually required as we get closer to first spell and sustainable production.

Hayden Bairstow -- Macquarie Research -- Analyst

Okay. Great. So the underground lateral development, that's not impacted by not having expense [Phonetic] onsite, is it? It can still go ahead as normal?

Jo-Anne Dudley -- Chief Operating Officer

It is absolutely progressing well. I mean, we've invested heavily in the development of our local workforce. And so there is some really excellent work that continues on sites in lateral development. There are other pieces that do need some specialized services, and we are used to relying upon some niche service providers being able to come south to help on other parts of the project.

Hayden Bairstow -- Macquarie Research -- Analyst

Okay. Great. Thanks for that [Indecipherable].

Ulf Quellmann -- Chief Executive Officer

Yeah. Hey, I know -- and Jo-Anne said that it sounds like we're evasive. We don't mean to be, and we need to be careful that we're not sort of using COVID-19 as an excuse for everything. But there is an element to that where at some stage everything's on the critical path, right, if you wait for long enough. And so that's what the team is monitoring at the moment, is to make sure that what is the impact of the travel restrictions because it's subject matter expertise, it's supervisory capability, at some stage you're going to make sure you can actually manage your roster as well, right. If you can't get people in and out for weeks and weeks, you end up with fatigue issues and things like that.

So there's a number of moving parts, and the team is sort of looking at all of that to make sure we know what is on the critical path and therefore how can be find ways to manage that. And I'm afraid today it's just way too early for us to quantify any of that on the call today, but rest assured that that work's ongoing, Hayden.

Operator

Thank you. The next question is from Craig Hutchison of TD. Please go ahead.

Craig Hutchison -- TD Securities -- Analyst

Good morning. I'll try to be brief here. I hate to belabor the issue of the $4.5 billion funding requirement above the $2.2 billion. But can you just give us a sense in terms of the assumption you're using for the delay of the underground, the 16 to 30 months, are you using the midpoint of that number or the upper end of that number to arrive at the $4.5 billion? And the same question in terms of capex, the $1.2 billion to $1.9 billion capex overrun. Are you using the midpoint to upper end? Just trying to get a sense of the $4 [Phonetic] billion, is that the upper range of what you think it's going to be or is that sort of the midpoint. Thank you.

Ulf Quellmann -- Chief Executive Officer

Yeah, thanks, Craig. Luke, I think that's another one for you, I'm afraid.

Luke Colton -- Chief Financial Officer

Yeah. No, listen, Craig, I would -- I'm not sure how -- I'm going to try and be as helpful as I can. But I think the reality is -- and it goes back to what I said earlier. There are a lot of variables and there are a lot of scenarios that are being run. So it's not -- there is no one answer at this stage, which is why we're giving you at least $4.5 billion.

So we're giving you multiple scenarios, we're giving you -- sorry, in assessing and monitoring the impacts of this funding gap, we are looking at multiple scenarios, multiple points on the sort of spectrum, both in terms of the capital cost overrun and the timing of first sustainable production. I mean, what I am able to say is those scenarios at the moment do still fall between the $1.2 billion and the $1.9 billion in terms of the capital cost overrun, and in terms of the timing of first sustainable production they do still fall within the 16 to 30 months. But again, we are trending away from the lower end of the range.

Craig Hutchison -- TD Securities -- Analyst

Okay. Thanks.

Operator

Your next question is a follow-up from Orest Wowkodaw of Scotiabank. Please go ahead. Orest, your line is open. You may proceed with your question.

Orest Wowkodaw -- Scotiabank -- Analyst

Hi. Thank you for taking the follow-up. Just Luke, a follow-up on the project finance facility maturity schedule. I appreciate you laying out that schedule on, I think it's page 21. But can you give us a bit more granularity there, specifically of the $447 million that's due within one to three years? Can you give us the breakdown, say, 2020, '21, '22 and then the similar $1.4 billion? Can you give us the breakdown between your [Indecipherable]?

Luke Colton -- Chief Financial Officer

So there is the actual -- there is a table in the MD&A. Is that the table in the MD&A that you're referring to? I mean, I think what we do in that table is give you one year out, then we give you one to three years out, and then we give you four to five years out? I mean, all of that is relevant for the calculation of the funding gap. I mean, at this stage, that's the level of detail that we've provided to market.

Orest Wowkodaw -- Scotiabank -- Analyst

Okay. Thank you.

Luke Colton -- Chief Financial Officer

Yep.

Operator

Thank you. The next question is from Oscar Cabrera of CIBC. Please go ahead.

Oscar Cabrera -- CIBC World Markets -- Analyst

Thank you, operator, and good morning or evening, everyone. Ulf, I'm sorry I dropped out of the call. I have been having problems with my phone. Just a couple of quick things, if I may. And if you answered these, please let me know and I can go back to the transcript of the call and just read through it. But on your statement that the delay to the steady state production are more than 16 months. Can you provide more color on what are the different things that make you state that?

Ulf Quellmann -- Chief Executive Officer

Sure, Oscar. I think we covered it briefly. But what we'll do, Jo-Anne, maybe you covered it briefly already. Do you want to have a very, very quick summary for Orest [Phonetic] why we're saying we're trending away and what the components -- or the main component that contributes to that statement?

Jo-Anne Dudley -- Chief Operating Officer

Sure. Thank you for your question, Oscar. I guess one of the -- we've talked about the mid-access drive decision that was made, and it moved the earliest schedule date away from the lower end of the range by a few months. So this, combined with the design and schedule review that's in progress, has given us a better understanding of the range. However, there is still ongoing optimization and planning work that needs to be completed, and the final design has to be selected.

So, it's too early to provide a full update of the range. So, the work in progress has been indicated that the final schedule go outside the 30 months, and we aren't proposing any change to the range. But the range of results we're seeing as the work progresses is trending away from the lower end. Is that helpful?

Oscar Cabrera -- CIBC World Markets -- Analyst

That is helpful, Jo-Anne. But trending away two months to five months -- I know it's hard to pinpoint at this point. But it would be helpful just to hear what you're seeing with the different scenarios you're playing with.

Jo-Anne Dudley -- Chief Operating Officer

Right. To understand the kind of process that's going on at the moment, there are a number of well advanced design options that they considered with a range of assumptions applied to those. And therefore there are a range of outcomes that we are seeing. And so the reason the language is used the way it is is because there is still work going on. However, that mid-access drive decision really has meant that we have moved away from the 16 months, and we're not going to change the range that it seemed appropriate to try to provide some further color to what we've provided before.

Oscar Cabrera -- CIBC World Markets -- Analyst

Okay. No. Fair enough, Jo-Anne. Thank you very much. And then the second question, please. In your conversations with the Mongolian government -- or do you think that you can reach any conclusion with respect to either the power plant or the discussion with respect to the potential sale of the 34% stake in OT before the election?

Ulf Quellmann -- Chief Executive Officer

Yeah. Thanks, Oscar. So, Luke, I'll give you a break here because I know you normally cover power as well, but you've answered most of the questions. So if you don't mind, I'll take both of these. Yeah, look, I think, Oscar, if I start with power first. With power, there's quite a prescribed mechanism in place. It's called the Power Source Framework Agreement that sort of governs the steps that we are taking to make progress.

There's sort of two months period there. One we have triggered a month ago, and that allows us to review the current Tavan Tolgoi coal-fired power plant with the government. And then if the parties decided that they don't like that proposal, there is a second two months period, in which we could look at other alternatives. And we talk about renewables, but there could be others. If you just add up those two months periods, the clock started to tick in mid-February. So 2 times 2 will take you through the middle of June, which is very close to the elections.

Now, the first point I would say on power, because it is business-critical for us, that is something where we are working closely with the government, where we're urging each other to make sure we make a decision sooner rather than later because we don't want the business to suffer because we have uncertainty on power. So that's a very, very specific point.

The other issues that were identified in the Parliamentary Working Group and in the resolutions range from a number of issues. I think there was a list of seven or eight or nine items, and some of them are more complex than others. We've had a meeting. We've had a discussion. Now, it's been interrupted by the COVID-19 related travel interruptions. I think we'll need to work with the government to make sure we have a timetable and a game plan that says what if anything can be resolved before the elections and then what needs to be dealt with after the elections.

And the truth is, Oscar, at the moment, with the impact of the pandemic, both on the business but also on national governments, we'll probably need to revisit that and we'll probably end up having to do more after the elections than we had initially anticipated when the resolution came first out in December.

Oscar Cabrera -- CIBC World Markets -- Analyst

Okay. That's super-helpful. Thank you very much and all the best, everyone.

Ulf Quellmann -- Chief Executive Officer

Thank you, Oscar. Same to you.

Operator

There are no further questions. I will now turn it back over for closing comments.

Ulf Quellmann -- Chief Executive Officer

Thank you, operator.

Well, thank you, everyone, for being on the call. I know we've run over the allocated time, but I'd like to think it's a positive that we had lots of questions and dialog rather than a negative. Look, from our perspective, I think -- we had a long debate among ourselves as to how much of the additional disclosure we should give or not give, if you like, both on the funding side as well as on the schedule, the trending away discussion we just had because we recognized that there are still lots of questions, both on the funding side and Luke, sort of admirably, tried to answer most of them as well as on the underground development side.

We decided in the end that we wanted to err on the side of providing more transparency rather than less, even though the degree of uncertainty at this stage is still high because a lot of these items will need to be refined, developed further. And as a result of that, as we sit here today, we would love to give you more specific answers. But in many cases, we are not able to because the work hasn't necessarily progressed to that degree of maturity yet. That doesn't mean that there isn't a plan and we can't see when that will be the case.

For example, on the underground, we have mentioned to you before that the mine design will be finalized in the second half of this year. At that point in time, we should be able to give you more clarity. And then, of course, by the end of the year, the definitive estimate will give you a lot more clarity. But there is sort of a road map that will allow us to be more specific on some of those items as we progress throughout the year. And equally, on the funding side, I think, Oscar, you asked the question on power, for example. It's not the biggest component in the financing, but it's one of them that contributes.

And so once we get more clarity on power, once we have finalized the mine design, that funding gap of which we've given you the floor at the moment will naturally narrow. And so as we go through the year, we can give you more clarity. At the moment, we appreciate it is still quite wide open, but we felt it was important to provide you with a floor on the funding need as well as with the trend, at least on the underground schedule.

What I think is important, though, for all of us to take away from the call is we spent a lot of time talking about those two things and we know why that is important. But please also don't forget that the business itself has continued and does continue to operate really well. From an operational perspective, we think we had a strong year last year, and we've said before on this call that the operations have continued to operate even in view of the impact of the COVID-19 crisis. There is no case on-site. We continue to export, we continue to import consumable and the business continues to operate. And it does so safely. That's important.

And lastly, I would say the underground progress has also been good. We are now getting to the stage where, of course we have to take COVID-19 considerations into account. But up until now, if you wind back the clock I think to July last year, we've said we've done what we said we would do. I think we've taken the decisions we said we would take such as the one on mid-access drive; we managed to deliver Shaft 2 in the end. Yes, it was late, but in the end, it was delivered to the revised timeline. I think you are seeing some good productivity numbers coming through, and we are maintaining the timetable for the mine design for the first half of this year as well as for the definitive estimate.

So I just want to make sure that nobody walks away from the call with just the questions but also remembers that I think the business performance, especially in view of these challenges that we're seeing today has been very, very strong, and Armando and his team are working incredibly hard to proof the business and has the business and of course the people to be protected and to be as resilient as possible. And the cooperation and the collaboration with the authorities in Mongolia is outstanding as well. So all of that, I want to make sure that we don't lose sight of when we just focus on -- I know funding gap is important and the schedule update is important as well. But please, let's make sure we don't forget some of the underlying real business issues as well.

Anyway, forgive me for my long summary. But I wanted to make sure we don't lose sight of that. Thank you for joining us this morning. Apologies for taking more time than usual. But thank you for your interest. And as we said before, please all be safe, stay safe, and we hope that you, your colleagues, your family members are all managing in these very, very difficult times. Thank you for joining us this morning.

And with that, we'll close off the call. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 71 minutes

Call participants:

Roy McDowall -- Head of Investor Relations & Corporate Communications

Ulf Quellmann -- Chief Executive Officer

Jo-Anne Dudley -- Chief Operating Officer

Luke Colton -- Chief Financial Officer

Dalton Baretto -- Canaccord Genuity Corp. -- Analyst

Ralph Profiti -- Eight Capital -- Analyst

Orest Wowkodaw -- Scotiabank -- Analyst

Hayden Bairstow -- Macquarie Research -- Analyst

Craig Hutchison -- TD Securities -- Analyst

Oscar Cabrera -- CIBC World Markets -- Analyst

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